Capital in the Twenty-First Century by Thomas Piketty

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pages: 345 words: 92,849

Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook

3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, corporate governance, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, wealth creators, women in the workforce, working poor, zero-sum game

Stiglitz, “Equal Opportunity, Our National Myth,” New York Times, February 2013, http://opinionator.blogs.nytimes.com/2013/02/16/equal-opportunity-our-national-myth/ (accessed April 12, 2015). 3. Thomas Piketty, “Capital in the Twenty-First Century,” March 2014, http://piketty.pse.ens.fr/en/capital21c2 (accessed April 12, 2015). 4. On some of the problems with Piketty’s data on wealth inequality, see Phillip W. Magness and Robert P. Murphy, “Challenging the Empirical Contribution of Thomas Piketty’s Capital in the Twenty-First Century,” Journal of Private Enterprise, Spring 2015, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2543012 (accessed April 12, 2015); Malin Sahlén and Salim Furth, “Piketty Is Misleading about the Swedish Case,” Timbro, November 7, 2014, http://timbro.se/en/samhallsekonomi/articles/piketty-is-misleading-about-the-swedish-case (accessed April 12, 2015); Phillip W. Magness, “5 Remaining Problems for Thomas Piketty in the Wake of the FT Controversy,” Atlas Network, June 16, 2014, http://www.atlasnetwork.org/news/article/5-remaining-problems-for-thomas-piketty-in-the-wake-of-the-ft-controversy (accessed April 12, 2015); and Alan J.

Timothy Noah, The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It (New York: Bloomsbury Press, 2013), chapter 1. 6. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap, 2014), pp. 1, 514. 7. Obama, “Remarks by the President on Economic Mobility.” 8. James Truslow Adams, The Epic of America (Garden City, NY: Garden City Books, 1933), p. 317. 9. Obama, “Remarks by the President on Economic Mobility.” 10. Joseph E. Stiglitz, “Conclusion: Slow Growth and Inequality Are Political Choices. We Can Choose Otherwise,” Washington Monthly, November/December 2014, http://www.washingtonmonthly.com/magazine/novemberdecember_2014/features/conclusion_slow_growth_and_ine052716.php (accessed April 12, 2015). 11. Obama, “Remarks by the President on Economic Mobility.” 12. Piketty, Capital in the Twenty-First Century, pp. 513, 517. 13.

See also Daniel J. Mitchell, “What Can the United States Learn from the Nordic Model?,” Policy Analysis, November 5, 2007, http://object.cato.org/sites/cato.org/files/pubs/pdf/pa-603.pdf (accessed May 28, 2015). 60. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap, 2014), pp. 247–49. 61. Johnny Munkhammar, “The Swedish Model: It’s the Free-Market Reforms, Stupid!” Wall Street Journal, January 26, 2011, http://www.wsj.com/articles/SB10001424052748704698004576104023432243468 (accessed April 13, 2015). 62. Piketty, Capital in the Twenty-First Century, p. 246. Chapter 5 1. Joseph Stiglitz, “America Is No Longer a Land of Opportunity,” Financial Times, June 25, 2012, http://www.ft.com/intl/cms/s/2/56c7e518-bc8f-11e1-a111-00144feabdc0.html (accessed April 28, 2015). 2.


pages: 470 words: 148,730

Good Economics for Hard Times: Better Answers to Our Biggest Problems by Abhijit V. Banerjee, Esther Duflo

"Robert Solow", 3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, basic income, Bernie Sanders, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, charter city, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, endowment effect, energy transition, Erik Brynjolfsson, experimental economics, experimental subject, facts on the ground, fear of failure, financial innovation, George Akerlof, high net worth, immigration reform, income inequality, Indoor air pollution, industrial cluster, industrial robot, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jean Tirole, Jeff Bezos, job automation, Joseph Schumpeter, labor-force participation, land reform, loss aversion, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, Network effects, new economy, New Urbanism, non-tariff barriers, obamacare, offshore financial centre, open economy, Paul Samuelson, place-making, price stability, profit maximization, purchasing power parity, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Robert Gordon, Ronald Reagan, school choice, Second Machine Age, secular stagnation, self-driving car, shareholder value, short selling, Silicon Valley, smart meter, social graph, spinning jenny, Steve Jobs, technology bubble, The Chicago School, The Future of Employment, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, trickle-down economics, universal basic income, urban sprawl, very high income, War on Poverty, women in the workforce, working-age population, Y2K

Ely Lecture, American Economic Review: Papers and Proceedings, 2019. 34 David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen, “The Fall of the Labor Share and the Rise of Superstar Firms,” NBER Working Paper 23396, issued in May 2017, DOI: 10.3386/w2339. 35 Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014). 36 World Bank Data, accessed April 19, 2019, https://data.worldbank.org/indicator/ne.trd.gnfs.zs. 37 Claudia Goldin and Lawrence F. Katz, The Race between Education and Technology (Cambridge, MA: Harvard University Press, 2010). 38 Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014). 39 David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen, “The Fall of the Labor Share and the Rise of Superstar Firms,” NBER Working Paper 23396 10.3386/w2339, 2017. 40 Jason Furman and Peter Orszag, “Slower Productivity and Higher Inequality: Are They Related?

The Ones Without Principals Are,” Quarterly Journal of Economics 116, no. 3 (2001): 901–32. 57 Scharfstein and Greenwood showed that in most continental European countries the share of finance in the economy either did not grow much in the 1990s and 2000s, or it even declined. Robin Greenwood and David Scharfstein, “The Growth of Finance,” Journal of Economic Perspectives 27, no. 2 (2013): 3–28. 58 Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014), 550–51, and Emmanuel Saez and Gabriel Zucman, “Alexandria Ocasio-Cortez’s Idea Is Not about Soaking the Rich,” accessed April 20, 2019, https://www.nytimes.com/2019/01/22/opinion/ocasio-cortez-taxes.html. 59 Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva, “Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities,” American Economic Journal: Economic Policy 6, no. 1 (2014): 230–71. 60 Maury Brown, “It’s Time to Blowup the Salary Cap Systems in the NFL, NBA, and NHL,” Forbes, March 10, 2015, accessed April 11, 2019, https://www.forbes.com/sites/maurybrown/2015/03/10/its-time-to-blowup-the-salary-cap-systems-in-the-nfl-nba-and-nhl/#1e35ced969b3. 61 Our discussion in this section and the next draws heavily on the work of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman.

—Pinelopi Goldberg, Elihu Professor of Economics, Yale University, and chief economist of the World Bank Group “Not all economists wear ties and think like bankers. In their wonderfully refreshing book, Banerjee and Duflo delve into impressive areas of new research questioning conventional views about issues ranging from trade to top income taxation and mobility, and offer their own powerful vision of how we can grapple with them. A must-read.” —Thomas Piketty, professor, Paris School of Economics, and author of Capital in the Twenty-First Century “A magnificent achievement, and the perfect book for our time. Banerjee and Duflo brilliantly illuminate the largest issues of the day, including immigration, trade, climate change, and inequality. If you read one policy book this year—heck, this decade—read this one.” —Cass R. Sunstein, Robert Walmsley University Professor, Harvard University, and author of How Change Happens “Banerjee and Duflo have shown brilliantly how the best recent research in economics can be used to tackle the most pressing social issues: unequal economic growth, climate change, lack of trust in public action.


The Limits of the Market: The Pendulum Between Government and Market by Paul de Grauwe, Anna Asbury

"Robert Solow", banking crisis, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, conceptual framework, crony capitalism, Erik Brynjolfsson, eurozone crisis, Honoré de Balzac, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kitchen Debate, means of production, moral hazard, Paul Samuelson, price discrimination, price mechanism, profit motive, Robert Gordon, Ronald Coase, Simon Kuznets, The Nature of the Firm, The Rise and Fall of American Growth, too big to fail, transaction costs, trickle-down economics, ultimatum game, very high income

Robert Skidelsky and Edward Skidelsky, How Much is Enough? The Love of Money, and the Case for the Good Life (London: Allen Lane, ). . Facundo Alvaredo, Tony Atkinson, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, The World Wealth and Income Database (WID), <http://www. wid.world>, and Tony Atkinson and Salvatore Morelli, The Chartbook of Income  NO TE S . . . . . . . . . . . Inequality, VoxEU (), <http://www.voxeu.org/article/chartbook-economicinequality>. See Raghuram G. Rajan and Luigi Zingales, Saving Capitalism from the Capitalists (New York: Crown Business, ), and Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Belknap Press, ). Jonathan D. Ostry, Andrew Berg, and Charalambos G. Tsangarides, Redistribution, Inequality, and Growth, IMF Staff Discussion Note (April ), <https:// www.imf.org/external/pubs/ft/sdn//sdn.pdf>.

For a thorough analysis see Paul De Grauwe, Economics of Monetary Union (th edn, Oxford: Oxford University Press, ). Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States, – (Princeton, NJ: Princeton University Press, ). Thomas Piketty, Le capital au XXIe siècle (Paris: Editions du Seuil, ); Eng. Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, ). Odran Bonnet, Pierre-Henri Bono, Guillaume Camille Chapelle, and Étienne Wasmer, ‘Capital is not back: A comment on Thomas Piketty’s “Capital in the st Century” ’, VoxEU ( June ), <http://www.voxeu.org/article/ housing-capital-and-piketty-s-analysis>. Paul De Grauwe and Yuemei Ji, ‘Panic-driven austerity in the Eurozone and its implications’, VoxEU ( February ), <http://www.voxeu.org/article/panicdriven-austerity-eurozone-and-its-implications>.  INDEX Note: text within tables, figures, and boxes is indicated by t, f, and b following the page number.

This has led Robert Solow, the great American economist who won the Nobel Prize for his contribution to the theory of economic growth, to the conclusion that the new technologies are visible everywhere except in productivity growth statistics. We see a similar trend in other developed countries, including those of the EU, as represented in Figure .. This is based on Thomas Piketty’s authoritative book Capital in the Twenty-First Century, which I will discuss in Chapter . Figure . shows the development of production per capita since the industrial revolution. These figures are not directly comparable with those of Figure ., showing production per hour, which is a better measure of productivity. Production per capita (Figure .) is also influenced by working hours. We can see that since the s growth in annual per capita productivity has slowed in Western Europe and North America.{ It seems that we are returning to the ‘normal’ growth figures of the nineteenth century.


pages: 221 words: 55,901

The Globalization of Inequality by François Bourguignon

Berlin Wall, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Credit Default Swap, deglobalization, deindustrialization, Doha Development Round, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial intermediation, gender pay gap, Gini coefficient, income inequality, income per capita, labor-force participation, liberal capitalism, minimum wage unemployment, offshore financial centre, open economy, Pareto efficiency, purchasing power parity, race to the bottom, Robert Gordon, Simon Kuznets, structural adjustment programs, The Spirit Level, too big to fail, very high income, Washington Consensus

During the last few years, rising inequality in certain countries, notably the United States, has been the subject of or inspiration for several major books—among which it would be difficult to overstate the importance of two recent books by Joseph Stiglitz and Thomas Piketty, the success of which is a clear sign of the mounting public interest in the issue of inequality.2 While few books address global income inequality directly, with the exception of Branko Milanovic’s Worlds Apart,3 many have analyzed inequalities in development between 2 Joseph Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York: Norton, 2012); Thomas Piketty, Capital in the Twenty-­First Century (Cambridge, MA: Harvard University Press, 2013). 3 Branko Milanovic, Worlds Apart, Measuring International and Global Inequality (Princeton, NJ: Princeton University Press, 2005).

Another way in which these very high salaries spread comes from the provision of specialized services to superstars or multinational corporations. For example, lawyers who take part in litigation involving large sums of money will often be compensated directly in proportion to 10 Carola Frydman and Raven Saks, “Executive Compensation: A New View from a Long-­Term Perspective, 1936–2005,” Review of Financial Studies 23, no. 5 (2010): 2099–2138. In Capital in the Twenty-­First Century, Thomas Piketty relates the explosion in top executives’ pay to the drop in top marginal income tax rates in the 1980s, the argument being that it was not worth negotiating a high level of compensation when 70% would go to the state. I’ll return to the tax issue later. 90 Chapter 3 the sums in question. Certain law firms have therefore seen their fees skyrocket just like those of the superstars they work for, and the net effect of this process of contagion has made a significant impact on income distribution.

But there are also non-­monetary forms of inequality—some of which can be measured and some of which cannot—that are also socially and economically significant from the point of view of both social justice and the perity in India and China prior to 2002 was estimated by Sanjay Ruparelia et al., Growth, Reforms and Inequality: India and China Since the 1980s, APSA 2010 Annual Meeting Paper, 2010. 11 Piketty, Capital in the Twenty-­First Century. Are Countries Becoming More Unequal?61 ception that the public may have of the equity of the economy. This is the case, in particular, of the inequality of opportunities. Two individuals or two families whose economic standards of living, measured by income or consumer spending are identical, will not necessarily feel “equal” or be considered equal in the eyes of an observer. One might have to work longer than the other or endure longer commutes and less pleasant surroundings.


pages: 393 words: 91,257

The Coming of Neo-Feudalism: A Warning to the Global Middle Class by Joel Kotkin

Admiral Zheng, Andy Kessler, autonomous vehicles, basic income, Bernie Sanders, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, clean water, creative destruction, deindustrialization, demographic transition, don't be evil, Donald Trump, edge city, Elon Musk, European colonialism, financial independence, Francis Fukuyama: the end of history, gig economy, Gini coefficient, Google bus, guest worker program, Hans Rosling, housing crisis, income inequality, informal economy, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, life extension, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, megacity, Nate Silver, new economy, New Urbanism, Occupy movement, Parag Khanna, Peter Thiel, plutocrats, Plutocrats, post-industrial society, post-work, postindustrial economy, postnationalism / post nation state, precariat, profit motive, RAND corporation, Ray Kurzweil, rent control, Richard Florida, road to serfdom, Robert Gordon, Sam Altman, Satyajit Das, sharing economy, Silicon Valley, smart cities, Steve Jobs, Stewart Brand, superstar cities, The Death and Life of Great American Cities, The Future of Employment, The Rise and Fall of American Growth, Thomas L Friedman, too big to fail, trade route, Travis Kalanick, Uber and Lyft, uber lyft, universal basic income, unpaid internship, upwardly mobile, We are the 99%, Wolfgang Streeck, women in the workforce, working-age population, Y Combinator

New York Times, August 5, 2017, https://www.nytimes.com/2017/08/05/opinion/sunday/when-will-the-tech-bubble-burst.html. 8 Kevin Starr, Coast of Dreams: California on the Edge, 1990–2003 (New York: Knopf, 2004), 271–75. 9 Scott Galloway, “Silicon Valley’s Tax-Avoiding, Job-Killing, Soul-Sucking Machine,” Esquire, February 8, 2018, http://www.esquire.com/news-politics/a15895746/bust-big-tech-silicon-valley/. 10 Shira Ovide, “Big Tech Has Dug a Moat That Rivals and Regulators Can’t Cross,” Yahoo, July 5, 2019, https://finance.yahoo.com/news/big-tech-dug 11 Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap/Harvard, 2014), 174; “Richest people in the world,” CBS News, https://www.cbsnews.com/pictures/richest-people-in-world-forbes/12/. 12 Carter Coudriet, “13 Under 40: Here Are The Youngest Billionaires On The Forbes 400 2019,” Forbes, October 31, 2019, https://www.forbes.com/sites/cartercoudriet/2019/10/02/forbes-400-youngest-under-40-zuckerberg-spiegel/#7fd35f5a5a0e. 13 Sally French, “China has 9 of the world’s 20 biggest companies,” Market Watch, May 31, 2018, https://www.marketwatch.com/story/china-has-9-of-the-worlds-20-biggest-tech-companies-2018-05-31. 14 Farhad Manjoo, “Tech’s ‘Frightful 5’ Will Dominate Digital Life for Foreseeable Future,” New York Times, January 20, 2016, https://www.nytimes.com/2016/01/21/technology/techs-frightful-5-will-dominate-digital-life-for-foreseeable-future.html; Dana Mattioli, “Takeovers Roar to Life as Companies Hear Footsteps From Tech Giants,” Wall Street Journal, November 20, 2017, https://www.wsj.com/articles/takeovers-roar-to-life-as-companies-hear-footsteps-from-tech-giants-1511200327. 15 “Why startups are leaving Silicon Valley,” Economist, August 30, 2018, https://www.economist.com/leaders/2018/08/30/why-startups-are-leaving-silicon-valley; Rex Crum, “Let’s make a deal: SV150 firms spent $41 billion on acquisitions in 2016,” Mercury News, May 1, 2017, https://www.mercurynews.com/2017/05/01/lets-make-a-deal-acquisitions-were-all-over-the-sv150-in-2016/; “Too much of a good thing,” Economist, March 26, 2016, https://www.economist.com/brieing/2016/03/26/too-much-of-a-good-thing. 16 Christopher Mims, “Why Free Is Too High a Price for Facebook and Google,” Wall Street Journal, June 8, 2019, https://www.wsj.com/articles/why-free-is-too-high-a-price-for-facebook-and-google-11559966411; Andy Kessler, “Antitrust Can’t Catch Big Tech,” Wall Street Journal, September 14, 2019, https://www.wsj.com/articles/antitrust-cant-catch-big-tech-11568577387; David Dayen, “Trump’s Antitrust Cops Fail to Police Big Business—Again,” American Prospect, July 24, 2019, https://prospect.org/power/trump-s-antitrust-cops-fail-police-big-business-again/; Andrew Orlowski, “Google had Obama’s ear during antitrust probe,” Register, August 18, 2016, https://www.theregister.co.uk/2016/08/18/google_had_obamas_ear_on_antitrust_probe/. 17 Bryan Clark, “Facebook’s new ‘early bird’ spy tool is just tip of the iceberg,” Next Web, August 10, 2017, https://thenextweb.com/insider/2017/08/10/facebooks-new-early-bird-spy-tool-is-just-the-tip-of-the-iceberg/#; Betsy Morris and Deepa Seetharaman, “The New Copycats: How Facebook Squashes Competition from Startups,” Wall Street Journal, August 9, 2017, https://www.wsj.com/articles/the-new-copycats-how-facebook-squashes-competition-from-startups-1502293444. 18 Crunchbase, Google Acquisitions, updated January 15, 2020, https://wwwcrunchbase.com/organization/google/acquisitions/acquisitions_list#section-acquisitions; Ben Popper, “Failure is a feature: how Google stays sharp gobbling up startups,” The Verge, September 17, 2012, https://www.theverge.com/2012/9/17/3322854/google-startup-mergers-acquisitions-failure-is-a-feature; Tim Wu and Stuart A.

CNN, May 6, 2017, https://money.cnn.com/2017/05/26/news/economy/mark-zuckerberg-universal-basic-income/index.html; Chris Weller, “Elon Musk doubles down on universal basic income: ‘It’s going to be necessary,’” Business Insider, February 13, 2017, https://www.businessinsider.com/elon-musk-universal-basic-income-2017-2; Patrick Caughill, “Another Silicon Valley Exec Joins the Ranks of Universal Basic Income Supporters,” Futurism, September 8, 2017, https://futurism.com/another-silicon-valley-exec-joins-the-ranks-of-universal-basic-income-supporters; Sam Altman, “Moving Forward on Basic Income,” Y Combinator, May 31, 2016, https://blog.ycombinator.com/moving-forward-on-basic-income/; Diane Francis, “The Beginning of the End of Work,” American Interest, March 19, 2018, https://www.the-american-interest.com/2018/03/19/beginning-end-work/. 14 “The YIMBY Guide to Bullying and Its Results: SB 827 Goes Down in Committee,” City Watch LA, April 19, 2018, https://www.citywatchla.com/index.php/los-angeles/15298-the-yimby-guide-to-bullying-and-its-results-sb-827-goes-down-in-committee; John Mirisch, “Tech Oligarchs and the California Housing Crisis,” California Political Review, April 15, 2018, http://www.capoliticalreview.com/top-stories/tech-Oligarchs-and-the-california-housing-crisis/; Joel Kotkin, “Giving Common Sense a Chance in California,” City Journal, April 26, 2018, https://www.city-journal.org/html/giving-common-sense-chance-california-15868.html. 15 Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap/Harvard, 2014), 85. 16 VanderMey, “Why Are Young Billionaires So Boring?” 17 Fernand Braudel, The Structures of Everyday Life, vol. 1 of Civilization and Capitalism, 15th–18th Century, trans. Sian Reynolds, (Berkeley: University of California Press, 1992), 334. 18 Laura Sydell, “In Google’s Vision of the Future, Computing is Immersive,” NPR, May 20, 2017, https://www.npr.org/sections/alltechconsidered/2017/05/20/529146185/in-googles-vision-of-the-future-computing-is-immersive. 19 Jason Pontin, “Silicon Valley’s Immortalists Will Help Us All Stay Healthy,” Wired, December 15, 2017, https://www.wired.com/story/silicon-valleys-immortalists-will-help-us-all-stay-healthy/; Dom Galeon and Christianna Reedy, “A Google Exec Just Claimed the Singularity Will Happen by 2029,” Science Alert, March 16, 2017, https://www.sciencealert.com/google-s-director-of-engineering-claims-that-the-singularity-will-happen-by-2029. 20 Alvin Toffler, The Third Wave (New York: Bantam, 1980), 158–59; Kevin Carty, “Tech giants are the robber barons of our time,” New York Post, February 3, 2018, https://nypost.com/2018/02/03/big-techs-monopolistic-rule-is-hiding-in-plain-sight/; Jia Tolentino, “The End of the Awl and the Vanishing of Freedom and Fun from the Internet,” New Yorker, January 18, 2018, https://www.newyorker.com/culture/cultural-comment/the-end-of-the-awl-and-the-vanishing-of-freedom-and-fun-from-the-internet; Andrew Orlowski, “Google, propaganda, and the new New Man,” Register, September 4, 2017, https://www.theregister.co.uk/2017/09/04/google_propaganda_and_the_new_new_man; Aaron Renn, “How Apple and Google Are Censoring the Mobile Web,” Real Clear Politics, August 24, 2017, https://www.realclearpolitics.com/2017/08/24/how_apple_and_google_are_censoring_the_mobile_web_419092.html; Kenneth P.

Cantor, Medieval History: The Life and Death of a Civilization (New York: Macmillan, 1963), 50–51, 69–70, 97, 101. 5 Pitirim Sorokin, The Crisis of Our Age (London: Oneworld Publication, 1992), 20–21, 67–69, 81. 6 Adam K. Webb, “Class and Clerisy,” Front Porch Republic, October 19, 2010, https://www.frontporchrepublic.com/2010/10/class-and-Clerisy. 7 Max Weber, Economy and Society (Berkeley: University of California Press, 1978), vol. 1: xcviii; Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap/Harvard, 2014), 345. 8 Barbara Tuchman, The March of Folly: From Troy to Vietnam (New York: Ballantine, 1984), 6–7; John Hale, The Civilization of Europe in the Renaissance (New York: Touchstone, 1993), 413–19. 9 H. G. Wells, Anticipations of the Reaction of Mechanical and Scientific Progress Upon Human Life and Thought (1901; Mineola, N.Y.: Dover Books, 1999), 85–87, 99, 151; Fred Siegel, The Revolt Against the Masses: How Liberalism Has Undermined the Middle Class (New York: Encounter, 2015), 100. 10 Peter Bachrach, The Theory of Democratic Elitism (Boston: Little Brown & Co., 1967), 58–60; Arthur Herman, The Idea of Decline in Western History (New York: Free Press, 1997), 17; Talcott Parsons, “The Distribution of Power in American Society,” in The Power Elite, ed.


pages: 209 words: 53,236

The Scandal of Money by George Gilder

Affordable Care Act / Obamacare, bank run, Bernie Sanders, bitcoin, blockchain, borderless world, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, Claude Shannon: information theory, Clayton Christensen, cloud computing, corporate governance, cryptocurrency, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, Deng Xiaoping, disintermediation, Donald Trump, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, glass ceiling, Home mortgage interest deduction, index fund, indoor plumbing, industrial robot, inflation targeting, informal economy, Innovator's Dilemma, Internet of things, invisible hand, Isaac Newton, Jeff Bezos, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, Law of Accelerating Returns, Marc Andreessen, Mark Zuckerberg, Menlo Park, Metcalfe’s law, money: store of value / unit of account / medium of exchange, mortgage tax deduction, obamacare, Paul Samuelson, Peter Thiel, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, reserve currency, road to serfdom, Robert Gordon, Robert Metcalfe, Ronald Reagan, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, secular stagnation, seigniorage, Silicon Valley, smart grid, South China Sea, special drawing rights, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, time value of money, too big to fail, transaction costs, trickle-down economics, Turing machine, winner-take-all economy, yield curve, zero-sum game

Across the Atlantic, in France and the United Kingdom, influential people have noticed the hypertrophy of finance and called for a new economic theory. Several candidates offer policy breakthroughs intended to be as far reaching as the New Deal that supposedly ended the Great Depression. We have already met the Frenchman Thomas Piketty, that cherubic scourge of wealth, bearing credentials from Harvard and MIT, electrifying the crowds with Capital in the Twenty-First Century and its new “laws of capitalism.”1 Piketty warns that a society that stops growing will grow fat on finance and real estate. The accumulated overhang of capital and inheritance will overwhelm the future as entrepreneurs become mere rentiers of old wealth. From the early 1970s to the 2000s, as economic growth declined, financial obesity became increasingly evident.

He also asked his audience how many would trade their healthcare in 2015 for the allegedly much cheaper healthcare in 1950. Since everyone refused the offer, Summers concludes that, adjusted for quality, healthcare has not risen in price. Thus productivity in healthcare has improved far more than the measured gains. See also Bret Swanson, “Moore’s Law and the Productivity Paradox,” AEIdeas (blog), November 25, 2015, https://www.aei.org/publication/moores-law-and-the-productivity-paradox/. 4.Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University, Belknap Press, 2014). 5.Ta-Nehisi Coates, Between the World and Me (New York, NY: Spiegel and Grau, 2015). See also Kyle Smith, “The Hard Untruths of Ta-Nehisi Coates: A Bestselling Polemic Riven with Hatred Thrills the Liberal Elite,” Commentary, October 2015, pp. 20–25. 6.Yuval Levin, “The Mobility Crisis,” Commentary, March 2015, pp. 12–20. 7.Kwasi Kwarteng, War and Gold: A 500-Year History of Empires, Adventures, and Debt (New York, NY: PublicAffairs, 2014), 219–20. 8.Peter Thiel with Blake Masters, Zero to One: Notes on Startups, or How to Build the Future (New York, NY: Crown Business, 2014), 5–11 and passim.

(London: The Institute of Economic Affairs, 1990). 5.Ametrano, “Hayek Money,” 20. 6.Ametrano, presentation to the Central Bank of Italy, June 9, 2014. 7.George Gilder, Telecosm: The World after Bandwidth Abundance (New York, NY: Simon & Schuster, 2002). 8.Board of Governors of the Federal Reserve System, “Current FAQs: Informing the Public about the Federal Reserve,” http://www.federalreserve.gov/faqs/faq.htm. 9.Richard Vigilante, personal communication. 10.Hayek, “A Free-Market Monetary System,” lecture at the Gold and Monetary Conference, New Orleans, LA, November 10, 1977, Journal of Libertarian Studies 3, no. 1. 11.Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” Bitcoin.org, 2008. 12.George Sammon, speech to CoinAgenda, Las Vegas, October 2014. CHAPTER 9: THE PIKETTY-TURNER THESIS 1.Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University, Belknap Press, 2014). 2.“The Scandal of Money,” chapter 12 in George Gilder, Knowledge and Power: The Information Theory of Capitalism and How It Is Revolutionizing Our World (Washington, DC: Regnery Publishing, 2013), 113–23. 3.Adair Turner, Between Debt and the Devil: Money, Credit, and Fixing Global Finance (Princeton, NJ: Princeton University Press, 2016). 4.Joseph E.


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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

Capital in the Twenty-First Century CAPITAL IN THE TWENTY-FIRST CENTURY Thomas Piketty Translated by Arthur Goldhammer The Belknap Press of Harvard University Press CAMBRIDGE, MASSACHUSETTS LONDON, ENGLAND 2014 Copyright © 2014 by the President and Fellows of Harvard College All rights reserved First published as Le capital au XXI siècle, copyright © 2013 Éditions du Seuil Design by Dean Bornstein Jacket design by Graciela Galup The Library of Congress has cataloged the printed edition as follows Piketty, Thomas, 1971– [Capital au XXIe siècle. English] Capital in the twenty-first century / Thomas Piketty ; translated by Arthur Goldhammer. pages cm Translation of the author’s Le capital au XXIe siècle. Includes bibliographical references and index.

The Capital/Income Ratio over the Long Run 6. The Capital-Labor Split in the Twenty-First Century Part Three: The Structure of Inequality 7. Inequality and Concentration: Preliminary Bearings 8. Two Worlds 9. Inequality of Labor Income 10. Inequality of Capital Ownership 11. Merit and Inheritance in the Long Run 12. Global Inequality of Wealth in the Twenty-First Century Part Four: Regulating Capital in the Twenty-First Century 13. A Social State for the Twenty-First Century 14. Rethinking the Progressive Income Tax 15. A Global Tax on Capital 16. The Question of the Public Debt Conclusion Notes Contents in Detail List of Tables and Illustrations Index Acknowledgments This book is based on fifteen years of research (1998–2013) devoted essentially to understanding the historical dynamics of wealth and income.

This first part of the book contains nothing really new, and the reader familiar with these ideas and with the history of global growth since the eighteenth century may wish to skip directly to Part Two. The purpose of Part Two, titled “The Dynamics of the Capital/Income Ratio,” which consists of four chapters, is to examine the prospects for the long-run evolution of the capital/income ratio and the global division of national income between labor and capital in the twenty-first century. Chapter 3 looks at the metamorphoses of capital since the eighteenth century, starting with the British and French cases, about which we possess the most data over the long run. Chapter 4 introduces the German and US cases. Chapters 5 and 6 extend the geographical range of the analysis to the entire planet, insofar as the sources allow, and seek to draw the lessons from all of these historical experiences that can enable us to anticipate the possible evolution of the capital/income ratio and the relative shares of capital and labor in the decades to come.


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The Hidden Wealth of Nations: The Scourge of Tax Havens by Gabriel Zucman, Teresa Lavender Fagan, Thomas Piketty

Berlin Wall, Bretton Woods, British Empire, Capital in the Twenty-First Century by Thomas Piketty, dematerialisation, Fall of the Berlin Wall, financial innovation, financial intermediation, high net worth, income inequality, means of production, new economy, offshore financial centre, transfer pricing

Figure 7: The case for a global financial register. The companies Clearstream, Euroclear, and so on feed the world financial register. Tax authorities can verify that taxpayers indeed declare all the financial securities included in the register. Source: Depository Trust Company (USA). A Tax on Capital The world financial register is intimately linked to the proposal for a global wealth tax made by Thomas Piketty in Capital in the Twenty-First Century. This proposal has generated a heated controversy, and I don’t want to repeat it here. Quite simply, let’s assume that a tax on wealth might turn out to be desirable in certain places, at certain times, if wealth concentration was to reach extreme levels above which inequality harms growth, innovation, or the well functioning of our democratic institutions. How would the wealth tax work?

Index Africa, 31, 32–33, 53 Amazon, 104 Apple, 1, 104 arm’s-length pricing, 103 Austria, 69, 70 automatic exchange of data: EU savings tax directive and, 68, 69; FATCA and, 64–65, 66, 73–74; first international treaty for, 59; on inheritances in France, 57–59; progress toward a global system, 64–65; to end tax fraud, 5 Bahamas, 23, 35, 71, 85 Bank for International Settlements (BIS), 39 bank note wealth, 43 Bergier, Jean-François, 13 Bergier commission, 13, 15, 16, 20 Bermuda, 4, 103, 104, 105, 107, 109, 111 Birkenfeld, Bradley, 68 Bretton Woods, 23 British Virgin Islands, 1, 26, 28, 31, 33, 43, 45, 73, 77 BSI, 67 Cahuzac, Jérôme, 62 Caillaux, Joseph, 57, 58 Canada, 21, 53, 85 Capital in the Twenty-First Century (Piketty), 98 Cayman Islands: dominance in hedge funds, 27; financial wealth held in tax havens, 35; role in routine tax fraud, 10–11; role in world’s asset/liability imbalance, 38; trust registration in, 28 Clearstream, 4, 94–95 Common Consolidated Corporate Tax Base (CCCTB), 112 Congress of Vienna (1815), 9 Convention IV, 21 cost of offshore tax evasion. See global cost of offshore tax evasion Credit Suisse, 13, 16, 67, 68 Cyprus, 1, 90 Depository Trust Company (DTC), 4, 93–94 derivatives, 97–98 Economist, 15 Euroclear, 94, 95 Euroclear France, 95 European Union: anti-tax-haven coalitions and, 84; attempt at an automatic exchange (see EU savings tax directive); means of achieving a tax on global profits, 112–13; ownership of wealth managed by Swiss banks, 16; question of Luxembourg’s membership in, 89–92 EU savings tax directive: ease of avoiding the withholding tax, 70–71; effect of, 72–73; exemptions granted to some countries, 69–70; ignoring of dividends by, 71; premise of, 69; revenues lost due to evasion, 73 financial register, global.

English] The hidden wealth of nations: the scourge of tax havens / Gabriel Zucman; translated by Teresa Lavender Fagan; with a foreword by Thomas Piketty. pages; cm Includes bibliographical references and index. ISBN 978-0-226-24542-3 (cloth: alk. paper) — ISBN 978-0-226-24556-0 (e-book) 1. Tax havens. 2. Tax evasion. I. Fagan, Teresa Lavender, translator. II. Piketty, Thomas, 1971–, writer of foreword. III. Title. HJ2336.Z8313 2015 336.24'16—dc23 2015019946 ♾ This paper meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper). Contents FOREWORD by Thomas Piketty INTRODUCTION Acting against Tax Havens ONE A Century of Offshore Finance TWO The Missing Wealth of Nations THREE Mistakes FOUR What to Do?: A New Approach FIVE The Tax Avoidance of Multinational Corporations CONCLUSION NOTES INDEX FOREWORD Thomas Piketty If you are interested in inequality, global justice, and the future of democracy, then you should definitely read this book.


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The Upside of Inequality by Edward Conard

affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, assortative mating, bank run, Berlin Wall, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Climatic Research Unit, cloud computing, corporate governance, creative destruction, Credit Default Swap, crony capitalism, disruptive innovation, diversified portfolio, Donald Trump, en.wikipedia.org, Erik Brynjolfsson, Fall of the Berlin Wall, full employment, future of work, Gini coefficient, illegal immigration, immigration reform, income inequality, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invention of the telephone, invisible hand, Isaac Newton, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, Kodak vs Instagram, labor-force participation, liquidity trap, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass immigration, means of production, meta analysis, meta-analysis, new economy, offshore financial centre, paradox of thrift, Paul Samuelson, pushing on a string, quantitative easing, randomized controlled trial, risk-adjusted returns, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, selection bias, Silicon Valley, Simon Kuznets, Snapchat, Steve Jobs, survivorship bias, The Rise and Fall of American Growth, total factor productivity, twin studies, Tyler Cowen: Great Stagnation, University of East Anglia, upwardly mobile, War on Poverty, winner-take-all economy, women in the workforce, working poor, working-age population, zero-sum game

The proponents of these policies mean well, but both their diagnoses and their prescriptions are wrong. Ironically, their solutions make matters worse for the very people they are intended to help. In the long run, they slow middle- and working-class employment and wage growth. Evidence Shows the 0.1 Percent Earned, Not Unfairly Negotiated, Their Pay Thomas Piketty has spearheaded the attacks on individuals who comprise the 0.1 percent by insisting their growing success is unearned. In his book Capital in the Twenty-First Century, Piketty rejects claims that income inequality results from skill-biased technological change, globalization, low-skilled immigration, or growing returns to skill that have driven up the pay of the most successful Americans. He fears that these views, whether true or not, legitimize inequality. Instead, he insists the rich are “rentiers” who earn money solely from passive returns on investment, or “supermanagers” who “by and large have the power to set their own remuneration, in some cases without limit and in many cases without any clear relation to their individual productivity.”

Driving Population Growth and Change Through 2065,” September 28, 2015, http://www.pewhispanic.org/files/2015/09/2015-09-28_modern-immigration-wave_REPORT.pdf. Chapter 1: The Causes of Growing Inequality 1. Joseph Stiglitz, Rewriting the Rules of the American Economy (New York: W. W. Norton, 2015). 2. Martin Ford, Rise of the Robots: Technology and the Threat of a Jobless Future (New York: Basic Books, 2015). 3. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2013). 4. Alyssa Davis and Lawrence Mishel, “CEO Pay Continues to Rise as Typical Workers Are Paid Less,” Economic Policy Institute, June 12, 2014, http://www.epi.org/publication/ceo-pay-continues-to-rise. 5. Bruce Greenwald and Judd Kahn Globalization: n. The Irrational Fear That Someone in China Will Take Your Job (Hoboken, NJ: John Wiley & Sons, 2008). 6.

Christoph Lakner and Milanovic Branko, “Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession,” World Bank, December 2013, http://www.umass.edu/preferen/You%20Must%20Read%20This/Global%20Income%20Distribution%20Lakner%20Milanovic.pdf. Chapter 3: The Myth That Incentives Don’t Matter 1. Peter Diamond and Emmanuel Saez, “The Case for a Progressive Tax: From Basic Research to Policy Recommendations,” Journal of Economic Perspectives 25, no. 4 (2011): 165–90, http://eml.berkeley.edu/~saez/diamond-saezJEP11opttax.pdf. 2. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2013). 3. Lawrence Summers, “U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound,” Business Economics 49, no. 2 (February 24, 2014), http://larrysummers.com/wp-content/uploads/2014/06/NABE-speech-Lawrence-H.-Summers1.pdf. 4. Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: W.


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A World Without Work: Technology, Automation, and How We Should Respond by Daniel Susskind

3D printing, agricultural Revolution, AI winter, Airbnb, Albert Einstein, algorithmic trading, artificial general intelligence, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, blue-collar work, British Empire, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, computer age, computer vision, computerized trading, creative destruction, David Graeber, David Ricardo: comparative advantage, demographic transition, deskilling, disruptive innovation, Donald Trump, Douglas Hofstadter, drone strike, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, future of work, gig economy, Gini coefficient, Google Glasses, Gödel, Escher, Bach, income inequality, income per capita, industrial robot, interchangeable parts, invisible hand, Isaac Newton, Jacques de Vaucanson, James Hargreaves, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joi Ito, Joseph Schumpeter, Kenneth Arrow, Khan Academy, Kickstarter, low skilled workers, lump of labour, Marc Andreessen, Mark Zuckerberg, means of production, Metcalfe’s law, natural language processing, Network effects, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, pink-collar, precariat, purchasing power parity, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Gordon, Sam Altman, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, social intelligence, software is eating the world, sovereign wealth fund, spinning jenny, Stephen Hawking, Steve Jobs, strong AI, telemarketer, The Future of Employment, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, Travis Kalanick, Turing test, Tyler Cowen: Great Stagnation, universal basic income, upwardly mobile, Watson beat the top human players on Jeopardy!, We are the 99%, wealth creators, working poor, working-age population, Y Combinator

Gordon,” New York Times, 25 January 2016. 76.  Robert Gordon, The Rise and Fall of American Growth (Oxford: Princeton University Press, 2017). 77.  In eighty-seven years’ time because 100 × 1.00887 = 200.01, to two decimal places. If the United States were to return to the 2.41 percent growth rate, the same doubling of wealth would take just twenty-nine years: 100 × 1.024129 = 199.50. Thomas Piketty makes a similar point in Capital in the Twenty-First Century (London: Harvard University Press, 2014), p. 5, noting that “the right way to look at the problem is once again in generational terms. Over a period of thirty years, a growth rate of 1 percent per year corresponds to cumulative growth of more than 35 percent. A growth rate of 1.5 percent per year corresponds to cumulative growth of more than 50 percent. In practice, this implies major changes in lifestyle and employment.” 78.  

Global Well-Being Since 1820,” OECD (2014), p. 207: “It is hard not to notice the sharp increase in income inequality experienced by the vast majority of countries from the 1980s. There are very few exceptions to this…” 11.  See, for instance, Piketty, Capital in the Twenty-First Century, p. 266. 12.  These are post-tax and transfer Gini coefficients for 2017, or latest available year. This is an updated version of Figure 1.3 in OECD, “In It Together: Why Less Inequality Benefits All” (2015), using OECD (2019) data; http://www.oecd.org/social/income-distribution-database.htm (accessed April 2019). 13.  John Rawls, A Theory of Justice (Cambridge, MA: Harvard University Press, 1999), p. 266. 14.  These are pre-tax income, from Appendix Data FS40 in Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, “Distribution National Accounts: Methods and Estimates for the United States,” Quarterly Journal of Economics 133, no. 2 (2018): 553–609.

PwC, “Global Top 100 Companies by Market Capitalisation” (2018). Alibaba and Amazon are nominally classified in the “consumer services” category, but both are better thought of as technology companies instead. 41.  Piketty, Capital in the Twenty-First Century, p. 244. 42.  Melanie Kramers, “Eight People Own Same Wealth as Half the World,” Oxfam press release, 16 January 2017. 43.  “Are Eight Men as Wealthy as Half the World’s Population?,” Economist, 19 January 2017. 44.  Dabla-Norris, Kochhar, Ricka, et al., “Causes and Consequences of Income Inequality,” p. 16. 45.  Here, “richest” is “richest in wealth”; see Piketty, Capital in the Twenty-First Century, table 7.2, pp. 248–49 and 257. 46.  Ibid., p. 257. 47.  Joseph Stiglitz, “Inequality and Economic Growth,” Political Quarterly 86, no. 1 (2016): 134–55. 48.  Emmanuel Saez and Gabriel Zucman, “Wealth Inequality in the United States Since 1913: Evidence from Capitalized Income Tax Data,” Quarterly Journal of Economics 131, no. 2 (2016): 519–78. 49.  


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Capital Without Borders by Brooke Harrington

banking crisis, Big bang: deregulation of the City of London, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, complexity theory, corporate governance, corporate social responsibility, diversified portfolio, estate planning, eurozone crisis, family office, financial innovation, ghettoisation, haute couture, high net worth, income inequality, information asymmetry, Joan Didion, job satisfaction, joint-stock company, Joseph Schumpeter, liberal capitalism, mega-rich, mobile money, offshore financial centre, race to the bottom, regulatory arbitrage, Robert Shiller, Robert Shiller, South Sea Bubble, the market place, Thorstein Veblen, transaction costs, upwardly mobile, wealth creators, web of trust, Westphalian system, Wolfgang Streeck, zero-sum game

Arthur Kennickell, “Ponds and Streams: Wealth and Income in the US, 1989 to 2007,”Finance and Economics Discussion Series, Federal Reserve Board, Washington, DC, 2009. 7. Thomas Piketty, “On the Long-Run Evolution of Inheritance: France 1820–2050,” Working Paper, Paris School of Economics, 2010. 8. Santiago Budría, Javier Díaz-Giménez, José-Victor Ríos-Rull, and Vincenzo Quadrini, “Updated Facts on the US Distributions of Earnings, Income, and Wealth,” Federal Reserve Bank of Minneapolis Quarterly Review 26 (2002): 2–35. 9. John Langbein, “The Secret Life of the Trust: The Trust as an Instrument of Commerce,” Yale Law Journal 107 (1997): 165–189. 10. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). 11. Holly Brewer, “Entailing Aristocracy in Colonial Virginia: ‘Ancient Feudal Restraints’ and Revolutionary Reform,” William and Mary Quarterly 54 (1997): 307–346. 12.

Thorstein Veblen, The Theory of the Leisure Class (New York: Penguin, 1994 [1899]). 30. Jonathan Dunlop, “Healthy Competition,” STEP Journal, April 2008, 31. 31. Cap-Gemini, World Wealth Report. 32. William Robinson, “Social Theory and Globalization: The Rise of a Transnational State,” Theory and Society 30 (2001): 165. 33. James Davies, Rodrigo Lluberas, and Anthony Shorrocks, Global Wealth Report (Zurich: Credit Suisse, 2013). 34. Ibid. 35. Thomas Piketty, Capital in the Twenty-first Century (Cambridge, MA: Harvard University Press, 2014). 36. Melvin Oliver and Thomas Shapiro, Black Wealth, White Wealth: A New Perspective on Racial Inequality (New York: Routledge, 1995). 37. Palan, Murphy, and Chavagneux, Tax Havens, 12. 38. For the $21 trillion figure, see Heather Stewart, “Wealth Doesn’t Trickle Down—It Just Floods Offshore, New Research Reveals,” The Guardian, July 21, 2012.

Goodwin, “How the Rich Stay Rich,” 468. 5. Wealth Management and Inequality 1. Emma Duncan, “Your Money, His Life,” Intelligent Life (supplement to The Economist), September 2007, 73–79. 2. George Marcus, “The Fiduciary Role in American Family Dynasties and Their Institutional Legacy,” in George Marcus, ed., Elites: Ethnographic Issues (Albuquerque: University of New Mexico Press, 1983), 227. 3. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). See also Arthur Kennickell, “Ponds and Streams: Wealth and Income in the US, 1989 to 2007,” Federal Reserve Board Finance and Economics Discussion Series, Washington, DC, 2009, www.federalreserve.gov/pubs/feds/2009/200913/200913pap.pdf. See also Melvin Oliver and Thomas Shapiro, Black Wealth, White Wealth: A New Perspective on Racial Inequality (New York: Routledge, 1995). 4.


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The Great Divide: Unequal Societies and What We Can Do About Them by Joseph E. Stiglitz

"Robert Solow", accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Asian financial crisis, banking crisis, Berlin Wall, Bernie Madoff, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, clean water, collapse of Lehman Brothers, collective bargaining, computer age, corporate governance, credit crunch, Credit Default Swap, deindustrialization, Detroit bankruptcy, discovery of DNA, Doha Development Round, everywhere but in the productivity statistics, Fall of the Berlin Wall, financial deregulation, financial innovation, full employment, George Akerlof, ghettoisation, Gini coefficient, glass ceiling, global supply chain, Home mortgage interest deduction, housing crisis, income inequality, income per capita, information asymmetry, job automation, Kenneth Rogoff, Kickstarter, labor-force participation, light touch regulation, Long Term Capital Management, manufacturing employment, market fundamentalism, mass incarceration, moral hazard, mortgage debt, mortgage tax deduction, new economy, obamacare, offshore financial centre, oil shale / tar sands, Paul Samuelson, plutocrats, Plutocrats, purchasing power parity, quantitative easing, race to the bottom, rent-seeking, rising living standards, Ronald Reagan, school vouchers, secular stagnation, Silicon Valley, Simon Kuznets, The Chicago School, the payments system, Tim Cook: Apple, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Turing machine, unpaid internship, upwardly mobile, urban renewal, urban sprawl, very high income, War on Poverty, Washington Consensus, We are the 99%, white flight, winner-take-all economy, working poor, working-age population

Putting all of this together, one reaches a disappointing result: overall inequality, in the way it is conventionally measured (the Gini coefficient, a number ranging from zero, with perfect equality, to one, with perfect inequality), has barely budged. The Piketty Phenomenon The final two articles of this section are, in part, a response to the enormous success of the economist Thomas Piketty’s book Capitalism in the Twenty-First Century. The success of that book echoed the growing concern about inequality, a concern expressed in Davos by the world’s elite, and consistent with the way my own article “Of the 1 percent, by the 1 Percent, for the 1 Percent” had gone viral. President Obama had in 2013 declared that inequality would in fact be the focus of his attention for the remaining three years of his office.

In these divided societies, the rich will hunker in gated communities, almost completely separated from the poor, whose lives will be almost unfathomable to them, and vice versa. I’ve visited societies that seem to have chosen this path. They are not places in which most of us would want to live, whether in their cloistered enclaves or their desperate shantytowns. ______________ * New York Times, October 13, 2013. DEMOCRACY IN THE 21ST CENTURY* THE RECEPTION IN THE UNITED STATES, AND IN OTHER advanced economies, of Thomas Piketty’s recent book Capital in the Twenty-First Century attests to growing concern about rising inequality. His book lends further weight to the already overwhelming body of evidence concerning the soaring share of income and wealth at the very top. Piketty’s book, moreover, provides a different perspective on the 30 or so years that followed the Great Depression and World War II, viewing this period as a historical anomaly, perhaps caused by the unusual social cohesion that cataclysmic events can stimulate.

The main question confronting us today is not really about capitalism in the 21st century. It is about democracy in the 21st century. ______________ * Project Syndicate, September 1, 2014. PHONY CAPITALISM* AMERICANS ARE FINALLY BEGINNING TO APPRECIATE THE magnitude of the inequalities in income and wealth that mark our society. Lately, this realization has been helped along by an unexpected source: the French economist Thomas Piketty, whose Capital in the Twenty-First Century is the surprise bestseller of the year. Piketty has collected the most extensive evidence available of the increases in economic inequality and inherited wealth over the past forty years, which are creating a new plutocracy. But while Piketty is right about the severity of the problem, he is not completely right about its cause—and how to fix it. If Americans take the wrong lessons from his work, we may fail to make the changes that could actually address our inequality problem.


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Open: The Progressive Case for Free Trade, Immigration, and Global Capital by Kimberly Clausing

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, active measures, Affordable Care Act / Obamacare, agricultural Revolution, battle of ideas, Bernie Sanders, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, corporate social responsibility, creative destruction, currency manipulation / currency intervention, David Ricardo: comparative advantage, Donald Trump, floating exchange rates, full employment, gig economy, global supply chain, global value chain, guest worker program, illegal immigration, immigration reform, income inequality, index fund, investor state dispute settlement, knowledge worker, labor-force participation, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, meta analysis, meta-analysis, offshore financial centre, open economy, Paul Samuelson, profit motive, purchasing power parity, race to the bottom, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transfer pricing, uber lyft, winner-take-all economy, working-age population, zero-sum game

More important, an estate tax can limit the passing of inherited wealth across generations, reducing the economic power of dynastic families living solely off the work effort of prior generations and investment returns. A robust estate tax helps counter the worries of patrimonial capitalism raised in Thomas Piketty’s best-selling book, Capital in the Twenty-First Century. The masterful data collection efforts of this book documented worrisome trends in the role of capital in the economy.2 Left unchecked, high capital-to-income ratios risk creating societies where wealth and political power are too concentrated. ________________________ 1.  Center on Budget and Policy Priorities, “Policy Basics: The Estate Tax,” Report, August 14, 2017. 2.  Thomas Piketty, Capital in the Twentyb-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014). Saving the Planet: An Essential Part of the Grand Bargain Economic inequality and middle-class stagnation are the essential economic problems of our time.

This negative correlation between the share of the top 1 percent and the top marginal tax rates is striking.39 Tax avoidance provides one explanation for this pattern, since top incomes are more likely to be hidden when tax rates are high. But many argue that the bargaining process between workers and their managers is affected by tax rates. If tax rates at the top of the distribution decline, this provides more incentive for those at the top to aggressively increase their compensation. Figure 2.17: US Tax Rates and Income Shares for the Top 1 Percent Data sources: World Top Incomes Database; Thomas Piketty, Capital in the Twenty-First Century, (Cambridge: Harvard University Press, 2014). The era of increasing income inequality has also corresponded to lower tax rates on capital income, a source of income that is far more concentrated in the hands of high-income households. Capital gains tax rates were over 30 percent for most of the 1970s, fell to between 20 percent and 29 percent during the 1980s and the 1990s, and then fell to about 15 percent for most of this century, before increasing to 25 percent in 2013.40 Dividends were taxed as ordinary income until 2003, but have since been taxed at far lower rates, with a top rate of 15 percent before 2013, and a top rate of 20 percent since then.41 Indeed, high tax rates serve as a brake, or speed limit, on earnings by high-income earners.

American Economic Review 99:1 (2009), 25–48; Peter Diamond and Emmanuel Saez, “The Case for a Progressive Tax: From Basic Research to Policy Recommendations,” Journal of Economic Perspectives 25:4 (2011), 165–190; Emmanuel Farhi, Christopher Sleet, Iván Werning, and Sevin Yeltekin, “Non-Linear Capital Taxation Without Commitment,” The Review of Economic Studies 79:4 (2012), 1469–1493; Thomas Piketty and Emmanuel Saez, “A Theory of Optimal Capital Taxation,” Working Paper 17989, NBER Working Papers, National Bureau of Economic Research, 2012; Thomas Piketty and Emmanuel Saez, “A Theory of Optimal Inheritance Taxation,” Econometrica 81:5 (2013), 1851–1886. 5. In recent years, there was a large preference for pass-through income relative to corporate income for domestic companies. A key study shows that the US government likely loses substantial revenue due to the favorable treatment of noncorporate business income, which has increased the share of business income that is more lightly taxed.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, business cycle, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Satyajit Das, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, zero-sum game

Financial sector wages—an easy way to track the two variables’ relationship—were high relative to everyone else’s in the run-up to the market crash of 1929, then fell precipitously after banking was reregulated in the 1930s, and then grew wildly from the 1980s onward as finance was once again unleashed.49 The share of financiers within the top 1 percent of the income distribution nearly doubled between 1979 and 2005.50 Rich bankers themselves aren’t so much the reason for inequality as the most striking illustration of just how important financial assets have become in widening America’s wealth gap. Financiers and the corporate supermanagers whom they enrich represent a growing percentage of the nation’s elite precisely because they control the most financial resources. These assets (stocks, bonds, and such) are the dominant form of wealth for the most privileged,51 which actually creates a snowball effect of inequality. As French economist Thomas Piketty explained so thoroughly in his 696-page tome, Capital in the Twenty-First Century, the returns on financial assets greatly outweigh those from income earned the old-fashioned way: by working for wages.52 Even when you consider the salaries of the modern economy’s supermanagers—the CEOs, bankers, accountants, agents, consultants, and lawyers that groups like Occupy Wall Street rail against—it’s important to remember that somewhere between 30 and 80 percent of their income is awarded not in cash but in incentive stock options and stock shares.

It’s telling that technology, which usually decreases industries’ operating costs, has failed to deflate the costs of financial intermediation. Indeed, finance has become more costly and less efficient as an industry as it deployed new and more advanced tools over time.16 It’s also telling that during the last few decades financiers have earned three times as much as their peers in other industries with similar education and skills.17 As Thomas Piketty put it in Capital in the Twenty-First Century, financiers are, in some ways, like the landowners of old. Instead of controlling labor, they regulate access to things even more important in the modern economy: capital and information. As a result, they represent the largest single group of the richest and most powerful people on earth. Even more so than Silicon Valley titans or petro-czars, financiers are truly masters of our capitalist universe.

That’s a big deal, because when Bertolini first posed the idea of his wage hike to a group of Harvard Business School professors whom he regularly consulted with, they responded negatively. The CEO, who grew up working class in Detroit and worked a welding line for years before going to college on scholarship, has continued to push forward his agenda within Aetna; in 2015 he gave all his top executives something that’s not yet on the typical MBA reading list—a copy of Thomas Piketty’s Capital in the Twenty-First Century. Companies, says Bertolini, shouldn’t just be moneymaking machines. They also have to invest in people, the real economy, and society as a whole if they want to succeed in the long term. “Capital is the resource that we often manage well, but in my opinion, the scarce resource is a talented and engaged workforce.” Creating that requires thinking bigger, looking at people as assets, not just costs on a balance sheet, and knowing how to think beyond the quarter.


pages: 363 words: 92,422

A Fine Mess by T. R. Reid

Affordable Care Act / Obamacare, Bernie Sanders, Capital in the Twenty-First Century by Thomas Piketty, carried interest, centre right, clean water, Donald Trump, Double Irish / Dutch Sandwich, game design, Gini coefficient, High speed trading, Home mortgage interest deduction, Honoré de Balzac, income inequality, industrial robot, land value tax, loss aversion, mortgage tax deduction, obamacare, Occupy movement, offshore financial centre, oil shock, plutocrats, Plutocrats, race to the bottom, Ronald Reagan, seigniorage, Silicon Valley, Skype, Snapchat, sovereign wealth fund, Tesla Model S, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, We are the 99%, WikiLeaks

This was not a frequent occurrence at the press, a prestigious academic publisher that churns out scores of learned volumes each year in fields like microbial ecology, medieval philosophy, and molecular physiology. But in those early months of 2014, there was enormous prepublication buzz about a forthcoming Harvard book. It was an unlikely blockbuster, to be sure: a 699-page treatise on economics written by a scholar who was hardly a household name even in his own neighborhood in Paris. But Professor Thomas Piketty’s tome Capital in the Twenty-First Century, thick as a brick and somewhat heavier, rocketed to the top of the bestseller lists as soon as it hit America’s bookstores. A New York Times story on the Frenchman’s U.S. book tour was headlined “Economist Receives Rock Star Treatment.” The reason that an unknown French economist suddenly achieved rock-star stature in the United States was that Piketty’s book focused squarely on an increasingly worrisome issue in the American zeitgeist: the inequality of wealth and income

Whatever changes we eventually make, almost every observer agrees that the current corporate income tax is not working. The corporate income tax, once a key source of funding for the U.S. government, has become just another minor revenue source. There are already many of those. 9. THE SINGLE TAX, THE FAT TAX, THE TINY TAX, THE CARBON TAX—AND NO TAX AT ALL Thomas Piketty’s surprising bestseller, Capital in the Twenty-First Century, sold nearly a million copies in the year after its publication, a stunning development for a heavyweight economics tome. But Piketty is a piker compared with an earlier author who wrote a similarly hefty volume on the same subject. The newspaperman Henry George’s economic magnum opus, Progress and Poverty, first published in 1879, sold more than three million copies in the late nineteenth and early twentieth centuries.

Widespread concern over this trend was the reason Piketty’s heavy economics tome became a number one bestseller in the United States. Still, it was not exactly beach reading. Because you, gentle reader, have been kind enough to read this book, I will repay the favor by providing a summary of the professor’s argument, thus saving you the $40 price of the book and the hours required to read it. Capital in the Twenty-First Century is actually more like three books than one. First, it’s a history of the rich/poor divide, based on three centuries of wealth and income data that Piketty and his colleagues gathered from the United States, the U.K., France, and Sweden. Piketty relies heavily on mathematical models and statistical tables, but he thoughtfully spares his readers all that stuff, sticking it in a “technical appendix” on the Internet.


pages: 493 words: 98,982

The Tyranny of Merit: What’s Become of the Common Good? by Michael J. Sandel

affirmative action, Affordable Care Act / Obamacare, anti-communist, Berlin Wall, Bernie Sanders, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, centre right, coronavirus, COVID-19, Credit Default Swap, Deng Xiaoping, Donald Trump, ending welfare as we know it, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, global supply chain, helicopter parent, High speed trading, immigration reform, income inequality, Khan Academy, laissez-faire capitalism, meta analysis, meta-analysis, Nate Silver, new economy, obamacare, Occupy movement, plutocrats, Plutocrats, Ronald Reagan, smart grid, Steve Jobs, Steven Levy, the market place, The Wealth of Nations by Adam Smith, Washington Consensus

For working-age men, the median income was “the same in 2014 as in 1964, about $35,000. There has been no growth for the median male worker over half a century.” Thomas Piketty, Emmauel Saez, and Gabriel Zucman, “Distributional National Accounts: Methods and Estimates for the United States,” Quarterly Journal of Economics 133, issue 2 (May 2018), pp. 557, 578, 592–93, available at eml.berkeley.edu/~saez/PSZ2018QJE.pdf ; Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, World Inequality Report 2018 (Cambridge, MA: Harvard University Press, 2018), pp. 3, 83–84. Income distribution data for the U.S. and other countries is also available at the online World Inequality Database, wid.world . See also Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), p. 297, where Piketty states that from 1977 to 2007, the richest 10 percent absorbed three-quarters of the entire economic growth of the United States.

In the United States, most of the economic growth since 1980 has gone to the top 10 percent, whose income grew 121 percent; almost none went to bottom half of the population, whose average income (about $16,000) in 2014 was about the same as it was in real terms in 1980. For working-age men, the median income was “the same in 2014 as in 1964, about $35,000. There has been no growth for the median male worker over half a century.” Piketty, Saez, and Zucman, “Distributional National Accounts,” pp. 557, 578, 592–93. See also Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), p. 297, where Piketty states that from 1977 to 2007, the richest 10 percent absorbed three-quarters of the entire economic growth of the U.S. 32. Americans agree by 77 to 20 percent that “most people can succeed if they are willing to work hard.” Germans agree by 51 to 48 percent. In France and Japan, majorities agree more with the statement that “hard work is no guarantee of success for most people,” by 54 to 46 percent (France) and 59 to 40 percent (Japan).

On Trump share of non-college white voters, see 2016 exit polls, CNN, cnn.com/election/2016/results/exit-polls ; Clinton share of advanced degree holders is from Thomas Piketty, “Brahmin Left vs. Merchant Right: Rising Inequality & the Changing Structure of Political Conflict,” wid.world Working Paper Series, March 2018, piketty.pse.ens.fr/files/Piketty2018.pdf , Figure 3.3b; on education versus income, see Nate Silver, “Education, Not Income, Predicted Who Would Vote for Trump,” November 22, 2016, FiveThirtyEight.com , fivethirtyeight.com/features/education-not-income-predicted-who-would-vote-for-trump . 60. Silver, “Education, Not Income, Predicted Who Would Vote for Trump.” Trump quoted in Susan Page, “Trump Does the Impossible—Again,” USA Today , February 25, 2016, usatoday.com/story/news/politics/elections/2016/02/24/analysis-donald-trump-does-impossible-again/80843932 . 61. Thomas Piketty, “Brahmin Left vs. Merchant Right: Rising Inequality & the Changing Structure of Political Conflict.” 62.


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

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. Song, Jae, David J. Price, Fatih Guvenen, Nicholas Bloom, and Till von Wachter. 2015. Firming Up Inequality. NBER, Working Paper, No. 21199. doi:10.3386/w21199. Soto, Hernando de. 2001. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Black Swan.

Financial journalists typically refer to people who buy and sell securities as “investors,” and nervously diagnose the “mood of investors.” The same journalist might call a long-term financier like Warren Buffett an “investor” and his short-term rivals “speculators.” Someone considering going to college might be advised that “education is the best investment you can make.” The terms “assets” and “capital” are also used in a confusing variety of ways. In his justly famous Capital in the Twenty-First Century, Thomas Piketty (2014) defined capital as “all forms of wealth that individuals . . . can own.” Marxist writers commonly ascribe to “capital” not just an accounting definition, but an entire exploitative system. “Assets” also have different definitions. Many firms think of their business assets as their stock of plant and equipment. For an accountant, business assets commonly include the cash in the firm’s bank account and bills its customers have yet to pay, which don’t seem to be machines used in the business production but rather the results of doing that business.

And as development economist Branko Milanović pointed out, this is part of a global phenomenon: over the past two decades, incomes have risen sharply for most people in the world, in particular people in big, once-poor countries like China (Milanović 2005). The world’s richest people have done well too. But one big group has not done as well: people between the seventy-fifth and ninety-fifth percentiles of world income—which represents a lot of the traditional working class in developed countries. Thomas Piketty’s blockbuster book added another flavor of inequality to the mix: inequality of wealth. One of the many dazzling features of Piketty’s Capital in the Twenty-First Century (2014) and the research that underpins it was the light it cast on the wealth of the very rich, which is often hard to measure. It will not come as a huge surprise that this showed that the wealth of the richest in countries like the United States, the UK, and France has increased dramatically in the past few decades.


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Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, basic income, Bernie Sanders, big-box store, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, mass incarceration, minimum wage unemployment, moral hazard, moral panic, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, plutocrats, Plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Sam Peltzman, Scientific racism, Simon Kuznets, single-payer health, strikebreaker, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

My New Mexico State University (NMSU) colleague Mark Walker, who was writing a book on the Basic Income Guarantee as I wrote this one, first encouraged me to consider inequality from a historical perspective. The NMSU conference that Mark organized on the Basic Income Guarantee in 2014 introduced me to scholars who have long worked on the philosophy of contemporary inequality. Simultaneously, participation in an ad hoc reading group facilitated by NMSU student Alan Dicker on Thomas Piketty’s Capital in the Twenty-First Century helped to get my thoughts flowing My NMSU colleagues Lori Keleher, Peter Kopp, and Julie Rice, and my former graduate student Ryan MacLennan, all provided helpful suggestions at crucial moments. In the later stages of the project’s completion, Tim Ketelaar of the psychology department at NMSU gave me the opportunity to present the ideas contained in this book to a wider general audience, allowing me to better focus my message.

The New York Times in 2005 ran a series of articles on class, pointing out for its readership that, contrary to popular belief, the United States is not the most upwardly mobile country in the world.9 A number of recent books question the notion that deregulation, budget cuts to safety nets, free trade promotion, and privatization have promoted growth to benefit all.10 Despite its length and serious subject matter, economist Thomas Piketty’s Capital in the Twenty-First Century (2014) was widely read and reviewed. Historian Steven Fraser’s Age of Acquiescence (2015) compared the modern American public unfavorably with Americans in the late nineteenth and early twentieth centuries, who were not afraid to call out class warfare against the working poor when they saw it.11 Former Secretary of Labor Robert Reich’s documentary Inequality for All (2013) reached a wide audience, with an accessible message: the prosperity of the United States hinges on the middle class having an income to spend.

Although some economists called for an economic stimulus package on par with the New Deal, Republicans and most economists opposed the idea. They called for austerity instead, and President Barack Obama lacked the political capital to press the issue.20 The Great Recession thus came and went with no significant steps taken to prevent inequality from causing another economic panic. Many structural features of the modern American economy promote inequality. In his well-received book Capital in the Twenty-First Century (2013), economist Thomas Piketty argued that out-of-control executive compensation has caused much of the growth in inequality across Europe and in the United States. Executives are granted enormous salaries by boards of directors whom the CEOs themselves control, in a direct conflict of interest.21 Executive compensation hides the real inequity in the share of compensation going to labor: “In 2002–2012 the bottom 90 percent of the population saw their average family income … drop by 11 percent, while those in the top .1 to .01 percent saw theirs rise by 30 percent.”


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

These people are wage workers who need to work in order to draw their large salaries.8 But these same people, whether through inheritance or because they have saved enough money through their working lives, also possess large financial assets and draw a significant amount of income from them. The rising share of labor income in the top 1 percent (or even more select groups, like the top 0.1 percent) has been well documented by Thomas Piketty, in Capital in the Twenty-First Century (2014), and other authors.9 We shall return to that topic later in the chapter. What is important to realize here is that the presence of high labor income at the top of the income distribution, if associated with high capital income received by the same individuals, deepens inequality. This is a peculiarity of liberal meritocratic capitalism, something that has never before been seen to this extent.

NBER Working Paper 11513, National Bureau of Economic Research, Cambridge, MA, February, rev. 2007. Rawls, John. 1971. A Theory of Justice. Cambridge, MA: Belknap Press of Harvard University Press. Rawls, John. 1999. The Law of Peoples. Cambridge, MA: Harvard University Press. Raworth, Kate. 2018. Doughnut Economics: Seven Ways to Think Like a 21st Century Economist. White River Junction, VT: Chelsea Green. Ray, Debraj. 2014. “Nit-Piketty: A Comment on Thomas Piketty’s Capital in the Twenty-First Century.” Unpublished manuscript, May 25, https://www.econ.nyu.edu/user/debraj/Papers/Piketty.pdf. Rognlie, Matthew. 2015. “Deciphering the Fall and Rise in the Net Capital Share: Accumulation or Scarcity?” Brookings Papers on Economic Activity, Spring. https://www.brookings.edu/wp-content/uploads/2016/07/2015a_rognlie.pdf. Rotman, David. 2015. “Who Will Own the Robots?” MIT Technology Review, June 16. https://www.technologyreview.com/s/538401/who-will-own-the-robots/.

The curse of wealth To see how important the combination of rising capital income and heavy concentration of capital ownership is to total income inequality, one has to look at it dynamically. As countries grow richer, they acquire more wealth from savings and successful investments (just like individuals do). Moreover, the increase in their capital overtakes the increase in their income, and they gradually become more “capital-intensive” or “capital-rich.” This relationship—the ratio between capital and income—was a central feature of Piketty’s Capital in the Twenty-First Century. Countries with higher income (GDP per capita) not only have more wealth per person, but their wealth-income ratio (denoted by β) is higher (Table 2.2). Thus in terms of GDP per capita, Switzerland is 53 times better off than India, but it has almost 100 times more wealth per adult than India. FIGURE 2.1. Gini coefficients of capital income and labor income in the United States, the United Kingdom, Germany, and Norway, 1970s and 1980s to 2010s Both capital and labor incomes are pretax.


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The New Class Conflict by Joel Kotkin

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, Bob Noyce, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, creative destruction, crony capitalism, David Graeber, deindustrialization, don't be evil, Downton Abbey, Edward Glaeser, Elon Musk, energy security, falling living standards, future of work, Gini coefficient, Google bus, housing crisis, income inequality, informal economy, Internet of things, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John von Neumann, Joseph Schumpeter, Kevin Kelly, labor-force participation, low-wage service sector, Marc Andreessen, Mark Zuckerberg, mass affluent, McJob, McMansion, medical bankruptcy, Nate Silver, New Economic Geography, new economy, New Urbanism, obamacare, offshore financial centre, Paul Buchheit, payday loans, Peter Calthorpe, plutocrats, Plutocrats, post-industrial society, RAND corporation, Ray Kurzweil, rent control, rent-seeking, Report Card for America’s Infrastructure, Richard Florida, Silicon Valley, Silicon Valley ideology, Steve Jobs, technoutopianism, The Death and Life of Great American Cities, Thomas L Friedman, too big to fail, transcontinental railway, trickle-down economics, Tyler Cowen: Great Stagnation, upwardly mobile, urban planning, urban sprawl, War on Poverty, women in the workforce, working poor, young professional

Consequently, the new progressive politics of inequality have become the primary themes of the nation’s political leaders and the Clerisy. Oddly enough, much of the thinking behind this new focus is drawn primarily from European models, even as Europe’s dismal prospects have inspired the lowest levels of political support in several decades.4 In his influential book Capital in the Twenty-First Century, French economist Thomas Piketty argues powerfully that the only way to confront increasing inequality and prevent deeper social fracturing is to expand the “social state” that forcibly redistributes wealth. In his mind, economic growth, traditionally a prime source of social uplift, is little more than an “illusory” solution. Rather than stoke growth to create opportunity, Piketty looks to governmental action to enforce greater equality.

Pew Research Social & Demographic Trends, “The Lost Decade of the Middle Class: Fewer, Poorer, Gloomier,” report, August 22, 2012, http://www.pewsocialtrends.org/files/2012/08/pew-social-trends-lost-decade-of-the-middle-class.pdf. 5. Associated Press, “The Future’s NOT So Bright: Americans Predict a Dark Downward Spiral over the Next Four Decades,” Daily Mail, January 3, 2014. 6. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard UP, 2014), pp. 23–24, 192–96, 321–23, 347. 7. Annie Lowrey, “The Rich Get Richer Through the Recovery,” Economix (blog), New York Times, September 10, 2013, http://economix.blogs.nytimes.com/2013/09/10/the-rich-get-richer-through-the-recovery. 8. A study by the Citizens Housing and Planning Council of New York finds that “[f]rom 1963 to 1993, a period spanning the growth of modern environmental regulation, the relative price of shelter increased by 26 percent while the relative price of energy decreased by 1 percent, transportation by 11 percent, and all commodities by 18 percent.”

They note that (1) many of these regulations were clearly necessary, such as asbestos regulations; and (2) while no single environmental policy has a profound effect on costs, cumulatively regulations have a huge cost on housing. See Frank P. Braconi, Citizens Housing and Planning Council of New York, Inc., “Environmental Regulation and Housing Affordability,” Cityscape: A Journal of Policy Development and Research, vol. 2, no. 3 (September 1996): 82–106. 9. Annie Lowrey, “Even Among the Richest of the Rich, Fortunes Diverge,” New York Times, February 11, 2014; Piketty, Capital in the Twenty-First Century, p. 173; Ryan Dezember, “Blowout Haul for Buyout Tycoons,” Wall Street Journal, March 3, 2014; Lawrence Mishel and Natalie Sabadish, “CEO Pay and the Top 1%,” Economic Policy Institute Issue, Issue Brief, no. 331, May 2, 2012, http://www.epi.org/publication/ib331-ceo-pay-top-1-percent. 10. Simon Johnson, “Banking’s ‘Toxic Cocktail’ Is Too Big to Forget,” Bloomberg News, January 26, 2011, http://www.bloomberg.com/news/2011-01-27/banking-toxic-cocktail-is-too-big-to-forget-commentary-by-simon-johnson.html. 11.


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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

So conservatives and libertarians should not simply dismiss the subject of inequality as a function of envy or a hatred of free enterprise. They need to recognize that inequality is a threat to the political consensus in favor of market competition and dynamism. Liberals and progressives have a mirror-image problem. Many on the left rail against unrestrained capitalism’s innate and immoral tendency toward invidious inequality. Thomas Piketty caused a sensation with his book Capital in the Twenty-First Century by arguing at magisterial length that this tendency reflects the workings of a basic law of economics.12 Because the rate of return on capital (allegedly) outstrips the rate of economic growth, increasing inequality is written into the DNA of capitalism, which means that only massive taxes and transfers are capable of reversing hyper-inequality. In Piketty’s story, government matters only as the answer to inequality, never as a cause.

Finally, zoning’s contributions to economic inequality go beyond widening income gaps, whether geographic or socioeconomic in nature. In addition, tightening restrictions on building appear to be the driving force behind rising wealth inequality. At least that is the conclusion of Matt Rognlie, who as a 26-year-old grad student at MIT leaped to prominence with his bold critique of Thomas Piketty’s bestselling Capital in the Twenty-First Century. Piketty famously argued that there is a fundamental tendency in capitalism toward ever-greater concentration of wealth, a tendency that was checked in the twentieth century only because of global depression and war, and then only temporarily. Specifically, he argued that over the long run, the rate of return on wealth tends to outstrip the rate of economic growth, with the result that the share of national income that compensates owners of capital grows inexorably (and the share that goes to workers shrinks concomitantly).

abstract_id=2822059. 9.Arthur Okun, Equality and Efficiency: The Big Tradeoff (Washington, DC: Brookings Institution, 1975). 10.See Daniel Carpenter and David A. Moss, Preventing Regulatory Capture: Special Interest Influence and How to Limit It (New York: Cambridge University Press, 2014). 11.See, e.g., N. Gregory Mankiw, “Defending the One Percent,” Journal of Economic Perspectives 27, no. 3 (Summer 2013): 21–34, https://www.aeaweb.org/articles?id=10.1257/jep.27.3.21. 12.See Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2014). 13.Barry Goldwater, The Conscience of a Conservative (New York: MacFadden Books, 1960), p. 23. 14.Interview on National Public Radio, Morning Edition, May 25, 2001. 15.Anna Persson and Bo Rothstein, “It’s My Money: Why Big Government Is Good Government,” Comparative Political Studies 47, no. 2 (January 2015): 231–49. 16.Joseph Stiglitz, Nell Abernathy, Adam Hersh, Susan Holmber, and Mike Konczal, “Rewriting the Rules of the American Economy,” http://rooseveltinstitute.org/rewriting-rules-report/. 17.Frank Levy and Peter Temin, “Inequality and Institutions in 20th Century America,” SSRN Working Paper 07-17, June 27, 2007. 18.The connection between excessive governmental informalism and capture by the organized was recognized on the left as far back as Theodore Lowi’s great book, The End of Liberalism (New York: W.


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Social Class in the 21st Century by Mike Savage

call centre, Capital in the Twenty-First Century by Thomas Piketty, Clapham omnibus, Corn Laws, deindustrialization, deskilling, Downton Abbey, financial independence, gender pay gap, Gini coefficient, income inequality, liberal capitalism, Mark Zuckerberg, megacity, moral panic, New Urbanism, Occupy movement, old-boy network, precariat, psychological pricing, Sloane Ranger, The Spirit Level, unpaid internship, upwardly mobile, very high income, winner-take-all economy, young professional

In making this argument, there is a clear overlap with our findings in Chapter 7 regarding the power of elite universities, all of which are located close to London. London is now a vortex – a voracious and intense space, in which an elite class finds its home. In the early twenty-first century, the very wealthy are subject to increasing attention. The remarkable reception of Thomas Piketty’s Capital in the Twenty-first Century, allied to increasing concern about spiralling remuneration at the top, has made the sociological analysis of the elite essential. But we need to guard against the view that this new, wealth-elite marks a return to the aristocratic, landed and gentlemanly class which held sway in Britain until the later twentieth century. It is easy to be confused here by the prominence of old idioms and the relics of aristocracy which abound.

There is one important caveat to note, however, and this is that the GBCS only has information on household income, so the figures for Table 2.3 will be affected by whether there are two or more income-earners in the household. Subsequent analysis by Sam Friedman, David Laurison and Andrew Miles in ‘Breaking the “Class” Ceiling? Social Mobility into Elite Occupations’, Sociological Review, 63(2), 2015, 259–89 (which compares the GBCS findings with those from the Labour Force Survey on individual incomes), suggests that similar patterns can be found in both sources. 7. See Thomas Piketty, Capital in the Twenty-first Century (Cambridge, MA: 2014), p. 116, Figure 3.1. 8. Markus Jäntti, Eva Sierminska and Philippe Van Kerm, ‘The Joint Distribution of Income and Wealth’, in Janet C. Gornick and Markus Jäntti (editors), Income Inequality: Economic Disparities and the Middle Class in Affluent Countries (Redwood City, CA: 2013), pp. 312–33. 9. Eva Sierminska, Timothy M. Smeeding and Serge Allegrezza, ‘The Distribution of Assets and Debt’, in Gornick and Jäntti (editors), Income Inequality: Economic Disparities and the Middle Class, pp. 285–311, at p. 294.

Indeed, further research on the GBCS by the leading French mathematician Professor Brigitte Le Roux, using a different technique – multiple correspondence analysis – and somewhat different measures of social and cultural capital – also demonstrates that the most distinctive cluster continues to be at the top and that in the middle reaches of the social structure there is much more fuzziness. See Mike Savage, Brigitte Le Roux, Johannes Hjellbrekke and Daniel Laurison, ‘Espace culturel britannique et classes sociales’, in Frédérie Lebaron and Brigitte Le Roux (editors), La méthodologie de Pierre Bourdieu en action: espace culturel, espace social, et analyse des données (paris. 2015). 2. Danny Dorling, Inequality and the 1% (London: 2014), Thomas Piketty, Capital in the Twenty-first Century (Cambridge, MA: 2014). 3. The same general point also applies to gender: but because we asked about household income, gender differences are not well defined when using the GfK sample (since some badly paid women might be living with well-paid men, and vice versa). 4. We repeat our earlier comments about the problems of using the GBCS and the GfK survey to analyse ethnicity in detail.


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The People vs. Democracy: Why Our Freedom Is in Danger and How to Save It by Yascha Mounk

affirmative action, Affordable Care Act / Obamacare, Andrew Keen, basic income, battle of ideas, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, Cass Sunstein, central bank independence, centre right, clean water, cognitive bias, conceptual framework, David Brooks, deindustrialization, demographic transition, desegregation, Donald Trump, en.wikipedia.org, Francis Fukuyama: the end of history, German hyperinflation, gig economy, Gini coefficient, Home mortgage interest deduction, housing crisis, income inequality, invention of the printing press, invention of the steam engine, investor state dispute settlement, job automation, Joseph Schumpeter, land value tax, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, mass immigration, mortgage tax deduction, Naomi Klein, new economy, offshore financial centre, open borders, Parag Khanna, plutocrats, Plutocrats, post-materialism, price stability, ride hailing / ride sharing, rising living standards, Ronald Reagan, Rosa Parks, secular stagnation, sharing economy, Thomas L Friedman, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, universal basic income, upwardly mobile, World Values Survey, zero-sum game

On the initially slow diffusion of the printing press, see Dittmar, “Information Technology and Economic Change.” 28. Josh Constine, “Facebook Now Has 2 Billion Monthly Users … and Responsibility,” Techcrunch, June 27, 2017, https://techcrunch.com/2017/06/27/facebook-2-billion-users/. 29. George Orwell, “Second Thoughts on James Burnham,” Polemic 3 (May 1946). 5. Economic Stagnation 1. See Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014), 72–112. 2. S. N. Broadberry and Bas van Leeuwen, “British Economic Growth and the Business Cycle, 1700–1870: Annual Estimates,” Working Paper, Department of Economics, University of Warwick, Coventry, UK, February 2011, CAGE Online Working Paper Series, vol. 2010 (20), http://www2.warwick.ac.uk/fac/soc/economics/events/seminars-schedule/conferences/venice3/programme/british_economic_growth_and_the_business_cycle_1700-1850.pdf. 3.

This suggestion is inspired by similar proposals in relation to carbon taxation. See, for example, Robert O. Keohane, “The Global Politics of Climate Change: Challenge for Political Science,” PS: Political Science & Politics 48, no. 1 (2015): 19–26. 48. There have been many reasons for this, from the Great Recession to Occupy Wall Street. But the book that has catalyzed most of this discussion has undoubtedly been Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014). 49. On the role of lobbying in politics, see Jane Mayer, Dark Money: The Hidden History of the Billionaires behind the Rise of the Radical Right (New York: Doubleday, 2016); and Lee Drutman, The Business of America Is Lobbying: How Corporations Became More Politicized and Politicians Became More Corporate (New York: Oxford University Press, 2015).

But during that same time period, the Gini coefficient, the standard measure of income inequality, increased just as rapidly. In effect, England had, in the span of a quarter century, gone from the level of income inequality recorded in today’s Iceland to the level of income inequality recorded in today’s India.3 Then another big aberration in human history set in: a period of unprecedented economic equality. Back in 1928, Thomas Piketty shows, the richest 1 percent could expect to capture 15–20 percent of income in European countries like France or the United Kingdom and almost 25 percent of income in the United States. By 1960, the wealth distribution had flattened considerably: In France and the United Kingdom, the richest 1 percent now captured less than 10 percent of income. In the United States, they captured no more than 12 percent.


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Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff

activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Burning Man, business process, buy and hold, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, disintermediation, diversified portfolio, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, loss aversion, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Mitch Kapor, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, TaskRabbit, The Future of Employment, trade route, transportation-network company, Turing test, Uber and Lyft, Uber for X, uber lyft, unpaid internship, Y Combinator, young professional, zero-sum game, Zipcar

Central currency is the transactional tool that has overwhelmed business itself; money is the tail wagging the economy’s dog. Financial services, slowly but inevitably, become the biggest players in the economy. Between the 1950s and 2006, the percentage of the economy (as measured by GDP) represented by the financial sector more than doubled, from 3 percent to 7.5 percent.13 This is why, as Thomas Piketty demonstrated in Capital in the Twenty-First Century, the rate of return on capital exceeds the growth rate of the economy.14 Money makes money faster than people or companies can create value. The richest people and companies should, therefore, position themselves as far away from working or creating things, and as close to the money spigot, as possible. Some companies, such as General Electric in the 1980s, understood this principle quite well and acted on it.

Andrew Keen, The Internet Is Not the Answer (New York: Atlantic Monthly Press, 2015). 43. Vivek Wadhwa, “The End of Chinese Manufacturing and Rebirth of U.S. Industry,” forbes.com, July 23, 2012. 44. Daniel Bell, The Coming of Post-Industrial Society: A Venture in Social Forecasting (New York: Basic Books, 1976). 45. David Rotman, “How Technology Is Destroying Jobs,” technologyreview.com, June, 12, 2013. 46. Ibid. 47. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press, 2014). 48. Bernard Lietaer, The Mystery of Money: Beyond Greed and Scarcity, 148 [PDF]. 49. Jeff Tyler, “Banks Demolish Foreclosed Homes, Raise Eyebrows,” Marketplace, American Public Media, October 13, 2011. Transcript available at www.marketplace.org/topics/business/banks-demolish-foreclosed-homes-raise-eyebrows/. 50.

Wilson, “Platform Monopolies.” 34. Betsy Corcoran, “Blackboard’s Jay Bhatt Strikes Up the Brass Band,” edsurge.com, July 23, 2014. 35. Justin Pope, “E-Learning Firm Sparks Controversy with Software Patent,” washingtonpost.com, October 15, 2006. 36. withknown.com. 37. Carlota Perez, Technological Revolutions and Financial Capital (Cheltenham, England: Edward Elgar Press, 2002). 38. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press, 2014). 39. Mario Preve, quoted in Ernst & Young and Family Business Network International, “Built to Last: Family Businesses Lead the Way to Sustainable Growth” (n.p.: Ernst & Young Global Limited, 2012), www.ey.com/Publication/vwLUAssets/EY-Built-to-last-family-businesses-lead-the-way-to-sustainable-growth/$FILE/EY-Built-to-last-family-businesses-lead-the-way-to-sustainable-growth.pdf. 40.


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The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It by Richard Florida

affirmative action, Airbnb, basic income, Bernie Sanders, blue-collar work, business climate, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbine, congestion charging, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, Donald Trump, East Village, edge city, Edward Glaeser, failed state, Ferguson, Missouri, Gini coefficient, Google bus, high net worth, income inequality, income per capita, industrial cluster, informal economy, Jane Jacobs, jitney, Kitchen Debate, knowledge economy, knowledge worker, land value tax, low skilled workers, Lyft, megacity, Menlo Park, mortgage tax deduction, Nate Silver, New Economic Geography, new economy, New Urbanism, occupational segregation, Paul Graham, plutocrats, Plutocrats, RAND corporation, rent control, rent-seeking, Richard Florida, rising living standards, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, sovereign wealth fund, superstar cities, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, Uber and Lyft, uber lyft, universal basic income, upwardly mobile, urban decay, urban planning, urban renewal, urban sprawl, white flight, young professional

In New York’s SoHo, the artistic and creative ferment I had observed as a student was giving way to a new kind of homogeneity of wealthy people, high-end restaurants, and luxury shops. Truth be told, the downsides of the urban revival had captured my attention fairly early on. Back in 2003, well before Occupy Wall Street drew attention to the rise of the “one percent,” or Thomas Piketty’s Capital in the Twenty-First Century opened our eyes to global inequality, I warned that America’s leading creative cities were also the epicenters of economic inequality. My research found that the metros with the highest levels of wage inequality were also those with the most dynamic and successful creative economies—San Francisco, Austin, Boston, Seattle, Washington, DC, and New York.3 But even as I was documenting these new divides, I had no idea how fast they would metastasize, or how deeply polarized these cities would become.

Report of the National Advisory Commission on Civil Disorders (Kerner Commission Report) (Washington, DC: US Government Printing Office, 1968); Max Herman, Summer of Rage: An Oral History of the 1967 Newark and Detroit Riots (Bern: Peter Lang, 2013); Kevin Mumford, Newark: A History of Race, Rights, and Riots in America (New York: New York University Press, 2008); Sidney Fine, Violence in the Model City: The Cavanagh Administration, Race Relations, and the Detroit Riot of 1967 (Ann Arbor: University of Michigan Press, 1989); Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton, NJ: Princeton University Press, 1996). 2. Richard Florida, The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community, and Everyday Life (New York: Basic Books, 2002); Florida, The Rise of the Creative Class Revisited (New York: Basic Books, 2012). 3. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2013); Richard Florida, “The New American Dream,” Washington Monthly, March 2003; Richard Florida, The Flight of the Creative Class (New York: HarperCollins, 2005). 4. Richard Florida, “More Losers Than Winners in America’s New Economic Geography,” CityLab, January 30, 2013, www.citylab.com/work/2013/01/more-losers-winners-americas-new-economic-geography/4465. 5.

Average wages are positively correlated with metropolitan populations (0.58), as are wages for the three classes of workers: knowledge, professional, and creative workers (0.69); service workers (0.46); and blue-collar workers (0.28). 30. The correlation between housing cost and creative-class wages left over after paying for housing is positive and significant (0.58). The correlations between housing costs and wages left over after paying for housing are negative and significant for the service class (–0.36) and the working class (–0.20). 31. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2013); Matthew Rognlie, “Deciphering the Fall and Rise in the Net Capital Share,” Brookings Papers on Economic Activity, Brookings Institution, March 2015, www.brookings.edu/~/media/projects/bpea/spring-2015/2015a_rognlie.pdf. While some have jumped on Rognlie’s work as somehow criticizing or upending Piketty’s arguments and conclusions, I prefer to see it as clarifying and focusing attention on the role that housing plays in mounting inequality.


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Wealth, Poverty and Politics by Thomas Sowell

affirmative action, Albert Einstein, British Empire, Capital in the Twenty-First Century by Thomas Piketty, colonial exploitation, colonial rule, correlation does not imply causation, Deng Xiaoping, desegregation, European colonialism, full employment, Gunnar Myrdal, income inequality, income per capita, invention of the sewing machine, invisible hand, low skilled workers, mass immigration, means of production, minimum wage unemployment, New Urbanism, profit motive, rent control, Scramble for Africa, Simon Kuznets, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, transatlantic slave trade, transcontinental railway, trickle-down economics, very high income, War on Poverty

., “The ‘Poor’ Are Getting Richer,” Fraser Forum, January/February 2013, p. 25. 9. Armine Yalnizyan, The Rise of Canada’s Richest 1% (Ottawa: Canadian Centre for Policy Alternatives, December 2010). 10. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, Massachusetts: Harvard University Press, 2014), p. 252. 11. Thomas A. Hirschl and Mark R. Rank, “The Life Course Dynamics of Affluence,” PLoS ONE, January 28, 2015, p. 5. 12. Ibid. 13. Paul Krugman, “Rich Man’s Recovery,” New York Times, September 13, 2013, p. A25. 14. U.S. Department of the Treasury, “Income Mobility in the U.S. from 1996 to 2005,” November 13, 2007, p. 4. 15. Thomas Piketty, Capital in the Twenty-First Century, pp. 253, 254. 16. Ibid., p. 278. 17. U.S. Department of the Treasury, “Income Mobility in the U.S. from 1996 to 2005,” November 13, 2007, pp. 2, 4. 18.

A15; Alan Reynolds, “Why Piketty’s Wealth Data Are Worthless,” Wall Street Journal, July 10, 2014, p. A11. 25. Thomas Piketty, Capital in the Twenty-First Century, pp. 473, 507; Robert A. Wilson, “Personal Exemptions and Individual Income Tax Rates, 1913–2002,” Statistics of Income Bulletin, Spring 2002, p. 219. 26. W. Michael Cox and Richard Alm, Myths of Rich & Poor: Why We’re Better Off Than We Think (New York: Basic Books, 1999), p. 16. 27. See, for example, Chapter 19 (“Government Finance”) in the 5th edition of my Basic Economics: A Common Sense Guide to the Economy (New York: Basic Books, 2015) or my monograph “Trickle Down” Theory and “Tax Cuts for the Rich” (Stanford: Hoover Institution Press, 2012), pp. 1–5. 28. Adrian Dungan and Michael Parisi, “Individual Income Tax Rates and Shares, 2011,” Statistics of Income Bulletin, Spring 2014, p. 43. 29. Thomas Piketty, Capital in the Twenty-First Century, p. 252. 30.

Nevertheless, what happens in those abstract categories— income brackets, in this case— over time is often discussed just as if that is what is happening to specific sets of people over time, often called “the poor” and “the rich.” Transients in the various income brackets are spoken of as if they were continuous residents in those brackets. Time and Turnover Understandable and commendable as it may be to be concerned about the fate of fellow human beings, that is very different from being obsessed with the fate of numbers in abstract categories. To say, as Professor Thomas Piketty does in his much acclaimed book, Capital in the Twenty-First Century, that “the upper decile is truly a world unto itself”10 is to fly in the face of the fact that most American households— 53 percent— are in the top decile at some point in their lives,11 usually in their older years. For most Americans to envy or resent the top ten percent would be to envy or resent themselves. This is not even “class warfare,” but confusion between social classes and age cohorts.


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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

Robbins, “Capital Gains and the Distribution of Income in the United States,” Brown University, Dec. 2018. 16.See Joseph E. Stiglitz, “New Theoretical Perspectives on the Distribution of Income and Wealth among Individuals.” For a discussion of the role of housing, see Matthew Rognlie, “Deciphering the Fall and Rise in the Net Capital Share: Accumulation or Scarcity?,” Brookings Papers on Economic Activity 46, no. 1 (Spring 2015): 1–69. See also Thomas Piketty, Capital in the Twenty-First Century. 17.The right to obtain a certain rent stream, year after year, has a market value, and this is called the capitalized value of the rents. Thus, owning a monopoly will give the owner profits each year. The owner could sell that stream of profits. The value today of that stream is called the capitalized rents. 18.See Mordecai Kurz, “On the Formation of Capital and Wealth: IT, Monopoly Power and Rising Inequality” (Stanford Institute for Economic Policy Research Working Paper 17-016, 2017). 19.In mid-twentieth-century capitalism, corporations with market power shared their monopoly rents with their unionized workers.

Many potential innovators are no doubt discouraged from even trying, as they consider the threat of expensive lawsuits that would bankrupt them even if they have little merit.34 Even the threat of a patent suit can send chills down the spine of a young innovator. A quick search of “patent infringement” shows numerous cases, in the hundreds of millions of dollars, between Qualcomm and Apple, Apple and Samsung, and so forth. The only sure winners in all of these suits are the lawyers; the only sure losers are consumers and small firms unable to enter the fray. Such is American-style capitalism in the twenty-first century. Our “innovative” firms do not rest their anticompetitive practices there. They have pioneered new contractual arrangements to leverage their market power. In credit cards, these new contractual forms do not allow, for instance, stores to charge customers who use credit cards with high rewards—and high merchant fees—for the use of these high-cost credit cards. Credit card companies have effectively short-circuited price competition.35 The lack of competition means that the dominant firms (Visa, MasterCard, and American Express) can charge merchants fees that are a multiple of the costs of providing the service.36 Of course, these costs eventually get passed on in the prices of the goods and services that individuals buy with these cards, so even when the credit cards provide rewards, it’s not even obvious that the credit card customers are better off.

These insights fly in the face of Reagan-style “supply-side” policies, based on the assumptions that deregulation would free up the economy, lower taxes would incentivize it, and the two together would lead to economic growth. However, after Reagan’s reforms, growth actually slowed. Deregulation, especially of the financial market, brought us the downturns of 1991, 2001, and most grievously, the Great Recession of 2008. And lower taxes did not have the energizing effect that supply-siders claimed. Thomas Piketty and his coauthors have documented that lowering top tax rates has actually been accompanied by unchanged or lower growth around the world.43 As anticipated by the critics of these tax cuts, neither Reagan’s cuts for the rich nor the later cuts enacted under George W. Bush led to increased labor supply or savings44—and accordingly, neither led to faster growth.45 Evidently, there is much less than meets the eye to “supply-side” economics and its faith in the unfettered free market as the path to growth.


pages: 976 words: 235,576

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite by Daniel Markovits

"Robert Solow", 8-hour work day, activist fund / activist shareholder / activist investor, affirmative action, Anton Chekhov, asset-backed security, assortative mating, basic income, Bernie Sanders, big-box store, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, carried interest, collateralized debt obligation, collective bargaining, computer age, corporate governance, corporate raider, crony capitalism, David Brooks, deskilling, Detroit bankruptcy, disruptive innovation, Donald Trump, Edward Glaeser, Emanuel Derman, equity premium, European colonialism, everywhere but in the productivity statistics, fear of failure, financial innovation, financial intermediation, fixed income, Ford paid five dollars a day, Frederick Winslow Taylor, full employment, future of work, gender pay gap, George Akerlof, Gini coefficient, glass ceiling, helicopter parent, high net worth, hiring and firing, income inequality, industrial robot, interchangeable parts, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, longitudinal study, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass incarceration, medical residency, minimum wage unemployment, Myron Scholes, Nate Silver, New Economic Geography, new economy, offshore financial centre, Paul Samuelson, payday loans, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, purchasing power parity, rent-seeking, Richard Florida, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, school choice, shareholder value, Silicon Valley, Simon Kuznets, six sigma, Skype, stakhanovite, stem cell, Steve Jobs, supply-chain management, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas Davenport, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, traveling salesman, universal basic income, unpaid internship, Vanguard fund, War on Poverty, Winter of Discontent, women in the workforce, working poor, young professional, zero-sum game

Inequality’s modern critics no doubt employ a less systematic method and strike a more moderate tone, but the conventional wisdom to this day pursues a similar style of argument, a variation on Marx’s rentier theme. Critics still commonly connect economic inequality to the familiar political and economic battle between capital and labor, associating the rich with capital and inequality’s increase with capital’s renewed dominance. Thomas Piketty’s formidable book Capital in the Twenty-First Century gives this view its now-canonical statement. Familiar laments about the decline of labor unions, rising market power among large employers, and outsourcing and globalization also share this general attitude. These complaints capture something real. Unions have been systematically dismantled in recent decades. Labor’s share of national income has fallen—modestly, but appreciably—since the middle of the last century.

See also Bourree Lam, “Recruitment, Resumes, Interviews: How the Hiring Process Favors Elites,” Atlantic, May 27, 2015, accessed June 14, 2018, www.theatlantic.com/business/archive/2015/05/recruitment-resumes-interviews-how-the-hiring-process-favors-elites/394166/ [inactive]. outright fraud: See, e.g., Russell Sobel, “Crony Capitalism Pays Well for Rent-Seeking CEOs,” Investor’s Business Daily, July 9, 2014, accessed June 14, 2018, www.investors.com/politics/commentary/political-activity-and-connections-dont-make-business-profitable/. a rising oligarchy: See Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Belknap Press of Harvard University Press, 2014). Hereafter cited as Piketty, Capital. denounce real targets: In addition to Piketty’s work, canonical accounts along these lines include Joseph E. Stiglitz, The Price of Inequality (New York: W. W. Norton, 2012), and Anthony B. Atkinson, Inequality: What Can Be Done? (Cambridge, MA: Harvard University Press, 2015).

., 181, 317nn(18), 330n(67), 335n(87), 337n(93), 341n(104), 351n(127), 352n(130), 355n(134), 364n(166), 365n(171), 366nn(174), 369n(179), 371–72nn(182–83), 375nn(185–87), 383n(220), 396n(267), 401n(282), 402nn(293, 298), burnout, 43 Bush, Barbara, 229 Bush, George W., 68, 197, 198, 224 Bush, Jenna, 229 campaign financing, 52 Cantor, Eric, 57 capital asset pricing model, 237–38 capital deepening, 253–54 capital dominance, 13, 15, 18, 88–89, 92–94 Capital in the Twenty-First Century (Piketty), 88 Cappelli, Peter, 333n(83), 358nn(140–41), 359n(141), 364n(167), 365nn(169–70), 366–67nn(173–74, 176), 368nn(176–77), 370n(180), 371n(182), 379n(203), 392n(248) Carnegie, Andrew, 51 Carnevale, Anthony, 353n(132), 354n(132), 356nn(136), 359nn(141), 372nn (182–83), 374n(183), 403nn(305) carried interest, 91–92 casino lobby, 54 celebrities, 85, 97 Census Bureau, U.S., 314n(3), 316n(13), 318nn(21–23), 319nn(23, 25), 322nn(41), 324n(46), 325nn(48, 50), 334nn(85–86), 339nn(99–100), 340–41nn(102–4), 345n(117), 346nn(118), 349n(125), 350–51n(126–27), 354nn(132–33), 357n(138), 359nn(141–42), 365n(169), 368nn(177–78), 372nn(182), 375n(186), 378n(201), 382nn(216), 393n(251), 401n(292), 402n(293), 403nn(305–6) Center for American Progress, 283 CEOs.


pages: 323 words: 90,868

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

Much the same is true of the long-term unemployed, many of them older men without much education, who drift around, often drinking to pass the day, lacking much, if any, connection to society at large. For an awful lot of people, work has become a less certain and often less remunerative contributor to material security. It is a development that makes political forces of populist outsiders, such as Donald Trump and Marine Le Pen, and bestsellers of wonky economics books, such as Thomas Piketty’s Capital in the Twenty-First Century,10 an analysis of global inequality published in 2014 that flew off the shelves. Work is not just the means by which we obtain the resources needed to put food on the table. It is also a source of personal identity. It helps give structure to our days and our lives. It offers the possibility of personal fulfilment that comes from being of use to others, and it is a critical part of the glue that holds society together and smoothes its operation.

Worries and speculation have grown more intense and more common since 2011, when Erik Brynjolfsson and Andrew McAfee published Race Against the Machine,19 which laid out in compelling detail how quickly the capabilities of clever software and robots were improving. Authors like Martin Ford, whose 2015 book Rise of the Robots20 described a vision of a post-work world, argue that robots and machine intelligence will create a world wholly different from anything that has come before, and that a techno-socialism of sorts will need to be adopted to keep society functioning. Economist Thomas Piketty’s aforementioned masterpiece, Capital in the Twenty-First Century, set out a bold theory of inequality and predicted trouble ahead, as did Chris Hayes, whose book Twilight of the Elites21 was an incisive examination of the loss of faith in elite institutions and technocrats, who have struggled to manage recent economic change. Yet at the moment there is little agreement on how seriously to take automation concerns, how a transition to something like a jobless future might unfold and what ought to be done about it.

The rising tide didn’t wash away inequities, but it kept both capital and labour satisfied enough to hold the revolution at bay. From 1875 until the eve of the First World War, the world’s industrialized economies were extraordinarily unequal, but rising living standards for workers kept revolutionary fervour in check. Yet societies were not exactly living harmoniously, either. As Thomas Piketty notes, in Capital in the Twenty-First Century, it took the turmoil of the first half of the twentieth century to undo the inequality that developed in the nineteenth. War, taxation, inflation and economic depression destroyed many of the great fortunes of the industrial era. They ushered in an entirely new state structure, in which extensive taxation was used to fund massive welfare states. And that structure ensured that the rapid economic growth of the first few decades after the Second World War was highly egalitarian in nature.8 The taming of capitalism was not a smooth or easy or inevitable process, however.


pages: 312 words: 91,835

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

This is why Tinbergen expected the skill premium to go to zero.2 But here too, the very opposite has happened: the skill premium has shown a strong increase in most advanced countries during the past twenty years. Note also that Tinbergen’s theory, like Kuznets’s, holds that inequality should be expected to decrease with development—a conclusion that is unambiguously contradicted by the facts. It was Thomas Piketty’s Capital in the Twenty-First Century, a book of extraordinary breadth and influence, that presented a theory to effectively displace Kuznets’s. The problem was how to explain both the decrease in inequality in rich countries in the period 1918–1980 and its subsequent increase. Piketty argued that the decrease was a special and unusual event driven by the political forces of wars, taxation to finance the wars, socialist ideology and movements, and economic convergence (which kept the growth rate of wages above the growth rate of income from property).

In northern Europe (England and the Netherlands), where feudal institutions were weaker, it was more difficult to check wage increases. Inequality as measured by the land rent/wage ratio probably went down in both cases, but not equally.18 Another type of catastrophic event that reduces inequality is war. For modern societies, the argument that war can be a force for equality, if an unwelcome one, recently received much attention in Piketty’s Capital in the Twenty-First Century. It was already present in Piketty’s earlier work on French inequality (2001a), which showed how inequality was affected by World War I and its aftermath. War reduces inequality through physical destruction of capital and inflation (creating real losses for creditors), resulting in a general decrease of income received from property. David Ricardo, in the famous chapter 31 of his Principles of Political Economy and Taxation (1817), proposed another channel, which has not been much explored, through which war reduces inequality.

The traditional one, espoused largely by Kuznets himself, is that it was a product of various economic forces: a gradual end to the structural transformation whereby most of the population moved into urban areas and into manufacturing (thus eliminating the rural/urban gap that is one of the important contributors to inequality); increased schooling, which reduced the education premium (an explanation especially favored by Tinbergen [1975] and Goldin and Katz [2010]); the aging of the population, and thus greater demand for social services (social security, nationalized health), which in turn required greater taxation of the rich; and, possibly in the background, the need for greater social cohesion in the context of wars, including the Cold War, which meant that financing of wars should fall mostly on the rich.35 The second explanation, favored by Piketty, not only in his most recent book, Capital in the Twenty-First Century, but also in his earlier book Les Hauts revenus en France, published in 2001, is, unlike Kuznets’s theory, primarily a political theory. According to Piketty, the two world wars not only led to higher taxes but also destroyed property and reduced large fortunes. This was particularly true in France, which provided a template for his later work.36 In his book on France, Piketty shows that the concentration of capital declined after the wars and the largest French fortunes never recovered: around the year 2000, the highest-valued estates were still worth less than before World War I.37 The lower concentration of wealth combined with a lower capital-output ratio (because of the destruction of capital) resulted in a reduction of revenues from capital and a reduction of inequality.


pages: 295 words: 90,821

Fully Grown: Why a Stagnant Economy Is a Sign of Success by Dietrich Vollrath

"Robert Solow", active measures, additive manufacturing, American Legislative Exchange Council, barriers to entry, business cycle, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, creative destruction, Deng Xiaoping, endogenous growth, falling living standards, hiring and firing, income inequality, intangible asset, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, labor-force participation, light touch regulation, low skilled workers, manufacturing employment, old age dependency ratio, patent troll, Peter Thiel, profit maximization, rising living standards, Robert Gordon, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, The Rise and Fall of American Growth, total factor productivity, women in the workforce, working-age population

With an onerous enough set of regulations, no firm will find it worth the trouble of complying and so will shut down. But the evidence indicates that taxation and regulation did not have a significant effect on the ability of firms to produce real goods and services, and specifically there was no substantial shift in government policies around 2000 that could explain the growth slowdown. 15 Did Inequality Cause the Slowdown? From the Occupy Wall Street movement to Thomas Piketty’s Capital in the Twenty-First Century, economic inequality has gathered a lot of attention over the previous decade. And given that this coincided with the growth slowdown, it is natural to wonder whether inequality was a material cause of the slowdown in any way. From the perspective of the growth slowdown, though, the best way to view the rise in inequality is as just another symptom of the increasing market power of firms that we’ve already discussed rather than a separate cause in and of itself.

Labor income for the top 10% in 1929 and 2007 Note: Data is from Piketty (2013). The evidence here shows that much of the increase in inequality came from an increase in the wages earned by the top 1%. This shift toward wage income as a source of top-end inequality represented a distinct change from inequality in the past. The Piketty, Saez, and Zucman data gives us some information on the top 1%, but Thomas Piketty’s data from Capital in the Twenty-First Century provides more extensive insight into the fraction of income that is accounted for by capital (dividends, capital gains), labor (wages), and mixed income for subsets of the top 10%. Figure 15.3 shows wages as a percentage of total income for different groups within the top 10% for both 1929 and 2007. For the people in the 90th through 95th percentiles of income, wages accounted for about 60% of their income in 1929, with capital and mixed income making up the rest.

But that isn’t quite right, is it? The real source of that decline in your tomato yield was the drought the year before, which in turn affected your ability to invest. The tomato analogy is oversimplified, but the same principle applies to talking about physical capital accumulation in the economy. Because physical capital depends on our ability to produce real GDP, the drop in the growth rate of physical capital in the twenty-first century may be as much a consequence of the growth slowdown as it is a cause. While arguments could be made that both human capital and the residual suffer from the same issue, they suffer far less than physical capital does. Lower growth in real GDP could, for example, limit the resources available to staff schools or universities, but most of the changes in human capital growth are driven by the demographics of people aging into or out of the labor force.


pages: 322 words: 87,181

Straight Talk on Trade: Ideas for a Sane World Economy by Dani Rodrik

3D printing, airline deregulation, Asian financial crisis, bank run, barriers to entry, Berlin Wall, Bernie Sanders, blue-collar work, Bretton Woods, BRICs, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, central bank independence, centre right, collective bargaining, conceptual framework, continuous integration, corporate governance, corporate social responsibility, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Donald Trump, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, financial deregulation, financial innovation, financial intermediation, financial repression, floating exchange rates, full employment, future of work, George Akerlof, global value chain, income inequality, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Jean Tirole, Kenneth Rogoff, low skilled workers, manufacturing employment, market clearing, market fundamentalism, meta analysis, meta-analysis, moral hazard, Nelson Mandela, new economy, offshore financial centre, open borders, open economy, Pareto efficiency, postindustrial economy, price stability, pushing on a string, race to the bottom, randomized controlled trial, regulatory arbitrage, rent control, rent-seeking, Richard Thaler, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Sam Peltzman, Silicon Valley, special economic zone, spectrum auction, Steven Pinker, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, total factor productivity, trade liberalization, transaction costs, unorthodox policies, Washington Consensus, World Values Survey, zero-sum game, éminence grise

Rawi Abdelal, “Writing the Rules of Global Finance: France, Europe, and Capital Liberalization,” Review of International Political Economy, vol. 13(1), February 2006: 1–27. 3. Anat Admati and Martin Hellwig, The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It, Princeton University Press, Princeton and Oxford, 2013; Simon Johnson and James Kwak, White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You, Vintage Books, New York, 2012; Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, Cambridge, MA, 2014; Anthony B. Atkinson, Inequality: What Can be Done? Harvard University Press, Cambridge, MA, 2015; Mariana Mazzucato, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, Public Affairs Press, New York, 2015; Ha-Joon Chang, Economics: The User’s Guide, Penguin, London, 2014; J. Bradford DeLong and Lawrence H. Summers, “Fiscal Policy in a Depressed Economy,” Brookings Papers on Economic Activity, Spring 2012; Jeffrey D.

Stiglitz and N. Serra, eds., Oxford University Press, New York, 2008. 9. Theodore Pelagidis, “Why Internal Devaluation is Not Leading to Export-Led Growth in Greece,” Brookings Online, September 12, 2014, http://www.brookings.edu/blogs/up-front/posts/2014/09/12-internal-devaluation-export-growth-greece-pelagidis. 10. “Pour l’économiste Thomas Piketty: Macron, c’est ‘l’Europe d’hier’,” Le Point, February 20, 2017, http://www.lepoint.fr/presidentielle/pour-l-economiste-thomas-piketty-macron-c-est-l-europe-d-hier-19-02-2017-2105950_3121.php#section-commentaires. 11. “Emmanuel Macron proposes Nordic economic model for France,” Financial Times, February 23, 2017, https://www.ft.com/content/3691a448-fa1d-11e6-9516-2d969e0d3b65. 12. “Merkel rules out eased eurozone spending rules to help Macron,” Financial Times, May 8, 2017, https://www.ft.com/content/2d3004a2-33ee-11e7-bce4-9023f8c0fd2e. 13.

He will have to build from scratch a legislative majority following the National Assembly elections in June 2017. Macron’s economic ideas resist easy characterization. During the presidential campaign, he was frequently accused of lacking specifics. To many on the left and the extreme right, he is a neoliberal, with little to distinguish himself from the mainstream policies of austerity that failed Europe and brought it to its current political impasse. The French economist Thomas Piketty, who supported the socialist candidate Benoit Hamon, described Macron as representing “yesterday’s Europe.”10 Many of Macron’s economic plans did indeed have a neoliberal flavor. He has vowed to lower the corporate tax rate from 33.5 percent to 25 percent, cut 120,000 civil service jobs, keep the government deficit below the EU limit of 3 percent of GDP, and increase labor-market flexibility (a euphemism for making it easier for firms to fire workers).


pages: 417 words: 97,577

The Myth of Capitalism: Monopolies and the Death of Competition by Jonathan Tepper

Affordable Care Act / Obamacare, air freight, Airbnb, airline deregulation, bank run, barriers to entry, Berlin Wall, Bernie Sanders, big-box store, Bob Noyce, business cycle, Capital in the Twenty-First Century by Thomas Piketty, citizen journalism, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, computer age, corporate raider, creative destruction, Credit Default Swap, crony capitalism, diversification, don't be evil, Donald Trump, Double Irish / Dutch Sandwich, Edward Snowden, Elon Musk, en.wikipedia.org, eurozone crisis, Fall of the Berlin Wall, family office, financial innovation, full employment, German hyperinflation, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, Google bus, Google Chrome, Gordon Gekko, income inequality, index fund, Innovator's Dilemma, intangible asset, invisible hand, Jeff Bezos, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, late capitalism, London Interbank Offered Rate, low skilled workers, Mark Zuckerberg, Martin Wolf, means of production, merger arbitrage, Metcalfe's law, multi-sided market, mutually assured destruction, Nash equilibrium, Network effects, new economy, Northern Rock, offshore financial centre, passive investing, patent troll, Peter Thiel, plutocrats, Plutocrats, prediction markets, prisoner's dilemma, race to the bottom, rent-seeking, road to serfdom, Robert Bork, Ronald Reagan, Sam Peltzman, secular stagnation, shareholder value, Silicon Valley, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, undersea cable, Vanguard fund, very high income, wikimedia commons, William Shockley: the traitorous eight, zero-sum game

Across all the democratic “capitalist” countries of the West, voters said “Enough!” Voters know that something is rotten in capitalism, and the elite does as well. If voting for political outsiders is what the average person does, then pretending to read weighty books on capitalism is what the elite does. Nothing highlights the search for a diagnosis of our ills more than the extraordinary, puzzling success of Thomas Piketty's Capital in the Twenty-First Century. A 700-page economics book that is full of data tables and charts is hardly anyone's idea of a bestseller. There were no murder cases like in a Grisham book or any magical spells like in a J.K. Rowling book, yet Piketty's book sold more than 1.5 million copies. Everyone bought and pretended to read the book. We have yet to meet anyone who has read the entire book. We're not making that up.

They clearly showed what many had feared but could not prove: the United States was becoming more unequal. Who cared about hundreds of pages of text when he had such good charts? Figure 10.1 Income Inequality in the United States, 1910–2015 The reviews of the book were ecstatic, even rapturous. The Economist said it was “the economics book that took the world by storm.” According to the Financial Times, “Thomas Piketty's book, ‘Capital in the Twenty-First Century’, has been the publishing sensation of the year. Its thesis of rising inequality tapped into the zeitgeist and electrified the post-financial crisis public policy debate.” Lawrence Summers's said this research “has transformed political discourse and is a Nobel Prize–worthy contribution.” Perhaps, most tellingly, Ed Miliband, the former Labour leader, said of Piketty at the time, “In a way, he is symptomatic of what people are actually feeling.”

In Houston, United has around a 60% market share, in Newark 51%, in Washington Dulles 43%, in San Francisco 38%, and in Chicago 31%.5 This situation is even more skewed for other airlines. For example, Delta has an 80% market share in in Atlanta and 77% in Philadelphia, while in Dallas-Fort Worth it has 77%.6 For many routes, you simply have no choice. The episode became a metaphor for American capitalism in the twenty-first century. A highly profitable company had bloodied a consumer, and it didn't matter because consumers have no choice. When consumers see a man bloodied by a big company or see a suffering patient gouged by a hospital, they get the sense that something is profoundly wrong with companies. All around the world, people have an overwhelming sense that something is broken. This is leading to record levels of populism in the United States and Europe, resurgent intolerance, and a desire to upend the existing order.


pages: 374 words: 111,284

The AI Economy: Work, Wealth and Welfare in the Robot Age by Roger Bootle

"Robert Solow", 3D printing, agricultural Revolution, AI winter, Albert Einstein, anti-work, autonomous vehicles, basic income, Ben Bernanke: helicopter money, Bernie Sanders, blockchain, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, computer age, conceptual framework, corporate governance, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, deindustrialization, deskilling, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, facts on the ground, financial intermediation, full employment, future of work, income inequality, income per capita, industrial robot, Internet of things, invention of the wheel, Isaac Newton, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, Kevin Kelly, license plate recognition, Marc Andreessen, Mark Zuckerberg, market bubble, mega-rich, natural language processing, Network effects, new economy, Nicholas Carr, Paul Samuelson, Peter Thiel, positional goods, quantitative easing, RAND corporation, Ray Kurzweil, Richard Florida, ride hailing / ride sharing, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, Skype, social intelligence, spinning jenny, Stanislav Petrov, Stephen Hawking, Steven Pinker, technological singularity, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, universal basic income, US Airways Flight 1549, Vernor Vinge, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, wealth creators, winner-take-all economy, Y2K, Yogi Berra

These data come from World Inequality Database, https:/​/​wid.​world/​data/​ and Office for National Statistics, Effects of taxes and benefits on household income: historical datasets, https:/​/​www.​ons.​gov.​uk/​peoplepopulationandcommunity/​personalandhouseholdfinances/​incomeandwealth/​datasets/​theeffectsoftaxesandbenefitsonhouseholdincomehistoricaldatasets 6 Quoted by Schwab, K. (2018) Shaping the Future of the Fourth Industrial Revolution, Penguin Radom House: London, p. 23. 7 Kelly, K. (2012) Better than Human: Why Robots Will – and Must – Take Our Jobs, Wired, December 24, 2012, p. 155. 8 Brynjolfsson, E. and McAfee, A. (2016) The Second Machine Age, Work, Progress, And Prosperity in a Time of Brilliant Technologies, New York: W. W. Norton & Company, p. 157. 9 Ibid., p. 179. 10 Piketty, T. (2014) Capital in the Twenty-First Century, Massachusetts: Harvard University Press. 11 See “Thomas Piketty’s Capital, Summarised in Four Paragraphs,” The Economist, May 2014, Lawrence Summers, “The Inequality Puzzle, Democracy: A Journal of Ideas, No. 33 (Summer 2014; Mervyn King, “Capital in the Twenty-First Century by Thomas Piketty,” review, The Daily Telegraph, May 10, 2014. 12 See M. Feldstein in G. Wood and Steve Hughes, (eds) (2015) The Central Contradiction of Capitalism?, London: Policy Exchange. 13 Grubel, H. in Wood and Hughes (2015), op. cit. 14 Giles, C. in Wood and Hughes (2015), op. cit. 15 Stiglitz, J.

Less able surgeons will still be employed but at lower pay – unless and until robots and AI raise the quality and reliability of their work to that of the best. The new Marx? So, globalization and digitization have been two powerful forces operating over the last two decades to drive an increase in inequality. And now into this world of burgeoning inequality there steps a Frenchman bearing (intellectual) gifts. In 2014 Thomas Piketty published a book explaining the trend toward increased inequality in a different and powerful way and forecasting that it would intensify. Piketty’s Capital in the Twenty-First Century became an international publishing sensation. It has proved to be the launching pad for thousands of books, academic papers, and PhD theses.10 Piketty’s thesis is that the distribution of wealth and income is set to become ever more unequal because, quite simply, the return on capital exceeds the economic growth rate.

And 21 of these 100 individuals even reached the very top income quintile. Third, Chris Giles, the Economics Editor of the Financial Times, has shown that there are serious problems with Piketty’s data at a detailed level, including discrepancies between the data in original sources and Piketty’s reproduction of them, as well as the crude insertion of “assumed” data where there are gaps in the original data. Giles says that: “The conclusions of Capital in the Twenty-First Century do not appear to be backed by the book’s own sources.”14 Theory and evidence Given how devastating these criticisms of Piketty’s data are, you might well think that it is superfluous to comment on the theoretical defects of Piketty’s thesis. Nevertheless, we should briefly consider the theory. After all, there is a well-known quip in economics along the lines of “OK, so the idea doesn’t work in practice, but does it work in theory?”


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

Ibid., bk V, ch. 3, para. 92.; Ross, Life of Adam Smith, p. 315. 25.  Ross, Life of Adam Smith, p. 302. 26.  Smith, Wealth of Nations, bk IV, ch. 5, Digression concerning the Corn Trade and Corn Laws, para. 43. 2 – David Ricardo: Do Trade Deficits Matter? 1.    John E. King, 2013, David Ricardo, Basingstoke: Macmillan, p. 5. 2.    Ibid., pp. 15–16. 3.    Thomas Piketty, 2014, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press, pp. 314–15. 4.    Nicholas Crafts, 2005, ‘The First Industrial Revolution: Resolving the Slow Growth/Rapid Industrialization Paradox’, Journal of the European Economic Association, 3(2/3), pp. 525–34. 5.    David Ricardo, 2011 [1817], The Works and Correspondence of David Ricardo, vol. IV, ed. Piero Sraffa, Cambridge: Cambridge University Press, p. 21. 6.    

Tsangarides, 2014, ‘Redistribution, Inequality, and Growth’, International Monetary Fund Staff Discussion Note SDN/14/02; www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf Parsons, Talcott, 1931, ‘Wants and Activities in Marshall’, Quarterly Journal of Economics, 46(1), pp. 101–40 Pessoa, João Paulo and John Van Reenen, 2013, ‘Decoupling of Wage Growth and Productivity Growth? Myth and Reality’, Centre for Economic Performance, London School of Economics and Political Science Discussion Paper No. 1246; http://cep.lse.ac.uk/pubs/download/dp1246.pdf Pigou, A. C., 1953, Alfred Marshall and Current Thought, London: Macmillan Pigou, A. C., ed., 1925, Memorials of Alfred Marshall, London: Macmillan Piketty, Thomas, 2014, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press Ranelagh, John, 1991, Thatcher’s People: An Insider’s Account of the Politics, the Power and the Personalities, London: HarperCollins Reagan, Ronald, 1986, ‘The President’s News Conference’, 12 August; www.presidency.ucsb.edu/ws/?pid=37733 ________, 1986, ‘Remarks to State Chairpersons of the National White House Conference on Small Business’, 15 August; www.reaganlibrary.gov/archives/speeches/1986/081586e.html Reich, Robert, 2012, Beyond Outrage: What Has Gone Wrong with Our Economy and Our Democracy, and How to Fix It, New York: Vintage Books Ricardo, David, 2011 [1817], On the Principles of Political Economy and Taxation, London: John Murray Robinson, Joan, 1932, Economics is a Serious Subject: The Apologia of an Economist to the Mathematician, the Scientist and the Plain Man, Cambridge: Heffer ________, 1962, Economic Philosophy, Harmondsworth: Pelican Books ________, 1969 [1933], The Economics of Imperfect Competition, London: Palgrave Macmillan ________, 1974, Reflections on the Theory of International Trade: Lectures Given in the University of Manchester, Manchester: Manchester University Press ________, 1980, ‘Marx, Marshall, and Keynes’, Collected Economic Papers, vols.

But, how about redistributing income in the face of rising inequality? How would Marshall have viewed inequalities that have burgeoned as the benefits of a growing economy disproportionately accrue to the top 1 per cent? There’s no doubt that inequality is high on the policy agenda, a reminder that we must consider the quality and not just the speed of economic growth. A best-selling book on the topic of inequality is by the French economist Thomas Piketty. Its popularity reflects a widespread concern that inequality is as high now in America as the Gilded Age of the late nineteenth century. A recent economics Nobel laureate, Joseph Stiglitz, has even pointed to inequality as one of the causes of the slow recovery after the Great Recession. So, how would Marshall view the worsening of income inequality which is often perceived as an indictment of capitalism?


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

Smith, Lectures on Jurisprudence, p. 514. 24. Ibid., bk V, ch. 3, para. 92.; Ross, Life of Adam Smith, p. 315. 25. Ross, Life of Adam Smith, p. 302. 26. Smith, Wealth of Nations, bk IV, ch. 5, Digression concerning the Corn Trade and Corn Laws, para. 43. Chapter 2 – David Ricardo: Do Trade Deficits Matter? 1. John E. King, 2013, David Ricardo, Basingstoke: Macmillan, p. 5. 2. Ibid., pp. 15–16. 3. Thomas Piketty, 2014, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press, pp. 314–15. 4. Nicholas Crafts, 2005, ‘The First Industrial Revolution: Resolving the Slow Growth/Rapid Industrialization Paradox’, Journal of the European Economic Association, 3(2/3), pp. 525–34. 5. David Ricardo, 2011 [1817], The Works and Correspondence of David Ricardo, vol. IV, ed. Piero Sraffa, Cambridge: Cambridge University Press, p. 21. 6.

Tsangarides, 2014, ‘Redistribution, Inequality, and Growth’, International Monetary Fund Staff Discussion Note SDN/14/02; www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf Parsons, Talcott, 1931, ‘Wants and Activities in Marshall’, Quarterly Journal of Economics, 46(1), pp. 101–40 Pessoa, João Paulo and John Van Reenen, 2013, ‘Decoupling of Wage Growth and Productivity Growth? Myth and Reality’, Centre for Economic Performance, London School of Economics and Political Science Discussion Paper No. 1246; http://cep.lse.ac.uk/pubs/download/dp1246.pdf Pigou, A. C., 1953, Alfred Marshall and Current Thought, London: Macmillan Pigou, A. C., ed., 1925, Memorials of Alfred Marshall, London: Macmillan Piketty, Thomas, 2014, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press Ranelagh, John, 1991, Thatcher’s People: An Insider’s Account of the Politics, the Power and the Personalities, London: HarperCollins Reagan, Ronald, 1986, ‘The President’s News Conference’, 12 August; www.presidency.ucsb.edu/ws/?pid=37733 ———, 1986, ‘Remarks to State Chairpersons of the National White House Conference on Small Business’, 15 August; www.reaganlibrary.gov/sites/default/files/archives/speeches/1986/081586e.htm Reich, Robert, 2012, Beyond Outrage: What Has Gone Wrong with Our Economy and Our Democracy, and How to Fix It, New York: Vintage Books Ricardo, David, 2011 [1817], On the Principles of Political Economy and Taxation, London: John Murray Robinson, Joan, 1932, Economics is a Serious Subject: The Apologia of an Economist to the Mathematician, the Scientist and the Plain Man, Cambridge: Heffer ———, 1962, Economic Philosophy, Harmondsworth: Pelican Books ———, 1969 [1933], The Economics of Imperfect Competition, London: Palgrave Macmillan ———, 1974, Reflections on the Theory of International Trade: Lectures Given in the University of Manchester, Manchester: Manchester University Press ———, 1980, ‘Marx, Marshall, and Keynes’, Collected Economic Papers, vols.

But, how about redistributing income in the face of rising inequality? How would Marshall have viewed inequalities that have burgeoned as the benefits of a growing economy disproportionately accrue to the top 1 per cent? There’s no doubt that inequality is high on the policy agenda, a reminder that we must consider the quality and not just the speed of economic growth. A best-selling book on the topic of inequality is by the French economist Thomas Piketty. Its popularity reflects a widespread concern that inequality is as high now in America as the Gilded Age of the late nineteenth century. A recent economics Nobel laureate, Joseph Stiglitz, has even pointed to inequality as one of the causes of the slow recovery after the Great Recession. So, how would Marshall view the worsening of income inequality which is often perceived as an indictment of capitalism?


pages: 198 words: 52,089

Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It by Richard V. Reeves

affirmative action, Affordable Care Act / Obamacare, assortative mating, Bernie Sanders, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, circulation of elites, cognitive dissonance, desegregation, Donald Trump, Downton Abbey, full employment, ghettoisation, glass ceiling, helicopter parent, Home mortgage interest deduction, housing crisis, income inequality, knowledge economy, land value tax, longitudinal study, mortgage tax deduction, obamacare, Occupy movement, plutocrats, Plutocrats, positional goods, race to the bottom, randomized controlled trial, unpaid internship, upwardly mobile, War on Poverty, We are the 99%, working-age population, zero-sum game

Charles Tilly, Durable Inequality (University of California Press, 1998), p. 34. CHAPTER 3 1. Adam Swift, “Justice, Luck, and the Family: The Intergenerational Transmission of Economic Advantage from a Normative Perspective,” in Unequal Chances: Family Background and Economic Success, edited by Samuel Bowles, Herbert Gintis, and Melissa Osborne Groves (Princeton University Press, 2005), p. 267. 2. Thomas Piketty, Capital in the Twenty-First Century (Harvard University Press, 2014), p. 419. 3. William Mosher, Jo Jones, and Joyce Abma, Intended and Unintended Births in the United States: 1982–2010, National Health Statistics Report 55 (Hyattsville, Md.: National Center for Health Statistics, July 24, 2012) (www.cdc.gov/nchs/data/nhsr/nhsr055.pdf). 4. Author’s calculations from the National Survey of Family Growth 2011–13 public use dataset, produced by the CDC. 5.

After all, the separation of an affluent, well-educated class has been the subject of more than one book. Producing another volume about class and inequality might then seem redundant. But I think some of the most popular efforts to date have diagnosed the class fracture incorrectly. Some analysts have let the upper middle class off the hook (yes, that would be you) by pointing at the “super-rich” or “top 1 percent.” Take the new rock star of economic history, Thomas Piketty. For him, inequality is pretty much all about the top 1 percent. Others have looked through a slightly wider lens. In Coming Apart, Charles Murray describes an isolated “New Upper Class,” comprised of the most successful adults (and their spouses), working in managerial positions, the professions, or with senior jobs in the media. This class, according to Murray, is defined as much by elitist culture—tastes and preferences—as by economic standing, and accounts for just 5 percent of the population.

“What one’s parents are like is entirely a matter of luck,” points out the philosopher Adam Swift. But he adds: “What one’s children are like is not.”1 Children raised in upper middle-class families do well in life. As a result, there is a lot of intergenerational “stickiness” at the top of the American income distribution—more, in fact, than at the bottom—with upper middle-class status passed down from one generation to the next, as I’ll show in the next chapter. As Thomas Piketty writes in Capital: “A society structured by the hierarchy of wealth has been replaced by a society whose structure relies almost entirely on the hierarchy of labor and human capital.”2 Piketty cites American TV shows (House, Bones, The West Wing) as evidence of a belief in the moral virtue of learning, brains, and hard work. The market acts as the arena where the rewards flow to those with the right skills.


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

See also Alan Greenspan, The Age of Turbulence, with a new epilogue (Penguin, New York, 2008). 7.Financial Services Authority, The Turner Review: A Regulatory Response to the Global Banking Crisis (Financial Services Authority, London, 2009), p. 39. 8.The case for the Keynesians is argued by Robert Skidelsky, Keynes: The Return of the Master (Penguin, London, 2009). 9.Milton Friedman and Anna Schwartz, A Monetary History of the United States 1867–1960 (Princeton University Press, Princeton, NJ, 1963). 10.For the background to the euro, see David Marsh, The Euro: The Battle for the New Global Currency (Yale University Press, New Haven, CT, 2009). 7 The Search for an Answer 1.Thomas Piketty, Capital in the Twenty-First Century (Belknap Press, Cambridge, MA, 2014), see figure 6.1, p. 200; figure 6.2, p. 201; figure 8.5, p. 291. 2.Meghnad Desai, “An Econometric Model of the Share of Wages in National Income: UK 1855–1965” (1984), republished in The Selected Essays of Meghnad Desai, vol. 1: Macroeconomics and Monetary Theory (Edward Elgar, Cheltenham, 1995). 3.Andrew Glyn and Robert Sutcliffe, “The Collapse of UK Profits,” New Left Review, 66 (Mar.–Apr. 1971). 4.Gerard Duménil and Dominique Lévy, “The Crisis of the Early 21st Century: Marxian Perspectives,” in R. Bellofiore and G. Vertova, eds, The Great Recession and the Contradictions of Contemporary Capitalism (Edward Elgar, Cheltenham, 2014). 5.Piketty, Capital in the Twenty-First Century, ch. 5. 6.Carmen M.

But it would be nearly impossible to build a DSGE model – of the sort the new classical economics specializes in – on this global scale. Thus we might have a discussion about the cross-country linkages at an informal, journalistic level but no attempt to weave together a systematic theoretical account. But evidence of long cycles can still be seen in data even when we analyze single countries. Recently Thomas Piketty has analyzed the long-run trends in inequality in his book Capital in the Twenty-First Century. He finds evidence of long cycles of 40 to 50 years. Thus the share of labor income in Britain peaks in 1920 and again in 1970. In France the wage share exhibits a 40-year cycle with peaks in 1900, 1940 and 1980. In the US, Piketty’s data show a fall in income inequality from a peak in 1940 which is regained in the mid-1990s.1 Given the average length of 40 to 50 years, there can only have been about four or five cycles since the Industrial Revolution.

., Adam Smith: An Enlightened Life. Penguin, London, 2010. Phillips, A. W. H., “The Relationship between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957,” Economica, ns, 25.100 (1958): 283–99. Pigou, A. C., “The Classical Stationary State,” Economic Journal, 37.212 (1943): 343–51. Pigou, A. C., The Economics of Welfare. Macmillan, London, 1920. Piketty, T., Capital in the Twenty-First Century. Belknap Press, Cambridge, MA, 2014. Rajan, R., Fault Lines: How Hidden Fractures Still Threaten the World Economy. Princeton University Press, Princeton, NJ, 2010. Rajan, R., “Has Financial Development Made the World Riskier?” NBER Working Paper No. 11728. National Bureau of Economic Research, Cambridge MA, 2005. Reinhart, C. and K. Rogoff, This Time Is Different: Eight Centuries of Financial Folly.


pages: 524 words: 143,993

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis by Martin Wolf

air freight, anti-communist, Asian financial crisis, asset allocation, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Black Swan, bonus culture, break the buck, Bretton Woods, business cycle, call centre, capital asset pricing model, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, debt deflation, deglobalization, Deng Xiaoping, diversification, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, floating exchange rates, forward guidance, Fractional reserve banking, full employment, global rebalancing, global reserve currency, Growth in a Time of Debt, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandatory minimum, margin call, market bubble, market clearing, market fragmentation, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, negative equity, new economy, North Sea oil, Northern Rock, open economy, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, purchasing power parity, pushing on a string, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Richard Feynman, risk-adjusted returns, risk/return, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, shareholder value, short selling, sovereign wealth fund, special drawing rights, The Chicago School, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tyler Cowen: Great Stagnation, very high income, winner-take-all economy, zero-sum game

See ‘Moore’s Law’, http://en.wikipedia.org/wiki/Moore’s_law. 58. On the forces driving inequality and their consequences, see Organisation for Economic Co-operation and Development, Divided We Stand: Why Inequality Keeps Rising (Paris: OECD, 2011), Joseph Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers our Future (New York and London: Norton, 2012), and Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA, and London, England, 2014). 59. See, in particular, a remarkable paper by Christoph Lakner and Branco Milanovic of the World Bank, ‘Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession’, World Bank Research Working Paper 6719, December 2013, http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2013/12/11/000158349_20131211100152/Rendered/PDF/WPS6719.pdf. 60.

Mervyn King, ‘Banking from Bagehot to Basel, and Back Again’, 25 October 2010, The Second Bagehot Lecture, Buttonwood Gathering, New York City, http://www.bankofengland.co.uk/publications/Documents/speeches/2010/speech455.pdf, p. 18. 4. Luc Laeven and Fabian Valencia, ‘Systemic Crises Database: An Update’, International Monetary Fund Working Paper, WP/12/163, June 2102, http://www.imf.org/external/pubs/ft/wp/2012/wp12163.pdf. 5. This proposition is supported by Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA, and London: Harvard University Press, 2014). 6. For a detailed discussion of the evolution of real interest rates, see International Monetary Fund, World Economic Outlook, April 2014, ch. 3, http://www.imf.org/external/Pubs/ft/weo/2014/01/. 7. See the speech by Lawrence H. Summers at the 14th IMF Annual Research Conference in Honor of Stanley Fischer, 18 November 2013, http://larrysummers.com/imf-fourteenth-annual-research-conference-in-honor-of-stanley-fischer/.

On the risks of low inflation or even deflation in the Eurozone, see Reza Moghadam, Ranjit Tela and Pelin Berkmen, ‘Euro Area – “Deflation” Versus “Lowflation” ’, 24 March 2014, IMFdirect, http://blog-imfdirect.imf.org/2014/03/04/euro-area-deflation-versus-lowflation. 16. A fully worked out plan for such a reform is in Andrew Jackson and Ben Dyson, Modernising Money: Why our Monetary System is Broken and How it Can be Fixed (London: Positive Money, 2013). 17. See Andrew Smithers, The Road to Recovery: How and Why Economic Policy Must Change (London: Wiley, 2013). 18. See Piketty, Capital in the Twenty-First Century, Part Four. 19. For elements of the new Eurozone policy system, see ‘Stability and Growth Pact’, http://ec.europa.eu/economy_finance/economic_governance/sgp/index_en.htm; ‘Macroeconomic Imbalance Procedure’, http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm; ‘Treaty on Stability, Co-ordination and Governance’ (also known as the Fiscal Compact), http://european-council.europa.eu/media/639235/st00tscg26_en12.pdf; ‘European Semester’, http://ec.europa.eu/europe2020/making-it-happen; ‘Euro Plus Pact’, http://ec.europa.eu/europe2020/pdf/euro_plus_pact_background_december_2011_en.pdf; and ‘European Stability Mechanism’, http://www.esm.europa.eu/index.htm; ‘European Financial Supervision’, http://ec.europa.eu/internal_market/finances/committees; and ‘Banking Union’, http://ec.europa.eu/internal_market/finances/banking-union. 20.


pages: 273 words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, intangible asset, invisible hand, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, obamacare, offshore financial centre, oil shock, plutocrats, Plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Ronald Reagan, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor

The middle class, defined as households earning from two-thirds to double the median American household income, went from earning over three-fifths of total national income in 1970 to earning only just over two-fifths in 2014. The lines in figure 1 were horizontal before 1970, but they are continuing their movements after 2014. Figure 1 shows that the income share lost by the middle class went to people earning more than double the median income. In short, the rich got richer, the poor did not disappear, and the middle class shrank sharply. We know from the work of Thomas Piketty in Capital in the Twenty-First Century that inequality has been increasing since 1970.2 Now we see that the income distribution is hollowing out. We are on our way to become a nation of the rich and the poor with only a few people in the middle. Figure 1 Percent of aggregate U.S. household income. Note: The assignment to income tiers is based on size-adjusted household incomes in the year prior to the survey year.

John Edwards, a presidential candidate, observed in 2004, “We shouldn’t have two different economies in America: one for people who are set for life, they know their kids and their grand-kids are going to be just fine; and then one for most Americans, people who live paycheck to paycheck.”1 Where did the rest of the national product go? Not to the lower group shown in figure 1. It went instead to the upper group as shown in figure 3. This well-known graph comes from Thomas Piketty, author of Capitalism in the Twenty-First Century, and his colleagues who have developed data for the richest 1 percent of the population for many countries as far back as the data allow. The top group in figure 1 contains 20 percent of the population, and the path of what is called the “one percent” shows the pattern. Chrystia Freeland calls this group “the plutocrats.” A graph of the next 19 percent looks like figure 3, albeit not quite as steep.

Anderson 2016; Confessore 2016. 3. Wright 2013. 4. Page, Bartels, and Seawright 2013; Ferguson 1995; Hacker and Pierson 2010; Gilens and Page 2014. 5. Autor 2015; Feinstein 1998. 6. Dewey 1935, 62; Piketty 2014, 481. 7. Heckman, Pinto, and Savelyev 2013. 8. Kremer 1993. 9. Dewey 1935, 66; Rawls 1999. Appendix: Models of Inequality The big book about inequality around the world is Thomas Piketty’s classic, Capital in the Twenty-First Century. Piketty worked mainly with tax data from various countries, and his sample was restricted to those developed countries that had good records extending back into history. In terms of figure 7, he focused on the growth of the global elite. And to show that politics matter, he contrasted the experiences of France and the United States. None of the growth in inequality that happened in the United States since 1980 happened in France!


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

accounting loophole / creative accounting, Airbnb, basic income, Ben Bernanke: helicopter money, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, Clayton Christensen, collective bargaining, conceptual framework, corporate governance, creative destruction, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, disruptive innovation, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, fixed income, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, information asymmetry, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, liberal capitalism, market bubble, means of production, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, post-industrial society, private sector deleveraging, profit maximization, profit motive, quantitative easing, reserve currency, rising living standards, Robert Gordon, savings glut, secular stagnation, shareholder value, sharing economy, sovereign wealth fund, The Future of Employment, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, Vilfredo Pareto, winner-take-all economy, Wolfgang Streeck

The content and goal of this new social and economic order can no longer be the capitalistic pursuit of power and profit; it must lie in the welfare of our people.’ 9Ironically, it was in the aftermath of the two great wars of the twentieth century, in 1918 and 1945, respectively, that the working classes under capitalism made their most effective advances in the capitalist political economy (Piketty, Capital in the Twenty-First Century). 10I have sketched out this dynamic in Buying Time. 11Merkel, ‘Is Capitalism Compatible with Democracy?’, p. 126. 12Mair, Representative versus Responsible Government. 13See ‘Jürgen Habermas im Gespräch: Europa wird direkt ins Herz getroffen’, Frankfurter Allgemeine Zeitung, 29 May 2014. One interesting irony is that Juncker ascended to the presidency shortly after the publication of Thomas Piketty’s now famous book in which he demands a general wealth tax to correct the long-term and inherent increase in inequality under capitalism (Piketty, Capital in the Twenty-First Century). On the farce of last year’s ‘European election’ see Susan Watkins, ‘The Political State of the Union’. 14Merkel, ‘Is Capitalism Compatible with Democracy?’

‘SAC Starts to Balk over Insider Trading Inquiry’, New York Times, 17 May 2013, dealbook.nytimes.com, last accessed 30 November 2015. 45A fascinating example is the Koch brothers’ nurturing, over several decades, of James Buchanan’s Center for Study of Public Choice at George Mason University. See Nancy MacLean, Forget Chicago, It’s Coming from Virginia: The 1970s Genesis of Today’s Attack on Democracy, Unpublished Manuscript 2015. 46Thomas Piketty, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press 2014. 47An exception is David A. Stockman, ‘State-Wrecked: The Corruption of Capitalism in America’, New York Times, 31 March 2013, who may be considered particularly knowledgeable on the subject. 48‘Vernunft durch Strafen in Milliardenhöhe’, Frankfurter Allgemeine Zeitung, 29 June 2015, faz.net, last accessed 2 December 2015. The estimate seems far too low, given that another source names the same sum for Bank of America alone: John Maxfield, ‘The Complete List’, The Motley Fool, 1 October 2014, fool.com, last accessed 2 December 2015. 49‘Banken zahlen 260 Milliarden Dollar Strafe’, Frankfurter Allgemeine Zeitung, 24 August 2015, www.faz.net, last accessed 2 December 2015.

As long as they succeed in this, there is no need for American-style oligarchic neo-feudalism to be replicated, for example, in Western Europe. Given the structure of the contemporary capitalist world system, what matters for global oligarchic wealth defence, both politically and ideologically, is control over American politics to ensure, for example, that the American Congress will never agree to a global wealth tax as proposed, among others, by Thomas Piketty.46 As long as this is certain, it does not really matter who governs with what ambitions in France or Germany. The second disorder of capitalism to be briefly touched upon here is corruption. I use this concept broadly, beyond its definition in criminal law, to mean the gross violation of legal rules and the systematic betrayal of trust and moral expectations in pursuit of competitive success and personal or institutional enrichment, as elicited by rapidly growing opportunities for huge material gain in and around today’s political economy.


pages: 317 words: 71,776

Inequality and the 1% by Danny Dorling

Affordable Care Act / Obamacare, banking crisis, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Boris Johnson, Branko Milanovic, buy and hold, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, collective bargaining, conceptual framework, corporate governance, credit crunch, David Attenborough, David Graeber, delayed gratification, Dominic Cummings, double helix, Downton Abbey, en.wikipedia.org, Etonian, family office, financial deregulation, full employment, Gini coefficient, high net worth, housing crisis, income inequality, land value tax, longitudinal study, low skilled workers, lump of labour, mega-rich, Monkeys Reject Unequal Pay, Mont Pelerin Society, mortgage debt, negative equity, Neil Kinnock, Occupy movement, offshore financial centre, plutocrats, Plutocrats, precariat, quantitative easing, race to the bottom, Robert Shiller, Robert Shiller, TaskRabbit, The Spirit Level, The Wealth of Nations by Adam Smith, trickle-down economics, unpaid internship, very high income, We are the 99%, wealth creators, working poor

World Bank, ‘Where is the Wealth of Nations? Measuring Capital for the 21st Century’, Washington, DC, World Bank, 2006, at web.worldbank.org. 50. J. B. Stewart, ‘Calculated Deal in a Rate-Rigging Inquiry’, New York Times, 13 July 2012. 51. E. Logutenkova, ‘UBS, Barclays Dodge $4.3 Billion EU Fines for Rate Rigging’, Bloomberg News, 4 December 2013, at bloomberg.com. 52. T. Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press), pp. 515–17. 53. Ipsos MORI, ‘General Concern About the Economy Continues to Fall as Concern Shifts to Poverty/Inequality and the Personal Economy’, Economist/Ipsos MORI, 29 November 2013, at ipsos-mori.com. 54. P. Diamond, ‘Labour’s Economic Path to Power’, Policy Network, 2 December 2013, at policy-network.net. 55. C. James, ‘A Prediction That’s a Safe Bet’, BBC News, 2 January 2009, at news.bbc.co.uk.

It is because of the growing divide between the 1 per cent and the 99 per cent that those at the bottom of the 1 per cent don’t often look down. A financial chasm is opening up between them and the best-off of the rest – the best-off of the 99 per cent. It is because this chasm is now so large that those at the bottom of the 1 per cent more often look up to see how small they are in comparison to the giants above them. Above them they see what Thomas Piketty has termed ‘meritocratic extremism’, people who try to justify huge incomes in terms of what is required to match the wealth of those who inherit the most.26 They are out of touch with the dwarfs of the 99 per cent. But they need to look down, because if they don’t they too will soon be in trouble. And some are beginning to look to their feet and then down over the edge. Even the worst-off couple in the top 1 per cent has eight times more than the amount a couple with two children requires if they are to live at the UK minimum living standard – the minimal amount of income that allows any decency.

In 2012 Barclays ‘secured a non-prosecution agreement and agreed to pay a penalty of more than $450 million, a comparatively paltry sum for a bank that had more than £32 billion ($50 billion) in revenue in 2011’.50 But in 2013 Barclays was forced to begin to reveal more of its activities in order to avoid paying part of a $4.3 billion EU antitrust penalty.51 The 1 per cent is finding it progressively harder to hide its money and its corruption. Many people argue that concerted political action, including much more effective banking regulation, is needed to address the problem of increasing inequality. A global tax on capital was seriously proposed in 2014 by Thomas Piketty, one of the world’s leading economists, and a best-selling author in the US and UK that year.52 But successful social movements in the past, rather like the victors in wars, wrote their own history, and may have overstated the importance of overt politics. Campaigners want to say why they mattered; academics want to try to influence policy, and so look for evidence of their personal impact.


pages: 334 words: 100,201

Origin Story: A Big History of Everything by David Christian

Albert Einstein, Arthur Eddington, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Cepheid variable, colonial rule, Colonization of Mars, Columbian Exchange, complexity theory, cosmic microwave background, cosmological constant, creative destruction, cuban missile crisis, dark matter, demographic transition, double helix, Edward Lorenz: Chaos theory, Ernest Rutherford, European colonialism, Francisco Pizarro, Haber-Bosch Process, Harvard Computers: women astronomers, Isaac Newton, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kickstarter, Marshall McLuhan, microbiome, nuclear winter, planetary scale, rising living standards, Search for Extraterrestrial Intelligence, Stephen Hawking, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, trade route, Yogi Berra

Nissen, “Urbanization and the Techniques of Communication: The Mesopotamian City of Uruk During the Fourth Millennium BCE,” in Cambridge World History, vol. 3, Merry Wiesner-Hanks, ed. (Cambridge: Cambridge University Press, 2015), 115–16. 6. Mark McClish and Patrick Olivelle, eds., The Arthasastra: Selections from the Classic Indian Work on Statecraft (Indianapolis: Hackett Publishing, 2012), sections 1.4.13–15, Kindle. 7. Ibid., sections 1.4.1–1.4.4, 1.5.1. 8. Ibid., section 2.36.3. 9. Ibid., section 2.35.4. 10. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014), 270, and see page 258, table 7.2. Chapter 10. On the Verge of Today’s World 1. Grace Karskens, The Colony: A History of Early Sydney (New South Wales: Allen and Unwin, 2009), loc. 756–79, Kindle. 2. The intensifying global hunt for new resources is described superbly in John Richards, The Unending Frontier: Environmental History of the Early Modern World (Berkeley: University of California Press, 2006). 3.

But so huge was the increase in energy and wealth that, for the first time in human history, consumption levels began to rise for a growing global middle class of billions of people, far more people than the entire population of the world at the end of the agrarian era. Thomas Piketty estimates that in modern European countries, 40 percent of the population controls between 45 percent and 25 percent of national wealth. The appearance of this middle class was a new phenomenon in human history. And more and more people are joining the new middle class as the numbers living in extreme poverty fall. Paradoxically, increasing wealth also means increasing inequality, and even as the numbers living above subsistence are rising, the numbers living in extreme poverty remain higher than ever before in human history. Thomas Piketty estimates that in most modern countries, the wealthiest 10 percent of the population controls between 25 percent and 60 percent of national wealth, while the bottom 50 percent controls no more than 15 percent to 30 percent.

So at least some of the energy bonanza from agriculture helped improved some human lives. But after all these other outlays, there was little left to raise the living standards of the rest of the population. That is why all the evidence we have suggests that, though people surely enjoyed occasional luxuries, most of the time, most of them lived close to subsistence level throughout the agrarian era. The French economist Thomas Piketty has estimated that in most European countries as late as 1900, 1 percent of the population owned about 50 percent of national wealth, and 10 percent of the population accounted for 90 percent of national wealth. The other 90 percent of the population made do with just 10 percent of national wealth. There was really no middle class in the modern sense because “the middle 40 percent of the wealth distribution were almost as poor as the bottom 50 percent.


pages: 346 words: 90,371

Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane

"Robert Solow", agricultural Revolution, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, basic income, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, debt deflation, deindustrialization, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, garden city movement, George Akerlof, ghettoisation, Gini coefficient, Hernando de Soto, housing crisis, Hyman Minsky, income inequality, information asymmetry, knowledge worker, labour market flexibility, labour mobility, land reform, land tenure, land value tax, Landlord’s Game, low skilled workers, market bubble, market clearing, Martin Wolf, means of production, money market fund, mortgage debt, negative equity, Network effects, new economy, New Urbanism, Northern Rock, offshore financial centre, Pareto efficiency, place-making, price stability, profit maximization, quantitative easing, rent control, rent-seeking, Richard Florida, Right to Buy, rising living standards, risk tolerance, Second Machine Age, secular stagnation, shareholder value, the built environment, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, universal basic income, urban planning, urban sprawl, working poor, working-age population

But since the birth of modern, capitalist economies other uses have become predominant: first as the site of industrial production, and later as the site of service provision and domestic housing. Today, it is in the housing market that the economic function of land is most visible, as the value of residential property has overtaken the value of land used for other purposes, as the economist Thomas Piketty (2014) makes clear in his recent book Capital in the Twenty-First Century. For this reason, much of the book focuses on housing as the main economic use of land. Land has several unique features that differentiate it from the other ‘factors of production’ that form the central focus of the economics discipline: capital and labour. Most obviously land is immobile: you can’t move land from one place to another, because land is the place itself.

Housing wealth has increased at a faster rate than financial wealth (e.g. pensions, shares, savings) and non-financial wealth (e.g. ownership of physical assets). It has also increased considerably faster than national income in the UK, in particular since the 1990s, as discussed in Chapter 5. Indeed, in advanced economies generally, it is the increase in housing wealth that has been driving the trends that have been observed in the recent work of French economist Thomas Piketty (2014). Piketty’s book Capital in the Twenty-first Century contains data on what he calls the ‘capital to income ratio’ for the UK since the year 1700. In the book Piketty uses the terms capital and wealth interchangeably, as if they were perfectly synonymous, and does not attempt to separate capital from land and natural resources. However, this ignores key differences between the characteristics of wealth, capital and land.

‘Breaking the Link between Housing Cycles, Banking Crises, and Recession’. CIYPERC Working Paper Series 2016/02, 23 March. Perugini, Cristiano, Jens Hölscher, and Simon Collie. 2015. ‘Inequality, Credit and Financial Crises’. Cambridge Journal of Economics. doi:10.1093/cje/beu075. Pierson, Christopher. 2013. Just Property: A History in the Latin West. Volume One: Wealth, Virtue, and the Law. Oxford: Oxford University Press. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. Piketty, Thomas, and Gabriel Zucman. 2013. ‘Capital Is Back: Wealth-Income Ratios in Rich Countries, 1700–2010’. http://www.piketty.pse.ens.fr/files/PikettyZucman2013BookRevQJE.pdf Pollock, Frederick, and Frederic William Maitland. 1899. The History of English Law before the Time of Edward I. Vol. 2. Cambridge: Cambridge University Press.


Free Money for All: A Basic Income Guarantee Solution for the Twenty-First Century by Mark Walker

3D printing, 8-hour work day, additive manufacturing, Affordable Care Act / Obamacare, basic income, Baxter: Rethink Robotics, Capital in the Twenty-First Century by Thomas Piketty, commoditize, financial independence, full employment, happiness index / gross national happiness, industrial robot, intangible asset, invisible hand, Jeff Bezos, job automation, job satisfaction, John Markoff, Kevin Kelly, laissez-faire capitalism, longitudinal study, market clearing, means of production, new economy, obamacare, off grid, plutocrats, Plutocrats, precariat, profit motive, Ray Kurzweil, rent control, RFID, Rodney Brooks, Rosa Parks, science of happiness, Silicon Valley, surplus humans, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, universal basic income, working poor

In chapter 3, we argued that BIG might be seen as a dividend on shares in state capital. And in chapters 6 and 7, we looked at ways to utilize the productivity of capitalism to generate more GNH and GNF. So, we have plenty of motivation to think about the future of capitalism. Seemingly relevant in this connection is Thomas Piketty’s recent and much discussed Capital in the Twenty-first Century. From the title, one might think the book was mostly forward-looking into the prospects of capital and capitalism in the twenty-first century; however, the book is mostly historical. Picketty does a marvelous job tracing the ebb and flow of the accumulation of capital over the past two centuries. He argues on the basis of historical enquiry that income and capital inequalities are the most important economic problems facing us in the twenty-first century.

data/ national_accounts_gdp/gdp_expenditure_approach/structure_ NOTES 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 219 of_gdp_expenditure_approach/structure_of_gdp_expenditure_ approach_annual_nominal_of_gdp|chart/line&countries=usa&sort ing=list//title. US Census Bureau, “Current Population Survey,” US Census Bureau, January 14, 2013, http://www.census.gov/hhes/www/ cpstables/032011/perinc/new01_001.htm. The New York Times, “Effective Income Tax Rates,” 2012, http:// www.nytimes.com/interactive/2012/01/18/us/effective-incometax-rates.html?_r=2&. Thomas Piketty, Capital in the Twenty-First Century (Massachusetts: Harvard University Press, 2014). Allan Sheahen (1932–2013) was a longtime proponent of BIG. We follow here Sheahen’s last major proposal: Sheahen, Basic Income Guarantee: Your Right to Economic Security. Many of Sheahen’s calculations can be found in Appendix A (153–160). Many of the figures date from 2010. I have mostly used these figures. As noted, the economy has improved considerably since 2010, so things are actually a bit better than described in most of this section.

Roediger and Philip Sheldon Foner, Our Own Time: A History of American Labor and the Working Day (London: Verso, 1989). 17. Edward P. Lazear and James R. Spletzer, The United States Labor Market: Status Quo or a New Normal? (National Bureau of Economic Research,2 012). 18. Widerquist, Independence, Propertylessness, and Basic Income: A Theory of Freedom as the Power to Say No,1 05. 19. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), 217. 20. Andrew Hind, “Brrrr! History of the Ice Industry,” History Magazine, 2010, 39–42. 21. Rebecca Weber, “The Travel Agent Is Dying, but It’s Not yet Dead—CNN.com,” CNN, accessed May 18, 2015, http://www. cnn.com/2013/10/03/travel/travel-agent-survival/index.html. 22. Björn Nykvist and M\a ans Nilsson, “Rapidly Falling Costs of Battery Packs for Electric Vehicles,” Nature Climate Change, 2015, http://www.nature.com/nclimate/journal/vaop/ncurrent/full/ nclimate2564.html. 23.


pages: 561 words: 157,589

WTF?: What's the Future and Why It's Up to Us by Tim O'Reilly

4chan, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, barriers to entry, basic income, Bernie Madoff, Bernie Sanders, Bill Joy: nanobots, bitcoin, blockchain, Bretton Woods, Brewster Kahle, British Empire, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, Chuck Templeton: OpenTable:, Clayton Christensen, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, computer vision, corporate governance, corporate raider, creative destruction, crowdsourcing, Danny Hillis, data acquisition, deskilling, DevOps, Donald Davies, Donald Trump, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Filter Bubble, Firefox, Flash crash, full employment, future of work, George Akerlof, gig economy, glass ceiling, Google Glasses, Gordon Gekko, gravity well, greed is good, Guido van Rossum, High speed trading, hiring and firing, Home mortgage interest deduction, Hyperloop, income inequality, index fund, informal economy, information asymmetry, Internet Archive, Internet of things, invention of movable type, invisible hand, iterative process, Jaron Lanier, Jeff Bezos, jitney, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Khan Academy, Kickstarter, knowledge worker, Kodak vs Instagram, Lao Tzu, Larry Wall, Lean Startup, Leonard Kleinrock, Lyft, Marc Andreessen, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, McMansion, microbiome, microservices, minimum viable product, mortgage tax deduction, move fast and break things, move fast and break things, Network effects, new economy, Nicholas Carr, obamacare, Oculus Rift, packet switching, PageRank, pattern recognition, Paul Buchheit, peer-to-peer, peer-to-peer model, Ponzi scheme, race to the bottom, Ralph Nader, randomized controlled trial, RFC: Request For Comment, Richard Feynman, Richard Stallman, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Coase, Sam Altman, school choice, Second Machine Age, secular stagnation, self-driving car, SETI@home, shareholder value, Silicon Valley, Silicon Valley startup, skunkworks, Skype, smart contracts, Snapchat, Social Responsibility of Business Is to Increase Its Profits, social web, software as a service, software patent, spectrum auction, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, strong AI, TaskRabbit, telepresence, the built environment, The Future of Employment, the map is not the territory, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Davenport, transaction costs, transcontinental railway, transportation-network company, Travis Kalanick, trickle-down economics, Uber and Lyft, Uber for X, uber lyft, ubercab, universal basic income, US Airways Flight 1549, VA Linux, Watson beat the top human players on Jeopardy!, We are the 99%, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, yellow journalism, zero-sum game, Zipcar

As shown in the figure below, the share of GDP going to wages has fallen from nearly 54% in 1970 to 44% in 2013, while the share going to corporate profits went from about 4% to nearly 11%. Wallace Turbeville, a former Goldman Sachs banker, aptly describes this as “something approaching a zero-sum game between financial wealth-holders and the rest of America.” Zero-sum games don’t end well. “The one percent in America right now is still a bit lower than the one percent in pre-revolutionary France but is getting closer,” says French economist Thomas Piketty, author of Capital in the Twenty-First Century. Lazonick believes his research demonstrates that this trend “is in large part responsible for a national economy characterized by income inequity, employment instability, and diminished innovative capability—or the opposite of what I have called ‘sustainable prosperity.’” Even stock options, so powerful a tool in the Silicon Valley innovation economy, have played a damaging role in turning the economy into a casino.

Louis; https://fred. stlouisfed.org/series/CP, April 2, 2017; Gross Domestic Product (GDP), retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed. org/series/GDP, April 2, 2017. 246 “something approaching a zero-sum game”: Rana Foroohar, Makers and Takers (New York: Crown, 2016), 18. 246 “the one percent in pre-revolutionary France”: Rana Foroohar, “Thomas Piketty: Marx 2.0,” Time, May 9, 2014, http://time.com/92087/thomas-piketty-marx-2-0/. Retrieved April 2, 2017, http://piketty. pse.ens.fr/files/capital21c/en/media/Time%20-%20Capital%20in%20the %20Twenty-First%20Century.pdf. 247 “‘sustainable prosperity’”: Lazonick, “Stock Buybacks,” 2. 247 more of the compensation moved to stock: Foroohar, Makers and Takers, 280. 247 options had to be disclosed, but not valued: Hal Varian, “Economic Scene,” New York Times, April 8, 2004, retrieved April 2, 2017, http://people.ischool.berkeley. edu/~hal/people/hal/NYTimes/2004-04-08.html. 248 “profit extracted through harm to others”: Umair Haque, “The Value Every Business Needs to Create Now,” Harvard Business Review, July 31, 2009, https://hbr.org/2009/07/the-value-every-business-needs. 248 disinformation firms used by the tobacco industry: Naomi Oreskes and Erik Conway, Merchants of Doubt (New York: Bloomsbury Press, 2011). 249 “left holding the bag”: George Akerlof and Paul Romer, “Looting: The Economic Underworld of Bankruptcy for Profit,” Brookings Papers on Economic Activity 2 (1993), http://pages.stern.nyu. edu/~promer/Looting.pdf. 250 “The customer is the foundation of a business”: Peter F.

A financial transactions tax calibrated to eliminate all the benefits of front-running and other forms of high-speed market manipulation would be a good place to start, but we could go much further in taxing financial speculation while rewarding productive investment with lower rates. Larry Fink, the CEO of BlackRock, suggests that at a minimum, long-term capital gains treatment should begin at three years rather than one, with a declining rate for each additional year that an asset is held. We could even institute a wealth tax such as that proposed by Thomas Piketty. And if we were to tax carbon rather than labor, rather than starting by substituting a carbon tax for income taxes, it might be better to substitute a carbon tax for Social Security, Medicare, and unemployment taxes. These rule changes might be costly to some capital owners but might well benefit society overall. These are political decisions as much as they are purely economic or business decisions.


pages: 408 words: 108,985

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity by Joseph E. Stiglitz

Airbnb, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, basic income, Berlin Wall, bilateral investment treaty, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, deindustrialization, discovery of DNA, diversified portfolio, Donald Trump, eurozone crisis, Fall of the Berlin Wall, financial intermediation, Francis Fukuyama: the end of history, full employment, gender pay gap, George Akerlof, gig economy, Gini coefficient, hiring and firing, housing crisis, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, investor state dispute settlement, invisible hand, Isaac Newton, labor-force participation, liberal capitalism, low skilled workers, market fundamentalism, mini-job, moral hazard, non-tariff barriers, offshore financial centre, open economy, patent troll, pension reform, price mechanism, price stability, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Robert Shiller, Ronald Reagan, selection bias, shareholder value, Silicon Valley, sovereign wealth fund, TaskRabbit, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, tulip mania, universal basic income, unorthodox policies, zero-sum game

For a review of the evidence on the link between inequality and growth in Europe, see Catherine Mathieu and Henri Sterdyniak, “Growth and Inequality in the European Union,” OFCE le Blog, Sept. 12, 2017, https://www.ofce.sciences-po.fr/blog/growth-and-inequality-in-the-european-union/; and Jonathan Ostry, Andrew Berg, and Charalambos Tsangarides, Redistribution, Inequality, and Growth (IMF Staff Discussion Note, SDN/14/02, International Monetary Fund, Feb. 2014), https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf; for a discussion of the link between inequality and political stability, see Joseph E. Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York: W. W. Norton, 2012); Joseph E. Stiglitz, The Great Divide: Unequal Societies and What We Can Do about Them (New York: W. W. Norton, 2016); Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). 2. Brian Blackstone, Matthew Karnitschnig, and Robert Thomson, “Europe’s Banker Talks Tough,” Wall Street Journal, Feb. 24, 2012, https://www.wsj.com/articles/SB10001424052970203960804577241221244896782. 3. Report by the Commission on the Measurement of Economic Performance and Social Progress, chaired by Joseph E. Stiglitz, Amartya Sen, and Jean-Paul Fitoussi, https://ec.europa.eu/eurostat/documents/118025/118123/Fitoussi+Commission+report. 4.

For a detailed discussion of the reform needs and options for European tax systems from a gender perspective, see Åsa Gunnarsson, Ulrike Spangenberg, and Margit Schratzenstaller, Gender Equality and Taxation in the European Union, Study for the FEMM Committee (Brussels: Policy Department for Citizens’ Rights and Constitutional Affairs, Apr. 2017), http://www.europarl.europa.eu/RegData/etudes/STUD/2017/583138/IPOL_STU(2017)583138_EN.pdf. 6. Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva, “Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities,” American Economic Journal: Economic Policy 6, no. 1 (2014): 230–71; and Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva, “Taxing the 1%: Why the Top Tax Rate Could Be Over 80%,” VoxEU, Dec. 2011, https://voxeu.org/article/taxing-1-why-top-tax-rate-could-be-over-80; Danny Yagan, Tax Progressivity and Top Incomes: Evidence from Tax Reforms (CEPR Discussion Paper no. 11936, Washington, DC: Center for Economic and Policy Research, 2015). 7.

See “Net Pension Replacement Rates,” Organisation for Economic Co-operation and Development, 2018, doi: 10.1787/4b03f028-en. 2. See Bert Brys, Sarah Perret, Alastair Thomas, and Pierce O’Reilly, Tax Design for Inclusive Economic Growth (Organisation for Economic Co-operation and Development Taxation Working Papers no. 26, Paris: OECD Publishing, July 2016), https://doi.org/10.1787/5jlv74ggk0g7-en; Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, World Inequality Report 2018 (Paris: Paris School of Economics, 2017). 3. Brian Sloan, Günther Ebling, Martin Becker, Luis Peragon Lorenzo, and Antonella Caiumi, eds., Taxation Trends in the European Union (Luxembourg: Publications Office of the European Union, 2018), https://ec.europa.eu/taxation_customs/sites/taxation/files/taxation_trends_report_2018.pdf. 4.


pages: 190 words: 53,409

Success and Luck: Good Fortune and the Myth of Meritocracy by Robert H. Frank

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Amazon Mechanical Turk, American Society of Civil Engineers: Report Card, attribution theory, availability heuristic, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, carried interest, Daniel Kahneman / Amos Tversky, David Brooks, deliberate practice, en.wikipedia.org, endowment effect, experimental subject, framing effect, full employment, hindsight bias, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, invisible hand, labor-force participation, lake wobegon effect, loss aversion, minimum wage unemployment, Network effects, Paul Samuelson, Report Card for America’s Infrastructure, Richard Thaler, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Rory Sutherland, selection bias, side project, sovereign wealth fund, Steve Jobs, The Wealth of Nations by Adam Smith, Tim Cook: Apple, ultimatum game, Vincenzo Peruggia: Mona Lisa, winner-take-all economy

By every measure, markets have grown more competitive, and the most productive players have gained additional leverage since The Winner-Take-All Society’s publication in 1995. What’s also clear is that the economic forces that have been causing the spread and intensification of winner-take-all markets have by no means run their course. We can expect continued growth in the intensity of competition on the buyers’ side for the best talent, and on the sellers’ side for the top positions. In his widely discussed 2013 book, Capital in the Twenty-First Century, Thomas Piketty suggested yet another reason for rising inequality, which is the historical tendency for the rate of return on invested capital to exceed the overall growth rate for the economy.10 When that happens, he argues, wealth continues to concentrate in the hands of those who own the most capital. All things considered, then, it appears prudent to envision a future characterized by continued growth in income and wealth inequality—which is to say, a future in which chance events will become still more important.

You can review some of The Nepotist’s music videos here: http://thenepotist.com/videos/. 7. Xavier Gabaix and Augustin Landier, “Why Has CEO Pay Increased So Much?” Quarterly Journal of Economics 123.1 (2008): 49–100. 8. Adam Smith, The Wealth of Nations, book 1, chap. 10. 9. The Conference Board, “Departing CEO Age and Tenure,” June 13, 2014, https://www.conference-board.org/retrievefile.cfm?filename=TCB-CW-019.pdf&type=subsite. 10. Thomas Piketty, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press, 2013. CHAPTER 4: WHY THE BIGGEST WINNERS ARE ALMOST ALWAYS LUCKY 1. High School Baseball Web, “Inside the Numbers,” http://www.hsbaseballweb.com/inside_the_numbers.htm. 2. See Wikipedia, List of World Records in Athletics, http://en.wikipedia.org/wiki/List_of_world_records_in_athletics#Men and http://en.wikipedia.org/wiki/Athletics_record_progressions. 3.

., 73 Alou brothers, 33 American Dream, the, 4, 145 American Economic Association, 25 American Economic Review, 28, 126, 133, 171 American Enterprise Institute, 127, 171 American Society of Civil Engineers, 87 Anderson, Chris, 47 antlers in bull elk, 116–18, 118 Apotheker, Léo, 53 Apple, 44, 49, 132 Arab Spring, 107 Archilla, Gustavo, 106 artificial intelligence, 70 attention scarcity, 48–49 attribution theory, 77 austerity policies, 134 availability heuristic, 79, 80 baby boomer retirements, 97, 127, 167 Baker Library, 36 Bartlett, Bruce, 90 Bartlett, Monica, 101 Baumeister, Roy, 75 Beatty, Warren, 23 behavioral economics, 69, 70, 96 Bernanke, Ben, 133–35 best seller, xiii, 45 Betamax, 44, 45 birth order effects, 32 birth-date effects: in hockey, 38; in the workplace, 38 Blackstone, 103 Blockbusters, 48 Bloomberg Business, 132 Bonaparte, Napoleon, 7 Boudreaux, Donald, 122 Breaking Bad, 24, 31, 68 British accent, 4 Broderick, Matthew, 24, 68 Brooklyn Dodgers, 142 Brooks, David, 83, 84 Buffett, Warren, 12, 39 Bush, George H. W., 90 Bush, George W., 90 Caan, James, 23 Cabrera, Miguel, 63 Calvino, Italo, 128 Campanella, Roy, 142 Canada, 20, 88, 106 Capital in the Twenty-First Century, 55 Carroll, Robert, 127 Casablanca, 87 Cayuga Lake, 6 CEO pay, 49–51 character assessment, 129–31 Clinton, Bill, 126 Clotfelter, Charles, 72 Congressional Budget Office, 90 conservatives, xi, 17, 83, 171 context and quality assessment, 122, 123; a formal model of, 123 Cook, Philip, 9, 41, 42, 72 Cook, Tim, 133 Coppola, Francis Ford, 23 Corleone, Michael, 23 Corleone, Vito, 23 Cornell University, 4, 25–29, 59, 67, 125, 143 CP/M (computer operating system), 35 Cranston, Bryan, 24, 68 Cusack, John, 24, 68 da Vinci, Leonardo, 22 Dalai Lama, 29 Darwin, Charles, 73, 115, 116, 121 Darwin Economy, The, 117 Davidai, Shai, 81 Delaplane, VA, 60 dentists, 51 Department of Motor Vehicles, 17–19 depressive realism, 73 DeSteno, David, 98–101 Detroit Tigers, 63 DeWall, Nathan, 103 Dickens, Charles, 102 Dickens, Mamie, 102 Digdon, Nancy, 102 Digital Research, 34, 35 divine intervention, 2 Domenici, Pete, 126 Econometrica, 28 economic pie, 16 Educational Longitudinal Survey, 144, 145 Edwards, Mike, 2 Elberse, Anita, 48 Electric Light Orchestra, 2 Emmons, Robert, 102 environment, xvi, 8, 13, 115, 119, 123, 143, 144 envy, 112, 122, 132 estate taxation, 166, 167 expenditure cascades, 112, 113, 121, 165, 169 expertise, 77 Federal Reserve Board of Governors, 134 Ferrari, 15, 16, 91, 119 52 Metro, 30 Fitzgerald, F.


pages: 326 words: 91,559

Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy by Nathan Schneider

1960s counterculture, Affordable Care Act / Obamacare, Airbnb, altcoin, Amazon Mechanical Turk, back-to-the-land, basic income, Berlin Wall, Bernie Sanders, bitcoin, blockchain, Brewster Kahle, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Clayton Christensen, collaborative economy, collective bargaining, Community Supported Agriculture, corporate governance, creative destruction, crowdsourcing, cryptocurrency, Debian, disruptive innovation, do-ocracy, Donald Knuth, Donald Trump, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, Food sovereignty, four colour theorem, future of work, gig economy, Google bus, hydraulic fracturing, Internet Archive, Jeff Bezos, jimmy wales, joint-stock company, Joseph Schumpeter, Julian Assange, Kickstarter, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, mass immigration, means of production, multi-sided market, new economy, offshore financial centre, old-boy network, Peter H. Diamandis: Planetary Resources, post-work, precariat, premature optimization, pre–internet, profit motive, race to the bottom, Richard Florida, Richard Stallman, ride hailing / ride sharing, Sam Altman, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, Silicon Valley, Slavoj Žižek, smart contracts, Steve Jobs, Steve Wozniak, Stewart Brand, transaction costs, Turing test, Uber and Lyft, uber lyft, underbanked, undersea cable, universal basic income, Upton Sinclair, Vanguard fund, white flight, Whole Earth Catalog, WikiLeaks, women in the workforce, working poor, Y Combinator, Y2K, Zipcar

The economy keeps getting more efficient and generating more value, but most people are getting a smaller and smaller portion of it. The rest of the value gets siphoned upward to the few and wealthy. More than pleasing customers, more than creating jobs, business keeps getting better at serving the single-minded goal of maximizing shareholder value—the rewards for those who already have excess to invest. Economist Thomas Piketty’s best-selling book Capital in the Twenty-First Century argued that the returns to investors are careening the world into a new feudalism; his most celebrated critic, twenty-six-year-old MIT graduate student Matthew Rognlie, differed only in stressing that the major share of the phenomenon was in real estate.4 An uptick in the minimum wage isn’t going to fix this. One way or another, wealth is going to the owners—of where we live, where we work, and what we consume.

Black Lives Matter, 15, 165, 190, 199, 205–206 black power, 194–195, 199 blockchain, 107, 109, 111–114, 153, 157 Bluestone Farm, 33 Boggs, Grace Lee, 74–75, 92, 225 Boggs, Jimmy, 74, 78 Book of Acts, 21–22 Bookchin, Murray, 207 Botsman, Rachel, 91 Boulder Community Housing Association, 98, 100 Boulder Neighborhood Alliance, 98 Bradford, Mark, 81 Brain, Marshall, 222–223 Britain, co-op legislation in, 7, 50 British Cooperative Wholesale Society, 42–43 Bronec, Jasen, 173 Brown, Michael, 191 Brown-Davis, Della, 177, 179 “Building Global Community” (Zuckerberg), 219 Buni, Abdi, 85–86, 89 Buterin, Vitalik, 111–112, 114, 130 #BuyTwitter, 165–167 Byck, Maria Juliana, 28 Caesar, Julius, 21 Calafou, 124 Calvinists, 38 capital credits, 180 Capital in the Twenty-First Century (Piketty), 77 capitalism, 14–15, 75, 199, 203 co-op businesses compared to, 14–15 as feudal lord, 46–47 feudalism and, 212 Capra, Robert, 35 Carmichael, Stokely, 199 Carter, Jimmy, 171 Cartier-Bresson, Henri, 35 Catalan Integral Cooperative (CIC), 117, 121–127, 131 Aurea Social assembly of, 127–128, 128 (photo) Economic Commission of, 124–125 projects and budget of, 123 Catalan Supply Center, 122 (photo), 123 Catholicism, 24, 59–65, 232 Chaplin, Charlie, 35 Charter of the Forest, 38 Chartism, 48 Chavez, Chris, 32–34 Chesterton, G.

Here Rural Electrification Administration, A Guide for Members of REA Cooperatives (US Department of Agriculture, 1939), 20–21. Here Concept from Peter Turchin, “The Strange Disappearance of Cooperation in America,” Cliodynamica (blog) (June 21, 2013), peterturchin.com/cliodynamica/strange-disappearance. Data from Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Community (Simon & Schuster, 2000), 54, and Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez, “The Top 1 Percent in International and Historical Perspective,” Journal of Economic Perspectives 27, no. 3 (Summer 2013): 3–20. Notes Introduction: Equitable Pioneers 1. LeRoy Croissant, Ancestors and Descendants of Fred Henry Croissant (1791–2001), private family history (2001); the cassette tapes were made as part of Croissant’s research for the book, recorded January 14 and 15, 1989. 2.


pages: 165 words: 45,129

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

That is, the macroeconomic or functional distribution of national income and national wealth is substantially less stable than what I was taught in graduate school and what I report in this book. The large historical variations in top income shares also receive insufficient treatment in the present book, because the corresponding research became fully available only recently. Readers interested in a detailed account of that more recent research and the lessons that can be drawn from it are advised to consult the World Top Incomes Database (available online) and my book Capital in the Twenty-First Century (Belknap Press, 2014). Introduction The question of inequality and redistribution is central to political conflict. Caricaturing only slightly, two positions have traditionally been opposed. The right-wing free-market position is that, in the long run, market forces, individual initiative, and productivity growth are the sole determinants of the distribution of income and standard of living, in particular of the least well-off members of society; hence government efforts to redistribute wealth should be limited and should rely on instruments that interfere as little as possible with the virtuous mechanisms of the market—instruments such as Milton Friedman’s negative income tax (1962).

THE ECONOMICS OF INEQUALITY Thomas Piketty Translated by Arthur Goldhammer The Belknap Press of Harvard University Press CAMBRIDGE, MASSACHUSETTS LONDON, ENGLAND 2015 Copyright © 2015 by the President and Fellows of Harvard College All rights reserved First published as L’économie des inégalités copyright © Éditions La Découverte, Paris, France, 1997, 2008, 2014 Jacket design by Graciela Galup 978-0-674-50480-6 (hardcover) 978-0-674-91558-9 (EPUB) 978-0-674-91557-2 (MOBI) 978-0-674-91556-5 (PDF) The Library of Congress has cataloged the printed edition as follows: Piketty, Thomas, 1971– [L’économie des inégalités. English] The economics of inequality / Thomas Piketty ; translated by Arthur Goldhammer. pages cm Includes bibliographical references and index. 1.


pages: 301 words: 89,076

The Globotics Upheaval: Globalisation, Robotics and the Future of Work by Richard Baldwin

agricultural Revolution, Airbnb, AltaVista, Amazon Web Services, augmented reality, autonomous vehicles, basic income, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, commoditize, computer vision, Corn Laws, correlation does not imply causation, Credit Default Swap, David Ricardo: comparative advantage, declining real wages, deindustrialization, deskilling, Donald Trump, Douglas Hofstadter, Downton Abbey, Elon Musk, Erik Brynjolfsson, facts on the ground, future of journalism, future of work, George Gilder, Google Glasses, Google Hangouts, hiring and firing, impulse control, income inequality, industrial robot, intangible asset, Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, knowledge worker, laissez-faire capitalism, low skilled workers, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, Metcalfe’s law, new economy, optical character recognition, pattern recognition, Ponzi scheme, post-industrial society, post-work, profit motive, remote working, reshoring, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, social intelligence, sovereign wealth fund, standardized shipping container, statistical model, Stephen Hawking, Steve Jobs, supply-chain management, TaskRabbit, telepresence, telepresence robot, telerobotics, Thomas Malthus, trade liberalization, universal basic income

In these nations, inequality tended to fall from the 1970s to the 1980s, before rising. They are now back at their 1970s starting point and seem stable. The causes of these varied changes in income equality are many and complex. While this has been a topic in seminar rooms for many years, it burst into the open with the 99 Percent movement; the Occupy Wall Street movement; and Thomas Piketty’s transformative 2013 book, Capital in the Twenty-First Century. The explanations range from government deregulation and the rise of monopoly capitalism to the decline of labor unions and skill-biased technology progress. Technology surely played a role. Many elements of the ICT impulse tended to boost income and wealth inequality. The skill twist, for example, meant that the wages for higher income earners were favored over those of the working class.

Inequality fell quite dramatically in the UK as industrial growth got its second wind from the cluster of new industries. The income share of the top 5 percent dropped from 40 percent down to under 20 percent by the 1970s. Since then it’s been rising, but that’s a story for the next chapter. It is not easy to say exactly what causes these waves of inequality. It is the subject of much debate, as Thomas Piketty’s bestselling Capitalism in the 21st Century points out. By its very nature, inequality involves almost every aspect of the economic system—ranging from education, technology, and globalization to urbanization, voting rights, and imperialism. Most of these are interrelated. Figure 2.1 Income Inequality in the Great Transformation, 1688–2009. SOURCE: Author’s elaboration of data provided privately by Max Roser (Our World in Data).

See Max Roser and Esteban Ortiz-Ospina, “Income Inequality”, published online at OurWorldInData.org, based on data from Peter H. Lindert, “When Did Inequality Rise in Britain and America?,” Journal of Income Distribution 9 (2000): 11–25, and Anthony B. Atkinson, “The Distribution of Top Incomes in the United Kingdom 1908–2000,” in Top Incomes over the Twentieth Century: A Contrast between Continental European and English-Speaking Countries, ed. Anthony B. Atkinson and Thomas Piketty (Oxford: Oxford University Press, 2007), ch. 4. 9. The data is from Robert C. Allen, “Engel’s Pause: A Pessimists Guide to the British Industrial Revolution,” Department of Economics Discussion Paper Series no. 315, University of Oxford, April 2007. 10. Quoted in Carl Wittke, “The German Forty-Eighters in America: A Centennial Appraisal.” The American Historical Review 53, no. 4 (1948): 711–725. 11.


pages: 296 words: 98,018

Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas

"side hustle", activist lawyer, affirmative action, Airbnb, Bernie Sanders, bitcoin, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cognitive dissonance, collective bargaining, corporate raider, corporate social responsibility, crowdsourcing, David Brooks, David Heinemeier Hansson, deindustrialization, disintermediation, Donald Trump, Edward Snowden, Elon Musk, friendly fire, global pandemic, high net worth, hiring and firing, housing crisis, Hyperloop, income inequality, invisible hand, Jeff Bezos, Kibera, Kickstarter, land reform, Lyft, Marc Andreessen, Mark Zuckerberg, new economy, Occupy movement, offshore financial centre, Panopticon Jeremy Bentham, Parag Khanna, Paul Graham, Peter Thiel, plutocrats, Plutocrats, profit maximization, risk tolerance, rolodex, Ronald Reagan, shareholder value, sharing economy, side project, Silicon Valley, Silicon Valley startup, Skype, Social Responsibility of Business Is to Increase Its Profits, Steven Pinker, technoutopianism, The Chicago School, The Fortune at the Bottom of the Pyramid, the High Line, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Travis Kalanick, trickle-down economics, Uber and Lyft, uber lyft, Upton Sinclair, Vilfredo Pareto, working poor, zero-sum game

A Jesuit priest and political science professor named Matthew Carnes, with whom Cohen would soon work on a philanthropic project, told the newspaper that longtime critics of inequality on campus felt “vindicated” by the pope. And in the summer before Cohen’s senior year, Black Lives Matter was born, drawing many of her classmates into one of the more trenchant critiques of inequality in modern American history. As Cohen’s graduation neared, a little-known French economist named Thomas Piketty published the surprise bestseller Capital in the Twenty-First Century—a two-and-a-half-pound, 704-page assault on inequality. Piketty and some colleagues would later publish a paper containing a startling fact about 2014, the year of Cohen’s graduation and debut as a self-supporting earner. The study showed that a college graduate like Cohen, on the safe assumption that she ended up in the top 10 percent of earners, would be making more than twice as much before taxes as a similarly situated person in 1980.

I am grateful that they were willing to wrestle with these issues with me, even though my views were clear to them. I am no less grateful to all those other subjects whom I did not know but who answered my emails and calls anyway, and took me up on sharing their stories and beliefs about making change. In a small handful of cases I have changed names to protect privacy. I am indebted to two professors. As I read Thomas Piketty’s masterpiece, Capital in the Twenty-First Century, I came upon a line that brought the purpose of my own book into focus. “Whether such extreme inequality is or is not sustainable,” Piketty writes, “depends not only on the effectiveness of the repressive apparatus but also, and perhaps primarily, on the effectiveness of the apparatus of justification.” That day I decided my book would be an inquiry into the apparatus of justification.

On the reading of literature, see “The Long, Steady Decline of Literary Reading,” by Christopher Ingraham (Washington Post, September 7, 2016). On trust in government, see “Public Trust in Government Remains Near Historic Lows as Partisan Attitudes Shift” (Pew Research Center, May 3, 2017). On the uneven spread of the “fruits of change,” see “Distributional National Accounts: Methods and Estimates for the United States,” by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman (National Bureau of Economic Research Working Paper No. 22945, December 2016). On the changing realities of social mobility and the “opportunity to get ahead,” see “The Fading American Dream: Trends in Absolute Mobility Since 1940,” by Raj Chetty et al. (National Bureau of Economic Research Working Paper No. 22910, December 2016). On the rich/poor life expectancy gap, see “The Association Between Income and Life Expectancy in the United States, 2001–2014,” by Raj Chetty et al.


pages: 169 words: 52,744

Big Capital: Who Is London For? by Anna Minton

Airbnb, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, Donald Trump, eurozone crisis, Fall of the Berlin Wall, Frank Gehry, high net worth, housing crisis, illegal immigration, Kickstarter, land value tax, market design, new economy, New Urbanism, offshore financial centre, payday loans, quantitative easing, rent control, Right to Buy, sovereign wealth fund, the built environment, The Wealth of Nations by Adam Smith, urban renewal, working poor

It is these rates of return on property that are driving the reconfiguration of London, boosted by policy decisions carried out by local authorities, which are in tune with deliberate changes in housing policy and the property market, designed to take maximum advantage of the attraction of London real estate to global investors. This has little to do with the process that Glass or even Lees describe, which saw capital invested in gentrifying parts of the city at a much slower rate, over generations rather than a few years: as such, it is crucial that the impact of global capital and foreign investment is scrutinized for its local effects. The title of this book is a nod to Thomas Piketty’s landmark study, Capital in the Twenty-First Century, which investigates the consequences for inequality when the rate of return on rent is greater than the rate of economic growth. I hope to expose the lie that the housing crisis is a market question of supply and demand. Governments of all stripes have argued that we simply need to loosen planning restrictions and build more homes for sale. It may seem logical enough to argue that if we increase housing supply then prices will come down and there will be more homes to go around, but the UK housing market doesn’t function like a pure market: it is linked to global capital flows, not local circumstances.

In Barcelona and Berlin the city government has banned renting out whole properties through Airbnb, and at the time of writing the company was embroiled in a battle in New York over the same issue. But while regulation is being introduced, it is a notoriously hard business to regulate and raises contentious issues in a city such as Barcelona where it has become an important source of income for people on modest salaries. The success of the model fits perfectly into Thomas Piketty’s thesis that income from rent now far exceeds economic growth, let alone wages. As such, it is likely to remain a key feature of the contemporary property market. The bedroom tax presents a mirror image of Airbnb. In a society where the ideal of public housing has collapsed, a financial penalty is imposed on people in social housing with a spare room, while those who are lucky enough to own a house with one find themselves with an additional source of revenue.


pages: 354 words: 105,322

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis by James Rickards

"Robert Solow", Affordable Care Act / Obamacare, Albert Einstein, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Bayesian statistics, Ben Bernanke: helicopter money, Benoit Mandelbrot, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Black Swan, blockchain, Bonfire of the Vanities, Bretton Woods, British Empire, business cycle, butterfly effect, buy and hold, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, cellular automata, cognitive bias, cognitive dissonance, complexity theory, Corn Laws, corporate governance, creative destruction, Credit Default Swap, cuban missile crisis, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, disintermediation, distributed ledger, diversification, diversified portfolio, Edward Lorenz: Chaos theory, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, fiat currency, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, Fractional reserve banking, G4S, George Akerlof, global reserve currency, high net worth, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Isaac Newton, jitney, John Meriwether, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, money market fund, mutually assured destruction, Myron Scholes, Naomi Klein, nuclear winter, obamacare, offshore financial centre, Paul Samuelson, Peace of Westphalia, Pierre-Simon Laplace, plutocrats, Plutocrats, prediction markets, price anchoring, price stability, quantitative easing, RAND corporation, random walk, reserve currency, RFID, risk-adjusted returns, Ronald Reagan, Silicon Valley, sovereign wealth fund, special drawing rights, stocks for the long run, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transfer pricing, value at risk, Washington Consensus, Westphalian system

Here’s what the G7 leaders: “G7 Ise-Shima Leaders’ Declaration / G7 Ise-Shima Summit, 26–27 May 2016,” G7 Ise-Shima Summit, May 27, 2016, accessed August 7, 2016, www.mofa.go.jp/files/000160266.pdf, 6–7. In particular, Piketty advanced the thesis: French economist Thomas Piketty advanced the thesis that high tax rates have been associated with strong economic growth and equitable income distribution, while low tax rates have been associated with weaker growth and extremes of income inequality. See Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2014). Henry Kissinger offers a brilliant overview: For an in-depth history and analysis of the Westphalian state system, other historical forms of world order, and implications for policy today, see Henry Kissinger, World Order (New York: Penguin Press, 2014).

In Our Hands: A Plan to Replace the Welfare State. Washington, DC: AEI Press, 2016. Noah, Timothy. The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It. New York: Bloomsbury Press, 2012. Palley, Thomas I. From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics, 1st edition. New York: Cambridge University Press, 2012. Piketty, Thomas. Capital in the Twenty-First Century. Cambridge, MA: Belknap Press, 2014. Popper, Karl R. The Open Society and Its Enemies: Volume 1, The Spell of Plato. Princeton, NJ: Princeton University Press: 1971. ———. The Open Society and Its Enemies: Volume 2, The High Tide of Prophecy: Hegel, Marx, and the Aftermath. Princeton, NJ: Princeton University Press, 1971. Rappleye, Charles. Herbert Hoover in the White House: The Ordeal of the Presidency.

The United States has globalized its tax compliance to match its globalized tax collections. The IMF, OECD, and G20 have all endorsed these efforts and have added their own calls for international information collection and information sharing. The G20 final communiqué from the November 2014 meeting in Brisbane, Australia, included technical papers describing an implementation program for data collection. Prominent economists including Nobelist Joseph Stiglitz and Thomas Piketty have joined the chorus calling for global taxation. In particular, Piketty advanced the thesis that high tax rates are not an impediment to growth. His thesis is riddled with flaws, but attracted a following among global elites nonetheless. Piketty recognizes that high tax rates will not achieve his redistribution goals if collections are thwarted by tax avoidance. He complements his high-tax theories with calls for global taxation so his proposed taxes are actually collected.


pages: 558 words: 168,179

Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer

affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-communist, Bakken shale, bank run, battle of ideas, Berlin Wall, Capital in the Twenty-First Century by Thomas Piketty, carried interest, centre right, clean water, Climategate, Climatic Research Unit, collective bargaining, corporate raider, crony capitalism, David Brooks, desegregation, diversified portfolio, Donald Trump, energy security, estate planning, Fall of the Berlin Wall, George Gilder, housing crisis, hydraulic fracturing, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job automation, low skilled workers, mandatory minimum, market fundamentalism, mass incarceration, Mont Pelerin Society, More Guns, Less Crime, Nate Silver, New Journalism, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, oil shock, plutocrats, Plutocrats, Powell Memorandum, Ralph Nader, Renaissance Technologies, road to serfdom, Robert Mercer, Ronald Reagan, school choice, school vouchers, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, the scientific method, University of East Anglia, Unsafe at Any Speed, War on Poverty, working poor

Hacker and Paul Pierson, Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class (Simon & Schuster, 2010), says in 2007 that the top 1 percent of earners took home 23.5 percent of the country’s income, when capital gains and dividends were factored in. Liberal critics: See Chrystia Freeland, Plutocrats: The Rise of the New Global Super-rich and the Fall of Everyone Else (Penguin, 2012), 3. “We are on the road”: Paul Krugman, speaking in an interview with Bill Moyers about Thomas Piketty’s book Capital in the Twenty-First Century. “What the 1% Don’t Want Us to Know,” BillMoyers.com, April 18, 2014. “Wealth begets power”: Joseph E. Stiglitz, “Of the 1%, by the 1%, for the 1%,” Vanity Fair, May 2011. Thomas Piketty: Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Belknap Press/Harvard University Press, 2014). “disconnect themselves”: Mike Lofgren, “Revolt of the Rich,” American Conservative, Aug. 27, 2012. Only one full guest list: The list was published by the Web site ThinkProgress, on October 20, 2010, in a news story by Lee Fang.

As the conservative Nobel Prize–winning economist Milton Friedman wrote, “A society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom…On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.” In the new millennium, however, this consensus was beginning to fray. A growing number of academics studying the nexus of politics and wealth regarded the accelerating inequality in America as a threat not only to the economy but to democracy. Thomas Piketty, an economist at the Paris School of Economics, warned in his zeitgeist-shifting book, Capital in the Twenty-First Century, that without aggressive government intervention economic inequality in the United States and elsewhere was likely to rise inexorably, to the point where the small portion of the population that currently held a growing slice of the world’s wealth would in the foreseeable future own not just a quarter, or a third, but perhaps half of the globe’s wealth, or more.


pages: 424 words: 119,679

It's Better Than It Looks: Reasons for Optimism in an Age of Fear by Gregg Easterbrook

affirmative action, Affordable Care Act / Obamacare, air freight, autonomous vehicles, basic income, Bernie Madoff, Bernie Sanders, Branko Milanovic, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, coronavirus, David Brooks, David Ricardo: comparative advantage, deindustrialization, Dissolution of the Soviet Union, Donald Trump, Elon Musk, Exxon Valdez, factory automation, failed state, full employment, Gini coefficient, Google Earth, Home mortgage interest deduction, hydraulic fracturing, Hyperloop, illegal immigration, impulse control, income inequality, Indoor air pollution, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Watt: steam engine, labor-force participation, liberal capitalism, longitudinal study, Lyft, mandatory minimum, manufacturing employment, Mikhail Gorbachev, minimum wage unemployment, obamacare, oil shale / tar sands, Paul Samuelson, peak oil, plutocrats, Plutocrats, Ponzi scheme, post scarcity, purchasing power parity, quantitative easing, reserve currency, rising living standards, Robert Gordon, Ronald Reagan, self-driving car, short selling, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, Steve Wozniak, Steven Pinker, supervolcano, The Chicago School, The Rise and Fall of American Growth, the scientific method, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transaction costs, uber lyft, universal basic income, War on Poverty, Washington Consensus, WikiLeaks, working poor, Works Progress Administration

Stephen Rose, a labor economist at the Urban Institute: Stephen Rose, “The Growing Size and Incomes of the Upper Middle Class” (Washington, DC: Urban Institute, 2016). The most-talked-about serious book… bore the subhead: Christopher Lasch, The Culture of Narcissism (New York: W. W. Norton, 1979). “the simplest and most powerful measure” of inequality: Thomas Piketty and Emmanuel Saez, “Inequality in the Long Run,” Science, May 23, 2014. Piketty’s 2013 tome Capital in the Twenty-First Century was received: Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). for the typical middle-class family, the value of federal benefits exceeds: “Distribution of Household Income and Federal Taxes, 2013” (Washington, DC: Congressional Budget Office). On the first day of the twentieth century, the typical American household: Caplow et al., The First Measured Century.

Inarguably, pretax income is the most powerful measure of inequality. That it is also the simplest does not make it correct; height is the simplest measure of a basketball player, but choosing up a team based solely on height would not be wise. No one in the United States or Europe runs a family on pretax income alone. Tax rates, government benefits, consumer prices, and household size must be taken into account too. Piketty’s 2013 tome Capital in the Twenty-First Century was received by many editorialists and academics as having proven that rising inequality in pretax income means the Western economy is in an emergency situation. The book travels 704 pages without assessing how taxes, government benefits, and consumer prices impact the average people Piketty seeks to champion. Taxes, benefits, and prices are major factors in most people’s lives: bringing this up makes the Western economic situation sound better than the income-only analysis.

Yet Americans speak of the present as bad, the past as preferable. THE PEW RESEARCH CENTER METRIC for gauging the extent of the middle class took into account pretax income only. Citing income numbers alone is the approach employed by Senators Sanders of Vermont and Elizabeth Warren of Massachusetts, who are the left wing’s most notable declinists, trafficking in anger and negativity. Income-only is the approach employed by Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California at Berkeley, who were favorite economists of the Obama White House. Piketty and Saez produced voluminous charts and graphs showing that because returns on capital exceed increases in wage income, the system is structured such that those at the top, who own the most equity (primarily as stock shares), will make out better than average people.


pages: 402 words: 126,835

The Job: The Future of Work in the Modern Era by Ellen Ruppel Shell

3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, Amazon Mechanical Turk, basic income, Baxter: Rethink Robotics, big-box store, blue-collar work, Buckminster Fuller, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer vision, corporate governance, corporate social responsibility, creative destruction, crowdsourcing, deskilling, disruptive innovation, Donald Trump, Downton Abbey, Elon Musk, Erik Brynjolfsson, factory automation, follow your passion, Frederick Winslow Taylor, future of work, game design, glass ceiling, hiring and firing, immigration reform, income inequality, industrial robot, invisible hand, Jeff Bezos, job automation, job satisfaction, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, low skilled workers, Lyft, manufacturing employment, Marc Andreessen, Mark Zuckerberg, means of production, move fast and break things, move fast and break things, new economy, Norbert Wiener, obamacare, offshore financial centre, Paul Samuelson, precariat, Ralph Waldo Emerson, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, Steve Jobs, The Chicago School, Thomas L Friedman, Thorstein Veblen, Tim Cook: Apple, Uber and Lyft, uber lyft, universal basic income, urban renewal, white picket fence, working poor, Y Combinator, young professional, zero-sum game

But if you were born in 1985, you have only a 50 percent chance of exceeding your father’s lifetime earnings. Most of this change is due not to any educational deficits; on the contrary, the younger you are, the more likely you are to have a college degree. Rather, the bulk of this change is due to an unequal distribution of economic growth. In his magisterial history of economic inequality, Capital in the Twenty-First Century, economist Thomas Piketty concludes that among a number of possible factors underlying income disparity, “the educational factor does not seem to be the right one to focus on.” Of the many ways we Americans manifest our boundless optimism, a commitment to universal education ranks near the top. It should remain there. Preparing young minds is a vital exercise, one we must continue to pursue with vigor, creativity, and humility.

the relative decline in the market value of education Claudia Dale Goldin and Lawrence F. Katz, The Race Between Education and Technology (Cambridge, MA: Belknap Press of Harvard University Press, 2009); also my own interview with Dr. Goldin. “being squeezed out of white collar work” Paul Douglas, “What Ever Happened to the White-Collar Job Market,” System: The Magazine of Business 49 (December 1926): 719. inequality declined Thomas Piketty and Arthur Goldhammer, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014). an “educational slowdown” Goldin and Katz, Race, 7. the nation’s “poorly educated” workforce See, for example, David C. Berliner and Bruce J. Biddle, The Manufactured Crisis: Myths, Fraud, and the Attack on America’s Public Schools (New York: Perseus, 1995), 133. In 2007 high school graduation rates started to rise “Public High School Graduation Rates,” National Center for Education Statistics, last modified April 2017, http://nces.ed.gov/​programs/​coe/​indicator_coi.asp.

Smeeding, “What Have We Learned,” in From Parents to Children: The Intergenerational Transmission of Advantage (New York: Russell Sage Foundation, 2012), 463–81. The authors write, “The evidence indicates that…[the] net effect [of educational systems] is not to reduce the relationship between parental SES [socioeconomic status] and child achievement, but to maintain or strengthen patterns of differences in outcomes already evident at younger ages.” “the educational factor” Thomas Piketty and Arthur Goldhammer, Capital in the Twenty-First Century, 315. CHAPTER 8 “there is little to be gained from increasing potential supply” Lawrence Summers, “The Jobs Crisis,” Reuters, June 13, 2011, https://www.reuters.com/​article/​column-usjobs-summers/​rpt-column-the-jobs-crisis-lawrence-summers-idUSN1­2279957201­10613. after they were married, Leroy and Susan Kathryn Edin kindly shared the true story of Leroy and Susan with me but stipulated that their real names not be used.


pages: 267 words: 72,552

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, bitcoin, blockchain, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, lone genius, low cost airline, low cost carrier, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta analysis, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Network effects, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Sam Altman, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, William Langewiesche, Y Combinator

The rate at which workers are made redundant by data-driven automation is bound to accelerate in the coming years. If the link to labor share is real, this will prompt a further reduction in the share of income accruing to workers, while it enriches investors and banks. Concerns about the shrinking role of labor, and the shift in income distribution, have already caused alarm in many corners, from economists such as Thomas Piketty, whose 2014 book, Capital in the Twenty-First Century, a stinging critique of capitalism, became a global best seller, to populist movements (such as those led by Marine Le Pen and Donald Trump) that promise to eradicate the plight of the displaced worker. And two sets of relatively conventional ideas, one distributive and the other participatory, are being advanced by policy makers and debated in many nations as a response to this troubling trend.

temporary gigs with limited or no benefits: Ian Hathaway and Mark Muro, “Tracking the Gig Economy: New Numbers,” Brookings Institution, October 13, 2016, https://www.brookings.edu/research/tracking-the-gig-economy-new-numbers; the gig economy is not limited to advanced economies; see, e.g., Mark Graham, Isis Hjorth, and Vili Lehdonvirta, “Digital Labour and Development: Impacts of Global Digital Labour Platforms and the Gig Economy on Worker Livelihoods,” Transfer: European Review of Labour and Research, March 16, 2017, http://journals.sagepub.com/eprint/3FMTvCNPJ4SkhW9tgpWP/full. shrinking role of labor: Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2014). not necessarily to tax the economy more: See Ryan Abbott and Bret N. Bogenschneider, “Should Robots Pay Taxes? Tax Policy in the Age of Automation,” forthcoming in Harvard Law and Policy Review (March 13, 2017), https://ssrn.com/abstract=2932483. Bill Gates, announced his support: Kevin J. Delaney, “The Robot That Takes Your Job Should Pay Taxes, Says Bill Gates,” Quartz, February 17, 2017, https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxes.

See Daimler; Ford Motor Company; General Motors; Tesla Autopilot, 78 Autor, David, 195 Avant, 151 Bacon, Francis, 223 Baidu, 30, 151 Bank La Roche, 136 banks, 11, 12, 137, 138–140, 146–156 capital share of, 185, 186 central, 134–135, 149 choice expansion in, 215–216 cost cutting in, 146–148 crisis facing, 134–136 government loans to, 134 investment planning by, 150, 154–155 Italian merchant families in, 91 lending by, 150–151 payment businesses competing with, 146–147 poor insight of, 154 regulations affecting, 139–140 reinvention of from within, 146, 149–156 traditional role of, 138–139 Barclays, 215 Bardi family, 91 Barkai, Simcha, 194, 195 barter economy, 45 Bastani, Aaron, 221 Bauer, Florian, 55 Bear Stearns, 155 Beer, Staffors, 175–176 Bethlehem Steel, 95 Betterment, 151, 153 Bezos, Jeff, 68, 88, 89, 96, 106, 107, 130 Big Data, 77, 213, 219, 222 See also data-rich markets Bitcoin, 48, 147 BlaBlaCar, 3, 9, 65 blockchain, 147, 148 BMW, 120 book value, 172 bookkeeping, 92–93 bounded rationality, 104 Brezhnev, Leonid, 221 Bridgewater Associates, 114–115 Brookings Institution, 186 Brown, John Seely, 31 Brynjolfsson, Erik, 184, 220 Buick Motor Company, 98 cacao beans (as currency), 48 Canada, 191–192 capital, 15, 133–156 abundance of, 142–143, 194 banks’ shift from, 134–136, 138–140, 146–156 future role of, 11–12, 141 problems caused by decline of, 141–144 signaling with, 141–143 steady value of predicted, 144 See also money; price capital gains tax, 187 Capital in the Twenty-First Century (Piketty), 186 capital share, 185–186, 193–195, 197, 198 Carnegie Mellon University (CMU), 60 Case, Bob, 133–134 castells, 17–20 cell phones. See mobile phones central banks, 134–135, 149 centralization, 13, 90, 95, 100 cognitive limitations and, 103 of communicative coordination, 28–30 matching and, 74 Champagne fairs, 160 Charles Schwab, 146 Charlotte, Queen, 94 checklists, 100–101 Chichén Itzá, 21 Chile, 175–179 Chilean Production Development Corporation, 175 China, 147, 196 communicative coordination in, 30–32 fintechs in, 151, 152 firms in, 28 labor market of, 184 choice, 6, 207–223 in banking and financial sector, 215–216 in education sector, 214 in energy markets, 213 in health care sector, 213–214 historical constraints on, 13–14 human error and, 14–15 questions about, 219–220 relinquishing some, 85 in retail sector, 207–212 about time management, 221–222 Chongqing Province (China), 31–32, 33 Cisco, 7 Claudico (machine learning system), 60 Coconut, 147 cognitive bias and constraints, 5, 62 automation and, 79, 80, 81 firms and, 102–104 markets and, 169–170 persistence of, 14–15 Colson, Eric, 209 command-and-control management, 29–30, 88, 120 Commerzbank, 136 communicative coordination, 10, 17–33 castell example, 17–20 effectiveness as measure of, 24–25 firms and, 26, 28–33, 90, 102 importance of, 20–23 markets and, 26–28, 30–33 price hampering of, 63 societal institutions and, 23–24 competition, 165–167, 202–203 comprehensive cost accounting, 94–95 concentrated markets, 161–169, 171, 217 Condorcet, Marquis de, 50 confirmation bias, 103 Confused.com, 52 conglomerates, 30 Consumer Reports, 51 Contix, 155 coordination.


pages: 320 words: 87,853

The Black Box Society: The Secret Algorithms That Control Money and Information by Frank Pasquale

Affordable Care Act / Obamacare, algorithmic trading, Amazon Mechanical Turk, American Legislative Exchange Council, asset-backed security, Atul Gawande, bank run, barriers to entry, basic income, Berlin Wall, Bernie Madoff, Black Swan, bonus culture, Brian Krebs, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, Chuck Templeton: OpenTable:, cloud computing, collateralized debt obligation, computerized markets, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, Debian, don't be evil, drone strike, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, Filter Bubble, financial innovation, financial thriller, fixed income, Flash crash, full employment, Goldman Sachs: Vampire Squid, Google Earth, Hernando de Soto, High speed trading, hiring and firing, housing crisis, informal economy, information asymmetry, information retrieval, interest rate swap, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, Julian Assange, Kevin Kelly, knowledge worker, Kodak vs Instagram, kremlinology, late fees, London Interbank Offered Rate, London Whale, Marc Andreessen, Mark Zuckerberg, mobile money, moral hazard, new economy, Nicholas Carr, offshore financial centre, PageRank, pattern recognition, Philip Mirowski, precariat, profit maximization, profit motive, quantitative easing, race to the bottom, recommendation engine, regulatory arbitrage, risk-adjusted returns, Satyajit Das, search engine result page, shareholder value, Silicon Valley, Snapchat, social intelligence, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical arbitrage, statistical model, Steven Levy, the scientific method, too big to fail, transaction costs, two-sided market, universal basic income, Upton Sinclair, value at risk, WikiLeaks, zero-sum game

Ben Austen, “The YouTube Laugh Factory: A Studio System for Viral Video,” 260 NOTES TO PAGES 86–90 Wired, December 16, 2011, http://www.wired.com /magazine/2011/12/ff_you tube/all /. 159. On the barriers to organization of digital labor, see Scholz, Digital Labor. 160. Lawrence Lessig, Remix: Making Art and Commerce Thrive in the Hybrid Economy (New York: Penguin, 2008), 128. 161. James Galbraith, The Predator State (New York: Free Press, 2008), xix. 162. Thomas Piketty, Capital in the Twenty-First Century (Cambridge: Harvard University Press, 2014): 571. 163. Turow, The Daily You. 164. Jerry Kang, “Race.Net Neutrality,” Journal on Telecommunications and High Technology Law 6 (2007): 9–10. 165. Ibid. See also Jack Balkin, “Media Access: A Question of Design,” George Washington Law Review 76 (2008): 933. 166. “Complaint of McGraw-Hill Companies, Inc.,” McGraw-Hill Companies, Inc. v.

MacKinnon, Consent of the Networked; Anupam Chander, “Facebookistan,” North Carolina Law Review 90 (2012): 1807–1844. 304 NOTES TO PAGES 214–218 95. For the strange career of neoliberal approaches to antitrust law, see Robert Van Horn and Philip Mirowski, “Reinventing Monopoly,” in The Road from Mount Pèlerin, ed. Philip Mirowski and Dieter Plehwe (Cambridge, MA: Harvard University Press, 2009), 219 ff. 96. C. Wright Mills, The Power Elite. New ed. (New York: Oxford University Press, 2000). First published 1956. 97. Thomas Piketty, Capital in the Twenty-First Century (Cambridge: Harvard University Press, 2014), 574. 98. Pope Francis, Evangelii Gaudium (Apostolic Exhortation), November 24, 2013, para. 55. Available at http://w2.vatican.va /content /francesco/en /apost _exhortations/documents/papa-francesco_esortazione-ap_20131124 _evangelii -gaudium.html. ACKNOWLEDGMENTS This book is based on ten years of research covering law, technology, and social science.

This allows them to offer data-driven targeting to advertisers, with whose handsome payments they can buy content, apps, and other enticements (the fruits of other people’s ingenuity) that draw a bigger audience still, and so on. The well-realized technological vision that attracts the initial user base deserves recompense. But it does not entitle present corporate leaders to endlessly leverage past success into future dominance. What Thomas Piketty said of unlimited capital accumulation applies as well to untrammeled tech giants: “the past devours the future.”162 The data advantage of the Silicon Valley giants may owe as much to fortuitous timing as to anything inherent in the firms themselves. Social theorist David Grewal has explained the “network power” of English as a lingua franca; it’s not “better” than other languages; it’s not easier to learn, or any more expressive.


pages: 435 words: 120,574

Strangers in Their Own Land: Anger and Mourning on the American Right by Arlie Russell Hochschild

affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, clean water, collective bargaining, Deep Water Horizon, desegregation, Donald Trump, ending welfare as we know it, equal pay for equal work, Exxon Valdez, feminist movement, full employment, greed is good, guest worker program, invisible hand, knowledge economy, McMansion, minimum wage unemployment, new economy, obamacare, oil shock, payday loans, Richard Florida, Ronald Reagan, school vouchers, Silicon Valley, sovereign wealth fund, Thorstein Veblen, urban sprawl, working poor, Yogi Berra

And those combining the incomes of both spouses—whatever the education of either—enjoyed incomes that were that high or higher. 150more profits to top executives and stockholders, and less to workers Robert Reich, Saving Capitalism: For the Many, Not the Few (New York: Knopf, 2015); John Ehrenreich, Third Wave Capitalism: How Money, Power, and the Pursuit of Self-Interest Have Imperiled the American Dream (Ithaca and London: ILR Press, an Imprint of Cornell University Press, forthcoming 2016); Thomas Piketty and Emmanuel Saez, 2007 Average Incomes, U.S. 1980–2012 (in real 2014 dollars). Also see Thomas Piketty, Capital in the Twenty-First Century (Boston: Harvard University Press, 2014). Thomas Piketty and his French-American colleague, Emmanuel Saez, base this distribution on income individuals hold in the absence of government activity—so it’s what people have if they neither pay taxes nor receive government distributions (e.g., Social Security, unemployment insurance, food stamps, Medicaid, or earned income tax credits).

Oilprice.com (September 4, 2014). http://oilprice.com/Energy/Natural-Gas/Sasol-Clears-Major-Hurdle-to-Build-Americas-First-GTL-Plant.html. Phillips, Justin. “Calcasieu, Cameron Areas ‘on Bubble’ with EPA for Air Quality.” American Press (July 11, 2014). http://www.americanpress.com/news/local/Air-quality. Phillips-Fein, Kim. Invisible Hands: The Businessmen’s Crusade Against the New Deal. New York: W.W. Norton & Company, 2007. Piketty, Thomas. Capital in the Twenty-First Century. Boston: Harvard University Press, 2014. Piketty, Thomas, and Emmanuel Saez. 2007 Average Incomes, U.S. 1980–2012 (in real 2014 dollars). The World Top Incomes Database. http://topincomes.g-mond.parisschoolofeconomics.edu. Porter, Michael, and C. Van der Linde. “Toward a New Conception of the Environment–Competitiveness Relationship.” Journal of Economic Perspectives 9, no. 4 (1995): 97–118.


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New Dark Age: Technology and the End of the Future by James Bridle

AI winter, Airbnb, Alfred Russel Wallace, Automated Insights, autonomous vehicles, back-to-the-land, Benoit Mandelbrot, Bernie Sanders, bitcoin, British Empire, Brownian motion, Buckminster Fuller, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cognitive bias, cognitive dissonance, combinatorial explosion, computer vision, congestion charging, cryptocurrency, data is the new oil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Douglas Hofstadter, drone strike, Edward Snowden, fear of failure, Flash crash, Google Earth, Haber-Bosch Process, hive mind, income inequality, informal economy, Internet of things, Isaac Newton, John von Neumann, Julian Assange, Kickstarter, late capitalism, lone genius, mandelbrot fractal, meta analysis, meta-analysis, Minecraft, mutually assured destruction, natural language processing, Network effects, oil shock, p-value, pattern recognition, peak oil, recommendation engine, road to serfdom, Robert Mercer, Ronald Reagan, self-driving car, Silicon Valley, Silicon Valley ideology, Skype, social graph, sorting algorithm, South China Sea, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stem cell, Stuxnet, technoutopianism, the built environment, the scientific method, Uber for X, undersea cable, University of East Anglia, uranium enrichment, Vannevar Bush, WikiLeaks

Lewis details a world in which the market has become a class system – a playground for those with the vast resources needed to access it, completely invisible to those who do not: The haves paid for nanoseconds; the have-nots had no idea that a nanosecond had value. The haves enjoyed a perfect view of the market; the have-nots never saw the market at all. What had once been the world’s most public, most democratic, financial market had become, in spirit, something more like a private viewing of a stolen work of art.15 In his deeply pessimistic work on income equality, Capital in the Twenty-First Century, the French economist Thomas Piketty analysed the increasing disparities in wealth between a minority of very rich people, and everyone else. In the United States, in 2014, the richest 0.01 per cent, comprising just 16,000 families, controlled 11.2 per cent of total wealth – a situation comparable to 1916, the time of greatest inequality on record. The top 0.1 per cent today hold 22 per cent of total wealth – the same as the bottom 90 per cent.16 And the great recession has only accelerated the process: the top 1 per cent captured 95 per cent of income growth from 2009 to 2012.

., ‘Banks start to drain Barclays dark pool’, Financial Times, June 26, 2014, ft.com. 10.Care Quality Commission, Hillingdon Hospital report, 2015, cqc.org.uk/location/RAS01. 11.Aneurin Bevan, In Place of Fear, London: William Heinemann, 1952. 12.Correspondence with Hillingdon Hospital NHS Trust, 2017, whatdotheyknow.com/request/hillingdon_hospital_structure_us. 13.Chloe Mayer, ‘England’s NHS hospitals and ambulance trusts have £700million deficit’, Sun, May 23, 2017, thesun.co.uk. 14.Michael Lewis, Flash Boys, New York: W. W. Norton & Company, 2014. 15.Ibid. 16.‘Forget the 1%’, Economist, November 6, 2014, economist.com. 17.Thomas Piketty, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press, 2014. 18.Jordan Golson, ‘Uber is using in-app podcasts to dissuade Seattle drivers from unionizing’, Verge, March 14, 2017, theverge.com. 19.Carla Green and Sam Levin, ‘Homeless, assaulted, broke: drivers left behind as Uber promises change at the top’, Guardian, June 17, 2017, theguardian.com. 20.Ben Kentish, ‘Hard-pressed Amazon workers in Scotland sleeping in tents near warehouse to save money’, Independent, December 10, 2016, independent.co.uk. 21.Kate Knibbs, ‘Uber Is Faking Us Out With “Ghost Cabs” on Its Passenger Map’, Gizmodo, July 28, 2015, gizmodo.com. 22.Kashmir Hill, ‘“God View”: Uber Allegedly Stalked Users For Party-Goers’ Viewing Pleasure’, Forbes, October 3, 2014, forbes.com. 23.Julia Carrie Wong, ‘Greyball: how Uber used secret software to dodge the law’, Guardian, March 4, 2017, theguardian.com. 24.Russell Hotten, ‘Volkswagen: The scandal explained’, BBC, December 10, 2015, bbc.com. 25.Guillaume P.

., 176 Bush, Vannevar ‘As We May Think,’ 23–4 Bush Differential Analyser, 27 on hypertext, 79 Bush Differential Analyser, 27 Byron “Darkness,” 201–2 C Cadwalladr, Carole, 236 calculating machines, 27 calculation p-hacking, 89–91 raw computing, 82–3 replicability, 88–9 translation algorithms, 84 Cambridge Analytica, 236 Campbell, Duncan, 189 ‘Can We Survive Technology?’ (von Neumann), 28 Capital in the Twenty-First Century (Piketty), 112 carbon dioxide, 75 Catch-22 (Heller), 187–8 ‘cautious regulator’ theory, 94–5 CCTV, 181–2 centaur chess, 159 Chanarin, Oliver, 143 chaotic storage, 115–6 Chargaff, Erwin, 96–7 Charlie Hebdo attacks, 212 chemtrails, 192–5, 206–8, 214 children’s television, 216–7 children’s YouTube, 219, 238 Cirrus homogenitus, 196, 197 Civil Aviation Authority (CAA), 161–2 clear-air turbulence, 68 climate carbon dioxide, 75 global warming, 73, 193, 214 permafrost, 47–9, 56–7 seed banks, 52–6 turbulence, 65–9 climate change patterns disrupted by, 72–3 resilience against, 59 climate crisis, 56 Clinton, Bill, 243 Clinton, Hillary, 207, 232–3 cloning, 86–8 closed-circuit television, 181–2 cloud(s), 6–7, 8, 17, 195–6 ‘The Cloud Begins with Coal-Big Data, Big Networks, Big Infrastructure, and Big Power’ report, 64 ‘The Cloud of Unknowing,’ 9 cloudy thinking, 9 coal deposits, discovery of, 52 coastal installations, 62 Cocks, Clifford, 167 code/spaces, 37–9 code words, 175 cognition about, 135–6 artificial intelligence (AI), 139 facial recognition, 141 image recognition, 139–40 machine translation, 147 ‘predictive policing’ systems, 144–6 collectivism, totalitarianism vs., 139 Commission on Government Secrecy, 169 complex systems about, 2–3 aggregation of, 40 high-frequency trading, 14, 106–7, 108, 122, 124 complicity computational logic, 184–5 Freedom of Information, 161–2, 165, 192 global mass surveillance, 179–80 Glomar response, 165, 186 public key cryptography, 167–8 computation calculating machines, 27 Electronic Numerical Integrator and Computer (ENIAC), 27, 27–30, 33 flight trackers, 35–6, 36 IBM Selective Sequence Electronic Calculator (SSEC), 30, 30–2, 31, 146 opaqueness of, 40 computational logic, 184–5 computational thinking about, 4 evolution of, 248 importance of, 44–5 Concorde, 69, 70, 71 conspiracy chemtrails, 192–5, 206–8, 214 conspiracy theories, 195, 198–9, 205 contrails, 196–8, 197, 214 global warming, 73, 193, 214 9/11 terrorist attacks, 203–4, 206 ‘Conspiracy as Governance’ (Assange), 183 contrails, 196–8, 197, 214 Copenhagen Climate Change Conference (COP15), 199 Cowen, Deborah, 132 Credit Suisse, 109 cryptocurrency, 63 Cumulus homogenitus, 195–6 cyborg chess, 159 D Dabiq (online magazine), 212 Dallaire, Roméo, 243 darkness, 11–2 “Darkness” (poem), 201–2 dark pools, 108–9 DARPA (Defense Advanced Research Projects Agency), 33 Darwin, Charles, 78 data abundance of, 83–4, 131 big, 84 importance of, 245–6 realistic accounting of, 247 thirst for, 246 data dredging, 90–1 Debord, Guy, 103 DEC (Digital Equipment Corporation), 33 Decyben SAS, 110 Deep Blue, 148–9, 157–60 DeepDream, 153, 154–5 DeepFace software, 140 defeat devices, 120 Defense Advanced Research Projects Agency (DARPA), 33 de Solla Price, Derek, 91–2, 93 Diffie-Hellman key exchange, 167 digital culture, 64–5 Digital Equipment Corporation (DEC), 33 digital networks, mapping, 104 digitisation, 108 ‘Discussion of the Possibility of Weather Control’ lecture, 26 diurnal temperature range (DTR), 204 DNA sequencing, 93 D-Notices, 179 domain name system, 79 doomsday vault, 52–3 Dow Jones Industrial Average, 121–2 drones, 161–2 drug discovery/research, 94–5 DTR (diurnal temperature range), 204 Duffy, Carol Ann, 201 Dunne, Carey, 194–5 E Elberling, Bo, 57 electromagnetic networks, 104 Electronic Computer Project, 27 Electronic Frontier Foundation, 177 Electronic Numerical Integrator and Computer (ENIAC), 27, 27–30, 33 Elements of Chemistry (Lavoisier), 208–9 Elkins, Caroline, 183–4 Ellis, James, 167 encoded biases, 142 ‘End of Theory’ (Anderson), 83–4, 146 Engelbart, Douglas, 79 ENIAC (Electronic Numerical Integrator and Computer), 27, 27–30, 33 Enlightenment, 10 Environmental Protection Agency (EPA), 119–20 EPA (Environmental Protection Agency), 119–20 Epagogix, 130 epidemic type aftershock sequence (ETAS) model, 145–6 Epimetheus, 132–4 Equinix LD4, 104 Eroom’s law, 86, 93–6 ETAS (epidemic type aftershock sequence) model, 145–6 Euronext Data Center, 104, 105, 106 Evangelismos Hospital, 130–1 evolution, theory of, 78 exploitation, 229–30 Eyjafjallajökull, eruption of, 200–1, 202 F Facebook, 39–40, 156–7 facial recognition, 141 Fairchild Semiconductor, 80 Farage, Nigel, 194 Fat Man bomb, 25 Fermi, Enrico, 250 Ferranti Mark I, 78 fiat anima, 19–20 fiat lux, 19–20 Finger Family, 221–2, 224, 227 ‘Five Eyes,’ 174 Flash Boys (Lewis), 111–2 flash crash, 121–2, 130–1 FlightRadar24, 36, 189, 191 flight trackers, 35–6, 36 ‘Fourteen Eyes,’ 174 Fowler, R.H., 45 Frankenstein (Shelley), 201 fraud, 86–8, 91 Freedom of Information, 161–2, 165, 192 Friends’ Ambulance Unit, 20 Fuller, Buckminster, 71 Futurama exhibit, 30–1 ‘Future Uses of High Speed Computing in Meteorology’ lecture, 26 G Gail, William B., 72–3 Galton, Francis, 140 game developers, 130 Gates’s law, 83 GCHQ (Government Communications Headquarters), 167, 174, 176–9, 189 genocide, 243 ghost cars (Uber), 118–9 G-INFO, 190 global mass surveillance, 179–80 Global Positioning System (GPS), 36–7, 42–3 Global Seed Vault, 54 global warming, 73, 193, 214 Glomar response, 165, 186 Godard, Jean-Luc, 143 Google, 84, 139, 230, 242 Google Alerts, 190 Google Brain project, 139, 148, 149, 156 Google Earth, 35–6 Google Home, 128–9 Google Maps, 177 Google Translate, 147–8, 156 Government Communications Headquarters (GCHQ), 167, 174, 176–9, 189 GPS (Global Positioning System), 36–7, 42–3 Graves, Robert, 159 Gravity’s Rainbow (Pynchon), 128 gray zone, 212–4 Great Nōbi Earthquake, 145 Greenland, 57–8 Green Revolution, 53 Greyball programme, 119, 120 guardianship, 251–2 H Hankins, Thomas, 102 Haraway, Donna, 12 Harvard Mark I machine, 30 Hayek, Friedrich, 156–7 The Road to Serfdom, 139 The Sensory Order: An Inquiry into the Foundations of Theoretical Psychology, 138–9 HealthyFoodHouse.com (website), 231–2 Heller, Joseph Catch-22, 187–8 Hermes, 134 Hersh, Seymour, 164 Hewlett-Packard, 143 hidden technological processes, 120 high-frequency trading, 14, 106–7, 108, 122, 124 high-throughput screening (HTS), 95–6 Hillingdon Hospital, 110–1, 111 Hippo programme, 32 Hofstadter, Douglas, 205–6 Hola Massacre, 170 homogenitus, 195, 196 Horn, Roni, 50, 201 How-Old.net facial recognition programme, 141 ‘How the World Wide Web Just Happened’ lecture, 78 HTS (high-throughput screening), 95–6 Hughes, Howard, 163 Hughes Glomar Explorer, 163–5 human genome project, 93 Human Interference Task Force, 251 human violence, 202 Humby, Clive, 245, 246 Hwang Woo-suk, 86–8 hyperobjects, 73, 75, 76, 194 hypertext, 79 I IBM Selective Sequence Electronic Calculator (SSEC), 30, 30–2, 31, 146 ICAO (International Civil Aviation Organisation), 68 ICARDA (International Center for Agricultural Research in the Dry Areas), 53–4, 55 ICT, 60–2 image recognition, 139–40 Infinite Fun Space, 149–50, 156 information networks, 62 information superhighway, 10 Infowars (Jones), 207 In Place of Fear (Bevan), 110 Institute of the Aeronautical Sciences, 26 integrated circuits, 79, 80 Intel, 80 International Center for Agricultural Research in the Dry Areas (ICARDA), 53–4, 55 International Civil Aviation Organisation (ICAO), 68 International Cloud Atlas, 195 Internet Research Agency, 235, 237 Inuit Knowledge and Climate Change, 199 The Invisibles (Morrison), 196–7 Isaksen, Ketil, 54 ISIL, 212–3 J Jameson, Fredric, 205 Jelinek, Frederick, 146–7 Jones, Alex Infowars, 207 Joshi, Manoj, 68–9 journalism, automated, 123–4 just-in-time manufacturing, 117 K K-129, 162–3 Karma Police operation, 175 Kasparov, Garry, 148–9, 157–8 Keeling Curve, 74, 74 Kennedy, John F., 169–70 Kinder Eggs, 215–6 Kiva robots, 114 Klein, Mark, 176–7 Kodak, 143 Krakatoa, eruption of, 202 Kunuk, Zacharias, 199, 200 Kuznets curve, 113 L Large Hadron Collider, 93 Lavoisier, Antoine, 78 Elements of Chemistry, 208–9 Lawson, Robert, 175–6 LD4, 104, 105 Leave Campaign, 194 Leibniz, Gottfried Wilhelm, 78 Levy, David, 158, 159 Lewis, Michael Flash Boys, 111–2 LifeSphere, 125 literacy in systems, 3–4 Lockheed Ocean Systems, 163 Logan, Walt (pseudonym), 165 Lombroso, Cesare, 140 London Stock Exchange, 110–1 Lovecraft, H.P., 11, 249 ‘low-hanging fruit,’ 93–4 M Macedonia, 233–4 machine learning algorithms, 222 machine thought, 146 machine translation, 147 magnetism, 77 Malaysian Airlines, 66 manganese noodles, 163–4 Manhattan Project, 24–30, 248 Mara, Jane Muthoni, 170 Mark I Perceptron, 136–8, 137 Maslow’s hierarchy of needs, 128–9 Matthews, James Tilly, 208–10, 209 Mauro, Ian, 199 McCarthy, Joe, 205 McGovern, Thomas, 57–8 McKay Brothers, 107, 110 memex, 24 Mercer, Robert, 236 Merkel, Angela, 174 metalanguage, 3, 5 middens, 56 migrated archive, 170–1 Minds, 150 miniaturisation principle, 81 Mirai, 129 mobile phones, 126 The Modern Prometheus (Shelley), 201 monoculture, 55–6 Moore, Gordon, 80, 80, 83 Moore’s law, 80–3, 92–4 Mordvintsev, Alexander, 154 Morgellons, 211, 214 Morrison, Grant The Invisibles, 196–7 Morton, Timothy, 73, 194 Mount Tambora, eruption of, 201 Moynihan, Daniel Patrick, 169 Munch, Edvard The Scream, 202 Mutua, Ndiku, 170 N NarusInsight, 177 NASA Ames Advanced Concepts Flight Simulator, 42 Natanz Nuclear Facility, 129 National Centre for Atmospheric Science, 68–9 National Geospatial-Intelligence Agency, 243 National Health Service (NHS), 110 National Mining Association, 64 National Reconnaissance Office, 168, 243 National Security Agency (NSA), 167, 174, 177–8, 183, 242–3, 249–50 National Security Strategy, 59 natural gas, 48 neoliberalism, 138–9 network, 5, 9 networks, 249 Newton, Isaac, 78 NewYorkTimesPolitics.com, 221 New York World’s Fair, 30–1 NHS (National Health Service), 110 9/11 terrorist attacks, 203–4, 206 ‘Nine Eyes,’ 174 1984 (Orwell), 242 NORAD (North American Air Defense Command), 33 North American Air Defense Command (NORAD), 33 ‘The Nor’ project, 104 Not Aviation, 190–1 NSA (National Security Agency), 167, 174, 177–8, 183, 242–3, 249–50 nuclear fusion, 97–8, 100 nuclear warfare, 28 Numerical Prediction (Richardson), 45 Nyingi, Wambugu Wa, 170 Nzili, Paulo Muoka, 170 O Obama, Barack, 180, 206, 231 Official Secrets Act, 189 Omori, Fusakichi, 145 Omori’s Law, 145 Operation Castle, 97 Operation Legacy, 171–2 Optic Nerve programme, 174 Optometrist Algorithm, 99–101, 160 O’Reilly, James, 185–6 Orwell, George 1984, 242 ‘Outline of Weather Proposal’ (Zworykin), 25–6 P Paglen, Trevor, 144 ‘paranoid style,’ 205–6 Patriot Act, 178 Penrose, Roger, 20 Perceptron, 136–8, 137 permafrost, 47–9, 56–7 p-hacking, 89–91 Phillippi, Harriet Ann, 165 photophone, 19–20 Pichai, Sundar, 139 Piketty, Thomas Capital in the Twenty-First Century, 112 Pincher, Chapman, 175–6 Pitt, William, 208 Plague-Cloud, 195, 202 Poitras, Laura, 175 Polaroid, 143 ‘predictive policing’ systems, 144–6 PredPol software, 144, 146 Priestley, Joseph, 78, 208, 209 prion diseases, 50, 50–1 PRISM operation, 173 product spam, 125–6 Project Echelon, 190 Prometheus, 132–4, 198 psychogeography, 103 public key cryptography, 167–8 pure language, 156 Putin, Vladimir, 235 Pynchon, Thomas Gravity’s Rainbow, 128 Q Qajaa, 56, 57 quality control failure of, 92–3 in science, 91 Quidsi, 113–4 R racial profiling, 143–4 racism, 143–4 ‘radiation cats,’ 251 raw computing, 82–3 Reagan, Ronald, 36–7 Reed, Harry, 29 refractive index of the atmosphere, 62 Regin malware, 175 replicability, 88–9 Reproducibility Project, 89 resistance, modes of, 120 Reuter, Paul, 107 Review Group on Intelligence and Communications Technologies, 181 Richardson, Lewis Fry, 20–1, 29, 68 Numerical Prediction, 45 Weather Prediction by Numerical Process, 21–3 Richardson number, 68 The Road to Serfdom (Hayek), 139 Robinson, Kim Stanley Aurora, 128 robots, workers vs., 116 ‘Rogeting,’ 88 Romney, Mitt, 206–7 Rosenblatt, Frank, 137 Roy, Arundhati, 250 Royal Aircraft Establishment, 188–9 Ruskin, John, 17–20, 195, 202 Rwanda, 243, 244, 245 S Sabetta, 48 SABRE (Semi-Automated Business Research Environment), 35, 38 SAGE (Semi-Automatic Ground Environment), 33, 34, 35 Samsung, 127 Scheele, Carl Wilhelm, 78 Schmidt, Eric, 241–5 The Scream (Munch), 202 Sedol, Lee, 149, 157–8 seed banks, 52–6 Seed Vault, 55 seismic sensors, 48 self-excitation, 145 ‘semantic analyser,’ 177 Semi-Automated Business Research Environment (SABRE), 35, 38 Semi-Automatic Ground Environment (SAGE), 33, 34, 35 semiconductors, 82 The Sensory Order: An Inquiry into the Foundations of Theoretical Psychology (Hayek), 138–9 Shelley, Mary Frankenstein, 201 The Modern Prometheus, 201 SIGINT Seniors Europe, 174 simulation, conflating approximation with, 34–5 Singapore Exchange, 122–3 smart products, 127–8, 131 Smith, Robert Elliott, 152 smoking gun, 183–4, 186 Snowden, Edward, 173–5, 178 software about, 82–3 AlphaGo, 149, 156–8 Assistant, 152 AutoAwesome, 152 DeepFace, 140 Greyball programme, 119, 120 Hippo programme, 32 How-Old.net facial recognition programme, 141 Optic Nerve programme, 174 PredPol, 144, 146 Translate, 146 Solnit, Rebecca, 11–2 solutionism, 4 space telescopes, 168–9 speed of light, 107 Spread Networks, 107 SSEC (IBM Selective Sequence Electronic Calculator), 30, 30–2, 31, 146 Stapel, Diederik, 87–8 Stapledon, Olaf, 20 steam engines, 77 Stellar Wind, 176 Stewart, Elizabeth ‘Betsy,’ 30–1, 31 Steyerl, Hito, 126 stock exchanges, 108 ‘The Storm-Cloud of the Nineteenth Century’ lecture series, 17–9 Stratus homogenitus, 195–6 studios, 130 Stuxnet, 129–30 surveillance about, 243–4 complicity in, 185 computational excesses of, 180–1 devices for, 104 Svalbard archipelago, 51–2, 54 Svalbard Global Seed Vault, 52–3 Svalbard Treaty (1920), 52 Swiss National Bank, 123 Syed, Omar, 158–9 systemic literacy, 5–6 T Taimyr Peninsula, 47–8 Targeted Individuals, 210–1 The Task of the Translator (Benjamin), 147, 155–6 TCP (Transmission Control Protocol), 79 technology acceleration of, 2 complex, 2–3 opacity of, 119 Teletubbies, 217 television, children’s, 216–7 Tesco Clubcard, 245 thalidomide, 95 Thatcher, Margaret, 177 theory of evolution, 78 thermal power plants, 196 Three Guineas (Woolf), 12 Three Laws of Robotics (Asimov), 157 Tillmans, Wolfgang, 71 tools, 13–4 To Photograph the Details of a Dark Horse in Low Light exhibition, 143 totalitarianism, collectivism vs., 139 Toy Freaks, 225–6 transistors, 79, 80 Translate software, 146 translation algorithms, 84 Transmission Control Protocol (TCP), 79 Tri Alpha Energy, 98–101 Trinity test, 25 trolling, 231 Trump, Donald, 169–70, 194–5, 206, 207, 236 trust, science and, 91 trusted source, 220 Tuktoyaktuk Peninsula, 49 turbulence, 65–9 tyranny of techne, 132 U Uber, 117–9, 127 UberEats app, 120–1 unboxing videos, 216, 219 United Airlines, 66–7 Uniting and Strengthening America by Fulfilling Rights and Ending Eavesdropping, Dragnet-collection and Online Monitoring Act (USA FREEDOM Act), 178 USA FREEDOM Act (2015), 178 US Drug Efficacy Amendment (1962), 95 V van Helden, Albert, 102 Veles, objectification of, 235 Verizon, 173 VHF omnidirectional radio range (VOR) installations, 104 Vigilant Telecom, 110–1 Volkswagen, 119–20 von Neumann, John about, 25 ‘Can We Survive Technology?


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The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, corporate governance, cosmological principle, crony capitalism, dark matter, declining real wages, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, global pandemic, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, plutocrats, Plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

If there were more economists like him, more historians would be listening. About a decade ago, Steve Friesen made me think harder about ancient income distributions, and Emmanuel Saez further piqued my interest in inequality during a shared year at Stanford’s Center for Advanced Study in the Behavioral Sciences. My perspective and argument have been inspired in no small measure by Thomas Piketty’s work. For several years before his provocative book on capital in the twenty-first century introduced his ideas to a wider audience, I had read his work and pondered its relevance beyond the last couple of centuries (also known as the “short term” to an ancient historian such as myself). The appearance of his magnum opus provided much-needed impetus for me to move from mere contemplation to the writing of my own study. His trailblazing has been much appreciated.

Laxenburg, Austria: International Institute for Applied Systems Analysis, IR-07–024. Machin, Stephen. 2008. “An appraisal of economic research on changes in wage inequality.” Labour 22: 7–26. Maddison project. “Maddison project.” http://www.ggdc.net/maddison/maddison-project/home.htm. Magness, Phillip W., and Murphy, Robert P. 2015. “Challenging the empirical contribution of Thomas Piketty’s Capital in the twenty-first century.” Journal of Private Enterprise 30: 1–34. Mahler, Vincent A. 2010. “Government inequality reduction in comparative perspective: a cross-national study of the developed world.” Polity 42: 511–541. Maisels, Charles K. 1990. The emergence of civilization: from hunting and gathering to agriculture, cities, and the state in the Near East. London: Routledge. Malinen, Tuomas. 2012.

“On the long-run evolution of inheritance: France 1820–1998.” Quarterly Journal of Economics 126: 1071–1131. Piketty, Thomas. 2013. Le capital au XXIe siècle. Paris: Éditions du Seuil. Piketty, Thomas. 2014. Capital in the twenty-first century. Trans. Arthur Goldhammer. Cambridge, MA: Harvard University Press. Piketty, Thomas. 2015a. “Vers une économie politique et historique: réflexions sur le capital au XXIe siècle.” Annales: Histoire, Sciences Sociales, 125–138. Piketty, Thomas. 2015b. “Putting distribution back at the center of economics: reflections on Capital in the twenty-first century.” Journal of Economic Perspectives 29: 67–88. Piketty, Thomas, Postel-Vinay, Gilles, and Rosenthal, Jean-Laurent. 2006. “Wealth concentration in a developing economy: Paris and France, 1807–1994.” American Economic Review 96: 236–256.


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The Decadent Society: How We Became the Victims of Our Own Success by Ross Douthat

Affordable Care Act / Obamacare, AI winter, Bernie Sanders, bitcoin, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, centre right, charter city, crack epidemic, crowdsourcing, David Graeber, Deng Xiaoping, Donald Trump, East Village, Elon Musk, Flynn Effect, Francis Fukuyama: the end of history, Francisco Pizarro, ghettoisation, gig economy, Haight Ashbury, helicopter parent, hive mind, Hyperloop, immigration reform, informal economy, Intergovernmental Panel on Climate Change (IPCC), Islamic Golden Age, Jeff Bezos, Joan Didion, Kevin Kelly, Kickstarter, knowledge worker, life extension, mass immigration, mass incarceration, means of production, megacity, move fast and break things, move fast and break things, multiplanetary species, New Journalism, Nicholas Carr, Norman Mailer, obamacare, Oculus Rift, open borders, out of africa, Panopticon Jeremy Bentham, Peter Thiel, plutocrats, Plutocrats, pre–internet, QAnon, quantitative easing, rent-seeking, Robert Bork, Robert Gordon, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, Silicon Valley ideology, Snapchat, social web, Steve Jobs, Steven Pinker, technoutopianism, the built environment, The Rise and Fall of American Growth, Tyler Cowen: Great Stagnation, wage slave, women in the workforce, Y2K

The age of stagnation, in this theory, is the fruit of what Brink Lindsey of the Niskanen Institute and Steven Teles of Johns Hopkins University describe as a “captured economy,” in which everything from land-use rules, to exclusionary zoning, to occupational licensing, to ever-expanding intellectual-property protections, to corporate subsidies and tax breaks all converge to create an system that’s basically the worst of socialism and the worst of capitalism conjoined—plutocratic and sclerotic, overregulated and undertaxed, with an upper class enriching itself off rents rather than innovation and a service class that can’t advance beyond its station. The overlap between this more libertarian argument and the left-wing critique of neoliberalism is apparent in one of the urtexts of the post–financial crisis left: French economist Thomas Piketty’s 2013 tome Capital in the Twenty-First Century, which mined centuries’ worth of statistics to argue that capitalism inherently makes the rich richer (because returns on capital will always be higher than simple economic growth) unless some powerful force intervenes. The forces that intervened in the twentieth century were the Great Depression and two world wars, which not only provided the impetus for massive government interventions in the economy but also destroyed outright a great deal of capitalist wealth, leading to a temporary golden age for the Western middle classes.

A 2017 paper found that companies in younger labor markets are more innovative; a 2018 report found that the aging of society helped explain the growth of monopolies and the declining rate of start-ups. Another paper in the same year found “a clear relationship between an older workforce and lower productivity,” suggesting a demographic explanation for the persistent decline of productivity growth. The empty cradle helps explain the growth of inequality as well. In Piketty’s Capital in the Twenty-First Century, his vision of the permanent triumph of the one percent depends heavily on the assumption that slow population growth will inevitably lead to slower growth overall—and, more subtly, on the fact that fewer children means fewer heirs to divide up family wealth. The narrowing of family trees ensures that fortunes will grow ever more concentrated instead of diffusing with each successive generation, as they would in a society where more wealthy people had more than just two kids.

.), 155, 156, 160 Bentham, Jeremy, 144 Bernanke, Ben, 84 Better Angels of Our Nature, The (Pinker), 165 Between the World and Me (Coates), 97 Bezos, Jeff, 213 bipartisanship, 68, 76–77, 82, 171 birthrates, 202 in Africa, 197, 198, 207 of American Jews, 222 in Israel, 50, 54, 217 birthrates, decline in, 27, 46, 47–65, 166–67, 180, 236 contributing factors in, 50–56 in dystopian fiction of Atwood and James, 47–50 economic consequences of, 56–58 innovation and, 57–58 in Islamic world, 161 mass immigration as solution to economic problems of, 62–65 psychological consequences of, 61–62 recessions and, 51 replacement rate and, 50, 53–54, 58, 63 shrinking families and, 58–62 welfare states and, 51, 52 Black Death, 190 Black Panther (film), 209–10 Blade Runner: 2049 (film), 94 Bloom, Allan, 97 Bloom, Harold, 224 Bloomberg, Michael, 143 Bloomberg BusinessWeek, 43 Bork, Robert, 78 brain drain, 171 Brave New World (Huxley), 127–28, 151, 184–85 Brazil, economic growth in, 166–67 Brexit, 63, 64, 85, 114, 172, 193 Great Recession and, 193 immigration and, 196 Brookings Institution, 71 Brown, Peter, 223 Brown, Scott, 67 Buckley, William F., 97 Buddhism, 225 Bundy, Ted, 119, 120 Bush, George H. W., 71 Bush, George W., 71, 80 Byzantium, 201 Caldwell, Christopher, 84 Canada, birthrate in, 50 cancer, 211 Capital in the Twenty-First Century (Piketty), 30–31, 57–58 capitalism, 32, 181, 218 neo-Marxist critique of, 219–21 Piketty’s theory of, 30–31 rentier class and, 26, 30–31, 46 captured economies, 30 Carr, Nicholas, 107 Carter, Jimmy, 24 Carter presidency, 25–26 catastrophe, 189–203 climate change scenario for, 195–97, 200 economic scenario for, 191–95, 200 mass migration scenario for, 197–99, 200 unforeseen, 189–91, 202 Catholics, Catholicism, 103, 156, 183, 227 decline in church attendance by, 100 lapsed, 218 liberal, 110 traditionalist, 206–7, 208 Vendée massacre of, 206 Cavafy, C.


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An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy by Marc Levinson

affirmative action, airline deregulation, banking crisis, Big bang: deregulation of the City of London, Boycotts of Israel, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, car-free, Carmen Reinhart, central bank independence, centre right, clean water, deindustrialization, endogenous growth, falling living standards, financial deregulation, floating exchange rates, full employment, George Gilder, Gini coefficient, global supply chain, income inequality, income per capita, indoor plumbing, informal economy, intermodal, invisible hand, Kenneth Rogoff, knowledge economy, late capitalism, linear programming, manufacturing employment, new economy, Nixon shock, North Sea oil, oil shock, Paul Samuelson, pension reform, price stability, purchasing power parity, refrigerator car, Right to Buy, rising living standards, Robert Gordon, rolodex, Ronald Coase, Ronald Reagan, Simon Kuznets, statistical model, strikebreaker, structural adjustment programs, The Rise and Fall of American Growth, Thomas Malthus, total factor productivity, unorthodox policies, upwardly mobile, War on Poverty, Washington Consensus, Winter of Discontent, Wolfgang Streeck, women in the workforce, working-age population, yield curve, Yom Kippur War, zero-sum game

Mizoguchi, “Long-run Fluctuations in Income Distribution in Japan,” Economic Review 37 (1986): 152–158, cited in Toshiaki Tachibanaki, Confronting Income Inequality in Japan (Cambridge, MA: MIT Press, 2005), 59. 4. Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez, “The Top 1% in International and Historical Perspective,” Journal of Economic Perspectives 27 (2013): 7; Richard T. Griffiths, “Economic Growth and Overfull Employment in Western Europe,” in Richard T. Griffiths and Toshiaki Tachibanaki, eds., From Austerity to Affluence: The Transformation of the Socio-Economic Structure of Western Europe and Japan (New York: St. Martin’s Press, 2000), 68–72; Takenori Inoki, “From Rapid Growth to the End of Full Employment in Japan,” in Griffiths and Tachibanaki, eds., From Austerity to Affluence, 87. 5. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). 6. Carmen DeNavas-Walt, Bernadette D.

In some cases, national union leaders even bargained with the heads of business organizations and government officials to set the share of national income that would be paid out in workers’ wages and the share that would be paid out in profits, evening out the distribution of income by limiting the amount that could go to corporate shareholders or the owners of small businesses.4 But as the economist Thomas Piketty has shown, one of the most significant causes of greater equality in the postwar world had less to do with economic policy than with tragedy. World War II destroyed massive amounts of capital: apartments, shops, office blocks, and factories were blown to bits, along with production machinery and household furnishings. Even those business firms whose assets were not destroyed or confiscated saw their profits hurt by price controls, shortages of raw materials, and the financial problems of their customers.


pages: 596 words: 163,682

The Third Pillar: How Markets and the State Leave the Community Behind by Raghuram Rajan

activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, airline deregulation, Albert Einstein, Andrei Shleifer, banking crisis, barriers to entry, basic income, battle of ideas, Bernie Sanders, blockchain, borderless world, Bretton Woods, British Empire, Build a better mousetrap, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, computer vision, conceptual framework, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, data acquisition, David Brooks, Deng Xiaoping, desegregation, deskilling, disruptive innovation, Donald Trump, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, global supply chain, high net worth, housing crisis, illegal immigration, income inequality, industrial cluster, intangible asset, invention of the steam engine, invisible hand, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, labor-force participation, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South China Sea, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, superstar cities, The Future of Employment, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transaction costs, transfer pricing, Travis Kalanick, Tyler Cowen: Great Stagnation, universal basic income, Upton Sinclair, Walter Mischel, War on Poverty, women in the workforce, working-age population, World Values Survey, Yom Kippur War, zero-sum game

“Academic Ranking of World Universities, 2017,” Shanghai Rankings (website), accessed August 7, 2018, http://www.shanghairanking.com/ARWU2017.html. 30. “Table 326.10,” Digest of Education Statistics, National Center for Education Statistics, accessed August 7, 2018, https://nces.ed.gov/programs/digest/d16/tables/dt16_326.10.asp. 31. See Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118, no. 1 (2003): 1–41; Anthony Atkinson, Thomas Piketty, and Emmanuel Saez, “Top Incomes in the Long Run of History,” Journal of Economic Literature 49, no. 1 (2011): 3–71; Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2014). 32. Piketty, Capital. 33. Tobias Buck, “German Inheritance Wave Stokes Fears over Inequality,” Financial Times, May 2, 2018. https://www.ft.com/content/894689c2-4933-11e8-8ee8-cae73aab7ccb; “Taxing inheritances is falling out of favour,” The Economist, November 23, 2017, https://www.economist.com/briefing/2017/11/23/taxing-inheritances-is-falling-out-of-favour?

With higher-than-warranted demand for job candidates with degrees and lower-than-desirable demand for candidates with high school diplomas, it is less surprising that the wage premium in the United States is higher than elsewhere despite the high average years of education. THE ONE PERCENT AND THE WINNER-TAKE-MOST EFFECTS OF TECHNOLOGY While incomes for those with a bachelor’s degree, especially in technology and engineering, have grown relative to the rest, incomes at the very top have truly exploded in a number of countries. As economists Thomas Piketty and Emmanuel Saez have documented in various studies, in the United States, the top 1 percent of earners took only 8 percent of total income in 1970, but this grew to 18 percent by 2010.31 In the United Kingdom, starting from similar shares in 1970, the top 1 percent earned about 15 percent of total income by 2010. Such an explosion of the incomes of the rich has not happened in continental Europe.32 Each year, the top 1 percent have earned about 8 percent of total income in France since 1950, and about 11 percent in Germany over that period with little variation.


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Doing Good Better: How Effective Altruism Can Help You Make a Difference by William MacAskill

barriers to entry, basic income, Black Swan, Branko Milanovic, Cal Newport, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Brooks, effective altruism, en.wikipedia.org, end world poverty, experimental subject, follow your passion, food miles, immigration reform, income inequality, index fund, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, job automation, job satisfaction, Lean Startup, M-Pesa, mass immigration, meta analysis, meta-analysis, microcredit, Nate Silver, Peter Singer: altruism, purchasing power parity, quantitative trading / quantitative finance, randomized controlled trial, self-driving car, Skype, Stanislav Petrov, Steve Jobs, Steve Wozniak, Steven Pinker, The Future of Employment, The Wealth of Nations by Adam Smith, universal basic income, women in the workforce

References to the 1 percent versus the 99 percent—i.e., the rest of the population—quickly became shorthand for the income gap in America. Inequality in America is getting starker over time: while typical household income grew by less than 40 percent between 1979 and 2007, the income of the richest 1 percent grew by 275 percent in that same time period. The French economist Thomas Piketty, who gained international fame for his 2014 book Capital in the Twenty-First Century, has suggested that the level of income inequality in the United States is “probably higher than in any other society at any time in the past, anywhere in the world.” This can lead those of us who aren’t in that 1 percent to feel powerless, but this focus neglects just how much power almost any member of an affluent country has. If people focus exclusively on American inequality, they’re missing an important part of the bigger picture.

In an effort to avoid technical vocabulary whenever possible, throughout this book I use “typical” to refer to “median,” and “average” to refer to “mean.” while typical household income: Congressional Budget Office, Trends in the Distribution of Household Income Between 1979 and 2007, October 2011, http://www.cbo.gov/sites/default/files/10-25-HouseholdIncome_0.pdf. “probably higher than in any other society”: Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), 265. Consider this graph of global income distribution: The data on world income distribution is drawn from several sources. The figures for between the richest 1 percent and the richest 21 percent are based on microdata from national household surveys carried out in 2008, kindly provided by Branko Milanovic. The figures for the poorest 73 percent are based on the 2008 data from PovcalNet (http://iresearch.worldbank.org/PovcalNet/index.htm?


pages: 263 words: 80,594

Stolen: How to Save the World From Financialisation by Grace Blakeley

"Robert Solow", activist fund / activist shareholder / activist investor, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, basic income, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Bretton Woods, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, cryptocurrency, currency peg, David Graeber, debt deflation, decarbonisation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, full employment, G4S, gender pay gap, gig economy, Gini coefficient, global reserve currency, global supply chain, housing crisis, Hyman Minsky, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), Kenneth Rogoff, Kickstarter, land value tax, light touch regulation, low skilled workers, market clearing, means of production, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, Northern Rock, offshore financial centre, paradox of thrift, payday loans, pensions crisis, Ponzi scheme, price mechanism, principal–agent problem, profit motive, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Right to Buy, rising living standards, risk-adjusted returns, road to serfdom, savings glut, secular stagnation, shareholder value, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, the built environment, The Great Moderation, too big to fail, transfer pricing, universal basic income, Winter of Discontent, working-age population, yield curve, zero-sum game

Democratising our economic institutions will ensure that finance comes to work in the interests of society as a whole, rather than just a privileged elite. Socialising finance will steadily erode the distinction between owners and workers and, before long, will allow us to transcend capitalism altogether. If history has a sense of humour, then the death of capitalism will begin where it was born — in the United Kingdom. Capital In 2013, 146 years after Marx published his work of the same name, Thomas Piketty published Capital in the Twenty-First Century.1 It was an instant hit, though few made it past the introduction. In Capital, Piketty argued that the central problem of our time was the tendency for the returns to wealth to outstrip economic growth. Because wealth is highly unequally distributed in capitalist systems, this tendency leads to increasing inequality. The only respite was the “golden age” of capitalism during the post-war period, when the combination of the destruction of the war and the politics of the post-war consensus created a significant dent in wealth inequality.

An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change sustainable development, and efforts to eradicate poverty”. Chapter Seven The Way Forward 1 This account draws on: Piketty (2013); Hudson, P. and Tribe, K. (2017) The Contradictions of Capital in the Twenty-First Century, London: Agenda; Harvey, D. (2014) “Afterthoughts on Piketty’s Capital”, http://davidharvey.org/2014/05/afterthoughts-pikettys-capital/; Mandel (1976; 1981); Harvey (2018). 2 This account draws on: Marx (1894); Mandel (1981) 3 See, e.g., Autor, D. and Dord, D. (2012) “The Growth of Low Skill Service Jobs and the Polarisation of the US Labour Market”, MIT Department of Economics. 4 This account draws on: Mazzucato, M. (2011) The Entrepreneurial State: Debunking Public vs Private Sector Myths, London: Anthem; Mazzucato, M. (2015) “The Market Creating State”, RSA Journal, vol. 2. 5 Srnicek N. and Williams A. (2016) Inventing the Future: Postcapitalism and a World Without Work, London: Verso. 6 Eagleton, O. (2017) “Criminalising Anti-Austerity in Ireland”, Jacobin, 21 April. 7 This account draws on: Baker, A. (2013) “The New Political Economy of the Macroprudential Ideational Shift”, New Political Economy, vol. 18. https://www.tandfonline.com/doi/abs/10.1080/13563467.2012.662952; Galati, G. and Moessner, R. (2011) “Macroprudential Policy — A Literature Review”, BIS Working Paper 337; Blanchard, O., Rajan, R., Rogoff and Summers (2016); Bank of England (2009) “The Role of Macroprudential Policy: A Discussion Paper” http://www.bankofengland.co.uk/publications/other/financialstability/roleofmacroprudentialpolicy091121.pdf; Kregel, J. (2014) “Minsky and Dynamic Macroprudential Regulation”, Levy Economics Institute Public Policy Brief No. 131. 8 This account draws on: Blakeley (2018a) 9 Haldane, A. (2012) “The Dog and the Frisbee”, speech given at the Federal Reserve Bank of Kansas City’s 36th economic policy symposium, 31 August. 10 IPPR (2018) 11 See, e.g., Stirling, A. (2018) “Just About Managing Demand: Reforming the UK’s Macroeconomic Policy Framework”, IPPR. 12 See, e.g., Roberts, C. and Lawrence, M. (2018) “Our Common Wealth: A Citizens’ Wealth Fund for the UK”, IPPR. 13 See, e.g., Murphy, R. (2017) Dirty Secrets: How Tax Havens Destroy the Economy, London: Verso ACKNOWLEDGEMENTS Writing a book is hard.

Since the 1970s, capital has become much more powerful than labour in Anglo-America.25 In the post-war period, strong labour unions and state commitments to maintaining full employment meant that workers could demand wage increases that were in line with productivity. As a result of the increase in the power of labour relative to that of capital, labour got its way. But this was an historically unusual situation — as Thomas Piketty points out, the “golden age” of capitalism was the exception, not the rule. After the 1970s, rising capital mobility, financial deregulation, and changing models of corporate governance have increased the power of shareholders — particularly big investors — in the management of corporations. Workers have been disempowered through simultaneous anti-union legislation and the reversal of the Keynesian economic policy which provided for full employment.


pages: 318 words: 77,223

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse by Mohamed A. El-Erian

activist fund / activist shareholder / activist investor, Airbnb, balance sheet recession, bank run, barriers to entry, break the buck, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, collapse of Lehman Brothers, corporate governance, currency peg, disruptive innovation, Erik Brynjolfsson, eurozone crisis, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, friendly fire, full employment, future of work, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, inflation targeting, Jeff Bezos, Kenneth Rogoff, Khan Academy, liquidity trap, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, Norman Mailer, oil shale / tar sands, price stability, principal–agent problem, quantitative easing, risk tolerance, risk-adjusted returns, risk/return, Second Machine Age, secular stagnation, sharing economy, sovereign wealth fund, The Great Moderation, The Wisdom of Crowds, too big to fail, University of East Anglia, yield curve, zero-sum game

Federal Reserve Board of Governors, “Changes in US Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin 100, no. 4 (September 2014), http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf. 6. Rakesh Kochhar and Richard Fry, “Wealth Inequality Has Widened Along Racial, Ethnic Lines Since the End of the Great Recession,” Pew Research Center, December 12, 2014, http://www.pewresearch.org/fact-tank/2014/12/12/racial-wealth-gaps-great-recession/. 7. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014). 8. Mohamed A. El-Erian, “The Inequality Trifecta,” Project Syndicate, October 17, 2014, http://www.project-syndicate.org/commentary/imf-world-bank-annual-meetings-and-inequality-by-mohamed-a--el-erian-2014-10. 9. Madeline Ostrander, “What Poverty Does to the Young Brain,” New Yorker, June 4, 2015, http://www.newyorker.com/tech/elements/what-poverty-does-to-the-young-brain. 10.

As noted earlier, the expansion of their balance sheets has tended to support the wealthy since the latter hold a disproportionately large share of the financial assets being targeted for support by central bank action. Given all this, it should come as no surprise that there is now quite a bit of general interest in the matter. Recall how in 2014 a big economic tome (almost seven hundred pages, including research analysis and historical insights) on inequality by French economist Thomas Piketty shot up to the top of bestseller lists, triggering lots of discussions, panels, and interviews in the process.7 At the 2014 IMF–World Bank Annual Meeting in Washington, D.C., inequality was the most common topic in seminars organized by the official sector, industry groups, and think tanks. There is also a growing realization that the effects of inequality may well have evolved beyond questions of fairness, and beyond the threats it poses to social, geopolitical, and political well-being: Inequality also creates adverse economic feedback loops that make it much harder for the advanced countries to emerge from their generalized economic malaise.


Deep Work: Rules for Focused Success in a Distracted World by Cal Newport

8-hour work day, Albert Einstein, barriers to entry, business climate, Cal Newport, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, David Brooks, David Heinemeier Hansson, deliberate practice, disruptive innovation, Donald Knuth, Donald Trump, Downton Abbey, en.wikipedia.org, Erik Brynjolfsson, experimental subject, follow your passion, Frank Gehry, informal economy, information retrieval, Internet Archive, Jaron Lanier, knowledge worker, Mark Zuckerberg, Marshall McLuhan, Merlin Mann, Nate Silver, new economy, Nicholas Carr, popular electronics, remote working, Richard Feynman, Ruby on Rails, Silicon Valley, Silicon Valley startup, Snapchat, statistical model, the medium is the message, Watson beat the top human players on Jeopardy!, web application, winner-take-all economy, zero-sum game

The New Yorker, January 29, 2010, http://www.newyorker.com/online/blogs/georgepacker/2010/01/stop-the-world.html. The Metric Black Hole “A ‘free and frictionless’ method of communication” and other details of Tom Cochran’s e-mail experiment: Cochran, Tom. “Email Is Not Free.” Harvard Business Review, April 8, 2013. http://blogs.hbr.org/2013/04/email-is-not-free/. “it is objectively difficult to measure individual”: from page 509 of Piketty, Thomas. Capital in the Twenty-First Century. Cambridge, MA: Belknap Press, 2014. “undoubtedly true”: Manzi, Jim. “Piketty’s Can Opener.” National Review, July 7, 2014. http://www.nationalreview.com/corner/382084/pikettys-can-opener-jim-manzi. This careful and critical review of Piketty’s book by Jim Manzi is where I originally came across the Piketty citation. The Principle of Least Resistance “At first, the team resisted”; “putting their careers in jeopardy”; and “a better product delivered to the client” as well as a good summary of Leslie Perlow’s connectivity research can be found in Perlow, Leslie A., and Jessica L.

This example generalizes to most behaviors that potentially impede or improve deep work. Even though we abstractly accept that distraction has costs and depth has value, these impacts, as Tom Cochran discovered, are difficult to measure. This isn’t a trait unique to habits related to distraction and depth: Generally speaking, as knowledge work makes more complex demands of the labor force, it becomes harder to measure the value of an individual’s efforts. The French economist Thomas Piketty made this point explicit in his study of the extreme growth of executive salaries. The enabling assumption driving his argument is that “it is objectively difficult to measure individual contributions to a firm’s output.” In the absence of such measures, irrational outcomes, such as executive salaries way out of proportion to the executive’s marginal productivity, can occur. Even though some details of Piketty’s theory are controversial, the underlying assumption that it’s increasingly difficult to measure individuals’ contributions is generally considered, to quote one of his critics, “undoubtedly true.”

Of course, just because it’s hard to measure metrics related to deep work doesn’t automatically lead to the conclusion that businesses will dismiss it. We have many examples of behaviors for which it’s hard to measure their bottom-line impact but that nevertheless flourish in our business culture; think, for example, of the three trends that opened this chapter, or the outsize executive salaries that puzzled Thomas Piketty. But without clear metrics to support it, any business behavior is vulnerable to unstable whim and shifting forces, and in this volatile scrum deep work has fared particularly poorly. The reality of this metric black hole is the backdrop for the arguments that follow in this chapter. In these upcoming sections, I’ll describe various mind-sets and biases that have pushed business away from deep work and toward more distracting alternatives.


pages: 354 words: 92,470

Grave New World: The End of Globalization, the Return of History by Stephen D. King

9 dash line, Admiral Zheng, air freight, Albert Einstein, Asian financial crisis, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Sanders, bilateral investment treaty, bitcoin, blockchain, Bonfire of the Vanities, borderless world, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collateralized debt obligation, colonial rule, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, debt deflation, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Snowden, eurozone crisis, facts on the ground, failed state, Fall of the Berlin Wall, falling living standards, floating exchange rates, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, global value chain, hydraulic fracturing, Hyman Minsky, imperial preference, income inequality, income per capita, incomplete markets, inflation targeting, information asymmetry, Internet of things, invisible hand, joint-stock company, Kickstarter, Long Term Capital Management, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, moral hazard, Nixon shock, offshore financial centre, oil shock, old age dependency ratio, paradox of thrift, Peace of Westphalia, plutocrats, Plutocrats, price stability, profit maximization, quantitative easing, race to the bottom, rent-seeking, reserve currency, reshoring, rising living standards, Ronald Reagan, Scramble for Africa, Second Machine Age, Skype, South China Sea, special drawing rights, technology bubble, The Great Moderation, The Market for Lemons, the market place, The Rise and Fall of American Growth, trade liberalization, trade route, Washington Consensus, WikiLeaks, Yom Kippur War, zero-sum game

Subdued labour incomes – thanks to a mixture of weak demand, technological change and competition from cheaper labour elsewhere in the world – meant that gains in sales revenues alone led to higher corporate profits; higher profits, in turn, fed through to further stock market gains, even in the absence of a recovery in investment. For both the owners and managers of companies, this appeared to be a case of ‘heads I win, tails you lose’, triggering much gnashing of teeth and, not surprisingly, a renewed interest in the causes of, and the cures for, rising income inequality. Not for nothing did Thomas Piketty’s Capital in the Twenty-First Century become a New York Times bestseller. Piketty made the strong claim that the rate of return on capital was – in the absence of wars and revolutions – always likely to be higher than the rate of economic growth: the implication was simply that the already well-off – basically those with no shortage of capital – would steadily get richer, a conclusion that appeared very much to be playing out before our eyes.

(i), (ii), (iii), (iv), (v) Byzantium (i) Cabinet (UK) (i) California (i), (ii) caliphates (i), (ii), (iii) Callaghan, Jim (i), (ii) Cameron, David (i) Canada a reputable country (i) Asian Development Bank and (i) closes gap on US (i) Irish emigrate to (i), (ii) North America Free Trade Agreement (i), (ii) TPP (i) Cape of Good Hope (i) capital, mobility of (i), (ii), (iii), (iv) see also cross-border capital flow Capital in the Twenty-First Century (Thomas Piketty) (i) capitalism communism and (i) free-market capitalism (i), (ii), (iii), (iv) Fukuyama’s disciples on (i) Steffens and Shaw on (i) US economic model and (i) Caribbean (i) Carter, Jimmy (i) Castillon, Battle of (i) Castro, Fidel (i) Catherine of Aragon (i) Catherine the Great (i) Catholics (i), (ii), (iii) Caucasus (i), (ii) Central African Republic (i), (ii) Central America (i) Central Asia (i), (ii), (iii) see also Asia central banks (i), (ii) see also bankers inflation targets (i) Kosmos (i) price distortion (i) printing money (i), (ii) quantitative easing (i), (ii), (iii) zero interest rates and (i) Chad (i) Chechens (i) checks and balances (i), (ii) Chile (i) China (i), (ii), (iii), (iv) 1980 emergence (i) ageing population (i) attracting Western investment (i) balance of payments surplus (i) boom to slowdown (i) Brazil and (i) British in (i) Coca-Cola and (i) demand for German goods (i) Deng Xiaoping (i) Disney and (i) economic resurgence (i), (ii) excess capital in US (i) foreign capital for (i) iPhones (i) Japan and (i) living standards (i) military spending (i) OECD and (i) per capita incomes (i), (ii) ratifies Paris climate deal (i) rise of renminbi (i), (ii) Russia threatens (i) South China Sea and neighbour disputes (i) TPP and (i) treaty ports (i) Trump’s protectionism and (i) US tries to contain (i), (ii), (iii) Chongqing (i), (ii) Christianity (i), (ii), (iii), (iv), (v) Churchill, Winston (i), (ii), (iii), (iv)n1 CIA (i) Ciudadanos (i) Cleveland, Grover (i) climate change (i), (ii) Clinton, Hillary 2016 campaign (i) Bernie Sanders opposes (i) concerns of supporters (i) rejects TPP (i), (ii) Syria (i) wins Democrat nomination (i) clubs (i), (ii) Cobden, Richard (i), (ii), (iii) Coca-Cola (i) ‘coffin ships’ (i) Cold War binary rivalry, a (i) economic differences (i) end of (i), (ii) globalization and (i) NATO and (i) Soviet living standards (i) collateralized debt obligations (CDOs) (i) Collins, Philip (i) Columbus, Christopher (i), (ii), (iii) commodity markets (i), (ii), (iii) common sense (i) Commonwealth (i) communism Berlin Wall and (i) capitalism and (i) Cuba (i) Marx’s stages (i) Shaw extols (i) Soviet Union collapse and (i), (ii) Como, Lake (i) Comptoir National d’Escompte de Paris (i) Concert of Europe (i) Congo (i) Congress (US) 1933 banking crisis (i) American public’s confidence in (i) Bush Jnr on terrorism (i) Immigration Act 1917 (i) Japanese sanctions (i), (ii) Smoot–Hawley tariff (i) Congress of Vienna (i), (ii), (iii), (iv) Connally, John (i) Conolly, Arthur (i) Conservative Party (i), (ii) Constantinople (i), (ii) Constitutional Tribunal (Poland) (i) ‘Convention of Peking’ (i) Convention on the International Regulations for Preventing Collisions at Sea (i) Corbyn, Jeremy (i), (ii) Córdoba (i), (ii) corporate scandals (i) Corroyer, Edouard (i) Court of Cassation (Egypt) (i) Crécy, Battle of (i) Creole languages (i) Crimea (i), (ii) Crimean War (19th century) (i) crop yields (i) cross-border capital flow allocation of resources and (i) emerging markets and (i), (ii) extraordinary growth of (i), (ii), (iii) globalization dominated by (i) inequality and (i) Varoufakis tries to limit (i) Cuba (i) Czech Republic (i) Czechoslovakia (i) Darius the Great (i) Darwin, Charles (i) Davos (i), (ii) de Gaulle, Charles (i), (ii) debt (i) Africa (i) China (i) debt to income ratios (i) government debt (i) Latin America (i) low inflation and (i) deflation (i), (ii), (iii), (iv) Delhi (i) demand management (i), (ii) Democratic Party (US) (i), (ii) Democratic Republic of the Congo (i) Denfert-Rochereau, Eugène (i) Deng Xiaoping (i), (ii), (iii), (iv) Denmark (i), (ii) Department of Housing and Urban Development (US) (i) deposit insurance (i) devaluation 1930s (i), (ii), (iii) dollars, gold and (i) Eisenhower and Britain (i) franc (i) right conditions for (i) Diaoyu (i) Disney (i), (ii) Doha Round (i) dollar (US) see American dollar Dow Jones Industrial Average (i) Draghi, Mario (i) Duisburg (i) Duterte, Rodrigo (i), (ii) DVDs (i) East Africa (i) see also Africa Eastern Europe EU and its effects (i) importing democracy (i) joining the EU (i), (ii) Molotov–Ribbentrop Pact (i) New World emigration (i) Ottoman Empire and (i) Soviet communism and (i), (ii), (iii) ‘Economic Theory of Clubs’ (James Buchanan) (i) Ecuador (i) Eden, Anthony (i), (ii) Edison, Thomas (i) Edison Electric (i) educational attainment (i) Edward VI, King (i) Egypt (i), (ii), (iii) Einstein, Albert (i) Eisenhower, Dwight D.

Financial Flows and the International Monetary System, National Bureau of Economic Research Working Paper No. 21172, Cambridge, MA, May 2015 Petri, P. and M. Plummer. The Economic Effects of the Trans-Pacific Partnership: New estimates, Peterson Institute for International Economics Working Paper 16-2, Washington, DC, January 2016 Pettis, M. The Great Rebalancing: Trade, conflict and the perilous road ahead for the world economy, Princeton University Press, Princeton, NJ, 2013 Piketty, T. Capital in the Twenty-First Century, trans. A. Goldhammer, Belknap Press, Cambridge, MA, 2014 Pinker, S. and A. Mack. ‘The world is not falling apart’, Slate, 2014, available at: http://www.slate.com/articles/news_and_politics/foreigners/2014/12/the_world_is_not_falling_apart_the_trend_lines_reveal_an_increasingly_peaceful.html Rachman, G. Zero-Sum World: Politics, power and prosperity after the crash, Atlantic Books, London, 2010 Rachman, G.


pages: 442 words: 130,526

The Billionaire Raj: A Journey Through India's New Gilded Age by James Crabtree

accounting loophole / creative accounting, Asian financial crisis, Big bang: deregulation of the City of London, Branko Milanovic, business climate, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial rule, Commodity Super-Cycle, corporate raider, creative destruction, crony capitalism, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, facts on the ground, failed state, Francis Fukuyama: the end of history, global supply chain, Gunnar Myrdal, income inequality, informal economy, Joseph Schumpeter, liberal capitalism, Mahatma Gandhi, McMansion, megacity, New Urbanism, offshore financial centre, open economy, Parag Khanna, Pearl River Delta, plutocrats, Plutocrats, Ponzi scheme, quantitative easing, rent-seeking, Rubik’s Cube, Silicon Valley, Simon Kuznets, smart cities, special economic zone, spectrum auction, The Great Moderation, Thomas L Friedman, transaction costs, trickle-down economics, Washington Consensus, WikiLeaks, yellow journalism, young professional

Then there were other trends, for instance a growing gap between richer parts of India, such as Kerala in the south, and poorer areas like the heartland state of Bihar.47 Tens of millions more people could have been lifted from poverty, according to the Asian Development Bank, had these various kinds of inequality not increased so sharply.48 Most striking of all was a 2017 paper published by Thomas Piketty, whose opus Capital in the Twenty-First Century first raised worries about an era of renewed inequality across the industrialized world. Along with coauthor Lucas Chancel, Piketty compiled data from tax records to show that the share of national income taken by India’s top one percent was at its highest level since records began to be collected under the British Raj in 1922. In the West, the relative wealth of the ultra-rich dipped in the mid-twentieth century before bouncing back over the last two decades.

The average citizen earns less than $2,000 a year. To be counted among its richest one percent required assets of just $32,892, according to research from investment bank Credit Suisse in 2016.19 But that same one percent now owns more than half of national wealth, one of the highest rates in the world. The International Monetary Fund suggests that India, alongside China, now ranks as Asia’s most unequal major economy. Thomas Piketty, the French economist famous for his work on global inequality, has shown the share of Indian national income taken by the top one percent of income earners to be at its highest level since tax records began in 1922.20 On these measures, India should now rightly be viewed alongside South Africa and Brazil as one of the world’s least equal countries. Yet a strange intellectual consensus has often downplayed this conclusion.

Finally, and most troublingly, there was crony capitalism: the sectors dominated by the Bollygarchs, most of whom enjoyed deep connections with the state. A fierce battle was under way between them, Sinha said, and one whose outcome would define the kind of country India would become. An Unequal Fortune The rise of India’s billionaires mirrored changes that had swept through the world economy over recent decades, bringing with them new anxieties about inequality. Data compiled by Thomas Piketty showed the share of national wealth held by the richest Americans hitting levels not seen since the 1930s.31 A similar story was true in many advanced European economies. Yet while hedge fund magnates and Silicon Valley entrepreneurs came to represent the excesses of Western capitalism, it was in countries like India, with its newly powerful Bollygarch class, that the super-rich were expanding quickest of all.


pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril by Satyajit Das

"Robert Solow", 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Albert Einstein, Alfred Russel Wallace, Anton Chekhov, Asian financial crisis, banking crisis, Berlin Wall, bitcoin, Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, happiness index / gross national happiness, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, light touch regulation, liquidity trap, Long Term Capital Management, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, Mikhail Gorbachev, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, passive income, peak oil, peer-to-peer lending, pension reform, plutocrats, Plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Ronald Reagan, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, TaskRabbit, 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 market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

These included attractive women dressed as imperial concubines, discounts for people who lost weight, and appeals to patriotism. The most novel involved the offer of 1,000 free live chickens to prospective customers. After a desperate scramble by locals, only chicken feathers and a few lost shoes were left. It was an apt postscript to the latest installment in the rise and fall of emerging markets. In 2014, Thomas Piketty, a French economics professor, had an unexpected bestseller with the English translation of Capital in the Twenty-First Century. Self-consciously evoking Karl Marx, the 700-page book analyzed income and wealth distribution. Like Casablanca's Captain Renault, who was shocked to find that gambling was going on under his nose, the world appeared surprised that inequality was increasing and that capitalism concentrates wealth over time. Not everyone agreed with the conclusion.

Nicholas Stern, The Economics of Climate Change: The Stern Review, Cambridge University Press, 2007. Alan Weisman, The World without Us, Picador, 2007. Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power, Touchstone Books, 1991. ——, The Quest: Energy, Security, and the Remaking of the Modern World, Penguin, 2011. Inequality and Trust Geoffrey Hosking, Trust: A History, Oxford University Press, 2014. Thomas Piketty, Capital in the Twenty-First Century, Belknap Press, 2014. Richard Wilkinson and Kate Pickett, The Spirit Level: Why Greater Equality Makes Societies Stronger, Bloomsbury Press, 2011. Satyajit Das is a globally respected former banker and consultant with over thirty-five years’ experience in financial markets. He presciently anticipated, as early as 2006, the Global Financial Crisis and the subsequent sovereign debt problems, as well as the unsustainable nature of China's economic success.


pages: 626 words: 167,836

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

Lindert and Williamson, 2016, Unequal Gains, table 7-2. 65. I. Fisher, 1919, “Economists in Public Service: Annual Address of the President,” American Economic Review 9 (1): 10 and 16. 66. T. Piketty, 2014, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press). 67. W. Scheidel, 2018, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century (Princeton, NJ: Princeton University Press). 68. On financial occupations, see Lindert and Williamson, 2016, Unequal Gains, figure 8-3. 69. Piketty, 2014, Capital in the Twenty-First Century, 506–7. 70. C. Goldin and R. A. Margo, 1992, “The Great Compression: The Wage Structure in the United States at Mid-Century,” Quarterly Journal of Economics 107 (1): 1–34. 71. H. S. Farber, D. Herbst, I.

Lindert, 2000b, “When Did Inequality Rise in Britain and America?,” Journal of Income Distribution 9 (1): 11–25. 5. H. A. Taine, 1958, Notes on England, 1860–70, trans. E. Hyams (London: Strahan), 181. See also Cannadine, 1977, “The Landowner as Millionaire.” 6. See P. H. Lindert, 1986, “Unequal English Wealth since 1670,” Journal of Political Economy 94 (6): 1127–62. 7. T. Piketty, 2014, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press), figure 3.1. 8. See, for example, C. Boix, and F. Rosenbluth, 2014, “Bones of Contention: The Political Economy of Height Inequality,” American Political Science Review 108 (1): 1–22. 9. J. Diamond, 1987, “The Worst Mistake in the History of the Human Race,” Discover, May 1, 64–66. 10. See J. J. Rousseau, [1755] 1999, Discourse on the Origin of Inequality (New York: Oxford University Press). 11.

“The Cotton Harvester in Retrospect: Labor Displacement or Replacement?” Journal of Economic History 46 (1): 199–216. Phelps, E. S. 2015. Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change. Princeton, NJ: Princeton University Press. Phyllis, D., and W. A. Cole. 1962. British Economic Growth, 1688–1959: Trends and Structure. Cambridge: Cambridge University Press. Piketty, T. 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. Piketty, T. 2018. “Brahmin Left vs. Merchant Right: Rising Inequality and the Changing Structure of Political Conflict.” Working paper, Paris School of Economics. Piketty, T., and E. Saez. 2003. “Income Inequality in the United States, 1913–1998.” Quarterly Journal of Economics 118 (1): 1–41. Polanyi, M. 1966. The Tacit Dimension. New York: Doubleday.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

asset allocation, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamonds, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, financial innovation, Flash crash, forward guidance, Gini coefficient, global reserve currency, high net worth, High speed trading, hindsight bias, income inequality, inflation targeting, interest rate swap, Isaac Newton, Jaron Lanier, joint-stock company, joint-stock limited liability company, Kodak vs Instagram, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Plutocrats, Ponzi scheme, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trickle-down economics, Washington Consensus, wealth creators, working poor, yield curve

From there, it is a short move towards the politics of economics, maybe beginning with Ha-Joon Chang’s 23 Things They Don’t Tell You about Capitalism, a highly effective account of the arguments and evidence against neoliberal free-market orthodoxies. A number of very good recent books look at the effect of these policies in terms of their impact at the top end of the income distribution, and the consequences of that inequality for everyone else: Chrystia Freedland’s Plutocrats, Robert Frank’s Richistan, Jaron Lanier’s Who Owns the Future?, and George Packer’s The Unwinding. Spring 2014 saw the publication of Thomas Piketty’s masterpiece Capital in the Twenty-First Century, an important, powerful, and densly argued study of the shift in the balance of power between capital and labor. There is a notable gap in the market here: there are attacks on the existing neoliberal order, but there doesn’t seem to be a powerful popular counternarrative. It’s not as if there are no arguments on the economic and political right, and no one who believes and indeed acts on those arguments; but they aren’t well represented in book form.

Citizens for Tax Justice, an organization that advocates for a more progressive tax system, has estimated that, when federal, state and local taxes are taken into account, the top 1 percent paid only slightly more than 20 percent of all American taxes in 2010—about the same as the share of income they took home, an outcome that is not progressive at all. With such low effective tax rates—and, importantly, the low tax rate of 20 percent on income from capital gains—it’s not a huge surprise that the share of income going to the top 1 percent has doubled since 1979, and that the share going to the top 0.1 percent has almost tripled, according to the economists Thomas Piketty and Emmanuel Saez. Recall that the wealthiest 1 percent of Americans own about 40 percent of the nation’s wealth, and the picture becomes even more disturbing.64 prop trading In proprietary trading, banks bet their own money for their own benefit, as opposed to making such trading only on behalf of their clients. It is supposed to be banned by the forthcoming Volcker rule. quantitative easing (QE) An “unconventional” technique used by governments and central banks when interest rates are too low to go down any further, but the need for economic stimulus still exists.


pages: 370 words: 99,312

Can Democracy Work?: A Short History of a Radical Idea, From Ancient Athens to Our World by James Miller

Berlin Wall, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, colonial rule, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, Donald Trump, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, income inequality, Joseph Schumpeter, mass incarceration, means of production, Occupy movement, Ralph Waldo Emerson, Republic of Letters, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transatlantic slave trade, union organizing, upwardly mobile, Vilfredo Pareto

But nothing like that consistently democratic document has ever been implemented anywhere. In part, this failure has occurred because Condorcet’s constitution presupposes a shared commitment to forging a society of equals, and the trend toward ever greater levels of social and economic inequality in many advanced industrial countries today, as documented by the French economist Thomas Piketty in Capital in the Twenty-First Century, if left unchallenged, effectively nullifies such hopes. But the original revolutionary democratic project was also perverted when, in the hands of fanatics like Babeuf, Rigault, and Lenin, its partisans resorted to brute force and tried to level every single political opponent and institutional obstacle in its path. Václav Havel embraced a democratic revolution that was “self-limiting,” precisely because he had experienced, and abhorred, the historical alternative: “Censorship, the terror, and concentration camps are consequences of the same historical phenomenon that produced the collapsing centralized economy we inherited from communism.

If we abandon a virtue like truthfulness: In treating truthfulness as a virtue, I follow Bernard Williams, Truth and Truthfulness (Princeton: Princeton University Press, 2002). “I am convinced that we will never build a democratic state”: Havel, “Politics, Morals and Civility,” 18. “I feel that the dormant goodwill in people”: Ibid., 8–9. In part, this failure has occurred because Condorcet’s constitution: Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014). “Censorship, the terror, and concentration camps”: Havel, “What I Believe,” in Summer Meditations, 62–63. Through online platforms like Facebook: See Dipayan Ghosh and Ben Scott, Digital Deceit: The Technologies Behind Precision Propaganda on the Internet, January 23, 2018, https://www.newamerica.org/public-interest-technology/policy-papers/digitaldeceit; Tufekci, Twitter and Tear Gas; and Adrian Chen, “The Agency,” The New York Times Magazine, June 2, 2015, www.nytimes.com/2015/06/07/magazine/the-agency.html?

Anonymous (hacker collective) Antigone (Sophocles) Antipater antiwar movement antiwar protesters, Huntington reviled by Apprentice, The (TV show) Arab Spring Arendt, Hannah aristocracy, in ancient Athens Aristotle; Athenian political institutions described by; democracy criticized by; on elections vs. lotteries arms race Athenian democracy; Aeropagus in; Aristotle’s criticism of; Aristotle’s description of; Assembly (Ekklesia) in; civic tribes in; Cleisthenes and, see Cleisthenes; as community of self-governing citizens; concept of human rights as lacking in; conformity emphasized in; Council of 500 in; criteria for citizenship in; decline of; election of generals in; election of treasurers in; festivals in; in fourth century; jury system in; lotteries as defining feature of; Mytilene revolt and; nativism and; ostracism in; Pericles and, see Pericles; Plato’s criticism of; presupposed norms of; slavery and; Thucydides’ criticism of; as tyranny of the majority Athens, ancient: as aggressive regional power; aristocracy in; City Dionysia in; compulsory military service in; hegemony of; infantry of; military reforms in; naval powers of; plague in; population of; slaves in; Solon’s reforms and; Thirty Tyrants regime in; tyrants in; women in Atlantic Charter Attwood, Thomas Augustus, emperor of Rome Azoulay, Vincent Babeuf, Gracchus Babeuf’s Conspiracy for Equality (Buonarroti) Bakunin, Mikhail bandwagon effect Barber, Benjamin Barère, Bertrand Bartels, Larry Bastille; fall of Beaumont, Gustave de, at Albany Fourth of July celebration Berlin Wall, fall of Bernays, Edward; on public opinion Bernstein, Eduard Birmingham, England, Chartist Convention in Birmingham Political Union Bismarck, Otto von Black Lives Matter Blanqui, Auguste Blight, David Bodin, Jean Bolsheviks; soviet executive committees takeover by Bonaparte III, emperor of France Boston, Mass., French Revolution celebration in bounded rationality bourgeoisie Bowen, Sayles Jenks Brecht, Bertolt Brexit Brissot, Jacques-Pierre Brown, John Brunswick Manifesto Brussels Bryce, James Brzezinski, Zbigniew Buonarroti, Philippe Burckhardt, Jacob bureaucracies, power of Bush, George H. W. Bush, George W. California Democratic Council (CDC) Capital in the Twenty-First Century (Piketty) capitalism; democracy and; Marx’s predicted self-destruction of Carbonari Carlyle, Thomas Carter, Jimmy Cartledge, Paul Central Intelligence Agency (CIA) Chaerephon Chamberlain, Joseph Charles II, king of England Charmides Chartists; arrests and imprisonment of; Convention of; 1839 conventions of; electoral reforms demanded by; strikes and uprisings by; universal male suffrage as core principle of Cherokee nation Chicago, Ill., 1968 Democratic convention in Chickasaw nation Choctaw nation Chomsky, Noam Chronique de Paris Churchill, Winston Cimon City Dionysia civil disobedience civil liberties, Wilson’s suppression of civil rights movement Civil War, U.S.


pages: 918 words: 257,605

The Age of Surveillance Capitalism by Shoshana Zuboff

Amazon Web Services, Andrew Keen, augmented reality, autonomous vehicles, barriers to entry, Bartolomé de las Casas, Berlin Wall, bitcoin, blockchain, blue-collar work, book scanning, Broken windows theory, California gold rush, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, citizen journalism, cloud computing, collective bargaining, Computer Numeric Control, computer vision, connected car, corporate governance, corporate personhood, creative destruction, cryptocurrency, dogs of the Dow, don't be evil, Donald Trump, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, facts on the ground, Ford paid five dollars a day, future of work, game design, Google Earth, Google Glasses, Google X / Alphabet X, hive mind, impulse control, income inequality, Internet of things, invention of the printing press, invisible hand, Jean Tirole, job automation, Johann Wolfgang von Goethe, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, knowledge economy, linked data, longitudinal study, low skilled workers, Mark Zuckerberg, market bubble, means of production, multi-sided market, Naomi Klein, natural language processing, Network effects, new economy, Occupy movement, off grid, PageRank, Panopticon Jeremy Bentham, pattern recognition, Paul Buchheit, performance metric, Philip Mirowski, precision agriculture, price mechanism, profit maximization, profit motive, recommendation engine, refrigerator car, RFID, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Mercer, Second Machine Age, self-driving car, sentiment analysis, shareholder value, Shoshana Zuboff, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, slashdot, smart cities, Snapchat, social graph, social web, software as a service, speech recognition, statistical model, Steve Jobs, Steven Levy, structural adjustment programs, The Future of Employment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, two-sided market, union organizing, Watson beat the top human players on Jeopardy!, winner-take-all economy, Wolfgang Streeck

See, for example, Nicolas Berggruen and Nathan Gardels, Intelligent Governance for the 21st Century: A Middle Way Between West and East (Cambridge: Polity, 2013). 66. Hannah Arendt, The Origins of Totalitarianism (New York: Schocken, 2004), 615. 67. Theodor Adorno, “Education after Auschwitz,” in Critical Models: Interventions and Catchwords (New York: Columbia University Press, 1966). 68. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2014), 571. 69. Piketty, Capital in the Twenty-First Century, 573. For a wise and elegant defense of democracy, see also Wendy Brown, Undoing the Demos: Neoliberalism’s Stealth Revolution (New York: Zone, 2015). 70. Roger W. Garrison, “Hayek and Friedman,” in Elgar Companion to Hayekian Economics, ed. Norman Barry (Northampton, MA: Edward Elgar, 2014). 71. Friedrich Hayek, interview by Robert Bork, November 4, 1978, Center for Oral History Research, University of California, Los Angeles, http://oralhistory.library.ucla.edu. 72.

Two years after the North London riots, research in the UK showed that by 2013, poverty fueled by lack of education and unemployment already excluded nearly a third of the population from routine social participation.46 Another UK report concluded, “Workers on low and middle incomes are experiencing the biggest decline in their living standards since reliable records began in the mid-19th Century.”47 By 2015, austerity measures had eliminated 19 percent, or 18 billion pounds, from the budgets of local authorities, had forced an 8 percent cut in child protection spending, and had caused 150,000 pensioners to no longer enjoy access to vital services.48 Buy 2014 nearly half of the US population lived in functional poverty, with the highest wage in the bottom half of earners at about $34,000.49 A 2012 US Department of Agriculture survey showed that close to 49 million people lived in “food-insecure” households.50 In Capital in the Twenty-First Century, the French economist Thomas Piketty integrated years of income data to derive a general law of accumulation: the rate of return on capital tends to exceed the rate of economic growth. This tendency, summarized as r > g, is a dynamic that produces ever-more-extreme income divergence and with it a range of antidemocratic social consequences long predicted as harbingers of an eventual crisis of capitalism.

., “Reading the Riots,” see also Kawalerowicz and Biggs, “Anarchy in the UK”; James Treadwell et al., “Shopocalypse Now: Consumer Culture and the English Riots of 2011,” British Journal of Criminology 53, no. 1 (2013): 1–17, https://doi.org/10.1093/bjc/azs054; Tom Slater, “From ‘Criminality’ to Marginality: Rioting Against a Broken State,” Human Geography 4, no. 3 (2011): 106–15. 42. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press, 2014). Piketty integrated years of income data to conclude that income inequality in the US and the UK has reached levels not seen since the nineteenth century. The top decile of US wage earners steadily increased its share of national income from 35 percent in the 1980s to over 46 percent in 2010. The bulk of this increase comes from the top 1 percent, whose share rose from 9 percent to 20 percent, about half of which went to the 0.1 percent.


Undoing the Demos: Neoliberalism's Stealth Revolution by Wendy Brown

Affordable Care Act / Obamacare, bitcoin, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, corporate governance, credit crunch, crowdsourcing, David Brooks, Food sovereignty, haute couture, immigration reform, income inequality, invisible hand, labor-force participation, late capitalism, means of production, new economy, obamacare, occupational segregation, Philip Mirowski, Ronald Reagan, sexual politics, shareholder value, sharing economy, The Chicago School, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trickle-down economics, Washington Consensus, Wolfgang Streeck, young professional, zero-sum game

“Remarks by the President in the State of the Union Address,” February notes 225 12, 2013, White House Office of the Press Secretary, available at http://www. whitehouse.gov/the-press-office/2013/02/12/remarks-president-state-unionaddress, p. 1. 13. Ibid., pp. 1–9. The one exception to this was gun control, which may also explain why Obama gave up on it so quickly in 2013. 14. Ibid., p. 2. 15. Ibid., p. 4. 16. Ibid., p. 5. 17. Ibid., p. 6. 18. Ibid., p. 6. 19. Ibid., p. 7. 20. Ibid., p. 8. 21. Ibid., pp. 8–9. 22. See Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014) and “Dynamics of Inequality,” an interview with Piketty, New Left Review 85 (January–February 2014). Many are arguing with Piketty’s policy prescriptions, few with his fundamental claim that capital accumulation without growth is at the bottom of intensifying inequality. 23. There are many other examples of the neoliberalization of social justice concerns by the Obama administration.

The first is intensified inequality, in which the very top strata acquires and retains ever more wealth, the very bottom is 28 u n d o in g t h e d e m o s literally turned out on the streets or into the growing urban and suburban slums of the world, while the middle strata works more hours for less pay, fewer benefits, less security, and less promise of retirement or upward mobility than at any time in the past half century. While they rarely use the term “neoliberalism,” this is the emphasis of the valuable critiques of Western state policy offered by economists Robert Reich, Paul Krugman, and Joseph Stiglitz and of development policy offered by Amartya Sen, James Ferguson, and Branko Milanvic, among others.24 Growing inequality is also among the effects that Thomas Piketty establishes as fundamental to the recent past and near future of post-Keynesian capitalism. The second criticism of neoliberal state economic policy and deregulation pertains to the crass or unethical commercialization of things and activities considered inappropriate for marketization. The claim is that marketization contributes to human exploitation or degradation (for example, Third World baby surrogates for wealthy First World couples), because it limits or stratifies access to what ought to be broadly accessible and shared (education, wilderness, infrastructure), or because it enables something intrinsically horrific or severely denigrating to the planet (organ trafficking, pollution rights, clearcutting, fracking).


pages: 116 words: 31,356

Platform Capitalism by Nick Srnicek

3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative economy, collective bargaining, deindustrialization, deskilling, disintermediation, future of work, gig economy, Infrastructure as a Service, Internet of things, Jean Tirole, Jeff Bezos, knowledge economy, knowledge worker, liquidity trap, low skilled workers, Lyft, Mark Zuckerberg, means of production, mittelstand, multi-sided market, natural language processing, Network effects, new economy, Oculus Rift, offshore financial centre, pattern recognition, platform as a service, quantitative easing, RFID, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, software as a service, TaskRabbit, the built environment, total factor productivity, two-sided market, Uber and Lyft, Uber for X, uber lyft, unconventional monetary instruments, unorthodox policies, Zipcar

Pasquale, Frank. 2015. ‘The Other Big Brother’. The Atlantic, 21 September. http://www.theatlantic.com/business/archive/2015/09/corporate-surveillance-activists/406201 (accessed 22 May 2016). Perez, Carlota. 2009. ‘The Double Bubble at the Turn of the Century: Technological Roots and Structural Implications’. Cambridge Journal of Economics, 33 (4): 779–805. Piketty, Thomas. 2014. Capital in the Twenty-First Century, translated by Arthur Goldhammer. Cambridge, MA: Harvard University Press. Polivka, Anne. 1996. ‘Contingent and Alternative Work Arrangements, Defined’. Monthly Labor Review, 119 (10): 3–9. Pollack, Lisa. 2016. ‘What Is the Price for Your Personal Digital Dataset?’ Financial Times, 10 May. http://www.ft.com/cms/s/0/1d5bd1d0-15f6-11e6-9d98–00386a18e39d.html (accessed 30 June 2016).

Behind these technical changes, however, lies competition and struggle – both between classes, in their struggle to gain strength at one another’s expense, and between capitalists, in their efforts to lower the costs of production below the social average. It is the latter dynamic, in particular, that will play a key role in the changes that lie at heart of this book. But before we can understand the digital economy we must look back to an earlier period. The End of the Postwar Exception It is increasingly obvious to many that we live in a time still coming to terms with the breakdown of the postwar settlement. Thomas Piketty argues that the reduction in inequality after the Second World War was an exception to the general rule of capitalism; Robert Gordon sees high productivity growth in the middle of the twentieth century as an exception to the historical norm; and numerous thinkers on the left have long argued that the postwar period was an unsustainably good period for capitalism.4 That exceptional moment – broadly defined at the international level by embedded liberalism, at the national level by social democratic consensus, and at the economic level by Fordism – has been falling apart since the 1970s.


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Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

Airbnb, Akira Okazaki, big-box store, Black Swan, book scanning, British Empire, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbian Exchange, conceptual framework, correlation does not imply causation, Costa Concordia, creative destruction, crony capitalism, dark matter, Dava Sobel, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, Deng Xiaoping, Donald Trump, double entry bookkeeping, en.wikipedia.org, epigenetics, Erik Brynjolfsson, experimental economics, Ferguson, Missouri, fundamental attribution error, Georg Cantor, George Akerlof, George Gilder, germ theory of disease, Gini coefficient, God and Mammon, greed is good, Gunnar Myrdal, Hans Rosling, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, immigration reform, income inequality, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, John Harrison: Longitude, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labor-force participation, lake wobegon effect, land reform, liberation theology, lone genius, Lyft, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, means of production, Naomi Klein, new economy, North Sea oil, Occupy movement, open economy, out of africa, Pareto efficiency, Paul Samuelson, Pax Mongolica, Peace of Westphalia, peak oil, Peter Singer: altruism, Philip Mirowski, pink-collar, plutocrats, Plutocrats, positional goods, profit maximization, profit motive, purchasing power parity, race to the bottom, refrigerator car, rent control, rent-seeking, Republic of Letters, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Scientific racism, Scramble for Africa, Second Machine Age, secular stagnation, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, spinning jenny, stakhanovite, Steve Jobs, The Chicago School, The Market for Lemons, the rule of 72, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, total factor productivity, Toyota Production System, transaction costs, transatlantic slave trade, Tyler Cowen: Great Stagnation, uber lyft, union organizing, very high income, wage slave, Washington Consensus, working poor, Yogi Berra

Their chart 2 exhibits weekly income distributions in 1886 prices at 1886, 1906, 1938, and 1960, showing the disappearance of the inflation-adjusted classic line of misery for British workers, “’round about a pound a week.”8 Yet the left works overtime, out of the best of motives, to rescue its ethically irrelevant focus on Gini coefficients and the relative poverty line. A recent example of the leftish labor is the book by a French economist I have mentioned, Thomas Piketty’s Capital in the Twenty-First Century (translated 2014), which was greeted with squeals of delight by the American and British left, and rapidly rose to number one on the New York Times best-seller list. Piketty claims that relative poverty is what matters, whether or not the poorest improve. “Just as we’ve been saying!” the left cried. “Eliminate poverty and inequality.” Much of the research on the economics of inequality stumbles on this simple ethical point, focusing on measures of relative inequality such as the Gini coefficient rather than on measures of the absolute welfare of the poor, on inequality rather than poverty, having elided the two.

Righteous, if inexpensive, indignation inspired by survivor’s guilt about alleged “victims” of something called “capitalism,” and envious anger at the silly consumption by the rich, does not invariably yield betterment for the poor. Remarks such as “there are still poor people” or “some people have more power than others,” though claiming the ethical high-ground for the speaker, are neither deep nor clever. Repeating them, or nodding wisely at their repetition, or buying Piketty’s Capital in the Twenty-First Century to display on your coffee table, does not make you a good person. You are a good person if you actually help the poor. Open a business. Invest in a grocery store in an urban food desert. Invent a new battery. Vote for better schools. Adopt a Pakistani orphan. Volunteer to feed people at Grace Church on Saturday mornings. The offering of counterproductive policies, or the making of indignant declarations to your husband after finishing an article in the Sunday New York Times Magazine, does not help the poor.

University Park: Pennsylvania State University Press. Phillips, Susan M., and J. Richard Zecher. 1993. “The Securities Exchange Commission: From Where, Where To?” In McCloskey, ed. 1993, pp. 136–141. Phillipson, Nicholas. 2010. Adam Smith: An Enlightened Life. New Haven, CT: Yale University Press. Piaget, Jean. 1932 (1965). The Moral Judgment of the Child. Trans. Marjorie Gabain. New York: Free Press. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Trans. A. Goldhammer. Cambridge, MA: Harvard University Press. Pink, Daniel H. 2012. To Sell Is Human: The Surprising Truth about Moving Others. New York: Riverhead Books/Penguin. Pipes, Richard. 1999 (2000). Property and Freedom. New York: Knopf. Pirenne, Henri. 1925. Ville du Moyen Age (Medieval Cities: Their Origins and the Revival of Trade). New York: Doubleday. Pleij, Herman. 1994.


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European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right by Philippe Legrain

3D printing, Airbnb, Asian financial crisis, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, BRICs, British Empire, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, cleantech, collaborative consumption, collapse of Lehman Brothers, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, debt deflation, Diane Coyle, disruptive innovation, Downton Abbey, Edward Glaeser, Elon Musk, en.wikipedia.org, energy transition, eurozone crisis, fear of failure, financial deregulation, first-past-the-post, forward guidance, full employment, Gini coefficient, global supply chain, Growth in a Time of Debt, hiring and firing, hydraulic fracturing, Hyman Minsky, Hyperloop, immigration reform, income inequality, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), Irish property bubble, James Dyson, Jane Jacobs, job satisfaction, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, liquidity trap, margin call, Martin Wolf, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, North Sea oil, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, open economy, peer-to-peer rental, price stability, private sector deleveraging, pushing on a string, quantitative easing, Richard Florida, rising living standards, risk-adjusted returns, Robert Gordon, savings glut, school vouchers, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, smart meter, software patent, sovereign wealth fund, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, working-age population, Zipcar

713 http://www.economist.com/blogs/freeexchange/2012/06/innovation 714 Thomas Paine, Agrarian Justice, 1797 715 http://www.progress.org/banneker/chur.html 716 John Stuart Mill, Principles of Political Economy, 1848, quoted in Richard Reeves, John Stuart Mill: Victorian Firebrand, Atlantic: 2007 717 Friedrich Hayek, Individualism and Economic Order, University of Chicago: 1948. http://library.mises.org/books/Friedrich%20A%20Hayek/Individualism%20and%20Economic%20Order.pdf 718 http://www.worldbank.org/en/region/eca/publication/golden-growth 719 http://www.bankofengland.co.uk/publications/Documents/speeches/2010/speech442.pdf 720 http://www.lrb.co.uk/v34/n04/andrew-haldane/the-doom-loop 721 Facundo Alvaredo, Tony Atkinson, Thomas Piketty and Emmanuel Saez, “The World Top Incomes Database” http://topincomes.parisschoolofeconomics.eu/#Database: 722 Ibid. Table 4 723 Thomas Piketty, Capital in the Twenty-First Century, Harvard: 2014 724 David Sainsbury, Progressive Capitalism: How To Achieve Economic Growth, Liberty and Social Justice, Biteback: 2013 725 "Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.

The top 1 per cent earned 7.02 per cent of national income, nearly twice the 3.97 per cent they received in 1981, while the top 0.1 per cent obtained 2.19 per cent, nearly three times the 0.77 per cent they obtained in 1986. The top 0.01 per cent took home 0.75 per cent, nearly five times the 0.17 per cent they got in 1980. Looking at the Gini coefficient, a measure of a society’s overall income inequality, Britain and Italy are the most unequal societies in western Europe, while Denmark is the most equal, with Sweden just behind.722 The distribution of wealth is generally much more unequal. And as Thomas Piketty of the Paris School of Economics has pointed out, as growth slows and with it the creation of new wealth, old (inherited) fortunes weigh more heavily than before.723 A decent society should want to encourage effort and enterprise – by everyone, not just those who end up billionaires – without rewarding undeserved or unearned income. Battles between right and left about how high tax rates should be generally fail to make this distinction: those who want to cut taxes point to people like James Dyson, those who want to raise them point to Fred Goodwin.


Money and Government: The Past and Future of Economics by Robert Skidelsky

anti-globalists, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Basel III, basic income, Ben Bernanke: helicopter money, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, constrained optimization, Corn Laws, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Graeber, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, Donald Trump, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, Financial Instability Hypothesis, forward guidance, Fractional reserve banking, full employment, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, incomplete markets, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, law of one price, liberal capitalism, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, market clearing, market friction, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, mobile money, Mont Pelerin Society, moral hazard, mortgage debt, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, placebo effect, price stability, profit maximization, quantitative easing, random walk, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, rising living standards, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, shareholder value, short selling, Simon Kuznets, structural adjustment programs, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, trade liberalization, value at risk, Washington Consensus, yield curve, zero-sum game

Replying to Marx’s charge that the capitalist exploited the worker, the American economist John Bates Clark, in his 1899 book The Distribution of Wealth, used a simple aggregate production function to show that, in a competitive market equilibrium, the two factors of production, capital and labour, would be paid their marginal products – that is, in proportion to their contribution to satisfying individual preferences.1 Distribution was off the economic agenda. Recently, discussion of distribution has centred on the fact, and meaning, of the sharp rise in inequality since the 1970s, particularly in the United States and Britain. The most notable contributions here 288 di s t r i bu t ion a s a m ac roe c onom ic p robl e m are Thomas Piketty’s Capital in the Twenty-First Century (2013), a documentation of long-run trends in the distribution of wealth and income in developed capitalist economies, and Walter Scheidel’s The Great Leveler (2017). 2 Piketty’s data show both a widening dispersal of incomes and a fall in labour’s wage share since the 1970s and 1980s. For Scheidel, whose history of inequality stretches back to the Stone Age, inequality is humanity’s natural condition, interrupted only by wars, revolution, state failure and lethal pandemics.

Once the depression occurred, recovery of private investment and consumption was blocked by falling prices, which increased the real debt burden. Trying to restore the profit rate by cutting wages only reduced prices and consumer demand further. Devine called this the under-consumption trap.28 I V. T h e Mode r n U n de rc onsu m p t ion is t S t ory The modern under-consumptionist story starts with the big increase in inequality, noticeable in all developed countries since the 1970s. Thomas Piketty’s Capital in the Twenty-First Century documented 298 di s t r i bu t ion a s a m ac roe c onom ic p robl e m in exhaustive detail the increase in inequality over the last forty years.29 Coming on top of the crash of 2008, it rekindled interest in distributional issues in both their moral and efficiency aspects. Piketty restated the familiar social democratic charge against capitalism: that its ownership system offended the principle of distributive justice.

Cambridge: The University Press, pp. 437–48. Phillips, A. W. (1958), The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861–1957. Economica, 25 (100), pp. 283–99. Pigou, A. C. (1912), Wealth and Welfare. London: Macmillan. Pigou, A. C. (1913), Review of R. G. Hawtrey, Good and Bad Trade, The Economic Journal, 23, pp. 580–83. Piketty, T. (2014 (2013)), Capital in the Twenty-First Century. Cambridge, Mass.: Harvard University Press. Piketty, T. (2017), Chronicles: On our Troubled Times. London: Penguin. Plumpe, W. (2016), German Economic and Business History in the 19th and 20th Centuries. London: Palgrave Macmillan. Private Debt Project (2015), Conversation with Lord Adair Turner. Available at: http://privatedebtproject.org/view-articles.php?An-Interview-With-LordAdair-Turner-6 [Accessed 6 December 2017].


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Four Futures: Life After Capitalism by Peter Frase

Airbnb, basic income, bitcoin, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cryptocurrency, deindustrialization, Edward Snowden, Erik Brynjolfsson, Ferguson, Missouri, fixed income, full employment, future of work, high net worth, income inequality, industrial robot, informal economy, Intergovernmental Panel on Climate Change (IPCC), iterative process, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, litecoin, mass incarceration, means of production, Occupy movement, pattern recognition, peak oil, plutocrats, Plutocrats, post-work, postindustrial economy, price mechanism, private military company, Ray Kurzweil, Robert Gordon, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart meter, TaskRabbit, technoutopianism, The Future of Employment, Thomas Malthus, Tyler Cowen: Great Stagnation, universal basic income, Wall-E, Watson beat the top human players on Jeopardy!, We are the 99%, Wolfgang Streeck

The growing inequality of wealth and income in the world has become an increasing focus of attention from activists, politicians, and pundits. Occupy Wall Street struck a chord with the slogan “we are the 99 percent,” drawing attention to the fact that almost all the gains from economic growth in recent decades have accrued to 1 percent or less of the population. Economist Thomas Piketty scored an improbable best seller with Capital in the Twenty-First Century, a massive treatise about the history of wealth and the prospect of an increasingly unequal world.22 The two crises I’ve described are fundamentally about inequality as well. They are about the distribution of scarcity and abundance, about who will pay the costs of ecological damage and who will enjoy the benefits of a highly productive, automated economy.

Lbo-News.com, 2015. 17Jeremy Rifkin, The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era, New York: Putnam, 1995; Stanley Aronowitz and William DiFazio, The Jobless Future: Sci-Tech and the Dogma of Work, Minneapolis: University of Minnesota Press, 1994. 18Norbert Wiener, Cybernetics: Or Control and Communication in the Animal and the Machine, Cambridge, MA: MIT Press, 1948, p. 28. 19Paul Krugman, “Sympathy for the Luddites,” New York Times, June 14, 2013. 20Ford, Rise of the Robots; Derek Thompson, “A World Without Work,” Atlantic, July/August 2015; Farhad Manjoo, “Will Robots Steal Your Job?,” Slate.com, September 26, 2011; Drum, “Welcome Robot Overlords.” 21Mike Konczal, “The Hard Work of Taking Apart Post-Work Fantasy,” NextNewDeal.net, 2015. 22Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer, Cambridge, MA: Harvard University Press, 2014. 23Thom Andersen, Los Angeles Plays Itself, Thom Andersen Productions, 2003. 24Ray Kurzweil, The Singularity Is Near: When Humans Transcend Biology, New York: Penguin, 2005. 25Rosa Luxemburg, The Junius Pamphlet: The Crisis in the German Social Democracy, Marxists.org, 1915. 26Robert Costanza, “Will It Be Star Trek, Ecotopia, Big Government, or Mad Max?


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The Health Gap: The Challenge of an Unequal World by Michael Marmot

active measures, active transport: walking or cycling, Affordable Care Act / Obamacare, Atul Gawande, Bonfire of the Vanities, Broken windows theory, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, centre right, clean water, congestion charging, correlation does not imply causation, Doha Development Round, epigenetics, financial independence, future of work, Gini coefficient, Growth in a Time of Debt, illegal immigration, income inequality, Indoor air pollution, Kenneth Rogoff, Kibera, labour market flexibility, longitudinal study, lump of labour, Mahatma Gandhi, meta analysis, meta-analysis, microcredit, New Urbanism, obamacare, paradox of thrift, race to the bottom, Rana Plaza, RAND corporation, road to serfdom, Simon Kuznets, Socratic dialogue, structural adjustment programs, the built environment, The Spirit Level, trickle-down economics, twin studies, urban planning, Washington Consensus, Winter of Discontent, working poor

I have long harboured a wish to adapt her most famous opening line, and write: ‘It is a truth universally acknowledged that a single man not in possession of a good fortune must be in want of a life.’ Single, poor, his prospects for life expectancy are not good.) Large inequalities of wealth and income and a preponderance of inherited wealth characterised nineteenth-century Britain and France. These insights and the concern that we may be heading that way again are the message of Thomas Piketty’s Capital in the Twenty-First Century. For a 685-page economics book, published by a university press, to become a best-seller – it sold out within days, and was likely to have sold 200,000 copies within three months – and for its author, a serious French economics professor, to become a superstar, Capital must be tapping in to something important. It is. There are two issues that Piketty highlights: growing inequalities of wealth and income and the fact that, in the future, much of the wealth will be inherited rather than earned.

But half the people in the world have less than $3,650 each; and the richest 20 per cent have 94.5 per cent of all the wealth. What the figures on income and wealth show is that there are oceans of money sloshing about. It is not easy to maintain the fiction that we do not have enough money to do good things. The problem is that, within countries, the concentration of wealth is becoming more extreme. That was the message of Piketty’s Capital in the Twenty-First Century. At the same time as wealth concentration is increasing, all across Europe and the US we are being lectured to on the dire importance of austerity. Public services have to be cut back because . . . because . . . we cannot afford them? John Maynard Keynes, immediately after the Second World War, wrote: ‘The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems – the problems of life and of human relations, of creation and behaviour and religion.’8 In country after country, too much of our public conversation is about how we can grow national income, too little about how we can improve society.

Available from: http://dx.doi.org. 12Lundberg O, Aberg Yngwe M, Kolegard Stjarne M, Bjork L, Fritzell J. The Nordic Experience: welfare states and public health (NEWS). Health Equity Studies. 2008; 12. 13Woolf SH, Aron L, editors. U.S. Health in International Perspective: Shorter Lives, Poorer Health. National Research Council; Institute of Medicine. Washington, DC: The National Academies Press, 2013. 14Stiglitz J. The Price of Inequality. New York: Penguin, 2013. 15Piketty T. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press, 2014. 16Vardi N. The 25 Highest-Earning Hedge Fund Managers and Traders. Forbes. 2014. 17Ostry JD, Berg A, Tsangarides CG. IMF Staff Discussion Note: Redistribution, Inequality, and Growth. International Monetary Fund, 2014. 18Sen A. Inequality Reexamined. Oxford: Oxford University Press, 1992. 19Dahl E, van der Wel KA. Educational inequalities in health in European welfare states: a social expenditure approach.


pages: 343 words: 101,563

The Uninhabitable Earth: Life After Warming by David Wallace-Wells

"Robert Solow", agricultural Revolution, Albert Einstein, anthropic principle, Asian financial crisis, augmented reality, basic income, Berlin Wall, bitcoin, British Empire, Buckminster Fuller, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon-based life, cognitive bias, computer age, correlation does not imply causation, cryptocurrency, cuban missile crisis, decarbonisation, Donald Trump, effective altruism, Elon Musk, endowment effect, energy transition, everywhere but in the productivity statistics, failed state, fiat currency, global pandemic, global supply chain, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, Joan Didion, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, life extension, longitudinal study, Mark Zuckerberg, mass immigration, megacity, megastructure, mutually assured destruction, Naomi Klein, nuclear winter, Pearl River Delta, Peter Thiel, plutocrats, Plutocrats, postindustrial economy, quantitative easing, Ray Kurzweil, rent-seeking, ride hailing / ride sharing, Sam Altman, Silicon Valley, Skype, South China Sea, South Sea Bubble, Steven Pinker, Stewart Brand, the built environment, the scientific method, Thomas Malthus, too big to fail, universal basic income, University of East Anglia, Whole Earth Catalog, William Langewiesche, Y Combinator

Progressive scientists will apply gene therapy to climate change, as they have already begun to do with the woolly mammoth—which they hope, once brought back to life, might restore the grasslands of the Eurasian steppe and prevent methane release from permafrost—and will probably do soon with the mosquito, hoping to eradicate mosquito-borne disease. Perhaps a rogue billionaire will try to single-handedly cool the earth with geoengineering, flying a few private planes around the equator to disperse sulfur and citing the model of Bill Gates and his mosquito nets. “apparatus of justification”: Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). SoulCycle, Goop, Moon Juice: The founder of hipster foodie magazine Modern Farmer is, in 2018, rumored to be launching a “Goop for climate change.” the pesticide Roundup: Alexis Temkin, “Breakfast with a Dose of Roundup?” Environmental Working Group Children’s Health Initiative, August 15, 2018, www.ewg.org/childrenshealth/glyphosateincereal.

On perhaps no issue more than climate is that liberal posture of well-off enlightenment a defensive gesture: almost regardless of your politics or your consumption choices, the wealthier you are, the larger your carbon footprint. But when critics of Al Gore compare his electricity use to that of the average Ugandan, they are not ultimately highlighting conspicuous and hypocritical personal consumption, however they mean to disparage him. Instead, they are calling attention to the structure of a political and economic order that not only permits the disparity but feeds and profits from it—this is what Thomas Piketty calls the “apparatus of justification.” And it justifies quite a lot. If the world’s most conspicuous emitters, the top 10 percent, reduced their emissions to only the E.U. average, total global emissions would fall by 35 percent. We won’t get there through the dietary choices of individuals, but through policy changes. In an age of personal politics, hypocrisy can look like a cardinal sin; but it can also articulate a public aspiration.


pages: 831 words: 98,409

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

activist fund / activist shareholder / activist investor, assortative mating, bank run, barriers to entry, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversification, East Village, Elon Musk, eurozone crisis, family office, financial repression, Gini coefficient, glass ceiling, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, John Meriwether, Kenneth Arrow, Kenneth Rogoff, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, money market fund, Myron Scholes, NetJets, Network effects, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Plutocrats, Ponzi scheme, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, rolodex, Satyajit Das, shareholder value, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, women in the workforce, young professional

“Homepage,” Douglas Rushkoff, http://www.rushkoff.com. 6. Robin Greenwood and David Scharfstein, “The Growth of Modern Finance,” Journal of Economic Perspectives 27(2) (Spring 2013): 3-28. 7. Oxfam International, “Richest 1% Will Own More Than All the Rest by 2016,” press release, January 19, 2015, https://www.oxfamorg/en/pressroom/pressreleases/2015-01-19/richest-1-will-own-more-all-rest-2016. 8. For reference, see also: Thomas Piketty, Capital in the Twenty-First Century (Boston: Harvard University Press, 2014), 1, 237, Kindle edition. 9. Donella H. Meadows, Thinking in Systems: A Primer (Chelsea, VT: Chelsea Green Publishing), 3, Kindle edition. 10. Joseph E. Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York: W. W. Norton & Company, 2012), 121, Kindle edition. 11. Nick Hanauer, “The Pitchforks Are Coming...

There are no barriers to entry as it is not a licensed profession, and anyone can call him- or herself a consultant. Therefore, having top academic credentials, policy experience, and access to high-caliber networks provide thought leaders with distinct competitive advantages that propel them into the league of superhubs. Most thought leaders in finance are economists. A select few have become academic celebrities, such as Thomas Piketty, Nassim Taleb, and Paul Krugman, because they have touched the Zeitgeist. They are their own brands, with rock star status and almost cultlike followings. Inundated with media requests, exclusive invitations, and offers to join prestigious boards, their work surpasses the insular world of academia and becomes the center of public attention. They often contribute to the public discourse by translating their abstract and complex analyses into layman’s terms.


pages: 424 words: 121,425

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran

access to a mobile phone, affirmative action, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, disruptive innovation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, Kickstarter, M-Pesa, McMansion, microcredit, mobile money, moral hazard, mortgage debt, new economy, Own Your Own Home, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, white flight, working poor

The eventual downturn that “white flight” created in these urban areas also resulted in “bank flight” as private business followed the white customers out. The social contract forged during the Great Depression stabilized U.S. banking for several decades. For fifty years, the banking sector experienced measured growth and success while the rest of the economy generally thrived. This growth and stability coincided with exceptional international economic growth. As Thomas Piketty explains in Capital in the Twenty-First Century, the time between the Great Depression and the 1970s marked a unique period in world history of relative equalities of wealth and remarkable economic growth.89 Surely, sustained economic growth contributed to a stable and successful banking system. And so did the federal deposit insurance fund, which succeeded in finally ending the confidence-destroying runs that had historically wreaked havoc on banks.

Freddie Mac, “Company Profile,” accessed September 30, 2014, www.freddiemac.com/corporate/company_profile/. 88. For a comprehensive discussion of “redlining,” see Charles Lewis Nier, III, “The Shadow of Credit: The Historical Origins of Racial Predatory Lending and its Impact upon African American Wealth Accumulation,” University of Pennsylvania Journal of Law and Social Change (2008). 89. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press: 2014), 80. 90. Martin Luther King Jr., “I Have a Dream,” accessed March 19, 2015, www.thekingcenter.org/archive/document/i-have-dream-1. 91. Richard Scott Carnell, Jonathan R. Macey, and Geoffrey P. Miller, The Law of Banking and Financial Institutions, 350 (New York: Aspen Publishers, 2009). 92. Jan Blakeslee, “ ‘White Flight’ to the Suburbs: A Demographic Approach,” University of Wisconsin Institute for Research on Poverty Newsletter Vol. 3, No. 2 (1978–1979), 1. 93.

Before the civil-rights-era laws forbidding discrimination in banking were passed, many blacks were left out of the mainstream banking institutions. Many blacks had to form their own institutions—black-owned banks. The story of black banking is too rich to be summarized in this text but will be the topic of the author’s future research and study. 36. Regulation Q, 12 CFR §217. 37. Thomas Picketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). 38. Connecticut Department of Banking, “ABCs of Banking,” accessed March 17, 2015, www.ct.gov/dob/cwp/view.asp?a=2235&q=297892. 39. “The relaxation of restrictions on intrastate branching and interstate banking that took place in the 1980s and early 1990s facilitated both mergers and consolidations. While only sixteen states permitted unrestricted intrastate branching in 1984, by 1994 the number had risen to forty.


pages: 550 words: 124,073

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century by Torben Iversen, David Soskice

Andrei Shleifer, assortative mating, augmented reality, barriers to entry, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, centre right, cleantech, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, deskilling, Donald Trump, first-past-the-post, full employment, Gini coefficient, hiring and firing, implied volatility, income inequality, industrial cluster, inflation targeting, invisible hand, knowledge economy, labor-force participation, liberal capitalism, low skilled workers, low-wage service sector, means of production, mittelstand, Network effects, New Economic Geography, new economy, New Urbanism, non-tariff barriers, Occupy movement, offshore financial centre, open borders, open economy, passive investing, precariat, race to the bottom, rent-seeking, RFID, road to serfdom, Robert Bork, Robert Gordon, Silicon Valley, smart cities, speech recognition, The Future of Employment, The Great Moderation, The Rise and Fall of American Growth, too big to fail, trade liberalization, union organizing, urban decay, Washington Consensus, winner-take-all economy, working-age population, World Values Survey, young professional, zero-sum game

“Setting the Rules of the Game: The Choice of Electoral Systems in Advanced Democracies.” American Political Science Review 93 (September): 609–24. ———. 2003. Democracy and Redistribution. Cambridge, UK: Cambridge University Press. Bonnet, Odran, Pierre-Henri Bono, Guillaume Chapelle, and Etienne Wasmer. 2014. “Does Housing Capital Contribute to Inequality? A Comment on Thomas Piketty’s Capital in the Twenty-First Century.” Sciences Po Economics Discussion Paper, 7: 1–12. Borjas, George J. 2013. “Immigration and the American Worker: Review of the Academic Literature.” Center for Immigration Studies, Washington, DC. https://sites.hks.harvard.edu/fs/gborjas/publications/popular/CIS2013.pdf. Bork, Robert. 1978. The Antitrust Paradox: A Policy at War with Itself. New York: Basic Books. Bornschier, Simon. 2010.

For Piketty this is the basis for his prediction that r > g, which will produce ever-greater concentration of wealth. Yet Piketty’s own data show that after taking account of destruction of capital and capital taxation, in fact r < g for the entire period from 1913 to 2012—that is, basically during the period of democracy (see figures 10.10 and 10.11). The dire prediction for the future relies on the key assumption “that fiscal competition will gradually lead to total disappearance of taxes on capital in the twenty-first century” (2014, 355), coupled with a sharp drop in growth rates.11 A look at actual capital taxation rates instead reveals remarkable stability. While top statutory capital tax rates have come down in most countries since the 1980s, Swank and Steinmo (2002) show that such cuts were accompanied by a broadening of the tax base that left effective tax rates virtually unchanged from 1981 to 1995.

We count Piketty (2014) as the ultimate pessimist. Like Gordon, he believes that the capacity of technology to produce high rates of GDP growth is low. Specifically, he argues that “global growth is likely to be [only] around 1.5 percent a year between 2050 and 2100” (355). At the same time, he believes that capital is becoming more mobile and that “fiscal competition will gradually lead to total disappearance of taxes on capital in the twenty-first century.” Combined with a relatively constant rate of return on capital of about four percent, the result is r > g and a massive rise in inequality. There may be work for all, but the fruits of this labor will be increasingly captured by the rich. How does our framework cast light on these debates? We return here to the core idea of location cospecific assets and their embeddedness in social networks.


pages: 586 words: 160,321

The Euro and the Battle of Ideas by Markus K. Brunnermeier, Harold James, Jean-Pierre Landau

Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, battle of ideas, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, currency peg, debt deflation, Deng Xiaoping, different worldview, diversification, Donald Trump, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, financial deregulation, financial repression, fixed income, Flash crash, floating exchange rates, full employment, German hyperinflation, global reserve currency, income inequality, inflation targeting, information asymmetry, Irish property bubble, Jean Tirole, Kenneth Rogoff, Martin Wolf, mittelstand, money market fund, Mont Pelerin Society, moral hazard, negative equity, Neil Kinnock, new economy, Northern Rock, obamacare, offshore financial centre, open economy, paradox of thrift, pension reform, price stability, principal–agent problem, quantitative easing, race to the bottom, random walk, regulatory arbitrage, rent-seeking, reserve currency, road to serfdom, secular stagnation, short selling, Silicon Valley, South China Sea, special drawing rights, the payments system, too big to fail, union organizing, unorthodox policies, Washington Consensus, WikiLeaks, yield curve

Pierre Bauby, L'Etat-stratège, (Paris: Les éditions ouvrières, 1991), 195. 44. Jean-Jacques Laffont and Jean Tirole, A Theory of Incentives in Regulation and Procurement (Cambridge, MA: MIT Press, 1993). In Germany, Hans-Werner Sinn also made a significant contribution to the analysis of the provision of public goods and built this position up as the basis for a critique of many of the Euro rescue mechanisms. 45. Thomas Piketty, Capital in the Twenty-first Century (Cambridge, MA: Harvard University Press, 2014), 32. 46. Obituary: Raymond Barre, Independent, August 26, 2007, http://www.independent.co.uk/news/obituaries/raymond-barre-5334901.html. 47. Jacques Sapir, Les Économistes contre la démocratie: Pouvoir, mondialisation et démocratie (Paris: Albin Michel, 2000). 48. Bernard Maris, Lettre ouverte aux gourous de l’économie qui nous prennent pour des imbéciles (Paris: Albin Miche, 1999). 49.

In that sense, they have done more than the German Ordoliberals to present a version of a system of rules that is really applicable to the complexities of a modern economy, in which competition is not an obvious result of economic activity. Jean Tirole and Jean-Jacques Laffont in particular have been instrumental in developing a new approach to the provision of incentives by regulators, in which the dangers of creating moral hazard play a key role.44 The visions of the past influence the way that economics is seen. Most French economists complain—as did the recent best-selling author Thomas Piketty of Capital, a dramatic manifesto on how capitalism does not provide a self-sustaining and politically acceptable model of growth—that “economists are not highly respected in the academic and intellectual world or by political and financial elites.”45 In fact, a popular and intellectual culture exists that sees economists as narrow-minded and soulless technocrats who force a dehumanized concept of rationality on their fellow citizens.

A powerful statement of the world of French thought—which was presented as a revolution against traditional Anglo-Saxon economics—was the report of a commission called by Sarkozy and cochaired by Jean-Paul Fitoussi (along with two distinguished but left-leaning non-French Nobel Prize winners, Joseph Stiglitz and Amartya Sen), in which the central role of government in the economy was emphasized and a plea made for a more extensive assessment of the role of “well-being.”50 Even economists like to participate in the backlash against modern economics. Distinguished (and numerate) figures such as Edmond Malinvaud and Thomas Piketty complain about the overmathematization of economics. The same sort of public mobilization of economists for a political cause that took place in Germany against rescue packages occurred in France against the German doctrines and against austerity politics. In September 2010, over 700 French economists signed a widely publicized manifesto for “an alternative economic and social strategy” for Europe, attacking the “false economic platitudes” of “neoliberal dogma.”51 The manifesto was drawn up by four economists, three of whom worked at governmental research institutes, and the fourth was an adviser to the antiglobalization organization Attac.


pages: 403 words: 111,119

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

World Bank (1978) World Development Report, Washington, DC: World Bank, p. 33. 10. Krueger, A. (2002) ‘Economic scene: when it comes to income inequality, more than just market forces are at work’, New York Times, 4 April 2002, available at: http://www.nytimes.com/2002/04/04/business/economic-scene-when-it-comes-income-inequality-more-than-just-market-forces-are.html?_r=0 11. Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. 12. Ostry, J. D. et al. (2014) Redistribution, inequality and growth. IMF Staff discussion note, February 2014, p. 5. https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf 13. Quinn, J. and Hall, J. (2009) ‘Goldman Sachs vice-chairman says “learn to tolerate inequality” ’, Daily Telegraph 21 October 2009. http://www.telegraph.co.uk/finance/recession/6392127/Goldman-Sachs-vice-chairman-says-Learn-to-tolerate-inequality.html 14.

Pearce, J. (2012) ‘The case for open source appropriate technology’, Environment, Development and Sustainability, 14: 3. Pearce, J. et al. (2012) ‘A new model for enabling innovation in appropriate technology for sustainable development’, Sustainability: Science, Practice and Policy, 8: 2, pp. 42–53. Persky, J. (1992) ‘Retrospectives: Pareto’s law’, Journal of Economic Perspectives 6: 2, pp. 181–192. Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. Pizzigati, S. (2004) Greed and Good. New York: Apex Press. Polanyi, K. (2001) The Great Transformation. Boston: Beacon Press. Pop-Eleches, C. et al. (2011) ‘Mobile phone technologies improve adherence to antiretroviral treatment in resource-limited settings: a randomized controlled trial of text message reminders’, AIDS 25: 6, pp. 825–834.

Far from being inevitable, the Kuznets process had turned out to be avoidable: it was indeed possible to achieve growth with equity. What’s more, starting in the early 1980s, many high-income countries that believed they had successfully made it over the curve’s hump saw their income distribution begin to widen again, resulting in the infamous rise of the one percent accompanied by flat or falling wages for the majority. It was, however, the economist Thomas Piketty’s 2014 long view of the dynamics of distribution under capitalism that made the underlying story plain to see. By asking not just who earns what but also who owns what, he distinguished between two kinds of households: those that own capital – such as land, housing, and financial assets which generate rent, dividends and interest – and those households that own only their labour, which generates only wages.


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

And all the more so, the argument goes, in an increasingly globalized world: a world in which capital is liquid, companies are multinational and effectively able to choose where they pay tax, labour is offshored to low-cost jurisdictions with few rights or union protections, while the rich are mobile and can relocate as and where they see fit. This in turn supports an emergent global value system which exalts material success and tacitly despises national cultures and local values and institutions. The runaway success of Thomas Piketty’s recent book Capital in the Twenty-First Century, with its argument that the past thirty years have been conspicuous for the imbalance between the economic returns accruing to capital and to labour, is just one token of a much deeper and wider sense of malaise. But as with economics, as with financial markets, so some would go further still, and place the ultimate blame for these failures of capitalism on Adam Smith himself.

Monks, Corpocracy: How CEOs and the Business Roundtable Hijacked the World’s Greatest Wealth Machine—and How to Get It Back, John Wiley 2007 Arguments for falling rates of gain from technology: see Robert J. Gordon, The Rise and Fall of American Growth, Princeton University Press 2016 Absence of critique: debate on the nature of capitalism has been hugely reinvigorated by Thomas Piketty’s book Capitalism in the Twenty-First Century, Allen Lane 2014. In many ways rightly so, for it offers a very important analytical window into data on wealth and incomes, a simple but comprehensive theory of their long-term evolution and an overdue focus on the distributional consequences of the key trends involved. It is, moreover, framed as a work of political economy, conscious of the limitations of economics as such and infused by an awareness of the importance of norms and institutions.

., Adam Smith’s Marketplace of Life, Cambridge University Press 2002 Peirce, Charles Sanders, Reasoning and the Logic of Things, ed. Kenneth Laine Ketner, Harvard University Press 1992 Phelps, Edmund, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change, Princeton University Press 2013 Phillipson, Nicholas, David Hume: The Philosopher as Historian, rev. edn, Penguin Books 2011 Piketty, Thomas, Capital in the Twenty-First Century, Allen Lane 2014 Pinker, Steven, The Better Angels of our Nature: The Decline of Violence and its Causes, Allen Lane 2011 Pinker, Steven, Enlightenment Now, Allen Lane 2018 Pirie, Madsen, The Neoliberal Mind: The Ideology of the Future, Adam Smith Institute 2017 Pocock, J. G. A., Virtue, Commerce and History: Essays on Political Thought and History, Chiefly in the Eighteenth Century, Cambridge University Press 1985 Polanyi, Karl, The Great Transformation, Farrar & Rinehart 1944 Pujol, Michèle A., Feminism and Anti-Feminism in Early Economic Thought, Edward Elgar 1992 Putnam, Hilary and Vivian Walsh (eds.), The End of Value-Free Economics, Routledge 2011 Raphael, D.


The New Enclosure: The Appropriation of Public Land in Neoliberal Britain by Brett Christophers

Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, Corn Laws, credit crunch, cross-subsidies, Diane Coyle, estate planning, ghettoisation, Hernando de Soto, housing crisis, income inequality, invisible hand, land reform, land tenure, land value tax, late capitalism, market clearing, Martin Wolf, New Journalism, New Urbanism, off grid, offshore financial centre, performance metric, Philip Mirowski, price mechanism, price stability, profit motive, Right to Buy, Skype, sovereign wealth fund, special economic zone, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, urban sprawl, wealth creators

It has long been widely understood that one cannot grasp actually-existing patterns of socioeconomic inequality without factoring in landownership.2 But what is much less obvious, though no less important, is that land rents and land value gains appear to be critical to rapidly growing levels of inequality, in terms of both income and wealth, during the neoliberal era – a trend that is, of course, one of the key issues of the moment in Western societies. The centrality of land to this troubling ongoing development has been a principal theme of emerging critiques of the book that has done so much to put inequality in the intellectual and political spotlight – Thomas Piketty’s Capital in the Twenty-First Century.3 The first line of critique concerns income inequalities. One of Piketty’s main contributions has been to show that stability in the respective shares of national income accruing to wage earners and capital owners, for so long considered a ‘stylized fact’ of macroeconomics, did not survive beyond the 1950s. In most advanced capitalist countries, labour’s share of income consistently rose through to the end of the 1970s.

One of the most striking things about the widespread attempts in Asia and Africa between 1950 and 1980 to create more egalitarian rural societies precisely through land reform – collectivization in China, Vietnam and Ethiopia, for example, and landlord abolition in Egypt and India – is that, in this regard, they failed. See D. Low, The Egalitarian Moment: Asia and Africa, 1950–1980 (Cambridge: Cambridge University Press, 1996). 3 T. Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). 1 G. La Cava, ‘Piketty’s Rising Share of Capital Income and the US Housing Market’, Vox, 8 October 2016, at voxeu.org. Long before Piketty, notably, another Frenchman, the Marxist Henri Lefebvre, called attention to the rising share of income accruing to landowners in twentieth-century capitalism, and the fact that this trend contradicted Marx’s expectation that land would ultimately be subsumed under capital and that rent – as a distinct category of capital income – would be subsumed within profit.

., 191 budgets, squeezing, 205–6 Build Now, Pay Later scheme, 236, 265, 282 Cabinet Office, 122, 122n1, 135, 137, 174, 182, 264, 268–9 Cable, Vince, 340 Cahill, Kevin, 25, 31, 74, 84, 90, 116, 173, 189, 247–8, 297 Callcutt, John, 303 Camden, 204, 347 Cameron, David, 137, 159, 192–4, 254, 303, 326, 327, 333 Canada, 5 Canary Wharf, 314, 317–8 Canary Wharf Group Investment Holdings, 298 Canterbury City Council, 266, 271 Capital (Marx), 62, 67–8 capital charging, 178–80, 184–5 capital gains, 48–55, 61–2, 64 Capital in the Twenty-First Century (Piketty), 53–4 capitalism and land, 11–13, 26, 34–5, 38– 72, 75, 83, 113–4, 283 contradictions of, 59–60, 62–3, 283 rentier form of, 305–11 role of the state in, 39–40, 64–5, 71 Cardiff, 265–6 Carlino, Nicholas, 268 Carlisle, John, 221 Catalano, Alejandrina, 52, 112–3, 116–7, 117n2, 297, 328–9, 339, 341 Cayman Islands, 195 Central Bedfordshire Council, 219 central government. see also Whitehall landholdings, 87, 115, 117, 134, 198, 209, 251–4, 259–63 Centre for Environmental Studies, 328–9 Centre for Policy Studies (CPS), 179 Chakrabortty, Aditya, 38, 124 Chamberlain, Joseph, 86 Chamberlain Walker Economics, 302n2, 3 Chartist movement, 86 Chelsea Barracks, 253 Churchill, Winston, 48–9, 60–1 City Hall, 199 City of London, 192, 332 city villages, 236, 313 City Villages, 160, 161, 162–3 civil estate, 134–6, 178, 182, 226–7, 253, 260 Civil Estate Property Benchmarking Service, 184 Civitas, 171 Clark, Gordon, 89, 90, 94 Clifford, Ben, 146, 319 coalition government, UK (2010–15), 122, 168, 228, 326 Cobden, Richard, 86 Cogan, Jacob, 27 collectivization, 53n2 Collings, Jesse, 86 Collinson, Patrick, 308 Commission for Architecture and the Built Environment (CABE), 201–2 commodity, land as a, 33–4, 60, 66–72, 311–2, 324, 327. see also ‘fictitious commodities’ Common Good lands, 260 common land, 9, 10–3, 30, 80–3, 116–7, 139, 323, 344 Commons Act (1876), 81, 82 Commons Preservation Society, 81 The Communist Manifesto (Engels and Marx), 46–7 Communities and Local Government Committee, 214n3, 238, 272, 293n4 community benefits, of land disposal, 228, 230, 232, 276–9 Community Care Act, 254 Community Empowerment (Scotland) Act (2015), 239 Community Land Act (1975), 107, 112, 113 Community Land Bill, 107 community land trust (CLT), 346–7 Community Right to Reclaim Land, 151, 228, 237, 238, 239 competition, 15–16, 18n2, 59, 61, 120–1 compulsion, of land disposal, 215–23 compulsory purchase, of land, 40–1, 95, 98–9, 110–1, 314, 320–1 The Condition of the Working Class in England (Engels), 67–8 Conservative Party (UK), 111, 119 donorship, 125 landlord MPs, 122 land privatization, 122, 176, 207, 213, 253, 268 views on landownership, 27, 93, 108, 173, 328 Cooper, Olivia, 88 Corby Borough Council, 266–7n5 Corbyn, Jeremy, 195–6, 337–8 Cornwall, 78 Couchman, James, 136 council estates ‘regeneration’ of, 160–3, 176n1, 236–7, 313, 325, 331 council housing, 240, 272, 314, 320–1, 339. see also Right to Buy policy birth of, 94–5 financing, 145–6, 212–3 land acquisition for, 94–6, 99–100 privatization, 1–2, 7–8, 144–6, 255, 267–8 repurchase by councils, 270–1 waiting lists, 271 Council Tax, 170, 196n2 ‘counter-movement’ (Polanyi), 324, 327, 328 Coventry, 100 Cowen, Tyler, 2–3 Cox, Andrew, 110, 165, 173 Coyle, Diane, 173 Cragoe, Matthew, 88–9 Crawley, 99 Crewe, Tom, 147, 148, 255, 258 Crichel Down affair/rules, 225, 227 Cromwell, Thomas, 79 Crosland, Anthony, 111 Crown Estate, 9–10, 10n1, 88, 116– 7, 259n1, 298 Crown Estate (Scotland), 10n1, 346 Crown land, 88 Cumbria County Council, 12n1 Currie, Edwina, 152 Dalton, Hugh, 110–1, 113 Dalyell, Tam, 217 Davies, Ceri, 18n2, 177–8, 179–80. see also Davies report (1983) Davies, Will, 15 Davies report (1983), 186, 210, 211, 254, 332. see also Davies, Ceri DB Schenker, 273 deBuys, William, 331 Defence Infrastructure Organisation, 165, 215 defence land. see Ministry of Defence, landholdings Defence Lands Committee, 105 deficit reduction, 119, 131, 152, 154, 213 Deloitte Real Estate, 218, 219, 332 Department for Communities and Local Government (DCLG), 198n1, 208, 221–2, 235, 280–2, 284, 285n4, 340n3 Department for Environment, Food and Rural Affairs (DEFRA) landholdings, 209, 259–60, 281 Department for Transport, 273 Department of Health, 221, 254, 280, 281, 333. see also National Health Service Department of the Environment, 187 de-risked sites, 235–6, 285 de Soto, Hernando Mystery of Capital, 34–5 Development Land Tax (1976), 112–3 Dissolution of the Monasteries, 79, 81 Dobson, Frank, 224, 225 Dobson, Julian, 277–9 Domesday Book, 73–4, 77, 199 Dorset, 105–6 ‘double movement’ (Polanyi), 68–9 Downing (property developer), 239 Dunkley, Emma, 1, 2 Eastbourne, 242 Eastbourne Review, 243–4 economic growth, land privatization and, 129, 157–8, 165–7, 264–5, 307–10 Edinburgh, 239 Education Funding Agency (EFA), 232n2, 319 Edwards, Chris, 2 efficiency land allocation, 4, 42–3, 59, 62–5, 286–96 land use, 11–12, 126–7, 136–43, 153, 177–85, 274 Elazar, Dahlia, 26, 27 Elephant Park, 314 employment, land privatization and, 129, 157, 165–7 enclosure movement, 11–4, 30–1, 79–85 Enfield, 320 Engels, Friedrich, 242 The Communist Manifesto, 46–7 The Condition of the Working Class in England, 67–8 enterprise privatizations, 1–3, 6–7, 120–1, 247–8, 299, 328 ‘factor of production,’ 29, 120 Fair, J.


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Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller

agricultural Revolution, Albert Einstein, algorithmic trading, Andrei Shleifer, autonomous vehicles, bank run, banking crisis, basic income, bitcoin, blockchain, business cycle, butterfly effect, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, central bank independence, collective bargaining, computerized trading, corporate raider, correlation does not imply causation, cryptocurrency, Daniel Kahneman / Amos Tversky, debt deflation, disintermediation, Donald Trump, Edmond Halley, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, full employment, George Akerlof, germ theory of disease, German hyperinflation, Gunnar Myrdal, Gödel, Escher, Bach, Hacker Ethic, implied volatility, income inequality, inflation targeting, invention of radio, invention of the telegraph, Jean Tirole, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, litecoin, market bubble, money market fund, moral hazard, Northern Rock, nudge unit, Own Your Own Home, Paul Samuelson, Philip Mirowski, plutocrats, Plutocrats, Ponzi scheme, publish or perish, random walk, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, Rubik’s Cube, Satoshi Nakamoto, secular stagnation, shareholder value, Silicon Valley, speech recognition, Steve Jobs, Steven Pinker, stochastic process, stocks for the long run, superstar cities, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, traveling salesman, trickle-down economics, tulip mania, universal basic income, Watson beat the top human players on Jeopardy!, We are the 99%, yellow journalism, yield curve, Yom Kippur War

All of these narratives imply that the causes and effects of the Great Depression extend beyond economists’ simple story of multiple rounds of expenditure and the effects of interest rates on rational investing behavior. The decline in modesty and compassion narratives since the Great Depression may help to explain many economic trends. The modesty decline is likely related to the rise in inequality, in the share of national income earned by the top 1%, documented by Thomas Piketty in his 2014 book Capital in the Twenty-First Century.39 It also is likely related to the long-term decline in managers’ feeling of loyalty to their employees, documented by Louis Uchitelle in his 2006 book The Disposable American.40 A narrative downplaying modesty and compassion was supported by Donald Trump in his 2007 book, Think Big and Kick Ass in Business and Life, coauthored with Bill Zanker.41 The frugality narrative was repeated in Japan after 1990, with different stories and personalities.

.… Increase the purchasing power of the 95 percent of the families of the United States who have only tiny incomes, and they will at once buy more.28 Recent years have seen a renewal of this great wave of concern as new redistribution proposals are put forth and discussed. Notably, Google Trends shows a huge uptrend in searches for the term universal basic income starting in 2012. ProQuest News & Newspapers reveals essentially the same uptrend. Public attention to inequality has burgeoned, with much attention to the increased share of income by the top 1% or the top one-tenth of 1%. Thomas Piketty’s Capital in the Twenty-First Century, which described this trend, was a best seller that generated intense discussion. The term “digital divide” has gone viral, describing a sort of inequality related to access to digital computers. No one can predict the effects of labor-saving and intelligent machines on livelihoods and work in the future, but the narratives themselves have the potential to drive amplified economic booms and recessions, as well as public policy.

Penfield, Wilder. 1958. “Some Mechanisms of Consciousness Discovered during Electrical S