Chris Casey writes:  Due to its unjustified acceptance of the Phillips curve and its related misconceptions about price inflation and business cycles, the Federal Reserve will never be able to trade higher price inflation for lower unemployment. Nor can it sacrifice higher unemployment for lower price inflation. But it can, and likely will, generate high levels of both. If the Federal Reserve’s economic controls appear broken, it is because they never really worked in the first place.  Inflation and Unemploymnet

Nobel Laureate Thomas Sargent  began with a simple promise. “I will economize on words,” he said. And he did.

Economics is organized common sense. Here is a short list of valuable lessons that our beautiful subject teaches.

1. Many things that are desirable are not feasible.

2. Individuals and communities face trade-offs.

3. Other people have more information about their abilities, their efforts,
and their preferences than you do.

4. Everyone responds to incentives, including people you want to help. That
is why social safety nets don’t always end up working as intended.

5. There are tradeoffs between equality and efficiency.

6. In an equilibrium of a game or an economy, people are satisfied with their
choices. That is why it is difficult for well meaning outsiders to change
things for better or worse.

7. In the future, you too will respond to incentives. That is why there are
some promises that you’d like to make but can’t. No one will believe those
promises because they know that later it will not be in your interest to
deliver. The lesson here is this: before you make a promise, think about
whether you will want to keep it if and when your circumstances change.
This is how you earn a reputation.

8. Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.

9. It is feasible for one generation to shift costs to subsequent ones. That is
what national government debts and the U.S. social security system do
(but not the social security system of Singapore).

10. When a government spends, its citizens eventually pay, either today or
tomorrow, either through explicit taxes or implicit ones like inflation.

11. Most people want other people to pay for public goods and government
transfers (especially transfers to themselves).

12. Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.

 

 

Dr. Morten Huse, who holds the Reinhard Mohn Endowed Chair for Corporate Governance, Business Ethics and Social Evolution at Witten/Herdecke University (UW/H), write in the Journal of Business Ethics about some of the issues surrounding women on boards as well as employee-elected board members. We focus on women in the following synopsis:

In recent years, there has been increasing pressure from society and investors to appoint women directors on corporate boards. The number of women in top management and board positions has slowly increased. How does gender diversity contribute to variations in board tasks. Some have argued that there are greater differences among men and women than there are between men and women.

Conventional wisdom suggests that men focus more on quantitative issues and that women are more concerned with qualitative issues. How the bottom line is affected by this difference is still debated. If women are more concerned with corporate governance and social issues, how does this impact shareholder value? Does the adding of women to boards increase diversity of thought in the boardroom? And if it does, increasing studies show that decision-making is improved.

Some recent studies have re-directed the questions about if women make contributions to how women make contributions. When women are in the boardroom, discussions appear to be more open and creative. Are they?

In showing the need to go beyond board composition and corporate financial performances Huse suggests 1. Going beyond demographic descriptions of women, 2. Exploring differences related to various boards takes to include open discussions in the boardroom as a mediating variable between board member characteristics and boardroom tasks.

1. Huse’s research results emphasize that backgrounds and experiences go beyond gender and external demographics and that the personalities of the individual board members should be considered when researching the implications of diversity.

2. While women are expected to have a more questioning attitude than men and contribute to more open discussions in the boardroom, Huse has found that the contribution of women to creative discussions only existed when the women had a different background from the men. However, this relationship was weak. A possible reason for the lack of strong findings may be that women directors tend to adopt the ideas of the conventional board members.

3. Other research has found that minority board members make a contribution to their boards dependent on (1) their own previous experience in a minority position of other corporate boards and (2) previous experience by other board members in a minority position. Hence, while women directors may bring alternative back- grounds and knowledge to the boardroom, they may lack the experience of how to actually present and bring through such knowledge.

4. There appears to be correlation between women board members and concerns of Corporate Social Responsibility (CSR).

5. In the case of women directors, Huse found that esteem was positively related to budget controls, but not to the other types of control. However, the esteem of the women directors was generally found to be high and the lack of variations in the data might have caused the lack of findings.  Women on Boards

Time Online reports that for fifteen minutes after a parent has signed off from their Itunes account, anyone can go online and charge to that account.  Kids have been doing this the world over.  In January Apple agree to reimburse over 24 million dollars to parents whose children, unattended, shopped in the Apple Store.

Time notes that children should gain experience with money in the real world, so that they can grasp the issues of charging to their parents’ account.

A new report by YouGuv prepared for Bank of American finds that only one in three women even consider working in the “male dominated”  financial world. 1000 girls aged 16-20

A “lack of information from teachers” (21 per cent) and a perceived “sexist culture” (19 per cent) came second and third. The survey was carried out by YouGov for Bank of America Merrill Lynch and North London Collegiate School.

Almost half believed work-life balance would be better in industries other than finance, compared with just 22 per cent who disagreed. This is despite efforts by financial institutions to provide a supportive working environment, including mentoring programmes aimed at women, workshops for those returning from maternity leave and various diversity and inclusion policies.
In 2013, girls’ schools dominated GCSE and A-level league tables but just 19 per cent of applications for financial services graduate jobs came from women. Employers are trying to increase the percentage by recruiting young women before they go to university.
The report urges the financial services sector and education establishments to work together to encourage more young women to consider a career in the field. Just three out of 10 young women said financial careers had been discussed with them at school.

Harvard Magazine reports on an address by Jacques Attali: