ROBERT LUCAS PARADOX: Law of Diminishing Returns

By Staff Reporters

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Capital is not flowing from developed countries to developing countries despite the fact that developing countries have lower levels of capital per worker, and therefore higher returns to capital.

Classical economic theory predicts that capital should flow from rich countries to poor countries, due to the effect of diminishing returns of capital. Poor countries have lower levels of capital per worker – which explains, in part, why they are poor. In poor countries, the scarcity of capital relative to labor should mean that the returns related to the infusion of capital are higher than in developed countries.

In response, savers in rich countries should look at poor countries as profitable places in which to invest. In reality, things do not seem to work that way. Surprisingly little capital flows from rich countries to poor countries.

This puzzle, famously discussed in a paper by Robert Lucas in 1990, is often referred to as the “Lucas Paradox”.

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DAILY UPDATE: Chinese Stocks and Wall Street Down

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China’s stock market suffered its worst start to a year in nearly a decade, as investors brace for Donald Trump to impose tariffs on the world’s second-largest economy. The CSI 300 index closed down 2.9pc on Thursday, marking its steepest drop on the first day of annual trading since 2016, while the Hang Seng in Hong Kong fell 2.2pc.

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The fall for US stocks accompanied a rally in the dollar, a popular haven, which set a fresh two-year high Thursday and opened little changed Friday. The yen climbed in early trading after a third daily decline against the greenback in the prior session. The moves are a sign the selling that has sapped US equities over the past week may be starting to turn. Investors are preparing to implement asset-allocation strategies for the 2025 year ahead after a rocky end to 2024.

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Visualize: How private equity tangled banks in a web of debt, from the Financial Times.

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2024: Healthcare Industry Future Outlook

By Health Capital Consultants, LLC

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2024 Healthcare Industry Outlook

Nearly one year removed from the end of the COVID-19 public health emergency, the healthcare industry expects a number of new opportunities in 2024, despite lingering challenges exposed by the pandemic. For example, healthcare organizations anticipate issues related to workforce shortages and legislative challenges; however, the industry also expects that opportunities emanating from technological advancements will allow them to grow and transform.

This Health Capital Topics article reviews anticipated U.S. healthcare industry activity for 2024 as well as trends that may drive change in the industry. (Read more…)

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Tips to Cruise Safely into the Holidays & New Year 2024

Follow these 5 Tips to be sure you cruise safely into the new year!

By Dr. David Edward Marcinko MBA

I am not an auto mechanic but I did cover the local hospital ER for more than a decade.

So, here are some holiday driving tips and pearls for Christmas, Holiday motoring safety and the New Year 2024.

1. Get a Pre-holiday Vehicle Check-up

A general pre-holiday vehicle check-up at your dealership can reduce your risk of having problems on the road. You’ll want to pay close attention to your vehicle’s tire pressure. Temperature fluctuations can affect pressure and a little destabilization can create unsafe driving conditions. Be sure to check yours and when you need to add air to those tires.

2. Raise ‘Em High – to Not Drinking and Driving

Sounds obvious but it bears repeating. Whether it’s at the company Christmas party, New Year’s Eve or just catching up with friends for a festive drink, drinking and driving is just not worth it. Designate a driver or enjoy a mock-tail instead.

3. Slow the Rein-Deer Down and Pay Attention

Not only are drivers distracted today by all their electronic devices, pedestrians are too. Be aware and pay attention to everyone. Speed is another one of the leading causes of car accidents (plus sudden acceleration is a major gas guzzler). Yes, rushing around can make you feel like you can make up some time on the road. But we promise you that your friends and family would rather have you arrive safely even if you are 10 minutes late.

4. Buckle Up

Another pretty obvious tip…but, you don’t want to wrinkle your new party dress! That dress is not going to impress the Emergency Room Doctor! According to the National Highway Traffic Safety Administration, in 2015, seat belts saved an estimated 13,941 lives among passenger vehicle occupants age 5 and older. An estimated 266 lives of children under age 5 were saved by their use of restraints and an estimated 2,573 lives were saved by frontal air bags. You definitely want to be part of that statistic in the event of an accident.

5. Rest Up Before Your Trip

Be sure to stay alert and be well rested before heading out. Late night holiday gatherings or long trips to visit family can lead to drowsiness. Sharing the driving responsibilities can help. You can stretch and walk around to help wake your body up. Be sure to take additional breaks as needed. If you are feeling tired and fatigued, pull over to get coffee, water and a snack.

Assessment

Remember GOMER = Get Out of My Emergency Room

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