Economics in the 21st Century
Two separate articles caught my attention on a similar topic - our gaining intelligence in the world of finance and economics.
The first involves a new breed of websites like Prosper.com (by the way I happen to be a lender on this website) which is a peer to peer lending website. Peer to Peer Lending is a form of lending that brings the lenders and the borrowers directly in contact with each other, removing the banks from the equation. The purpose of banks are to use their expertise to do exactly what these sites are doing - find people with capital to invest and find those with a need for loans and then, using their ability to value risk, make loans that bring profit to everyone involved. The study, titled "The Democratization of Personal Consumer Loans?", showed that lenders might be benefiting more from these sites because of higher rates of return than their traditional manner of savings and that borrowers might be benefiting more because of lower rates of interest that are available.
For those of us who believe in The Long Tail this is simply a logical procession. Banks came into being because they were needed - how do we pool resources and find people needing loans on a widespread area? For those of us who have learned to save (and there aren't many) the benefits of long-term compounding interest are significant.
The second article that I found speaks of altruism and how it applies to Economics.
"Sam Bowlers...points to new experimental evidence that people do often act against their own personal self-interest in favor of the common good, and they do so in predictable, understandable ways. Poorly-designed economic institutions fail to take advantage of intrinsic moral behavior and often undermine it."
Our default view on human beings is that we are all self-interested, short minded beasts looking out only for number one, and to a certain level there is some truth to this with a lot of people. But wonderfully things like morals have been ingrained in our culture and society and these things greatly affect how we choose to act. Of course you can argue that that those of us who are following morals are acting in our own interests as we are attempting to help ourselves in the long term by impressing our friends, making ourselves happy, doing it for our religious reasons or a million other excuses - but I see it being closer to human beings looking to benefit their society, which over the long term, benefits them. So long term self beneficial altruism?
A certain phrase comes to mind - "A rising tide lifts all boats."
The first involves a new breed of websites like Prosper.com (by the way I happen to be a lender on this website) which is a peer to peer lending website. Peer to Peer Lending is a form of lending that brings the lenders and the borrowers directly in contact with each other, removing the banks from the equation. The purpose of banks are to use their expertise to do exactly what these sites are doing - find people with capital to invest and find those with a need for loans and then, using their ability to value risk, make loans that bring profit to everyone involved. The study, titled "The Democratization of Personal Consumer Loans?", showed that lenders might be benefiting more from these sites because of higher rates of return than their traditional manner of savings and that borrowers might be benefiting more because of lower rates of interest that are available.
For those of us who believe in The Long Tail this is simply a logical procession. Banks came into being because they were needed - how do we pool resources and find people needing loans on a widespread area? For those of us who have learned to save (and there aren't many) the benefits of long-term compounding interest are significant.
The second article that I found speaks of altruism and how it applies to Economics.
"Sam Bowlers...points to new experimental evidence that people do often act against their own personal self-interest in favor of the common good, and they do so in predictable, understandable ways. Poorly-designed economic institutions fail to take advantage of intrinsic moral behavior and often undermine it."
Our default view on human beings is that we are all self-interested, short minded beasts looking out only for number one, and to a certain level there is some truth to this with a lot of people. But wonderfully things like morals have been ingrained in our culture and society and these things greatly affect how we choose to act. Of course you can argue that that those of us who are following morals are acting in our own interests as we are attempting to help ourselves in the long term by impressing our friends, making ourselves happy, doing it for our religious reasons or a million other excuses - but I see it being closer to human beings looking to benefit their society, which over the long term, benefits them. So long term self beneficial altruism?
A certain phrase comes to mind - "A rising tide lifts all boats."
Labels: acusticthoughts, altruism, Brave New World, economics, Peer to Peer
posted by AcusticThoughts at
11:13
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