According to popular thinking an easy interest rate stance and monetary pumping by the Fed encourages borrowings and spending. More spending leads to a stronger economic growth and more employment.
It is however held that this time around an easy interest rate stance and money pumping are not working. Not only bank’s are reluctant to lend but also individuals are clinging to their money thereby weakening the aggregate demand and weakening prospects for economic recovery.
So how could the Fed force people to spend more?
The former White House Chief Economist and currently a Harvard professor of economics Gregory Mankiw offers a solution to this dilemma. (It May Be Time For The Fed To Go Negative — The New York Times April 19,2009).
Mankiw suggests that the US central bank could do the trick by offering negative interest rate.
Why not lower the target interest rate to, say, negative 3 percent? At that interest rate, you could borrow and spend $100 and repay $97 next year. This opportunity would surely generate more borrowing and aggregate demand.
But who is going to lend at negative interest rates?
Our Harvard professor offers the following solution to this dilemma. Mankiw suggests that the Fed could announce that a year from now all money with a serial number, between zero to nine, which is randomly selected, will no longer be legal tender.
Suddenly, the expected return to holding currency would become negative 10 percent. That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10. Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit.
The threat of confiscating people’s money (Mankiw calls it a tax on money) will force them to spend it — precisely what is needed to revive the economy, says Mankiw. He also of the view that a tax on money will also force banks to reduce their excess cash and boost lending.
In the week ending April 15 commercial bank loans stood at $5,996.7 billion — a fall of 1.6% from the end of January and a fall of 2.2% from November last year. (The data is adjusted for large commercial bank acquisitions of non-bank institutions in the week ending October 1 2008).
Banks surplus cash has continued to pile up. In the week ending April 22 banks excess reserves stood at $862.39 billion — an increase of $91.12 billion from the end of March. Note that between January 2000 to August 2007 the average level of excess reserves stood at $1.6 billion.
Another idea to boost spending, according to Mankiw, is that the Fed must commit itself to produce inflation ahead. In this case, borrowing at zero interest rate and repaying the debt with devalued dollars will provide an incentive to borrow and spend.
What however, drives the economy is not demand as such but the production of goods and services. The more goods an individual produces the more of other goods he can secure for himself.
This means that an individual’s effective demand is constrained by his production of goods. Demand, therefore cannot stand by itself and be independent — it is limited by production.
According to James Mill,
When goods are carried to market what is wanted is somebody to buy. But to buy, one must have the wherewithal to pay. It is obviously therefore the collective means of payment which exist in the whole nation constitute the entire market of the nation. But wherein consist the collective means of payment of the whole nation? Do they not consist in its annual produce, in the annual revenue of the general mass of inhabitants? But if a nation’s power of purchasing is exactly measured by its annual produce, as it undoubtedly is; the more you increase the annual produce, the more by that very act you extend the national market, the power of purchasing and the actual purchases of the nation…. Thus it appears that the demand of a nation is always equal to the produce of a nation. This indeed must be so; for what is the demand of a nation? The demand of a nation is exactly its power of purchasing. But what is its power of purchasing? The extent undoubtedly of its annual produce. The extent of its demand therefore and the extent of its supply are always exactly commensurate.[1]
If a population of five individuals produces ten potatoes and five tomatoes — this is all that they can demand and consume. No government tricks can make it possible to increase effective demand. The only way to raise the ability to consume more is to raise the ability to produce more. (Neither printing money nor tax on holding money can strengthen the ability to produce more).
The dependence of demand on the production of goods cannot be removed by means of loose interest rate policy and monetary pumping, or government threat of confiscating people’s money.
On the contrary the loose Fed’s interest rate stance and money printing will only impoverish real wealth generators and weaken their ability to produce goods and services — weaken the effective demand.
Notes
[1] James Mill, ‘On the Overproduction and Underconsumption Fallacies’. Edited by George Reisman, a publication of the Jefferson School of philosophy, Economics and Psychology — 2000.
{ 16 comments }
Mankiw’s plan is very clumsy and obvious. The government is at this very moment arranging to cheapen all US money by at lest 10%/year. It is called inflation, soon to come to every town in America.
That will convince the peasants, I mean people, to spend. All too soon, they will be bidding up the price of everything, desperate to get rid of cash and buy something tangible.
(sarcasm alert)
The magic of inflation will make everyone rich, as the cheapening money travels around faster and faster.
How did inflation work out in the 80′s. Stagflation anyone? Only a Harvard professor would conclude that printing up slips of paper will create wealth. I think the idea is to fool the people into working. Otherwise, they sit around enjoying themselves without a thought about raising the GDP statistics.
Even better would be to assign them productive work, after unemploying them through spending and tax policy.
If only the government could buy everything, and raise the GDP directly. A professor can dream, can’t he?
I concede that there is a thrill to Mankiw’s suggestion. Imagine the professorial power of telling everyone that you will take 10% of their stuff if they don’t get out there and work overtime. It is very satisfying to motivate people to be productive.
The only reason people put up with current inflation is because prices rise slow enough to take years to notice. However, once the Fed gets the printing press nice and hot, inflation will push prices up fast enough to be seen by even the most unaware.
Well put. It would seem obvious that prior to consumption something, other than paper money, must be produced. One wonders why does such an obvious concept elude mainstream economists? Is it missed on purpose because redistribution is the goal?
It seems that Harvard Economics today is still what Harvard Psychology was back in the 50′s and 60′s when B.F. Skinner, the Behaviorist, was its crown jewel.
What a great idea! It is not an entirely original idea though. I recognize elements of professor Mankiw’s plan as deriving from the Zimbabwean monetary policy.
The professor must have taken notes from how Zimbabwe increased aggregate demand.
Zimbabweans were forced to spend their money immediately because it depreciated so quickly and now aggregate demand has increased there so much people have taken to rivers and streams to pan for gold all day so that they can buy a loaf of bread.
Gosh… and they call us Gold Bugs “loonies…”
Clearly, if politically correct professors are allowed to suggest any “solution” except Constitutional [Gold and Silver] Money, we will get some really loony ideas! Nuking every tenth city could also… no, don’t go there!
Does anyone else out there get the feeling that we are living through the last few chapters of Atlas Shrugged? Got a nice, safe valley somewhere?
Easy, the government promises the bank fresh notes in excess of the loss on the loan, with the condition, of course, that they make the negative interest loan in the first place.
This is inflationary, but that is exactly what the Keynesians believe will solve this.
From Prof Mankiw: … “Unless, that is, we figure out a way to make holding money less attractive.
At one of my recent Harvard seminars, a graduate student proposed a clever scheme to do exactly that…. Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat” etc. etc.
This says much about Harvard. A grad student fails to recognize the relative insignificance of actual cash and the Professor thinks the student is clever.
Hmmmm.
Now, in spite of the shambles the good people at Harvard made of the case for negative interest rates, it still has merit. It revolves around four issues: 1) Encouraging actual production of goods and services. 2) Who would lend at negative rates and why? 3) International competition (competitive devaluations) and 4) inflationary impact.
1. It should be fairly obvious that lower interest rates are more likely to encourage borrowing than higher interest rates. In a capitalist economy, the cost of capital is a determinant of production.
2. Who would lend at negative interest rates and why? The Fed would because it increases the value of the Fed’s existing holdings of Treasuries. Just like any consumer oriented company buying down debt to promote sales of products from TV’s to appliances to autos, the Fed has a product to move – it has a shelf life and inventory carrying costs (figuratively). Why lend at negative rates when they can effectively encourage banks to lend by manipulating the yield curve by buying differing maturities of treasuries. One, because recent actions have only encouraged the banks to “investâ€, and two, borrowers want lower rates. Pushing on a string. (Not that the banks won’t borrow at negative rates only to keep playing their financial games.)
3. Domestic production has long been adversely affected by a strong dollar. Even at near zero percent, the dollar is gaining strength because other countries are finally figuring out the need to lower interest rates to stimulate their economies. What happens when all the central banks in the world reach zero? The options are to increase liquidity or lower interest rates because a de facto status quo does not allow export oriented economies to achieve their “competitive or comparative advantages. And the US will not be able to sustain a trade deficit of the magnitude needed to “bailout†the rest of the world.
4. Any inflationary impact of lower rates will only show up when the economy turns around. Has anyone noticed how any whiff of strength in the stock market results in strength in commodities, i. e. oil? Ultimately, the fiscal/monetary excesses will come together to push prices up at a faster pace than actual production. The main advantage of negative interest rates is to provide an option to the Fed that would mitigate the need to inject seemingly unlimited liquidity into the financial system. When the economy starts to rebound, the Fed could start raising interest rates. The signal that the Fed sends to banks and businesses is that “these rates won’t last forever, so better get your deals now.â€
“4. Any inflationary impact of lower rates will only show up when the economy turns around.”
The inflationary impact will show up when formerly submarginal borrowers become marginal borrowers and obtain resources that they would not have been able to obtain absent coercive government policy.
What will the effect be of the formerly submarginal borrowers on the structure of production?
What Prof Mankiw is advocating is 10% deflation per year. Which is funny because he advocates this half ass scheme (half ass because the proposition is only about banknotes and there are other parts of the money supply) for 10% deflation because he is afraid of deflation and wants to inflate the money supply without any withholding problems from banks.
re: ktibuk
He’s threatening to deflate so that it would inflate. lol
The general problem is (at least in the US and in the rest of the post-industrialized countries) is that the regulations, bad schooling system and welfare state crippled the inventivenes, crippled the ability of the industry to produce new things, and we all have most of the things, we buy a new car every 3-6 years, and all the cars can go much more, we buy a new cell phone every 1-2 years, a new TV a new everything because the industry don’t have incentives to develop new products, they just polish the existing ones. This is why even without the stupid fiat money robbery system we live in, the industry is less and less capable to come up with real meaningful future products and this is why it is harder and harder to employ the rising workforce and the only way we can have stable employment is to make up positions completely unneeded in the marketplace and to made people to pay for those unneded services by politics.
Too many people live by political means (Franz Oppenheimer) directly or indirectly instead of live by economic means. The socialist marketplace encourage political and discourage economic… that is why people invest in title not in knowledge, title is what buy you political strenght, the early 19. century China has walked this route, they was the No.1 economic power in 1800 with 30% of world production and with 40% of trade and they had only 5% of world production in 1900.
If politics pay off better then production, people will invest in politics, they will gradually become (directly or indirectly) predators instead of producers. Spending predators, they spend other people money. As Mises teach us, only accumulation of capital can rise the level of production and only the higher level of production can result in a higher level of consumption (long term) all other “solutions” are just temporary and payed by someone else thus predatory. Production made America the No.1 economy not spending. If the projected spending is higher then the projected production we are in trouble, the answer is not more spending the answer is more production (and then more spending), we have to build the production level which will be able to support the higher spending level. And production level can rise ONLY by the combination of a few factors: capital accumulation (saving), free market and free education. So the answer is not more spending, the answer is more saving… but more saving is meaningless if there is no free market and free education.
This is so fascinating that I feel the need to write some more on it
“Mankiw suggests that the Fed could announce that a year from now all money with a serial number, between zero to nine, which is randomly selected, will no longer be legal tender.”
Well this is outright deflation of the money supply. The holders of money would lose 10% of the nominal value of their money.
“People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.”
Who is losing 10%? In nominal terms every money holder. And because of this very fact, in real terms nobody. Since this is a sudden deflation that effects every money holder, its effect are neutral.
You can do a much more radical neutral deflation by removing zeros from notes. Remove one zero and you have 90% deflation.
And this has been done many times in the history of many countries after years of inflation. In Turkey, where I live, the CB removed six (6) zeros from the currency just a couple years back. What used to cost one million lira one day, cost 1 lira the next. Nobody got any poorer or any richer and nothing changed regarding lending, interest rates or anything.
Does anyone else notice the similarity between Mankiw’s plan and the same plan offered by monetary crank Silvio Gesell in his Natural Economic Order?
http://www.appropriate-economics.org/ebooks/neo/neo2.htm
I suppose old habits die hard.
What are they teaching/reading/drinking at Harvard?
Fiat-fizz.
Like Carl Schramm and Schrammeconomist statists, high-tech incubator Harvard MBAs generally ignore the exalted genius of F.A. Hayek and Ludwig Von Mises, who simply say that funds ought go first and foremost to innovators and entrepreneurs, and not to central-planning, risk-free, innovation-averse, uncreative bureaucrats who condescendingly see entrepreneurs and innovators as poor, helpless, timid souls who need incubation in their “benevolent” corproate-state incubators designed to transfer the technology from the timid, helpless entrepreneur for the greater good of all. All that the entreprnuer really needs is to get some of Kauffman’s funds while the MBAs get out of the way, but then where would the value of a Harvard MBA be in such a system? Kauffman wished for his funds to support entreprneurs and innovators, as Kuaffman knows that his vast fortune was not born in an incubator conceived by some innovationless MBA. Oh the irony–the MBAs greatest value is to never notice it, and to smile, smile, and smile as Tolstoy calls them out.
Bo Fishback will be hanging the following quote above the entrance to his incubator/conservatory: “I sit on a man’s back, choking him, and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by any means possible, except getting off his back.†–Tolstoy Writings on Civil Disobedience and Nonviolence
The MBA incubator’s fundamental precept is that without him, the entrepreneur has no value. All too often this becomes a self-fulfilling prophecy, as while the MBA is paid, the incubator fails to produce more wealth than was invested into it, save for that infamous moment in history whence worthless companies were taken public in ponzi schemes, or that other moment, whence worthless mortgages were sliced and diced and sold and gambled with, and that other infamous moment in history whnce the government rewarded all the gamblers and Harvard MBAs with massive taxpayer bailouts. The Harvard MBA excels at wealth destruction and wealth transfer, and some combination of the two are most generlaly manifested in their “incubators.” Sprinkle a little bit of indecipherable Schrammenomics on it, and one has a surfire way of enriching oneself from the funds of a dead entreprnuer’s foundations, while serving the spirit of entreprnuership in no discernable manner, but only opposing and eroding it.
The reason why entrepreneurship/technology incubator programs generally fail, besides lining the pockets of the risk-free “too cool to innovate or invent/too big to fail” founders with cash from foundations, is that they exalt the MBA/Bo Fishbacks over the innovators, entrepreneurs, and creators. To make a long story short, they fail because they try to privatize profits and socialize risk via the MBA bluff which the public/true entrepreneurs/innovators/inventors are growing tired of.
http://www.alternet.org/story/111376/?page=entire
“The multiple failures that beset the country, from our mismanaged economy to our shredded constitutional rights to our lack of universal health care to our imperial debacles in the Middle East, can be laid at the feet of our elite universities. Harvard, Yale, Princeton and Stanford, along with most other elite schools, do a poor job educating students to think. They focus instead, through the filter of standardized tests, enrichment activities, advanced-placement classes, high-priced tutors, swanky private schools and blind deference to all authority, on creating hordes of competent systems managers. The collapse of the country runs in a direct line from the manicured quadrangles and halls in places like Cambridge, Mass., Princeton, N.J., and New Haven, Conn., to the financial and political centers of power. ” –http://www.alternet.org/story/111376/?page=entire
Incubators are generally wealth-transfer mechanisms set up by innovationless MBAs to exalt themselves over the innovators and line their own personal pockets while also perpetuating the myth that innovators cannot succeed without them (a remarkably fallacious notion dispelled by google/Dell/Microsft/Starbcucks/Yahoo/Myspace/Facebook/Twitter/Apple/Ford/GM/AT&T/IBM/reality), as they maneuver themselves in-between innovators and the innovator’s natural place in the academy/institution, while simultaneoulsy undermining the innovator’s work, thusly bolstering their original, dire, and decpetive myth that innovators cannot succeed without their incubator. Two things are accomplished in setting up an incubator/conservatory–firstoff a permanent position is granted to the riskless MBA who can blame any shortcomings on the innovators’ inability to understand their supreme MBA wisdom (whcih has killed classic capitalism), and secondly, the MBA can leverage their position in undermining the innovators’ natural wealth creation while putting out PR releases that innovators and inventors are worthless without their incubators, while simultaneously lining their pockets with funds that the nobel Ewing Marion Kauffman had meant for entrepreneurs and innovators.
If Bo Fishback wants to witness a successful technology-transfer program, all he has to do is look towards Stanford, where the creators are left alone. MBAs do not set up incubators to siphon their money away. Acaemeics are respected, and thus mere grad students–such as the yahoo founders and google founders–are allowed to own and run their own companies. Never would schramm and his army of mbas/laywers amdit to/acknowledge this. Google’s first ten hires were not MBAs, but engineers–builders, creators, and innovators. google did not see the need to hire MBAs to try and take credit for all their innovative work while stifling their progress. And like Apple, Facebook, Microsoft, and Virgin, Google is not lead by MBAs. An MBA tried to wring Apple from Jobs’ hands, and almost killed the company, before bringing him back.
The Bo Fishbacks create the myth that an entrepreneur is worthless without the MBA, and that the entrepreneur must come to Mommy’s incubator/womb because Mommy has an MBA, and sign over all of his/her innovations, inventions, and ideas while sitting in the incubator’s cubicle. The MBA announces to the world that he stands for welath creation and the greater good of society, and that the selfish entreprnuer is a useless heathen without their MBA “growthology” buzzwords. The MBA will then promise to pour his secret sauce on the innovations/inventions, and ideas, while letting them incubate. Sooner or later the innovator will realize that they are doing all the work anyway, so why are they giving up their equity? Then they will realize that no great company, such as Berkshire Hathaway, Apple, Dell, IBM, Microsoft, Facebook, Twitter, ever began in an incubator lined with swarmy MBAs and schrammeocnomists. When they try to leave, the incubator heads will send their schrammenomic lawyers forth to destroy the innovations and innovators, funded by an enormous Foundation which was never meant to fund MBAs and lawyers, but entrepreneurs, academics, and innovators; but which was somehow hijacked and transformed into a personal vanity press and ATM machine for loyal, sycophantic shrammeconomists.
There is a reason Schramm only hires fellow Schrammeconomists who never read the Nobel Laureate eocnomist F.A. Hayek; for if they did (or if they noticed the success of Stanford’s hands-off approach and the epic track record of failed MBA incubators), they would not be able to launch centrally-planned incubators of their own. It takes a village to raise a child, we are told, and I guess it takes the village idiot to launch an incubator, for only the village idiot can exlat themselves above history, reality, and the innovator and inventor while actually believing the MBA incubator’s myth, even after it has been refuted in theory and practice and relaity ten thousand times over.
Hayek reminds us of the incubators’ fundamental fallacy–of its fundamentally flawed structure which is set up to provide the MBA a risk-free salaray and pension while also transferring the wealth of those “naughty, risky entrepeneurs” into the incubator’s pockets, should the entrepreneur be able to carry the incubator’s bureuacracy on his/her back and still somehow succeed. Hayek writes:
And the incubator/conservatory profits to the extent that it refrains from funding entrepreneurs and innovators while perpetuating the myth that MBAs alone can save entreprneurs from failure, even though it was an MBA who almost killed Apple by firing the entrepreneur Steve Jobs, before Jobs was brought on back.
The MBA is generally not all that creative nor innovative, and as everyone has to make a living, their first instinct is to profit off the works of others, as we witnessed in this era of massive welath transfer which the MBA never criticizes.
http://www.alternet.org/story/111376/?page=entire “The Best and the Brightest Have Led America Off a Cliff”
Insetad, the MBA focuses on 1) ignoring innovators and entrepreneurs, 2) funeling foundation’s funds into their own pocket, and 3) setting up a conservatory/incubator which can fail forward for decades more, as the MBA blames the entrepreurs’and innovators for the incubators’ failures while pocketing a steady salary for ignoring the fact that the vast, vast majority of high-growth companies came from far, far beyond the incubator. So it is that Schrammenomics embraces the incubator, as it turns entrepreneurship on its head, exlating the MBA/Statist/economist over the innovator and creator, as the MBAs/schrammeconomists never fight against the burgeoning government and bailouts for their banker Harvard MBA friends, but only set up dog-and-pony show incubators which they think they can finally make work by calling them “conservatories,” while they simultaneously siphon the funds that Ewing Marion Kauffman had meant for tomorrow’s innovators and entrepreneurs, thusly augmenting their both their private nest eggs while further impeding innovators and inventors, and serving the myth that what is needed is more shcrammenomics and more MBA conservatories which guarantee innovationless economists/MBA/Statists secure positions while alos giving them the opportunity to privatize the profits of the risk takers, and socilaize the risk. This is the #1 talenty/occupation of the postmodern MBA/JD–the ability to use smoke and mirrors–to play the mere word games that transfer wealth into one’s owns pockets, while transferring risk to others–be it via the inflation tax or an “incubator/conservatory.” This would all be fine and great, but that for it is the exact opposite of entrepreneurship and actually profits via the destruction and erosion of the entrepreneurial spirit.
Ergo after seven years of Schrammenomics and Fishbackian tech incubators, which naturally must reallocate cpital menat for entreprneurs and innovators into fishback’s and schramm’s pockets, look at the economy. Millions of jobs and homes are being lost, as the Harvard MBA bankers make out in a vast manner, while the individual innovator and inventor is taxed, traduced, and ignored by the Schrammenomics juggernaut which prefers to buy itself George Eastman Kodak medals and speak to the rich bankers at the Milken institute, rather than focus on serving tomorror’s rich and today’s true innovators and entrepreneurs.
“Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow…†–Ludwig Von Mises talking about why Carm Schramm goes to the $ 3,995.00/head Milken Institute to address his fellow corporate-statists on Kauffman’s dime, instead of funding innovators, true academics, entrepreneurs, entrepreneurship, and inventors who are losing their homes and businesses as the eocnomy withers after seven lonmg years of Schrammenomics and Schramm funnels himself and his growthology buzzword-bloggers millions from the Kauffman endowment (which was meant to go to entrepreneurs, true academics who are not afraid to quote Hayek and Mises, and innovators), while pretending to serve the innovators and entrepreneurs Schramm opposes in his characterless actions and by saying one thing while doing another.
“Profit is not related to or dependent on the amount of capital employed by the entrepreneur. Capital does not beget profit. Profit and loss are entirely determined by the success or failure of the entrepreneur to adjust production to the demand of the consumers.” –Ludwig Von Mises
Incubators generally turn the above on its head, trying to tell entrepreneurs that they need the incubator’s contacts and capital; even through it are the entreprneurs’ ideas which will have the true value.
Famous companies created outside of “tech incubators” nannied by condescending MBAs and “Bo Fishback” bureaucrats include, Facebook, Microsoft, Google, Dell, Apple, Virgin, Yahoo, and Mark Ecko enterprises. Famous companies created inside the confines of Bo Fishbackian incurbators include the Schrammenomics vanity press once known as the Kauffman Foundation.
What the Harvard MBAs/economists/Statists always miss are two things–historical reality and sublime ecomomic theory. Blessed with a blindness to reality and a general aversion to reading, they press on with all the best intentions, reinstituting yesterday’s failed incubators with a slightly different twist, such as calling it a “conservatory.” Yes, just as students learn music and the art of performance in a conservatory such as Juliard, students will learn how to chant “growthology” and “shrammenomics” in unison in Bo’s Fishbackian conservatory which will be sure to create high-growth firms; as Microsoft, Facebook, and Mark Ecko enterprises were all created in incubators headed by Statist MBAs who primary concern was not innovation and inventing (as Kauffman conveniently refuses to fund inventors, entrepreneurs, academic economists quoting mMises and Hayek, and innovators) but lining their own private pockets with millions upon millions.
What the Statist/MBAs always miss are the contradictions between their own wealth-subtracting ambitions and the actual reality of how true entrepreneurship and innovation works.
“The only source from which an entrepreneurs profits stem is his ability to anticipate better than other people the future demand of the consumers.”
“Six years ago Burke was responsible for setting up CranfieldCreates, a business incubator modelled on the latest fashion in the private sector. Many other business schools were doing the same. ‘I was deeply involved in dot-com and was swept up in the euphoria like everyone else,’ he admits. The incubators lasted a couple of years. ‘Unless they were enormously heavily financed they couldn’t survive once the bubble burst. It was a typical technology wave; a bounce-back followed by a period of consolidation.’” –http://findarticles.com/p/articles/mi_qn4158/is_20050512/ai_n14623642/
–http://mba.eiu.com/index.asp?layout=view_article&eiu_article_id=758101675
Pursuing your MBA
Why b-school incubators failed to hatch
08 Mar 2005
In response to the dot.com boom, business schools rapidly set up “incubators†to help their students create their own businesses and greatly increased their e-commerce and entrepreneurship courses. Five years on, is the emphasis still the same?
“Exactly five years ago, at the very peak of the dot.com stock-market boom, The Economist concluded a long analysis of the phenomenon with the admonition: “Don’t bet on this fairy tale having a happy endingâ€. As it turned out, this was prescient. Within weeks, the newspaper was reporting on April 14th 2000—”Black Fridayâ€â€”when the technology-heavy US Nasdaq Index dropped to 3,321, over 34% lower than the record high reached on March 10th.
A great deal worse was to come. According to the Business Plan Archive, a US government-funded research initiative, 835 Internet businesses in the US went bust between January 2000 and April 2002.”
–http://mba.eiu.com/index.asp?layout=view_article&eiu_article_id=758101675
Einstein defined insanity as doing the same thing over and over and expecting different results. Schrammenomics takes great pride in never reading Esintein in addition to compeletly ignoring F.A. Hayek and Ludwig Von Mises, as by ignoring great minds and reality, they are able to line their pockets with others’ wealth and still sleep at night, while profiting by pretedning to serve the people and entrepreneurial spirit they oppose by their very actions.
Bo Fishback will be hanging the following quote above the entrance to his incubator/conservatory: “I sit on a man’s back, choking him, and making him carry me, and yet assure myself and others that I am very sorry for him and wish to ease his lot by any means possible, except getting off his back.†–Tolstoy Writings on Civil Disobedience and Nonviolence
1 january 2011
“ecocrises 2011″
i had written so many letters, comments, suggestions
with regards to the economy, but no one is listening
maybe i’m not that good, i don’t have the personality
i already wrote that the u.s. economy is going nowhere
yes, it is not on the right path, trust me more and
more citizens are going to loose their jobs
economic crises will stay whether we like it or not
believe me, there will never be any recovery
they all have the brains, but sorry to say,
they are not using it.
let’s still hope and pray,
God bless . . . . . . . raul
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