Looking down the road

Throughout our class discussion, the concept of being short sighted came up again and again. People, it seems, are only looking out for how they can benefit right now and not how their actions will affect the future. In the Aspen reading, the idea of revising capital gains tax so that it would discourage people from excessively share trading and promote long term investing. This idea of long term goals also comes up in the Krugman reading. In this reading, Krugman talks about how economists believed that everything was perfect and that nothing could happen to de-stabilize our economy. If something did happen, economists believed the market and the Fed could handle it. This is yet another example of how people in the financial world are not looking down the road and seeing what could result from the actions we take now. It seems a bit ridiculous that everyone is always shocked when something goes wrong, but no one ever thinks about 5 years down the road, just what kind of profit they can make tomorrow.

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4 Responses to Looking down the road

  1. aml028 says:

    I couldn’t agree more with this blog. It is interesting to look at our current situation though with the idea of short termism. Our current economy is not stable and is doing worse than ten years ago. How can you look at the future when the current situation is so poor? I read the other day that the number of unemployed is lower than it has been for many years. I agree with you that economist should not be short sighted but they also need to be concerned about the future. I just feel like it’s hard to balance both, short and long term issues, when the short term is so unstable.

  2. nrz002 says:

    I also agree with you and it’s like a long-term outlook is much easier said than done. When fast cash is right in front of a company it’s beyond tempting to just go with it. We read how short-termism is negatively affecting company’s long-term growth. But you bring up a valid point in that our economy is not perfect or stable and who knows what will be the issue in five years. It’s almost imperative to look into the future when determining how good that cash in front of you really looks and what will be in the company’s best interest down the road.

  3. cea008 says:

    Have to agree especially after reading Friedman’s article (who Krugman doesn’t appear too fond of) about management’s sole responsibility is to the stockholders whose goal is to increase profits. Especially when compared with Freeman’s point with Chrysler’s suppliers bailing them out in tough times due to their close ties, this seems to ring true.

  4. knr004 says:

    I like what was said in one of the previous post that it is imperative to look into the future when determining how good that cash will be down the road. One thing I wanted to add is that we as a society seem to be obsessed with this idea of explaining everything. Maybe that is a good thing, and maybe it’s not. Everyone was so angry when Enron was exposed and when the housing bubble burst because the signs were there. I agree that sometimes things can be foreseen, but I think at some point we must also accept that we cannot predict everything accurately. It is impossible to know the future. Because of this we shouldn’t put SO much weight in our predictions and our rating systems. They cannot be completely accurate, I think if people accept this to be true and make financial decisions with caution then crisis might be more easily avoided. Everyone is always so quick to blame the regulator for conspiring against them.

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