"What they Don't Teach You at harvard Business School"

There is a popular book titled 'What They Don't Teach you at Harvard Business School' by Mark H. McCormack. For those of us who didn't go to that prestigious school, this should be a compelling read. Nonetheless I haven't gotten around to read the book because that is not my kind of stuff - I would rather Thomas Piketty's 'Capital in the Twenty-First Century' or William Easterly's 'Tyranny of Experts: Economists, Dictators and the Forgotten Rights of the Poor '.
Now, Adan Mohammed, the Cabinet Secretary for Industrialization and Enterprise Development, went to Harvard Business School. I have no doubt that a prestigious school such as Harvard Business School teaches that strategic policy initiatives have a time lag before their positive effects can be seen; and that lag can stretch to a few years. In the modest schools that we went to (Oh. I have been to Economics Schools and not Business Schools), that is one of the issues we were repeatedly told.
Either Mr. Mohammed has forgotten (it has been a while since he was in that School) or he is being a good politician; for he imagines that all the good things in the Kenyan policy space happened over the last two years or as long as he has been in Government.
Just watch him say that! Here he is full or praises for the World Economic Forum and the World Bank's Ease of Doing Business ranking - which he links to the one and half year's that he has been in Cabinet. He nonetheless hints that some of these reforms could take some two to three years for their benefits to be seen, and this he does reluctantly on account of the prompting of the interviewer.
It is hard to believe that it is the same guy now sulking when the World Bank's latest Ease of Doing Business Raking simply tells us that we have been running around in circles. I do not want to call this intellectual dishonesty - there is nothing intellectual here. Oh, unless the concept of lagged effects of policy is part of  "What they Don't Teach You at Harvard Business School". 

The Righ To be Confused!

What is your objective reaction to this piece by Jaindi Kisero in the Daily Nation? Well, I can understand. Any way to bend an argument to fit a prejudiced view seems to be the order of the day here; and unfortunately it is often celebrated as great commentary. Look at this:
1. You make an irrelevant comparison that one intervention - under totally different circumstances - was less deserving than the one where your views are leaning towards without any logical basis.  I know why, project financing economics is not easy if you earn your living through mere pontificating in a subject where your expertise is only feigned.
2. You give examples that indicate government failure in running enterprises in a particular segment, even illustrating how the private sector is a master in running similar enterprises; yet you conclude that we need more government in the same enterprises.
My conclusion in one word is: confusion. In our constitutional dispensation, one has a right to be confused; right?

The Pretence Persists

Recently, I argued that there is a  lot of pretence when it comes to providing a good guide to housing prices. Seems like the pretenders are digging in: just have a look at the readers comments to the Business Daily piece and see how they have smoked out the persisting pretence!

Economics Nobel Prize 2014 Makes Lots of Sense!

I have a short version of the thinking of the Royal Swedish Academy in their 2014 economics Nobel Prize award. If you have no time for the technical citations that run up to 40-plus pages, my essay in today's Business Daily can give you a good idea why the prize was deserved.   

Argument Devoid of Context

I know a lazy argument when I see a lazy argument. This is especially in a subject where a keen professional interest and formal training, and where for more than a decade I have undertaken careful analysis; I am talking of the economics of the financial system.
Lazy arguments - often by people hiding their identity or with pedestrian viewpoints - are often coated with cherry-picked statistics that lack context. The trick here is to sound a "matter-of-fact" guy. And for people to take you seriously, you thrown in statements that make you sound profound. To non-suspecting members of the public, you may sound intelligent; until one looks at the argument being made carefully and asks the question: where is the context?
A case in point is a recent commentary by Bankelele(??) in the Daily Nation. His strategy is simple, take a list of bank ranking; don't bother to look at the comparison over time and against the size of the economy; observe that there is growth but it is not strong enough; rush into a conclusion that the banks that are "not big enough" are a let down. My take is that the conclusion is unmotivated; it could have been arrived at anyway without the pretence of grounding by anybody with a juandiced eye who sees everything as yellow.

Feigning Intellectualism

Last week my colleague and I presented a paper in a research conference. The paper was a Conceptual Framework on Housing Price Index for the Kenyan market. The framework undertakes a comprehensive evaluation of literature that highlights the various methodologies for computing a credible index for the property market. Our proposal is to base the index on the so-called hedonic function - which makes adjustments for qualitative aspects of houses.
I have no doubt that the proposed index will cause excitement to three types of stakeholder.
One, there are those who are really looking for a reliable tool for managing their assets - be they investment portfolio or security held for lending.
Two, there are those who pretend that such tool exists  while anybody who is slightly more than curious will tell you it doesn't.
Three, there are those - whom economist Paul Krugman would call Accidental Theorists - who will feign intellectualism and lazily (or sensationally) argue that banks are now fighting for control of the property market.
It is the latter two, whose views are represented in a recent lead story in the Smart Company pullout of the Daily Nation , that I find interesting.
There are several angles to the story that tells of the cheapness of sensational journalism, but I use one purely for illustration.
Assuming the Kenya National Bureau of Statistics publishes the consumer price index (CPI) and tells you that the price of the goods in the CPI basket has gone up by 20 percent, and therefore for your given income you may need to take a loan from  a bank at 15 percent interest rate to be able to afford the goods for your household, would you argue that the high interest rates have caused the CPI to increase?
Stretch the same argument to housing. Assume that an index for housing prices indicates that the house process have gone up by 20 percent; for you to acquire the house with your current income you need to get a mortgage from a bank at 15 percent interest rate, would you argue that it is the interest rate that has influenced the housing price index?
That is the argument that a tomato seller cannot make because it doesn't make sense; but that is the argument a self-declared leader in the mortgage market analysis tells a reporter, who readily peddles it as high street merchandise.