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Yearly Archives: 2015

People, not a Machine

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You have a goal – lose weight, turn your life around, climb Mt Everest – and you want to be sure to stick with it. What’s the best way to get you to make your goal? According to stickK.com a pledge to a charity or a friend if you fail to achieve it is a powerful motivator. That’s what you do at this site and their results are amazing.

The reason? Fear of loss motivates far more than a possibility of gaining.

It’s not exactly rational, but it’s human behavior. Understanding behavior and what drives people to do what they do is called “Behavioral Economics”. It differs from classic economics in that it never presumes people are always rational and always seeking to maximize profit. We have other things that drive us personally and socially – happiness, fear, morality, and shame among them.

And an understanding of behavioral economics is just what’s often missing in business and public policy.

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Post-Capitalist, Pre-(Something?)

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Are you ready for a Post Capitalist world? Paul Mason, an economist and columnist for the Guardian, has outlined what that might mean in his book Postcapitalism: A Guide to Our Future. The premise of this provocative subject is simply that information technology has a tendency to commoditize everything in our lives and ultimately push the value to zero, rendering concepts of money and markets as we understand them today utterly useless.

No one actually lives in a post-anything world, so the question becomes less about capitalism and more about what might come afterward. Financial writers, far from dismissal of the potential downfall of their trade, are actually quite excited by the concept of a new world where the old rules do not apply. The traditional left, steeped in a quasi-Marxist dialectic, are far more unsure.

That’s what makes this concept exciting.

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Show’s Over?

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If you have watched the Republican debate, there’s a good chance you’ve already asked yourself, “Is this any way to elect the leader a democratic republic, the strongest nation in the history of the world?” And yes, technically the system we have is a way to do it, even if it isn’t a very good one. Billions will be spent, a lot of frothing and excitement will be expended, and in the end we’ll have a result.

But is it possible that the result is already, more or less, in the can?

Moody’s Analytics, better known as a consulting company and research arm for large financial institutions, has made their predictions for every state in every election since 1980. They’ve gotten it right 406 out of 459 times (DC counts!) for a success rate of 88%, and they do it with their own methodology – by looking at economic conditions. This year, the call the Democrat in a squeaker.

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Demographics is Still Destiny

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Just about 12 hours after this post goes up, the world will see the ADP Employment Report for July. We can expect it to show a net gain of about 240k jobs, about the same as the 237k gained in June. It’s a decent number, higher than the 220k or so averaged last year at this time, but what does it really mean?

Context is the key to understanding the data that drives our world, so let’s get going with some solid background on what these figures mean. It’s time for a few charts and graphs once again to demonstrate just how strong things really are going into the magic period where Baby Boomers start to retire in droves – sometime after 2017.

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Growth is … ?

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“Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”
– Kenneth Boulding

The figure for growth in Gross Domestic Product (GDP) growth for the second quarter came in, and it wasn’t bad – 2.3%, and the revision to the first quarter was a positive if sluggish 0.6%. Like so many economic figures it’s not great but it’s also not bad. We’re still muddling through this year hoping to make it through to better times ahead.

But will there be better times? The Federal Reserve accidentally posted on its website, briefly, some internal estimates from their own economists that show that where 2015 and 2016 won’t be too bad, with growth in the 2.3-2.4% range, it may taper off after that. But can we expect better? Should we, for that matter, expect more growth from the economy?

Or is one of the big changes in this new economy a much lower growth rate than we are used to?

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