Itâs a little hard to imagine a Nobel Prize in physics being shared by (1) a guy famous for advancing a particular hypothesis and (2) a guy famous for relentlessly attacking that hypothesis. This of course is what the Nobel committee has done with this yearâs economics award, with the added Hegelian twist of giving another third of the prize to a guy who came out somewhere in between. Thesis (Gene Fama)! Antithesis (Bob Shiller)! Synthesis (Lars Peter Hansen)!
This is, to a certain extent, further evidence that economics isnât a science like physics is a science (and yeah, yeah, the economics Nobel isnât a real Nobel prize). But thatâs not because economists are all frauds â itâs at least partly because economics is harder than physics. And the interaction over the decades between the differing ideas of Fama and Shiller, while maybe not exactly scientific, has certainly been enlightening, and had a huge impact on the world.
Like a lot of people, I know much more about Fama and Shiller than about Hansen. Thatâs partly because Fama and Shiller have been willing (downright eager, in Shillerâs case) to explain their work to the public, while Hansen apparently prefers to sit in his office and do math. Itâs also because Fama and Shiller are the obvious poles of the debate, while Hansen is one of a number of people who have been plowing the extensive acreage between them. I think he got the Nobel nod (instead of somebody like Andy Lo, or Mordechai Kurz, or Roman Frydman) because he was (1) very early to the game, (2) a macroeconomist (the Nobel people generally seem more comfortable with macro than with finance), and (3) most suited to being shoehorned into a narrative of steady scientific progress. Itâs also possible that Hansen just got the prize because his work is so great and/or has spawned lots of productive further research, but Iâm really in not in a position to judge that â his stuff is really dense. So Iâm not going to pretend that I know much about his contributions; you need to go elsewhere for that....
To solve the worldâs biggest challenges, such as climate change and inequality, the business community will have to play a critical role. And we need CEOs who understand the challenges and want to drive deep change in how business operates. Last month, nearly 200 CEOs declared, through the Business Roundtable (BRT), that the purpose of business is no longer just maximizing shareholder profit. But are they ready to follow through?...
What would be your perfect job? Although there are well-defined parameters around what people actually want from work, our career-related choices are not always consistent with those parameters â even when we are consciously aware of them....
The global financial crisis prompted many companies to pull in their horns, hoard cash, trim costs, and take a wary view of large investments. Yet the same crisis ushered in a new age of capital superabundance. Bain & Companyâs Macro Trends Group carefully analyzed the global balance sheet and found that the world is awash in money. Global capital balances more than doubled between 1990 and 2010 â from $220 trillion (about 6.5 times global GDP) to more than $600 trillion (9.5 times global GDP). And capital continues to expand. Our models suggest that by 2025 global financial capital could easily surpass a quadrillion dollars, more than 10 times global GDP....
