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That undermines efficient capital allocation and allows excesses to fester.Many officials are aware of this, but conflicts of interest get in the way of resolving the problem.
This has the potential to invigorate Japan's financial sector by encouraging more efficient capital allocation and by exposing management of the country's vast pool of under-utilised postal savings to greater market forces.
The combination of state-led investment decisions in the emerging world and a parochial focus on price stability in the rich world produced serial asset bubbles rather than efficient capital allocation.
Ketan Patel, a fund manager at EdenTree Investment Management, said: "The decision not to pay up for Pfizer's consumer assets will have led Emma Walmsley to remove uncertainty by bringing all the consumer revenues in-house and assisting toward efficient capital allocation.
Gramm's focus on "efficient capital allocation" and his silence regarding the overall level of capital investment suggest the "static analysis" mentality that is the GOP's deadliest sin.
That outperformance stems from a deliberate decision by the company to prioritize efficient capital allocation and transform itself from a growth-focused company to an efficient, cash generating machine.
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Short-termism can result in a range of corporate and financial games that may enrich management at the expense of market integrity and efficient investor capital allocation.
This can support efficient and equitable capital allocation domestically and effective financial coordination with the rest of the world.
"In aggregate, it really contributes a lot to the efficiency of capital allocation, and capital allocation is very important," he said.
Fig. 3 Comparative analysis of the efficiency on capital allocation.
"We are a more efficient way of consumer lending and capital allocation," says Mr Laplanche.
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