Property is not a set of things but a set of rights and interests. Standard interpretations see property as consisting of rights to possess, use, manage, dispose of, and keep others away from things. Property is also a set of interests, for if the things we own become worthless we no longer have property. All property has always been, in a sense, government largesse. It is LAW that allows a given physical object to be legally acquired or owned by one person and not another.
Property is power compelling service and obedience, as is political sovereignty. We must distinguish between rights to have or do something and rights to merely try to have or do something.
What are the grounds for moral rights to property? One answer is that we are morally entitled to the products of our labor. An important proviso is that if a resource is scarce we should take only as much as would leave "enough and as good for others". To take more of a limited natural resource than one needs and can put to good use is contrary to the requirements of morality.
I have to say this is not plausible in the contemporary world. The unowned wilderness waiting to be appropriated no longer exists. Nearly always we mix our labor with an economic system, an industrial economy, and it makes little sense to think of the result as the outcome of our labor. A person's labor cannot be distinguished from the other labor it is mixed with in producing a product or contributing to production.
Interests, in contrast to rights, need not necessarily be respected for their own sake but are usually to be judged in terms of the further consequences of pursuing them. They are needs or desires or claims for some state of affairs to be effected. Justifiable interests are what we should be good for us in the long run if we were fully enlightened. They are what we would want if we were fully informed and wanted what would be good for us.
Rights are entitlements to something we can either do or have or not do or not have done to us. Interests are matters of more and less.
When interests conflict, we tend to find a moral solution to maximize the a particular criteria. But rights are not subject to maximizing.
9/23/2012
9/22/2012
What is entrepreneur
The origin of the word derives from the French words entre meaning "between" and prendre being the verb "to take". The French economist Richard Cantillan related it to those who carried the risk in the economy. (Risk-taker)
The definition of entrepreneur: a person who habitually creates and innovates to build something of recognized value around perceived opportunities.
"recognized value" means creation of financial capital, social capital and aesthetic capital.
An entrepreneur is someone who knows the right people, can pick a good team, act quickly and make it all happen.
Reasons to be an entrepreneur: seek independence, wait to be his own boss, respond to a challenge, possibility of wealth
The low rating of money and wealth as a motivator with entrepreneurs is against the general perception of the entrepreneur. In reality money is a by-product of the business entrepreneurs, but it is this that people see and , so, assume it to be the main motivator.
internal locus of control: the extent to which people feel they are in control of what happens in their lives.
the main difficulty is one of the cultures where we are suspicious of people who become wealthy.
The definition of entrepreneur: a person who habitually creates and innovates to build something of recognized value around perceived opportunities.
"recognized value" means creation of financial capital, social capital and aesthetic capital.
An entrepreneur is someone who knows the right people, can pick a good team, act quickly and make it all happen.
Reasons to be an entrepreneur: seek independence, wait to be his own boss, respond to a challenge, possibility of wealth
The low rating of money and wealth as a motivator with entrepreneurs is against the general perception of the entrepreneur. In reality money is a by-product of the business entrepreneurs, but it is this that people see and , so, assume it to be the main motivator.
internal locus of control: the extent to which people feel they are in control of what happens in their lives.
the main difficulty is one of the cultures where we are suspicious of people who become wealthy.
9/16/2012
Efficient market theory (notes of math 210H)
There are many participants in the markets, and they share roughly equal access to all relevant information. They are intelligent, objective, highly motivated and hardworking. h eir analytical models are widely known and employed.
Because of the collective ef orts of these participants, information is rel ected fully and immediately in the market price of each asset. And because market participants will move instantly to buy any asset that’s too cheap or sell one that’s too dear, assets are priced fairly in the absolute and relative to each other.
Thus, market prices represent accurate estimates of assets’ intrinsic value, and no participant can consistently identify and profit from instances when they are wrong.
Assets therefore sell at prices from which they can be expected to deliver risk- adjusted returns that are “fair” relative to other assets. Riskier assets must of er higher returns in order to attract buyers. The market will set prices so that appears to be the case, but it won’t provide a “free lunch.” That is, there will be no
incremental return that is not related to (and compensatory for) incremental risk.
I agree that because investors work hard to evaluate every new piece of information, asset prices immediately reflect the consensus view of the information’s significance. I do not, however,believe the consensus view is necessarily correct.
To beat the market you must hold an idiosyncratic, or nonconsensus, view.
Although the more efficient markets often misvalue assets, it’s not easy for any one person—working with the same information as everyone else and subject to the same psychological influences— to consistently hold views that are different from the consensus and closer to being correct.
Mutual funds are rated relative to each other. The ratings don’t say anything about their having beaten an objective standard such as a market index.
The fact that the Warren Bufetts of this world attract as much attention as they do is an indication that consistent outperformers are exceptional.
Every once in a while, then, people learn an essential lesson. They realize that nothing— and certainly not the indiscriminate acceptance of risk— carries the promise of a free lunch, and they’re reminded of the limitations of investment theory.
• the asset class is widely known and has a broad following;
• the class is socially acceptable, not controversial or taboo;
• the merits of the class are clear and comprehensible, at least on the surface; and
• information about the class and its components is distributed widely
and evenly.
If these conditions are met, there’s no reason why the asset class should systematically be overlooked, misunderstood or underrated.
Where might errors come from? Let’s consider the assumptions that
underlie the theory of efficient markets:
• There are many investors hard at work.
• They are intelligent, diligent, objective, motivated and well equipped.
• They all have access to the available information, and their access is
roughly equal.
• They’re all open to buying, selling or shorting (i.e., betting against) every
asset.
But it’s impossible to argue that market prices are always right. In fact, if you look at the four assumptions just listed, one stands out as particularly tenuous: objectivity. Human beings are not clinical computing
machines. Rather, most people are driven by greed, fear, envy and other emotions that render objectivity impossible and open the door for significant mistakes.
Whereas investors are supposed to be open to any asset— and to both owning it and being short—
the truth is very different.
A market characterized by mistakes and mispricings can be beaten by people with rare insight. h us, the existence of inefficiencies gives rise to the possibility of outperformance and is a necessary condition for it. It
does not, however, guarantee it.
Respect for ei ciency says that before we embark on a course of action, we should ask some questions: have mistakes and mispricings been driven out through investors’ concerted efforts, or do they still exist, and why?
All that means is that prices aren’t always fair and mistakes are occurring: some assets are priced too low and some too high. You still have to be more insightful than others in order to regularly buy more of the former than the latter.
Swallowing theory whole can make us give up on finding bargains, turn the process over to a computer and miss out on the contribution skillful individuals can make. The image here is of the efficient-market-believing instance professor who takes a walk with a student.
“Isn’t that a $10 bill lying on the ground?” asks the student.
“No, it can’t be a $10 bill,” answers the professor. “If it were,someone would have picked it up by now.”
The professor walks away, and the student picks it up and has a beer.
9/05/2012
Some thoughts on the high salaries of super athletes
If you analyze the salaries of athletes in 4 major leagues, you will see that
(1) the median salaries are always dramatically less than the average salaries
(2) the top salaries have been more than 10 times the median salaries since the 1980s
(3) salaries rises quickly
source of salaries
(1) endorsement
endorsement earnings typically double the income of male superstars, as for female stars, the multiplication can be 10 times
(2) salaries
even though sports stars are paid handsomely, they are not even in he same league with other entertainment superstars, generally speaking.
MRP(marginal revenue product) = MP * MR
MP: this particular player's contribution to winning percent
MR: marginal revenue generated by the player's contribution to winning (depend on fans' willingness to pay)
MRP is the input's contribution to the revenues earned by the team owner
MRP unravels the faulty logic behind the idea that higher player salaries drive up ticket prices. MRP theory dictates that player can only earn more if (1) they become more productive (MP rises) (2) fans increase their willingness to pay for their result (MR rises and the contributing factors can be population, size of cities, etc)
MR rises means that stars are more valuable in the fans' eye and owner will raise prices since fans are willing to pay more.
The reason players make more is that a change in some demand parameter (income, population, preferences) has increased fans' willingness to pay
(1) the median salaries are always dramatically less than the average salaries
(2) the top salaries have been more than 10 times the median salaries since the 1980s
(3) salaries rises quickly
source of salaries
(1) endorsement
endorsement earnings typically double the income of male superstars, as for female stars, the multiplication can be 10 times
(2) salaries
even though sports stars are paid handsomely, they are not even in he same league with other entertainment superstars, generally speaking.
MRP(marginal revenue product) = MP * MR
MP: this particular player's contribution to winning percent
MR: marginal revenue generated by the player's contribution to winning (depend on fans' willingness to pay)
MRP is the input's contribution to the revenues earned by the team owner
MRP unravels the faulty logic behind the idea that higher player salaries drive up ticket prices. MRP theory dictates that player can only earn more if (1) they become more productive (MP rises) (2) fans increase their willingness to pay for their result (MR rises and the contributing factors can be population, size of cities, etc)
MR rises means that stars are more valuable in the fans' eye and owner will raise prices since fans are willing to pay more.
The reason players make more is that a change in some demand parameter (income, population, preferences) has increased fans' willingness to pay
Worries over Three-gorge dam
i'm shocked to learn that dams cause so many troubles to local environment. The three-gorge dam in China has 5 major problems
(1) because of the imbalanced distribution of water resources, the chinese government mandates that water should be redistributed from south to north to enhance the development of north. But the problem of shortage of north china is largely due to man-made destroy of forests and wetland. Let alone the problem of fairness, government somewhat misses the real problem and causes some real trouble. For example, the dam damages the equilibrium of water supply and in 2006, sea water poured into Huangpu River in Shanghai 3 times because of the man-made change of river flow direction.
(2) the reservoir to some extent becomes a man-made big water pool and inevitably it changes the local weather. IN 2006, Chongqing suffered from unusual scorching weather. The ground temperature even approached 77 degree centigrade.
(3) the existence of dam break down the water path so that some kinds of fishes cannot swim back to upper reaches of Changjiang River to reproduce. The biodiversity is damaged.
(4) Changjiang River brings down to lower reaches delta large amount of silt. Silt stacks and forms the basis of Shanghai. The existence of the dam obstructs Changjiang river (reduce the risk of floods) but at the same time stops the silt. Without the continuous protect of silt, sea water "erodes" Shanghai.
(5) The construction of the dam stops the normal flow of the river, some chemical materials gather and eutrophication of water occurs.
5/14/2012
Why progressive institutions are unsustainable
Consistent bad results can only be explained by consistent bad policies and not by some mysterious run of bad luck.
The classical liberal evokes references to 19th century theories of market liberalization, which were intended to reduce the dead hand of government over the operation of the economy.
Modern progressive recalls the progressive movement of the first third of the 20th century, which championed the rise of the large administrative state to overcome the perceived weaknesses of the classical liberal synthesis.
Governments are to supply public goods and maintain social stability, leaving innovation to the private sector.
Key components of the classical liberal theories:
(1) The call for limited government funded by tax revenues preferably generated under a flat tax. It is proper to use borrowed funds to create long-term capital improvement but not to fund short-term government activities.
The purpose of taxation is to fund the creation of (nonexcludable) public goods that could not be created or maintained without some system of coerced public support.
(2) Traditional libertarian theory insofar as it relies on a system of strong property rights that allow individuals choice on how to use and dispose of their property so long as they do not encroach on the land of their neighbor or create nuisance to their neighbors.
Differentiate between technological and pecuniary externalities. Classical liberalism steers between the risks of anarchy and authoritarianism.
The theory is that the rules that preserve the like liberties of property owners should maximize their joint welfare by imposing parallel limitation against disrupting the quiet enjoyment that neighbors have of their own property.
(3) a strong commitment to the principle of freedom of contract
The progressive agenda shrinks the size of the stock of financial wealth by a sustained program of ill-advised regulation of primary conduct. It imposes extensive and counterproductive programs of redistribution that cannot be supported by a stagnant economy and a shrinking productive wealth base.
Lump sum tax limits the political competition for favorable tax rates.
The restriction of the use of taxation (only to public goods) reduces the likelihood that a skewed set of government payments will undermine the strict parity on the taxation side.
The reason why the gulf between public revenues and public expenditures has risen to 10 percent of GDP, or 40 percent of the federal budget, which now can only be made up by deficit financing:
(1) decrease in tax revenue
(2) increase in government expenditure
(3) increase in regulatory burden
what triggered the downturn in income tax revenue is the radical decrease in the income of upper-income individuals, not any favorable rate break.
The classical liberal evokes references to 19th century theories of market liberalization, which were intended to reduce the dead hand of government over the operation of the economy.
Modern progressive recalls the progressive movement of the first third of the 20th century, which championed the rise of the large administrative state to overcome the perceived weaknesses of the classical liberal synthesis.
Governments are to supply public goods and maintain social stability, leaving innovation to the private sector.
Key components of the classical liberal theories:
(1) The call for limited government funded by tax revenues preferably generated under a flat tax. It is proper to use borrowed funds to create long-term capital improvement but not to fund short-term government activities.
The purpose of taxation is to fund the creation of (nonexcludable) public goods that could not be created or maintained without some system of coerced public support.
(2) Traditional libertarian theory insofar as it relies on a system of strong property rights that allow individuals choice on how to use and dispose of their property so long as they do not encroach on the land of their neighbor or create nuisance to their neighbors.
Differentiate between technological and pecuniary externalities. Classical liberalism steers between the risks of anarchy and authoritarianism.
The theory is that the rules that preserve the like liberties of property owners should maximize their joint welfare by imposing parallel limitation against disrupting the quiet enjoyment that neighbors have of their own property.
(3) a strong commitment to the principle of freedom of contract
The progressive agenda shrinks the size of the stock of financial wealth by a sustained program of ill-advised regulation of primary conduct. It imposes extensive and counterproductive programs of redistribution that cannot be supported by a stagnant economy and a shrinking productive wealth base.
Lump sum tax limits the political competition for favorable tax rates.
The restriction of the use of taxation (only to public goods) reduces the likelihood that a skewed set of government payments will undermine the strict parity on the taxation side.
The reason why the gulf between public revenues and public expenditures has risen to 10 percent of GDP, or 40 percent of the federal budget, which now can only be made up by deficit financing:
(1) decrease in tax revenue
(2) increase in government expenditure
(3) increase in regulatory burden
what triggered the downturn in income tax revenue is the radical decrease in the income of upper-income individuals, not any favorable rate break.
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