Economics, Business & Mankind, one perspective (3)
Florence Arthaud over the oceans.
We realize that all the large industrial groups have started small at one time and success brought them the big size they enjoyed later. But not all the start-ups became an industrial behemoth, and with this uncertainty some of the excitement around the word start-up appears a bit over-confident. Of course, young ladies and guys please us when they believe in their idea, are confident in their brain and convincing many seasoned businessmen, settle in a garage or a barn with a small bunch of chums to launch a business based on a clearly identified need for a large panel of potential customers around. Hopefully their banker sees quickly a nice increase in their bank account and without much time they move into a more functional housing. We know the Gates and co. story or the Dell computers as well as Branson or Zuckenberg and Buffet or Ford, Disney, Jobs, Carnegie, Franklin, Rockefeller, Winfrey or Page successes in a lifetime, the sign of “genius”. In the Bay, we prefer see the yachts of Allen, an early associate of Gates, rather than those of Abramovitch, said to be a former Siberia governor landing in London with suitcases filled with spoliated Russian citizen money. And to say the less, we also appreciate the statements of Ms Warren about Mr Z. We got to learn that all stories are not fairy tales such as The Sleeping Beauty in the Woods with Zellandine or Genevieve of Brabant. Derailments happen in business.
We saw how Mr Obama, a sophisticated gentleman, brought back on rails the largest U.S. industries pretty much previously derailed by financial legerdemain (1998-2008) under G.W. Bush with a record Dow Jones Index growth (2008-2016). The following President generated also a DJIA growth but with a tax and public debt program which may put the whole world under very serious threats. While we bow to such spectacular results we recognized that for the General de Gaulle France was not to be governed to please the Stock Exchange. Reality and perception are different, and perception is very often prevailing in brains of our business customers.
Every year since 1969, in the environment of the Nobel Prizes, a prize is awarded to the best economist, “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”. First, the choices have often been contested, possibly because economy and politics are tied together, second, contesting may be no more violent than for the choices in literature or medicine or science or Peace, third, the candidates are many every year and it is in the nature of a run or an examination to build frustration. Within the list of the winners for the past 50 years, 12 Chicago University economists, 10 MIT, 7 Harvard, 5 Princeton, 4 Columbia, 3 Stanford, 70 belong to American universities and 19 come from non-American universities. Some American theories have proved to be inexact after their prize and relate to later disastrous financial practices sponsoring. This prize has been created for the 300th anniversary of the Swedish central bank, Nobel is associated to serious human science while economist works are often related to ? pseudo-science ?, the Swedish Academy of science has requested the suppression of this prize and the Nobel family has refused to have its name associated to it. Alternate prizes have been created; the Tufts university launched the Leontief prize well considered by heterodox economists and the "Not the Nobel Prize" has been created in Europe. In 50 years, the words “inequality and crisis” have never been used to justify the Swedish Bank award, “poverty and climate” only once, the number of women: two. Average age of prize winners: 69 years. Basically, it looks that to win, you are better be an old male from mainstream.
Rationales for the award have been: developed and applied dynamic models for the analysis of economic processes, static and dynamic economic theory and raising the level of analysis in economic science, new and deepened insight into the economic and social structure and process of development, general economic equilibrium theory and welfare theory, input-output method and for its application to important economic problems, theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena, the theory of optimum allocation of resources, achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilisation policy, the theory of international trade and international capital movements, the decision-making process within economic organizations, particular consideration of the problems of developing countries, econometric models and the application to the analysis of economic fluctuations and economic policies, financial markets and their relations to expenditure decisions, employment, production and prices, industrial structures, functioning of markets and causes and effects of public regulation, economic theory and rigorous reformulation of the theory of general equilibrium, development of systems of national accounts and hence greatly improved the basis for empirical economic analysis, pioneering analyses of saving and of financial markets, contractual and constitutional bases for the theory of economic and political decision-making, the theory of economic growth, the theory of markets and efficient utilization of resources, the probability theory foundations of econometrics and his analyses of simultaneous economic structures, pioneering work in the theory of financial economics, significance of transaction costs and property rights for the institutional structure and functioning of the economy, domain of microeconomic analysis to a wide range of human behaviour and interaction, including non-market behaviour, economic theory and quantitative methods in order to explain economic and institutional change, analysis of equilibria in the theory of non-cooperative games, hypothesis of rational expectations and macroeconomic analysis and understanding of economic policy, economic theory of incentives under asymmetric information, new method to determine the value of derivatives, contributions to welfare economics, monetary and fiscal policy under different exchange rate regimes and analysis of optimum currency areas, development of theory and methods for analyzing selective samples, development of theory and methods for analyzing discrete choice, analyses of markets with asymmetric information, insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty, laboratory experiments as a tool in empirical economic analysis especially in the study of alternative market mechanisms, analyzing economic time series with time-varying volatility, methods of analyzing economic time series with common trends (cointegration), contributions to dynamic macroeconomics the time consistency of economic policy and the driving forces behind business cycles, understanding of conflict and cooperation through game-theory analysis, analysis of intertemporal tradeoffs in macroeconomic policy, laid the foundations of mechanism design theory, analysis of trade patterns and location of economic activity, analysis of economic governance, especially the commons, analysis of economic governance, especially the boundaries of the firm, analysis of markets with search frictions, empirical research on cause and effect in the macroeconomy, theory of stable allocations and the practice of market design, empirical analysis of asset prices, analysis of market power and regulation, analysis of consumption, poverty, and welfare, contributions to contract theory, contributions to behavioural economics, integrating climate change into long-run macroeconomic analysis, integrating technological innovations into long-run macroeconomic analysis, experimental approach to alleviating global poverty.
U.S. Farmers have a low income like many European counterparts, all are exposed to the prices of commodities determined by the Chicago Mercantile Exchange (CME), a place further remote for Europeans than Washington for many Americans. These U.S. farmers voted in majority for Mr Trump, elected President at the 2016 US Presidential elections by 62,984,828 votes against 65,853,514 votes collected by his Democrat opponent and at 76 % these farmers approve Mr Trump’s handling of the job. In Europe, farmers with an “industrial type of farms” do better than the small size farmers who are performing an admirable work of gardening our countryside. All of them are confronting the chemical pesticides and fertilizers and warming climate and pollution effects. We have already seen that the US mass media machine and technology have been a tsunami wave “American way of life” over European countries up to McDonald’s or Coca cola’s production of massive obesity. Some response to this invasion happened with the organic development and local sources of supply since bringing to Europe by airplanes flowers from Ecuador or avocados from Peru or South Africa or corn from Middle West. If eating American meat is like going on a trip to the drug store we may hesitate – “most of the meat Americans eat is banned in other industrialized countries”. SF “100% Natural” products contain unnatural and even prohibited substances, chicken products positive for the antibiotic chloramphenical and amoxicillin, products positive for residues of steroids, hormones, anti-inflammatory drugs and even ketamine with hallucinogenic effects. The New York Times reported most chicken contained Tylenol, one-third contained the antihistamine Benadryl, the FDA caught hatcheries injecting antibiotics into chicken eggs, injecting eggs with the dangerous human antibiotic gentamicin. The NRDC reported the presence of potentially dangerous herbs fo-ti, lobelia, kava kava and black cohosh in the U.S. food supply as well as strong the antihistamine hydroxyzine, ingredients from suppliers in China. (https://www.salon.com/2017/07/08/why-eating-meat-in-america-is-like-going-on-a-trip-to-the-drug-store_partner_partner/). Life expectancy has been longer but number of new diseases, illnesses and handicaps have been generated by the atmosphere microparticles, asbestos, etc … derived from technologies. Energy generation is polluting, air and river warming, nuclear waste and exhaust gas are polluting, all land, sea and air transportation are polluting, heavy industries like steel, refineries, chemical factories pollute, the seventh continent of a third of the size of the United States is completely uninhabited consists of an accumulation of plastic waste in the oceans.
Mr Allègre, a “respected scientist” in geochemicals, attacked in 2012 the ecologists with The climate imposture or the false ecology but indeed he was an imposter writing that the sun acting on the oceans would dissipate the pollution of the world. Mr Allegre behaved like many other supposedly scientists with conflict of interest because of income coming from association to industrial companies. Mr Trump retired the U.S.A from the 2015 Paris Agreement on ecology but the U.S.A. are the second most polluting countries ranked: China, USA, India, Russia, Japan, Germany, South Korea, Iran, Canada, S. Arabia, Brazil, Mexico, Indonesia, S. Africa, U. Kingdom, Australia, Italy, Turkey, France, Poland.
Modern life conflicts with ecology. Under the apartheid policy, an affluent white district was “ruined” when a black family was arriving in the street opening the door to a second one and soon to a majority. People's dream is often to move from a multi-story building apartment to an independent small house, their modest income forces them to choose an address quite away from the town-centre, next their work implies a loss of time and money plus associated pollution with their cars running long distance to shopping and work places. Japan is an exceptional model for public transportation Shinkansen-train-subway-bus which pollutes less with a unique system to deliver luggage door-to-door. In L.A. car drivers ride for hours on the metropole highways. Oppositely, we see in Europe thousands of trucks moving along the highways while all reason should put their containers on trains, truckers love their independence!
Mr Trump closes the door to immigrants and all the American people came from other continents or have been imported by force then killed the natives. Duties on products from foreign countries, subsidies to U.S-made products for exports, low tax on U.S. corporations leading them to design a fake accountancy to pay no tax to foreign states to declare income in no-tax countries and U.S. headquarter territory, a steal. By a public deficit he adds debt to the national public debt, the U.S. dollar having no base since Mr Nixon 1971 decision to allow the dollar to float against foreign currencies and ending the convertibility of the dollar into gold. All this means isolationism from the world at the time of global market, global vision, global internet, global information, global warming and global pollution; we have seen before that America is the present richest market but soon smaller in perspective than each European Union and China. The World Trade Organization (WTO) may have been managed without creativity these past years but it presents itself as the only global international organization dealing with the rules of trade between nations. The WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments with the goal of ensuring that trade flows as smoothly, predictably and freely as possible. Mr President must be joking or paying too much attention to his personal business of real estate speculation and casino betting and supporters in the gun and ammunition business. His leading Democrat competitor is presenting an American version of wealth tax partially designed by French Berkeley economists Saez and Zucman’s in The Triumph of Injustice: no tax up to $ 50 million, 2 % above and 3 % above $ 1 billion wealth.
Strategists at Bank of America Merrill Lynch have noticed that more than 70% of Initial Public Offering have been made by companies with negative Net result or Ebitda. Low interest rates, low growth, century changes in technology led investors to innovative businesses without paying attention to rentability. Uber has lost more than 30%, Lyft lost 45%, SmileDirectClub lost 27% on the first day, the same with Peloton, WeWork, Endeavor. Such priority to rentability could call for a return of some inflation vs deflation.