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Talk at Cato conference on the future of US growth

Excerpts from my Editorial Commentary in Barron’s November 22, 2014

“In Capital in the Twenty-First Century, Thomas Piketty announced an audacious thesis that sets his opus apart … Capitalism inevitably increases inequality, Piketty claims, because the return on capital grows faster than the economy.

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Amar Bhidé and Pankaj Ghemawat

Quartz  October 9, 2014

Clay Christensen’s theories are great for entrepreneurs, but not executives

http://blogs.law.harvard.edu/corpgov/2014/08/26/the-hidden-costs-and-underpinnings-of-debt-market-liquidity/#more-65323

Market Liquidity

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Tuesday August 26, 2014 at 9:08 am

Editor’s Note: The following post comes to us from Amar Bhidé, Thomas Schmidheiny Professor at The Fletcher School.

Even as rabble rousers rail against financiers, the powers that be prize the breadth and liquidity of financial markets. Flash traders are investigated for unsettling stock markets and violators of securities laws receive jail sentences on par with violent criminals. The Federal Reserve has spent trillions with the avowed aim of pumping up the prices of traded securities, while expressing little more than the pious hope that this largesse might spill over into old-fashioned, illiquid loans.

In my article, The Hidden Costs and Underpinnings of Debt Market Liquidity, I offer a skeptical view of pro-liquidity policies. A good financial system may be vital for a thriving economy, but what warrants favoring liquid over illiquid claims? Yes, the United States—the world’s leading economic power since 1914—has exceptionally broad and liquid financial markets. But, “industry led and finance followed.” The transformation of the US from agrarian society to industrial powerhouse occurred before the smoothly functioning stock and bond markets became indispensable stars of American capitalism. The NYSE even shut down for nearly six months in 1914 without paralyzing the economy. Britain, the birthplace of the Industrial Revolution, actually lost its economic leadership, even as financial markets flourished in the City of London. Meanwhile, in spite of defeats in two World Wars, Germany’s economy and industry surpassed Britain’s, powered by businesses with illiquid stocks and banks making illiquid loans.

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For geeks (and bitcoin fans):

I got a referee report on my liquidity paper earlier this week that said (among other nasty things)

“The definition of liquidity is so vague as to be completely useless. In a related vein, the paper seems to use tradability and liquidity as synonyms which is either a grave mistake or an expositional shortcoming.”

My definition was

“I define a financial claim to be liquid if: 1) there are no legal or practical restrictions on who the claim can be sold to, on when (during normal trading periods) sales can be made, or on the amounts that can be sold (partial sales allowed); and 2) during normal trading times and conditions, market makers quote firm bid and asked prices that are not contingent on any further investigation of the claims or of the identity of the seller or buyer of the claim.”

This was slightly sloppy. I should have said “I define the market for a financial claim” etc.

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Finally good to go on medical innovation project today! 

Welcome Katherine and Julie who start their “orientation” at HBS this morning (not that Julie needs any orientation to HBS). 

It took 15 months of noodling, talking, lobbying (with all kinds of people) and a *really* generous friend who was willing to take a chance on a one page proposal. But if we are lucky and it doesn’t sputter out, this should keep us occupied for the next eight years…

“certified organic by COCF”, country of origin China (whose residents smuggle in baby-formula milk powder when they return from abroad)

And Ive been eating pounds and pounds of this stuff (what’s COCF anyhow?)

 

http://www.nuts.com/snacks/pumpkinseeds/organic.html

If you teach in any 21st century university you have surely encountered the dreaded “course platform”, supposedly a productivity tool for faculty and students. The people who built them have learned nothing from the Apple/Design Thinking that puts simplicity and ease of use first. 

Course platforms are horribly overfeatured, with inscrutable, impossible to navigate interfaces that seem designed by troglodytes trained at Microsoft — before Microsoft saw the light (kind of)

Worse yet, each year the platforms are “improved”, which is to say more features are added and the user interfaces revamped, rendering everything you learned last year useless.

So you have to go off whimpering for more help, more hand-holding, more training.. which may be the point of the exercise: lifelong dependency masquerading as lifelong learning.

It makes you feel like Buckley wanting to “stand athwart history, yelling Stop”