The Dutch flower auction

In March 2022 I achieved a long standing ambition – to visit the world famous Dutch flower auction in Aalsmeer. I needed to teach on our Berlin campus and decided to take the Eurostar from London direct to Amsterdam. The Royal FloraHolland building is around 20km from Amsterdam Centraal with good bus routes and, of course, is easy to reach with Uber.

There are really two things that you visit here. The first is a market – you are essentially touring a big warehouse, which is the site for a large share of the global flower trade. But what makes this particular market so special is that it uses a Dutch auction method. While the most famous auctions like Christie’s and Sotherby’s are ascending auctions (the auctioneer gradually raises the price until there’s a winning bidder) the Dutch flower auction uses a descending one. This can often be quicker and therefore more suited to perishable items like fresh produce.

Having pioneered the flower industry in the 17th century, there are several reasons why the Netherlands became the dominant player:

  • Good growing conditions (tulips were first imported to region around 1570 and the sandy, coastal grounds are conducive for flower cultivation)
  • Good transport links (historically this was the river and canal system that linked the sea port to the heart of Europe, more recently this includes Amsterdam’s Schipol Airport, which since the 1960s has provided direct flights to important markets such as New York and Tokyo)
  • A strong financial centre (the Amsterdam stock market is the oldest in the world)

Unfortunately, I arrived too early and had to wait for the visitor centre to open:

 

The building is very large and the tour takes place along an elevated walkway – the first part is above some empty trolleys:

I wasn’t sure if these flowers were arriving or leaving but you can see that some of the logistic system is automated:

The overhead shuttle system allows sold flowers to be carried outside the premises, and avoid having to be loaded and unloaded onto vehicles:

Some of the flowers are boxed up while some are open. Those in boxes are subject to inspection to ensure that buyers are receiving a quality product.

I really enjoyed watching the activity taking place – the scooter drivers wear headsets to tell them where to go:

I realised that I should have been recording in landscape – this is my favourite video, showing how markets look chaotic but lead to a spontaneous order:

Here are some key facts and figures:

This graphic shows that the biggest import country is Kenya.

Here is a time-lapse of the trolleys:

…”we’ve got to keep on moving”!

The buggies are electric and here’s where they get stored:

This is my favourite photo from the tour:

Here is my overview of how the auction mechanism works:

When I was touring the site, I thought that the physical auction room was no longer in use. Here is a photo of it:

In fact, the auction room is still used sometimes, it’s just that most of the traders who are on site prefer to access the system from their own back offices:

Right at the end of the tour I discovered the old auction room. This was used when all traders had to physically assemble on site.

At the end of the tour there’s an interactive exhibit to learn how the clock works. Here I am having a go:

This is the official Royal FloraHolland video showing how the Dutch clock works:

 

Right at the back of the hall is a loading area:

After the tour I reflected on the relevance of the auction within the broader Dutch flower cluster:

 

Finally, here is the new trailer for Royal FloraHolland. Do you think I managed to get a ride on the trolleys??


I hope you enjoyed the tour!


You can test you knowledge of the Dutch flower auction with this quiz:

More resources:

Porter, M.E., Ramirez-Vallejo, J., and Van Eenennaam, F., ‘The Dutch Flower Cluster’, Harvard Business School Case No. 9-711-507, November 2013 (and teaching note).

This page can also be viewed as a Twitter thread.

Central banks and digital transformation

Lecture handout: Central banking and digital transformation*

We are seeing unprecedented innovation in payment technologies, with disruptive firms encroaching on activities that many think should be left to central banks. But why not think creatively about the opportunities and threats from decentralised money? What is the proper role of a monetary authority in a system that is fit for the twenty first century? This lecture will equip students with the skills to take a radical looks at contemporary issues such as crypto currencies and central bank activities.

Background readings:
Current policy relevance:

In January 2022 the Fed released a paper on CBDC’s. In response, George Selgin wrote a briefing paper that advocated expanding the set of providers that the Fed deals with, to obtain the competition and innovation that comes from the private sector without the Fed having to issue their own digital currencies. Stablecoin issuers do not require the same regulatory oversight as traditional banks, by providing access to the Fed’s system they simply need to ensure that they fully back their coins with central bank reserves (and possibly short term Treasury certificates). This would require:

  • Bank licenses should be available to non-traditional banks (i.e. institutions that don’t do all of the activities typically associated with a bank, such as maturity transformation)
  • The Fed should allow fintech companies to have master/settlement accounts (which the Bank of England did in 2018)
Recommended audio:
Recommended video:

If you are totally new to concepts like blockchain, bitcoin and NFTs and want a thorough account of the history and development, in a well produced an informative documentary that takes a highly skeptical and cynical approach, I recommend this:

For a more positive view of NFTs, an identification of the context in which they’ve emerged (post global financial crisis and great stagnation), and subjectivist approach to value, see this Twitter thread.

Learning Objectives: Provide an assessment of central bank responsibilities in the digital currency landscape. 

Cutting edge theory: Making assessments of digital and crypto currencies.

Policy

I have contributed to a number of policy debates and have received notable coverage in the following areas:

  • Competitiveness and entrepreneurship policy
  • Flat taxes, corporation tax and public finance
  • NGDP targets and free banking

My work on nuclear energy, and the potential role of SMR’s for Croatia, was covered by Open Access Government. And my advice on competitiveness was presented in a joint conference with the Minister of Finance.

My call for the Bank of England to abolish the Monetary Policy Committee was covered on the front page of the The Daily Telegraph and City AM and prompted an invitation to give a guest lecture to the Bank’s staff. I provided a comprehensive proposal for the UK to adopt nominal GDP targeting and it was covered by Forbes, CNBC, Bloomberg, Moneyweek, and discussed on Bloomberg TV.

I served on the 2020 Tax Commission which advocated a single income tax, and won the $100,000 2013 Templeton Freedom Award. My back of the envelope calculations on the counter intuitive idea that corporation tax harms workers was featured on Page 3 of The Sun, and contributed to the fact that from 2012-2017 the UK government cut it from 28% to 19%. This coincided with revenues rising by 44%.


Policy reports

What happened in Belarus?” GCRF COMPASS Policy Brief, 25 November 2021


Harnessing nuclear power to meet Croatia’s energy needs” Energy Management Centre Working Paper No. 32, July 2020

  • Submitted to the lead project coordinator for the International Atomic Energy Agency Technical Cooperation Project RER2017, July 2020 (for some background see here).
  • Covered by Open Access Government, January 22nd 2021 (see here)

A Belarus Monetary Perspective” Markets and Money Advisory, March 2018


Monetary Policy After the Crash” Adam Smith Institute, February 2018


Sound Money: An Austrian proposal for free banking, NGDP targets, and OMO reforms” Adam Smith Institute, 2016


In Search of Austerity: An Analysis of the British Situation” Mercatus Center, October 2012


The Single Income Tax” 2020 Tax Commission, May 2012 [I served as a commissioner]

  • Winner of the 2013 Templeton Freedom Award
  • “Business backs single income tax rate of 30%”, Financial Times
  • “Boost growth with 30pc flat rate, Osborne told”, Daily Telegraph
  • “Plan for 30% levy and end of stamp duty; The single tax rate”, The Times
  • “Tax shake-up urged to empower consumers and kick-start growth”, The Independent
  • “The Tax Reform Britain Needs”, Wall Street Journal Europe
  • “Calls for single 30% tax rate”, Daily Mail
  • “Tax cuts ‘booster'”, The Sun
  • “Demand for tax shake-up to aid recovery”, Sunday Express
  • Also covered by Sky News, BBC Two’s Daily Politics, BBC News Channel, ITV News.

Corporation Tax” 2020 Tax Commission Briefing Note, April 2011

  • Also covered on Page 3
  • Impact: in 2008 the rate of corporation tax was 28%. In 2011 successive UK governments started to reduce it, firstly to 26% and then to 24% in 2012, 23% in 2013, 21% in 2014, 20% in 2015, and 19% in 2017. During this period tax revenue rose by 44%. The experience during the 2010s is that lower rates coincided with higher revenues. See here for more.

Public Attitudes to Banking” The Cobden Centre, June 2010


2 days, 2 weeks, 2 months: A proposal for sound money” The Cobden Centre, June 2010


Enterprising Britain: Building the enterprise capital of the world” (with Davide Sola and Adina Poenaru), independent report for the Conservative Party, February 2008

See the interim report, published in October 2007, here.


Are Tesco Acting Competitively?” (with Toby Baxendale), submitted to the Competition Commission, December 2007 [Groceries Market – Third Party Submissions]


Sharpening the Thinking on the UK Audit Industry”, submitted to the Financial Reporting Council, May 2006 [Responses to Discussion Papers]

Social, political, and ethical dimensions of digital transformation

Course introduction

This course investigates how digital transformation relates to current issues relating to democracy and governance in an increasingly connected yet polarised world.

There are widespread concerns that social and political divisions are being exacerbated by information technology, and that this is having a profound impact on the capabilities and quality of both global and local institutions. In a similar way to how the advent of the printing press prompted the rise of democracy and the nation state, perhaps digital transformation is contributing to a similar disruption in governance.

Such trends are particularly relevant in regimes where statehood was not an internal process, and was adopted either through colonial or international activity. Rising populism and authoritarianism provides the social and political backdrop to our analysis of the broad impact of technology, and we will consider whether pluralist approaches may help to combat some of the emerging threats to liberal democracy.

Mandatory pre-course readings

For a 40 point quiz to test your knowledge of the pre-readings see here.

Contents

Group workbooks [download here]

Course introduction [lecture handouts]

  1.  Addiction [lecture handouts]
  2. Democracy [lecture handouts]
  3. Ethics [lecture handouts]
  4. Governance [lecture handouts]
  5. Central banks and digital transformation [lecture handouts]
Optional background preparation

To understand some of the context for my construction of this course I recommend:

  • The Coming Storm, BBC Sounds (7 part podcast documentary on the rise of QAnon)
  • Four Hours at the Capitol, BBC (a documentary about the storming of the US Capitol building on January 6th 2021)
  • Things Fell Apart, BBC Sounds (a documentary that looks at the different origins of the culture wars, which are defined as “the battle for dominance over conflicting values”, or the things we shout about on social media)
  • Command and Control, PBS (a documentary looking at how close we came to a major nuclear accident)

I also prepared for this course with the following:

  • Death by Conspiracy, BBC Sounds (an 11 part podcast documentary on Gary Matthews, who died from covid in January 2021 having been drawn to social media claims that it was a hoax. I listened to this as a parallel to The Coming Storm but it strayed too far into covid, media ethics, and psychology for me to incorporate it more fully in this course, which attempts to avoid those areas. I didn’t learn much about conspiracy theories aside from episode 9 which provided a good attempt to understand why our common conception is often misplaced. Ultimately I just found this sad.)

Famous documentaries about Facebook include:

Here is the Brexit movie mentioned in class:

Recommended audio
Recommended activity
Assessment
  • Group report [download here]
  • Individual One Pager
    • This should be based on an article that you think is relevant for this course and that I should add for next year
    • Here are instructions on How to Write a One Pager
  • Individual MCQ final exam
    • This relates to all lecture content and the readings from the content section

On design
Resources for the public sector

If you wish to work in the public sector I recommend the following resources:

Topics in Economics (MIM)


This course introduces students to several important and contemporary issues that relate to economics. Having already covered the key insights from Micro and Macroeconomics, this advanced course goes deeper into the frontiers of the discipline. Students will challenge their understanding of complex and controversial issues and develop their perspective on how to become managers of the future.

Topic Before During After
1. Macro Trends Lecture handouts
2. Macro Models Lecture handouts
3. Money and central banking
  • Menger, C., 1892, “On the Origins of Money” Economic Journal, 2:239-55
Lecture handouts
4. Central banking and digital transformation Lecture handouts
5. Prosperity Pre class quiz

Lecture handouts
6. Inequality Pre class survey

and watch the full movie Parasite (2019), Bong Joon Ho

Lecture handouts
7. Stagnation Watch “Steve Jobs – iPhone Introduction in 2007 Lecture handouts
8. Review Submit review questions

 

Writing a corporate memo

Business school students often produce exams or other written assignments in an essay style, but in most business situations a memo format is more appropriate. The purpose of this post is to articulate what constitutes an effective memo so that we can replace bad academic writing with good business writing.

The aim of a memo is to quickly inform the reader and explain any decision making. It should be easy to read and have a clear message.

  • The first few sentences should explain the purpose of the memo and any key background information.
  • The use of bullets or numbered lists to split up the text and separate key points is often appropriate.
  • Don’t be afraid to highlight important text.
  • It’s a good idea to finish a memo with a call to action or some other type of positive ending.

We tend to think of memos as an antiquated document but many emails are de facto memos. In fact, I would argue that any email sent to multiple people should be treated as a memo – they are an important part of a manager’s toolkit!

Addendum: Here the thoughts of Scott Adams on business writing (source):

And for a fascinating collection of corporate memos, see https://sriramk.com/memos.

Macro Perspectives

My Perspective on Macroeconomics workshop is split into two presentations:

  • Macro Trends: what’s going on? – this provides an overview of the global economy and a discussion of current critical uncertainties.
  • Macro Models: from DICE to doughnuts – this integrates ecological concerns wirth standard economics, providing an overview of how macroeconomists model the economy and how those methods and models relate to climate issues.

To keep up to date with my thoughts on economic issues either follow me on Twitter or see Kaleidic Economics.

You can find the latest global growth forecasts from the institutions mentioned in the lecture here:

And here are the scorecards on social progress mentioned:

Here’s a short quiz to test your knowledge about the sessions:

https://forms.gle/hYsBs2hnhMwy7B9D8


Recommended readings:
Recommended audio:
Recommended videos:

This is a good explanation of current Fed policy:

@kylascan Reply to @joelsephs what does the federal reserve do? #federalreserve #monetarypolicy #inflation #economics #fyp #foryou #LIKEABOMBSHELL ♬ Spooky, quiet, scary atmosphere piano songs – Skittlegirl Sound


Here is a fascinating video (in French) on the limits to growth and the World 3 model

Here is Tyler Cowen on growth being a moral imperative:

Here is more on the doughnut model:

Some spinning donuts (see! it is meant to be measured!):

Money and (central) banking

Lecture handout: Money and central banking*

Textbook Reading: Chapter 7 (Section 7.3; pp. 216-255)

“I’m very interested to watch the crypto community relearn centuries of monetary economics” John Cochrane (Conversations with Tyler, March 10th 2021)

Can someone really understand crypto currencies and the future of digital money without having a solid grasp of why money even exists? This topic is a great example of why historic knowledge and theoretical clarity are crucial when involved in fast changing industries – it provides a benchmark to verify the bold claims made by industry practitioners.

The purpose of this lecture is to gain a deep understanding of what money is and how it has evolved.

Background readings:
  • Menger, C., 1892, “On the Origins of Money” Economic Journal, 2:239-55
  • Radford, R.A., 1945, “The Economic Organization of a P.O.W. Camp”, Economica, 12(48):189-201
Recommended audio:
Recommended video:

If you are totally new to concepts like blockchain, bitcoin and NFTs and want a thorough account of the history and development, in a well produced an informative documentary that takes a highly skeptical and cynical approach, I recommend this:

For a more positive view of NFTs, an identification of the context in which they’ve emerged (post global financial crisis and great stagnation), and subjectivist approach to value, see this Twitter thread.

Learning Objectives: Understand the origins of money. 

Problem Solving and Decision Making

How can I improve my team effectiveness when facing complex business problems?

A 2-3 day course that leads participants through the 7 key stages of finding a solution using practical examples and plenty of team work.

Problem Solving and Decision Making is an intensive managerial programme that has been shown to be an enjoyable and successful way to improve team performance and productivity. The course provides practical skills and a management mindset rather than simply transfer knowledge. Participants are taken through the full problem-solving and decision-making cycle: from breaking down the issue, to prioritising and writing the action plan. They also practice communicating their proposal, an important and often overlooked aspect of the decision-making process. The course focuses mostly on experiential, proactive and practical learning: participants engage in individual and team problem-solving and decision-making, and receive constructive feedback to build on personal strengths and address limitations.

 

Resources:

For more on the Pyramid Principle:

For more content: