Friday, December 21, 2007

Thursday, December 20, 2007

Best Line I Have Read Today

The fundamental basis of capitalism is that mistakes must be borne.

That's professor Charles Wyplosz in FT commenting on the central banks' joint efforts in providing liquidity to curb the transformation of the sub-prime problem into a massive credit crunch.

Wednesday, December 19, 2007

What I Would Watch Over Christmas

Learn more about it here.

The K.G.B. Is better Than an M.B.A

That has to be the best line I have read today so far. And there is some validity to that statement as well because of the language and other training intelligence agents have to go through. So the spy school may very well be one of the best prep schools for international business.

Other contenders, from the same story include:

-- [I]t should not be surprising that former agents became free-market enthusiasts.

--Mr. Shvartsman suggested that he had F.S.B. backing for corporate raiding, a term that is often more than just a figure of speech in Russia’s bare-knuckle business world.

All of the above is from a story also in NYT about the extensive role fomer intelligence agents have in Russian business today. Read the whole thing here.

China Sovereign Fund Acquires Morgan Stanley Stake

The stake taken by CIC will be passive and give the investment firm no special rights to name directors, Morgan Stanley said in its press release. CIC will purchase equity units that will be converted into common shares on Aug. 17, 2010, at prices between a still-undetermined reference price and a premium of 20 percent to that price. The units will pay a fixed annual rate of 9 percent on a quarterly basis.

That's the latest from NYT, more here.

Wonder what WSJ would have to say on this given its recent unfriendly stance towards foreign acquisition of US assets.

Tuesday, December 18, 2007

Ronald Coase and Steven Cheung

Coase once remarked that “a theory serves as a base for thinking,” but he never explained explicitly what he meant or developed the idea. Cheung, a friend of Coase for several decades, has inadvertently taken up the task.

With his widely read literary economic essays, Cheung forcefully demonstrates the analytical power of economics and almost single-handedly launched a unique literary tradition in the Chinese-speaking world.

If the economist can help improve the efficiency of resource allocation by advising policy makers, then his helping the general public to acquire the economic way of thinking would have an even more profound impact. As such, Cheung’s endeavors are meaningful to both the profession and the development of economics.

More here.

Thursday, December 13, 2007

Why Africa Does Not Develop?

My research shows that this is indeed the case. The countries from which the most slaves were taken (taking into account differences in country size) are today the poorest in Africa. This can be seen in figure 1, which shows the relationship between the number of slaves taken between 1400 and 1900 and average real per capita GDP measured in 2000. As the figure clearly shows, the relationship is extremely strong. As well, the relationship remains robust when many other key determinants of economic development are taken into account...

According to my calculations, if the slave trades had not occurred, then 72% of the average income gap between Africa and the rest of the world would not exist today, and 99% of the income gap between Africa and the rest of the underdeveloped world would not exist. In terms of economic development, Africa would not look any different from the other developing countries in the world.

More here. BTW, professor Nathan Nunn, the author of the piece summarized above is now at Harvard, not Canada's UBC.

Wednesday, December 12, 2007

Professor S.C. Tsiang Part II

My good friend Dennis, I believe it was him, back at college days sent me a picture of professor Tsiang circa 1992. Thanks, Dennis.
For an evaluation of professor Tsiang's contribution to monetary theory, this is the best place to start.

Tuesday, December 11, 2007

蔣碩傑 S.C. Tsiang

It's indeed my greatest honour to have my 500th post devoted to one of the best economists in the 2oth century:

S. C. Tsiang or in Chinese 蔣碩傑

This is a brief story of him by the late John Fei posted on the Chinese Hayekian Soceity website.


民國31年秋,在經濟學大師海耶克(Friedrich A. von Hayek)的幫助下得到獎學金,因此重回劍橋,進入倫敦政經學院的研究所。撰文批駁凱因斯(Keynes)有關人口成長與就業關係的論文,刊登於當年11月份的Economica(英國著名的經濟學雜誌),此為首度正式發表的學術論文,心中甚喜。翌年又於Economica 上為文批判卡爾多(Nicholas Kaldor)的股票投機學說,從此致力於流動分析(flow approach)的理論發展。第三篇論文則批評了在劍橋大學三十餘年的資深教授庇古(A. C. Pigou),並蒙庇古覆文認錯,因此將其書《就業與均衡》修改了二章。34年,得博士學位,於劍橋首次見到張公權(嘉傲)和胡適,同時得到該校象徵最佳博士論文的「赫其森銀牌」(Hutchinson Silver Medal)。

PS. If anyone could locate a picture of professor Tsaing, please let me know.

The Best Blogpost I have Read Today

I was having dinner with someone the other evening who commented that there were many people who didn't seem talented or industrious when he knew them, years ago, but somehow they had now ended up making large amounts of money.

Here's my take on this. It's either a proof of the fact that God doesn't exist (how could he possibly let this happen!?) or, more likely, a proof of the fact that he does exist and that he wants you to be humble.

That's by Emanuel Derman up at Wilmott.

Monday, December 10, 2007

WSJ's Strange Turn to Economic Nationalism

Commenting on the injection of funds to UBS from an investment arm of the Singapore government, WSJ editorial wrote:

UBS Chairman Marcel Ospel said he's "delighted to welcome these new long-term strategic investors." The markets seemed equally so as the bank's shares ended up 1.4% in yesterday's trading. But the problem for UBS and other big financial institutions is that sovereign wealth funds are no ordinary investors. State-controlled and often opaque, they are driven by different motivations than private investors. Politics may trump business interests. Who knows.

More here.

Does the editorial writer who did the piece really think that he or she, not the ordinary investors who have to fork over their hard-earned greenbacks to purchase shares of UBS, is the only one who realizes that the new investors of UBS might have motiviations other than private investors? What on earth makes he or she thinks that her/her sense is much sharper than that of the market? If that is not hubris, what is?

Why can't the writer go ahead and simply say he or she would rather prefer UBS to go belly up and its shareholders suffer losses than the firm being resecued by "non-western" financial institution so long as there is no "western" money available for a cash injection?


Apple Daily reported today:

今 年 24 歲 的 Kennis , 指 資 方 過 去 一 年 不 斷 削 減 福 利 , 令 她 忍 無 可 忍 , 又 指 機 艙 服 務 是 體 力 勞 動 工 作 , 容 易 傷 及 腰 背 手 腕 , 「 公 司 唔 建 議 我 幫 客 人 搬 行 李 , 因 為 太 重 會 傷 腰 , 但 客 人 又 會 要 求 我 咁 做 。 」 另 一 空 姐 陳 小 姐 稱 , 資 方 的 做 法 「 好 似 訓 導 老 師 罰 學 生 咁 」 , 「 我 都 唔 想 病 , 但 我 比 做 office 更 容 易 病 , 飛 機 空 氣 燥 , 一 咳 就 好 難 好 。 」 亦 有 遊 行 人 士 指 , 即 使 是 患 輕 微 感 冒 也 可 以 影 響 耳 道 , 在 機 艙 環 境 內 耳 膜 甚 至 會 出 血 。

I presume the ladies who complain about all those work harzards are well aware of them when they first sign their contracts years ago, if so, the terms of the contract must in their own evaluations worth the risks assumed. Why complain now? And if the current pay, everything considered including the slashed medical benefits, is below their earnings elsewhere I presume they would quit right away instead of participating in a strike, aren't they?

The fact of the matter is that with Cathay's eroding MONOPOLY PROFITS because of intensifying competition coming from other airlines, especially those budget airlines, Cathay is no longer able to share as much with its workers as before.

So these Cathay ladies are actually bitching and moarning about their declining level of monopoly rents shared with the company, not that they are being exploited by the greedy capitalists.

But I am willing to bet with you readers that if the strike drags on, sooner or later, 李卓人之流必然会走出來攻擊貪婪的資本家。

To Hong Kong's so called Pan-democrats

Property is an indispensable ingredient of both prosperity and freedom... It is a serious mistake, unfortunately often committed by the U.S. government in its foreign dealings, to define freedom to mean exclusively democracy, for, as noted above, ordinary citizens may enjoy a wide range of economic and legal freedoms along with personal rights without being able to choose their government.

That is from Richard Pipe's Property and Freedom on pages 286 -- 287. Pipe is Baird Research Professor of History at Harvard.

Seems like HK's self-proclaimed democrats are committing the same mistake as well. BTW, if you like Property and Freedom, do get his Communism as well, a slim volume that would walk you through the tragic history of attempts to build communist society on earth.

Electable Dictators

Bryan Caplan up at Econlog asked an excellent question:

What do the electable dictators have in common?

And he went on to offer several possible candidates like

1. The electable dictators deliver peace and prosperity.

2. The electable dictators give the people the policies they want.

3. The electable dictators are the best brain-washers.

More here.

My question is:

if electable dictators do know they will win even in a fair election, why we don't see more dictators who restrain from rigging election or usher in a regime change from dictatorship to a more open polity? What they will have to lose by doing so? Sharing their wealth and power with somebody? Wouldn't they already need to do so, at least to some degree even in a dictatorship?

Sunday, December 09, 2007

Bottom Billion

The Bottom Billion has been picked by the Economist as one of the books of the year 2007.

The Economist's review of the book wrote:

Its author, Paul Collier, an Oxford economics professor, has spent 30-odd years puzzling mainly over sub-Saharan Africa and trying to work out why so many of its 48 countries have become basket cases. Crammed with statistical nuggets and common sense, his book should be compulsory reading for anyone embroiled in the hitherto thankless business of trying to pull people out of the pit of poverty where the “bottom billion” of the world's population of 6.6 billion seem irredeemably stuck.

Here is another positive review from Martin Wolf at FT.

Just when you plan to rush out and buy the book, first read what another economic guru on Africa Bill Easterly has to say about the book:

With such a statistical muddle, to remake other societies on the basis of what numbers flicker across Oxford computer screens is at best hubris, and at worst irresponsibility. If Collier’s statistical analysis does not hold up under scrutiny, unfortunately,then his recommendations are not a reliable guide for deploying foreignaid, technical assistance, or armies.

Economists should not be allowed toplay games with statistics, much less with guns.

More here.

Doing Good While Doing Well

From Ming Pao:



More here.

This is exactly what the phrase doing good while doing well means. 張超雄,收到冇?

Tuesday, December 04, 2007

支持凌尉雲 2008 再戰立法會!!!!!!!!

HK just had a Legislative Council (HK's legislature) by-election this past Sunday.

Whom did I vote for? Candidate no.6 Ling Wai-wan.

Reason? Simple.

Just check out her election platform posted above or you could read it here.

What's next?

支持自由市場的朋友, 現在是時候團結起來, 看看如何協助凌女士明年再戰立法會!!!!! Please kindly leave your suggestions in the comments section on how we could help. Thanks!