Download for the lecture - Gresham College

Mercers’ School Memorial Professor of Commerce
Michael Mainelli
“New Learning”
Stealing the Silver:
How We Take From The Dispossessed, The
Poor And Our Own Children
Barnard’s Inn Hall
Holborn
London EC1N 2HH
© Gresham College
2007
www.gresham.ac.uk
Tel: +44 (0)20 7831-0575
Fax: +44 (0)20 7831-5208
Email : [email protected]
Outline
Stealing the sliver
Creaky Victoriana
Investing for the future
At any rate…
Seven Subtle Steals
Stainless steal
Climate change
Dis-count me out
© Gresham College
2007
www.gresham.ac.uk
“Get a detailed grip on the big picture.”
Chao Kli Ning
Stealing the Sliver (sic)
© Gresham College
2007
www.gresham.ac.uk
Creaky Victoriana
© Gresham College
2007
www.gresham.ac.uk
Intergenerational Transfer
© Gresham College
2007
www.gresham.ac.uk
Cash
Simple NPV
600
500
400
300
200
100
0
-100
-200
-300
-400
-500
1
2
3
4
5
6
7
8
9
Time in Years
© Gresham College
2007
www.gresham.ac.uk
Keep-the-Cash
Mega-Project
Micro-Project
10
Simple NPV with Cash Interest
600
500
Cash on Deposit
400
300
200
100
0
-100
1
2
3
4
5
6
7
8
9
-200
-300
-400
-500
Time in Years
© Gresham College
2007
www.gresham.ac.uk
Keep-the-Cash
Mega-Project
Micro-Project
10
Cash on Deposit & Interest on
Loan
Simple NPV With Interest On Cash And
Loan
200
100
0
-100
1
2
3
4
5
6
7
8
9
-200
-300
-400
-500
Years
© Gresham College
2007
www.gresham.ac.uk
Keep-the-Cash
Mega-Project
Micro-Project
10
Geometry over Commerce
NPV =
CF(0)
+ CF(1)/(1+d)
+ CF(2)/(1+d)2
+ ...
+ CF(n)/(1+d)n
© Gresham College
2007
www.gresham.ac.uk
CF = cash flow in period; d = discount rate; n = number of time periods
Garga-Project Income
100
80
60
40
20
$
0
-20 1
-40
-60
-80
-100
3
5
7
9
11 13 15 17 19 21 23 25
Years
© Gresham College
2007
www.gresham.ac.uk
Garga-Project Income NPV of Garga-Project Income
Garga-Project Payoff?
500
400
300
200
100
$
0
-100 1
-200
-300
-400
-500
© Gresham College
2007
www.gresham.ac.uk
3
5
7
9
11 13 15 17 19 21 23 25
Years
Garga-Project Expenditure
Garga-Project Income
NPV of Garga-Project Income
50 years of Garga-Project NPV
Cumulative Cash
Dis-counting Investment
1200
1000
800
600
$
400
200
0
-200 1
6
11
16
21
26
31
36
41
46
-400
-600
Years
© Gresham College
2007
www.gresham.ac.uk
"2%"
"10%"
"4%"
"12%"
"6%"
"14%"
"8%"
51
Regressive Taxation
© Gresham College
2007
www.gresham.ac.uk
Waste
© Gresham College
2007
www.gresham.ac.uk
Biased Social Services
© Gresham College
2007
www.gresham.ac.uk
Subsidies
© Gresham College
2007
www.gresham.ac.uk
Lack of Competition
© Gresham College
2007
www.gresham.ac.uk
Under-provisioning
© Gresham College
2007
www.gresham.ac.uk
[Source:
http://www.bbc.co.uk/tyne/content/images/2006/08/18/kendra_moore_470x353.jpg]
(sic)
Externalities
© Gresham College
2007
www.gresham.ac.uk
A Stern Rebuke
© Gresham College
2007
www.gresham.ac.uk
Stainless Steal
Subtle Steal
Regressive taxation
Waste
Biased social services
Subsidies
Lack of competition
Under-provisioning
Externalities
© Gresham College
2007
www.gresham.ac.uk
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Typical Warning Signs
social cohesion
essential revenue
public sector investment
public good
universal coverage
postcode lotteries
quotas, voluntary export restraints, tariffs
‘level playing field’, unfair competition
national champions, national security
structured or ‘smart’ procurement
pay-as-you-go, public-private partnership
public safety net
public commons
free-riders
Climate Change
© Gresham College
2007
www.gresham.ac.uk
http://www.climate.org/topics/climate/images/cc-cartoon.jpg
Dis-Assemly
Stealing
From
Ourselves
© Gresham College
2007
www.gresham.ac.uk
[Source:
www.hightowerlowdown.org/sites/hightowerlowdown.ci
vicactions.net/files/images/cartoon_2006_jan.png]
Discussion
1.
2.
© Gresham College
2007
www.gresham.ac.uk
Are discount rate
techniques
appropriate under
great uncertainty?
Is politics the only
framework for
long-term policy
formulation?
Stealing the Silver:
How We Take From The Dispossessed,
The Poor And Our Own Children
Thank you!
© Gresham College
2007
www.gresham.ac.uk
“Get a big picture grip on the details.”
Chao Kli Ning