Shareholders maybe the owners of corporations but, as the most mobile of the "stakeholders", they often care the least about the long-term future of the company. Consequently, shareholders, especially but not exclusively the smaller ones, prefer corporate strategies that maximize short-term profits, usually at the cost of long-term investments,and maximize the dividends from those profits, which even further weakens the long-term prospects of the company by reducing the amount of retained profit that can be used for re-investment. Limited liability has allowed huge progress in human productive power by enabling the amassing of huge amounts of captal, exactly because it has offered shareholders an easy exit, thereby reducing the risk involved in any investment. However, at the same time, this very ease of exit is exactly what makes the shareholders unreliable guardians of a company's long-term future.
Poor countries are poor not because of their poor people, many of whom can out-compete their counterparts in rich countries, but because of their rich people, most of whom cannot do the same. Swedish workers are protected from competition from the workers of India and other poor countries through immigration control.
Morality is not an optical illusion. When people act in a non-selfish way - be it not cheating their customers, working hard despite no one waching them, or resisting bribes as an underpaid public official - many, if not all, of them do so because they genuinely believe that that is the right thing to do.
Below 8-10%, inflation has no relationship with a country's economic growth rate.
Most of the shrinkage in the share of manufacturing in total output is not due to the fall in the absolute quantity of manufactured goods produced byt due to the fall in their prices relative to those for services, which is caused by their faster growth in productivity (output per unit of input)....Continua
Although an avid fan of the "you think you know something, but I bet you don't" genre (Freakonomics, The Logic of Life), I started this book with a slight sense of trepidation - was it just more of the same? And yes,to a great extent, the ideas in the book are not new ones (the free market is not free otherwise we would be able to enslave children andd buy drugs from Tesco), but they are written with panache, warmth and and a sense of humour. Ha-Joon Chang's book should be recommended reading for all those eager young capitalists warming the pews of lecture theatres across the world. It is a solid dose of common sense and a sobering reminder of how the world we live is twisted by the agenda's of the rich and powerful. Roll on the revolution....Continua
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