Friday, September 29, 2006

Corporate governance and state governance











The Wall Street Journal featured a story about corporate governance in China today. The reporter touted an ex-Goldman Sacks banker's efforts to help erect new corporate governance paradigm in China. The banker, John Thornton, is a legendary figure who gave up his banking career and chose instead to teach in Tsinghua University in Beijing, China.

I always support attempts that help modernize China. Only a civilized and modernized China could stabilize the entire Asia Pacific region. But Mr. Thornton's efforts will eventually hit the unbreakable Great Wall of Chinese Communist Party. It is all good that Netcom's chairman, Zhang Chunjiang, supports changes happening in Netcom. However, Netcom is not Mr. Zhang's company. It is still controlled by the Party. What if some reforms pursued by Messrs. Zhang and Thornton are in conflict with the Party's other goals?

Just by looking at how the Communist Party ousted Shanghai's party chief a couple of days ago, I would not be so optimistic as to believe Mr. Thornton's efforts will go anywhere.

Friday, September 22, 2006

Wal-Mart bashing













American liberals are lashing out hard at Wal-Mart right now. Chicago city council's attempt to mandate giant retailers to pay a "super minimum wage" was just a little episode of their efforts. I was relieved to find out that the mayor vetoed the Big Box Ordinance. There are still sane men standing among us.

On the other hand, I heard some commenter on NPR demanding the break-up of Wal-Mart for its being a monopolist. I couldn't believe my ears. Why is it branded as a monopolist? I haven't seen a single customer being forced into buying at Wal-Mart. Even when mom-and-pop stores are driven out of business by Wal-Mart, people still have a great deal of choices for their grocery shopping. And what do mom-and-pop shops do consumers any good anyway?

People always need an enemy to motivate themselves. Wal-Mart is a huge and easy target. I just hope the critics have studied economics harder in college. That way we will have a more constructive discussion of helping out the poor.

(Picture: www.yoest.org)

Tuesday, September 12, 2006

Moneyball and no-trade theory

















To non-A's fans' chagrin, Billy Beane once again proved Moneyball rules in the big league. A's are red hot and Frank Thomas is on a home-run streak. Thomas costs the A's only half a million this year! Heard of Mark Mulder this year? I still remember how people scolded Billy Beane for giving away two of the big three. Voila! A's got a new pitching trio. Yet, not only Mulder is gone for the season, but Hudson doesn't do well, either.

Every time I read stories like that, I always recalled the no-trade theory learned in game theory class. If someone is giving up something valuable, he must know that stuff is flawed. On the other hand, if someone is eager to get something, he must know that stuff is very valuable. Consequently, there shouldn't be any trade at all.

Billy Beane is a proven genius. I just don't understand why any sane general managers would do deal with him. What do you know? They just keep on being preyed. I root for LA Angels, but can't find a way to hate Billy Beane, even when Angels are trailing right now. I just wish Arte Moreno can acquire Billy Beane some day.

(Picture: AP)

Wednesday, September 06, 2006

Driven by love- From China to America















Donald Tang wrote a piece in LA Times today. He told a compelling story of his love and his remarkable journey. He is Bear Stearns' China hand and recently said to broker a monster deal between China Construction Bank and Bear Stearns.

The story tells us that you are bound to succeed if you are sincere and able to concentrate. What a motto!

(Picture: Milken Institute)

Tuesday, September 05, 2006

Grading exams



















Grading exams or papers is perhaps the least satisfying part of teaching. But sometimes students provide very entertaining and creative answers. This is not taken from the actual exams I have graded, but it serves the purpose.

Saturday, September 02, 2006

Hedge your gasoline spending












Oil price dropped a few bucks the last few weeks. I beleive it is a good time to lock in the gasoline price now. If you have to spend 2 grands a year on gas, you can buy the same amount of oil price-pegged ETFs(Exchange Traded Funds). That way your gas bill won't be subejct to any fluctuations in crude oil or to any stupid conflicts in the middle east.

A few caveats: (1) The hedging strategy only lasts for a certain period of time. In the previous example, you still will have to take whatever the gas price is next year. If you want to lock in the price for more years, interests forgone should be taken into consideration as well.

(2) Hedging is a double-edged sword. You won't have losses, but you also give up any potential gains. If the oil price keeps dropping, your ETF holding will shrink, too. Such an outcome will be worse than doing nothing at all.

It is no magic that I came up with this strategy. I got burned pretty bad by owning this ETF (symbol: USO) lately. I need to think a way to comfort myself and here it is. What a finance genius!

(Picture: Yahoo! Finance)

Friday, August 25, 2006

What economists do















The Wall Street Journal front page today covered a story about Yahoo!'s recent hiring of economists. To compete with Google and MSN, Yahoo! greatly increased its R&D spending. Of course, they hired computer engineers for research. But economists can help, too. With abundant information collected from clicks by users, economists can play their best games, too. We analyze problems, create models, simulate the behaviors, and then predict outcomes. It is not much different from what engineers do. Yahoo! took the lead and hopefully they have created a new job market for economists by doing such.

The guy in the picture is an economics professor at Harvard. He is now Yahoo! bound.

(Picture: The Wall Street Journal)

Monday, August 21, 2006

Hallyu













I was watching this Korean drama aired on AZN tv. Although I wasn't supposed to enjoy Korean stuff (Because I am a Taiwanese and Taiwan produces better stuff!), I found it entertaining. My Lovely Samsoon, the drama's offical title, has many elements of a successful drama: complicated plots, unpredictable twist, conflicts, comedy, love story, and well selected street scenes. No wonder it is the highest rated Korean drama ever (more than 50% of Korean population tuned in for the show when it was first aired).

As an economist wannabe, watching soap operas is not just as simple as it sounds.

(to be conituned)

(Picture: MBC Global Media)

Sunday, August 13, 2006

Proposition 65











I shelfed my first research idea the other day.

Californians are used to warning signs like this one. As a libertarian, I loathed the language used in the sign. It was obvious that it helped no one. Ever since I learned the tremendous costs associated with putting up the sign, I extended the list of evils that governments can do to you. If I hate it so much, why don't I do something about it? I told myself.

As a consequence, I set out to prove Proposition 65 is useless. I started to read the literature and found it to be a daunting task. The purpose of Proposition 65 was to help consumers make the right choice when they are faced with the trade-off between health risk and price. Yet, people who drafted the proposition did not want to appear anti-business. The compromised version was then meant to be ambiguous. As it turned out, consumers are either totally scared away by the products or totally ignorant of the sign. The language is too vague to distinguish those with dire consequences from those with pretty mild effects. In a nutshell, it failed to help consumers make the wise decision it was purported to.

But the evidence is hard to come by. I thought that if I could prove nothing has happened in public health before and after the passage of the proposition, I would be able to claim it to be a waste of social resources. It was simply not workable, as I was told by Prof. Dobkin. If there is any effect of any specific chemicals, it would be long-term and complicated by other factors as well. The causal effect will be impossibe to identify. I had to turn to to study the effects on business side instead.

What do you know? Proposition 65 did do some good if we look from business' perspective. Reading archived newspaper and megazines, I identified some anecdotal evidence. Some big companies, like Gillette, did reformulate their products to avoid the Proposition 65 labels. Either out of fear of lawsuits or out of competition pressure, companies did try to eliminate the use of toxic components. Again I thought, "If I can find evidence showing that the use of certain chemicals dropped significantly after the passage of Proposition 65, I might conclude that Proposition 65 works."

You see how absurd researchers are. You set out to disapprove one thing and you ended up reinforcing the thing you were against. But the fact is, researchers must be open-minded and willing to accept any scientific evidence that is against you. It is not absurdness, but scientific spirits.

I was glad that I took this positive approach. However, I did not seem to be able to get the beautiful cliff-like curve. Companies do not react to regulation change at the snap of fingers. It takes time.

That was why I decided to shelf my first research idea.

As a concluding remark, libertarians like me still do not like such regulations. Without the proposition, firms still might reduce the use of toxic components either out of fear of lawsuits or out of competitioin pressure (see, the same market forces are working). The correct next step, ifthere is anyone desiring to pursue this avenue, will be weighting the costs and benefits of the proposition. Meantime, I will keep hating the annoying labels until Proposition 65 is proved to be economically beneficial.

Saturday, August 05, 2006

Trying to be different




















First of all, the guy in the picture isn't me. When I saw Jeremy Chang on TV, some thoughts came to my mind. He is a pop singer in Taiwan with several hits. Not a super star but popular enough that people won't mistaken him for someone else. One of my college buddies, let's call him K, looked like him in many ways. For one, they both have deceiving sad looks. For some reasons, college girls just fell for that look. Anyway, I am not here to whine about how popular they used to be. Just like Chang, K used to play great guitar in a band. Jeremy Chang's banal performance on TV got me wonder why a guy like K, who could have easily become another pop singer, ends up being a fat-belly, middle-class man that he used to hate so much.

Everyone tries so hard to be different. I am no exception. So is K. He despised pop music. Everybody could play pop songs. The lyrics are soft and meaningless. The only music that was good enough for him was alternative heavy metal. Just by looking at the name, we would know there wasn't a big crowd cheering for him. He went on playing that until his band flopped.

He was just trying to be different. Thank god K has so many talents. He got a decent job with his computer programming skill. He is now having a good time with his family and work, I guess. Nothing wrong with that. I just thought that if he could just be a more ordinary guitar player or singer, he would have left a bigger footprint because he would have been so popular.

Better be the head of an ass than tail of a horse, as they say. Such mentality best describes why we want to be different. But how do we know we can't be the head of a horse some day?

(Picture: Jeremy Chang)

Sunday, July 30, 2006

Journalism down to the bottom




Taiwan's Apple Daily (Don't be fooled by this funny title. It is actually the most widely read paper there) published a piece of mine on 7/21. I criticized the widespread blogs provided by traditional news media. Being a blogger myself, I am not against blogs at all. It is just wrong to have editors in the media writing blogs that are compiled by the same media. News reporting is a serious business. Publishing unedited blogs will only hurt the hard-earned credibility.

We Taiwanese are going through the most painful period on the way to be fully democratized. The last thing we need is irresponsible media to exacerbate our agony. I am glad that these irresponsible newspapers are gradually driven out of business by Apple Daily, which I believe is the only newspaper that knows something about journalism. Squandering their barely existing credibility is the very proof of Apple Daily's success.

You know what they say about eating apples, "It is good for your health." Well, your mind, too!

Thursday, July 27, 2006

Wharf to wharf












I ran the race from Santa Cruz to Capitola. It took me one hour and 23 minutes. The winner finished the race in 27 minutes. That says everything.

Monday, July 17, 2006

50-50










Recent escalation of the Middle East crisis and the handling of the major world powers remind me of my childhood fights with my siblings. In the end, everyone got punished. My parents always attributed the responsibility equally to both kids involved. G8 just asked Israel to exercise "utmost restraint" and Hezbollah and Hamas to return the hostages. The 50-50 styled justice again came to my mind.

That is not justice to me. It is never 50-50. There is always someone that arouses the conflict and should be held responsible for the behavior. Punishing both sides just obscures the principle and encourages future stimulation. I don't like the 50-50 because I was never the party to begin the fight. So is Israel in this case.

This should be the right message to Hezbollah and Hamas: Return the hostages unconditionally!

(Picture: New York Times)

Sunday, July 16, 2006

Hainan chicken




















I know I am a terrible restaurant reviewer, but can't help writing about this terrific dining place. I would say Layang Layang is easily a top 10 Asian restaurant in South Bay. A friend of mine, a pregant one, was craving Hainan Chicken tonight. We had to come up with a Singaporean/Malaysian resturant fast. It turned out that Chinese Yellow Page was awesome and extremely helpful. Before the future promised by Google realizes, Yellow Pages are indeed indispensible.

Check out Layang Layang's website!

Thursday, July 13, 2006

Mexican












Living in California is a bliss. You never need to take a flight to taste authentic international cuisines. But I don't like how Americans call them: ethnic foods. It just doesn't sound right. Anyway, California boasts the largest Vietnamese community outside Vietnam, the largest Korean community outside Korea Peninsula, and many more different ethnic groups. Despite that many international cuisines are twisted to appeal to Americans, we still can find first-rate foreign foods if we look harder.

I have an obstinate Taiwanese/Chinese stomach. Yet, I still try different foods once in a while. I love Pho, Pul-kogi, Larp, and Sashimi. To be honest, I learned to taste them only after coming to California. If you know all the names I just flashed to you, you probably know I still have an Asian stomach. Not that I don't like western foods. I need some guide to learn to appreciate American/European foods. It always takes a lot of luck if I just venture into "exotic" restaurants and try them out.

Consequently, it is safer for me to order hamburgers from Carl's Jr or Jack-in-the-Box if there isn't an In-N-Out around (don't want to talk about McDonald's here). The same logic applies to Mexican foods. Baja Fresh and Taco Bell know their ways. Yet, if someone shows me a really good Mexican restaurant and tells me which to order, I won't hesitate to try.

That is how I get to know this authentic Mexican restaurant- Tepa-Sahuayo(There is another one in Wastonville, called Cilantros. I will try it next time when I feel like Mexican). I went there and asked the waitress for some suggestions. I can't remember the names of the dishes, but the food was greasy and spicy and even came with rice, just like Chinese! Anyway, we had a good time eating. I did a poor job talking about the food, but please consider it a good review.

Sunday, July 02, 2006

Chancellor Denton and the "scandal"




















Chancellor Denton's story was featured in today's San Jose Mercury News. Her death is still a myth so far. Most people blame the pressure Denton had since the UC-wide financial "scandal" was reported in major media outlets here in California.

I don't know how it became a scandal. Most likely the bureaucrats in the UC system mishandled the whole executive-pay thing. Why did they try to hide the not-so-exorbitant executive salary? Let's be realistic. If UC wants to remain as top research universities in the world, the spending of the system has to catch up not only with that of top public universities, but also with that of private ones, such as Stanford. Executive compensations are part of the spending, too. Good chancellors or presidents are hard to come by. If there is anyone available in the market, guess which institution will snatch him or her up? The one with deep pockets, of course!

Let's not be hypocrite. Outstanding scholars are human, too. You can't always count on them to be philanthropic or on their endless love to public education. Let's pay them well and ask them to bring the reputation and donations Californians really want.

I don't know if the bureaucrats have learned a thing or two from the tragedy. Hopefully, they will not simply list dog runs as not-to-offer items, but also deeply re-exam their attitudes toward executive compensations. If they still feel they are inept to explain the necessity of reasonable pay package to the politicians in Sacramento, I will suspect that they feel guilty about their own pay as well.

(Picture: UC Santa Cruz Review)

Saturday, July 01, 2006

The richest and the second richest















Warren Buffett announced to give away his wealth to Bill Gates' foundation. When I first saw the news, I thought they must be on to something big because Bill Gates not long ago decided to step down from Microsoft's chief software architect position and to focus on his philantrophy business. Unless they are planning something gigantic, they have no reason to combine their fortunes together. Well, they both denied it. What a coincidence!

I totally can see Buffett's reasoning. So many foundations built by so-called robber barons have fallen into the hands of crazy liberals. Were those barons still alive today, they would have found a way to kick the executives out themselves. Bill Gates is still young. He is definitely the guy to take care of Buffett's money and do things Buffett can feel comfortable when he is up in the sky.

It then comes to why Buffett's move is so novel and noble. It isn't hard to reason, either. Successful business men have a common feature: super-sized ego. Just today, I saw a story in the Wall Street Journal about a guy trying to build a dynasty. This Harlan guy literally comes up with a 200-year plan for his family. It is good to have a dream, but a wish like this? I can't really appreciate it. Ben Franklin once said(these are not the exact words), "It is insane to say that your eighth generation descendents are related to you." What is the purpose of building a dynasty when a total stranger is going to reign?

Hats off to Buffett.

(Picture: AP)

Friday, June 30, 2006

It's over




















It is officially over for my first year in the Ph.D. program. Hopefully I will see great results for my prelims next week. I have never studied this hard since the college entrance exam. During the preparation time, the university's chancellor jumped off the tallest apartment building in San Francisco. I've never seen her before(you can see how distant graduate students are from the place where we spend our youth), but the news still sent a shock wave throughout the campus anyway. The first thing we discussed right after the prelim was exactly the death of the head of school. Of course, her being gay added some gossip ingredients. Well, it's over for her, too. I don't know her, but rest in peace.

Tuesday, June 27, 2006

Give him a Ph.D. right now!

I got my TA evaluation back today. One of my students compliments my work and concludes with that line. I am totally elevated. During the grueling prelim preparation, I do need such an encouragement. Too bad teaching is only a small part of graduate study and I need more than compliments to complete my study.

Back to study!

Thursday, June 22, 2006

The Wall Street Journal

This was originally written on 11/18/2005

One of the best pieces of advice I have ever received was to subscribe to The Wall Street Journal. I did just that when I first came to America to get my MBA at UC Irvine. Reading The Journal somehow changes my life. It is one of the reasons why I started studying economics. I admire The Wall Street Journal's authentic journalism. Unlike New York Times, it might be the only national newspaper that clearly separates news and editorial sections. Not just I see it this way. I recently found out Milton Friedman said the same in his memoir, Two Lucky People. Of course, you have to be a true libertarian to appreciate The Journal. If I were at the position to give advice, I would urge you to subscribe to it.

Let's blog!

In addition to the website maintained in the school, I decided to begin blogging. I like to tell people what I think (trust me, lots to say). It is a natural move for me. Let's see how far I can go.