Preserve the Forests
In agreement with Kim Stafford, who opposes the clear-cutting of old growth forests, I feel that it is necessary to preserve the profitable lumber in its natural state for future generations. Currently, the tons of lumber produced from the Pacific Northwest region of the United States are taken for granted, and most people do not realize that the forests will be destroyed within ten years at this rate of exploiting our natural resources. We must make loggers a profession of the past and divert those current ones into another sector in our society. The spotted owl is more than a *Darwinistic* survival of the fittest issue; it represents the direction of our only planet.
In order to preserve the beauty of this planet, we must cease the clear-cutting of forests. All old growth forests have been around for multiple centuries and are cut down daily in a matter of hours in order to produce more buildings and houses in this already over-crowded world. If the rate at which we cut down trees is continued without any regulation, the forests will all be gone in ten years, so we should do mankind a favor and try to preserve what is left. If the old growth forests are gone, then they can never return because it takes over five generations to produce one and at the rate that the human population is increasing, there is not enough land to have a secure place for a new forest.
If we realize that it is best for the human race to stop destroying the natural resources, then we must destroy, too, the existence of loggers all together. To do so, there must not be any new loggers, so all training potential loggers must be stopped. The current loggers must be diverted to another occupation. Perhaps if the public supported the notion of stopping clear-cutting, the government would be able to provide services to educate the loggers in a different field. Also, with public support, many companies will probably offer several programs for former loggers. No matter what we choose today, the loggers have seen their last Haley*s comet; they will all be gone with forests in ten years.
When we stop the development and decrease the number of loggers, we will help save the spotted owl, a species that has greater importance than a mere animal towards the our species. It is a symbol of the general health of Mother Earth, a figure without which no living object can survive. If the cutting of forests at this rate remains constant, the spotted owls will disappear within the ten years along with the our forests.
In order to regulate the logging industry to keep our trees intact, there must be public support for the idea. With that, the government would most likely be willing to provide educational services for the loggers who need to get new jobs. Sooner of later, this sacrifice of loggers will occur, and the latest will be in ten years. The spotted owl represents a major part of our natural resources. At this rate, that major part will disappear along with the spotted owl in a mere decade.
Saturday, January 12, 2013
Long Swings in the Exchange Rate and the Excess Returns Puzzl
William Strauss
Long Swings in the Exchange Rate and the Excess Returns Puzzle:
The Role of Imperfect Knowledge
The paper is a clear breath of "dirty" air in the sterile world of perfect foresight. The authors offer a well worked out model of how agents persistently bid the exchange rate away from the expected long-run equilibrium rate. It seems intuitively comfortable to see the mathematical justification for the unexplained excess returns to be a function of the distance from the bench-mark (PPP). The uncertainty of a switch occurring in a regime (the Peso Problem) is an interest-ing form within which to embed the imperfect information. It is a format that seems ready to ex-pand into many other areas of economic modeling in which expectations are at the core of the model's dynamics.
Of course, the choice of the benchmark is key to the mechanics of the process. In this case, PPP is an obvious choice... but, since the idea of PPP drives this model so strongly, it is interesting to look at its place and its characteristics. In the paper, the authors note that if PPP holds, "relative excess demand for domestic and foreign goods is zero." The obvious suggestion, based on the model, is that the flow of goods and services is the foundation for the equilibrating dynamic. Behind the flow of goods and services is the gap between the gap between, domestic and foreign short-term rates, and the steady state long-run interest rate gap that sets goods flows to zero. The assumption is that the prices of the domestic and foreign goods in their respective for-eign currencies are "incorrect" based on the fundamentals of the respective countries and that agents know this (and know that the exchange rate path is unstable) but cannot be sure of the de-gree of "incorrectness" or the persistence of the divergence. Embedded into this model are as-sumptions about PPP that provide comfort about this benchmark's ability to give the "correct" relative prices. It is possible that these assumptions, to some degree, mask the complexity of the situation with respect to PPP's ability to proxy relative prices. At the theoretical level, PPP should simply offer equal purchasing power for equal commodity bundles through the exchange rate. Unfortunately, the problem of explaining stylized facts requires some matching with reality. Set-tling for getting the signs right mitigates much of the angst, but, as has been demonstrated by the predictive abilities of many of the models to date, the problem is not really solved. Perhaps the model of PPP as a function of interest rates only misses something...
But here we have a BIG step (from the real exchange rate side, not from the side of better modeling PPP) toward not only getting the signs right, but also understanding the dynamics of the switch. If PPP were built from a micro-foundation choice-based model (where demand-side ef-fects influence saving/investment and interest rates), I suspect that we might see a real conver-gence toward understanding the excess returns puzzle.
Long Swings in the Exchange Rate and the Excess Returns Puzzle:
The Role of Imperfect Knowledge
The paper is a clear breath of "dirty" air in the sterile world of perfect foresight. The authors offer a well worked out model of how agents persistently bid the exchange rate away from the expected long-run equilibrium rate. It seems intuitively comfortable to see the mathematical justification for the unexplained excess returns to be a function of the distance from the bench-mark (PPP). The uncertainty of a switch occurring in a regime (the Peso Problem) is an interest-ing form within which to embed the imperfect information. It is a format that seems ready to ex-pand into many other areas of economic modeling in which expectations are at the core of the model's dynamics.
Of course, the choice of the benchmark is key to the mechanics of the process. In this case, PPP is an obvious choice... but, since the idea of PPP drives this model so strongly, it is interesting to look at its place and its characteristics. In the paper, the authors note that if PPP holds, "relative excess demand for domestic and foreign goods is zero." The obvious suggestion, based on the model, is that the flow of goods and services is the foundation for the equilibrating dynamic. Behind the flow of goods and services is the gap between the gap between, domestic and foreign short-term rates, and the steady state long-run interest rate gap that sets goods flows to zero. The assumption is that the prices of the domestic and foreign goods in their respective for-eign currencies are "incorrect" based on the fundamentals of the respective countries and that agents know this (and know that the exchange rate path is unstable) but cannot be sure of the de-gree of "incorrectness" or the persistence of the divergence. Embedded into this model are as-sumptions about PPP that provide comfort about this benchmark's ability to give the "correct" relative prices. It is possible that these assumptions, to some degree, mask the complexity of the situation with respect to PPP's ability to proxy relative prices. At the theoretical level, PPP should simply offer equal purchasing power for equal commodity bundles through the exchange rate. Unfortunately, the problem of explaining stylized facts requires some matching with reality. Set-tling for getting the signs right mitigates much of the angst, but, as has been demonstrated by the predictive abilities of many of the models to date, the problem is not really solved. Perhaps the model of PPP as a function of interest rates only misses something...
But here we have a BIG step (from the real exchange rate side, not from the side of better modeling PPP) toward not only getting the signs right, but also understanding the dynamics of the switch. If PPP were built from a micro-foundation choice-based model (where demand-side ef-fects influence saving/investment and interest rates), I suspect that we might see a real conver-gence toward understanding the excess returns puzzle.
Information Technology Outsourcing 2
Information Technology Outsourcing
"Information Technology outsourcing is the contracting out of part or all of an organization's IT activities." New trends have included operations, programming, and technology planning. The main reason for information technology outsourcing is to gain immediate economic gains for the company, usually through savings. Financial motivations aren't first on businesses minds though; other strategic objectives are.
Outsourcing can make it easier to downsize. Because you are bringing in outside help, and can cut back on fixed salaries, the company becomes more variable. Outsourcing leads to tighter linking of strategy and IT. Knowledge which usually flows slowly can flow freely, and a company has more access to outside technology. Plus businesses receive information faster than other types of hierarchical communication, and the resources are endless. Outsourcing can unlock organizational structures. "The unlocked IT organization can provide a better mechanism for costing user requests, prioritizing technology initiatives and controlling expenditures." It offers the benefits of both systems involved. Another important goal that IT outsourcing takes on, is reducing technological risk. By outsourcing your needs you know that that the employee know what they are doing.
Some of the problems IT outsourcing may encounter are, loss of strategic control, risk of technological obsolescence, limiting of long-term flexibility, difficulty in benchmarking initial contract, hostage to additional charges, high exit or switching costs, limited choice of vendors, the fixed nature of legal contracts, legal exposure, from dissatisfied former employees, and cultural conflicts.
The people doing the outsourcing for the companies are sometimes the life's-blood of that company. If the outsourcers want more money, then they are almost obligated to give that money. This is usually the case when the contractors are bringing new technology into the system.
High exit or switching costs entail the switch-over costs the company must shoulder if they decide to end the outsourcing and hire full time employees. It is important not to put too many resources at the hands of the contractors. Limiting this will ease the switch-over costs.
Legal issues also creep into the picture when a company chooses to outsource. Some companies have problems with employees that are not happy with their current arrangement or are mistreated. There tends to be a high unionization with these kinds of workers. A company can not only be held for its actions but also for the actions of the outsourcing agent.
Finally an important factor is cultural conflicts. What is excepted in one culture may be different in another, causing worker and management related problems. For instance the role of leadership in an organization or the number of hours a worker is expected to work a week. These variables have to be scrutinized by the outsourcing company.
"Information Technology outsourcing is the contracting out of part or all of an organization's IT activities." New trends have included operations, programming, and technology planning. The main reason for information technology outsourcing is to gain immediate economic gains for the company, usually through savings. Financial motivations aren't first on businesses minds though; other strategic objectives are.
Outsourcing can make it easier to downsize. Because you are bringing in outside help, and can cut back on fixed salaries, the company becomes more variable. Outsourcing leads to tighter linking of strategy and IT. Knowledge which usually flows slowly can flow freely, and a company has more access to outside technology. Plus businesses receive information faster than other types of hierarchical communication, and the resources are endless. Outsourcing can unlock organizational structures. "The unlocked IT organization can provide a better mechanism for costing user requests, prioritizing technology initiatives and controlling expenditures." It offers the benefits of both systems involved. Another important goal that IT outsourcing takes on, is reducing technological risk. By outsourcing your needs you know that that the employee know what they are doing.
Some of the problems IT outsourcing may encounter are, loss of strategic control, risk of technological obsolescence, limiting of long-term flexibility, difficulty in benchmarking initial contract, hostage to additional charges, high exit or switching costs, limited choice of vendors, the fixed nature of legal contracts, legal exposure, from dissatisfied former employees, and cultural conflicts.
The people doing the outsourcing for the companies are sometimes the life's-blood of that company. If the outsourcers want more money, then they are almost obligated to give that money. This is usually the case when the contractors are bringing new technology into the system.
High exit or switching costs entail the switch-over costs the company must shoulder if they decide to end the outsourcing and hire full time employees. It is important not to put too many resources at the hands of the contractors. Limiting this will ease the switch-over costs.
Legal issues also creep into the picture when a company chooses to outsource. Some companies have problems with employees that are not happy with their current arrangement or are mistreated. There tends to be a high unionization with these kinds of workers. A company can not only be held for its actions but also for the actions of the outsourcing agent.
Finally an important factor is cultural conflicts. What is excepted in one culture may be different in another, causing worker and management related problems. For instance the role of leadership in an organization or the number of hours a worker is expected to work a week. These variables have to be scrutinized by the outsourcing company.
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