From "the Bloodlands" to "New Europe"

Anne Applebaum has written an interesting review of a new book by Timothy Snyder on "Bloodlands: Europe Between Hitler and Stalin", which talks about inter alia the fourteen million people in Poland, Belarus and Ukraine, who have been deliberately killed by Hitler and Stalin during their reign.

What a far cry from a situation today, where Germans pay for the Polish highways... I think that Poles and the West still do not appreciate how far we have come since those disastrous times...

The Prague Post quotes me on the Polish privatization program

The Prague Post quotes me on the privatization process in Poland and the sale of the Warsaw Stock Exchange.

What's new in economic research

Below a selection of a couple of interesting articles from the most recent vox.eu column:

Martin Ravaillon cautions about the overuse of various rankings and indexes.

Olivier Blanchard, Chief Economist of the IMF, talks about the need to rebalance the global economy. He argues that "the [global economic] recovery which is neither strong, nor balanced, and runs the risk of not being sustained"

Willem Buiter and Ebrahim Rahbari analyze the sovereign debt crisis in the Eurozone and the response of the national authorities, EU institutions, and IMF (full paper here). They find Greece’s debt burden to be unsustainable, with or without the support package, with which I strongly agree: bankruptcy of Greece is inevitable, although you will never hear the "b" word. Instead, Greece will restructure its debt through what will be called "An Enhanced Market Friendly Debt Swap" or something similar.

Finally, Francesco Giavazzi and Luigi Spaventa argue that the EC's new proposals for strengthening fiscal discipline are "empty and useless".

Brazil - a power of the present and of the future?

There is a new text on vox.eu arguing that Brazil has become the the power of the present (and an interesting book by the same author is available here)

I agree with it, with some qualifications.

But am not sure about the future. Ten years of fast development does not yet mean that fundamental changes in the long-term growth outlook have occurred. For now, the markets' superoptimism about BRICs may soon lead to an ever growing financial bubble, which will burst sooner or later, miring these countries in yet another crisis...

Goldman Sachs, however, continues to foment the optimism in his 2009 update on the growth prospects of the BRICs and N-11.. After all, optimism, even if unwarranted, is good for business.

More on GS's research on BRICs is here

Macroeconomics from the MIT

The internet is the global public good par excellence: the MIT has put a lot of its lectures online, including in a video format.

There are courses in economics, including full lecture notes, exams and solutions for Principles of Macroeconomics. Alas, there are no videos available for lectures in economics.

There are, however, a couple of video courses in business and management, including "Dynamic Leadership: Using Improvisation in Business" and How to Develop "Breakthrough" Products and Services

Organizations would become more efficient if they promoted people at random

The 2010 spoof IG Nobel has been awarded to a paper below demonstrating mathematically that organizations would become more efficient if they promoted people at random.

Not only is it interesting, but has potentially many implications for our business and economic life, starting from salaries of CEOs (should they really receive 1000s mulitples of salaries of average worker for --as Laurence Peter described it--climb the hierarchy until he/she reaches his/her level of maximum incompetence?) to the way companies' mnagement and public administration is organized..

REFERENCE: “The Peter Principle Revisited: A Computational Study,” Alessandro Pluchino, Andrea Rapisarda, and Cesare Garofalo, Physica A, vol. 389, no. 3, February 2010, pp. 467-72.

Abstract:

In the late sixties the Canadian psychologist Laurence J. Peter advanced an apparently paradoxical principle, named since then after him, which can be summarized as follows: {\it 'Every new member in a hierarchical organization climbs the hierarchy until he/she reaches his/her level of maximum incompetence'}. Despite its apparent unreasonableness, such a principle would realistically act in any organization where the mechanism of promotion rewards the best members and where the mechanism at their new level in the hierarchical structure does not depend on the competence they had at the previous level, usually because the tasks of the levels are very different to each other. Here we show, by means of agent based simulations, that if the latter two features actually hold in a given model of an organization with a hierarchical structure, then not only is the Peter principle unavoidable, but also it yields in turn a significant reduction of the global efficiency of the organization. Within a game theory-like approach, we explore different promotion strategies and we find, counterintuitively, that in order to avoid such an effect the best ways for improving the efficiency of a given organization are either to promote each time an agent at random or to promote randomly the best and the worst members in terms of competence.