Thursday, 22 May 2014

The National Debt Clock



The following Link shows the National (US) Debt Clock in action...       http://www.usdebtclock.org


Blogger Ref Link http://www.net/p2pfoundation.net/Transfinancial_Economics








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Coordinates: 40°45′23″N 73°59′02″W / 40.756329°N 73.983921°W / 40.756329; -73.983921
Photo of the National Debt Clock on September 15, 2009, at which time it reads approximately 11.8 trillion USD in national debt
The National Debt Clock on September 15, 2009, at which time it read approximately 11.8 trillion USD in national debt
The National Debt Clock is a billboard-sized running total display which constantly updates to show the current United States gross national debt and each American family's share of the debt. It is currently installed on Sixth Avenue in Manhattan, New York City.
The idea for the clock came from New York real estate developer Seymour Durst, who wanted to highlight the rising national debt. In 1989, he sponsored the installation of the first clock, which was originally placed on Sixth Avenue—between 42nd Street and 43rd Street—one block away Times Square. At the time, the national debt remained under $3 trillion but was rising. The clock was temporarily switched off from 2000 to 2002 due to the debt actually falling during that period.
In 2004, the original clock was dismantled and replaced by the current clock at the new location one block away. In 2008, the U.S. national debt exceeded $10 trillion for the first time, leading to press reports that the clock had run out of digits.[1][2][3][4]
The original clock outlived Seymour, who died in 1995, with Seymour's son Douglas taking over responsibility for the clock through the Durst Organization. As of September 2009, Douglas Durst's cousin Jonathan "Jody" Durst, with whom he currently shares a co-presidency of the company, is in the process of taking over the day-to-day operations as president. In an interview with The New York Times, Jonathan Durst has said that maintenance of the clock is planned "for years to come."[5]


History[edit]

Clock concept[edit]

Invented and sponsored by New York real estate developer Seymour Durst, the National Debt Clock was installed in 1989.[6] After Seymour's death in 1995, his son Douglas Durst became president of the Durst Organization which owns and maintains the clock.[7][8][9]
Douglas Durst has been quoted as saying that the clock represents a non-partisan effort; he has further explained the motivation behind the project in terms of intergenerational equity: "We're a family business. We think generationally, and we don't want to see the next generation crippled by this burden."[10]
According to Douglas Durst, his father had been toying with the basic idea of drawing attention to the growing national debt since at least 1980, when during the holiday season he sent cards that said "Happy New Year. Your share of the national debt is $35,000" to senators and congressmen.[11] In the early eighties, when Durst first developed the idea of a constantly updated clock, the technology required to implement the project was not yet available.[10]

First clock[edit]

Photo of the first National Debt Clock at the original location near Times Square
The first clock at the original location near Times Square (2002)
With the national debt at 2.7 trillion dollars, the original 11 by 26 feet (3.4 m × 7.9 m) clock was constructed in 1989 at a cost of $100,000.[7] It was mounted a block from Times Square, on a Durst building at Sixth Avenue near 42nd Street, facing the north side of 42nd Street and Bryant Park across the intersection. Built by the New York sign company Artkraft Strauss, the clock featured a dot-based segment display emulating the then-typical character resolution of 5x7. Similar to the second clock, the updating mechanism was such that the display was set to the estimated speed of debt growth (odometer-style) and adjusted weekly according to the latest numbers published by the United States Treasury.[7][9][12] Up until the week before his death, Seymour Durst himself adjusted the tally via modem.[7] Since his passing, Artkraft Strauss has been keeping the figures current.[7]
In 2000, due to an improving debt situation, the clock started to run backward.[8] With the original purpose of the clock being to highlight the rising debt and the reverse giving a mixed message, and with the display not being designed to properly run backward, the clock was unplugged and covered with a red, white and blue curtain in September 2000, with the national debt standing at roughly 5.7 trillion dollars.[10] The clock was not dismantled, however, and in July 2002 the curtain was raised and the clock once again picked up tracking a rising debt, starting at 6.1 trillion dollars.[13]

Second clock[edit]

In 2004, the original clock was moved from its location near 42nd Street; the building has since made way for One Bryant Park. An updated model, which can run backward, was installed one block away on a Durst building at 1133 Avenue of the Americas (more commonly known as 1133 Sixth Avenue).[10][14] It is mounted on the side wall of the building which faces W. 44th Street. The new clock is outfitted with a brighter seven-segment display with multiple LEDs per segment, allowing the numbers to be read more easily.
In the midst of extensive media attention during the financial crisis beginning in 2007, some news reports mentioned the National Debt Clock, highlighting the fact that its display had run out of digits when the U.S. gross federal debt rose above $10 trillion on September 30, 2008.[1][2][3][4]
An overhaul or complete replacement adding two more digits to the clock's display is currently being planned.[12][15][16]

Similar projects[edit]

Photo of the German national debt clock at the Berlin headquarters of taxpayer watchdog group Bund der Steuerzahler
German national debt clock at the Berlin headquarters of taxpayer watchdog group Bund der Steuerzahler
The idea of conveying a message through a periodically updated clock found an earlier expression in the Doomsday Clock. However, the innovation of the National Debt Clock was to feature a constantly running counter; it has since inspired similar projects elsewhere, both in the United States and further afield.[7][17] Various tracking counters of national debt are also kept online.[18]
The National Debt Clock has also been credited as the inspiration behind other running totalisers, for example an AMD campaign employing an electronic billboard; instead of a debt, it tracked the supposed additional cost of using a rival chip.[19]

See also[edit]

References[edit]

  1. ^ Jump up to: a b "National Debt Clock runs out of digits". London: timesonline.co.uk. October 9, 2008. Retrieved 2008-10-10. 
  2. ^ Jump up to: a b "The Debt to the Penny and Who Holds It — Daily History Search Application". TreasuryDirect. September 30, 2008. Retrieved September 15, 2009. 
  3. ^ Jump up to: a b "Debt clock can't keep up (CNN video)". cnn.com. October 4, 2008. Retrieved 2008-10-05. 
  4. ^ Jump up to: a b "US debt clock runs out of digits". BBC News. October 9, 2008. 
  5. Jump up ^ Marino, Vivian (September 11, 2009). "Square Feet | The 30-Minute Interview: Jonathan Durst". The New York Times. Retrieved September 15, 2009. 
  6. Jump up ^ Daniels, Lee A. (November 8, 1991). "Chronicle". The New York Times. Retrieved 2008-10-06. 
  7. ^ Jump up to: a b c d e f Toy, Vivian S. (May 28, 1995). "The Clockmaker Died, but Not the Debt". The New York Times. Retrieved 2008-10-06. 
  8. ^ Jump up to: a b "National Debt Clock stops, despite trillions of dollars of red ink". CNN, AP, Reuters (hosted on Internet Archive's Wayback Machine). September 7, 2000. Archived from the original on 2008-01-29. Retrieved 2008-10-05. 
  9. ^ Jump up to: a b Upham, Ben (May 14, 2000). "NEIGHBORHOOD REPORT: TIMES SQUARE; Debt Clock, Calculating Since '89, Is Retiring Before the Debt Does". The New York Times. Retrieved 2008-10-05. 
  10. ^ Jump up to: a b c d "US debt clock running out of time, space". China Daily / AFP. 2006-03-30. Retrieved 2008-10-05. 
  11. Jump up ^ Koh, Eun Lee (August 13, 2000). "FOLLOWING UP; Time's Hands Go Back On National Debt Clock". The New York Times. Retrieved 2008-10-06. 
  12. ^ Jump up to: a b Rubinstein, Dana (October 6, 2008). "Durst To Add Extra Trillion Dollar Digit to National Debt Clock". observer.com. Retrieved 2008-10-08. 
  13. Jump up ^ Stevenson, Robert W. (July 13, 2002). "White House Says It Expects Deficit to Hit $165 Billion". The New York Times. Retrieved 2008-10-06. 
  14. Jump up ^ Haberman, Clyde (March 24, 2006). "We Will Bury You, in Debt". The New York Times. Retrieved 2008-10-06. 
  15. Jump up ^ Boniello, Kathianne (October 5, 2008). "'1' Big Tick is due for Debt Clock". nypost.com. Retrieved 2008-10-08. 
  16. Jump up ^ "U.S. debt too big for National Debt Clock (MSNBC video)". NBC Nightly News. msnbc.com. October 7, 2008. Retrieved 2008-10-08. 
  17. Jump up ^ "Debt Clock Moves Next Door to Government". Deutsche Welle. June 18, 2004. Retrieved 2008-10-05. 
  18. Jump up ^ Examples for online debt tracking resources include treasurydirect.gov, brillig.com and others, see External links below.
  19. Jump up ^ Hesseldahl, Arik (May 3, 2006). "AMD Sticks It to Intel—Again". BusinessWeek.com. Retrieved October 27, 2009. 
  20. Jump up ^ "indieWIRE INTERVIEW: James Scurlock, director of "Maxed Out"". indieWIRE. March 11, 2007. Retrieved 2008-10-10. 

External links

Wikimedia Commons has media related to US National Debt Clock.
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Tuesday, 20 May 2014

Students are taking on old economics – and winning


Photo credit:   Alex Proimos
MAY 19, 2014 // BY: ALICE MARTIN/ New EConomics foundation 


This is getting exciting.  With student groups across 30 countries now calling for change, it’s clear the campaign to reform university economics curriculums is reaching new heights.
Just last month the Executive Director of Financial Stability at the Bank of England, Andy Haldane, publically backed the students’ argument, agreeing it is high time “to rethink some of the basic building blocks of economics.” He added to their already sizeable list of high profile supporters, including economist of the day Thomas Piketty and renowned Cambridge scholar, Ha-Joon Chang.
What are they asking for?
The student movement is objecting to the dominance of neoclassical models of economics taught by the vast majority of university economics departments across the world: models that continue to promote profit-led decision making despite international financial instability and widening inequality.
Rather than being taught to regurgitate old theories, the student movement is calling for degrees that analyse and evaluate economic systems, decisions and models in a real world context. They object to the surrendering of political, social and environmental systems to financial markets, and want to study instead an economics that fulfils its real responsibility – answering how the world’s population can live well without further draining the planet’s resources.
The broader syllabus the students are proposing would address the major events that have shaped our current economic outlook, the most obvious of which being the 2008 financial crisis.  With the impact of the crisis still sending tremors through the economic stability of nations andhouseholds alike, it is crucial that rigourous, academic research into its causes is fostered. For this the students recognise a ‘pluralist’ approach is needed. This means a range of theories and schools of thought would be studied, instead of continuing the one theory fits all approach.
65 student groups, including those based in Oxford University and LSE here in the UK, and Jadavpur University in West Bengal, India, to name just three, have signed this open letter outlining their shared demands.
Why is this important for the rest of us?
Since the financial crash economics itself has been in crisis. With politicians pulling in different directions to try and rationalise what happened, most people have been left with no option but to soldier on with their own personal financial crises. MPs have pushed through austerity as a solution to the UKs national financial woes, despite the approach being based onwholly false economic grounds. And their damaging slight of hand has worked. Why? Because with bamboozling stock market figures and complicated national debt calculations, most people feel they have to leave economics to the ‘experts’.
But what happens when it turns out the experts don’t have all the answers? Just as we saw recently with the Bank of England’s welcome exposé onhow the modern monetary system works, economics is by no means a settled science.
This is why it’s so important that those embarking on degrees in economics are taught how to challenge the models and theories that aren’t working. And the message the students are sending out is that under the current curriculum, they are not able to do so.
Universities are listening
The University of Manchester have chosen not to renew the contract of a lecturer who set up an out-of-hours class ‘Bubbles Panics and Crashes’ to broaden the undergraduate syllabus. Despite this setback for the movement, other universities are starting to listen to the students’ calls. Kingston University last week released a statement in support of their demands “for genuine reform of economics education”. With other universities expected to follow suit, the student led action has the potential to make a profound change. A ripple effect through the financial industries is perhaps too far off to get excited about, but a reformed curriculum is certainly a bold first step.
For those keen to find out more about what changes are being proposed, the UK based student group Rethinking Economics are planning a public conference in London this June.  And the International Student Initiative for Pluralism in Economics (ISIPE) website has full details of the groups, and supporters involved. 
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Friday, 16 May 2014

Let’s take Piketty proposal for global wealth tax seriously

Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics

Karsten Moran/The New York Times
Attendees at a recent speech given by Thomas Piketty picked up copies of the French economist’s book Capital in the Twenty-First Century at the City University of New York.
Published: 15 May 2014 07:52 PM
Updated: 15 May 2014 07:52 PM

I’ve complained about Thomas Piketty’s Capital in the 21st Century, and I still think it’s been vastly overpraised, but I don’t go along with every criticism others have made. As a matter of fact, I think one idea that’s been roundly dismissed by fans and critics alike deserves to be taken more seriously: the proposal for a global wealth tax.
From the left, James Galbraith of the University of Texas in Austin says the idea is futile: “Why spend an entire chapter on it — unless perhaps to incite the naive?” Daniel Shuchman in The Wall Street Journal says it ignores the sources of prosperity: “He breezily assures us that none of this would reduce economic growth, productivity, entrepreneurship or innovation.” Tim Worstall at Forbes says it’s a logical impossibility. “Mr. Piketty’s focus on soaking the rich smacks of socialist ideology, not scholarship,” says The Economist.
Piketty acknowledges that the tax is utopian and, as in the rest of book, he spends no time interrogating his big conclusions or trying to improve them. But if you unpack the idea a little, it starts to look better. When it comes to feasibility, you might even claim that policy is moving this way.
On equity and efficiency grounds, it makes sense to tax wealth. The practicalities, though, are daunting. Flight to low-tax jurisdictions — the rationale for making a wealth tax global — is only one of many difficulties. To levy a tax each year, you’d need an annual accounting of wealth, which isn’t easy to do, and you’d have to contend with the fact that wealth doesn’t always produce a flow of income that can be used to pay what’s owed.
The best way to tax wealth is to tax capital income as it’s realized and, once a lifetime, tax inheritance. Tax authorities generally pay lip service to this concept, but they execute it badly.
In America, capital gains are taxed when realized, though at a preferential rate. More important, as Warren Buffett could tell you, investments can soar in value for decades without gains ever being realized or tax ever coming due. Incredibly, when those assets are passed to heirs, their value gets a new base — and the unrealized gains simply disappear for capital gains tax purposes. True, the estate is then supposedly taxed in its own right, but the wealthy can find ways around that, too. The result is that enormous accumulations of income — that is, wealth — can escape tax altogether.
What’s needed is moderate but effective taxation of capital income combined with moderate but effective taxation of inheritance, so that unrealized gains are brought back into the tax base, either during the course of an investor’s life or at death. In the case of the very rich, attuned as they are to tax-avoidance opportunities, effectiveness does require international co-operation. But here’s the thing: That part is already happening.
Bear in mind that the U.S. taxes its citizens wherever they live and work in the world. In that sense, the U.S. already collects a global income tax. In addition, in recent years, the U.S. authorities have been waging war on foreign tax shelters and bank-secrecy laws. In some ways, this campaign has gone too far: The rules have become burdensome for ordinary taxpayers who have lived or worked abroad. (Many Americans complain that foreign banks and financial companies no longer want them as clients — too much record-keeping and reporting.) What’s interesting, though, is just how far foreign jurisdictions have gone in accommodating U.S. demands for compliance with U.S. standards.
Plutocrats are mobile and can live and work where they please. They can hire teams of lawyers to advise them on domicile, residence, citizenship and any of a thousand factors that will affect their tax liabilities. Co-operation among tax authorities in closing loopholes is therefore necessary. But it’s happening and is likely to go further.
Piketty’s nightmare of rule by oligarchs rests partly on his assumption that international tax competition will drive capital taxes to zero. In fact, greater cooperation among governments is already helping to ensure that the very rich pay their taxes. Combine this with reform at the national level to recapture unrealized capital gains for tax purposes, and you could tax global wealth without ever needing a “global wealth tax.”
Not quite as momentous as Piketty’s overblown “central contradiction of capitalism” — but on taxing wealth, he has a point.
Clive Crook is a Bloomberg View columnist and a member of the Bloomberg View editorial board. Follow him on Twitter at @clive_crook.





 



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Five dynamic pricing issues retailers should consider

by Patricio Robles 25 January 2013 14:01     Source Ref Econcultancy Blog
Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics
From social media sentiment analysis to digital ad buying, faster is increasingly seen as better, or at least necessary.
So it's no surprise that the ability to generate lots of data and analyze it rapidly is changing the way products and services are sold.
Last year, Orbitz raised eyebrows when it was revealed that the online travel site rearranges the order of hotel search results, displaying more expensive lodging options to users it had reason to believe, based on data analysis, were more likely to be willing to pay a premium.
In the retail space, a similar data-driven approach to product pricing is increasingly being employed. Amazon is perhaps the best and most widely-known user of dynamic pricing, where the prices of products changes regularly over short intervals, if not in real-time. But as detailed by AdAge's Kate Kaye, Amazon is hardly alone. Other retailers are jumping on the dynamic pricing bandwagon too.
That could be a good thing. By analyzing competitor pricing data on an ongoing basis and using it to adjust their own prices, retailers can, in theory, optimize sales. And, as Kaye points out, dynamic pricing can be a tool for fighting showrooming.
But dynamic pricing isn't without risks. Here are five things retailers should consider when evaluating whether to employ it, and how much to employ it.

1. Customer perception

Many consumers aren't aware of the fact that retailers alter prices on a regular basis, and did so even before the advent of online retail, but as it becomes more noticeable thanks to the web, retailers must consider the perception issues it raises.
Put simply, a customer who observes that a product can become cheaper or more expensive within minutes may not be thrilled at the prospect that they could end up paying more for a product based on little more than, say, the time of day.
Particularly worrisome is the possibility that some users will notice dynamic pricing, but won't quite understand what's going on, resulting in a reduction of trust.

2. Data accuracy

Dynamic pricing depends on data, and when pricing is being changed on the order of hours or even minutes, ensuring that the data driving pricing decisions is accurate is critical. While there's a growing ecosystem of data providers and the techniques by which data is collected and filtered are sure to improve, retailers shouldn't assume that bad data won't make it into their systems.

3. Algorithm mishaps

Wall Street and the phenomenon of flash crashes reminds us that algorithms are far from perfect and can produce costly errors. As retailers embrace dynamic pricing models which are of course based on algorithms, thought should be given to how mishaps can be minimized and what policies will govern when a mishap results in a big mistake (eg. customers being able to purchase a product at a ridiculously low price).

4. Altered customer behavior

As the existence of dynamic pricing becomes more evident to consumers, retailers will need to grapple with the possibility that it could impact customer behavior.
On one hand, dynamic pricing clearly has the potential to encourage sales, but is it possible that in some instances it could it impede sales? If customers come to believe that the price of a product might go down in the very near future, and perhaps even on the same day, it's not unfathomable that some of them would decide to hold off on a purchase.
And as every retailer knows, a delayed purchase is much more likely to become a purchase that never happens, or happens somewhere else.

5. Overall experience

While price is an important factor in purchasing decisions and is often the most important factor, retailers should remember that their long-term success will likely depend on their ability to offer much more than that.
Customer service, selection, shipping, return policies and loyalty schemes can also help drive sales, even when a retailer can't offer the lowest price. These things are often crucial to fostering the brand positioning and customer loyalty retailers covet, so embracing dynamic pricing without addressing overall customer experience is short-sighted.
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Comic


Comic

Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics
Many thanks go to both Neil Lancastle for writing the script and Sophie Bédard for designing the comic!
You can find out more about Neil here and follow his blog here.
Sophie Bédard joined our movement from Montreal, Quebec. You can see her blog here.
If you like her comic you can show your appreciation by donating to her using sophie.bdr@gmail.com here. 
comic1.jpg
comic2.jpg
comic3.jpg

The above comes from the following links

International Student Initiative for Pluralism in Economics

Street Address
City, State, Zip
Phone Number
Argentina - Australia - Austria - Brazil - Canada - Chile - Denmark - France - Germany - India - Israel - Italy - Pakistan - Russia - Slovenia- Spain - Sweden - Switzerland - United Kingdom - USA - Uruguay
Your Custom Text Here

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Economics teaching and the real world

 

Economics section, Durham University's South Road Library.
Whither economics education? Durham University's South Road Library. Photograph: Graham Turner/The Guardian +442072399503
It is not only the world economy that is in crisis (IMF approves $17bn Ukraine bailout, 2 May). The teaching of economics is in crisis too, and this has consequences far beyond the university walls. What is taught shapes the minds of the next generation of policymakers and so shapes the societies we live in. Forty-one associations of economics students from 19 countries believe it's time to reconsider the way economics is taught. We are dissatisfied with the dramatic narrowing of the curriculum that has taken place over the past couple of decades. This lack of intellectual diversity does not only restrain education and research. It limits our ability to contend with the multidimensional challenges of the 21st century – from financial stability to food security and climate change. The real world should be brought back into the classroom, as well as debate and a pluralism of theories and methods. This will help renew the discipline and ultimately create a space in which solutions to society's problems can be generated.
United across borders, we call for a change of course. We do not claim to have the perfect answer, but we have no doubt that economics students will profit from exposure to different perspectives and ideas. Pluralism could help to fertilise teaching and research, reinvigorate the discipline and bring economics back into the service of society. Three forms of pluralism must be at the core of the curriculum: theoretical, methodological and interdisciplinary.
Change will be difficult - it always is. But it is already happening. Students across the world have already started creating change step by step. We have founded university groups and built networks both nationally and internationally. Change must come from many places. So now we invite students, economists and non-economists to join us and create the critical mass needed for change. Visit www.isipe.net to read the full manifesto and connect with our growing networks. Ultimately, pluralism in economics education is essential for healthy public debate. It is a matter of democracy.
Severin Reissl, Max Schröder, Faheem A Rokadiya, Pia Andres, Glen Costlow, Joakim J Rietschel, Ayse Yayali
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After the crash, we need a revolution in the way we teach economics


Students who claim that economics courses fail to explain the 2008 crash are gaining support from British business. Here, two Cambridge academics agree it's time for a change
Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics
manchester graduates
Economics graduates at Manchester University who joined the protests at what they felt was teaching that did not fit them for real-life challenges. Photograph: Jon Super for the Observer
All academics think their own subjects are unique – distinctively difficult, unusually useful, exceptionally elegant, and what have you. But the two of us think our subject – economics – is truly unique.
We do not take pride in saying this. On the contrary, we are ashamed. Because what makes economics so unique is the fact that it is the only academic discipline in which a significant and increasing number of students are in an open revolt against the content of their degree courses.
The discontent has been brewing since the outbreak of the 2008 financial crisis, when students found out that their professors have little to offer in terms of explanation of the biggest financial crisis in three generations, not to speak of some of them having been cheerleaders of reckless financial expansion.
But recently student economists in many UK universities – including Manchester, Cambridge, University College London, Essex, the London School of Economics, the School of Oriental and African Studies – have begun organised protest against the content of their degree courses. They argue that their degrees are not fit for purpose, whether that purpose is preparing students for their future careers in the "real world", or more broadly, equipping them with a good understanding of real world economies.
This phenomenon is not unique to the UK. Similar movements are springing up in the United States, Germany, France, Brazil, Chile, India and other countries. Now there is even a global alliance between these student groups, under the banner of the International Student Initiative for Pluralist Economics.
Complaints about the content of economics degrees do not just come from students, whose youthful arrogance and idealism might make them see every theory as wanting, and every economic policy a manifestation of some conspiracy. The students are increasingly being joined in this protest by leading employers of economics graduates, from the Bank of England, the civil service and the City.
Employers complain that recent economics graduates, while being technically proficient, know very little about the real world. Lacking knowledge about the historical backgrounds, institutional details and political idioms of real-world economies, they end up being idiot savants – they can manipulate most complicated mathematical models but cannot translate their insights into business strategies and economic policies in the real world.
Another complaint is that, when graduate economists do have something to say about the real-world economy, their advice is incomprehensible to noneconomists – and noneconomists make up almost all their audience. And, finally, there is the nagging doubt that the advice may simply be incorrect.
It is no coincidence that employers of economists, who had been privately despairing about the direction of academic economics for years, started to express their concerns more publicly after the financial crisis hit in 2008.
To summarise bluntly, students and many employers feel that the typical economics graduate today receives a training that is irrelevant to understanding real economies, incomprehensible to the target audiences for economic advice, and often just plain incorrect.

What needs to change? – 'Back to the future'


Students, employers and many economists from outside academia are in broad agreement about necessary changes.
Students need to learn more about the real world. They need to know about the current state of the world economy, the history of capitalism (including the history of finance), and some details about specific contemporary economies – why are the Chinese or the German economies so different from the UK one, for example?
Many observers advocate "economic pluralism": students should be introduced to different approaches to economics. Free-market economics alone has three distinctive varieties – the Classical (Adam Smith and David Ricardo) and the Austrian (Friedrich Hayek) schools, as well as the Neoclassical school, which is today's "mainstream" economics. Beyond that, there are many other influential schools of economic thinking, including Keynesian, Marxist, Schumpeterian, Institutionalist, Developmentalist, and Behaviouralist. All these different modes of analysis have their strengths and weaknesses, so students need to know something about all of them, because a good analysis of complex real-world problems demands more than one analytical perspective.
Another common suggestion is that students need a wider range of empirical skills. Nowadays students are just taught econometrics (application of sophisticated statistical techniques to large data sets). They should also be introduced to national accounts, company balance sheets, flow-of-funds accounts, surveys and interview techniques. These tools are routinely used in many jobs which economics students enter after their graduation.
The striking thing about most of these proposals is that they are not radical departures, but "back to the future" – topics and skills that used to be routinely taught in undergraduate economics degrees. In the past, economics was taught as a series of interrelated debates about competing theories and the different policy recommendations of those theories. Imprecise, even messy, but useful. This approach to teaching economics could work well today – it is how other social sciences are taught and there are no good reasons for treating economics differently. But the modern economics degree is so unlike this picture that it is unrecognisable to other social scientists – and equally unrecognisable to anyone who was an undergraduate economist more than twenty years ago.
Of course, undergraduates also need to be made aware of important new ideas and theories that did not feature on past courses. Behavioural economics is frequently mentioned, and now so established that it barely qualifies as "new", yet many undergraduate courses (such as the one in Cambridge) still completely ignore it. And even when mainstream economists do introduce behavioural economics to undergraduates, they mostly teach a watered-down version, stripped of the bits which contradict mainstream economic theory.
The psychologist Daniel Kahneman, who won the Nobel prize for his work in this field, warned in his prize lecture that orthodox behavioural economics is hard to reconcile with his analysis (as in his book Thinking, Fast and Slow) of how people actually make decisions.
In recent years, when we meet people living outside the academic bubble, from taxi drivers to fund managers, and they learn that we are university economists, they often say the same thing: "You must have had to rewrite the course."
And they are always shocked when we explain that in Cambridge, like every other elite university, the undergraduate economics curriculum has remained almost the same. Effectively no change, not even marginal acknowledgement that something might be wrong with conventional economic theories that, among other things, failed to see the 2008 financial crisis coming and can't satisfactorily explain it even in hindsight.
So here is the puzzle: why has the curriculum not changed, given that so many "consumers" – students and employers – are dissatisfied with economics education today, and that there is a broad and not-so-radical consensus on the changes required? The answer lies in the peculiar view of economics adopted by most mainstream economists.

Economics as the science of 'everything'

The most important thing about mainstream economics today – and a source of pride among many of its supporters – is that it is not limited to the study of anything in particular, including the economy. It is defined by its tools of analysis (mathematical models mostly involving optimisation and equilibrium), rather than the object of inquiry.
The prevalence of this view is why so many popular economics books of recent years have claimed to be about "everything". Prominent examples include Freakonomics – probably the best-known economics book of our time – and the first volume in the Economic Naturalist book series by Robert Frank, the Cornell University professor and New York Times columnist, whose subtitle is Why Economics Explains Almost Everything (what modesty!)
This strange definition of economics, in terms of tools rather than objects of inquiry, explains a lot about why mainstream economists resist curriculum reform. They have constructed a Kafkaesque world in which proposed reforms are rejected because they are redundant, as economics already has tools to analyse "everything". At the same time, if reforms involve issues that the existing theories cannot explain well, they are rejected because they would take the curriculum outside the domain of economics. Challenged, for example, to introduce to the economics syllabus the study of the actual behaviour of traders in financial markets, academics defending the status quo reply that, first, their models can already capture the behaviour of "rational" traders, and second, the descriptive study of the actual behaviour of traders is a subject for sociologists, historians or psychologists.
In this world view, subjects such as economic and financial history, or the detailed empirical study of specific contemporary economies, are also topics best left outside the undergraduate course. Most (but not all) mainstream economists may recognise the value in studying these topics, but they are too peripheral to their understanding of what economics is for them to be given much space in the course. Students in Norway who asked to study real economies in their courses were told by their professors: "Our task is to give you an analytical framework, you have the rest of your lives to learn about current affairs."
Part of the self-image of most academic economists today is that the core of the subject is an established, settled science. At the frontiers of research, there may be controversy and even turmoil, but the undergraduate curriculum need not be disturbed, because it reflects the core of agreed theories – or at least an agreed mathematical toolkit – emerging from years of steady progress. This settled science can effectively be codified in textbooks, which include essentially everything that undergraduates need to know.
From this perspective, teaching undergraduates economics as a series of interconnected debates at best risks needlessly confusing students and at worst actively misleading them by suggesting problems or gaps in the theories where there are none (well, at least none that impressionable young students need to worry about). This is unfortunately the view taken by a leading group of curriculum reformers among mainstream economists – the CORE project group, whose proposals were recently launched with prominent media coverage in a conference at the UK Treasury. Assuming that economics is a settled science, or at least insisting that it be presented as such to undergraduates so as not to confuse them, is a serious obstacle to meaningful reform.
Academic economics, in any flavour or school of thought, is not characterised by steady scientific progress just because economists wish it were so. It is not hard to find evidence of mainstream economists being overconfident about their knowledge – think of all their declarations, in the years before the 2008 crisis, that the days of economic fluctuation and instability were over.
Even after the crisis, some economists show a stubbornness bordering on arrogance in their refusal to acknowledge the flaws in core theory. In a 2010 interview in the depths of recession, Nobel laureate Tom Sargent refused to accept any of the by then standard criticisms of macroeconomics, insisting instead that the critics showed "woeful ignorance or intentional disregard for what much of modern macroeconomics is about and what it has accomplished". Sargent added: "It is just wrong to say that this financial crisis caught modern macroeconomists by surprise."
There is another kind of arrogance at work in the refusal to reform the curriculum, especially in response to proposals to strengthen its "real world" relevance.
John Maynard Keynes famously said that economics should be like dentistry, by which he meant it should be a modest profession providing practical services to noneconomists, rather than indulging in grand theorising for its own sake. Unfortunately many academic economists seem to have an alternative, ivory-tower-centred view of the world: "pure" research is more prestigious than applied or policy-relevant research, and research is more important than teaching. So, the more detached from the real world your work is, the higher up in the intellectual hierarchy you are.
As a result, undergraduate economics courses are designed to prepare students to do further study leading to an academic research career, when in fact less than 10% of them intend to pursue one. No wonder the students and their future employers find the economics course unfit for purpose.
Given the definition of economics in terms of its toolkit and the importance accorded to "pure" research, the curriculum reform acceptable to most mainstream economists is that which proposes more maths – of the kind needed for an academic career.
Among mainstream economists who accept the need for change, the most popular reform proposal is the introduction of mathematical models of complex nonlinear systems – the kinds of models which, at least with hindsight, might have predicted the 2008 financial crisis.
There is no doubt that these models, and related research in "econophysics", represent a promising new research direction in macroeconomics. But that does not make them, even in simplified form, candidates for a new undergraduate curriculum. Most graduate economists will have no contact with these models in their careers; a few of them may need, at most, to understand their broad insights. A civil servant in the Government Economic Service expressed the requirements for the latter group pithily: government economists need to know how to drive the car, not build it.
This point extends to the teaching of models in the undergraduate course more generally. The focus should be on teaching the underlying ideas and mechanisms which drive the models, rather than the ability to derive all the results mathematically. Training students how to do these mathematical manipulations takes an enormous share of teaching time: this could be reallocated to teaching the new topics and skills mentioned earlier.

Bad economics affects us all

Reform of economics teaching is resisted so strongly by mainstream economists because they find it threatening. It is like asking the medieval Catholic clergy to teach their new recruits different interpretations of Christianity, to stop teaching them exclusively in Latin and teach more in the local vernacular, and to encourage them to challenge the intellectual and the moral authority of the Holy See. No wonder it is so strongly resisted by most mainstream economists, even by those who claim to be interested in reform.
But what does this have to do with everyone outside the academic bubble? Why does it matter that those nerds doing economics degrees are made to jump through one set of hoops rather than another?
Reform of economics education is not just a matter for university economists. The current curriculum frustrates thousands of bright young students who started studying economics thinking that they would learn something useful for making the world a better place and find themselves learning an ersatz theory of "everything" instead. Cynicism about the purpose of economics leads some of the smartest students to careers in investment banking. For employers who recruit economists with first-class degrees, only to find that they possess very narrow skill sets, lack communication skills, and have little knowledge of real economies, the current curriculum hurts their bottom line.
Above all, the future of economics education is ultimately a matter for all of us, because what economists learn in their degree influences what they do later when they make important policy decisions that fundamentally affect our lives – financial deregulation, welfare cuts, gas prices, and healthcare reform. It is time that everyone gets involved in this debate.

Ha-Joon Chang and Jonathan Aldred teach economics at Cambridge University. Chang's Economics: The User's Guide has just been published. Aldred is author of The Skeptical Economist. Chang is appearing at the Bristol Festival of Ideas, in association with the Observer, on Wednesday 14 May
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Dynamic Pricing


With Transfinancial Economics it would be possible to deal with rapid changes in the Free Market Price.In the case of many airline charges, algorithms, and computers  are actually used to determine dynamic price changes necessary  for that industry. http://www.p2pfoundation.net/Transfinancial_Economics


Dynamic pricing, also called real-time pricing, is an approach to setting the cost for a product or service that is highly flexible. The goal of dynamic pricing is to allow a company that sells goods or services over the Internet to adjust prices on the fly in response to market demands.
Changes are controlled by pricing bots, which are software agents that gather data and use algorithms to adjust pricing according to business rules. Typically, the business rules take into account such things as the customer's location, the time of day, the day of the week, the level of demand and competitors' pricing.  With the advent of big data and big data analytics, however, business rules for price adjustments can be made more granular. By collecting and analyzing data about a particular customer, a vendor can more accurately predict what price the customer is willing to pay and adjust prices accordingly.
Dynamic pricing is legal, and the general public has learned to accept dynamic pricing when purchasing airline tickets or reserving hotel rooms online.  The approach, which is sometimes marketed as a personalization service, has been less successful with online retail vendors. Dynamic pricing can be contrasted with fixed pricing, an approach to setting the selling price for a product or service that does not fluctuate. Source Ref Tech Target






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Dynamic pricing is a pricing strategy in which businesses set highly flexible prices for products or services based on current market demands.[1] Business are able to stay competitive by changing prices based on algorithms that take into account competitor pricing, supply and demand, and other external factors. Dynamic pricing is a common practice in several industries such as hospitality, travel, entertainment, and retail. Each industry takes a slightly different approach to repricing based on its needs and the demand for the product. One commonality, however, is the use of dynamic pricing to increase revenue and profits, whether to fill a stadium, flight, or sales quota.
Hospitality
Hotels and other players in the hospitality industry use dynamic pricing to adjust the cost of rooms and packages based on the supply and demand needs at a particular moment.[2] The goal of dynamic pricing in this industry is to find the best price that consumers are willing to pay. Another name for dynamic pricing in the industry is demand pricing and is a form of price discrimination, which is used to try to maximize revenue based on the willingness to pay of different market segments. They feature price increases when demand is high and decreases to stimulate demand when it is low. Having a variety of prices based on the demand at that point in the day makes it possible for hotels to generate more revenue by bringing in customers at the different price points they are willing to pay.
Travel
Airlines change prices often depending on the day of the week, time of day, and number of days before the flight.[3] For airlines, dynamic pricing factors in different components such as: how many seats a flight has, departure time, and average cancellations on similar flights.[4]
Entertainment
Sports ticketing is a segment of the entertainment industry that effectively uses real-time pricing to boost revenue. Dynamic pricing is particularly important in baseball because MLB teams play around twice as many games as some other sports and in much larger venues.[5]
Sports that are outdoors have to factor weather into pricing strategy, in addition to date of the game, date of purchase, and opponent.[6]
Ticket retailers have much more flexibility with dynamic pricing because tickets for a game during inclement weather will sell better at a lower price; conversely, when a team is on a winning streak, fans will be willing to pay more.
Retail
Retailers, and online retailers in particular, adjust the price of their products according to competitors, time, traffic, conversion rates, and sales goals.[7] The aim of dynamic pricing is to increase revenue and profit. There are three basic ways to do this.
  • First, retailers can use price intelligence to reprice based on the prices of their competitors.
  • Second, retailers can drop prices when demand is low.
  • Third, retailers can increase prices while demand is high.
Pricing Based on Competitors
Businesses that want to price competitively will monitor their competitors’ prices and adjust accordingly. Amazon is a market leader in retail that reprices often,[8] which encourages other retailers to alter their prices to stay competitive. Competitor-based dynamic pricing can increase sales, especially if they take advantage when other retailers run out of stock.
Time Based Pricing
Many industries change prices depending on the time of day, especially online retailers, whose customers usually shop the most in the evening. Dropping prices during the morning and afternoon can be an effective way to increase sales during typically slow times of the day. Raising prices during the evening is a way to generate more revenue and profit because demand is highest then.
Transportation is another area where prices vary based on the time of day. The San Francisco Bay Bridge charges a higher toll during rush hour and on the weekend, when drivers are more likely to be travelling.[9] This is an effective way to boost revenue when demand is high, while also managing demand since drivers unwilling to pay the premium will avoid those times. Dynamic pricing in transportation is also called peak-load pricing.
Conversion Rate Pricing
Pricing based on conversion rates is a way to turn window shoppers into buyers. When conversion rates of viewers to buyers is low, dropping the price can help turn it around.
Future of Dynamic Pricing
Dynamic pricing is becoming an important factor for retailers,[10] as many have already adopted some form of it in order to counteract showrooming. The concept of dynamic pricing has been around for many years, particularly in the airline and hotel industries, but retail is one of the newer industries to adopt this pricing strategy. Nonetheless, adoption has accelerated recently as retailers have seen the impact on revenue and profits.

References[edit]

  1. Jump up ^ "Dynamic Pricing definition". WhatIs.com. Retrieved April 1, 2014.
  2. Jump up ^ Tucker Cummings (2013) "Everything You Need to Know about Dynamic Pricing". Hospitality Net. Retrieved April 1, 2014.
  3. Jump up ^ Dr. Gabor Forgacs (2010) "Revenue Management: Dynamic Pricing". WhatIs.com. Retrieved April 1, 2014.
  4. Jump up ^ Dale Furtwengler (2011) "The Perils of Dynamic Pricing Lessons Learned from the Airline Industry". Retail Customer Experience. Retrieved April 1, 2014.
  5. Jump up ^ Patrick Rishe (2012) "Dynamic Pricing: The Future of Ticket Pricing in Sports". Forbes. Retrieved April 1, 2014.
  6. Jump up ^ Doug Williams (2012) "Dynamic pricing is new trend in ticket sales". ESPN. Retrieved April 1, 2014.
  7. Jump up ^ Arie Shpanya (2013) "5 Trends To Anticipate In Dynamic Pricing". Retail Touch Points. Retrieved April 1, 2014.
  8. Jump up ^ Arie Shpanya (2013) "Do profits matter? The curious case of Amazon.com". Venturebeat. Retrieved April 18, 2014.
  9. Jump up ^ "Toll Schedule for State-Owned Toll Bridges". Bay Area Toll Authority. Retrieved April 1, 2014.
  10. Jump up ^ "Dynamic Pricing - Price Optimization, Competitive Pricing & Merchandising". LinkedIn. Retrieved April 29, 2014.
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