In Time Michael Schuman argues that a financial crisis on the level of the one seen by Japan and Korea is inevitable. Here’s why:

• China has used the “Asian Devilment Model” to reach its current levels of growth and prosperity. The steps to this model include exploiting low wages to quickly industrialize with generous amounts of investment as determined by the government, allowing it to ‘direct’ the growth.
• The involvement of the government causes prices to settle at the ‘wrong’ levels. The study of economics has shown that if prices are at the wrong level for an extended period then this will trigger a financial crisis that will lead to a correction of prices.
• In China there is ample evidence that prices are wrong – especially in the property sector. While analysts are correct to note that China needs extensive infrastructure projects to house its people, the type of housing being built is often of the wrong type. It is either too expensive, or it does not meet the safety specifications required by corporations. The multitude of malls seem to mostly be empty.
• Countries that follow the Asian Development model generally have a crisis after about 35 years of following the model. Unless China reforms, this would place a potential Chinese financial crisis around 2015.

To read about what it means for prices to be wrong, other signs that the country is headed towards a crisis, and the things that China could do to prevent such a fate for itself, click here.

Source: Time

Via: Newmark’s Door

Clare O’Connor had the opportunity to conduct the first ever interview with Manoj Bhargava, the creator of 5-hour energy, a product that went from nothing to $1 billion in sales in just eight years. Some of the highlights from the profile include:

• Bhargava maintains a graveyard of his competitor’s products. Every time he manages to sue or bully off of the market a similar product, he places a bottle of it in a bookcase and a placard underneath it with a skull and crossbones drawn in.
• The parent company is thought to command a 90% share of the energy-shot market.
• Bhargava chose names such as “Living Essentials LLC” and “Innovation Ventures” for the companies he runs because of how bland they sound.
• The secret to the success of the drink is that unlike other energy drinks at the time such as Red Bull or Coke, 5-hour energy came in a small, single serving bottle. You don’t have to be thirsty to drink it.
• It’s also a product that either lives or dies. Costing just $3, consumers can try it, test it, see if they like it, and immediately reject it. The first experience must be perfect if it is to be popular.
• Bhargava, who spent his 20s at an Ashram in India in search for inner peace, believes that he’s probably the richest Indian in the United States.

To read more about Bhargava’s history, his questionable claims about charity, how he made his first million, and what he’s working on now, read the entire profile here.

Source: Forbes

Via: Newmark’s Door

Michael Blanding reports on a paper being written by academics about the way that lobbyists exert their influence on politics in the United States.

The primary findings of the paper include:

• Relatively few firms lobby.
• Larger firms are more likely to lobby than smaller ones.
• The companies that do lobby do so consistently. Lobbying in one year was a near-perfect predictor of lobbying in the next.

What does this all mean?

• A company can’t just jump into the fray and lobby on a particular issue. Lobbying has high fixed costs and requires expertise in the art of lobbying and complying with regulations, as well as extensive relationship networks. These can only be built up over time.
• This means that a small number of corporations are able to consistently influence the government.
• These companies decide what issues do and don’t get lobbying support – they may support or oppose a bill even if it has nothing to do with them.

To read about the details of the study, the surprising things they found when they looked at H1-B lobbying, and what this means for democracy, click here.

Source: Harvard Business School

Via: Newmark’s Door

Daron Acemoglu and James Robinson are two academics who have a forthcoming book titled Why Nations Fail. In their blog of the same name they explore some of the issues involved with the first post looking at…Uzbekistan. Highlights include:

• Uzbeikistan’s literacy, primacy school enrollment, and secondary school enrollment are close to 100%. Why then does its economy continue to underperform?
• The “schools” are actually better thought of as labour camps, with the teachers the labour recruiters. Once the students arrive to school they are sent off to pick cotton, the commodity that forms the backbone of Uzbeikistan’s economy.
• Parents are not asked for consent, and each child is required to pick between 20 and 60 kg of cotton in a day depending on their age.

To read more about the conditions that the children have to work under, what this means for human capital, and what the children do during their ‘holidays’ click here.

Source: Why Nations Fail

Via: Pretty much every economics blog we follow linked to this. It was enough to convince us to preorder the book.

Liz Mullen took a look at the work-life of those that have built a career in sports broadcasting. Some of the highlights of her report include:

• The day begins at 5:30am when the broadcasters first arrive at the studio. It ends about 12 hours later.
• The top broadcasters make a salary of around $5 million.
• Ex-coaches say that the travel schedule for broadcasters is more hectic than the schedule for coaches.
• Broadcasters also struggle with the idea of having to criticize their former teammates and colleagues.

To read more about why broadcasters rarely switch networks, why there has never been a better time to get into sports broadcasting, and a startling trend that allows broadcasters to build their brand, click here.

Source: Sports Business Daily

Via: Newmark’s Door

Apple, through iTunes, has become the top music retailer. However, as Chris Foresman at Arstechnica reports, the music files bought by millions of consumers are of extremely low quality. Some of the highlights of his article include:

• All music bought from iTunes is compressed so that the resulting music file takes up less space on your computer’s hard drive. The compression is done by removing various sounds from the music file.
• This means that some of the ‘good’ part of the song is lost. Even the highest quality song files bought on iTunes contain just 3% of the data in the original music file.
• Attempts to change this are unlikely to be successful, because higher quality song files require more memory capacity, and as long as relatively low capacity iPods are the most popular music devices, people will be wary of music files that don’t fit on their iPods.
• Artists have begun to alter their songs to accommodate individuals who purchase their songs from iTunes. One common trick is to boost the amount of bass to make up for the “tinny sound” produced by the low quality headphones that ship with iDevices.

To read about some of the other things that artists have begun to do to try to enhance the quality of their music for users of iTunes, other forms of media that are compressed, and the steps that Apple could take to ameliorate the problem, click here.

Source: Arstechncia

Eve Tahmincioglu reports on a study that analyzed the relationship between the content of individual Facebook profiles and career success. Some of the predictors of success in your job include:

• Emotional Stability – not too many passive-aggressive updates or emotional images.
• Extraversion – having lots of friends helps.
• Openness –the ability to consider alternative viewpoints is a good thing. In this context those who have travelled have an advantage since they’ve been exposed to different people and cultures
• A dislike of cats. Research shows that cat-people are less extraverted and agreeable than dog people.

To read more about whether or not human resource departments can (or should) consider these attributes before making the decision to hire somebody, the other qualities that predict career success, and some limitations of the study click here.

Source: Life Inc.

Bill Wyman writes that the people behind the Oscar’s have over the past few years been struggling with declining viewership. He argues that this is because the films that win awards are those that people don’t watch, giving audiences very little reason to tune into the Oscars. In 2007 they tried to combat this by increasing the number of films nominated for best picture from five to ten, in the hopes that the blockbusters that drew the biggest crowds would win some of the nominations. Wyman reports on the results of that initiative:

• In 2009, the year after the policy was implemented, the move was successful: the average gross of best picture academy award nominees went from about $70 million to $170 million.
• Since then however the average gross of academy award best picture nominees has fallen, reaching a low of $67 million this year – the same level it was at before the switch.
• The problem is that sequels and comic-book movies have become the most popular box-office hits, and the list of nominees would have to be expanded to much more than just 10 before the academy would be willing to consider them for best picture.
• 2011’s winner – The Artist – epitomizes this problem. It is essentially a silent film from France that has grossed just $28 million – making it the second lowest grossing film to ever win an award. (The highest grossing film of the year was Harry Potter and the Deathly Hallows – Part 2. It’d be difficult to convince the committee to consider that film for best picture.)
• Wyman concludes that there are two Hollywoods now. Those that produce movies that are deserving of Oscar’s best picture nominations, and those that pull in the crowds and generate revenues.

To read which low-grossing films spurred the committee to make the change as well how the Grammys deal with this problem, and the role that affirmative action could play, click here.

Source: Salon