Enjoy low oil prices – for now?

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We have been here before – [1] economic growth drives up demand which [2] raises prices when supply gets tight which [3] makes oil companies/countries rich which [4] makes everyone look for more oil which [5] they eventually discover and start to pump, at just the time when [6] high prices kill the economy, so [7] we get over-supply so [8] oil prices collapse.

It won’t last, of course – eventually [9] production slows as reserves get depleted, and [10] low prices restart growth ...

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Revolt of Economics students

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See Teaching Economics after the Crisis.  J-C Trichet: ECB President “As a policy-maker, I felt abandoned by conventional tools.” (2010).

This may be mostly about macro-economics, but reflects fundamental inadequacies in the underlying science that afflict micro-economics and have poisoned fundamental ideas in strategy. Even the most basic tools, such as the PQ demand-curve, are hopelessly unrealistic depictions of real-world mechanisms, and attempts to adapt them end up like trying to squeeze Cinderella’s ugly sisters’ foot into a dainty shoe. Standard economic models do not deal ...

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Preparing for one-off shocks

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Following my Weather hits utilities post, I just reviewed the EU-funded CRISADMIN project assessing one-off impacts on city infrastructure. This goes beyond a single utility to look at inter-sector effects, including the consequences of citizens’ behavioural responses … a flood or bomb takes out some metro lines, so people flood the cell-phone network and take to the roads, for example.

This is a really neat example of just how valuable simple, aggregated models can be. Most other such efforts ...

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Business process and dynamics

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BP deals with processes for doing activities, which are done *to* things [people, equipment, orders, products, cash]. SD deals with the things themselves, which flow into, out of, and between states [the stocks]. Almost all of BP therefore describes the processes that are undertaken to influence those flows – hiring people, developing products,processing orders, collecting cash – and efficient processes make that happen fast [or slow if it’s a rate we want to limit]. Some simple examples of resource structures to which BP ...

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Big Data needs architecture

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SD models offer a rigorous enterprise architecture for firms’ data. Pharmaceuticals firms are  blessed with huge amounts of data on just about everything. But a competitive war-gaming project just completed for one of the big players was surprising. Sure, we could get data on things needed to model the firm and its rivals, but this seemed to come from lots of different sources, in many different forms – mostly big spreadsheets and slide-decks.

The data was inconsistent ...

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