Bardonomics

Image: YP In another blow to Wall Street’s reputation with the public, it was recently uncovered that Wells Fargo employees had created over two million fake accounts for customers in an attempt to meet ambitious sales targets. The bank is to pay USD 185 million in fines and 5,300 employees have been fired.  Wells Fargo CEO John Stumpf was hauled before incensed lawmakers on the Senate and House banking committees late last month to testify on the matter. He has agreed to forfeit USD 41 million in pay and to end the banks controversial sales incentive program that purportedly led to the illegal behavior. Lawmakers lambasted the banks activities as akin to theft, and condemned what they saw as a weak reaction from Stumpf in handling the situation. Stumpf insisted at the hearings that the problem was not with the company culture, but rather with a set of dishonest employees. However, with 5,300 employees involved in the scandal, it is difficult to claim that there was n...

It would be redundant to comment on the shock dealt to financial markets around the world by the Brexit. No one was expecting it. And despite the best efforts of “Remain” campaigners—some are desperately hoping for another referendum—the hands of time are unlikely to run backward; Britain will be leaving the EU for good.   Article 50, the EU’s exit clause, requires that a country formally leave the EU within two years of signaling its intention to do so. Instead of performing an autopsy on the referendum, the focus must shift toward negotiating an exit that minimizes the harm done to the UK and to the EU.  The ramifications of Brexit extend far beyond trade relations—most notably to immigration policy and regulatory measures. These topics, and others, require lengthy articles to themselves, so I will focus only on the potential trade implications of Britain’s departure.  In leaving the EU, Britain is withdrawing from the group’s unified market. Membe...

Image: YP Markets pervade our society. For transportation we have Uber, for living space Airbnb, and for tickets Stubhub. Even the right to pollute is for sale, at 13 Euros per metric ton of carbon dioxide on the European emissions market. Michael Sandel, the renowned Harvard University professor, complains, “We have drifted from having a market economy to being a market society.” There are some who laud this expansion of market values. Libertarians believe markets promote individual freedom by allowing parties to engage in consensual and mutually beneficial agreements. The libertarian philosophy is that, as long as coercion is not involved, a trade of any sort will only occur if both parties stand to gain. Thus, any such trade should be permitted. An exception is made only for instances in which a deal beneficial to the transacting parties may harm a third party. For example, if my neighbors rented out their apartment to a nightclub, the ensuing late night noise wou...

Image: FMSC In discussions about development, foreign aid is heralded as a remedy for the severe poverty facing hundreds of millions around the world. International organizations often assert that aid is a tested path to success, and that the main problem with foreign aid is that there is not enough of it going around to alleviate the world’s problems.  Every humanitarian crisis leads to more urgent calls for aid money from organizations such as the United Nations and the World Bank. There are indeed some resounding success stories.  The Economist  recently noted that foreign aid transformed Taiwan and South Korea into prosperous nations, and that it essentially eliminated smallpox and polio.   Foreign aid is conceived with lofty and noble ideals. The defined objective of aid is to alleviate poverty and to put underdeveloped nations on a path to prosperity. There is consensus that aid should not be distributed with an underlying aim of advancing ...

Image: Shutterstock In 1930, famed economist and philosopher John Maynard Keynes wrote that by the time of his “grandchildren’s generation,” people in the developed world would be working no more than 15 hours a week.  Keynes predicted that rapid advances in technology would lead to high levels of productivity and efficiency. The amount of human labor required to produce necessary goods and services would thus be greatly reduced.  He envisioned a world in which, instead of being occupied with dreary work, humans would seek fulfillment through exploring the arts and pursuing creative endeavors. Keynes was optimistic about the future, but the proposition of advanced technology also worried him.  Keynes’ concern was that increasingly productive technology would lead to what he called “technological unemployment.” With machines allowing fewer humans to produce more, it followed that overall employment would drop.  Such concerns have resonated for c...

Image: Phil Broad On May 19, EgyptAir Flight 804 crashed into the Mediterranean Sea, killing all 66 on board. The past couple of years have seen a spate of fatal aviation incidents, and questions have been raised about the safety of air travel.   There is no doubting that any great fear about air travel is thoroughly unwarranted. Statistically, aviation is safer today than at any previous time in its history. It is also often noted that flying by plane is the safest form of transportation. The chances of dying in a plane crash are calculated to be around 1 in 11 million; you are orders of magnitude more likely to be involved in a fatal car or traffic accident.  At the same time, calls for greater aviation security and safety measures abound. Governments and corporations around the world have invested large sums of money into tightening security at airports and protecting planes against all manner of threats, from terrorism to mechanical failure to pilot error. ...

Image: kennysarmy Around this time every year, one begins to notice a marked shift in the demeanor of students everywhere. Following a grueling period of studying and exams, we emerge from our rooms, battle-scarred yet relieved. Summer, once hopelessly distant, is now nearly within our grasp.   Some of what we have learnt and, by now, no doubt forgotten, may seem just a bit impractical. It is true that outside very specific career paths, it is supremely unlikely many of us will have to identify the production quantity at which a natural monopoly achieves allocative efficiency. (It’s where price is equal to marginal cost, for anyone wondering!)  Why, then, do we work so hard to learn material we may never use again? There is, of course, a deep satisfaction that comes with learning. Yet apart from that, there is also a fundamental economic concept at play.   Whether consciously or not, all of us taking APs, IBs, DSEs, or another one of the alphabet soup of...