Rostra Economica 298

rostra economica Which path will Ukraine choose:

East or West?

The future of Bitcoins: are they here to stay?

Issue 298 February 2014 respond? rostra@sefa.nl

Trust, distrust and their effects on economic growth

-------------------------------------------------------------------------------------------------------------------------------editorial rostraeconomica 5 -------------------------------------------------------------------------------------------------------------------------------text Dovile Venskutonyte editor-in-chief -------------------------image Aaron Brown

Dovile Venskutonyte is a Bachelor student in Economics.

Time to cut some wings

I

often get asked the question, as I’m sure we all do, on whether I am right wing or left wing? Or center, or center-right or center-left? I find this divide, still so prominent in a modern society, to be quite perplexing.

Of course it is not very difficult to read up on the history of these ideologies and understand their development, but today we live in a very different world than when they first appeared and grown. Economics is a relatively recent field.

It is not a hard science, but it is quite close to it. Now more than ever we have an abundance of data, theories, calculations and lessons form history to make an informed rational decision on economic policy in specific cases.

However, instead we still have political parties, which choose their approaches to economic matters on the basis of ideology rather than science.

There is no place where this is more apparent than the United States of America. I remember once watching a news show where the anchor said that some republican politician called president Obama the S-word. It took me a few minutes to understand that that word is not some inappropriate four-letter word, which are usually referred to in that manner, but it was “socialist”. Democrats depict republicans as hating the poor and republicans often call democrats socialist, which is still a dirty word. Ironically, republicans support many leftist ideas like subsidies to farms and some businesses, while US democrats would be called right wing in many European democracies. It is impossible for a member of a party to admit that the opposing side made the right decision on an economic issue. This has very damaging ramifications. It slows down the countries progress and allows for irrational and populist economic policy. The current Unites States congress is the laziest in the countries history, in the sense that so far it passed the least amount of legislation. This is so, because it became impossible to have a good debate and reach a conclusion.

Politicians criticize other parties policies not on their individual merit and substance, but simply name call them

socialist or anti-poor. This allows laws and programs made by the most charismatic and persuasive politicians to win.

It seems insane to me that we still think that there is a onefits-all solution to all issues relating to economics. Truth is that each and every problem should be studied individually and resolved without the interference of outdated ideologies.

However, this is easier said than done. We still think that economic policy doesn’t require as much analysis as other scientific fields. There is a prevailing notion that: anyone can be an economist, it’s really all about raising taxes and cutting spending. Which of course we know is much more than that.

Policy decisions if not based on a good amount of research can have very counterproductive consequences and only exacerbate the problem they were trying to solve. This is the way that politics blocks optimal and efficient economic plans from being adopted. It allows some politicians to warp voters’ minds with populism and fancy slogans, making them believe that there is an ideology, which is right all the time.

Friedrich Hayek once said: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. “I believe that these are words that should be engraved on every policy maker’s desk. Because it will always be politicians who make economic decisions for their countries. There will always be political goals and intrigues that distort the workings of a democracy. Therefore it is crucial for us to take the heart out of economics, but keep it only in politics. It is great that some politicians want to help the poor or some want to make business more efficient and prevalent. But giving more social benefits or simply cutting corporate taxes until they are no more, are very simple and understudied solutions. Of course this will never happen from the top down. It is up to the people, as everything fundamentally is, to learn and to become unsusceptible to empty promises and loud speeches. Perhaps that is when we will finally understand what we are designing.

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the rostra chart

image def.

Every year the World Bank ranks countries on how easy it is to do business in them. the rank is based on 10 topics ranging from infrastructure, to regulation, to taxes. here we represent in which part (approximately which fifth) countries are.

1 - 38 39 - 76 77 - 114 115 - 152 153 - 189

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CoLoPHoN Editor in chief Dovile Venskutonyte Copy editor Poya kabiri Editors Jantine Derksen klara keutel matteo ruozzo milian Bachem Pierre Borst Poya kabiri sophie yang supervisor from sefa Jeroen Pennings supervisory Board Wouter smeets lennart Verhoef reactions, letters and applications can be sent to: room e0.02 roetersstraat 11 1018 WB amsterdam 020 5254024 rostra@sefa.nl www.rostraeconomica.nl Columnists arthur schram Design def., amsterdam (yvonne roos) Print run 5000 address Changes can only be made through studielink, www.studielink.nl advertisements akzonobel amsterdamse carrière Dagen Duisenberg school of Finance liander Pwc sefa shell advertisement Costs contact sefa and ask for thijs algra 020 525 40 24 commercial@sefa.nl Printing Dr&DV media services, amsterdam Copyright Notice any redistribution of part or all of the contents in any form is prohibited. you may not, except with express written permission by the editor in chief, distribute or commercially exploit the contents. nor may you transmit it or store it in any other website or other form of electronic retrieval system.

Berlusconi just doesn’t give up, unfortunately…

What’s going on behind the protests in Ukraine?

18 26 32 36 What history tells us. trade to the hand.

What kind of power will decide tomorrow’s global leaders?

What does the famous virtual currency bring?

the connection between trust and economic growth.

aND MorE 22 seFa Front 31 Fsr Page 35 colUmn arthUr schram 42 FeB Flash

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-------------------------------------------------------------------------------------------------------------------------------rostraeconomIca 9 -------------------------------------------------------------------------------------------------------------------------------image kevin cappis

on the 30th of November 1999 thousands of people gathered in the streets of this city, seattle Usa to protest the World trade organization. even though the institution advocates for free trade policies it is dominated by the strongest economies. the last round of negotiations was closed this December and is receiving major criticism. It is an example of how political influence and intrigue blocks truly efficient economic policy. Wto will be part of shaping the future of trade, so perhaps it is time to reconsider the way in which global economic policy is created.

-------------------------------------------------------------------------------------------------------------------------------10 rostraeconomica -------------------------------------------------------------------------------------------------------------------------------text Matteo Ruozzo -------------------------image Pim Stouten

Matteo Ruozzo is a Bachelor student in Economics and Business.

Italy - the aftermath of Berlusconi’s fal l

A

ttempting to understand the current Italian political landscape can be, now more than ever, quite confusing. With leadership changes, backstabs and fear of a government fall every now and then, it is a task that never gets boring.

Even so, at stake is the stability of a country that carries the burden of a debt accounting to 133% of GDP and growth levels just approaching zero.

The fall of Mr Berlusconi, buoyant exprime minister and entrepreneur, who dominated the political scene for more than 20 years, does come as a pleasant surprise. Following his conviction for tax fraud, the “Cavaliere” was expelled from the Senate and deprived of his political immunity in November.

Signalling the fact that he may no longer be a politician but still detains an influential role in politics, Berlusconi decided to re-brand his party under the old name of “Forza Italia” immediately after the verdict.

This caused a split between his

followers: Angelino Alfano, the man who by all means appeared to be Berlusconi’s designated successor, decided to withdraw his support and announced the creation of yet another party, the “New Centre Right”.

The grand confusion This course of events was of little help in making the country and its political representatives more united. While the government driven by center-left president Mr Letta struggles for survival, people from the most diverse social and political background reversed in protest on the streets of Sicily’s major cities on December 9th.

The protests, ignited by a group of lorry drivers and farmers under the name of forconi (pitchforks) quickly turned into a nation-wide phenomenon that lasted for nearly five days. Calling for a new political class, an exit from Europe and an opposition to globalization, the forconi blocked roads and railways and occupied

piazzas, firmly showing that Italian politicians are failing to respond to people’s needs. The Five Star Movement shares a similar viewpoint. It is a political party that aims to completely swipe away the traditional political class with its many inefficiencies and privileges.

Despite being led by Beppe Grillo, a comedian, the movement received widespread support during the last national election, signalling people’s growing disappointment.

A new leader?

Meanwhile, the recent election of Matteo Renzi as leader of the centerleft PD party, to whom the prime minister belongs, brings a gust of fresh air into a party that had not been able to affirm its leadership at a time when Berlusconi was at its weakest. Aside from being Firenze’s mayor, Renzi is a young leader with well-defined ideas, who aims to cut political expenses and make the Italian

-------------------------------------------------------------------------------------------------------------------------------rostraeconomica 11 -------------------------------------------------------------------------------------------------------------------------------Ease of doing business ranks for selecter EU economies Germany: 21st Netherlands 28th France: 38th Spain: 52nd Italy: 65th Greece: 72nd Source: Doing Business (world bank) http://www.doingbusiness.org/rankings

labour market more flexible. Renzi’s political campaign promotes, among many things, change in the form of “Meritocracy”, or the belief that people should move ahead because of their talent and not because of the friends they have. Such calls for change are warmly welcomed in a country that is just about to exit its longest post-war recession, but where the cost of politics still remains the highest in Europe.

In Italy, a mixture of almost zero growth and low inflation (0.8% according to latest statistics) is hampering debt-reduction by making deficit more expensive in real terms.

Holding back growth is the mixture of a rigid labour market with the burden of cumbersome laws and regulations, a fall in domestic demand (accentuated by austerity measures and a 12.5% unemployment rate) and a failure to attract foreign business. It is not a coincidence that Italy ranks 69th on

------------------------------------------------Holding back Italy’s growth is the mixture of a rigid labor market with the burden of cumbersome laws and regulations, a fall in domestic demand (accentuated by austerity measures and a 12.5% unemployment rate) and a failure to attract foreign business

perceived corruption and 65th on ease of doing business, both well below other major European economies.

By curbing its public expenses, the political class would be able to restore confidence levels in the short-term.

A further drop in consumer confidence in December, now at its lowest level since June, shows that such measures are necessary.

Meanwhile long-term reforms would still need to follow.

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-------------------------------------------------------------------------------------------------------------------------------rostraeconomica 13 -------------------------------------------------------------------------------------------------------------------------------text Sophie Yang -------------------------images Sasha Maksymenko

Sophie Yang is a Bachelor student in Business studies.

The New Iron Curtain? a new tug of war between the West and the East On one Sunday in early past December, many tourists on Dam Square in Amsterdam were not taking pictures of the Palace or the New Church as usual; instead their eyes were fixed on a group of protestors waving blue and yellow flags in front of the National Monument. Their signs read: “Yanukovych, Goodbye!”

It was not hard to guess that they were calling for the ouster of the Ukrainian President Viktor Yanukovych who had suspended signing a far-reaching accord with the European Union and instead decided to strengthen ties with Russia.

At the same time, on the Independence Square in the Ukrainian capital of Kiev, people had been camping in the cold for weeks to protest against the president’s decision.

Mutual dependency It all started at the end of November 2013, when the Ukrainian President suddenly suspended signing a planned trade agreement with the EU, which was aimed at setting a firm Western path for Ukraine. The Ukrainians responded by massive protests in the capital Kiev, where almost 20,000 people marched to the streets. Despite the opposition to the decision, President Yanukovych who came into power in 2010, did not show signs of changing his mind. A violent police crackdown was enforced and many protestors were injured.

It is clear that Russia is behind the scene. The Slavic state of Ukraine has always been hugely important to Russia. Not only is it seen as the birthplace of the Russian civilization, but also, practically speaking, Ukraine provides a vital outlet to the sea for Russia as well as key pipelines that carry Russia’s oil and gas pass through Ukrainian territory.

On the other hand, Ukraine is also very dependent on Russia especially in terms of resources: Ukraine imports

-------------------------------------------------------------------------------------------------------------------------------14 rostraeconomica -------------------------------------------------------------------------------------------------------------------------------Ukraine imports about 35 percent of its domestic demand from Russia and 40 percent from Central Asia through transit routes that Russia control.

about 35 percent of its domestic demand from Russia and 40 percent from Central Asia through transit routes that Russia controls.

What each side has to offer Ukraine’s protest is certainly not just a domestic problem. It is becoming a cold-war like situation where Russia and the Western powers are fighting against each other to have Ukraine on their own side. Russian President Vladimir Putin has pressured the Ukranian government to drag Kiev into his own trade and political bloc while in midDecember, the U.S. Sen. John McCain and Sen. Chris Murphy took to the Kiev encampments’ stage to address a crowd that “Ukraine’s future stands with Europe and the U.S. stands with Ukraine”. The speech by McCain showed to the Ukrainians that the U.S. is behind them and against Yanukovych. Professor Sweder van Wijnbergen from UvA who has worked for the World Bank said that “You can see very clearly that Russia feels threatened: Central and Eastern Europe has escaped and Ukraine is too close to Russia by the border. For the same reason, the U.S. has always been very keen to have Ukraine join the western side”.

The economical situation in Ukraine is not bright. The economy is in recession and the country is at the brink of default. It needs to find roughly $18billion in external financing over the next year. While Russia has suggested Ukraine join a trade union it has formed with other former Soviet republics, offering possible reductions in the price it charges Ukraine for natural gas; the Western leaders have urged Ukraine to sign up for IMF aid as well as the EU trade and political association pact. When asked about which side will be more beneficial for Ukraine to choose, Professor van Wijnbergen commented that “I think it is clearly in Ukraine’s long term interest to slowly try to get more into the EU’s sphere of influence, particularly all those institutional reforms that most member countries had to go through are ultimately very beneficial for the country itself: transparency, stable

-------------------------------------------You can see very clearly that Russia feels threatened: Central and Eastern Europe has escaped and Ukraine is too close to Russia by the border

financial system, anti-corruption, better court system and so on.” When asked what benefits can Ukraine bring to the EU, he said: “Like other former Soviet Union states which gave universal education to its people, the degree of education in Ukraine is much higher. I think that it will take Ukraine very long time before they can join the EU but the fact that Ukraine is so different from the EU means that there is potential big gains for both parties to trade.”

A win for Russia As the protests in Kiev continued for over four weeks, finally in December 17th, Putin agreed to hand Ukraine $15 billion in loans and cut the price of critical natural gas supplies by one-third. Reacting to this action, the EU indicated that Ukraine could have gained more in loans and grants from the EU but Ukraine officials said that the EU was offering too little cash and that the IMF’s reform conditions for loans were too tough. Despite an economic deal signed with Russia, the opposition has vowed to continue pro-EU protests over the holiday period in 2013.

The situation in Eastern Europe From the political games fighting for Ukraine, it seems that the “Iron Curtain” from the cold war is still there, at least in the mind of President Putin of Russia. The motivation behind Russia forming a trade union with former Soviet

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-------------------------------------------it is clearly in a long term interest for Ukraine to slowly try to get more into the EU’s sphere of influence, particularly all those institutional reforms that most member countries had to go through are ultimately very beneficial for the country itself

Union countries is worth close attention. On the other hand, the EU is also putting more effort into bringing more efficiency to its trade routes between member countries.

These projects include the North Sea-Baltic transport corridor, which includes a high-speed rail that links the Baltic countries with Warsaw, Berlin, Rotterdam and Brussels. However, the project also faces some difficulties

in the Baltic countries which borders with Russia: the governments there face intense pressure by domestic companies and industry groups to focus on improving rail links to Russia instead, transporting oil and minerals to the Baltic Sea. A country like Lithuania, its main trade partner is still Russia even though they are part of the European Union. When asked about how they think about economical cooperation with Russia, Igor Polupan, UvA student originally from Estonia said: “I think trading is beneficial to both sides but personally I don’t think there are many people who would choose Russian ties instead of European; even among Russians living in Estonia.” Dovile Venskutonyte from Lithuania said: “It is absolutely necessary for Lithuania to grow its exports to Europe and become independent of Russian natural resource imports, because whether you exports will be allowed through the border the price of gas will be is always uncertain and decided by the regime.”

Do these countries really have to pick sides? Is there no way to gain from having good relations with both parties and not picking just one? Of course, in principle it should be possible, however the political situation in Russia is far from good and it is hard to guess, how relationships between the EU, Eastern Europe and Russia will evolve.

Interview at the Duisenberg school of finance (DSF) with Lesley Berlauwt Can you introduce yourself and tell us what did you study before joining DSF? My name is Lesley Berlauwt, 23 years old and currently pursuing a master Finance with a specialization in Financial Markets & Regulation at the Duisenberg school of finance (DSF). My specialization provides a combination of finance and law courses that enable me to gain thorough knowledge of finance and a solid legal insight in the principles of finance. Before I started at DSF, I obtained the bachelor Economics and Business at the University of Amsterdam. After my bachelor, I started my first master in Business Studies. Previous year I’ve been involved in the Sefa International Research Project where I had the opportunity to do research for a company in Vietnam. Before my experience at Sefa, I was a board member of a student association and did an internship at a “Big4” company.

Why did you choose DSF? There are multiple reasons why I specifically chose to pursue a master at DSF. First of all, I wanted to gain more knowledge of finance and wanted to study finance within a broader perspective. For example, I was not only interested in knowing more finance theory, but I was also interested in its effects on society.

DSF provides an intense and unique experience that provides this combination of finance theory and placing finance within a broader

context. The curriculum is more intensive (70 ECTS) as you get more courses, the school has a highly career driven and highly international environment and it builds on a pragmatic teaching style. Almost every course in the curriculum is “case based” which forces you to apply theory to real life and practical problems. In addition, together with highly motivated students and the small scaled and interactive classes, DSF creates an ideal and effective learning environment. The philosophy of DSF is to create all round finance professionals that also have the right set of interpersonal skills. Through diverse workshops on communication, presentation and negotiating skills students will also enhance their interpersonal skills.

This combination is something that I value a lot and made my choice for DSF more clear.

What kind of differences do you see between a regular university education and DSF? The fact that DSF is a small-scaled private institute makes it already different from a “regular” university, which is more colossal. The intense curriculum, the case based teaching style, the highly international and career driven environment and the emphasis on teamwork makes DSF different from other universities. DSF also has a unique “fly-in” business model which simply means that they are able to attract the best professors in their fields from all around the world (e.g. from LSE, Harvard and

Columbia). We also get a fair amount of guest lectures from professionals who work within the financial sector.

For example, we had a guest lecture from a member of the managing board of ABN AMRO who was discussing the ethical issues the bank encountered during the financial crisis.

How are your practical skills trained at DSF? Your practical skills are trained in different ways. For example, during the preparation week before the start of the first block, you will have an “excel bootcamp” in which you will get trained in using excel on an intermediate level. The excel bootcamp provides students with a solid basis which is necessary in order to be able to solve the case studies of your courses. With respect to the socalled “soft skills” and as I mentioned before, you will follow different workshops that will help you in enhancing your communication and presentation skills. This is definitely different from a regular university where these types of trainings are missing.

Does the study that you followed at the UvA connects with DSF? If not, how is it different?

Well, content wise it is entirely different. The study that I followed and especially my master at the UvA is focusing more on theories and principles of strategy, marketing and international management whereas my study at DSF is purely focused on

finance. In this sense, the two studies are not related at all. However, there are some aspects of my previous master that I also witness in my master at DSF. For example, my study at DSF puts finance in a broader perspective, which means that finance theory is also used to, for example, explain certain strategic decisions made by companies. This is what I have encountered during certain case studies where you had to explain why a company would pursue different financial strategies in different situations and why it would make sense. Hence, this “organizational behaviour” part that I’ve experienced extensively during my first master also comes to some extent back in my master at DSF. What does a normal day at DSF look like and what are examples of the courses you follow?

That’s a difficult question to answer, because there really isn’t a standard day at DSF. It depends how many deadlines we have in a particular period or how many case studies or presentations we have to do. On average we have about two lectures per day of at least 3 hours per lecture.

Because most deadlines are pretty short you will also have to work after these lectures in order to meet your deadlines. Mostly you will have to work on multiple cases for different courses, hence it can be very intense sometimes. However, you will have to do most of the case studies in a team, which makes it more fun and instructive.

How does the class composition looks like?

This year, there are approximately 30 different nationalities that are represented in DSF. We have people from almost every continent, which I find pretty special if you consider the small scale of DSF. This provides a really unique experience, because you are able to interact with people from all around the world that all have different (professional) backgrounds.

It’s great, because you learn from everyone. E.g. a student from the USA can have such a different perspective on valuation then Europeans. It really adds to the learning curve. Most students have an economics or business background, but we also have people who have an engineering, mathematics or physics background. Some of the students already have professional working experience for a couple of years. This international environment with such a diverse range of students provides an ideal culture and learning environment.

How can a student get in touch with DSF? There are a lot of different ways in which a student can get in touch with DSF. For international students, DSF has partnerships with several universities across the world. The recruitment managers of DSF are flying around the world to meet students and to give information about DSF. For students who study in the Netherlands, it is the easiest to send an e-mail to one of the

recruitment managers of DSF (admissions@dsf.nl, red.). They are more than happy to receive any student who is interested in DSF and provide you with all the information you need. In addition, students at DSF are also more than happy to talk to you. It is also possible for (some) students to follow a lecture so you are able to form your own impressions of what it is like to study at DSF. DSF has good connections with a large amount of student- and study associations that organize info sessions with and for DSF. This is also a good opportunity for students who are interested in pursuing a master degree at DSF. Lastly, DSF is frequently organizing open days, which is the perfect moment for interested students to get in touch with DSF. The next open day is 6 February from 17:30 – 20:00 What kind of student would you recommend applying for DSF?

Students who are motivated, ambitious, have a good level of inquisitiveness, aspire a career in finance and that want to study in a highly international, career driven and pragmatic oriented environment should definitely consider DSF. DSF is looking for different, but wellrounded personalities that also, preferably, have engaged in extracurricular activities.

If you have any questions about DSF, you can send an e-mail to Lesley: l.berlauwt@gmail.com

-------------------------------------------------------------------------------------------------------------------------------18 rostraeconomica What history tells us -------------------------------------------------------------------------------------------------------------------------------text Dovile Venskutonyte -------------------------image Jon Bowen

Dovile Venskutonyte is a Bachelor student of Economics.

Trade to the hand I

t is not news to anyone that the economic health of our countries strongly depends on the thinking and hence the decisions of our politicians. They are sometimes wrong and sometimes right, to put it politely, but at least we know that they have the countries interest in mind. At least, if you’re not living in a dictatorship or a country with very high levels of corruption, that should be true. However, today, it’s not only domestic political figures that call the shots. With the world becoming ever more globalized, the economic policies countries make influence other nations to a great extent and weather they like it or not. This is in many cases unintentional, but sometimes a powerful country can make a smaller country do what it wants by using economics. Of course I am talking about the case of economic sanctions.

They are sometimes imposed to protect a domestic industry against a flood of imports and other economic reasons, however sometimes their goal is political change. They often fail and only impoverish an unfortunate people more, but there have been a few success stories, such as South

Africa, where economic sanctions helped bring down the Apartheid regime. However, the most famous policy of this nature is the over 5 decades long and ongoing US embargo on Cuba.

The not so good old days Once upon a time USA and Cuba were quite friendly neighbors. They were living in harmony with the US importing Cuban sugar and Cuba welcoming US’ tourists and investors.

In the early 1950’s Havana was a paradise for rich Americans to build cheap holiday homes, open clubs, bars and hotels and even be entertained by American celebrities such as the one and only Frank Sinatra. This great host was president Batista, however he was not that good to his own people.

Batista gained power through a military coup, which established him as dictator. His economic policy exploited the poor and created a huge gap between high and low-income people. Furthermore he made deals with American mafia and corporations without taking into consideration the interests of ordinary Cubans. As the nation grew weary of its dictator,

---------------------------President John F. Kennedy sent his press secretary to buy 1,200 Cuban cigars the night before he signed the embargo in February 1962

Batista began cracking down on communist and opposition groups through extremely violent means that often included public executions.

And so it begins And so in 1955 Fidel Castro became the leader of Cuba after his successful Communist Revolution. Of course USA was in the cold war era, when Communism was (in some circles still is) public enemy number one, so it could not tolerate the first Communist

-------------------------------------------------------------------------------------------------------------------------------rostraeconomica 19 -------------------------------------------------------------------------------------------------------------------------------The United Nations has denounced the US embargo against Cuba for 22 straight years.

The vote against the embargo was 188-2 in 2013, with only Israel supporting the United States.

Empty pharmacy in Baracoa

country in the Western Hemisphere.

At first America tried gentle measures such as denouncing Castro and discouraging American investment in Cuba, but Castro didn’t mind that at all and responded with expropriating 70 000 acres of American owned land.

Then the republican president Dwight Eisenhower decided to raise the stakes by introducing a strong propaganda campaign against Castro, but he wasn’t thinking about giving up. Castro nationalized all US businesses, costing America 2 billion dollars in property and a further 1.5 billion in assets. And so, on October 19th, 1960 Eisenhower approved a partial embargo on Cuba in order to pressure the regime.

cruelty by Cuban authorities. Even though the operation failed it drew the world’s attention to Cuba, which in most democratic countries created a very negative view of the island. In 1992 a democrat president, Kennedy, extended the embargo to include all products made with at least some Cuban material, regardless of the country in which it was manufactured.

However, the last blow to US-Cuban relations was the Cuban Missile Crisis, when it was uncovered that Cuba was pointing middle-range missiles at the US. At this point the embargo became not about changing the regime or opposing communism, it was an issue of national security.

American politicians strongly hoped that the embargo will make Castro reconsider his economic policy, however he nationalized what was left of American property and committed abuse of Americans living in Cuba.

This is why in 1961 the CIA backed an invasion of Cuba, called the Bay of Pigs Invasion. Majority of the participants were Cuban exiles, whom experienced a major failure and the captured ones were treated with great

The legacy Soon after, the embargo became much more than it was set out to be.

A countries position on the embargo would become a sign of allegiance with either the US or the Soviet Union. Vast majority of countries supported the US, especially after the atrocities of the Bay of Pigs Invasion.

Only China, the USSR and some of its satellite countries sided with Communist Cuba. USA tightened the

embargo even further and quite a few other countries joined in. This way they tried to bankrupt Castro financially and end the regime, but due to an annual donation of 4 billion dollars from Soviet Russia, the regime survived until present day. However, now Cuba is much better than it was before. Recently it became a bit more democratic and wants to build relations and trade with other countries. An enormous help for that could be the US finally lifting its embargo, but that is a tricky political move. Even though the embargo is not in US’ economic interest, it did not achieve all that it wanted. The revolution in Cuba did not fail, at least in one way, the regime became better over time, but it still is a Communist country. Of course, countries should not impose sanctions for the economic systems their neighbors adopt. Should the US lift the embargo? I think so. Cuba is better and it will get even better sooner without the embargo. Truth is that economic prosperity almost always brings political change, so perhaps the US’s policy against Cuba was very counterproductive.

Discover yourself at Shell an Interview with Pieter Gerretsen and Jeroen van Eenennaam As a student studying Economics and Business, I am sure many of you dream of one day working for a big multinational company like Shell. But what do they actually offer you and what kind of opportunities do you have there?

Most importantly, how can you get the dream job?

reporting, a section in the annual report and creating the quarterly Audit Committee report. I work in quite an international team, actually the 40 colleagues in my department have 17 different nationalities, only a few are Dutch.

Recent graduates and alumni Pieter Gerretsen and Jeroen van Eenennaam who are completing their Shell Graduate Programme will answer your questions!

Why did you choose Shell?

Pieter: There are two major reasons: one is the people who work for Shell and the other is the opportunities Shell offers. I took part in a Shell Business course where I talked to several Shell employees. I was amazed by how professional and focused they were. I also chose Shell because it is such a big organization and it offers a lot of opportunities. If you are not quite sure what you want to pursue in your career, you can discover your interests and develop yourself along the way by working here.

So, what do you do at Shell?

Pieter: I’m in, the three-year-long, Shell downstream Commercial Graduate Programme. Currently I’m a network planner in Retail, and as such responsible for optimizing the Dutch network footprint. This means I have to acquire and dispose sites, choosing the right platform (e.g. manned versus unmanned) and selecting the best investment opportunities in the network. Part of the job is to prepare auctions, where Shell has to defend a Shell site or tries to acquire a competitor site. During preparation, I

model the profits and costs drivers for each location in order calculate a Net Present Value (NPV) and finally to decide how much to bid. In this process, there is an overlap with several courses I followed on the UvA, like Game Theory and Corporate Finance.

Jeroen: For the Finance Graduate Program, I have two rotations in three years. I work in the office in The Hague in the department Group Reporting where I work as a Business Analyst.

Our department is mainly responsible for the internal reporting and analysis of Group-wide financial results, external financial reporting of the Group’s operations and setting appropriate accounting and reporting policies. Examples of my responsibilities are; support quarterly

Jeroen: I have always been very interested in the energy industry because of its relevance and importance, especially as there is a significant increase in global demand

Pieter Gerretsen (left): - Currently Commercial Graduate at Shell - obtained both Bachelor and Master degree at UvA; Master degree in Business Economics (track Finance) - He has been working for Shell for two and a half years Jeroen van Eenennaam: - Currently Finance Graduate at Shell - obtained Bachelor degree in University of Utrecht; Master degree in Business Economics (track Finance) at UvA - Started his job at Shell in February 2013

and limited current resources. And after working on an oil rig during two summers for a marine contracting company, my interest in the oil and gas business and especially the engineering side of it increased. Another important reason is the people, I agree with Pieter that the people who I work with are a divers smart group, which keeps me challenged.

How is your experience at Shell so far?

Pieter: The Graduate Programme at Shell is quite different from most other traineeships: from Day One you start with a job with real and challenging responsibilities. Next to the job, everyone in Shell has an IDP(Individual Development Plan), in which desired development opportunities and actions are covered. Hence, people in Shell have a tailored training programme which matches the development need of an individual, instead of a general programme. So far, I followed several local trainings to improve my professional and personal competences, and I also have been to two marketing

trainings in London and a two-week Network Planning course in the Philippines. On these trainings you’ll meet peers from all over the world.

Also, as part of the Commercial Downstream Graduate Programme, several field experiences are offered, like visiting a refinery, a chemical plant and a trading floor, and working on a Shell petrol site.

A more general positive experience is Shell’s focus on diversity and inclusiveness. I think that diversity is what makes a team efficient and strong and I really see that happening in Shell.

Jeroen: Besides my work at the office, I recently started an external accreditation programme at the VU (EMFC/RC), which is one of the sponsored studies for Finance Graduates at Shell. It is a post graduate programme and I actually go back to school every Friday. Besides the learning’s being directly applicable to my job it is great to meet all the different people from a wide range of companies, a perfect way to expand my network. Overall I am very keen on working in an international team with interesting and challenging responsibilities in an environment where I am triggered to keep developing myself!

What is your goal in the future?

Pieter: In order to increase my value as an commercial employee, it’s important to have wide commercial experiences.

As I did not work in a sales environment yet,. my next goal is to do a sales role. Looking further, I will focus on a role somewhere else in the organization, and get team lead experience.

Jeroen: For my next rotation, I hope to work more on-sight, more in the business, for example in a refinery where I can increase my understanding of how we actually make the money which we report in our annual report.

Another great opportunity would be a short term (up to one year) international assignment in one of the

Finance Operations Centres, in say Malaysia, Krakow or the Philippines.

How should students apply for a position at Shell?

Pieter: There are two ways that you can be hired by Shell: one is by doing an assessed Internship program which ranges from three to six months. The other way is by attending a Shell Recruitment Day which is a one-day assessment.

The process looks like this: apply online -> resume evaluated -> do an online assessment test -> interview -> being invited for an internship or a Recruitment Day. More information is on the website.

Do you have any tips for the student readers?

Pieter: Be brave and don’t underestimate yourself. You should not be scared to apply. When I applied, I never thought I would actually get the position, either.

In order to improve you chances, prepare well and develop yourself by having different experiences outside your study, like fulfilling a board function in a study organization. This gives you responsibilities, which you can use as evidence during the application process.

Jeroen: I have a small preference for starting via an internship, as I think you are then better able to see whether Shell is somewhere you want to work.

For me, I went to a career event where I had a lunch with Shell, then before writing my Master thesis I did an assessed internship. After the internship I got a job offer in June 2012, finished my thesis in October and was able to travel for 3 months before starting my first job in February. h t t p : / / w w w. s h e l l . c o m / g l o b a l / aboutshell/careers/students-andgraduates.html

-------------------------------------------------------------------------------------------------------------------------------22 rostraeconomica sefa front --------------------------------------------------------------------------------------------------------------------------------

sefa front

Message from Merel For one of the biggest career events for students you don’t even need to leave your beloved Amsterdam.

It’s here!

The Amsterdamse Carrière Dagen, organized by Sefa together with Aureus (VU), offers students in Economics, Finance, Econometrics, Accountancy and Business Administration the opportunity to get to know the biggest firms in The Netherlands. You might even tie down your future employer.

Through company presentations, cases, individual interviews, trainings, breakfast sessions, lunch sessions, diner and drinks you will get a good overall picture of what is going on behind the normally pretty closed doors of those companies.

The Amsterdamse Carrière Dagen take place at the World Trade Center. Visit www.acd.nu for more information.

As you may have noticed, November was transformed into the Sefa Career Month. Throughout this week students could participate in multiple events among which marketing, accountancy and finance. Apart from that the International Career Event, an event exclusively for international students took place for the first time. All events where a huge success. Over a hundred students participated in the International Career Event.

For my fellow board members and me, leading one of the largest study associations in the Netherlands has thus far been an incredible experience.

To read more about an average day of one of the board members, see the article about our commercial officer on the next page.

Being the board of Sefa, we always have to keep in mind the long run. Although it feels strange to look for successors when there are so many things left we want to realize this year, it is part of the job. With the second semester, the search for a new board has also started and there are many big challenges awaiting them.

Study delay? Instead of a random job with limited freedom and responsibility, go for a board year. Almost done with your masters but want to gain more relevant working experience? Go for a board year. Or maybe you’re already convinced when I tell you a board year offers you the freedom of setting out your own ideas into strategies and events. You will increase your managerial skills and really learn how to work in a strongly connected team. And don’t even get me started on the specific skills you will learn in each board function. Companies will confirm it: no excuses are needed – just go for a board year.

If you feel ready for the ultimate step in your student life, you can apply through board@sefa.nl.

For now, make sure you don’t miss the development opportunities Sefa offers to you. We hope to see you at one of our events! Want to become active? We are recruiting again in June.

With kind regards, On behalf of the 92nd Sefa board, Merel van Geel Chairman Sefa board 2013-2014

-------------------------------------------------------------------------------------------------------------------------------rostraeconomIca 23 --------------------------------------------------------------------------------------------------------------------------------

seFa actIVItIes

1 november - amsterdam marketing challenge 2 December - sefa alumni event 3 December - room for Discussion: nout Wellink 4 January - sefa grand Ball

1

2

3

4

-------------------------------------------------------------------------------------------------------------------------------24 rostraeconomica --------------------------------------------------------------------------------------------------------------------------------

Go www to learn .sefa.nl to mo the a re about vail posit able ions!

A day in the life of the commercial officer My name is Thijs Algra. As the commercial officer, I am responsible for the commercial relations of Sefa.

What does this mean in practice?

Being responsible for the commercial relations of Sefa means that I am in contact with over 100 companies every day. During visits to these companies, I try to initiate a partnership for either one of our events or for promotional goals.

In practice, this means that many hours are spend in one of the skyscrapers at Amsterdam-Zuid/ WTC. As commercial officer, I am not only focusing on our existing partners, but I am also continuously looking for new partners. Besides this, I am responsible for the

acquisition process within our committees and supervision of the Commercial Team. On this page, see what an average day of my board year looks like.

9.00 – 11.00 Visit to a large multinational for main sponsorship 11.00 – 12.00 Meeting with the treasurer to discuss revenues 12.00 – 13.00 Lunch 13.00 – 15.00 Meeting with the Amsterdamse Carrière Dagen committee 15.00 – 17.00 Visit to a new company to start cooperation

17.00 – 19.00 Updating the Internship & Vacancy database 19.00 – 21.00 Dinner with my colleagues from the Big Five study associations In general, a board year gives you the chance to develop yourself resulting in a perfect position when entering the job market. Learning how to work efficient in a team, finding new solutions for upcoming challenges and expanding your professional network definitely will get you ahead of fellow students in finding your dream job! The board consists of seven positions, all of which are very challenging in their own manner.

CAN YOU MANAGE

sefa

Application Deadline April 13

th

For more information on a board year at Sefa, go to www.sefa.nl/board (Fluency in Dutch is required)

65 events 4500 members 200 active members 250 company contacts

-------------------------------------------------------------------------------------------------------------------------------26 rostraeconomIca --------------------------------------------------------------------------------------------------------------------------------

change oF PoWer

-------------------------------------------------------------------------------------------------------------------------------rostraeconomIca 27 -------------------------------------------------------------------------------------------------------------------------------text Dovile Venskutonyte -------------------------image rene mensen

Dovile Venskutonyte is a Bachelor student of economics.

today it is still very important for a country to have a strong military or an ally with one. however, there has never been a point in history when armed conflict has been less likely in the developed world or when physical force has been less important. Is this a growing trend and will we soon come to see military strategies replaced by economic ones?

-------------------------------------------------------------------------------------------------------------------------------28 rostraeconomica --------------------------------------------------------------------------------------------------------------------------------

The United States of America has by far the most powerful armed forces in the world. Even though its military spending is 6 times larger than that of the second largest Chinese army, America keeps on investing in its armed forces. This is not a surprise because a strong army has always been essential for a country to establish itself as a global power and not only protect its sovereignty but also shape the destinies of other nations. Yet, today, if China would sell its dollar reserves the most powerful country in the world could crumble to its knees. This and other trends beg the question: what factors will decide on who will be world leaders in the future? Will traditional soldiers in camo and armed with guns be replaced by economists in suites, armed with models?

Yesterday’s power Militaries are as old as civilization itself. Through out most of human history the strength of a country has largely depended on the size of its population and the strength of its army. As societies evolved so have their militaries, increasingly strategies rather than pure force became important and later weapons technology took one of the most prominent roles in warfare. This culminated in the invention of the most powerful weapon of all – the nuclear bomb. However, its power is not only in its physical destruction capabilities. Having a nuclear weapon does not only mean that a country is more secure, but it also gives it a privileged status in the geopolitical arena. It gives a voice to nations, which others do not have. Even though the chances of nuclear weapons actually being used are slim, due to the principal on Mutually Assured Destruction (MAD), this small possibility gives countries a large say in global geopolitical discussions. Some say that this is one of the main reasons why the cold war did not become much hotter. Even though there were armed conflicts between the two sides it never turned out to be World War III. It was clear in the cold war era, that armies played a massive role in deciding on who rules the world. During the arms race

the Soviet Union and the United States of America invested enormous resources into becoming militarily stronger than the other side. Today there seams to be only one country in the arms race – USA. Other countries are beginning to understand that it will not be the number of guns or soldiers that will make them global powers.

We are the world Today we live in a much safer world than ever before. At least in the sense that we are much less likely to be attacked by military forces. This is so, simply because countries are much more dependent on each other than ever before.

Several factors have lead to this. Firstly, past military conflicts of great scale such as the two world wars have incentivized the global community to build alliances and institutions, which would not only make nations more interconnected, but also foster discussion before armed operations can take place. Of course this is a great

-------------------------------------------------------------------------------------------------------------------------------rostraeconomica 29 --------------------------------------------------------------------------------------------------------------------------------

development, but it does not mean that we are all equal and friendly. Major powers are still major powers that have great influence which is unfair yet necessary. For example NATO and the European Union make small Eastern European countries a lot safer than before, however this does not mean that there are no more threats to their sovereignty. Secondly, international trade has never been more important for countries. Even if two countries have major disagreements, chances are they still trade. If one of them would invade or attack the other it would suffer great ramifications to its economy. Take for instance Chinas and Japans conflict over the Senkaku islands. These countries have a territorial dispute, but they are two important economies. Even though there is risk of armed conflict, the fact that they are trading partners and dependent on each other makes it far less likely for arms to be taken up. Lastly, countries are extremely integrated and have mutual interests besides trade. Some of the most pressing issues

------------------------------------------Barack Obama

We must begin by acknowledging the hard truth that we will not eradicate violent conflict in our lifetimes. There will be times when nations – acting individually or in concert – will find the use of force not only necessary but morally justified

-------------------------------------------------------------------------------------------------------------------------------30 rostraeconomica -------------------------------------------------------------------------------------------------------------------------------China became the world's largest trading nation in 2013, overtaking the US in what Beijing described as “a landmark milestone” for the country.

------------------------------------------Herbert Hoover

Once upon a time my political opponents honored me as possessing the fabulous intellectual and economic power by which I created a worldwide depression all by myself

of today are very global. These include the environment, terrorism, financial stability, migration, population control and many more. In the past America’s enemies would have rejoiced at its struggle in Afghanistan, however today they are far too interested in stopping the threat of terrorism and the spread of drugs to have a one-sided approach to the issue. However even though the world is much more intertwined and therefore safer, the hunger for power is alive and well.

Money talks The fact that armed conflict is far less likely and therefore strong militaries are less relevant has given countries the opportunity to concentrate on their economic growth more than ever before. As the global population grows and resources become even scarcer countries such as China have realized that economic power will be what really matters in the future. For example while the West is still flooding the African continent with aid, the benefits of which are strongly arguable, China has enormous investment projects into the region. It builds infrastructure and business in exchange for various benefits such as rights to Africa’s minerals and in some cases oil. This is a very symbiotic

relationship, however it does mean that the China is likely to become much more powerful than the West in the future. This country has been carrying out a very sensible policy. It hasn’t been involved in any major political conflicts nor has it become nearly as strong a military power as the US, but instead it put all its energy into business. Now it is a huge power because of its large economy and because of the expectation that it will grow even further. In the past countries feared bombs being dropped on their soil and responded to military threats, now they fear that China will withhold investment, close up trade or disrupt markets using its vast dollar reserves.

China is probably the best example of a country, which seeks power though economic means, but the same is happening in many other parts in the world. Rapidly developing countries are also concentrating on business and leaving the military behind. Even India and Pakistan which have some serious security concerns with regard to each other, put most of their strength into building economic foundations.

A shift Of course in order to have a strong military you need a strong economy. But until now military power has always been the end goal. Strong economies provide strong militaries, but in the end power lies with the army. Armies were the necessary protectors of people and their economic wellbeing, however we are finally moving away from this idea. The trend is that economic power will be the most important of powers a country can have and it will decide on who is going to be running the shots in the not too distant future. Who will that be? Europe seams to understand it, but also relies strongly on soft political power and has many economic struggles. The US however is a different story. Listening to their political leaders it seems that there is going to be a change of policy, but their military is ever growing. Will this shift in power dynamics mean the end to western dominance? Only time will tell.

-------------------------------------------------------------------------------------------------------------------------------Fsr page rostraeconomIca 31 --------------------------------------------------------------------------------------------------------------------------------

Please senD Us yoUr comPlaInt!

o

ne day every student at the faculty faces a problem related to his or her education. The dimensions of these problems can vary from not receiving your grade and feedback on time to resits being scheduled at the same moment, we take them all into consideration. When that day comes for you, what do you do? Do you just start running around with your hands in the air? Do you start moaning to your friends, who will then walk away soon?

Or do you want to do something about it? Our faculty is not perfect and that is not a surprise to anyone, but what is a surprise for most of you, is the fact that there is a group of people, who listen to the problems you are facing and will try to help you solve them. This group of people are eight students studying at your own faculty, facing the same sort of problems and who know what you are talking about.

This group is the Faculty Student Council.

Usually the council has multiple projects to work on at the same time. In the first semester we have been working on several different complaints you had sent us. Among many things, these complaints were about the problem of multiple resits on one day and about one particular master track. We work together with the people responsible in the faculty, such as the board and education directors, trying to solve every issue. So if you have a problem, complaint or suggestion, send us an email at fsr.feb@studentenraad.nl and we will work on it.

Apart from your complaints we have been working on a pilot for a new course evaluation method. We have investigated another way of evaluating the courses you are following, in addition to the current evaluation system of the questionnaires. The idea was to let students and professors meet twice per block to discuss the course and potential improvements face-to-face. The outcome of the pilot is unknown at the moment as we are still evaluating it.

Moreover we are trying to co-organize Excel courses as a pilot to give students the opportunity to obtain practical skills and better prepare for their future career.

Furthermore, we have been working together with the educational directors on re-evaluating the bachelor of Economics and Business. Together we are trying to find

ways on how to improve the quality of education at the FEB, encourage participation in exchange programs and incorporate them into the bachelor degree more conveniently.

Also, together with our colleagues in the student councils of other faculties in the UvA we are monitoring the renovation of Roeterseiland to ensure that both the procedure and the results are in the students’ interest.

And to conclude with, we are also organizing various activities in order stay in touch with the students and to stay up-to-date on what is happening on the faculty floor.

The Think Tank is an example of one of these activities and we are organizing one of them on the 6th of February.

The subjects will be: the quality of lectures, teaching methods, the honours program and the applicability of the bachelor degree. Everyone is very welcome to join and talk about improving education with respect to these subjects.

Stay up-to-date on this and other activities by liking our Facebook page.

The eight individual members of the council are chosen every year for one academic year. This May elections for the student council of 2014-2015 will take place. If you have ideas on education related or any other activities in our faculty and you are looking for an extra-curricular activity for next year, think about applying for the FSR. But don’t take too long because the deadlines to join one of the two parties: List Sefa or Party Mei, are coming up very soon!

You can always contact us via fsr.feb@studentenraad.nl or come by at the FSR room. Please note that we have moved temporarily to room E 3.23.

And don’t forget: Please send us your complaint!

Fsr CoNtaCt INFo Website: www.studentenraad.nl/feb e-mail: fsr.feb@studentenraad.nl Facebook: www.facebook.com/Uvacouncil tel.: 020 - 525 4384

-------------------------------------------------------------------------------------------------------------------------------rostraeconomica 33 -------------------------------------------------------------------------------------------------------------------------------text Poya Kabiri -------------------------image Yvonne Roos

Poya Kabiri is a Masters student in Business.

Bitcoins, the Promise of a Decentralized Currency?

The price explosion of Bitcoins generated curiosity for this new and complex currency, which has been correspondingly increasing. Few are acquainted with the design of this potentially revolutionizing currency and skepticism could be a healthy approach. But what are the issues at hand and why are Bitcoins necessary?

The Digital Currency Bitcoin is a peer-to-peer currency created in 2009 by an unknown group or individual known as Satoshi Nakamoto. The fundamental idea is that transactions can be made without a middleman, such as a bank, but merely as a transaction between two different accounts that can be set up for free. Bitcoin is a digital currency without any strings attached to a central authority and is thus completely decentralized from private or governmental pressure. Instead, a fixed algorithm controls the supply of the currency where merely 21 million bitcoins will ever be created. Bitcoin is acquired either by a purchase of the currency at some of the “Bitcoin exchanges” or through the process of “mining”. The mining process is one of the most essential features of the Bitcoin construct. It is simply designed to validate all transaction of Bitcoins and thereby build a secure proof of all transactions. It is similar to a typical ledger. The process constructs a chain of all transactions, also known as a block chain, which is basically a record that shows who is in control of a specific Bitcoin and where it was transferred from. The miners make it impossible to “double-spend” a Bitcoin, which sounds like an obvious

-------------------------------------------------------------------------------------------------------------------------------34 rostraeconomIca -------------------------------------------------------------------------------------------------------------------------------PaUl krUgman:

so let’s talk Both aBoUt Whether BItcoIn Is a BUBBle anD Whether It’s a gooD thIng – In Part to make sUre that We Don’t conFUse these QUestIons WIth each other

feature, but proved to be a difficult challenge to overcome in previous efforts to create digital currencies. Just like music files are transferred peer-to-peer between people and widely distributed it is imperative that the Bitcoin cannot be copied and redistributed. The mining helps to avoid this and is part of the reason as to why Bitcoin is referred to as a digital currency - the owner has complete control and also loses permanent control when a transaction has been made.

The actual process of mining demands computer power to solve complex math puzzles that encrypt and enhance the block chain, and in return the miner is rewarded Bitcoins.

Now, one might ask where the value of Bitcoins derives from. It stems strictly from the speculative value, which is implied by demand, just like any other product in a supply and demand market. There is no intrinsic value of the Bitcoin, but, on the other hand, everything physical is bestowed value based on trust and faith in either a central bank, in the case of fiat currency, or the usefulness of its physical properties, such as oil or gold.

A Threat to Fiat Currencies?

The faith in Bitcoin has evidently surged as the value of one unit has skyrocketed from around $13 in early January this year to a current value of around $650. As the price has rushed dramatically media has also caught up with the trend and reported incredible stories on the increasing amount of Bitcoin millionaires, Bitcoin accepting businesses and the use of it as an anonymous currency to purchase illegal goods and services online. This has subsequently brought the attention of governments that has so far given mixed responses. China, one of the largest users of Bitcoin, recently announced restrictions for the country’s banks to handle Bitcoin transaction as third-party providers. Similar official stands have been seen in Norway, which does not recognize Bitcoin as a legal tender, while the US has taken an awaiting stance and recognized Bitcoin as a “legal means of exchange” for the time being, but remains skeptical towards the ability to use the currency for illegal purposes.

Germany, however, is the first country to accept it as a legal tender but only as “private money” and not as a foreigncurrency. The overall tip toeing around Bitcoins among governments, to a large degree stems from the non-existing regulation and the anonymity factor. Politicians are reluctant to see a currency that cannot be either tracked or controlled. Since a fixed algorithm, limited to 21 million coins, controls the supply of Bitcoins there is no external control or power that can increase or decrease the amount of money in circulation. This lack of control is considered to be one of the greatest strengths of Bitcoins due to its subsequent ability to avoid political interference and inflicted inflation. Further on, as the currency is voluntary to use and absent of any type of regulations, current law cannot protect regular consumer refund and other rights.

This has additionally been a major cause for concern among regulators together with the unlawful usage for criminal activity. It is a great hurdle to overcome forthcoming.

Nevertheless, it is still far to soon to detect any kind of long-term positions from governments on how this new currency should be evaluated and dealt with. It is still uncertain if Bitcoins should be perceived as an asset or liability. However, the number of Bitcoin enthusiasts is growing and they are collectively pushing forward a solution that makes financial transactions more accessible for the poor, which is also at a lower cost and instantaneous. The complex nature of Bitcoins and the inability to categorize it analogous to an existing instrument or product might deter the masses and breed further skepticism. And as far as we know, we cannot tell for certain if Bitcoin offers a glimpse into the future. A future where money, literally, is only numbers on a screen and completely detached from any type of physical object or government control. Or is it simply a craze or a bubble that is gaining momentum in search for a financial instrument as far away from governmental influence and supervision as possible. Perhaps it is the answer for a new generation yearning for more discretion, privacy and autonomy.

-------------------------------------------------------------------------------------------------------------------------------column rostraeconomIca 35 --------------------------------------------------------------------------------------------------------------------------------

Arthur Schram

arthur Jan Hendrikus Christoffel schram is a professor of experimental economics at the amsterdam school of economics as well as the director of creeD. he launched his career by graduating cum laude with a masters in econometrics from the University of tilburg and later achieving a Ph.D. degree (cum laude) at the University of amsterdam.

PolItIcal economIcs

a

bout ten years ago, a student entering a course called Political Economics could find herself being taught (I) the principles of Marxist economics, (II) a macroeconomic analysis of the role and effects of government in the economy or (III) an analysis of government, voter and party behavior. Though our courses have evolved, research in Political Economics generally still means working in one of these categories.

Because I consider myself to belong to category III, I will talk of I and II. Some of this research seems more interested in the politics part than in economics. This has certainly been the case for the first category. Though the days seem to have passed where some considered Economic Marxism as a normative prescription of how a government ought to organize an economy, I still suspect some of my colleagues of secretly maintaining a shrine dedicated to Marx. More disturbing is the political bias in the second category. This constitutes a large group of researchers, some of whom seem to use economic science as a means to pursue their political goals, more than to analyze the economy. This need not be done consciously. For example, if one honestly believes that market mechanisms are beneficial in health care, then it is relatively easy to find simple arguments in the economics literature that support less government

intervention. The funny thing is, that one can just as easily find arguments for more government intervention, but many economists stop looking once they have found arguments in line with their prior beliefs.

---------------------------I stIll sUsPect some oF my colleagUes oF secretly maIntaInIng a shrIne DeDIcateD to marx This second group of researchers dominates the popular press. For example, on October 18, 2013 the Volkskrant published the top 10 of most modest and the top 10 of most vain Dutch economists. This was based on a publication by the web site “Follow the Money” (www.ftm.nl) which used self reported expertise by economists in various subdisciplines (of course, this excludes the large group of economists who do not care to participate in this kind of nonsense).

An interesting thing about the lists –aside from the fact that the FEB employs the most vain economist in the Netherlands – is the kind of economist that is on them. First of all, of the 20 scholars on the two lists, there are only four whose research record is such that a serious research institute

would consider hiring them (happily, three of these already work at the FEB).

Who, then, are these economists that dominate the media? In a conservative estimate, I would categorize at least 13 of the 20 as belonging to the second category of political economists. They are interested in the role government has and its effects on the economy.

There is nothing wrong with this, except that they typically also belong to the group that I suspect of pursuing private political objectives. So what we end up with is a group of political economists that dominate the media, by and large do not belong to the best economists in the Netherlands and pursue their own political goals. It is too bad that the media tend not to see this. Even worse, these economists are seen as representative of economic science in the Netherlands.

They are not. There is a large group of excellent economists in the Netherlands who are not interested in giving opinions any time the press calls, simply because they realize that science does not always provide immediate answers.

Their research is motivated by interesting research questions and is aimed at better understanding the (political) economy. Amongst them are the best political economists in the Netherlands, but you will rarely see them in the news.

-------------------------------------------------------------------------------------------------------------------------------36 rostraeconomica -------------------------------------------------------------------------------------------------------------------------------text Jantine Derksen -------------------------images Tobias Abel, Bryan Kennedy

Jantine Derksen MSc Student Entrepreneurship & Innovation.

In distrust we trust After Edward Snowden had revealed the existence of the worldwide extensive Internet and phone surveillance by a US intelligence agency, the NSA, trust in governments and their officials has become a hot topic.

Many people are in favour of the principles of “open government� and advocate heightened levels of transparency where data is no longer secret but publicly available. On the other hand, there is a growing concern about personal privacy. This seems contradictory, as people want other people to be open and transparent but want to remain anonymous themselves.

-------------------------------------------------------------------------------------------------------------------------------rostraeconomica 37 --------------------------------------------------------------------------------------------------------------------------------

The demand for openness of governments is not surprising in the light of continuing revelations of corrupt government officials giving subsidies to ambiguously chosen groups and corporations, often due to ever-stronger lobbies. In large bureaucratic states citizens lack the ability to keep track of their own governments. In the aftermath of the global financial crisis there has been a collapse of trust even in countries that are classified as high-trust states. For example, In the United States a record has been reached with over 81 per cent of Americans not trusting

their government. On the other side of the Atlantic in March of 2011 a survey of five European countries found that 89 per cent of people did not trust national politicians to act with honesty and integrity. These numbers seem to indicate that political systems in western liberal democracies are loosing credibility at an alarming rate.

This is cause for great concern in itself, but also recent research has shown that growing distrust in the government can have a negative effect on economic prosperity.

-------------------------------------------------------------------------------------------------------------------------------38 rostraeconomica -------------------------------------------------------------------------------------------------------------------------------In the 2012 Values survey,

69%

of Americans said the federal government should only run things that cannot be done at the local level.

------------------------------------------Friedriech Nietzsche I’m not upset that you lied to me, I’m upset that from now on I can’t believe you

Lack of pressures In his book Liars and Outliers, Bruce Schneider explains that a variety of societal pressures such as moral pressure, institutional pressure, reputational pressure and various security systems, are crucial for keeping order and stability within a society. These societal pressures in varying degrees over time generate trust within groups. The lack of these pressures results in public distrust, which is a catalyst for crises. In the financial crisis of 2008, people lost trust in the banking system after unethical behavior became apparent and banks seemed to be immune for institutional pressure.

As financial institutions are built on trust – based on promises backed only by words and figures, written down – they will fall down immediately when they loose their trustworthiness. However, a lot of banks that failed to retain the people’s trust still exist. Why? There is no good alternative yet. Banks do not have real competitors because ironically, the market economy has become dependent on banks and the banking system. Off course banks still compete against each other and try to create a better image, but like large bureaucratic states the financial system lacks the ability of people to keep track of it.

More regulation?

One can suggest more regulation will increase transparency and decrease corruption, however a recent study showed this is not the case. Philippe Aghion, Yann Algan, Pierre Cahuc, and Andrei Shleife created a model, based on data from over 50 countries in the past decades, which explains

the correlation between distrust and the public demand for regulation. Their research showed that high-trust societies exhibit low levels of government regulation, and low trust societies exhibit high levels of government regulation.

People in low trust societies do not trust business, since doing business is not about honesty. To control business, they are in favour of more government regulation; even knowing that such regulation leads to corruption. People in low-trust societies prefer a bad government over bad businesses. However, since growing regulations favour corruption this demand for more regulations is ineffective.

Schneider agrees that there can be asked for too much security. He points at the fact that constantly expanding security systems and policies will result in rapidly diminishing returns, and maybe even worse: “too much security system pressure lands you in a police state”.

Violating privacy This brings us back to the extensive Internet and phone surveillance by the NSA. President Barack Obama mentioned: ‘I think it’s important to recognize that you can’t have 100 per cent security and also then have 100 per cent privacy and zero inconvenience,’ However, governments in general argue that preventing terrorism always over-rides an individual’s privacy. However, how can governments expect their citizens to trust them if they themselves do not trust their own citizens? Violating privacy laws will only harm a government’s credibility, which not only threatens the economy but society as a whole.

Crowdfunded assassinations Frustrated by the revelations of the mass surveillance by the NSA, a man named after samurai Kuwabatake Sanjuro decided in July 2013 to create Assassination Market Anonymous, safe, secure, crowdfunded assassinations, motivated by a deep-rooted hate against oppressive regimes.

Based on a manifesto written in 1995 by engineer and

-------------------------------------------------------------------------------------------------------------------------------rostraeconomica 39 --------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------Niccolo Machiavelli When you disarm the people, you commence to offend them and show that you distrust them either through cowardice or lack of confidence, and both of these opinions generate hatred

anarcho-libertarian Jim Bell, Assassination Market lets anyone anonymously contribute an amount towards a bounty on the head of any government official. When someone on the hit list is killed, any person who can prove he or she was responsible receives the collected funds. All the donations are made through leading crypto currency Bitcoin. Six persons until so far are submitted, with Ben Shalom Bernanke, an US economist and previous head of the Federal Reserve, having the highest price on his head: more than 124 bitcoins. In an interview through encrypted email correspondence with Andy Greenberg from Forbes, Sanjuro explains himself: “I believe it will change the world for the better ‘…’ Thanks to this system, a world without wars, dragnet panopticon-style surveillance, nuclear weapons, armies, repression, money manipulation,

and limits to trade is firmly within our grasp for but a few bitcoins per person. I also believe that as soon as a few politicians gets offed and they realize they’ve lost the war on privacy, the killings can stop and we can transition to a phase of peace, privacy and laissez-faire.” Assassination Market can be found on the ‘deep web’. The deep web is the part of the Internet that is inaccessible to conventional search engines and requires connecting to an anonymous network called TOR that was originally developed by the U.S. Navy.

Restoring trust The example of the Assassination Market shows the ongoing paradox of privacy versus transparency. On the one hand governments try to act in secret, hiding their activities from the public eye, while on the other hand they violate privacy laws collecting private data. However, this paradox can also be found concerning individuals. Defending on the one hand their own privacy, on the other hand people demand more transparency from governments and businesses. In the case of the NSA and Assassination Market violating privacy or even worse, encouraging murder while remaining anonymous does not seem the solution. Governments, businesses and individuals want to keep their privacy, but as long as there is no trust between these parties this only results in more control and activities violating the law of human dignity and liberty. Trust must be restored, but this can only be done if people, businesses and governments become trustworthy. It seems however that at the moment the only thing we trust is our own distrust.

Start your tomorrow today De Amsterdamse Carrière Dagen (ACD) 2014 is coming up soon. The event itself is the crown jewel of the study associations Sefa and Aureus, and is also one of the largest career events in The Netherlands.

To carry out this mission, a great degree of persistence and dedication is needed from every individual member of the committee, and also a great deal of learning, socializing and fun. Keep on reading to find out more about the unique structure of the organizing committee and to see what lies at the root of this special event.

Poker It was the end of January 2013 and I was playing poker with a friend. On one of these days, I was already expecting a phone call with the outcome of the ACD interview that I had earlier that week. My hopes were high. In the past few years I had fulfilled various positions in committees within Sefa and always looked up to the ACD as a personal goal. I found it very special, that fulltime students managed to build up such a large event alongside their studies. In December 2012, I figured the next edition would be the last chance for me to take part of it.

Because later on during my master I would lack the time to fulfil the position I desired, namely: chairman.

The call ‘Hi Emil, I am calling about your application for the ACD 2014’ (Yes, the suspense is killing me, come on, what is the result?). ‘I would like to congratulate you! We have decided that you will be the chairman. We would like you to say discrete abo..’. I can hardly understand the rest of the message, but that did not matter to me at that moment. After I called my family and a couple of friends (with the remark that they had to be discrete about it), the meaning of it started to sink in. Being the chairman means carrying full responsibility for an event with 1600 subscriptions, around 60 companies and to continue the heritage which has proved its success year over year, for the last 18 years.

Starting with the committee The following week, the whole committee gathered to meet each other and to get explanations about the upcoming period, and give the current committee a helping hand.

Because the month of February is the busiest month for the committee,

they really used our help. During this month there is a lot of promotion activities happening both in the university and online. For example posters are hung around the universities, short information sessions are held at as many lectures as possible, goodie bags are assembled, all the materials are transported to the WTC, the final appointments with recruiters are being made, all resumes are anonymized, and much more. So, during February, next year’s committee is of high importance and becomes part of the ACD immediately. In this way, we supported the ex-committee with these activities. It is a period in which you will all get to know each other quiet well, as you spend a lot of time with each other and share a common goal.

When the promotion period is over, the actual event takes place. Here, the responsible committee is on site at 7.00 am every morning (luckily, we could come in at 8.30). The first day started off with a motivational speech from Tijmen (the former chairman).

During this speech he emphasized that the event should run smoothly.

In order to achieve this he did not not allow any contradiction during the day and suggested that there would be space for it during the evaluation at night. The former committee stayed at the WTC until 10.00 pm every night, while we left at 7.00 pm. The good thing about the intense process of supporting the ex-committee in the event is that the new committee can directly experience the ACD. That gave our committee the opportunity to realize what does creating the ACD actually means, and how we could improve it even more next year.

Complex decisions After the official transference of the event from the “old” committee to the new one, the true interesting process begins. During the following weeks after that, the structure and context of the ACD becomes clearer. Like The European Parliament, controlled by its member states, moves to Strasbourg for its monthly plenary meeting, the ACD has a similar process of advocacy. Because it is a collaboration of two study associations, certain coordination and cooperation efforts are needed, for example the location of the meetings alter between universities every week, there needs to be at least one coordinator present per association, major decisions are discussed by two

boards and lastly, the committee always consists of an even number of members, fulfilled by an equal number of representatives per association.

Committee tasks Our committee contains eight people.

It consists of a controller (Bart Slieker, Aureus), four acquirers (Hylke Schaaf & Evianne van de Zande from Sefa and Kelly Ammerlaan & Monique van Dalen from Aureus), two marketing members (Sander Montanus from Sefa and Arina Torop from Aureus) and a chairman (me).

All perform different tasks that support and enrich each other’s mission. The acquirers approach hundreds of companies from June until October (literally, hundreds!).

Once a company announces participation, it is important that they cater to all the needs of every company (an aspect that the ACD does really well compared to other career events), receive their information on time and then forward it to Arina and Sander. Then they ensure that this information is all being properly incorporated in the profile book and on the website.

Before that, they were busy already designing all the promotional materials, testing of the website, coming up with a promotional video and much more. Throughout the entire process, Bart ensures that all

contracts are written, he makes sure budgets are not exceeded and he gives a weekly update on the current financial position. Although all parts of the committee have different tasks, cooperation is crucial for most decisions made in order to shape the event in a professional and efficient manner.

Right now, all the companies are known and Arina and Sander are really busy processing all the incoming information. For one of the final steps before the active promotional month of February, I compiled the schedule of the whole event week together with Bart, so that it’s known which company will do a presentation, case, individual meeting, workshop, breakfast, lunch, High-Tea or dinner and where. Now, the ACD 2014 is starting to be visible on the horizon more and more every week. The coming months we will do everything to ensure the 19th edition of the ACD will run as smoothly as the past editions, and will become a great success that will represent the ACD heritage.

---------------------------I would like to see you all from 3 until 6 march at the ACD!

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MSc Entrepreneurship

UvA honorary doctorates for economist Alvin Roth and legal scholar James Crawford During the UvA Dies natalis celebration on Wednesday, the 8th of January 2014 the University of Amsterdam awarded honorary doctorates to economist and nobel Prize winner Alvin Roth and legal scholar James Crawford.

On the 10th December the NVAO (Accreditation Organisation of the Netherlands and Flanders) announced that it will approve accreditation for the MSc of Entrepreneurship, a new joint master’s programme of the University of Amsterdam and VU University Amsterdam. Practical preparations are already underway, including recruitment, enrolment and communication. This is the first jointmaster for the Amsterdam-based universities and also the first academic master’s programme in Entrepreneurship.

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