882 Posts Found

Sometimes borrowing makes sense, to borrow to invest into something productive. But if you borrow just to consume, then eventually you get in trouble and your debt ratios become too high relative to your need to pay back your debts over time. It could be a problem for households, for the business sector, financial institutions, for governments, for a country as a whole.

Content: Quotation | Author: Nouriel Roubini | Source: McKinsey Quarterly | Subjects: Economics, Finance

If we’re going to live on average to age one hundred, we are certainly not going to be retiring at 65 or anything close to 65, because we’re not going to be able to earn enough money prior to 65 to finance retirement to one hundred.

We’re going to have to rethink retirement, we’re going to have to rethink careers, and we’re going to have to … [ Read more ]

Content: Quotation | Author: Myra Strober | Source: McKinsey Quarterly | Subject: Economics

[Central banks] have installed enormous and more or less permanent backstops for financial systems and transformed lending of last resort into comprehensive “first response” functions against financial crises.

Content: Quotation | Author: Leon Wansleben | Source: strategy+business | Subject: Economics

Many perceive the markets as short-term oriented, forcing management to worry only about quarterly earnings. Our research shows that successful companies are typically those with longer-term horizons. There are plenty of investors who have long-term horizons as well, but they generally need to talk to a company only once or twice a year to make their decisions. Short-term investors are noisier. They probably drive the … [ Read more ]

Content: Quotation | Author: Tim Koller | Source: McKinsey Quarterly | Subjects: Economics, Finance

We … tend to regulate to prevent a repeat of the previous crisis rather than look in an unbiased manner at points of future vulnerability.

Content: Quotation | Author: Mike Jakeman | Source: strategy+business | Subjects: Economics, Risk Management

For the economy to grow, we need banks to accept the risk of lending, but we also need them to take the right amount of risk. Too little, and no one can borrow. Too much, and the system blows up. The rub: figuring out what that right amount is. Doing so has proven extremely difficult, even as the increasingly necessary role that banks perform has … [ Read more ]

Content: Quotation | Author: Mike Jakeman | Source: strategy+business | Subject: Economics

The Corporate Gini Index is a barometer of a competitive landscape. In other words, it measures the strength of the all-or-nothing force in an industry. The higher an industry’s index score, the more dominant a few players are within it.

In those industries in which digitization has had the greatest effect, the Gini Index tends to be high. The correlation is related to the widely observed … [ Read more ]

Content: Quotation | Authors: John Sviokla, Kelly Barnes, Miles Everson | Source: strategy+business | Subject: Economics

Dysfunctions … occur when we don’t debate value — when [value is] just presented as “this is how the economy works.” So it becomes very easy for some actors in the economy to present themselves as value creators, and in the process extract value, because the difference — what’s value creation, what’s value extraction — is no longer part of the way we think about … [ Read more ]

Content: Quotation | Author: Mariana Mazzucato | Source: strategy+business | Subject: Economics

The twin problems I see in modern-day capitalism are the fact that the financial sector is financing itself and industry itself has become financialized, obsessed with short-term quarterly returns. To change that system, you need to debunk the pillars on which those behaviors are based. The problem with the maximization of shareholder value approach is that it has dismissed the role of other actors in … [ Read more ]

Content: Quotation | Author: Mariana Mazzucato | Source: strategy+business | Subjects: Capitalism, Economics

Value in capitalism has fundamentally been created collectively through different types of actors coming together to solve problems. Workers have contributed. The state has contributed. Of course managers and people on the ground have contributed, but we need a body of thought within economics that really captures that collective value creation.

Maximization of shareholder value is a very narrow approach to understanding value. Indeed, it is … [ Read more ]

Content: Quotation | Author: Mariana Mazzucato | Source: strategy+business | Subjects: Capitalism, Economics

As soon as you take innovation seriously, you start having to throw up in the air so many of the things we learn in mainstream economics: unique equilibria, representative agents, perfect competition. Indeed, the mathematics that we’re taught in mainstream economics departments mainly comes from Newtonian physics. It allows nice, smooth curves to be drawn where there is a maximum point (important if firms are … [ Read more ]

Content: Quotation | Author: Mariana Mazzucato | Source: strategy+business | Subjects: Economics, Innovation

Technocratic management, no matter how brilliant, cannot unwind structural inequalities.

Content: Article | Author: Daniel Markovits | Source: The Atlantic Monthly | Subject: Economics | Industry: Consulting | Company: McKinsey & Company

If you can rely on people to do what they say they’re going to do—without costly coercive mechanisms to make them dependable—a lot of things become possible.

Content: Quotation | Authors: Francis Fukuyama, Jerry Useem | Source: The Atlantic Monthly | Subjects: Economics, Organizational Behavior

Trust is to capitalism what alcohol is to wedding receptions: a social lubricant. In low-trust societies (Russia, southern Italy), economic growth is constrained.

Content: Quotation | Author: Jerry Useem | Source: The Atlantic Monthly | Subjects: Capitalism, Economics

Virtually every commercial transaction has within itself an element of trust.

Content: Quotation | Author: Kenneth Arrow | Source: The Atlantic Monthly | Subjects: Capitalism, Economics, Marketing / Sales

Economic and political turbulence have prompted speculation that the world is already deglobalizing. But the evidence suggests that global integration is here to stay, albeit with nuance.

Content: Article | Authors: Hamid Samandari, Jeongmin Seong, Jonathan Woetzel, Michael Birshan, Olivia White, Sven Smit, Tiago Devesa | Source: McKinsey Quarterly | Subjects: Economics, International, Trade

What is capitalism? Is it the greatest source of prosperity and freedom the world has ever seen or a menace on the verge of destroying the planet and our society? Rebecca Henderson argues that capitalism is the only solution to the massive problems that we face and explores the ways in which the private sector can help to reimagine capitalism so that it works for … [ Read more ]

Content: Article | Author: Rebecca Henderson | Source: Management and Business Review (MBR) | Subjects: Capitalism, Economics, Social Responsibility (ESG)

Scholars came to distinguish between “inclusive” and “extractive” societies. Extractive regimes concentrate both political and economic power in the hands of an elite few. Healthy inclusive societies, by contrast, rest on three foundations: a free market; a strong civil society; and a democratically elected, transparent, capable, and responsive government. Together these three institutions hold each other accountable, balancing the power of the free market with … [ Read more ]

Content: Quotation | Author: Rebecca Henderson | Source: Management and Business Review (MBR) | Subjects: Capitalism, Economics

Markets require adult supervision. Markets only lead to prosperity and freedom when they are genuinely free and fair. Intuitively, if firms can dump toxic waste into rivers, lie to their consumers, and form alliances to fix prices, there is no guarantee that maximizing profits will increase either aggregate wealth or individual freedom.

Content: Quotation | Author: Rebecca Henderson | Source: Management and Business Review (MBR) | Subjects: Capitalism, Economics

The rule of law, well-designed corporate governance, anti-corruption safeguards, democratic government, a free media, and appropriate financial regulations are critical to enabling free markets to stimulate high quality development.

Content: Quotation | Author: Rebecca Henderson | Source: Management and Business Review (MBR) | Subjects: Capitalism, Economics