Office Politics: Time Management a la Pomodoro

tomato_wall_clock

So in my new bent to discover all things productive, I have found the “Pomodoro” technique for time management.

And ironically, I’ve elected to write about it on a day that I have no time (I am writing this from an airport lounge – my flight boards in… *checks time*…twenty minutes).

Which is almost enough time.

The basic idea:

  • Housewives everywhere use this device:

tomato clock

  • It’s a timer.
  • You should use it too.
  • Work on a task for 25 minutes
  • Then take a break.
  • Repeat thrice.
  • Take a longer break on the third time.

A diagram:

Why it works:

  • Most tasks tend to be ambiguous.
  • And the deadlines not immediately pressing.
  • So you tend to work slower. And do quizzes on Buzzfeed. And get coffee*.
    *I know this because I recently downloaded the Hours app to test my attention span.
  • But if you isolate the time period with a timer, then you create deadline-like conditions.
  • Also, it’s habit-forming (there’s a routine of working for 25 minutes, followed by a reward of 5 minute breaks).
  • I like habits.

For more, read this article: “Get Unstuck”.

The flight is boarding. Happy weekend, all!

Rent or Buy: Paying Off A House In 7 Years?

So there was a recent opinion piece on moneyweb: How To Pay Your House Off In 7 Years.

A pretty broad claim was made:

  1. Pay 10% extra each month;
  2. Pay a constant percentage of your take-home salary; and
  3. Make your payment on the 25th (when you get paid) rather than the 1st – because this could take a year and a half off your mortgage period*.
    *I am raising a HUGELY sceptical eyebrow at this one.

Do this, and you could pay off your house in 7 years.

This tip comes from this website: justonelap.com, where you find some disclaimers to said opinion:

  1. It may mean that you need to buy a smaller home.
  2. Increase your monthly repayments by 10% each year (rather than just by your salary increase), in addition to the 10% extra each month.
  3. Keep your savings in your home loan in order to reduce interest (presumably, whatever savings are left, after all the extras).

Allow me to illustrate some compounding:

  1. In year one, let’s say that your mortgage is R12,500 per month.
  2. So instead, you pay R13,750 (up by that initial 10%).
  3. By year 2, you’re up to R15,125
  4. Year 3, R16,638…
  5. And so on until year 7, where you’re up to R24,360. Nearly double what you had to pay initially.

So on the one hand – each additional Rand you put in is a contribution to capital, so you automatically save interest. On the other hand, are there better ways to use the money?

Anyway, here’s some modelling.

What does increasing the mortgage repayment by 10% each month and/or by 10% per year do to the loan period?

Here’s the way a mortgage works:

  1. Each month, you pay back a portion of the initial capital.
  2. The interest is calculated on the capital that’s left over.
  3. Over time, with a fixed repayment, you’re paying progressively more capital, and progressively less interest.

So if you can accelerate the capital repayments, you do two things:

  1. Pay things back quicker in general (because you’re paying more, obviously); but also
  2. You make your fixed repayments more efficient (because less of the payment will be allocated to interest).

A graph of a 20 year mortgage at 9% on a R2 million property with a 10% deposit:

Screen Shot 2014-07-24 at 9.25.35 AMSo here’s what happens when you pay an extra 10% per month:

Screen Shot 2014-07-24 at 9.25.57 AM

Bottom line: you cut 4 years off your mortgage repayment period.

Here’s what happens when you escalate your mortgage repayments by 10% a year (that is: you attempt to keep your mortgage repayments as a fairly constant proportion of your salary – sort of):

Screen Shot 2014-07-24 at 9.26.35 AM

Bottom line: you cut your mortgage period in half.

Here’s what happens if you do both (an extra 10% per month, and an annual escalation of 10%):

Screen Shot 2014-07-24 at 9.27.01 AMBottom line: the extra 10% per month takes off an extra year, if you were already escalating at 10% per annum.

Here’s what happens when you pay on the 25th:

Screen Shot 2014-07-24 at 9.41.59 AMPermit me to zoom in:

Screen Shot 2014-07-24 at 9.42.55 AMYou save a month. Unless I’m missing something dramatic.

fake-sad-face

The justification:

  • I pay my first instalment a week early. So I save a week’s worth of interest, which goes toward capital.
  • But then my second instalment is no longer a week early. It’s exactly a month later. In which case, I pay a full month’s interest on the full capital amount.
  • The only saving is on my very first payment. Which, over 240 months of repayments, gives me a month off.
  • Again, unless I’ve missed something.
  • If someone has an alternative viewpoint, please point it out. I’d love to say “So listen, making your mortgage payment a week earlier means that you save a year and a half – for doing almost nothing!”
  • But as it stands, I just don’t think that’s true.

So let’s just ignore that last, and assume that you pay an extra 10% per month, and you do an annual escalation of 10%. It means that you’ll have paid off your bond, in full, by year 9.

An Alternative

Because I love alternatives.

Instead of paying the money into your bond, let’s put the extras (the 10% per month and the 10% escalation) into a Satrix equivalent. Assuming a 15% annual return, here’s the growth path of your investment (alongside the capital portion outstanding of the standard mortgage):

Screen Shot 2014-07-24 at 10.02.31 AM

Assuming that higher return, you could take the Satrix investment and use it to pay off the outstanding capital somewhere in the beginning of year 8.

But if I’m honest – I wouldn’t trade in a mortgage saving for a satrix return. The mortgage rate is almost a guaranteed return. In other words, once you’ve committed to buying a house, every rand of extra capital repaid “earns” a return equal to the mortgage interest rate. And you’ve already committed to the repayment process, so there’s less to be gained from going elsewhere.

So if you’ve already bought a house, pour money into the mortgage. But ignore the advice around the 25th. That’s what I’m saying.

For more in this series of home-ownership:

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.

The Investor Diaries: Week 18

What’s happening with the investors:

Screen Shot 2014-07-23 at 8.15.30 AM

Screen Shot 2014-07-23 at 8.15.53 AM

So not a lot has changed since last week. And the indicators:

Screen Shot 2014-07-23 at 8.33.27 AM

You’ll notice that the Repo Rate went up by 25 basis points? That came into effect last Friday.

I find that very few people actually understand rate hikes, or why they happen, or how on earth they’re meant to make a difference. So I thought that I might spend the rest of this post explaining it.

How The SARB thinks

So the South African Reserve Bank has a single mandate: “keep the inflation rate between 3% and 6%”. But it also has some other (minor) considerations, namely: “But, you know, we need to keep in mind that destroying the economy in the pursuit of that mandate would be a tad foolish.”

In all of this, the SARB has one tool with which to play: the repo rate.

Here’s what the SARB thinks/knows/believes will happen if they lower the repo rate:

  1. Lowering the Repo rate means that it’s cheaper for the commercial banks to borrow money from the SARB (and, correspondingly, it’s more expensive for them to keep money at the SARB).
  2. So the banks, because they’re competitive, pass on some of that to cheapness to their customers.
  3. People with mortgages and hire-puchase agreements (on cars, etc) suddenly find that they’ve got a little more spare money each month, because their monthly repayments have come down. So maybe they’ll spend more.
  4. Businesses with mortgages and hire-purchase agreements suddenly find that they’ve also got a little more spare money each month, so they can perhaps afford to hire more people, or do more expansion, or whatever.
  5. In addition, it just became a bit cheaper to borrow money – so perhaps people/businesses that hadn’t made some big purchase decisions beforehand might choose to make those purchases now.
  6. Meaning that demand is stimulated – which would cause some inflation. But acceptable inflation when the economy is slowing down.

The problem:

  1. Lower interest rates mean that foreign investors might start to earn lower returns on their investments (at least, that’s the theory).
  2. And in particular, there will be lower forward rates in the foreign exchange market (which is driven by interest rates).
  3. So foreign capital might start to leave South Africa in the search for higher returns.
  4. Which would cause the Rand to depreciate.
  5. Which would make imports quite expensive.
  6. Which would hurt any industries that are reliant on imported goods.

And the opposite is true when the SARB raises the repo rate:

  1. Raising the Repo rate means that it’s more expensive for the commercial banks to borrow money from the SARB (and, correspondingly, it’s more lucrative for them to keep money at the SARB).
  2. So the banks, because they’re businesses, pass on the higher costs to their customers.
  3. People with mortgages and hire-puchase agreements (on cars, etc) suddenly find that they’ve got less spare money each month, because their monthly repayments have gone up. So they’ll spend less.
  4. Businesses with mortgages and hire-purchase agreements suddenly find that they’ve also got less spare money each month, so they might need to cut back and/or attempt to sell off assets in order to maintain their solvency..
  5. In addition, it just became more expensive to borrow money – so perhaps people/businesses that were about to make some big purchase decisions might choose to delay those purchases.
  6. So demand is suppressed.
  7. Oh, and higher interest rates would cause the exchange rate to appreciate (normally).
  8. Making South African exports quite expensive.
  9. Which would hurt any industries that produce goods for export.

I would also point out on this whole exchange rate story that foreign capital is flighty. It almost only ever negatively impacts. And I say that because:

  1. People doing long term investments into South Africa don’t make impulse decisions to get into and/or out of SA on the back of a 25 basis point rate movement. They’re concerned with things like “long-term sustainability” and “profit margins”. Of course exchange rates matter – but they’re a risk that can be managed.
  2. The foreign capital that wreaks havoc on the exchange rate is speculator flows, which move into and out of bond and equity markets.
  3. So the SARB needs to consider that whatever it does, the exchange rate will be affected opportunistically.

The Current Situation

The SARB has found itself awkwardly placed. On the one hand, inflation is up to 6.6% – which has them concerned because now they’re outside their mandate. But on the other hand, there is an economy that’s looking pretty stagnant with all the strikes and the depreciated Rand. Here’s ETMAnalytics‘ graph of the SARB’s GDP forecasts over the last year:

Screen Shot 2014-07-23 at 9.27.57 AM

 

So the SARB might want to raise interest rates to stop the inflation, but raising interest rates also suppresses demand, which would prolong all this poor growth.

Either way, the SARB has elected to do something: they’ve raised the repo rate by 25 basis points. Which is really quite conservative.

And now we’ll wait to see what difference it makes.

 

Why Do We Still Get Emails From Nigeria?

We’re all familiar with the Nigerian bank-employee/government-minister/lawyer that has found you on the internet and identified you as the long-lost only surviving relative of some poor deceased cocoa lord with an heirless fortune that you can claim, if you’ll just contact the sender on <prepaid cellphone number>. And pay a little something to secure your claim. And then pay a little more as a deposit on the estate duty. All of which you can just take out of the fortune when it gets paid back to you.

Or not.

So here’s a question: if everyone is so familiar with these mails, why do we still continue to receive them? I mean, it must be time for a change. The scam is tired. It’s been around since the internet began. And the relatives that fell for it are now wiser and poorer.

Which brings me too a follow-up question: doesn’t it seem like the supposed fraudster on the other end of the line is incredibly, well, stupid to think that we’ll keep falling for this tired old ruse?

The cynics amongst my readers might be expecting me to answer this question by saying “Yes, but there is no end to the infinity of human stupidity”.

house wrong

Okay, not entirely off track. But maybe, not in the way that you expect.

So to answer that question, allow me to introduce a tangent.

The Wisdom Of Solomon

An extract:

1 Kings 3:16-28 (King James Version)

17 And the one woman said, “O my lord, I and this woman dwell in one house; and I was delivered of a child with her in the house.
18 And it came to pass the third day after I was delivered that this woman was delivered also. And we were together; there was no stranger with us in the house, save we two in the house.
19 And this woman’s child died in the night, because she lay upon it.
20 And she arose at midnight, and took my son from beside me while thine handmaid slept, and laid it in her bosom and laid her dead child in my bosom.
21 And when I rose in the morning to give my child suck, behold, it was dead. But when I had considered it in the morning, behold, it was not my son whom I had borne.”
22 And the other woman said, “Nay; but the living is my son, and the dead is thy son!” And this said, “No; but the dead is thy son, and the living is my son!” Thus they spoke before the king.
23 Then said the king, “The one saith, ‘This is my son who liveth, and thy son is the dead’; and the other saith, ‘Nay; but thy son is the dead, and my son is the living.’”
24 And the king said, “Bring me a sword.” And they brought a sword before the king.
25 And the king said, “Divide the living child in two, and give half to the one and half to the other.”
26 Then spoke the woman whose the living child was unto the king, for her heart yearned for her son and she said, “O my lord, give her the living child, and in no wise slay it!” But the other said, “Let it be neither mine nor thine, but divide it.”
27 Then the king answered and said, “Give her the living child, and in no wise slay it. She is the mother thereof.”
28 And all Israel heard of the judgment which the king had judged; and they feared the king, for they saw that the wisdom of God was in him to do judgment.

Or to summarise:

  1. Solomon was in a she-said-she-said situation.
  2. So he introduced a new variable (“Divide the living child in two“).
  3. And watched how the two women reacted.

Why? The game theory:

  1. There are two women, one of whom is clearly a psychopath (I mean, whether she’s replacing one child with another, or trying to claim another woman’s child – neither is a normal response to her child’s death).
  2. But how to tell which is which?
  3. If he threatens to kill the child, the psychopath would not react in quite the same way as the child’s real mother. If anything, she would rather see the child live with another woman than see it die.
  4. So introduce that into the mix and see what happens.
  5. *rolls dice*

In game theory, this new variable is known as a separating equilibrium.

Which brings me to my next fun historical example…

Trial By Ordeal

Earlier this year, I visited the Museum of Torture in Vienna. It was vastly less exciting than it sounds – there was a lot of dust and it was very small. But I did learn that medieval life was very unpleasant, and seemed to revolve around cauldrons of boiling water. Specifically, in trials by ordeal. How those worked:

  1. Let’s say that you were accused of theft/murder.
  2. You would be ordered to do one of the following:
    1. Insert your hand into a kettle of boiling water in order to retrieve a ring.
    2. Grab onto a red-hot iron bar.
    3. Other painful variations along this theme.
  3. The above would be conducted by a priest.
  4. If you emerged unharmed, you were innocent.
  5. And if you were harmed, then you were clearly guilty, and got punished again.

So obviously, it doesn’t sound like the most…unbiased of outcomes.

And yet, it worked? According to this article by economist Peter Leeson, ordeals exonerated the accused about two thirds of the time (he uses some historical records from Hungary, which record the results of 200 trials by ordeal). So either there was a lot more miracle happening in the Middle Ages, or something else was happening.

Mr Leeson’s argument:

  1. The miracle at play here was never really the issue.
  2. The trial by ordeal is just another example of a separating equilibrium.
  3. Recall that the trial by ordeal was conducted by clerics; and that people had full belief in Iudicum Dei (God’s judgement) in a way that we don’t really have today.
  4. This means that, when faced with a trial by ordeal, the innocent would expect some kind of divine exoneration; while the guilty would be faced with a bad outcome from the ordeal, as well as the punishment that followed it.
  5. So the priest conducting the ceremony could see the innocence/guilt in the accused’s willingness to undergo the ordeal.
  6. He would then rig the ordeal to match the outcome.
  7. And this has the awesome side-benefit of keeping the populace generally believing in the power of Iudicum Dei, which would further strengthen the power of the separating equilibrium effect.

Fascinating, right? If you want to hear more, here’s the Freakonomics podcast that inspired almost all of this post: What Do King Solomon and David Lee Roth have in common?

So back to the Nigerian emails…

The Emails From Nigeria are Separating Equilibria

Here’s the scenario that the Nigerian Princeling faces:

  1. The world is filled with greedy people.
  2. But not all of them are gullible.
  3. I don’t want to be dealing with people that think my story sounds plausible, but then insist that I prove myself. That’s too many people.
  4. No – what I want is to field calls from the really gullible people, who are going to deposit money into my account without asking too many awkward questions.
  5. So what I need to send out is an email that’s filled with bait, but I’ll make it quite obvious that it’s a scam.
  6. That’ll weed out all the rational ones. And the vaguely rational ones.
  7. And I’ll only get calls from the really gullible ones. Which is exactly what I want.

And that’s why we still get them.

*bows*

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.

Billions and Billions of Bad Punishments

Here are two stories from last week that I think are outrageous:

To begin, let’s just ignore the fact that Citigroup played a key role in causing a global financial crisis that affected almost everyone, while Cynthia Robinson’s husband was just one man, however tragic his demise. And that Citi paid $7 billion, while RJR has been told to pay $24 billion…

What Citigroup did

  1. Citi did some due diligence on some home loans that it was repackaging to sell to investors.
  2. The results of that due diligence were not so hot. In the words of one Citibank employee: “We should start praying.”
  3. In the words of another “I would not be surprised if half of these loans went down… It’s amazing that some of these loans were closed at all.”
  4. But whatevs – Citi sold them as solid-gold mortgages anyway.
  5. Because profit.
  6. Huzzah!

What the Department of Justice did

It said to Citigroup:

  1. Looks like you’re profitable again, chaps.
  2. Time to pay up.
  3. Here’s how we’re going to do it.
  4. We’ll take $4 billion for us, because we’re the Department of Justice. And that’s what we do – collect money.
  5. Then there are all the lawyers. We’d like half a bil for them. Because lawyers.
  6. Finally, because you sold defaulting loans to those poor investors – we’d like you to pay $2.5 billion to the defaulters.

Re-read 6.

And what of the investors that were sold the bad stuff?

And why on earth are the defaulters getting compensated? For doing what, exactly?

What R.J. Reynolds Tobacco Company did

  1. It knew that cigarette smoking could be both harmful and addictive.
  2. But sold the cigarettes anyway.
  3. Specifically to Michael Robinson, a hotel shuttle bus driver, who smoked one to three packs a day for more than 20 years.
  4. He started when he was 13.
  5. Cynthia married him in 1990, and he passed away six years later.

What the Florida Jury did

  1. It was outraged by some video footage of tobacco execs claiming that cigarettes didn’t cause cancer, while an (ironically) smoking-gun internal memo suggested that they knew otherwise.
  2. So they awarded $23.6 billion in punitive damages.

The Trouble With Both Of These 

I realise that this is becoming a bit of a steady complaint from me, but why are people punishing shareholders?

When you come down to it, here is who is responsible for both of the above:

  1. In Citi’s case, it was those managers and traders that knew they were selling bad investments, but lied about them.
  2. In R. J. Reynolds’ case, it was the tobacco executives that knew they were selling addictive and harmful substances, but decided to pretend that they were safe.

Here is who is actually paying for the above:

  1. Pension funds.
  2. Other institutional and mutual funds.

Here’s the ownership profile of Citigroup:

Institutional Ownership of Citigroup

Institutional Ownership of Citigroup

And this is the institutional ownership of Reynolds American Inc. (the owner of R.J. Reynolds Tobacco Company):

Institutional Owners of Reynolds American

Institutional Owners of Reynolds American

Whose money do the big institutions invest? Yours (if you’re American). And mine (if I’ve invested in an Exchange-Traded Fund that tracks global equities). These fines punish pensioners and savers and people that almost certainly had nothing to do with the decisions that were made.

And where are the people that were actually responsible for the deception?

There’s a phrase for this in the world of finance: “IBGYBG“.

I’ll be gone and you’ll be gone – by the time the punishment needs to be dealt with.

Oh, and it’s also telling the currently employed “Go right ahead with whatever you’re doing – if the company gets caught, someone else will pay for it.”

Is it any wonder that these situations keep repeating themselves? With ever more global consequence?

Office Politics: Inbox Folders Are Not Productive

SpamCartoon

Last week, I started talking about productivity (and by “talking” what I mean is “paraphrasing from ayearofproductivity.com“).

During the writing of that post (Office Politics: The Art of Productivity), I discovered this magnificent article: Stop organising your email into folders: searching your email is way faster.

What followed, I’m embarrassed to say, was not dignified: said articles were forwarded on to various critics, generally accompanied by some variation of the phrase “HA!”

So I thought I’d continue that here.

The Fear Of Being A Fraud

The general theory behind inbox folders:

  1. We get many many emails each day.
  2. Wouldn’t it be nice if we just filed those away appropriately for future reference?
  3. It makes your inbox look clean.
  4. And if ever you need anything, you just go straight to the folder that it’s in.
  5. And also, you inbox looks clean.
  6. Did I mention the clean inbox?
  7. *sighs contentedly*
  8. *sighs at all those other disorganised people*
  9. *sighs smugly*

Although I only suspect this, because I don’t do any inbox filing.

I keep telling people that my inbox is organised chronologically (because that’s how it arrives). Although admittedly, were it not for spam filters, cash flow budgets would be nestled next to pharmaceutical companies promising to enhance my endurance.

For some years now (and I do mean years), there has been a task on my To Do list titled simply “organise inbox”. I have been plagued with feelings of inadequacy. And I’ve been waiting for other people (clients, really) to realise my dark secret. That I’m actually a fraud with no organisation skills and please don’t trust my opinion because it’s backed by no filing system at all apart from a brief foray into “smart folders” that now lie discarded, gathering virtual dust, and yet still managing to judge me by presenting themselves for my attention whenever I open my mail client.

Only now, I’ve faced that fear, and realised that it makes no sense to spend time filing emails.

Why Email Folders Make No Sense Part 1: Looking For Old Emails

Here is the thought process that one would have to follow when looking for an email in the well-organised inbox:

  1. “Okay, I’m looking for an email from whatshisname about such-and-such”
  2. “Right, so, would I have put it in the folder for mails from whatshisname, or for mails about such-and-such?”
  3. “Oh yes, I remember now – I put it in the sub-folder for whasthisname in the folder for such-and-such”
  4. “Look at how beautifully arranged my filing system is!”
  5. *pauses to self-congratulate*
  6. *clicks on such-and-such folder*
  7. *clicks on whatshisname subfolder*
  8. *scrolls through looking for email*

Here’s my process in my not-organised inbox:

  1. *types “whatshisname” and “such-and-such” into search bar*
  2. *presses enter*
  3. *scrolls through looking for email*

And here’s the IBM study to prove that it takes longer to find emails if your inbox is organised. The key points:

  • It takes a disorganised person using a search bar 66 seconds on average to find an old email.
  • It takes an organised person using their folders 73 seconds on average to find an old email.
  • That’s, like, 10% more time. Just on searching.
  • Also, there is absolutely no difference in effectiveness: both “email strategies” have the same success rate when it comes to finding mails.

Why Email Folders Make No Sense Part 2: Checking Your Emails

Here’s how I check my mails:

  1. *scrolls through mails*
  2. *ignores the unimportant ones*
  3. *reads the important ones*
  4. *replies as necessary*
  5. *goes back to other work and/or buzzfeed*

Here’s how the organised inboxer has to check their mails:

  1. *reads first mail*
  2. *replies if necessary*
  3. *thinks about how to file it*
  4. *drags and drops it into a file*
  5. *moves on to next mail*
  6. and so on.

There is just no way that is quicker. According to the IBM study – people spend 10% of their time filing. But I don’t believe that – it’s probably only 10% when you average it out against all the no-time-at-all that people like me spend putting emails into folders…

Especially when:

reply all email

 

Conclusion

By all means – if organising your inbox makes you feel more productive and happy at work, then you should continue what you’re doing.

But I shall be impolitely responding to any further suggestions that I organise my inbox.

Because facts.

*grin*

How Economists See The World. And Things To Know.

economics and job

Last week, I started talking about the various ways that Economists think about the world (The Economic Schools: Gettin’ Schooled). I have since found the summary table that Ha-Joon Chang uses:

chang schools of economic thought

Which I think is a bit brilliant. And from next week, I’ll start writing about each school individually.

But I thought I’d start this series of posts with a list of things I learned from Ha-Joon Chang. Mainly because there is much that we assume (yes – even the non-economic people think some of these things) that is either demonstrably false, or really not that clear cut.

Economics was not always called “economics” – it used to be called “Political Economy”.

Does that seem like a strange thing to bring up? Perhaps. But much of the movement in the economic world is to separate the State from the market through deregulation, free trade, Bitcoin, etc. As though, somehow, economics should be free of the politics of it all. Which is a bit ironic, seeing as economics is politics, and almost every economic viewpoint is based on one’s politics:

Economics is a political argument. It is not – and can never be – a science; there are no objective truths in economics that can be established independently of political, and frequently moral, judgements. Therefore, when faced with an economic argument, you must ask the age-old question “Cui bono?” (Who benefits?). 

Economics is too important to be left to the experts

Economics has been uniquely successful in making the general public reluctant to engage with its territory. People express strong opinions on all sorts of things despite not having the appropriate expertise: climate change, gay marriage, the Iraq war, nuclear power stations. But when it comes to economic issues, many people are not even interested, not to speak of not having a strong opinion about them. When was the last time you had a debate on the future of the Euro, inequality in China or the future of the American manufacturing industry? These issues can have a huge impact on your life, wherever you live, by affecting, positively or negatively, your job prospects, your wage and eventually your pension, but you probably haven’t thought about them seriously.

There is no single economic theory that can explain Singapore’s economy.

The Economist likes to credit Singapore’s success with its free trade policies and low tax regime. It’s hailed as the most open and least corrupt and most pro-business economy in the world – almost as though there is no government interference with things. But nearly all of Singapore’s land is owned by the Singapore government, 85% of the housing is supplied by the government’s housing corporation, and State-Owned Enterprises produce 22% of Singapore’s gross national product (the world average is 9%). Singapore is both a socialist and a capitalist success story…

Britain and the US invented protectionism, not Free Trade

These countries were super-protectionist (way more than by modern standards) in the 18th and 19th centuries. Britain protected her industries against the “Low Countries” (Belgium and the Netherlands). And $10-dollar-note-man Alexander Hamilton developed the “Infant Industry Argument” (that some industries need to be protected in their early growth stages, until they ‘grow up’).

Free Trade was first colonial

Britain traded freely with her colonies… And Britain also imposed free trade on some of her partners by, well, winning wars. Example: in 1842, the Nanking Treaty with China after the opium wars.

The Welfare State was first proposed by conservative right-wingers

State welfare was not a “democrat-led” proposal presented by bleeding-heart liberals. The first proponent was “arch-conservative Otto von Bismarck”, who hated socialism, but felt that without a minimum safety net for workers, they might be seduced by more hardcore socialism.

The Golden Age of Capitalism took place under high regulation and high taxes

Well it’s true – everyone talks about the 1950s, 60s and 70s as being a high-point. Well, that was in a time before Ronald Reagan and Margaret Thatcher started slashing taxes and deregulating things.

The Internet was invented by the US Government

The private sector is not the only source of innovation.

“The ‘lazy’ Greeks are the hardest-working people in the rich world, after the South Koreans.”

Greeks work between 1.4 and 1.5 times as many hours per week as the Germans and the Dutch. Italians also work longer hours than the Germans. It’s not about laziness – it’s an issue with productivity*.
*And, possibly, Mediterranean statistics. But let’s not be pessimistic.

I owe some of the above to this zerohedge article: What Piketty Forgot. I also recommend this one: The Shortest Economics Textbook Ever (the article is longer than the book).

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.