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I think people don't understand compound interest because typically no one ever explains it to them and the level of financial literacy in the US is very low.

James Surowiecki

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James Surowiecki
Age: 57
Born: 1967
Born: April 30
Journalist
Writer
Meriden
Connecticut
James Michael Surowiecki
Ever
Typically
Think
Literacy
Thinking
Lows
People
Financial
Level
Levels
Compound
Interest
Explains
Understand
Compounds

More quotes by James Surowiecki

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In a world where companies increasingly know about their business in real time, it makes no sense that public reporting mostly follows the old quarterly schedule. Companies sit on vital information until reporting day, at which point the market goes crazy.
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Wall Street has come a long way from the insider-dominated world that was blown apart by the Great Depression.
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Standards wars involve lots of variables, and understanding them often seems more an art than a science. They generally involve just two big players, and end in a winner-take-all situation.
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Developing countries often have hypertrophied bureaucracies, requiring businesses to deal with enormous amounts of red tape.
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The fundamental problem with banks is what it's always been: they're in the business of banking, and banking, whether plain vanilla or incredibly sophisticated, is inherently risky.
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If army ants are wandering around and they get lost, they start to follow a simple rule:Just do what the ant in front of you does. The ants eventually end up in a circle. There's this famous example of one that was 1,200 feet long and lasted for two days the ants just kept marching around and around in a circle until they died.
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The typical American corporation is a shareholders' republic the same way that China is a peoples' republic.
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Capitalism, after all, is no fun when real failure becomes a possibility.
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Campaigns fail if they waste resources courting voters who are unpersuadable or already persuaded. Their most urgent task is to find and persuade the few voters who are genuinely undecided and the larger number who are favorably disposed but need a push to actually vote.
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Of course, looking tough on inflation is part of any central banker's job description: if investors believe that inflation is going to get out of control, you end up with higher interest rates and capital flight, and a vicious circle quickly ensues.
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Meeting external deadlines is much harder than meeting internal ones. On the other hand, internal deadlines sometimes don't feel real, and are therefore easy to evade.
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Nike used to be known as Blue Ribbon Sports. What's now Sara Lee used to be Consolidated Foods. And Exxon was once Standard Oil Company of New Jersey. These were name changes that worked. But for all the ones that do, there are 10 or 20 that don't.
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In the struggle between capital and labor, more often than not capital has won, because the real source of value for most companies has historically been the hard assets that they owned and controlled.
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What an economy really wants, after all, is not more investment per se but better investment. It wants capital to flow to companies that will create value - not in the form of a rising stock price but in the form of more goods for less cost, more jobs, and rising wages - by enhancing productivity.
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One key to successful group decisions is getting people to pay much less attention to what everyone else is saying.
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The financial crisis of 2008 was not caused by investment banks betting against the housing market in 2007. It was caused by the fact that too few investors - including all of the big investment banks - bet too heavily on the housing market in the years before 2007.
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From a social point of view, it's beneficial that homeownership encourages commitment to a given town or city. But, from an economic point of view, it's good for people to be able to leave places where there's less work and move to places where there's more.
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Downsizing itself is an inevitable part of any creatively destructive economy.
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The smartest groups, then, are made up of people with diverse perspectives who are able to stay independent of each other. Independence doesn't imply rationality or impartiality, though. You can be biased and irrational, but as long as you're independent, you won't make the group any dumber.
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All things being equal, letting people make decisions for themselves will produce smarter outcomes, collectively, than relying on government planners.
James Surowiecki