Prince defends City regulation
By Andrew Edgecliffe-Johnson in Davos
Published: January 30 2009 02:00 | Last updated: January 30 2009 02:00
Bernard Madoff's alleged $50bn (£34.9bn) fraud could not have happened in London, according to Prince Andrew, who claimed yesterday that the UK's system of "principles-based" regulation was not broken.
"Madoff couldn't happen in London. It could never get to that scale," the Duke of York told the Financial Times at the World Economic Forum in Davos. The fact the UK had avoided the more rules-based US system meant that while fraud could still happen, "we would have bowled something like that a lot earlier".
Prince Andrew, who serves as the UK's special rep-resentative for international trade and industry, said the City of London was well regulated, in spite of the financial crisis.
Saturday, 31 January 2009
The Food Industry and Good Shows About It
When I moved into my first apartment on my own in college, my parents remember a phone call in which I asked how to cook a baked potato. In terms of my culinary prowess, as my poor boyfriend can attest, not much has improved over the years. But, I love food and I never skip a meal, so naturally I'm very interested in how food gets grown, made and marketed. I actually came to business school with the dream of some day working in the food industry, and maybe even starting my own food business. This hobby/passion/quirk of mine has led me to focus intently on food production and the food industry in the UK while I'm here. In the past few months I've read Kingsolver's "Animal, Vegetable, Miracle," and Pollack's "The Omnivore's Dilemma." Now that I'm reading "Fast Food Nation," I think I'm absolutely obsessed with food, and while my research so far has been pop-lit, TV and Whole Foods propaganda, I'm still on to something... I'm searching for a better way to be a consumer to do my responsible part for the demand curve. And here are a few things I've noticed about Britain and about our view on food vs. theirs...
As my Grandmother loves to quote, "The British do not have cuisine, they have food!" (TV detective on PBS, Mssr. Poirot). This may or may not be true depending on what things you like to eat, but the British DO have a very strong food culture and consumers care about their national dishes, farmers and food stuffs.
Organic is not as big as you'd think, and Whole Foods and those like it really aren't here in much presence. This is mostly because there's not as much of a need for them. The UK, and the greater EU for that matter, have taken very aggressive measures to legislate, regulate and protect methods of farming, food production and culinary methods in a way that would simply never fly in the US. For instance, you can't grow anything in the entire EU that is genetically modified in any way, not even for animal feed (and it's been this way since the late '90s.) Far more pesticides and farming methods are illegal here than they are at home. You also cannot grow animals in many of the ways we call "conventional" in the US in Britain, and soon in the greater EU, because of laws providing for humane farming practices. Many more farms in the UK are independent producers to bigger companies than actually owned by big companies (as they are in the US). Consumer labeling is also much better than at home and the conscientious consumer can willingly find certified humane or local foods in conventional markets thanks to labeling practices and watch-dog groups setting and monitoring standards of production and labeling. At the cheapest store in town, I can tell you exactly where my orange was grown, my salami was produced, and how the cow that made my milk lived, thanks to labels. I cannot do this at home. Corn subsidies, at the level they are in the US, are just not in use here and as a result processed food labels are a LOT easier to read - even the cheapest packaged frozen foods at discount markets have few additives, fillers, modifiers, etc. The microwavable spaghetti carbonara I bought from Tesco yesterday was the cheapest on the shelf for 1 pound 50, and the ingredients are: "pasta, cream, butter, eggs, bacon, salt, pepper" - that's it! Preservatives and additives are of course still in use, but not nearly to the extent as in the US - at home I have to literally HUNT the bread aisle of a conventional supermarket to find a product that is "bread" - flour, water, yeast (go try it)... in the US, to get that product, you have to go to Whole Foods or the organic aisle. Here in Britain, that's all they have - bread. Yogurt is yogurt (no corn starch), and partially hydrogenated oils are almost gone - you can still buy margarine - and most foods are labeled "zero trans fat."
None of this is as a result of lovey dovey hippie nonsense, although some at home might think so. The UK pays for its nation's health directly, and as a result, individual people care a great deal about the health of the nation - what the people grow and eat. Farming is a culture not as removed from every day people's lives as it sometimes seems to be at home, and while big supermarket chains supply most people's groceries, every main street still has a local butcher, market, and bakery where normal every day people buy their normal every day groceries. Grocery shopping is done more frequently than at home (smaller fridges and more expensive gas), and products can be less preserved and fresher as a result (local farming production is also very diverse across all food sector products and so food can arrive from farm to store in a few hours).
There's no Food Network here - maybe it's not needed? Basic TV, or the few free channels of the BBC, Sky etc. that anyone can watch carry a variety of shows ranging from news, history, documentary, food shows, pop culture, sitcoms, and movies - it's a great selection all for free. But some of the most popular programs on right now are food ones - all over town I've seen billboards for a series on Channel 4 called "The Great British Food Fight." Top celebrity chefs have taken up the cause of reaffirming British food culture to its roots and trying to shed light on modern food production techniques, especially in the recession when Britons are buying cheaper food. Here are two of the first installments of the series, and they're really awesome. A few things I thought when I watched are you could never show this on public TV at home (Jamie helps masturbate a pig!), our food industry giants would never let anyone in where these guys are going, and how great is it to see (in Hugh vs. Tesco) a guy trying to use the system for change as an activist investor instead of chaining his freakoid dead beat self to some pole outside like a hippie? Nice job Hugh, you're so cute.
http://www.channel4.com/food/on-tv/jamie-oliver/jamie-saves-our-bacon/index.html
http://www.channel4.com/food/on-tv/river-cottage/chickens-hugh-and-tesco-too/
As my Grandmother loves to quote, "The British do not have cuisine, they have food!" (TV detective on PBS, Mssr. Poirot). This may or may not be true depending on what things you like to eat, but the British DO have a very strong food culture and consumers care about their national dishes, farmers and food stuffs.
Organic is not as big as you'd think, and Whole Foods and those like it really aren't here in much presence. This is mostly because there's not as much of a need for them. The UK, and the greater EU for that matter, have taken very aggressive measures to legislate, regulate and protect methods of farming, food production and culinary methods in a way that would simply never fly in the US. For instance, you can't grow anything in the entire EU that is genetically modified in any way, not even for animal feed (and it's been this way since the late '90s.) Far more pesticides and farming methods are illegal here than they are at home. You also cannot grow animals in many of the ways we call "conventional" in the US in Britain, and soon in the greater EU, because of laws providing for humane farming practices. Many more farms in the UK are independent producers to bigger companies than actually owned by big companies (as they are in the US). Consumer labeling is also much better than at home and the conscientious consumer can willingly find certified humane or local foods in conventional markets thanks to labeling practices and watch-dog groups setting and monitoring standards of production and labeling. At the cheapest store in town, I can tell you exactly where my orange was grown, my salami was produced, and how the cow that made my milk lived, thanks to labels. I cannot do this at home. Corn subsidies, at the level they are in the US, are just not in use here and as a result processed food labels are a LOT easier to read - even the cheapest packaged frozen foods at discount markets have few additives, fillers, modifiers, etc. The microwavable spaghetti carbonara I bought from Tesco yesterday was the cheapest on the shelf for 1 pound 50, and the ingredients are: "pasta, cream, butter, eggs, bacon, salt, pepper" - that's it! Preservatives and additives are of course still in use, but not nearly to the extent as in the US - at home I have to literally HUNT the bread aisle of a conventional supermarket to find a product that is "bread" - flour, water, yeast (go try it)... in the US, to get that product, you have to go to Whole Foods or the organic aisle. Here in Britain, that's all they have - bread. Yogurt is yogurt (no corn starch), and partially hydrogenated oils are almost gone - you can still buy margarine - and most foods are labeled "zero trans fat."
None of this is as a result of lovey dovey hippie nonsense, although some at home might think so. The UK pays for its nation's health directly, and as a result, individual people care a great deal about the health of the nation - what the people grow and eat. Farming is a culture not as removed from every day people's lives as it sometimes seems to be at home, and while big supermarket chains supply most people's groceries, every main street still has a local butcher, market, and bakery where normal every day people buy their normal every day groceries. Grocery shopping is done more frequently than at home (smaller fridges and more expensive gas), and products can be less preserved and fresher as a result (local farming production is also very diverse across all food sector products and so food can arrive from farm to store in a few hours).
There's no Food Network here - maybe it's not needed? Basic TV, or the few free channels of the BBC, Sky etc. that anyone can watch carry a variety of shows ranging from news, history, documentary, food shows, pop culture, sitcoms, and movies - it's a great selection all for free. But some of the most popular programs on right now are food ones - all over town I've seen billboards for a series on Channel 4 called "The Great British Food Fight." Top celebrity chefs have taken up the cause of reaffirming British food culture to its roots and trying to shed light on modern food production techniques, especially in the recession when Britons are buying cheaper food. Here are two of the first installments of the series, and they're really awesome. A few things I thought when I watched are you could never show this on public TV at home (Jamie helps masturbate a pig!), our food industry giants would never let anyone in where these guys are going, and how great is it to see (in Hugh vs. Tesco) a guy trying to use the system for change as an activist investor instead of chaining his freakoid dead beat self to some pole outside like a hippie? Nice job Hugh, you're so cute.
http://www.channel4.com/food/on-tv/jamie-oliver/jamie-saves-our-bacon/index.html
http://www.channel4.com/food/on-tv/river-cottage/chickens-hugh-and-tesco-too/
Thursday, 29 January 2009
Ah LSE - So SMART! (And something you must see!!)
In my course at LSE on World Trade Systems, our first required reading was an essay by the Nobel Prize-winning economist, Paul Krugman. It's excellent, and funny, and is copied below. Additionally, my professor in European Models of Capitalism had us watch this video yesterday because he was in a good mood at the end of class, you MUST see, British humor is awesome. Watch it through if you can: Bird and Fortune http://www.youtube.com/watch?v=mzJmTCYmo9g
What Do Undergrads Need To Know About Trade?
By PAUL R. KRUGMAN *
Few of the undergraduates who take an introductory course in economics will go on to graduate study in the field, and indeed most will not even take any higher-level economics courses. So what they learn about economics will be what they get in that first course. It is now more important than ever before that their basic training include a solid grounding in the principles of international trade.
I could justify this assertion by pointing out that international trade is now more important to the U.S. economy than it used to be. But there is another reason, which I think is even more important: the increased perception among the general public that international trade is a vital subject. We live in a time in which Americans are obsessed with international competition, in which Lester Thurow's Head to Head is the nonfiction best-seller and Michael Crichton's Rising Sun tops the fiction list. The news media and the business literature are saturated with discussions of America's role in the world economy.
The problem is that most of what a student is likely to read or hear about international economics is nonsense. What I want to argue in this paper is that the most important thing to teach our undergrads about trade is how to detect that nonsense. That is, our primary mission should be to vaccinate the minds of our undergraduates against the misconceptions that are so predominant in what passes for educated discussion about international trade.
I. The Rhetoric of Pop Internationalism
As a starting point, I would like to quote a typical statement about international economics. (Please ignore the numbers for a moment.) Here it is: "We need a new economic paradigm, because today America is part of a truly global economy (1). To maintain its standard of living, America now has to learn to compete in an ever tougher world marketplace (2). That's why high productivity and product quality have become essential (3). We need to move the American economy into the high-value sectors (4) that will generate jobs (5) for the future. And the only way we can be competitive in the new global economy is if we forge a new partnership between government and business (6)."
OK, I confess: it's not a real quotation. I made it up as a sort of compendium of popular misconceptions about international trade. But it certainly sounds like the sort of thing one reads or hears all the time--it is very close in content and style to the still-influential manifesto by Ira Magaziner and Robert Reich (1982), or for that matter to the presentation made by Apple Computer's John Sculley at President-elect Clinton's Economic Conference last December. People who say things like this believe themselves to be smart, sophisticated, and for-ward-looking. They do not know that they are repeating a set of misleading clich6s that I will dub "pop internationalism."
It is fairly easy to understand why pop internationalism has so much popular appeal. In effect, it portrays America as being like a corporation that used to have a lot of monopoly power, and could therefore earn comfortable profits in spite of sloppy business practices, but is now facing an onslaught from new competitors. A lot of companies are in that position these days (though the new competitors are not necessarily foreign), and so the image rings true.
Unfortunately, it's a grossly misleading image, because a national economy bears very little resemblance to a corporation. And the ground-level view of businessmen is deeply uninformative about the inherently general-equilibrium issues of international economics.
So what do undergrads need to know about trade? They need to know that pop internationalism is nonsense--and they need to know why it is nonsense.
II. Common Misconceptions
I inserted numbers into my imaginary quotation to mark six currently popular misconceptions that can and should be dispelled in an introductory economics course.
1.--"We need a new paradigm..." Pop internationalism proclaims that everything is different now that the United States is an open economy. Probably the most important single insight that an introductory course can convey about international economics is that it does not change the basics: trade is just another economic activity, subject to the same principles as anything else.
James Ingram's (1983) textbook on international trade contains a lovely parable. He imagines that an entrepreneur starts a new business that uses a secret technology to convert U.S. wheat, lumber, and so on into cheap high-quality consumer goods. The entrepreneur is hailed as an industrial hero; although some of his domestic competitors are hurt, everyone accepts that occasional dislocations are the price of a free-market economy. But then an investigative reporter discovers that what he is really doing is shipping the wheat and lumber to Asia and using the proceeds to buy manufactured goods--whereupon he is denounced as a fraud who is destroying American jobs. The point, of course, is that international trade is an economic activity like any other and can indeed usefully be thought of as a kind of production process that transforms exports into imports.
It might, incidentally, also be a good thing if undergrads got a more realistic quantitative sense than the pop internationalists seem to have of the limited extent to which the United States actually has become a part of a global economy. The fact is that imports and exports are still only about one-eighth of output, and at least two-thirds of our value-added consists of nontradable goods and services. Moreover, one should have some historical perspective with which to counter the silly claims that our current situation is completely unprecedented: the United States is not now and may never be as open to trade as the United Kingdom has been since the reign of Queen Victoria.
2.--"Competing in the world marketplace": One of the most popular, enduring misconceptions of practical men is that countries are in competition with each other in the same way that companies in the same business are in competition. Ricardo already knew better in 1817. An introductory economics course should drive home to students the point that international trade is not about competition, it is about mutually beneficial exchange. Even more fundamentally, we should be able to teach students that imports, not exports, are the purpose of trade. That is, what a country gains from trade is the ability to import things it wants. Exports are not an objective in and of themselves: the need to export is a burden that a country must bear because its import suppliers are crass enough to demand payment.
One of the distressing things about the tyranny of pop internationalism is that there has been a kind of Gresham's Law in which bad concepts drive out good. Lester Thurow is a trained economist, who understands comparative advantage. Yet his recent book has been a best-seller largely because it vigorously propounds concepts that unintentionally (one hopes) pander to the cliches of pop internationalism: "Niche competition is win-win. Everyone has a place where he or she can excel; no one is going to be driven out of business. Head-to-head competition is win-lose." (Thurow, 1992 p. 30). We should try to instill in undergrads a visceral negative reaction to statements like this.
3.--"Productivity": Students should learn that high productivity is beneficial, not because it helps a country to compete with other countries, but because it lets a country produce and therefore consume more. This would be true in a closed economy; it is no more and no less true in an open economy; but that is not what pop internationalists believe.
I have found it useful to offer students the following thought experiment. First, imagine a world in which productivity rises by 1 percent annually in all countries. What will be the trend in the U.S. standard of living? Students have no trouble agreeing that it will rise by 1 percent per year. Now, however, suppose that while the United States continues to raise its productivity by only 1 percent per year, the rest of the world manages to achieve 3-percent productivity growth. What is the trend in our living standard?
The correct answer is that the trend is still 1 percent, except possibly for some subtle effects via our terms of trade; and as an empirical matter changes in the U.S. terms of trade have had virtually no impact on the trend in our living standards over the past few decades. But very few students reach that conclusion--which is not surprising, since virtually everything they read or hear outside of class conveys the image of international trade as a competitive sport.
An anecdote: when I published an op-ed piece in the New York Times last year, I emphasized the importance of rising productivity. The editorial assistant I dealt with insisted that I should "explain" that we need to be productive "to compete in the global economy." He was reluctant to publish the piece unless I added the phrase--he said it was necessary so that readers could understand why productivity is important. We need to try to turn out a generation of students who not only don't need that kind of explanation, but understand why it's wrong.
4.--"High-value sectors": Pop internationalists believe that international competition is a struggle over who gets the "high-value" sectors. "Our country's real income can rise only if (1) its labor and capital increasingly flow toward businesses that add greater value per employee and (2) we maintain a position in these businesses that is superior to that of our international competitors'' (Magaziner and Reich, 1982 p. 4).
I think it should be possible to teach students why this is a silly concept. Take, for example, a simple two-good Ricardian model in which one country is more productive in both industries than the other. (I have in mind the one used in Krugman and Maurice Obstfeld [1991 pp. 20-1]. The more productive country will, of course, have a higher wage rate, and therefore whatever sector that country specializes in will be "high value," that is, will have higher value-added per worker. Does this mean that the country's high living standard is the result of being in the right sector, or that the poorer country would be richer if it tried to emulate the other's pattern of specialization? Of course not.
5.--"Jobs": One thing that both friends and foes of free trade seem to agree on is that the central issue is employment. George Bush declared the objective of his ill-starred trip to Japan to be "jobs, jobs, jobs"; both sides in the debate over the North American Free Trade Agreement try to make their case in terms of job creation. And an astonishing number of free-traders think that the reason protectionism is bad is that it causes depressions.
It should be possible to emphasize to students that the level of employment is a macroeconomic issue, depending in the short run on aggregate demand and depending in the long run on the natural rate of unemployment, with microeconomic policies like tariffs having little net effect. Trade policy should be debated in terms of its impact on efficiency, not in terms of phony numbers about jobs created or lost.
6.--"A new partnership": The bottom line for many pop internationalists is that since U.S. firms are competing with foreigners instead of each other, the U.S. government should turn from its alleged adversarial position to one of supporting our firms against their foreign rivals. A more sophisticated pop internationalist like Robert Reich (1991) realizes that the interests of U.S. firms are not the same as those of U.S. workers (you may find it hard to believe that anyone needed to point this out, but among pop internationalists this was viewed as a deep and controversial insight), but still accepts the basic premise that the U.S. government should help our industries compete.
What we should be able to teach our students is that the main competition going on is one of U.S. industries against each other, over which sector is going to get the scarce resources of capital, skill, and, yes, labor. Government support of an industry may help that industry compete against foreigners, but it also draws resources away from other domestic industries. That is, the increased importance of international trade does not change the fact the government cannot favor one domestic industry except at the expense of others.
Now there are reasons, such as external economies, why a preference for some industries over others may be justified. But this would be true in a closed economy, too. Students need to understand that the growth of world trade provides no additional support for the proposition that our government should become an active friend to domestic industry.
III. What We Should Teach
By now the thrust of my discussion should be clear. For the bulk of our economics students, our objective should be to equip them to respond intelligently to popular discussion of economic issues. A lot of that discussion will be about international trade, so international trade should be an important part of the curriculum.
What is crucial, however, is to understand that the level of public discussion is extremely primitive. Indeed, it has sunk so low that people who repeat silly clich6s often imagine themselves to be sophisticated. That means that our courses need to drive home as clearly as possible the basics. Offer curves and Rybczinski effects are lovely things. What most students need to be prepared for, however, is a world in which TV "experts,'' best-selling authors, and $30,000-a-day consultants do not understand budget constraints, let alone comparative advantage.
The last 15 years have been a golden age of innovation in international economics. I must somewhat depressingly conclude, however, that this innovative stuff is not a priority for today's undergraduates. In the last decade of the 20th century, the essential things to teach students are still the insights of Hume and Ricardo. That is, we need to teach them that trade deficits are self-correcting and that the benefits of trade do not depend on a country having an absolute advantage over its rivals. If we can teach undergrads to wince when they hear someone talk about "competitiveness," we will have done our nation a great service.
REFERENCES
Crichton, Michael, Rising Sun, New York: Knopf, 1992.
Ingrain, James, International Economics, New York: Wiley, 1983.
Krugman, Paul and Obstfeid, Maurice, International Economics: Theory and Policy, New York: Harper Collins, 1991.
Magaziuer, Ira and Reich, Robert, Minding America's Business, New York: Random House, 1982.
Reich, Robert, The Work of Nations, New York: Knopf, 1991.
Thurow, Lester, Head to Head, New York: William Morrow, 1992.
* Department of Economics, Massachusetts Institute of Technology, Cambridge, MA 02139.
What Do Undergrads Need To Know About Trade?
By PAUL R. KRUGMAN *
Few of the undergraduates who take an introductory course in economics will go on to graduate study in the field, and indeed most will not even take any higher-level economics courses. So what they learn about economics will be what they get in that first course. It is now more important than ever before that their basic training include a solid grounding in the principles of international trade.
I could justify this assertion by pointing out that international trade is now more important to the U.S. economy than it used to be. But there is another reason, which I think is even more important: the increased perception among the general public that international trade is a vital subject. We live in a time in which Americans are obsessed with international competition, in which Lester Thurow's Head to Head is the nonfiction best-seller and Michael Crichton's Rising Sun tops the fiction list. The news media and the business literature are saturated with discussions of America's role in the world economy.
The problem is that most of what a student is likely to read or hear about international economics is nonsense. What I want to argue in this paper is that the most important thing to teach our undergrads about trade is how to detect that nonsense. That is, our primary mission should be to vaccinate the minds of our undergraduates against the misconceptions that are so predominant in what passes for educated discussion about international trade.
I. The Rhetoric of Pop Internationalism
As a starting point, I would like to quote a typical statement about international economics. (Please ignore the numbers for a moment.) Here it is: "We need a new economic paradigm, because today America is part of a truly global economy (1). To maintain its standard of living, America now has to learn to compete in an ever tougher world marketplace (2). That's why high productivity and product quality have become essential (3). We need to move the American economy into the high-value sectors (4) that will generate jobs (5) for the future. And the only way we can be competitive in the new global economy is if we forge a new partnership between government and business (6)."
OK, I confess: it's not a real quotation. I made it up as a sort of compendium of popular misconceptions about international trade. But it certainly sounds like the sort of thing one reads or hears all the time--it is very close in content and style to the still-influential manifesto by Ira Magaziner and Robert Reich (1982), or for that matter to the presentation made by Apple Computer's John Sculley at President-elect Clinton's Economic Conference last December. People who say things like this believe themselves to be smart, sophisticated, and for-ward-looking. They do not know that they are repeating a set of misleading clich6s that I will dub "pop internationalism."
It is fairly easy to understand why pop internationalism has so much popular appeal. In effect, it portrays America as being like a corporation that used to have a lot of monopoly power, and could therefore earn comfortable profits in spite of sloppy business practices, but is now facing an onslaught from new competitors. A lot of companies are in that position these days (though the new competitors are not necessarily foreign), and so the image rings true.
Unfortunately, it's a grossly misleading image, because a national economy bears very little resemblance to a corporation. And the ground-level view of businessmen is deeply uninformative about the inherently general-equilibrium issues of international economics.
So what do undergrads need to know about trade? They need to know that pop internationalism is nonsense--and they need to know why it is nonsense.
II. Common Misconceptions
I inserted numbers into my imaginary quotation to mark six currently popular misconceptions that can and should be dispelled in an introductory economics course.
1.--"We need a new paradigm..." Pop internationalism proclaims that everything is different now that the United States is an open economy. Probably the most important single insight that an introductory course can convey about international economics is that it does not change the basics: trade is just another economic activity, subject to the same principles as anything else.
James Ingram's (1983) textbook on international trade contains a lovely parable. He imagines that an entrepreneur starts a new business that uses a secret technology to convert U.S. wheat, lumber, and so on into cheap high-quality consumer goods. The entrepreneur is hailed as an industrial hero; although some of his domestic competitors are hurt, everyone accepts that occasional dislocations are the price of a free-market economy. But then an investigative reporter discovers that what he is really doing is shipping the wheat and lumber to Asia and using the proceeds to buy manufactured goods--whereupon he is denounced as a fraud who is destroying American jobs. The point, of course, is that international trade is an economic activity like any other and can indeed usefully be thought of as a kind of production process that transforms exports into imports.
It might, incidentally, also be a good thing if undergrads got a more realistic quantitative sense than the pop internationalists seem to have of the limited extent to which the United States actually has become a part of a global economy. The fact is that imports and exports are still only about one-eighth of output, and at least two-thirds of our value-added consists of nontradable goods and services. Moreover, one should have some historical perspective with which to counter the silly claims that our current situation is completely unprecedented: the United States is not now and may never be as open to trade as the United Kingdom has been since the reign of Queen Victoria.
2.--"Competing in the world marketplace": One of the most popular, enduring misconceptions of practical men is that countries are in competition with each other in the same way that companies in the same business are in competition. Ricardo already knew better in 1817. An introductory economics course should drive home to students the point that international trade is not about competition, it is about mutually beneficial exchange. Even more fundamentally, we should be able to teach students that imports, not exports, are the purpose of trade. That is, what a country gains from trade is the ability to import things it wants. Exports are not an objective in and of themselves: the need to export is a burden that a country must bear because its import suppliers are crass enough to demand payment.
One of the distressing things about the tyranny of pop internationalism is that there has been a kind of Gresham's Law in which bad concepts drive out good. Lester Thurow is a trained economist, who understands comparative advantage. Yet his recent book has been a best-seller largely because it vigorously propounds concepts that unintentionally (one hopes) pander to the cliches of pop internationalism: "Niche competition is win-win. Everyone has a place where he or she can excel; no one is going to be driven out of business. Head-to-head competition is win-lose." (Thurow, 1992 p. 30). We should try to instill in undergrads a visceral negative reaction to statements like this.
3.--"Productivity": Students should learn that high productivity is beneficial, not because it helps a country to compete with other countries, but because it lets a country produce and therefore consume more. This would be true in a closed economy; it is no more and no less true in an open economy; but that is not what pop internationalists believe.
I have found it useful to offer students the following thought experiment. First, imagine a world in which productivity rises by 1 percent annually in all countries. What will be the trend in the U.S. standard of living? Students have no trouble agreeing that it will rise by 1 percent per year. Now, however, suppose that while the United States continues to raise its productivity by only 1 percent per year, the rest of the world manages to achieve 3-percent productivity growth. What is the trend in our living standard?
The correct answer is that the trend is still 1 percent, except possibly for some subtle effects via our terms of trade; and as an empirical matter changes in the U.S. terms of trade have had virtually no impact on the trend in our living standards over the past few decades. But very few students reach that conclusion--which is not surprising, since virtually everything they read or hear outside of class conveys the image of international trade as a competitive sport.
An anecdote: when I published an op-ed piece in the New York Times last year, I emphasized the importance of rising productivity. The editorial assistant I dealt with insisted that I should "explain" that we need to be productive "to compete in the global economy." He was reluctant to publish the piece unless I added the phrase--he said it was necessary so that readers could understand why productivity is important. We need to try to turn out a generation of students who not only don't need that kind of explanation, but understand why it's wrong.
4.--"High-value sectors": Pop internationalists believe that international competition is a struggle over who gets the "high-value" sectors. "Our country's real income can rise only if (1) its labor and capital increasingly flow toward businesses that add greater value per employee and (2) we maintain a position in these businesses that is superior to that of our international competitors'' (Magaziner and Reich, 1982 p. 4).
I think it should be possible to teach students why this is a silly concept. Take, for example, a simple two-good Ricardian model in which one country is more productive in both industries than the other. (I have in mind the one used in Krugman and Maurice Obstfeld [1991 pp. 20-1]. The more productive country will, of course, have a higher wage rate, and therefore whatever sector that country specializes in will be "high value," that is, will have higher value-added per worker. Does this mean that the country's high living standard is the result of being in the right sector, or that the poorer country would be richer if it tried to emulate the other's pattern of specialization? Of course not.
5.--"Jobs": One thing that both friends and foes of free trade seem to agree on is that the central issue is employment. George Bush declared the objective of his ill-starred trip to Japan to be "jobs, jobs, jobs"; both sides in the debate over the North American Free Trade Agreement try to make their case in terms of job creation. And an astonishing number of free-traders think that the reason protectionism is bad is that it causes depressions.
It should be possible to emphasize to students that the level of employment is a macroeconomic issue, depending in the short run on aggregate demand and depending in the long run on the natural rate of unemployment, with microeconomic policies like tariffs having little net effect. Trade policy should be debated in terms of its impact on efficiency, not in terms of phony numbers about jobs created or lost.
6.--"A new partnership": The bottom line for many pop internationalists is that since U.S. firms are competing with foreigners instead of each other, the U.S. government should turn from its alleged adversarial position to one of supporting our firms against their foreign rivals. A more sophisticated pop internationalist like Robert Reich (1991) realizes that the interests of U.S. firms are not the same as those of U.S. workers (you may find it hard to believe that anyone needed to point this out, but among pop internationalists this was viewed as a deep and controversial insight), but still accepts the basic premise that the U.S. government should help our industries compete.
What we should be able to teach our students is that the main competition going on is one of U.S. industries against each other, over which sector is going to get the scarce resources of capital, skill, and, yes, labor. Government support of an industry may help that industry compete against foreigners, but it also draws resources away from other domestic industries. That is, the increased importance of international trade does not change the fact the government cannot favor one domestic industry except at the expense of others.
Now there are reasons, such as external economies, why a preference for some industries over others may be justified. But this would be true in a closed economy, too. Students need to understand that the growth of world trade provides no additional support for the proposition that our government should become an active friend to domestic industry.
III. What We Should Teach
By now the thrust of my discussion should be clear. For the bulk of our economics students, our objective should be to equip them to respond intelligently to popular discussion of economic issues. A lot of that discussion will be about international trade, so international trade should be an important part of the curriculum.
What is crucial, however, is to understand that the level of public discussion is extremely primitive. Indeed, it has sunk so low that people who repeat silly clich6s often imagine themselves to be sophisticated. That means that our courses need to drive home as clearly as possible the basics. Offer curves and Rybczinski effects are lovely things. What most students need to be prepared for, however, is a world in which TV "experts,'' best-selling authors, and $30,000-a-day consultants do not understand budget constraints, let alone comparative advantage.
The last 15 years have been a golden age of innovation in international economics. I must somewhat depressingly conclude, however, that this innovative stuff is not a priority for today's undergraduates. In the last decade of the 20th century, the essential things to teach students are still the insights of Hume and Ricardo. That is, we need to teach them that trade deficits are self-correcting and that the benefits of trade do not depend on a country having an absolute advantage over its rivals. If we can teach undergrads to wince when they hear someone talk about "competitiveness," we will have done our nation a great service.
REFERENCES
Crichton, Michael, Rising Sun, New York: Knopf, 1992.
Ingrain, James, International Economics, New York: Wiley, 1983.
Krugman, Paul and Obstfeid, Maurice, International Economics: Theory and Policy, New York: Harper Collins, 1991.
Magaziuer, Ira and Reich, Robert, Minding America's Business, New York: Random House, 1982.
Reich, Robert, The Work of Nations, New York: Knopf, 1991.
Thurow, Lester, Head to Head, New York: William Morrow, 1992.
* Department of Economics, Massachusetts Institute of Technology, Cambridge, MA 02139.
Wednesday, 28 January 2009
How Politeness Softens a Blow and UK Banking Update
Yesterday, to instill confidence in the bank, Barclays issued a personal letter to shareholders outlining their current balance sheet status and recent efforts to improve earnings. The Financial Times commented on the old-school British politeness of the gesture, and conjectured that it worked - honesty, "up-frontness," and outlining the plan of action engender trust and lay out the path ahead which is reassuring to people. What an idea? In other UK banking news, this update from the WSJ today:
LONDON MARKETS
U.K. banks catch fire to help lift London stocks
By Steve Goldstein, MarketWatch
Last update: 4:47 a.m. EST Jan. 28, 2009
Comments: 11
LONDON (MarketWatch) -- The hard-hit banking sector caught fire in London trade on Wednesday, with some traders returning to lenders on the belief the U.K. government won't fully nationalize them.
Lloyds Banking Group (UK:LLOY: news , chart , profile ) (LYG:
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LYG 3.82, +0.42, +12.4%) , already 43% held by the U.K. taxpayer, was the biggest beneficiary, surging 31%.
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BCS 5.21, +0.11, +2.2%) added 8%. The Royal Bank of Scotland (UK:RBS: news , chart , profile ) (RBS:
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RBS 4.42, +0.38, +9.4%) , which is 70% in the hands of the U.K. government, added 1 pence to 17 pence.
"I think what we are seeing is a retreat of the nationalization fears which gripped markets last week, people are buying into what they see as opportunity," said Patrick Gordon, a market strategist at the U.K. brokerage Killik & Co.
"I don't think the government wants to nationalize banks if they can help it," he said.
Also rebounding was British Land (UK:BLND: news , chart , profile ) , up 7.4% as The Times (of London) reported that it and Land Securities (UK:LAND: news , chart , profile ) are going to sell 750 million pounds of assets to help deal with financing issues.
More broadly, the U.K. FTSE 100 (UK:UKX: news , chart , profile ) rose 1.3%, or 52.9 points, to 4,247.30. Gainers outnumbered fallers by a 2-to-1 margin.
European stocks also were strong, as were U.S. stock futures. See Europe Markets.
Of other movers, BSkyB (UK:BSY: news , chart , profile ) shares rose 7% as the satellite broadcaster swung to a quarterly profit of 166 million pounds on 6% revenue growth and added 171,000 net subscribers. Analysts attributed the rise to consumers buying the firm's Sky+ recording and SkyHD high-definition services.
"We see growth in these premium products as a significant positive for Sky, as this should increase average revenue per user and lower churn over time, all other things being equal," said analysts from Numis Securities.
BSkyB is 39% held by News Corp., which owns MarketWatch, the publisher of this report.
It wasn't all rosy, however.
Rio Tinto (UK:RIO: news , chart , profile ) dropped 4.6% as the miner admitted it may sell shares to help cut its debt by $10 billion.
Other miners also struggled. Xstrata shares (UK:XTA: news , chart , profile ) dropped 9.8%, and Vedanta Resources (UK:VED: news , chart , profile ) fell after a 99% drop in earnings before interest, tax, depreciation and amortization. The earnings tumble came on inventory write-downs and falling prices, Vedanta said.
Private-equity group 3i (UK:III: news , chart , profile ) slumped 3.4% as the group estimated a 21% drop in the value of its top 50 investments, before foreign exchange gains, during the Dec.-ending quarter. It also comes amid reports that creditors want to take over one of its holdings, VNU Business Media Europe, in a debt-for-equity swap.
3i said it's willing to put more equity into VNU.
Tate & Lyle (UK:TATE: news , chart , profile ) slipped 5.5% as results for the year to March 31 will be at the lower end of market expectations, which the company blamed on its U.S. ingredients arm and to a lesser extent on ethanol demand.
Outside the FTSE 100, HSBC Infrastructure (UK:HICL: news , chart , profile ) slipped 3% as the U.K. infrastructure investment group warned its net asset value will likely fall when next calculated on March 31. End of Story
Steve Goldstein is MarketWatch's London bureau chief.
LONDON MARKETS
U.K. banks catch fire to help lift London stocks
By Steve Goldstein, MarketWatch
Last update: 4:47 a.m. EST Jan. 28, 2009
Comments: 11
LONDON (MarketWatch) -- The hard-hit banking sector caught fire in London trade on Wednesday, with some traders returning to lenders on the belief the U.K. government won't fully nationalize them.
Lloyds Banking Group (UK:LLOY: news , chart , profile ) (LYG:
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4:07pm 01/27/2009
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LYG 3.82, +0.42, +12.4%) , already 43% held by the U.K. taxpayer, was the biggest beneficiary, surging 31%.
Barclays (UK:BARC: news , chart , profile ) (BCS:
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4:00pm 01/27/2009
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BCS 5.21, +0.11, +2.2%) added 8%. The Royal Bank of Scotland (UK:RBS: news , chart , profile ) (RBS:
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4:00pm 01/27/2009
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RBS 4.42, +0.38, +9.4%) , which is 70% in the hands of the U.K. government, added 1 pence to 17 pence.
"I think what we are seeing is a retreat of the nationalization fears which gripped markets last week, people are buying into what they see as opportunity," said Patrick Gordon, a market strategist at the U.K. brokerage Killik & Co.
"I don't think the government wants to nationalize banks if they can help it," he said.
Also rebounding was British Land (UK:BLND: news , chart , profile ) , up 7.4% as The Times (of London) reported that it and Land Securities (UK:LAND: news , chart , profile ) are going to sell 750 million pounds of assets to help deal with financing issues.
More broadly, the U.K. FTSE 100 (UK:UKX: news , chart , profile ) rose 1.3%, or 52.9 points, to 4,247.30. Gainers outnumbered fallers by a 2-to-1 margin.
European stocks also were strong, as were U.S. stock futures. See Europe Markets.
Of other movers, BSkyB (UK:BSY: news , chart , profile ) shares rose 7% as the satellite broadcaster swung to a quarterly profit of 166 million pounds on 6% revenue growth and added 171,000 net subscribers. Analysts attributed the rise to consumers buying the firm's Sky+ recording and SkyHD high-definition services.
"We see growth in these premium products as a significant positive for Sky, as this should increase average revenue per user and lower churn over time, all other things being equal," said analysts from Numis Securities.
BSkyB is 39% held by News Corp., which owns MarketWatch, the publisher of this report.
It wasn't all rosy, however.
Rio Tinto (UK:RIO: news , chart , profile ) dropped 4.6% as the miner admitted it may sell shares to help cut its debt by $10 billion.
Other miners also struggled. Xstrata shares (UK:XTA: news , chart , profile ) dropped 9.8%, and Vedanta Resources (UK:VED: news , chart , profile ) fell after a 99% drop in earnings before interest, tax, depreciation and amortization. The earnings tumble came on inventory write-downs and falling prices, Vedanta said.
Private-equity group 3i (UK:III: news , chart , profile ) slumped 3.4% as the group estimated a 21% drop in the value of its top 50 investments, before foreign exchange gains, during the Dec.-ending quarter. It also comes amid reports that creditors want to take over one of its holdings, VNU Business Media Europe, in a debt-for-equity swap.
3i said it's willing to put more equity into VNU.
Tate & Lyle (UK:TATE: news , chart , profile ) slipped 5.5% as results for the year to March 31 will be at the lower end of market expectations, which the company blamed on its U.S. ingredients arm and to a lesser extent on ethanol demand.
Outside the FTSE 100, HSBC Infrastructure (UK:HICL: news , chart , profile ) slipped 3% as the U.K. infrastructure investment group warned its net asset value will likely fall when next calculated on March 31. End of Story
Steve Goldstein is MarketWatch's London bureau chief.
Tuesday, 27 January 2009
Semblances of civilization, and Scotland
Riding trains in Europe is proof that modern western civilization is at least showing signs of a post-industrial and Internet age existence - if japan is still kicking their asses, they are definitely kicking ours. Cheap, fast, clean, efficient, and free wifi and you're in Scotland for the weekend!! Edinburgh is a beautiful city filled with wonderful people, many of them funky musicians, and all of them friendly, and passionate about their country and heritage. Haggis is actually delicious, and whiskey is cheaper in the USA because of taxes. Traditional music is as much a pub mainstay as is modern rock, and men unabashedly wear kilts on Burns Night to show off their legs. The countryside is breathtaking, and I enjoyed one of my best runs ever up and around the hills. Edinburgh is definitely distinct in culture from London, and I'm proud to say that I loved my time there with my new non-Duke MBA friends who are surpisingly cool ;)
On the train headed home to London.
On the train headed home to London.
Friday, 23 January 2009
Recession hits UK, what a crumpet is, and other thoughts
Today's front-line news was that the UK has officially declared that it is in recession, which is a shocker to the people, obviously. Nonetheless, that combined with the fears of a few days ago that Britain's bailout package would come in too light for the situation, sent the Pound tumbling. This meant only one thing to an obnoxious American MBA like myself: shopping time! The absolute best way to make good of a terrible situation is to shop when the local currency is down against your own, and all of the retail sector is being pummeled by weak holiday sales and is extending their big blow-out liquidation sales. So I did my part for the UK people today (but of course waited to see customer service to collect my tax-back form.)
I've become a huge fan of British TV, and here's this week's Channel 4 Dispatches program on the cost of cheap food during a recession. If you have time, and you can watch it from where you are (have already confirmed it's a no-go in Riyadh,) it's really entertaining from a pure information standpoint as well as a cultural observance. When food tastes good, you say "it's nice." The conclusion of the program is equally charming - in a recession, grocery store chains should make every effort to take a hit on profits in order to improve the quality of their cheapest lines of food products because the health of the nation is at stake. Totally admirable and probably true, but would we hear 60 Minutes back home in the US ever saying the same thing?
http://www.channel4.com/video/brandless-catchup.jsp?vodBrand=dispatches-the-true-cost-of-cheap-food
Speaking of cheap food - Tesco (large grocery store chain) sells packaged crumpets - which I learned are... English Muffins!
Arugula is called "Rockit"
Endives are "chicory"
Eggplant is called, in the French, "aubergine"
And one can waltz around town with a huge cup of mulled wine in hand and no one is bothered at all - what a great country!
I've become a huge fan of British TV, and here's this week's Channel 4 Dispatches program on the cost of cheap food during a recession. If you have time, and you can watch it from where you are (have already confirmed it's a no-go in Riyadh,) it's really entertaining from a pure information standpoint as well as a cultural observance. When food tastes good, you say "it's nice." The conclusion of the program is equally charming - in a recession, grocery store chains should make every effort to take a hit on profits in order to improve the quality of their cheapest lines of food products because the health of the nation is at stake. Totally admirable and probably true, but would we hear 60 Minutes back home in the US ever saying the same thing?
http://www.channel4.com/video/brandless-catchup.jsp?vodBrand=dispatches-the-true-cost-of-cheap-food
Speaking of cheap food - Tesco (large grocery store chain) sells packaged crumpets - which I learned are... English Muffins!
Arugula is called "Rockit"
Endives are "chicory"
Eggplant is called, in the French, "aubergine"
And one can waltz around town with a huge cup of mulled wine in hand and no one is bothered at all - what a great country!
Wednesday, 21 January 2009
Business Culture and Customs
I would love to be able to say that my LSE classmates and professors have been a wealth of knowledge on the subject of doing business in London and the greater UK, but unfortunately for my readers you will have to settle for some thoughts based on academic readings from my classes and my personal anecdotes and observations. You see, LSE's masters programs have a funny characteristic in that the vast majority of the students have never worked before and come straight from college. If you have work experience, I'm told you're more likely to go for the MBA since it's "better," for getting a job I'd presume - although all the banks and consulting co's recruit from LSE as well as LBS. The school is definitely a different feel from a business school however, both in character and student body. Nearly 90% (according to the exchange student coordinator here) are from countries other than the UK, as are most of the professors (I do not have a single British professor or TA). This makes for an incredible experience that mixes depression over how old I am, with excitement over hearing 10 languages on the street before lunch.
My fellow students are mostly from Europe which makes courses like "European Models of Capitalism" absolutely awesome. Last week's seminar was a presentation of the chummy professor's portfolio of 'let's make fun of your country next' jokes, and of course the USA suffered a few. However, this week's seminar on labor and the firm (or "labour" and the firm) was mostly, at least from my unbiased seat, a tutorial on how the USA is the absolute best country in the world to do business in, and we should all thank our lucky stars for choosing it as the launching pad for our careers (recession or no). I'm also certain that the mood in the room was a bit friendlier to the US today being the day after Obama-rama, and that the students now know that Fiona, Radhika and I are in the room, and we're trying to look as intimidating as possible... which is hard when I need to ask 'dumb American' questions on things like the German system of apprenticeship and what a centralized and controlled market economy really means: yes, there are countries where the entire work force gets together and actually sets the wage rates with all the employers in the country, it's not a union, it's not a temporary contract, it's a way of life... and they study us for our competitive hire/fire at-will 'market sets the wage' ways. The US is always the benchmark for the utmost liberal and free example of a market economy in our readings and discussions, and the UK gets lumped in with the US as another example. The UK, I'm told by my sage Danish professor, is like the US, but has very centralized/controlled tendencies (read-"socialist" in USA-speak). Many of the UK's liberal US-like economic and business policies are relatively new and were introduced by Margaret Thatcher. For our parents' generation of UK laborers, there seems to be, as suggested by my prof, a bit of a push to "call it what it is and make the UK a centralized market" - but this is one academic's opinion, and I cannot substantiate it at all yet. Given the UK's bent for very centralized and all-inclusive policies toward citizens and workers (think the healthcare system, welfare, etc.), this could make sense, I just don't know yet.
What I have seen is that London is a city catering to tourists, recent immigrants working round town (construction and retail, from what I've seen), and very well-dressed and briskly-paced professionals. LSE is in the heart of the legal center of town, and many of the main consulting firms have offices on the Strand nearby. Banking and finance has pretty much moved to Canary Wharf, a newly developed area a few miles down the river, which looks much like a shiney big glass wallstreet. The arts are alive here, and according to Fiona, the UK is a great place for artists to come and live because they can qualify for welfare and have a wonderful life creating in town. The UK also has a rich manufacturing history (duh, think industrial revolution) and from what I've eaten and seen on TV, an idyllic agricultural tradition (I'm picturing rolling green hills with sheep and cows munching around all over the countryside somewhere).
I have planned a few business investigative trips and interviews which I hope to have completed some time in February, including a trip to a self-sustaining organic farm (think Polyface Farms if you've read "The Omnivore's Dilemma"), the UK's leading smoothie-making company called "Innocent", and a surviving hedge fund (no, it's not a joke.)
My fellow students are mostly from Europe which makes courses like "European Models of Capitalism" absolutely awesome. Last week's seminar was a presentation of the chummy professor's portfolio of 'let's make fun of your country next' jokes, and of course the USA suffered a few. However, this week's seminar on labor and the firm (or "labour" and the firm) was mostly, at least from my unbiased seat, a tutorial on how the USA is the absolute best country in the world to do business in, and we should all thank our lucky stars for choosing it as the launching pad for our careers (recession or no). I'm also certain that the mood in the room was a bit friendlier to the US today being the day after Obama-rama, and that the students now know that Fiona, Radhika and I are in the room, and we're trying to look as intimidating as possible... which is hard when I need to ask 'dumb American' questions on things like the German system of apprenticeship and what a centralized and controlled market economy really means: yes, there are countries where the entire work force gets together and actually sets the wage rates with all the employers in the country, it's not a union, it's not a temporary contract, it's a way of life... and they study us for our competitive hire/fire at-will 'market sets the wage' ways. The US is always the benchmark for the utmost liberal and free example of a market economy in our readings and discussions, and the UK gets lumped in with the US as another example. The UK, I'm told by my sage Danish professor, is like the US, but has very centralized/controlled tendencies (read-"socialist" in USA-speak). Many of the UK's liberal US-like economic and business policies are relatively new and were introduced by Margaret Thatcher. For our parents' generation of UK laborers, there seems to be, as suggested by my prof, a bit of a push to "call it what it is and make the UK a centralized market" - but this is one academic's opinion, and I cannot substantiate it at all yet. Given the UK's bent for very centralized and all-inclusive policies toward citizens and workers (think the healthcare system, welfare, etc.), this could make sense, I just don't know yet.
What I have seen is that London is a city catering to tourists, recent immigrants working round town (construction and retail, from what I've seen), and very well-dressed and briskly-paced professionals. LSE is in the heart of the legal center of town, and many of the main consulting firms have offices on the Strand nearby. Banking and finance has pretty much moved to Canary Wharf, a newly developed area a few miles down the river, which looks much like a shiney big glass wallstreet. The arts are alive here, and according to Fiona, the UK is a great place for artists to come and live because they can qualify for welfare and have a wonderful life creating in town. The UK also has a rich manufacturing history (duh, think industrial revolution) and from what I've eaten and seen on TV, an idyllic agricultural tradition (I'm picturing rolling green hills with sheep and cows munching around all over the countryside somewhere).
I have planned a few business investigative trips and interviews which I hope to have completed some time in February, including a trip to a self-sustaining organic farm (think Polyface Farms if you've read "The Omnivore's Dilemma"), the UK's leading smoothie-making company called "Innocent", and a surviving hedge fund (no, it's not a joke.)
Monday, 19 January 2009
UK Preps for the US' Big Day Tomorrow
London celebrates Obama's historic day
By Catherine Steele
As Barack Obama's presidential dream becomes reality, bars, clubs and hotels will be packed with Londoners sharing the moment. Where will you be when America welcomes its first black president?
BBC London will of course be marking the event on January 20th with special programming. Among the venues we'll be visiting are the celebrations at the IndigO2 and Bernie Grant Arts Centre in Tottenham, with live coverage from both.
Back in the Game
So it's been quite a few days since I set up Kate and Crumpets, and the honest answer for the lack of posts since then, is that I'm very lazy. But, vacation's over!
Classes have started, Joe is off to Hong Kong, and I'm all by my lonesome in the big city.
I've taken the wondrous advice of my followers, and I've found an Oyster card (discount card for the Tube), and I'm learning the cheap eats and free entertainment that comes with being poor in an ungodly expensive town.
It's funny getting to know a city from the outsiders' perspective because I'm sure the things that I've noticed and become charmed by are the seemingly silly things Londoners would never pay attention to. As I've been settling in, most of my first "oh that's so cute of them!" moments have come from observations of food and fashion.
Some of my new favorite things are British cooking shows on the BBC, Cadbury's Mint Aero chocolate bar, all-butter shortbread cookies with tea - and the afternoon tea and snack is an excellent meal that I intend to import. The new fashion here for ladies is skinny jeans tucked into really cool tall boots of all shapes and sizes. Londoners cannot seem to figure out what side of the street they want to walk on, and they like very strange sandwich concepts - butter and ham, cheese and pickle, prawn and mayonaise... all delicious, I assure you. The town also seems to be obsessed with chain restaurants - all UK chains, but still chains - the most notable is Pret for sandwiches, and Starbucks which is EVERYWHERE.
In the past week I've gotten to know the other American MBAs who are in town for the term at both LBS and LSE, and so far we have an excellent crew who have excellent priorities - the email question is always "where are we drinking tonight and where are we travelling to this weekend?"
The weather has been surprisingly good lately, little rain, and a balmy 40+ daily which is nice running weather.
Since tomorrow is the US's big day, the UK is actually really going a little apeshit over it. I've been absolutely shocked by how many bars and big public spaces are going to be holding huge events and parties to watch the inauguration tomorrow, and of course there are fancy balls and parties as well. Normal, average Brits seem to be very excited for tomorrow, and the first thing anyone asks me when I say where I'm from is, "Are you excited about Obama?!" Yes, we are all excited, and tomorrow promises to be an evening filled with cheeseburgers, ketchup, Coka Cola Classic, and other traditional homestyle comfort food to celebrate the occasion!
Classes have started, Joe is off to Hong Kong, and I'm all by my lonesome in the big city.
I've taken the wondrous advice of my followers, and I've found an Oyster card (discount card for the Tube), and I'm learning the cheap eats and free entertainment that comes with being poor in an ungodly expensive town.
It's funny getting to know a city from the outsiders' perspective because I'm sure the things that I've noticed and become charmed by are the seemingly silly things Londoners would never pay attention to. As I've been settling in, most of my first "oh that's so cute of them!" moments have come from observations of food and fashion.
Some of my new favorite things are British cooking shows on the BBC, Cadbury's Mint Aero chocolate bar, all-butter shortbread cookies with tea - and the afternoon tea and snack is an excellent meal that I intend to import. The new fashion here for ladies is skinny jeans tucked into really cool tall boots of all shapes and sizes. Londoners cannot seem to figure out what side of the street they want to walk on, and they like very strange sandwich concepts - butter and ham, cheese and pickle, prawn and mayonaise... all delicious, I assure you. The town also seems to be obsessed with chain restaurants - all UK chains, but still chains - the most notable is Pret for sandwiches, and Starbucks which is EVERYWHERE.
In the past week I've gotten to know the other American MBAs who are in town for the term at both LBS and LSE, and so far we have an excellent crew who have excellent priorities - the email question is always "where are we drinking tonight and where are we travelling to this weekend?"
The weather has been surprisingly good lately, little rain, and a balmy 40+ daily which is nice running weather.
Since tomorrow is the US's big day, the UK is actually really going a little apeshit over it. I've been absolutely shocked by how many bars and big public spaces are going to be holding huge events and parties to watch the inauguration tomorrow, and of course there are fancy balls and parties as well. Normal, average Brits seem to be very excited for tomorrow, and the first thing anyone asks me when I say where I'm from is, "Are you excited about Obama?!" Yes, we are all excited, and tomorrow promises to be an evening filled with cheeseburgers, ketchup, Coka Cola Classic, and other traditional homestyle comfort food to celebrate the occasion!
Saturday, 3 January 2009
Day 3 - London and Some New London-speak
Today is the 3rd of January, and a Saturday. I'm settled in my new home for the next few months, a dingy LSE dorm near the Tate Modern that is cheap and convenient, but doesn't have a kitchen which is a PAIN. It's very cozy though, and I think I'll get used to the bed that dips in the middle and has awkward springs that jut out and punch me at night. At least the Aerobed is leaking air, so that was worth it! (Poor Joe who has to sleep on it.)
Complaining aside, it's SUNNY OUT! And gorgeously crisp out. We're taking in a cafe, and then heading to Chinatown in search of a cheap coffee pot, and for a run down the river bank. So far, people here are wonderful, polite, nice, and very cool. I like that Londoners are "chill" and pretty casual which is going to help with my poor student look for a while. The city at night is beautiful, and LSE is right downtown steps from St. Paul's Cathedral.
We tested the Tube (Underground) and found it great, except for the rip-off price, so we've been walking everywhere which is a great way to see the city. Museums are mostly free, and shopping season is a wonderland of sales and posh stuff that I wish I could fit in my overstuffed suitcases home. We're researching the hipster music scene and exploring cheap eats - and learning tons of new vocabulary!
Administrators - the British SEC, we think... when companies go under, the "administrators are called in," says the UK Economist.
Anti-climbing paint - is a petroleum-based paint stuff that doesn't set but looks black and shiney. It's meant to stop you from climbing lamp posts, but if you try, it gunks you all up and makes you slide down.
Pie and Mash Shop - a store that sells meat pies and mashed potatoes... mmm.
Jackets - a stuffed potato skin, very popular apparently!
Yoghurt comes in a "pot."
Complaining aside, it's SUNNY OUT! And gorgeously crisp out. We're taking in a cafe, and then heading to Chinatown in search of a cheap coffee pot, and for a run down the river bank. So far, people here are wonderful, polite, nice, and very cool. I like that Londoners are "chill" and pretty casual which is going to help with my poor student look for a while. The city at night is beautiful, and LSE is right downtown steps from St. Paul's Cathedral.
We tested the Tube (Underground) and found it great, except for the rip-off price, so we've been walking everywhere which is a great way to see the city. Museums are mostly free, and shopping season is a wonderland of sales and posh stuff that I wish I could fit in my overstuffed suitcases home. We're researching the hipster music scene and exploring cheap eats - and learning tons of new vocabulary!
Administrators - the British SEC, we think... when companies go under, the "administrators are called in," says the UK Economist.
Anti-climbing paint - is a petroleum-based paint stuff that doesn't set but looks black and shiney. It's meant to stop you from climbing lamp posts, but if you try, it gunks you all up and makes you slide down.
Pie and Mash Shop - a store that sells meat pies and mashed potatoes... mmm.
Jackets - a stuffed potato skin, very popular apparently!
Yoghurt comes in a "pot."
Before I leave
Well, I left already so this post isn't precisely timely, but I'll try to recall the fateful day three days ago...
A few days after classes ended, I was in my little Honda, stuffed to the gills with crap I was convinced I'd need in London. We drove from Durham straight for over 10 hours to Connecticut and passed through three distinct weather conditions along the way ending in a snowy mess that looked nothing like the warm and sun we'd left. Upon arriving at my parents' place, my dad's first words were, "How much crap are you bringing? Jeez!" This sentence would oddly be heard several times between this day and today, actually (sometimes uttered by me, Joe, and even a cabbie I believe.)
Post-Christmas and a week later I was on the road again with all of my crap (two huge suitcases, a backpack, purse, and an Aerobed to be exact) heading to JFK for the big flight on New Year's Eve. The day of, I was a little homesick at the thought of leaving my parents' comfortable and cozy house full of dogs and things I like. But, I was really excited to be going adventuring. I expected the trip to be full of fun, excitement, and beautiful site-seeing. I was excited for the change from the ordinary, from Fuqua for a while, and to see London!
A few days after classes ended, I was in my little Honda, stuffed to the gills with crap I was convinced I'd need in London. We drove from Durham straight for over 10 hours to Connecticut and passed through three distinct weather conditions along the way ending in a snowy mess that looked nothing like the warm and sun we'd left. Upon arriving at my parents' place, my dad's first words were, "How much crap are you bringing? Jeez!" This sentence would oddly be heard several times between this day and today, actually (sometimes uttered by me, Joe, and even a cabbie I believe.)
Post-Christmas and a week later I was on the road again with all of my crap (two huge suitcases, a backpack, purse, and an Aerobed to be exact) heading to JFK for the big flight on New Year's Eve. The day of, I was a little homesick at the thought of leaving my parents' comfortable and cozy house full of dogs and things I like. But, I was really excited to be going adventuring. I expected the trip to be full of fun, excitement, and beautiful site-seeing. I was excited for the change from the ordinary, from Fuqua for a while, and to see London!
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