The chart above shows the budget forecast for the US economy overlaid with what really happened in the last 28 years. The whiskers are the predictions and the solid line shows what really happened. Macro economic forecasts are useful but are mostly inaccurate. Why then are public debates conducted as if budget forecast were the Holy Grail?
When next you hear anyone make authoritative statements about the future if the US economy, just remember that chances are that they are wrong. And the farther into the future those predictions go the more certain you can be that they will miss the mark.
Macro economic forecasts are right as long as there are no economic corrections. On the other hand corrections are what make capitalism tick.
Economics
4
Feb 10
Forecast
21
Jan 10
Unlearn Your MBA
Interesting perspective from David Heineimeier Hansson, the creator of Ruby on Rails and partner at 37signals in Chicago. He says that planning is guessing, and for a start-up, the focus must be on today and not on tomorrow. He argues that constraints–fiscal, temporal, or otherwise–drive innovation and effective problem-solving. The most important thing, Hansson believes, is to make a dent in the universe with your company.
17
Oct 09
Chris Anderson Discusses the Future of Free
Chris Anderson the Author of the NYTimes Best seller ‘Free’ discusses the future of Free.
15
Oct 09
Blog Action Day 2009: Climate Change
Actions to mitigate the negative consequences of climate change cannot be dictated to developing countries. Developed economies ought not to dictate expectations and therefore actions to check climate change to developing economies. The local gains global pains nature of climate issues present a unique challenge that waters down the potency of the carrot and stick method. Actions against pollution and unsustainable stripping of the earth’s natural resources will only succeed if the participants in this market are motivated from within. This is a volunteer market structure and bills and ordinance should be designed with the nature of the market in mind.
I believe the climate challenge, as it relates to developing economies, will only be resolved through listening to all parties and demonstration of the commitments of the more privileged parties. Developing countries want and need to be heard. They are looking for policy makers from the western hemisphere to objectively observe climate change issues through the lens of the challenges experienced by their not so affluent co-residents of planet earth. Secondly, demonstrate, show and demonstrate again. Pointing out the environmental damage caused by the chopping of trees used as cooking firewood while driving around in a gas guzzling SUV is questionable.
At some point we will have to listen and demonstrate how the new self sustaining environmentally conscious market will be structured. Wouldn’t it be more efficient to start today?
My entry for the 2009 Blog Action Day.
6
Aug 09
Book 32: When Markets Collide
Well written. Mohammed El-Erian’s When Markets Collide is a masterpiece. He demonstrates his depth of knowledge through the text. The text contains nuggets of investment strategies for the age of global economic change. El-Erian’s treatment of noise and the sheer number of economic principles which he deployed in explaining the process of separation of economic noise from market signal is impressive.
This ought to be recommended text for business school students. Recommended reading for anybody with an interest in high finance, emerging markets macro economics and the future of finance in general. I have kept this review short because this book is for a niche audience.
31
Jul 09
Book 31: What Would Google Do?
Vanilla. I read Jeff Jarvis’s blog Buzzmachine.com. I have also followed his body of work for some time. As a card carrying member of the Google fanboy club I felt I had hit on a business book gold when I picked up WWGD? In addition to this, the cover of Jeff’s book displays endorsements from Chris Anderson, Craigslist’s Craig Newmark, the CEO of Salesforce, Clay Shirky, Seth Godin and Don Tapscott. Regular readers of this blog know that I am a fan of these heavy hitters. I looked forward to reading What Would Google Do? I came off disappointed.
Upon reading this text, it was difficult to determine the target audience of this book. If this book was written for someone like me, it would score low marks because I could not shake the seen-this-before feeling off my mind. On the other hand if this text was written for a more casual observer, it felt unnecessarily drawn out. If this text was written with the hardcore web sociologist in mind, then its scope was too wide and and poorly defined. Jeff did not drill down on any major idea.
In addition to the scenario described above, the text seemed dated and I thought the omnipotent portrayal of Google’s business model was misleading. Google stumbled on some of these ideas by chance, it would be more stimulating to point this out.
This is my opinion and I am comparing WWGD with other highly acclaimed masterpieces. Some may find the book more useful than I did. I still like Jeff’s work. The last 100 pages made a decent attempt at redeeming the book. I enjoyed reading about Google Mobile, Google U, Google Capital. Overall, WWGD tried to do too much. The book may have turned out to be a hostage to its concept. WWGD was over conceptualized.
23
Jul 09
Book 29: Free
Decent, fast paced and thoughtful. Mike Anderson’s Free is well written and totally worth the time expended reading it. I measure the worth of a book against the time spent reading it. Are the new ideas or new perspectives of older ideas more valuable than the time and effort I expended reading the text. ‘Free’ passed this test. The somewhat fresh perspective on the old idea of ‘Free’ was valuable. The idea of separating bits from atoms in Anderson’s thesis is what sets this effort apart. Anderson ends up being very convincing.
He quote Ariely’s book Predictably Irrational a few times, this was interesting to me becase I read Ariely text a few days ago. Anderson, just like Ariely has a solid grasp of behavioural economics. However not all the ideas in ‘Free’ are as novel as presented. Some of the ideas presented are; Information wants to be free. Free is inevitable. Bits will always end up being free. Free may be the best price but it can not be the only one. You can not stop free with locks and laws. You can make money from Free. There are countless ways to make money from free. Sooner or later you will compete with Free. Embrace waste. Free makes other things more valuable. Manage for abundance not scarcity and many more.
I enjoyed reading Free. I recommend the text to any web entrepreneur and anybody interested in gaining more insight into the pricing models on the Internet and digital media in general.
20
Jul 09
Book 28: Predictably Irrational
Predictably Irrational is a properly written pop behavioural economics text. Mr Ariely examines irrationality in decision making, an important idea, which is often assumed away in classical economics. Behavioural economics is an emerging filed that appears to have enough broad appeal in the general population to warrant writing algebra free economics texts. Dan Ariely’s penmanship is top rate unlike many writers with formal economics training. I recall preparing and participating in a few of these experiments discussed in my behavioural economics class back in graduate school when the stars of behavioural economics were emerging. These test may not be as novel as the book represents them.
I enjoyed reading discussions on anchoring, social norms, habits, free stuff, coupons and dishonesty. Predictably Irrational discusses similar material as Richard Thaler’s book Nudge. The discussion on the use of social norms as incentives in the workplace proposes some creative ideas for managers. I also encourage entrepreneurs to read chapter 4. Overall Predictably Irrational was well written and worth the time expended on it.
14
Jul 09
Book 27: A Beautiful Mind
The biography of John Nash the mathematical genius and Nobel laureate. This text is a chronicle of his life, battles of John Nash. The text is long, 443 pages. For non game theory enthausiasts I suggest you watch the movie of the same title. Though this is not a core business book, I enjoyed reading A Beautiful Mind. Game theory and international trade was my forte in graduate school.
Sylvia Nasar’s narrative was thoughtful and incisive.
8
Jul 09
Architects of Poverty
The author of Architects of Poverty, Mr Mbeki speaks on poverty in Africa.
22
Jun 09
Open Banks
Nigeria is to lift a ban on foreign takeovers of its banks, breaking a decades-old legacy of protectionism to open Africa’s biggest untapped market for financial services to international competition…“We would try to encourage foreign banks that are coming, not just with money, but with management and systems, to come in and acquire,” he said. “Why wouldn’t I be comfortable with a bank owned by a Barclays, or HSBC or China Construction Bank, who I know? For me it’s a no-brainer.”- FT
Is this a laudable rponouncement? It depends on who you ask. While lifting the 10% cap on foreign ownership may increase the confidence of foreign investors and subsequently capital inflow into these major banks, the converse is also true.
I see this move as a bit too drastic and reactionary and it may end up being counter-productive. Long term investors think long term, rhetoric that seem to be lost on the policy makers. Who knows what the next-Gov. will choose to do. A policy of new leadership resulting in a drastic overhaul, attracts the shady kind of foreign investment developing economies ought to avoid. A key lesson learned from the global financial crisis is that all foreign investments are not created equal.
The lack of confidence in financial systems right now is not a result of the limited stake of foreign banks in the Nigerian banking sector. It is pervasive in the global financial system. Regardless of their part in the global meltdown all financial institutions are viewed through the lens of the global recession. Only time will heal these wounds.
Ever wondered why Nigeria always seem to attract oppourtunistic capital?
