Antitrust & Lobbying

The traditional way to succeed in the world of business was to have better product, better marketing, better service etc., than the competition. The firm had to strive to please the consumer. (It's a bit idealistic view,but whatever...)

The weapon of modern times is Antitrust. Big companies lobby in Brussels (or in Washington DC) for antitrust examination of their rivals to get them tangled in red tape, and slow their growth. Last case is a preliminary examination of Google, triggered by a complaint by Ciao! (owned by Microsoft), and two other EU based companies. Often these investigation find nothing wrong, but end up damaging the investigated company.

It would be very sad if the legal environment in the Western World incentivized companies to spend their resources on lawsuits and lobbying rather than on competition to create the best product...

Anti-smoking nudges

A smoking ban is too much for the libertarian paternalistic. In his world, bar owners would decide if their bar is for smokers or not and people would choose where they wanna go out. (Of course, in this world there is no public health system as non-smokers do not wanna pay for smokers' health bills). But the government, though liberal, still wants to nudge smokers out of their bad habit. What could it do? Governments could:

• subsidize a free beer for non-smokers, or free finger food
• hire fat and ugly smokers to be in unattractive smoking section all the time...and really hot, easy-going, talkative non-smokers in non-smoking section
• require huge noisy fans to be next to smoking sections
• hand out free electronic cigarettes and nicotine patches
• arrange free sex for non-smokers
• pay people with real bad lung cancers to applaud people that go into smoky bars
• design a cap-and-trade system for smoking emissions

ht Rieger for the 2 last suggestions

Any other ideas? Obvioulsy, I prefer the smoking ban and a public health system.

Video application to the Tufts University

Tufts, one of the three famous universities located in the Boston area encourages students to supplement their application with a Youtube video. In my opinion a brilliant idea, the world around us is changing and the university applications should keep up with the trend.
The only think I don’t like is that it might further disadvantage kids coming from low income families. Today some of the wealthy parents are hiring professionals to write application essays for their kids, tomorrow they’re going to hire Hollywood directors to make short films about their “young geniuses”. Wonder if Cameron would do an application video in 3D…

Technology with an anti-trade bias

Countries trade when the productivity difference between partners is big enough to cover transport costs. So technological progress everywhere can reduce trade, unless it has a transport bias. In other words, "real transport costs only fall if technological progress in transportation is faster than progress in rest of the economy". Trade boost in 1870-1913: all about steam. Big trade decline in interwar period: electrification of factories. This is Krugman theorizing on his blog. 

The city learns

We have already written at various instances about the poor state of politics in Geneva. So let me for once say something good. It appears that at least the TPG has learned some lessons and has listened to our advice . I have not only found the first ticket machines in buses but the TPG started also to provide ticket machines that give change. Finally, the various extensions of the tram network promise to alleviate the traffic problem in the longer run, even if they make them worse for the moment.

Now they just need to reduce the regulations regarding housing and abolish the ridiculous restrictions on opening hours and the quality of life will increase and the cost of living decrease....

IHEID shapes policies of the future :)

Check it out. No policy making without the influence of the Graduate Institute :) Check this too!

The adult magazine of choice

If Spain were Florida...

In a very euroskeptic piece, that have called the attention of some nationalist here, Krugman mentioned how the Euro is responsibly for the slow and painful recover of Spain. The impossibility to devaluate make deflation and reallocation the only via crusis to find a way out. He compared the situation of Florida, that also was part of a real state bubble because the nice weather and cheap labour, with the difference that to be part of the USA protect a State from rampant inflation and gurantee protection from D.C.

Definitely a very good point. But... what would have been of Spain without the EU? No doubt all the incredible growth of the last 20 years before the crisis is related to the membership in the club and probably to 8 years of Euro...

And, by the way, Florida in fact was Spain 200 years ago...

The US to double exports in the next five years

From the Washington Post: "Increasing the export of American products and services to global markets can help revive the fortunes of US companies, spur future economic growth and support jobs here at home"

The president's National Export Initiative will target three key areas:

• expanding trade advocacy (free trade agreements)
• improving access to credit especially for small and medium-sized businesses
• rigorously enforcing international trade laws

I have two more ideas to boost exports:

• let in migrants (especially Chinese)
• a one child policy

Sophisticated economies

Last year we had the chance to have Ricardo Hausman in Rigot for a seminar. What a show it was! This is what I had thought back then. This week, The Economist makes a spot-on summary of the research. It's about monkeys in forests. It's a must read!

A monopoly makeover

From Yahoo News:

"The new Monopoly has debit cards and an ATM instead of paper money and a banker...and clips of popular songs like Rihanna’s "Umbrella," Daniel Powter’s "Bad Day," and Beyonce's "Crazy in Love" that play after certain actions. So far, the Internet echo chamber's biggest criticism focuses on the new version's tight security. It seems that when it comes to Monopoly, half the fun comes from cheating by stealing from the till when nobody's looking, a loophole the new version closes with its fancy electronic banking."

I always thought the funniest part of the game was the financial innovation that comes at late stages of despair. Bankruptcies and debt restructuring negotiations between players are always interesting. They can make the game go on and on...until the bubble bursts!

I would still like to try the more capitalist version, the anti-monopoly.

Valueless bribes

Three years ago an Indian NGO thought of a new tool to fight corruption: zero rupee bills."The idea was dreamt up by an Indian physics professor from the University of Maryland who, travelling back home, found himself harassed by endless extortion demands. He gave the notes to the importuning officials as a polite way of saying no..." There are now one million notes in circulation. Apparently, according to this article, it works. "Ordinary people are more willing to protest, since the notes have an organisation behind them and they do not feel on their own." Little things like this can sometimes make a difference. We don't always need to dream up impossible and useless government reforms!

No Pyjamas Policy

Apparently, a popular chain supermarket in Cardiff has put a ban on shoppers wearing pyjamas, as reported by BBC news. The ban read like this:

"To avoid causing offence or embarrassment to others we ask that our customers are appropriately dressed when visiting our store (footwear must be worn at all times and no nightwear is permitted)."

The lady interviewed in the article just dropped by to buy some "fags" (nb for the people non familiar with british slang, these are cigarettes) and was not allowed to enter the supermarket.

Maybe they should start putting a label on the pyjamas they sell: "not to be worn outside your bedroom, it may cause inadvertent offence, embarrassment". Or maybe they should start producing even more beautiful pyjamas (like design pyjamas) or normal clothes that look like pyjamas so that you could not tell the difference...

Devil's advocates?

Don't donate money to Haiti! Don't cancel Haiti's foreign debt!

In this time of emergency, how should we take this kind of calls?
Are they from the fat pigs sited in a comfortable desk drinking champagne and smoking cigars or from engaged people that want to put a bit of rationality in a time of emotional shock?
... maybe a little bit of both ...

Prices in Luanda

• Single hotel room - $500
• Bed in guesthouse - $250
• Two bedroom-flat monthly rent - $7000
• Two bedroom-flat - $2 million
• Take away hamburger - $13
• Glass of fruit juice - $5
• Pair of flip flops - $34
• Annual fees at international school - $38,000
• Car and driver for a day - $500

Luanda is the world's most expensive city for international businessmen according to ECA. Source: The Economist