Experience Faculty & Research

The Current Expected Credit Loss (CECL), or loan-loss rule, is expected to go into effect in 2020 with a serious conceptual flaw: discounting expected cash collections by the contractual rate, as prescribed in the Financial Accounting Standards Board (FASB) guidance, which would result in accounting losses where no economic losses exist. Fortunately, there is a “cure” to CECL’s deficiency: use as discount rate the internal rate of return (IRR). Read More...

“If at first you don’t succeed, try, try and try again.” Every British schoolchild has been brought up on this idiom. Theresa May is clearly no exception. She tried to get her deal through the House of Commons three times, and three times she was defeated. There’s another adage, allegedly American: “If you’re in a hole, stop digging.” All that May achieved was to dig her own political grave. The tombstone will read “Brexit means Brexit” — except it didn’t. Read More...

For much of the post-World War II period, economic policy has focused on unemployment. The massive job losses of the Great Depression – reversed only when World War II, and the massive debt accumulated to finance it, kick-started economic growth – had a lasting impact on at least two generations. But employment is just one facet of welfare, and in today’s world, it is not enough. Read More...

Gender pay inequality has become a hot issue for corporate leaders. A few of the lead advocates for change have been investors, who cite studies that show significant financial benefits associated with gender pay equity. In New York State alone, the economic lost opportunity is estimated to be around US$17bn per annum. Read More...

Capitalism has benefitted a few people a lot in recent years. How can we help the rest? As a reader of Worth, you’re probably in the one percent. Or maybe the 10 percent. Or maybe you’re in the top 20 percent of earners, but you aspire to join the 1 percent. Here’s one thing you have in common: In any of those scenarios, chances are that you make most of your money in the stock market, real estate and other forms of investment. Your salaried income is just the beginning. Read More...

A few years ago, as part of a Western delegation to China, I met President Xi Jinping in Beijing’s Great Hall of the People. When addressing us, Xi argued that China’s rise would be peaceful, and that other countries – namely, the United States – need not worry about the “Thucydides Trap,” so named for the Greek historian who chronicled how Sparta’s fear of a rising Athens made war between the two inevitable. In his 2017 book Destined for War: Can America and China Escape Thucydides’s Trap?, Harvard University’s Graham Allison examines 16 earlier rivalries between an emerging and an established power, and finds that 12 of them led to war. No doubt, Xi wanted us to focus on the remaining four. Read More...

In the last several years, a growing number of global apparel companies have begun having their products manufactured in Ethiopia. For these firms, Ethiopia has become the new low-wage frontier. The East African country now competes with Bangladesh, Vietnam and other South and East Asian nations for a share of the massive volume of global garment production. In this competition, Ethiopia has the dubious distinction of offering the lowest pay anywhere in the worldwide clothing supply chain—and that’s the main reason the big brands are drawn there. Read More...

This week, Chris Hughes, a co-founder of Facebook, delivered a dramatic and dire diagnosis of threats his former company poses to our society. Much of his assessment is accurate and troubling. Speaking as an insider, he provides a compelling account of just how powerful Facebook has become and the dangers associated with its dominance. Yet the prescription he proposes—breaking up the company—doesn’t address what is perhaps the most important aspect of the problem—namely, the flood of politically divisive disinformation and harmful content online. Read More...

After years of mismanagement, corruption, lack of meritocracy, and multiple step-backs on national issues, the government supported by Syriza and defectors from other parties, Greeks will soon have an opportunity to elect a parliament. It is very likely that the new government will be under the New Democracy leader, Kyriakos Mitsotakis. Read More...

It is the job of government to prevent a tragedy of the commons. That includes the commons of shared values and norms on which democracy depends. The dominant digital platform companies, including Facebook and Google, make their profits using business models that erode this commons. They have created a haven for dangerous misinformation and hate speech that has undermined trust in democratic institutions. And it is troubling when so much information is controlled by so few companies. Read More...

The global economy is undergoing very large structural shifts, driven by three megatrends. One is the digital transformation of the foundations on which economies are built and run. Another is the growing purchasing power and economic strength of emerging economies, and China in particular. Lastly, there are broad-based political-economy trends, which include rising nationalism, various forms of populism, political and social polarization, and a possible breakdown of the multilateral framework within which the global economy has functioned since World War II. Read More...

The Commission has certainly not blocked the appearance of a European GAFAM and is instead the only one to impose rules of conduct on the American giants. If Europe is to move forward, let us increase funding for innovation but keep a free and competitive market. Read More...