I admire N. Gregory Mankiw’s ten principles of economics because they take into account both economic theories as well as real world observations. As far as my economic management philosophy is concerned, I believe people respond to incentives but I also believe not all people respond to the same incentives in the same manner. Thus, in order to ensure incentives fulfill their purpose, the management should try to understand individual employees or group of employees to understand their value system and needs and develop a flexible incentives plan accordingly. As CFO, I will arrange for employee compensation surveys at regular intervals and design an incentive plan that meets the preferences of most employees.
While I believe markets are usually a good way to organize economic activity, I also believe government can play an important role in improving the functioning of the market. The economic theory may led us believe market on the whole acts in a rational manner and imbalances are quickly eliminated but I don’t think practical evidence supports this idea because market can behave in irrational manner due to groupthink. As a result, I support some government regulations because the actions of the few can endanger the entire economy including the organization I lead. Thus, I will support policy positions not on the basis of self-interest but what’s logical because I believe the long-term benefits would more than outweigh the costs.
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I also believe trade is mostly good though I don’t think the benefits of trade are always evenly distributed. I will outsource some the production as long as costs can be reduced without sacrificing quality but I will also ensure employees whose jobs may be in jeopardy are given the opportunity to acquire new skills and be relocated within the organization. I believe the benefits of loyal and satisfied labor force are not always obvious or quantifiable but the company benefits economically in the long run.
- Mankiw, N. G. (n.d.). Mankiw’s 10 Principles. Retrieved March 10, 2014, from http://www.swlearning.com/
