The 'two souls' equation I showed in class today relates the real wage divided by average labour productivity to the return on productive capital divided by the rate of capacity utilisation. Adding these two ratios together gives you 1. I've been sent an email to explain my use of the 'two souls' epithet. It comes from Goethe's Faust:
Two souls, alas, are housed within my breast,
And each will wrestle for the mastery there.
So there you have it.
Stephen,
It is funny when you write something down and forget about it completely afterwards. I employed a blog site over the past few years, to capture some things I had rattling around in my brain, and some ideas. I began to investigate the new 'stats' feature in the blog tools lately, and found a lot of vistors to a blog entry I had scribbled down called 'Berlin Wall'. I guess I am using the big Google brain to find out what I have written which is of any use.
I googled the Albert Foer paper my blog entry referred to, and re-read it just now. Its not a bad paper, and worth taking a look at - because it sort of captures something about the Irish situation and Anglo Irish banks position within it all. I think that someone such as Iansiti and Levien (Keystone Advantage), would have success in analysing Anglo as some kind of 'hub landlord' within the greater scheme of things in Ireland.
A hub landlord, the most anti-social species of dominator, “eschews control of the network and instead pursues control of value extraction alone,” providing little new value to its network, leaving a “starved and unstable” ecosystem around it.
Good discussion on the radio this morning. I didn't have time to dial 53106 while cooking the dinner, and anyhow my thumbs would have problems typing all of the above.
Cheers Brian, much appreciated 🙂
Stephen,
More than anything else, the debate in politics and in the media about Anglo Irish bank, and the bank guarantee gives me pause for consideration - and reminding of the need for educators such as yourself to offer to young brains, the tools with which to analyse situations and problems.
The most disappointing part for me about the whole Anglo Irish and bank guarantee debate, I have seen to date, is the way it neatly split down the middle between those who believed Anglo to be systemic and those who do not. Having proved or dis-proved either point, whether one believes one or other point of view to be correct, there is no where to go beyond that.
The question is not whether Anglo Irish bank was systemic or not. It is a question of how Anglo Irish bank related to the 'network' and the ecosystem, in which it tried to dominate. Instead of attempting to be keystone participants, Irish corporates wanted all to become hub landlords.
The reality, as economic students venture into the world is a world of networks. As authors such as Iansiti and Levien remind us in their Keystone Advantage publication - the wealth of companies is in their 'access' rather than their assets. If anything could define the Irish situation as of 2011, it is that. Our deficit of access on so many levels, and on so many networks, from top to bottom.
Our reputation shot internationally according to the IDA. Our politicians tell us bridges need to be re-built with Europe. Our access to funding at the level of business. Our constant paranoia with regards to access to 'the markets'. Every door shut down in rapid succession.
Our young economics and business students have to learn and understand why this happens. The 'hub landlord' in our case, begin the national obsession with property, and its ability to suck all of the life out of the ecosystem, and replace it with nothing. Not least, I remember John Fitzgeralds article for the Sunday Tribune a while back, in which he documented how the construction industry robbed labour resources from our other industries.
In almost every level, the work of Iansiti and Levien does shine a very clear light into the heart of the Irish dilemma. I suggest we need a few bright young students to look at this in the coming years. Respectfully, BOH.
Last pithy remark, if I may. Our formation of a 'National Asset Management Agency', betrays the legacy of the old fashioned thinking, that gripped the country during the property bubble. Now that our asset bubble is well and trully over (notwithstanding the Lucey argument, that NAMA created an artificial floor), most of our apprenhension in Ireland focusses no longer on assets, but on access of so many kinds.
Perhaps efforts would have been better spend, had Ireland established a:
national ACCESS management agency,
to coordinate the re-building of access and bridges back into so many networks?