Monday, June 9, 2014

A guide to the top 1% after college

This article is quite fun to read
"The obvious implication is that you must find a job where the distinction between capital and labor is blurry. A job where you can take a slice off the top by getting paid as if you owned a piece of action even though you don't. Because without some capital working on your behalf, no amount of even the hardest and most skillful labor will get you anywhere near the top. (How many doctors or engineers join the country club these days? Virtually none.)
Let's assume that you won't settle for mere membership in the top 1.0% but have your sights set on the top 0.1% with a corresponding annual income of roughly $4 million. Piketty's analysis of long-run returns (4% to 5%) suggests that this would require you to have roughly $100 million of capital working on your behalf. Although this seems daunting -- it's what the average American makes in 2,000 years -- fear not, for there are a few places where this type of money can be found:
Listed stocks: The average Fortune 500 company has a market value of $28 billion (280 times more than you need) and its real owners -- the shareholders -- are virtually powerless to stop senior management from taking 3.0% or more off the top. So even if the company's performance is lackluster, and the pot is split between you and four or five other top guys, there's plenty to go around. So while the corporate ladder can be long and greasy, it's worth the climb. I'd suggest you steer clear of smaller companies as they're just as hard to run as the bigger ones but don't hold enough capital -- the average Russell 3000 company has a market value of only $1.4 billion -- to be worth your while.
...[ Read the link for more]

Friday, June 6, 2014

Job creation remains steady, 217k jobs added in May

Overall, this is a report that suggests the jobs landscape is … holding steady. At least after one read-through, there’s nothing that stands out as either great or horrible. The economy continues to plod along steadily.
All told, over the last 12 months, the U.S. economy has added over 2.38 million jobs overall and 2.36 million in the private sector. What’s more, May was the 51st consecutive month in which we’ve seen private-sector job growth. The year isn’t quite half over, but 2014 is currently on track to be the best year for U.S. job creation since 1999.

Wednesday, June 4, 2014

All the world's most powerful (mostly) men in one place

This article is written with a humorous tone, but the matter is pretty serious: the Bilderberg Conference is an annual meeting of effectively the most powerful people in business and politics across the globe. It's totally off the record, but the list of who attends and their agenda is published every year preceding.

What do you think? Is it okay that our government officials attend these secretive meetings?

WATCH: Elizabeth Warren And Thomas Piketty Discuss Inequality

I'm not sure if we're done with blogging, but if you have an hour to spare, you should watch this.

Tuesday, June 3, 2014

Big Banks, Big Fines

The US Justice Department recently announced they are seeking a $10BN fine for BNP Paribas.

Needless to say, they are a bit pissed.

What do you think, too much or deserved? 

Drug Companies Making Drugs, or Money

Here is an article from the NY Times:

This relates to a discussion we had in class on at least one occasion regarding our health system and the operations and goals of drug companies. The article includes interesting figures as well.

Seattle votes for $15 minimum wage

Wages would begin to rise next year, ultimately reaching $15 from Washington state's minimum of $9.32 over three to seven years, depending on the business.
One councillor said the vote "sends a message heard around the world".
US minimum wage is $7.25, although 38 states have set higher levels.
The states of California, Connecticut and Maryland have recently passed laws increasing their respective wages to $10 or more in coming years.
Nationally, US President Barack Obama has called for a $10.10 federally-mandated minimum wage, which would require action by the divided US Congress.
Under the plan, firms with more than 500 employees nationally will be given at least three years to phase in the increase, those who provide health insurance subsidies would get four years and smaller businesses would be given seven years.
Click here to read more and to see a map of the U.S. with minimum pay spreads across different states. 

Monday, June 2, 2014

The New Skyscraper Curse

I found this fascinating article on the Ludwig von Mises Institute's Daily Blog section. The interview looks into Andrew Lawrence's Skyscraper Index and the economist argues that the construction of tall skyscrapers will most likely correlate with an asset bubble. It is important to note that Andrew Lawrence argues that there is a correlation (that does not mean causation) between construction of tall skyscrapers and economic busts.

Here is the link to the article:

Here is a key quote from the section:

The confluence of regional skyscraper signals in Europe, North America, and China along with a skyscraper alert for a world economic crisis clearly suggests the possibility of a looming world economic crisis. This pattern would be very much like previous episodes of skyscraper records including the Panic of 1907, the Great Depression, the stagflation of the 1970s, the dot-com bubble, and the housing bubble. In line with these skyscraper-based predictions, a fundamental case can be built around the notion of a looming world economic crisis. Most of the world’s major economies are facing pressing economic difficulties, including the U.S., Europe, Japan, and China. Additionally, central banks have been engaged in a world currency war on a scale that has never been experienced in human history.

Families Struggling to Afford Food in OECD Countries

Residents in OECD Countries Report Struggling to Afford Food

The OECD has many wealthy countries among its ranks, but the recent
global recession has been difficult on the residents of those countries.
Individuals with young children were particularly vulnerable, with more
than one in five such individuals struggling to buy food.

An interesting finding is that the U.S., despite being a geopolitical
superpower and the largest world economy, performs worse than many
other OECD countries in terms of its residents being able to afford

Families Struggling to Afford Food in OECD Countries

Sunday, June 1, 2014

Private Equity

Since everyone's trying to steal my Chief Blogger thunder, here is another article:

This article examines  the risky, but potentially extremely lucrative, practice of investing in private equity and mutual funds.

Amazon and Book Publishers

I know it's not my week to post, but I found this article interesting. Amazon has been coming under pressure for their practices and treatment of book publishers. The NYT has written an article on what publishers can do in response to Amazon. They present the idea of a monopsony, which is an interesting idea to contrast with a monopoly.

Google to close Motorola smartphone factory in Texas

Google's Motorola Mobility has said it will close its Fort Worth, Texas factory after its Moto X smartphone failed to appeal to consumers.
The facility - which is the only smartphone factory in the US - opened in May of last year.
At its peak, the factory employed 3,800 people, although now only 700 workers remain.
In January, Google said it was selling the Motorola Mobility unit to Lenovo for $3bn (£1.8bn; 2.2bn euros).
That deal is expected to close later this year.
When the Texas plant opened last year, Motorola said it was aiming to challenge the conventional wisdom that manufacturing advanced electronics products like smartphones in the US would be too expensive.
However, poor sales of the Moto X smartphone in the US - which initially retailed for $600 before the price was dropped to $399 - made it difficult to justify the higher costs of the plant.
According to research firm Strategy Analytics, the company sold 900,000 Moto X smartphones worldwide in the first three months of 2014.
Motorola says that the Moto X smartphone will still continue to be manufactured at plants in China and Brazil.
Was this the best course of action for Google?

US economy contracted in first quarter of 2014

Some grim stats on the U.S. economic growth slowdown in a short BBC article.
The US economy shifted into reverse in the first three months of 2014 shrinking by an annualised rate of 1%, official estimates have shown.
It is the worst economic performance since the first quarter of 2011.
It is also a big fall on the 2.6% rise in economic output in the final quarter of last year.
The US Commerce Department's first reading of gross domestic product (GDP) showed the economy grew at an annualised rate of just 0.1%.
The fall in output was blamed on an unusually cold and disruptive winter - one of the coldest in the US for 20 years - and a plunge in business investment.
Economists estimate the weather could have cost up to 1.5 percentage points of GDP.
However, the Commerce's Department's report did not estimate the effect of the winter weather.
The fall was also twice as big as economists expected.
Most Wall Street analysts had forecast the economy to contract by around 0.5%.
But the Commerce Department said there was already evidence that the economy was rebounding, with data ranging from employment to manufacturing activity already pointing to a sharp acceleration in economic activity in the second quarter.
Tumbling exports, while not as severe as initially thought, combined with stronger imports in the first quarter resulted in a larger than expected trade deficit which shaved 0.95 percentage points off US economic output.
Consumer spending, which accounts for more than two-thirds of US economic activity, increased by 3.1%, which was revised up slightly from 3% in the first estimate.
Business spending on non-residential structures, such as gas drilling, fell by 7.5%. It had previously been reported to have increased by 0.2% .
The report showed corporate pre-tax profits also plunged 13.7% in the first quarter, the biggest drop since the fourth quarter of 2008.
The White House said the GDP revision was subject to a number of notable influences, including the severe winter weather, which temporarily lowered growth.
It added: "The President will do everything he can either by acting through executive action or by working with Congress to push for steps that would raise growth and accelerate job creation, including fully paid-for investments in infrastructure, education and research, a reinstatement of extended unemployment insurance benefits, and an increase in the minimum wage."

This article is about transparency and SEC involvement in the oil industry. 

This quote on regulation comes straight from the mouth of Shell's CFO, “No one benefits from an outcome under which multinational resource companies are required to file multiple reports in multiple jurisdictions providing substantially the same information in different forms,”

What are everyone's thoughts on the current regulatory state in the oil industry? Does it need reform? Is the complaint of Shell's CFO a legitimate one?

Friday, May 30, 2014

S&P Closes Record High

Sorry about difficulty with the last financial times post. This article focuses on the U.S. bond market. It is worth noting that the current trends in the bond market mirror those that preceded the crash. Here is the article in totality:

Friday 21.00 BST. US stocks ended a gravity-defying week at record highs, even as Treasury bond yields held close to levels not seen for nearly a year – although activity was relatively subdued ahead of a series of key risk events next week.
“As was the case before the crash, US equity markets are providing signals about the economy that seem to conflict with those coming out of the other most liquid market in the world, the US bond market,” said Lena Komileva at G+ Economics.




“Similarly, traditional indicators of uncertainty and market volatility have continued to reach new lows. The result is that too many participants are starting to confuse the decline in market volatility with a decline in overall risk.”
But such concerns appeared to carry little weight on Wall Street – for now at least. The S&P 500 rose 0.2 per cent to 1,923, its fourth record close in five sessions. The US equity benchmark gained 1.2 per cent over the holiday-shortened week and 2.1 per cent for the month.
The CBOE Vix equity volatility index – often called Wall Street’s “fear gauge” – was down 1.5 per cent in late trade and hovering near its 2014 low.
Across the Atlantic, the FTSE Eurofirst 300 edged back 0.1 per cent from Thursday’s six-year closing high but recorded a weekly rise of 0.6 per cent and a monthly gain of 1.8 per cent.
In Tokyo, the Nikkei 225 slipped 0.3 per cent yesterday but rose 1.2 per cent over the week and 2.3 per cent in May as a whole – its first monthly gain this year.
The strong equity market performances came as highly rated US and German government bonds also attracted hefty buying.
The 10-year US Treasury yield – which moves inversely to its price – was up 3 basis points yesterday at 2.48 per cent, but down 6bp over the week. It touched 2.4 per cent on Thursday, the lowest since last June and some 60bp down from the start of year.
Analysts scrambled to explain the conundrum of rising equities and falling yields, which has caught many investors on the hop, given expectations for yields to rise this year as the Federal Reserve scales back its bond purchases.
US data releases have – on the surface at least – pointed to improving economic conditions in coming months, particularly in the labour market.
This week’s downward revision to US first-quarter GDP was attributed by many to sharply falling levels of inventories.
Most economists expected a strong rebound in the second quarter. Further clues on the health of the US economy may come next week with the release of manufacturing and non-farm payrolls figures.
Meanwhile, some strategists argued that the drop in yields had been exacerbated by investors caught out after they positioned for yields to rise.
Others suggested China was buying Treasuries in a move aimed at to weaken the renminbi.
An interesting theory was that bond investors had revised down their estimates of the longer-term natural, or equilibrium, interest rate – the rate consistent with full employment and stable inflation.
“Any estimate is highly uncertain, is unobservable and varies considerably over time,” said Ethan Harris, global economist at BofA-Merrill Lynch.
“Our tentative bottom-line – the real natural rate has dropped from a historic average of about 2 per cent to 1.5 per cent.”
Others said the drop in yields was encouraged by growing speculation that the European Central Bank would unveil a package of easing measures next week – including a negative deposit rate – to counter low eurozone inflation.
The German Bund yield ended the week at 1.36 per cent – up 1bp on the day but 6bp lower on the week. Peripheral eurozone sovereign debt was also in demand.
In spite of such speculation, the euro remained resilient. The single currency was up 0.2 per cent against the dollar at $1.3631 yesterday to stand barely changed on the week.
Petr Krpata, FX strategist at ING, warned that investors expecting the euro to fall on the back of a negative ECB rate could well be disappointed.
“We think such a move from the ECB is likely to cap the euro’s upside, via lower portfolio inflows and the increasing credibility of forward rate guidance, rather than actively driving it down,” he said.
“The other side of the euro/dollar equation – the dollar – has to start working to bring the cross lower. This may still take time.”
The strength of global stocks encouraged heavy selling of gold . The metal was down a further $10 yesterday at $1,244 an ounce – a drop of $48 over the week, its worst five-day performance in two months.
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UK's richest can save £18,680 a year as poorest 40% spend more than they earn | Money | The Guardian

A bit of data from the UK that supports Piketty's position over that of the FT:

The richest 20% of the population in Britain will have, on average, the spare sum of £18,680 to put into their savings this year, while the poorest 20% will spend £1,910 more than they earn, latest figures suggest.  In research published this Thursday, the Post Office
said saving was still being driven by the wealthiest people while lower
earners were suffering a debt crisis. According to the Centre for
Economics and Business Research, which undertook the analysis, this
trend has been happening for the past 12 years.The poorest 40% of
the population have spent more than they have earned over this period,
in contrast to the top 40% of earners who had money to save every year.

UK's richest can save £18,680 a year as poorest 40% spend more than they earn | Money | The Guardian

Piketty also issued a 10 page response to the FT questions about his data.  The tone is academic.  I think it shows the difference between academic inquiry and  journalistic inquiry.  You can read it on his website or also at Huffington Post here.  Note that he didn't post his response at the Huffington Post site...they copied it from his website. 

Thursday, May 29, 2014

Africa Rising

I found this article to be interesting as it touches on some frequently discussed topics in our class: the role of debt in growth and its detriments, the IMF, and economic interplay between more developed and the so-called "developing" countries:

Any thoughts?

This Businessweek Cover Is Making Econ Geeks Swoon

I know I'm not blog leader this week but I just thought this was funny.

Wednesday, May 28, 2014

Innovation in Technology:

Here is an article regarding Apple's acquisition of Beats:

This quote, I believe, is indicative of the advantages of having numerous competitors in the tech market, generating new innovation:

“We’ve got a streaming service that we believe is the first to get it right,” Mr Cook [Apple CEO] told the FT. “They had the insight that human curation was very important . . . we think they’ve done an A plus job.”
Beats was superior to rival streaming services, he added. “Some of them are no more than a random set of songs put together.”

What do you think about Apple's acquisition of Beats? Do you believe that Apple's growth into becoming a veritable tech giant is detrimental to innovation within the industry much in the mold of a monopoly?

WSJ's CEO Pay Rises Moderately

Here is a WSJ article about the rising pay for CEOs.

Here is a quote:

The Wall Street Journal's annual compensation survey found that, for all the debate around high CEO pay, the biggest rewards go to a relative handful of executives at the very top, and that their pay doesn't necessarily correlate to their company's size or results.

A great blog post on a huge retail bubble

This is a post that underscores the inefficiency that massive monetary policy intervention has created in the United States:

Around 1990, for example, real median income was $56k per household and
now, 25 years later, it’s just $51k. Main street living standards
have plunged by about 9% during the last quarter century. But what has
not dropped is the opportunity for Americans to drop shopping: square
footage per capita during the same period more than doubled, rising from 19 square feet per capita at the earlier date to 47 at present....

When the aggregate level of shopping space is looked at during the
above longer-term time frame, the aberration is even more apparent. At
the time of the S&L fiasco around 1990, there were only about 5
billion square feet of shopping space in the nation; capacity tripled during
the subsequent a quarter century. Yet this was a period when the real
incomes of the middle class were essentially dead in the water. So what
market signals could have possibly given rise to such a disconnect?

The answer is the relentless drive for yield among fixed income
investors during a period when time and again the Fed intervened in
financial markets to prevent the benchmark rate – the 10 year Treasury
note – from finding its natural economic price/yield in what was
becoming a savings parched economy. Accordingly, a massive tidal wave
called “retail operating leases” developed that quenched this thirst for
yield – helped along by accounting loopholes which allowed trillions of
these operating leases to be kept off borrower balance sheets and which
thrived on the illusion that the proliferating chains of new retail
concepts served up by the Wall Street IPO machine were “national credit
tenants.” These overnight sensations had such solid and sustainable
“business models” as to imply blue chip credit status. They had such
attractive terms (10-15 years) and interest rate spreads over benchmark
rates that retail occupancy costs were dirt cheap relative to the true
long-run economics and risks.

Testosterone Pit - Home - Why Retail Results In America Are Not Better Than Expected, But Worse Than Ever! 

Drizzle alone will not provide a path to prosperity : Climate and Growth

One of my favorite columnists from the Financial Times, John Kay, wrote a piece summarizing some of the theories about economic development in hot climates.  Sanjay mentioned one of these theories last night.  From the article:

Jeffrey Sachs has
emphasised disease: hot, humid climates may not be congenial
environments for humans but they are congenial to many unpleasant
parasites. Malaria
alone is a major obstacle to economic development. Another geographic
explanation comes from Jared Diamond. The crops and animals on which
modern agriculture is based – such as corn, pigs and sheep – thrive in
temperate zones. In an ingenious twist, Prof Diamond argues that this is
why Eurasia – a horizontally positioned land mass where agricultural
practices could be transmitted to similar climates to the east and west –
developed more readily than America, a vertically positioned landmass
in which agricultural practice could not easily be transmitted from
north to south....
In their 2001 paper, The Colonial Origins of Comparative Development,
Daron Acemoglu, Simon Johnson and James Robinson of MIT point out that
you would have seen a very different relationship between temperature
and per capita income if you had looked at the world in 1500, when the
Mogul and Aztec civilisations were at their height. But then western
Europe developed the political, social and economic institutions that
make modern economic prosperity possible – and in subsequent centuries
transmitted these around the world......But in India and the Congo Europeans had no interest in permanent
settlement: the institutions they installed were those of exploitation,
and a legacy of exploitation continued to afflict these countries even
after the colonisers departed. It is not an accident that Montesquieu
was the first person (in 1748) to observe the correlation between
climate and prosperity: not only was he from a colonial power, but he
was writing at precisely the time that imperialism was creating the
phenomenon he described.


Drizzle alone will not provide a path to prosperity -

Tuesday, May 27, 2014

Piketty’s Arguments Still Hold Up, After Taxes

CEOs paid more than ever: Median pay for bosses rise above $10million for the first time after fourth consecutive increase

Health Sectors, Unite?

Here's an article about the continued teamwork of Health Insurers and Hospitals with health care.

What do you think about the team up of the two different sectors? Are there any obstacles that may appear in this teamwork in the long run? How beneficial is it to the people buying health insurance?

Piketty and the FT: shots fired

Piketty and others (including the Economist) have come out defending his work from the barrage of criticism from FT. Things may get ugly.

Monday, May 26, 2014

A new rating system for universities and colleges

"The rating system is in fact a radical new effortby the federal government to hold America’s 7,000 colleges and universities accountable by injecting the executive branch into the business of helping prospective students weigh collegiate pros and cons. For years that task has been dominated by private companies like Barron’s and U.S. News & World Report.

Mr. Obama and his aides say colleges and universities that receive a total of $150 billion each year in federal loans and grants must prove they are worth it. The problem is acute, they insist: At too many schools, tuition is going up, graduation rates are going down, and students are leaving with enormous debt and little hope of high-paying jobs.

White House officials said the government rating system would provide new incentives for colleges to hold down costs and broaden access to a more diverse student population — and provide an alternative to the private rankings, where colleges often battle for spots by erecting lavish new athletic centers and libraries and by becoming more selective in whom they admit. The officials said Mr. Obama’s system would not rank schools numerically but would give them grades or ratings like “excellent,” “good,” “fair” or “poor.”"

Does this new ranking system by the government, according to this article, sound like a good idea to you? There are many flaws in the ranking done by the private companies. I don't think building a building a lavish structure should push the rankings by a considerable amount.  The presidents of various colleges do not like this idea, however Obama is keeping a very strong opinion on the issue.

Blogs of the Future

Blogging seems to be the epitome of spreading information across the world. This article suggests that it can become like another Twitter. The creator of Blogger, Mr. Williams, seems to be working on another form of blogging called Medium.

Since we have been using blogs to record our thoughts about current events, I wanted to know what everyone thinks about blogging. Has it helped to be able to use them? What are the disadvantages of using it? Advantages?

Sunday, May 25, 2014

Is Piketty All Wrong? -

A writer for the Financial Times took a hard look at some of Piketty's wealth data and found some problems.  His conclusion is that Piketty is wrong.  Others, including Paul Krugman, call for more explanation by Piketty of why he made the data manipulation choices that he made.  At the same time, they doubt that Piketty's main conclusions have been refuted.  Its all a big controversial mess in academia.  Read Krugman's take here:

Is Piketty All Wrong? -

Saturday, May 24, 2014

The Ripple Effects of Rising Student Debt

"In many cases, the choices that student borrowers make are just common sense, based on the financial realities they face. Taken together, they seem to be having a substantive — many would say negative — effect on the economy.
Is that enough reason for schools or the government to step in with a solution? Not many schools are like Anon U (as the researchers above called it), which could afford to take loans off the table. If society wants to change the skewing effect of student loans, some tough decisions about allocating educational resources may well lie ahead."
In what ways can government step in to minimize the ripple effects of rising student debts?
Here is the link to the article.

Net Traffic Controller?

There's been a lot of talk about having Net companies control the amount of traffic or ads that pop up on computers. This has lead to a proposal from FCC (Federal Communications Commission) to make all companies who use ads or pop ups to discretely.

Here's the link below:

What are your thoughts? Do you think that Net Traffic should be controlled? If passed, would this proposal affect companies' rights to post and discriminate between which ads to post?

Friday, May 23, 2014

A New Critique of Piketty Has Its Own Shortcomings

The data used by the Piketty's book is a hot topic currently. Here is an interesting article that supports for Piketty's data or criticizes the people who are saying the data is flawed. The author appreciates the work done by the Financial Times but support's Pikkety's data.

Here is the link to the article.

A piece of advice from Warren Buffet

This article summarizes Warren Buffet's suggestions for business owners seeking for rapid growth.

“Keep things simple and don’t swing for the fences.”

What do you think?

Piketty's Data is Flawed

An interesting article I found in the FT...I don't think many of you will have access to the link so I am posting the entire article here.

May 23, 2014 7:00 pm
Thomas Piketty’s exhaustive inequality data turn out to be flawed
By Chris Giles and Ferdinando Giugliano 

Thomas Piketty is in no doubt that data underpin the conclusions of his best selling economics book, “Capital in the Twenty-First Century” .

He writes, in the introduction: “Compared with previous works, one reason why this book stands out is that I have made an effort to collect as complete and consistent a set of historical sources as possible in order to study the dynamics of income and wealth distribution over the long run”.

While the conclusions of his work, including his call for an international wealth tax, have stirred controversy among academics, commentators and policy makers, even his critics have generally praised the ambition and quality of the data presented in the text.

Reviewing the book this month, Lord Mervyn King, former governor of the Bank of England, said, “the principal weakness of the book is that the carefully assembled data do not live up to Piketty’s rhetoric about the nature of capitalism”.

The sense of diligence in Professor Piketty’s compilation of trends in wealth is bolstered by an online technical annex and spreadsheets containing the data, with sources.

An investigation by the Financial Times, however, has revealed many unexplained data entries and errors in the figures underlying some of the book’s key charts.

These are sufficiently serious to undermine Prof Piketty’s claim that the share of wealth owned by the richest in society has been rising and “the reason why wealth today is not as unequally distributed as in the past is simply that not enough time has passed since 1945”.

After referring back to the original data sources, the investigation found numerous mistakes in Prof Piketty’s work: simple fat-finger errors of transcription; suboptimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing, unexplained use of different 
time periods and inconsistent uses of source data.

Together, the flawed data produce long historical trends on wealth inequality that appear more comprehensive than the source data allows, providing spurious support to Prof Piketty’s conclusion that the “central contradiction of capitalism” is the inexorable concentration of wealth among the richest individuals.

Once the data are cleaned and simplified the European results do not show any tendency towards rising wealth inequality after 1970.

The US source data are also too inconsistent to draw a single long series. But when the individual sources are graphed, none of them supports the view that the wealth share of the top 1 per cent has increased in the past few decades. There is some evidence of a rise in the top 10 per cent wealth share since 1970.

The FT uncovered several types of defect.
One apparent example of straightforward transcription error in Prof Piketty’s spreadsheet is the Swedish entry for 1920. The economist appears to have incorrectly copied the data from the 1908 line in the original source.

A second class of problems relates to unexplained alterations of the original source data. Prof Piketty adjusts his own French data on wealth inequality at death to obtain inequality among the living. 

However, he used a larger adjustment scale for 1910 than for all the other years, without explaining why.

In the UK data, instead of using his source for the wealth of the top 10 per cent population during the 19th century, Prof Piketty inexplicably adds 26 percentage points to the wealth share of the top 1 per cent for 1870 and 28 percentage points for 1810.

A third problem is that when averaging different countries to estimate wealth in Europe, Prof Piketty gives the same weight to Sweden as to France and the UK – even though it only has one-seventh of the population.

There are also inconsistencies with the years chosen for comparison. For Sweden, the academic uses data from 2004 to represent those from 2000, even though the source data itself includes an estimate for 2000.

Prof Piketty’s documents explaining his sources and methods, suggest that he uses similar data from death duty records around the world. In fact, he interchanges between such source material and surveys of the living, which often give very different answers. Switching between the two sorts of data series, particularly for the US is important to his results.

Some of the biggest defects relate to the UK data, where his original sources consistently show very large declines of near 10 percentage points in wealth held by the rich in the highly inflationary 1970s.
Conversely, Prof Piketty shows the super rich held a greater share of wealth by 1980 and the top 10 per cent saw their share fall only 1.5 percentage points.

The official data series that Prof Piketty says he used for the UK after 1980 shows little increase in inequality over the next 30 years, while his figures show a steep rise.

The Hackers Are Back...

A while ago, there was a scandal with the Internet in China about several people's use of it. The Internet was hacked in the US and information was being sent to China. Most of the info taken by the hackers included some data from the US' FBI and about the US military. The last time it has happened, nothing concrete was done by China or the US to solve the problem.

What do you think should happen? Should there be a law to stop this? Should the hackers be arrested in China?

Thursday, May 22, 2014

Too Much Information? Facebook, Google Face Backlash Over Logins

We all  needed a google account to access this blog site. Everyday we use number of apps where we use our facebook and google account to login. Facebook and google already has enough information about us and when we hit the login to a separate app using facebook/google account, we accept the policy that we are ready to share the socail media information and our contacts. Google and facebook charges the apps and thus they are making money with our private information.

How frequently do you login to other sites using google/facebook accounts? Do you feel safe?

Here is the link to the article.