"Robert Solow"

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pages: 453 words: 117,893

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems by Linda Yueh

"Robert Solow", 3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, Fall of the Berlin Wall, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, Gini coefficient, global supply chain, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low-wage service sector, manufacturing employment, market bubble, means of production, mittelstand, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

., p. 426. 29.  Ibid., p. 427. 30.  North, Institutions, Institutional Change and Economic Performance, p. 140. 12 – Robert Solow: Do We Face a Slow-Growth Future? 1.    Nobelprize.org, 1987, ‘Robert M. Solow – Biographical’, Nobel Media AB 2014; www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1987/solow-bio.html 2.    Barnaby J. Feder, 1987, ‘Man in the News: Robert Merton Solow; Tackling Everyday Economic Problems’, The New York Times, 22 October. 3.    Ibid. 4.    Nobelprize.org, ‘Robert M. Solow – Biographical’. 5.    Robert Solow, 1956, ‘A Contribution to the Theory of Economic Growth’, Quarterly Journal of Economics, 70(1), pp. 65–94; Robert Solow, 1957, ‘Technical Change and the Aggregate Production Function’, Review of Economics and Statistics, 39(3), pp. 312–20. 6.    

Nobelprize.org, 1987, ‘Robert M. Solow – Prize Lecture: Growth Theory and After’, Nobel Media AB 2014; www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1987/solow-lecture.html 15.  Ibid. 16.  Ibid. 17.  Ibid. 18.  Ibid. 19.  Robert Solow, 1989, ‘How Economic Ideas Turn to Mush’, in The Spread of Economic Ideas, eds. David Colander and A. W. Coats, Cambridge: Cambridge University Press, pp. 75–84. 20.  Clement, ‘Interview with Robert Solow’. 21.  Feder, ‘Man in the News’. 22.  Clement, ‘Interview with Robert Solow’. Epilogue: The Future of Globalization 1.    ‘Globalization and Rapid Change Sparked Backlash, Says Obama’, Financial Times, 15 November 2016. 2.    Jon Huang, Samuel Jacoby, Michael Strickland and K. K. Rebecca Lai, 2016, ‘Election 2016: Exit Polls’, The New York Times, 8 November; www.nytimes.com/interactive/2016/11/08/us/politics/election-exit-polls.html 3.    

Physical capital as well as human capital – the skills and education of workers – are central to this model. It’s especially pressing for rich countries, where the working-age population is ageing or even shrinking and having better-skilled workers is even more important. How to raise productivity lies at the heart of whether or not we’re doomed to a stagnant future. What would Robert Solow, whose pioneering work has helped us to understand what generates economic growth, make of the prospect of low productivity and a slow-growth future for major economies? The life and times of Robert Solow Robert Solow was born in 1924 in Brooklyn. The son of Jewish immigrants, his was the first generation of the family to go to college. He attributes his intellectual awakening to the New York City public school system, where a teacher got him interested in nineteenth-century French and Russian novelists.


Tyler Cowen - Stubborn Attachments A Vision for a Society of Free, Prosperous, and Responsible Individuals by Meg Patrick

"Robert Solow", agricultural Revolution, Berlin Wall, conceptual framework, Fall of the Berlin Wall, framing effect, hedonic treadmill, impulse control, Peter Singer: altruism, rent-seeking, The Wealth of Nations by Adam Smith, total factor productivity, trade route, transaction costs, trickle-down economics, Tyler Cowen: Great Stagnation, zero-sum game

Singer, Peter. Practical Ethics. Cambridge: Cambridge University Press, 1993. Slote, Michael. 1992. From Morality to Virtue. Oxford: Oxford University Press. 129 Smart, J.C.C. and Williams, Bernard. Utilitarianism: For and Against. Cambridge: Cambridge University Press, 1973. Solow, Robert M. 1956. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics 70(1): 65-94. Solow, Robert M. 1957. “Technical Change and the Aggregate Production Function.” The Review of Economics and Statistics 39(3): 312-320. Solow, Robert, 1974. “The Economics of Resources or the Resources of Economics,” American Economic Review 64, 1-14. Stanczyk, Lucas. “Productive Justice.” Philosophy and Public Affairs, 40, 2, 2012. Stevenson, Betsey, and Justin Wolfers. 2008. “Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox.”

It’s very important whether a specified policy choice will affect the overall growth rate or not. The details of this distinction are complicated, however, because economic models provide differing accounts of which changes alter growth rates, as opposed to bringing one-off changes or improvements. The most prominent economic approach to growth, the Solow model, is named after MIT economist and Nobel Laureate Robert Solow, who laid out the basics of the model in the 1950s. 74 The Solow model, in its most basic form, postulates a stripped-down economy-wide production function based on constant returns to scale. National output is the result of capital inputs, labor inputs, and technological progress, which renders both capital and labor more effective.49 In this model the primary way to increase ongoing growth is to induce a higher rate of technological innovation.

Hansson, and Wolfgang Stroebe (eds.) Handbook of bereavement research: Conseqences, Coping, and Care (263-283). Washington, DC: American Psychological Association. Argyle, M. (1999). Causes and correlates of happiness. In D. Kahneman, E. Diener, & N. Schwarz (Eds.). Well-being: The foundations of hedonic psychology. New York; Russell Sage Foundation Arrow, Kenneth J., Edward Leamer, Howard Schuman, and Robert Solow. 1994. “Comments of Proposed NOAA Scope Test,” Appendix D of Comments of Proposed NOAA/DOI Regulations on Natural Resource Damage Assessment, U.S. Environmental Protection Agency. 112 Arrow, Kenneth J. and Maureen L. Cropper, Christian Gollier, Ben Groom, Geoffrey M. Heal, Richard G. Newell, William D. Nordhaus, Robert S. Pindyck, William A. Pizer, Paul R. Portney, Thomas Sterner, Richard S.J.


pages: 374 words: 113,126

The Great Economists: How Their Ideas Can Help Us Today by Linda Yueh

"Robert Solow", 3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, Fall of the Berlin Wall, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, Gini coefficient, global supply chain, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, manufacturing employment, market bubble, means of production, mittelstand, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

., p. 426. 29. Ibid., p. 427. 30. North, Institutions, Institutional Change and Economic Performance, p. 140. Chapter 12 – Robert Solow: Do We Face a Slow-Growth Future? 1. Nobelprize.org, 1987, ‘Robert M. Solow – Biographical’, Nobel Media AB 2014; www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1987/solow-bio.html 2. Barnaby J. Feder, 1987, ‘Man in the News: Robert Merton Solow; Tackling Everyday Economic Problems’, The New York Times, 22 October. 3. Ibid. 4. Nobelprize.org, ‘Robert M. Solow – Biographical’. 5. Robert Solow, 1956, ‘A Contribution to the Theory of Economic Growth’, Quarterly Journal of Economics, 70(1), pp. 65–94; Robert Solow, 1957, ‘Technical Change and the Aggregate Production Function’, Review of Economics and Statistics, 39(3), pp. 312–20. 6. Paul A.

Kristian Behrens, Giordano Mion, Yasusada Murata and Jens Südekum, 2014, ‘Trade, Wages, and Productivity’, International Economic Review, 55(4), pp. 1305–49. 14. Nobelprize.org, 1987, ‘Robert M. Solow – Prize Lecture: Growth Theory and After’, Nobel Media AB 2014; www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1987/solow-lecture.html 15. Ibid. 16. Ibid. 17. Ibid. 18. Ibid. 19. Robert Solow, 1989, ‘How Economic Ideas Turn to Mush’, in The Spread of Economic Ideas, eds. David Colander and A. W. Coats, Cambridge: Cambridge University Press, pp. 75–84. 20. Clement, ‘Interview with Robert Solow’. 21. Feder, ‘Man in the News’. 22. Clement, ‘Interview with Robert Solow’. Epilogue: The Future of Globalization 1. ‘Globalization and Rapid Change Sparked Backlash, Says Obama’, Financial Times, 15 November 2016. 2. Jon Huang, Samuel Jacoby, Michael Strickland and K. K. Rebecca Lai, 2016, ‘Election 2016: Exit Polls’, The New York Times, 8 November; www.nytimes.com/interactive/2016/11/08/us/politics/election-exit-polls.html 3.

Physical capital as well as human capital – the skills and education of workers – are central to this model. It’s especially pressing for rich countries, where the working-age population is ageing or even shrinking and having better-skilled workers is even more important. How to raise productivity lies at the heart of whether or not we’re doomed to a stagnant future. What would Robert Solow, whose pioneering work has helped us to understand what generates economic growth, make of the prospect of low productivity and a slow-growth future for major economies? The life and times of Robert Solow Robert Solow was born in 1924 in Brooklyn. The son of Jewish immigrants, his was the first generation of the family to go to college. He attributes his intellectual awakening to the New York City public school system, where a teacher got him interested in nineteenth-century French and Russian novelists.


pages: 290 words: 76,216

What's Wrong with Economics? by Robert Skidelsky

"Robert Solow", additive manufacturing, agricultural Revolution, Black Swan, Bretton Woods, business cycle, Cass Sunstein, central bank independence, cognitive bias, conceptual framework, Corn Laws, corporate social responsibility, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, disruptive innovation, Donald Trump, full employment, George Akerlof, George Santayana, global supply chain, global village, Gunnar Myrdal, happiness index / gross national happiness, hindsight bias, Hyman Minsky, income inequality, index fund, inflation targeting, information asymmetry, Internet Archive, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labour market flexibility, loss aversion, Mark Zuckerberg, market clearing, market friction, market fundamentalism, Martin Wolf, means of production, moral hazard, paradox of thrift, Pareto efficiency, Paul Samuelson, Philip Mirowski, precariat, price anchoring, principal–agent problem, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, shareholder value, Silicon Valley, Simon Kuznets, survivorship bias, technoutopianism, The Chicago School, The Market for Lemons, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, transaction costs, transfer pricing, Vilfredo Pareto, Washington Consensus, Wolfgang Streeck, zero-sum game

The Philosophy of Social Science, Boulder: Westview Press. Routh, Guy (1984). Economics: An Alternative Text, London: Macmillan. Samuelson, Paul (1970). Economics (8th ed.), New York: McGraw-Hill. Samuelson, Paul and Solow, Robert M. (1960). ‘Analytical Aspects of Anti-Inflation Policy’, American Economic Review, 50 (2): 177–94. Schelling, Thomas (2006 [1978]). Micromotives and Macrobehavior, New York: W.W. Norton. Skoufias, Emmanuel, Parker, Susan W., Behrman, Jere R. and Pessino, Carola (2001). ‘Conditional Cash Transfers and Their Impact on Child Work and Schooling: Evidence from the PROGRESA Program in Mexico’, Economía, Vol. 2 (1): 45–96. Solow, Robert (1985). ‘Economic History and Economics’, American Economic Review, Vol. 75 (2): 328–31. Chapter 6 Akerlof, George (1970). ‘The Market for Lemons: Quality, Uncertainty, and the Market Mechanism’, Quarterly Journal of Economics, Vol. 84 (3): 488–500.

The role of maths in any social science is to formalise its logic, and to make specific the relationships between different variables. But the wholesale formalisation of economics rests entirely on the premise that the variables of interest can readily be expressed as mathematical quantities. Many behavioural facts such as friendship or love of power do not lend themselves to such treatment. The tight logical relations, therefore, simply exhibit the theoreticians’ prowess in tight logical reasoning. As Robert Solow (b.1924) has pointed out, ‘there is enough for us to do without pretending to a degree of completeness and precision which we cannot deliver’. The functions of analytic economics are ‘to organise incomplete knowledge, see connections that the untrained eye might miss, tell plausible causal stories with the help of a few basic principles, make rough quantitative judgments about consequences of economic policy and other events.

Denison’s use of time-series to estimate relationships of key inputs (labour, capital, education, efficiency) in the growth of output.4 But as we have already argued in Chapter 5, econometrics is vastly oversold as a way of testing theories: in addition to model specification problems, as soon as you get enough observations, too much time has passed to assume conditions are stationary. For example, do high taxes hinder economic growth? The evidence is inconclusive. Much of economics can never be ‘proved’. Robert Solow offers a devastating critique of the identification of economic history with econometrics. Econometrics, he says, is ‘history blind’. The best and brightest in the profession proceed as if economics is the physics of society. There is a single universally valid model. It only needs to be applied. You could drop a modern economist from a time machine . . . at any time, in any place, along with his or her personal computer; he or she could set up in business without even bothering to ask what time and which place.5 In short, much of the modelling we do depends on assuming that people in the past had essentially the same values and motives as we do today.


pages: 159 words: 45,073

GDP: A Brief but Affectionate History by Diane Coyle

"Robert Solow", Asian financial crisis, Berlin Wall, big-box store, Bretton Woods, BRICs, business cycle, clean water, computer age, conceptual framework, crowdsourcing, Diane Coyle, double entry bookkeeping, en.wikipedia.org, endogenous growth, Erik Brynjolfsson, Fall of the Berlin Wall, falling living standards, financial intermediation, global supply chain, happiness index / gross national happiness, hedonic treadmill, income inequality, income per capita, informal economy, Johannes Kepler, John von Neumann, Kevin Kelly, Long Term Capital Management, mutually assured destruction, Nathan Meyer Rothschild: antibiotics, new economy, Occupy movement, purchasing power parity, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thorstein Veblen, University of East Anglia, working-age population

But even as late as the mid-1970s, GDP data were available on a comparable basis, adjusted for purchasing power parity, for only a small number of countries. In the 1950s, when the economic theory of growth was in its early stages, the figures were available for just a few of the most developed economies. Early theories of how economies grow, and how the process of economic development occurs, set out by economists such as Roy Harrod and Evsey Domar, Robert Solow, and Paul Rosenstein-Rodan in the 1950s had little empirical evidence available with which to test their theories. So it is not surprising that the theories, although expressed in the elegant algebra beloved of modern economists, were simple. Solow’s model of growth remained the basic work-horse theory until the 1980s. It said that the economy’s growth of its total output depended on the growth in the inputs needed—land or materials, labor and capital—and an unexplained remainder or residual labeled “technical progress.”

Because separately, telecommunications technology has been revolutionized by a sequence of innovations such as fiber-optic cables, and in particular mobile telephony and other wireless communications. This epoch of the information and communications revolution has spanned forty years. THE NEW ECONOMY BOOM It was obvious by the mid-1980s that a lot of businesses were buying and using computers, but what effect this was having on the economy was not at all apparent. Robert Solow wrote a frequently quoted New York Times Book Review article in 1987 claiming, “You can see the computer age everywhere but the productivity statistics.”4 In fact, it took the convergence of a number of separate streams of technological innovation, plus the investment in new computer and communications equipment, plus the reorganization of businesses to use these new tools, before any benefit in terms of productivity or GDP could occur.

The Sino-U.S. bilateral trade imbalance has been greatly inflated,” according to one study of the statistics.7 Value-added trade statistics are now becoming available, and their study is likely to change the big picture we hold in our minds about the shape of the world economy. PRODUCTIVITY If economists were to play a game of word association, the one that would leap to mind on hearing productivity would be puzzle. I already quoted Robert Solow’s famous 1987 version of the productivity puzzle: “You can see the computer age everywhere but in the productivity figures.” As discussed in chapter 5, the New Economy era from the mid-1990s to 2001 did see productivity growth increase in the official figures, although that has slowed down again in the postcrisis economy. But a different “puzzle” may have emerged in the United Kingdom: despite more or less zero GDP growth since 2008, employment has increased.


pages: 298 words: 95,668

Milton Friedman: A Biography by Lanny Ebenstein

"Robert Solow", affirmative action, banking crisis, Berlin Wall, Bretton Woods, business cycle, Deng Xiaoping, Fall of the Berlin Wall, fiat currency, floating exchange rates, Francis Fukuyama: the end of history, full employment, Hernando de Soto, hiring and firing, inflation targeting, invisible hand, Joseph Schumpeter, Kenneth Arrow, Lao Tzu, liquidity trap, means of production, Mont Pelerin Society, Myron Scholes, Pareto efficiency, Paul Samuelson, Ponzi scheme, price stability, rent control, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Sam Peltzman, school choice, school vouchers, secular stagnation, Simon Kuznets, stem cell, The Chicago School, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thorstein Veblen, zero-sum game

In the review, Koopmans argued that because Burns and Mitchell had no theory of a business cycle, they had no determinate idea of what data to gather or hypotheses to test. In a contemporary conference comment, Friedman made reference to the “desultory skirmishing between what have been loosely designated as the National Bureau and the Cowles Commission techniques of investigating business cycles.”8 Robert Solow, who received the Nobel Prize in Economics in 1987, relates an anecdote about the response to Cowles Commission member Lawrence Klein’s Economic Fluctuations in the United States (1950) at a Cowles seminar, which gives an idea of relations between Friedman and the commission: “There was formal discussion. Friedman concluded that the whole econometric model-building enterprise had been shown to be worthless and congratulated the Cowles Commission on its self-immolation.”9 According to a number of historians of economic thought, the relationship between the Cowles Commission and the Department of Economics at Chicago was less than harmonious.

Milton received a Fulbright fellowship to spend the 1953–54 academic year as a visiting fellow at Cambridge University, the citadel of Keynesianism, where John Maynard Keynes had lived and where many of his former students and colleagues continued to teach. Jan and David turned eleven and nine during this year abroad. Friedman’s understanding of Keynes and his work, and British life, developed during this Cambridge sojourn. In discussing Friedman’s monetary views, Robert Solow makes an interesting reference to Friedman’s opposition to “English Keynesian economics,”5 which was even more inclined than its American cousin to view money as of little importance in determining economic activity and the price level. As in much of American and British English, there are subtle differences in meaning in economics terminology. The Friedmans traveled throughout much of Europe during breaks in the Cambridge schedule, with Milton often lecturing along the way.

Over the foreseeable future, stabilization policy will be performed by Federal Reserve monetary policy.”5 Todd Buchholz comments that in the 1985 edition of Economics, Samuelson and Nordhaus “conceded that ‘early Keynesianism has benefited from “the rediscovery of money.” Money definitely matters. In their early enthusiasm about the role of fiscal policy, many Keynesians unjustifiably downgraded the role of money.’ Samuelson and Nordhaus did not mention the names of any perpetrators”!6 Samuelson, Modigliani, and Robert Solow have all spent much of their careers at the Massachusetts Institute of Technology (MIT), one of the leading centers in academic economics for much of the postwar era. Friedman has criticized MIT’s mathematical methodological approach. Commenting in 1988 on differences between his own methodology and that at MIT, he says that at MIT economics is viewed as a “branch of mathematics... as an intellectual game and exercise.”7 By way of contrast, his own approach, using Marshall’s phrase, is to look at economics as “an engine of analysis.”8 John Kenneth Galbraith was, with Keynes and Friedman, one of the three best-known economists in the twentieth century.


pages: 346 words: 89,180

Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel, Stian Westlake

"Robert Solow", 23andMe, activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, Andrei Shleifer, bank run, banking crisis, Bernie Sanders, business climate, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, cognitive bias, computer age, corporate governance, corporate raider, correlation does not imply causation, creative destruction, dark matter, Diane Coyle, Donald Trump, Douglas Engelbart, Douglas Engelbart, Edward Glaeser, Elon Musk, endogenous growth, Erik Brynjolfsson, everywhere but in the productivity statistics, Fellow of the Royal Society, financial innovation, full employment, fundamental attribution error, future of work, Gini coefficient, Hernando de Soto, hiring and firing, income inequality, index card, indoor plumbing, intangible asset, Internet of things, Jane Jacobs, Jaron Lanier, job automation, Kenneth Arrow, Kickstarter, knowledge economy, knowledge worker, laissez-faire capitalism, liquidity trap, low skilled workers, Marc Andreessen, Mother of all demos, Network effects, new economy, open economy, patent troll, paypal mafia, Peter Thiel, pets.com, place-making, post-industrial society, Productivity paradox, quantitative hedge fund, rent-seeking, revision control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Sand Hill Road, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, software patent, sovereign wealth fund, spinning jenny, Steve Jobs, survivorship bias, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, total factor productivity, Tyler Cowen: Great Stagnation, urban planning, Vanguard fund, walkable city, X Prize, zero-sum game

., and Yuan Shi. 2016. “Evidence and Implications of Short-Termism in US Public Capital Markets: 1980–2013.” SSRN Electronic Journal. doi:10.2139/ssrn.2837524. Smil, Vaclav. 2005. Creating the Twentieth Century: Technical Innovations of 1867–1914 and Their Lasting Impact. Oxford University Press. doi: 10.1093/0195168747.001.0001. Solow, Robert M. 1957. “Technical Change and the Aggregate Production Function.” Review of Economics and Statistics 39 (3): 312–20. doi:10.2307/1926047. Solow, Robert M. 1987. “We’d Better Watch Out.” New York Times Book Review. http://www.standupeconomist.com/pdf/misc/solow-computer-productivity.pdf. ———. 2014. “Thomas Piketty Is Right: Everything You Need to Know about ‘Capital in the Twenty-First Century.’ ” New Republic, April 22, 2014. https://newrepublic.com/article/117429/capital-twenty-first-century-thomas-piketty-reviewed.

The thing that reignited economists’ interest in the measurement of intangibles was ironically something tangible: computers. Over the course of the 1980s, economists had been wrestling with a puzzle. Since the mid-1970s productivity growth in developed countries had been disappointingly low. This was despite the advent of widely hyped new computer technologies that were supposedly going to transform business for the better. Robert Solow, who contributed more to the study of economic growth than most, famously pointed out in 1987 that the impact of the Computer Age could be seen everywhere but in the productivity statistics (Solow 1987). Goaded by these criticisms, statistical agencies, led by the US Bureau of Economic Analysis (BEA), began to examine their treatment of information and information technology more closely. They introduced two types of innovation.

Piketty argues that in the postwar period, political choices reduced r: in particular, high taxes on the rich and government policies that encouraged full employment and union rights. The reversal of those policies and the fall of economic growth have shifted economies to where r now exceeds g and will continue to do so. Box 6.2. An Outline of Piketty’s r > g Condition A sketch of Piketty’s argument, from a brilliant review by the economist Robert Solow (2014), is this. We want to find out whether the slice of the economic pie going to capital, the capital/income ratio, is rising or falling. Suppose national income is 100 and growing at, say, 2 percent. So income is growing from 100 to 102. At the same time saving and, therefore, investing grows capital as well: suppose saving is 10 percent of income this year. Thus capital is growing by 10 (10 percent of 100).


pages: 270 words: 73,485

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One by Meghnad Desai

"Robert Solow", 3D printing, bank run, banking crisis, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, correlation coefficient, correlation does not imply causation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, German hyperinflation, Gunnar Myrdal, Home mortgage interest deduction, imperial preference, income inequality, inflation targeting, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, market bubble, market clearing, means of production, Mexican peso crisis / tequila crisis, mortgage debt, Myron Scholes, negative equity, Northern Rock, oil shale / tar sands, oil shock, open economy, Paul Samuelson, price stability, purchasing power parity, pushing on a string, quantitative easing, reserve currency, rising living standards, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, seigniorage, Silicon Valley, Simon Kuznets, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, women in the workforce

During the 1950s, economists began delving into historical statistics, including those of income, capital, and labor. This research led to discoveries of constants and regularities and as a result the capital–output ratio was found to be around 3. So if the economy saved and invested 15 percent of the national income, the resulting growth would be 5 percent (15 divided by 3). Growth, at least in the US economy, had been more or less continuous except for the years of the Depression. Robert Solow used the Cobb-Douglas production function to try and explain growth. To his astonishment, he found that if you valued the labor input at the real wage level and capital stock at its rental, the resulting income growth was only one-eighth of the total growth. Thus seven-eighths was unexplained – “residual.” And so began the search to explain this residual, with economists eventually concluding that it was due to “technical progress.”

For later periods the association was not as strong. The interwar period had witnessed levels of unemployment that were unprecedented by pre–1914 standards, and post–1945 there was little variation in the level of unemployment as governments were wedded to a Keynesian policy. Researchers in the UK and US took up the task of estimating the “Phillips curve” using contemporary data. Paul Samuelson and his MIT colleague Robert Solow, two of the foremost US economists, presented a paper entitled “Analytical Aspects of an Anti-Inflation Policy” before the American Economic Association Conference in 1959.16 This was perceived as an official seal of approval to the Phillips curve as a policy tool. Figure 4 The Phillips curve Phillips had provided Keynesians with the answer to what caused prices to rise: inflation. Persistently high levels of employment led to sustained money wage rises, and hence, by implication, via unit labor costs, price rises.

This has been partly due to the problems of assimilation of peoples from different cultures and partly because during the recent recession public opinion has begun to scapegoat immigrants for what are larger macroeconomic difficulties. In the eighteenth century, Adam Smith provided a definitive answer to the hotly debated question: Where does growth come from? He showed that the best source of national growth was the productivity of a country’s workers. When growth seemed automatic, it was easy to put faith in steady technical progress, as Robert Solow did in his pioneering work. But what the world needs now is another bout of Schumpeterian innovations. Only this can transform the prospects for the DEs and the world. But whether companies will want to innovate when prices are falling is a question that needs to be addressed. There has been a continuing revolution in communications technology ever since the Silicon Valley boom began in the 1980s.


pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

"Robert Solow", Andrei Shleifer, business climate, business cycle, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, Gini coefficient, Gunnar Myrdal, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, manufacturing employment, Network effects, New Urbanism, open economy, Productivity paradox, purchasing power parity, rent-seeking, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

Shleifer, Andrei, and Robert Vishny. 1993. ”Corruption.” Quarterly Journalof Economics 108 (August): 599-617. Simon, Julian, ed. 1995. The State ofHumanity. Oxford: Blackwell. Slemrod, Joel. 1995. ”Do Cross-Country Studies Teach About Government Involvement, Prosperity, and Economic Growth?” Brookings Papers on Economic Activity 10, no. 2:373-415. Solow, Robert M. 1957. “Technical Change and the Aggregate Production Function.” Review of Economics and Statistics 39:312-320. Solow, Robert M. 1987. Growth Theory: An Exposition. New York: Oxford University Press. (Originally published 1970). Stremlau, John. 1996. ”Dateline Bangalore: Third World Technopolis.” Foreign Policy (Spring): 152-168. Summers, Robert, and Alan Heston. 1991. ”The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988.”

Although Domar assumed that production capacity was proportional to thestock of machinery, he admitted the assumption was unrealistic and eleven years later, in 1957,complaining of an ”ever-guilty conscience,” he disavowed the theory.15 He said his earlier purpose was to comment on an esoteric debate on business cycles, not to derive ”an empirically meaningful rate of growth.” He said his theory made no sense for long-run growth, and instead he endorsed the new growth theory of Robert Solow (which I discuss in thenext chapter). To sum up, Domar’s model was not intended as a growth model, made no sense as a growth model, and was repudiated as a growth model over fortyyearsagobyitscreator. So it was ironic that Domar’s growth model became, and continues to be today, the most widely applied growth model in economic history. Howdid Domar’s modelsurviveitssupposeddemise in the 1950s?

Parmila has great self-respect and despite her woes refuses to be looked at with sympathy. "Even in times of acute crisis, l held my nerves and did not give in to circumstances. My God has always stood with me," says Parmila in a confident t0ne.l This Page Intentionally Left Blank 3 Solow’s Surprise: Investment Is Not the Key to Growth Politicians are the same all over. They promise to build bridges, even where there are no rivers. Nikita Khrushchev Nobel laureate Robert Solow published his theory of growth in a couple of articles in 1956 and 1957. His conclusion surprised many, and still surprises many today: investment in machinery cannot be a source of growth in the long run. Solow argued that the only possible source of growth in the long run is technological change. Solow in the 1957 article calculated that technological change accounted for seventh-eighths of U.S. growth per worker over the first half of the twentieth century.


pages: 272 words: 71,487

Getting Better: Why Global Development Is Succeeding--And How We Can Improve the World Even More by Charles Kenny

"Robert Solow", agricultural Revolution, Berlin Wall, British Empire, Charles Lindbergh, clean water, demographic transition, double entry bookkeeping, experimental subject, Fall of the Berlin Wall, germ theory of disease, Gunnar Myrdal, income inequality, income per capita, Indoor air pollution, inventory management, Kickstarter, Milgram experiment, off grid, open borders, purchasing power parity, randomized controlled trial, structural adjustment programs, The Wealth of Nations by Adam Smith, total factor productivity, Toyota Production System, trade liberalization, transaction costs, very high income, Washington Consensus, X Prize

Thus, if investment reached 15 percent in that country, GDP growth would climb to 3 percent. For a long time a country’s capital output ratio was used by donors to calculate the foreign aid “requirement” of that country in order to reach a target rate of growth.4 But Domar himself argued that his model was not appropriate for determining long-term growth rates, supporting instead a model developed by Nobel Prize winner Robert Solow. Solow’s model predicted that long-term growth rates were primarily dependent on technological change rather than on investment. Economists define “technology” broadly—as anything that isn’t capital that might affect per-worker growth rates. For example, it can include inventions as usually imagined, like the steam engine or the transistor, but also new processes, like the assembly line, or new ways of doing business, like double-entry bookkeeping.

Furthermore, we have learned that technology is central to per capita GDP growth—given that countries can invest in considerable physical capital (roads, factories, power plants) as well as human capital (school and university graduates) and still not see rising average incomes. We’ve also learned that some technologies may be more important than others in promoting output. In particular, given the divergence of global incomes, these technologies must be “sticky” in that they do not flow easily across borders as predicted by Robert Solow. This suggests there may be value in further analysis of such “sticky technologies.” INSTITUTIONS: STICKY TECHNOLOGIES We have seen that “technology” as defined by economists is a very broad concept, covering all sorts of innovation. It covers traditional or invented technologies—Watt’s steam train, Engelbart’s computer mouse—to be sure. But it also covers anything else that can raise the productivity of labor or capital.

At the same time, the common transition pattern implies that there must be an upper limit to the importance not only of different rates of income growth but also of different speeds of policy or institutional change in explaining relatively fast or slow progress in quality of life over time across countries. A model of development that suggests a strong influence of factors common across countries, that predicts convergence of outcomes, and that sees a comparatively minor role for policy differences across countries in explaining variation in outcomes is Robert Solow’s “exogenous growth model” discussed in Chapter 3. We saw that it was abandoned by analysts of economic growth as singularly failing to account for changes in GDP per capita across countries over time. But the model fits far better with the facts of global change in other measures of quality of life where change does appear to be driven by strong global trends and countries further behind are rapidly catching up.


pages: 193 words: 47,808

The Flat White Economy by Douglas McWilliams

"Robert Solow", access to a mobile phone, banking crisis, Big bang: deregulation of the City of London, bonus culture, Boris Johnson, Chuck Templeton: OpenTable:, cleantech, cloud computing, computer age, correlation coefficient, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, eurozone crisis, George Gilder, hiring and firing, income inequality, informal economy, Kickstarter, knowledge economy, loadsamoney, low skilled workers, mass immigration, Metcalfe’s law, Network effects, new economy, offshore financial centre, Pareto efficiency, Peter Thiel, Productivity paradox, Robert Metcalfe, Silicon Valley, smart cities, special economic zone, Steve Jobs, working-age population, zero-sum game

Most other countries likewise account software expenditure in the same way – the difference being that in the UK the FWE sector is larger and the mis-measurement more significant. IT investment as an enabling technology In the 1980s, economic studies seemed not to be able to find much evidence of information technology making much difference to economic growth. This was known at the time as the ‘productivity paradox.’6 Nobel laureate Robert Solow famously quipped “You can see the computer age everywhere except in the productivity statistics”.7 But micro studies since have provided compelling evidence that IT is not only a technology that enhances growth but also one that enables further productivity gains. A Google search lists over 64,000 references for ‘information technology as an enabler’.8 The modern thinking about IT investment is that it encourages improved and innovative products, services and methods of production.

But you only have to go back to the 1960s to discover that there really was a Golden Age of Parliamentary debate. 4. ‘Understanding National Accounts’, François Lequiller and Derek Blades, 2016, Paris (www.oecd.org/std/na/38451313.pdf). 5. www.bankofengland.co.uk/statistics/Pages/iadb/notesiadb/capexp.aspx 6. The productivity paradox of information technology’, Erik Brynjolfsson, Communications of the ACM 36 (12), 1993, pp66–77. 7. ‘We’d better watch out’, Robert Solow, New York Times Book Review, 12 July, 1987, p.36. 8 scholar.google.co.uk/scholar?start=20&q=information+technology+as+an+enabler&hl=en&as_sdt=0,5&as_vis=1 9. ‘Sources of Economic Growth, Trade and Investment Analytical Papers No 6 of 18,BIS/DFID, 2011, London. 10. www.gov.uk/government/uploads/system/uploads/attachment_data/file/32468/11–723-sources-of-economic-growth.pdf 11. 10 November 2014. 12. www.itpro.co.uk/mobile/23478/o2-ceo-how-the-digital-revolution-is-driving-the-uk-economy#ixzz3K5a452gr 13.

article=1021&context=confpapers INDEX Accenture Fintech Innovation Lab ref1 accommodation ref1, ref2, ref3 cheap ref1, ref2, ref3 cramped ref1 displacement of ref1 proximity to amenities ref1 Advanced Card Systems ref1 advertising/marketing ref1, ref2 campaigns ref1 digital ref1 investment in ref1 online ref1, ref2, ref3, ref4 role of creativity in ref1 Aerob ref1 AirWatch ref1 Alibaba ref1, ref2 floated on NYSE ref1 Allegra Strategies ref1 Allford, Simon ref1 Allford Hall Monaghan Morris ref1 Amazon.com, Inc. ref1, ref2, ref3 Apple, Inc. ref1, ref2, ref3 development kits ref1 facilities of ref1 product lines of ref1 Argentina Buenos Aires share of GDP ref1 Association of London Councils ref1 AT&T Inc. ref1 Australia ref1 Sydney ref1 Austria Vienna share of GDP ref1 Bangladesh economy of ref1 Dhaka ref1 Bank of England investment guidelines ref1 BASF SE ref1 Bell Telephones personnel of ref1 Bennet, Natalie leader of Green Party ref1 bicycles ref1 fatalities associated with ref1 sales of ref1 use in commuting ref1 big data ref1 Birmingham Science Park Aston Innovation Birmingham Complex ref1 Bold Rocket ref1 bonuses ref1 use in property market ref1 Boston Consulting Group ref1, ref2 British Bars and Pubs Association ref1 British Broadcasting Corporation (BBC) BBC Scotland ref1 Brough, Graham ref1 Brown, Gordon ref1, ref2 Burkina Faso Ouagadougou ref1 Burt, Prof Ronald ref1, ref2 Cable and Wireless assets of ref1 Cameron, David economic policies of ref1, ref2 immigration policies of ref1 Canada ref1 Montreal ref1 Toronto ref1, ref2 Vancouver ref1 capital rate of return ref1, ref2 capitalism ref1, ref2, ref3 profits ref1 Catholicism ref1 Centre for Cities ref1, ref2 Centre for Economics and Business Research (Cebr) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 estimates of UK economic growth ref1 offices of ref1 personnel of ref1, ref2 Centre for Retail Research ref1, ref2 champagne sales figures ref1, ref2 Channel 4 ref1 China Beijing ref1, ref2, ref3 Haidian district ref1 economy of ref1 Golden Shield firewall (Great Firewall of China) ref1 government of ref1, ref2, ref3 Hong Kong ref1, ref2, ref3, ref4, ref5, ref6 Cyberport ref1 Hong Kong Stock Exchange ref1 People’s Liberation Army (PLA) ref1, ref2 special economic zones Hangzhou ref1 Shenzhen ref1 Zhongguancun Innovation Way (Z-innoway) ref1 China Mobile ref1 China Telecom ref1 China Unicom ref1 Cisco Systems facilities of ref1 cloud computing ref1, ref2 Coalition Government immigration policy of ref1, ref2 coffee shops culture of ref1 cyber cafes ref1 growth of market ref1 Commonwealth migration from ref1 Companies House ref1 Confederation of British Industry (CBI) ref1, ref2 personnel of ref1 Confucianism ref1 Conservative Party ref1 Cooper, Wayne ref1 Corporation of London ref1, ref2, ref3 Crafts, Nick ref1 creative economy ref1 Cridland, John leader of CBI ref1 Cromwell, Oliver ref1 Crow, Bob ref1 Daily Mail ref1 Danone ref1 Danticat, Edwidge ref1 Davis, Charles ref1 Decoded ref1 Deloitte ref1 deregulation of financial markets (1986) ref1 digital economy ref1, ref2, ref3, ref4 emergence of ref1, ref2 role of creativity in ref1 Dorling, Danny ref1 Dunne, Ronan CEO of O2 (UK) ref1 Durden, Tyler ref1 Economic Journal, The ref1, ref2 Economist, The ref1, ref2, ref3 Edinburgh University ref1 Eggers, Dave Circle, The (2013) ref1 Egypt Cairo ref1 share of GDP ref1 employment ref1 growth ref1 immigrant labour ref1 in FWE ref1, ref2, ref3, ref4 job creation ref1 low-skilled jobs ref1 public sector 1112 science, technology, engineering and mathematics (STEM) ref1 growth of ref1 shortages ref1 end user demand ref1 Engels, Friedrich ref1 Entrepreneurs for the Future (E4F) ref1 entrepreneurship ref1, ref2, ref3 e.Republic Center for Digital Government and Digital Communities Digital Cities award programme ref1, ref2 Esquire (magazine) ref1 European Economic Area (EEA) ref1 migrants from ref1 contribution to fiscal system ref1 migrants from outside ref1 contribution to fiscal system ref1 European Union (EU) free movement of labour in ref1 member states of ref1, ref2, ref3 taxation regulations ref1 Eurostar ref1 Eurozone ref1, ref2 Crisis (2009–) ref1, ref2, ref3 economy ref1 Facebook ref1, ref2, ref3, ref4 IPO of ref1 Falmouth University ref1 Fan, Donald Senior Director for Office for Diversity of Walmart ref1 FanDuel ref1 Farage, Nigel leader of UKIP ref1 feudalism ref1 financial services ref1, ref2, ref3, ref4, ref5 lifestyles associated with ref1, ref2 Financial Times (FT) ref1 FT Global Top 500 Companies ref1 Fintech ref1 First World War (1914–18) ref1 fiscal transfer ref1, ref2, ref3 net ref1 potential use to cover local deficits ref1 Flat White Economy (FWE) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12, ref13, ref14, ref15, ref16, ref17 advantages of immigration for ref1, ref2, ref3 business model for ref1 development and growth of ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 employment in ref1, ref2, ref3, ref4 shortages ref1 impact on UK economy ref1, ref2 model of ref1, ref2, ref3 replicating ref1-ref2 role of creativity in ref1 startups in ref1 business model ref1 Flat Whiters ref1 accommodation data for ref1 social culture of ref1 fashion ref1 nightlife ref1 transport ref1 technology used by ref1 Forbes (magazine) ref1 France ref1 education system of ref1 Paris ref1, ref2, ref3 share of GDP ref1 Paris-Sarclay ref1 creation of (2006) ref1 potential limitations of ref1 promotion of ICT in ref1 Forst and Sullivan ref1 France ref1, ref2 Freeman, Prof Christopher ref1 Fujitsu Ltd. ref1 Funding Circle ref1 Gates, Bill ref1 Germany ref1, ref2, ref3 Berlin ref1 economy of ref1 Glaeser, Edward ref1 Triumph of the City, The ref1 Global Financial Crisis (2007–9) ref1, ref2 Banking Crises (2008) ref1 impact on migration ref1 UK recession (2008–9) ref1 Global Innovation Index ref1 globalisation ref1, ref2, ref3 Glyn, Andrew ref1 Goodison, Sir Nicholas Chairman of the Stock Exchange ref1 Google, Inc. ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 acquisitions made by ref1 development kits ref1 offices of ref1, ref2 Greater London Authority (GLA) ref1, ref2 Green Party members of ref1 Gröningen Growth and Development Centre ref1 Guardian, The ref1, ref2, ref3 Harbron, Rob ref1, ref2 Harrison, Andy Chief Executive of Whitbread ref1 Harvard Business School ref1 Harvard University Harvard Lab for Computer Graphics and Spatial Analysis ref1 HCL Technologies ref1 Heisnberg, Werner uncertainty principle ref1 Hewlett-Packard Company (HP) ref1 Huawei Technologies ref1 immigration ref1, ref2, ref3, ref4, ref5, ref6 advantages for FWE ref1, ref2, ref3 economic impact of ref1, ref2 impact on social cohesion ref1 impact on wages ref1 legislation ref1 access to state benefits ref1 quota systems ref1 non-EEA ref1, ref2 restrictions on ref1, ref2, ref3 Imperial College, London facilities of ref1 India ref1, ref2 Calcutta ref1 IT sector of ref1 Karnataka ref1 Bangalore ref1, ref2, ref3, ref4 Electronics City ref1 Mumbai ref1 inequality ref1 potential role of London in ref1, ref2 sources of wealth ref1 Infosys Ltd ref1 initial public offering (IPOs) ref1 innovation ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8 hubs ref1, ref2 independent ref1 investments in ref1 projects ref1 Institute for Public Policy Research ref1 intellectual property protection of ref1, ref2 Intel Corporation ref1, ref2, ref3 facilities of ref1 personnel of ref1 International Business Machines (IBM) ref1, ref2 facilities of ref1, ref2, ref3 personnel of ref1, ref2, ref3 internet usage ref1 investment ref1, ref2, ref3 advertising and marketing ref1 capitalising of ref1 in innovation ref1 process of ref1 Israel ref1, ref2 Defence Ministry ref1 Haifa ref1 tech sector of ref1 IT spending ref1, ref2 accounting for ref1 software ref1 Italy ref1 Frascati ref1 Rome ref1 ITC Infotech India Ltd ref1 Japan ref1 economy of ref1 Tokyo ref1 share of GDP ref1 Johnson, Boris Mayor of London ref1, ref2, ref3 Johnson Press plc ref1 Judaism ref1 Kaldor, Nicholas ref1 Keynes, John Maynard ref1 Economic Consequences of the Peace, The ref1 KPMG ref1 labour ref1 division of ref1 immigrant ref1, ref2, ref3, ref4 market ref1 shocks ref1 share of income ref1, ref2 supply of ref1, ref2, ref3, ref4 Labour Party ref1 immigration policies of ref1 Lai, Ian ref1 Laserfiche ref1 Lawson, Nigel ref1 Leeds Beckett University ref1 Level 39 ref1 Liberal Democrats immigration policies of ref1 lifestyles ref1 associated with financial services ref1 Livingstone, Ken ref1 Lloyds ref1 London School of Economics (LSE) ref1 MadRat games ref1 MagnetWorks Engineering ref1 Mahindra Satyam ref1 Mainelli, Michael Gresham Professor of Commerce ref1 Malaysia ref1 Kuala Lumpur ref1 Manchester Science Parks (MSP) ref1 market capitalisation ref1, ref2 market economy ref1 Marx, Karl ref1, ref2 Labour Theory of Value ref1 Marxism ref1 Massachusetts Institute of Technology (MIT) ref1 campuses of ref1 Technology Review ref1, ref2 MasterCard ref1 McAfee, Inc. ref1 McKinsey Global Institute ref1 McQueen, Alexander ref1 McWilliams, Sir Francis ref1 Pray Silence for Jock Whittington (2002) ref1 Medvedev, Dmitry ref1 technology policies of ref1 Metcalfe, Robert ref1 Metcalfe’s Law concept of ref1 Mexico ref1 Mexico City ref1 share of GDP ref1 Microsoft Corporation ref1, ref2, ref3, ref4 facilities of ref1 Future Decoded conference ref1 personnel of ref1 Windows (operating system) ref1 Migration Advisory Committee ref1 Miliband, Ed immigration policies of ref1 MindCandy ref1 Moshi Monsters ref1 offices of ref1 Mitsui Chemicals ref1 Mohan, Mukund CEO of Microsoft Ventures in India ref1 Mongolia Ulan Bator ref1 Moore, Gordon Earle Moore’s Law ref1 MphasiS ref1 National Institute of Economic and Social Research (NIESR) ref1, ref2 Netherlands Amsterdam ref1 network effects ref1 relationship with supereconomies of scale ref1 Network Rail offices of ref1 New Scientist ref1 New Statesman ref1 Nitto Denko ref1 Nokia Oyj ref1 O2 (Telefónica UK Limited) ref1 offices of ref1 personnel of ref1 Office of Communications (Ofcom) ref1 Olympic Games (2012) ref1, ref2 online shopping ref1, ref2 Organisation for Economic Cooperation and Development (OECD) ref1, ref2, ref3, ref4 Osborne, George ref1 Outblaze ref1 Pareto Principle concept of ref1 Passenger Demand Forecasting Council ref1 PayPal ref1 PCCW ref1 Poland accession to EU (2004) ref1 Pollock, Erskine ref1 Procter & Gamble Co. ref1 property markets ref1, ref2 commercial ref1, ref2 housebuilding ref1, ref2 house/property prices ref1, ref2, ref3, ref4 property crisis (2007) ref1 residential ref1 use of bonuses in ref1 public spending ref1, ref2, ref3 Barnett formula ref1 relationship with taxation ref1 Qualcomm facilities of ref1 Reinartz, Werner ref1 Republic of Ireland ref1 research and development (R&D) ref1, ref2, ref3 definitions of ref1, ref2 expenditure ref1, ref2 hubs ref1, ref2 industrial ref1 Research Council for the Arts and Humanities ‘Diasporas, Migration and Identities’ ref1 Rogers, Everett Diffusion of Innovations (1962) ref1 Russian Federation ref1 economy of ref1 Defence Ministry ref1 Moscow ref1, ref2 Skolkovo Innovation Centre ref1, ref2 Saffert, Peter ref1 sales and advertising ref1 Sarkozy, Nicolas technology policies of ref1 Scottish Media Group (STV) ref1 Second World War (1939–45) Blitz, The (1940–1) ref1 shared accommodation ref1 Silicon Canal ref1 Silicon Roundabout ref1, ref2, ref3, ref4, ref5 Silicon Valley ref1, ref2, ref3, ref4, ref5, ref6 role of US government defence spending in development of ref1 social culture of ref1 Silva, Rohan Senior Policy Advisor to David Cameron ref1 Singapore ref1, ref2, ref3, ref4 government of ref1 Research, Innovation and Enterprise Plan (RIE 2015) ref1 research centres of ref1 A*Star Biopolis ref1 Fusionopolis ref1 Campus for Research Excellence and Technological Enterprise (Create) ref1 CleanTech Park ref1 Singapore Science Park ref1 Tuas Biomedical Park ref1 skills drain ref1 Skyscanner ref1 small- and medium-sized businesses (SMBs) ref1 small- and medium-sized enterprises (SMEs) ref1 Small Business Service Household Survey of Entrepreneurship ref1 Smith, Adam Wealth of Nations, The ref1 Smith, Michael Acton founder of MindCandy ref1 Social Democratic Party (SDP) formation of (1981) ref1 social media ref1 restrictions on ref1 Solow, Robert ref1 South Africa Johannesburg share of GDP ref1 South East Regional Assembly ref1 South Korea Seoul ref1 share of GDP ref1 Spain Barcelona ref1 Ibiza ref1 Sprint Corporation ref1 startups ref1 business models of ref1 in FWE ref1 Stigler, George ref1 supereconomies of scale concept of ref1 relationship with network effects ref1 Sweden Stockholm share of GDP ref1 Tata Consultancy Services ref1 taxation ref1, ref2, ref3, ref4, ref5 allowance ref1 corporation ref1 EU regulations ref1 National Insurance ref1, ref2, ref3 regional variation of ref1 relationship with public spending ref1 Tech City ref1, ref2, ref3 technology clusters ref1, ref2, ref3 identification of ref1 Techstars/Barclays ref1 telecommunications ref1 Thatcher, Margaret ref1, ref2 Thile, Peter ref1 trade unions ref1 Transport for London (TfL) ref1, ref2 UK Independence Party (UKIP) members of ref1, ref2 United Kingdom (UK) ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10 Bath ref1 Birmingham ref1, ref2 Bristol ref1 Cambridge ref1 Cheshire ref1 Civil Service ref1 Department for Business, Innovation and Skills ref1, ref2 Department for Transport ref1 economy of ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 contribution of creative industries to ref1 growth of ref1, ref2, ref3, ref4, ref5 Edinburgh ref1 GDP per capita ref1, ref2, ref3, ref4, ref5, ref6 Glasgow ref1, ref2 media clusters in ref1 government of ref1, ref2, ref3 Index of Multiple Deprivation ref1 ‘Innovation Report 2014’ ref1 Hounslow ref1 labour market of ref1 Leeds ref1, ref2, ref3 London ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10, ref11, ref12, ref13, ref14, ref15, ref16, ref17, ref18, ref19, ref20, ref21, ref22, ref23 business sector of ref1 Camden ref1, ref2 City Fringes ref1, ref2 City of London ref1, ref2, ref3, ref4, ref5, ref6, ref7 cultural presence of ref1 economy of ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9, ref10 migrant labour in ref1 expansion of ref1, ref2, ref3 GDP per capita ref1, ref2 GVA of ref1, ref2, ref3 Hackney ref1, ref2, ref3 Haringey ref1, ref2 Islington ref1, ref2 Old Street ref1, ref2, ref3, ref4, ref5, ref6 share of national GDP ref1 Shoreditch ref1, ref2, ref3, ref4 Tower Hamlets ref1 transport infrastructure of ref1 Crossrail ref1 Westminster ref1, ref2, ref3 Manchester ref1, ref2, ref3 Midlands ref1 Milton Keynes ref1, ref2 Newbury ref1 Newcastle ref1 Northern Ireland ref1 Northampton ref1 Office for National Statistics (ONS) ref1 Oxford ref1 Parliament House of Commons ref1 House of Lords ref1 pub industry of ref1 Reading ref1 Salford ref1 Slough ref1 United States of America (USA) ref1, ref2, ref3, ref4 Baltimore, MD ref1 Boston, MA ref1, ref2 Buffalo, NY ref1 Cambridge, MA ref1 Chicago, IL ref1 Columbus, OH ref1 Detroit, MI ref1 economy of ref1 government of ref1, ref2 Irving, TX ref1 Jacksonville, FL ref1 Los Angeles, CA ref1 Minneapolis, MN ref1 Nashville, TN ref1 New York City, NY ref1, ref2, ref3, ref4 New York Stock Exchange (NYSE) ref1 Palo Alto, CA ref1 Portland, OR ref1, ref2 Raleigh, NC ref1 Salt Lake City, UT ref1 San Diego, CA ref1 San Francisco, CA ref1 Seattle, WA ref1, ref2 Washington DC ref1 Winston-Salem, NC ref1 University of Chicago faculty of ref1, ref2 University of London ref1 University of Sussex faculty of ref1 venture capital ref1, ref2 Visa facilities of ref1 Vodafone offices of ref1 wages ref1, ref2, ref3, ref4, ref5, ref6 depression of ref1, ref2 growth of ref1 impact of immigration on ref1 low ref1, ref2 Walmart personnel of ref1, ref2 Waze acquired by Google ref1 We Are Apps ref1 Whitbread Costa Coffee ref1 personnel of ref1 Wikipedia ref1 Wilson, Harold ref1 administration of ref1 Wipro Technologies ref1 Wired (magazine) ref1 Woolfe, Steven UKIP spokesman on migration and financial affairs ref1 World Bank ref1 Xiaomi ref1 Yorkshire Post, The ref1 ZopNow ref1


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House of Debt: How They (And You) Caused the Great Recession, and How We Can Prevent It From Happening Again by Atif Mian, Amir Sufi

"Robert Solow", Andrei Shleifer, asset-backed security, balance sheet recession, bank run, banking crisis, Ben Bernanke: helicopter money, break the buck, business cycle, Carmen Reinhart, collapse of Lehman Brothers, creative destruction, debt deflation, Edward Glaeser, en.wikipedia.org, financial innovation, full employment, high net worth, Home mortgage interest deduction, housing crisis, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liquidity trap, Long Term Capital Management, market bubble, Martin Wolf, money market fund, moral hazard, mortgage debt, negative equity, paradox of thrift, quantitative easing, Robert Shiller, Robert Shiller, school choice, shareholder value, the payments system, the scientific method, tulip mania, young professional, zero-sum game

Army, worked as an economist in the Federal Reserve System, and was a leading architect of the Marshall Plan in the State Department after World War II. So by the time he arrived at MIT, he had already made a major impact on western European economies.1 Kindleberger’s research style was a bit unusual compared to many of his contemporaries, and this likely reflected his real-world experience outside the ivory tower. Instead of proposing theory, he approached economic phenomena as a natural scientist would. His colleague and Nobel laureate Robert Solow compared Kindleberger to Darwin on the Beagle: “collecting, examining, and classifying interesting specimens . . . it was Kindleberger’s style as an economic historian to hunt for interesting things to learn, not pursue a systematic agenda.”2 The culmination of Kindleberger’s massive data collection on bubbles—Manias, Panics, and Crashes: A History of Financial Crises—is one of the most influential books written in economic history.

Yuliya Demyanyk and Otto Van Hemert, “Understanding the Subprime Mortgage Crisis,” Review of Financial Studies 24 (2011): 1848–80. 18. This estimate is based on the ABX index that tracks the value of mortgage-backed securities with mortgage originated in 2007. Chapter Eight 1. Daniel Altman, “Charles P. Kindleberger, 92, Global Economist, Is Dead,” New York Times, July 9, 2003. 2. Robert Solow, foreword to Manias, Panics, and Crashes: A History of Financial Crises, 5th ed., by Charles Kindleberger and Robert Aliber (Hoboken, NJ: John Wiley & Sons, 2005). 3. Vernon Smith, Gerry Suchanek, and Arlington Williams, “Bubbles, Crashes and Endogenous Expectations in Experimental Spot Asset Markets,” Econometrica 56 (1988): 1119–51. 4. Robert Shiller, “Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends?”

See also savers Seru, Amit, 101–3, 139 shared-responsibility mortgages (SRMs), 170–74; benefits of, 174–78; bubbles and, 179–80; downside protection in, 172–74, 183; equity-like financing of, 168–70, 180–87, 206n13; 5 percent capital-gain rule for, 174; government policy on, 180–81; job protection and, 178–79; lender fees for, 173, 180 Sherlund, Shane, 198n13 Shiller, Robert, 109, 185, 206n8 Shleifer, Andrei, 28, 114 short-term financing, 125 Sinn, Hans-Werner, 165 skills mismatch, 68–69 Smith, Vernon, 108–9, 110 Snowden, Kenneth, 144 Solow, Robert, 106 Song, Jae, 148 Spanish mortgage law, 119–21, 184–85 spending. See consumer spending Stafford, Erik, 98, 101 standard asset pricing theory, 108–9 Steinsson, Jon, 163, 179 Stewart, Jon, 122 stimulus spending, 162–66, 205n19 student-loan debt, 167–69, 182–83, 206n9 Stulz, Rene, 129 subordinated debt, 123 subprime mortgages. See securitization market Suchanek, Gerry, 108–9 Summers, Lawrence, 136 supply-side view of resources, 47–49 Surowiecki, James, 38–39, 193n4 Swire, Peter, 148 TARP (Troubled Asset Relief Program), 136 tax policy, 164–65, 181, 205n20 Taylor, Alan, 8–9 Tea Party movement, 135, 165 tech bubble collapse, 43–44 Temin, Peter, 6, 156 Term Asset-Backed Securities Loan Facility (TALF), 125 Term Auction Facility (TAC), 125 Term Security Lending Facility (TSLF), 125 Thai/East Asian banking crisis of 1990s, 92–95 tradable jobs, 63–66, 195n3 tranching, 96–100 Trebbi, Francesco, 28, 131, 165–66, 176 Troubled Asset Relief Program (TARP), 136 Trust Indenture Act of 1939, 138 Turner, Adair, 206n8 underwater mortgages, 26, 51–52, 150; forgiveness programs for, 135–51; government programs for, 135–42; Obama’s bailout proposal for, 60, 137; refinancing rates and, 158–59; shared-responsibility mortgages and, 175–76 unemployment, 60–70; in bank-lending view of recession, 128–30; of college graduates, 167–68; foreclosures and, 2, 202n21; in fundamentals view of recession, 66–68; government policies on, 69; human consequences of, 2–3, 70; layoffs in, 1–2, 33, 128–30; in levered-losses framework, 56–66, 195n3; local banking risks and, 95–96; net-worth shock and, 63, 68; shared-responsibility mortgages and, 178–79; skills mismatch and, 68–69; in Tennessee, 61–62 unemployment-insurance payments, 69 U.S.


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The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, basic income, Baxter: Rethink Robotics, British Empire, business cycle, business intelligence, business process, call centre, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, combinatorial explosion, computer age, computer vision, congestion charging, corporate governance, creative destruction, crowdsourcing, David Ricardo: comparative advantage, digital map, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, G4S, game design, global village, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, intangible asset, inventory management, James Watt: steam engine, Jeff Bezos, jimmy wales, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mars Rover, mass immigration, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, payday loans, post-work, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen: Great Stagnation, Vernor Vinge, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

(Most commonly, this term is used as shorthand for ‘labor productivity,’ which is output per hour worked [or output per worker].) * In turn, productivity growth comes from innovations in technology and techniques of production. Simply working more hours does not increase productivity. Indeed, Americans once routinely worked fifty, sixty, or even seventy hours per week. While some still do, the average workweek is shorter now (thirty-five hours per week), and yet living standards are higher. Robert Solow got his Nobel Prize in Economics for showing that increases in labor input and capital input could not explain most of the increase in the total output of the economy.† In fact, it would take the average American only eleven hours of labor per week to produce as much as he or she produced in forty hours in 1950. That rate of improvement is comparable for workers in Europe and Japan, and even higher in some developing nations.* FIGURE 7.1 Labor Productivity Productivity improvement was particularly rapid in the middle part of the twentieth century, especially the 1940s, 50s, and 60s, as the technologies of the first machine age, from electricity to the internal combustion engine, started firing on all cylinders.

The ln (2) is 0.693 and for small x, ln (1 + x) is roughly equal to x, so the equation simplifies to xy = 70 percent. * One can also measure capital productivity, which is output per unit of capital input; or multifactor productivity, which is output divided by a weighted average of both capital and labor inputs. Economists sometimes use another term for multifactor productivity, the “Solow Residual,” which better reflects the fact that we don’t necessarily know its origins. Robert Solow himself noted that it was less a concrete measure of technological progress than a “measure of our ignorance.” † That’s a good thing, because there are natural limits to how much we can increase inputs, especially labor. They’re subject to diminishing returns—no one is going to work more than twenty-four hours a day, or employ more than 100 percent of the labor force. In contrast, productivity growth reflects ability to innovate—it’s limited only by our imaginations

His observations, including the relatively constant growth rates of key variables, such as wage growth and the amount of capital per worker, came to be known as the “Kaldor Facts.” 2. Bret Swanson,“Technology and the Growth Imperative,” The American, March 26, 2012, http://www.american.com/archive/2012/march/technology-and-the-growth-imperative (accessed Sept 23, 2013). 3. Congressional Budget Office, The 2013 Long-Term Budget Outlook, September 2013, p. 95. http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013.pdf. 4. Robert Solow, “We’d Better Watch Out,” New York Times Book Review, July 12, 1987. 5. Erik Brynjolfsson, “The Productivity Paradox of Information Technology,” Communications of the ACM 36, no. 12 (1993): 66–77, doi:10.1145/163298.163309. 6. See, e.g., Erik Brynjolfsson and Lorin Hitt, “Paradox Lost: Firm Level Evidence on the Returns to Information Systems,” Management Science 42, no. 4 (1996): 541–58. See also Brynjolfsson and Hitt, “Beyond Computation: Information Technology, Organizational Transformation and Business Performance,” Journal of Economic Perspectives 14, no. 4 (2000): 23–48, which summarizes much of the literature on this question. 7.


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Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"Robert Solow", Alvin Roth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, Bretton Woods, Brownian motion, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, full employment, George Akerlof, Goldman Sachs: Vampire Squid, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Ponzi scheme, precariat, prediction markets, price mechanism, profit motive, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, school choice, sealed-bid auction, Silicon Valley, South Sea Bubble, Steven Levy, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

Indeed, the effect of the crisis has been to bring those repressed disputes out into the open. Once the presumption of omniscience broke down, then the consequences of the banishment of methodological self-scrutiny began to be felt. Both the criticisms and defenses of DSGE, at the congressional hearings and elsewhere after the crisis onset, were distressingly unsophisticated, as one might expect as fallout from the ostracism of methodological thought. Robert Solow testified in Congress that DSGE models “didn’t pass the smell test,” introducing a novel olfactory standard for scientific model choice. The defense of DSGE by V. V. Chari at the hearings equally reveals the paucity of resources (and rhetorical skills) possessed by contemporary economists: So, any interesting model must be a dynamic stochastic general equilibrium model. From this perspective, there is no other game in town.

If you allowed freedom of amendment to the DSGE in this manner, you would end up with models that violated the Lucas critique in a more egregious fashion than the earlier Keynesian models these macroeconomists love to hate. And there are the nagging worries that, as in the case of undermining existence of equilibria and welfare indicies, one ends up driving the formalism into Bedlam. Thus, a “more realistic DSGE” ends up a contradiction in terms. The second option, the one favored by the high-profile economists dismissive of the DSGE tradition such as Robert Solow and Paul Krugman, was to roll back the clock to 1969, and pretend like the whole sequence of sordid developments leading up to DSGE never happened. Sometimes this was bruited about as a “return to Keynes,” although a historian might aver that the American profession was never all that enamored of the actual Keynes and his writings.98 Nevertheless, this latter group was extrapolating from the heady days of late 2008, when all thoughts of DSGE were nowhere to be found.

“New York Fed Brownshirt Jason Barker Urges Police to Crack Skulls of #OWS” (November 2011), at www.nakedcapitalism.com/2011/11/22811.html. Snowdon, Brian, and Howard Vane. Modern Macroeconomics: Its Origins, Development and Current State (Cheltenham, U.K.: Elgar, 2005). Soederberg, Susan, George Menz, and Philip Cerny, eds. Internalizing Globalization: The Rise of Neoliberalism (London: Palgrave, 2005). Solomon, Miriam. Social Empiricism (Cambridge, Mass.: MIT Press, 2001). Solow, Robert. “Hedging America,” New Republic, January 12, 2010. Sommer, Jeff. “The Slogans Stop Here,” New York Times, October 30, 2011. Sorkin, Andrew. Too Big to Fail (New York: Viking, 2009). Sorkin, Andrew. “Vanishing Act: ‘Advisers’ Seek Distance from a Report,” New York Times Dealbook, February 14, 2011, at http://dealbook.nytimes.com/2011/02/14/vanishing-act-advisers-seek-distance-from-a-report/.


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The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World) by Robert J. Gordon

"Robert Solow", 3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Charles Lindbergh, clean water, collective bargaining, computer age, creative destruction, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the sewing machine, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, mass immigration, mass incarceration, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, The Rise and Fall of American Growth, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, undersea cable, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yellow journalism, yield management

The Rise of Industrial America: A People’s History of the Post-Reconstruction Era. New York: McGraw-Hill. Snow, Richard. (2013). “Henry Ford’s Experiment to Build a Better Worker,” Wall Street Journal, May 10, p. B1. Snyder, T. D., and Dillow, S. A. (2013). Digest of Education Statistics. Washington, DC: National Center for Education Statistics. Solow, Robert M. (1957). “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics 39: 312–20. Solow, Robert M. (1987). “We’d Better Watch Out,” The New York Times, July 22. Soltow, Lee and Edward Stevens. (1981). The Rise of Literacy and the Common School in the United States: A Socioeconomic Analysis to 1870. Chicago, IL: University of Chicago Press. Sonoc, Scott. (2003). “Defining the Chicago Bungalow,” in Pacyga and Shanabruch (2003), pp. 8–30.

Apparently only the second half of the special century exhibited TFP growth that was substantially above average. We can state this puzzle in two symmetric ways: Why was TFP growth so slow before 1920? Why was it so fast during the fifty years after 1920? The leading hypothesis is that of Paul David, who provided a now well-known analogy between the evolution of electric machinery and of the electronic computer.14 In 1987, Robert Solow quipped, “We can see the computer age everywhere but in the productivity statistics.”15 David responded, in effect: “Just wait”—suggesting that the previous example of the electric dynamo and other electric machinery implied that a long gestation period could intervene between a major invention and its payoff in productivity growth. David counted almost four decades between Thomas Edison’s opening in 1882 of the Pearl Street power plant in Lower Manhattan and the subsequent upsurge of productivity growth in the early 1920s associated with the electrification of manufacturing.

However, the main upward stimulus to productivity must have come from the impetus of higher hourly wages, particularly in the late 1930s, that led firms to economize on the use of labor. This helps us to understand the explosion of productivity during World War II. THE ROLE OF LABOR QUALITY: THE SURGE IN EDUCATIONAL ATTAINMENT The study of the sources of productivity growth is called “growth accounting” and was pioneered by Robert Solow in the 1950s, with seminal additional contribution in the 1960s from Edward Denison, Zvi Griliches, and Dale Jorgenson.12 This approach subdivides the growth in labor productivity into four categories: Increases in labor quality, usually represented by changes in educational attainment Increases in the quantity of capital relative to the quantity of labor Increases in the quality of capital The leftovers, alternately called “total factor productivity” or “the residual” or even “the measure of our ignorance.”


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Prediction Machines: The Simple Economics of Artificial Intelligence by Ajay Agrawal, Joshua Gans, Avi Goldfarb

"Robert Solow", Ada Lovelace, AI winter, Air France Flight 447, Airbus A320, artificial general intelligence, autonomous vehicles, basic income, Bayesian statistics, Black Swan, blockchain, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, collateralized debt obligation, computer age, creative destruction, Daniel Kahneman / Amos Tversky, data acquisition, data is the new oil, deskilling, disruptive innovation, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Google Glasses, high net worth, ImageNet competition, income inequality, information retrieval, inventory management, invisible hand, job automation, John Markoff, Joseph Schumpeter, Kevin Kelly, Lyft, Minecraft, Mitch Kapor, Moneyball by Michael Lewis explains big data, Nate Silver, new economy, On the Economy of Machinery and Manufactures, pattern recognition, performance metric, profit maximization, QWERTY keyboard, race to the bottom, randomized controlled trial, Ray Kurzweil, ride hailing / ride sharing, Second Machine Age, self-driving car, shareholder value, Silicon Valley, statistical model, Stephen Hawking, Steve Jobs, Steven Levy, strong AI, The Future of Employment, The Signal and the Noise by Nate Silver, Tim Cook: Apple, Turing test, Uber and Lyft, uber lyft, US Airways Flight 1549, Vernor Vinge, Watson beat the top human players on Jeopardy!, William Langewiesche, Y Combinator, zero-sum game

PART THREE Tools 12 Deconstructing Work Flows In the midst of the IT revolution, businesses asked, “How should we implement computers in our business?” For some, the answer was easy: “Find where we do lots of calculations and substitute computers for humans; they’re better, faster, and cheaper.” For other businesses, it was less obvious. Nonetheless, they experimented. But the fruits of those experiments took time to materialize. Robert Solow, a Nobel laureate economist, lamented, “You can see the computer age everywhere but in the productivity statistics.”1 From this challenge came an interesting business movement called “reengineering.” In 1993, Michael Hammer and James Champy, in their book Reengineering the Corporation, argued that to use the new general-purpose technology—computers—businesses needed to step back from their processes and outline the objective they wanted to achieve.

Department of Defense Directive 3000.09: Autonomy in Weapon Systems, November 21, 2012, https://www.hsdl.org/?abstract&did=726163. 10. For instance, there are various clauses allowing alternatives when there is time pressure in battle. Mark Guburd, “Why Should We Ban Autonomous Weapons? To Survive,” IEEE Spectrum, June 1, 2016, http://spectrum.ieee.org/automaton/robotics/military-robots/why-should-we-ban-autonomous-weapons-to-survive. Chapter 12 1. Robert Solow, “We’d Better Watch Out,” New York Times Book Review, July 12, 1987, 36. 2. Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review, July–August 1990, https://hbr.org/1990/07/reengineering-work-dont-automate-obliterate. 3. Art Kleiner, “Revisiting Reengineering,” Strategy + Business, July 2000, https://www.strategy-business.com/article/19570?gko=e05ea. 4.

See autonomous vehicles sensors, 15, 44–45, 105 Shevchenko, Alex, 96 signal vs. noise, in data, 48 Simon, Herbert, 107 simulations, 187–188 skills, loss of, 192–193 smartphones, 129–130, 155 Smith, Adam, 54, 65 The Snows of Kilimanjaro (Hemingway), 25–26 society, 3, 19, 209–224 control by big companies and, 215–217 country advantages and, 217–221 inequality and, 212–214 job loss and, 210–212 Solow, Robert, 123 Space Shuttle Challenger disaster, 143 sports, 117 camera automation and, 114–115 sabermetrics in, 56, 161–162 spreadsheets, 141–142, 163, 164 Standard & Poor’s, 36–37 statistics and statistical thinking, 13, 32–37 economic thinking vs., 49–50 human weaknesses in, 54–58 stereotypes, 19 Stern, Scott, 169–170, 218–219 Stigler, George, 105 strategy, 2, 18–19 AI-first, 179–180 AI’s impact on, 153–166 boundary shifting in, 157–158 business transformation and, 167–178 capital and, 170–171 cheap AI and, 15–17 data and, 174–176 economics of, 165 hybrid corn adoption and, 158–160 judgment and, 161–162 labor and, 171–174 learning, 179–194 organizational structure and, 161–162 value capture and, 162–165 strokes, predicting, 44–46, 47–49 Sullenberger, Chesley “Sully,” 184 supervised learning, 183 Sweeney, Latanya, 195, 196 Tadelis, Steve, 199 Taleb, Nassim Nicholas, 60–61 The Taming of Chance (Hacking), 40 Tanner, Adam, 195 task analysis, 74–75, 125–131 AI canvas and, 134–139 job redesign and, 142–145 Tay chatbot, 204–205 technical support, 90–91 Tencent Holdings, 164, 217, 218 Tesla, 8 Autopilot legal terms, 116 navigation apps and, 89 training data at, 186–187 upgrades at, 188 Tesla Motor Club, 111–112 Thinking, Fast and Slow (Kahneman), 209–210 Tinder, 189 tolerance for error, 184–186 tools, AI, 18 AI canvas and, 134–138 for deconstructing work flows, 123–131 impact of on work flows, 126–129 job redesign and, 141–151 usefulness of, 158–160 topological data analysis, 13 trade-offs, 3, 4 in AI-first strategy, 181–182 with data, 174–176 between data amounts and costs, 44 between risks and benefits, 205 satisficing and, 107–109 simulations and, 187–188 strategy and, 156 training data for, 43, 45–47 data risks, 202–204 in decision making, 74–76, 134–138 by humans, 96–97 in-house and on-the-job, 185 in medical imaging, 147 in modeling skills, 101 translation, language, 25–27, 107–108 trolley problem, 116 truck drivers, 149–150 Tucker, Catherine, 196 Tunstall-Pedoe, William, 2 Turing, Alan, 13 Turing test, 39 Tversky, Amos, 55 Twitter, Tay chatbot on, 204–205 Uber, 88–89, 164–165, 190 uncertainty, 3, 103–110 airline industry and weather, 168–169, 170 airport lounges and, 105–106 business boundaries and, 168–170 contracts in dealing with, 170–171 in e-commerce delivery times, 157–158 reducing, strategy and, 156–157 strategy and, 165 unknown knowns, 59, 61–65, 99 unknown unknowns, 59, 60–61 US Bureau of Labor Statistics, 171 US Census Bureau, 14 US Department of Defense, 14, 116 US Department of Transportation, 112, 185 Validere, 3 value, capturing, 162–165 variables, 45 omitted, 62 Varian, Hal, 43 variance, 34–36 fulfillment industry and, 144–145 taming complexity and, 103–110 Vicarious, 223 video games, 183 Vinge, Vernor, 221 VisiCalc, 141–142, 163, 164 Wald, Abraham, 101 Wanamaker, John, 174–175 warehouses, robots in, 105 Watson, 146 Waymo, 95 Waze, 89–90, 106, 191 WeChat, 164 Wells Fargo, 173 Windows 95, 9–10 The Wizard of Oz, 24 work flows AI tools’ impact on, 126–129 decision making and, 133–140 deconstructing, 123–131 iPhone keyboard design and, 129–130 job redesign and, 142–145 task analysis, 125–131 World War II bombing raids, 100–102 X.ai, 97 Xu Heyi, 164 Yahoo, 216 Y Combinator, 210 Yeomans, Mike, 117 YouTube, 176 ZipRecruiter, 93–94, 100 About the Authors AJAY AGRAWAL is professor of strategic management and Peter Munk Professor of Entrepreneurship at the University of Toronto’s Rotman School of Management and the founder of the Creative Destruction Lab.


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The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society by Binyamin Appelbaum

"Robert Solow", airline deregulation, Alvin Roth, Andrei Shleifer, anti-communist, battle of ideas, Benoit Mandelbrot, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, Celtic Tiger, central bank independence, clean water, collective bargaining, Corn Laws, correlation does not imply causation, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, desegregation, Diane Coyle, Donald Trump, ending welfare as we know it, financial deregulation, financial innovation, fixed income, floating exchange rates, full employment, George Akerlof, George Gilder, Gini coefficient, greed is good, Growth in a Time of Debt, income inequality, income per capita, index fund, inflation targeting, invisible hand, Isaac Newton, Jean Tirole, John Markoff, Kenneth Arrow, Kenneth Rogoff, land reform, Long Term Capital Management, low cost airline, manufacturing employment, means of production, Menlo Park, minimum wage unemployment, Mohammed Bouazizi, money market fund, Mont Pelerin Society, Network effects, new economy, oil shock, Paul Samuelson, Philip Mirowski, plutocrats, Plutocrats, price stability, profit motive, Ralph Nader, RAND corporation, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Bork, Robert Gordon, Ronald Coase, Ronald Reagan, Sam Peltzman, Silicon Valley, Simon Kuznets, starchitect, Steve Jobs, supply-chain management, The Chicago School, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, trickle-down economics, ultimatum game, Unsafe at Any Speed, urban renewal, War on Poverty, Washington Consensus

During the second half, he emerged as “the most creative social political thinker of our age,” in the words of Daniel Patrick Moynihan, the New York senator and public intellectual who was well equipped to judge Friedman, since they worked in the same line.7 Even those who disagreed with Friedman found themselves unable to ignore his broadsides. “Only a small minority of the profession is persuaded by his opinions,” the liberal economist Robert Solow said in the 1960s, but “around any academic lunch table on any given day, the talk is more likely to be about Milton Friedman than about any other economist.”8 A half century later, economists still were talking about Friedman — but many more of them had come to agree. Lawrence H. Summers, a Harvard economist who served as a senior official in the Clinton and Obama administrations, wrote in 2006 that Friedman had been a “devil figure” in his youth, but he had come to view Friedman with great admiration.

Phillips plotted the relationship between unemployment and wages in the United Kingdom over the previous century, and found wages tended to rise when unemployment was low. Enthusiastically conflating correlation and causation, economists concluded governments could glide up and down a “Phillips curve,” trading off unemployment and inflation. In an influential paper published in 1960, Samuelson and Robert Solow, two of the most important economists of the postwar era, said the American government could choose from a “menu” of unemployment and inflation rates. The available options included 5 to 6 percent unemployment with no inflation or, if one preferred, 3 percent unemployment with 4 to 5 percent inflation.12 In Great Britain, one economist recalled a meeting in the early 1960s that devolved into an emotional confrontation between those wanting to limit unemployment to 1.25 percent and those favoring 1.75 percent: “There was a figure called Professor Frank Paish who proposed 2.5 percent, who was regarded as, more or less, a Nazi.”13 Washington’s embrace of economics began in the engine rooms of government.

In their view, the Fed encouraged (or discouraged) economic activity by lowering (or raising) interest rates, not by controlling the money supply. But they were ready to acknowledge that monetary policy mattered. “Prevailing economic doctrine has only recently — prodded by Professor Friedman, among others — swung around from the view that monetary phenomena are not very important to the view that perhaps they are,” the Keynesian economist Robert Solow wrote in an open-minded review of A Monetary History.63 But Friedman’s triumph was incomplete. Two important differences remained. First, while Keynesians increasingly accepted the importance of monetary policy, they did not accept the impotence of fiscal policy. “The issue is not whether money matters — we all grant that — but whether only money matters,” said Walter Heller.64 Paul W. McCracken, the first chairman of Nixon’s Council of Economic Advisers, described his views on macroeconomic policy as “Friedmanesque” — the quantity of money was important, but it wasn’t the only thing.


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The Economics of Inequality by Thomas Piketty, Arthur Goldhammer

"Robert Solow", affirmative action, basic income, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, conceptual framework, deindustrialization, endogenous growth, Gini coefficient, income inequality, low skilled workers, means of production, moral hazard, Pareto efficiency, purchasing power parity, Simon Kuznets, The Bell Curve by Richard Herrnstein and Charles Murray, very high income, working-age population

The opposition between the classical and marginalist theories of the capital-labor split resurfaced in the 1950s and 1960s in the so-called “Cambridge capital controversy,” which pitted economists in Cambridge, England, who insisted that the split was in essence a purely distributive conflict and emphasized the role of bargaining power, against other economists in Cambridge, Massachusetts, who argued that the relative prices of capital and labor also played an allocative role, drawing on Robert Solow’s idea of the aggregate production function, a mathematical representation of the possibility of capital-labor substitution at the level of the economy as a whole. Redistribution: “Fiscal” or “Direct”? What are the implications of capital-labor substitutability for redistribution? If one tries to redistribute capital income to labor by increasing workers’ wages, thereby increasing the price of labor, firms (and therefore the economy as a whole) will use less labor and more capital, so that the level of employment will decrease, and labor’s share of total income will increase less than the initial wage increase might have led one to believe.

See also Pension plans Ricardo, David, 30 RMI, in France, 113 Rothenberg, Jerome, 98 Savings: behavioral differences and, 13; credit markets and, 56–57, 60; elasticity of capital supply and, 35–37; Marx and, 39; pensions and, 115–116, 118 Self-employment: calculation of value added, 43; compensation as percentage of household income, 5, 6t; credit rationing and, 62; income inequality and, 12 Self-interest, and economic organization, 39, 106 Singapore, 58 Skill-biased technological change, 71–73, 76–77, 92 Social charges: average and marginal rates of redistribution, 100–102, 108; employer-employee shares of, 46–48, 104–105; fiscal incidence and, 52–53; as political issue, 76–77; price of labor and, 32, 42–44; shifting burden of from low- to high-wage jobs, 34, 76–77, 111, 113, 119; unemployment and, 110–111 Social income: household income and, 5, 6t, 7, 105; income inequality and, 12, 23; taxes and, 47 Social insurance: efficient redistribution and, 114–116; as instrument of fiscal redistribution, 116–119; markets as intertemporal markets, 61 Social integration, housing and educational outcomes and human capital, 83–84 Social justice: left-right consensus about fundamental principles of, 1–2; left’s skepticism about taxes and, 38, 52, 76; methods of redistribution and economic efficiency, 2–3, 32, 35–37, 55–57, 61, 64–65, 74, 105–106 Social origin, influence on human capital, 80–81 Solow, Robert, 30, 48, 59 South America: growth rate per capita, 58; human capital, 59; income inequality, 15 South Korea, 58 Stimulus programs, redistribution and, 121 Subsidized loans, as possible intervention in credit market, 62–63 Supply and demand: human capital and wages, 68, 69–70, 73–74, 88–89; unemployment and social charges, 111–112. See also Demand management Sweden: historical evolution of inequality, 22; income inequality, 14; percentage of obligatory taxes in, 101; wage inequality, 10 Taiwan, 58 Taxes: average and marginal rates of redistribution, 100–105; capital income and, 28–32, 36–37, 43–44, 64–65; Earned Income Tax Credit, in US, 108–109, 112; effect on disposable income, 14, 22–23; Left’s skepticism of redistribution through, 38, 52, 76; negative income tax, 1, 3, 112–113; progressive, on estates, 19, 64; progressive, on income, 19, 48, 64, 102–103, 106; receipts as percent of GDP, 44; redistribution methods, 31–35, 75–76; revenue and, 106–108.


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The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All by Martin Sandbu

"Robert Solow", Airbnb, autonomous vehicles, balance sheet recession, bank run, banking crisis, basic income, Berlin Wall, Bernie Sanders, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, centre right, collective bargaining, debt deflation, deindustrialization, deskilling, Diane Coyle, Donald Trump, Edward Glaeser, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, future of work, gig economy, Gini coefficient, hiring and firing, income inequality, income per capita, industrial robot, intangible asset, job automation, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, liquidity trap, longitudinal study, low skilled workers, manufacturing employment, Martin Wolf, meta analysis, meta-analysis, mini-job, mortgage debt, new economy, offshore financial centre, oil shock, open economy, pattern recognition, pink-collar, precariat, quantitative easing, race to the bottom, Richard Florida, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, social intelligence, TaskRabbit, total factor productivity, universal basic income, very high income, winner-take-all economy, working poor

The third is still under way: it is about the policy response to the digitisation of economic life. If this were baseball, it would be fair to count two strikes against Western policy makers’ performance already. That leaves them one pitched ball—the third big economic transformation hurtling towards us—away from being struck out. * * * Strike one: (mis)managing structural change. In 2015, the economist Robert Solow penned an article asking, “Why aren’t wages keeping up?”3 Solow is a giant in the economics profession whose theories of growth shaped everything that was done in that field in the second half of the twentieth century. He was also uniquely placed to give the question the full historical sweep it deserved: he published his article when he was just shy of his ninety-first birthday. “The purpose of the Treaty of Detroit,” Solow wrote, “was to freeze [the] allocation” of economic surplus (or “rent”) between capital and labour.

Miguel Carreras, Yasemin Irepoglu Carreras, and Shaun Bowler, “Long-Term Economic Distress, Cultural Backlash, and Support for Brexit,” Comparative Political Studies 52, no. 9 (2019): 1396–424, https://doi.org/10.1177/0010414019830714, summarised in Miguel Carreras, Yasemin Irepoglu Carreras, and Shaun Bowler, “It Is the Interplay between Economic Factors and Individual Attitudes That Explains Brexit,” LSE British Politics and Policy blog, London School of Economics and Political Science, 7 May 2019, https://blogs.lse.ac.uk/politicsandpolicy/economics-and-culture-brexit/. Chapter 4. Half a Century of Policy Mistakes 1. Robert Solow, “The Future of Work: Why Wages Aren’t Keeping Up,” Pacific Standard, 11 August 2015, https://psmag.com/economics/the-future-of-work-why-wages-arent-keeping-up. Also see Nelson Lichtenstein, Walter Reuther: The Most Dangerous Man in Detroit, Urbana: University of Illinois Press, 1997, chap. 14. 2. Susan Pedersen, “One-Man Ministry,” review of Bread for All: The Origins of the Welfare State, by Chris Renwick, London Review of Books 40, no. 3 (2018): 3–6, https://www.lrb.co.uk/v40/n03/susan-pedersen/one-man-ministry. 3.

See also economics of belonging Social Democratic Party (Germany), 231 social market economy: challenges to contemporary, 12–13; failures of, 9–10; in Germany, 60; policies and actions leading to creation of, 11–13; postwar accomplishments of, 8–9; principles of, 5; promise of, 8, 9; restoration of, 10; significance of, for political health of the nation, 7–8, 10, 12–16 soft skills, 33–34 Solow, Robert, 55–56 Soros, George, 89 Soviet Union, 6 Spain, 59, 150, 172, 175, 270n6 Springsteen, Bruce, 35 Starbucks, 181 structural change, mismanagement of, 55–62, 67 Subramanian, Arvind, 79–80 subsidies, 196–97 sudden stop, in money flows, 218 Summers, Lawrence, 66, 145 Sweden: economic change as trigger for populism in, 42–44, 47; egalitarianism and prosperity in, 99–100; job mobility in, 107–8; job training programmes in, 109; manufacturing technology in, 79 Sweden Democrat party, 43–45, 47 swing voters, 16 Switzerland: negative interest rates in, 164; net wealth taxes in, 172, 175, 177, 261n6, 263n12 “Take Back Control,” 8, 111, 221 TaskRabbit, 124, 128 tax avoidance, 179–81, 218–19 taxe GAFA (French tax), 180 tax policy, 168–87; carbon tax, 183–87; corporate taxes, 178–83, 218–19; harms inflicted on the vulnerable by, 168–69; income inequality arising from, 56–57, 169, 171; loopholes in, 175; net wealth taxes, 172–78; progressive taxes, 171; Trump’s, 179, 264n18.


pages: 484 words: 104,873

Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford

"Robert Solow", 3D printing, additive manufacturing, Affordable Care Act / Obamacare, AI winter, algorithmic trading, Amazon Mechanical Turk, artificial general intelligence, assortative mating, autonomous vehicles, banking crisis, basic income, Baxter: Rethink Robotics, Bernie Madoff, Bill Joy: nanobots, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, computer age, creative destruction, debt deflation, deskilling, disruptive innovation, diversified portfolio, Erik Brynjolfsson, factory automation, financial innovation, Flash crash, Fractional reserve banking, Freestyle chess, full employment, Goldman Sachs: Vampire Squid, Gunnar Myrdal, High speed trading, income inequality, indoor plumbing, industrial robot, informal economy, iterative process, Jaron Lanier, job automation, John Markoff, John Maynard Keynes: technological unemployment, John von Neumann, Kenneth Arrow, Khan Academy, knowledge worker, labor-force participation, liquidity trap, low skilled workers, low-wage service sector, Lyft, manufacturing employment, Marc Andreessen, McJob, moral hazard, Narrative Science, Network effects, new economy, Nicholas Carr, Norbert Wiener, obamacare, optical character recognition, passive income, Paul Samuelson, performance metric, Peter Thiel, plutocrats, Plutocrats, post scarcity, precision agriculture, price mechanism, Ray Kurzweil, rent control, rent-seeking, reshoring, RFID, Richard Feynman, Rodney Brooks, Sam Peltzman, secular stagnation, self-driving car, Silicon Valley, Silicon Valley startup, single-payer health, software is eating the world, sovereign wealth fund, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, Steven Pinker, strong AI, Stuxnet, technological singularity, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Coming Technological Singularity, The Future of Employment, Thomas L Friedman, too big to fail, Tyler Cowen: Great Stagnation, uber lyft, union organizing, Vernor Vinge, very high income, Watson beat the top human players on Jeopardy!, women in the workforce

In industrialized countries, at least, people at all levels of society received an astonishing upgrade in the quality of their lives, even as the overall wealth of society was propelled to dizzying new heights. Some economists have taken note of this plodding rate of advance in most spheres of technology and have tied it to the economic trends we looked at in the previous chapter, and in particular to the stagnation of incomes for most ordinary Americans. One of the foundational principles of modern economics is that such technological change is essential to long-term economic growth. Robert Solow, the economist who formalized this idea, received the Nobel Prize for his work in 1987. If innovation is the primary driver of prosperity, then perhaps stagnant incomes imply that the problem is the rate at which new inventions and ideas are being generated, rather than the impact of technology on the working and middle classes. Maybe computers aren’t really all that important, and the slow rate of progress on a broader front is what matters most.

US Corporate Profits Versus Retail Sales During Recovery from the Great Recession SOURCE: Federal Reserve Bank of St. Louis (FRED).10 The Nobel laureate economist Joseph Stiglitz has been perhaps the most vocal proponent of the idea that inequality undermines economic growth, writing in a January 2013 New York Times op-ed that “inequality is squelching our recovery” because “our middle class is too weak to support the consumer spending that has historically driven our economic growth.”11 Robert Solow—who won the Nobel Prize in 1987 for his work on the importance of technological innovation to long-term economic growth—seems to largely agree, saying in a January 2014 interview that “increasing inequality tends to hollow out the income distribution, and we lose the solid middle class jobs and steady middle class incomes which provide a reliable flow of consumer demand that keeps industry going and innovating.”12 Paul Krugman, yet another Nobel laureate—and the one with the highest profile as a columnist and blogger for the New York Times—disagrees, however, writing in his blog that he wishes he “could sign on to this thesis,” but that the evidence doesn’t support it.13* Among more conservative economists, the idea that inequality is a significant drag on growth is likely to be dismissed entirely.

Louis: Corporate Profits After Tax (without IVA and CCAdj) [CP] and Retail Sales: Total (Excluding Food Services) [RSXFS]; http://research.stlouisfed.org/fred2/series/CP/; http://research.stlouisfed.org/fred2/series/RSXFS/; accessed April 29, 2014. 11. Joseph E. Stiglitz, “Inequality Is Holding Back the Recovery,” New York Times, January 19, 2013, http://opinionator.blogs.nytimes.com/2013/01/19/inequality-is-holding-back-the-recovery. 12. Washington Center for Equitable Growth, interview with Robert Solow, January 14, 2014, video available at http://equitablegrowth.org/2014/01/14/1472/our-bob-solow-equitable-growth-interview-tuesday-focus-january-14–2014. 13. Paul Krugman, “Inequality and Recovery,” New York Times (The Conscience of a Liberal blog), January 20, 2013, http://krugman.blogs.nytimes.com/2013/01/20/inequality-and-recovery/. 14. See, for example, Krugman’s “Cogan, Taylor, and the Confidence Fairy,” New York Times (The Conscience of a Liberal blog), March 19, 2013, http://krugman.blogs.nytimes.com/2013/03/19/cogan-taylor-and-the-confidence-fairy/. 15.


The State and the Stork: The Population Debate and Policy Making in US History by Derek S. Hoff

"Robert Solow", affirmative action, Alfred Russel Wallace, back-to-the-land, British Empire, business cycle, clean water, creative destruction, David Ricardo: comparative advantage, demographic transition, desegregation, Edward Glaeser, feminist movement, full employment, garden city movement, George Gilder, Gunnar Myrdal, immigration reform, income inequality, income per capita, invisible hand, Jane Jacobs, John Maynard Keynes: technological unemployment, Joseph Schumpeter, labor-force participation, manufacturing employment, mass immigration, New Economic Geography, new economy, old age dependency ratio, Paul Samuelson, peak oil, pensions crisis, profit motive, Ralph Waldo Emerson, road to serfdom, Ronald Reagan, Scientific racism, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, trickle-down economics, urban planning, urban sprawl, wage slave, War on Poverty, white flight, zero-sum game

For example, Nicholas Kaldor, a leading refiner of the Keynesian tradition at Cambridge University, suggested that population growth reduces the level of per capita technological progress and stunts income growth.106 Moses Abramovitz, who studied the growth process for half a century and was later president of the American Economic Association, summed up the matter this way: “It is now clear that rich countries can maintain high levels of average income without rapid [population] growth.”107 And in his Theory of Economic Growth, W. A. Lewis, who won the Nobel Prize for his development research, illuminated the traditional principle of diminishing returns and guessed that the United States was “neither over- nor under-populated.”108 Perhaps most importantly, a seminal 1956 statement on growth theory by population unbound 125 Nobel laureate Robert Solow assumed that a rising population reduces the level of capital per worker.109 The evolving strategy of the Population Council, the leading anti– population growth organization founded by John D. Rockefeller in 1952 and subsequently supported by the Ford Foundation, reflected the developing mainstream view that population problems could be found at home as well as overseas. Three years after its creation, the Population Council convened an ad hoc committee to discuss the state of the population movement and address ways to sharpen its message.110 At the committee’s first meeting in May 1955, Frederick Osborn, the Council’s president, urged greater emphasis on population problems in the United States.111 This emphasis was in part a tactic to show foreign governments that the US was taking its own population issues seriously.

Paul Samuelson, an MIT Nobel laureate and leader of his generation of American Keynesians, noted, “It may be that in order to convince public opinion on the need to do something about ecology and not just talk about it, the overselling of . . . the Club of Rome, of biological scientists like the distinguished Paul Ehrlich . . . may still be found to earn a gold 226 chapter 8 star for good performance in that court of final judgment.”34 Nobel laureate and theorist of economic growth Robert Solow roundly dismissed the MIT study and yet wrote, “I hope nobody will conclude that I believe the problems of population control, environmental degradation, and resource exhaustion to be unimportant, or that I am one of those people who believe that an adequate response to such problems is a vague confidence that some technological solution will turn up. On the contrary, it is precisely because these are important problems that public policy had better be based on sound and careful analysis.”35 Other economists who aligned themselves with neither the Malthusians nor the cornucopianists advocated new controls over technology and public policies (e.g., pollution taxes) to correct for the negative externalities of market activity.36 Those who favored reform rather than cessation of economic growth also sought to redefine economic growth to account for goods not traded on the open market and, most important, to account for human welfare.37 Richard Easterlin, whose work supported the optimists, reminded his readers that economic growth for its own sake is little more than a treadmill.38 A coterie of conservative and market-oriented economists sought to bury the limits-to-growth idea.

Nicholas Kaldor, “A Model of Economic Growth,” Economic Journal 67 (December 1957): esp. 614–18. 107. Abramovitz, Thinking about Growth, xvi. 108. W. A. Lewis, The Theory of Economic Growth (London: George Allen and Unwin, 1955), 330. In his autobiography on the Nobel Prize’s website, Lewis discusses the role of “population pressure” in depressing wages (www.nobelprize.org/ economics/laureates/1979/lewis-autobio.html). 109. See Robert Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics 70 (February 1956): 65–94. 110. Committee meetings centered on the developing world and reflected the shift in demographic transition theory from the assumption that modernization and economic development were sufficient to lower population growth to the stress on direct family planning programs. 111. “Minutes to Ad Hoc Committee May 11, 1955,” in Population Council Records, Box 1, Folder “Ad Hoc Philosophy Committee, Kirk, Dudley, 1955.” 112.


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Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

"Robert Solow", 3D printing, Asian financial crisis, bank run, basic income, battle of ideas, Berlin Wall, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, dematerialisation, disruptive innovation, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, land reform, land value tax, Landlord’s Game, loss aversion, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, mobile money, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, Richard Thaler, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, Steve Ballmer, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

Both variants failed to see the crash coming because – being built on the presumption of equilibrium, while simultaneously overlooking the role of the financial sector – they had little capacity to predict, let alone respond to, boom, bust and depression. With such ill-fitting models dominating macroeconomic analysis, some big-name insiders began to critique the very theories that they had helped to legitimise. Robert Solow, known as the father of neoclassical economic growth theory and long-time collaborator of Paul Samuelson, became an outspoken critic, first in his 2003 speech bluntly entitled ‘Dumb and Dumber in Macroeconomics’, then in analyses that mocked the theory’s stringent assumptions.6 The general equilibrium model, he pointed out, in fact depends upon there being just one single, immortal consumer-worker-owner maximising their utility into an infinite future, with perfect foresight and rational expectations, all the while served by perfectly competitive firms.

‘It might well have been called “The Game of Life”,’ remarked Magie, ‘as it contains all the elements of success and failure in the real world.’ But when the games manufacturer Parker Brothers bought the patent for The Landlord’s Game from Magie in the 1930s, they relaunched it simply as Monopoly, and provided the eager public with just one set of rules: those that celebrate the triumph of one over all.35 Distributional dynamics that play out in board games show up in computer simulations of the economy too. It was Robert Solow, the outspoken critic of modern macro, who ridiculed equilibrium economic models by demonstrating that, far from modelling markets of many players, they were actually made up of a single ‘representative agent’ – reducing the economy to just one typical consumer-worker-owner who responds predictably to ‘external’ shocks. Since the 1980s, complexity economists have been developing alternative approaches including ‘agent-based’ modelling which starts out with a diverse array of agents all following a simple set of rules as they continually respond and adapt to their surroundings.

Far from being too early to rule decoupling out, it is too late to rely on the belief that it will happen. If sufficient action were taken to move back within planetary boundaries, they argue, it would be unrealistic to believe that it could be accompanied by continual growth. And to understand why, we must revisit long-standing assumptions about what drives GDP growth in the first place. Back in the 1950s Robert Solow, father of economic growth theory, attempted to pin down exactly what had caused the US economy to grow over the past half-century. His seminal growth model – based on the same theoretical foundations as the Circular Flow diagram – assumed it would be due to the productivity gains arising from labour and capital working ever more effectively together. But when he plugged US data into the model’s equations, to his surprise he found that capital invested per worker explained a mere 13% of the American economy’s growth over the previous 40 years, and he was forced to ascribe the unexplained remaining 87% to ‘technical change’.34 It was an embarrassingly large residual, leading his contemporary Moses Abramovitz, whose own calculations were turning up similarly large explanatory gaps, to admit that this residual was effectively a ‘measure of our ignorance about the causes of economic growth’.35 Economists have been chasing after better explanations of GDP growth ever since, seeking to discover the contents of that mysterious residual.


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Global Inequality: A New Approach for the Age of Globalization by Branko Milanovic

"Robert Solow", Asian financial crisis, assortative mating, Berlin Wall, bitcoin, Black Swan, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial exploitation, colonial rule, David Ricardo: comparative advantage, deglobalization, demographic transition, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Gunnar Myrdal, income inequality, income per capita, invisible hand, labor-force participation, liberal capitalism, low skilled workers, Martin Wolf, means of production, mittelstand, moral hazard, Nash equilibrium, offshore financial centre, oil shock, open borders, Paul Samuelson, place-making, plutocrats, Plutocrats, post scarcity, post-industrial society, profit motive, purchasing power parity, Ralph Nader, Second Machine Age, seigniorage, Silicon Valley, Simon Kuznets, special economic zone, stakhanovite, trade route, transfer pricing, very high income, Vilfredo Pareto, Washington Consensus, women in the workforce

Trade union density in selected OECD countries, 1999–2013 This graph shows the percentage of workers who belong to trade unions in Austria, the United Kingdom, Germany, and the United States. It shows that the percentage has been decreasing since 1999. Data source: Based on OECD data available at https://stats.oecd.org/Index.aspx?DataSetCode=UN_DEN. The decline in trade union density underpins a more general process of the weakening of the bargaining position of labor vis-à-vis capital. In a recent revisiting of his own contribution to the theory of growth, Robert Solow looked at the possibility that the declining labor share in rich countries is due to a renegotiation of rents in favor of capital owners.48 Solow considers an economy-wide model of imperfect competition where value added is distributed between labor and capital, paid according to their marginal products plus a rent, which is the object of negotiation between the two. These rents could be monopoly rents, patent rents, rents arising from obstacles to entry, and the like.

For example, in 1995, trade union membership in public and private sectors in the United Kingdom was about the same (some 3.5 million each). Twenty years later, membership in the public sector was almost 4 million and in the private sector just 2.5 million (see chart 2.1 in https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/313768/bis-14-p77-trade-union-membership-statistical-bulletin-2013.pdf). 48. Based on Robert Solow’s presentation at the Graduate Center, City University of New York, April 30, 2015. There was no written paper as of May 2015. 49. For a discussion of the technology versus globalization “contest,” see Krugman (1995), Slaughter and Swagel (1997), and Slaughter (1999). The technological change literature argues that wage inequality increased mostly as a result of the race between technology and skills (with periods of greater demand for skills unmatched by a sufficient increase in their supply).

See also false consciousness; socialism; social tables socialism: great leveling and, 48, 79, 99, 100–102; Piketty on, 94; World War I and, 98; capitalism and, 101, 156–157; labor/capital income and, 101, 260n23; voluntarism and, 248n23; political voluntarism and, 248n24 social mobility, 202–203 social (cultural) norms, 49, 188–189, 190, 206, 262n39, 262n43. See also marriages social services and insurance: preindustrial period and, 70; Kuznets cycles and, 89, 93–94, 116–117; globalization and, 163; middle class decline and, 197, 199; rich people and, 197, 199, 261n30; US Great Leveling and, 222; “net” and, 262n42. See also health care; transfers, social social tables, 82–84, 248n19, 253n3, 254n7 Society of Peoples, 255n18 Solow, Robert, 106 Stakhanov, Aleksei, 101 standards of living, 14–15 staple goods, subsidization of, 101 steamship technology, 258n7 stock variables, 39 subsistence level, 50, 52–53, 65, 67–68, 69, 84, 246n6 Sumarto, Sudarno, 262n42 super-wealthy. See billionaires supply and demand, 245n2 Suryahadi, Asep, 262n42 Swagel, Phillip, 252n49 Taleb, Nassim, 159, 223, 225 Tan, Kok-Chor, 203, 256n26 taxes: twenty-first and twenty-second centuries and, 7; data sources, 12; S curves and, 23; income pre-, 37–38; income after, 38–39; rich countries (1918–1980) and, 48; 1980s and, 54–55; wars and, 64, 97, 250n35; 1980 and after, 72; Netherlands preindustrial period and, 77; twentieth-century leveling and, 94; Great Leveling and, 98; capital/labor bargaining power and, 106; United States, 107, 181; Kuznets cycles and, 111, 113–114; globalization and, 112, 217–218; migrants and, 152, 206, 262n41; financial assets and, 221; methodological nationalism and, 237; mobile capital and, 246n11.


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The Wealth of Humans: Work, Power, and Status in the Twenty-First Century by Ryan Avent

"Robert Solow", 3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, disruptive innovation, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, post-work, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, uber lyft, very high income, working-age population

In 1965 Gordon Moore, a co-founder of Intel, reckoned his industry could double the number of transistors in an integrated circuit roughly once every two years, and that this doubling would likely continue.7 This astonishing pace of progress has been maintained for most of the last half-century, changing computing from something done at great expense by house-sized machines to something done all the time in tiny devices which now rest in the pockets of about 30 per cent of the world’s population. This slice of history played out during a period that economist Tyler Cowen, of George Mason University, has labelled the ‘Great Stagnation’.8 A half-century of extraordinary gains in computing power somehow did not return humanity to the days of dizzying economic and social change of the nineteenth century. In 1987 the Nobel Prize-winning economist Robert Solow mused, in a piece pooh-poohing the prospect of a looming technological transformation, that the evidence for the revolutionary power of computers simply wasn’t there. ‘You can see the computer age everywhere but in the productivity statistics’, he reckoned, and he had a point.9 Productivity perked up in the 1990s but wheezed out again in the 2000s. And that, some seemed to conclude, was all there was.

Rosenberg, Nathan, and Trajtenberg, Manuel, ‘A General-Purpose Technology at Work: The Corliss Steam Engine in the Late 19th Century US’, Journal of Economic History, March 2004.   7. Moore, Gordon, ‘Cramming More Components Onto Integrated Circuits’, Electronics, 19 April 1965.   8. Cowen, Tyler, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York, NY: E. P. Dutton & Co Inc., 2011).   9. Solow, Robert, ‘Manufacturing Matters’, The New York Times, 12 July 1987. 10. Basu, Susanto, and Fernald, John, ‘Information and Communications Technology as a General-Purpose Technology: Evidence from U.S. Industry Data’, German Economic Review, Vol. 8, Issue 2, 2007. 11. Brynjolfsson and McAfee Race Against the Machine. 12. Raymond ‘Ray’ Kurzweil (1948–) is a serial inventor and entrepreneur whose past innovations include programmes which allow computers to recognize text and convert it to speech.

Ray labour abundance as good problem bargaining power cognitive but repetitive collective bargaining and demographic issues discrimination and exclusion global growth of workforce and immigration liberalization in 1970s/80s ‘lump of labour’ fallacy occupational licences organized and proximity reallocation to growing industries retraining and skill acquisition and scarcity and social value work as a positive good see also employment Labour Party, British land scarcity Latvia Le Pen, Jean-Marie Le Pen, Marine legal profession Lehman Brothers collapse (2008) Lepore, Jill liberalization, economic (from 1970s) Linkner, Josh, The Road to Reinvention London Lucas, Robert Lyft maker-taker distinction Malthus, Reverend Thomas Manchester Mandel, Michael Mankiw, Gregory marketing and public relations Marshall, Alfred Marx, Karl Mason, Paul, Postcapitalism (2015) McAfee, Andrew medicine and healthcare ‘mercantilist’ world Mercedes Benz Mexico Microsoft mineral industries minimum wage Mokyr, Joel Monroe, President James MOOCs (‘massive open online courses’) Moore, Gordon mortality rates Mosaic (web browser) music, digital nation states big communities of affinity inequality between as loci of redistribution and social capital nationalist and separatist movements Netherlands Netscape New York City Newsweek NIMBYism Nordic and Scandinavian economies North Carolina North Dakota Obama, Barack oil markets O’Neill, Jim Oracle Orbán, Viktor outsourcing Peretti, Jonah Peterson Institute for International Economics pets.com Philadelphia Centennial Fair (1876) Philippines Phoenix, Arizona Piketty, Thomas, Capital in the Twenty-First Century (2013) Poland political institutions politics fractionalization in Europe future/emerging narratives geopolitical forces human wealth narrative left-wing looming upheaval/conflict Marxism nationalist and separatist movements past unrest and conflict polarization in USA radicalism and extremism realignment revolutionary right-wing rise of populist outsiders and scarcity social membership battles Poor Laws, British print media advertising revenue productivity agricultural artisanal goods and services Baumol’s Cost Disease and cities and dematerialization and digital revolution and employment trilemma and financial crisis (2008) and Henry Ford growth data in higher education of highly skilled few and industrial revolution minimum wage impact paradox of in service sector and specialization and wage rates see also factors of production professional, technical or managerial work and education levels and emerging economies the highly skilled few and industrial revolution and ‘offshoring’ professional associations skilled cities professional associations profits Progressive Policy Institute property values proximity public spending Putnam, Robert Quakebot quantitative easing Race Against the Machine, Brynjolfsson and McAfee (2011) railways Raleigh, North Carolina Reagan, Ronald redistribution and geopolitical forces during liberal era methods of nation state as locus of as a necessity as politically hard and societal openness wealth as human rent, economic Republican Party, US ‘reshoring’ phenomenon Resseger, Matthew retail sector retirement age Ricardo, David rich people and maker-taker distinction wild contingency of wealth Robinson, James robots Rodrik, Dani Romney, Mitt rule of law Russia San Francisco San Jose Sanders, Bernie sanitation SAP Saudi Arabia savings glut, global ‘Say’s Law’ Scalia, Antonin Scandinavian and Nordic economies scarcity and labour political effects of Schleicher, David Schwartz, Anna scientists Scotland Sears Second World War secular stagnation global spread of possible solutions shale deposits sharing economies Silicon Valley Singapore skilled workers and education levels and falling wages the highly skilled few and industrial revolution ‘knowledge-intensive’ goods and services reshoring phenomenon technological deskilling see also professional, technical or managerial work Slack (chat service) Slate (web publication) smartphone culture Smith, Adam social capital and American Constitution baseball metaphor and cities ‘deepening’ definition/nature of and dematerialization and developing economies and erosion of institutions of firms and companies and good government and housing wealth and immigration and income distribution during industrial revolution and liberalization and nation-states productive application of and rich-poor nation gap and Adam Smith and start-ups social class conflict middle classes and NIMBYism social conditioning of labour force working classes social democratic model social reform social wealth and social membership software ‘enterprise software’ products supply-chain management Solow, Robert Somalia South Korea Soviet Union, dissolution of (1991) specialization Star Trek state, role of steam power Subramanian, Arvind suburbanization Sweden Syriza party Taiwan TaskRabbit taxation telegraphy Tesla, Nikola Thatcher, Margaret ‘tiger’ economies of South-East Asia Time Warner Toyota trade China as ‘mega-trader’ ‘comparative advantage’ theory and dematerialization global supply chains liberalization shaping of by digital revolution Adam Smith on trade unions transhumanism transport technology self-driving cars Trump, Donald Twitter Uber UK Independence Party United States of America (USA) 2016 Presidential election campaign average income Bureau of Labour Statistics (BLS) Constitution deindustrialization education in employment in ethno-nationalist diversity of financial crisis (2008) housing costs in housing wealth in individualism in industrialization in inequality in Jim Crow segregation labour scarcity in Young America liberalization in minimum wage in political polarization in post-crisis profit rates productivity boom of 1990s real wage data rising debt levels secular stagnation in shale revolution in social capital in and social wealth surpasses Britain as leading nation wage subsidies in university education advanced degrees downward mobility of graduates MOOCs (‘massive open online courses’) and productivity see also education urbanization utopias, post-work Victoria, Queen video-gamers Virginia, US state Volvo Vox wages basic income policy Baumol’s Cost Disease cheap labour and employment growth and dot.com boom and financial crisis (2008) and flexibility and Henry Ford government subsidies and housing costs and immigration and industrial revolution low-pay as check on automation minimum wage and productivity the ‘reservation wage’ as rising in China rising in emerging economies and scarcity in service sector and skill-upgrading approach stagnation of and supply of graduates Wandsworth Washington D.C.


pages: 293 words: 88,490

The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction by Richard Bookstaber

"Robert Solow", asset allocation, bank run, bitcoin, business cycle, butterfly effect, buy and hold, capital asset pricing model, cellular automata, collateralized debt obligation, conceptual framework, constrained optimization, Craig Reynolds: boids flock, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, dark matter, disintermediation, Edward Lorenz: Chaos theory, epigenetics, feminist movement, financial innovation, fixed income, Flash crash, Henri Poincaré, information asymmetry, invisible hand, Isaac Newton, John Conway, John Meriwether, John von Neumann, Joseph Schumpeter, Long Term Capital Management, margin call, market clearing, market microstructure, money market fund, Paul Samuelson, Pierre-Simon Laplace, Piper Alpha, Ponzi scheme, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, Richard Feynman, risk/return, Saturday Night Live, self-driving car, sovereign wealth fund, the map is not the territory, The Predators' Ball, the scientific method, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, tulip mania, Turing machine, Turing test, yield curve

A growing number lose confidence in the paradigm. That is where we are today, and, ironically, the germination of the crisis in economics is its inability to deal with the dynamics of crisis. A scientific revolution requires both a period of crisis science and a candidate for a new paradigm. The 2008 crisis may be such a stimulus. Agent-based modeling may be the new paradigm. Borges’s Tlön Following the 2008 crisis, Robert Solow, Nobel laureate and dean of economic growth theory, testified before the House Committee on Science and Technology. He critiqued the core model applied for macroeconomic analysis by central banks throughout the world, the dynamic stochastic general equilibrium (DSGE) model. In his prepared testimony, titled “Building a Science of Economics for the Real World,” he said that these models take it for granted that the whole economy can be thought about as if it were a single, consistent person or dynasty carrying out a rationally designed long-term plan, occasionally disturbed by unexpected shocks but adapting to them in a rational, consistent way.

Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations. New York: Macmillan. Singer, Tania, and Matthias Bolz, eds. 2013. Compassion: Bridging Practice and Science. Munich, Germany: Max Planck Society. http://www.compassion-training.org/en/online/index.html?iframe=true&width=100%&height=100%#22. Smith, Rupert. 2008. The Utility of Force: The Art of War in the Modern. New York: Vintage. Solow, Robert. 2010. “Building Science for a Real World.” Testimony presented at a hearing before the Subcommittee on Investigations and Oversight, Committee on Science and Technology, U.S. House of Representatives, July 20. https://www.gpo.gov/fdsys/pkg/CHRG-111hhrg57604/pdf/CHRG-111hhrg57604.pdf. Soros, George. 1987. The Alchemy of Finance: Reading the Mind of the Market. Hoboken, NJ: Wiley & Sons. ———. 2010.

See also Russell, Bertrand; Whitehead, Alfred North radical uncertainty, 12, 18; defined as, 50–51; economists’ view of, 197; and heuristics, 68; and the Library of Babel, 63 (see also Library of Babel); and the limits to knowledge, 52; and the nature of humanity, 60; and risk management, 121; in unknown state versus unknown probabilities, 198; and warfare, 117, 121 railroads, 4 rational expectations, 86 Rational Expectations Hypothesis (REH); fallibility and, 175; and reflexivity, 175; reflexivity, comparison to, 115 rationality, 87 reflexivity, 58, 60, 113; and complexity, 115, 122; and the cognitive function, 114, 137–138; and elements in modeling, 114; and fallibility, 59; and heuristics, 115; manipulative function in, 114, 137–138; time-and-context in, 183 regime shift, 105 regularity conditions, 29 regulators, 15 representative agent, 81–82 reproduction, 72–73 Reynolds, Craig, and boids, 37 Ricardo, David, 3–4, 91, 188 risk management: radical uncertainty in, 121 (see also radical uncertainty); in warfare, 121 risk transformations, 131 Rome, 131 Rorty, Richard, 178 Rothschild, Baron, 4 Royal Society, 52 Rumsfeld, Donald, 50 Russell, Bertrand, 52–53 Saari, Donald, 29 Samuelson, Paul, 84 Sartre, Jean-Paul, 77 Sargent, Thomas, 71, 103 Saturday Night Live, 144 Say, Jean-Baptiste, 4 Securities and Exchange Commission (SEC), 147–148 securities lenders, 136 self-fulfilling prophecy, 113 self-referential systems, 57, 60 self-replication, 31 Shackle, G.L.S., 85 Sharpe, William, 85 Shereshevsky, Solomon, 76–77 Simon, Herbert, 110 SIVs, 161, 165 Slick, Grace, 50 Smith, Adam, 3–4, 188 Societie Generale (SocGen), 164 Solow, Robert, 92 Soros, George, 83, 115, 137; and reflexivity, 58–59 stampede: and emergence, 35–36; Hajj, example of, 34–36 Standard & Poor’s, 160 stock market crash (October 1987): and the New York Stock Exchange (NYSE), 145–147; and portfolio insurance, 145–147 (see also portfolio insurance); and the S&P 500, 145–147 subprime mortgages, 160–161 Sun Pin, 117 Syll, Lars, 138 Thomas Theorem, 108 tight coupling, 112 Turing, Alan: and David Hilbert’s program, 54 (see also halting problem); and the halting problem, 31, 55; and the printing problem, 55; and Turing test, 196; and the universal Turing machine (UTM), 54 (see also universal Turing machine) Tversky, Amos, 45–47 Unbearable Lightness of Being, The, 60–61 uncertainty principle, 56–57; and the limits to knowledge, 51 universal Turing machine (UTM), 32, 54–56 University of Chicago, 3 Victorian England, 3–4 Volcker Rule, 156, 158 Walras, Leon, 194 Washington Mutual, 11 white night, 131 Whitehead, Alfred North, 52–53 Wittgenstein, Ludwig, 40 Wolfram, Stephen, 26–27 A NOTE ON THE TYPE This book has been composed in Adobe Text and Gotham.


pages: 590 words: 153,208

Wealth and Poverty: A New Edition for the Twenty-First Century by George Gilder

"Robert Solow", affirmative action, Albert Einstein, Bernie Madoff, British Empire, business cycle, capital controls, cleantech, cloud computing, collateralized debt obligation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversified portfolio, Donald Trump, equal pay for equal work, floating exchange rates, full employment, George Gilder, Gunnar Myrdal, Home mortgage interest deduction, Howard Zinn, income inequality, invisible hand, Jane Jacobs, Jeff Bezos, job automation, job-hopping, Joseph Schumpeter, knowledge economy, labor-force participation, longitudinal study, margin call, Mark Zuckerberg, means of production, medical malpractice, minimum wage unemployment, money market fund, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, mortgage debt, non-fiction novel, North Sea oil, paradox of thrift, Paul Samuelson, plutocrats, Plutocrats, Ponzi scheme, post-industrial society, price stability, Ralph Nader, rent control, Robert Gordon, Ronald Reagan, Silicon Valley, Simon Kuznets, skunkworks, Steve Jobs, The Wealth of Nations by Adam Smith, Thomas L Friedman, upwardly mobile, urban renewal, volatility arbitrage, War on Poverty, women in the workforce, working poor, working-age population, yield curve, zero-sum game

A car, for example, is more or less valuable not only through its own qualities, but through the quality of roads and places to drive, the availability of fuel and alternative modes of transportation, the level of real incomes, the opportunity costs of such a large purchase, and the existence of suburbs and shopping centers. These and endless other considerations affect price and value but defy quantification or comparison to the prices in previous eras, whether of automobiles or horse-drawn carriages. In a footnote to his famous essay on inflation, Robert Solow airily observes that all who raise such concerns “can sign up for the course on index theory, but they will find it dull.”9 Dull or not, such matters constitute the essence of the problem of defining, measuring, and treating inflation. These problems render the usual indexes nearly useless in scientific terms in the long run and of doubtful worth even in the short run. Since what we see as inflation is the product of these problematical basket trends, the London study called into question the very statistical foundation of price-level theory and thus impugned the most enduring images of the history of inflation, which economists hold in their minds as they interpret current events.

., Inflation and the Income Tax (Washington, DC: the Brookings Institution, 1976), p. 193. 7 David Warsh and Lawrence Minard, “Inflation Is Too Important to Leave to the Economists,” Forbes, November 15, 1976, and David Warsh, “The Great Hamburger Paradox,” Forbes, September 15, 1977. 8 E. H. Phelps-Brown and Sheila V. Hopkins, “Seven Centuries of Building Wages,” Economica, vol. 22, no. 87 (August 1955) and E. H. Phelps-Brown and Sheila V. Hopkins, “Seven Centuries of the Prices of Consumables, Compared to Builders’ Wage Rates,” Economica (1956). 9 Robert Solow, “The Intelligent Citizen’s Guide to Inflation,” Public Interest , no. 38 (Winter 1975), p. 33. 10 Robert L. Heilbroner and Lester C. Thurow, The Economic Problem, rev. edition (Englewood Cliffs, NJ: Prentice-Hall, 1979). 11 M. Panic, “The Origin of Increasing Inflationary Tendencies,” in Fred Hirsch and John H. Goldthorpe, eds., The Political Economy of Inflation (Cambridge, MA: Harvard University Press, 1978), p. 137. 12 Solow, “The Intelligent Citizen’s Guide to Inflation,” pp. 30–66. 13 Charles S.

Forty Centuries of Wage and Price Controls. Washington, DC: the Heritage Foundation, 1978. Sennholz, Hans. F. Death and Taxes. Washington, DC: the Heritage Foundation, 1976. Shackle, G. L. S. Epistemics and Economics: A Critique of Economic Doctrines. London, Cambridge University Press, 1972. Smith, Adam. The Wealth of Nations. Edited by Edwin Cannan. New York: G. P. Putnam’s Sons, 1904. Solow, Robert. “The Intelligent Citizen’s Guide to Inflation.” Public Interest 38 (Winter 1975). Sowell, Thomas. American Ethnic Groups. Washington, DC: the Urban Institute, 1978. ———. Classical Economics Reconsidered. Princeton, NJ: Princeton University Press, 1974. ———. “Economics and Economic Man.” In Kristol, Irving, and Weaver, Paul, eds. The Americans, 1976: Critical Choices for Americans. Vol. 2.


pages: 223 words: 58,732

The Retreat of Western Liberalism by Edward Luce

"Robert Solow", 3D printing, affirmative action, Airbnb, basic income, Berlin Wall, Bernie Sanders, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, call centre, carried interest, centre right, Charles Lindbergh, cognitive dissonance, colonial exploitation, colonial rule, computer age, corporate raider, cuban missile crisis, currency manipulation / currency intervention, Dissolution of the Soviet Union, Doha Development Round, Donald Trump, double entry bookkeeping, Erik Brynjolfsson, European colonialism, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, future of work, George Santayana, gig economy, Gini coefficient, global pandemic, global supply chain, illegal immigration, imperial preference, income inequality, informal economy, Internet of things, Jaron Lanier, knowledge economy, lateral thinking, liberal capitalism, Marc Andreessen, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, Monroe Doctrine, moral panic, more computing power than Apollo, mutually assured destruction, new economy, New Urbanism, Norman Mailer, offshore financial centre, one-China policy, Peace of Westphalia, Peter Thiel, plutocrats, Plutocrats, precariat, purchasing power parity, reserve currency, reshoring, Richard Florida, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, Snapchat, software is eating the world, South China Sea, Steve Jobs, superstar cities, telepresence, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, Washington Consensus, We are the 99%, We wanted flying cars, instead we got 140 characters, white flight, World Values Survey, Yogi Berra

For brief moments, such as during the internet boom of the 1990s, that age looked like it had returned. But the growth vanished almost as quickly as it came. We are still awaiting the productivity gains we were assured would result from the digital economy. With the exception of most of the 1990s, productivity growth has never recaptured the rates it achieved in the post-war decades. ‘You can see the computer age everywhere but in the productivity statistics,’ said Robert Solow, the Nobel Prize-winning economist. Peter Thiel, the Silicon Valley billionaire, who has controversially backed Donald Trump, put it more vividly: ‘We wanted flying cars, instead we got 140 characters [Twitter].’ That may be about to change, with the acceleration of the robot revolution and the spread of artificial intelligence. But we should be careful what we wish for. The squeeze is already uncomfortable enough.

., 149 media: exposure of Nixon, 131–2; fake news, 130, 148, 178–9; falling credibility in US, 130; in Russia, 129–31, 172–3; television, 84, 128, 129, 130 medicine and healthcare, 35, 36, 42, 58, 59, 60, 62, 102, 103, 198 Medvedev, Dimitry, 79 Meiji Restoration in Japan, 78 mercantilism, 78 ‘meritocracy’, 43, 44–6 Merkel, Angela, 15, 180 Mexico, 29, 114 Middle East, 181, 183 Middle East and North Africans (MENAs, US ethnic category), 95 Midland, Michigan, 194–5 migration, 41, 99–100, 196, 198; current crisis, 70, 100, 140, 180–1; and welfare systems, 101, 102 Milanovic, Branko, 31, 32, 33 Mill, John Stuart, 161, 162 Mineta, Norman, 134 Mitterrand, François, 90, 107 Modi, Narendra, 201 Moldova, Grape Revolution (2009), 79 Mongol China, 25 Monroe Doctrine (1823), 164–5 Moore, Barrington, 12 Morozov, Evgeny, The Net Delusion, 129 Mounk, Yascha, 68, 123 Müller, Jan-Werner, 90, 118, 139 multinational companies, 26–7, 69–70 multipolarity, 6–8, 70 Musharraf, Pervez, 80 Muslim Brotherhood in Egypt, 82 Napoleonic Wars, 156 Nathan, Andrew, 84 National Endowment for Democracy (NED), 82 National Front in France, 15, 102, 108–10 National Health Service, 102 nationalism: comeback of, 11, 97, 102, 108–9, 170, 174; and end of Cold War, 5; European, 10–11, 102, 108–9; and global trilemma, 72–3; Summers’ responsible nationalism, 71–2 Nato alliance, 135, 140, 179 Navarro, Peter, 149, 167, 180 Negroponte, Nicholas, 127 Netherlands, 102 New York, 49–50, 54 New Yorker, 35 Nixon, Richard, 131–2, 134 non-governmental organisations (NGOs), 85 North American Free Trade Agreement, 73 North Korea, 175 nuclear weapons, 5, 167, 174–6 Nuttall, Paul, 90 Obama, Barack: and AIIB, 84; and Arab Spring, 82; Asia pivot policy, 157, 160–1; election of (2008), 97; and financial sector, 193, 199; gay marriage issue, 188; gender identity order (2016), 187–8; on history’s long arc, 190; and Islam, 182; and nuclear weapons, 175–6; trip to China (2009), 159–60; US–Russia relations, 79; and world trade agreements, 73; ‘wrong side of history’ language, 187–8, 190 Occupy Wall Street, 139 oikophobia, 111–12, 117 Opium Wars, 23 Orbán, Viktor, 138–9, 181 Organization for Economic Cooperation and Development, 29 Orwell, George, 69, 128 Oxford University, 4 Paine, Thomas, 126 Pakistan, 175 Philippines, 61, 136–7, 138, 160, 202 Philosophy, Politics and Economics (PPE), 4 Plato, 137 politics in West: 1968 Democratic Convention, 188–9; decline of established parties, 88–90; declining faith in system, 8–9, 12, 14, 88–9, 98–100, 103–4, 119–23, 202–3; and disappearing growth, 13; falling voter turnout in UK, 99; left embraces personal liberation (1960s), 188–9; and ‘meritocracy’, 43–6; move rightwards of working classes, 95–9, 102, 108–10, 189–91, 194–5; and national identity, 71–3; privatising of risk since late 1970s, 191–3; responses to digital revolution, 52–4, 56–8, 59–61, 67–8; Third Way, 89–92; urban–hinterland split, 46–51, 119, 120, 130, 135; US political system, 131–6; voter disdain for elites, 14, 98–100, 110, 119 Pomerantsev, Peter, Nothing Is True and Everything Is Possible, 79, 130, 140, 172 populist right: ‘alt-right’ fringe, 97, 104; America First movement, 117; and automation, 67; cultural and economic anxieties, 190–6; Davos’s solution, 69, 70–1; in Europe, 139–40; Andrew Jackson’s election (1828), 113–14; and migration crisis, 181; as not democratic, 139; racism as not root cause, 97, 98, 100, 195; Republican Party dog whistles, 190; stealing of the left’s clothes, 103; ‘take back control’ as war cry, 190; and war against truth, 79, 86, 127, 128–31, 172–4, 178–9, 195–6; see also Putin, Vladimir; Trump, Donald Portugal, 77 Primakov, Yevgeny, 6 protectionism, 19–20, 73, 78, 149 Putin, Vladimir: 2012 presidential victory, 130; annexation of Crimea (2014), 8, 173; and fall of Soviet Union, 6; interference in Europe, 179, 180; and Islam, 182; mastery of diversion/confusion, 86, 129, 130–1, 137, 172–3; Medvedev succeeds (2008), 79; replaces Yeltsin as president, 78; Trump’s admiration for, 7, 129, 135; and Trump’s victory, 7, 12, 79; and US ‘war on terror’, 80; and US–China war scenario, 146–7, 152–3 Putnam, Robert, 38 Quadruple Alliance, 7 Quah, Danny, 21 race and ethnicity: and 2016 US Presidential election, 94, 95, 96–7, 98; and ‘identity liberalism’, 14, 96–8; majority-white backlash concept, 12, 14, 96, 102, 104; poor whites in USA, 95–6, 112–13; return of racial politics, 102, 103, 104; US classification data, 94–5; and welfare systems, 101, 102 racism, 97, 98, 99, 100–1, 104, 113–14, 195 Reagan, Ronald, 37 Reagan Democrats, 95, 189 Reeves, Richard, 44 Regional Comprehensive Economic Partnership, 167 remote intelligence, 13, 61–2 Renaissance, 24 Reuther, Walter, 66–7 the rich, 32–3, 50–1, 68, 197; Aristotle on, 200; loss of faith in democracy, 122–3; and rising inequality, 32–3, 43, 46; Trump’s support for, 193, 195, 196, 199–200 robot economy, 34, 51–5, 56, 60–2, 123 Rodrik, Dani, 72, 73 Rome, classical, 25, 128–9 Roosevelt, Eleanor, 10 Roosevelt, Franklin Delano, 128 Rousseau, Jean-Jacques, 126 RT (Russian state TV channel), 84, 85 Rubin, Robert, 71 Russia: conference on ‘polycentric world order’ (Moscow, 2016), 5–8; dissidents’ view of West, 140; expulsion of Western NGOs, 85; as failed democracy, 12, 78, 79, 82, 173; and fake news, 178; media in, 129–31, 172–3; metropolitan elites, 130; and multipolarity, 6–8; and nuclear weapons, 175; privatisation fire sale in, 79; reality-TV politics in, 79, 86, 129–31, 172–3; Revolution (1917), 115; and Trump, 7, 12, 79; and Washington Consensus, 29, 78–9; see also Putin, Vladimir; Soviet Union Sajadpour, Karim, 193, 194–5 Salazar, António de Oliveira, 77 San Bernardino massacre (2015), 182 San Francisco, 49 Sanders, Bernie, 92, 93 Santayana, George, 10 Saudi Arabia, 175, 182 Scandinavia, 43, 101, 197 Schröder, Gerhard, 90 Schwarzman, Stephen, 199–200 science, 72, 171, 172 Scopes Monkey trial, 111 Scruton, Roger, 111–12 Seattle world trade talks (1999), 73 Second World War, 116–17, 163, 169, 170–1 Sessions, Jeff, 151 Shanghai Cooperation Organization, 80 Shultz, George, 132 Shultz, Martin, 15 Singapore, 21 Sino-Indian war (1962), 166 slave trade, African, 23, 55, 56 Smith, Adam, The Theory of Moral Sentiments, 38–9 Social Darwinism, 162 social insurance systems, 42, 101–3, 191, 198 social media, 34, 39, 53, 54, 66, 67, 70, 178 Solow, Robert, 34 South America, 32 South China Sea, 147–8, 160–1 South Korea, 21, 29 Soviet Union, 80, 115, 130, 171, 174; collapse of, 6, 78, 168; see also Russia Spain, 43, 63, 77, 140 Stalin, Joseph, 128, 171 suburban crisis, 46–8 Summers, Lawrence, 71 Sun Tzu, 161 Surkov, Vladislav, 172–3 surveillance technologies, 68 Sweden, 101, 122 Taiwan, 145, 158, 164, 165, 166–7, 168; and US ‘One China’ policy, 145–6, 158; and US–China war scenario, 145, 151–3 Taiwan Strait, 152, 158 Task Rabbit, 63 taxation, 110, 198, 199–200 technology: age of electricity, 58–9; and globalisation, 55–6; leap forward (from 1870), 58–9; steam power, 24, 55–6; the telegraph, 127; as Trump’s friend, 131, 171; and utopian leaps of faith, 127–8; see also digital revolution television, 84, 128, 129, 130 tesobono crisis, Mexican (2005), 29 Thailand, 21, 82 Thatcher, Margaret, 189–90 Thiel, Peter, 34, 53 Thompson, E.P., 201 Thoreau, Henry David, 127–8 Thrower, Randolph, 132 Tillerson, Rex, 147–8, 161 Toil Index, 35–6 Trans-Pacific Trade Partnership, 73, 167 transport, 54, 55, 56–7, 58, 61; self-driving vehicles, 54, 57, 60, 68 Trump, Donald: admiration for Putin, 7, 129, 135; and America First movement, 117; autocratic/authoritarian nature of, 133, 169, 171, 178–9; Bannon as Surkov of, 173; Chinese view of, 85–6, 140; confusion as strategic goal, 79, 86, 127, 128, 130, 131, 173, 178–9, 195–6; foreign policy, 167–70, 178–80, 181–4; ignorance of how other countries think, 161, 167–9; inaugural address, 135, 146; Andrew Jackson comparisons, 113–14; and male voters, 57; as mortal threat to democracy, 97, 104, 111, 126, 133–6, 138, 139, 161, 169–70, 178–84, 203–4; and Muslim ban, 135, 181, 182; narcissism of, 170; need for new Mark Felt/Deep Throat, 136; and nuclear weapons, 175, 176; offers cure worse than the disease, 14, 181; plan to deport Mexican immigrants, 114, 135; poorly educated as base, 103, 123; promised border wall, 94–5; protectionism of, 19–20, 73, 149; and pro wrestling, 124; stealing of the left’s clothes, 101, 103; stoking of racism by, 97; support for plutocracy, 193, 195, 196, 199–200; and Taiwan, 145, 166–7, 168; targeting of Muslims, 135, 181–3, 195–6; and Twitter, 70, 146; and UFC, 126; urban–hinterland split in 2016 vote, 47–8, 119, 120, 130, 135; and US political system, 131, 133–5; US–China war scenario, 145–53, 161; victory in US presidential election, 5, 6–7, 11–12, 15, 28, 47–8, 79, 87, 96–8, 111, 120, 194–5 Trump: The Game (board game), 7 Tsai Ing-Wen, 151 Tunisia, 12, 82 Turkey, 12, 82, 137, 140, 175 Twitter, 34, 53, 70, 146 Uber, 63 UFC (Ultimate Fighting Championship), 125–6, 127 UK Independence Party (UKIP), 90, 98, 100, 101–2, 190; xenophobia during Brexit campaign, 100–1 Ukraine: Orange Revolution (2004), 79; Putin’s annexation of Crimea (2014), 8, 173 United States of America (USA): 1968 Democratic Convention, 188–9; 2016 presidential election, 5, 6–7, 11–12, 15, 28, 47–8, 79, 87–8, 91–8, 119, 130, 133, 135; 9/11 terrorist attacks, 79–80, 81, 182; America First movement, 117; civil rights victories (1960s), 190; ‘complacent classes’ in, 40; Constitution, 112–13, 163; and containment of China, 25–6, 145–6, 157–61, 165; decline of established parties, 89; declining hegemony of, 14, 21–2, 26–8, 140–1, 200–1; domestic terrorist attacks, 182, 183; elite–heartland divide, 47–8, 119, 130, 135; foreign policy since WW2, 183–4; gig economy, 63–5; gilded age, 42–3; growth after 2008 crisis, 30–1; growth of inequality in modern era, 43, 44–8, 49, 50–1; history in popular imagination, 163; Lend-Lease aid to Britain, 169; middle-income problem in, 35–41; Monroe Doctrine (1823), 164–5; murder rate in suburbs, 47; nineteenth-century migration to, 41; Operation Iraqi Freedom, 8, 81, 85, 156; opioid-heroin epidemic, 37–8; Patriot Act, 80; political system, 112–13, 131–6, 163; post-Cold War triumphalism, 6, 71; primacy in Asia Pacific, 26, 157, 160–1; racial/ethnic make-up of, 94–6; relations with Soviet Union see Cold War; relative decline of, 170; ‘reverse white flight’ in, 46; technological leap forward (from 1870), 58–9; vanishing class mobility in, 43–6; ‘war on terror’, 80–1, 140, 183; Washington’s ‘deep state’, 133–4 Universal Basic Income (UBI) proposals, 196–7 Universal Declaration of Human Rights, 8–9, 10 Vance, J.D., 108 Venezuela, 82 Versailles Conference (1919), 154 Vienna, Congress of (1814–15), 7 Vietnam, 166 Wallace, George, 113 Walters, Johnnie M., 132 ‘war on terror’, US, 80–1, 140, 183 Warsh, Kevin, 150 Washington Consensus, 29–30, 71, 77, 78–9, 158–9 Washington Post, 132 Weber, Max, 162 welfare systems, 42, 101–3, 191, 198 Western thought: on China, 158–9, 161–2; conceit of primacy of, 4–5, 8–9, 85, 158–9, 162; declining influence of, 200–1; idea of progress, 4, 8, 11–12, 37; modernity concept, 24, 162; non-Western influences on, 24–5; see also democracy, liberal; liberalism, Western WhatsApp, 54 White, Hugh, 25, 158 Wilders, Geert, 102 Wilentz, Sean, 114 Williamson, John, 29 Wilson, Woodrow, 115 Woodward, Bob, 132 Wordsworth, William, 3 World Bank, 84 World Trade Organization (WTO), 26, 72, 149, 150 Wright, Thomas, 180 WWE (World Wrestling Entertainment), 124–5 Xi Jinping, 19–20, 26, 27, 146, 149, 168, 170; and US–China war scenario, 150, 152 Yellen, Janet, 150 Yeltsin, Boris, 78, 79 Young, Michael, 45–6 YouTube, 54 Zakaria, Fareed, 13, 119


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Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George A. Akerlof, Robert J. Shiller

"Robert Solow", affirmative action, Andrei Shleifer, asset-backed security, bank run, banking crisis, business cycle, buy and hold, collateralized debt obligation, conceptual framework, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, experimental subject, financial innovation, full employment, George Akerlof, George Santayana, housing crisis, Hyman Minsky, income per capita, inflation targeting, invisible hand, Isaac Newton, Jane Jacobs, Jean Tirole, job satisfaction, Joseph Schumpeter, Long Term Capital Management, loss aversion, market bubble, market clearing, mental accounting, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Myron Scholes, new economy, New Urbanism, Paul Samuelson, plutocrats, Plutocrats, price stability, profit maximization, purchasing power parity, random walk, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, South Sea Bubble, The Chicago School, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, working-age population, Y2K, Yom Kippur War

It is indicative how important it is to macroeconomics that just four years later, James Tobin, an arch foe of Milton Friedman, would declare in his own presidential address to the American Economic Association that “an economic theorist can, of course, commit no greater crime than to assume money illusion.”11 Tobin failed to mention that money illusion had been standard fare just four years earlier. It lay at the heart of the views on macroeconomics of some of the century’s leading economists, including Keynes, Paul Samuelson, Robert Solow, Irving Fisher, Franco Modigliani, and Tobin himself. Presumption We see Fisher’s and Keynes’ unadulterated money illusion as a remarkably naïve belief. It was in need of serious revision. But that does not mean that one should jump to the opposite extreme. It is not necessarily true that, on the contrary, there is no money illusion at all. That is only one possibility. We consider the adoption of natural rate theory, with its outright banishment of money illusion, on the basis of so little evidence, also remarkably naïve.

Sims, Christopher A. 1972. “Money, Income and Causality.” American Economic Review 62:540–52. ———. 2001. “Pitfalls of a Minimax Approach to Model Uncertainty.” American Economic Review 91(2):51–54. Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London: Ward, Lock, Bowden & Co. Smith, Edgar Lawrence. 1925. Common Stocks as Long-Term Investments. New York: Macmillan. Solow, Robert. 1979. “Another Possible Source of Wage Rigidity.” Journal of Macroeconomics 1(1):79–82. Sorkin, Andrew Ross. 2008. “JP Morgan Pays $2 a Share for Bear Stearns.” New York Times, March 17. Soros, George. 2008. The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. New York: Public Affairs. Souleles, Nicholas S. 2001. “Consumer Sentiment: Its Rationality and Usefulness in Forecasting Expenditure—Evidence from the Michigan Micro Data.”

., 180n12 Singapore, 125, 126, 130 Singer Sewing Machine Company, 194n23 Skilling, Jeffrey, 33 Sloan, Alfred P., Jr., 71–72 Smith, Adam, xxiii, 2, 3, 5, 6, 125, 177n5,1 Smith, Edgar Lawrence, 66, 185n23 Smith, Vernon L., 189n15 Snake oil, 26–27, 28, 35, 37, 87, 146–47, 155, 175 Snower, Dennis, 189n17 Snow Shovel price vignette, 21 Socialism, xxii, 2 Social Security, 124–25, 129–30, 146 sociology, 23–25 Solow, Robert, 46, 188n2 Sorensen, Elaine, 197n15 Sorkin, Andrew Ross, 186n13 South Sea bubble, 13 Soviet Union, 26 spiritus animalis, 3, 178n3 sporting events, studies of outcomes, 179n3 staggered contracts, 5 Staiger, Douglas, 183n8 Stalin, Joseph, 26 Standard & Poor’s Composite Stock Price Index, 59 status, 24–25 Steeples, Douglas, 62, 184n8,11 Stein, Jeremy C., 182n21, 195n36 Sternberg, Robert J., 52, 184n4 Sticky wages, 48, 109, 110, 111, 183n14, 185n32 Stiglitz, Joseph E., 104–5, 188n12 Stock, James H., 183n8 stock market, xxi, 174; depression of the 1890s and, 59; margin credit of, 64; in the 1920s, 64, 66–67; price volatility in, 131–40, 145–46, 193n6; rate of return in, 117; real estate market and, 149, 152–53, 154; recession of 2001 and, 33, 35; stories and, 55 stock market crash of 1902, 11 stock market crash of 1929, 15, 66, 67, 68, 131, 145, 177n7 stock market crash of 2000, 169 Stoft, Steven, 188n12 stories, 5, 6, 51–56, 167, 170, 172, 174, 183–84n1–14; on central banks, 75–78; changes in, 173, 174–75; confidence and, 55–56; of corporate investments, 144, 145; depression of the 1890s and, 61; epidemics of, 56; of financial crisis of 2007–8, 88; financial prices and, 137, 138, 142, 146, 147; minorities and, 159–60, 162, 163, 164; new era, 55–56, 66; of our time, 171; overheated economy and, 66–67; patterns to, 52; political-economic, 53–54; real estate market and, 149, 151, 156; relevant to whole economies, 54; saving and, 119, 127–28; Tobin’s q as, 145; World War II and, 72 strikes, 138, 139, 140, 194n23 subprime mortgages, 73, 149; corruption and, 36–37, 38, 182n21; effect on housing prices, 155 Summers, Lawrence, 103, 188n9, 189n17, 191n11, 194n30,36, 195n37 Sunde, Uwe, 183n14 sunspot equilibria, 12, 179n2 supply and demand: for labor, 98, 99–100, 103, 104; open market operations and, 76 Swedish financial crisis, 93, 188n15 Switzerland, 109 Tabasco, Mexico, 53 TAF.


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Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

"Robert Solow", 1960s counterculture, activist lawyer, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Gunnar Myrdal, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, liberal capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

He admitted that the analogy was a little hysterical, but he passionately opposed what he believed was the alliance between business and strong unions. Kahn reminded the president that the alliance had fought trucking and airline deregulation. Now the culprits were the auto and steel industries and their unions. Kahn preferred an Economic Revitalization Board composed of people like Archibald Cox, distinguished but without industrial experience. For his economist he named Robert Solow or Gardner Ackley, both Keynesians who were neoclassical when it came to the microeconomy.126 Ralph Nader opposed the Economic Revitalization Board for similar reasons. Nader’s principal animus was the corporation.127 Because he believed that corporations dominated government and corrupted labor, he also opposed tripartite modes of governing. Such collaboration would be at the expense of the consumer.

Volcker and Gyohten, Changing Fortunes, 168. 28. Oct. 6, 1979, transcript, “Meeting of the Federal Open Market Committee (FOMC),” Federal Reserve Open Market Secretariat, Washington, D.C., 6. 29. Ibid. 30. Newsweek, Oct. 15, 1979, 101. 31. Telephone conference call, FOMC, Sept. 5, 1979, 1–2. 32. Oct. 6, 1979, “Meeting of FOMC,” 17. 33. Ibid., 10. 34. Greider, Secrets of the Temple, 121. 35. Business Week, Nov. 12, 1979, 29. 36. Robert Solow, cited in New York Times, Dec. 30, 1979, SM3. 37. Nov. 20, 1979, “Meeting of the FOMC,” 19–20. 38. Ibid., 22. 39. Business Week, Oct. 29, 1979, 174. 40. New York Times, Oct. 5, 1979, A1. 41. New York Times, May 8, 1980, D1. 42. Schultze, “Memo for President,” Dec. 11, 1979, file Memos to President 12/79, box 54, CEA papers, Jimmy Carter Library and Museum, Atlanta, Ga. 43. Caddell, “Memorandum for President,” Mar. 1, 1980, #743, CF O/A file Caddell PHW 7/77–3/80, box 1, Jimmy Carter Library and Museum, Atlanta, Ga. 44.

The bonanza had come from the reduction in the capital gains tax, which had produced a sprint to take advantage of the high prices of the stock market boom. 104. Kuttner, The Squandering of America, 200. 105. Elizabeth Drew, “Bush’s Weird Tax Cut,” New York Review of Books, 48 (Aug. 9, 2001). 106. Krugman, The Great Unraveling, 170. 107. New York Times, Aug. 29, 2005, A15. 108. New York Times, Oct. 5, 2008, 34. 109. Economist, Sept. 20–26, 2008, 19. 110. “Spare a Dime?” 4. 111. Robert Solow, “Getting it Wrong,” New Republic, Sept 10, 2008, 33. 112. Economist, Oct. 4–10, 2008, 11; New York Times, Oct. 3, 2008, A25. 113. Paul Krugman, “Stressing the Positive,” New York Times, May 8, 2009, A31. 114. http://www.realclearpolitics.com/articles/2009/03/responding_to_an_historic_econ.html. 115. Robert Reich, who offered similar advice to President Clinton, offered this advice again; http://tpmcafe.talkingpointsmemo.com/talk/blogs/robert_reich/2009/05/the-future-of-manufacturing-gm-1.php. 116.


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Making the Future: The Unipolar Imperial Moment by Noam Chomsky

"Robert Solow", Albert Einstein, Berlin Wall, Bretton Woods, British Empire, capital controls, collective bargaining, corporate governance, corporate personhood, creative destruction, deindustrialization, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Frank Gehry, full employment, Howard Zinn, Joseph Schumpeter, kremlinology, liberation theology, Long Term Capital Management, market fundamentalism, Mikhail Gorbachev, Nelson Mandela, Occupy movement, oil shale / tar sands, precariat, RAND corporation, Ronald Reagan, structural adjustment programs, The Great Moderation, too big to fail, uranium enrichment, Washington Consensus, WikiLeaks, working poor

The result, according to Ferguson, is that debates “rely heavily on the endless repetition of a handful of slogans that have been battle-tested for their appeal to national investor blocs and interest groups that the leadership relies on for resources.” The country be damned. Before the 2007 crash for which they were largely responsible, the new post–Golden Age financial institutions had gained startling economic power, more than tripling their share of corporate profits. After the crash, a number of economists began to inquire into their function in purely economic terms. Nobel laureate Robert Solow concludes that their general impact may be negative: “The successes probably add little or nothing to the efficiency of the real economy, while the disasters transfer wealth from taxpayers to financiers.” By shredding the remnants of political democracy, the financial institutions lay the basis for carrying the lethal process forward—as long as their victims are willing to suffer in silence.

., 58–59 Schmidt, Helmut, 276 School of the Americas, 180 Schoultz, Lars, 147–148 Schwarzenegger, Arnold, 209 Scowcroft, Brent, 162 sectarian warfare. in Iraq, 60 Securities and Exchange Commission, 287 Senate Armed Services Committee Report on Detainee Treatment, 145 Senauer, Benjamin, 22, 23 Separation Wall, 83, 152, 244 September 11, 2001, 277, 291–295 settlement expansion, 42–43, 70, 152, 201–206, 241–245 Shamir, Yitzhak, 202 Shanghai Cooperation Organization, 142, 232–233 Shankar, Thom, 225 Shapira, Ya’akov Shimson, 243 Sharon, Ariel, 132 Shell, 87 Sigal, Leon V., 18 Simon, Steven, 91 Smith, Adam, 196, 236–237 SOFA (Status of Forces Agreement), 117 Solow, Robert, 289 Somalia, 45–49 South Africa, 248–249, 268 South America, 79, 231 South Korea, 225–226, 297–300 South Ossetia, 101 South Summit (Cuba 2000), 162 Spirit of Humanity, 158 Stack, Joe, 207–208 state capitalism, 107 Status of Forces Agreement (SOFA), 117 Stern, Fritz, 238 Stevens, John Paul, 190 Stiglitz, Joseph, 196 Stimson, Henry L., 183 Stolberg, Sheryl Gay, 171 Suleiman, Omar, 254 Summers, Lawrence, 114–115 Sunday Herald (Glasgow), 215 Supreme Court (U.


EuroTragedy: A Drama in Nine Acts by Ashoka Mody

"Robert Solow", Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Basel III, Berlin Wall, book scanning, Bretton Woods, call centre, capital controls, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, credit crunch, Daniel Kahneman / Amos Tversky, debt deflation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, financial intermediation, floating exchange rates, forward guidance, George Akerlof, German hyperinflation, global supply chain, global value chain, hiring and firing, Home mortgage interest deduction, income inequality, inflation targeting, Irish property bubble, Isaac Newton, job automation, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, Kickstarter, liberal capitalism, light touch regulation, liquidity trap, loadsamoney, London Interbank Offered Rate, Long Term Capital Management, low-wage service sector, Mikhail Gorbachev, mittelstand, money market fund, moral hazard, mortgage tax deduction, neoliberal agenda, offshore financial centre, oil shock, open borders, pension reform, premature optimization, price stability, purchasing power parity, quantitative easing, rent-seeking, Republic of Letters, Robert Gordon, Robert Shiller, Robert Shiller, short selling, Silicon Valley, The Great Moderation, The Rise and Fall of American Growth, too big to fail, total factor productivity, trade liberalization, transaction costs, urban renewal, working-age population, Yogi Berra

Economic History Review 68, no. 1: 218–​243. Boston, William. 2012. “WSJ: Merkel Backs ECB Bond Buying.” Dow Jones News Service, September 17. 546   r e f e r e n c e s Boughton, James M. 2012. Tearing Down Walls: The International Monetary Fund 1990–​1999. Washington, D.C.: International Monetary Fund. Boushey, Heather. 2017. “Equitable Growth in Conversation: Robert Solow.” Washington Center for Equitable Growth, July 20, http://equitablegrowth.org/ research-analysis/equitable-growth-in-conversation-robert-solow/. Bovenzi, John F. 2015. Inside the FDIC: Thirty Years of Bank Failures, Bailouts, and Regulatory Battles. Hoboken: Wiley. Bowley, Graham. 2004. “EU Warns on Deficit of Greece Commission Seeks New Eurostat Powers.” International Herald Tribune, December 23. Boyes, Roger. 1993. “Strict Speed Limits Imposed on Bonn’s Road to Maastricht.”

Divergent economies will not converge; they will diverge, and they will be more unstable. Nevertheless, the budget rule got locked in, periodically tweaked through administrative changes, but shielded by a protective stability ideology. The view was that even a bad rule is better than no rule. The ECB, set up to conduct the single monetary policy, reinforced the stability ideology through its commitment to price stability. Two Nobel Laureates in economics, Franco Modigliani and Robert Solow, warned that excessive commitment to price stability would restrain output growth and, hence, would raise the eurozone’s unemployment rate. Moreover, like the budget rule, price stability when pursued unthinkingly, can—​as it did during the eurozone’s financial crisis—​become a source of instability. But the ECB’s stability ideology is even more insulated from criticism than the budget rule, because the ECB is accountable to no one.

The fiscal rules proposed at Maastricht, he said, were “not just irrelevant, but may be positively harmful because of the limits they place on the scope for national fiscal policies.” To emphasize his concern, Bean added, “Active national fiscal policies will be needed more than ever after monetary union, and imposing unnecessary constraints is a major error, especially in the absence of a Community-​ wide fiscal system” (Bean 1992, 48, 51). And in 1993, a galaxy of international economists—​ including Economics Nobel laureate Robert Solow, Columbia University economics professor and future Economics Nobel laureate Edmund Phelps, and Olivier Blanchard, economics professor at MIT and future chief economist of the IMF—​warned against the proposed fiscal rule. “It would be untenable,” they wrote, “to expect governments faced with poor conditions to remain passive, or even to have to act in a way that is likely to deepen a domestic recession.”


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Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

"Robert Solow", Andrei Shleifer, asset-backed security, Bernie Madoff, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, desegregation, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, market bubble, Menlo Park, mental accounting, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, short selling, Silicon Valley, the new new thing, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, Vilfredo Pareto, wage slave

Over the course of the past century, one idea once a month by all the world’s adults would have yielded more than three trillion new ideas.2 The implications are enormous: over the course of a lifetime, in a typical developed country, output per capita will increase sixfold.3 Older retirees in the United States were born in a country poorer than present-day Mexico.4 This critical role of new ideas as the engine of economic growth had been chewed over for decades, but then it was definitively established in 1957 by a simple, clever calculation: a 32-year-old economist at MIT, Robert Solow, took a page out of Sherlock Holmes to get his answer. He eliminated the other leading suspect. Before the Solow calculation, economists did not know how to apportion economic growth between two causes. Increases in labor productivity (that is, increases in output per man-hour) could be due to new inventions (called “technical change”); or they could be due to increases in “capital” (e.g., machines, buildings, etc.).5 With the simple assumption that the earnings of capital represent its contributions to output, Solow was able to calculate the fraction of increases in productivity that was attributable to capital growth.

Standard Deviations: Flawed Assumptions, Tortured Data, and Other Ways to Lie with Statistics. New York: Duckworth Overlook, 2014. Snell, George D. “Clarence D. Little, 1888–1971: A Biographical Memoir by George D. Snell.” Washington, DC: National Academy of Sciences, 1971. Social Security Perspectives. “President #6: Richard M. Nixon (1969–1974).” May 8, 2011. http://socialsecurityperspectives.blogspot.com/2011/05/president-6-richard-m-nixon-1969-1974.html. Solow, Robert M. “Technical Change and the Aggregate Production Function.” Review of Economics and Statistics 39, no. 3 (August 1957): 312–20. Sorkin, Andrew Ross. Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System. New York: Viking, 2009. Stahre, Mandy, Jim Roeber, Dafna Kanny, Robert D. Brewer, and Xingyou Zhang. “Contribution of Excessive Alcohol Consumption to Deaths and Years of Potential Life Lost in the United States.”

., 222n11 Siegelman, Peter, 60–62, 198nn3–6 Silverman, Brian, 206–7n42 Simester, Duncan, 68, 70, 201n28 Sinclair, Upton, The Jungle, 84, 140, 207nn2–3 Singer, Tania, 194–95n3 Singh, Gurkirpal, 208n12 Skeel, David A., Jr., 225nn22–23 slot machines, viii–ix, x Small, Art, III, 72 Small, Art, Jr., 72–73, 74 Smith, Adam, 5, 6, 169, 185n16, 186n18 Smith, Gary, 126, 221n8 smoking. See tobacco Snower, Dennis J., 194–95n3 Snyder, James M., 77, 205nn21–22 Social Security, 152, 153–56 Solow, Robert M., 97, 212n6 Solow residual, 97–99 Sorkin, Andrew Ross, 189–90n1 Spiegel, Thomas, 128, 129, 222n18 Stahre, Mindy, 217–18n38 standards, quality, 137–38, 140 Stein, Benjamin, 222n13, 222n17 Stempel, Jonathan, 226n39 Stern, Mark Joseph, 216n26 Stevens, John Paul, 161 Stewart, James B., 222n13, 223n26, 229n26 Stigler, George J., 226nn44–45 Stock, James H., 219n2 stocks: crash of 1929, 134; equity premium, 127; informed vs. uninformed traders, 168; initial public offerings, 26–27; prices of, xiv, 168.


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The Technology Trap: Capital, Labor, and Power in the Age of Automation by Carl Benedikt Frey

"Robert Solow", 3D printing, autonomous vehicles, basic income, Bernie Sanders, Branko Milanovic, British Empire, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, collective bargaining, computer age, computer vision, Corn Laws, creative destruction, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, desegregation, deskilling, Donald Trump, easy for humans, difficult for computers, Edward Glaeser, Elon Musk, Erik Brynjolfsson, everywhere but in the productivity statistics, factory automation, falling living standards, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Frank Levy and Richard Murnane: The New Division of Labor, full employment, future of work, game design, Gini coefficient, Hyperloop, income inequality, income per capita, industrial cluster, industrial robot, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of movable type, invention of the steam engine, invention of the wheel, Isaac Newton, James Hargreaves, James Watt: steam engine, job automation, job satisfaction, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, labor-force participation, labour mobility, Loebner Prize, low skilled workers, Malcom McLean invented shipping containers, manufacturing employment, mass immigration, means of production, Menlo Park, minimum wage unemployment, natural language processing, new economy, New Urbanism, Norbert Wiener, oil shock, On the Economy of Machinery and Manufactures, Pareto efficiency, pattern recognition, pink-collar, Productivity paradox, profit maximization, Renaissance Technologies, rent-seeking, rising living standards, Robert Gordon, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, social intelligence, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade route, Triangle Shirtwaist Factory, Turing test, union organizing, universal basic income, washing machines reduced drudgery, wealth creators, women in the workforce, working poor, zero-sum game

In hindsight, and in the light of the gains brought by technology, it is astounding to think that economists of the early nineteenth century like Thomas Malthus and David Ricardo did not believe that technology could improve the human lot. The technological virtuosity of the nineteenth and early twentieth centuries took some time to trickle down to the economics profession. But in the 1950s, Robert Solow, who would go on to win the Nobel Prize in Economics in 1987, found that virtually all economic advance over the twentieth century had been thanks to technology. And others documented that those gains had been widely shared. Simon Kuznets found that America had become more equal and advanced his theory of capitalist development in which inequality automatically decreases along the industrialization path.

Beating the Axis powers required everyone to work at full capacity, and they did. * * * The machinery question, however, only faded temporarily. The first few introductions of electronic computers into the workplace sparked a panic about the threat of automation to jobs in the news media, and the upsurge in unemployment that came with the three post–Korean War recessions led people to connect the two. Looking back in 1965, Robert Solow noted: “Whenever there is both rapid technological change and high unemployment the two will inevitably be connected in people’s minds. So it is not surprising that technological unemployment was a live subject during the depression of the 1930s, nor that the debate has now revived.”18 As noted above, the technological unemployment debate actually predated the Great Depression. However, machinery angst in the twentieth century was clearly cyclical, and this time it followed an upswing in unemployment after the Korean War.

It may be telling that unlike economists of the Industrial Revolution (like Thomas Malthus, David Ricardo, and Karl Marx) who were all fond of apocalyptic economic predictions, economists living in the aftermath of the Second Industrial Revolution were largely optimistic—perhaps overly so. In any event, the idea that industrialists grew rich on the misery of workers had evidently fallen out of fashion. In the 1950s, Robert Solow advanced a model of a balanced growth path, in which progress delivered equal benefits for every social group; Kaldor put forward his stylized facts of economic growth, showing that the labor share of income had remained roughly constant, at two-thirds of national income, despite rapid mechanization; and Simon Kuznets advanced his hugely optimistic theory of economic progress in which inequality automatically decreases, regardless of economic policy choices.54 Their optimism surely seemed warranted at the time.


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Data-Ism: The Revolution Transforming Decision Making, Consumer Behavior, and Almost Everything Else by Steve Lohr

"Robert Solow", 23andMe, Affordable Care Act / Obamacare, Albert Einstein, big data - Walmart - Pop Tarts, bioinformatics, business cycle, business intelligence, call centre, cloud computing, computer age, conceptual framework, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, Danny Hillis, data is the new oil, David Brooks, East Village, Edward Snowden, Emanuel Derman, Erik Brynjolfsson, everywhere but in the productivity statistics, Frederick Winslow Taylor, Google Glasses, impulse control, income inequality, indoor plumbing, industrial robot, informal economy, Internet of things, invention of writing, Johannes Kepler, John Markoff, John von Neumann, lifelogging, Mark Zuckerberg, market bubble, meta analysis, meta-analysis, money market fund, natural language processing, obamacare, pattern recognition, payday loans, personalized medicine, precision agriculture, pre–internet, Productivity paradox, RAND corporation, rising living standards, Robert Gordon, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, speech recognition, statistical model, Steve Jobs, Steven Levy, The Design of Experiments, the scientific method, Thomas Kuhn: the structure of scientific revolutions, unbanked and underbanked, underbanked, Von Neumann architecture, Watson beat the top human players on Jeopardy!

The Internet was minting millionaires aplenty and hailed as a revolutionary technology, yet it was not boosting the productivity of the American economy. Productivity gains—more wealth created per hour of labor—are the fuel of rising living standards, and a by-product of the efficiency that technology is supposed to generate. The conundrum raised the question of whether all of the investment in, and enthusiasm for, digital technology was justified. Robert Solow, a Nobel Prize–winning economist, tartly summed up the quandary in the late 1980s, when he wrote, “You can see the computer age everywhere but in the productivity statistics.” Solow’s critique became known as the productivity paradox. Brynjolfsson, a technology optimist, has two answers for the skeptics. First, he argues, the official statistics do not fully capture the benefits of digital innovation.

See Fischer, Rachana Shah Singapore, traffic management in, 47–48 Singer, Natasha, 190 “six degrees of separation,” 87 Six Sigma system, 62 Sloan School of Management, at MIT, 71 “slow” thinking, 66–67 Smarr, Larry, 134, 214, 215 Smarter Planet campaign, of IBM, 48–53, 62, 128 smartphone cameras, privacy concerns and, 186 Smeall, Andrew, 26 Snow, C. P., 5–6 Snyder, Steven, 165–67, 170 social networks, research using human behavior and, 86–94 retail use, 153–62 spread of information and, 73–74 Twitter posts and, 197–202 see also privacy concerns Social Security numbers, data used to predict person’s, 187–88 software, origin of term, 96 Solow, Robert, 72 Speakeasy programming language, 160 Spee (Harvard club), 28–30 Spohrer, Jim, 25 Stanford University, 211–12 Starbucks, 157 Stockholm, rush-hour pricing in, 47 storytelling, computer algorithms and, 120–21, 149, 165–66, 205, 214 structural racism, in big data racial profiling, 194–95 Structure of Scientific Revolutions, The (Kuhn), 175 Sweeney, Latanya, 193–95 System S, at IBM, 40 Tarbell, Ida, 208 Taylor, Frederick Winslow, 207–8 Tecco, Halle, 16, 25, 28, 168–69 Tetlock, Philip, 67–68 thermostats, learning by, 143–45, 147–53 Thinking, Fast and Slow (Kahneman), 66–67 toggling, 84 Truth in Lending Act (1968), 185 T-shaped people, 25 Tukey, John, 96–97 Turing, Alan, 178–79 Tversky, Amos, 66 Twitter, 85 posts studied for personal information, 197–202 “Two Cultures, The” (Snow), 5–6 “universal machine” (Turing’s theoretical computer), 179 universities, data science and, 15–16, 97–98, 211–12 Unlocking the Value of Personal Data: From Collection to Usage (World Economic Forum), 203 “Unreasonable Effectiveness of Data, The” (Norvig), 116 use-only restrictions, on data, 203 Uttamchandani, Menka, 77–78, 80, 212 VALS (Values, Attitudes, and Lifestyles), 155 Van Alstyne, Marshall, 74 Vance, Ashlee, 85 Vargas, Veronica, 159–60 Varma, Anil, 136–37 Veritas, 91 vineyards, data used for precision agriculture in, 123–33, 212 Vivero, David, 29 Vladeck, David, 203, 204 von Neumann, John, 54 Von Neumann architecture, 54 Walker, Donald, 2, 63, 212 Walmart, 104, 154 Watson, Thomas Jr., 49 Watson technology, of IBM, 45, 66–67, 120, 205 as cloud service, 9, 54 Jeopardy and, 7, 40, 111, 114 medical diagnoses and, 69–70, 109 Watts, Duncan J., 86 weather analysis, with big data, 129–32 Weitzner, Daniel, 184 “Why ask Why?”


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Why Information Grows: The Evolution of Order, From Atoms to Economies by Cesar Hidalgo

"Robert Solow", Ada Lovelace, Albert Einstein, Arthur Eddington, assortative mating, business cycle, Claude Shannon: information theory, David Ricardo: comparative advantage, Douglas Hofstadter, Everything should be made as simple as possible, frictionless, frictionless market, George Akerlof, Gödel, Escher, Bach, income inequality, income per capita, industrial cluster, information asymmetry, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, job satisfaction, John von Neumann, Joi Ito, New Economic Geography, Norbert Wiener, p-value, Paul Samuelson, phenotype, price mechanism, Richard Florida, Ronald Coase, Rubik’s Cube, Silicon Valley, Simon Kuznets, Skype, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, working-age population

“The intention of fixed capital is to increase the productive powers of labour, or to enable the same number of labourers to perform a much greater quantity of work,” he wrote.2 Smith saw improvements in mechanics, such as those embodied in the steam engine created by his contemporary James Watt, as improvements in the ability of people to produce work: “Improvements in mechanics . . . enable the same number of workmen to perform an equal quantity of work with cheaper and simpler machinery.”3 During the twentieth century Smith’s ideas were mathematized by economists, who used calculus and differential equations to create models of economic growth that hinged on the accumulation of different forms of capital. The earliest models equated economic output to the ratio between an economy’s capital and labor when the economy was in equilibrium. They also modeled economic growth as the tug-of-war between an economy’s savings rate (the capital that it keeps for later use) and capital depreciation (the wear and tear that erodes capital). Robert Solow advanced the prototypical model of economic growth in the 1950s—a timely development, as the data needed to evaluate such models were just becoming available. Simon Kuznets, the Russian-born economist who fathered GDP, had finished creating the system of national accounts a couple of decades earlier, helping generate the economic metric that dominated the twentieth century.4 Solow’s model, however, did not measure up well when it was compared with empirical data.

., 67–68 economic value of and context of, 63–64 geographic distribution of production of simpler and complex, 134–136 importance of source of information embodied in, 62–63 practical use of knowledge/knowhow and, 65–71 stimuli for production of, 77–78 See also Complex products; Objects; Solids Product space, 136–139, 143 Product ubiquity, economic complexity and, 156–157 Professional networks social networks and composition of, 123–124 social networks and formation of, 114–117 trust and, 119–121 Proteins, information embedded in, 34, 176 Putnam, Robert, 121, 122, 135, 179 Quantization of knowhow, 73–75 Quantization of knowledge and knowhow, 87–88 Quantization principle, economies and, 168 Quantum Corporation, 92 Quantum mechanics, xiii Raw materials, exploitation narrative and, 55, 58–59, 60 Real estate market, secondary to social network, 109–111 Reality, instantaneous nature of, 40 Ricardo, David, 148 River Rouge complex (Ford Motor Company), 87–88, 89, 105 RNA, embodiment of information in, 5 Roanoke colony, 170 Robotic limbs, 50–51, 61, 178 Rocket development, 143 Rolfe, John, 170 Romer, David, 148 Romer, Paul, 148 Route 128 (Boston), contrasted with Silicon Valley, 118–120, 124 Rubik’s cube, 21–22, 23 Ruiz, Israel, 73 Russia, 60 Salter, Arthur, 90 Saltpeter exports, 55, 58 Samsung, 92 Saxenian, AnnaLee, 118–119 Scale economies, 87–88 Schrödinger, Erwin, 33, 34, 176 Seagate, 92 Second law of thermodynamics, 27 Seed, information and knowhow contained in, 166–167 Shannon, Claude, 9 entropy and, 14–15, 17–18 theory of information, xiv, xv–xvii, 13–15, 17–18, 19–20 Shared social foci, formation of social networks and, 114 Shipping costs, cost of market interactions and, 95 Shoes, information in form of, 45 Silicon Valley contrasted with Route 128 (Boston), 118–120, 124 personbytes of knowledge and knowhow in, 142 Simoes, Alex, 52, 139 Simon, Herbert, xv Simpler products, production in most countries, 134–136 Singapore, economic complexity of, 157–159 Smith, Adam, 87, 146, 148 Social capital, 149–151, 152 measuring, 149–150, 153 theory of, 111 trust and access to, 121 Social context, of information growth, 43 Social group isolation, loss of knowhow and, 169–171 Social institutions familial vs. high-trust, 115, 120–123 within-country variation in, 118–120 Social learning, 80–81 Social networks adaptability of firms and networks of firms and, 118–120, 124 difficulty in forming, 83 economic relevance of, 111–124 firm interactions within, 93 formation of, 114–117 formation of professional networks and, 123–124 information exchange and, 44, 45, 46 knowledge and knowhow trapped in, 78–79 labor market and, 112–114, 121, 124 market forces and, 111 real estate market secondary to, 109–111 social capital and, 150–151 trust and, 119–121, 123 Social sciences, xviii information and, xiv–xv Society familial vs. high-trust, 115, 120–123 products that augment human capacity and complexity of, 70–71 Sokolovska, Anna, 3 Solids, information embedded in, 33–35, 176, 181. See also Objects; Products Solow, Robert, 146, 147, 148, 149 Specific and recurrent transactions, 94 Stadium example, ordered states and, 16–21 Standards coevolution of markets with, 100 cost of market interactions and, 95, 100 Static steady state, 28–29 Statistical system, irreversibility of time in, 37–40 Steady state of non-equilibrium system, 29–31 origin of information and, 28–30 Stock, diversity vs., 152–154, 162 Study of Disadvantaged Youth, 113 Tacit knowledge, knowhow and, 78, 80 Tasmanians, 169–170 Teams, physical embodiment of knowledge/knowhow in, 73–74 Technological transfer, 143 Technologies, social networks and, 44 Tesla, Nikola, 59, 60, 62, 69 TFP.


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The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality by Brink Lindsey

"Robert Solow", Airbnb, Asian financial crisis, bank run, barriers to entry, Bernie Sanders, Build a better mousetrap, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, collective bargaining, creative destruction, Credit Default Swap, crony capitalism, Daniel Kahneman / Amos Tversky, David Brooks, diversified portfolio, Donald Trump, Edward Glaeser, endogenous growth, experimental economics, experimental subject, facts on the ground, financial innovation, financial intermediation, financial repression, hiring and firing, Home mortgage interest deduction, housing crisis, income inequality, informal economy, information asymmetry, intangible asset, inventory management, invisible hand, Jones Act, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, knowledge worker, labor-force participation, Long Term Capital Management, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass immigration, mass incarceration, medical malpractice, Menlo Park, moral hazard, mortgage debt, Network effects, patent troll, plutocrats, Plutocrats, principal–agent problem, regulatory arbitrage, rent control, rent-seeking, ride hailing / ride sharing, Robert Metcalfe, Ronald Reagan, Silicon Valley, Silicon Valley ideology, smart cities, software patent, too big to fail, total factor productivity, trade liberalization, transaction costs, tulip mania, Uber and Lyft, uber lyft, Washington Consensus, white picket fence, winner-take-all economy, women in the workforce

Even if government subsidies and entry barriers as a whole weren’t getting worse—and the data strongly suggest they are—strong underlying trends toward both slower growth and greater inequality mean that we have less room for error where restraints on competition are concerned. To understand why, we need to understand exactly how rent-creating policies undermine growth and exaggerate inequality, and how those harmful consequences interact with deeper factors now shaping the pace and distribution of economic growth. III STIFLING GROWTH Modern growth theory, beginning with the pioneering work of Robert Solow and continuing with more recent “endogenous growth” models, makes clear that the ultimate source of economic growth is innovation: the development of new products and production methods that increase the level of output per given unit of capital and labor inputs.15 Of course, the mere introduction of new products and methods is only the first step; innovation’s full effect comes as the new products and methods diffuse throughout the economy.

See also regulation affluence and, 140–47 agenda-setting and, 133–36, 204n9 concentration of industry and, 20–21 defined, 16–18 dynamism and, 21–22 economic growth and, 113–23 entry barriers and, 21–22 image and, 140–47 increase in, 22–23, 185n11 intangible assets and, 19–20 intellectual property and, 64 legal profession and, 106–8 morality of, 17 politics of ( See politics) reform and, 159–64 RegData index of regulations and, 23, 186n13, 186n14 regressive regulation and, 123–26 rent-proofing and, 153–80 scarcity and, 16–17 secrecy and, 147–49 welfare state and, 150–52, 207n35 zoning as, 113 Republican party, 3, 143, 176, 178 research and development, 20, 23, 26, 70, 72, 80 reserve requirements, 50 ridesharing services, 96–97, 145–46 Rise and Decline of Nations, The (Olson), 8 risk-taking, 36–37 Robinson, James, 8 Robinson, Joan, 74 Rognlie, Matt, 123 Rogoff, Kenneth, 35 Saez, Emmanuel, 1 Sanders, Bernie, 4 savings-and-loan industry, 39–40, 44, 53, 150 scale, economies of, 21, 82, 114 Scalia, Antonin, 100–101 scarcity artificial, 17, 19, 32–33, 120, 184n1 of innovation, 16 rent/rent-seeking and, 16–17 Schleicher, David, 168 Schmitt, Mark, 135 Schumer, Chuck, 145 Schumpeter, Joseph, 21 secrecy, 147–49 securitization, 32, 38–45, 57, 150 self-liquidating profits, 16 “shadow banking”, 38, 41, 44, 47, 151 Shoag, Daniel, 116 Shockley, William, 115 sideways redistribution, 29 skilled workforce, 4, 6, 15, 27, 29–31. See also digital era/information technology; occupational licensing Smith, Adam, 17 Smith, Vernon, 46 Snyder, Jeffrey, 208n13 social mobility. See upward mobility software industry, 65, 67, 71, 74, 79–83, 86, 125, 144. See also digital era/information technology Solow, Robert, 24 Somin, Ilya, 135 Sonny Bono Copyright Extension Act of 1998, 66 special interests. See lobbying/special interests startup rates, 22. See also entry barriers state action. See regulation; regulatory capture status quo bias, 100 Stiglitz, Joseph, 12, 61 stock market, 31, 38, 46–48 Stop Online Piracy Act, 176 student loans, 38 subprime mortgages, 42–47 subsidies, 17 of countervailing power, 154–59, 208n13, 208n14 debt financing and, 36–63 failure to limit, 55–58 financial sector and, 32, 55–58 mortgage lending and, 36–45, 47, 57–59, 63 “Tobin’s Q” and, 20 Sunstein, Cass, 137, 165 Supreme Court, 76, 100, 166 judicial review and, 170–75 Tabarrok, Alex, 186n14 tariffs, 29, 31, 95, 149 taxation, 7 high income, 11 post-New Deal, 30–31 rising costs of home ownership and, 113 technology.


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Hit Refresh: The Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone by Satya Nadella, Greg Shaw, Jill Tracie Nichols

"Robert Solow", 3D printing, Amazon Web Services, anti-globalists, artificial general intelligence, augmented reality, autonomous vehicles, basic income, Bretton Woods, business process, cashless society, charter city, cloud computing, complexity theory, computer age, computer vision, corporate social responsibility, crowdsourcing, Deng Xiaoping, Donald Trump, Douglas Engelbart, Edward Snowden, Elon Musk, en.wikipedia.org, equal pay for equal work, everywhere but in the productivity statistics, fault tolerance, Gini coefficient, global supply chain, Google Glasses, Grace Hopper, industrial robot, Internet of things, Jeff Bezos, job automation, John Markoff, John von Neumann, knowledge worker, Mars Rover, Minecraft, Mother of all demos, NP-complete, Oculus Rift, pattern recognition, place-making, Richard Feynman, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, special economic zone, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, telepresence, telerobotics, The Rise and Fall of American Growth, Tim Cook: Apple, trade liberalization, two-sided market, universal basic income, Wall-E, Watson beat the top human players on Jeopardy!, young professional, zero-sum game

Finding the answer to this last question is perhaps the most pressing need of our times. In recent decades, the world has invested hundreds of billions of dollars in technology infrastructure—PCs, cell phones, tablets, printers, robots, smart devices of many kinds, and a vast networking system to link them all. The aim has been to increase productivity and efficiency. Yet what, exactly, do we have to show for it? Nobel Prize–winning economist Robert Solow once quipped, “You can see the computer age everywhere but in the productivity statistics.” However, from the mid-1990s to 2004, the PC Revolution did help to reignite once-stagnant productivity growth. But other than this too brief window, worldwide per capita GDP growth—a proxy for economic productivity—has been disappointing, just a little over 1 percent per year. Of course, GDP growth can be a crude measure of actual improvement in the well-being of humanity.

Chapter 9 — Restoring Economic Growth for Everyone Associated Press. “Who’s Been Invited to the State of the Union Tonight?” Boston Globe, January 12, 2016. Accessed December 9 2016. https://www.bostonglobe.com/news/politics/2016/01/12/guestsrdp/DR3KzNA90x3nxLYFOFs0nN/story.html. Obama, Barack. State of the Union Address. White House, January 12, 2016. Accessed December 9, 2016. https://obamawhitehouse.archives.gov/sotu. Solow, Robert M. “We’d Better Watch Out.” Review of The Myth of the Post-Industrial Economy, by Stephen S. Cohen and John Zysman. New York Times, July 12, 1987. Accessed December 9, 2016. http://www.standupeconomist.com/pdf/misc/solow-computer-productivity.pdf. Nadella, Satya, Ulrich Spiesshofer, and Andrew McAfee. “Producing Digital Gains at Davos.” BCG Perspectives, March 9, 2016. Accessed December 9, 2016. https://www.bcgperspectives.com/content/articles/technology-digital-technology-business-transformation-producing-digital-gains-davos/.


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The Rational Optimist: How Prosperity Evolves by Matt Ridley

"Robert Solow", 23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, Thales and the olive presses, Thales of Miletus, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, Y2K, Yogi Berra, zero-sum game

It was Paul Romer’s great achievement in the 1990s to rescue the discipline of economics from the century-long cul-de-sac into which it had driven by failing to incorporate innovation. From time to time its practitioners had tried to escape into theorems of increasing returns – Mill in the 1840s, Allyn Young in the 1920s, Joseph Schumpeter in the 1940s, Robert Solow in the 1950s – but not until Romer’s ‘new growth theory’ in the 1990s was economics fully back in the real world: a world where perpetual innovation brings brief bursts of profit through temporary monopoly to whoever can commandeer demand for new products or services, and long bursts of growth to everybody else who eventually gets to share the spilled-over idea. Robert Solow had concluded that innovation accounted for growth that could not be explained by an increase in labour, land or capital, but he saw innovation as an external force, a slice of luck that some economies had more of than others – his was Mill’s theory with calculus.

Yet most anti-corporate activists have faith in the good will of the leviathans that can force you to do business with them, but are suspicious of the behemoths that have to beg for your business. I find that odd. Moreover, for all their eventual sins, entrepreneurial corporations can do enormous good while they are young and growing. Consider the case of discount retailing. The burst of increasing productivity that countries like America and Britain rather unexpectedly experienced in the 1990s at first puzzled many economists. They wanted to credit computers, but as the economist Robert Solow had quipped in 1987, ‘you can see the computer everywhere but in the productivity statistics’, and those of us who experienced how easy it was to waste time using a computer in those days agreed. A study by McKinsey concluded that the 1990s surge in the United States was caused by (drum roll of excitement) logistical changes in business (groan of disappointment), especially in the retail business and especially in just one firm – Wal-Mart.

Kung people 44, 135, 136–7 Kuznets curve 106 Kwakiutl people 92 Lagos 322 Lagrange Point 346 lakes, acidification of 305–6 Lamalera people 87 Lancashire 214, 217, 232, 263 Landes, David 223, 406 Lang, Tim 392 language: and exchange 58; genes for 55; Indo-European 129; and isolationism 73; Neanderthals 4, 55; numbers of languages 73; as unique human development 4 Laos 209 lapis lazuli 162, 164 Lascaux caves, France 6 lasers 272 Lassa fever 307 Laurion, Attica 171 Law, John 29, 259 Lawson, Nigel, Baron 331 Lay, Ken 29, 385 Layard, Richard 25 lead 167, 174, 177, 213 Leadbetter, Charles 290 Leahy, Michael 92 leather 70, 122, 167, 176 Lebanon 167 LeBlanc, Steven 137 LEDs (light-emitting diodes) 21–2 lentils 129 Leonardo da Vinci 196, 251 Levy, Stephen 355 Liang Ying (farm worker) 220 liberalism 108, 109–110, 290 Liberia 14, 316 libertarianism 106 Libya 171 lice 68 lichen 75 life expectancy: in Africa 14, 316, 422; in Britain 13, 15, 284; improvements in 12, 14, 15, 17–18, 205, 284, 287, 298, 316; in United States 298; world averages 47 Life (magazine) 304 light, artificial 13, 16, 17, 20–22, 37, 233, 234, 240, 245, 272, 368 light-emitting diodes (LEDs) 21–2 Limits to Growth (report) 303–4, 420 Lindsey, Brink 102, 109 linen 216, 218 lions 43, 87 literacy 106, 201, 290, 353, 396 Liverpool 62, 283 local sourcing (of goods) 35, 41–2, 149, 392; see also food miles Locke, John 96 Lodygin, Alexander 272 Lombardy 178, 196 Lomborg, Björn 280 London 12, 116, 186, 199, 218, 222, 282; as financial centre 259 longitude, measurement of 261 Longshan culture 397 Los Angeles 17, 142 Lothal, Indus valley 162, 164 Louis XI, King of France 184 Louis XIV, King of France 36, 37, 38, 184, 259 Lowell, Francis Cabot 263 Lübeck 180 Lucca 178, 179 Lunar Society 256 Luther, Martin 102 Luxembourg 331 Lyon 184 Macao 183 MacArthur, General Douglas 141 Macaulay, Thomas Babington, 1st Baron 11, 285–7, 359 McCloskey, Deirdre 109, 366–7 Mace, Ruth 73 McEwan, Ian 47 Machiguenga people 87 MacKay, David 342 McKendrick, Neil 224 McKibben, Bill 293 Macmillan, Harold, 1st Earl of Stockton 16 McNamara, Robert 203 mad-cow disease (vCJD) 280, 308 Madagascar 70, 299 Maddison, Angus 180 Maddox, John 207 Madoff, Bernard 28–9 Maghribis 178, 180 magnesium 213 maize 126, 146–7, 153, 155, 156, 163; for biofuel 240, 241 malaria 135, 157, 275, 299, 310, 318, 319, 331, 336, 353, 428, 429 Malawi 40–41, 132, 316, 318 Malawi, Lake 54 Malay Peninsula 66 Malaysia 35, 89, 242, 332 Mali 316, 326 Malinowski, Bronislaw 134 malnutrition 154, 156, 337 Maltese Falcon, The (film) 86 Malthus, Robert 139, 140, 146, 191, 249, 303 Malthusianism 141, 193, 196, 200, 202, 401 mammoths 68, 69, 71, 73, 302 Manchester 214, 218, 283 Mandell, Lewis 254 manganese 150, 213 mangoes 156, 327, 392 Manhattan 83 manure 147, 150, 198, 200, 282 Mao Zedong 16, 187, 262, 296, 311 Marchetti, Cesare 345–6 Marcuse, Herbert 291 Marie-Antoinette, Queen of France 199 markets (in capital and assets) 9, 258–60 markets (in goods and services): and collective betterment 9–10, 36–9, 103–110, 115–16, 281; disdain for 102–3, 104, 291–2, 358; etiquette and ritual of 133–4; and generosity 86–7; global interdependence 42–3; market failure 182, 250; ‘perfect markets’ 249–50; and population control 210–211; and preindustrial economies 133–4; and trust 98–100, 103; and virtue 100–104, 105; see also bartering; exchange; trade Marne, River 234 Martu aborigines 62 Marx, Karl 102, 104, 107–8, 291, 406 Marxism 101, 217–18, 319, 356 Maskelyne, Nevil 221 Maudslay, Henry 221 Mauritius 187, 316 Mauryan empire 172–3, 201, 357 Maxwell, James Clerk 412 measles 14, 135, 310 meat eating 51, 60, 62, 68–9, 126, 147, 156, 241, 376 Mecca 177 Mediterranean Sea: prehistoric settlements 56, 68–9, 159; trade 89, 164, 167–8, 169, 171, 176, 178 meerkats 87 Mehrgarh, Baluchistan 162 Mehta, Suketa 189 Meissen 185 memes 5 Menes, Pharaoh of Egypt 161 mercury 183, 213, 237 Mersey, River 62 Merzbach valley, Germany 138 Mesopotamia 38, 115, 158–61, 163, 177, 193, 251, 357; see also Assyrian empire; Iraq metal prices, reductions in 213 Metaxas, Ioannis 186 methane 140, 329, 345 Mexico: agriculture 14, 123, 126, 142, 387; emigration to United States 117; hurricanes 335; life expectancy 15; nature conservation 324; swine flu 309 Mexico City 190 Meyer, Warren 281 Mezherich, Ukraine 71 mice 55, 125 Michelangelo 115 Microsoft (corporation) 24, 260, 268, 273 migrations: early human 66–70, 82; rural to urban 158, 188–9, 210, 219–20, 226–7, 231, 406; see also emigration Milan 178, 184 Miletus 170–71 milk 22, 55, 97, 135 Mill, John Stuart 34, 103–4, 108, 249, 274, 276, 279 Millennium Development goals 316 Miller, Geoffrey 44, 274 millet 126 Mills, Mark 244 Ming empire 117, 181–4, 260, 311 Minoan civilisation 166 Mississippi Company 29 Mittal, Lakshmi 268 mobile phones 37, 252, 257, 261, 265, 267, 297, 326–7 Mohamed (prophet) 176 Mohawk Indians 138–9 Mohenjo-Daro, Indus valley 161–2 Mojave Desert 69 Mokyr, Joel 197, 252, 257, 411, 412 monarchies 118, 162, 172, 222 monasteries 176, 194, 215, 252 Monbiot, George 291, 311, 426 money: development of 71, 132, 392; ‘trust inscribed’ 85 Mongolia 230 Mongols 161, 181, 182 monkeys 3, 57, 59, 88; capuchins 96–7, 375 monopolies 107, 111, 166, 172, 182 monsoon 174 Montesquieu, Charles, Baron de 103 moon landing 268–9, 275 Moore, Gordon 221, 405 Moore, Michael 291 Morgan, J.P. 100 Mormonism 205 Morocco 53, 209 Morse, Samuel 272 mortgages 25, 29, 30, 323; sub-prime 296 Moses 138 mosquito nets 318 ‘most favoured nation’ principle 186 Moyo, Dambisa 318 Mozambique 132, 316 Mozart, Wolfgang Amadeus 267 Mugabe, Robert 262 Mumbai 189, 190 murder 14, 20, 85, 88, 106, 118, 201 Murrays’ Mills, Manchester 214 music 70, 115, 266–7, 326 Myceneans 166 Nairobi 322 Namibia 209, 324 Napoleon I 184 NASA 269 Nashville 326 Nassarius shells 53, 56, 65 National Food Service 268 National Health Service 111, 261 nationalisation (of industry) 166, 182 nationalism 357 native Americans 62, 92–3, 138–9 Natufians 125 natural selection 5–6, 27, 49–50, 350 nature conservation 324, 339; see also wilderness land, expansion of Neanderthals 3, 4, 53, 55, 64, 65, 68, 71, 79, 373, 378 Nebuchadnezzar 169 needles 43, 70 Nehru, Jawaharlal 187 Nelson, Richard 5 Nepal 15, 209 Netscape (corporation) 259 New Deal 109 New Guinea: agriculture 123, 126, 387; languages 73; malaria 336; prehistoric 66, 123, 126; tribes 87, 92, 138 New York 12, 16, 83, 169, 190 New York Times 23, 295, 305 New Zealand 17, 35, 42, 70 Newcomen, Thomas 244, 256 newspapers 270, 295; licensing copyrights 267 Newsweek (magazine) 329 Newton, Sir Isaac 116, 256 nickel 34, 213 Niger 208–9, 210, 324 Nigeria 15, 31, 99, 117, 210, 236, 316 Nike (corporation) 115, 188 Nile, River 161, 164, 167, 171 nitrogen fertlisers 140, 146, 147, 149–50, 155, 305 nitrous oxide 155 Nobel Peace Prize 143, 280 ‘noble savage’ 43–4, 135–8 Norberg, Johann 187 Nordau, Max 288 Nordhaus, William 331 Norte Chico civilisation 162–3 North, Douglass 324, 397 North Carolina 219–20 North Korea 15, 116–17, 187, 333 North Sea 180, 185 North Sentinel islanders 67 Northern Rock (bank) 9 Northumberland 407 Norton, Seth 211 Norway 97–8, 332, 344 Norwich 225 nostalgia 12–13, 44, 135, 189, 284–5, 292 Novgorod 180 Noyce, Robert 221, 405 nuclear accidents 283, 293–4, 308, 345, 421 nuclear power 37, 236, 238, 239, 245, 246, 343, 344, 345 nuclear war, threat of 280, 290, 299–300, 333 Obama, Barack 203 obesity 8, 156, 296, 337 obsidian 53, 92, 127 occupational safety 106–7 ocean acidification 280, 340–41 ochre 52, 53, 54, 92 octopi 3 Oersted, Hans Christian 272 Oetzi (mummified ‘iceman’) 122–3, 132–3, 137 Ofek, Haim 131 Ohalo II (archaeological site) 124 oil: and ‘curse of resources’ 31, 320; drilling and refining 242, 343; and generation of electricity 239; manufacture of plastics and synthetics 237, 240; pollution 293–4, 385; prices 23, 238; supplies 149, 237–8, 280, 281, 282, 296, 302–3 old age, quality of life in 18 olive oil 167, 169, 171 Olson, Ken 282 Omidyar, Pierre 99 onchoceriasis 310 open-source software 99, 272–3, 356 Orang Asli people 66 orang-utans 60, 239, 339 organic farming 147, 149–52, 393 Orinoco tar shales, Venezuela 238 Orma people 87 ornament, personal 43, 52, 53, 54, 70, 71, 73 O’Rourke, P.J. 157 Orwell, George 253, 290, 354 Ostia 174 otters 297, 299 Otto I, Holy Roman emperor 178 Ottoman empire 161 Oued Djebanna, Algeria 53 oxen 130, 136, 195, 197, 214–15 oxytocin (hormone) 94–5, 97–8 ozone layer 280, 296 Paarlberg, Robert 154 Pacific islanders 134 Pacific Ocean 184 Paddock, William and Paul 301 Padgett, John 103 Page, Larry 114 Pagel, Mark 73 Pakistan 142–3, 204, 300 palm oil 57–8, 239, 240, 242, 339 Pan Am (airline) 24 paper 282, 304 Papin, Denis 256 papyrus 171, 175 Paraguay 61 Pareto, Vilfredo 249 Paris 215, 358; electric lighting 233; restaurants 264 parrots 3 Parsons, Sir Charles 234 Parthian empire 161 Pasadena 17 Pataliputra 173 patents 223, 263, 264–6, 269, 271, 413–14 patriarchy 136 Paul, St 102 PayPal (e-commerce business) 262 peacocks 174 peanuts 126 peat 215–16 Peel, Sir Robert 185 Pemberton, John 263 pencils 38 penicillin 258 Pennington, Hugh 308 pensions 29, 40, 106 Periplus of the Erythrean Sea, The 174 Persia 89, 161, 171, 177 Persian Gulf 66, 164, 340, 429 Peru 97–8, 126, 162–3, 320, 387; silver 31, 132, 183–4 pessimism: and belief in turning points in history 287–9, 301, 311; natural pessimism of human nature 294–5; in nineteenth century 283–8; in twentieth century 281, 282, 288–91, 292–4, 296–308, 328–9; in twenty-first century 8–9, 17, 28, 281–2, 291–2, 308–311, 314–15; ubiquity of 280–85, 291–2, 294–7, 341, 352 pesticides 151–2, 154, 155, 336; DDT 297–8, 299; natural 298–9 Peto, Richard 298 Petty, Sir William 185, 199, 254, 256 pharmaceutical industry 260, 266 philanthropy 92, 105, 106, 295, 318–19, 356 Philip II, King of Spain 30–31 Philip II of Macedon 171 Philippines 61–2, 89, 234 Philistines 166, 170, 396 Phillips, Adam 103, 292 Phoenicians 166–70, 177 photography 114, 283, 386 physiocrats 42 pi, calculation of 173 pig farming 135, 145, 148, 197 Pinnacle Point, South Africa 52, 83 Pisa 115, 178 plagues 135, 176, 195–6, 197; forecasts of 280, 284, 307–310; see also Black Death plastics 237, 240, 270 Plate, River 186 platinum 213 Plato 292 Plautus 44 ploughing 129–30, 136, 145, 150, 195, 197, 198, 215 pneumonia 13, 353 Polanyi, Karl 164–5 polar bears 338–9 polio 261, 275, 310 political fragmentation 170–73, 180–81, 184, 185 pollution: effects on wildlife 17, 297, 299, 339; and industrialisation 218; pessimism about 293–4, 304–6; reduction in 17, 106, 148, 279, 293–4, 297, 299 polygamy 136 Pomeranz, Kenneth 201–2 Ponzi, Charles 29 Ponzi schemes 28–9 population control policies 202–4, 210–211 population growth: and food supply 139, 141, 143–4, 146–7, 192, 206, 208–9; global population totals 3, 12, 14, 191, 206, 332; and industrialisation 201–2; and innovation 252; pessimism about 190, 193, 202–3, 281, 290, 293, 300–302, 314; population explosions 8, 139, 141, 202, 206, 281; and specialisation 192–3, 351; see also birth rates; demographic transition; infant mortality; life expectancy porcelain 181, 183, 184–5, 225, 251 Porritt, Jonathan 314 Portugal 75, 183, 184, 317, 331 Post-it notes 261 Postrel, Virginia 290–91 potatoes 199 Potrykus, Ingo 154 pottery 77, 158, 159, 163, 168, 177, 225, 251 Pound, Ezra 289 poverty: and charitable giving 106; current levels 12, 15, 16–17, 41, 316, 353–4; and industrialisation 217–20; pessimism about 280, 290, 314–15; reduction in 12, 15, 16–17, 290; and self-sufficiency 42, 132, 200, 202, 226–7; solutions to 8, 187–8, 316–17, 322, 326–8, 353–4 Prebisch, Raul 187 preservatives (in food) 145 Presley, Elvis 110 Priestley, Joseph 256 printing: on paper 181, 251, 252, 253, 272; on textiles 225, 232 prisoner’s dilemma game 96 property rights 130, 223, 226, 320, 321, 323–5 protectionism 186–7, 226 Ptolemy III 171 Pusu-Ken (Assyrian merchant) 165–6 putting out system 226, 227, 230 pygmy people 54, 67 Pythagoras 171 Quarterly Review 284 quasars 275 Quesnay, François 42 racial segregation 108 racism 104, 415 radioactivity 293–4, 345 radios 264–5, 271 railways 252; and agriculture 139, 140–41; opposition to 283–4; speed of 283, 286; travel costs 23 rainforests 144, 149, 150, 240, 243, 250–51, 338 Rajan, Raghuram 317 Rajasthan 162, 164 Ramsay, Gordon 392 rape seed 240 Ratnagar, Shereen 162 ravens 69 Rawls, John 96 Read, Leonard 38 recession, economic 10, 28, 113, 311 reciprocity 57–9, 87, 95, 133 Red Sea 66, 82, 127, 170, 174, 177 Rees, Martin 294 Reformation 253 refrigeration 139 regress, technological 78–84, 125, 181–2, 197–200, 351, 380 Reiter, Paul 336, 428 religion 4, 104, 106, 170, 357, 358, 396; and population control 205, 207–8, 211; see also Buddhism; Christianity; Islam Rembrandt 116 Renaissance 196 research and development budgets, corporate 260, 262, 269 Research in Motion (company) 265 respiratory disease 18, 307, 310 restaurants 17, 37, 61, 254, 264 Rhine, River 265–6 rhinoceroses 2, 43, 51, 68, 73 Rhodes, Cecil 322 Ricardo, David 75, 169, 187, 193, 196, 249, 274 rice 32, 126, 143, 146–7, 153, 154, 156, 198 Rifkin, Jeremy 306 Riis, Jacob 16 Rio de Janeiro, UN conference (1992) 290 risk aversion 294–5 Rivers, W.H.R. 81 Rivoli, Pietra 220, 228 ‘robber-barons’ 23–4, 100, 265–6 Rockefeller, John D. 23, 281 Rocky Mountains 238 Rogers, Alex 340 Roman empire 161, 166, 172, 173–5, 184, 214, 215, 259–60, 357 Rome 158, 175 Romer, Paul 269, 276–7, 328, 354 Roosevelt, Franklin D. 109 Roosevelt, Theodore 288 Rosling, Hans 368 Rothschild, Nathan 89 Rousseau, Jean-Jacques 43, 96, 104, 137 Royal Institution 221 rubber 220 rule of law 116–18, 325 Rumford, Benjamin Thompson, Count 221 rural to urban migration 158, 188–9, 210, 219–20, 226–7, 231, 406 Ruskin, John 104 Russia, post-Soviet 14; oil and gas production 31, 37; population decline 205 Russia, prehistoric 71, 73 Russia, Tsarist 216, 229, 324 Rwanda 14, 316 rye 124, 125, 199, 224, 286 Sachs, Jeffrey 208 Saddam Hussein 161 Sahel region 123, 334 Sahlins, Marshall 133, 135 Sahul (landmass) 66, 67 Salisbury, Wiltshire 194 Salk, Jonas 38, 261 salmon 297 Salmon, Cecil 142 saltpetre 140 Sanger, Frederick 412 Sanskrit 129 São Paulo 190, 315 Sargon of Akkad 164 SARS virus 307, 310 satellites 252, 253 satnav (satellite navigation systems) 268 Saudi Arabia 238 Saunders, Peter 102 Schumpeter, Joseph 113–14, 227, 260, 276, 302 science, and innovation 255–8, 412 Scientific American 280 Scotland 103, 199–200, 227, 263, 315 scrub jays 87 scurvy 14, 258 sea level, changes in 128, 314, 333–4 Seabright, Paul 93, 138 seals (for denoting property) 130 search engines 245, 256, 267 Second World War 289 segregation, racial 108 Seine, River 215 self-sufficiency 8, 33–5, 39, 82, 90, 133, 192, 193, 351; and poverty 41–2, 132, 200, 202, 226–7 selfishness 86, 87, 93–4, 96, 102, 103, 104, 106, 292 Sematech (non-profit consortium) 267–8 Sentinelese people 67 serendipity 257, 346 serfs 181–2, 222 serotonin 156, 294 sexism 104, 136 sexual division of labour 61–5, 136, 376 sexual reproduction 2, 6, 7, 45, 56, 271; of ideas 6–7, 270–72 Sforza, house of 184 Shady, Ruth 162 Shakespeare, William 2; The Merchant of Venice 101, 102 Shang dynasty 166 Shapiro, Carl 265 sheep 97, 176, 194, 197 Shell (corporation) 111 shellfish 52, 53, 62, 64, 79, 92, 93, 127, 163, 167 Shennan, Stephen 83, 133 Shermer, Michael 101, 106, 118 ship-building 185, 229; see also boat-building shipping, container 113, 253, 386 Shirky, Clay 356 Shiva, Vandana 156 Siberia 145 Sicily 171, 173, 178 Sidon 167, 170 Siemens, William 234 Sierra Leone 14, 316 Silesia 222 silicon chips 245, 263, 267–8 Silicon Valley 221–2, 224, 257, 258, 259, 268 silk 37, 46, 172, 175, 178, 179, 184, 187, 225 Silk Road 182 silver 31, 132, 164, 165, 167, 168, 169, 171, 177, 183–4, 213 Silver, Lee 122–3 Simon, Julian 83, 280, 303 Singapore 31, 160, 187 Skhul, Israel 53 slash-and-burn farming 87, 130 slave trade 167, 170, 177, 229, 319, 380; abolition 214, 221 slavery 34, 214–15, 216, 407; ancient Greece 171; hunter-gatherer societies 45, 92; Mesopotamia 160; Roman empire 174, 176, 214; United States 216, 228–9, 415; see also anti-slavery sleeping sickness 310, 319 Slovakia 136 smallpox 13, 14, 135, 310; vaccine 221 smelting 131–2, 160, 230 smiling 2, 94 Smith, Adam 8, 80, 96, 101, 104, 199, 249, 272, 350; Das Adam Smith Problem 93–4; Theory of Moral Sentiments 93; The Wealth of Nations vii, 37–8, 39, 56, 57, 93, 123, 236, 283 Smith, Vernon 9, 90, 192 smoke, indoor 13, 338, 342, 353, 429 smoking 297, 298 Smoot-Hawley Tariff Act 186 soap 176, 215 social networking websites 262, 268, 356 socialism 106, 115, 357, 406 software, computer 99, 257, 272–3, 304, 356 solar energy 216, 243, 244 solar power 234–5, 238, 239, 245–6, 343, 344–5, 408 solar wind 346 solid-state electronics 257 Solomon, Robert 94 Solow, Robert 276 Somalia 14, 316, 337, 353 songbirds 55 Sony (corporation) 261 sorghum 126, 156 South Africa: agriculture 154; economy 316, 322; life expectancy 316; pre-historic 52, 53, 54, 83 South Korea 15, 31, 116–17, 187, 212, 322 South Sea Company 29 Southey, Robert 284–5 Soviet Union 16, 107, 109, 289, 299, 318, 324 soybeans 147, 148, 155, 156, 242 space travel 268–9, 275, 282 Spain: agriculture 129; climate 334; Franco regime 186, 289; Peruvian silver 30–31, 183–4; tariffs 222 spears 6, 43, 48, 50, 52, 70, 80, 81, 91 specialisation: by sex 61–5, 136, 376; and division of labour 7, 33, 38, 46, 61–5, 175; and exchange 7, 10, 33, 35, 37–8, 46, 56, 58, 75, 90, 132–3, 350–52, 355, 358–9; and innovation 56, 71–2, 73–4, 76–7, 119, 251; and population growth 192–3, 351; and rule of law 116, 117–18 speech 2, 55; see also language Spencer, Herbert 108 Spengler, Oswald 289 sperm counts 280, 293, 329 spice trade 167, 175, 176, 177, 179, 185 Spinoza, Baruch de 116 Sputnik 282 squashes (vegetables) 126, 163 Sri Lanka 35, 38, 66, 205, 208, 299 Stalin, Joseph 16, 262 stamp seals 130 Stangler, Dane 294 steam engines 126, 214, 221, 228, 231–2, 244, 256, 258, 270, 271, 413–14 steamships 139, 253, 283 Stein, Gil 159 Stein, Herb 281 stem-cell research 358 Stephenson, George 256, 412 Steptoe, Patrick 306 sterilisation, coerced 203–4 Stern (magazine) 304 Stern, Nicholas, Baron 330–31, 332, 425 Stiner, Mary 64, 69 storms 314, 333, 335 Strabo 174 string 70 strokes (cerebral accidents) 18 Strong, Maurice 311 Subramanian, Arvind 317 subsidies: farming 188, 328; renewable energy supplies 344 subsistence farming 87, 138, 175–6, 189, 192, 199–200 substantivism 164–5 suburbia 108, 110, 190 Sudan 316 suffrage, universal 107 sugar 179, 202, 215 sugar beet 243 sugar cane 240, 241, 242 Sun Microsystems (corporation) 259 Sunda (landmass) 66 sunflowers 126 Sungir, Russia 71, 73 superconductivity, high-temperature 257 Superior, Lake 131 supermarkets 36, 112, 148, 268, 292, 297 surfboards 273 Sussex 285 Swan, Sir Joseph 234, 272 Swaziland 14 Sweden 17, 184, 229, 305, 340, 344 Swift, Jonathan 121, 240 Switzerland 264 swords, Japanese 198–9 Sybaris 170–71 symbiosis 75, 351 synergy 6, 101 Syria 124, 130, 164, 174 Szilard, Leo 412 Tahiti 169 Taiwan 31, 187, 219, 322 Talheim, Germany 138 Tanzania 316, 325, 327–8; Hadza people 61, 63, 87 Tapscott, Don 262 Tarde, Gabriel 5 tariffs 185–7, 188, 222–3 taro (vegetable plant) 126 Tartessians 169 Tasman, Abel 80 Tasmania 78–81, 83–4 Tattersall, Ian 73 Taverne, Dick, Baron 103 taxation: carbon taxes 346; and charitable giving 319; and consumption 27; and declining birth rates 211; early development of 160; and housing 25; and innovation 255; and intergenerational transfer 30; Mauryan empire 172; Roman empire 184; United States 25 Taylor, Barbara 103 tea 181, 182, 183, 202, 327, 392 telegraph 252–3, 257, 272, 412 telephones 252, 261; charges 22–3, 253; mobile 37, 252, 257, 261, 265, 267, 297, 326–7 television 38, 234, 252, 268 Telford, Thomas 221 Tennessee Valley Authority 326 termites 75–6 terrorism 8, 28, 296, 358 Tesco (retail corporation) 112 Tesla, Nikola 234 text messaging 292, 356 Thailand 320, 322 Thales of Miletus 171 Thames, River 17 thermodynamics 3, 244, 256 Thiel, Peter 262 Thiele, Bob 349 Thoreau, Henry David 33, 190 3M (corporation) 261, 263 threshing 124, 125, 130, 153, 198; machines 139, 283 thumbs, opposable 4, 51–2 Thwaites, Thomas 34–5 Tiberius, Roman emperor 174, 259 tidal and wave power 246, 343, 344 Tierra del Fuego 45, 62, 81–2, 91–2, 137 tigers 146, 240 timber 167, 216, 229; trade 158, 159, 180, 202 time saving 7, 22–4, 34–5, 123 Timurid empire 161 tin 132, 165, 167, 168, 213, 223, 303 ‘tipping points’ 287–9, 290, 291, 293, 301–2, 311, 329 Tiwi people 81 Tokyo 190, 198 Tol, Richard 331 Tooby, John 57 tool making: early Homo sapiens 53, 70, 71; machine tools 211, 221; Mesopotamian 159, 160; Neanderthals 55, 71, 378; Palaeolithic hominids 2, 4, 7, 48–51; technological regress 80 Torres Strait islanders 63–4, 81 tortoises 64, 68, 69, 376 totalitarianism 104, 109, 181–2, 290 toucans 146 Toulouse 222 Townes, Charles 272 ‘toy trade’ 223 Toynbee, Arnold 102–3 tractors 140, 153, 242 trade: and agriculture 123, 126, 127–33, 159, 163–4; early human development of 70–75, 89–93, 133–4, 159–60, 165; female-centred 88–9; and industrialisation 224–6; and innovation 168, 171; and property rights 324–5; and trust 98–100, 103; and urbanisation 158–61, 163–4, 167; see also bartering; exchange; markets trade unions and guilds 113, 115, 223, 226 trademarks 264 traffic congestion 296 tragedy of the commons 203, 324 Trajan, Roman Emperor 161 transistors 271 transport costs 22, 23, 24, 37, 229, 230, 253, 297, 408 transport speeds 22, 252, 253, 270, 283–4, 286, 287, 296 trebuchets 275 Tressell, Robert 288 Trevithick, Richard 221, 256 Trippe, Juan 24 Trobriand islands 58 trust: between strangers 88–9, 93, 94–8, 104; and trade 98–100, 103, 104; within families 87–8, 89, 91 Tswana people 321, 322 tungsten 213 Turchin, Peter 182 Turkey 69, 130, 137 Turnbull, William (farm worker) 219 Turner, Adair, Baron 411 turning points in history, belief in 287–9, 290, 291, 293, 301–2, 311, 329 Tuscany 178 Tyneside 231 typhoid 14, 157, 310 typhus 14, 299, 310 Tyre 167, 168–9, 170, 328 Ubaid period 158–9, 160 Uganda 154, 187, 316 Ukraine 71, 129 Ulrich, Bernd 304 Ultimatum Game 86–7 unemployment 8, 28, 114, 186, 289, 296 United Nations (UN) 15, 40, 205, 206, 290, 402, 429 United States: affluence 12, 16–17, 113, 117; agriculture 139, 140–41, 142, 219–20; biofuel production 240, 241, 242; birth rates 211, 212; civil rights movement 108, 109; copyright and patent systems 265, 266; credit crunch (2008) 9, 28–9; energy use 239, 245; GDP, per capita 23, 31; Great Depression (1930s) 31, 109, 192; happiness 26–7; immigration 108, 199–200, 202, 259; income equality 18–19; industrialisation 219; life expectancy 298; New Deal 109; oil supplies 237–8; pollution levels 17, 279, 304–5; poverty 16–17, 315, 326; productivity 112–13, 117; property rights 323; rural to urban migration 219; slavery 216, 228–9, 415; tax system 25, 111, 241; trade 186, 201, 228 Upper Palaeolithic Revolution 73, 83, 235 urbanisation: and development of agriculture 128, 158–9, 163–4; global urban population totals 158, 189, 190; and population growth 209–210; and trade 158–61, 163–4, 167, 189–90; see also rural to urban migration Uruguay 186 Uruk, Mesopotamia 159–61, 216 vaccines 17, 287, 310; polio 261, 275; smallpox 221 Vandals 175 Vanderbilt, Cornelius 17, 23, 24 vCJD (mad-cow disease) 280, 308 Veblen, Thorstein 102 Veenhoven, Ruut 28 vegetarianism 83, 126, 147, 376 Venezuela 31, 61, 238 Venice 115, 178–9 venture capitalists 223, 258, 259 Veron, Charlie 339–40 Victoria, Lake 250 Victoria, Queen 322 Vienna exhibition (1873) 233–4 Vietnam 15, 183, 188 Vikings 176 violence: decline in 14, 106, 201; homicide 14, 20, 85, 88, 106, 118, 201; in pre-industrial societies 44–5, 136, 137–9; random 104 Visby, Gotland 180 vitamin A 353 vitamin C 258 vitamin D 129 Vivaldi, Antonio 115 Vladimir, Russia 71 Vogel, Orville 142 Vogelherd, Germany 70 voles 97 Voltaire 96, 103, 104, 256 Wagner, Charles 288 Wal-Mart (retail corporation) 21, 112–14, 263 Wales 132 Wall Street (film) 101 Walton, Sam 112–13, 263 Wambugu, Florence 154 war: in Africa 316; in hunter-gatherer societies 44–5; threat of nuclear war 280, 290, 299–300; twentieth-century world wars 289, 309; unilateral declarations of 104 water: contaminated 338, 353, 429; pricing of 148; supplies 147, 280, 281, 324, 334–5; see also droughts; irrigation water snakes 17 watermills 176, 194, 198, 215, 216–17, 234 Watson, Thomas 282 Watt, James 221, 244, 256, 271, 411, 413–14 wave and tidal power 246, 343, 344 weather forecasting 3, 4, 335 weather-related death rates 335–6 Wedgwood, Josiah 105, 114, 225, 256 Wedgwood, Sarah 105 weed control 145, 152 Weiss, George David 349 Weitzman, Martin 332–3 Welch, Jack 261 welfare benefits 16, 106 Wellington, Arthur Wellesley, 1st Duke of 89 Wells, H.G. 65, 313, 352, 354 West Germany 289–90 West Indies 202, 216, 310 Western Union (company) 261 Westinghouse, George 234 whales 6, 281, 302 whaling 87, 185, 281 wheat 42, 71, 124, 125, 129, 139, 140, 146–7, 149, 153, 156, 158, 161, 167, 300–301; new varieties 141–3 Wheeler, Sir Mortimer 162 wheels, invention of 176, 274 Whitehead, Alfred North 255 Wikipedia (online encyclopedia) 99, 115, 273, 356 Wilberforce, William 105, 214 Wilder, Thornton 359 wilderness land, expansion of 144, 147, 148, 239, 337–8, 347, 359 wildlife conservation 324, 329 William III, King 223 Williams, Anthony 262 Williams, Joseph 254 Williams, Rowan, Archbishop of Canterbury 102 Wilson, Bart 90, 324 Wilson, E.O. 243, 293 Wiltshire 194 wind power 239, 246, 343–4, 346, 408 wolves 87, 137 women’s liberation 108–9 wool 37, 149, 158, 167, 178, 179, 194, 224 working conditions, improvements in 106–7, 114, 115, 188, 219–20, 227, 285 World Bank 117, 203, 317 World Health Organisation 336–7, 421 World Wide Web 273, 356 World3 (computer model) 302–3 Wrangham, Richard 59, 60 Wright brothers 261, 264 Wright, Robert 101, 175 Wrigley, Tony 231 Y2K computer bug 280, 290, 341 Yahgan Indians 62 Yahoo (corporation) 268 Yangtze river 181, 199, 230 Yeats, W.B. 289 yellow fever 310 Yellow river 161, 167 Yemen 207, 209 Yir Yoront aborigines 90–91 Yong-Le, Chinese emperor 183, 184, 185 Yorkshire 285 Young, Allyn 276 young people, pessimism about 292 Young, Thomas 221 Younger Dryas (climatic period) 125 Yucatan 335 Zak, Paul 94–5, 97 Zambia 28, 154, 316, 317, 318, 331 zero, invention of 173, 251 zero-sum thinking 101 Zimbabwe 14, 28, 117, 302, 316 zinc 213, 303 Zuckerberg, Mark 262 Acknowledgements It is one of the central arguments of this book that the special feature of human intelligence is that it is collective, not individual – thanks to the invention of exchange and specialisation.


pages: 395 words: 116,675

The Evolution of Everything: How New Ideas Emerge by Matt Ridley

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, Albert Einstein, Alfred Russel Wallace, AltaVista, altcoin, anthropic principle, anti-communist, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Boris Johnson, British Empire, Broken windows theory, Columbian Exchange, computer age, Corn Laws, cosmological constant, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, cryptocurrency, David Ricardo: comparative advantage, demographic transition, Deng Xiaoping, discovery of DNA, Donald Davies, double helix, Downton Abbey, Edward Glaeser, Edward Lorenz: Chaos theory, Edward Snowden, endogenous growth, epigenetics, Ethereum, ethereum blockchain, facts on the ground, falling living standards, Ferguson, Missouri, financial deregulation, financial innovation, Frederick Winslow Taylor, Geoffrey West, Santa Fe Institute, George Gilder, George Santayana, Gunnar Myrdal, Henri Poincaré, hydraulic fracturing, imperial preference, income per capita, indoor plumbing, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Khan Academy, knowledge economy, land reform, Lao Tzu, long peace, Lyft, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, meta analysis, meta-analysis, mobile money, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, Necker cube, obamacare, out of africa, packet switching, peer-to-peer, phenotype, Pierre-Simon Laplace, price mechanism, profit motive, RAND corporation, random walk, Ray Kurzweil, rent-seeking, reserve currency, Richard Feynman, rising living standards, road to serfdom, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, sharing economy, smart contracts, South Sea Bubble, Steve Jobs, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, twin studies, uber lyft, women in the workforce

The ecologist Daniel Botkin has complained that while ecologists agree that nature changes, when asked to design a policy, they nearly always come up with a ‘balance-of-nature policy’ that assumes an equilibrium. Call it the dynamic revolution in both economics and ecology. Innovationism Since Schumpeter, economists have taken up the challenge of explaining this innovation thing that has been happening to us and driving up living standards. Robert Solow in the 1950s was able to tease out just how much it was contributing by counting the contribution of capital and labour, and deducing that the rest (87.5 per cent) of the change in living standards must be due to technological change. It is technological change that is the chief source of increasing returns: of the fact that economic growth for the world as a whole shows no sign of reaching a plateau.

This conclusion of Terence Kealey’s is so heretical as to be incomprehensible to most economists, as well as scientists. It has been an article of faith for decades in both of their professions that science would not get funded if government did not do it, and economic growth would not happen if science did not get funded by the taxpayer. This received wisdom has been handed down for more than half a century. It was the economist Robert Solow who demonstrated in 1957 that innovation in technology was the source of most economic growth – at least in societies that were not expanding their territory or growing their populations. It was his economist colleagues Richard Nelson and Kenneth Arrow who explained in 1959 and 1962 respectively that government funding of science was necessary, because it is cheaper to copy others than to do original research.

(with Paul Paddock) 207 Page, Larry 188 Pagel, Mark 80, 81–2 Pakistan 32, 206 Paley, William 38–9, 41–2, 51 Panama 286 Paris 102, 121, 254 Park, Walter 139 Parris, Matthew 303 Parys Mine Company, Anglesey 278 Pascal, Blaise 273 Paul, Senator Rand 241 Paul, Ron 114, 285, 292, 295 Paul, St (Saul of Tarsus) 8, 258, 264 Pauling, Linus 121 Pax Romana 239 Peace High School, Hyderabad (India) 181 Peel, Robert 246, 283–4 Peer-to-Peer Foundation 308 Peninsular War 280 People’s Printing Press 288 personality: and the blank slate 156–7, 158–9; and genes 159, 160–2; and homicide 169–71; innateness of behaviour 157–8; intelligence from within 165–7; non-genetic differences 162–5; and parenting 159–60, 161–2; and sexual attraction 172–3; and sexuality 167–9 Peterloo massacre (1819) 245 Pfister, Christian 276 Philippe, duc d’Orléans 286 Philippines 190 Philips, Emo 140 Philostratus 258 Phoenicia 101 Pinker, Steven 28, 30, 31–3, 172–3; The Better Angels of Our Nature 28–9 Pinnacle Technologies 136 Pitt-Rivers, Augustus 127 Pixar 124 Planned Parenthood Foundation 204 Plath, Robert 126 Plato 7, 11 Plomin, Robert 165, 167 Poincaré, Henri 18, 121 Polanyi, Karl 133 Polanyi, Michael 253 politics 314–16 Poor Law (1834) 195 Pope, Alexander 15 Popper, Karl 253; ‘Conjectures and Refutations’ 269 Population: American eugenics 200–3; control and sterilisation 205–8; and eugenics 197–9; impact of Green Revolution 208–10; Irish application of Malthusian doctrines 195–7; Malthusian theory 193, 194–5; and one-child policy 210–14; post-war eugenics 203–5 Population Crisis Committee 206 Portugal, Portuguese 134 Pottinger, Sir Harry 233 ‘Primer for Development’ (UN, 1951) 232 Prince, Thomas 242 Pritchett, Lant 179–80; The Rebirth of Education 176 Procter & Gamble 130 Proudhon, Pierre-Joseph 194–5 Prussia 176 Psychological Review 159 Putin, Vladimir 305 ‘The Puzzle of Monogamous Marriage’ (Henrich, Boyd & Richerson) 89 Pythagoras 85 Pythagorism 259 Qian XingZhong 213 Quesnay, François 98 Raines, Franklin 292 Ramsay, John 25 RAND Corporation 206, 300 Ravenholt, Reimert 206 Ray Smith, Alvy 124 Reagan, Ronald 254, 290 Red Sea 82 Reed, Leonard 43 Reformation 216, 220 religion: and climate change/global warming 271–6; and cult of cereology (crop circles) 264–6; existence of God 14–15; heretics and heresies 141–2; as human impulse 256–8; predictability of gods 259–60; and the prophet 260–3; temptations of superstition 266–8; variety of beliefs 257–8; vital delusions 268–71 Renaissance 220 Ricardo, David 104–5, 106, 246 Richardson, Samuel 88 Richerson, Pete 78, 89 Ridley, Matt, The Rational Optimist: How Prosperity Evolves 110–11, 126–7 Rio de Janeiro 92 Roberts, Russ 4 Robinson, James 97–8 Rockefeller Foundation 229, 230–1 Rodriguez, Joã 47–8 Rodrik, Dani 228 Rome 257, 259, 260 Romer, Paul 109 Roosevelt, Franklin Delano 251 Roosevelt, Theodore 197 Rothbard, Murray 243 Rousseau, Jean-Jacques 165, 216 Rowling, J.K. 122 Royal Bank 281 Royal Mint 278, 279 Royal Navy 297 Royal United Services Institution 198 Rudin, Ernst 202 Rufer, Chris 226 Runciman, Garry, Very Different, But Much the Same 94 Rusk, Dean 206–7 Russell, Lord John 195 Russia 119, 204, 227–8, 250, 303 Russian Revolution 318 Sadow, Bernard 126 Safaricom 296 St Louis (ship) 202–3 St Maaz School, Hyderabad (India) 181 Salk Institute, California 67 San Marco, Venice 53 Sandia National Laboratory 136 Sanger, Margaret 201, 204 Santa Fe Institute 93, 126 Santayana, George 10 Sapienza, Carmen 67 Satoshi Nakamoto 307–8, 309–10, 312 Schiller, Friedrich 248 Schmidt, Albrecht 222 Schumpeter, Joseph 106, 128, 251; Capitalism, Socialism and Democracy 106–7; Theory of Economic Development 106 science: as driver of innovation 133–7; as private good 137–9; pseudo-science 269 Science (journal) 70 Scientology 263 Scopes, John 49 Scotland 17, 280–2, 286 Scott, Sir Peter 211 Scott, Sir Walter (‘Malachi Malagrowther’) 283 Second International Congress of Eugenics 200 Second World War 105, 138, 203, 231, 252, 254, 318 Self-Management Institute 226 Selgin, George 297; Good Money 279, 280 Shade, John 188 Shakespeare, William 15, 131, 216, 224 Shanker, Albert 180 Shaw, George Bernard 197 Shaw, Marilyn 155–6 Shelley, Mary, Frankenstein 16 Shelley, Percy 16 Shockley, William 119 Shogun Japanese 130 Sierra Club 204 Silk Road 311–12 Silvester, David 274 Simon, Julian 209 Singapore 190 Sistine Chapel, Rome 256 Skarbek, David, The Social Order of the Underworld 237–8 Skinner, B.F. 156, 267–8 Skirving, William 244 skyhooks 7, 13, 14, 18, 65, 67, 71, 150, 267 Slumdog Millionaire (film, 2008) 185 Smith, Adam 3, 20, 21, 22–7, 28, 33, 110, 112, 117, 234, 243, 244, 246, 249; The Theory of Moral Sentiments 23–4, 27, 28, 37–8, 98; The Wealth of Nations 24, 38, 98–100, 103–4, 137 Smith, John Maynard 53 Smith, Joseph 263, 264, 266 Smithism 110 Snowden, Edward 303 SOLE (self-organised learning environment) 186 Solow, Robert 108, 137 Somalia 32 Song, Chinese dynasty 101 Song Jian 210–11, 212–13 South America 247 South Korea 125, 190, 229 South Sea Bubble (1720) 285, 294 South Sudan 32 Soviet-Harvard illusion 3 Soviet Union 114, 122 Spain 101, 247 Sparkes, Matthew 313 Sparta 101 Spencer, Herbert 216–17, 249, 253 Spenser, Edmund 15 Spinoza, Baruch 20, 141–2, 148, 268; Ethics 142; l’Esprit des lois 142–3 Sputnik 138 Stalin, Joseph 250, 252, 253 Stalling, A.E. 10 Stanford University 184, 185 Stealth bomber 130 Steiner, George, Nostalgia for the Absolute 266 Steiner, Rudolf 271 Steinsberger, Nick 136 Stephenson, George 119 Stewart, Dugald 38, 244 Stiglitz, Joseph 292 Stockman, David 288, 289–90; The Great Deformation 294 stoicism 259 Stop Online Piracy Act (US, 2011) 304 Strawson, Galen 140 Stuart, Charles Edward ‘The Young Pretender’ 282 Stuart, James Edward ‘The Old Pretender’ 281 Sudan 32 Summers, Larry 110 Sunnis 262 Suomi, Stephen 161 Sveikauskas, Leo 139 Swan, Joseph 119 Sweden 101, 284 Switzerland 32, 190, 247, 254 Sybaris 93 Syria 32 Szabo, Nick 307, 310; ‘Shelling Out: The Origins of Money’ 307 Tabarrok, Alex 132; Launching the Innovation Renaissance 132 Taiwan 190 Tajikistan 305 Taleb, Nassim 3, 92, 107, 135, 285, 312 Tamerlane the Great 87 Taoism 259, 260 Taylor, Winslow 250 Taylorism 250, 251 Tea Act (UK, 1773) 282n Tea Party 246 technology: biological similarities 126–31; boat analogy 128; computers 123–5, 126; copying 132–3; electric light 1–2; and fracking 136; inexorable progress 122–6, 130–1; innovation as emergent phenomenon 139; and the internet 299–316; light bulbs 118–19, 120; many-to-many 300; mass-communication 200; open innovation 130; patents/copyright laws 131–2; and printing 220; and science 133–9; simultaneous discovery 120–2; skunk works 130; software 131 TED (Technology, Entertainment, Design) lecture 177 Thatcher, Margaret 217 Third International Congress of Eugenics 201–2, 204 Third World 231–2 Thrun, Sebastian 185 Time (magazine) 241 The Times 308 Togo 94 Tokyo 92 Tolstoy, Leo 217 Tooby, John 43 Tooley, James 181–4 Toy Story (film, 1995) 124 Trevelyan, Charles 195 Tuchman, Barbara, A Distant Mirror 29 Tucker, William 90; Marriage and Civilization 89 Tullock, Gordon 35 Turner, Ted 213 Twister (messaging system) 313 Twitter 310, 313 U-2 reconnaissance plane 130 Uber 109 UK Meteorological Office 275 UN Codex Alimentarius 254 UN Family Planning Agency 213 UN Framework Convention on Climate Change 254–5 UN General Assembly 305 UNESCO 205 Union Bank of Scotland 281 United Nations 131, 213, 232, 305 United States 34, 122, 125, 138, 139, 176, 200–2, 232, 235–8, 245, 247, 250, 254, 284–5, 286, 302 United States Supreme Court 50 universe: anthropic principle 18–20; designed and planned 7–10; deterministic view 17–18; Lucretian heresy 10–12; Newton’s nudge 12–13; swerve 14–15 University of Czernowitz 106 University of Houston 71 University of Pennsylvania 133 UNIX 302 Urbain Le Verrier 120–1 US Bureau of Land Management 240 US Department of Education 240 US Department of Homeland Security 240, 241 US Federal Reserve 285, 286, 288, 293, 297, 309 US Financial Crisis Inquiry Commission 294 US Internal Revenue Service (IRS) 240 US National Oceanographic and Atmospheric Administration 240 US Office of Management and Budget 290 Utah 89 Uzbekistan 305 Vancouver 92 Vanuatu 81 Vardanes, King 258 Veblen, Thorstein 249 Verdi, Giuseppe: Aida 248; Rigoletto 248 Veronica (search engine) 120 Versailles Treaty (1919) 318 Victoria, Queen 89 Virgil (Publius Vergilius Maro) 10, 23 vitalism 270–1 Vodafone 296 Vogt, William 205, 209; Road to Survival 204 Voltaire, François-Marie Arouet 14, 15, 20, 22, 25, 41, 143, 243, 268; Candide 15 Volvo 101 Wagner, Andreas 47 Wall Street Journal 125, 132 Wallace, Alfred Russell 20, 54–5, 196 Wallison, Peter 294 Walras, Léon 106 Waltham, David, Lucky Planet 19 Walwyn, Thomas 242 Wang Mang, Emperor 267 Wang Zhen 212 Wannsee conference 198 Wapinski, Norm 136 Washington, George 220, 222, 240 Washington Post 241 Watson, James 121, 145 Webb, Beatrice 197 Webb, Richard 5, 319 Webb, Sidney 197 Webcrawler 120 Wedgwood family 38 Wedgwood, Josiah 199 Weismann, August 55 Wells, H.G. 197, 251 West, Edwin 178; Education and the State 177 West, Geoffrey 93 West Indies 134, 286 Whitney, Eli 128 Whittle, Frank 119 Whole Foods 227 Wikipedia 188, 304–5 Wilby, Peter 315 Wilhelm II, Kaiser 198, 247 Wilkins, Maurice 121 Wilkinson, John 278–9 Willeys 278–9, 280 Williams, Thomas 278 Williamson, Kevin 33; The End is Near and it’s Going to be Awesome 238–9 Wilson, Catherine 12 Wilson, Margo 171 Wolf, Alison, Does Education Matter?


pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

"Robert Solow", accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, business cycle, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, different worldview, disintermediation, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, income inequality, income per capita, industrial cluster, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, Pareto efficiency, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey, zero-sum game

Partha Dasgupta has argued that the Brundtlandt definition does not go far enough. He says of this definition of sustainability: “It doesn’t, for example, demand that development be optimal or just. But how is a generation to judge whether it is leaving behind an adequate productive base for its successor?”25 So he introduces the dimension of social welfare and the practical question of how sustainability is to be judged. The economist Robert Solow has also argued for a more capacious definition of sustainability, leaving for the next generation “whatever it takes to achieve a standard of living at least as good as our own and to look after the next generation similarly.”26 The focus on living standards is more generous than the mere fulfillment of needs, and the formulation passes on the responsibility for sustainability in all successive generations as well, as it is recursive.

“Organizations and Markets.” Journal of Economic Perspectives 5:2, pp. 25–44. Simon, Julian L. 1996. The Ultimate Resource. Princeton: Princeton University Press. Smith, Tom W. 2008. “Trends in Confidence in Institutions, 1973–2006.” Paper No. SC54. Chicago: National Opinion Research Center. Smith, Vernon L. 1982. “Microeconomic Systems as an Experimental Science.” American Economic Review 72:5, pp. 923–55. Solow, Robert M. 1992. “An Almost Practical Step toward Sustainability.” London: RFF Press. Sowell, Thomas. 2008. Applied Economics: Thinking Beyond Stage One. New York: Basic Books. ———. 2007. Basic Economics: A Common Sense Guide to the Economy Cambridge, MA: Perseus Books. Spilimbergo, Antonio, Steven Symansky, Olivier Blanchard, and Carlo Cottarelli. 2009. “Fiscal Policy for the Crisis.” IMF Staff Position Note, 29 September.

See distribution Inconvenient Truth, An (Gore), 60 Index of Sustainable Economic Welfare (ISEW), 36 India, 212; emerging middle class of, 125; fairness and, 122–26, 133; inequality and, 125–26; nature and, 63, 65, 81; posterity and, 108; purchasing power parity (PPP) and, 306n19; Satyam and, 146; trust and, 146, 149, 163, 172; wage penalties and, 133; World Bank influence and, 163 Industrial Revolution, 27, 149, 290, 297 inequality, 4–5, 11, 17, 84, 306n19, 308n34; Bush and, 127–28; consequences for growth, 135–36; decline in trust and, 139–44; dramatic increase in, 126–27, 131; extraction ratio for, 124; fairness and, 114–16, 122–43; fractal character of, 134; Gini coefficient and, 126; globalization and, 122–24, 127, 131, 155; happiness and, 25, 36, 42, 44, 53; high salaries and, 130, 143–44, 193, 223, 277–78, 286, 296; historical perspective on, 126–27; institutions and, 116, 127–31, 141; measurement of, 126; policy recommendations for, 267, 276, 295–97; poverty and, 43, 55–56, 100, 125, 128, 138, 142, 168–69, 261, 267; reduction of, 276–77; Republican administrations and, 127–28; social corrosiveness of, 139–44; structural causes of, 131–35; superstar effect and, 134; taxes and, 115–16, 123, 127–28, 131, 135–36; trends in, 125–30; unequal countries and, 124–30; United Kingdom and, 125–30; United States and, 122, 125–31, 135, 276; values and, 223–24, 234–36; well-being and, 137–43; within/between countries, 123–24 inflation, 37, 43, 61, 89, 102–5, 110–11, 189, 281, 305n17 information and communication technology (ICT), 6–7, 15, 17; data explosion and, 205, 291; decreased cost of, 254; fairness and, 133; happiness and, 24–25; institutional impacts of, 252–53; structural effects of, 194–98; trust and, 156–60, 165–67, 174 innovation, 6–7, 12; consumer electronics and, 36–37; fairness and, 121, 134; growth and, 271–73, 281, 290–92; happiness and, 37; institutions and, 244, 258, 263, 290–91; measurement and, 183, 196, 201–8, 273–74; musicians and, 195; nature and, 69–70, 81; policy recommendations for, 290–91; posterity and, 102; statistics and, 201–7; trust and, 157; values and, 210, 216, 220, 236 In Praise of Slowness, 27 institutions, 18; anomie and, 48, 51; balance and, 12–17; blindness of to financial crises, 87–88; broad framework for, 249–52; capitalism and, 240; consumption and, 254, 263; decentralization and, 246; democracy and, 242–43, 251–52, 262; downsizing and, 175, 246, 255; economies of scale and, 253–58; efficiency and, 245–46, 254–55, 261; extinction crisis and, 288; face-to-face contact and, 7, 147, 165–68; failures of, 240–44, 257, 262–63, 267, 289–90; fall of communism and, 226, 239–40, 252; freedom and, 244, 262; globalization and, 244; governance and, 242, 247, 255–58, 261–62; government and, 240–63; growth and, 258, 261, 263; health care and, 247, 252–53; high salaries and, 130, 143–44, 193, 223, 277–78, 286, 296; impact of new technologies and, 252–54; importance of, 261–63; inequality and, 116, 127–31, 141; innovation and, 244, 258, 263, 290–91; legitimacy and, 8, 16, 50, 66, 68–69, 162–63, 213, 226, 269, 274, 292, 296–97; managerialism and, 259; morals and, 254; nature and, 66–69, 82–84; New Public Management and, 245–47; outsourcing and, 159, 161, 175, 219, 287; policy recommendations for, 269, 284–91; politics and, 239–48, 251, 256–63; pollution and, 15, 35, 228; productivity and, 244–47, 257, 263; public choice theory and, 242–43; public deliberation and, 258–60; reform and, 245–48, 256, 285, 288–91, 296–97; responsibility to posterity and, 296; shareholders and, 145, 248, 257–58, 277; statistics and, 245; technology and, 244–46, 251–54, 257–63 (see also technology); values and, 240–42, 246–47, 258–60 intangible assets: measurement and, 199–201, 204–6; satellite accounts and, 38, 81, 204–6, 271; social capital and, 149–52, 157, 161, 199–201 InterAcademy Council, 66–67 interbank market, 1–2 Intergovernmental Panel on Climate Change (IPCC), 59, 66–69, 82, 297 International Monetary Fund (IMF), 90, 101–3, 111, 162–64, 176, 211, 287, 297 International Price Comparison, 124 International Telecommunications Union, 219 Internet, 155, 195, 245, 260, 273, 287–89, 291, 296 invisible hand, 209 iPods, 195 Ipsos Mori poll, 66, 247 Ireland, 172 Iron Curtain, 183, 239, 252 Italy, 95, 97–98, 146, 152 Jackson, Michael, 198 Japan, 42; debt of, 102; equal income distribution in, 125; fairness and, 125–26, 140–41; inequality and, 126; lost decade of, 102; posterity and, 91–92, 95, 97–98, 102; savings rates in, 280; trust and, 169, 175; voter turnout and, 175 Jazz Age, 127 Jefferson, Thomas, 184, 253–54 Johns, Helen, 41 Johnson, Simon, 256–57 Johnson, Steven, 187 Justice (Sandel), 237 Kahneman, Daniel, 215 Kamarck, Elaine, 247–48 Kay, John, 139, 245–46, 257 Kennedy School of Government, 247 Keynes, John Maynard, 101, 183–84, 190 Kleinwort, Dresdner, 87 knowledge economy, 191 Kobayashi, Keiichiro, 102 Korea, 126 Krugman, Paul, 100–103, 127–29, 232, 282 Kyoto Protocol, 62–64 labor: absorbing work and, 10, 48–49; call centers and, 131, 133, 161; creativity and, 166–68, 205–7; downsizing and, 175, 246, 255; global cities and, 165–70; globalization and, 131, 149 (see also globalization); human capital and, 81, 203–4, 282; measurement and, 189–99; migration and, 108–10, 172; outsourcing and, 159, 161, 175, 219, 287; pensions and, 4, 25, 85–86, 90, 92–100, 103–7, 111–13, 174–76, 191, 203, 243, 269–71, 275, 280, 286, 289–90, 293; Protestant work ethic and, 13–14, 236; retirement age and, 94, 97–99, 106–7, 112; skilled, 132–33, 159, 166–67, 276; specialization and, 160–61; technology and, 131–33; unemployment and, 3, 10, 43, 51, 56, 89, 107, 169, 207, 212–13, 243; unions and, 15, 51, 224, 249; unskilled, 132–33, 158, 172, 193; well-being and, 137–39; Whitehall Studies and, 139 lack of control, 47, 138–39 Lawson, Neal, 26 Layard, Richard, 31, 39–40, 43 Lehman Brothers, 1, 85, 87–88, 145, 211, 275–76 Leipzig marches, 239 Leviathan (Hobbes), 114 light bulbs, 59–61 Linux, 205 Lipsky, John, 102, 111 List, John, 117 literacy, 36 Live Nation, 197 living standards, 78–79, 106, 113, 136, 151, 162, 190, 194, 267 lobbyists, 15, 71, 247, 257, 276, 285, 289, 296 Lolapaloozza, 197 Louis Vuitton, 150 Luxury Fever (Frank), 40 Mackenzie, Donald, 221 Madonna, 194 Malthusianism, 95 Mama Group, 197 managerial competence, 2, 16, 150, 209, 259 Manzi, Jim, 231–32 Mao Zedong, 10 markets: asymmetric information and, 17, 186, 214, 219–20, 229, 248, 254, 262–63; black, 225; boom–bust cycles and, 4, 22, 28, 93, 102, 106–9, 136–37, 145, 147, 213, 222–23, 233, 277, 280, 283; capitalism and, 182, 230–38 (see also capitalism); culture and, 230–38; declining population and, 86, 89–90, 95–99, 103, 113; democracy and, 230–38; deregulation and, 7, 212; evidence–based policy and, 233–34; exchange advantage and, 214; externalities and, 15, 70, 80, 211, 228–29, 249, 254; failures of, 226–30, 240–44, 257, 262–63, 267, 289–90; Fama hypothesis and, 221–22; flaws of, 215–16; fractal character of, 134; free market model and, 14, 121, 129, 182–83, 210–11, 218–24, 232, 240, 243, 251; fundamentalism for, 213; gift economy and, 205–7; interbank, 1–2; international trade and, 110, 148, 159, 163; invisible hand and, 209; mathematical models of, 214; merits of, 211–17; missing, 229; moral, 210, 213, 220–25, 230–33; music, 194–98; network effects and, 253, 258; options, 222; as organizing economy, 218; performativity and, 224–25; Protestant work ethic and, 13–14, 236; public choice theory and, 220, 242–45; public domain and, 196; rational calculation and, 214–15; satellite accounts and, 81; shorting of, 86; social, 217–20; stability issues and, 2–4, 25, 70, 101, 124, 135, 140–41, 174, 176, 218, 296; trilemma of, 230–38; values and, 209–10 (see also values); winner take all, 134 Marx, Karl, 14, 28, 131, 221 McDonalds, 27 McKitrick, Ross, 68 Mean Fiddler Group, 197 Measuring Australia’s Progress, 274 measurement: asymmetric information and, 17, 186, 214, 219–20, 229, 248, 254, 262–63; Australian model and, 271, 274; balance and, 12–17; bankers and, 193, 200; capitalism and, 182; challenges of, 188–93; consumption and, 181–82, 198; distribution and, 191–99; evidence–based policy and, 233–34; GDP, 10 (see also gross domestic product [GDP]); Gini coefficient and, 126; governance and, 183, 186; government and, 182–88, 191, 193, 196, 202–3, 206; growth and, 181–85, 188–90, 194, 201–5, 208; happiness and, 35–39; health issues and, 181, 188–93, 200, 207; hedonic techniques and, 274; importance of, 184–85, 187–89; of inequality, 126; innovation and, 183, 196, 201–8, 273–74; intangible assets and, 199–201, 204–6; labor and, 189–99; less publication of, 271–72; living standards and, 13, 65, 78–79, 106, 113, 136, 139, 151, 162, 190, 194, 267; Measuring Progress exercise and, 294; policy recommendations for, 270–74; politics and, 182–84, 191, 193, 203, 208; productivity and, 189–90, 194, 199–201, 206–7; resources for, 294; social capital and, 154; statistics and, 187–89, 198–208; technology and, 181–85, 188–91, 194–201, 204–6; time constraints and, 204–7; trust and, 152–57; uncertainty of accuracy and, 273; unmeasurable entities and, 187; values and, 209, 212–13, 224 Medicare, 93–94 Meek, James, 26 metrification, 184 Metropolitan Museum of Art symposium, 100–101 Mexico, 226 Microsoft, 253, 258 migration, 108–10, 172 Milanovic, Branko, 123–24 Mill, John Stuart, 31–32 Minsky, Hyman, 226 monopolies, 196, 245, 252, 254 Montreal Protocol, 59 Moore’s Law, 156 morals: bankers and, 90, 277–78; criticism of poor and, 142; fairness and, 116–20, 127, 131, 142, 144; greed and, 221 (see also greed); growth and, 275–76, 279, 293, 295, 297; happiness and, 22, 26, 30, 34, 43, 48–49; institutions and, 254; nature and, 55, 70–72, 76, 78; performativity and, 224–25; posterity and, 90; trust and, 149, 174; values and, 185, 210, 213, 220–25, 230–33 MP3 players, 195 music, 11, 194–98, 204, 208, 229, 254 nature: Brundtlandt Report and, 77; carbon prices and, 70–71; climate change and, 57–84 (see also climate change); consumption and, 58–61, 71–76, 79, 82; Copenhagen summit and, 62, 64–65, 68, 162, 292; democracy and, 61, 66, 68; efficiency and, 61–62, 69, 82; environmentalists and, 29, 55–59, 69–70, 99; freedom and, 79; future and, 75–83; global warming and, 57, 64, 66, 68; government and, 58–62, 65–71, 82–84; greenhouse gases and, 23, 29, 35, 59, 61–63, 68, 70–71, 83; green lifestyle and, 55, 61, 76, 289, 293; gross domestic product (GDP) and, 56–60, 75–76, 80–82; growth and, 56–59, 62–66, 69–72, 76, 79–82; happiness and, 56–59, 75–76, 80–84; health issues and, 81; hybrid cars and, 61; innovation and, 69–70, 81; institutions and, 66–69, 82–84; InterAcademy Council and, 66–67; Intergovernmental Panel on Climate Change (IPCC) and, 59, 66–69, 82, 297; Kyoto Protocol and, 62–64; light bulbs and, 59–61; Montreal Protocol and, 59; morals and, 55, 70–72, 76, 78; natural capital and, 79–81, 151, 271, 273; philosophy and, 69–70; plastic and, 61; politics and, 57–71, 75, 77, 82–84; population issues and, 99; productivity and, 78, 82; satellite accounts and, 81; self-interest and, 65; squandered natural wealth and, 181–82; statistics and, 66, 81–82; stewardship and, 78, 80; technology and, 69–72, 76–77, 80, 84; TEEB project and, 78–79 network effects, 253, 258 New Deal, 129 New Economics Foundation, 36 New Public Management theory, 245–47 Newton, Isaac, 214–15 Niger, 122 Nobel Prize, 18, 60, 102, 215, 220, 236, 250, 261 noise, 47 No Logo (Wolf), 34 Nordhaus, William, 37, 70, 73, 156 North, Douglass, 261 Northern Rock, 1, 146 Obama, Barack, 62–63, 87, 173, 260, 285, 288 Oberholzer-Gee, Felix, 197 obesity, 137–38, 279 Office for National Statistics, 274 Olson, Mancur, 242 opinion formers, 61 option pricing theory, 222 Orchestra of the Age of Enlightenment, 194 Organization for Economic Cooperation and Development (OECD), 4, 11, 201, 305n11; happiness and, 38, 52; inequality in, 125–26; nature and, 60, 68; policy recommendations for, 273–74, 281, 283, 287, 291, 293; posterity and, 87, 93–94, 97–99, 112; trust and, 160, 171; values and, 212, 243–44, 246 organized crime, 277 Ormerod, Paul, 41 Orwell, George, 56 Ostrom, Elinor, 17, 220, 250–51, 261–63 Pakistan, 81, 226 Paradox of Choice, The (Schwartz), 10–11, 40 Parmalat, 146 partisanship, 2, 16, 101, 128, 269, 285 Peake, Mervyn, 9 pensions, 4, 25, 243; burden of, 92–95; Chinese savings and, 94; measurement and, 191, 203; policy recommendations for, 269–71, 275, 280, 286, 289–90, 293; posterity and, 85–86, 90–100, 103–7, 111–13; retirement age and, 92, 97–99, 106–7, 112; trust and, 174–76 performativity, 224–25 Persson, Torsten, 136 Pew surveys, 140 philanthropy, 33 philosophy, 16; fairness and, 114–15, 123; freedom and, 237; happiness and, 21, 27, 31–32, 49–50; nature and, 69–70; utilitarian, 31–32, 78, 237; values and, 237–39 Pickett, Kate, 137–40 Piereson, James, 183 Piketty, Thomas, 127, 129 Pimco, 287 Pinch (Willetts), 98–99 Pinker, Steven, 118, 305n4 Poland, 239 police service, 5, 35, 163, 193, 200, 247 policy: Commission on the Measurement of Economic Performance and Social Progress and, 37–38; deregulation and, 7, 212; errors in standard, 8; evidence–based, 233–34; first ten steps for, 294–98; future and, 75–83, 291–98; Intergovernmental Panel on Climate Change (IPCC) and, 59, 66–69, 82, 297; legitimacy and, 8, 16, 50, 66, 68–69, 162–63, 213, 226, 269, 274, 292, 296–97; measurement and, 187–89; OECD countries and, 4, 11, 38, 52, 60, 68, 87, 93–94, 97–99, 112, 125–26, 160, 171, 201, 212, 243–44, 246, 273–74, 281, 283, 287, 291, 293; population growth and, 95–100; practical recommendations for, 269–91; reform and, 8, 82–83, 85 (see also reform); stability issues and, 2–4, 25, 70, 101, 124, 135, 140–41, 174, 176, 218, 296; stimulus packages and, 91, 100–103, 111; sustainability and, 57 (see also sustainability); tradition and, 9; transparency and, 83, 164, 288, 296; trilemma of, 13–14, 230–36, 275; World Forum on Statistics, Knowledge, and Policy and, 38 political correctness, 173, 231 political economy, 27–28 pollution, 15, 35, 228 Population Bomb, The (Ehrlich), 70 population issues: aging, 4, 95–100, 106, 109, 206, 267, 280, 287, 296; baby boomers and, 4, 106, 109; declining population and, 86, 89–90, 95–99, 103, 113; demographic implosion and, 95–100; environmentalists and, 99; global cities and, 165–70; Malthusianism and, 95; migration and, 108–10; one-child policy and, 95–96; posterity and, 89–90, 94–95, 105–6, 109, 112–13; retirement age and, 94, 97–99, 106–7, 112 Porter, Roy, 184 Portugal, 126, 287 posterity, 298; aging population and, 89–90, 94–95, 105–6, 109, 112–13; bankers and, 85–91, 94, 99–102; consumption and, 86, 104–6, 112–13; current generation’s debt to, 90–92, 112–13; declining population and, 86, 89–90, 95–99, 103, 113; default and, 110–12; democracy and, 106; demographic implosion and, 95–100; freedom of investors and, 108; globalization and, 108; government and, 84–95, 98–113; gross domestic product (GDP) and, 91–94, 98–99, 103, 108, 111; growth and, 90, 95, 97, 99, 102, 105–8, 111; health issues and, 89, 93–94, 97–99, 103, 106, 111–13; higher retirement age and, 94–98, 106–7, 112; innovation and, 102; institutional responsibility and, 296; less leisure and, 106–7; Medicare and, 93–94; migration and, 108–9; morals and, 90; pensions and, 85–86, 90, 92–100, 103–7, 111–13; politics and, 86–94, 98, 101–8, 111–13; poverty and, 100; productivity and, 88, 97–99, 102, 105–8, 112; public debt and, 85–86; reform and, 85–86, 98, 111–12; savings and, 86–87, 94, 98, 100–101, 105–8, 112; Social Security and, 93–94; social welfare and, 85, 100, 112; sustainability and, 79 (see also sustainability); taxpayer burden and, 85–91, 94, 99, 103–5; technology and, 107; welfare burden and, 92–95 poverty, 261, 267; desire to spend and, 55–56; fairness and, 125, 128, 138, 142; happiness and, 43; posterity and, 100; trust and, 168–69 printing press, 7 productivity, 16; balance and, 268, 271, 273–76, 281, 287; bureaucratic obstacles to, 285–86; Commission on the Measurement of Economic Performance and Social Progress and, 37–38; fairness and, 131, 135; globalization and, 131 (see also globalization); governance and, 173–77; happiness and, 27, 38, 42, 51; improvements in, 107–8; institutions and, 244–47, 257, 263; measurement and, 189–90, 194, 199–201, 206–7; nature and, 78, 82; posterity and, 88, 97–99, 102, 105–8, 112; public services and, 257; Soviet method and, 246; technology and, 107–8, 157–59, 268; trilemma of, 13–14, 230–36, 275; trust and, 156–59, 162, 166–67, 170, 174 property rights, 80, 174, 195–96, 261 Protestant work ethic, 13–14, 236 psychology: altruism and, 118–22; anomie and, 48, 51; anxiety and, 1, 25, 47–48, 136–38, 149, 174; behavioral economics and, 116–17, 121, 282; choice and, 10–11; coherence and, 49; commuting and, 47; conflict in relationships and, 47; Easterlin Paradox and, 39–44; face-to-face contact and, 7, 147, 165–68; freedom and, 237 (see also freedom); game theory and, 116–18, 121–22; gift economy and, 205–7; greed and, 26, 34, 54, 88, 129, 150, 221–23, 248, 277–79; happiness and, 9–12, 44–50 (see also happiness); lack of control and, 47; noise and, 47; paradox of prosperity and, 174; positive, 9–10, 49–50, 303n51; public choice theory and, 220, 242–45; rational choice theory and, 214–15; shame and, 47; Slow Movement and, 27–28, 205; thrift education and, 283–84, 294–95; well-being and, 137–43 Ptolemy, 274 public choice theory, 220, 242–45 Public Domain, The (Boyle), 196 public goods, 185–86, 190, 199, 211, 229, 249, 261 purchasing power parity (PPP), 306n19 Putnam, Robert, 140–41, 152–54 Quiet Coup, The (Johnson), 256–57 Radio Corporation of America (RCA), 195 Rajan, Raghuram, 136 Rank, Robert, 40 rational choice theory, 214–15 Rawls, John, 31 Reagan, Ronald, 93, 121, 127, 211, 240, 243, 247–48 recession, 9, 11–12, 275; happiness and, 22, 24, 41, 54; nature and, 55–56, 66; plethora of books following, 55; posterity and, 85, 88, 91–93, 100–101, 108, 110; recovery from, 3, 103; trust and, 182; values and, 209–10, 213, 222 reciprocal altruism, 118–22 reform, 8; benchmark for, 218; bankers and, 277–79; bonus taxes and, 278; collective assent to, 269; courage needed for, 203; first ten steps for, 294–98; health care, 285; improving statistics and, 271; institutions and, 245–48, 256, 285, 288–91, 296–97; nature and, 82–85; New Public Management and, 245–46; politics and, 287–88; posterity and, 98, 111–12; public sector, 288–90; trust and, 162–64, 176–77; values and, 218, 233, 275–78, 295 Reinhardt, Carmen, 111 religion, 10; happiness and, 32–33, 43, 50; nature and, 76, 78; Protestant work ethic and, 13–14, 236; trust and, 147 Renaissance, 7 retirement age, 94, 97–99, 106–7, 112 revalorization, 275 Road to Wigan Pier, The (Orwell), 56 Rodrik, Dani, 136 Rogoff, Kenneth, 111 Romantic Economist, The (Bronk), 28 Romanticism, 27 Rothschilds, 147 Rousseau, Jean–Jacques, 114 Royal Bank of Scotland, 146 runs, 1 Ruskin, John, 27–28 Russia, 97–98, 123; Cold War and, 93, 112, 147, 209, 213, 239; Iron Curtain and, 183, 239, 252; production targets and, 246; as Soviet Union, 228, 246 Saez, Emmanuel, 127, 129 salaries: high, 130, 143–44, 193, 223, 277–78, 286, 296; measurement and, 191–99; paradox of, 193; superstar effect and, 134; technology and, 2, 89 Sandel, Michael, 224–25, 237 Sarkozy, Nicolas, 37, 202, 274 satellite accounts, 38, 81, 204–6, 271 Satyam, 146 savings, 1, 280–82, 293; China and, 87, 94, 100, 108; necessary increasing of, 105–6; negative, 105; policy recommendations for, 280–84; posterity and, 86–87, 94, 98, 100–101, 105, 108, 112; thrift education and, 283–84, 294–95 savings clubs, 283 Schumpeter, Joseph, 14 Schwartz, Barry, 10–11, 40 Seabright, Paul, 148–49, 170, 213–14, 228 self-interest: fairness and, 114–22; greed and, 26, 34, 54, 88, 129, 150, 221–23, 248, 277–79; moral sentiments and, 119–20, 142, 221; nature and, 65; reciprocal altruism and, 118–22; values and, 214, 221 Selfish Gene, The (Dawkins), 118 Sen, Amartya, 18, 37, 43, 82, 202, 237, 274, 310n25 shame, 47 shareholders, 88, 145, 248, 257–58, 277 Silicon Valley, 166 Simon, Herbert, 249–50, 254, 261, 270 Simon, Julian, 70 Singapore, 126 Sloan School, 256 Slow Food, 27 Slow Movement, 27–28, 205 smart cards, 252–53 Smith, Adam, 119–20, 209, 221, 255 Smith, Vernon, 215 social capital, 8, 12, 17; definition of, 152–53; fairness and, 116, 121, 139–43; intangible assets and, 149–52, 157, 161, 199–201; measurement of, 154, 185; policy recommendations for, 267, 271, 273, 276; Putnam on, 152–54; trust and, 5, 151–57, 168–74, 177; values and, 223–25, 231, 257 social justice, 31, 43, 53, 65, 123, 164, 224, 237, 286 Social Limits to Growth, The (Hirsch), 190, 231 social markets, 217–20 social networks, 260, 270, 288–89 Social Security, 93–94 social welfare. See welfare Socrates, 32 software, 253 Solow, Robert, 77–78, 80, 82 Soulful Science, The (Coyle), 121 South Sea Bubble, 3 Spain, 126, 287 spillovers, 186, 228–29 Spirit Level, The (Wilkinson and Pickett), 137–39 Stagecoach Festival, 197 Standard & Poor’s, 201 statistics, 10; fairness and, 115, 138; growth and, 270–74, 290–94; happiness and, 35–42, 51–52; innovation and, 12, 201–7; institutions and, 245; measurement and, 187–89, 198–208; nature and, 66, 81–82; policy recommendations for, 270–74; posterity and, 92; resources for, 294; trust and, 154; user–generated content and, 273; values and, 13; World Forum on Statistics, Knowledge, and Policy and, 38.


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After the New Economy: The Binge . . . And the Hangover That Won't Go Away by Doug Henwood

"Robert Solow", accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, corporate governance, corporate raider, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, intangible asset, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, post-work, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, zero-sum game

.^ The raving cooled considerably along with the NASDAQ's long swoon (as the graph on page 4 shows), but, sadly, it's not dead yet, despite all the scandals. This book is an exercise in kicking the thing while it's down, to make sure it won't get up again. The canonical New Economy discourse was relentlessly, almost de-Hriously, optimistic. It goes something Hke this. Finally, after a long wait, the computer revolution is paying off economically. It used to be, as the economist Robert Solow famously put it, that that revolution was visible everywhere but in the statistics. But with the takeoff in the U.S. productivity stats in the mid-1990s, Solow's quip was ready for retirement. It took some time for people and organizations to learn how to use computers (broadly defined, of course, to include all kinds of high-tech electronic gadgetry), but now they've finally learned. All that hardware, now Hnked from local area networks to the global Internet, along with a poHtical re- After the New Economy 1400 1200 1000 800 600 400 200 articles containing the phrase "new economy" gime of smaller government and lighter regulation, has unleashed forces of innovation and wealth creation like the world has never known before.

Clothaire, 146 Reagan, Ronald, 8 recessions, political purpose, 182 regionahzation, 159 Reich, Robert, 71,74 retail trade, 64-66 Riflcin, Jeremy, 68 Robinson, Joan, 235 Robinson, William, 175-176 Rockefeller, David, 232 Rubin, Robert, 218 ruling class, global, 174—178 Russell, Marta, 100 sad militants, 185 Sakakibara, Eisuke, 228 Index Sale, Kirkpatrick, 168 Salomon Smith Barney, 197 scale, economic, 167-168 Scandinavia, very wired, 6 Schama, Simon, 23 Schrager, Ian, 233 Schwab, Klaus, 175-178 Seattle, anti-WTO protests, 32,160 sex, Gilder on, 11—13 sexual preference and pay, 100 sex discrimination, 94—101 international comparisons, 101—102 Shakespeare, 188 shareholder activism, 214 Shiller, Robert, 6-8,25-27,194 Shiva, Vandana, 162,168-169 Shorrock.Tim, 171 Sichel, Daniel, 57 Silicon Valley, income distribution, 105 Silicon Valley Toxics CoaUtion, 232 Sinai, Allen, 4 Singhne, Peter, 18 Skilhng, Jeffirey, 33 skills, job, 73-77 returns to, 86—87 skin shade and pay, 99 Smith, Adam, 109-110, 163,173 Smith, Patti, 183 Smith, Paul, 6 social democracy, 139-143,182 social movements, new, 179 Social Security, 227 Solow, Robert, 3 sovereignty, 170 space, shrinkage of, 146 speedup, 215, 229 Spencer, Herbert, 37 state, retreat of, 150-152 Stigbtz, Joseph, 193 Stiroh,Kevin,51,57 stock market 1990s bubble, history, 188-189 analysts' role, 194—200 anomalies, 194 book value, defined, 233 brokers' fees and salaries, 201-202 and corporate profitability, 203—204 and corporate restructuring, 214-215 economics of, 187-188,192-195 and evolution of the corporation, 212-217 excess volatiHty, 194 happiness of investors, 212 and managers' pay, 216—217 and pop culture, 187 psychology of, 25—26 trading frequency and returns, 190—191, 234,239 wisdom of, 35 see also finance stock options, 216—217 and wealth distribution, 126—127 stock ownership, distribution of, 24, 122-124 stress, management by, 25 stylish shoes, 165 Summers, Lawrence, 5,231 surveillance, 68,77—78 Survey of Consumer Finances, 118—119 Survey of Income and Program Participation, 118 symbolic analysts, 71,72 synergy vs. conflict, 197-200 Taylorism, 78 technology not evil, 2 and social movements, 179 telecommunications industry, 196—198 telegraph, 7 telemarketers, 68 TheGlobe.com, 189 269 TheStreet.com, 31 dme, acceleration of, 146 Tocqueville, Alexis de, 82,139 Tompkins, Doug, 161-162 total factor productivity.


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Fully Automated Luxury Communism by Aaron Bastani

"Robert Solow", autonomous vehicles, banking crisis, basic income, Berlin Wall, Bernie Sanders, Bretton Woods, capital controls, cashless society, central bank independence, collapse of Lehman Brothers, computer age, computer vision, David Ricardo: comparative advantage, decarbonisation, dematerialisation, Donald Trump, double helix, Elon Musk, energy transition, Erik Brynjolfsson, financial independence, Francis Fukuyama: the end of history, future of work, G4S, housing crisis, income inequality, industrial robot, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, James Watt: steam engine, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Kuiper Belt, land reform, liberal capitalism, low earth orbit, low skilled workers, M-Pesa, market fundamentalism, means of production, mobile money, more computing power than Apollo, new economy, off grid, pattern recognition, Peter H. Diamandis: Planetary Resources, post scarcity, post-work, price mechanism, price stability, private space industry, Productivity paradox, profit motive, race to the bottom, RFID, rising living standards, Second Machine Age, self-driving car, sensor fusion, shareholder value, Silicon Valley, Simon Kuznets, Slavoj Žižek, stem cell, Stewart Brand, technoutopianism, the built environment, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transatlantic slave trade, Travis Kalanick, universal basic income, V2 rocket, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, working-age population

Even for its inventor, GDP was always limited in understanding the broader determinants of a truly successful society. But besides those older judgements regarding the often zealous manner in which GDP was used, by the late 1980s another criticism began to emerge. Now, some said, it was no longer capable of even measuring economic growth properly. This was most famously expressed by the economist Robert Solow when he claimed in 1987 that ‘you can see the computer age everywhere but the productivity statistics.’ That conclusion was a response to the ‘productivity paradox’ which so troubled economists at the time – namely, how investment in information technology over the 1980s had a seemingly negligible impact on productivity measures, which actually slowed over the decade. But what if, rather than digital technologies failing to increase productivity, the changes they wrought were so significant as to require a new way of measuring success altogether?

See also luxury populism Post, Mark, 170–2, 175, 176 post-capitalism information and, 59–60 without communism, 56–9 poverty, 24–5 Preston Model, 208–11, 213 private space industry, 120–1 privatisation, 202–4, 207, 209–10 production, mode of, 195 productivity paradox, 233 productivity revolution, 60–3 progressive procurement, 207 property-owning democracy, 25 prototype politics, 198 PV (photovoltaic) cells, 47, 102–5 radical politics, revival of, 27–8 railway lines, 33–4 realism, capitalist, 17–9 red politics, 188–92 Rees-Mogg, Jacob, 206–7 Reformation, 240, 241 regeneration, 207 Reither, Walter, 70–1 Relativity Space, 123, 124 renewable energy about, 104, 108 financing, 219–20 generating and storing, 218–19 green movement and, 238–9 transitioning to, 218–19 renewables, 106 ‘Reopening the American Frontier: Exploring How the Outer Space Treaty Will Impact American Commerce and Settlement in Space’, 129 Resolution Foundation, 58 resources asteroid mining, 119–20 globalism and, 197 post-scarcity in, 117–37 private space industry, 120–1 space, 119–37 Ricardo, David, 69, 233 rice production, 161–2 Richards, Bob, 124 Rifkin, Jeremy, 79 Rio Earth Summit, 98, 197 robots about, 78, 133 Atlas, 82–3, 132 da Vinci surgery robot, 90 information technology and robotics, 76 ‘KIVA’, 89 rise of, 80–2 Rocket Lab, 121, 122, 123 Romer, Paul, 63–5, 199–200 Roosevelt, Franklin, 194 Rutter, Brad, 80 Sanders, Bernie, 29, 30 Saturn V, 120, 122 Saudi Arabia, 220–1 Schumpeter, Joseph, 36 Scottish National Party, 28 Second Disruption, 11, 32–6, 72–4, 79, 94, 96, 106, 134, 139, 141, 163, 188, 190, 192, 198, 201, 208, 217, 232–3, 236, 238, 241 Selden, Mike, 172, 173 self-regulation, consequences of, 206 ‘Sermon on Indulgences and Grace’ (Luther), 241 Silicon Valley, 196 ‘Six Laws of Technology’ (Kranzberg), 237 Skelton, Noel, 25 Smith, Adam, 69, 233 ‘Social Prosperity for the Future’, 214 socialised capital market, 230–2 socialism, 191 society, electoralism and, 194–6 soil fertility, 118 ‘solar home’, 113–14 solar power/energy about, 101–5, 107 Global South and, 106–11 in Saudi Arabia, 220–1 Solow, Robert, 233 Sondergaard, Peter, 87 space asteroid mining, 133–4 falling costs of, 122–4 mineral wealth in, 134–7 Moon Express, 125–6 near-Earth asteroids (NEAs), 130–1 Outer Space Treaty (1967), 127 as private industry, 120–1 private sector, 132–3 SPACE Act (2015), 2, 9 Space Launch System, 120 Space Shuttle programme, 122 SpaceX, 119–21, 122, 133–4, 156 speculative economy, repressing the, 229–30 Sputnik, 137, 153 state socialism, 213 steam engine, 93, 95, 149, 164, 201, 238 steam power, 33 Summers, Larry, 64–5, 116, 199–200 Supplemental Nutrition Assistance Program, 24 surplus, food, disruptions and, 159–60 sustenance about, 178–9 cultured meat, 170–5 egg whites, 177–9 food, surplus and disruptions, 159–60 meat from vegetables, 175–7 milk, 177–9 planetary limits, 160–4 post-scarcity in, 159–81 synthetic meat, 168–70 wine, 177–81 synthetic meat, 168–70 Syriza, 28, 30 TALEN (transcription activator-like effector-based nucleases), 150 Taylor, Frederick, 60–3, 85 Taylorism, 60–3 technological unemployment, 86–8 technology Marx on, 237 relationship between politics and, 237 Technology and Unemployment report, 53 Terran 1 rocket, 124 Tesla, 84, 85, 106 Thatcher, Margaret, 206–7 Third Disruption, 11, 37–48, 70, 79, 82, 92, 116, 143–4, 148, 156, 171, 185–8, 192–6, 201, 212–4, 217, 221, 226, 232, 234, 236, 238, 241–3 3-D Magnetic Recording technology, 45–6 3-D printing, 122–4, 127 Tithebarn project, 208 transatlantic telegraph cable, 34 transcription activator-like effector-based nucleases (TALEN), 150 transportation, in UK, 215 travel, exponential, 39–40 Trump, Donald, 21, 24, 29, 30 Trussell Trust, 24 Turnspit dog, 72–3 Uber, 84, 85 UBI (Universal Basic Income), 224–6 UBS (Universal Basic Services), 207–8, 213–17, 224, 226, 236 UK ageing in Britain, 141–4 healthcare in, 215–16 transportation in, 215 UKIP, 28 unemployment, 26 unfreedom, 214 unions, in Britain, 211–12 Universal Basic Income (UBI), 224–6 Universal Basic Services (UBS), 207–8, 213–17, 224, 226, 236 University College London, 90 US Department of Agriculture, 178 US Food and Drug Administration, 153 US National Institute of Health, 147 US National Space Council, 129 US Senate Committee on Commerce, Science and Transportation, 129 utopia, from crisis to, 48–9 V2, 137 Valeti, Uma, 173 vegetables, meat from, 175–7 Verne, Jules Around the World in Eighty Days, 33 von Braun, Wernher, 120, 128 voting, 195 wage-labour, 35 Wagner, Erika, 135 Wales, 114 Watson (computer), 80 Watson, James, 144, 149 Watt, James, 33 Watt’s steam engine, 93, 95, 149, 201, 238 The Wealth of Nations (Smith), 69–70 wheat production, 161–2, 165 Whole Foods Market, 88 Wikipedia, 235 wind power/energy, 111–13 windfall tax, 230 wine, cellular agriculture and, 177–81 work, future of, 92–3 worker-owned cooperatives, 209–10 worker-owned economy, 207–8, 211–12, 219 World Bank, 221, 222 Wycliffe, John, 239–41 Xplorer, 132 Yang (factory worker), 1–2 ZFNs (zinc finger nucleases), 150 zinc, 118 zinc finger nucleases (ZFNs), 150 Žižek, Slavoj, 17n


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Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes by Mark Skousen

"Robert Solow", Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, business climate, business cycle, creative destruction, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, full employment, Hernando de Soto, housing crisis, Hyman Minsky, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, liberation theology, liquidity trap, means of production, microcredit, minimum wage unemployment, money market fund, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, unorthodox policies, Vilfredo Pareto, zero-sum game

In the 1950s and 1960s, scholars in the major economics departments spent their entire careers doing empirical studies on the consumption function, the multiplier, national income statistics, and other Keynesian aggregates. Keynesian macroeconomics also became popular among journalists, because it was easy to understand (increasing consumer spending is "good for the economy"), and among politicians, because deficit spending bought votes. Robert Solow, Samuelson's colleague at MIT and a Nobel laureate, summarized the new orthodoxy when he proclaimed with considerable pride that "short-term macroeconomic theory is pretty well in hand.... All that is left is the trivial job of filling in the empty boxes" (1965, 146). The Pigou Effect: The First Assault But over time critics have chipped away at the Keynesian structure. The first objection was the "liquidity trap" doctrine, Keynes's fear that the economy could be trapped indefinitely in a deep depression where interest rates are so low and "liquidity preference" so high that reducing interest rates further would have no effect (Keynes 1973a 2.

Indianapolis, IN: Liberty Fund. . 1987. Correspondence of Adam Smith, ed. E.G. Mossner and I.S. Ross. Indianapolis, IN: Liberty Fund. Snooks, Graeme Donald. 1993. Economics Without Time. Ann Arbor: University of Michigan Press. Sobel, Robert. 1980. The Worldly Economists. New York: The Free Press. Solomou, S.N. 1987. "Nikolai Kondratieff." In The New Palgrave: A Dictionary of Economics. Vol. 3, 60. London: Macmillan. Solow, Robert W. 1965. "Economic Growth and Residential Housing." In Readings in Financial Institutions, ed. M.E. KetchumandL.T. Kendall, 142-64. Boston: Houghton Mifflin. Somary, Felix. 1986 [I960]. The Raven of Zurich. London: C. Hurst. Soto, Hernando de. 2002. The Other Path. 2d ed. New York: Perseus Books. . 2003. The Mystery of Capital. New York: Basic Books. Sraffa, Piero. 1960. Production of Commodities by Means of Commodities.


pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan

"Robert Solow", Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy

The Economics Counterculture of the 1960s The mathematical revolution that reached its zenith in the 1950s set the stage for a counterrevolution just a few years later. The next generation of revolutionaries didn’t abandon mathematical modeling but focused their efforts on tethering their abstractions more directly to tangible economic phenomena. In the spirit of the worldly philosophers, they brought the field of economics back in connection with the world it was meant to describe. Many economists of this era refer to Robert Solow, another Nobel Prize–winning economist from MIT, as a source of inspiration for their own work. Solow introduced different kinds of capital—high versus low grade, for example—to models of competition, an early but critical step toward making them look more like real-life markets. Theodore Schultz, a midwestern farm boy whose father pulled him out of school after eighth grade for fear that an education would encourage him to leave the farm, further extended the Solow model after, paternal wishes notwithstanding, completing a doctorate in economics at the University of Wisconsin.

., 7–10, 22–23 Ranau Japanese POW camp, 10–11 RAND Corporation, 25, 27, 134–136 reality-based economic modeling, 35–37, 49–51, 141 See also lemon markets theory recessions, 36, 48, 75 Roberts, John, 66, 70–71 Ross, Lee, 177–179 Roth, Al, 140, 141, 163–165 rush, fraternity/sorority, 140 Rutland, VT, 1 Rysman, Marc, 109 Samuelson, Paul, 28–29, 44 Samuelson, William, 55–57 San Fernando Valley gangs, 61–62 San Fers gang, 61–62 Sandakan camp, Borneo, 10–11 Sauget, IL, 168–169 scams internet, 52–55 money-back, 69–70 Scarf, Herbert, 163–164 school choice, in Sweden, 151–152 school to student matching, 138–139, 141–142, 143–149 Schultz, Theodore, 35 Schumpeter, Joseph, 24, 49–50 Scottish auctions, 82 Sears, 115–116 second-bid auction, 81–82 second-price sealed-bid auctions, 87–89 “Selection process starts with choices, ends with luck” (article), 146 self-destructive behaviors, signaling theory and, 67–68 selfish, markets making us, 177–179 seller misrepresentation, 52–55 sellers, knowing more than buyers, 41, 44–55 Seven Minute Abs, 172 Shakin’ Cat Midgets gang, 61 Shapley, Lloyd, 134–136, 137–138, 163–164 Shapley-Gale algorithm, 137–140 Shi, Peng, 148 Shleifer, Andrei, 180–181 shopping malls, as two-sided markets, 122–123 Shoup, Carl, 85 sick organizations, 142–143 signaling model applications of, 66–68 commitment signs, 62–66 competitive signaling, 69–71 integrity, 71–75 Silicon Valley, market friction and, 169–173 Skoll, Jeff, 39–40, 43, 51 Smith, Adam, 21 Snider, James, 42 social efficiency, auctions, 89 social well-being, assessing, 22 Solow, Robert, 35 Solow model, 35 Sönmez, Tayfun, 144 Sony’s Blu-ray format war, 125–126 sorority rush, 140 spectrum auction theory, 102–103 Spence, Michael, 62–66 Stack, Charles, 42–43 Stalag VII-A POW camp market, 5–6, 7–10, 13 stamp collecting, 82–84 Stiglitz, Joseph, 35–36, 76, 182 strategy proofness mechanism, 145 student to school matching, 138–139, 141–142, 143–149 Summers, Larry, 166–167 Super Bowl advertising, 70–71 supply and demand, 96 survival rates, of Japanese vs.


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10% Less Democracy: Why You Should Trust Elites a Little More and the Masses a Little Less by Garett Jones

"Robert Solow", Andrei Shleifer, Asian financial crisis, business cycle, central bank independence, clean water, corporate governance, correlation does not imply causation, creative destruction, Edward Glaeser, financial independence, game design, German hyperinflation, hive mind, invisible hand, Jean Tirole, Kenneth Rogoff, Mark Zuckerberg, mass incarceration, minimum wage unemployment, Mohammed Bouazizi, open economy, Pareto efficiency, Paul Samuelson, price stability, rent control, The Wealth of Nations by Adam Smith, trade liberalization

Before we turn to their answer, we should first consider the possibility that the question is simply ill posed. Maybe there really is no free lunch, and maybe having more of one item on the menu means getting less of another. Maybe if my team gets more, your team gets less. That outcome can’t be dismissed: it has a long tradition in economic thought, both technical and popular. Maybe, as then-future Nobel laureates Paul Samuelson and Robert Solow of MIT and James Tobin of Yale had suggested in the 1960s, there was some kind of near-permanent trade-off between low inflation and low unemployment. The government could choose to help out workers by heating up the economy, creating persistently low unemployment at the cost of persistently higher inflation, or it could instead help out the financial class, people with savings accounts and bonds, by keeping a cooler economy with lower inflation at the cost of higher unemployment.

Denmark, 169–70, 175; economic growth in, 170; Economist’s Democracy Index score for, 171; electoral terms in, 175; Feedback Unit, 173; Government Parliamentary Committees, 173; income per person in, 169, 170; independent central bank in, 175; independent judiciary in, 175; Institute of Policy Studies, 173; Lee Kuan Yew, 172–73, 175; libel suits in, 170; life expectancy, 169, 170; middle class in, 173, 175; monetary policy, 175; People’s Action Party (PAP), 170, 174, 175; Singapore Zoo, 174; vs. United States, 171 Smith, Adam: on economic freedom, 73; The Wealth of Nations, 157 social media, 2, 13, 132, 141, 144–47, 170, 179 Socrates, 181, 182 Solow, Robert: on inflation and unemployment, 43 South Korea, 22 sovereign debt. See government debt/sovereign debt Spain: central bank in, 46; EU membership, 158; inflation in, 46; relations with EU, 155 Standard & Poor’s, 121 statistics: multivariate regression, 12 Stella, Andrea: on independent central banks and inflation, 58–59 Stockemer, Daniel, 107 Summers, Larry: on control of central banks, 42–43; on economic independence of central banks, 45–46, 50; on income growth and central bank independence, 48, 49; on inflation and central bank independence, 45–47; influence of, 49–50; on political independence of central banks, 45–46, 47; on unemployment and central bank independence, 48 sweet spots, 19–20, 21–22 Switzerland: independent central bank in, 45–46; inflation in, 45–46 Tabarrok, Alex: on elected judges and voters, 66–68 Tobin, James: on inflation and unemployment, 43 Taiwan, 22 Tammany Hall, 105, 137–38, 141, 143 tariffs, 32, 100, 105 Tawadros, George: on inflation and central banks, 47–48 taxation: Blinder on, 61, 92–94, 143; and democracy, 62; of imports, 32, 100, 105; and inflation, 23; of interest earnings, 23; tax rates, 19–20, 117, 118, 133 term lengths of politicians: increases in, 11, 22, 37–40; short terms and short-term thinking, 31–35.


pages: 435 words: 127,403

Panderer to Power by Frederick Sheehan

"Robert Solow", Asian financial crisis, asset-backed security, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buy and hold, call centre, central bank independence, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversification, financial deregulation, financial innovation, full employment, inflation targeting, interest rate swap, inventory management, Isaac Newton, John Meriwether, margin call, market bubble, McMansion, Menlo Park, money market fund, mortgage debt, Myron Scholes, new economy, Norman Mailer, Northern Rock, oil shock, Paul Samuelson, place-making, Ponzi scheme, price stability, reserve currency, rising living standards, rolodex, Ronald Reagan, Sand Hill Road, savings glut, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, stocks for the long run, supply-chain management, supply-chain management software, The Great Moderation, too big to fail, transaction costs, trickle-down economics, VA Linux, Y2K, Yom Kippur War, zero-sum game

The draft reads as follows: ‘Chairman Alan Greenspan announced today that the Federal Open Market Committee decided.’”17 Greenspan had brought the committee’s communiqué to the meeting. “The Greenspan Fed” Was Exactly That When Volcker ruled, the board was not a rubber stamp. There was no such unruliness under Greenspan. There was rarely an interesting discussion. Alan Blinder was appointed to the vacant post of vice chairman of the Federal Reserve in 1994. A Princeton undergraduate, he earned his Ph.D. at MIT, where his dissertation was supervised by Robert Solow (also one of Ben S. Bernanke’s thesis sponsors).18 Blinder served on the Council of Economic Advisers in the first Clinton administration (where his greatest contribution may have been as algebra homework consultant to Chelsea Clinton).19 Blinder was filling the home stretch of a 14-year term vacated by David Mullins. Clinton wanted to reappoint Blinder to a full 14-year term in 1996, but Blinder declined.

Blinder did not speak publicly about his decision, but when Felix Rohatyn, investment banker from Lazard Frères and “Evening Hours” companion of Alan Greenspan, decided to pursue the opening, Blinder asked: “Why are you doing it? I’m leaving because I can’t stand it.”20 15 FOMC meeting transcript, July 5–6, 1995, p. 56. 16 Ibid., p. 59 17 Ibid., p. 72. 18Bernanke’s thesis sponsors at MIT were Stanley Fischer, Rudiger Dornbusch, and Robert Solow; http://econ-www.mit.edu/about/economic. 19 John Cassidy, “Fleeing the Fed” (“Annals of Finance”), New Yorker, February 19, 1996, p. 39. Laurence Meyer served as a Federal Reserve governor from 1996 to 2002. In A Term at the Fed, Meyer wrote that Greenspan drafted the statements about the economy and economic policy that the FOMC issued after it met. In Meyer’s words: “[T]he fact that the statements were prepared by the Chairman without any real input from the Committee, created a degree of tension … that never diminished during my term.”21 The July 1995 transcript shows how the Greenspan FOMC operated.

William, 55, 55n.33, 85, 88–91 Semiconductors, 207, 242 September 11, 2001, terrorist attacks, 245–249 740 Park Avenue, 322, 357 Shanghai Stock Exchange, 327 Sharkey, Thomas F., 91 Shulman, David, 133 Shultz, George, 42 Sichel, Daniel, 159 Silk, Leonard, 61–62 Simon, William, 56 Skadden Arps, Slate, Meagher & Flom, 116 Slichter, Sumner, 24 S&Ls (see Savings and loans) Smith, Greg, 248 Soccernet, 222 Social security, 84, 147, 149, 154 Social Security Commission, 146 Solow, Robert, 137 Soros, George, 131 S&P 500 Index, 169 and 1987 stock market crash, 111–112 in 1991, 128 in 1995, 139, 141 in 1996, 141 in 1997, 141, 278 in 1998, 188, 278 futures contract on, 110n..5, 111–112 Spielberg, Steven, 353 Sprinkel, Beryl, 42, 60 Stagflation, 52 Standards of living, investment and, 350–352 Statistical espionage, 4 Statisticalitis, 40 Stein, Herbert, 61, 227n.1 Steinberg, Jonathan, 322 Steinberg, Saul, 35, 88–90, 117, 322 Steinhardt, Michael, 38 Stempel, Robert, 127 Stern, Gary, 194 Stern, Robert A.M., 356 Stevenson, Richard W., 164 Stiglitz, Joseph, 143, 342 Stock market: 1950 to 1966 rise in, 4 in 1970s, 43 1987 crash, 103–104, 110–115 1990s bubble in, 145, 155, 160–164, 169–178, 191–210, 285–287 and 1990s recession, 127 in 1995, 133 in 1998, 187–188 in 2000, 215–216, 219, 221, 224–225, 229 in 2001, 237–238, 246, 248 as driver of the economy, 175 Greenspan’s predictions about, 105–106 and “irrational exuberance,” 105 (See also Nasdaq; S&P 500 Index) Stock market analysts (see also Wall Street analysts under “Alan Greenspan”), 177–178, 193, 195, 198–204, 209, 218, 232, 239, 243–244, 284 Stock options, 318 Stock-option cashout plans, 72 Strauss-Kahn, Dominique, 341 Subprime lending market, 1990s, 164–166, 274 Subprime mortgages, 296, 328–331, 340, 357 Summers, Lawrence “Larry,” 143, 276–277, 323, 361 Sun Microsystems, 207 Sunny Isles Beach, Florida, 295 Supply-side economics, 68–69, 96 “Sweeping” assets from retail checking accounts, 134–135 Swope, Gerard, 364–365 Sulzberger, Arthur Ochs, 74 Sunday Times (London), 342 Sydney Morning Herald (Australia), 347 Synthetic CDOs, 313 T TACA International, 164 Technology, 196, 200–201, 241 “Technology and the Economy” (Alan Greenspan), 218 Technology industry, 207 and 2000 slowdown, 234, 235 in 2001, 237 profit losses in, 219 and Y2K scare, 216 Television, stock market and, 248–249 Terra Holdings LLC, 356 Terrorist attacks of 2001, 245–247 Tett, Gillian, 313 Texas Instruments, 207 Thomas, Allen, 74 Thomas, Barbara, 74 Thrifts (see Savings and loans) Time magazine, 35, 42, 43, 45, 55–56, 60–61, 70, 96, 101, 289 Townsend, William, 3, 15–16, 353 TownsendGreenspan & Co., 3, 5, 6, 16, 17, 19, 25, 27, 73, 74, 102 Trans-World Financial, 93 Travelers, 275 Treasury Department, 20, 56, 132, 247, 296 Treasury securities (see U.S.


pages: 494 words: 132,975

Keynes Hayek: The Clash That Defined Modern Economics by Nicholas Wapshott

"Robert Solow", airport security, banking crisis, Bretton Woods, British Empire, business cycle, collective bargaining, complexity theory, creative destruction, cuban missile crisis, Francis Fukuyama: the end of history, full employment, Gordon Gekko, greed is good, Gunnar Myrdal, if you build it, they will come, Isaac Newton, Joseph Schumpeter, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, means of production, Mont Pelerin Society, mortgage debt, New Journalism, Northern Rock, Paul Samuelson, Philip Mirowski, price mechanism, pushing on a string, road to serfdom, Robert Bork, Ronald Reagan, Simon Kuznets, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, trickle-down economics, War on Poverty, Yom Kippur War

Heller, however, was no gambler. He was operating according to the latest neo-Keynesian notions that intended to offer a more predictable means of managing the economy. Keynes’s protégé Roy Harrod and Harvard’s Evsey Domar56 had, in their “Harrod-Domar model,” built on Kahn’s multiplier theory to predict how tax cuts could lead to economic growth. And Heller himself, working with his colleague Robert Solow,57 took account of the work in 1958 of an LSE economics professor, the New Zealander William Phillips,58 who postulated in a graph dubbed the “Phillips curve” a trade-off between reducing unemployment and rising inflation. By formulating policy according to the Phillips curve, Heller believed he had found a way to provide full employment without provoking higher prices. JFK’s proposal for tax cuts languished in the Senate, but after his assassination in November 1963, the accidental president Lyndon Johnson vowed to continue his predecessor’s legacy in every particular.

“I don’t worry about the deficit,” he quipped. “It’s big enough to take care of itself.”72 For many Keynesians, Reaganomics was little more than a thimblerig, a political gimmick that, behind the macho Hayekian rhetoric about slashing the size of the government, set off a public spending spree on defense that boosted aggregate demand and economic growth. According to the Nobel Prize–winning MIT economist Robert Solow, “The boom that lasted from 1982 to 1990 was engineered by the Reagan administration in a straightforward Keynesian way by rising spending and lowered taxes, a classic case of an expansionary budget deficit.”73 Galbraith agreed. “[Reagan] came into the presidency as the country was experiencing a rather disagreeable recession and [implemented] lots of strong Keynesian policy,” he said. “One of the results was an improving economy in the Eighties under Ronald Reagan.

., 204 Smuts, J. C., 11 Snowden, Philip, 33–34, 82, 83, 85, 86 social contracts, 60, 218 social democracy, 16–17, 29, 36, 151, 288–89 socialism, 16–17, 21, 29–30, 32–36, 59, 145–46, 151, 164, 194, 196–99, 202, 209, 220–21, 232, 242, 289, 290–91, 294 Socialism: An Economic and Sociological Analysis (Mises), 29–30 Social Security, 275, 276 sociology, 199 Solow, Robert, 238, 265 South America, 73 South Vietnam, 241 Soviet Union, 9, 87, 170, 194, 211, 228, 266, 276 Sozialpolitik, 17 space program, 234, 237 Spain, 282 Spartacus League, 9, 145 speculation, 24, 52–53 spending, 81–82, 119–20, 127, 131, 143–44, 184–87, 191 “spoilation,” 119–20 Sputnik launch (1957), 234 Sraffa, Angelo, 115 Sraffa, Piero, 67, 103, 106, 109, 113–22, 124, 126, 190, 309n SS Adriatic, 84 stagflation, 244–45, 257, 261–62, 263, 286 Stalin, Joseph, 194 Standard & Poor’s, 276 Stanford University, 2 starvation, 9–10, 21, 39, 81 State Department, U.S., 228 State of the Union addresses, 228, 231, 241–42, 275 statistics, 120–21, 129–31, 166 steel industry, 9 Stein, Herbert, 242, 243, 256, 265, 278, 294 Stigler, George, 212, 213, 248, 328n stock market, xiii, 40, 44, 52–53, 58, 83, 112, 141, 143–44, 149, 157, 189, 276 stock market crash (1929), xiii, 40, 44, 52–53, 58, 83, 112, 141, 157, 189 Strachey, James, 7–8, 13 Strachey, Lytton, 5, 6–7, 301n Straight, Michael, 132 strikes, labor, 38, 39–40, 201 subprime mortgages, 278–79 Summers, Lawrence, 275 supply and demand, 9, 41–43, 48–49, 77, 111, 121, 131, 134, 148–49, 184–87, 249 supply curve, 131 supply-side economics, 262–63, 267–68, 271 “Supra-national Central Bank,” 56 Sweden, 289 Switzerland, 211, 289 tariffs, 61–64, 82–83, 86, 247 Tarshis, Lorie, 67, 132 Taussig, Frank, 91–92 Tawney, Richard, 24 taxation: —business, 233, 262, 264, 267–68 —cuts in, 135, 235, 237–39, 243, 249, 259, 261, 262–64, 265, 271, 272, 273, 275, 276, 283–84, 286, 287 —employment and, 130, 163, 191 —flat, 222 —income, 159, 191, 222, 231, 252, 253, 254, 262–63, 264 —increases in, 188, 241, 271–72 —Keynes’s views on, 131, 159, 191, 238, 262–63, 265 —progressive, 191, 222, 252, 253 —public works financed by, 33, 49, 163, 233–34 —revenues from, 12, 131, 234–35, 262–63, 264, 267, 274, 276 —unemployment and, 130, 163, 191 —welfare programs supported by, 227, 233, 234–35, 240, 267 tax credits, 277, 280, 281–82, 285, 287 Taylor, John, 271 Taylor’s rule, 271 teachers, 135 “Tea Party” movement, xiii–xiv, 283, 293, 343n technology, 267, 276, 277 telephone system, 60, 291 terrorism, 276–78 textbooks, economics, 1–3, 5, 20, 169, 232, 318n–19n Thatcher, Margaret, 258–62, 288, 289, 292, 295, 338n, 344n–45n theoretical analysis, 3, 52–53, 70–72, 78–79, 87–91, 103–7, 113–22, 120–21, 140, 161–62, 177–81, 183, 186–87, 209, 256–57 “Theories of the Influence of Money on Prices” (Hayek), 72–75 think tanks, 216, 260, 278 Thornton, Henry, 74 Thorp, Willard, 28 Tilton, 53, 128–29, 132, 206, 226, 307n Time, 221, 239–40, 280 Time and Tide, 212 Times (London), 31, 133, 139, 143 Tobin, James, 167, 168, 236 Tocqueville, Alexis de, 292, 325n Today, 254 Toms, P.


pages: 545 words: 137,789

How Markets Fail: The Logic of Economic Calamities by John Cassidy

"Robert Solow", Albert Einstein, Andrei Shleifer, anti-communist, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black-Scholes formula, Blythe Masters, Bretton Woods, British Empire, business cycle, capital asset pricing model, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, corporate raider, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, different worldview, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, global supply chain, Gunnar Myrdal, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, Kickstarter, laissez-faire capitalism, Landlord’s Game, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, Naomi Klein, negative equity, Network effects, Nick Leeson, Northern Rock, paradox of thrift, Pareto efficiency, Paul Samuelson, Ponzi scheme, price discrimination, price stability, principal–agent problem, profit maximization, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, unorthodox policies, value at risk, Vanguard fund, Vilfredo Pareto, wealth creators, zero-sum game

Market prices will fail to approximate true scarcity values in terms of wants; they will be loaded with misinformation, and producers’ profit calculations will leave out of account much of the private benefit associated with public goods. The ‘invisible hand’ will fumble: people’s decentralized market choices will not efficiently cater to their tastes.” A highly important public good that largely escaped the attention of economists until pretty recently is scientific knowledge. Back in the 1950s, Robert Solow, an economist at MIT, calculated that between 1909 and 1949, technical progress accounted for about 51 percent of the annual growth in U.S. GDP, which meant it had made a bigger contribution to American prosperity than population growth and the accumulation of capital combined. Subsequent studies confirmed that the application of scientific knowledge, in the form of new inventions and new methods of organizing production, is central to the growth process, but for many years economists had little to say about where this technological advancement came from and whether it could be speeded up.

His mother, who met his father while she was in graduate school, came from a bookish family of German Jews. Akerlof was a bright and studious kid. In high school, he later recalled, “I belonged to a small group of students, who in today’s terminology would be called nerds . . . Socially, I was a misfit. I failed to understand why my classmates spent the typical free afternoon watching American Bandstand.” At MIT, Akerlof studied under Paul Samuelson and Robert Solow, two of the leading figures of postwar economics. By the early 1960s, the subject had been divided into several mutually antagonistic camps. The high theorists were busy debating the intricacies of general equilibrium and game theory. Out in Chicago, Friedman and his followers were pursuing their own libertarian path. At MIT and most other American universities, a pragmatic, if not wholly consistent, mélange of Marshallian microeconomics and Keynesian macroeconomics held sway.

Banking Committee Senior, Nassau September 11, 2001, terrorist attacks (9/11) shadow banking system Shakespeare, William Shearson Lehman Sherman Antitrust Act (1890) Shiller, Robert Shin, Hyun Song Shleifer, Andrei Shmelev, Nikolai Shultz, George Simons, Henry Sinai, Todd 60 Minutes Skidelsky, Robert Smith, Adam on banking death of divison of labor described by on duties of government Greenspan influenced by Hayek and legacy of invisible hand metaphor of moral philosophy of public goods addressed by Smith, Debbie Smith, Vernon Smoot-Hawley Tariff Act (1930) Socialism (Mises) Socialist Party Social Security Société Générale Solomon, Amit Solow, Robert Sonnenschein, Hugo Soros, George Soros Fund Mangement South Africa Southern California, University of Southern Pacific Railroad South Korea South Sea bubble Soviet Union collapse of Ministry of Light Industry Spain Spamann, Holger special-purpose vehicles (SPVs) speculative bubbles, see bubbles Spence, Michael Sperry Lease Finance Corporation spillovers Spitzer, Eliot Sputnik I Sraffa, Piero stability, illusion of Stabilizing an Unstable Economy (Minsky) Stack, Brian E.


pages: 500 words: 145,005

Misbehaving: The Making of Behavioral Economics by Richard H. Thaler

"Robert Solow", 3Com Palm IPO, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, Berlin Wall, Bernie Madoff, Black-Scholes formula, business cycle, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, market clearing, Mason jar, mental accounting, meta analysis, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, Paul Samuelson, payday loans, Ponzi scheme, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, South Sea Bubble, Stanford marshmallow experiment, statistical model, Steve Jobs, Supply of New York City Cabdrivers, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game

From the beginning, law and economics was primarily based on traditional, Chicago-style economics, so he had a considerable investment in the approach to which we were offering an alternative. We knew that Posner would find much to criticize in our approach, and we also knew that he could knock off a comment quickly. In spite of his serving both as a part-time law professor and federal judge on the Seventh Circuit in Chicago (one step below the Supreme Court), his research productivity is legendary. As the economist Robert Solow so colorfully put it: “Posner evidently writes the way other men breathe.” Writing a comment on our long article would not take him much time. Although we had a good hunch about what Posner might think of our paper, any uncertainty about which parts of the paper he would find to be most objectionable was resolved the day before the three of us were to present our paper at the University of Chicago Law School.

An Inquiry into the Nature and Causes of the Wealth of Nations. Reprint edited by R. H. Campbell and A. S. Skinner. Indianapolis: LibertyClassics. Smith, Vernon L. 1976. “Experimental Economics: Induced Value Theory.” American Economic Review 66, no. 2: 274–9. ———, Gerry L. Suchanek, and Arlington W. Williams. 1988. “Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets.” Econometrica 56, no. 5: 1119–51. Solow, Robert M. 2009. “How to Understand the Disaster.” New York Review of Books, May 14. Available at: http://www.nybooks.com/articles/archives/2009/may/14/how-to-understand-the-disaster/. Spiegler, Ran. 2011. Bounded Rationality and Industrial Organization. Oxford and New York: Oxford University Press. Stanovich, Keith E., and Richard F. West. 2000. “Individual Differences in Reasoning: Implications for the Rationality Debate.”

Petersburg paradox, 27 sales, 61–62 Samuelson, Paul, 159 economics formalized by, 44, 94 financial economics work of, 208 “public goods” formalized by, 144–46 on rationality of repeat betting, 192–95, 197 time inconsistency and, 92 utility measured by, 89–90, 92, 99 Save More Tomorrow, 314–22, 318, 341 lack of randomized control trial test of, 338n savings, 54 after-tax financial return on, 309–13 standard theories of, 309 savings, for retirement, 7, 9, 50, 52, 80, 345, 370 automatic enrollment, 313–22, 318 inertia in, 313 loss aversion in, 313–14 and marginal propensity to consume, 98 narrow framing of, 195–98, 196 nest egg amount and, 309–10 and present bias, 314 self-control and, 314 Scarcity (Mullainathan and Shafir), 58n, 366 Schachter, Stanley, 180 Schelling, Thomas, 12–13, 14, 37n, 100, 104n, 178 in Behavioral Economics Roundtable, 181 Schiphol International Airport, 326 Scholes, Myron, 208 Schwartz, Alan, 197 Science, 22, 319 scientific revolutions, 167–68, 169–70 secret sales, 119–20 Security Analysis (Graham and Dodd), 219–20 Seeger, Pete, 65 self-control, 54, 85–86, 99–111, 115 as about conflict, 103 retirement savings and, 314 and savings for retirement, 309 two selves in, 103–5 willpower and, 87–99, 363 self-interest, bounded, 258 selfishness, 145–46 Sen, Amartya, 145 sense of humor, 218, 219, 223 Shafir, Eldar, 58n, 67–68, 69, 71, 179, 257, 366 Shankar, Maya, 344 Shapiro, Jesse, 75–76, 357 Sharpe, William, 208, 226, 229 Shaton, Maya, 198 Shea, Dennis, 315–17 Shefrin, Hersh, 98, 104, 164–66, 167, 223–24 Shiller, Robert, 5n, 176, 242 in behavioral economics debate, 159, 167–68 in Behavioral Economics Roundtable, 181 behavioral finance workshop organized by, 236 and behavioral macroeconomics, 349 housing prices studied by, 235, 252 as president of AEA, 347 on variability of stock prices, 230–33, 231 Shleifer, Andrei, 175, 178 closed-end fund paper of, 240–43, 244 on limits of arbitrage, 249 Signal and the Noise, The (Silver), 292 Silva, Rohan, 330–33, 334 Silver, Nate, 47, 292 Simon, Herbert, 23, 29 in behavioral economics debate, 159, 162 Sinden, John, 148–49 skiing, 115–20, 138 Slovic, Paul, 21, 36, 48 slow hunch, 39–40 Small Business Administration, 351, 352n Smith, Adam, 7, 51–52, 58, 87–88, 89, 103 Smith, Cliff, 206 Smith, Roger, 123 Smith, Vernon, 40, 41, 148, 149 “learning” critique of experimental economics, 153 snow shovels, 20, 64–65, 127–29, 133, 136, 137 Snyder, Daniel, 288–89, 290n Social Security, 322 Society for Judgment and Decision Making, 180n Society of Actuaries, 14 Soll, Jack, 75 Solow, Robert, 259 Soman, Dilip, 66–67 Sony, 135–36 sophisticated agents, 110–11 sporting events, tickets for, 18–19, 57–58 spreadsheets, 214n Stanford Law Review, 258–59 Stanford University, 35–41, 125, 126, 185 statistical lives, 13 Statman, Meir, 104, 164–66, 167 status quo, 131 bias, 154 and Weber-Fechner law, 32 Staw, Barry, 65 Steinberg, Saul, 91 Stewart, Jon, 352 sticky wages, 131–32 Stigler, George, 37n, 87, 162–63 Stigler, Stephen, 296n Stigler’s Law, 296n Stiglitz, Joseph, 170 stock market, stocks, 7 beating, 206, 207 bonds vs., 191–92, 195–98, 196 calendar effects in, 174 cheap, 219–21 growth, 28, 214–15, 222, 227 October 1987 crash of, 7, 232 regression toward the mean, 222–23 value, 214–15, 220–21, 222, 227–28 variability of prices of, 230–33, 231, 367 “Stock Prices and Social Dynamics” (Shiller), 233 strikes, 372 Strotz, Robert, 99–100, 102, 108 Structure of Scientific Revolutions, The (Kuhn), 169 Stubhub.com, 18–19 stub value, 246, 246 Stulz, René, 243 Sufi, Amir, 78 suggested retail price, 61–63 Summers, Larry, 178, 239–40, 247 sunk costs, 21, 52, 64–73, 118, 180, 261 and revised Ultimatum Game, 266–67 Sunstein, Cass, 258, 260, 269, 322, 323–25, 330, 333, 343, 345 on ethics of nudging, 337n Super Bowl, 139n, 359 supermarkets, 62n supposedly irrelevant factors (SIFs), 9, 24, 315 budgets and, 74 luck on Deal or No Deal, 298 noise traders’ use of, 240 purchase location as, 61 in retirement savings, 310–11, 312, 315 and returns on investments, 196 sunk costs as, 267 tax cuts as, 350 surcharge, discount vs., 18 surge pricing, 136–38, 200n surplus value, 285–86, 285, 286, 288 Susanne (game show contestant), 299–300 Sydney, Australia, 138n Tarbox, Brian, 317–19, 321 tax cuts, 350–51 taxes, 165 compliance with, 334–36 and savings, 309–13 taxi drivers, hours worked by, 11, 199–201, 295 Taylor, Tim, 173n technology bubble, 7, 78, 220, 234, 250, 252 teenage pregnancy, 342 Teichman, Doron, 269 10% club, 277–78, 293–94 test periods, 227 texting, 190n, 342 Thaler, Alan, 14 Thaler, Jessie, 129 Thaler, Maggie, 118n theories, normative vs. descriptive, 25 theory-induced blindness, 93–94, 128 Theory of Games and Economic Behavior, The (von Neumann and Morgenstern), 29 Theory of Interest, The (Fisher), 88–89 Theory of Moral Sentiments, The (Smith), 87–88 “THERE ARE IDIOTS” paper (Summers), 240–41 Thinking, Fast and Slow (Kahneman), 38, 103n, 109, 186 Thompson, Rex, 242 Tierney, John, 327 time, value of, 21 time-inconsistency, 92–93, 99 time-shares, 71 Tirole, Jean, 307 Tobin, James, financial economics work of, 208 tokens, 149–53, 151, 263, 264–65 Tories, see Conservative Party, U.K.


Adam Smith: Father of Economics by Jesse Norman

"Robert Solow", active measures, Andrei Shleifer, balance sheet recession, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Branko Milanovic, Bretton Woods, British Empire, Broken windows theory, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, cognitive dissonance, collateralized debt obligation, colonial exploitation, Corn Laws, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, David Ricardo: comparative advantage, deindustrialization, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Fellow of the Royal Society, financial intermediation, frictionless, frictionless market, future of work, George Akerlof, Hyman Minsky, income inequality, incomplete markets, information asymmetry, intangible asset, invention of the telescope, invisible hand, Isaac Newton, Jean Tirole, John Nash: game theory, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, lateral thinking, loss aversion, market bubble, market fundamentalism, Martin Wolf, means of production, money market fund, Mont Pelerin Society, moral hazard, moral panic, Naomi Klein, negative equity, Network effects, new economy, non-tariff barriers, Northern Rock, Pareto efficiency, Paul Samuelson, Peter Thiel, Philip Mirowski, price mechanism, principal–agent problem, profit maximization, purchasing power parity, random walk, rent-seeking, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, scientific worldview, seigniorage, Socratic dialogue, South Sea Bubble, special economic zone, speech recognition, Steven Pinker, The Chicago School, The Myth of the Rational Market, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, time value of money, transaction costs, transfer pricing, Veblen good, Vilfredo Pareto, Washington Consensus, working poor, zero-sum game

These factors may help to explain a host of other troubling recent phenomena: relatively low rates of industrial investment, despite low interest rates; sluggish productivity growth; and rising inequality of incomes. There is thus every reason for concern about the loss of effective competition in many advanced economies, and so the loss of economic value to consumers and to the public interest, a loss of value not reflected in share prices, which have become increasingly disconnected from improved economic performance. Within firms, as Robert Solow has argued, the tacit understandings that historically governed the allocation of value between labour and capital may be coming under threat, not least from capture by management. If this is true, then in fundamental ways it seems that capitalism itself may be starting to struggle. But by far the most significant development has been the increasing impact of technology. With more technology has come rapidly increasing complexity in markets, as choices proliferate for the consumer.

Hiram Caton, ‘The Preindustrial Economics of Adam Smith’, Journal of Economic History, 45.4, 1985 Rise in share of nominal US GDP created by largest companies: Adrian Wooldridge, ‘The Rise of the Superstars’, The Economist, 17 September 2016 Recent increase in market power: overall, see Martin Sandbu, ‘America’s Threadbare Capitalism’, Financial Times, 21 April 2016. For the Obama White House’s critique of market power, see ‘Benefits of Competition and Indicators of Market Power’, US Council of Economic Advisers Issue Brief, May 2016; Jan de Loecker and Jan Eeckhout, ‘The Rise of Market Power and the Macroeconomic Implications’, NBER Working Paper 23687, August 2017. On the erosion of real wages and the loss of trust within firms, see Robert Solow, ‘The Future of Work: Why Wages Aren’t Keeping Up’, Pacific Standard, 11 August 2015 Scalability of technology platforms: this is just one aspect of the economic effects of investment in intangible assets, which now outstrips investment in tangible assets in the US and UK. For a pioneering analysis see Jonathan Haskel and Stian Westlake, Capitalism without Capital: The Rise of the Intangible Economy, Princeton University Press 2017 ‘Competition is for losers’: Peter Thiel, Wall Street Journal, 12 September 2014 Effects of information and choice overload, especially on the poor: see Sendhil Mullainathan and Eldar Shafir, Scarcity: The True Cost of Not Having Enough, Allen Lane 2013 Consumer detriment from UK retail electricity market: UK Competition and Markets Authority, Energy Market Investigation: Final Report, 24 June 2016 Volkswagen scandal: see Frank Dohmen and Dieter Hawranek, ‘Collusion between Germany’s Biggest Carmakers’, Der Spiegel, 27 July 2017, and Jack Ewing, Faster, Higher, Farther: The Inside Story of the Volkswagen Scandal, Bantam Press 2017 Limits of competition policy: recent arguments, and disparate US and EU views, are explored by John Vickers in ‘Competition Policy and Property Rights’, Economic Journal, 120.544, 2010 Hidden costs of price comparison websites: see e.g.

See specific topics Smith, Margaret, 3, 6–8, 17, 133, 140, 155–156, 218 Smith, Vernon, 196–197, 222 Smoot-Hawley Tariff Act of 1930, 276 smuggling, 16 sociability, 20, 37, 57, 62 social contract, 21–22, 296 social media, 329 social norms, 146–147 social renewal, 331–332 society commercializing, 311–319 governing, 149 justice and, 75 religion in, 121 See also commercial society Solow, Robert, 281 South Sea Bubble, 167 Spain, 11–12, 32 specialization, 78, 105–106, 119, 230 stadial theory, of human development, 57, 78–80 Standard Oil Company, 283 standing army, 118–119 state church and, 120–121 commercial societies in, 327 market pressures in, 305 state of nature, 77 Steuart, James, 154, 176 Stewart, Dugald, 3, 10, 21, 26, 50–53, 137, 152–153 on conjectural history, 77–78 on government, 187 Millar, J., and, 74 on political economy, 162 on Smith, M., 7–8, 218 on The Wealth of Nations, 179 Stigler, George, 181 Strahan, William, 91, 129–131, 140, 142, 302 Stuart, Charles Edward, 34–35 the Stuarts, 31–33 sympathy, 58–59, 62–65, 75, 105, 220 system of natural liberty, 53, 177 commerce in, 292 free commerce and, 200 freedoms in, 115–116 inequality and, 272 the invisible hand and, 253–254 market imperfections and, 188 regulation and, 254 systems, 45 systems of law, 75 tar water, 25 Tassie, 160 taxation, 71 of American colonies, 101–102 for commercial initiatives, 116–117 in England, 121–122 four maxims of good, x, 122–123 French system, 150–151 by government, 189 Townshend on, 102 without representation, 103 technology, 280–284 “That Politics may be Reduced to a Science” (Hume), 28 Thatcher, Margaret, x–xi theory of evolution, 168–170 The Theory of Moral Sentiments (Smith, A.), xi–xii, 27, 39, 44, 53–54, 143, 168–169 on behaviour, 201 Burns and, 61 on Calas, 289–290 on compassion, 58 corrections, to third edition of, 87–88 on economy of regard, 307–308 French Revolution and, 150 on government, 71, 271 Hume on, 66–67 on impartial spectator, 296 on the invisible hand, 173 on justice, 75–76 moral philosophy in, 55, 146 on norms, values, 230 publication of, 65–66, 144–145 on the rich, 185 on selfishness, 183 on slavery, 233, 235 on sociability, 57 on sympathy, 62–63 on tranquility, 155 on wealth, 172 The Wealth of Nations and, 160–161, 166–167, 178–180, 237–238 Wollstonecraft and, 220 on women, 218 Thiel, Peter, 282 Thomas Aquinas, 163–164 Tories, 32, 40, 52 Toulouse, 288–289 Townshend, Charles, 50, 81–84, 88, 102 trade, 106 balance of, 115 British monopoly on, 115–116 comparative advantage and, 199 of England, 113, 115–116, 136 free, 258–259, 277, 280 government and, 186–187 Pitt and, 141–142 regulation of, 327 Scotland and, 90 slave, 232–234 uses of, 276–280 value in, 107 The Wealth of Nations on, 279 tranquility, 155 Treatise of Human Nature (Hume), 27, 48, 129, 297–298 Treaty of Utrecht, 32 Tronchin, Théodore, 84, 289 Tucker, Josiah, 141 Tullock, Gordon, 271 Turgot, Anne Robert Jacques, 79 Turnbull, William, 17 United Kingdom of Great Britain, 14–16 See also England; Scotland United States.


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The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly

"Robert Solow", air freight, Andrei Shleifer, battle of ideas, Bretton Woods, British Empire, business process, business process outsourcing, Carmen Reinhart, clean water, colonial rule, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, Deng Xiaoping, desegregation, discovery of the americas, Edward Glaeser, en.wikipedia.org, European colonialism, Francisco Pizarro, fundamental attribution error, germ theory of disease, greed is good, Gunnar Myrdal, income per capita, invisible hand, James Watt: steam engine, Jane Jacobs, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, M-Pesa, microcredit, Monroe Doctrine, oil shock, place-making, Ponzi scheme, risk/return, road to serfdom, Silicon Valley, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, urban renewal, Washington Consensus, WikiLeaks, World Values Survey, young professional

Smith articulated three important ideas that made the Invisible Hand so effective: the division of labor, gains from specialization, and gains from trade. These three ideas are connected so that each makes the other possible. Again, it does not make these ideas any less powerful that they are elementary concepts taught in introductory economics classes. We are interested in ideas with either moral or pragmatic payoffs, regardless of their originality or prestige. Nobel laureate Robert Solow might have been right when he once said that most or all of what you need to give practical policy advice comes from Econ 101. And actually it will turn out that, despite the recent inclusion of some of Smith’s ideas in new academic theories of growth, these ideas are still neglected in debates among nonacademics in the development community. The Division of Labor. The division of labor is about how much a worker performs all the necessary tasks to produce something versus how much the work is divided up into more specialized tasks among workers.

Adam Smith’s Invisible hand in 1776 applied to goods that were already in existence, and this remained the dominant framework in economics for the next two centuries. For most of the history of economics, the field spent most of its energies on explaining a static economy in which existing goods could be allocated with ever-increasing efficiency. The field never had quite enough to say about the most important two things going on over those two centuries: the invention of new goods and perpetual economic growth. Nobel laureate Robert Solow at last placed innovation at the center of growth in a 1957 article. He showed that traditional factors like investment in plant and equipment could not account for most of American economic growth. There was something else, and the obvious candidate for “something else” was invention.5 After Solow, most economists accepted that economic growth happened through technological innovation. Yet still unexplained was why and how innovation happened, a state of affairs that continued for the next three decades.

See also Gang of Four Slave trade/slavery in Africa, 159–165, 172–173 in Benin, West Africa, 159–163, 172–173, 344 in Colombia, 166–167, 177–178 in Ethiopia, 165 and geography, 163–165, 177–178 in Ghana, 345 in New York City, 175–177, 179 See also Oppression Small, William, 283 Smith, Adam, 240, 241–248, 268, 283, 286, 287, 288 and development, 273–274 and free trade, and invisible hand concept, 243–245. See also Invisible hand and problem-solving, 245–253 versus Quesnay, François, 335–338 The Theory of Moral Sentiments, 242, 244 The Wealth of Nations, 244, 337 Smuts, Jan, 87, 96 Snow, John, 192 Social return/payoff, 251–252, 287–288 Sokoloff, Kenneth, 168 Solow, Robert, 245, 277 Soninke people, 163–165 South America, versus North America, and oppression, 168–170 South Korea, 261–274, 266, 267 (fig.), 346. See also Gang of Four Soviet Union, 97–98, 104, 112, 115–118, 119. See also Cold War Sowell, Thomas, 229 Specialization, 261–274. See also Gains from Specialization Spontaneous order, 32–34, 35–36, 38–39, 244, 290, 305 Spontaneous solutions, 7, 237, 348.


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Start-Up Nation: The Story of Israel's Economic Miracle by Dan Senor, Saul Singer

"Robert Solow", agricultural Revolution, Albert Einstein, back-to-the-land, banking crisis, Boycotts of Israel, call centre, Celtic Tiger, cleantech, Dissolution of the Soviet Union, friendly fire, immigration reform, labor-force participation, mass immigration, new economy, pez dispenser, post scarcity, profit motive, Silicon Valley, smart grid, social graph, sovereign wealth fund, Steve Ballmer, web application, women in the workforce, Yom Kippur War

[and] losing our collective sense of purpose along with our fire, ambition, and determination to achieve.”21 The economic downturn has only sharpened the focus on innovation. The financial crisis, after all, was triggered by the collapse of real estate prices, which had been inflated by reckless bank lending and cheap credit. In other words, global prosperity had rested on a speculative bubble, not on the productivity increases that economists agree are the foundation of sustainable economic growth. According to the pioneering work of Nobel Prize winner Robert Solow, technological innovation is the ultimate source of productivity and growth.22 It’s the only proven way for economies to consistently get ahead—especially innovation born by start-up companies. Recent Census Bureau data show that most of the net employment gains in the United States between 1980 and 2005 came from firms younger than five years old. Without start-ups, the average annual net employment growth rate would actually have been negative.

.: Heritage Foundation, 2008. ———. The Entrepreneurial Imperative: How America’s Economic Miracle Will Reshape the World. New York: HarperCollins, 2006. Scott, Bruce R., and Srinivas Ramdas Sumder. “Austin, Texas: Building a High-Tech Economy.” Harvard Business School Case 799-038, October 1998. Case Library, Harvard Business Publishing. Singer, Saul. “Superpower in Silicon Wadi.” Jerusalem Post, June 19, 1998. Solow, Robert M. “Growth Theory and After.” Nobel Prize lecture, December 8, 1987. http://nobelprize.org/nobel_prizes/economics/lau reates/1987/solow-lecture.html. Snook, Scott A., Leslie J. Freeman, and L. Jeffrey Norwalk. “Friendly Fire.” Harvard Business School Case 404-083, January 2004. Case Library, Harvard Business Publishing. Steil, Benn, David G. Victor, and Richard R. Nelson, eds. Technological Innovation and Economic Performance.


pages: 276 words: 82,603

Birth of the Euro by Otmar Issing

"Robert Solow", accounting loophole / creative accounting, Bretton Woods, business climate, business cycle, capital controls, central bank independence, currency peg, financial innovation, floating exchange rates, full employment, inflation targeting, information asymmetry, labour market flexibility, labour mobility, market fundamentalism, money market fund, moral hazard, oil shock, open economy, price anchoring, price stability, purchasing power parity, reserve currency, Y2K, yield curve

The first is: what in your view is the mechanism linking the money supply and the price level, or, more exactly, how is a higher or lower rate of inflation reflected in higher or lower unemployment, and how does it happen in practical terms? The second question: assume it is theoretically and empirically arguable that European labour market rigidity (a) has not increased significantly between the 1970s and today and (b) is not the main reason for unemployment – you cited a Nobel laureate, and I will cite Robert Solow, who recently maintained in a lecture that rigidities are 40 • Historical background not the reason for unemployment. Well, what policy means are still available to Europe to tackle the problem of unemployment? Issing: I have already emphasised on a number of occasions that I do not see any medium- or long-term trade-off between inflation and unemployment, and that monetary policy can contribute most when it ensures low and stable inflation expectations and thus low real interest rates.

I. 191 liquidity of banks, ECB control by open-market operations 120–1, 124–6 Lisbon agenda (2000) 235, 241 Lithuania 75, 221 living standards per capita GDP 43–6 table 3 differences in 17, 209–10 euro area compared with USA 43 London, as financial centre 176 Lucas, Robert 79 Luxembourg 14, 15, 16, 26 conversion rates 20 per capita GDP 44–7 Maastricht summit (1991), decision on EMU Stage III 9–13 Maastricht Treaty 33, 37–8, 146 (Article 111) 170–1 (Articles 105ff.) 52–4, 60–1, 97, 100, 118–19 convergence criteria 11–12, 13–17 exclusion of liability 194 fiscal policy rules 192–6 and national legislation 223 ‘opt-out clauses’ 25 prohibition on monetary financing 54–5, 192, 194, 234 ratified in European law 234–5 McKinnon, Ronald 48 macroeconomic policy asymmetry in 200–3 stability 206 macroeconomic projections 109–11 Madrid summit (1995) 232 Malta 67, 220 Index • 255 marginal lending facility 126–7, 130, 134 market economy, vs. central planning 61–2, 75, 222 media and ECB communication policy 157–8, 188 pessimism about transition 135, 136 Members of the European Parliament (MEPs) criticism of non-disclosure of ECB voting records 160–3 questions to Issing 34–43 minimum reserves 119, 120–2, 127–8 Mitterrand, François 11 model uncertainty 81 Modigliani, Franco 40 ‘monetarist’ position 5–6, 11–12 monetary financing, prohibition of 54–5, 192, 194, 234 monetary pillar, and economic pillar 99–100, 105–11, 112, 116 monetary policy autonomy 7, 8–9 centralized and decentralized fiscal policy 30, 38–9 communitisation of 9, 10 credibility 57, 65 cross-checking and communication 111–14, 116 data for 54 decision-making by committee or individual 147–9 ECB in EMU framework 191–236 in ECB Governing Council 149–56 economic theory and the practice of 184–90 and exchange rate 169–76 and fiscal policy relationship 192, 200–7 implementation of ECB 122–4, 128–30 instruments of ECB 118–30 limits to 205–6 medium-term orientation 103–4 the nature of 41 and price stability 35, 61–3, 203 prior experience and preliminary considerations 119–22 ‘regime shift’ and 79, 82–4, 94 review of ECB strategy (2002/3) 115–18 rules versus authorities 87–9 stability-oriented for the ECB 97–100 fig. 7 success of 141–6 transmission mechanism 189 trust in 33, 57 under a floating exchange regime 171–4 under uncertainty 77–9 see also single monetary policy monetary targeting 90–6 Monetary Transmission Network 189 monetary union conditions for 11–12, 13–17 consequences of 32–3 EU countries outside 75 and European Union 219–22 ‘opt-out clause’ 25 and political union 12–13, 192, 227–36 political will for 25–6 road to 3–9 start of 11–13 without political union 227–36 see also European Economic and Monetary Union (EMU) money reference value 97, 98, 106–8, 116, 118 role in ECB monetary policy strategy 98, 99, 106–7, 115, 117 as unit of account and store of value 102 use of electronic 128 256 • Index money market rate 127 fig. 8; 128–30 and interest rates (1999–2006) 141 fig. 10 and interest rates at beginning of monetary union 138–40 fig. 9 money supply defined (M3) 107 growth and inflation 92–3, 105–6 fig. 6 increase for circulation 55 ‘k-per cent rule’ 88 and price levels 39–40, 96, 105, 112 Montenegro 180 moral hazard 193–4, 196, 202 Mundell, Robert 48 nation states autonomy 196 and ECB 191–2 economic policy coordination 38–9 legislation compatibility with EMU 13, 223 responsibility of national policy 215–19 and supranational institution 2, 20–1 national central banks consensus procedures 134 control of liquidity by ECB 120–1, 124–6 cooperation with ECB 110, 131–3 and credit institutions 119 and the ESCB 52–4 and the Eurosystem 53–4, 76, 110, 119–20 independence of (Article 108) 55–60, 223 interest rates reduction 133–4 mandate 165 minimum reserves 120–2 ‘overcapacity’ problems 150 powers of 118–19 rotation and voting rights of governors on ECB Governing Council 224–5 table 8 shift to single monetary policy 82–4, 131–5 stability-oriented policy 138 transparency 164–5 national currencies 48 conversion rates with euro 20 former 1, 20–5 linkages with euro 239 transition to the euro 77, 82–4, 135–6 Netherlands, the 14, 15, 16, 26, 156 conversion rates 20 current account balance 214 neutrality 120, 183, 206 New Zealand, Reserve Bank of 90 Nice, Treaty of, enabling clause 171, 223 North, D. 234 Noyer, Christian 27, 70, 244 oil prices 138–9, 143, 208 declining (1990s) 14, 138 shocks first ((1970s) 6, 57 second (1979/80) 6 old age provision 197, 238 open-market operations 120, 124–6 fine-tuning operations 126, 129, 130 fixed rate and variable rate tenders 125–6, 129, 140 longer-term refinancing operations 126 main refinancing operation 124–6, 129–30, 134, 138–40 structural operations 126 optimum currency area, criteria 48–9, 219 Österreichische Nationalbank 74 Padoa-Schioppa, Tommaso 27, 28 parameter uncertainty 81 Index • 257 Party of European Socialists 34, 35, 37, 38, 40, 41–2 Pax Romana 4, 32 pensions 197, 238 Pöhl, Karl Otto 9 Poland 220 policy coordination in EMU 38–9, 200–7 assignment of responsibility and implicit 203–7 ex ante 200–3 political economy 201–2 political pressure on ECB 137, 162, 174, 202–3 on fiscal policy 206–7 on monetary policy decision-making 148–9 political risks 230–4 political union and common currency 4 in conflict with EMU scenario 242–4 conflict-free extension scenario 242 and economic union 47–51 and monetary union 12–13, 192, 227–36 monetary union without 227–36 political will 25–6, 230 poorer countries 17 population, euro area 43–4 table 2 portfolio diversification 214 Portugal 14, 15, 16, 26 conversion rates 20 current account balance 214, 215 per capita GDP 46 pound sterling 176, 240 press conferences, European Central Bank 157–8, 167, 168 price stability 7, 8, 30, 31, 33, 34–5, 39 below 2 per cent 97, 98, 103, 115, 117 and budget stabilisers 195 convergence criterion 220–1 ECB definition 97–8 ECB monetary policy and 96–118, 170–1, 203 effects of lack of 143–6 in euro area 150–1 and exchange rates 90–3, 170, 172–4 the importance of 61–3, 234 medium-term orientation 103–5, 115 primacy for European Central Bank 60–6, 168 quantitative definition 97, 98, 100–5, 115, 145, 221 trade-off with other objectives 63–6 prices, differentials (Balassa-Samuelson effect) 210–11, 216 Pro-DM party 21 Protocol on the Statute of the European System of Central Banks 26, 52, 119 psychology, in acceptance of euro 24–5, 33, 36 public debt 15–16 fig. 3, 17–18, 193, 236, 239 ceiling for 197 exchange rate risk 194–5 levels 238 public debt instruments, prohibition on direct purchase of 55 public finance, sound condition for EMU participation 13, 19–20, 25, 236 public sector prohibition on provision of credit to 55 relationship with private sector 204 share in euro area 46 purchasing power per capita GDP 210–11 fig. 16 Randzio-Plath, Christa 32, 37 real-estate prices 217–18 reference value, for monetary growth 97, 98, 106–8, 116, 118 258 • Index refinancing see open-market operations ‘regime shift’, and monetary policy 79, 82–4, 94 responsibility assignment of policy 203–7, 217 transfer of national to Europe scenario 242 revenue sharing 218–19 Rich, Georg 85 risk-sharing 214–15 Roman Empire 4, 32 Romania 76 Rueff, Jacques 229 Russia 181 economic crisis (1998) 138 San Marino 180 sanctions 197 savings 36 scepticism 42–3, 50, 68, 76, 84, 135, 207, 229, 243 Schiller, Karl 6 Second World War, and Germany 22–3, 38 securities euro-denominated 239 public and private sector 123–4 ‘tier one assets’ 123–4 ‘tier two assets’ 124 Simons, Henry 87 single monetary policy 47, 54, 68 causes of divergence 207–12 and the ECB 223–7 ECB preparations for 76–85 ‘one size fits all’ issue 207–19, 231, 241 price stability 97 real interest rates, real exchange rate, risk-sharing 212–15 shift of national central banks to 82–4, 131–5, 218–19 and social union 231, 238, 241, 242, 243 single money market 47 Slovenia 67, 75, 210 social rights 238, 243 social union 231, 238, 241, 242, 243 Solans, Eugenio Domingo 27, 28, 70 Solow, Robert 39–40 sovereignty and the Bundesbank 8–9 and economic policy coordination 38–9 and national central banks 150 and supranational institution 2, 20–1, 170, 230, 236 Spain 14, 15, 16, 26, 210, 213 conversion rates 20 current account balance 214, 215 stability consensus on 14 of currency 177, 184, 238, 244 of currency and scarcity of metal 4 of demand for money 117 ECB monetary policy strategy 96–118, 205 of euro 1–2, 33, 141–6 of euro in ECB monetary policy 131–90 exchange rates 6 monetary and society 191 Stability and Growth Pact 15, 17, 25, 55, 196–200, 202, 204, 217, 221, 237 evaluation 198–200, 235 non-compliance 222, 236, 241 standing facilities 126–7, 134–5 statistical data, conversion to a common base 82–4 Statistical Office of the European Communities see Eurostat Statute of the European System of Central Banks 26, 52–66, 87, 119, 223, 234, 239, 241 Article 10 and amendments 223–6 subsidiarity principle 234 supranational institution central bank as a 9, 122–4, 200, 232 Index • 259 and national sovereignty 2, 20–1, 170, 230, 236 Survey of Professional Forecasters 152 Sweden 75 Swiss National Bank 85 tax system increase in indirect rates 143, 204 redistribution effect 62 Taylor rule 89–90 terrorism (11 September 2001) 151 effects on bank liquidity 129 Thygesen, Niels 10 Tietmeyer, Hans 29, 69 Tinbergen Rule 65 Torres Marques, Helena 41–2 trade, usefulness of common currency to 3 trade unions 144, 202 transfer payments, in welfare state 230–1, 238, 243 transmission mechanism 189 transparency 164–5 of ECB 31, 33, 42–3, 60, 84, 87, 97, 99, 113, 163–9 travel, without having to change money 36 Treaty on European Union (1992) see Maastricht Treaty Trichet, Jean-Claude 26 trust 33, 42, 238, 242 uncertainty about the state of the economy 80–1, 82–4 about the structure of the economy 81, 84–5 the elements of 79–82 monetary policy under 77–9, 189 and price instability 63 strategic 81–2, 84–5 ‘uneasy triangle’ theory 7–9 unemployment 33, 34–5, 41, 144, 217 euro area compared with USA 47 and inflation 39–40 structural 238 unit labour costs, and current account balances 215–16 fig. 19 United Kingdom (UK) 4, 75 Chancellor of the Exchequer 58, 147 exchange rate intervention 175 opted out 25, 240 presidency of European Council (1998) 25 reservations on ECB 59 see also Bank of England United States of America (USA) euro area compared with 43, 46–7, 83, 190, 209–10, 212 exchange rate intervention 175 US Federal Open Market Committee (FOMC) 147 US Federal Reserve 76, 140 organizational structure 85 Vatican State 180 voting collegial 70 consensus principle 153–6 ECB Governing Council model 150, 153–5 majority 68, 171 no disclosure of records 160–3 ‘one person – one vote’ 67–8, 226 rights of national central bank governors in ECB Governing Council 224–7 wage policy 14, 138, 201 national 200, 202, 204 Waigel, Theo 28–9 wealth effect, and asset price trends 109 Weizsäcker, Richard von 230 welfare issues 202, 230–1, 238 welfare state, European transfer payments 230–1, 243 260 • Index Werner Group report (1970) 5 world economy, effects of decline in euro exchange rate on 175–6 ‘Y2K’ problem 129 Zweig, Stefan 22, 62


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The Future of Capitalism: Facing the New Anxieties by Paul Collier

"Robert Solow", accounting loophole / creative accounting, Airbnb, assortative mating, bank run, Berlin Wall, Bernie Sanders, bitcoin, Bob Geldof, bonus culture, business cycle, call centre, central bank independence, centre right, Commodity Super-Cycle, computerized trading, corporate governance, creative destruction, cuban missile crisis, David Brooks, delayed gratification, deskilling, Donald Trump, eurozone crisis, financial deregulation, full employment, George Akerlof, Goldman Sachs: Vampire Squid, greed is good, income inequality, industrial cluster, information asymmetry, intangible asset, Jean Tirole, job satisfaction, Joseph Schumpeter, knowledge economy, late capitalism, loss aversion, Mark Zuckerberg, minimum wage unemployment, moral hazard, negative equity, New Urbanism, Northern Rock, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, race to the bottom, rent control, rent-seeking, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley ideology, sovereign wealth fund, The Wealth of Nations by Adam Smith, theory of mind, too big to fail, trade liberalization, urban planning, web of trust, zero-sum game

The economic rents of agglomeration in our thriving big cities are currently staggeringly large. Not only is the scramble for them probably inflicting damage on the people who are scrambling, but its sheer momentum may blind people to the irreversible damage they can do to their own lives. Putting it all together: how can the gains of agglomeration be taxed? As a general idea, taxing economic rents is now being recognized as wise. The most influential recent advocate is Robert Solow, Nobel Laureate and the founder of the theory of economic growth, who has argued that economic rents have increased, and that taxation should be shifted to them and away from earned income. With this reassurance, I will now bring the two blocks of argument together. Taxing the gains from agglomeration is a smart policy on grounds both of ethics and efficiency. Each of these criteria matters, and there are few other taxes that satisfy them both.

., 120–21 business zones, 150 ‘Butskellism’, 49* Cadbury, 77 Cameron, David, 205 Canada, 22 capitalism competition, 21, 25, 56, 85, 86 ‘creative destruction’ concept, 21 current failings of, 4–5, 17, 25, 42, 45–6, 48, 201, 212–13 and decline of social trust, 5, 45–6, 48, 55, 59, 69 as essential for prosperity, 4–5, 18, 20, 25, 201 and families, 37 first mover advantage, 148 and greed, 10, 19, 25–7, 28, 31, 42, 58, 69, 70†, 81, 95 and Marx’s alienation, 17–18 and oppositional identities, 56, 74 vested interests, 85, 86, 135–6, 207 see also firms Catalan secession movement, 58 causality, narrative of, 33, 34 CDC Group, 122, 149* Chaucer, Geoffrey, The Canterbury Tales, 129 Chicago, University of, 166 childhood adoption, 110–11 children in ‘care’, 104, 105, 110, 111, 157 children ‘reared by wolves’, 31–2 cognitive development, 105–6, 170, 175–6 fostering, 104, 105, 111 identity acquisition, 32 impact of parental unemployment, 160–61 learning of norms, 33, 35, 107–8 non-cognitive development, 105, 163, 169–70, 171–3, 174, 175–6 ‘rights of the child’ concept, 103–4 in single-parent families, 101, 102, 104–5, 155, 160 trusted mentors, 169–70 see also family China, 118–19, 149, 203 Chira, Susan, 52–3 Chirac, Jacques, 14, 120–21 Christian Democratic parties, 5, 14 Citigroup, 186 Clark, Gregory, The Son Also Rises, 106–8 Clarke, Ken, 206 class divide assortative mating among new elite, 99–100, 154, 188–9 author’s proposed policies, 19–20, 21, 183–4, 187–8, 190, 207–8 and breadth of social networks, 169 and Brexit vote, 5, 196 and cognitive development, 105–6 divergence dynamic, 7, 18, 48, 98–108, 154–61, 170–71, 172–80, 181–90 ‘elite’ attitudes to less-well educated, 4, 5, 12, 16, 53, 59, 60–61, 63 and family life, 20, 98, 99–106, 157–62 and fracture to skill-based identities, 3–5, 51–6, 78 and home ownership, 68, 181, 182–3 need for socially mixed schools, 164–5 and non-cognitive development, 105, 163, 169–70, 171–3, 174, 175–6 and parental hothousing, 100, 101, 105–6 post-school skills development, 170–76 pre-emptive support for stressed families, 20, 155, 157–60, 161–3, 208 and reading in pre-teens, 167–9 and recent populist insurgencies, 5 retirement insecurities, 179–80 and two-parent families, 155–6, 157 unravelling of shared identity, 15, 50, 51–6, 57*, 58–61, 63, 215 see also white working class climate change, 44, 67, 119 Clinton, Hillary, 5, 9, 203–4 coalition government, UK (2010–15), 206 cognitive behavioral therapy, 160 Cold War, 113, 114, 116 end of, 5–6, 115, 203 Colombia, 120 communism, 32, 36–7, 85–6 communitarian values care, 9, 11, 12, 16, 29, 31, 42, 116 fairness, 11, 12, 14, 16, 29, 31, 34, 43, 116, 132–3 hierarchy, 11, 12, 16, 38–9, 43, 99–100 left’s abandonment of, 16, 214* liberty, 11, 12, 16, 42 loyalty, 11, 12, 16, 29, 31, 34, 42–3, 116 new vanguard’s abandonment of, 9, 11–13, 14–15, 16, 17, 49–50, 113, 116–18, 121, 214 post-war settlement, 8–9, 49, 113–16, 122 and reciprocal obligations, 8–9, 11–12, 13, 14, 19, 33, 34, 40–41, 48–9, 201, 212–15 roots in nineteenth-century co-operatives, 8, 13, 14, 201 sanctity, 11, 16, 42–3 Smith and Hume, 21–2† values and reason, 29–30, 43–4 see also belonging, narrative of; obligation, narrative of; reciprocity; social democracy Companies Act, UK, 82 comparative advantage, 20, 120, 192, 194 Confederation of British Industry (CBI), 79 conservatism, 30, 36 Conservative Party, 14, 49, 205, 206 contraception, 98–9, 102 co-operative movement, 8, 13, 14, 201 Corbyn, Jeremy, 202, 204–5 Crosland, Anthony, The Future of Socialism, 17, 18, 19 Cuban Missile Crisis (1962), 114 debutante balls, 188 Denmark, 63, 178, 214* Descartes, Rene, 31 Detroit, 128, 129, 144 Deutsche Bank, 78, 185 development banks, 149–50 Development Corporations Act (1981), 150 Dickens, Charles, Bleak House, 108 digital networks detachment of narratives from place, 38, 61–2 economies of scale, 86–7 global e-utilities, 37, 38, 86–7, 89–90, 91 social media, 27, 61, 87, 173, 207, 215 value-based echo-chambers, 38, 61–2, 64–5, 212, 215 Draghi, Mario, 153 Dundee Project, 161–2 Dutch Antilles, 193 East Asia, 147, 192 eBay, 87 economic man, 10, 19, 25, 26–7, 31, 34–5, 196, 209, 210, 215 economic rent theory, 19, 91, 133–9, 140–44, 186–8, 192, 195, 207 education and collapse of social democracy, 50, 52, 53, 54, 55, 59, 63 and empathy, 12 and European identity, 57* expansion of universities, 99–100, 127 and growth of the middle class, 100 inequality in spending per pupil, 167 mis-ranking of cognitive and non-cognitive training, 174–6 need for socially mixed schools, 164–5 post-school skills development, 170–76 pre-school, 105–6, 163–4 quality of teaching, 165–6 reading in pre-teens, 167–9 and shocks to norms of ethical family, 98, 99–105 symbols of cognitive privilege, 175 teaching methods, 166–7 vocational education, 171–6 zero-sum aspects of success, 189 electoral systems, 206 Emerging Market economies, 129, 130–31 empires, age of, 113 The Enigma of Reason (Mercier and Sperber), 29 enlightened self-interest, 33, 40*, 97–8, 101, 109, 112, 113, 114, 117, 184, 213 Enron, 80 ethnicity, 3, 20, 56, 62, 64, 65, 211 Europe Christian Democrats in, 5, 14 class divides, 3, 4, 5, 125 decline in social trust, 45 and knowledge industries, 192 metropolitan-provincial divides, 3, 4, 125 and migration, 121, 197 and shared identity, 57–8, 64, 66, 125 social democracy in, 8–9, 49, 50 European Central Bank, 153 European Commission, 57 European Investment Bank, 149 European Union (EU, formerly EEC), 66, 67, 114, 115, 116, 117 Brexit vote (June 2016), 5, 125, 131, 196, 215 Eurozone crisis, 153 public policy as predominantly national, 212 universities in, 170 evolutionary theory, 31, 33†, 35–6, 66 externalities, 145–6 Facebook, 87 Fairbairn, Carolyn, 79 fake news, 33–4 family, 19 African norms, 110–11 benefits for single parents, 160 Clark’s ‘family culture’, 107–8 entitled individual vs family obligation, 99–103, 104–6, 108–9, 210 equality within, 39, 154 erosion of mutual obligations, 101–2, 210 identity acquisition, 32 ideologies hostile to, 36–7 impact of unemployment/poverty, 4, 7, 160–61 importance of, 36, 37 and increased longevity, 110, 161 in-kind support for parenting, 161 nuclear dynastic family, 102, 110, 154 one-parent families, 101, 102, 104–5, 155, 160 parental hothousing, 100, 101, 105–6 post-1945 ethical family, 97–8, 99–105, 108, 210 pressures on young parents, 159–60, 161–3 and public policy, 21, 154–5, 157–70, 171–3, 177, 209 and reciprocity, 97–8, 101, 102 shocks to post-1945 norms, 98–105 shrinking of extended family, 101–2, 109–10, 161 social maternalism concept, 154–5, 157–8, 190 two-parent families as preferable, 155–6, 157 see also childhood; marriage Farage, Nigel, 202 fascism, 6, 13*, 47, 113 Federalist papers, 82 feminism, 13, 99 Fillon, François, 204 financial crisis, global (2008–9), 4, 34, 71, 160 no bankers sent to gaol for, 95–6 financial sector, 77–9, 80–81, 83–5 asymmetric information, 88, 185 co-ordination role, 145–6 economies of scale, 87 localized past of, 84, 146 toxic rivalries in, 189 trading in financial assets, 78–9, 84, 184–5, 186, 187 Finland, 63 firms, 19, 21, 69 CEO pay, 77–8, 79, 80–81 competition, 21, 25, 56, 85, 86 control/accountability of, 75–81, 82–5 cultures of good corporate behaviour, 94–5 demutualization in UK, 83, 84 deteriorating behaviour of, 18, 69, 78, 80–81 economies of scale, 17–18, 37, 86–7, 88–91, 126–7, 144–5, 146–7 ethical, 70–71, 172, 209–10 and ethical citizens, 93–4, 95, 96 failure/bankruptcy of, 70, 71, 72, 74, 75–6 flattening of hierarchies in, 39 Friedman’s profit nostrum, 69–70, 71, 76, 78–9, 210 global e-utilities, 37, 38, 86–7, 89–90, 91 ideologies hostile to, 37, 81 low productivity-low cost business model, 173–4 ‘maximising of shareholder value’, 69–70, 76, 79, 82–3 ‘mutuals’, 83 need for bankslaughter crime, 95–6 new network features, 86–7 policing the public interest, 93–4 public dislike of, 69, 95–6 public interest representation on boards, 92–3 regulation of, 87–90, 174 reward linked to short-term performance, 77, 78–81 sense of purpose, 39–40, 41, 70–75, 80–81, 93–4, 96 shareholder control of, 76–7, 79, 80, 82–3 societal role of, 81–2, 92–3, 96, 209–10 utility services, 86, 89, 90 worker interests on boards, 83, 84–5 Fisher, Stephen, 196* Five Star, 125 Ford, 70, 71 France, 7, 63, 67, 114 écoles maternelles in, 164 labour market in, 176, 189 pensions policy, 180 presidential election (2017), 5, 9, 204 universities in, 170 working week reduced in, 189 Frederiksen, Mette, 214* Friedman, Milton, 15, 69–70, 71, 76 The Full Monty (film), 7, 129 G20 group, 118 G7 group, 118 G8 group, 194 Ganesh, Janan, 125 Geldof, Bob, 169 General Agreement on Tariffs and Trade (GATT), 114, 115, 116–17 General Motors (GM), 72, 73–4, 75, 86, 172 geographic divide, 3, 16, 18, 19, 215 author’s proposed policies, 19, 207 and Brexit vote, 125, 196 broken cities, 4, 7, 19, 48, 125, 129–30, 147–9 business zones, 150 co-ordination problem over new clusters, 145–50, 207 decline of provincial cities, 4, 7, 19, 48, 125, 129–30, 131, 144–5 economic forces driving, 126–30 and education spending, 167 first mover disadvantage, 148–9 ideological responses, 130–32 investment promotion agencies, 150–51 and local universities, 151–2 and metropolitan disdain, 125 need for political commitment, 153 as recent and reversible, 152–3 regenerating provincial cities, 19, 142, 144–50 and spending per school pupil, 167 widening of since 1980, 125 George, Henry, 133–6, 141 Germany 2017 election, 5, 205 local banks in, 146 Nazi era, 57 and oppositional identities, 56–7 oversight of firms in, 76 post-war industrial relations policy, 94–5 and post-war settlement, 114 re-emergence of far right, 5 rights of refugees in, 14 ‘social market economy’, 49 TVET in, 171–2, 174, 175 vereine (civil society groups), 181 worker interests on boards, 84–5 global divide, 7–8, 20, 59–60, 191–8, 208 globalization, 4, 18, 20, 126–7, 128, 129, 130–31, 191–8 Goldman Sachs, 70†, 83–4, 94 Google, 87 Great Depression (1930s), 114 Green, Sir Philip, 80 Grillo, Beppe, 202 ‘Grimm and Co’, Rotherham, 168–9 Gunning, Jan Willem, 165 Haidt, Jonathan, 11–12, 14, 16, 28, 29, 132–3 Haiti, 208 Halifax Building Society, 8, 84 Hamon, Benoît, 9, 204 Harvard-MIT, 7, 152 Hershey, 77 HIV sufferers in poor countries, 120–21 Hofer, Norbert, 202 Hollande, Francois, 9, 204 Hoover, 148 housing market, 181–4 buy-to-let, 182, 183, 184 and lawyers, 187 mortgages, 84, 176, 182, 183–4 proposed stock transfer from landlords to tenants, 184 Hume, David, 14, 21, 21–2†, 29 Huxley, Aldous, Brave New World (1932), 5 Iceland, 63 Identity Economics, 50–56, 65–7 ideologies based on hatred of ‘other’ part of society, 43, 56, 213, 214 ‘end of history’ triumphalism, 6, 43–4 hostile to families, 36–7 hostile to firms, 37, 81 hostile to the state, 37–8 and housing policy, 183 and migration, 198 New Right, 14–15, 26, 81, 129 norms of care and equality, 116, 132–3 polarization of politics, 38, 63, 202–5 pragmatic eschewal of, 17, 18, 21, 22, 29–30 and principle of reason, 9, 13, 14, 15, 21, 43 Rawlsian vanguard, 13–14, 30, 49–50, 53, 67, 112, 113, 201, 202, 203, 214 return of left-right confrontation, 5, 6, 81, 202–5 and rights, 12–14, 44, 112 seduction of, 6 and twentieth century’s catastrophes, 5–6, 22 views on an ethical world, 112 see also Marxism; rights ideology; Utilitarianism IFC (International Finance Corporation), 122 Imperial Chemical Industries (ICI), 69–70, 75 India, 118–19 individualism entitled individual vs family obligation, 99–103, 104–6, 108–9, 210 fulfilment through personal achievement, 28, 99, 100–101, 102, 103, 108–9, 213 New Right embrace of, 14–15, 53, 81, 214–15 as rampant in recent decades, 19, 214–15 reciprocity contrasted with, 44–5 and withering of spatial community, 61–2 industrial revolution, 8, 126 inequality and assortative mating among new elite, 99–100, 154, 188–9 and divergence dynamic, 7, 18, 48, 98–108, 154–61, 170–71, 172–80, 181–90 and financial sector, 185 and geographic divide, 3, 7–8, 20, 125 global divide, 7–8, 20, 59–60, 191–8, 208 persistence of, 106–8 Rawls’ disadvantaged groups, 3–4, 13–14, 16, 50, 53, 121, 203–4, 214 and revolt against social democracy, 15–16 rising levels of, 3–5, 106, 125, 181, 190 and Utilitarian calculus, 132 innovation, 185–6, 208 International Monetary Fund (IMF), 114, 117 international relations achievement of post-WW2 leaders, 113–16, 122 building of shared identity, 114–16 core concepts of ethical world, 112, 113–14 erosion of ethical world, 116–18 expansion of post-war ‘clubs’, 116–18, 210 new, multipurpose club needed, 118–19, 122 and patriotism narrative, 67 situation in 1945, 112–13, 122 investment promotion agencies, 150–51 Irish Investment Authority, 151 Islamist terrorism, 42, 212, 213 Italy, 4, 58, 160 James, William, 29* Janesville (US study), 178 Japan, 72–3, 94, 101, 149, 192 John Lewis Partnership, 83, 172 Johnson, Robert Wood, 39–40, 72 Johnson & Johnson, 39–40, 41, 72, 74*, 79 Jolie, Angelina, 112 JP Morgan, 71* Juppé, Alain, 204 Kagame, Paul, 22 Kay, John, 82*, 84, 211 Keynes, John Maynard, 115 General Theory (1936), 47 kindergartens, 163 Knausgård, Karl Ove, 173 knowledge revolution, 126, 127–8 Kranton, Rachel, 35, 50–51 Krueger, Anne, 141 Krugman, Paul, 47 labour market flexicurity concept, 178 function of, 176–7 and globalization, 192, 194–6 and immigration, 194, 195, 196 investment in skills, 176–7 job security, 176, 177 and low productivity-low cost business model, 173–4 minimum wage strategies, 147, 174, 176, 180 need for reductions in working hours, 189 need for renewed purpose in work, 190 regulation of, 174, 189 and robotics revolution, 178–9 role of state, 177–8, 189 see also unemployment Labour Party, 49, 206 Marxist take-over of, 9, 204–5 language, 31, 32, 33, 39–40, 54, 57 Larkin, Philip, 99, 156 lawyers, 13–14, 45 Buiter’s three types, 186 and shell companies, 193, 194 surfeit of, 186–7 taxation of private litigation proposal, 187–8 Le Pen, Marine, 5, 63, 125, 202, 204 leadership and belief systems, 41–2, 43, 95 building of shared identity, 39–42, 49, 68, 114–16 changing role of, 39 and flattening of hierarchies, 39 and ISIS, 42 political achievements in post-war period, 113–16, 122 and pragmatist philosophy, 22 and shared purpose in firms, 39–40, 41, 71–5 strategic use of morality, 39–40, 41 transformation of power into authority, 39, 41–2, 57 League of Nations, 116 Lee Kwan Yew, 22, 147 Lehman Brothers, 71*, 76 liberalism, 30 libertarianism, 12–13, 15 New Right failures, 16, 21 Silicon Valley, 37–8 lobbying, 85, 141 local government, 182, 183 London, 3, 125, 127–8, 165–6, 193 impact of Brexit on, 131, 196 migration to, 195–6 Macron, Emmanuel, 67, 204 Manchester terror attack (2017), 212, 213 market economy, 19, 20, 21, 25, 48 and collapse of clusters, 129–30, 144–5 failure over pensions, 180 failure over skill-formation, 173–4 mutual benefit from exchange, 28 market fundamentalists, 147, 150 marriage assortative mating, 35, 99–100, 154, 188–9 cohabitation prior to, 99, 100 as ‘commitment technology’, 109, 155–6 divorce rates, 98, 99, 100–101, 102, 103 and female oppression, 156 religious associations, 109, 156 and rent-seeking, 141 ‘shotgun weddings’, 103 and unemployment, 103 Marxism, 13*, 26, 30, 43, 47, 113, 203, 214 alienation concept, 17–18 and the family, 36–7 late capitalism concept, 6 takeover of Labour Party, 9, 204–5 and ‘useful idiots’, 205* view of the state, 37 Maxwell, Robert, 80 May, Theresa, 205 Mayer, Colin, 18, 70 media celebrities, 6, 112, 204 Mélenchon, Jean-Luc, 5, 202, 204 mental health, 157, 158–9, 162 Mercier, Hugo, 29 meritocratic elites, 3–4, 5, 12–17, 20 Rawlsian vanguard, 13–14, 30, 49–50, 53, 67, 112, 113, 201, 202, 203, 214 Utilitarian vanguard, 9–10, 11–13, 15–16, 18, 52, 53, 59, 66–7, 209 see also Utilitarianism WEIRD (Western, Educated, Industrial, Rich and Developed), 3–4, 12, 14, 16, 17, 20, 116, 121, 133, 214* and white working class, 5, 16 Merkel, Angela, 14, 205 metropolitan areas, 3, 4, 7, 16, 19, 48, 125 co-ordination problem over new clusters, 145–50, 207 economies of agglomeration, 18, 19, 129, 131, 133–44, 195, 196, 207 gains from public goods, 134–5, 138–9 migration to, 195–6 political responses to dominance of, 131–2 scale and specialization in, 126–8, 130, 144–5 and taxation, 131, 132–43, 187, 207 Middle East, 192 Middleton, Kate, 188–9 migration, 121, 194–8, 203 as driven by absolute advantage, 20, 194–5, 208–9 and housing market, 182, 183 Mill, John Stuart, 9–10 minimum wage strategies, 147, 174, 176, 180 Mitchell, Andrew, 188 Mitchell, Edson, 78 modernist architecture, 12 Monarch Airlines, 75 monopolies, natural, 86–7, 88 and asymmetric information, 88, 90 auctioning of rights, 88–9 taxation of, 91–2 utility services, 86, 89, 90 ‘moral hazard’, 179 morality and ethics deriving from values not reason, 27, 28–9, 42–3 and economic man, 10, 19, 25, 26–7, 31, 34–5 and empathy, 12, 27 evolution of ethical norms, 35–6 Haidt’s fundamental values, 11–12, 14, 16, 29, 42–3, 132–3 and market economy, 21, 25, 28, 48 and modern capitalism, 25–6 and new elites, 3–4, 20–21 Adam Smith’s theories, 26–8 use for strategic purposes, 39–40, 41 and Utilitarianism, 9–10, 11, 14, 16, 55, 66–7, 209, 214 motivated reasoning, 28–9, 36, 86, 144, 150, 167 Museveni, President, 121 narratives and childhood mentors, 169–70 and consistency, 41, 67, 81, 96 conveyed by language, 31, 33, 57 detachment from place by e-networks, 38, 61–2 and heyday of social democracy, 49 and identity formation, 32 mis-ranking of cognitive and non-cognitive training, 174–6 moral norms generated from, 33, 97–8 and purposive action, 33–4, 40–41, 42, 68 and schools, 165 of shared identity, 53–6, 81 use of by leaders, 39–42, 43, 49, 80–81 see also belonging, narrative of; obligation, narrative of; purposive action National Health Service (NHS), 49, 159 national identity and citizens-of-the-world agenda, 59–61, 63, 65 contempt of the educated for, 53, 59, 60–61, 63 and distinctive common culture, 37†, 63 established in childhood, 32 esteem from, 51–3 fracture to skill-based identities, 3–5, 51–6, 78 legacy of Second World War, 15, 16 methods of rebuilding, 64, 65–8, 211–15 and new nationalists, 62–3, 67, 203, 204, 205 patriotism narrative, 21, 63, 67, 215 place-based identity, 51–6, 65–8, 211–14, 215 and polarization of society, 54–5 and secession movements, 58 unravelling of shared identity, 15, 50, 51–6, 57*, 58–61, 63, 215 and value identity, 64–5 National Review, 16 nationalism, 34 based on ethnicity or religion, 62–3 capture of national identity notion by, 62, 67, 215 and narratives of hatred, 56, 57, 58–9 and oppositional identities, 56–7, 58–9, 62–3, 68, 215 traditional form of, 62 natural rights concept, 12, 13 Nestlé, 70, 71 Netherlands, 206 networked groups as arena for exchanging obligations, 28 and ‘common knowledge’, 32–3, 34, 54, 55, 66, 212 decline of civil society networks/ groups, 180–81 and early man, 31 evolution of ethical norms, 35–6 exclusion of disruptive narratives, 34 families as, 97–8 leadership’s use of narratives, 39–42, 49 narratives detached from place, 38, 61–2 value-based echo-chambers, 38, 61–2, 64–5, 212, 215 see also family; firms Neustadt, Richard, 39* New York City, 5, 125, 128, 143–4, 193 NGOs, 71, 118, 157–8 ‘niche construction’, 35*, 36* Nigeria, 58 Noble, Diana, 149* Norman, Jesse, 21–2† North Atlantic Treaty Organization (NATO), 114, 115, 116, 117 North Korea, 85 Northern League, Italy, 58 Norway, 63, 206, 208–9 Nozick, Robert, 14–15 obligation, narrative of, 11, 12–13, 16, 19, 29, 33 and collapse of social democracy, 53–6, 210 entitled individual vs family obligation, 99–103, 104–6, 108–9, 210 in ethical world, 112, 113–22 and expansion of post-war ‘clubs’, 117–18, 210 fairness and loyalty instilled by, 34 heyday of the ethical state, 48–9, 68, 196–7 and immigration, 196–7 and leadership, 39, 40–41, 49 ‘oughts’ and ‘wants’, 27, 28, 33, 43 and secession movements, 58 and Adam Smith, 27, 28 see also reciprocity; rescue, duty of oil industry, 192 Organization for Economic Co-operation and Development (OECD), 114–15, 125 Orwell, George, Nineteen Eighty-Four (1949), 5 Oxford university, 7, 70, 100 Paris, 5, 7, 125, 128, 174, 179 patriotism, 21, 63, 67, 215 Pause (NGO), 157–8 pension funds, 76–7, 79–81, 179–80, 185 Pew Research Center, 169 Pinker, Steven, 12* Plato, The Republic, 9, 11, 12, 15, 43 Playboy magazine, 99 political power and holders of economic rent, 135–6, 144 leadership selection systems in UK, 204–5, 206 minimum age for voting, 203 need to restore the centre, 205–7 polarization within polities, 38, 63, 202–5 polities as spatial, 38, 61–2, 65, 68, 211–13 and shared identity, 8, 57–61, 65, 114–16, 211–15 transformation into authority, 41–2, 57–8 trust in government, 4, 5, 48, 59, 210, 211–12 populism, political, 6, 22, 43, 58–9, 202 and geographic divide, 130–31 headless-heart, 30, 60, 112, 119, 121, 122 media celebrities, 6, 112, 204 pragmatism as opposed to, 30 and US presidential election (2016), 5, 203–4 pragmatist philosophy, 6, 9, 19, 21, 21–2†, 46, 201 author’s proposed policies, 19–20, 21, 207–15 limitations of, 30 and Macron in France, 204 and migration, 198 and post-war settlement, 113, 116, 122 and social democracy, 18, 201–2 successful leaders, 22 and taxation, 132, 207 and teaching methods, 166–7 values and reason, 29–30, 43–4 proportional representation, 206 protectionism, 113, 114, 130–31 psychology, social, 16, 54 co-ordination problems, 32–3 esteem’s trumping of money, 174 Haidt’s fundamental values, 11–12, 14, 16, 29, 42–3, 132–3 narratives, 31, 32, 33–4, 38, 39–42, 49, 53–6 norms, 33, 35–6, 39, 42–3, 44, 97–8, 107–8 ‘oughts’ and ‘wants’, 27, 28, 33, 43 personal achievement vs family obligation, 99–103, 104–6, 108–9, 210 ‘theory of mind’, 27, 55 Public Choice Theory, 15–16 public goods, 134–5, 138–9, 186, 202, 213 public ownership, 90 Puigdemont, Carles, 202 purposive action, 18, 21, 25, 26, 34, 40*, 53–4, 68, 112, 211–13 autonomy and responsibility, 38–9 and belonging narrative, 68, 98, 114, 211, 212, 213 in Bhutan, 37† decline in ethical purpose across society, 48 and heyday of social democracy, 47, 49, 114 and narratives, 33–4, 40–41, 42, 68 in workplace, 190 Putnam, Robert, 45–6, 106 Bowling Alone, 181 ‘quality circles’, 72–3 Rajan, Raghuram, 178 Rand, Ayn, 32 rational social woman, 31, 50–51, 196 Rawls, John, 13–14 Reagan, Ronald, 15, 26 Reback, Gary, 90 reciprocity, 9, 19, 31, 212–15 and belonging, 25, 40–41, 49, 53–6, 67, 68, 98, 181, 182, 210–11, 212–13 and collapse of social democracy, 11, 14, 53–6, 58–61, 201, 210 and corporate behaviour, 95 in ethical world, 112, 113–15, 116 and expansion of post-war ‘clubs’, 117–18, 210 fairness and loyalty as supporting, 29, 31, 34 and the family, 97–8, 101, 102 and geographic divide, 125 heyday of the ethical state, 48–9, 68, 96, 196–7, 201 and ISIS, 42 Macron’s patriotism narrative, 67 nineteenth-century co-operatives, 8 rights matched to obligations, 44–5 and three types of narrative, 33, 34, 40–41 transformation of power into authority, 39, 41–2, 57–8 Refuge (Betts and Collier), 27 refugees, 14, 27, 115, 119–20, 213 regulation, 87–90 and globalization, 193–4 of labour market, 174 religion, 56–7, 62–3, 109, 156 religious fundamentalism, 6, 30, 36–7, 212, 213, 215 rent-seeking concept, 140–41, 150, 186, 187–8, 195 rescue, duty of, 40, 54, 119–21, 210, 213 as instrument for ethical imperialism, 117–18, 210 as not matched by rights, 44, 45, 117 and post-war settlement, 113, 115–16 restoring and augmenting autonomy, 121–2 and stressed young families, 163 term defined, 27, 112 value of care as underpinning, 29 retirement pensions, 179–80 rights ideology and corresponding obligations, 44–5 emergence in 1970s, 12–14 human rights lobby, 112, 118, 118* individualism as rampant in recent decades, 19, 214–15 and lawyers, 13–14, 45 Libertarian use of, 12–13, 14–15 natural rights concept, 12, 13 and New Right, 12–13, 14–15, 53 Rawls’ disadvantaged groups, 3–4, 13–14, 16, 50, 53, 112, 121, 203–4, 214 ‘rights of the child’ concept, 103–4 and Utilitarian atate, 12–14 see also individualism Romania, communist, 32, 36 Rotherham, ‘Grimm and Co’, 168–9 rule of law, 138–9, 186 Rwanda, 22 Salmond, Alex, 202 Sandel, Michael, 105 Sanders, Bernie, 9, 64, 202, 203 Sarkozy, Nicolas, 204 Schultz, Martin, 14 Schumpeter, Joseph, 21* Scotland, 58 Seligman, Martin, 108–9 sexual behaviour birth-control pill, 98–9, 102 and class divide, 99, 102, 155–6 concept of sin, 156 and HIV, 121 and stigma, 156–8 sexual orientation, 3, 45 Sheffield, 7, 8, 126, 128–9, 131, 151, 168, 192 shell companies, 193, 194 Shiller, Robert, 34 Sidgwick, Henry, 55 Signalling, Theory of, 41, 43, 53, 63, 95 Silicon Valley, 37–8, 62, 145, 152, 164 Singapore, 22, 147 Slovenia, 58 Smith, Adam, 14, 21, 21–2†, 174 and mutual benefit from exchange, 28 and pursuit of self- interest, 26–7, 40 on reason, 29 The Theory of Moral Sentiments (1759), 27, 28, 174 Wealth of Nations (1776), 26, 28, 174 Smith, Vernon, 28 social democracy ‘Butskellism’, 49* collapse of, 9, 11, 50, 51–6, 116–18, 201–2, 210 communitarian roots, 8–9, 11, 13, 14, 17, 48–9, 201 and group identities, 3–4, 13–14, 51–6 heyday of, 8–9, 15, 17, 47, 48–9, 68, 96, 196–7, 201, 210 and housing, 181–2 influence of Utilitarianism, 9, 10, 14, 16, 18, 49–50, 201, 203, 214 Libertarian challenge, 12–13, 14–15 New Right abandonment of, 14–15, 16, 26, 53 and Public Choice Theory, 15–16 replaced by social paternalism, 11–13, 49–50, 209–10 and rights ideology, 12–14 and secession movements, 58 shared identity harnessed by, 15, 196–7 unravelling of shared identity, 15, 50, 51–6, 57*, 58–61, 63, 215 and Utilitarianism, 214 social maternalism concept, 21, 154–5, 190 free pre-school education, 163–4 mentoring for children, 169–70, 208 support for stressed families, 20, 155, 157–60, 161–3, 208 social media, 27, 61, 87, 173, 207, 215 social paternalism backlash against, 11–13, 15–16 as cavalier about globalization, 20 and child-rearing/family, 105, 110, 154–5, 157, 158, 159, 160, 190, 209 replaces social democracy, 11–13, 49–50, 209–10 ‘rights of the child’ concept, 103–4 and Utilitarian vanguard, 9–10, 11–13, 15–16, 18, 66–7, 209 social services, 159 scrutiny role, 162 Solow, Robert, 141 Soros, George, 15* South Africa, 85 South Asia, 192 South Korea, 129, 130–31 South Sudan, 192 Soviet Union, 114, 115, 116, 203 Spain, 58, 160 specialization, 17–18, 36, 126–8, 130, 144–5, 192 Spence, Michael, 41, 53, 95 Sperber, Dan, 29 St Andrews University, 189 Stanford University, 145, 152 Starbucks, 193 the state, 19 ethical capacities of, 11, 20–21, 48–9 failures in 1930s, 47, 48 ideologies hostile to, 37–8 and pre-school education, 163–4 and prosperity, 37 public policy and job shocks, 177–8 public policy on the family, 21, 154–5, 157–70, 171–3, 177, 209 public-sector and co-ordination problem, 147–8 social maternalism policies, 21, 157, 190 Utilitarian takeover of public policy, 10–12, 13–14, 15–17, 18, 49–50, 113, 201 Stiglitz, Joseph, 56 Stoke-on-Trent, 129 Stonehenge, 64 Sudan, 8 Summers, Larry, 187 Sure Start programme, 164 Sutton, John, 151* Sweden, 178 Switzerland, 175, 206 Tanzania, 193 taxation and corporate globalization, 193, 194 of economic rents, 91–2, 187–8 ethics and efficiency, 132–43 on financial transactions, 187 generational differences in attitudes, 59 Henry George’s Theorem, 133–6, 141 heyday of the ethical state, 49 issues of desert, 132–3, 134–9 and the metropolis, 131, 132–43, 187, 207 and migration, 197 of natural monopolies, 91–2 ‘optimal’, 10 of private litigation in courts, 187–8 and reciprocity, 54, 55, 59 redesign of needed, 19 redistributive, 10, 11, 14, 49, 54, 55, 60, 197 of rents of agglomeration, 19, 132–44, 207 social maternalism policies, 21, 157 substantial decline in top rates, 55 tax havens, 62 Venables-Collier theory, 136–9 Teach First programme, 165–6 technical vocational education and training (TVET), 171–6 technological change, 4 robotics revolution, 178–9 and withering of spatial community, 61–2 see also digital networks telomeres, 155–6 Tepperman, Jonathan, The Fix, 22 Thatcher, Margaret, 15, 26 Thirty Years War, 56–7 Tirole, Jean, 177, 178 Toyota, 72–3, 74, 94, 172 trade unions, 173, 174, 176 Troubled Families Programme (TFP), 162 Trudeau, Pierre, 22 Trump, Donald, 5, 9, 63, 64, 86, 125, 136, 202, 204, 206, 215 Uber, 87 unemployment in 1930s, 47 and collapse of industry, 7, 103, 129, 192 impact on children, 160–61 older workers, 4, 103, 213 retraining schemes, 178 in USA, 160 young people, 4 Unilever, 70, 71 United Kingdom collapse of heavy industry, 7, 103, 129, 192 extreme politics in, 5 and falling life expectancy, 4 financial sector, 80, 83, 84–5 IMF bail-out (1976), 115 local banks in past, 146 northern England, 3, 7, 8, 84, 126, 128–9, 131, 151, 168, 192 shareholder control of firms, 76–7, 79, 80, 82–3 statistics on firms in, 37 universities in, 170, 172, 175* vocational education in, 172, 175† widening of geographic divide, 125 United Nations, 65, 112 ‘Club of 77’, 116 Security Council, 116 UNHCR, 115 United States breakdown of ethical family, 104–5 broken cities in, 129, 130 extreme politics in, 5, 63 and falling life expectancy, 4 financial sector, 83–4, 186 and global e-utilities, 89–90 growth in inequality since 1980, 125 heyday of the ethical state, 49 and knowledge industries, 192 labour market in, 176, 178 local banks in past, 146 oversight of firms in, 76 pessimism in, 5, 45–6 presidential election (2016), 5, 9, 203–4 Public Interest Companies, 93 public policy as predominantly national, 212 ‘rights of the child’ concept in, 103–4 Roosevelt’s New Deal, 47 statistics on firms in, 37 taxation in, 143–4, 144* unemployment in, 160 universities in, 170, 172, 173 weakening of NATO commitment, 117 universities in broken cities, 151–2 in EU countries, 170 expansion of, 99–100, 127 knowledge clusters at, 127, 151–2 low quality vocational courses, 172–3 in UK, 170, 172, 175* in US, 170, 172, 173 urban planning, post-war, 11–12 Utilitarianism, 19, 30, 49–50, 55, 108, 112, 121, 210–11 backlash against, 11–13, 201, 202 belonging as absent from discourse, 16, 59, 66–7, 210–11 care as key value, 12 and consumption, 10, 11, 16, 19–20, 209 equality as key value, 12, 13, 14, 15, 116, 132–3, 214 incorporated into economics, 10–11, 13–14, 16 influence on social democrats, 9, 10, 14, 16, 18, 49–50, 201, 203, 214 origins of, 9–10 paternalistic guardians, 9–10, 11–13, 66–7, 210 takeover of public policy, 10–12, 13–14, 15–17, 18, 49–50, 113, 201 and taxation, 10, 132*, 133 vanguard’s switch of identity salience, 52, 53, 59 Valls, Manuel, 204 Venables, Tony, 18, 136, 191* Venezuela, 120, 214 vested interests, 85–6, 135–6, 165, 166, 207 Volkswagen, 74–5 Walmart, 87 Warsi, Baroness Sayeeda, 65 Wedgwood, Josiah, 129 welfare state, 9, 48–9 unlinked from contributions, 14 well-being and happiness belonging and esteem, 16, 25, 27, 29, 31–3, 34, 42, 51–6, 97–8, 174 entitled individual vs family obligation, 108–9 and financial success, 26, 94 ‘ladder of life’, 25* poverty in Africa, 37 reciprocity as decisive for, 31 Westminster, Duke of, 136 white working class ‘elite’ attitudes to, 4, 5, 16 falling life expectancy, 4, 16 pessimism of, 5 William, Prince, 188–9 Williams, Bernard, 55* Wittgenstein, 62, 63 Wolf, Alison, 52–3, 155 World Bank, 115, 117, 118, 118*, 122 World Food Programme, 115 World Health Organization, 115 World Trade Organization (WTO), 116–17 Yugoslavia, 58 Zingales, Luigi, 178 Zuma, Jacob, 85 Copyright THE FUTURE OF CAPITALISM.


pages: 272 words: 83,798

A Little History of Economics by Niall Kishtainy

"Robert Solow", Alvin Roth, British Empire, Capital in the Twenty-First Century by Thomas Piketty, car-free, central bank independence, clean water, Corn Laws, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Eugene Fama: efficient market hypothesis, first-price auction, floating exchange rates, follow your passion, full employment, George Akerlof, greed is good, Hyman Minsky, inflation targeting, invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, loss aversion, market clearing, market design, means of production, moral hazard, Nash equilibrium, new economy, Occupy movement, Pareto efficiency, Paul Samuelson, prisoner's dilemma, RAND corporation, rent-seeking, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, sealed-bid auction, second-price auction, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, Vickrey auction, Vilfredo Pareto, washing machines reduced drudgery, wealth creators, Winter of Discontent

If the Great Depression was a crisis, then economic normality was something else: the situation in which a country uses all of its resources to make goods, so that there’s little unemployment and few idle factories. Over time, the economy grows; its capacity to make things increases, and society gets wealthier. Between crises, this is often what happens. Up until the First World War, many of the world’s leading countries grew steadily without huge economic turmoil; after the Second World War a new period of growth dawned. The American economist Robert Solow (b. 1924) is today one of the few economists to have lived through the economic growth that came after the war as well as the Great Depression that came before it. At the end of the war he was discharged from the army and returned to his interrupted education at Harvard University, where he’d been studying sociology and anthropology. On a bit of a whim – his wife suggested that he might find the subject interesting – he turned to economics.

(i), (ii) Kerala (India) (i) Keynes, John Maynard (i), (ii), (iii), (iv), (v), (vi) Keynesian theory (i), (ii), (iii) Klemperer, Paul (i) Krugman, Paul (i), (ii) Kydland, Finn (i), (ii) labour (i) in ancient Greece (i) and market clearing (i) women as unpaid (i) labour theory of value (i), (ii) laissez-faire (i) landowners (i), (ii), (iii) Lange, Oskar (i) law of demand (i), (ii) leakage of spending (i) Lehman Brothers (i) leisure class (i) leisured, women as (i) Lenin, Vladimir Ilyich (i), (ii) Lerner, Abba (i) Lewis, Arthur (i) Lincoln, Abraham (i) List, Friedrich (i) loss aversion (i) Lucas, Robert (i), (ii) MacKay, Charles (i) Macmillan, Harold (i) macro/microeconomics (i) Malaysia, and speculators (i) Malthus, Thomas (i), (ii), (iii) Malynes, Gerard de (i), (ii) manufacturing (i), (ii) division of labour (i) see also Industrial Revolution margin (i) marginal costs (i), (ii) marginal principle (i), (ii), (iii) marginal revenue (i) marginal utility (i), (ii) market, the (i) market clearing (i) market design (i) market failure (i), (ii), (iii), (iv) ‘Market for Lemons, The’ (Akerlof) (i) market power (i) markets, currency (i), (ii) Marshall, Alfred (i), (ii), (iii), (iv), (v) Marx, Karl (i), (ii), (iii), (iv), (v), (vi), (vii) Marxism (i) mathematics (i), (ii), (iii) means of production (i) mercantilism (i), (ii) Mesopotamia (i) Mexico, pegged currency (i) micro/macroeconomics (i) Microsoft (i) Midas fallacy (i) minimum wage (i) Minsky, Hyman (i) Minsky moment (i), (ii) Mirabeau, Marquis de (i), (ii), (iii) Mises, Ludwig von (i), (ii), (iii), (iv) mixed economies (i), (ii) Mobutu Sese Seko (i) model villages (i) models (economic) (i), (ii), (iii), (iv) modern and traditional economies (i), (ii) monetarism (i) monetary policy (i), (ii) money (i), (ii), (iii), (iv), (v), (vi) see also coins; currency money illusion (i) money wages (i) moneylending see usury monopolies (i), (ii) monopolistic competition (i), (ii) monopoly, theory of (i) monopoly capitalism (i), (ii), (iii) monopsony (i) moral hazard (i), (ii) multiplier (i) Mun, Thomas (i), (ii), (iii) Muth, John (i) Nash, John (i), (ii) Nash equilibrium (i) national income (i), (ii), (iii), (iv), (v) National System of Political Economy (List) (i) Nelson, Julie (i) neoclassical economics (i) net product (i) Neumann, John von (i) New Christianity, The (Saint-Simon) (i) new classical economics (i) New Harmony (Indiana) (i) New Lanark (Scotland) (i) Nkrumah, Kwame (i), (ii) non-rival good (i) Nordhaus, William (i), (ii) normative economics (i), (ii) Obstfeld, Maurice (i) Occupy movement (i) oligopolies (i) opportunity cost (i), (ii) organ transplant (i) output per person (i) Owen, Robert (i) paper money (i), (ii) Pareto, Vilfredo (i) pareto efficiency (i), (ii) pareto improvement (i) Park Chung-hee (i) partial equilibrium (i) pegged exchange rate (i) perfect competition (i), (ii), (iii), (iv), (v) perfect information (i) periphery (i) phalansteries (i) Phillips, Bill (i) Phillips curve (i), (ii), (iii), (iv), (v), (vi), (vii) physiocracy (i), (ii) Pigou, Arthur Cecil (i), (ii), (iii) Piketty, Thomas (i), (ii), (iii) Plato (i), (ii), (iii) policy discretion (i) Ponzi, Charles (i) Ponzi finance (i) population and food supply (i), (ii), (iii) of women (i) positive economics (i) poverty (i), (ii), (iii), (iv), (v) in Cuba (i) Sen on (i) and utopian thinkers (i) Prebisch, Raúl (i) predicting (i) Prescott, Edward (i), (ii) price wars (i), (ii) primary products (i) prisoners’ dilemma (i) private costs and benefits (i) privatisation (i) productivity (i), (ii), (iii) profit (i), (ii), (iii), (iv) and capitalism (i), (ii) proletariat (i), (ii) property (private) (i), (ii), (iii), (iv), (v) and communism (i), (ii), (iii), (iv) protection (i), (ii), (iii) provisioning (i) public choice theory (i) public goods (i) quantity theory of money (i) Quesnay, François (i) Quincey, Thomas de (i), (ii) racism (i) Rand, Ayn (i) RAND Corporation (i), (ii) rate of return (i), (ii) rational economic man (i), (ii), (iii), (iv), (v) rational expectations (i), (ii), (iii), (iv), (v) real wages (i), (ii), (iii) recession (i) and governments (i), (ii), (iii) Great Recession (i) Keynes on (i), (ii) Mexican (i) redistribution of wealth (i) reference points (i) relative poverty (i) rent on land (i), (ii), (iii) rents/rent-seeking (i) resources (i), (ii) revolution (i), (ii), (iii), (iv) Cuban (i) French (i), (ii), (iii), (iv) Russian (i), (ii) Ricardo, David (i), (ii), (iii) risk aversion (i) Road to Serfdom, The (Hayek) (i) robber barons (i) Robbins, Lionel (i) Robinson, Joan (i) Roman Empire (i) Romer, Paul (i) Rosenstein-Rodan, Paul (i) Roth, Alvin (i), (ii) rule by nature (i) rules of the game (i) Sachs, Jeffrey (i) Saint-Simon, Henri de (i) Samuelson, Paul (i), (ii) savings (i), (ii) and Say’s Law (i) Say’s Law (i) scarcity (i), (ii), (iii), (iv), (v), (vi) Schumpeter, Joseph (i), (ii) sealed bid auction (i) second price auction (i) Second World War (i) securitisation (i) self-fulfilling crises (i) self-interest (i) Sen, Amartya (i), (ii) missing women (i), (ii), (iii) services (i) shading bids (i), (ii) shares (i), (ii), (iii), (iv), (v), (vi) see also stock market Shiller, Robert (i), (ii) signalling (i) in auctions (i) Smith, Adam (i), (ii), (iii), (iv), (v) social costs and benefits (i) Social Insurance and Allied Services (Beveridge) (i) social security (i), (ii) socialism (i), (ii), (iii), (iv), (v) socialist commonwealth (i) Socrates (i) Solow, Robert (i) Soros, George (i), (ii), (iii) South Africa, war with Britain (i) South Korea, and the big push (i) Soviet Union and America (i) and communism (i), (ii) speculation (i) speculative lending (i) Spence, Michael (i) spending government (fiscal policy) (i), (ii), (iii), (iv), (v), (vi), (vii) and recessions (i), (ii) and Say’s Law (i) see also investment stagflation (i), (ii) Stalin, Joseph (i) standard economics (i), (ii), (iii), (iv) Standard Oil (i) Stiglitz, Joseph (i) stock (i) stock market (i), (ii), (iii), (iv), (v) stockbrokers (i) Strassmann, Diana (i), (ii) strategic interaction (i), (ii) strikes (i) subprime loans (i) subsidies (i), (ii) subsistence (i) sumptuary laws (i) supply curve (i) supply and demand (i), (ii), (iii), (iv) and currencies (i) and equilibrium (i), (ii) in recession (i), (ii), (iii) supply-side economics (i) surplus value (i), (ii) Swan, Trevor (i) tariff (i) taxes/taxation (i) and budget deficit (i) carbon (i) and carbon emissions (i) and France (i) and public goods (i) redistribution of wealth (i) and rent-seeking (i) technology as endogenous/exogenous (i) and growth (i) and living standards (i) terms of trade (i) Thailand (i) Thaler, Richard (i) theory (i) Theory of the Leisure Class, The (Veblen) (i) Theory of Monopolistic Competition (Chamberlain) (i) Thompson, William Hale ‘Big Bill’ (i) threat (i) time inconsistency (i), (ii) time intensity (i) Tocqueville, Alexis de (i) totalitarianism (i) trade (i), (ii), (iii) and dependency theory (i) free (i), (ii), (iii) trading permit, carbon (i) traditional and modern economies (i), (ii) transplant, organ (i) Treatise of the Canker of England’s Common Wealth, A (Malynes) (i) Tversky, Amos (i), (ii) underdeveloped countries (i) unemployment in Britain (i) and the government (i) and the Great Depression (i) and information economics (i) and Keynes (i) and market clearing (i) and recession (i) unions (i), (ii) United States of America and free trade (i) and growth of government (i) industrialisation (i) and Latin America (i) Microsoft (i) recession (i), (ii) and the Soviet Union (i) and Standard Oil (i) stock market (i) wealth in (i) women in the labour force (i) unpaid labour, and women (i) usury (i), (ii), (iii) utility (i), (ii), (iii), (iv) utopian thinkers (i), (ii) Vanderbilt, Cornelius (i), (ii) Veblen, Thorstein (i), (ii), (iii) velocity of circulation (i), (ii) Vickrey, William (i) wage, minimum (i) Walras, Léon (i) Waring, Marilyn (i) wealth (i) and Aristotle (i), (ii) and Christianity (i) Piketty on (i) and Plato (i) Smith on (i) Wealth of Nations, The (Smith) (i), (ii) welfare benefits (i), (ii), (iii), (iv) welfare economics (i) Who Pays for the Kids?


pages: 382 words: 92,138

The Entrepreneurial State: Debunking Public vs. Private Sector Myths by Mariana Mazzucato

"Robert Solow", Apple II, banking crisis, barriers to entry, Bretton Woods, business cycle, California gold rush, call centre, carbon footprint, Carmen Reinhart, cleantech, computer age, creative destruction, credit crunch, David Ricardo: comparative advantage, demand response, deskilling, endogenous growth, energy security, energy transition, eurozone crisis, everywhere but in the productivity statistics, Financial Instability Hypothesis, full employment, G4S, Growth in a Time of Debt, Hyman Minsky, incomplete markets, information retrieval, intangible asset, invisible hand, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, knowledge worker, natural language processing, new economy, offshore financial centre, Philip Mirowski, popular electronics, profit maximization, Ralph Nader, renewable energy credits, rent-seeking, ride hailing / ride sharing, risk tolerance, shareholder value, Silicon Valley, Silicon Valley ideology, smart grid, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, total factor productivity, trickle-down economics, Washington Consensus, William Shockley: the traitorous eight

And still today there is immense debate among economists over which factors are most important in producing growth. This debate is reflected in politics, where different views about growth are espoused with great vehemence, often ignorant of the underlying theoretical assumptions and origins driving those views. For years, economists have tried to model growth. Neoclassical economics developed its first growth model in the work of Harrod and Domar (Harrod 1939; Domar 1946), but it was Robert Solow who won the Nobel Prize for his growth ‘theory’. In the Solow growth model, growth is modelled through a production function where output (Y) is a function of the quantity of physical capital (K) and human labour (L), ceteris paribus – other things remaining equal. Included in ‘other things’ was technological change. Y = F (K, L) While increases in K and L would cause movements along the production function (curve), exogenous (unexplained) changes in technical change would cause an upward shift in the curve (allowing both K and L to be used more productively).

Soviet Union 37, 39; market failure theory applied to 61; as measure of innovation performance 34, 41; myth of business investment requirements 53–5; myth of innovation being about 44, 159–60; as not enough 142; of pharmaceutical companies 25–6, 188; R&D/GDP 52; SEMATECH funding 99; spending differences 42; of struggling OECD countries 41; technological change investments 59; in wind energy projects 144–5; worker tax credit 54 R&D/GDP 52 R&D Magazine 63 redistributional policies 31 Reenen, John van 46 Reinert, Erik 9n3, 38n5, 73 Reinhart, Carmen 17–18 renewable energy credits (RECs) 115n1 Renewable Portfolio Standards 114 ‘repatriation tax holiday’ 175 ‘representative’ agent 60 research 60, 78, 84, 136; see also science rewards, socialization of 156 risk 58–62, 70; see also socialization of risk risk landscape 22–3, 58, 194, 198 risk–reward nexus framework 186 risk–reward relationships: Apple and the US government 167–8; collective vs. private benefit 165–6, 196; corporate success resulting in regional economic misery 176–8; need for functional dynamic in 182–3, 197–8; overview 165–7; State recognition in 12 Robinson, Joan 34 Roche 82 Rock, Arthur 94 Rodrik, Dani 27, 28 Rogoff, Kenneth 17–18 Roland, Alex 98n7 Roosevelt, Franklin D. 6, 74 Royal Radar Establishment (RRE) 101 royalties 188–9 Ruegg, Rosalie 148 Ruttan, Vernon 62–3 Sanofi 69 Schmidt, Horace 92, 92–3; see also Apple Schumpeter, Joseph 10n4, 31, 35, 58 Schumpeterian innovation economics: creative destruction concept in 10, 10n4, 58, 165; extended protection in 189; influence of on BNDES 5; investment role in 31; macro models of 44; ‘systems of innovation’ view of 35–6; theory of 36n4 science 49, 51, 57, 59n1, 69; see also research Seagate 97 Segal, David 170 Semiconductor Manufacturing Technology (SEMATECH) consortium 99 Shapiro, Isaac 170–71, 171n2 share buybacks 25–7, 67, 171, 175 shareholder-value ideology 184, 186 Shiman, Philip 98n7 Shi Zhengrong 141, 152–4 Shockley, William 76 Silicon Valley 20, 63, 78, 95 Silver, Jonathan 129, 154 SIRI 103, 105–6, 109 SITRA, Finnish Innovation Fund 190 small and medium enterprises (SMEs) 10, 45–6, 45n6, 111n13 Small Business Administration (US) 94 small business associations 19 Small Business Innovation Development Act of 1982 79 Small Business Innovation Research (SBIR) (US) 20, 47, 79–81, 80, 188 Small Business Investment Company (SBIC) (US) 94 Smith, Adam 30; see also Adam Smith Institute; Inquiry into the Nature and Causes of the Wealth of Nations, An; ‘Invisible Hand’ socialization of risk and privatization of rewards: as cause of inequity and instability 185; direct or indirect returns of 187–91; framework for change of 185–7; income-contingent loans and equity 189–90; in the innovation economy 3; ‘innovation fund’ creation 189; IPR 189; mapping innovative labour into division of rewards 184–5; in pharmaceutical development 181; in public–private partnerships 27; skewed reality of risk and reward 181–5 social vs. private returns on investment 3–4 solar power: see wind and solar power Solow, Robert M. 33–4 Solyndra 129–32, 151, 154–5, 162; see also clean technology; ‘No More Solyndras Act’ Something Ventured, Something Gained (documentary) 78 Sony 108 Soppe, Birgit 146 South Korea 40, 61, 120–21 Soviet Union 37–9, 39, 76 Spain 120n4, 121, 121, 157 Spectrawatt 130n11, 162 spillovers 194 spinoff business model 76 SPINTRONICS 97, 97n5 Sputnik launch 76 Stanford Research Institute (SRI) 105–6; see also SIRI State: administrative role of 6, 12; attracting talent 12; capitalintensive investment by 27; ‘crowding in’ of 5–6, 8; ‘Developmental State’ 10, 37–8, 37–8n5, 40, 68; ‘directionality’ provided by 32n2; ‘dynamizing in’ 8; economic role of 1, 29; flexibility of 195–6; funding: see individual US agencies and departments; industrial directives of 21; as leading entrepreneurial force 193; market creation by 62, 167; organizational dynamics consideration 197; performance indicators lacking for 194; as private sector partner 5; response to criticism 19; responsibilities of 13; scope of endeavours of 18–19, 195; sectors funded by 63, 83, 196; targeted catch-up policies of 40; views of 9; see also ‘entrepreneurial’ State; ‘picking winners’ State development banks 2–3, 5, 122, 137–40, 189–91; see also Brazilian Development Bank (BNDES); China Development Bank (CDB); KfW (German Development Bank) stock market 49–50 Strategic Computing Initiative (SCI) 98–9 strategic management 197 Stumpe, Bent 101 Sullivan, Martin A. 174 SunPower 151 Suntech of China 152–5, 152n5 supply-side policies 83, 113–15, 159 sustainability 117, 119, 123, 195; see also green industrial revolution Swanson, Richard 151 Sweden 121 ‘systems of innovation’ approach: defined 36; foundation of 35–7; market failure approach vs. 9–10, 61–2; need for 22; regional 39; State role in 74; see also innovation; innovation ecosystems; Schumpeterian innovation economics ‘systems’ perspective 196 tariffs 108, 157, 157n6; see also feed-in tariffs Tassey, Gregory 32 tax avoidance: by Apple 11, 12, 171–5, 188; corporate 173–5, 187; ‘tax gap’ 187, 187n1 tax breaks 45–7 tax credits: energy 114, 138; impact of on R&D 28, 52–4; and R&D 111n13; and R&E 110; wind and solar power 126n8, 145, 149 tax cuts 10, 19, 23, 54, 69 taxes: antidumping tariffs 108; business as dependent on 69; ‘carbon tax’ 114; Citizens for Tax Justice 174n5; citizens unawareness of uses of 166; global avoidance schemes 174, 174n5; incentives to biotech firms 81; innovation systems not supported by 187–8; insensitivity of investment to 30n1; IRS 529 plans 111, 111n15; ‘patent box’ policy 51–2; policies impacting SMEs 45; policy 51; ‘repatriation tax holiday’ 175; State return from 165; US tax code 174; see also private vs. social returns; risk–reward nexus framework Taxol 188 Tea Party movement 17 technology: causing creative destruction 58; commissioning of advances in 54; core enabler technologies of Apple 95; dual-use 97; and growth 33–4; impact of regions on national performance 39; interagency collaborations in 74; origins of Apple products 109; revolutions 125, 126; SIRI 103, 105–6; State leadership of strategy for 40; unique situations in 59; see also computer field; wind and solar power technology commercialized: from capacitive sensing to click-wheels 99–101, 100n9, 103; cellular 102, 104, 109; from click-wheels to multi-touch screens 102–3; digital signal processing (DSP) 109; GPS 105; GPTs 62; LCD 107–8; lithium-ion battery 108; resistive touch-screens 101; silicon ICs impact on 98; thin-film transistors (TFTs) 107–8; ‘zero-emission’ electric vehicles 108 technology policy 75 Technology Reinvestment Program (TRP) 97 TFP of India vs. 46 TFTs (thin-film transistors) 107–8 Thomas, Patrick 148 ‘trade wars’ 122, 131, 157 ‘traitorous eight’, the 76 Tulum, Oner: on biopharmaceutical industry 67, 69, 82; NIH spending data compilation of 25, 69; on orphan drugs 81–2 United Kingdom (UK): approach to green initiatives 124–6; BBC 16; BERD (business expenditure on R&D) in 24; Big Society theme of 15–16; clean technology investment by 120; energy strategies of 116; government energy R&D spending 121, 121; green revolution in 120; Medical Research Council (MRC) 20, 67; outsourcing in 16; public R&D spending in 61; R&D/GDP 52; sector specialties of 42; SME government support 45; SME performance in 46 United States: Air Force 98, 104, 105; American Energy Innovation Council (AEIC) 26; Apple’s risk– reward relationship with 167–8; Army 107; competitiveness decline in 176; energy policy 158; energy strategies of 116, 137; funding and innovation in 52; funding sources for basic research R&D in 61; funding sources for R&D in 60, 60–61, 60n2; green revolution in 120; ‘hidden Developmental State’ in 38, 38n5; innovation threatened in 24; systems of innovation in 37; tax code 174; tax system 172; ‘trade wars’ of 122, 131, 157; types of venture capital successes in 49; undermining of innovation in 53; wind capacity of 143; see also taxes; specific agencies and departments of University of Southern California 77–8 UNIX 104 USSR: see Soviet Union US Windpower (later Kenetech) 147 Valentine, Don 94 Vallas, Steven P. 67–8 value: extraction 26, 42, 162; measures of 34 Venrock 94 Vensys Energiesysteme 149 venture capital: in Europe 53; Europe’s lag attributed to lack of 20; exit opportunities 48, 67, 81, 130, 138; failure of 107; government stimulation of 116; impatience of 129–32, 146n2; limited role of 131, 138; myth of as risk loving 47–50, 142, 161–2; and NASDAQ’s coevolution 50; presenting as lead risk taker 183; public vs. private 19, 47; short-termist approach of 108, 127; timing of investment by 23; Venrock 94; see also private sector venture capital sector investment: clean technology 161; green revolution 127–8, 128n9; in Solyndra 130; subsectors of within clean energy 128 venture capital stages of investment 47, 48; early stage and seed funding awards by 80; risk of loss in 48 Vestas: Denmark producing 143; DoE research influence on 148; early years of 147; patents purchased by 145; policy responses by 125, 137; rugged designs of 146 vision: Apple’s 93, 94, 99–100; ‘green’ 116, 120, 123; lack of 107; in nanotechnology 83–4; State’s 21–4, 58, 62–4 Warburg Pincus 50 Washington Consensus 40 Washington Post 57 Wayne, Ronald 89, 89n1; see also Apple welfare state institutions 31 Westerman, Wayne 102–3 Westinghouse 107 wind and solar power: clean technology in crisis 158–9; collective failure in 163; decline of US firms in 144, 144n1; grid parity in 141; networks of learning in 146n2; R&D myth in 159–60; small being beautiful myth in 160–61; solar bankruptcies 153–6; symbiotic innovation ecosystems in 162–3; venture capital myth in 161–2; from ‘Wind Rush’ to rise of China’s wind power sector 144–50; withdrawal of government support 149; see also specific corporations; clean technology wind and solar power markets: competition, innovation and market size 156–8; disrupting existing markets 161; global market for 143; growth opportunities in 156–7; growth powered by crisis 142–4; and manufacturing of 144, 146–7, 153 wind and solar power policies: California’s tax programme 147; fostering development 144–5; providing incentives 149–51; subsidies 148–9, 152; tax credits 145, 149 wind and solar power technology: aerodynamics of 148; computer use in 147–8; C-Si 129, 130n11, 151–2, 158; Denmark’s Gedser design 145; oil company role in 161n8; origins of solar technologies 150–53; remote power applications 150; research behind 148–9; see also clean technology wind energy R&D projects 144–6 Witty, Andrew 66–7 World Trade Organization (WTO) 40 World War II 74 Wozniak, Steve 89, 89n1, 94; see also Apple Wuxi-Guolian 152 Wuxi Suntech 153 Xerox 107 Xerox PARC 24 Zond Corporation 147–8 Table of Contents Halftitle Page Title Page Copyright Dedication Epigraph Contents List of Tables and Figures List of Acronyms Acknowledgements Foreword by Carlota Perez Introduction: Do Something Different A Discursive Battle Beyond Fixing Failures From ‘Crowding In’ to ‘Dynamizing In’ Images Matter Structure of the Book Chapter 1: From Crisis Ideology to the Division of Innovative Labour And in the Eurozone State Picking Winners vs.


pages: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

"Robert Solow", Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low skilled workers, M-Pesa, market bubble, means of production, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

In contrast, the new technologies and changes in labour organization in the years of financialization have not resulted in sustained productivity growth in mature countries. The weakness of productivity growth underscores the relatively poor results of GDP growth during the period, shown in figure 2. Looking more closely at figure 6, from the middle of the 1970s to the middle of the 1990s, productivity growth was broadly flat or declining, including in the US, the leading country in introducing the new technologies of the era.14 Robert Solow observed that ‘You can see the computer age everywhere but in the productivity statistics’, and his quip became the ‘Solow Paradox’ characteristic of the new era.15 After 1995, however, significant technological improvements in the microprocessor industry and faster productivity growth in general seemed to materialize for the US economy. A debate took place within mainstream economics in the second half of the 1990s regarding the validity of the upsurge.

There is an intractable problem here posed by new technology: if, say, it is considered that computer ‘output’ has risen because computers have become more powerful and have more functions (reflected in hedonic indices) then it follows that wholesale and retail output would also be considered to have risen. But then the output of the service sector would appear to have increased even if retailers have continued to do exactly what they have always done – selling a given number of boxes of computers per period. 15 Robert Solow, ‘We’d Better Watch Out’, review of Manufacturing Matters, by Stephen S. Cohen and John Zysman, New York Times, 12 July 1987. 16 Leading representatives of the former were Stephen Oliner, Daniel Sichel, Dale Jorgenson, Kevin Stiroh, Mun S. Ho, and William Nordhaus; on the opposite side stood mostly Robert J. Gordon; see also Ian Dew-Becker and Robert J. Gordon, ‘Where Did the Productivity Growth Go?

Sklair, Leslie, The Transnational Capitalist Class, Oxford: Blackwell, 2001. Skott, Peter, and Soon Ryoo, ‘Macroeconomic Implications of Financialization’, Cambridge Journal of Economics 32:6, 2008, pp. 827–62. Smaldone, William, Rudolf Hilferding, Dekalb, IL: Northern Illinois University Press, 1998. Smith, Adam, The Wealth of Nations, ed. Edwin E. Cannan, London: Methuen, 1904 (1776). Solow, Robert, ‘We’d Better Watch Out’, review of Manufacturing Matters, by Stephen S. Cohen and John Zysman, New York Times, 12 July 1987. Spufford, Peter, Money and Its Use in Mediaeval Europe, Cambridge: Cambridge University Press, 1988. Spufford, Peter, Power and Profit: The Merchant in Medieval Europe, New York: Thames & Hudson, 2002. Standing, Guy, ‘Global Feminization Through Flexible Labor: A Theme Revisited’, World Development 27:3, 1999, pp. 583–602.


pages: 261 words: 103,244

Economists and the Powerful by Norbert Haring, Norbert H. Ring, Niall Douglas

"Robert Solow", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Albert Einstein, asset allocation, bank run, barriers to entry, Basel III, Bernie Madoff, British Empire, buy and hold, central bank independence, collective bargaining, commodity trading advisor, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, diversified portfolio, financial deregulation, George Akerlof, illegal immigration, income inequality, inflation targeting, information asymmetry, Jean Tirole, job satisfaction, Joseph Schumpeter, Kenneth Arrow, knowledge worker, law of one price, light touch regulation, Long Term Capital Management, low skilled workers, mandatory minimum, market bubble, market clearing, market fundamentalism, means of production, minimum wage unemployment, moral hazard, new economy, obamacare, old-boy network, open economy, Pareto efficiency, Paul Samuelson, pension reform, Ponzi scheme, price stability, principal–agent problem, profit maximization, purchasing power parity, Renaissance Technologies, rolodex, Sergey Aleynikov, shareholder value, short selling, Steve Jobs, The Chicago School, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, ultimatum game, union organizing, Vilfredo Pareto, working-age population, World Values Survey

The money must be transformed into capital goods, and the method for doing so is not part of neoclassical theory. Any attempt to model this transformation inevitably points to fundamental problems of the neoclassical theory of capital and income distribution (Keen 2001/2008). MARKET POWER 159 The 1960s and ’70s saw a protracted fight over neoclassical capital theory, the so-called Cambridge Capital Controversy. Neoclassical economists, including Paul Samuelson and Robert Solow from MIT (the Massachusetts Institute of Technology), defended neoclassical capital theory against an attack from economists working in Cambridge, England, chiefly Joan Robinson and Piero Sraffa. The English economists attacked the neoclassical notion that the (relative) price of the two factors of production, labor and capital, determines how much of each is used. Since capital has very different forms, the neoclassicals resort to adding up the market values of capital goods to measure the aggregate capital.

Morgan (bank) 54, 59, 70, 87, 105 labor xii, 4–6, 8, 10, 18, 33–4, 137, 139, 141, 143, 146, 153–5, 157–9, 163–5, 167–73, 176, 178–83, 189–94, 197, 200, 203–5 legitimacy 16, 25 Lehman Brothers 17, 90, 94, 96 Leviathan (government) 210 liberty 8, 25, 207 liquidity xi, 66, 103–5, 112 London School of Economics 20, 27, 40, 144 Long-Term Capital Management (LCTM) 66, 92 macroeconomics 14 Madoff, Bernard 217 managerial power approach 119, 120, 124, 126, 132 marginal cost 142–4 marginal product 156–8, 189, 192 marginal rate of substitution 14 marginal utility 5–6, 13, 214 marginalism 1, 4–5 market forces x, 126, 169, 171–2, 180–82 market power xii, 154, 161, 164, 170, 203 Marshall, Alfred 5, 10, 16, 188, 193 Marx, Karl 5, 188, 198 Marxism 5–6, 10, 165 mass production 7, 15, 143, 161 Mazur, Paul 17–18 median voter theory 212, 214 Menger, Carl 5, 12 mercantilism 2–3 Merrill Lynch 90, 112, 133 Methuen Treaty 3 military vii, 3, 19–20, 22, 25, 45, 116, 208, 215 minimum wage 140–41, 154, 158, 183, 188–9, 192–7, 203–4 Mises, Ludwig von 12 monopoly viii, 9, 18, 26, 41, 86–7, 97–9, 142, 145–7, 149–54, 161, 171, 177 monopsony 153–4 Moody’s (ratings agency) 97–9 Morgan Stanley 49, 63, 90, 217 mutual fund 56, 58, 64–6, 68, 97, 134 NASDAQ 55 natural selection 167 negotiating power 160, 179, 205 net present value 159 new welfare economics 14, 19 news 53, 56, 114, 122, 143, 220 Nobel Prize 7, 17, 20, 22–4, 26, 44, 170, 186 Organisation for Economic Cooperation and Development (OECD) 20, 30, 41, 187, 189, 203 Olson, Mancur 23–4 optimal contracting 109, 119–20, 124, 126–7, 132 ordinalism 1, 11, 17, 21 outrage constraint 119–21, 124, 126–7, 136 outsourcing 165, 177, 184–6 over the counter (OTC) (derivatives) 90 Paretian welfare economics 14 Pareto, Vilfredo 12–13, 21, 157 INDEX pay-for-performance 95, 107–8, 111–12, 115, 119, 121–2, 126, 128, 139 pensions viii, 36, 39, 57, 58, 98, 113, 140, 134 perfect competition (economic) x, xii, 141–2, 145–6, 168, 187, 193 perfectly substitutable (economically) x performance-related pay 109, 111; see also pay-for-performance perverse incentive 113, 133 Pigou, Arthur C. 10, 188, 192–3, 198 Pimco (fund) 96, 215 Ponzi (scheme) 95, 217 poststructuralism 8 power viii–xii, 1–4, 8–9, 18, 25, 27–32, 42, 145, 147, 153–4, 159–61, 164, 166–8, 171, 174, 177–9, 184–7, 193, 198, 203–4 corporate 107–40 economic xii, 1, 32, 45, 46, 54, 208, 219 financial 47–106 informational 207–20 managerial (see managerial power approach) political ix, xii, 32, 86, 208, 210, 219 principal–agent theory 107 prisoner’s dilemma 38 private equity 68, 136 productivity (economic) ix, 10, 32, 34–6, 48, 79–80, 101, 137, 141, 146–7, 156, 171, 173, 176, 178, 180, 186, 189, 192, 194, 196, 201, 204–5 professions, the viii, 1, 25 profit xii, 2, 7, 43, 46, 54–6, 59, 61–2, 65, 68, 76, 82–3, 85, 91, 97, 99– 100, 105, 109–10, 112–13, 118, 127–8, 130, 135, 137, 141–3, 145–50, 153, 155, 157, 159–60, 164, 166, 171, 173, 175, 177–9, 184, 186, 197, 205, 215–16 profitability 49, 53, 60, 74, 84, 95, 97, 100, 132–3, 139, 143, 151, 183, 191, 194 245 profit margin 3, 195 profit maximization 120, 143, 147, 149–51 property rights 22, 215 public relations (PR) 15–16 quadratic weighting (inflation) 33 rating agencies x, 97–100 rational choice movement 1, 21–3, 25, 214 raw materials 2–3, 184 redistribution 10, 12, 19, 39, 161, 186, 210, 213 representative agent 14 reserve requirement 82–4, 103–4 risk management 94 Robbins, Lionel 12–13, 17, 21, 210–11 Robinson, Joan 146, 159–60, 208 Ross, Edward 9–10, 18, 38 Rothschild, Mayer Amschel 72–3, 75 S&P 500 110, 120 Samuelson, Paul 159–60 Sarbanes–Oxley Act 92, 99, 123 Schumpeter, Joseph 19 Second (Workingmen’s) International 5 Second World War 2, 18–19, 30, 79–80 Securities and Exchange Commission (SEC) 52–3, 69, 90, 93–4, 97–8, 115, 123–4, 130, 217 securitization 112 selfishness 7, 38, 40, 108, 167, 170, 211, 213 shareholder franchise 133 shareholders xii, 93, 102, 107–10, 112–15, 120–22, 128, 131, 133–6, 138 SMD assumptions/conditions 7, 14 Smith, Adam 3–4, 42, 155, 163, 188, 198 social norms 38, 108, 117, 120, 135, 138–9, 164 social security 36, 39, 188, 198–9 246 ECONOMISTS AND THE POWERFUL socialism 5–6 , 9–10, 19, 24, 27, 193 Solow, Robert 159 Sonnenschein–Mantel–Debreu theorem: see SMD assumptions/ conditions Soros, George 47, 67, 105 spring loading (stock options) 122 Squam Lake Group 44 Sraffa, Piero 141, 144, 159–60 staggered board (of directors) 126, 134 stagnation 32, 101, 218 stakeholders xii, 107–8, 117, 136–7 Standard & Poor’s (rating agency) 97, 99 Stanford University 10, 18, 93 stock option backdating 122 stock options 43, 67, 92–3, 96, 108–10, 112–13, 120, 122–5, 128, 131–3 structural reforms 188–9 subprime xi, 43, 47, 69–71, 82, 88, 90, 95, 97–8, 101, 105, 108, 111, 113, 120, 133, 136, 205, 217 supply and demand 108, 167 sustainability ix, 13 Syracuse University 9 takeover 70, 102, 113, 126, 135 tariffs 3, 16, 84 TARP: see Troubled Asset Relief Program (TARP) taxation 83, 109, 139, 214 Thatcher, Margaret 40 “too big to fail” 83, 105 transaction costs 7, 74, 168–9 transportation 7, 41, 73, 118, 143, 144–5, 169, 186 treasury secretary xi, 69, 71, 87, 90, 96 Troubled Asset Relief Program (TARP) 70 UBS (bank) 105 unemployment 170, 180–81, 188–9, 197–200, 203–5, 213 university 9, 16–17, 20–21, 27, 41, 101, 117, 142 University of Chicago: see Chicago, University of value added 31, 136 Wall Street xi, 38, 42, 54, 63, 67, 69–70, 88, 92–3, 96, 99, 105, 122–3 Walras, Leon 5–7 Warwick Commission 100–101, 103 Washington Mutual (bank) 95–6 wealth viii, xii, 2, 9, 42, 45, 69, 71–2, 96, 101, 110–11, 120, 135, 207–10 welfare economics 14–15 welfarism 10–11 Wieser, Friedrich von 12–13 worker representatives 137 World Bank 27–8, 31 Worldcom 52, 61, 92, 98, 110, 113, 128, 132 Yale University 10, 13


Who Rules the World? by Noam Chomsky

"Robert Solow", Albert Einstein, anti-communist, Ayatollah Khomeini, Berlin Wall, Bretton Woods, British Empire, capital controls, corporate governance, corporate personhood, cuban missile crisis, deindustrialization, Donald Trump, Doomsday Clock, Edward Snowden, en.wikipedia.org, facts on the ground, failed state, Fall of the Berlin Wall, Howard Zinn, illegal immigration, Intergovernmental Panel on Climate Change (IPCC), invisible hand, liberation theology, Malacca Straits, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, Nelson Mandela, nuclear winter, Occupy movement, oil shale / tar sands, one-state solution, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, Ralph Waldo Emerson, Ronald Reagan, South China Sea, Stanislav Petrov, structural adjustment programs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trade route, union organizing, uranium enrichment, wage slave, WikiLeaks, working-age population

Their “Plutonomy Stock Basket,” as they call it, has far outperformed the world index of developed markets since 1985, when the Reagan-Thatcher economic programs for enriching the very wealthy were really taking off.29 Before the 2008 crash for which they were largely responsible, the new post–golden age financial institutions had gained startling economic power, more than tripling their share of corporate profits. After the crash, a number of economists began to inquire into their function in purely economic terms. Nobel laureate in economics Robert Solow concludes that their general impact is likely to be negative, because “the successes probably add little or nothing to the efficiency of the real economy, while the disasters transfer wealth from taxpayers to financiers.”30 By shredding the remnants of political democracy, these financial institutions lay the basis for carrying the lethal process forward—as long as their victims are willing to suffer in silence.

Schlosser, Eric School of the Americas Schoultz, Lars Science secrecy Securities and Exchange Commission (SEC) separation of church and state Serbia settler-colonial societies Shalit, Gilad Shamir, Yitzhak Shanghai Cooperation Organization (SCO) Sharon, Ariel Shenon, Philip Shiites Shin Bet Shoigu, Sergei Shultz, George Sinai Peninsula Sisi, Abdul Fattah al- slavery Smith, Adam Smith, Lamar Snowden, Edward Solow, Robert Somalia Sourani, Raji South Africa South America South China Sea Southeast Asia South Korea South Vietnam Soviet Union collapse of Cuba and Israel and nuclear weapons and Spanish-American War Stalin, Joseph Stalingrad, Battle of Stark, USS, attack State Department Policy Planning Staff terrorist list Stearns, Monteagle Stern, Sheldon Stiglitz, Joseph Stockholm International Peace Research Institute (SIPRI) Story, Joseph Strategic Air Command (SAC) Strategic Command (STRATCOM) Strategic Defense Initiative (“Star Wars”) strategic primacy Sudan Suharto Summers, Lawrence SWAPO Sykes-Picot agreement Syria Tacitus Taliban tariffs taxation Taylor, William teachers Temple, Henry John (Lord Palmerston) terra nullius terrorism.


pages: 597 words: 172,130

The Alchemists: Three Central Bankers and a World on Fire by Neil Irwin

"Robert Solow", Ayatollah Khomeini, bank run, banking crisis, Berlin Wall, Bernie Sanders, break the buck, Bretton Woods, business climate, business cycle, capital controls, central bank independence, centre right, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency peg, eurozone crisis, financial innovation, Flash crash, George Akerlof, German hyperinflation, Google Earth, hiring and firing, inflation targeting, Isaac Newton, Julian Assange, low cost airline, market bubble, market design, money market fund, moral hazard, mortgage debt, new economy, Northern Rock, Paul Samuelson, price stability, quantitative easing, rent control, reserve currency, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, savings glut, Socratic dialogue, sovereign wealth fund, The Great Moderation, too big to fail, union organizing, WikiLeaks, yield curve, Yom Kippur War

Apart from political pressure, Burns’s actions were influenced by some fundamental economic misunderstandings. It was an era of supreme confidence in the ability of wise policymakers to fine-tune the economy, as well as a time that any amount of unemployment seemed unacceptable, even when the trade-off was higher inflation. Two of the greatest economists of their generation, Paul Samuelson and Robert Solow, argued that even 3 percent unemployment—stunningly low by any historical standard—was a “nonperfectionist’s goal.” Inflation had averaged only 2 percent from 1950 to 1968, but in pursuit of exceptionally low unemployment, the Federal Reserve began tolerating prices rising at a faster pace—first 4.7 percent inflation in 1968, then 5.9 percent in 1969. By the end of 1970, Time had published a cover featuring a massively enlarged dollar bill, with a single tear running down George Washington’s cheek and “Worth 73 cents” scrawled in red.

In 1977 alone, the program produced Mario Draghi, Trichet’s successor as ECB president; Olivier Blanchard, the International Monetary Fund’s chief economist; and Paul Krugman, the Nobel laureate and influential New York Times columnist. Bernanke finished two years after them, studying under Stanley Fischer, later an IMF chief economist and head of the Bank of Israel and something of an intellectual godfather to a generation of central bankers. “If you had known Ben Bernanke as a student you would have never picked him as a future central banker,” Robert Solow, a Nobel laureate economist at MIT, later told Bloomberg News. Bernanke didn’t even look the part, Solow added: “He had a lot of hair, and when I say a lot of hair, I mean a lot of hair.” Indeed, in the early years of his career, Bernanke showed little inclination to be anything other than a first-rate academic. He married Anna Friedmann, a Wellesley grad who would go on to be a seventh-grade Spanish teacher, and they moved first to California and then to New Jersey, where he became a star economist at Princeton.

., 45 Rehn, Olli, 209–10 Reichsbank, 47–53 creation of, 47 gold for paper money swap, 48–49 Great Depression measures, 58–60 hyperinflation, pre–Nazi era, 11, 50–53 paper money mass issuance (1914–1918), 48–49 Reid, Harry, 146 Rentenmark, origin of, 54 Republicans anti-Bernanke, 184, 190–92, 327–28, 330 QE2, objection to, 256 Reserve Primary Fund, 147–48 Riksbank, 152 Robertson, Linda, 177, 189–90, 193, 195 Romer, Christina, 338 Roosevelt, Franklin Delano gold standard abandoned, 60–61 “try it all” approach, 149–50 Rosengren, Eric, 264, 271, 275 Roumeliotis, Panagiotis, 341–42 Royal Bank of Scotland, 154 Royal Exchange, 31 Rubin, Robert, 94 Ryan, Paul, 256 Sack, Brian, 270 Salary cuts, as deficit reduction, 302–3, 309–10 Salary increases, and inflation, 65–66, 134–35 Salstrom, Sandra, 254–55 Samaras, Antonis, 310, 342, 345, 354 Samuelson, Paul, 65 Sanders, Bernie, 175–76, 189, 197–98 San Francisco earthquake (1906), 40 Sarkozy, Nicolas, 159, 211 bondholders pay bailouts decision, 289–92 on EFSF bank charter, 326 -Merkel relationship, 287–92, 356 Savings & loan bank failures (1980s), 79 Schabowski, Günter, 76 Schacht, Hjalmar Horace Greeley, Great Depression, actions during, 53–54, 57, 60 Schäuble, Wolfgang, 228, 257, 289, 290, 380, 382 Schmidt, Helmut, 325 Schultz, George, 62–63 Schuman, Robert, 74 Schumer, Chuck, 186 Seasonal loans, 40, 42–43 Second Bank of the United States (1816), 37–39 Securities Markets Programme (SMP) Greece bailout, 286–89, 310–11 initial proposal for, 220–23 Ireland bailout, 283–84, 287, 294–96 Italy bailout, 319–22, 347–48 opposition to, 229–32, 320, 322–23 Portugal bailout, 295 reactivation of (2011), 317–18 Spain bailout, 287, 320–21 suspension of, 304–5 Sentance, Andrew, 252 September 11 attack, economic remedies following, 98–99, 130 Sheets, Nathan, 227 Shelby, Richard, 174, 184–85, 261 Shiller, Robert, 112 Skidmore, David, 4 Smith, George Ross, 45 Smith, Michelle, 5, 193 Sócrates, José, 296 Soini, Timo, 297 Solow, Robert, 65, 116 Soros, George, 72–74 South Korea, Group of 20 meeting (2010), 257, 273–74 Spain financial crisis, 317–23 ECB bond buying program, 287, 320–21 fiscal reforms, 353 housing price increase (2005), 100–101 Speer, David, 261 Stagflation, Great Britain (2010–2011), 251–53, 334 Stamp, Josiah, 388 Stark, Jürgen ECB bond buying opposition, 220–21, 229, 320–21 economic orientation, 300 and Greek crisis, 209–10 resignation of, 322–23 Stein, Herbert, 62 Stein, Jeremy, 385 Steinbrück, Peer, 159 Stockholms Banco, 17–24 collapse (1668), 17–18, 23 innovations/failures of, 18–23 lessons learned, 23–24 Stock market.


Capitalism, Alone: The Future of the System That Rules the World by Branko Milanovic

"Robert Solow", affirmative action, Asian financial crisis, assortative mating, barriers to entry, basic income, Berlin Wall, bilateral investment treaty, Black Swan, Branko Milanovic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, dematerialisation, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, ghettoisation, gig economy, Gini coefficient, global supply chain, global value chain, high net worth, income inequality, income per capita, invention of the wheel, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, low skilled workers, Lyft, means of production, new economy, offshore financial centre, Paul Samuelson, plutocrats, Plutocrats, post-materialism, purchasing power parity, remote working, rent-seeking, ride hailing / ride sharing, Silicon Valley, single-payer health, special economic zone, The Wealth of Nations by Adam Smith, Thorstein Veblen, uber lyft, universal basic income, Vilfredo Pareto, Washington Consensus, women in the workforce, working-age population, Xiaogang Anhui farmers

They argue that the rising share of capital was driven by a decline in the cost of capital goods (think of relatively cheap computers); this increased the use of capital (by replacing low-skilled labor with technology) and drove up its share in net product. But that does not explain the full increase, they argue: part of it is due to increasing monopoly power and markups, a finding that others have confirmed.14 According to Robert Solow, the rising share of capital comes from a change in the relative bargaining power of labor and capital. When organized labor was relatively powerful, as exemplified in the 1949 Treaty of Detroit between the auto workers’ unions and employers, labor was able to push the distribution of income in its favor.15 But when the power of organized labor declined—with the shift toward services as well as toward a global capitalist system that more than doubled the number of wage workers worldwide—the power of labor waned, and the functional distribution of income moved in favor of capital.16 In an interesting take on the evidence, Barkai (2016) has argued that both capital and labor shares have shrunk while a third factor of production, entrepreneurship (which is normally lumped together with capital) has increased in importance.

., 84–87 Socialization within capitalist system, 4 Social policies, liberal meritocratic capitalism and new, 42–55; addressing twenty-first income inequality, 42–50; welfare state in era of globalization, 50–55 Social revolutions in Third World, 79–82 Social separatism, system of, 52 Social stability, migrants and, 147 Social transfers, attempting to redress inequality and, 44, 45, 46 Socioeconomic systems, laws governing rise and decline, 68–69 Söderberg, Daniel, 51, 203 Solow, Robert, 25 Song, Zheng (Michael), 120 Song China, merchants and central government in, 105, 115 Soviet Union: “export” of economic and political system, 113; failure of communism in, 83; household surveys in, 232. See also Russia Spirit of Laws, The (Montesquieu), 253n1 Stalin, Joseph, 81 Stalinists, revolution in China and, 81 Stamp, Josiah, 158 Stantcheva, Stefanie, 54 Starbucks, 183 State efficiency, political capitalism and, 118–119, 121, 127 State-led political capitalism.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

"Robert Solow", accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, centre right, circulation of elites, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, German hyperinflation, Gini coefficient, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, twin studies, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

Proposed in 1955, this was really a theory of the magical postwar years referred to in France as the “Trente Glorieuses,” the thirty glorious years from 1945 to 1975.9 For Kuznets, it was enough to be patient, and before long growth would benefit everyone. The philosophy of the moment was summed up in a single sentence: “Growth is a rising tide that lifts all boats.” A similar optimism can also be seen in Robert Solow’s 1956 analysis of the conditions necessary for an economy to achieve a “balanced growth path,” that is, a growth trajectory along which all variables—output, incomes, profits, wages, capital, asset prices, and so on—would progress at the same pace, so that every social group would benefit from growth to the same degree, with no major deviations from the norm.10 Kuznets’s position was thus diametrically opposed to the Ricardian and Marxist idea of an inegalitarian spiral and antithetical to the apocalyptic predictions of the nineteenth century.

My dream when I was teaching in Boston was to teach at the École des Hautes Études en Sciences Sociales, whose faculty has included such leading lights as Lucien Febvre, Fernand Braudel, Claude Lévi-Strauss, Pierre Bourdieu, Françoise Héritier, and Maurice Godelier, to name a few. Dare I admit this, at the risk of seeming chauvinistic in my view of the social sciences? I probably admire these scholars more than Robert Solow or even Simon Kuznets, even though I regret the fact that the social sciences have largely lost interest in the distribution of wealth and questions of social class since the 1970s. Before that, statistics about income, wages, prices, and wealth played an important part in historical and sociological research. In any case, I hope that both professional social scientists and amateurs of all fields will find something of interest in this book, starting with those who claim to “know nothing about economics” but who nevertheless have very strong opinions about inequality of income and wealth, as is only natural.

But one logically consistent way of interpreting his thought is to consider the dynamic law β = s / g in the special case where the growth rate g is zero or very close to zero. Recall that g measures the long-term structural growth rate, which is the sum of productivity growth and population growth. In Marx’s mind, as in the minds of all nineteenth- and early twentieth-century economists before Robert Solow did his work on growth in the 1950s, the very idea of structural growth, driven by permanent and durable growth of productivity, was not clearly identified or formulated.31 In those days, the implicit hypothesis was that growth of production, and especially of manufacturing output, was explained mainly by the accumulation of industrial capital. In other words, output increased solely because every worker was backed by more machinery and equipment and not because productivity as such (for a given quantity of labor and capital) increased.


pages: 374 words: 114,660

The Great Escape: Health, Wealth, and the Origins of Inequality by Angus Deaton

"Robert Solow", Admiral Zheng, agricultural Revolution, Branko Milanovic, BRICs, British Empire, call centre, clean water, colonial exploitation, Columbian Exchange, creative destruction, declining real wages, Downton Abbey, end world poverty, financial innovation, germ theory of disease, Gini coefficient, illegal immigration, income inequality, invention of agriculture, invisible hand, John Snow's cholera map, knowledge economy, Louis Pasteur, low skilled workers, new economy, purchasing power parity, randomized controlled trial, rent-seeking, rising living standards, Ronald Reagan, Simon Kuznets, Steve Jobs, Steven Pinker, structural adjustment programs, The Spirit Level, too big to fail, trade route, very high income, War on Poverty

Of course, possession of common knowledge does not imply that all countries should have the same living standards. To be able to use rich-country methods of production requires rich-country infrastructure—roads, railways, telecommunications, factories, and machines—not to mention rich-country educational levels, all of which take time and money to achieve. Yet the gaps between rich and poor provide plenty of incentives to make the investment in that infrastructure and equipment, and, as Robert Solow showed in one of the most famous papers in all of economics, average living standards should draw closer over time.4 Why this has not happened is a central question in economics. Perhaps the best answer is that poor countries lack the institutions—government capacity, a functioning legal and tax system, security of property rights, and traditions of trust—that are a necessary background for growth to take place.

See also Britain Scott, Sir Walter, x, 86 Sen, Amartya, 11, 28, 37, 116 Sierra Leone, 27, 48, 123, 154, 296, 302 Simon, Julian L., 243–44 Singapore, economic growth in, 235 Singer, Peter, 271, 306 smallpox, 81, 84–86, 104, 307. See also diseases Smith, Adam, 55, 270 smoking, 7, 66, 131–35, 137, 152 Smuts, Jan, 306 Snow, John, 95–96 Social Security, 181, 199 Sokoloff, Kenneth J., 215–16 Solow, Robert M., 234 South Africa: foreign aid received by, 296; HIV/AIDS in, 40; inequality in, 34–35, 40 Stevenson, Betsey, 50 Stone, Richard, 229 Suez Canal, 297 Summers, Robert, 222 Sweden: life evaluation scores in, 48; life expectancies in, 67–68, 70; mortality rates in, 68–70, 68f, 72; smallpox in, 84; vital registration system of, 72 Szreter, Simon, 97 taxes: carbon, 242; in democracies, 295; income, 199–200, 203, 204–5, 212; progressive, 199–200, 261 Taya, Maaouya Ould Sid’Ahmed, 301 technical assistance, 278, 321–22 technological change: in medicine, 99; skill-biased, 191–93; wages and, 194–95; wellbeing increased by, 327–28 Terry, Luther, 131–32 Thomas, Keith, 55 Tinbergen, Jan, 191 tobacco, 7, 66, 131–35, 137, 152 Togo, 48, 296 Tonga, 277, 278 trachoma, 98–99, 103 trade, 313, 322, 323.


pages: 289 words: 113,211

A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation by Richard Bookstaber

"Robert Solow", affirmative action, Albert Einstein, asset allocation, backtesting, beat the dealer, Black Swan, Black-Scholes formula, Bonfire of the Vanities, butterfly effect, commoditize, commodity trading advisor, computer age, computerized trading, disintermediation, diversification, double entry bookkeeping, Edward Lorenz: Chaos theory, Edward Thorp, family office, financial innovation, fixed income, frictionless, frictionless market, George Akerlof, implied volatility, index arbitrage, intangible asset, Jeff Bezos, John Meriwether, London Interbank Offered Rate, Long Term Capital Management, loose coupling, margin call, market bubble, market design, merger arbitrage, Mexican peso crisis / tequila crisis, moral hazard, Myron Scholes, new economy, Nick Leeson, oil shock, Paul Samuelson, Pierre-Simon Laplace, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk tolerance, risk/return, Robert Shiller, Robert Shiller, rolodex, Saturday Night Live, selection bias, shareholder value, short selling, Silicon Valley, statistical arbitrage, The Market for Lemons, time value of money, too big to fail, transaction costs, tulip mania, uranium enrichment, William Langewiesche, yield curve, zero-coupon bond, zero-sum game

He stayed on as a junior fellow at Harvard, but the 1940s were not a hospitable time for Jews in the Ivy League. He failed to receive a permanent appointment at Harvard, so he headed down the Charles River to MIT. There, joined by other Jewish academics, he became the leading light in an economics department that would have an enormous impact on academia, governmental economic policy, and the financial markets. Two who joined on shortly after his appointment were Robert Solow, a Brooklyn-born economist who did his undergraduate work at Harvard, and Franco Modigliani, who fled fascist Italy in 1939. Over the next 40 years, Samuelson, Solow, and Modigliani worked on some of the most important economic issues of their time. Solow’s most significant contribution involved the application of ordinary differential equations to understand the determinants of economic growth.

Treasury spread position, on-the-run/offthe-run trade, 120–124 Samuelson, Paul, 208–209 Santa Fe Institute, 229 Scharf, Charlie, 123–124 Scholes, Myron, 9, 119 Scribe Reports, 201–202 Securities price behavior, 36 volatility calculation, 14 Self-referentiality, 222 Shaw, David E., 165, 189, 243 Shiller, Robert, 179 Shopkorn, Stan, 181 Shuttle disasters, 159–161 Simon, Jim, 165 Singapore International Monetary Exchange (SIMEX), Osaka Exchange (matched positions), 39 Smith Barney, 75 Solow, Robert, 208–209 Soros, George, 179–180 Speculative traders, economic service, 219 Spread trades, holding periods, 83 Standard & Poor’s (S&P) futures contracts, sale, 20 Statistical arbitrage concept, 194 emergence, 182–188 origination, 184 traders, 191–192 Statistics, objective, 134–135 Stavis, Rob, 53, 59, 70–80, 84 Stock clearance/finance, 27–28 StockGeneration, web site, 168 Stock market crash (1929), 137 Stock market crash (1987), 1–2 demons, 7 impact/meditation, 18–20 mechanism, understanding, 28 meltdown, physics, 25–30 postmortem, 13–14 warning signs, 16–18 Strauss, Thomas, 196 resignation, 199 STRIPS, 40–41 Sunbeam, restatements/liability, 135 SuperDOT, linkage, 189 Swap maturity/rate level, interaction, 47 Systems, interactive complexity, 155 Takeovers, impact, 15–16 Tartaglia, Nunzio, 187–189 Thorp, Ed, 188 Three Mile Island, 159 safety systems, dangers, 147–150 Tight coupling, 143 accidents, 154–157 complexity, combination, 256 failure, cascade, 145–146 interactive complexity, relationship, 157–159 origination, 144–145 reduction, 260 Tilley, Jim, 8–9, 46 Time disintermediation, 21 Toevs, Alden, 9 Too big to fail doctrine, 113 Top-down approach, 167 Travelers brokerage unit, 75 Citigroup merger, 125, 140 Shearson American Express, merger, 78 Tribeca Investments, 204 Tulip mania, 174–177 Turnover, demand satisfaction, 173 Two-plus model, 85–86 U.K. tax code, change (1997), 117, 118 Ukraine Radiological Institute, 163 Unanticipated events, 239 Uncertainty, implications, 257 Uncertainty Principle, 223–227 behavioral analogue, 226 Undecidability Theorem, 223–224 Underwriting, profitability, 33–34 Union Bank of Switzerland (UBS), 48 Epstein, impact, 48–49 Goldstein, impact, 116–118 LTCM impact, 118–120 LTCM losses, 113–116, 120 monetary loss, 49 Swiss Bank Corporation, merger, 49 Unwind/unrealized losses, 68 275 bindex.qxd 7/13/07 2:44 PM Page 276 INDEX U.S. arbitrage, losses, 100 U.S. swap market, 92 U.S.


pages: 437 words: 115,594

The Great Surge: The Ascent of the Developing World by Steven Radelet

"Robert Solow", Admiral Zheng, agricultural Revolution, Asian financial crisis, bank run, Berlin Wall, Branko Milanovic, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, clean water, colonial rule, creative destruction, demographic dividend, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, Erik Brynjolfsson, European colonialism, F. W. de Klerk, failed state, Francis Fukuyama: the end of history, Gini coefficient, global pandemic, global supply chain, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, land reform, low skilled workers, M-Pesa, megacity, Mikhail Gorbachev, Nelson Mandela, off grid, oil shock, out of africa, purchasing power parity, race to the bottom, randomized controlled trial, Robert Gordon, Second Machine Age, secular stagnation, Simon Kuznets, South China Sea, special economic zone, standardized shipping container, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, women in the workforce, working poor

In these sectors, foreign firms pay workers two to three times more for basic production jobs and ten times more for supervisory and managerial jobs than for low-skilled work.12 Globalization has been, on the whole, a major force for progress in developing countries during the last two decades, and has provided the opportunities for millions of people to begin to escape poverty, increase their economic opportunities and incomes, and improve their health. A good summary of the evidence comes from the Commission on Growth and Development, an international panel of leading economists and financial experts, including two Nobel Prize laureates (Michael Spence and Robert Solow), and nineteen other experts from around the world. This group examined the forces behind the fastest-growing countries over the last few decades. They observed that rapid growth sustained over decades was not possible before World War II, and concluded (in what they call “the central lesson of this report”) that this rapid economic growth is possible only because the world economy is now more open and integrated.

., 121 Schumpeter, Joseph, 249 Second Machine Age, The (Brynjolfsson and McAfee), 166, 300 secular stagnation, 257 seed drill, 25 seeds, 171 semiconductors, 20 Sen, Amartya, 19, 123, 127, 128 Sendero Luminoso, 287 Senegal, 7, 37 aid to, 223, 224 corruption in, 114 democracy in, 123, 124, 263 demonstrations in, 281 growth in, 261 inequality in, 67 Senkaku islands, 288 Seoul, 201 September 11, 2001, terrorist attacks of, 269 services, 67, 260, 261–62 severe acute respiratory syndrome (SARS), 82, 267 Seychelles, 284 Shanghai, 201 Shenzhen, 91 Sherpas, 203 Shikha, 33–34 Shinawatra, Thaksin, 254–55, 264 Shinawatra, Yingluck, 255 Shining Path, 287 shipping, 202 shipping containers, 167–68 shock therapy, 219 shoes, 56, 139, 162, 262 Sierra Leone, 220, 285 democracy in, 104, 107 Ebola in, 82 growth in, 50 health system in, 266 violence in, 146, 206 Silk Road, 206 silks, 152 silver, 152 Simon, Julian, 294 Sin, Jaime, 18, 103 Singapore, 7, 16, 184 benign dictatorship in, 126 and democracy, 122, 248, 250 and globalization, 155 growth in, 125, 139, 147 universities in, 247 Singh, Manmohan, 192 Six-Day War, 285 skills and capabilities, 16, 190–92 slavery, 142, 156, 180, 206 smallpox, 214, 215 Smith, Adam, 151, 156, 200–201 Smith, David, 43 Smith, Marshall, 178–79 SMS text messages, 47, 178 Snow, John, 77 social safety net, 38, 39, 68, 164, 307 Sogolo, Nicéphore, 144 soil, 171, 215 Solow, Robert, 165 Somalia, 8, 9, 99, 119, 213, 243 aid to, 224 power vacuum in, 184 Zheng He’s trip to, 152 Somoza García, Anastasio, 100, 127 Song-Taaba Yalgré women’s cooperative, 178 South Africa, 7, 17, 18, 20, 22, 37, 43, 46, 127, 143, 145, 155, 182–83, 207 aid to, 223 apartheid in, 44, 57, 68, 100, 103, 135, 141, 180, 182 banks in, 56 corruption in, 264 economic growth in, 183, 235, 262 future of, 234 HIV in, 174 inequality in, 68 infrastructure financing in, 259–60 life expectancy in, 266 political turmoil in, 57 roads in, 202 universities in, 247 South Asia, 37, 50 Southeast Asia, 5, 12, 167 colonialism in, 140 growth in, 141 Southern Rhodesia, 180 South Jakarta, 286 South Korea, 36, 127, 159, 184, 201, 288, 290 aid to, 214, 216 benign dictatorship in, 126 democracy in, 104, 122, 126, 250 as dictatorship, 99, 122 and globalization, 155 growth in, 7, 16, 29, 71, 125, 139, 147, 236, 262 individual leadership in, 187 inequality in, 68 lack of resources in, 205 land redistribution in, 68 Soviet Union, x, 50, 126, 133–34, 145, 148, 298, 309 Afghanistan invaded by, 134, 146 collapse of, 16, 81, 103, 131, 135, 142, 156, 250, 251 countries controlled by, 141 dictatorships supported by, 100 malaria in, 210 Spain, 105, 123, 140 speech, freedom of, 198–99 Spence, Michael, 86, 165 Spratly Islands, 289 Sputnik, 147, 250 Sri Lanka, 11, 37 economic problems in, 255 engineers from, 56 malaria in, 211 Zheng He’s trip to, 152 Stalin, Joseph, 127 state-owned farms, 195 Stavins, Robert, 297 steam engine, 25, 300 Steinberg, James, 299 Stern, Nicholas, 213, 292 Stiglitz, Joseph, 213, 227 stock exchanges, 241 Strait of Malacca, 201 student associations, 110 Subic Bay Naval Station, 201 Subramanian, Arvind, 225 Sudan, 114, 115, 185, 206, 208, 285 aid to, 224 China’s example followed by, 266 violence in, 285 Suharto, 99, 112, 122, 126, 138–39, 144 Sumatra, 152 Summers, Lawrence, 88, 227, 235, 246, 257 Sustainable Development Goals, 217 Swaziland, life expectancy in, 266 sweatshops, 58 Sweden, 159 Switzerland, 27, 202 Sydney, 201 Syria, 8, 285 aid to, 224 conflict in, 118, 119, 146, 233, 255 in Six-Day War, 285 Taiwan, 29, 153, 201, 289, 290 aid to, 216 benign dictatorship in, 126 democracy in, 122, 126, 250 and globalization, 155 growth in, 125, 139, 147, 236, 262 individual leadership in, 187 lack of resources in, 205 Tajikstan, 205, 208 Tanzania: aid to, 214, 216 and democracy, 248 fruit markets in, 58 growth in, 45, 50, 238, 240, 261 purchasing power in, 27 reforms in, 192 Zheng He’s trip to, 152 tariffs, 44, 102, 155, 167, 193, 263, 305 Tarp, Finn, 226 tax revenues, 241, 247 Taylor, Charles, 99, 145 technology, x, 17, 19, 22, 94–96, 135, 150, 151–79, 183, 200, 206–7, 234, 245, 258, 294, 301 for agriculture, 170–71 for banking, 175, 179 in China, 154–55, 236 for education, 178–79 globalization and, 156, 166 for health, 173–75, 179, 293 terrorism and, 287–88 telecommunications, 158 Terai, 211 terms-of-trade ratio, 54 terrorism, 19, 20, 21, 146, 286–88 tetanus, 94, 161 textiles, 25, 56, 139, 152 Thailand, 9, 22, 36, 253–55, 265 benign dictatorship in, 126 child mortality in, 84 corruption in, 254, 264 and democracy, 248, 253–54, 255, 263 growth in, 139, 147, 262 protests in, 255, 263 Zheng He’s trip to, 152 Theroux, Paul, 12 Things Fall Apart (Achebe), 72 think tanks, 110 Third Wave, The (Huntington), 121 Thomas, Brendon, 90–91 Tiananmen Square, 148 Tibet, 203 Tigris, 285 timber, 61, 139, 206, 223, 285 Timbuktu, 206 Timor-Leste, 36, 139, 144, 184, 220 aid to, 223 democracy in, 106, 122 infrastructure investment in, 216 poverty in, 122 tin, 139 Tokyo, 201, 277 totalitarianism, 10–11, 16 tourism, 45 toys, 56, 139 trade, x, 6, 17, 20, 22, 52, 156, 157, 162–63, 193, 203, 204–5, 234, 257, 303 in agriculture, 273 Asian economic miracle and, 170, 201 growth of, 157, 158–59, 160 sea-based, 200–201 shipping containers and, 167–68 trade unions, 110 transportation, 166, 261 Truth and Reconciliation Commission, 182 T-shirts, 159, 164 Tuareg, 265 tuberculosis, 75, 94, 161, 205, 214 Tull, Jethro, 25 Tunisia: democracy in, 7, 106, 124, 255, 263 growth in, 50, 238 Turkey, 36, 127, 285 aid to, 223 authoritarian rule in, 255 demand in, 53 democracy in, 106, 123, 124, 263 future of, 234 growth in, 6, 7, 22, 235, 238 protests in, 263 trade encouraged by, 155 universities in, 247 Turkmenistan, 114, 266, 285 Tutu, Desmond, 18, 103, 185 Uganda, 106, 112, 144, 159, 287 aid to, 216 and democracy, 263, 264 growth in, 50 horticulture producers in, 169 individual leadership in, 187 inequality in, 67 infrastructure investment in, 216 mobile phones in, 176–77 Ukraine, 143, 192, 233 Ultimate Resource, The (Simon), 294 unemployment benefits, 38, 164 United Fruit Company, 223 United Nations, 79, 212, 217, 258, 275, 298, 309 United Nations’ International Labour Organization, 57 United States, 19, 47, 68, 148, 231, 292, 300 China’s relationship with, 298–99 countries controlled by, 141 coups supported by, 100 democracy criticized in, 126 democracy in, 112, 296 and dictatorships, 139, 222 Iraq invasion by, 8, 118, 124, 146 leadership needed by, 234 natural capital in, 63 Panama invaded by, 144 post–World War II boom in, 262 protection provided by, 289–90 in World War II, 137 universities, 247 urbanization, 4, 22, 233, 268, 276–77, 279 US Agency for International Development (USAID), 95, 170, 171, 216, 308 Uyuni Sal Flat, 205 Uzbekistan, 8, 145, 185, 281, 285 vaccines, 77, 94, 161, 214, 233, 302 Velvet Revolution, 103 Venezuela, 22, 47, 106, 115 and democracy, 248, 263, 264 economic problems in, 255 natural capital in, 63 Vereenigde Oostindische Compagnie (VOC), 136–37 Vietnam, 36, 106, 144, 289 aid to, 214, 224 China’s example followed by, 266 growth in, 7, 45, 50, 125, 128, 147, 262 individual leadership in, 187 inequality in, 67 life expectancy in, 78 rice yields in, 215–16 textiles from, 56 Zheng He’s trip to, 152 Vietnam War, 100, 138, 141, 145, 289 Vincent, Jeffrey, 61 violence, 6, 20, 290 decline in, 4, 115–20, 116, 117, 119, 145–46 poverty deepened by, 119, 119 and poverty traps, 15 over resources, 284–86 Vitamin A deficiency, 173–74 Viviano, Frank, 152 Wade, Abdoulaye, 114, 224 Wałesa, Lech, 18, 103, 143, 149, 184, 186 Walls, Peter, 181 Walmart, 46 Wang Huan, 90–91 war, 5 attention to, 10 and poverty traps, 15 reduction of, 3, 4, 6 watchdog groups, 110 water, 77, 80, 161, 216, 275, 277–80, 307 water conservation, 233 water pollution, 8 water shortages, 22, 73 Watt, James, 25 Wealth and Poverty of Nations, The (Landes), 13 Wealth of Nations, The (Smith), 200–201 Weber, Max, 120 West Africa, 8, 10, 22, 205 colonialism in, 140 West Bengal, 31 Western Samoa, 75, 202 What We Know (AAAS report), 281–82 “When Fast Growing Economies Slow Down” (Eichengreen et al.), 236 White, Howard, 226 white supremacy, 124 “Why Isn’t the Whole World Developed?”


Hopes and Prospects by Noam Chomsky

"Robert Solow", Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, British Empire, capital controls, colonial rule, corporate personhood, Credit Default Swap, cuban missile crisis, David Ricardo: comparative advantage, deskilling, en.wikipedia.org, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, Howard Zinn, Hyman Minsky, invisible hand, liberation theology, market fundamentalism, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, nuremberg principles, one-state solution, open borders, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ralph Waldo Emerson, RAND corporation, Ronald Reagan, structural adjustment programs, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, trade liberalization, uranium enrichment, Washington Consensus

Whether neoliberalism is the enemy of development is debatable, for a simple reason: the economy—particularly the international economy—is so poorly understood and involves so many variables that even when close correlations are found, one cannot be confident about whether there are causal relations, or if so, in which direction. The founder of the modern theory of economic growth, Nobel laureate Robert Solow, commented that despite the enormous accumulation of data since his pioneering work half a century ago, “the direction of causality” is unknown. It is not clear, he concludes, whether capital investment causes productivity, or productivity leads to capital investment; whether openness to trade improves economic growth, or growth leads to trade; and the same problems arise in other dimensions.

See 9/11 terrorist attacks settler-colonialism, 22 Sewall, Sarah, 302n20 Shalit, Gilad, 146, 256, 257 Shamir, Yitzhak, 154 Sharon, Ariel, 252 Shelby, Richard, 232 Simon, Steven, 235 Simpson, Cam, 145 Singh, Ajit, 91 Sistani, Ayatollah, 236 slavery, 78, 79, 81, 95 Smith, Adam, 15, 16, 27, 29, 37, 77, 81 maxim, 16, 30, 47, 94, 108, 278 “social cleansing,” 61 social democratic attitudes, 208–9 Solow, Robert, 76 South Africa, 163 South America. See Latin America South American Defense Council, 59 South Korea, 72 South Pacific NWFZ treaty, 168 sovereignty, loss of, 75 Soviet satellites, 271, 272, 275. See also East Germany Soviet Union, 90 Spanish conquerors and colonies, 20–22 “special interests,” 98 Status of Forces Agreement (SOFA), 235–37, 239 Steele, Jonathan, 129 Stevens, John Paul, 33–34 Stiglitz, Joseph, 86, 220 Stimson, Henry, 118 Story, Joseph, 19 STRATCOM, 165–66 structural adjustment, 106 Suharto, 43 Summers, Lawrence, 219–21 Supreme Court, 34 corporate personhood and, 31–35 Syria, 139, 144, 239 Iraq and, 125–26, 239 Obama and, 239, 249 U.S. raid of, 239 Taiwan, 9 Talabani, Jalal, 239 Taliban, 141, 243, 246 Afghanistan and, 141, 238, 242 public opinion regarding, 141, 243 tariffs.


pages: 573 words: 115,489

Prosperity Without Growth: Foundations for the Economy of Tomorrow by Tim Jackson

"Robert Solow", bank run, banking crisis, banks create money, Basel III, basic income, bonus culture, Boris Johnson, business cycle, carbon footprint, Carmen Reinhart, Cass Sunstein, choice architecture, collapse of Lehman Brothers, creative destruction, credit crunch, Credit Default Swap, David Graeber, decarbonisation, dematerialisation, en.wikipedia.org, energy security, financial deregulation, Financial Instability Hypothesis, financial intermediation, full employment, Growth in a Time of Debt, Hans Rosling, Hyman Minsky, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, liberal capitalism, Mahatma Gandhi, mass immigration, means of production, meta analysis, meta-analysis, moral hazard, mortgage debt, Naomi Klein, new economy, offshore financial centre, oil shale / tar sands, open economy, paradox of thrift, peak oil, peer-to-peer lending, Philip Mirowski, profit motive, purchasing power parity, quantitative easing, Richard Thaler, road to serfdom, Robert Gordon, Ronald Reagan, science of happiness, secular stagnation, short selling, Simon Kuznets, Skype, smart grid, sovereign wealth fund, Steve Jobs, The Chicago School, The Great Moderation, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, universal basic income, Works Progress Administration, World Values Survey, zero-sum game

For a discussion on productivity at firm level, see Freeman and Shaw (2009), and for UK firms, see Oulton (1996). 15 See The Conference Board (2015: 7). 16 Timmer et al. (2007: figure 2A). 17 The hypothesis that technological change is a key driver of growth is a key component of the so-called Solow–Swan growth model. Production output depends on three so-called ‘factors of production’: labour, capital and materials. Early growth theories suggested that growth could be predicted mainly on the basis of how much labour and capital was available. But these models failed to account for the ‘residual’ growth after expansions in capital and labour had been factored in. In 1956, economists Robert Solow and Trevor Swan independently argued that this residual could be explained by technological progress (Solow 1956, Swan 1956). 18 On rebound, see: Chitnis et al. (2014), Druckman et al. (2011), Sorrell (2007). 19 See Jackson (1996: chapter 1) for a more detailed discussion of this point; see also Georgescu-Roegen (1972), Daly (1996). 20 See Schumpeter (1934, 1950, 1954). For more detailed discussion of the relevance of Schumpeter’s work in this debate, see Beinhocker (2007), Booth (2004), Bouder (2008), Rutherford (2008), Wall (2008). 21 Perez (2003: 25). 22 Baumol (2012: chapter 2). 23 Lewis and Bridger (2001). 24 Belk et al. (1989, 2003), Csikszentmihalyi and Rochberg-Halton (1981), Hill (2011). 25 Belk (1988). 26 Dichter (1964). 27 See Armstrong and Jackson (2008, 2015), Arndt et al. (2004), Belk et al. (1989), Jackson (2013), Jackson and Pepper (2010). 28 This point has been made in various ways by numerous authors.

Online at www.nature.com/nclimate/journal/v6/n1/full/nclimate2870.html (accessed 12 July 2016). Sober, E. and D. Wilson 1998. Unto Others – The Evolution and Psychology of Unselfish Behaviour. Cambridge, MA: Harvard University Press. Soddy, F. 1931. Money Versus Man. London: Elkin Mathews & Marrot. Solomon, Sheldon, Jeff Greenberg and Tom Pyszczynski 2014. The Worm at the Core: On the Role of Death in Life. London: Penguin. Solow, Robert 1956. ‘A contribution to the theory of economic growth’. Quarterly Journal of Economics 70(1): 65–94. Soper, Kate 2008. ‘Exploring the relationship between growth and wellbeing’. London: Sustainable Development Commission. Online at www.sd-commission.org.uk/publications.php?id=780 (accessed 19 January 2016). Soros, George 2008. The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means.


Termites of the State: Why Complexity Leads to Inequality by Vito Tanzi

"Robert Solow", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Andrei Shleifer, Andrew Keen, Asian financial crisis, asset allocation, barriers to entry, basic income, bitcoin, Black Swan, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, clean water, crony capitalism, David Graeber, David Ricardo: comparative advantage, deindustrialization, Donald Trump, Double Irish / Dutch Sandwich, experimental economics, financial repression, full employment, George Akerlof, Gini coefficient, Gunnar Myrdal, high net worth, hiring and firing, illegal immigration, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labor-force participation, libertarian paternalism, Long Term Capital Management, market fundamentalism, means of production, moral hazard, Naomi Klein, New Urbanism, obamacare, offshore financial centre, open economy, Pareto efficiency, Paul Samuelson, price stability, principal–agent problem, profit maximization, pushing on a string, quantitative easing, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, The Chicago School, The Great Moderation, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, Tyler Cowen: Great Stagnation, universal basic income, unorthodox policies, urban planning, very high income, Vilfredo Pareto, War on Poverty, Washington Consensus, women in the workforce

I had also spent another two years working for a CongressionalPresidential Commission (the Outdoor Recreation Resources Review Commission) that was tasked with determining the optimal use for the extensive public land owned by the US federal government. This commission produced several reports that set the stage for the future use of public land. During the years I spent at Harvard, in the first half of the 1960s, some of the leading economists of the time – Paul Samuelson, Robert Solow, Simon Kuznets, Kenneth Arrow, Franco Modigliani, Wassily Leontief, Kenneth Galbraith, Robert Dorfman, Alvin Hansen, Otto Eckstein, James Duesenberry, and several others – were in the Boston area, either at Harvard or at MIT. Richard Musgrave, who was then considered the leading public finance economist in the United States, would come to Harvard a little later and would be the second reader of my doctoral dissertation; I thus completed my public finance preparation under a third refugee from Nazi Germany.

The Council of Economic Advisors was led by Walter Heller, an economist with enough personal prestige to play regular tennis with the president of the United States. He was widely known to the public, and, when he discussed economic policies, he spoke in a language that normal citizens could understand. The Council of Economic Advisers, which had prepared the Report, included among its staff two future Nobel Prize winners in economics (James Tobin and Robert Solow) and had also relied on consultants that included two other future Nobel Prize winners (Kenneth Arrow and Paul Samuelson). The Report would attract the kind of attention that could only be dreamed of by the authors of recent reports. The 1962 Report was a clear example of the extent to which the Keynesian Revolution and trust in the government to be able to make policy changes assumed to be beneficial to the citizens had reached their apotheosis, while economists had reached the peak of their prestige.

., 119 Singapore public spending in, 121–22, 162 regulations in, 174 taxation in, 381 Sinn, Hans-Werner, 20, 108 Slavery, 249–50, 265–66 Smith, Adam generally, 7–9, 12, 189 on constitutions, 270 on dishonesty, 79 on entrepreneurs, 307 on government intervention, 226, 325 on income inequality, 305, 306, 320, 321 individualism and, 89 “invisible hand of market,” 66, 312–13 on limited role of government, 99 on mercantilism, 70, 123 on social consciousness, 312 on specialization, 91–92 Smoking as externality, 164 Social consciousness, growth and, 312 Social contract, 89–91 Social costs of income inequality, 206 Socialism government failures and, 73–74 public ownership and, 135 types of, 28 Socialization of loss, 83–84 Index Social programs. See Welfare policies Social regulations, 146 Social responsibilities of corporations, 398 “Soft budgets,” 71, 138 Solow, Robert, 3, 56 Sony, 347 Sorensen, Theodore, 2–3 Southeast Asian financial crisis (1997-1998), 109, 243–44 South Korea intellectual property in, 347 public spending in, 121–22, 162 Sovereign debt Buchanan on, 64 easy credit and, 106 in Greece, 241 growth in, 64 in Italy, 241 in Japan, 241 size of, 109 stabilization policies and, 241–42, 244–45 Soviet Union. See also Russia Constitution, 266 economic challenges from, 2–3 economic planning in, 26 Keynes on, 27–30, 78 Spain authoritarian government in, 23 bubbles in, 331 contingent liabilities in, 138 influence of conservatives in, 395 marginal tax rates in, 376 Specialization, 91–92 Spending.


pages: 484 words: 131,168

The Big Sort: Why the Clustering of Like-Minded America Is Tearing Us Apart by Bill Bishop, Robert G. Cushing

"Robert Solow", 1960s counterculture, affirmative action, American Legislative Exchange Council, assortative mating, big-box store, blue-collar work, Cass Sunstein, citizen journalism, cognitive dissonance, David Brooks, demographic transition, desegregation, Edward Glaeser, immigration reform, income inequality, industrial cluster, Jane Jacobs, knowledge economy, longitudinal study, mass immigration, meta analysis, meta-analysis, Milgram experiment, music of the spheres, New Urbanism, post-industrial society, post-materialism, Ralph Nader, Richard Florida, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, superstar cities, The Death and Life of Great American Cities, union organizing, War on Poverty, white flight, World Values Survey

If one looks at each possible formula from a child's simple chemistry set as the equivalent of a new idea—a potentially economy-changing compound—it becomes clear that the stock of potentially valuable knowledge in the world is quite literally infinite. Only a small percentage of those "ideas" have economic value, but a small percentage of such a large number means that the potential for growth and wealth from those new ideas is still limitless. Until 1957, the prevailing theory was that increasing the application of labor and capital—more coal, ore, machines, and workers—made economies grow. That year, economist Robert Solow wrote a paper arguing that labor and capital alone couldn't account for the continuing expansion of the economy. Solow argued that a third factor, technical knowledge, combined with labor and capital to increase economic productivity.*32 In the 1980s, Romer refined that concept. "We now know that the classical suggestion that we can grow rich by accumulating more and more pieces of physical capital like forklifts is simply wrong," he wrote.33 Economic growth wasn't a function of forklifts.

., [>]–[>], [>], [>] Skaggs, David, [>]–[>] Skocpol, Theda, [>], [>]–[>], [>] n Slick, Grace, [>]–[>], [>] Smith, Harold Wayne, [>] Smith, J Walker, [>], [>]–[>], [>]–[>], [>]–[>], [>], [>] Smith, Wendell, [>]–[>] SNCC, [>] Snyder, Dot, [>]–[>] Social capital, [>], [>]–[>] Social class. See Class Social epidemics, [>] Social Gospel, [>]–[>], [>] n, [>], [>], [>], [>], [>], [>] Social networks, [>]–[>], [>] n Socioeconomic status (SES). See Class Solow, Robert, [>], [>] n The Sound of Music, [>] South Dakota, [>] South Florida Sun-Sentinel, [>] Southwest Landowner Conference, [>]–[>] Specter, Arlen, [>]–[>] Spencer, Herbert, [>] Spitzer, Eliot, [>] St. Louis, Mo., [>] Stagflation, [>] Stapleton, Bob, [>]–[>] Starbucks, [>] Stark, Rodney, [>] State Policy Network, [>] Stein, Rob, [>] Stem cell research, [>], [>]–[>] Stetzer, Ed, [>] n Stevenson, Adlai, [>] Stolarick, Kevin, [>], [>], [>] Stoner, James, [>]–[>] Straight-ticket voting, [>]–[>], [>]–[>] n Stranger, [>] Strong, Josiah, [>] Stross, Randall, [>] Student Nonviolent Coordinating Committee (SNCC), [>] Students for a Democratic Society, [>] Success versus integrity, [>]–[>], [>] n Suicide, [>] Sullivan County, N Y., [>] Sundquist, James, [>] Sunstein, Cass, [>], [>]–[>], [>]–[>], [>] n Susan B.


pages: 425 words: 122,223

Capital Ideas: The Improbable Origins of Modern Wall Street by Peter L. Bernstein

"Robert Solow", Albert Einstein, asset allocation, backtesting, Benoit Mandelbrot, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, corporate raider, debt deflation, diversified portfolio, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, fixed income, full employment, implied volatility, index arbitrage, index fund, interest rate swap, invisible hand, John von Neumann, Joseph Schumpeter, Kenneth Arrow, law of one price, linear programming, Louis Bachelier, mandelbrot fractal, martingale, means of production, money market fund, Myron Scholes, new economy, New Journalism, Paul Samuelson, profit maximization, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, stochastic process, Thales and the olive presses, the market place, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, transfer pricing, zero-coupon bond, zero-sum game

The stock market . . . was off to the side, a seeming casino that didn’t really fit in. In economics, firms maximized profits and that was that.”7 The hot topic in economics at the time was what was known as optimal growth theory, which sought to show how the economy can best adjust the mix of saving, investment, and consumption to fiscal and monetary policy to attain the highest sustainable rate of real growth. The leading economists in this area included Robert Solow and Kenneth Arrow, both of whom became Nobel laureates. Leland was convinced that the stock market played a role in determining optimal outcomes for the real economy. To prove his point, his doctoral dissertation combined the dynamics of the real economy with the uncertainty of portfolio theory. “This was fun to work on,” he told me.8 Leland began his teaching career at Stanford, where Harry Markowitz’s skirmish with Milton Friedman in 1952 still haunted scholars in the field of finance.

Reagan, Ronald Regan, Donald Renshaw, Edward Rhea, Robert Ricardo, David Rinfret, Pierre Roberts, Harry Robinson, James Harvey Roll, Richard Roos, Charles Rosenberg, Barr Rosenberg, June Ross, Stephen Rothschild, Nathan Roy, A. D. Rubinstein, Mark Sametz, Arnold Samuelson, Paul Savage, Jimmie Scheinman, William Scholes, Myron Schumpeter, Joseph Schwayder, Keith Schwert, G. William Sharpe, William Shepard, Alan Shiller, Robert Shultz, George Smith, Adam “Smith, Adam” Smith, Edgar Lawrence Solow, Robert Sprenkle, Case Stevenson, Adlai Tobin, James Treynor, Jack Tsai, Gerald Veblen, Thorstein Vertin, James Von Neumann, John Wallis, Allen Wells, Henry Wendt, Lloyd Weston, J. Fred Whitney, Richard Williams, Dave Williams, John Burr Wood, Kimba Working, Holbrook Subject Index ABC of Speculation, The (Nelson) Advanced Theory of Statistics, The (Kendall) Aetna Insurance “Aircraft Compartment Design Criteria for the Army Deployment Mission” (Sharpe) American & Foreign Power American Economic Review (AER) American Express Company American Finance Association American National Bank (Chicago) American Stock Exchange American Telephone and Telegraph (AT&T) Amsterdam Stock Exchange “Analysis of Economic Time Series, The” (Kendall) Apple Computer Arbitrage Arbitrage Pricing Theory (APT) Arthur D.


pages: 468 words: 123,823

A People's History of Poverty in America by Stephen Pimpare

"Robert Solow", affirmative action, British Empire, car-free, clean water, cognitive dissonance, Columbine, Daniel Kahneman / Amos Tversky, deindustrialization, delayed gratification, dumpster diving, East Village, Frederick Winslow Taylor, George Gilder, hedonic treadmill, hiring and firing, Howard Zinn, illegal immigration, impulse control, income inequality, index card, Jane Jacobs, low skilled workers, Mahatma Gandhi, mass incarceration, meta analysis, meta-analysis, moral panic, Naomi Klein, New Urbanism, payday loans, Ralph Waldo Emerson, Ronald Reagan, The Bell Curve by Richard Herrnstein and Charles Murray, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas Malthus, union organizing, urban renewal, War on Poverty, white flight, working poor, Works Progress Administration

Slaves were typically given the balcony, and poor whites were offered, sometimes quite grudgingly, seats at the very back, until some enterprising philanthropists began fundraising for “free chapels,” segregated houses of worship expressly for the poorer classes, to be erected, if at all possible, next to the poorhouse. As historian Barbara Bellows acerbically observed:Many were quite happy to support efforts to bring the church closer to the poor as long as the church did not bring the poor closer to them.26 Economist Robert Solow makes the case succinctly, responding here to those who have argued that we would do well to leave efforts at relieving poverty to private charity:I cannot see that taking alms from the well-off is any less damaging to “independence” than is a wage supplement from the state, or even the dole. If anything, I would guess that the psychological-sociological balance favors the state. Servility and gratitude toward one’s “betters” is not my idea of propriety in a democracy.

Shloss, Morris Simon, David Simpson, Juanita Sims, Hank Sink, David slaves and slavery and assumed mental disease (drapetomania ) and Civil War service class distinctions ex-slaves’ narratives former slaves and tenant farming and the Freedmen’s Bureau impact of abolition on daily lives mortality rates and passive resistance to poverty and poor whites/Southern poverty as post–Civil War tramps and Thirteenth Amendment as welfare state institution “slumming,” slums. See urban communities of concentrated poverty Smeeding, Timothy Smith, Adam Smith, Billy G. Smith, Mary Social Security actual effects and African Americans and labor market effects and Townsend Plan Social Security Act of 1935 (SSA) Society for the Prevention of Cruelty to Children Society for the Relief of Poor Widows Solow, Robert Soss, Joe soup kitchens South, American history of welfare in New Deal programs in See also poor whites, Southern Southern Poverty Law Center Spargo, John Special Supplemental Nutrition Program for Women, Infants and Children (WIC) Spinks, Jackie Spott, Robert St. Mary’s Settlement and Day Nursery (Chicago) Stack, Carol Stadum, Beverly Stansell, Christine sterilization, forced Student Nonviolent Coordinating Committee (SNCC) subprime mortgage crisis (2007–2008) substance abuse alcohol and diminished expectations and disapprobation directed at the poor drugs and female tramps and homelessness and moral reform in colonial asylums and TANF recipients and welfare eligibility and women on welfare Subway Beggar (Grachow) Sumner, William Graham Supplemental Security Income (SSI) participation rates Sussman, Marvin Syracuse University’s Maxwell School (2004 poll on income inequality) Tally’s Corner (Liebow) Tammany Hall Taylor, Frederick Winslow teen births teenagers and “bum hunting,” Temporary Assistance to Needy Families (TANF) tenant farming Tennessee Valley Authority (TVA) jobs Terkel, Studs Textile Workers Union Thirteenth Amendment Thompson, F.T.


pages: 654 words: 120,154

The Firm by Duff McDonald

"Robert Solow", Asian financial crisis, borderless world, collective bargaining, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, family office, financial independence, Frederick Winslow Taylor, income inequality, invisible hand, Jeff Bezos, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, Mahatma Gandhi, Nelson Mandela, new economy, pets.com, Ponzi scheme, Ralph Nader, risk tolerance, risk-adjusted returns, shareholder value, Silicon Valley, Steve Jobs, supply-chain management, The Nature of the Firm, young professional

MGI has been successful in giving the firm a quasi-academic glow that’s yet another in the long list of ways it is differentiated from the competition.43 The institute’s work on productivity in the early 1990s is widely regarded as groundbreaking in economic circles. Later work on global capital market developments, the U.S. healthcare system, and energy productivity continues to give McKinsey a voice in conversations to which its competitors are not invited. But it has also given an outlet to the firm’s recurring eruptions of arrogance. When the institute paid significant sums to lure Nobel laureate Robert Solow and other leading economists to its board, then-chairman Ted Hall reportedly professed the belief that the institute itself was doing Nobel-quality work instead of merely buying Nobel-quality window dressing. Marvin Bower instilled the firm’s values system, Ron Daniel perfected its personnel processes and institutionalized the place, and Fred Gluck was the architect of the firm’s knowledge culture.

., 235 Shearson Lehman, 165 Shell Oil, 147–48 Shepard, Steve, 154 Sherman Antitrust Act (1890), 18 Sidebottom, Peter, 254 Silicon Valley, 264, 294 Singh, Manmohan, 312 Skilling, Jeff, 7, 81, 238–46, 248 Sloan, Alfred P., 19, 54 Small Business Administration, 284 Smart Money magazine, 281 The Smartest Guys in the Room (McLean and Elkind), 241, 245 Smith, Adam, 20 Smith, Everett, 58, 76, 80, 94, 100, 101 Smith, Roger, 177, 183, 184 Smith, Yves, 235, 253 society: role of business in, 261–63 Socony Mobil Oil Company, 82, 91 Solow, Robert, 219 Sony Corporation, 114 South African Airlines, 256 Southern California Symphony, 64 Spalding Sporting Goods, 235 Spansion, 309 Special Operating Risk Committee (SORC), McKinsey, 307–8 specialization, 120–23, 142–46, 215 St. Petersburg Hermitage Museum, 228 Standard Oil, 18 State Street, 121 steel industry, 28, 29, 175 Steiner, Tom, 182, 204, 205–6, 216–17, 305 Stern, Stefan, 329 Stewart, Clothilde de Veze, 270 Stewart, MacLain, 83, 230 Stewart, Matthew, 25–26, 28, 84, 89, 112, 151, 184, 206 Stewart, Michael, 307–8 Strategic Planning Associates, 110 strategic planning/thinking: analytical approach to, 113 and BCG as competition for McKinsey, 88–89 BCG role in promotion of, 88–89 Bower’s views about, 41 and business school curriculums, 89–90 Citibank-McKinsey consulting and, 91–92 competition and, 186 decentralization and, 89–90 emergence of, 55–56 as essential to management, 89 focus on, 88–90 Fortune magazine survey about, 140 at GE, 113–15 Gluck and, 153, 197 GM-McKinsey and, 184 goal of, 186 Industrial Prussianism and, 186 as justification for corporate existence, 184 as large source of McKinsey revenue, 73 as learning process, 113 McKinsey knowledge focus and, 139–40 McKinsey’s idea of, 41 nine-box matrix and, 143–45 organizational structure and, 141–42 Peters views about, 151 phases in, 141 as pipe dream, 112–13 Superteam for, 140–42 strategy revolution, 112 Strategy and Structure (Chandler), 77 Sturdivant, Fred, 168, 190–91 succession planning, 66 Sumitomo Bank, 162, 165 Sun Oil, 91 Sunbeam Electric, 53 Superteam, McKinsey, 140–42 Supplementing Successful Management (McKinsey & Company), 45 surveys, McKinsey: as tools, 53–54 Sussex University: as McKinsey client, 77 Swain & Moore, 310 Swedish bank industry, 252 Swift & Company, 24 Swiss banks, 252–53, 286 Swiss Re, 232 Swissair, 2, 58, 86, 255–57 Switzerland: McKinsey activities in, 79, 128, 255–57 Sylvania Electric, 53 Systems Development Corporation, 118 Taj Capital, 312 Talbert, Harold, 68 talent: competition for, 90, 119, 166, 247, 263, 290 Tate & Lyle, 78 Taylor, Frederick Winslow, 26, 28 Taylor, Myron, 31 Taylorism, 26–27 technology, 74, 170, 171, 193, 196, 201–3, 276.


pages: 472 words: 117,093

Machine, Platform, Crowd: Harnessing Our Digital Future by Andrew McAfee, Erik Brynjolfsson

"Robert Solow", 3D printing, additive manufacturing, AI winter, Airbnb, airline deregulation, airport security, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, backtesting, barriers to entry, bitcoin, blockchain, British Empire, business cycle, business process, carbon footprint, Cass Sunstein, centralized clearinghouse, Chris Urmson, cloud computing, cognitive bias, commoditize, complexity theory, computer age, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, Dean Kamen, discovery of DNA, disintermediation, disruptive innovation, distributed ledger, double helix, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ethereum, ethereum blockchain, everywhere but in the productivity statistics, family office, fiat currency, financial innovation, George Akerlof, global supply chain, Hernando de Soto, hive mind, information asymmetry, Internet of things, inventory management, iterative process, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, joint-stock company, Joseph Schumpeter, Kickstarter, law of one price, longitudinal study, Lyft, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, Marc Andreessen, Mark Zuckerberg, meta analysis, meta-analysis, Mitch Kapor, moral hazard, multi-sided market, Myron Scholes, natural language processing, Network effects, new economy, Norbert Wiener, Oculus Rift, PageRank, pattern recognition, peer-to-peer lending, performance metric, plutocrats, Plutocrats, precision agriculture, prediction markets, pre–internet, price stability, principal–agent problem, Ray Kurzweil, Renaissance Technologies, Richard Stallman, ride hailing / ride sharing, risk tolerance, Ronald Coase, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, speech recognition, statistical model, Steve Ballmer, Steve Jobs, Steven Pinker, supply-chain management, TaskRabbit, Ted Nelson, The Market for Lemons, The Nature of the Firm, Thomas Davenport, Thomas L Friedman, too big to fail, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, ubercab, Watson beat the top human players on Jeopardy!, winner-take-all economy, yield management, zero day

So when did this important new, second machine age start? We’ve arrived at a two-phase answer to this question. Phase one of the second machine age describes a time when digital technologies demonstrably had an impact on the business world by taking over large amounts of routine work—tasks like processing payroll, welding car body parts together, and sending invoices to customers. In July of 1987 the MIT economist Robert Solow, who later that year would win a Nobel prize for his work on the sources of economic growth, wrote, “You can see the computer age everywhere but in the productivity statistics.” By the mid-1990s, that was no longer true; productivity started to grow much faster, and a large amount of research (some of it conducted by Erik‡‡ and his colleagues) revealed that computers and other digital technologies were a main reason why.

., 69 Shazam, 161 shopping malls, 131, 134 Silberholz, John, 39 silos, 295–96; See also stacks Simon, Herbert, 69 Simons, Jim, 266 singles (music recordings), 145 “Singles Day” (China), 7–8 Skycatch, 99 Sky Futures, 100 Slack, 249 Slee, Tom, 9 smart contracts blockchain and, 292–95 DAO and, 302–5 solutionism and, 297 smartphones; See also iPhone; specific manufacturers as key to rise of O2O platforms, 195 widespread adoption of, 17–18 Xiaomi, 203 smart tags, 290 Smith, Adam, 279 SMS messages, 140, 141 Snijders, Chris, 38, 55–56 soccer coaches, 122–23 social capital, 262–64 social drives, 122 social media; See also specific sites, e.g.: Facebook as data source, 95 “fake news” on, 234 social networking, 8–9 social skills, 122–24, 321–22 social skill task inputs, 321 Solow, Robert, 16 solutionism, 297–99 Songhurst, Charlie, 195 Sony Music Entertainment, 134 speech recognition, 83–84 Spode, E. J., 305 Spotify, 146–48 stacks, 295–96, 298 Stallman, Richard, 243 standard partnership creativity and, 119, 120 defined, 37 demand for routine skills and, 321 HiPPO and, 45, 59 inversion of, 56–60 modified by data-driven decision making, 46–60 structure of, 31 Starbucks, 185 statistical pattern recognition, 69, 72–74, 81–82, 84 statistical prediction, 41 status quo bias, 21 steampunk, 273 Sterling, Bruce, 295, 298 S3 (Amazon Web Service), 143 Stites-Clayton, Evan, 263 STR, 221 “stranger-danger” bias, 210 streaming services, 146–48 Street, Sam, 184 Street Bump, 162–63 Stripe, 171–74, 205 structured interviews, 57 students, gifted, 40 Sturdivant, Jeremy, 286 subscription services, 147–48 suitcase words, 113 Suleyman, Mustafa, 78 “superforecasters,” 60–61 supervised learning, 76 supply and demand; See also demand; demand curves; supply curves O2O platforms for matching, 193 platforms and, 153–57 and revenue management, 47 supply curves, 154–56 Supreme Court, US, 40–41 surge pricing, 55 Svirsky, Dan, 209n Sweeney, Latanya, 51–52 Swift, Taylor, 148 switching costs, 216–17, 219 Sydney, Australia, hostage incident (2014), 55 symbolic artificial intelligence, 69–72 introduction of, 69–70 reasons for failure of, 70–72 synthetic biology, 271–72 systems integration, 142 System 1/System 2 reasoning, 35–46 and confirmation bias, 57 defined, 35–36 and second-machine-age companies, 325 undetected biases and, 42–45 weaknesses of, 38–41 Szabo, Nick, 292, 294–95 Tabarrok, Alex, 208–9 Tapscott, Alex, 298 Tapscott, Don, 298 Tarantino, Quentin, 136n TaskRabbit, 261, 265 taxi companies, Uber’s effect on, 201 TCE (transaction cost economics), 312–16 TechCrunch, 296 technology (generally) effect on employment and wages, 332–33 effect on workplace, 334 as tool, 330–31 Teespring, 263–64 Teh, Yee-Whye, 76 telephones, 129–30, 134–35 tenure predictions, 39 Tesla (self-driving automobile), 81–82, 97 Tetlock, Philip, 59 text messages, 140–41 Thank You for Being Late (Friedman), 135 theories, scientific, 116–17 theory of the firm, See TCE (transaction cost economics) Thierer, Adam, 272 “thin” companies, 9 Thingiverse, 274 Thinking, Fast and Slow (Kahneman), 36, 43 Thomas, Rob, 262 Thomke, Stefan, 62–63 3D printing, 105–7, 112–13, 273, 308 Thrun, Sebastian, 324–25 TNCs (transportation network companies), 208 TØ.com, 290 Tomasello, Michael, 322 Topcoder, 254, 260–61 Torvalds, Linus, 240–45 tourists, lodging needs of, 222–23 Tower Records, 131, 134 trade, international, 291 trading, investment, 266–70, 290 Transfix, 188, 197, 205 transparency, 325 transportation network companies (TNCs), 208; See also specific companies, e.g.: Uber Transportation Security Administration (TSA), 89 Tresset, Patrick, 117 trucking industry, 188 T-shirts, 264 tumors, 3D modeling of, 106 Turing, Alan, 66, 67n Tuscon Citizen, 132 TV advertising, 48–51 Tversky, Amos, 35 Twitter, 234 two-sided networks credit cards, 214–16 Postmates, 184–85 pricing in, 213–16, 220 pricing power of, 210–11 switching costs, 216–17 Uber, 200, 201, 218–19 two-sided platforms, 174, 179–80 Two Sigma, 267 Uber driver background checks, 208 future of, 319–20 information asymmetry management, 207–8 lack of assets owned by, 6–7 as means of leveraging assets, 196–97 network effects, 193, 218 as O2O platform, 186 origins, 200–202 and Paris terrorist attack, 55 pricing decisions, 212–15, 218–19 rapid growth of, 9 regulation of, 201–2 reputational systems, 209 routing problems, 194 separate apps for drivers and riders, 214 and Sydney hostage incident, 54–55 value proposition as compared to Airbnb, 222 UberPool, 9, 201, 212 UberPop, 202 UberX, 200–201, 208, 212, 213n Udacity, 324–25 unbundling, 145–48, 313–14 unit drive, 20, 23 Universal Music Group, 134 University of Louisville, 11 University of Nicosia, 289 unlimited service ClassPass Unlimited, 178–79, 184 Postmates Plus Unlimited, 185 Rent the Runway, 187–88 unsupervised learning, 76, 80–81 Upwork, 189, 261 Urmson, Chris, 82 used car market, information asymmetry and, 207 Usenet, 229, 271 user experience/interface as platforms’ best weapon, 211 and successful platforms, 169–74 users, as code developers, 242 “Uses of Knowledge in Society, The” (Hayek), 235–37 utilization rate, O2O platforms, 196–97 Van Alstyne, Marshall, 148 Van As, Richard, 272–74 Vancouver, Canada, Uber prohibition in, 202 venture capital, DAO vs., 302 verifiability, 248 verifiable/reversible contributions, 242–43 Verizon, 96, 232n Veronica Mars (movie), 262 Veronica Mars (TV show), 261–62 Viant, 171 video games, AI research and, 75 videos, crowd-generated, 231–32 Viper, 163 virtualization, 89–93; See also robotics vision, Cambrian Explosion and, 95 “Voice of America” (Wright), 229–30 von Hippel, Eric, 265 wage declines, 332 Wagner, Dan, 48–50 Waldfogel, Joel, 144 Wales, Jimmy, 234, 246–48 Walgreens, 185 Walmart, 7, 47 Wanamaker, John, 8–9 warehousing, 102–3, 188 Warner Brothers, 262 Warner Music Group, 134 Washington Post, 132 Washio, 191n waste reduction, 197 Watson (IBM supercomputer) health claim processing, 83 Jeopardy!


pages: 756 words: 120,818

The Levelling: What’s Next After Globalization by Michael O’sullivan

"Robert Solow", 3D printing, Airbnb, algorithmic trading, bank run, banking crisis, barriers to entry, Bernie Sanders, bitcoin, Black Swan, blockchain, Boris Johnson, Branko Milanovic, Bretton Woods, British Empire, business cycle, business process, capital controls, Celtic Tiger, central bank independence, cloud computing, continuation of politics by other means, corporate governance, credit crunch, cryptocurrency, deglobalization, deindustrialization, disruptive innovation, distributed ledger, Donald Trump, eurozone crisis, financial innovation, first-past-the-post, fixed income, Geoffrey West, Santa Fe Institute, Gini coefficient, global value chain, housing crisis, income inequality, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, liberal world order, Long Term Capital Management, longitudinal study, market bubble, minimum wage unemployment, new economy, Northern Rock, offshore financial centre, open economy, pattern recognition, Peace of Westphalia, performance metric, private military company, quantitative easing, race to the bottom, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Scramble for Africa, secular stagnation, Silicon Valley, Sinatra Doctrine, South China Sea, South Sea Bubble, special drawing rights, supply-chain management, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, tulip mania, Valery Gerasimov, Washington Consensus

Many developing countries run into the limits of physical infrastructure–led growth without the productivity boosts that come from intangible factors. Intangible Infrastructure There is a strong link between the level of GDP per capita a country enjoys and the quality of its intangible infrastructure. Singapore, the Netherlands, and Sweden are good examples here. The Nobel Prize–winning economist Robert Solow studied the role that intangible factors like technology and human capital play in generating economic growth. For developed countries, Solow suggests that it is largely technological advances (and I would add, a better understanding of how to use technology) and improvements in human capital that determine the level of economic growth. It is intuitively easy to see how some component parts of intangible infrastructure have a positive impact on society and the economy.

., 291 Roosevelt, Theodore, 293–294 rule of law, and economy, 161–162 Russia, 137, 143–144, 160, 218–219, 296 same-sex marriage, 49–50 Santa Fe Institute, 74 Santolaria, Nicolas, 26 Sawers, John, 249 Scales, Bob, 67 Schott, Peter, 35 Schröder, Gerhard, 107 Schwab, Klaus, 142 science, ideas and paradigm shifts, 71–72 Scotland, 87, 251–253 search engines, 214 Second French Empire, 227 Selassie, Bereket, 281 Shanghai Cooperation Organization (SCO), 245 Shiller, Robert, 65 Shorrocks, Tony, 42 Skilling, David, 271 skyscrapers, as power, 211–212 small-sized nations in multipolar world, 244, 245–246, 259–262 Smoot, Reed, 65 Smoot-Hawley Tariff Act (1930), 65 social change, 47–51 social media, 49, 74, 107, 108–109, 141, 273–274 social mobility, 47 soft vs. hard power, 219–220, 223–224 Solow, Robert, 159–160 Somewhere/Anywhere theory, 79–80 Soros, George, 107 sortition, 109–110 Spanberger, Abigail, 129 Special Drawing Rights (SDR) bonds, 265–266 Spinoza, 94 St. Mary’s Church, 3, 81, 82 Stability and Growth Pact, 195 stock market. See financial markets strength of countries, 158–159, 162–164, 165 Sufi, Amir, 176 Survey of Consumer Finance, 43 Sweden, 6 Syriza, 110 Taleb, Nassim, 69 technology automation issues, 46 in China, 224, 231, 272–273 economy and economic growth, 142, 214 first globalization, 58, 60, 61–62 as force, 58–59 frameworks and standards, 297–299 and globalization, 213–214 and governments, 272–273 and inequalities, 46 interconnections worldwide, 8–9 Levellers as model, 96, 98, 99–100 pace of change, 26 political parties, 115 and productivity, 145 regulation, 275–276 as solution, 26 transparency, 262 Thatcher, Margaret, 133 Thirty Years’ War, 240 314 Action, 129 “Thucydides’s Trap,” 224 TomTom Traffic Index, 50 top 1 percent of wealthy, 40, 42 “total factor productivity,” 144 trade China, 33, 216, 232 and first globalization, 59–60 and globalization, 30, 31, 32–33 and jobs, 35 Levellers’ demands, 89 policy and agreements, 32–33 and politics, 34, 35–36 problems and disputes, 24, 33–34 protectionism, 34 recess, 30, 31, 32 US vs.


pages: 1,373 words: 300,577

The Quest: Energy, Security, and the Remaking of the Modern World by Daniel Yergin

"Robert Solow", addicted to oil, Albert Einstein, Asian financial crisis, Ayatollah Khomeini, banking crisis, Berlin Wall, bioinformatics, borderless world, BRICs, business climate, carbon footprint, Carmen Reinhart, cleantech, Climategate, Climatic Research Unit, colonial rule, Colonization of Mars, corporate governance, cuban missile crisis, data acquisition, decarbonisation, Deng Xiaoping, Dissolution of the Soviet Union, diversification, diversified portfolio, Elon Musk, energy security, energy transition, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, fear of failure, financial innovation, flex fuel, global supply chain, global village, high net worth, hydraulic fracturing, income inequality, index fund, informal economy, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), James Watt: steam engine, John von Neumann, Kenneth Rogoff, life extension, Long Term Capital Management, Malacca Straits, market design, means of production, megacity, Menlo Park, Mikhail Gorbachev, Mohammed Bouazizi, mutually assured destruction, new economy, Norman Macrae, North Sea oil, nuclear winter, off grid, oil rush, oil shale / tar sands, oil shock, Paul Samuelson, peak oil, Piper Alpha, price mechanism, purchasing power parity, rent-seeking, rising living standards, Robert Metcalfe, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Sand Hill Road, shareholder value, Silicon Valley, Silicon Valley startup, smart grid, smart meter, South China Sea, sovereign wealth fund, special economic zone, Stuxnet, technology bubble, the built environment, The Nature of the Firm, the new new thing, trade route, transaction costs, unemployed young men, University of East Anglia, uranium enrichment, William Langewiesche, Yom Kippur War

This innovation in interchangeable parts became known as the American system of manufacturing and was critical to America’s rise as an industrial power.5 But it was only after World War II that the government took on a much broader responsibility for supporting basic research and the whole R&D system. THE PUBLIC GOOD Spending on R&D has generally been recognized as a government responsibility because it is a public good. Beyond what the private investor can expect, R&D provides benefits in the form of higher economic growth, improved quality of life, and national security. When receiving the Nobel Prize in economics, MIT economist Robert Solow emphasized the central importance of innovation—the transfer of technology “from laboratory to factory”—to economic growth. Energy R&D is required to meet the more specific challenges of energy supply, usage, security, environmental impact—and, increasingly, climate change. The time horizons for energy innovation are often far longer than can be sustained either by companies, under quarterly-profit pressure, or by investment funds, which aim to exit an investment within five years.

Chapter 28: Science Experiment 1 Clay Christensen, The Innovator’s Dilemma (Cambridge: Harvard University Press, 2003). 2 Steven Chu autobiography, Nobel Prize Web site. 3 Interviews with Raymond Orbach and John Tully. 4 Chu autobiography, Nobel Prize Web site. 5 Vernon W. Ruttan, Is War Necessary for Economic Growth?: Military Procurement and Technology Development (Oxford: Oxford University Press, 2006), pp. 21–27. 6 Robert Solow, “Growth and After,” Nobel Prize lecture, November 18, 1987; Steven Koonin, “From Energy Innovation to Energy Transformation,” pp. 4, 8–10 (scrubbers); MIT Energy Initiative, The Future of Natural Gas: Interim Report (Cambridge: Massachusetts Institute of Technology Press, 2010) (coal bed methane). 7 DOE, “DOE Nobel Laureates” and “Laboratories,” U.S. Department of Energy. 8 Secretary of Energy Advisory Board, Task Force on Strategic Energy R&D, Energy R&D: Shaping Our Nation’s Future in a Competitive World (Washington, DC: GPO, 1995), p. 1 (“deficit”); Kelly Gallagher, Ambuj Sagar, Diane Segal, Paul de Sa, and John P.

Simmons, Matthew R. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Hoboken, N.J.: John Wiley, 2006. Simonds, William Adams. Edison: His Life, His Work, His Genius. Indianapolis: Bobbs-Merrill, 1934. Smith, Adam. Paper Money. New York: Summit Books, 1981. Soares de Oliveira, Ricardo. Oil and Politics in the Gulf of Guinea. New York: Columbia University Press, 2007. Solow, Robert. “Growth and After.” Nobel Prize Lecture. November 18, 1987. Sonnichsen, Ole. The Winner: The Dramatic Story of Vestas. Copenhagen: Gads Forlag, 2009. South Coast Air Quality Management District. The Southland’s War on Smog: Fifty Years of Progress Toward Clean Air. May 1997. Sperling, Daniel, and Deborah Golden. Two Billion Cars: Driving Toward Sustainability. Oxford: Oxford University Press, 2009.


pages: 538 words: 141,822

The Net Delusion: The Dark Side of Internet Freedom by Evgeny Morozov

"Robert Solow", A Declaration of the Independence of Cyberspace, Ayatollah Khomeini, Berlin Wall, borderless world, Buckminster Fuller, Cass Sunstein, citizen journalism, cloud computing, cognitive dissonance, Columbine, computer age, conceptual framework, crowdsourcing, Dissolution of the Soviet Union, don't be evil, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global village, Google Earth, illegal immigration, invention of radio, invention of the printing press, invisible hand, John Markoff, John von Neumann, Marshall McLuhan, Mitch Kapor, Naomi Klein, Network effects, new economy, New Urbanism, Panopticon Jeremy Bentham, peer-to-peer, pirate software, pre–internet, Productivity paradox, RAND corporation, Ronald Reagan, Ronald Reagan: Tear down this wall, Silicon Valley, Silicon Valley startup, Sinatra Doctrine, Skype, Slavoj Žižek, social graph, Steve Jobs, technoutopianism, The Wisdom of Crowds, urban planning, Washington Consensus, WikiLeaks, women in the workforce

(Cowan notes that in 1950 the American housewife produced singlehandedly what her counterpart needed a staff of three or four to produce just a century earlier.) Who could have predicted that the development of “labor-saving devices” had the effect of increasing the burden of housework for most women? Similarly, the introduction of computers into the workforce failed to produce expected productivity gains (Tetris was, perhaps, part of some secret Soviet plot to halt the capitalist economy). The Nobel Prize-winning economist Robert Solow quipped that “one can see the computer age everywhere but not in the productivity statistics!” Part of the problem in predicting the exact economic and social effects of a technology lies in the uncertainty associated with the scale on which such a technology would be used. The first automobiles were heralded as technologies that could make cities cleaner by liberating them of horse manure. The by-products of the internal combustion engine may be more palatable than manure, but given the ubiquity of automobiles in today’s world, they have solved one problem only by making another one—pollution—much worse.

See also individual search engines Searle, John Securing Cyberspace for the 44th Presidency (Lewis) Security Segal, Howard Sergeyeva, Maria Sex, and politics Shane, Scott Sharansky, Natan Sharp, Gene Sheridan, Barrett Shimko, Keith Shirk, Susan Shirky, Clay Shiyu Zhou SIM cards, prepaid Sinatra doctrine Singapore Skype Slacktivism Slee, Tom Smartphone SMS-filtering technology Snore, Evdins Social engineering A Social History of the Media (Briggs and Burke) Social network activism in Morocco See also Activism Social network lawlessness Social network surveillance. See also Surveillance Social network(s) and censorship and democracy, threats to and foreign policy and Internet, regulation of and Internet search surveillance and narcissism See also individual social networks; Social network activism; Social network lawlessness; Social network surveillance Social problems Solow, Robert Solzhenitsyn, Aleksandr Somalia Soros, George South Korea “Sovereignty in Cyberspace” (Franzese) Soviet republics The Soviet Story (documentary) Soviet Union collapse of and information technology Spectator Specter, Arlen Speer, Albert Spin. See also Propaganda; Spinternet Spinternet. See also Spin Sreberny, Annabelle Stalin, Joseph Stanton, Katie Jacobs Stewart, Jon Stork Fountain experiment Streisand, Barbara Streisand Effect Suleymanly, Bashir Sullivan, Andrew Sunstein, Cass Surkov, Vladislav Surveillance and databases and face-recognition and mobile phones modern and obscurity and technological fixes and text messaging traditional in Vietnam See also Censorship; Internet search surveillance; Social network surveillance; Video surveillance Switzerland Swope, Gerald Syria Tal Der Ahnungslosen (“The Valley of the Clueless”) Taliban Technological determinism Technological experts Technological fetishism Technological fixes and authoritarianism and technological experts vs. social engineering Technology and authoritarian governments and economocs excessive optimism about funding of history of neutrality of predictions about(see also Internet, predictions about) See also Information technology Tehrani, Hamid Telegraph Telephone Television.


pages: 484 words: 136,735

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky

"Robert Solow", bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, Carmen Reinhart, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, global rebalancing, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, Long Term Capital Management, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage debt, Nelson Mandela, new economy, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game

Better still, the neoclassical synthesis, in contrast to the classical economics of the nineteenth-century, made room for the post-Depression political realities of welfare safety nets and active demand management to stabilize business cycles, by explaining that the Fordist economic machine needed occasional lubrication, “pump-priming,” and “kickstarting” by a benignly probusiness government. Thus the new paradigm was able to co-opt both the Left and the Right. Conservatives were happy to describe the new orthodoxy as the neoclassical synthesis, while progressives such as Paul Samuelson and Robert Solow felt able to call it neo-Keynesian economics. In this process of accommodation to the postwar ideological consensus, however, the most important insight of macroeconomics was lost: Financial instability was no longer recognized as a natural consequence of uncertainty about the future; financial cycles were now merely aberrations caused by imperfections that could, at least in theory, be ironed out by government intervention.

./ administration; Lehman Brothers collapse Pension/health entitlements People’s Daily, China Personalities importance Petronius, Gaius Phelps, Edmund Planck, Max Platform Companies (Platco) Plato “Policy Ineffectiveness Proposition” (Sargent/Wallace) Prince, Charles Protectionism Protestant Ethic and the Spirit of Capitalism, The (Weber) Public Choice theory Rajan, Ranghuram Ramo, Joshua Rand, Ann Rational Expectations Hypothesis (REH) Rationality concept Reagan, Ronald See also Thatcher-Reagan revolution Reflexivity description See also Theory of Reflexivity Reich, Robert Reinhart, Carmen Ricardian Equivalence theory, Barro Ricardo, David Robinson, Joan Rogoff, Kenneth Roosevelt, Franklin Rowthorn, Robert Rumsfeld, Donald Samuelson, Paul Sargent, Thomas Sarkozy, Nicolas Savings Schumpeter, Joseph Seabright, Paul Sen, Amartya Shakespeare Shiller, Robert Short sellers Simon, Herbert Simon, John Singh, Jaswant Skidelsky, Robert Slaughter, Anne-Marie Smith, Adam Capitalism 1 and ideas/impact “invisible hand” of competitive markets concept Smith, Vernon Solow, Robert Sorkin, Andrew Ross Soros, George boom-bust cycles and boom-bust cycles/Theory of Reflexivity “market fundamentalism” term/concept South Sea Bubble/effects Sovereign wealth funds Specialization Spence, Michael Stagflation 1970s causes/conditions for description threat of Stiglitz, Joe Stimulus. See Government stimulus, postcrisis Structure of Scientific Revolutions, The (Kuhn) Summers, Lawrence Sunset clauses Taleb, Nassim TARP (Troubled Asset Relief Program) Taxes conservatives vs. the Left increases and oil use/industry progressive income tax beginnings progressive taxation effects structure issues Tea Party demonstrations Tett, Gillian Thatcher, Margaret Thatcher-Reagan revolution 1970s challenges and 2007-09 crisis and about failures of narrative of See also Capitalism Market fundamentalism; Monetarism Theory of Moral Sentiments (Smith) Theory of Reflexivity Thrift paradox Tobin, James Toffler, Alvin Trillion Dollar Meltdown, The (Morris) Tulipmania/effects Turner, Adair Unemployment central bankers and demand management and labor unions and monetarists and “natural-rate hypothesis,” targeted levels Value chain Viniar, David Volcker, Paul Federal Funds rate on finances inflation and monetarism Voltaire , Wachovia Wallace, Neil Washington Consensus Washington Mutual Watson, Thomas J.


pages: 477 words: 135,607

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson

"Robert Solow", air freight, anti-communist, barriers to entry, Bay Area Rapid Transit, British Empire, business cycle, call centre, collective bargaining, conceptual framework, David Ricardo: comparative advantage, deindustrialization, deskilling, Edward Glaeser, Erik Brynjolfsson, full employment, global supply chain, intermodal, Isaac Newton, job automation, Jones Act, knowledge economy, Malcom McLean invented shipping containers, manufacturing employment, Network effects, New Economic Geography, new economy, oil shock, Panamax, Port of Oakland, post-Panamax, Productivity paradox, refrigerator car, South China Sea, trade route, Works Progress Administration, Yom Kippur War, zero-sum game

On transportation and urban development, see James Heilbrun, Urban Economics and Public Policy (New York, 1974), p. 32, and Edwin S. Mills and Luan Sendé, “Inner Cities,” Journal of Economic Literature 35 (1997): 731. On aviation, see Caroline Isard and Walter Isard, “Economic Implications of Aircraft,” Quarterly Journal of Economics 59 (1945): 145–169. 12. The seminal article along this line was Robert Solow, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics 39, no. 2 (1957): 65–94. On the problems of innovation, see Joel Mokyr, “Technological Inertia in Economic History,” Journal of Economic History 52 (1992): 325–338; Nathan Rosenberg, “On Technological Expectations,” Economic Journal 86, no. 343 (1976): 528; and Erik Brynjolfsson and Lorin M. Hitt, “Beyond Computation: Information Technology, Organizational Transformation, and Business Performance,” Journal of Economic Perspectives 14, no. 4 (2000): 24.

“Why They Stick to the ILA.” Monthly Review (January 1956). Sjostrom, William. “Ocean Shipping Cartels: A Survey.” Review of Network Economics 3, no. 2 (2004). Slack, Brian. “Pawns in the Game: Ports in a Global Transportation System.” Growth and Change 24, no. 4 (1993). Slesinger, Reuben E. “The Pace of Automation: An American View.” Journal of Industrial Economics 6, no. 3 (1958): 241–261. Solow, Robert. “Technical Change and the Aggregate Production Function.” Review of Economics and Statistics 39, no. 2 (1957): 65–94. Stocker, H. E. “Cargo Handling and Stowage.” Society of Naval Architects and Marine Engineers, November 1933. Summers, Clyde W. “Admission Policies of Labor Unions.” Quarterly Journal of Economics 61, no. 1 (1946). Sung, Nai-Ching, and Michael C. Bunamo. “Competition for Handling U.S.


pages: 462 words: 129,022

People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

"Robert Solow", affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, battle of ideas, Berlin Wall, Bernie Madoff, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, central bank independence, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, deglobalization, deindustrialization, disintermediation, diversified portfolio, Donald Trump, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, global supply chain, greed is good, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta analysis, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Jobs, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population

Stiglitz, “Human Fallibility and Economic Organization,” American Economic Review 75, no. 2 (1985): 292–96; and Raaj Sah and Joseph E. Stiglitz, “The Architecture of Economic Systems: Hierarchies and Polyarchies,” American Economic Review 76, no. 4 (1986): 716–27. 21.An important set of associated institutions are our educational institutions, which train individuals in how to discover and assess the truth. 22.Robert Solow of MIT showed that the overwhelming fraction of increases in standards of living arises from advances in science and technology, work for which he received the Nobel Memorial Prize in Economics in 1987. His two classic papers were “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics 70, no. 1 (1956): 65–94; and “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics 39, no. 3 (1957): 312–20.

Holder, 342–43n44 Sherman Antitrust Act (1890), 68 Shiller, Robert, 63–64 shortsightedness, 104–5 short-term interests, 84, 112 short-term stock trading, 207 Silicon Valley, 16, 117 Sinclair, Upton, 144 single payer system, 214 skill-biased technological changes, 304n19 slavery, 161, 271n3 small and medium-sized enterprises (SMEs), 102, 105–6 Smith, Adam, 152 on collusion among businesses, 51, 66 and Enlightenment, 10 and limits of markets, 24 and moral sentiments, 229 Wealth of Nations, 8–9 Snowden, Edward, 127 Social Darwinism, 309–10n42 social insurance programs, 141, 189 “socialist market economy with Chinese characteristics,” 95 social justice government involvement in economy and, 142 and intergenerational transmission of advantage/disadvantage, 199–201 and labor market, 197–99 restoring, 197–201 social media, 96, 131–36; See also Facebook social protection, 188–91 government and, 231 unemployment insurance, 189–90 universal basic income, 190–91 Social Security, 13, 142, 189, 210, 214–16, 242 Social Security Administration, 217 Social Security Trust Fund, 216 society, economic behavior and, 30 soft power, 29, 235–36 solar panels, Chinese, 91–92 Solow, Robert, 263n22 special interests, 146; See also lobbyists specialization, 9 SpeechNow.org v. FEC, 332n29 “splinternet,” 135 split shifts/split scheduling, 66, 197 Standard Oil, 134 standards of living after 1800, 264n23 government-sponsored research and, 232 growth and, 181 increases over past 250 years, 11–12 international comparisons of, 35–37 knowledge and, 183–84, 240, 263n22 tariffs and, 91 Stanford University, 16 Staples, 125 state capitalism, 95 stock market, 112, 207, 214, 236 streaming video, 147–48 structural reforms, 70 student debt, 220 subsidies, 96–97 “sugar high,” from 2017 tax bill, 185, 236–38 suicide, 42 Super PACs, 332n29 supply and demand, labor and, 82, 122, 198 supply chains, 92 supply-side economics, xv, xvii, 25, 195 Supreme Court gene patent cases, 74–75, 127 lack of enforcement power, 241 on limits to freedom of speech, 133 loss of status as fair arbiter, 165–67 and power of money in politics, 169–70 Senate and, 6 Voting Rights Act gutted by, 202 Sweden, 25, 133, 269n45 Switzerland, 193 Syprine, 71 tariffs, 35, 87, 90–93 taxation of data, 131 educational system and, 220 of financial institutions, 207 and free-rider problem, 156 rent-seeking and, 268n43 restoring fairness to system, 205–8 and structural transformation from technological change, 123 and Sweden’s economic success, 25 and technological change, 122 of universities, 16, 184 tax avoidance, 108 tax bill (2017), 85 Affordable Care Act and, 212–13 damage to future generations from, 204 failed ideas behind, 184–85 flaws and loopholes, xvii–xix, 85, 258n6 infrastructure and, 183 public opinion of, 160 real estate interests and, 168–69 regressiveness of, 175, 194, 206 research universities and, 16, 184 share buybacks, 109 “sugar high” from, 236–38 trade deficit and, 90 Trump and, 152 as voodoo economics, xv tax cuts effects of, 268–69n44, 268n43 growth slowed by, 25, 26 under Trump, See tax bill (2017) tax revenue, globalization and, 84–86 teachers, 123, 200, 201 teams and teamwork, 225–26 Tea Party movement, 114, 174, 178 technology AI, See artificial intelligence Big Data, See Big Data challenges posed by, 117–37 customer targeting, 125–26 data regulation, 128–31 effect on individuals/social interactions, 136 employment and, 118–23 job destruction and, 86–87 lower wages and increased inequality from, 122–23 market power and, 73–74, 123–35 privacy and, 127–28 real pace of innovation, 118–19 threat to democracy posed by, 131–35 wealth of nation and, xiv telecom industry, 49 Ten Commandments, 143 term limits, 166, 167 Thaler, Richard, 126 Thatcher, Margaret, xiv–xv Thiel, Peter, 47, 104 Thomas, Clarence, 165 three-fifths clause, 161 Time Warner, 325n17 tolerance, 228 TPP (Trans-Pacific Partnership), 87 trade agreements, 80, 83–84, 87–89, 91, 99 trade deficit, 35, 89–91, 307n32 trade imbalance, budget deficits and, 90 trade liberalization, 82; See also globalization Trade-Related Aspects of Intellectual Property Rights (TRIPS), 89 trade wars, 93–94 transaction costs mortgage reform and, 217 public vs. private sector, 189, 214 of voting, 161 Trans-Pacific Partnership (TPP), 87 transparency, disclosure laws and, 171 Treasury Department, US, 173 trickle-down economics, xxv, 38, 82–83; See also supply-side economics TRIPS (Trade-Related Aspects of Intellectual Property Rights), 89 Trump, Donald, and administration; See also tax bill (2017) and Affordable Care Act, 212–13 attack on checks and balances, 233–34 attack on Enlightenment ideals, 14–22 attack on judiciary, 17, 165 attack on political system, 164 attack on publicly-funded research, 184 attack on truth, 177, 234 attack on truth-telling institutions, 14–18 2008 bank bailout and rise of, 114 and business community, 14–16 cost-benefit analysis under, 205 election of, 3 and globalization, 80–81 and immigration, 181 and lack of consequences for elites in Great Recession, 152 lack of rational discussion of nation’s problems, 240 Nazi’s rise in Germany compared to, 15–16 and need for good governance, 234–35 net neutrality repeal, 147 and protectionism, 89 public institutions undermined by, 231–33 Reagan administration’s parallels with, xvi and “rigged” system, 21 rule of law disregarded by, 80–81 tax “reform,” See tax bill [2017] and TPP, 87 and trade wars, 93–94 Trumponomics, xx; See also tax bill (2017) trust, as essential to economic system, 104 truth Enlightenment’s concern with, 10 Trump’s attack on, 14–18, 234 Tüfekçi, Zeynep, 126 Turing Pharmaceuticals, 296n72 twin deficits, 307n30 Twitter, 132 UBI (universal basic income), 190–91 Ulukaya, Hamdi, 266n33 unemployment automation and, 119–20 labor markets and, 65 market economies and, 23 universal basic income, 190–91 as waste of resources, 193 unemployment insurance, 189–90 unions, 66–67, 86–87 union shops, 67 United Kingdom, independent public media in, 133 US Trade Representative (USTR), 99–100 universal basic income (UBI), 190–91 universal health care, 13 universities income inequality and, 200 and 2017 tax bill, 16, 184 Trump’s attack on, 16–17 University of California, Berkeley, 16 University of Chicago, 68 unskilled workers, See low-skilled workers urbanization, 153, 187 USTR (US Trade Representative), 99–100 usury laws, 145 Valeant, 71 values American, 222 as cause of current problems, 239–40 conservatism vs. embracing change, 226–28 globalization and multiple systems of, 94–97 market economy and, 30 myths and, 224–26 shared, 228–30 social reality vs., 223–28 vertical mergers, 325n17 Visa, 60 Vlingo, 286n34 voodoo economics, xv voter disenfranchisement/suppression, 161–62 voting, 246 voting reform, 161–63 Voting Rights Act (1965), 202 wages after Great Recession, 193–94 class disparities, 38–39 globalization and, 80, 82 market power and, 65–66 new technologies and, 122–23 productivity and, 38 teachers and incentive pay, 201 Wall Street, 173; See also stock market Walmart, 71–72 Walton family, 43, 279n40 wealth concentration among three richest Americans, 5 creating vs. taking, 49–50 curbing the influence on democracy, 176–78 and inequality of opportunity, 44–45 and manipulation of public opinion via new technology, 132 and media control, 133 wealth creation, xiv, 26 wealth income ratio, 54 wealth inequality, 43, 177–78, 206, 238 wealth of nations alternative theories on sources of, 22–31 attack on sources of, 14–22 elements of, xiv, xxiv supply-side economics and, 25 true sources of, 8–9 unfettered markets and, 23–25 Wealth of Nations, The (Smith), 8–9 wealth redistribution, 50, 64 weather-related disasters, 207 Wells Fargo, 103 WhatsApp, 70, 73, 124 women and labor force growth, 181 life expectancy and socioeconomic status, 41 and teacher salaries, 200 wage inequality, 41 work, See jobs work–life balance, 192, 197 World Bank, 80 World Bank human capital index, 36 World Trade Organization (WTO), 83 World War II, 120, 210 Wynn, Steve, 331n26 Yale University, 126 Youn, Monica, 333n35 zero-sum thinking, 19 Zuckerberg, Mark, 117 ALSO BY JOSEPH E.


pages: 998 words: 211,235

A Beautiful Mind by Sylvia Nasar

"Robert Solow", Al Roth, Albert Einstein, Andrew Wiles, Brownian motion, business cycle, cognitive dissonance, Columbine, experimental economics, fear of failure, Gunnar Myrdal, Henri Poincaré, invisible hand, Isaac Newton, John Conway, John Nash: game theory, John von Neumann, Kenneth Arrow, Kenneth Rogoff, linear programming, lone genius, longitudinal study, market design, medical residency, Nash equilibrium, Norbert Wiener, Paul Erdős, Paul Samuelson, prisoner's dilemma, RAND corporation, Ronald Coase, second-price auction, Silicon Valley, Simon Singh, spectrum auction, The Wealth of Nations by Adam Smith, Thorstein Veblen, upwardly mobile, zero-sum game

Richard Palais, professor of mathematics, Brandeis University, interview, 11.6.95. 27. Bell, op. cit. 28. Atle Selberg, interview. 29. Eugenio Calabi, interview, 3.2.96. 30. Letter from John Nash to Martha Nash Legg, 11.4.65. 31. Stein, interview. 32. Hörmander, interview. 33. Harold Kuhn, e-mail, 7.97. 34. Paul A. Samuelson, interview. 35. William led Martin, interview, 9.7.95. 36. Robert Solow, professor of economics, MIT, interview, 1.95. 37. Martin, interview. 38. Cathleen Morawetz, interview, 2.29.96. 39. Alicia Nash, interview, 1.3.97. 40. Ibid. 41. John Nash, personal communication, 3.22.96. 42. Eva Browder, interview, 9.6.97. 43. Ibid. 44. A. Nash, interview 45. F. Browder, interview. 46. John Moore, professor of mathematics, Princeton University, interview, 10.5.95. 33: Schemes 1.

Saunders McLane, former chairman, department of mathematics, University of Chicago, interview, 3.4.96. 12. Shlomo Sternberg, interview, 3.5.96. 13. Ibid. Also membership application, Institute for Advanced Studies, tall 1958. 14. Letter from Albert W. Tucker to John Nash, 10.8.58. 15. Letter from Albert W. Tucker to Sloan Foundation, 10.8.58. 16. Letter from Albert W. Tucker to Guggenheim Foundation, 11.26.58. 17. Gian-Carlo Rota, interview, 11.14.95. 18. Robert Solow, emeritus professor of economics, MIT, interview, 1.95. 19. Letter from John Nash to Virginia Nash, 10.15.58. 20. New York Times, 11.14.63. 21. Paul S. Cohen won the Fields in 1966 and the Bôcher in 1964. The sketch of Paul Cohen is based on interviews with Raoul Bott, 11.95 and 11.5.96; Lennart Carleson, 10.18.95; Elias Stein, 12.28.95; Felix Browder, 11.2.95; Adriano Garsia, professor of mathematics, University of California at San Diego, 12.31.95; Lars Hörmander, 2.13.97; Jiirgcn Moser, 3.21.96; Jerome Neuwirth, 5.27.97. 22.

., 39, 99–103, 112, 113, 117, 119, 120, 122, 152, 208, 321, 388 in Econometric Society, 354 Nash’s arrest and, 187 on Nash’s illness, 299–300 in Nobel deliberations, 363, 364 remission noted by, 350 von Neumann prize arranged by, 338–339, 354 Sheldon, Elizabeth, 27–28 Shelley, Mary Wollstonecraft, 273 Shelley, Percy Bysshe, 269 Sherman, Agnes, 284 Sherman, Michael, 284 Sherman Institute, 26 Shubik, Martin, 63, 101, 102, 120, 208, 286 in Econometric Society, 354, 355 Nobel deliberations and, 366 Siegel, Carl Ludwig, 226 Siegel, George, 43, 45 Siegel, Robert, 42 Simon, Herbert, 108, 117 Singer, Isadore M., 142, 144–45, 162, 203 Nash’s McLean commitment and, 260 singularities, canonical resolution of, 318 Slater, J. C, 222–23 Sloan Fellowships, 202, 236, 280 Smith, Adam, 15, 88, 119, 151, 374–75 Smith (Nash), Martha (grandmother), 26 Social Democratic Party (Sweden), 359, 364, 366 Sohlman, Michael, 357 Solomon, Gustave, 144, 180 “So Long, Sucker,” 102 Solow, Robert, 134, 232, 233 Sophocles, 94 Soviet Union, 109, 110, 118, 119, 121 special theory of relativity, 51–52, 70, 86 Spencer, Donald, 93, 129–30, 131, 132, 141, 285, 291, 295 Carrier Clinic visits of, 307 description of, 130 IAS appointment obtained through, 296 Michigan position arranged by, 303, 304 Moore visited by, 341 Sputnik 106, 222 Stahl, Ingemar, 362, 364–72 Stahl, Ingolf, 362 Stanton, Alfred H., 259 Starr, Norton, 344 Stearns, A.


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The Rise of the Network Society by Manuel Castells

"Robert Solow", Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, business cycle, capital controls, complexity theory, computer age, computerized trading, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, financial deregulation, financial independence, floating exchange rates, future of work, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, James Watt: steam engine, job automation, job-hopping, John Markoff, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, Leonard Kleinrock, longitudinal study, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-industrial society, postindustrial economy, prediction markets, Productivity paradox, profi