Category: Economics, Business, & Work

Source: When is a Dollar not a Dollar?

An exploration of how the business value of a dollar varies depending on the context.

1. Money has different marginal value to a customer depending on where it falls on their balance sheet.
2. Some types of revenue require a lot more effort and resources to earn than other types.
3. Timing matters, and a dollar today is worth more than a dollar next year.

1. Cost vs. Revenue
2. The Principal-Agent Problem
3. Existing Expense vs. New Expense
   Companies and teams often have existing budgets for common expenses.
4. Above vs. Below Discretionary Spending Limits
5. Selling Services vs. Customized Products vs Off-the-shelf Products
   Different types of revenue have very different scaling characteristics.
6. Selling to Many Stakeholders vs. One Stakeholder
   Products with many stakeholders are hard to sell because you have to make everyone happy — but different stakeholders will have different, often conflicting, incentives and preferences.
7. Monthly vs. Upfront Payments
8. Selling vs. Upselling
   It’s typically easier to sell more products to an existing customer than to find a new customer.

 

Although cost-dollars-saved are fully and immediately realized, cost cutting is limited — the most cost that can be saved is 1x expenses. There is far greater potential for revenue growth than for cost cutting.

Source: What to Worry About in This Surreal Bull Market

We’re almost 10 years out from the financial crisis. Here, the pros share their thoughts on what could happen next.

Quant strategies are popular, and popularity is what makes a coordinated action, whether it’s a run on the bank or a crash, possible.

“some sort of cyber event.”

China…

The debate on whether bitcoin is a bubble about to burst or a great investment continues to divide the financial world. … ­cryptocurrency derivatives, including options and ETFs, are risky because they legitimize assets with prices derived from unregulated exchanges subject to manipulation and fraud.

Recession…

“Financial complexity brings prosperity but also increased fragility”

“In the long term, the EU is not stable as constructed; the essence of the problem is that you have a monetary union without fiscal union. If confidence is shaken in the European structure, markets will sell off, big time.”

Come mid-2018, just one entity—the Bank of New York Mellon Corp.—will be responsible for ensuring that almost $2 trillion of securities financed by so-called repurchase agreements are cleared and settled each and every day.

Source: American Equity – Sam Altman

I’d like feedback on the following idea.

I think that every adult US citizen should get an annual share of the US GDP.

There are historical examples of countries giving out land to citizens (such as the Homestead Acts in the US) as a way to distribute the resources people needed to succeed. Today, the fundamental input to wealth generation isn’t farmland, but money and ideas—you really do need money to make money.

I think we could start very small—a few hundred dollars per citizen per year

Source: Money Changing – The Disruptors – BBC News

Everything we knew about money is up for grabs. So will we end up smiling?

Who controls currency – governments or networks of computers? Who controls our payments – technology companies, payment card providers, or banks?

Arguably most importantly of all, who controls all the data about our financial transactions – you or them?

The future of banking is within software companies. It’s not going to be your traditional banks. It is who owns the data and who owns the experience.

But who can you trust? Consumers will be bombarded with confusing marketing, they will quickly give away and lose control of their personal information, and only the tech-savvy will benefit, according to Mick McAteer, of the UK’s Financial Inclusion Centre.
…
Instead, there is a danger, he says, of these consumers being exploited, either through businesses offering a new form of expensive payday loan, or abuse of data alongside other personal information revealed on social media and elsewhere by unscrupulous individuals.

Source: “License to Work: A National Study of Burdens from Occupational Licensing” – Institute for Justice, by Dick M. Carpenter II, Ph.D., Lisa Knepper, Kyle Sweetland and Jennifer McDonald

The share of American workers needing a license to work has climbed steadily in recent decades, from 1 in 20 workers in the 1950s to roughly 1 in 4 today, … Research suggests this growth is not primarily due
to more workers leaving the farm and the factory for traditionally licensed fields like medicine and law. Instead, the main driver is new laws expanding licensing into previously unlicensed occupations.

The U.S. Constitution protects the right to earn an honest living free from unreasonable government interference, yet courts have often been reluctant to enforce this right by striking down arbitrary or irrational licensing laws. In fact, under the prevailing legal standard, licensing laws are presumed valid when challenged in court, and individuals must prove that they are unconstitutional. This gets it exactly backward. Governments should have to prove that licensing laws advance legitimate health and safety concerns to justify restrictions on the right to earn a living.