The General Economics Thread

Since Norway specifically came up, I believe that it didn't immediately spend all the oil revenues it started taking in and actually thought about the long term, so there was that.

I do believe that private industry has many advantages over government run industries, and speed of adaption is often one of them. Mostly because elections do not occur frequently enough to respond to market forces, and the public often prioritizes things to benefit themselves in the short run rather than the long term sustainability of some institution. Governments do well running industries that do not need to change very quickly, while businesses that change too slow go bankrupt and are replaced by new ones that are designed to better fulfill consumer needs.

This isn't necessarily a good thing in all cases, however, because the government can be more efficient than any business (due to economies of scale) and sometimes efficiency is more important than quick adaptability.

The market can be slow at times, as companies have to wait for the market at-large to respond before they do. Once the market shifts such that an idea is profitable companies and businesses will move fast, but they will still be limited by capital constraints.

Government doesn’t have that problem, in a true emergency the government can engage in unlimited spending and utilise both the draft and rationing to get the needed manpower and resources to get production up and running.

Governments generally don’t move that fast, but that’s because it’s rare to have stable government undergone such large-scale emergencies.

It's not the speed of response that I'm referring to. Obviously if a gov. agency plans ahead, and the emergency corresponds to one of it's plans, it can react very quickly. I mean coming up with an entirely new way of doing things in response to an unpredictable change in demand. Because new businesses are constantly throwing things at the wall to see what sticks, someone will often have a solution right away. This happens in gov. much less often.

What you are more likely to see in government is a lot of state-funded basic research into technologies that are contracted for implementation to a major company. This is how a lot of military, space, and medical tech are handled (in Western nations at least). The government pays for the research because it doesn't have an immediate profit margin that could be justified to shareholders. It also pays for the development of the technology into products that are then used for public purposes. Once the technology is mature enough that it can be profitable for private companies to make on their own, it gets handed off.

These adoption cycles can occur on a very long or very short timeframe depending on the urgency and the amount of money allocated. Public funding got us COVID-19 vaccines very rapidly but only on the foundation built by 50 years of research into mRNA production. We have Velcro and microwaveable frozen meals (among many many other things) because of NASA's space program, but it took years for those to hit the consumer markets.

Big companies are only too happy to adopt new products when they can gain a market advantage with them, but not if there is excessive disruption to existing products. This is the balance that the private sector strikes. It's partly why alternative energy has been so slow to be adopted: there is enormous fixed investment in power plants and the new technologies cost more for the same output. There's no financial incentive to move on them. It's the same with electric vehicles.

Sometimes a disruptive innovator enters the market spontaneously, but we cannot count on that happening.

Edit: Lest this be misunderstood, I still think that having private enterprise build and sell the products is a superior solution. The government doesn't need factories and plants; it buys goods and services from the private sector and guarantees access to the resulting products.

Edited by Fighteer on Feb 16th 2021 at 11:39:21 AM

Citibank just got a $500 million lesson in the importance of UI design: Citibank was trying to make $7.8M in interest payments. It sent $900M instead.

Basically, Citibank accidentally paid back its creditors in full, rather than just the normal amount, due to poor UI design.

Don't feel too bad for Citibank, though: they did not exactly treat their creditors well, and they were at risk of holding the bag, so this is a great windfall for those creditors to get their money back, which they otherwise might not have. A judge has ruled in favour of the creditors so far: while some have returned the money voluntarily, others have not, and under the law they don't have to, as they did not have a reasonable expectation that a mistake like this would be made by a bank like Citibank.

And this, kids, is why GUI design matters.

This is great.

Ah Schadenfreude, the funniest of mishaps.

Let's see how many basic principles of UI design immediately come to mind as violated there... it should always be clear to the user exactly what they're doing and the user should feel in control. A UI with a total lack of feedback on your actions, which does not make it clear what an option does, and which has barely any difference between extremely divergent states is really failing on that count. Before committing to any irrevocable it should clarify that what it's about to do is what the user intends (even before any human review in this case), which obviously didn't happen or just restated information already on screen. And any information which is entered but not used (or sufficient) should be made clear to prevent these mistakes: this account number is serving zero purpose with the instructions as set.

Not to mention needing it to be set in three separate places to do this. Not only is this a violation of all ideas of clarity or feedback, it's overly difficult.

And ugh, that screen... it looks like Baby's First GUI.

"The actual work of entering this transaction into Flexcube fell to a subcontractor in India named Arokia Raj."

"Citibank's procedures require that three people sign off on a transaction of this size. In this case, that was Raj, a colleague of his in India, and a senior Citibank official in Delaware named Vincent Fratta. All three believed that setting the "principal" field to an internal wash account number would prevent payment of the principal."

"Ordinarily, paying back a loan early wouldn't be a big deal, since the parties could simply negotiate a new loan on similar terms. But in this case, some of the lenders were not on good terms with Revlon and Citibank."

So, a perfect storm of poorly designed interfaces, yes, but also poorly designed procedures, training and customer relations. Combined with the Bank's strong-arm tactics with its financial partners, they just learned an expensive lesson about business practices.

Hopefully Arokia doesn't end up bearing the brunt of this.

Edited by DeMarquis on Feb 18th 2021 at 1:14:56 PM

Why would something so important be subcontracted out to someone in India?

Because it saves money.

Also it wasn’t fully subcontracted, a senior official within Citibank was required to be part of it.

This isn't "something important" it's just an everyday transaction that happens all the time. The low level employee did a low level task, and he asked his boss back at HQ to sign off on it. Everything worked exactly as planned except for the part where no one involved understood what they were doing.

Edited by Clarste on Feb 18th 2021 at 5:28:51 AM

Elon Musk loses the title of world's richest man as Tesla's shares slide, tied to Bitcoin stumbling recently.

Let's refund his wealth tax.

More like let's double it.

Play stupid games, win stupid prizes.

Why exactly is a car company investing in cryptocurrency? As it appears that this is tied to Tesla and not Musk's personal expenditure.

Because when the CEO is a Twitter memelord sometimes the company makes investments for shits and giggles.

Tesla is just Musk's personal pet project. Some rich people buy personal jets for their pet falcons and some buy hugeass yachts.

We're just lucky Musk's hobby is something useful to everyone else.

As the article noted, this may also be because Musk himself tweeted that Bitcoin is overvalued.

Investors should really demand that Musk just stop tweeting forever.

Edited by M84 on Feb 23rd 2021 at 10:02:16 PM

I hate to break up this party with facts, but here goes.

Tesla is a multi-billion dollar company manufacturing and selling batteries, electric vehicles, solar panels, electronics, and stationary storage, among other things. It is the single largest manufacturer of electric vehicles on the planet. Elon Musk is the largest shareholder but he only owns 20 percent of the company. (For comparison, Jeff Bezos owns approximately 11 percent of Amazon.) He is also the lead engineer and probably the single most knowledgeable person about all of its products. Musk does not invest himself. The only stock he owns is his ownership share in his companies.

Recently he has been discussing the merits of cryptocurrency, including bitcoin. There has also been substantial pressure from retail investors for Tesla to invest some of its cash reserves in bitcoin as a hedge against the dollar. Musk tweeted a few weeks ago that the company's decision to make that investment was not related to his personal opinion.

I have no idea if the recent volatility in bitcoin, Tesla stock, and others has anything to do with these moves, but it's a little rich (no pun intended) to directly blame everything that happens on Elon.

Edited by Fighteer on Feb 23rd 2021 at 9:17:55 AM

Well Tesla's not going to be a billion dollar company much longer if keeps doing stupid shit like hedging crypto against the fucking US Dollar.