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Thursday, March 08, 2018

Interesting readings 08 March 2018



Finomics

Tepper highlights reasons as follows: (Please read the detailed explanation it has interesting charts)
  • Companies are keeping more of the economic pie
  • Workers are productive but are not getting paid for it
  • Companies have more market power
  • Many workers are dealing with a monopsonist
  • Many workers live in a rural area with less choice of jobs
  • CEOs are getting paid a lot more than workers
  • There is no countervailing force to high CEO and low worker pay
This is quite comprehensive and well laid out. Check out the charts. They are more impressive. Must read.

 Patrick Watson too weighs in on this. His comments are spot on. Take this quote:
As of December 2017, two the states the CAC named (Alabama and Arkansas) had lower unemployment rates than the national average, yet one of three jobs in those states were in the “low-wage” category. But if all you saw was is the unemployment rate, you might think they were doing fine.
 Now, if you need 2 jobs just to sustain yourself then you need twice the number of jobs as we have. In such a scenario understanding what 4% unemployment means is really difficult.

Interesting perspective on the dollar in short last para.

Investors ready to disrupt far-sighted strategies for short-term gain have ruined trust - says Michael Skapinker. Well written. Companies should focus on the long term. 

Dan Ariely speaks about his personal experience. He highlights an important point. What motivates medical professionals is very important. Their motivations in recommending a treatment do not always stem from patient interest. I am not talking about the usual Pharma marketing gimmicks. In Ariely's case the doctor wanted to write a scientific paper and he needed at least 3 sample surgeries. This topic needs to be studied and informed decision matrix needs to be developed for cases where courts examine medical propriety.

Hat-tip Tyler Cowen. Must read article. In Understanding Firms I discussed the mechanics of firm advantage. This fits in well with it.

India
Kenneth Andrade believes rural stocks are poised for growth. Good perspective. Kenneth Andrade is a good stock picker.

Arun Maira wrote this article is former BCG consultant. So I was a bit surprised. Heartening to note that the main focus of the article seems to be in the nature of "anti-dumping" rather than true protectionism. Indian businesses should aim to compete globally on merit. Any other form of competition will be (a) short lived  and (b) bigger disaster for future.

Raghav Behl asks this question. He objects to the mass sale of companies to Chinese, Amercian and Japanese investors. I am not that concerned. It is important to develop many more companies - some will go to foreign investors some will remain with locals. It is all part of the game.

Raghuram Rajan is not coming out of this mess in a pristine condition. Possibly was coerced by Chidambaram but we will never know.

Interesting Quote from the article
According to the Pakistan Bureau of Statistics, the country’s exports to Afghanistan fell to $1.271 billion in FY17 from $1.437 billion in the previous year. Exports in the first quarter of 2017-18 stood at $319 million.










China Is Making a Bold Military Power Play
David Tweed & Adrian Leung write on Bloomberg. I love the maps they have put up.
And this one about China's island chain that restrict its naval ambition.
 There are a certain missing links in the first map. First, India and US has signed naval treaties allowing each other to use the bases. Thus, the US influence should be measured in terms of Quad+two (US-Japan-Australia-India-Britain-France). That adds a few more bases. India has access to Chabbar in Iran (contentious though but accessible for friends), Australia has one more base in Indo-Pacific (others are purely pacific or southern facing). So my map goes like this.




Others
Raoji reviews the book. Seems to be must read about Indian entrepreneurship. Kindle version is at INR 60/- thats cheap. I just bought it. Will read and review it soon.

Interesting analysis of sonic distortions noticed in US Embassy.