Simon Kuznets

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The Haves and the Have-Nots by Branko Milanovic

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Berlin Wall, Branko Milanovic, colonial rule, crony capitalism, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Fall of the Berlin Wall, financial deregulation, full employment, Gini coefficient, high net worth, illegal immigration, income inequality, income per capita, Joseph Schumpeter, means of production, open borders, Plutocrats, plutocrats, purchasing power parity, Simon Kuznets, very high income, Washington Consensus

Vignette 1.3 - Who Was the Richest Person Ever? Vignette 1.4 - How Unequal Was the Roman Empire? Vignette 1.5 - Was Socialism Egalitarian? Vignette 1.6 - In What Parisian Arrondissement Should You Live in the ... Vignette 1.7 - Who Gains from Fiscal Redistribution? Vignette 1.8 - Can Several Countries Exist in One? Vignette 1.9 - Will China Survive in 2048? Vignette 1.10 - Two Students of Inequality: Vilfredo Pareto and Simon Kuznets CHAPTER 2 Vignette 2.1 - Why Was Marx Led Astray? Vignette 2.2 - How Unequal Is Today’s World? Vignette 2.3 - How Much of Your Income Is Determined at Birth? Vignette 2.4 - Should the Whole World Be Composed of Gated Communities? Vignette 2.5 - Who Are the Harraga? Vignette 2.6 - The Three Generations of Obamas Vignette 2.7 - Did the World Become More Unequal During Deglobalization?

As for income distribution within nations, Pareto failed to define a theory of change in it, although “failure” is not a wholly appropriate term simply because Pareto thought, and believed to have empirically proved, that income distribution must be more or less fixed and thus that there were no laws of its “change” with development. There was, Pareto argued, only a “law of its fixity.” It wasn’t until 1955 that Simon Kuznets, a Russian-American economist and statistician, proposed the first real theory of what propels change in income distribution. (He is profiled, together with Pareto, in Vignette 1.10.) He argued—having had access to not many more data points than Pareto (although the data were of a different kind, household, not fiscal, surveys)—that inequality among people is not the same regardless of the type of society but varies predictably as society develops.

The problem with surveys, though, is that, for most developed countries, the first available surveys start only after World War II. There are some earlier and incomplete surveys from nineteenth-century England and the early-twentieth-century United States and Soviet Russia, but we can hardly speak of anything serious and usable before approximately the early 1950s. (You may recall that Pareto’s speculations were based on fiscal data, whereas Simon Kuznets had hardly a dozen surveys to draw upon—even as late as 1955.) For developing countries the situation is even worse; very often there is nothing before the 1970s or even the 1980s. This is particularly true for African nations, where household surveys developed, often with the assistance of international organizations, only in the 1980s.23 What about the two most populous countries in the world?

 

pages: 296 words: 82,501

Stuffocation by James Wallman

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3D printing, Airbnb, back-to-the-land, Berlin Wall, big-box store, Black Swan, BRICs, carbon footprint, Cass Sunstein, clean water, collaborative consumption, crowdsourcing, David Brooks, Fall of the Berlin Wall, happiness index / gross national happiness, high net worth, income inequality, James Hargreaves, Joseph Schumpeter, Martin Wolf, McMansion, means of production, Nate Silver, Occupy movement, post-industrial society, Post-materialism, post-materialism, Richard Florida, Richard Thaler, sharing economy, Silicon Valley, Simon Kuznets, Skype, spinning jenny, The Signal and the Noise by Nate Silver, Thorstein Veblen, Tyler Cowen: Great Stagnation, World Values Survey, Zipcar

Source: various histories of the Great Depression, including The Econ Review (www.econreview.com). “Unemployment soared to 25% in the UK” Source: Stephen Constantine, Unemployment in Britain Between the Wars (London: Longman, 1980). “30% unemployed in Australia” Source: Australian government figures. Simon Kuznets Read more about the rise of economics and the life of Simon Kuznets in Robert Fogel, Simon S Kuznets April 30, 1901–July 9, 1985 (Cambridge, MA: NBER, 2000); and Simon Kuznets et al., National Income, 1929-32 (NBER, June 1934). “As recently as the late 19th century, economics was considered of such little importance that at Oxford University, for example, there was only one part-time lecturer, and at American universities it was merely one section of one segment of an entire course” Sources: Robert Fogel, Simon S Kuznets April 30, 1901–July 9, 1985 (Cambridge, MA: NBER, 2000); and Gerard M Koot, English Historical Economics, 1870-1926 : The Rise of Economic History and Neomercantilism (Cambridge: Cambridge University Press, 1987).

It was like asking a general to deploy his troops without knowing the lay of the land or where the enemy was, or where reinforcements were needed, and how many. How could any leader make plans when he could not see the whole picture? So the US senate commissioned a private enterprise called the National Bureau of Economic Research (NBER), which had been collecting records for some time, to create a set of national income accounts. The lead researcher on the project was a man by the name of Simon Kuznets. Born in Pinsk in what was then Russia in 1901, Kuznets had briefly served as a statistician in Odessa in the Ukraine. He had arrived in the US in 1922. He had distinguished himself, so far, only at Columbia University. He was about to create his magnum opus. It is hard for us to imagine economics as anything other than what it is today – a central consideration of our lives. But as recently as the late 19th century, economics was considered of such little importance that at Oxford University, for example, there was only one part-time lecturer, and at American universities it was merely one section of one segment of an entire course – moral philosophy, which was then only taught by ordained ministers.

Is Experientialism the Answer to Stuffocation? Ron Inglehart Again, Ron Inglehart, “The Silent Revolution in Europe: Intergenerational Change in Post-Industrial Societies”, American Political Science Review Vol. 65, No. 4, December 1971. To see the shift away from materialistic values, see the World Values Survey (www.worldvaluessurvey.org). The changing make-up of our economy Compare the type of items in Simon Kuznets, National Income, 1929-32 (Cambridge, MA: NBER, June 1934) with those in today’s economies. Consider also, Francisco J Buera and Joseph P Kaboski. “The Rise of the Service Economy”, American Economic Review Vol. 102, No. 6, 2012. For an easy introduction, see the video infographic “The iPhone Economy” at www.nytimes.com. For the definitive text on consuming fewer materials, read Chris Goodall, “Peak Stuff”, Carbon Commentary, 2011.

 

pages: 274 words: 66,721

Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet by Jane Gleeson-White

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Affordable Care Act / Obamacare, Bernie Madoff, Black Swan, British Empire, carbon footprint, corporate governance, credit crunch, double entry bookkeeping, full employment, Gordon Gekko, income inequality, invention of movable type, invention of writing, Islamic Golden Age, Johann Wolfgang von Goethe, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, means of production, Naomi Klein, Ponzi scheme, shareholder value, Silicon Valley, Simon Kuznets, spice trade, spinning jenny, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, traveling salesman, upwardly mobile

It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything, in short, except that which makes life worthwhile. Like many before and after him—including the GNP’s creator, Simon Kuznets—Senator Robert Kennedy believed there was something profoundly wrong with the way we calculate our national wealth and with the numbers we produce to do so, such as the GNP and the Gross Domestic Product (GDP). As Kennedy pointed out, these numbers generate alarming anomalies: in their parlance cigarette advertising is worth more than the health of a child. And yet today, forty years after Kennedy’s call for their revision, these numbers continue to rule the policy decisions of governments, financial institutions, corporations and communities.

With the crash of the New York Stock Exchange in October 1929 the laissez-faire principles that had guided government approaches to national economic affairs in the nineteenth century suddenly lost their lustre. Over the next four years in the United States, 11,000 banks failed, production collapsed by more than a half and unemployment soared, peaking at 13 million or nearly one-quarter of the workforce. At sea in their attempts to develop a coherent response to the crisis, the administrations of Herbert Hoover and then Franklin Delano Roosevelt commissioned Russian-born economist Simon Kuznets to develop comprehensive estimates of the income of the United States to guide their policies. In March 1933, Roosevelt succeeded Hoover as US president and immediately implemented his ‘Hundred Days’: ‘a presidential barrage of ideas and programmes unlike anything known to American history’. The following year, in May 1934, the British economist John Maynard Keynes went to America to see the New Deal in action.

And they were mere guesses: there was no systematic collection of information on national production by governments or any other institution. It was not until the depression of the 1930s that the idea of looking at a national economy in terms of accounting became widespread and the first attempts were made to calculate not just a nation’s income but also its expenditure. The first official measure of the overall US economy—measures of national savings, consumption and investment—was devised by Simon Kuznets and his colleagues in the 1930s to provide policymakers with a comprehensive picture of what was going on. No comprehensive measures of national income and output had existed before then. It was the Depression that raised the need for national accounts such as the Gross Domestic Product (GDP)—or, as economist William D. Nordhaus said in 2010: ‘If you want to know why GDP matters, you can just put yourself back in the 1930s period, where we had no idea what was happening to our economy.’

 

pages: 235 words: 62,862

Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman

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autonomous vehicles, banking crisis, Bartolomé de las Casas, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labour market flexibility, labour mobility, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey

Susan Steed and Helen Kersley, “A Bit Rich: Calculating the Real Value to Society of Different Professions,” New Economics Foundation (December 14, 2009). http://www.neweconomics.org/publications/entry/a-bit-rich 29. Kevin Kelly, “The Post Productive Economy,” The Technium (January 1, 2013). http://kk.org/thetechnium/2013/01/the-post-produc 30. Simon Kuznets, “National Income, 1929-1932,” National Bureau of Economic Research (June 7, 1934). http://www.nber.org/chapters/c2258.pdf 31. Coyle, p. 14. 32. Simon Kuznets, “How to Judge Quality,” The New Republic (October 20, 1962). 9 Beyond the Gates of the Land of Plenty 1. OECD, “Aid to developing countries rebounds in 2013 to reach an all-time high” (April 8, 2014). http://www.oecd.org/newsroom/aid-to-developing-countries-rebounds-in-2013-to-reach-an-all-time-high.htm 2.

It was obvious that the homeless population was growing and that companies were going bankrupt left and right, but as to the actual extent of the problem, nobody knew. A few months earlier, President Hoover had dispatched a number of Commerce Department employees around the country to report on the situation. They returned with mainly anecdotal evidence that aligned with Hoover’s own belief that economic recovery was just around the bend. Congress wasn’t reassured, however. In 1932, it appointed a brilliant young Russian professor by the name of Simon Kuznets to answer a simple question: How much stuff can we make? Over the next few years, Kuznets laid the foundations of what would later become the GDP. His initial calculations caused a flurry of excitement and the report he presented to Congress became a national bestseller (itself adding to the GDP, one 20-cent copy at a time). Soon, you couldn’t switch on the radio without hearing about “national income” this or “the economy” that.

“The GDP and related data are like beacons that help policymakers steer the economy toward the key economic objectives.”21 At the start of the 20th century the U.S. government employed a grand total of one economist; more accurately, an “economic ornithologist,” whose job was to study birds. Less than 40 years later, the National Bureau of Economic Research payrolled some 5,000 economists, in the sense that we use the word. These included Simon Kuznets and Milton Friedman, ultimately two of the century’s most important thinkers.22 All across the world, economists began to play a dominant role in politics. Most were educated in the United States, the cradle of the GDP, where practitioners pursued a new, scientific brand of economics revolving around models, equations, and numbers. Lots and lots of numbers. This was a completely different form of economics to what John Maynard Keynes and Friedrich Hayek had learned at school.

 

pages: 159 words: 45,073

GDP: A Brief but Affectionate History by Diane Coyle

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

Clark was appointed in 1930 to provide statistics to the newly created National Economic Advisory Council, the first body ever created by the British government to provide formal economic advice. The experience of the Depression created this demand for statistics that might help the government figure out how to bring to an end the unprecedented economic slump. Across the Atlantic, in the United States, Simon Kuznets had a similar motivation. The government of Franklin Delano Roosevelt wanted a clearer picture of the state of an economy trapped in a seemingly endless depression. The National Bureau of Economic Research was requested to provide estimates of national income. Kuznets, who later won the Nobel Memorial Prize in Economic Science for this work, took on the task of developing Clark’s methods and applying them to the U.S. economy.

In a book published in 1996 I noted the phenomenon that growth in GDP for more than a decade had literally not weighed anything: all the incremental value-added growth was in intangibles of one kind or another.15 A measure of the national economy designed for tangible, physical products only is not really a good measure of an increasingly weightless economy. The lesson to draw from this discussion is that GDP is not, and was never intended to be, a measure of welfare. It measures production. As we saw in chapter 1, Simon Kuznets, one of the pioneers of national accounting, was keen to develop a measure of economic welfare. But the demands of wartime meant his ambition was overtaken by the need to measure production and productive capacity, in order to use scarce material resources and labor as efficiently as possible. If the aim instead is to develop a measure of national economic welfare, we shouldn’t be starting with GDP.

“Economists all know that, and yet their everyday use of GNP as the standard measure of economic performance apparently conveys the impression that they are evangelistic worshippers of GNP,” remark William Nordhaus and James Tobin.33 Besides, whether or not the task ought to be measuring welfare rather than GDP was debated in the early years of GDP’s development, as we saw in chapter 1, and it has been debated ever since. Simon Kuznets, working on measuring national income in the 1930s, wrote: It would be of great value to have national income estimates that would remove from the total the elements which, from the standpoint of a more enlightened social philosophy than that of an acquisitive society represent dis-service rather than service. Such estimates would subtract from the present national income totals all expenses on armament, most of the outlays on advertising, a great many of the expenses involved in financial and speculative activities, and what is perhaps most important, the outlays that have been made necessary in order to overcome difficulties that are, properly speaking, costs implicit in our economic civilization.

 

pages: 309 words: 91,581

The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It by Timothy Noah

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autonomous vehicles, blue-collar work, Bonfire of the Vanities, Branko Milanovic, call centre, collective bargaining, computer age, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, Deng Xiaoping, Erik Brynjolfsson, feminist movement, Frank Levy and Richard Murnane: The New Division of Labor, Gini coefficient, income inequality, industrial robot, invisible hand, job automation, Joseph Schumpeter, low skilled workers, lump of labour, manufacturing employment, moral hazard, oil shock, pattern recognition, performance metric, positional goods, post-industrial society, postindustrial economy, purchasing power parity, refrigerator car, rent control, Richard Feynman, Richard Feynman, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, Stephen Hawking, Steve Jobs, The Spirit Level, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, union organizing, upwardly mobile, very high income, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, Yom Kippur War

Upon retiring from NYU in 1945, King became chairman of the Committee for Constitutional Government, an anti–New Deal organization originally founded to oppose Roosevelt’s 1937 court-packing scheme, which outraged King. Well before he died in 1962 at age eighty-two, King saw his legacy eclipsed by the work of a Russian émigré who in 1927 had succeeded King at the NBER and in 1971 would win the Nobel Prize in economics. His name was Simon Kuznets, and among his many lasting contributions to economics was the creation of the analytic foundation for the study of income inequality. Kuznets had (and continues to have) legions of admirers in the economics profession. King was not one of them. In a 1940 letter to one of the NBER’s directors, King quarreled with what he termed Kuznets’s “assumption … that environment and luck are the principal determinants of a persons [sic] success or failure in life.”

Sampling is very useful when you’re measuring extremely large populations; that’s why demographers are forever recommending that the Census Bureau’s much better-known project, the decennial census, quit trying to count every last American—a method that’s bound to miss some hard-to-find people—and instead conduct a scientifically rigorous sampling, which would be more accurate. But sampling becomes a lot less accurate when you’re measuring trends within a very small subgroup of the larger population. And the proportion of households with annual incomes above $1 million is well under 1 percent.1 Rather than rely on the Current Population Survey for broad-brush data about the rich, Piketty and Saez did what Simon Kuznets had done prior to his groundbreaking 1954 analysis of U.S. income distribution. They looked at data from the Internal Revenue Service. Except perhaps for a very few criminals who possess a superhuman ability to hide enormous quantities of cash, everyone in the United States who makes $1 million or more files a yearly tax return, and the IRS keeps track of precisely how much each of these people rakes in.

Very civilized men can all become equal because they all have at their disposal similar means of attaining comfort and happiness. Between these two extremes is found inequality of condition, wealth, knowledge—the power of the few, the poverty, ignorance and weakness of all the rest.” 16. In fairness to Kuznets, he himself characterized his income-inequality theory as “5 percent empirical information and 95 percent speculation, some of it possibly tainted by wishful thinking.” 17. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (Mar. 1955), 1–28. 18. Steven R. Weisman, The Great Tax Wars (New York: Simon & Schuster, 2002), 353. 19. Claudia Goldin and Robert Margo, “The Great Compression: The Wage Structure in the United States at Mid-Century,” Quarterly Journal of Economics 107, issue 1 (Feb. 1992), 1–34. 20. The factory workers were all in New York State. 21.

 

pages: 332 words: 89,668

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

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Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, 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, low skilled workers, low-wage service sector, minimum wage unemployment, moral hazard, 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, 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

Vernon argues that government spending did not end the Depression, but rather, tight monetary and fiscal policies increased investor confidence.79 Historian Robert Higgs argues that the war should not be seen as raising the general standard of living, since 22 percent of the (male) labor force was mobilized into the military—many by conscription. Being drafted took away male workers’ freedom of choice, forcing them into low-paid employment as soldiers. They were replaced by teenagers, retired workers, women, and members of minority groups. This sent the overall unemployment rate to 1.4 percent, but, Higgs argued, resulted in less comfort and happiness overall. Economist Simon Kuznets pointed out that during World War II, much was spent on war materiel and that war goods do not improve the well-being of Americans, but rather, in moments of existential crisis, make it possible for well-being to exist at all. Kuznets argued that many military products should not even be counted as part of the gross national product (GNP), and of course, to exclude military products from GNP would show a shrinking American productivity during wartime.

Murrow and show producer Fred Friendly gave little sense of what might concretely be done to improve the living conditions of the migrants or the educational prospects of their children, gesturing vaguely in the direction of farmworkers’ unions while at the same time acknowledging the extreme imbalance of power between the migrants and their farm employers. Harvest of Shame was part of a larger discourse about hidden poverty and the costs of economic inequality that emerged in the late Eisenhower administration and then grew louder in the 1960s. In 1962, the historian Gabriel Kolko published Wealth and Power in America. The economist Simon Kuznets had claimed that income in the United States necessarily would become more evenly distributed over time. Kolko attacked Kuznets with a statistical analysis demonstrating that Americans in fact had a remarkable lack of upward mobility. Kolko pointed out that large numbers of Americans could not afford medical expenses nor even to replace their clothing. He argued that the flagship social support program, Social Security, had been originally underfunded with the “Victorian virtue of thrift” in mind; it was meant to provide a substandard lifestyle.

Erik Sherman, “America Is the Richest, and Most Unequal, Country,” Fortune, September 30, 2015, available online at http://fortune.com/2015/09/30/america-wealth-inequality/, accessed April 2, 2016. 19. Shammas, “A New Look,” 420. 20. Williamson and Lindert, “Three Centuries of American Inequality,” 11, 15, 20. 21. Mark W. Frank, “Inequality and Growth in the United States: Evidence from a New State-Level Panel of Income Inequality Measures,” Economic Inquiry vol. 47 no. 1 (2009): 55–68. 22. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review vol. 45 no. 1 (1955): 1–30. 23. Milanovic, Haves and Have-Nots, 91. 24. Williamson and Lindert, “Three Centuries of American Inequality,” 56, 59; Jeffrey Williamson and Peter H. Lindert, American Inequality: A Macroeconomic History (New York: Academic Press, 1980), 258. 25. Williamson and Lindert, American Inequality, 8. CHAPTER 1 1.

 

pages: 330 words: 77,729

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

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

Only "effective demand"—a powerful new term introduced in chapter 3 of The General Theory—counts. What consumers and businesses spend determines national output. Keynes defined effective demand as aggregate output (Y), which is the sum of consumption (C) and investment (I). Hence, Y= C +1 Today we refer to Y or "aggregate effective demand," as gross domestic product (GDP). GDP is defined as the value of final output of goods and services during the year. Simon Kuznets, a Keynesian statistician, developed national income accounting in the early 1940s as a way to measure Keynes's aggregate effective demand. Keynes effectively demonstrated 10. Foster and Catchings rejected all arguments and never paid the prize money. that if savings are not invested by business, GDP does not reach its potential; recession or depression indicates a lack of effective demand.

Other free-market economists, such as Henry Hazlitt and Murray Rothbard, wrote largely from outside the profession and had marginal influence. How did Friedman almost single-handedly change the intellectual climate back from the Keynesian model to the neoclassical model of Adam Smith? After acquiring academic credentials, he focused on scholarly technical work, particularly empirical evidence to test the Keynesian model. He learned the importance of sophisticated quantitative analysis from Simon Kuznets, Wesley Mitchell, and other stars at the National Bureau of Economic Research. Friedman started teaching at Chicago in 1946, where he stayed until his official retirement in 1977. Following Frank Knight's retirement in 1955, Friedman continued the Chicago tradition and even strengthened it with an upgraded version of Irving Fisher's quantity theory of money, which he applied to monetary policy.

 

pages: 242 words: 68,019

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

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Ada Lovelace, Albert Einstein, Arthur Eddington, Claude Shannon: information theory, David Ricardo: comparative advantage, Douglas Hofstadter, frictionless, frictionless market, George Akerlof, Gödel, Escher, Bach, income inequality, income per capita, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, job satisfaction, John von Neumann, New Economic Geography, Norbert Wiener, p-value, phenotype, price mechanism, Richard Florida, Ronald Coase, Silicon Valley, Simon Kuznets, Skype, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, working-age population

The earliest models equated economic output to the ratio between an economy’s capital and labor when the economy was in equilibrium. They also modeled economic growth as the tug-of-war between an economy’s savings rate (the capital that it keeps for later use) and capital depreciation (the wear and tear that erodes capital). Robert Solow advanced the prototypical model of economic growth in the 1950s—a timely development, as the data needed to evaluate such models were just becoming available. Simon Kuznets, the Russian-born economist who fathered GDP, had finished creating the system of national accounts a couple of decades earlier, helping generate the economic metric that dominated the twentieth century.4 Solow’s model, however, did not measure up well when it was compared with empirical data. As Kuznets famously remarked in his Nobel Prize acceptance speech, “The earlier theory that underlies these measures defined the productive factors in a relatively narrow way, and left the rise in productivity as an unexplained gap, as a measure of our ignorance.”5 Kuznets’ “measure of our ignorance” is what we know technically as total factor productivity (TFP).

Kuznets originally generated the concept of gross national product (GNP), which was the official metric at the time. Gross domestic product (GDP) displaced GNP as the official metric in the 1990s. GDP considers the production of goods and services within a country. GNP considers the goods and services produced by the citizens of a country, whether or not those goods are produced within the boundaries of the country. 5. Simon Kuznets, “Modern Economic Growth: Findings and Reflections,” American Economic Review 63, no. 3 (1973): 247–258. 6. Technically, total factor productivity is the residual or error term of the statistical model. Also, economists often refer to total factor productivity as technology, although this is a semantic deformation that is orthogonal to the definition of technology used by anyone who has ever developed a technology.

 

pages: 421 words: 125,417

Common Wealth: Economics for a Crowded Planet by Jeffrey Sachs

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agricultural Revolution, air freight, back-to-the-land, British Empire, business process, carbon footprint, clean water, colonial rule, corporate social responsibility, correlation does not imply causation, demographic transition, Diane Coyle, Edward Glaeser, energy security, failed state, Gini coefficient, Haber-Bosch Process, income inequality, income per capita, intermodal, invention of agriculture, invention of the steam engine, invisible hand, Joseph Schumpeter, knowledge worker, labor-force participation, labour mobility, low skilled workers, microcredit, oil shale / tar sands, peak oil, profit maximization, profit motive, purchasing power parity, road to serfdom, Ronald Reagan, Simon Kuznets, Skype, statistical model, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, unemployed young men, War on Poverty, women in the workforce, working-age population

The Encyclopedia of Life could have one expandable Web page per species, documenting all known aspects of the species: genomics, cladistics and evolution, behavior, range, abundance, ecological relations with other species, threats to survival, and so forth. CHAPTER 7: GLOBAL POPULATION DYNAMICS 159 “There doesn’t seem ”: “How to Deal with a Falling Population” The Economist 284, no. 8539 (July 28, 2007): 11. 160 Simon Kuznets and Michael Kremer: Michael Kremer, “Population Growth and Technological Change: One Million B.C. to 1990,” The Quarterly Journal of Economics 108, no. 3 (August 1993): 681–716; Simon Kuznets, “Population Change and Aggregate Output,” Demographic and Economic Change in Developed Countries (Princeton, NJ: Princeton University Press, 1960): 324–40. 177 The standard tests have: Robert J. Barro and Xavier Sala-i-Martin, Economic Growth, 2nd edition (Cambridge, Mass.: MIT Press, 2004). 177 each country’s average annual growth rate: Initial income is expected to have a negative effect: richer countries should grow less rapidly, and poor countries more rapidly, because of the phenomenon of convergence.

THE DEBATE OVER POPULATION Economists tend to be divided into three camps: population optimists, who say that today’s population growth is good for development or is at least neutral; population pessimists, who say that population growth has already gone too far to avoid disaster; and those (including myself) who believe in the importance of spurring the demographic transition to lower fertility rates in the poorest countries. Population optimists maintain that there are no real bounds to the Earth’s population because technology can and will keep ahead of the curve. One variant of this optimism is associated with the ideas of economists Simon Kuznets and Michael Kremer, who have each argued that a larger global population will tend to bring about the very technological advances that are needed to sustain that larger population. From their viewpoint, an important part of economic advance comes from the scientific and technological discoveries of geniuses in society. These extraordinary individuals represent a small but relatively constant proportion of the population.

 

pages: 1,205 words: 308,891

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

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Admiral Zheng, agricultural Revolution, Albert Einstein, BRICs, British Empire, butterfly effect, Carmen Reinhart, clockwork universe, computer age, Corn Laws, dark matter, David Ricardo: comparative advantage, Donald Trump, Edward Lorenz: Chaos theory, European colonialism, experimental economics, financial innovation, Fractional reserve banking, full employment, George Akerlof, germ theory of disease, Gini coefficient, greed is good, Howard Zinn, income per capita, interchangeable parts, invention of agriculture, invention of air conditioning, invention of writing, invisible hand, Isaac Newton, James Watt: steam engine, John Maynard Keynes: technological unemployment, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, means of production, Naomi Klein, New Economic Geography, New Urbanism, purchasing power parity, rent-seeking, road to serfdom, Robert Gordon, Ronald Coase, Ronald Reagan, Scientific racism, Scramble for Africa, Shenzhen was a fishing village, Simon Kuznets, Slavoj Žižek, spinning jenny, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, tulip mania, union organizing, Upton Sinclair, urban renewal, V2 rocket, very high income, working poor, World Values Survey, Yogi Berra

According to the "marginal productivity theory" developed by economists from the 1890s to the 1940s, the share in total costs of an input into production such as horses or land or labor is the farmer's opinion of the percentage change in final output that will come from 1 percent more of the input. The theory is true if farmers face constant returns to scale and have no market power and are in the economist's sense rational. 18. Hansen 1938, 1941, out of Keynes 1937. 19. Fogel 2005. 20. Tunzelmann 2003, p. 89. 21. McCloskey 1995. 22. Feinstein 2003, p. 45. The table stands as a monument to the massive scholarly effort of numerous economic historians since Simon Kuznets invented the methods in the 1930s and 1940s. 23. Feinstein 2003, p. 46. 24. Schumpeter 1939, Vo. I, p. 223. The next quotation is from p. 224. 125 25. Schumpeter 1954, p. 78. 126 Chapter 12: Nor Because of a Rise of Greed or of a Protestant Ethic Nor does modern innovation have anything unusually “greedy” about it. In characterizing capitalism in 1867 as “solely the restless stirring for gain” Marx said he was quoting the bourgeois economist J.

The prehistory of thrift was revolutionized around 1960 when economists and economic historians realized with a jolt that thriftiness and savings could not explain the Industrial Revolution. The economists such as Abramowitz, Kendrick, and Solow discovered that only a smallish fraction even of recent economic growth can be explained by routine thrift and miserly accumulation. At the same time the economic historians were bringing the news that in Britain the rise in savings was too modest to explain much at all. Simon Kuznets and later many other economists such as Charles Feinstein provided the rigorous accounting of the fact—though as students of capital accumulation they could never quite overcome their initial hypothesis that Capital Did The Trick. The aggregate statistical news was anticipated in the 1950s and 1960s by numerous economic historians of Britain such as François Crouzet and Philip Cottrell and Sidney Pollard, in detailed studies of the financing of industry.

Elsewhere it constructs by government fiat great armies to crush dissent and great dams that will silt up in twenty years. All right. Again: what then explains innovation? New thoughts, new habits of the mind, what Mokyr calls the “industrial Enlightenment.” “The rise of our standard of living,” wrote Hayek, “is due at least as much to an increase in knowledge” as to accumulation of capital.3 The great economist Simon Kuznets, notes his student Richard Easterlin, believed that “the ‘givens’ of economics — technology, tastes, and institutions — are the key actors in historical change, and hence most economic theory has, at best, only limited relevance to understanding long-term change.”4 Mokyr and Goldstone and Jacob and Tunzelmann and I and some others would go one step further, to ideas. It was ideas of steam engines and light bulbs and computers that made Northwestern Europe and then much of the rest of the world rich, not new accumulations from saving.

 

pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

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accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, 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, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, 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, very high income, We are the 99%

To summarize: he occasionally sought to make use of the best available statistics of the day (which were better than the statistics available to Malthus and Ricardo but still quite rudimentary), but he usually did so in a rather impressionistic way and without always establishing a clear connection to his theoretical argument. 9. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (1955): 1–28. 10. Robert Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics 70, no. 1 (February 1956): 65–94. 11. See Simon Kuznets, Shares of Upper Income Groups in Income and Savings (Cambridge, MA: National Bureau of Economic Research, 1953). Kuznets was an American economist, born in Ukraine in 1901, who settled in the United States in 1922 and became a professor at Harvard after studying at Columbia University.

But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge for the century now under way? These are the questions I attempt to answer in this book. Let me say at once that the answers contained herein are imperfect and incomplete. But they are based on much more extensive historical and comparative data than were available to previous researchers, data covering three centuries and more than twenty countries, as well as on a new theoretical framework that affords a deeper understanding of the underlying mechanisms.

Accumulation ends at a finite level, but that level may be high enough to be destabilizing. In particular, the very high level of private wealth that has been attained since the 1980s and 1990s in the wealthy countries of Europe and in Japan, measured in years of national income, directly reflects the Marxian logic. From Marx to Kuznets, or Apocalypse to Fairy Tale Turning from the nineteenth-century analyses of Ricardo and Marx to the twentieth-century analyses of Simon Kuznets, we might say that economists’ no doubt overly developed taste for apocalyptic predictions gave way to a similarly excessive fondness for fairy tales, or at any rate happy endings. According to Kuznets’s theory, income inequality would automatically decrease in advanced phases of capitalist development, regardless of economic policy choices or other differences between countries, until eventually it stabilized at an acceptable level.

 

pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

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Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population, World Values Survey

.* The school emphasized the importance of understanding the history of how the material production system has changed, both influencing and influenced by law and other social institutions.12 The Developmentalist tradition in the modern world: Development Economics The Developmentalist tradition was advanced in its modern form in the 1950s and the 1960s by economists such as, in alphabetical order, Albert Hirschman (1915–2012), Simon Kuznets (1901–85), Arthur Lewis (1915–91) and Gunnar Myrdal (1899–87) – this time, under the rubric of Development Economics. Writing mostly about the countries on the periphery of capitalism in Asia, Africa and Latin America, they and their followers not only refined the earlier Developmentalist theories but also added quite a lot of new theoretical innovations. The most important innovation came from Hirschman, who pointed out that some industries have particularly dense linkages (or connections) with other industries; in other words, they buy from – and sell to – a particularly large number of industries.

When things started to unravel in the late 1980s, few wanted to defend a system that could now only be described as hypocritical. The most reasonable conclusion to draw from the review of various theories and empirical evidence is that neither too little nor too much inequality is good. If it is excessively high or excessively low, inequality may hamper economic growth and create social problems (of different kinds). The Kuznets hypothesis: inequality over time Simon Kuznets, the Russian-born American economist, who won one of the first Nobel Prizes in Economics (in 1971 – the first one was in 1969), proposed a famous theory about inequality over time. The so-called Kuznets hypothesis is that, as a country develops economically, inequality first increases and then decreases. This hypothesis has very strongly influenced the way in which the study of inequality has been conducted over the last half century, so it is important to know what it is about.

 

pages: 561 words: 87,892

Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

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Admiral Zheng, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, George Akerlof, German hyperinflation, Gini coefficient, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, knowledge economy, labour market flexibility, labour mobility, low skilled workers, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, women in the workforce, working-age population, Y2K, Yom Kippur War

All this after a decade of rule by a Labour government that, historically, would happily have burnished its redistributional credentials. THE EMERGING GAP As we have seen, growing income inequality is not confined to parts of the developed world. China has witnessed a widening gap between a growing middle class and the majority of people who still remain wrapped in poverty. Other emerging economies have also seen a growing divide between rich and poor.11 These developments are consistent with the thoughts of Simon Kuznets (1901–85), arguably the father of modern national accounts, who described the changes in the distribution of income as economies shifted from agrarian to urban societies.12 The argument is straightforward. Urban workers are more productive than their inefficient rural counterparts. As urban development lifts off, so the nation as a whole becomes more productive. The benefits initially accrue almost entirely to the urban workers.

Francis Jones, Daniel Annan and Saef Shah, ‘The distribution of household income 1977 to 2006/07’, Office for National Statistics, Economic and Labour Market Review, 2.12 (2008), pp. 18–31. 11. Some emerging economies, notably those in Latin America, have always had high levels of income inequality: political systems have allowed the middle classes to extract reasonable incomes even though rates of economic growth have often been poor. 12. Simon Kuznets, ‘Toward a theory of economic growth’. in Robert Lekachman, National Policy for Economic Welfare at Home and Abroad (Doubleday, Garden City, NY, 1955). 13. Source: UN Food and Agriculture Organization. 14. Source: Prabhu Pingali, Westernization of Asian Diets and the Transformation of Food Systems: Implications for Research and Policy, ESA Working Paper No. 04–17, Rome, September 2004. 15.

 

pages: 207 words: 86,639

The New Economics: A Bigger Picture by David Boyle, Andrew Simms

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Asian financial crisis, back-to-the-land, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, carbon footprint, clean water, collateralized debt obligation, colonial rule, Community Supported Agriculture, congestion charging, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, delayed gratification, deskilling, en.wikipedia.org, energy transition, financial deregulation, financial innovation, full employment, garden city movement, happiness index / gross national happiness, if you build it, they will come, income inequality, informal economy, Jane Jacobs, land reform, loss aversion, microcredit, Mikhail Gorbachev, mortgage debt, neoliberal agenda, new economy, North Sea oil, Northern Rock, offshore financial centre, oil shock, peak oil, pensions crisis, profit motive, purchasing power parity, quantitative easing, Ronald Reagan, seigniorage, Simon Kuznets, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trickle-down economics, Washington Consensus, working-age population

We will build roads and railways, develop atomic power and help with the re-equipment and modernization of the whole of industry.’ WHY DID AN APPARENTLY POOR PACIFIC ISLAND HIT THE TOP? 37 In fact, the idea of GDP dated back further than 1954, to the battle to rescue the world from the Great Depression, and then from Hitler. It was developed by some of the young economists around Keynes and Simon Kuznets in the USA as a way of working out the total productive power of the economy, a by-product of those techniques of investment that allowed Britain to out-produce Nazi Germany. Once the war was over, this seemed to provide the perfect scorecard for an impoverished nation: measure national success by the total amount of money that changed hands, and nothing else. As a result, the ‘growth’ has been gigantic, the technological innovations astonishing, and the living standards – if you measure them in terms of money – have shot up.

She wrote a paper for the Women and Food conference in Sydney in 1982, and submitted it for comment to Australia’s deputy chief statistician. ‘His memo of reply to me – a classic of sexist economic assumptions – was one of the major incentives to write this book,’ she wrote in the introduction. WHY DID AN APPARENTLY POOR PACIFIC ISLAND HIT THE TOP? 39 She also discovered the lists of students who worked under the economist Simon Kuznets (who originally warned against over-reliance on growth as a measure) in the 1930s to develop national accounting in the first place, before it had become the theory of economic growth. The names were all men, but at the bottom was an important note: ‘Five clerks, all women with substantial experience and know-how, assisted importantly in this work.’ These women – all with substantial experience apparently – had become non-persons.

 

pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

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Asian financial crisis, capital controls, clean water, correlation does not imply causation, Deng Xiaoping, Edward Glaeser, Gini coefficient, half of the world's population has never made a phone call, Hernando de Soto, illegal immigration, income inequality, informal economy, Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, manufacturing employment, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, profit motive, race to the bottom, rising living standards, school vouchers, Silicon Valley, Simon Kuznets, structural adjustment programs, The Wealth of Nations by Adam Smith, Tobin tax, trade liberalization, trade route, transaction costs, trickle-down economics, union organizing

This is corroborated by the fact that the 85 connection between inequality and growth is quite clear in nondemocratic states, but not apparent in modern, liberal ones.13 But can the opposite effect also hold? Is it true that increased growth leads to greater inequality, as is widely maintained? Economists sometimes refer to ‘‘Kuznets’s inverted U-curve,’’ which is based on a 1955 article by the economist Simon Kuznets, who argued that economic growth in a society initially leads to greater inequality and only after some time to a reduction of inequality. Many have accepted this thesis as truth, and it is sometimes used to discredit the idea of growth, or at least to demand redistributive policies. Kuznets himself did not draw any such drastic conclusions. On the contrary, he declared that his article was based on ‘‘perhaps 5 percent empirical information and 95 percent speculation,’’ adding that ‘‘so long as it is recognized as a collection of hunches calling for further investigation rather than a set of fully tested conclusions, little harm and much good may result.’’14 If we follow Kuznets’s recommendation and investigate what has happened since the 1950s, we can see that his preliminary conclusion is not universally valid.

Concerning equality of assets versus equality of income, see Klaus Deininger and P. Olinto, Asset Distribution, Inequality, and Growth, World Bank Policy Research Paper no. 2375 (Washington: World Bank, 2000). For the connection with democracy, 296 see Klaus Deininger and Lyn Squire, ‘‘New Ways of Looking at the Old Issues: Asset Inequality and Growth,’’ Journal of Development Economics 57 (1998): 259–87. 14. Simon Kuznets, ‘‘Economic Growth and Income Inequality,’’ American Economic Review 45 (March 1955): 26. 15. World Bank, Income Poverty: Trends in Inequality (Washington: World Bank, 2000), http://www.worldbank.org/poverty/data/trends/inequal.htm. The data refuting Kuznets are presented in Deininger and Squire, pp. 259–287. For a review of the research, see Arne Bigsten and Jo¨rgen Levin, Tillva¨ xt, inkomstfo¨rdelning och fattigdom i u-la¨ nderna (Stockholm: Globkom, September 2000), http://www.globkom.net/ rapporter.phtml. 16.

 

pages: 298 words: 95,668

Milton Friedman: A Biography by Lanny Ebenstein

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affirmative action, banking crisis, Berlin Wall, Bretton Woods, Deng Xiaoping, Fall of the Berlin Wall, fiat currency, floating exchange rates, Francis Fukuyama: the end of history, full employment, Hernando de Soto, hiring and firing, inflation targeting, invisible hand, Joseph Schumpeter, labour market flexibility, Lao Tzu, liquidity trap, means of production, Mont Pelerin Society, Ponzi scheme, price stability, rent control, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, secular stagnation, Simon Kuznets, stem cell, The Chicago School, The Wealth of Nations by Adam Smith, Thorstein Veblen

Friedman got to know Mitchell and his intellectual outlook better while working for the National Bureau between 1937 and 1940 than he did during his Columbia graduate student year. At the same time, his Columbia ties deepened as a result of his greater association with Mitchell and others at the National Bureau who were affiliated with the university. Friedman lectured part-time at Columbia and associated socially with many from the Columbia crowd. At the National Bureau, Friedman served as research assistant to Columbia graduate Simon Kuznets, a Mitchell disciple, who had organized the Conference on Research in National Income and Wealth. Kuznets was one of Friedman’s last mentors, along with Burns and Jones at Rutgers, Viner and Knight at Chicago, Hotelling at Columbia, and Mitchell at the National Bureau. Kuznets impressed on Friedman the value of Mitchell’s quantitative and statistical approach. Some indication of Kuznets’s early prominence is that John Maynard Keynes referred to him in his landmark The General Theory of Employment, Interest, and Money, published in 1936.

Friedman received his Ph.D. in economics from Columbia in 1946, thirteen years after enrolling there. The delay was the result of unusual circumstances. Columbia at this time required that a candidate’s dissertation be published before the degree would be awarded. A major controversy arose with respect to Friedman’s dissertation, Income from Independent Professional Practices, which he co-wrote with Simon Kuznets of the National Bureau. Kuznets wrote a preliminary manuscript, which Friedman completely rewrote between 1938 and 1941. The study covers five professional fields, including doctors and dentists. The average income of physicians at this time exceeded that of dentists by about one-third. Friedman and Kuznets argued that the reason for this difference was in part that the American Medial Association (AMA) hindered entrance to the medical profession, restricting the supply of doctors and thereby driving their price up.

 

pages: 606 words: 87,358

The Great Convergence: Information Technology and the New Globalization by Richard Baldwin

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3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, Commodity Super-Cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, Erik Brynjolfsson, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial robot, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, New Economic Geography, out of africa, paper trading, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

This proximity fostered innovation that triggered a dynamic of lower costs and further local concentration in the nations that started ahead (the North Atlantic economies and Japan). The flip side was a downward spiral in the ancient manufacturing consumption / production clusters. This industrialization of the North and deindustrialization of the South is one of the most striking aspects of Phase Three’s reversal of fortunes. As Simon Kuznets wrote in Economic Growth and Structure, “Before the nineteenth century and perhaps not much before it, some presently underdeveloped countries, notably China and parts of India, were believed by Europeans to be more highly developed than Europe.”4 During the eighteenth century, the Indian cotton textile industry was the global leader in terms of quality, production, and exports. Eighteenth-century India and China also produced the world’s highest-quality silk and porcelain.

See also Bairoch, Economics and World History (London: Harvester Wheatsheaf, 1993); and Bairoch and Richard Kozul-Wright, “Globalization Myths: Some Historical Reflections on Integration, Industrialization, and Growth in the World Economy,” Discussion Paper 113, United Nations Conference on Trade and Development, Geneva, 1996. 3. The quote comes from a speech Bismarck gave in 1879 supporting a protectionist law. Quoted in William Harbutt Dawson, Protection in Germany: A History of German Fiscal Policy during the Nineteenth Century (London: P. S. King & Son, 1904). 4. Simon Kuznets, Economic Growth and Structure: Selected Essays (London: Heinemann Educational Books, 1965). 5. Lant Pritchett, “Divergence, Big Time,” Journal of Economic Perspectives 11, no. 3, (1997): 3–17; Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, NJ: Princeton University Press, 2000). 6. Charles P. Kindleberger, “Commercial Policy between the Wars,” in Cambridge Economic History of Europe, ed.

 

pages: 126 words: 37,081

Men Without Work by Nicholas Eberstadt

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Carmen Reinhart, centre right, deindustrialization, financial innovation, full employment, illegal immigration, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labor-force participation, low skilled workers, moral hazard, Ronald Reagan, secular stagnation, Simon Kuznets, War on Poverty, women in the workforce, working-age population

6.We cannot readily calculate the corresponding proportion in 1948 because the Census Bureau online historical data series for annual CPS-based estimates of age-and sex-specific enrollments only extend back to 1961. See “School Enrollment Reports and Tables from Previous Years,” U.S. Census Bureau, http://www.census.gov/hhes/school/data/cps/previous/index.html. CHAPTER 4 1.Robert William Fogel et al., Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics (Chicago: University of Chicago Press, 2013), introduction, http://www.nber.org/chapters/c12912.pdf. 2.Dora L. Costa, “The Wage and the Length of the Work Day: From the 1890s to 1991” (working paper, National Bureau of Economic Research, Cambridge, MA, April 1998), http://www.nber.org/papers/w6504. 3.Dora L. Costa, The Evolution of Retirement: An American Economic History, 1880–1990, (Chicago: University of Chicago Press, 1998), chapter 2. 4.This upsurge also coincided with a marriage boom and a baby boom—meaning that men may not only have been more capable of entering the labor market, but more motivated to do so as well. 5.Derived from the Human Mortality Database: http:www.mortality.org. 6.

 

pages: 544 words: 168,076

Red Plenty by Francis Spufford

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affirmative action, anti-communist, Anton Chekhov, asset allocation, Buckminster Fuller, clean water, cognitive dissonance, computer age, double helix, Fellow of the Royal Society, John von Neumann, linear programming, market clearing, New Journalism, oil shock, Plutocrats, plutocrats, profit motive, RAND corporation, Simon Kuznets, the scientific method

For a consideration of the specific window of opportunity that was open to a command economy in the middle of the twentieth century, see Stephen Broadberry and Sayantan Ghosal, ‘Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870’, Structural Change and Economic Dynamics vol. 16 issue 4 (December 2005), pp. 437–66. 15 Indeed, there was a philosophical issue here: for the planners’ philosophical fidelity to Marx, despite everhing, see Paul Craig Roberts, Alienation and the Soviet Economy (Albuquerque: University of New Mexico Press, 2002). 16 This made it difficult to compare Soviet growth: there is a whole specialised literature, spread over fifty years, on the difficulty of assessing the USSR’s growth rate. For an accessible way in, see Alec Nove, Economic History of the USSR, and Paul R. Gregory and Robert C. Stuart, Russian and Soviet Economic Performance and Structure, 6th edn. (Reading MA: Addison-Wesley, 1998). For Western calculations during the Cold War, see Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963); Janet G. Chapman, Real Wages in Soviet Russia Since 1928, RAND Corporation report R-371-PR (Santa Monica CA, October 1963); Franklyn D. Holzman, ed., Readings on the Soviet Economy (Chicago: Rand-McNally, 1962). As a useful retrospective, see Angus Maddison, ‘Measuring the Performance of a Communist Command Economy: An Assessment of the CIA Estimates for the USSR’, Review of Income and Wealth vol. 44 no. 3 (September 1998), pp. 307–23.

For a consideration of the specific window of opportunity that was open to a command economy in the middle of the twentieth century, see Stephen Broadberry and Sayantan Ghosal, ‘Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870’, Structural Change and Economic Dynamics vol. 16 issue 4 (December 2005), pp. 437–66. 15 Indeed, there was a philosophical issue here: for the planners’ philosophical fidelity to Marx, despite everything, see Paul Craig Roberts, Alienation and the Soviet Economy (Albuquerque: University of New Mexico Press, 2002). 16 This made it difficult to compare Soviet growth: there is a whole specialised literature, spread over fifty years, on the difficulty of assessing the USSR’s growth rate. For an accessible way in, see Alec Nove, Economic History of the USSR, and Paul R. Gregory and Robert C. Stuart, Russian and Soviet Economic Performance and Structure, 6th edn. (Reading MA: Addison-Wesley, 1998). For Western calculations during the Cold War, see Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963); Janet G. Chapman, Real Wages in Soviet Russia Since 1928, RAND Corporation report R-371-PR (Santa Monica CA, October 1963); Franklyn D. Holzman, ed., Readings on the Soviet Economy (Chicago: Rand-McNally, 1962). As a useful retrospective, see Angus Maddison, ‘Measuring the Performance of a Communist Command Economy: An Assessment of the CIA Estimates for the USSR’, Review of Income and Wealth vol. 44 no. 3 (September 1998), pp. 307–23.

Bauer, Nine Soviet Portraits (Boston: MIT Press, 1965) Anthony Beevor and Luba Vinogradova, eds, A Writer at War: Vasily Grossman with the Red Army 1941–1945 (London: Harvill, 2005) Mark R. Beissinger, Scientific Management, Socialist Discipline and Soviet Power (Cambridge MA: Harvard University Press, 1988) Raissa L. Berg, Acquired Traits: Memoirs of a Geneticist from the Soviet Union, trans. David Lowe (New York: Viking Penguin, 1988) Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963) Abram Bergson, Economics of Soviet Planning (New Haven CT: Yale University Press, 1964) —, Planning and Productivity Under Soviet Socialism (New York: Columbia University Press, 1968) Isaiah Berlin, Russian Thinkers, ed. Henry Hardy and Aileen Kelly (London: Hogarth Press, 1978) Joseph Berliner, Factory and Manager in the USSR (Cambridge MA: Harvard University Press, 1957) —, The Innovation Decision in Soviet Industry (Boston: MIT Press, 1976) —, Soviet Industry from Stalin to Gorbachev: Essays on Management and Innovation (Ithaca NY: Cornell University Press, 1988) Fedor Burlatsky, Khrushchev and the First Russian Spring, translated by Daphne Skillen (London: Weidenfeld & Nicolson, 1991) Peter Carlson, K Blows Top: A Cold War Comic Interlude Starring Nikita Khrushchev, America’s Most Unlikely Tourist (New York: Public Affairs, 2009) Manuel Castells and Peter Hall, Technopoles of the World: The Making of 21st Century Industrial Complexes (London: Routledge, 1994) Manuel Castells and E.

 

pages: 374 words: 114,660

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

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

Top Incomes in the United States The study of income inequality was transformed by a 2003 study by two economists, Thomas Piketty, now of the Paris School of Economics, and Emmanuel Saez of the University of California at Berkeley.24 It had long been known that the data on incomes from household surveys were not very useful for looking at very high incomes; there are too few such people to show up regularly in nationally representative surveys. (Even if approached at random, they might also be less likely to answer.) Piketty and Saez greatly extended a method that had been originally used in 1953 by Nobel laureate economist Simon Kuznets, who worked with data from income-tax records.25 The rich, like everyone else, have no choice but to file tax returns, and so they are fully represented in the income-tax data. Piketty and Saez’s results have changed the way that people think about income inequality, particularly at the top of the distribution. Later studies have looked at comparable data from other countries around the world, so that we can extend these insights beyond the United States.

Lee, 1999, “Wage inequality in the United States during the 1980s: Rising dispersion or falling minimum wage,” Quarterly Journal of Economics 114(3): 977–1023. 23. Congressional Budget Office, 2011, Trends in the distribution of household income between 1979 and 2007, Washington, DC. 24. Thomas Piketty and Emmanuel Saez, 2003, “Income inequality in the United States 1913–1998,” Quarterly Journal of Economics 118(1): 1–41. 25. Simon Kuznets, 1953, Shares of upper income groups in income and saving, National Bureau of Economic Research. 26. Incomes in the Piketty-Saez analysis are taxable incomes and are incomes of tax units, not of families or of households, which would include unrelated individuals. The Congressional Budget Office income numbers quoted earlier include some of the items included in the national accounts, but not in the surveys.

 

pages: 590 words: 153,208

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

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

Behind all that growth—much of dubious value and negligible yields—was a deepening maw of debt, largely based on inflationary expectations that would have to be fulfilled if the debt was to be repaid in a stagnant economy. Yet this expected inflation would radically erode the capital prospects of American business unless taxes on wealth were drastically reduced. In this predicament the liberal economists found it possible to sing all their same old songs. They cited Denison’s Law to show that savings rates over the centuries had maintained an even level, regardless of interest rates, although Nobel winner Simon Kuznets had widely different estimates; and the idea that interest rates do not affect savings is self-evidently false. As economists have done for centuries, the liberals speculated that the vital energy and innovative genius of capitalism were near exhaustion and that government would now have to take the lead. They spoke of loopholes and martini lunches and hunger in America. They cried of unemployment and monopoly profits and unequal distribution of wealth and income.

Jung, Carl K Kahn, Richard Kelleher, Herb Kelley, Whitmore (Nick) Kemp, Jack Kemp-Roth tax cut bill Kendrick, John Kennedy, Edward Kennedy, John F. Kenniston, Kenneth Keynes, John Maynard Keynesian school Khrushchev, Nikita Klein, Burton knowledge technocracy Kodak. See Eastman Kodak Company Ko Kolakowski, Leszek Korea Korean War Krehm, William Kristol, Irving Kroc, Ray Krugman, Paul Kudlow, Larry Kuznets, Simon Kuznets curve Kwakiutl L labor, capitalization of elasticity of Labor Department labor market, equal rights agencies and restrictions labor unions Laffer, Arthur Laffer curve and Lafferite economics Laissez-faire land. See real estate land grant agricultural colleges Lasch, Christopher lasers Latin America Latvia Lauder, Estée Law Enforcement Assistance Administration Law of mind Law of Reciprocity Left legalized aliens legislators Lehman Brothers Leibenstein, Harvey leisure Levi-Strauss, Claude Levitt, Theodore Lewis, Michael Lewis the Fourteenth Lewis, W.

 

Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs, Arthur A. Ekirch, Jr.

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Alistair Cooke, clean water, collective bargaining, credit crunch, declining real wages, endowment effect, fiat currency, full employment, hiring and firing, income per capita, Joseph Schumpeter, laissez-faire capitalism, manufacturing employment, means of production, minimum wage unemployment, Plutocrats, plutocrats, post-industrial society, price discrimination, profit motive, rent control, rent-seeking, Richard Thaler, road to serfdom, Ronald Reagan, Simon Kuznets, strikebreaker, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, transcontinental railway, union organizing, Upton Sinclair, War on Poverty, Works Progress Administration

In a different but related context, and for rather different reasons, Gary Becker verged on this perspective when he said that sunk costs are not sunk in the political sector. See "A Theory of Competition among Pressure Groups for Political Influence," Quarterly Journal of Economics 98 (Aug. 1983): 383. 7. Edward S. Herman, Corporate Control, Corporate Power (New York: Cambridge University Press, 1981), pp. 299-300. For comparative international data on the growth of government, see Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, Conn.: Yale University Press, 1966), pp. 236-239; Leila Pathirane and Derek W. Blades, "Defining and Measuring the Public Sector: Some International Comparisons," Review of Income and Wealth 28 (Sept. 1982): 261-289; Alt and Chrystal, Political Economics, pp. 199-219. 8. James T. Bennett and Manuel H. Johnson, The Political Economy of Federal Government Growth: 1959-1978 (College Station, Tex.: Center for Education and Research in Free Enterprise, 1980), pp. 70-72, citing Moses Abramovitz and Vera F.

For the Populist and Democratic platforms and Bryan's famous Cross of Gold speech, see Documents of American History, ed. Henry Steele Commager (New York: Appleton-CenturyCrofts, 1948), II, pp. 143-146, 174-180. 3. Andrew Carnegie, Triumphant Democracy: Sixty Years'March of the Republic, rev. ed. (New York: Charles Scribner's Sons, 1893), p. 494; Henry George, Progress and Poverty (New York: Modern Library, n.d.), p. 7. 4. Simon Kuznets, Capital in the American Economy, Its Formation and Financing (Princeton, N.J.: Princeton University Press, 1961), p. 64; Stanley Lebergott, "Labor Force and Employment, 1800-1960," in National Bureau of Economic Research, Conference on Research in Income and Wealth, Output, Employment, and Productivity in the United States after 1800 (New York: Columbia University Press, 1966), p. 118. 5. Robert E.

 

pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

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bank run, banking crisis, barriers to entry, Bernie Madoff, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial innovation, full employment, fundamental attribution error, George Akerlof, income inequality, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, Steven Pinker, telemarketer, The Market for Lemons, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, Zipcar

Without e ective rules one is forced to do things that one nds personally questionable to stay in business. That is why businesses set up their own self-regulatory organizations, which impose rules that are usually (though, to be sure, not always) in the public interest. But there are some who think that regulators are not doing anything of the sort. Milton Friedman, following his 1954 study with Simon Kuznets of occupational incomes and regulation, made a strongly worded argument against regulation, particularly occupational licensing, in his 1962 book Capitalism and Freedom.1 He thought regulation was little more than a cynical ploy to limit the supply of services so as to keep their prices high. Friedman’s book turned out to be very in uential, creating a measure of public distaste for regulation.

The Squam Lake Report: Fixing the Financial System. Princeton, NJ: Princeton University Press. Freud, Sigmund. 1952 [1930]. Civilization and Its Discontents, trans. Joan Reviere. The Major Works of Sigmund Freud. Chicago: William Benton / Encyclopaedia Britannica. Friedman, Milton (with Rose D. Friedman). 1962. Capitalism and Freedom. Chicago: University of Chicago Press. Friedman, Milton, and Simon Kuznets. 1945. Income from Independent Professional Practice. New York: National Bureau of Economic Research. Gale, David., and Lloyd S. Shapley. 1962. “College Admissions and the Stability of Marriage.” American Mathematical Society Monthly 69(1):9–15. Gartner, John D. 2005. The Hypomanic Edge: The Link between (a Little) Craziness and (a Lot of) Success in America. New York: Simon and Schuster. Gartzke, Erik, Quan Li, and Charles Boehmer. 2001.

 

pages: 165 words: 45,129

The Economics of Inequality by Thomas Piketty, Arthur Goldhammer

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

In the 1890s Eduard Bernstein insisted that Marx’s proletarianization thesis did not hold because the social structure was clearly becoming more diverse and wealth was spreading to ever broader segments of society. It was not until after World War II, however, that it became possible to measure the decrease in wage and income inequality in the Western countries. New predictions were soon forthcoming. The most celebrated was that of Simon Kuznets (1955): according to Kuznets, inequality would everywhere be described by an inverted U curve. In the first phase of development, inequality would increase as traditional agricultural societies industrialized and urbanized. This would be followed by a second phase of stabilization, and then a third phase in which inequality would substantially decrease. This pattern—of growing inequality in the nineteenth century followed by declining inequality after that, has been well studied in the case of the United Kingdom (Williamson, 1985) and the United States (Williamson and Lindert, 1980).

 

pages: 221 words: 55,901

The Globalization of Inequality by François Bourguignon

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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, minimum wage unemployment, offshore financial centre, open economy, 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

What’s more, we can observe that the rise in inequality at the moment of Eastern Europe’s transition to a market economy was, in several countries, only temporary. Inequality fell once the economy had fully settled into the new regime and the mechanisms for redistributing income had been reconfigured. We don’t observe such a turnaround among the Asian giants. The Forces behind R ising Inequality 113 Globalization, Deregulation, Inequality Around sixty years ago, the U.S. economist Simon Kuznets, who had studied the evolution of inequality in several developed countries, formulated a hypothesis that would become widely influential. His idea was that in an initial stage, the process of economic development increases inequality by displacing a portion of the population from traditional occupations toward more productive, but also more heterogeneous, jobs, thus creating more inequality.

 

pages: 306 words: 78,893

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

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accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, capital controls, corporate governance, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, Y2K

Real incomes across the distribution grew strongly and in parallel, -with incomes of the poorer half of the population even outgrowing those of the richer over some periods, resulting in a mild compression of the income distribution (that is, a trend toward greater equality). Of course, even at its most egalitarian postwar moment, the U.S. remained a polarized society, but it was still widely thought that something had changed to make the new arrangements permanent. In 1955, Simon Kuznets pubHshed his famous "inverted U" theory of capitalist evolution: that income inequaHty rises in the early stages of development and faUs as economies mature. Economists came to believe this as a fact of their After the New Economy .525 .500 .475 .450 .425 .4001-.375 income inequality (Cini index) U.S., 1913-2001 "science," and you still hear it from development specialists at the World Bank and in academia to excuse the vast increase in inequaUty in the Third World over the last fifteen years.

 

pages: 275 words: 77,955

Capitalism and Freedom by Milton Friedman

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affirmative action, Berlin Wall, central bank independence, Corn Laws, Deng Xiaoping, floating exchange rates, Fractional reserve banking, full employment, invisible hand, Joseph Schumpeter, liquidity trap, market friction, minimum wage unemployment, price discrimination, rent control, road to serfdom, Ronald Reagan, secular stagnation, Simon Kuznets, the market place, The Wealth of Nations by Adam Smith, union organizing

The Virginia case is discussed in chapter vii. 6 The increased return may be only partly in a monetary form; it may also consist of non-pecuniary advantages attached to the occupation for which the vocational training fits the individual. Similarly, the occupation may have non-pecuniary disadvantages, which would have to be reckoned among the costs of the investment. 7 For a more detailed and precise statement of the considerations entering into the choice of an occupation, see Milton Friedman and Simon Kuznets, Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945), pp. 81–95, 118–37. 8 See G. S. Becker, “Underinvestment in College Education?” American Economic Review, Proceedings L (1960), 356–64; T. W. Schultz, “Investment in human Capital,” American Economic Review, LXI (1961), 1–17. 9 Despite these obstacles to fixed money loans, I am told that they have been a very common means of financing education in Sweden, where they have apparently been available at moderate rates of interest.

 

pages: 411 words: 80,925

What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

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Airbnb, barriers to entry, Bernie Madoff, bike sharing scheme, Buckminster Fuller, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, George Akerlof, global village, Hugh Fearnley-Whittingstall, information retrieval, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Parkinson's law, peer-to-peer lending, Ponzi scheme, pre–internet, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, Zipcar

Gross domestic product (GDP) allows economists to plot and compare our national economy’s growth, disparities, ranking, and power. Today the GDP of the world is a little more than $60 trillion. The United States and the European Union account for approximately one-third of this amount. The simplicity of the measurement of GDP is also its downfall. The argument against GDP fetishism is that we are more than what we make. Even the inventor of the GDP, the late Russian-American economist Simon Kuznets, was aware that the model of GDP had significant shortcomings. “The welfare of a nation can scarcely be inferred from a measure of national income,” he said in 1934. Imagine walking into a cocktail party and instead of making casual conversation everyone asked, “How much money do you make?” At the very least you would find it embarrassingly gauche, but you probably also would be somewhat offended.

 

pages: 381 words: 78,467

100 Plus: How the Coming Age of Longevity Will Change Everything, From Careers and Relationships to Family And by Sonia Arrison

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23andMe, 8-hour work day, Albert Einstein, Anne Wojcicki, artificial general intelligence, attribution theory, Bill Joy: nanobots, bioinformatics, Clayton Christensen, dark matter, East Village, en.wikipedia.org, epigenetics, Frank Gehry, Googley, income per capita, indoor plumbing, Jeff Bezos, Johann Wolfgang von Goethe, Law of Accelerating Returns, life extension, personalized medicine, Peter Thiel, placebo effect, post scarcity, Ray Kurzweil, rolodex, Silicon Valley, Simon Kuznets, Singularitarianism, smart grid, speech recognition, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, Steven Levy, Thomas Malthus, upwardly mobile, World Values Survey, X Prize

Princeton economists Gene Grossman and Alan Krueger made a similar argument and were among the first to demonstrate how this works in a 1991 paper about free trade.36 They showed that, although “economic growth brings an initial phase of deterioration” in environmental quality, it is “followed by a subsequent phase of improvement.”37 Such an inverted U curve is often referred to as an environmental Kuznets curve (EKC), named after economist Simon Kuznets, who argued that as incomes rise, there is an initial phase of great inequality, which is followed later by a reduction of that inequality. This theory, which won Kuznets the Nobel Prize in 1971, works in a similar way when applied to the environment. A typical EKC looks like Figure 3.4, and the actual numbers will vary depending on the environmental problems described (air pollutants, deforestation, etc.).

 

pages: 309 words: 78,361

Plenitude: The New Economics of True Wealth by Juliet B. Schor

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Asian financial crisis, big-box store, business climate, carbon footprint, cleantech, Community Supported Agriculture, credit crunch, Daniel Kahneman / Amos Tversky, decarbonisation, dematerialisation, demographic transition, deskilling, Edward Glaeser, en.wikipedia.org, Gini coefficient, global village, income inequality, income per capita, Isaac Newton, Joseph Schumpeter, knowledge economy, life extension, McMansion, new economy, peak oil, pink-collar, post-industrial society, prediction markets, purchasing power parity, ride hailing / ride sharing, Robert Shiller, Robert Shiller, sharing economy, Simon Kuznets, single-payer health, smart grid, The Chicago School, Thomas L Friedman, Thomas Malthus, too big to fail, transaction costs, Zipcar

Cornucopians have tended to be political and polemical, extreme free marketeers who reject the science of climate change and environmental degradation. Few economists go all the way with the Cornucopians, but a larger number are believers in a more moderate variant of eco-optimism, which argues that growth itself will save the environment. Represented in a concept called the Environmental Kuznets Curve, it is modeled on studies of inequality carried out in the 1950s and ’60s by the economist Simon Kuznets. Kuznets saw a humpback data pattern across nations. At a given point in time, some had low levels of both income and inequality, some had more inequality and more income, and some had high incomes with low inequality. From this finding, most economists came to believe that countries must endure a growing concentration of income as they develop, but that once they become wealthy, they can buy themselves more fairness.

 

pages: 303 words: 93,545

I'm a stranger here myself: notes on returning to America after twenty years away by Bill Bryson

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illegal immigration, millennium bug, Ronald Reagan, Simon Kuznets, telemarketer

But not until after 31,709.8 years would you count your trillionth dollar (and even then you would be less than one-fourth of the way through the pile of money representing America’s national debt). That is what $1 trillion is. What is interesting is that it is becoming increasingly evident that most of these inconceivably vast sums that get bandied about by economists and policy makers are almost certainly miles out anyway. Take gross domestic product, the bedrock of modern economic policy. GDP was a concept that was originated in the 1930s by the economist Simon Kuznets. It is very good at measuring physical things—tons of steel, board feet of lumber, potatoes, tires, and so on. That was all very well in a traditional industrial economy. But now the greater part of output for nearly all developed nations is in services and ideas—things like computer software, telecommunications, financial services—which produce wealth but don’t necessarily, or even generally, result in a product that you can load on a pallet and ship out to the marketplace.

 

pages: 411 words: 95,852

Britain Etc by Mark Easton

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agricultural Revolution, Albert Einstein, British Empire, credit crunch, financial independence, garden city movement, global village, Howard Rheingold, income inequality, James Watt: steam engine, knowledge economy, knowledge worker, low skilled workers, Ronald Reagan, science of happiness, Silicon Valley, Simon Kuznets, Slavoj Žižek, social software

Happiness appeared to be a candyfloss concept, attractive but ultimately fluffy and insubstantial – hardly the handy ready reckoner that government needed to decide its priorities. So it was that another yardstick for progress came to be accepted: money. Economists, not social scientists, were invited to sit closest to the seat of power. Tangible wealth, rather than ethereal well-being, became the fundamental political goal. Even finding a single accepted measure of affluence proved tricky, and it wasn’t until the 1930s that Russian-born economist Simon Kuznets came up with the concept of Gross Domestic Product (GDP). For industrialised countries such as Britain, trying to recover from the deprivations of the Second World War in the 1940s and 50s, GDP was embraced as the best way to monitor material and social development. Despite Kuznets’ own warning that his measure should not be used as a surrogate for well-being, those three letters became the focus of UK government activity, recited mantra-like as an incantation for a better life.

 

pages: 340 words: 91,387

Stealth of Nations by Robert Neuwirth

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accounting loophole / creative accounting, big-box store, British Empire, call centre, collective bargaining, corporate governance, full employment, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Jane Jacobs, jitney, joint-stock company, Joseph Schumpeter, megacity, microcredit, New Urbanism, pirate software, profit motive, Shenzhen was a fishing village, Simon Kuznets, special economic zone, The Wealth of Nations by Adam Smith, thinkpad, upwardly mobile

Unlike Proudhon and Gesell, Keynes offered no utopian solution (though he did credit Mandeville and Gesell as being among the “brave army of heretics” who called into question traditional economic nostrums) and he didn’t suggest that all inequities should be abolished, just that the size of the differential should be limited. “There is social and psychological justification for significant inequalities of incomes and wealth,” he wrote, “but not for such large disparities as exist today.” Simon Kuznets, the great modern explicator of inequality, won the Nobel Prize in economics in 1971 for his work suggesting that inequality starts out as relatively minor in agricultural society, grows massively with industrialization, but tends to lessen in the later stages of industrial development. (As a modern example of how this might work, Bill Gates and Warren Buffett are both fabulously wealthy, but the difference between their assets and the wealth of the average American of today is likely less than the gap that existed between John D.

 

pages: 339 words: 88,732

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

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

Kennedy WHEN PRESIDENT HOOVER WAS trying to understand what was happening during the Great Depression and design a program to fight it, a comprehensive system of national accounts did not exist. He had to rely on scattered data like freight car loadings, commodity prices, and stock price indexes that gave only an incomplete and often unreliable view of economic activity. The first set of national accounts was presented to Congress in 1937 based on the pioneering work of Nobel Prize winner Simon Kuznets, who worked with researchers at the National Bureau of Economic Research and a team at the U.S. Department of Commerce. The resulting set of metrics have served as beacons that helped illuminate many of the dramatic changes that transformed the economy throughout the twentieth century. But as the economy has changed so, too, must our metrics. More and more what we care about in the second machine age are ideas, not things—mind, not matter; bits, not atoms; and interactions, not transactions.

 

pages: 355 words: 63

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

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

The better state of social security in the United States, compared to other rich countries, is that our population is growing faster (thanks to immigration, not to fertility, as it turns out). A more ethereal reason that there could be positive effects of higher population is the genius principle. The more babies there are, the greater is the likelihood that one of them will grow up to be Mozart, Einstein, or Bill Gates. This effect, first pointed out by Simon Kuznets and Julian Simon,raises the stock of ideas that can then be used by any size population to better itself. Since ideas can be shared with additionalpersons at zero cost-an unlimited number of people can listen to a Mozart aria-new ideas are used moreeffectively in large than in small populations. The onetime cost of implementing a new idea can be spread across more people, all of whom can use the idea at zero cost.

 

pages: 378 words: 102,966

Affluenza: The All-Consuming Epidemic by John de Graaf, David Wann, Thomas H Naylor, David Horsey

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big-box store, Community Supported Agriculture, Donald Trump, Exxon Valdez, financial independence, Ford paid five dollars a day, full employment, greed is good, income inequality, informal economy, invisible hand, Isaac Newton, McMansion, medical malpractice, new economy, Ralph Nader, Ray Oldenburg, Ronald Reagan, Silicon Valley, Simon Kuznets, single-payer health, The Great Good Place, trade route, upwardly mobile, Yogi Berra, young professional

A central mission of Redefining Progress is to spotlight the “bads" that are hiding out in the gross domestic product, a yardstick that has for the last half century been a drug of choice for conventional economists. As long as the GDP goes higher, everything’s cool. Politicians point to a swelling GDP as proof that their economic policies are working, and investors reassure themselves that with the overall expansion of the economy, their stocks will also expand. Yet even the chief architect of the GDP (then GNP), Simon Kuznets, believed that “the welfare of a nation can scarcely be inferred from a measurement like GNP.”5 Here’s why: although the overall numbers continue to rise, many key variables have grown worse. As we have already mentioned, the gap between the rich and everyone else is expanding. In addition, the nation is borrowing more and more from abroad, a symptom of anemic savings and mountains of household debt.

 

pages: 420 words: 124,202

The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention by William Rosen

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Albert Einstein, All science is either physics or stamp collecting, barriers to entry, collective bargaining, computer age, Copley Medal, David Ricardo: comparative advantage, decarbonisation, delayed gratification, Fellow of the Royal Society, Flynn Effect, fudge factor, full employment, invisible hand, Isaac Newton, Islamic Golden Age, iterative process, Jacquard loom, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, Joseph Schumpeter, Joseph-Marie Jacquard, knowledge economy, moral hazard, Network effects, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, Ralph Waldo Emerson, rent-seeking, Ronald Coase, Simon Kuznets, spinning jenny, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transcontinental railway, éminence grise

.: Inventors Publishing, 1931). 7 “lack of capital” Ibid. 8 more than half will continue to invest their time Thomas Astebro, “Inventor Perseverance After Being Told to Quit: The Role of Cognitive Biases,” Journal of Behavioral Decision Making 20, January 2007. 9 “may be inventors” Scherer, “Invention and Innovation in the Watt-Boulton Steam Engine Venture,” citing Joseph Schumpeter’s Theory of Economic Development. 10 Another study, this one conducted in 1962 Donald W. MacKinnon, “Intellect and Motive in Scientific Inventors: Implications for Supply,” in Simon Kuznets, ed., The Rate and Direction of Inventive Activity: Economic and Social Factors (Princeton: Princeton University Press, 1962). 11 the eighteenth-century Swiss mathematician Daniel Bernoulli Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk (New York: John Wiley & Sons, 1996). 12 “The more inventive an independent inventor is” MacKinnon, “Intellect and Motive in Scientific Inventors: Implications for Supply,” in Kuznets, ed., Rate and Direction of Inventive Activity. 13 “first scientific man to study the Newcomen engine” “Henry Beighton” in Oxford Dictionary of National Biography. 14 Leonhard Euler applied Usher, History of Mechanical Inventions. 15 His published table of results Jennifer Karns Alexander, The Mantra of Efficiency: From Waterwheel to Social Control (Baltimore: Johns Hopkins University Press, 2008). 16 The resulting experiment Pacey, Maze of Ingenuity. 17 His example showed a generation of other engineers Mokyr, “The Great Synergy,” quoting Cardwell, 1994. 18 “In comparing different experiments” Pacey, Maze of Ingenuity. 19 As far back as the 1960s Dean Keith Simonton, “Creativity as Blind Variation and Selective Retention: Is the Creative Process Darwinian?”

 

pages: 443 words: 112,800

The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World by Jeremy Rifkin

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3D printing, additive manufacturing, Albert Einstein, barriers to entry, borderless world, carbon footprint, centre right, collaborative consumption, collaborative economy, Community Supported Agriculture, corporate governance, decarbonisation, distributed generation, en.wikipedia.org, energy security, energy transition, global supply chain, hydrogen economy, income inequality, informal economy, invisible hand, Isaac Newton, job automation, knowledge economy, manufacturing employment, marginal employment, Martin Wolf, Masdar, megacity, Mikhail Gorbachev, new economy, oil shale / tar sands, oil shock, open borders, peak oil, Ponzi scheme, post-oil, purchasing power parity, Ray Kurzweil, Ronald Reagan, Silicon Valley, Simon Kuznets, Skype, smart grid, smart meter, Spread Networks laid a new fibre optics cable between New York and Chicago, supply-chain management, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, transaction costs, trickle-down economics, urban planning, urban renewal, Yom Kippur War, Zipcar

The gross domestic product (GDP) was created in the 1930s to measure the value of the sum total of economic goods and services generated over a single year. The problem with the index is that it counts negative as well as positive economic activity. If a country invests large sums of money in armaments, builds prisons, expands police security, and has to clean up polluted environments and the like, it’s included in the GDP. Simon Kuznets, an American who invented the GDP measurement tool, pointed out early on that “[t]he welfare of a nation can . . . scarcely be inferred from a measurement of national income.”28 Later in life, Kuznets became even more emphatic about the drawbacks of relying on the GDP as a gauge of economic prosperity. He warned that “[d]istinctions must be kept in mind between quantity and quality of growth . . . .

 

pages: 621 words: 157,263

How to Change the World: Reflections on Marx and Marxism by Eric Hobsbawm

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anti-communist, banking crisis, battle of ideas, Berlin Wall, British Empire, currency manipulation / currency intervention, deindustrialization, discovery of the americas, experimental subject, Fall of the Berlin Wall, full employment, labour market flexibility, market fundamentalism, means of production, new economy, Simon Kuznets, Thorstein Veblen, Upton Sinclair, upwardly mobile

Even the natural sciences came under attack, not only because of the potential or actual damage caused by technology, but because their validity as modes of understanding the world was questioned. This was perhaps least marked in economics, where Marxists had always been peripheral, though among the first ten Nobel laureates in this field there were three who were formed or partly formed in the early years of the Soviet Union or who were still active there (Wassily Leontief, Simon Kuznets, Leonid Kantorovitch). However, from 1974, when Friedrich von Hayek received the prize, still balanced by his ideological opposite, the Swede Gunnar Myrdal, and 1976, when it was given to Milton Friedman, it became markedly identified with a sharp turn away from Keynesian and other interventionist theories and a return to an increasingly uncompromising laissez-faire. Cracks in this prevailing consensus did not begin to appear until the late l990s.

 

pages: 481 words: 120,693

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland

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Albert Einstein, algorithmic trading, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, conceptual framework, corporate governance, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, stem cell, Steve Jobs, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy

Until the past few decades, the received wisdom among economists was that income inequality would be fairly low in the preindustrial era—overall wealth and productivity were fairly small, so there wasn’t that much for an elite to capture—then spike during industrialization, as the industrialists and industrial workers outstripped farmers (think of China today). Finally, in fully industrialized or postindustrial societies, income inequality would again decrease as education became more widespread and the state played a bigger, more redistributive role. This view of the relationship between economic development and income inequality was first and most clearly articulated by Simon Kuznets, a Belarusian-born immigrant to the United States. Kuznets illustrated his theory with one of the most famous graphs in economics—the Kuznets curve, an upside-down U that traces the movement of society as its economy becomes more sophisticated and productive, from low inequality, to high inequality, and back down to low inequality. Writing in the early years of the industrial revolution, and without the benefit of Kuznets’s data and statistical analysis, Alexis de Tocqueville came up with a similar prediction: “If one looks closely at what has happened to the world since the beginning of society, it is easy to see that equality is prevalent only at the historical poles of civilization.

 

pages: 376 words: 118,542

Free to Choose: A Personal Statement by Milton Friedman, Rose D. Friedman

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affirmative action, agricultural Revolution, air freight, back-to-the-land, bank run, banking crisis, Corn Laws, Fractional reserve banking, full employment, German hyperinflation, invisible hand, labour mobility, means of production, minimum wage unemployment, oil shale / tar sands, oil shock, price stability, Ralph Nader, RAND corporation, rent control, road to serfdom, school vouchers, Simon Kuznets, The Wealth of Nations by Adam Smith, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration

.: American Enterprise Institute, November 1971), p. 10. 6. Ibid., pp. 1, 5. 7. See Yale Brozen and Milton Friedman, The Minimum Wage Rate (Washington, D.C.: The Free Society Association, April 1966); Finis Welch, Minimum Wages: Issues and Evidence (Washington, D.C.: American Enterprise Institute, 1978); and Economic Report of the President, January 1979, p. 218. 8. See Milton Friedman and Simon Kuznets, Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945), pp. 8–21. 9. Michael Pertschuk, "Needs and Incomes," Regulation, March/April 1979. 10. William Taylor, Executive Vice-President of the Valley Camp Coal Company, as quoted in Melvyn Dubofsky and Warren Van Tine, John L. Lewis: A Biography (New York: Quadrangle/New York Times Book Co., 1977), p. 377. 11.

 

pages: 497 words: 143,175

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

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

“Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118 (Feb. 2003), 1–39. 3. Gilbert Burck, “American Genius for Productivity,” Fortune (July 1955), 87. 4. Jack Metzgar, Striking Steel: Solidarity Remembered (Philadelphia: Temple University Press, 2000), 37. 5. Kenneth T. Jackson, Crabgrass Frontier, The Suburbanization of the United States (New York: Oxford University Press, 1985), 283–84. 6. Simon Kuznets, Share of Upper Income Groups in Income and Savings (New York: National Bureau of Economic Research, 1953); Joint Economic Committee, Productivity, Prices, and Incomes, 89th Cong., 2d sess. (Washington, D.C.: Government Printing Office, 1967). 7. Alfred E. Eckes Jr. and Thomas W. Zeiler, Globalization and the American Century (Cambridge: Cambridge University Press, 2003), 57–58. 8. Microeconomics, which until Keynes was synonymous with economics as a whole, investigated the role of prices in the allocation of resources.

 

pages: 494 words: 116,739

Geek Heresy: Rescuing Social Change From the Cult of Technology by Kentaro Toyama

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Albert Einstein, Berlin Wall, Bernie Madoff, blood diamonds, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, computer vision, conceptual framework, delayed gratification, Edward Glaeser, en.wikipedia.org, epigenetics, Erik Brynjolfsson, Francis Fukuyama: the end of history, fundamental attribution error, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, libertarian paternalism, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Nicholas Carr, North Sea oil, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Silicon Valley, Simon Kuznets, Steve Jobs, Steven Pinker, technoutopianism, The Fortune at the Bottom of the Pyramid, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K

If anything, it can be counterproductive by drawing our attention to short-term fixes rather than to long-term foundations. 55.The Internet has amplified both our penchant for catchy fake quotations and our ability to verify actual sources. Variations of this quotation are often attributed to Albert Einstein, but thanks to O’Toole (2010), I was able to trace its true source to sociologist William Bruce Cameron (1963), p. 13. 56.The United States grew to be a major economic power well before we were able to measure GDP. In the 1930s, the economist Simon Kuznets architected the first system of national income accounts. Since then, GDP has taken on a life of its own in exactly the ways that Kuznets cautioned against. A good account of his warnings and our failure to take them into account is offered by Rowe (2008). 57.Rankism – the root of all forms of discrimination and abuse of power – is nicely defined and demolished by Robert W. Fuller (2004). 58.Quoted in Fisher (1988).

 

pages: 414 words: 119,116

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

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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, 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, urban planning, Washington Consensus, Winter of Discontent, working poor

The first issue, growing inequalities, is of particular concern for health inequalities; the second, a preponderance of inherited wealth, is of concern for society as a whole, not only for health. I want to start with Piketty’s concern over the way wealth is being accumulated. The bulk of the chapter will then deal with health inequalities. Piketty’s central point is that the return on capital is higher than the growth of income. Therefore capital accumulates. Prior to Piketty’s painstaking collection and analysis of data, economists were not so concerned with distribution. Simon Kuznets, a distinguished US economist, observed that in the US and some other countries, as their economies developed and grew, up t0 the mid-twentieth century, inequality diminished. Inequality was just a stage of development, no need to worry about it, no politics involved. Piketty, drawing on detailed study of the data over a longer period of time, points out that the period Kuznets was observing, roughly 1914–70, was an aberration.

 

pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People? by John Kay

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Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, corporate governance, Credit Default Swap, cross-subsidies, dematerialisation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial innovation, financial intermediation, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, income inequality, index fund, inflation targeting, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, London Whale, Long Term Capital Management, loose coupling, low cost carrier, M-Pesa, market design, millennium bug, mittelstand, moral hazard, mortgage debt, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, regulatory arbitrage, Renaissance Technologies, rent control, Richard Feynman, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, Schrödinger's Cat, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, 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, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, Washington Consensus, We are the 99%, Yom Kippur War

And then there are the employees of sandwich bars and the London Transport staff who enable city folk to get to work. A reasonable guess might be that between 100,000 and 150,000 people in Britain are finance professionals dealing in wholesale markets (what might generally be described as ‘the City’) and that two to three times that number support them. The principles of national income accounting were set out around the time of the Second World War by a group of economists – notably Simon Kuznets, James Meade and Richard Stone – and these principles are the standard means of measuring the economic contribution of a commercial activity. We assess the car industry by its added value: the difference between the selling price of the car and the cost of the steel, rubber and other materials that went into it. That added value is the sum of the earnings of the people who build the car and the operating profit (before financing costs) of the business.

 

pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

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affirmative action, Amazon Mechanical Turk, banks create money, big-box store, Bretton Woods, car-free, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, moral hazard, mutually assured destruction, Naomi Klein, new economy, New Urbanism, Norbert Wiener, peak oil, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional

Their value as innovators—or the value they had created for so many urban dwellers—was not part of the equation. The less people spend on killing roaches, the worse it is for the economy by corporate and government measures. The universal metric of our economy’s health is the GDP, a tool devised by the National Bureau of Economic Research to help the Hoover administration navigate out of the Great Depression. Even the economist charged with developing the metric, Simon Kuznets, saw the limitations of the policy tool he had created, and spoke to Congress quite candidly of the many dimensions of the economy left out of his crude measure. Burning less gas, eating at home, enjoying neighbors, playing cards, and walking to work all subtract from the GDP, at least in the short term. Cancer, divorce, attention-deficit/hyperactivity disorder diagnoses, and obesity all contribute to GDP.

 

Year 501 by Noam Chomsky

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anti-communist, Bartolomé de las Casas, Berlin Wall, Bolshevik threat, Bretton Woods, British Empire, capital controls, colonial rule, corporate governance, cuban missile crisis, declining real wages, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, European colonialism, experimental subject, Fall of the Berlin Wall, Howard Zinn, invisible hand, land reform, land tenure, means of production, Monroe Doctrine, non-tariff barriers, offshore financial centre, Plutocrats, plutocrats, price stability, Ralph Nader, Ralph Waldo Emerson, RAND corporation, Ronald Reagan, Simon Kuznets, strikebreaker, structural adjustment programs, the scientific method, The Wealth of Nations by Adam Smith, trade liberalization, trickle-down economics, union organizing, War on Poverty, working poor

In his 1952 study of late development, Alexander Gerschenkron describes the “approximate sixfold increase in the volume of industrial output” as “the greatest and the longest [spurt of industrialization] in the history of the country’s industrial development,” though this “great industrial transformation engineered by the Soviet government” had “a remote, if any” relation to “Marxian ideology, or any socialist ideology for that matter”; and was, of course, carried out at extraordinary human cost. In his studies 10 years later of long-term trends in economic development, Simon Kuznets listed Russia among the countries with the highest rate of growth of per capita product, along with Japan and Sweden, with the US—having started from a far higher peak—in the middle range over a century, slightly above England.3 The ultranationalist threat was greatly enhanced after Russia’s leading role in defeating Hider left it in control of Eastern and parts of Central Europe, separating these regions too from the domains of Western control.

 

pages: 437 words: 115,594

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

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

Economist Branko Milanovic explores these and other ideas about inequality in developing countries in his terrific book The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality.21 Inequality Within Countries Most people have a strong presumption that inequality within countries worsens as economic growth proceeds, and—possibly—gets better at higher income levels. Much of the early research on development, especially the work of Simon Kuznets and Sir Arthur Lewis in the 1950s, suggested that would be the case. Stylistically, everyone starts out poor but equal; then some people begin to earn higher incomes, creating a widening income gap; and then over time others catch up and partially close the gap. But extensive research shows that, over the past several decades, this pattern has not held. It is true that within some countries, inequality has gotten worse—such as in China—but inequality has improved in others—such as in Brazil.

 

pages: 566 words: 163,322

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

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3D printing, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, Commodity Super-Cycle, corporate governance, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labor-force participation, Malacca Straits, Mark Zuckerberg, market bubble, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Peter Thiel, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, working-age population

Some world leaders still tend to dismiss vices like inequality, and the corruption that often feeds it, as timeless and inevitable sins that are common to all countries, particularly poor ones in the chaotic early stages of development. But this is a cop-out. Developing societies do tend to be more unequal than rich ones, but it is increasingly unclear that their inequality problem will naturally disappear. The belief that inequality fades over time had been the working assumption since the 1950s, when the economist Simon Kuznets pointed out that countries tend to grow more unequal in the early stages of development, as some poor farmers move to better-paying factory jobs in the cities, and less unequal in the later stages, as the urban middle class grows. Today, however, inequality appears to be rising at all stages of development: in poor, middle-class, and rich countries. One reason for the widening threat of inequality is that the period of intense globalization before 2008 tended to depress blue-collar wages.

 

pages: 494 words: 132,975

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

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

According to Galbraith’s biographer Richard Parker, “Currie realized how woefully understaffed the Keynesian camp was in the administration compared to the trust-busting and national-planning camps. Serious recruitment and careful placement of sympathetic allies in key Washington offices became an imperative.”42 Inspired by a common creed, the young Keynesians sought each other out in the corridors of power and began meeting at the National Planning Association, set up in 1934. Keynesian ideas also took root in America thanks to the work of econometricians and statisticians like Simon Kuznets, professor of economics and statistics at the University of Pennsylvania, and his followers at the National Bureau of Economic Research and the U.S. Department of Commerce, whose work logging the workings of the economy warranted Kuznets an honorable mention in The General Theory. Although Kuznets never became a Keynesian, his pioneering work on compiling statistics about national income and gross national product were called in evidence to fuel Keynes’s argument that bolstering aggregate demand would boost economic growth.

 

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor by John Kay

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Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, California gold rush, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, haute couture, illegal immigration, income inequality, invention of the telephone, invention of the wheel, invisible hand, John Nash: game theory, John von Neumann, Kevin Kelly, knowledge economy, labour market flexibility, late capitalism, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, pets.com, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Washington Consensus, women in the workforce, yield curve, yield management

Fogel USA 1993 Quantitative economic history Milton Friedman USA 1976 Macroeconomics Ragnar Frisch Norway 1969 Economic dynamics CWJ Granger UK 2003 Time series analysis Trygve Haavelmo Norway 1989 Econometrics John C. Harsanyi USA 1994 Game theory Friedrich von Hayek Austria/ UK 1974 Economic systems James J. Heckman USA 2000 Econometrics John R. Hicks UK 1972 General equilibrium theory Daniel Kahneman USA 2002 Behavioral economics Leonid Vitaliyevich Kantorovich USSR 1975 Optimization modeling Lawrence R. Klein USA 1980 Econometrics Tjalling C. Koopmans USA Simon Kuznets USA 1975 Optimization modeling 1971 Empirical studies of economic growth Wassily Leontief USA 1973 Input-output analysis Appendix { 359} Name Country Year Subject Arthur Lewis UK 1979 Development economics Robert E. Lucas Jr. USA 1995 Real business cycle theory Harry M. Markowitz USA 1990 Finance theory Daniel L. McFadden USA 2000 Econometrics James E. Meade UK 1977 Trade theory Robert C.

 

pages: 387 words: 120,155

Inside the Nudge Unit: How Small Changes Can Make a Big Difference by David Halpern

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Affordable Care Act / Obamacare, availability heuristic, carbon footprint, Cass Sunstein, centre right, choice architecture, cognitive dissonance, collaborative consumption, correlation does not imply causation, Daniel Kahneman / Amos Tversky, endowment effect, happiness index / gross national happiness, hindsight bias, illegal immigration, job satisfaction, Kickstarter, libertarian paternalism, market design, meta analysis, meta-analysis, Milgram experiment, nudge unit, peer-to-peer lending, pension reform, presumed consent, quantitative easing, randomized controlled trial, Richard Feynman, Richard Thaler, Ronald Reagan, Rory Sutherland, Simon Kuznets, skunkworks, the built environment, theory of mind, traffic fines, World Values Survey

The second problem was practical: how could a person, or government, empirically measure happiness? The first class of problems have kept philosophers happy, if no one else, for a good 200 years. But without an answer to the second question – measurement – the whole debate had to be left to philosophers in their armchairs. Measuring well-being: from GDP to SWB (subjective well-being) In 1937, Simon Kuznets presented the report National Income, 1929– 35 to the US Congress, which contained the initial idea of a single measure of economic progress. This measure became known as Gross Domestic Product (GDP), and was designed to capture the economic activity of an entire country. Since the Second World War, GDP has been used to measure and compare countries’ economic growth, but has also been used as a proxy for how well off the country’s citizens are.

 

pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

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affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, invisible hand, John Harrison: Longitude, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, London Interbank Offered Rate, lone genius, low skilled workers, Mark Zuckerberg, market bubble, market fundamentalism, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, obamacare, offshore financial centre, paper trading, patent troll, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, women in the workforce

Its report is available as Jean-Paul Fitoussi, Amartya Sen, and Joseph E. Stiglitz, Mismeasuring Our Lives: Why GDP Doesn’t Add Up (New York: New Press, 2010), and available at http://www.stiglitz-sen-fitoussi.fr/en/index.htm. (Translations are available in Chinese, Korean, Italian, and other languages.) 75. This point was made right at the start, by the early developer of the national income accounts, Simon Kuznets, who noted that “the welfare of a nation can scarcely be inferred from a measure of national income.” Kuznets, “National Income, 1929–1932,” 73rd U.S. Cong., 2d sess., 1934, Senate doc. no. 124, p. 7. Chapter Seven JUSTICE FOR ALL? HOW INEQUALITY IS ERODING THE RULE OF LAW 1. There are many instances where laws can be seen as preserving inequities. The laws that protected and preserved slavery offer the most profound example.

 

pages: 840 words: 202,245

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick

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accounting loophole / creative accounting, Asian financial crisis, bank run, Bretton Woods, capital controls, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, disintermediation, diversified portfolio, Donald Trump, financial deregulation, fixed income, floating exchange rates, Frederick Winslow Taylor, full employment, George Akerlof, Hyman Minsky, income inequality, index fund, inflation targeting, inventory management, invisible hand, laissez-faire capitalism, locking in a profit, Long Term Capital Management, market bubble, minimum wage unemployment, Mont Pelerin Society, moral hazard, mortgage debt, new economy, North Sea oil, Northern Rock, oil shock, price stability, quantitative easing, Ralph Nader, rent control, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Ronald Reagan: Tear down this wall, shareholder value, short selling, Silicon Valley, Simon Kuznets, technology bubble, Telecommunications Act of 1996, The Chicago School, The Great Moderation, too big to fail, union organizing, V2 rocket, value at risk, Vanguard fund, War on Poverty, Washington Consensus, Y2K, Yom Kippur War

He helped develop the nation’s tax withholding system, which made possible the rapid growth of government that he ultimately deplored. There is no greater irony in American economic history. He later said his experience in government reinforced his doubts about its efficiency. Friedman received his Ph.D. from Columbia in 1945. His doctoral thesis already contained conservative claims. Written with the future Nobelist Simon Kuznets, it was titled “Income from Independent Professional Practice,” and argued that state limitations on the number of entrants, even if the desire is to maintain a high standard, into professions like medicine, dentistry, and law raised fees artificially and reduced the accessibility of the professional services. With his degree at last in hand, Friedman sought a teaching position at a good university.

 

pages: 879 words: 233,093

The Empathic Civilization: The Race to Global Consciousness in a World in Crisis by Jeremy Rifkin

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agricultural Revolution, Albert Einstein, back-to-the-land, British Empire, carbon footprint, collaborative economy, death of newspapers, delayed gratification, distributed generation, en.wikipedia.org, energy security, feminist movement, global village, hydrogen economy, illegal immigration, income inequality, income per capita, interchangeable parts, Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, labour mobility, Mahatma Gandhi, Marshall McLuhan, means of production, megacity, meta analysis, meta-analysis, Milgram experiment, new economy, New Urbanism, Norbert Wiener, out of africa, Peace of Westphalia, peak oil, planetary scale, Simon Kuznets, Skype, smart grid, smart meter, supply-chain management, surplus humans, the medium is the message, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, transaction costs, upwardly mobile, uranium enrichment, working poor, World Values Survey

It does not, however, distinguish between economic activity that actually improves the quality of life of the society and negative economic activity that takes away from it. Every type of economic activity is calculated in the GDP, including the building of more prisons, enlarging the police force, military spending, spending for cleaning up pollution, increased health-care costs resulting from cigarette smoking, alcohol, and obesity, as well as the advertising spent to convince people to smoke and drink more or eat processed and fatty fast food. Simon Kuznets, the man who invented GDP, warned in his first report to the U.S. Congress in 1934 that “[t]he welfare of a nation can . . . scarcely be inferred from a measurement of national income.”38 Thirty years later Kuznets addressed the subject of GDP’s inherent limitations even more strongly writing that “[d]istinctions must be kept in mind between quantity and quality of growth. . . . Goals for ‘more’ growth should specify more growth of what and for what.”39 A number of attempts have been made over the years to come up with a suitable alternative to GDP.