On Monday, the Business Roundtable announced that nearly 200 of its leaders had signed onto a statement that appears to reverse 30 years of evolution in corporate governance. No longer is the purpose of corporations “principally to serve their shareholders,” as the BRT has held since 1997. Now the purpose is to serve both investors … Continue reading Shareholder Value Uber Alles
There are three stories of money, broadly speaking. The barter story is the most familiar. Long ago, traders found it’d be easier to conduct exchange using a finely divisible and intrinsically valuable medium, which could free them of the inconveniences of barter. Precious metals fit the bill. Money arises from exchange. A less familiar story … Continue reading Libra, MMT, and the Nature of Money
The Fed released a study this week that presents an important finding: companies that go public tend to invest more than similarly situated private companies. Firms listed on the stock exchange invest nearly 50 percentage points more than privately held ones, relative to tangible assets. Selling shares — or in the Fed’s words, “the financing of … Continue reading Asking The Right Questions On Short-Termism
Any one-sentence definition of capitalism will be incomplete, but as these things go, Schumpeter has a good one: “Capitalism is that form of private property economy in which innovations are carried out by means of borrowed money.” The emphasis is mine, but Schumpeter makes clear that capitalism isn’t capitalism without credit. It’s one of the … Continue reading Too Much Finance
One of the best-explored economic phenomena is the tendency of retail prices to end in $0.99. This oddity, the subject of ample academic and lay interest, stems largely from consumers’ left-digit bias: we notice the dollar amount and ignore the cents. It’s the sort of fun behavioral quirk that keeps Freakonomics and Radiolab in business. … Continue reading The Price of Monopsony
We're in a season of big ambitious lefty policy proposals. Earlier this year everyone was arguing about the merits and feasibility of a jobs guarantee. Now we've moved on to the social wealth fund. A social (or sovereign) wealth fund is the "next big idea" for tackling inequality, reports Rachel Cohen at the Intercept, who … Continue reading Would A Social Wealth Fund Help Police Corporate Baddies?
After many months of procrastination and delay, I've finally launched my blog. There has to be a first post, so this is the first post. The idea here is to have something like a public notebook, a ledger of bits and bobs that catch my interest. I'd like a place where I can release ideas … Continue reading Hello