Digital Musings

From the Art of War to the Art of Currency

Guess who said: "I want the whole of Europe to have one currency; it will make trading much easier." ?

Answer is here.

Burn the Mathematics: Alfred Marshall's Useful Reminder

Alfred Marshall (1842-1924) was the central figure in British economics for the last quarter of the 19th century and the first decades of the 20th century. He crafted many microeconomics concepts that students still learn today: price-elasticity of demand, consumer surplus, producer surplus...

His opus magnus, Principles of Economics , became a genuine best-seller and was considered as the Microeconomics bible. Interestingly enough, although he was trained as a mathematician, Alfred Marshall put almost all the mathematics he used for deriving his results in the celebrated Mathematical Appendix.

This should not come as a surprise from a man who one wrote:

"I had a growing feeling in the later years of my work at the subject that a good mathematical theorem dealing with economic hypotheses was very unlikely to be good economics: and I went more and more on the rules

1. Use mathematics as a shorthand language, rather than an engine of inquiry
2. Keep to them until you have done
3. Translate into English
4. Then illustrate by examples that are important in real life
5. Burn the mathematics
6. If you can't succeed in 4, burn 3.

This last I did often."

Quote drawn from: "On the Third Hand: Humor in the Dismal Science, An Anthology"
Caroline Postelle Clotfelter, Editor, The University of Michigan Press, 1996

Well, this should also apply to business plans although I am not sure venture capitalists will let you burn the spreadsheet that easily!

PS: Talking about the Third Hand, former US President Harry S. Truman once said "I want a one-armed economist so that the guy could never make a statement and then say 'on the other hand..."

By the way he also said that "if we could put a Sears catalog in every Russian’s mailbox on Friday, communism would be dead by Monday morning."

Searching Academic Finance Made Easy

You know about the Social Science Research Network. You know about John P. Scordo's research-finance website. You know about Google Scholar and SmealSearch. These are handy sites where finance research gets posted (scholars gain visibility) and can be downloaded (with SSRN, Google Scholar and SmealSearch you get more than finance by the way).

Well, if you find these sites useful, fairly good chances you will enjoy finance-research, the website published by Jean-Luc Chasson. This website, maintained on a voluntary basis, gathers working papers, articles, essays, PhD thesis, lecture notes... To gain access, you just have to register, it's free.

The posted content can be rated. The most prolific authors are listed and top 10 rankings are available. You may even pick your pet topics to be alerted when new material lands on the site.

Let me add two additional references that you may find useful too: Derivatives Portal and The MathFinance Newsletter.

Jim Mahar Has Company!!!

Our friend Jim Mahar, a genuine finance blog pioneer, has company now.

Indeed, Professor Christopher Westley of Jacksonville State University runs several blogs for his students:  a Money and Banking blog, a Principles of Macroeconomics Blog and a Principle of Microeconomics blog.

Christopher Westley explains in simple terms why he has decided to run blogs for his classes:

"Because sometimes textbooks, study guides, study sessions, copies of previous tests, coffee, and a 12-story library just aren't enough."

The other day I was asked at a conference dealing with e-learning and new technologies in teaching what the balance between the classroom (physical that is) and the virtual sessions should be. As a matter of fact, I do not think there is a unique answer to this. What I answered though is that professors when they blog are viewed differently by their students. Indeed, more often than not, students do not really know what professors do when they are not in the classroom teaching. With blogs they know.

Think for instance of Professor Walter Baets's blog. Walter shares his views, his comments on the press and reports on the conferences he attended to. His report on Cité de la Réussite triggered 28 comments. In the course of doing so, Walter gets closer to his students and this is without a doubt beneficial when he walks into the classroom.

Technology in education does not have to be disruptive to be efficient. However blogs linked to classrooms are "incrementally disruptive": They change a lot of things but these changes are not intrusive. They help the learning community to know itself better.

By the way Christopher, don't forget to release the RSS feeds (syndication links) for your blogs!

 

Air Battle in the Blogosphere: Boeing Blogs Down Airbus

Who should be afraid of Randy? Don't know who Randy is? Well, until a few minutes ago I did not know either, that is until I read a piece from Spiegel On-Line. Randy Baseler is vice president of Marketing for Boeing Commercial Airplanes and frankly he does not seem to like Airbus at all:

"....What I was really saying was this: It's great for Boeing because with the announcement of the A350 (a twin-engine airplane based on the A330), Airbus has validated what we've been saying since the launch of the 777 - that twin-engine airplanes are more efficient for short, medium, or long-range flights than airplanes with four engines.

What's even more interesting about the A350 offering is that it throws the Airbus product strategy out the window. Their strategy for 20 years has been that twin-engine airplanes like the A330 were the most efficient way to service short and medium range routes, but that you needed four engines for the long haul, or "4 engines 4 long haul" as their slogan went.

So, what happened? Apparently something changed.

Here's another way to think about it. The A350, being an A330 derivative, is good enough to obsolete the A330 and A340. But the key is, the A350 still falls short. It just isn't a breakthrough product like the 787... "

Where does this quote come from? From Randy's blog (to be more accurate from his journal (which walks and talks like a bog anyway)).

It is interesting to observe that a prominent marketing executive has decided to use a blogging device not only to promote his firm but also to go after his main competitor. Read the whole piece entitled "What happened to "4 engines 4 long haul?" and you'll see that his approach to competition is far from being soft indeed!

Well, the next question is whether Airbus should be afraid of Randy and will (or should) retaliate? To the best of my knowledge, executives at Airbus do not run blogs. They certainly should. Not that they should just do what Boeing does but they should view the blog as a way of making sure that "perception does not distort reality" too much. And, Randy seems to know a lot about perception!

The other pending (more generic) question is what corporations should do with blogs? These days they look a bit like chicken in front of forks": How to use them? Randy teaches one way of using them although I am not sure it pays to "blog down" your competitors in the long run. You are better off explaining what you do best, how you do it. Indeed, a lot of corporations tend to take for granted that outside people (whoever they are) know everything about them, that their so-called "value proposition" is obvious. Far from true! Never take for granted such a thing: It simply means that you do not care about the outside world. Worse the outside world gonna sooner or later recognize this and hold you accountable for it.

In the real estate business they say that the three most important words are "location, location, location". Well, I tend to think that in the corporate world the three most important words are "explain, explain, explain." Easily said, not easily done. An explanation that works for shareholders may not work for customers or employees. That is precisely what makes the corporate job so interesting. More and more value is co-created, which means that the legal boundaries of the modern corporation are somehow meaningless. What matters are its informal (economic in the broad sense of the term) boundaries. In a nutshell, terra cognita does not matter, terra incognita does matter. The challenge is to locate terra incognita and then to be able to talk, to exchange with its inhabitants. Either you embark like a modern Columbus to discover terra incognita or you give a chance to terra incognita to locate you. The two ways are not mutually exclusive. The second way is where blogs are most useful: You send signals, you create options that you or terra incognita may one day exercise to your mutual benefit.

Too optimistic a view? Best way to know is to try just like Randy (and others, chief among them Jonathan Schwartz, Sun Microsystems CEO) did!

A Shortcut to the Financial Times and The Wall Street Journal

You don't have time to read both the FT and the WSJ. No problem! Somebody does it for you. Indeed, Vincent Colot (who happens to be the co-author of a book entitled Investir en Bourse) runs a daily blog, Revue de Presse Financière, where he "cream-skims" the content of both newspapers.

From what I have seen his reading of both the FT and the WSJ is meticulous and you get his daily ranking of the two newspapers. More often than not, it seems, both journals fare equally well.

Admittedly you may object that Colot's selection is biased and/or too short. Never mind. This is what a blog is all about after all: A subtle blend of content and the author's perception of the outside world.

Thanks to Jim Mahar for posting on Vincent Colot's blog!