Better welfare and insurance systems can encourage entrepreneurship

To encourage entrepreneurship, it is important to have a complete system of insurance and welfare. This will help to reduce the risk premium of starting a new business. The welfare system is extremely important. People who start new business have risks to become bankrupted. People who start new business are usually either very poor or very rich. On the one hand, the poor people find that their living standards cannot be any lower even if they fail in their business. On the other hand, the rich people do not feel their loss from new business failure will be significant to their wealth. With a good welfare system and a complete insurance system, the expected loss from starting a new business will be smaller, giving more incentives to the middle class people to start their business. This will be super beneficial to the whole society, as the most of middle classes receive higher education, which means their business ideas may have higher probabilities to succeed and higher returns.

The US presidential election shows the Internet's power of increasing the level of competitions

Recently, we have learned some US presidential candidates, who were not as popular as those big names like Hillary Clinton and Jeb Bush. The campaigns start much earlier and everyone seems to have a chance to win the race. From this phenomena, we can see the power of the Internet. People become easier and harder to know each other. Easier, because there is so much information on the Internet, we can find out what we want to know in seconds. Harder, because there is too much information, it is impossible to find all information and it is hard to distinguish the reliability of the information we receive. Just like the US presidential candidates, during this Internet era, small companies can also become famous quickly. This also brings the small companies to compete with the larger firms directly, as they are in a relatively better position in terms of popularity. As the level of competition is continuously rising, the inflationary pressure will be reduced.

The TTP Pacific trade deal: the developed countries are the winners, and the developing countries are the losers.

The TTP Pacific trade deal: the developed countries are the winners, and the developing countries are the losers.

Trade barriers will be reduced. This act will seem beneficial to the developing countries; however, it will limit the potential of the developing countries. The developed countries have the dominating advantage of advanced technology; thus, the developing countries will rely on the developed countries’ technology output, and lose their technology development. Moreover, the enforcement of labour standards will also weaken the developing countries’ comparative advantage of low labour costs. The developed countries like US, Japan and Australia are the winners of this deal; and the developing countries are the losers.

No more free plastic bags? Well, only if shopping in retailers with MORE than 250 employees

No more free plastic bags? Well, only if shopping in retailers with MORE than 250 employees

Starting from the 5th October, retailers with more than 250 employees in the UK have to charge at least 5p for a bag, according to the new law. It is a clever move by the UK government. This is environmentally friendly. People start to carry their own recyclable bags and the retailers provide bags with better quality. More importantly, this is small business friendly. The law means the retailers with fewer than 250 employees can offer free bags. 5p is not a lot, but still something that people want to avoid on, especially when people experienced free bagging in the past. Within similar distance and with similar quality, people may start to prefer small retailers than the larger ones. Therefore, this act will help small retailers to generate more incomes.

Is it better to have a fall or a rise in energy prices rise? Market confidence says it does not matter.

Is it better to have a fall or a rise in energy prices rise? Market confidence says it does not matter.

Energy is a necessity for households and business. Fall in energy prices can lead to a decrease in household spendings on energy, thus households can consume more on other goods or services, and improve living standards. However, when the markets are unconfident, a fall in energy price signals a fall in demand for energy, which is considered as a portent of a decline in production in the future. However, a rise in energy prices is not a good thing, either. The oil crisis of the last century well explains how a rise in energy prices could affect our economy in a negative way. From my opinion, market confidence is key to everything. Nothing is absolutely correct. When people are confident, everything becomes positive; oppositely, when people are panic, all news becomes bad news, making people more anxious about their future. In addition, both confidence and panic need continuous news to convince people; otherwise, people will start to doubt their beliefs and the market may move in the opposite way.

The US Fed job report is not as weak as it seems, given the current condition

The US Fed job report is not as weak as it seems, given the current condition

The Fed report showed the US economy created 142000 jobs in September, August’s jobs tally was revised from 173000 to 136000 and wage growth flatlined. However, the unemployment rate remained steady at 5.1% in September. To me, it was not a bad report. 5.1% unemployment rate is actually quite low; when the unemployment rate is low, it is less urgent to create more jobs. Moreover, given the current poor performance of the financial markets and firms' lack of confidence, we should be pleased to see there isn't a rise in the unemployment rate. In addition, the low inflation rate has directly led to a zero income growth rate. Income usually arises when workers foresee an inflation in the future, which means when workers does not think there will be an inflation in the future, but have a danger to lose their jobs due to the unconfident markets, they will not ask for a rise in their incomes. In general, I think the report is not as weak as it seems, given the current condition of the economy.

We urgently need strong financial reports in October; otherwise the world economy may enter into a recession.

What are we still worrying about?

Trade volumes and stock prices stay low, showing the markets are still panicking. But what are the investors worrying about? Many people would say they worry about Chinese economy slowdown, the Fed's plan to raise rates, the Greece problem and so on. These answers are incorrect in my opinion. They are not news. Chinese economy slowdown could be foreseen last year. The Fed's plan to raise rates has been known since early this year. The Greece problem has been there since the Financial Crisis. Moreover, the oil price has returned to the previous level in early August. I think most investors are panic without knowing what is going wrong. However, because of the investors' panic, the firms are harder to raise money from the financial markets and this will affect the future income of the firms as well as the financial markets. Therefore, the financial reports due to be announced this month are important to the financial markets.  Strong reports can stimulate the financial markets and prevent a further fall in financial markets; otherwise, the financial markets will be dragged down and the whole world economy will have a danger to enter a recession.