What are brands for?
- Three main components of brand equity: 1) consumers’ awareness; 2) the qualities associated with it; and 3) loyalty; the question is how important how each element is;
- one analysis shows that awareness matters more than loyalty – brands are “a shorthand for choice”; such “physical and mental availability” are achieved through traditional method of mass marketing, such as television advertising, packaging, and celebrity endorsements, rather through the fashionable targeted sort made possible by the internet;
- brands have “a reduced role as a quality signal” – now it is easier to find reviews;
Choosing the right pin: Popping property bubbles
- property valuations look high in many countries: Belgium, Finland, France, and Britain; based on the ratios of prices to rents, or prices to incomes;
- household debt is also hitting new records, America is now 105% of income after tax, while that of euro-zone is almost 110%;
- Monetary policies (e.g. in Sweden) turned out to be a bad solution; macroprudential tools, to discipline both banks and borrowers, help to curb the irrational exuberance;
- A good case study: Netherlands, vs. Belgium;
- Europe’s property booms tend to be concentrated in capital cities – that makes matters more difficult;
Essay: What China Wants
- Structural reason for China’s subsequent decline: 1) (Mark Elvin) “the high-level equilibrium trap”, cheap labor, efficient administration, easily matched supply and demand, left no incentive to invest in technological improvement; 2) (Kenneth Pomeranz) for Europe, access to cheap commodities, benefits from competition and trade between states;
- Deep identity crisis after Mao era, when Confucius became the enemy – equivalent of Europeans throwing out any vestiges of Roman law, Greek philosophy or Christian belief;
- (Lucian Pye) “a civilization pretending to be a state”: imperial view historically; now China has to see itself as a state among others;
- (Debroah Brautigam) China’s (African) influence / engagement is not imperial but transactional, like what Japanese companies did in the 1980s, “it’s all about perceptions.”
- Lack of engagement as a rising power – not unusual: it took a world war to draw America onto the world stage;
- What China wants in East Asia seems akin to a Monroe Doctrine: a decrease in the influence of external powers that would allow it untroubled regional dominance; also America defined an ambitious regional role a hundred years earlier than it actually took on the global role; the difference is – the 19th century America did not have any home-grown challengers, and most of its nations were quite content with the idea of keeping European great powers away;
Unequal before the law? Trust-bursting in China
- China’s rising antitrust activism, but not even-handed: local firms settled quietly and regulators have been extremely reluctant to take on the biggest state-owned enterprises;
- one bright spot – progress being made by China’s courts; private antitrust cases handeld by well-trained cadre of judges; (David Evans, U.Chicago) has seen judges in Europe with a weaker grasp of how markets work than those he deals with Chinese cases;
- final cause of concern – antitrust campaign confuses and conflates differing, and possibly conflicting, policy goals; techno-nationalism, price reductions, etc.
Fixed Rates: The foreign-exchange market
- FX market is so quiet, multinationals now opt to live with the risk, financial firms pared back, hedge funds left the market;
- This is largely because the world’s big central banks have replaced yo-yo-ing interest rates with a uniform near-zero level since the financial crisis;
- Volatility may come back, but probably not the once tidy profit for banks: tiny spreads (enabled by electronic trades); high-frequency traders, etc.
- The bigger worry: regulators.
Revisiting Ricardo: Why globalization is not reducing inequality within developing countries
- Ricardo, one of the founding fathers of globalization disciplines: comparative advantages, works well in the first wave of globalization in the 18th century;
- Eric Mankin, from Harvard University, proposed a “matching theory” to explain the contradictions to Ricardo’s prediction since 1980s – the least skilled cannot match with skilled workers in rich countries; worse, they have lost access to skilled workers in their own economies; the result is growing income inequality;
- some evidence: typical call-centre employees in India has a bachelor’s degree; Mexico export-oriented firms pay wages 60% higher than non-exporting ones; foreign-owned plants in Indonesia paid white-collar workers 70% more than locally owned firms;
The lessons of Ferguson: Race relations in America
Three things to ponder:
- The lines between military and local law enforcement have already been blurred;
- The color matters – it ought to be easier to shift officers between towns, bringing in fresh faces and retain the old hands to be more racially sensitive (background: Ferguson has shifted from 75% white in 1990 to 67% black in 2010);
- The Policing would be easier and race relations a little more cordial, if America legalized drugs.