Tyler Cowen: Great Stagnation

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pages: 291 words: 81,703

Average Is Over: Powering America Beyond the Age of the Great Stagnation by Tyler Cowen

Amazon Mechanical Turk, Black Swan, brain emulation, Brownian motion, business cycle, Cass Sunstein, choice architecture, complexity theory, computer age, computer vision, computerized trading, cosmological constant, crowdsourcing, dark matter, David Brooks, David Ricardo: comparative advantage, deliberate practice, Drosophila, en.wikipedia.org, endowment effect, epigenetics, Erik Brynjolfsson, eurozone crisis, experimental economics, Flynn Effect, Freestyle chess, full employment, future of work, game design, income inequality, industrial robot, informal economy, Isaac Newton, Johannes Kepler, John Markoff, Khan Academy, labor-force participation, Loebner Prize, low skilled workers, manufacturing employment, Mark Zuckerberg, meta analysis, meta-analysis, microcredit, Myron Scholes, Narrative Science, Netflix Prize, Nicholas Carr, P = NP, pattern recognition, Peter Thiel, randomized controlled trial, Ray Kurzweil, reshoring, Richard Florida, Richard Thaler, Ronald Reagan, Silicon Valley, Skype, statistical model, stem cell, Steve Jobs, Turing test, Tyler Cowen: Great Stagnation, upwardly mobile, Yogi Berra

ALSO BY TYLER COWEN An Economist Gets Lunch The Great Stagnation The Age of the Infovore Discover Your Inner Economist DUTTON Published by the Penguin Group Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, USA USA | Canada | UK | Ireland | Australia | New Zealand | India | South Africa | China Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England For more information about the Penguin Group visit penguin.com. Copyright © 2013 by Tyler Cowen All rights reserved. No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the author’s rights. Purchase only authorized editions.

Purchase only authorized editions. REGISTERED TRADEMARK—MARCA REGISTRADA LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Cowen, Tyler. Average is over : powering America beyond the age of the great stagnation / Tyler Cowen. pages cm Includes bibliographical references and index. ISBN 978-0-698-13816-2 1. Economic forecasting—United States. 2. United States—Economic conditions—2009- 3. United States—Economic policy—2009- I. Title. HC106.84.C69 2013 330.973—dc23 2013016255 While the author has made every effort to provide accurate telephone numbers, Internet addresses, and other contact information at the time of publication, neither the publisher nor the author assumes any responsibility for errors or for changes that occur after publication. Further, the publisher does not have any control over and does not assume any responsibility for author or third-party websites or their content.

Also relevant is Runjuan Liu and Daniel Trefler, “A Sorted Tale of Globalization: White Collar Jobs and the Rise of Service Offshoring,” National Bureau of Economic Research, Working Paper 17559, November 2011, and that is the source for information on downward occupational switching. On how much of the US economy comes from China, see Galina Hale and Bart Hobijn, “The U.S. Content of ‘Made in China’,” Federal Reserve Board of San Francisco Economic Letter, August 8, 2011. For an overview of the research on the connection between immigration and offshoring, see Tyler Cowen, “How Immigrants Create More Jobs,” The New York Times, October 30, 2010. On the importance of economic clustering, see the blog post by Noah Smith, “Great Stagnation . . . or Great Relocation?”, http://noahpinionblog.blogspot.com/2011/09 /great-stagnationor-great-relocation.html. On how cities are diverging, see Sabrina Tavernise, “A Gap in College Graduates Leaves Some Cities Behind,” The New York Times, May 30, 2012. Especially on convergence, see also Peter Ganong and Daniel Shoag, “Why Has Regional Convergence in the U.S.


pages: 419 words: 109,241

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

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

Robert Reich, “The Sharing Economy Will Be Our Undoing,” Salon, 25 August 2015; Ben Casselman, “Maybe the Gig Economy Isn’t Reshaping Work After All,” New York Times, 7 June 2018. 39.  Andy Haldane, “Labour’s Share,” speech at the Trades Union Congress, London, 12 November 2015; Richard Partington, “More Regular Work Wanted by Almost Half Those on Zero-Hours,” Guardian, 3 October 2018. 40.  Quoted in Friedman, “Born to Be Free.” 41.  Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013), p. 23. 42.  Lowrey, Give People Money, p. 15. 7. STRUCTURAL TECHNOLOGICAL UNEMPLOYMENT   1.  Chris Hughes, Fair Shot: Rethinking Inequality and How We Earn (London: Bloomsbury, 2018), p. 82.   2.  The argument of this chapter runs through my doctorate, Susskind, “Technology and Employment.” Parts of the argument can be found in my articles “A Model of Technological Unemployment” and “Automation and Demand,” Oxford University Department of Economics Discussion Paper Series No. 845 (2018) as well.   3.  

I explore this example in “Robots Probably Won’t Take Our Jobs—for Now,” Prospect, 17 March 2017.   5.  For instance, in Tyler Cowen’s podcast, “Conversations with Tyler,” episode 22 titled “Garry Kasparov on AI, Chess, and the Future of Creativity.”   6.  The new machine, dubbed AlphaZero, was matched up against the champion chess computer Stockfish. Of the fifty games where AlphaZero played white, it won twenty-five and drew twenty-five; of the fifty games where it played black, it won three and drew forty-seven. David Silver, Thomas Hubert, Julian Schrittwieser, et al., “Mastering Chess and Shogi by Self-Play with a General Reinforcement Learning Algorithm,” https://arxiv.org, arXiv:1712.01815v1 (2017).   7.  Tyler Cowen, “The Age of the Centaur Is Over Skynet Goes Live,” Marginal Revolution, 7 December 2017.   8.  

Meanwhile food became more expensive, diets were poorer, infant mortality worsened, and life expectancy fell.21 People were, quite literally, diminished: a historian reports that average physical heights fell to their “lowest ever levels” on account of this hardship.22 Luddites are often dismissed today as technologically illiterate fools, but the evidence suggests they had legitimate grievances. Indeed, the upheaval and distress caused by technological change eventually contributed to the case for the welfare state, perhaps the most radical invention of the twentieth century. None of what has been said about displaced workers eventually finding new jobs feels like cause for celebration. To paraphrase the economist Tyler Cowen, perhaps the future will be like the past—and that is why we ought not to be optimistic about the future of work.24 Figure 1.2: The Unemployment Rate in Britain, 1760–190023 Nor is it the case, at a quick glance, that those who worried there might actually be less work in the future were completely wrong. Take Keynes who, in 1930, mused that within a hundred years technological progress would carry us into a world of “three-hour shifts” or a “fifteen-hour week.”


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

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

Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals By Tyler Cowen In my new essay, Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals, I ask questions about social philosophy for the future of our world. Why do we prefer one choice over another? To what extent do we have good reasons for such preferences? Exactly which choices should we make? Short reads are available for Medium readers, or read the whole thing, or find a full download of the essay at this pdf or pdf without images for Kindle. — Tyler Cowen, Mercatus Center at George Mason University, 3434 Washington Blvd, Arlington, VA 22201, tcowen@gmu.edu. July 25, 2016 After this essay, to see how we got into our current mess and where it is headed, please pre-order my next book, The Complacent Class.

Just as the present appears remarkable from the vantage point of the past, the future, at least provided growth continues, will offer comparable advances, including perhaps greater life expectancies, cures for debilitating diseases, and cognitive enhancements. Billions of people will have much better and longer lives. Many features of modern life might someday seem as backward as we now regard the large number of women who died in childbirth for lack of proper care. I have myself written of “the great stagnation” as a growth slowdown which overtook the Western world, starting in about 1973. It is a failure of imagination, however, to believe that human progress has run its course. The more plausible view is that progress is unevenly bunched, we have been in a slow period as of late, various new developments are percolating, and we should do our best to help them along. Whether we like it or not, economic growth and technological progress do not always come in steady doses.


pages: 76 words: 20,238

The Great Stagnation by Tyler Cowen

Asian financial crisis, Bernie Madoff, en.wikipedia.org, endogenous growth, financial innovation, Flynn Effect, income inequality, indoor plumbing, life extension, liquidity trap, Long Term Capital Management, Mark Zuckerberg, meta analysis, meta-analysis, Peter Thiel, RAND corporation, school choice, Tyler Cowen: Great Stagnation, urban renewal

.); Penguin Books Ltd, 80 Strand, London WC2R 0RL, England; Penguin Ireland, 25 St Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd); Penguin Group (Australia), 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd); Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi—110 017, India; Penguin Group (NZ), 67 Apollo Drive, Rosedale, North Shore 0632, New Zealand (a division of Pearson New Zealand Ltd); Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England Published by Dutton, a member of Penguin Group (USA) Inc. First printing, February 2011 Copyright © 2010 by Tyler Cowen All rights reserved <Dutton logo> REGISTERED TRADEMARK—MARCA REGISTRADA eISBN : 978-1-101-50225-9 Chart on page 14 reprinted from Technological Forecasting and Social Change, Vol 72/Issue 8, Jonathan Huebner, “A possible declining trend for worldwide innovation,” Copyright (October, 2005), with permission from Elsevier. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.

On Twitter, see Claire Cain Miller and Tanzina Vega, “After Building a Huge Audience, Twitter Turns to Ads to Cash In,” The New York Times, October 11, 2010, pp. B1, B4. On job creation and the iPod, see Greg Linden, Jason Dedrick, and Kenneth L. Kraemer, “Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod,” 2008, available at http://pcic.merage.uci.edu/papers/2009/InnovationAndJobCreation.pdf. Chapter 4 The Government of Low-Hanging Fruit On who pays how much of the tax burden, see Tyler Cowen and Alex Tabarrok, Modern Principles: Macroeconomics, New York: Worth Publishers, 2009, ch. 16, p. 340. The historian S. E. Finer first suggested that technology was behind the rise of big government, though he did not consider this claim in the context of public-choice issues. See S. E. Finer, The History of Government from the Earliest Times, Oxford: Oxford University Press, 1997. Bradford DeLong’s unpublished manuscript “Slouching Towards Utopia,” sometimes available on the Web in various parts, appears to cover related themes.

Valuable new ideas have become quite scarce, and so the small number of people who hold the rights to new ideas—whether it be the useful Facebook or the more dubious forms of mortgage-backed securities—earned higher relative returns than in earlier periods. The “rise in income inequality” and the “slowdown in ideas production” are two ways of describing the same phenomenon, namely that current innovation is more geared to private goods than to public goods. If one sentence were to sum up the mechanism driving the Great Stagnation, it is this: Recent and current innovation is more geared to private goods than to public goods. That simple observation ties together the three major macroeconomic events of our time: growing income inequality, stagnant median income, and, as we will see in chapter five, the financial crisis. You can argue about the numbers, but again, just look around. I’m forty-eight years old, and the basic material accoutrements of my life (again, the internet aside) haven’t changed much since I was a kid.


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Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy by Erik Brynjolfsson

"Robert Solow", Amazon Mechanical Turk, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, business cycle, business process, call centre, combinatorial explosion, corporate governance, creative destruction, crowdsourcing, David Ricardo: comparative advantage, easy for humans, difficult for computers, Erik Brynjolfsson, factory automation, first square of the chessboard, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, hiring and firing, income inequality, intangible asset, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Khan Academy, Kickstarter, knowledge worker, Loebner Prize, low skilled workers, minimum wage unemployment, patent troll, pattern recognition, Paul Samuelson, Ray Kurzweil, rising living standards, Robert Gordon, self-driving car, shareholder value, Skype, too big to fail, Turing test, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, wealth creators, winner-take-all economy, zero-sum game

In the cyclical explanation, an especially deep drop in demand like the Great Recession is bound to be followed by a long and frustratingly slow recovery. What America has been experiencing since 2007, in short, is another case of the business cycle in action, albeit a particularly painful one. A second explanation for current hard times sees stagnation, not cyclicality, in action. Stagnation in this context means a long-term decline in America’s ability to innovate and increase productivity. Economist Tyler Cowen articulates this view in his 2010 book, The Great Stagnation: We are failing to understand why we are failing. All of these problems have a single, little noticed root cause: We have been living off low-hanging fruit for at least three hundred years. … Yet during the last forty years, that low-hanging fruit started disappearing, and we started pretending it was still there. We have failed to recognize that we are at a technological plateau and the trees are more bare than we would like to think.

Furthermore, there are also areas where the productivity statistics overestimate growth, as when they fail to account for increases in pollution or when increased crime leads people to spend more on crime-deterring goods and services. On balance, the official productivity data likely underestimate the true improvements of our living standards over time. Stagnant Median Income In contrast to labor productivity, median family income has risen only slowly since the 1970s (Figure 3.2) once the effects of inflation are taken into account. As discussed in Chapter 1, Tyler Cowen and others point to this fact as evidence of economy-wide stagnation. In some ways, Cowen understates his case. If you zoom in on the past decade and focus on working-age households, real median income has actually fallen from $60,746 to $55,821. This is the first decade to see declining median income since the figures were first compiled. Median net worth also declined this past decade when adjusted for inflation, another first.

It has also brought real prosperity—engaging, challenging jobs and careers of self-realization and self-discovery … [but] dynamism has been in decline over the past decade.” The stagnation argument doesn’t ignore the Great Recession, but also doesn’t believe that it’s the principle cause of the current slow recovery and high joblessness. These woes have a more fundamental source: a slowdown in the kinds of powerful new ideas that drive economic progress. This slowdown pre-dates the Great Recession. In The Great Stagnation, in fact, Cowen maintained that it’s been going on since the 1970s, when U.S. productivity growth slowed and the median income of American families stopped rising as quickly as it had in the past. Cowen, Phelps, and other “stagnationists” hold that only higher rates of innovation and technical progress will lift the economy out of its current doldrums. A variant on this explanation is not that America has stagnated, but that other nations such as India and China have begun to catch up.


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

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

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

Techno-optimists, such as venture capitalist Marc Andreessen,22 lampoon the worriers as luddites and point to rising employment around the world as proof that their fears are overblown, while many left-leaning thinkers continue to blame globalization and the erosion of worker bargaining power, rather than robots, for stagnant pay and rising inequality in rich countries. Some writers, like Brynjolfsson and McAfee, and also Tyler Cowen, whose 2013 book, Average is Over,23 speculates about America’s economic future, anticipate a future in which broad economic and social change occurs incrementally, and in which sensible policy reforms (to education, for example) can make a technologically induced decline in the need for labour easier for households to manage. The various partisans are like the allegorical blind men describing different parts of an elephant: each has his insights, but the competing stories have yet to be reconciled with each other.

I will single out, however, Tom Standage, Emma Duncan, Ludwig Siegele and Tim Cross, discussions with whom were particularly informative. Most importantly, I am indebted to Zanny Minton Beddoes, without whose confidence and trust I would not have found myself in this position, and whose brilliance has made me a better thinker and writer. The ideas in the book were also shaped by years of debate and discussion with fellow economics writers and bloggers. I am especially grateful to Tyler Cowen, Matthew Yglesias, Karl Smith, Steve Randy Waldman and Brad DeLong, whose blogs have been a trusted sound-board off which I could bounce ideas. The book itself has been moulded by many hands. The text was immeasurably improved thanks to comments on early drafts from David Schleicher and Soumaya Keynes, and it was a great pleasure to work with Anna Hervé, who helped shape and polish the text.


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

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

If innovation is the primary driver of prosperity, then perhaps stagnant incomes imply that the problem is the rate at which new inventions and ideas are being generated, rather than the impact of technology on the working and middle classes. Maybe computers aren’t really all that important, and the slow rate of progress on a broader front is what matters most. Several economists have made this case. Tyler Cowen, an economist at George Mason University, proposed in his 2011 book The Great Stagnation that the US economy has run into a temporary plateau after consuming all the low-hanging fruit of accessible innovation, free land, and underutilized human talent. Robert J. Gordon of Northwestern University is even more pessimistic, arguing in a 2012 paper that economic growth in the United States, hampered by a slow pace of innovation and a number of “headwinds”—including excessive debt, an aging population, and shortfalls in our educational system—may essentially be over.1 In order to gain some insight into the factors that influence the pace of innovation, we may find it useful to think in terms of the historical path that nearly all technologies follow.

For a listing of the average wages for production or nonsupervisory workers, see Table B-47 in The Economic Report of the President, 2013, http://www.whitehouse.gov/sites/default/files/docs/erp2013/full_2013_economic_report_of_the_president.pdf. As noted in the Introduction, the table shows peak weekly wages of about $341 in 1973 and $295 in December 2012, measured in 1984 dollars. I have adjusted these to 2013 dollars using the Bureau of Labor Statistics’ inflation calculator at http://www.bls.gov/data/inflation_calculator.htm. 12. On median household incomes versus per capita GDP, see Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011), p. 15, and Lane Kenworthy, “Slow Income Growth for Middle America,” September 3, 2008, http://lanekenworthy.net/2008/09/03/slow-income-growth-for-middle-america/. I have adjusted the figures to reflect 2013 dollars. 13. Lawrence Mishel, “The Wedges Between Productivity and Median Compensation Growth,” Economic Policy Institute, April 26, 2012, http://www.epi.org/publication/ib330-productivity-vs-compensation/. 14.

Keith Bradsher, “Chinese Graduates Say No Thanks to Factory Jobs,” New York Times, January 24, 2013, http://www.nytimes.com/2013/01/25/business/as-graduates-rise-in-china-office-jobs-fail-to-keep-up.html; Keith Bradsher, “Faltering Economy in China Dims Job Prospects for Graduates,” New York Times, June 16, 2013, http://www.nytimes.com/2013/06/17/business/global/faltering-economy-in-china-dims-job-prospects-for-graduates.html?pagewanted=all. 53. Eric Mack, “Google Has a ‘Near Perfect’ Universal Translator—for Portuguese, at Least,” CNET News, July 28, 2013, http://news.cnet.com/8301–17938_105–57595825–1/google-has-a-near-perfect-universal-translator-for-portuguese-at-least/. 54. Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013), p. 79. 55. John Markoff, “Armies of Expensive Lawyers, Replaced by Cheaper Software,” New York Times, March 4, 2011, http://www.nytimes.com/2011/03/05/science/05legal.html. 56. Arin Greenwood, “Attorney at Blah,” Washington City Paper, November 8, 2007, http://www.washingtoncitypaper.com/articles/34054/attorney-at-blah. 57. Erin Geiger Smith, “Shocking?


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The Retreat of Western Liberalism by Edward Luce

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

His book The Rise and Fall of American Growth makes a startling forecast that did not go down well in Silicon Valley. The future is not what it used to be, he says. The peak age of high growth and disruptive technology is behind us. Forget the power of the iPhone. Stop exulting about Google’s driverless car. Such wonders pale beside the changes felt by earlier generations. They are unlikely to be matched by our age. Gordon’s thesis is not entirely new. Tyler Cowen made a similar argument with his sparkling monograph The Great Stagnation (ironically first published as an ebook). Nor is it as counterintuitive as it sounds to our app-crowded, WiFi-saturated twenty-first-century brains. Gordon points out that for most of history, growth was absent. Between the fall of the Roman Empire and the Middle Ages there was basically none. England’s per-capita income doubled between 1300 and 1700, a rate so slow as to be imperceptible.59 Life for most people was unimaginably stunted.

America’s per-capita rate of triadic patent applications – those that are filed in the US, Europe and Japan, which screens out the frivolous ones – has fallen by a quarter since 2000.25 The fastest-growing units in the big Western companies are the legal and public relations departments. Big companies devote the bulk of their earnings to buying back shares and boosting dividend payments. They no longer invest anything like what they used to in research and development. The future loses out. Tyler Cowen, who is perhaps the most lateral-thinking economist I know, talks of the rise of America’s ‘complacent classes’ – the creep of a risk-averse and conformist mindset. In a supposed age of hyper-individualism, eccentricity is penalised. Software screens out job applicants before they have a chance to show their faces. Matchmaking algorithms do the same for our love lives. Cowen detects conformism even in the liveliest Silicon Valley companies.

The number of unoccupied apartments in New York rose by almost three-quarters at the turn of the century to thirty-four thousand in 2011.49 London has witnessed similar growth. The new residents then lock in their gains by restricting land use, which keeps values high. Richard Florida calls them the ‘new urban Luddites’, who exploit an ‘enormous and complex thicket of zoning laws and other land use regulations’ to keep the others out. Tyler Cowen has coined a new acronym to replace Nimbys (Not in My Backyard): Bananas (Build Absolutely Nothing Anywhere Near Anything).50 Such risk aversion breeds its own failure. So deeply rooted is gentrification that Richard Florida has now modified his widely acclaimed thesis about the rise of the creative classes. Cities are becoming too successful for their own good. Until recently, he believed they would be the engine rooms of the new economy, embracing the diversity necessary to attract talent.


pages: 297 words: 84,009

Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen

23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, experimental economics, Filter Bubble, financial innovation, financial intermediation, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, late fees, Mark Zuckerberg, mobile money, money market fund, mortgage debt, Network effects, new economy, Nicholas Carr, obamacare, offshore financial centre, passive investing, payday loans, peer-to-peer lending, Peter Thiel, pre–internet, price discrimination, profit maximization, profit motive, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Ronald Coase, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Nature of the Firm, Tim Cook: Apple, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator

Treasury See also T-bills venture capital American innovation and Verizon Vietnam War voice recording Volkswagen wages Walgreens Walmart Warren, Elizabeth Waze wealth management Wells Fargo WhatsApp whistleblowers Wi-Fi-enabled technology WikiLeaks Williamson, Oliver Wilson, David work altruism and economic oppression exploitation flow and human relationships and non-pay-related benefits potential burden of satisfaction of sexual harassment and stress and studies “work as a safe haven” effect work hours workplace freedom WolframAlpha World Bank World Trade Organization World Values Survey World War I World War II X-rays Yahoo YouTube Zak, Paul J. Zawadzki, Matthew J. Zingales, Luigi zombie banks Zuckerberg, Mark See also Facebook ALSO BY TYLER COWEN The Complacent Class Average Is Over The Great Stagnation An Economist Gets Lunch The Age of the Infovore Discover Your Inner Economist ABOUT THE AUTHOR TYLER COWEN, Ph.D., holds the Holbert L. Harris Chair in Economics at George Mason University. He is the author of a number of explanatory books and textbooks, including The Complacent Class, as well as the most-read economics blog worldwide, marginalrevolution.com. He writes regularly for The New York Times and contributes to a wide number of newspapers and periodicals.

If Business Is So Good, Why Is It So Disliked? Appendix: What Is a Firm, Anyway, and Why Do So Many Workers End Up So Frustrated? Acknowledgments Notes Selected Bibliography Index Also By Tyler Cowen About the Author Copyright BIG BUSINESS. Copyright © 2019 by Tyler Cowen. All rights reserved. For information, address St. Martin’s Press, 175 Fifth Avenue, New York, N.Y. 10010. www.stmartins.com Cover photograph of city © Predrag Vuckovic / Getty Images The Library of Congress has cataloged the print edition as follows: Names: Cowen, Tyler, author. Title: Big business: a love letter to an American anti-hero / Tyler Cowen. Description: New York: St. Martin’s Press, [2019] | Includes bibliographical references and index. Identifiers: LCCN 2018045701 | ISBN 9781250110541 (hardcover) | ISBN 9781250225627 (international, sold outside the U.S., subject to rights availability) | ISBN 9781250110558 (ebook) Subjects: LCSH: Big business—United States. | Corporations—United States. | Industries—United States. | Capitalism—United States.


pages: 339 words: 88,732

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

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

Faltering Innovation Confronts the Six Headwinds, Working Paper (National Bureau of Economic Research, August 2012), http://www.nber.org/papers/w18315. 5. Ibid. 6. Tyler Cowen, The Great Stagnation: How America Ate All the Low-hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011). 7. Gavin Wright, “Review of Helpman (1998),” Journal of Economic Literature 38 (March 2000): 161–62. 8. Boyan Jovanovic and Peter L. Rousseau, “General Purpose Technologies,” in Handbook of Economic Growth, ed. Philippe Aghion and Steven N. Durlauf, vol. 1, Part B (Amsterdam: Elsevier, 2005), 1181–1224, http://www.sciencedirect.com/science/article/pii/S157406840501018X. 9. Alexander J. Field, Does Economic History Need GPTs? (Rochester, NY: Social Science Research Network, 2008), http://papers.ssrn.com/abstract=1275023. 10. Gordon, Is U.S. Economic Growth Over?, p. 11. 11. Cowen, The Great Stagnation, location 520. 12.

While puzzling at the time, it seems increasingly clear that the one-time-only benefits of the Great Inventions and their spin-offs had occurred and could not happen again. . . . All that remained after 1970 were second-round improvements, such as developing short-haul regional jets, extending the original interstate highway network with suburban ring roads, and converting residential America from window unit air conditioners to central air conditioning.5 Gordon is far from alone in this view. In his 2011 book The Great Stagnation, economist Tyler Cowen is definitive about the source of America’s economic woes: We are failing to understand why we are failing. All of these problems have a single, little noticed root cause: We have been living off low-hanging fruit for at least three hundred years. . . . Yet during the last forty years, that low-hanging fruit started disappearing, and we started pretending it was still there. We have failed to recognize that we are at a technological plateau and the trees are more bare than we would like to think.6 General Purpose Technologies: The Ones That Really Matter Clearly, Gordon and Cowen see the invention of powerful technologies as central to economic progress.

Those benefits start small while the technology is immature and not widely used, grow to be quite big as the GPT improves and propagates, then taper off as the improvement—and especially the propagation—die down. When multiple GPTs appear at the same time, or in a steady sequence, we sustain high rates of growth over a long period. But if there’s a big gap between major innovations, economic growth will eventually peter out. We’ll call this the ‘innovation-as-fruit’ view of things, in honor of Tyler Cowen’s imagery of all the low-hanging fruit being picked. In this perspective, coming up with an innovation is like growing fruit, and exploiting an innovation is like eating the fruit over time. Another school of thought, though, holds that the true work of innovation is not coming up with something big and new, but instead recombining things that already exist. And the more closely we look at how major steps forward in our knowledge and ability to accomplish things have actually occurred, the more this recombinant view makes sense.


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The Complacent Class: The Self-Defeating Quest for the American Dream by Tyler Cowen

affirmative action, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, assortative mating, Bernie Sanders, Black Swan, business climate, business cycle, circulation of elites, clean water, David Graeber, declining real wages, deindustrialization, desegregation, Donald Trump, drone strike, East Village, Elon Musk, Ferguson, Missouri, Francis Fukuyama: the end of history, gig economy, Google Glasses, Hyman Minsky, Hyperloop, income inequality, intangible asset, Internet of things, inventory management, knowledge worker, labor-force participation, low skilled workers, Marc Andreessen, Mark Zuckerberg, medical residency, meta analysis, meta-analysis, obamacare, offshore financial centre, Paul Samuelson, Peter Thiel, purchasing power parity, Richard Florida, security theater, sharing economy, Silicon Valley, Silicon Valley ideology, Skype, South China Sea, Steven Pinker, Stuxnet, The Great Moderation, The Rise and Fall of American Growth, total factor productivity, Tyler Cowen: Great Stagnation, upwardly mobile, Vilfredo Pareto, working-age population, World Values Survey

See also crime wages and collectibles and gender and living standards and matching and mobility and outsourcing and productivity Wang, Ben Wang Wenyin War on Drugs Warner, Michael Washington, DC Watts riots Weather Underground Wikipedia YouTube. See also social media Zuckerberg, Mark ALSO BY TYLER COWEN Average Is Over The Great Stagnation An Economist Gets Lunch The Age of the Infovore Discover Your Inner Economist ABOUT THE AUTHOR TYLER COWEN (Ph.D.) holds the Holbert C. Harris chair in economics at George Mason University. He is the author of a number of textbooks and other thought-provoking works and writes the most-read economics blog worldwide, marginalrevolution.com. He also writes regularly for The New York Times, for Bloomberg View, and contributes to a wide number of newspapers and periodicals.

The Respite of the Well-Ordered Match: Love, Music, and Even Your Dog 6. Why Americans Stopped Rioting and Legalized Marijuana 7. How a Dynamic Society Looks and Feels 8. Political Stagnation, the Dwindling of True Democracy, and Alexis de Tocqueville as Prophet of Our Time 9. The Return of Chaos, and Why the Complacent Class Cannot Hold Notes References Index Also by Tyler Cowen About the Author Copyright THE COMPLACENT CLASS. Copyright © 2017 by Tyler Cowen. All rights reserved. Printed in the United States of America. For information, address St. Martin’s Press, 175 Fifth Avenue, New York, N.Y. 10010. www.stmartins.com Cover photographs: American flag © Photoline/Shutterstock; deflated ballon © Jeff Wasserman/Shutterstock. Cataloging-in-Publication data for the print edition is available from the Library of Congress.

So many features of the country became nicer, safer, and more peaceful, but as an unintended side effect, a lot of the barriers to advancement and innovation were raised. Ultimately America decided it didn’t want a redo of all the turmoil of the 1960s and 1970s, and it did what was needed to stop that from happening. This added social stasis came roughly at the same time as a slowdown in the rate of technological progress, starting in the 1970s, as I outlined in my earlier book, The Great Stagnation. In 1973, the oil price shock and then some bad policy decisions hurt the American economy a great deal. The American government eventually repaired most of the policy mistakes, such as excess inflation, but since that time innovation and productivity growth have been relatively slow, and only the tech sector has been truly dynamic. America has been trying to run a new industrial revolution with a limited number of engines while checking potential losses for the well-off and upper middle class.


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

autonomous vehicles, banking crisis, Bartolomé de las Casas, basic income, 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, George Santayana, 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 Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, 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, Paul Samuelson, 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 Future of Employment, 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

“Leeds Woollen Workers Petition, 1786,” Modern History Sourcebook. http://www.fordham.edu/halsall/mod/1786machines.asp 33. Quoted in: Robert Skidelsky, “Death to Machines?” Project Syndicate (February 21, 2014). http://www.project-syndicate.org/commentary/robert-skidelsky-revisits-the-luddites--claim-that-automation-depresses-real-wages 34. Tyler Cowen, Average is Over. Powering America Beyond the Age of the Great Stagnation (2013), p. 23. 35. Tyler Cowen, The Great Stagnation, p. 172. 36. Quoted in: Daron Acemoglu and James A. Robinson, Why Nations Fail. The Origins of Power, Prosperity and Poverty (2012), p. 226. 37. Thomas Piketty, “Save capitalism from the capitalists by taxing wealth,” The Financial Times (March 28, 2014). http://www.ft.com/intl/cms/s/0/decdd76e-b50e-11e3-a746-00144feabdc0.html-axzz44qTtjlZN 5 The End of Poverty 1.

What can be done? Remedies Not much, according to many economists. The trends are clear. Inequality will continue to increase and everybody who hasn’t managed to learn a skill that machines cannot or will not be able to master will be sidelined. “Making high earners feel better in just about every part of their lives will be a major source of job growth in the future,” writes the American economist Tyler Cowen.34 Though the lower classes might have access to new amenities like cheap solar power and free Wi-Fi, the gap between them and the ultra-rich will be wider than ever. Beyond that, the rich and well-educated will continue to close ranks even as peripheral villages and towns grow more impoverished. We’re already seeing this happen in Europe, where Spanish techies can more easily find jobs in Amsterdam than in Madrid, and Greek engineers are pulling up stakes and heading for cities like Stuttgart and Munich.

Heidi Shierholz, “Immigration and Wages: Methodological advancements confirm modest gains for native workers,” Economic Policy Institute (February 4, 2010). http://epi.3cdn.net/7de74e-e0cd834d87d4_a3m6ba9j0.pdf Also see: Gianmarco I.P. Ottaviano and Giovanni Peri, “Rethinking the Effect of Immigration on Wages.” http://www.nber.org/papers/w12497 39. Frederic Docquiera, Caglar Ozden, and Giovanni Peri, “The Wage Effects of Immigration and Emigration,” OECD (December 20, 2010). http://www.oecd.org/els/47326474.pdf 40. Tyler Cowen, Average is Over (2013) p. 169. 41. Corrado Giulietti, Martin Guzi, Martin Kahanec, and Klaus F. Zimmermann, “Unemployment Benefits and Immigration: Evidence from the EU,” Institute for the Study of Labor (October 2011). http://ftp.iza.org/dp6075.pdf On the U.S., see: Leighton Ku and Brian Bruen, “The Use of Public Assistance Benefits by Citizens and Non-citizen Immigrants in the United States,” Cato Institute (February 19, 2013). http://object.cato.org/sites/cato.org/files/pubs/pdf/workingpaper-13_1.pdf 42.


pages: 222 words: 53,317

Overcomplicated: Technology at the Limits of Comprehension by Samuel Arbesman

algorithmic trading, Anton Chekhov, Apple II, Benoit Mandelbrot, citation needed, combinatorial explosion, Danny Hillis, David Brooks, digital map, discovery of the americas, en.wikipedia.org, Erik Brynjolfsson, Flash crash, friendly AI, game design, Google X / Alphabet X, Googley, HyperCard, Inbox Zero, Isaac Newton, iterative process, Kevin Kelly, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, mandelbrot fractal, Minecraft, Netflix Prize, Nicholas Carr, Parkinson's law, Ray Kurzweil, recommendation engine, Richard Feynman, Richard Feynman: Challenger O-ring, Second Machine Age, self-driving car, software studies, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, superintelligent machines, Therac-25, Tyler Cowen: Great Stagnation, urban planning, Watson beat the top human players on Jeopardy!, Whole Earth Catalog, Y2K

In the realm of logistics: Steven Rosenbush and Laura Stevens, “At UPS, the Algorithm Is the Driver,” The Wall Street Journal, February 16, 2015, http://www.wsj.com/articles/at-ups-the-Algorithm-is-the-driver-1424136536. On the blog Marginal Revolution, Alex Tabarrok refers to this kind of intelligence as “opaque intelligence.” http://marginalrevolution.com/marginal revolution/2015/02/opaque-intelligence.html. the economist Tyler Cowen noted: Tyler Cowen, Average Is Over: Powering America beyond the Age of the Great Stagnation (New York: Dutton, 2013), 72. “both praised and panned”: Feng-Hsiung Hsu, Behind Deep Blue: Building the Computer That Defeated the World Chess Champion (Princeton, NJ: Princeton University Press, 2002). “slow, tortuous reading”: Flood and Goodenough, “Contract as Automaton.” when forty-five tax professionals: Donald Sull and Kathleen M.

In the realm of logistics, powerful algorithms have been developed that route delivery trucks in seemingly illogical ways, leaving drivers dissatisfied with the counterintuitive routes they are being given. And in chess, a realm where computers are more powerful than humans and are able to win via pathways that the human mind can’t always see, the machines’ characteristic game choices are known as “computer moves”—the moves that a human would rarely make, the ones that are ugly but still get results. As the economist Tyler Cowen noted in his book Average Is Over, these types of moves often seem wrong, but they are very effective. When IBM’s Deep Blue was playing Garry Kasparov, it made a move so strange that it “was both praised and panned by different commentators,” according to one of Deep Blue’s builders. In fact, this highly odd but potentially brilliant move was eventually found to be due to a bug. Computers have exposed the fact that chess, at least when played at the highest levels, is too complicated for us, with too many interacting parts for a human—even a grandmaster—to keep in view.

We need to get better at “playing” simulations of the technological world more generally, teaching students how to play with some system, examining its limits and how it works, at least “sort of.” This play—tweaking a simulation of technological failure and seeing how it responds—can provide a greater comfort with large and unwieldy systems and can help us as we move forward through this world of increasingly complicated technology. We also need interpreters of what’s going on in these systems, a bit like TV meteorologists. Near the end of Average Is Over, the economist Tyler Cowen speculates about this new breed of future interpreters. He says they “will hone their skills of seeking out, absorbing, and evaluating this information. . . . They will be translators of the truths coming out of our networks of machines. . . . At least for a while, they will be the only people left who will have a clear notion of what is going on.” These interpreters—who will likely be comfortable with simulations—can help provide us with a glimmer of intuition into complex systems.


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An Economist Gets Lunch: New Rules for Everyday Foodies by Tyler Cowen

agricultural Revolution, big-box store, business climate, carbon footprint, cognitive bias, creative destruction, cross-subsidies, East Village, en.wikipedia.org, food miles, guest worker program, haute cuisine, illegal immigration, informal economy, iterative process, mass immigration, oil shale / tar sands, out of africa, pattern recognition, Peter Singer: altruism, price discrimination, refrigerator car, The Wealth of Nations by Adam Smith, Tyler Cowen: Great Stagnation, Upton Sinclair, winner-take-all economy, women in the workforce

AN ECONOMIST GETS LUNCH ALSO BY TYLER COWEN The Great Stagnation The Age of the Infovore Discover Your Inner Economist T Y L E R C O W E N A N E C O N O M I S T G E T S L U N C H New Rules for Everyday Foodies DUTTON DUTTON Published by Penguin Group (USA) Inc. 375 Hudson Street, New York, New York 10014, U.S.A. Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario M4P 2Y3, Canada (a division of Pearson Penguin Canada Inc.); Penguin Books Ltd, 80 Strand, London WC2R 0RL, England; Penguin Ireland, 25 St. Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd); Penguin Group (Australia), 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd); Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi–110 017, India; Penguin Group (NZ), 67 Apollo Drive, Rosedale, Auckland 0632, New Zealand (a division of Pearson New Zealand Ltd); Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England Published by Dutton, a member of Penguin Group (USA) Inc.

Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd); Penguin Group (Australia), 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd); Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi–110 017, India; Penguin Group (NZ), 67 Apollo Drive, Rosedale, Auckland 0632, New Zealand (a division of Pearson New Zealand Ltd); Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England Published by Dutton, a member of Penguin Group (USA) Inc. First printing, April 2012 1 3 5 7 9 10 8 6 4 2 Copyright © 2012 by Tyler Cowen All rights reserved. No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the author’s rights. Purchase only authorized editions. REGISTERED TRADEMARK—MARCA REGISTRADA LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Cowen, Tyler. An economist gets lunch : new rules for everyday foodies / Tyler Cowen. p. cm. Includes bibliographical references and index. ISBN: 978-1-101-56166-9 1. Food habits—Economic aspects. 2. Food preferences—Economic aspects. 3. Food industry and trade.

On the varieties of Mexican-derived foods, Tex-Mex tends to use venison and beef, fajitas, puffy tacos, and cabrito (goat). New Mexico foods are more likely to use fresh green chilies and green tomatillo sauces. Pork is the preferred meat, not beef. Mexican food from California uses more produce, as befits the diversified agriculture of the state. Avocados, sour cream, and Spanish olives are especially common. See Tyler Cowen, Creative Destruction: How Globalization is Changing the World’s Cultures (Princeton: Princeton University Press), 2002, chapter four, for information on the differential spread of television across the United States and Europe. For the figures on working women, see Martha Hahn Sugar, When Mothers Work, Who Pays? (Westport: Bergin and Garvey, 1994), p. 27. The quotation from the Jell-O pamphlet is from Carolyn Wyman, Jell-O: A Biography (New York: Harcourt, Inc., 2001), p. 23.


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The Impulse Society: America in the Age of Instant Gratification by Paul Roberts

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, asset allocation, business cycle, business process, Cass Sunstein, centre right, choice architecture, collateralized debt obligation, collective bargaining, computerized trading, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, David Brooks, delayed gratification, disruptive innovation, double helix, factory automation, financial deregulation, financial innovation, fixed income, full employment, game design, greed is good, If something cannot go on forever, it will stop - Herbert Stein's Law, impulse control, income inequality, inflation targeting, invisible hand, job automation, John Markoff, Joseph Schumpeter, knowledge worker, late fees, Long Term Capital Management, loss aversion, low skilled workers, mass immigration, new economy, Nicholas Carr, obamacare, Occupy movement, oil shale / tar sands, performance metric, postindustrial economy, profit maximization, Report Card for America’s Infrastructure, reshoring, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, technoutopianism, the built environment, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, Walter Mischel, winner-take-all economy

Some of this can be laid to historical timing: world-changing breakthroughs are a lot harder to come by these days in part because the easy ones have already been made. In times past, we were able to get massive increases in productivity by eliminating large and obvious inefficiencies—moving from animal-powered farming to mechanization, for instance, or switching from manure to synthetic fertilizers. But as George Mason University economist Tyler Cowen has argued, most of that “low-hanging fruit” has all been picked and eaten, and today it’s simply much harder, and more costly, to achieve similarly epoch-defining breakthroughs. But it’s not just that innovation has gotten harder. One can also make the case that, under the financialized business models that emerged with the Impulse Society, the way we pursue innovation has gotten weaker. As we’ve already seen, the manic drive to cut costs and protect quarterly earnings led to steady reductions in research and development, and these cuts have added up.

One will be a fairly narrow cadre of highly talented, well-paid superattorneys hired for their intellect, their management talents, and their networking skills—chores computers won’t likely be able to do for some time. The other, larger wing of the legal profession will be a sort of mass-production, Walmart model that digitally processes hundreds of thousands of simple cases, like uncontested divorce or mortgage contracts. This two-tier market is the pattern that some economists foresee for the entire job market. The scenario is most graphically laid out by Tyler Cowen, the economist, in his recent book Average Is Over. In Cowen’s version of the future, the top 15 percent of the workforce will be made up of what he calls “hyperproductives”—individuals who are extremely bright and who either know how to use the latest technologies or know how to manage other hyperproductives, and for whom each new generation of corporate efficiencies will mean an ever-larger slice of the pie.

Given the huge development costs these medical technologies will require, and the industry’s ever-more-intense need for prompt returns, it’s not so hard to imagine a medical future that looks an awful lot like the medical present—that is, where more and more of the truly life-altering benefits of innovation flow to the part of the market that can most afford them. Even if we managed to enact a single-payer system, we’d still be looking at a health culture very much along the lines of Tyler Cowen’s bifurcated, end-of-average society, where the wealthy get not only better health care but also more access to the sorts of innovations that are likely to dramatically extend life spans. What will society look like in thirty years, when Cowen’s hyperproductives are not only wealthier than everyone else, but living much longer? Again and again, our health care culture highlights and accentuates the inequities and imbalances of the Impulse Society—and the reflexes that guide so many of our decisions.


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The Gated City (Kindle Single) by Ryan Avent

big-box store, carbon footprint, deindustrialization, edge city, Edward Glaeser, income inequality, industrial cluster, labor-force participation, low skilled workers, manufacturing employment, offshore financial centre, profit maximization, rent-seeking, Silicon Valley, Thorstein Veblen, transit-oriented development, Tyler Cowen: Great Stagnation, Veblen good, white picket fence, zero-sum game

But these workers must be prepared to take different jobs, and the business and public infrastructure must be in place to allow them to do different things. This adjustment process takes a while. And while it continues, incomes for many American workers will stagnate, prices for many basic resources will rise, and growth may slow. Ultimately everyone will be better off, but during the transition period some people will be made worse off. - The low-hanging fruit is gone. Economist Tyler Cowen argues that the rich world rode a wave of low-hanging fruit to prosperity in the years between the onset of the Industrial Revolution and the chaotic 1970s. Lots of empty land was put to use. Uneducated populations became highly educated. And centuries of revolutionary technological innovations were exploited to their fullest. But now, he says, most of these gains have been used up. The best land is occupied and must be reallocated if uses are to change -- a costly process.

Wolff, Edward, “Spillovers, Linkages, and Productivity Growth in the US Economy, 1958 to 2007”, NBER Working Paper No. 16864, March 2011. Wright, Gavin, “The Economic Revolution in the American South”, Journal of Economic Perspectives, Volume 1, Issue 1, Summer 1987. ACKNOWLEDGMENTS I could not have done this alone. I am indebted to Zanny Minton-Beddoes for her patience, encouragement, and insight. Tyler Cowen has been a constant source of inspiration and an indispensible resource. I offer sincere thanks to Matthew Yglesias for being a kindred intellectual spirit and a partner in competitive cooperation. I am grateful to Rachel Horwood for her indefatigable research efforts. And I would like to thank and dedicate this book to my wife, Lisa, without whom it, and much else besides, would not have been possible

Baum-Snow, Nathaniel and Ronni Pavan, “Understanding the City Size Wage Gap”, February 2011. Bleakley, Hoyt and Jeffrey Lin, “Portage: Path Dependence and Increasing Returns in U.S. History”, Federal Reserve Bank of Philadelphia Working Paper No. 10-27, August 20, 2010. Ciccone, Antonio and Robert Hall, “Productivity and the Density of Economic Activity”, American Economic Review, Vol. 86, No. 1, March 1996. Cowen, Tyler, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, Dutton, January 25, 2011. Davies, Phil, “Sizing Up Job Creation”, Federal Reserve Bank of Minneapolis, September 2010. Davis, Morris, Jonas Fisher, and Toni Whited, “Productivity and Employment Density: New Estimates and Macroeconomic Implications”, November 2007. Fairlie, Robert and Aaron Chatterji, “High-Technology Entrepreneurship in Silicon Valley”, IZA Discussion Paper No. 5726, May 2011.


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With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough by Peter Barnes

Alfred Russel Wallace, banks create money, basic income, Buckminster Fuller, collective bargaining, computerized trading, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, diversified portfolio, en.wikipedia.org, Fractional reserve banking, full employment, hydraulic fracturing, income inequality, Jaron Lanier, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, land reform, Mark Zuckerberg, Network effects, oil shale / tar sands, Paul Samuelson, profit maximization, quantitative easing, rent-seeking, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, the map is not the territory, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen: Great Stagnation, Upton Sinclair, Vilfredo Pareto, wealth creators, winner-take-all economy

Joseph Hanlon, Armando Barrientos, and David Hulme, Just Give Money to the Poor: The Development Revolution from the Global South (Sterling, VA: Kumerian Press, 2010). 21. Edwin Amenta, When Movements Matter: The Townsend Plan and the Rise of Social Security (Princeton, NJ: Princeton University Press, 2006). 22. Nicholas Lemann, “When the earth moved: What happened to the environmental movement?” New Yorker, April 15, 2013. 23. Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013), 229—30 (Kindle Edition). Appendix: The Dividend Potential of Co-owned Wealth 1. Assumes 95 percent of US residents are eligible for Social Security and a 2013 population of 316 million; http://www.census.gov/population/foreign/data/acs2003.html. 2. Social Security and Medicare Boards of Trustees, A Summary of the 2013 Annual Reports, http://www.ssa.gov/oact/trsum/; US Department of Labor, Employment and Training Administration, Financial Data Handbookfor 2012, http://workforcesecurity.doleta.gov/unemploy/hb394/hndbkrpt.asp. 3.

But its larger goal—getting the atmosphere’s carbon dioxide concentration below 350 parts per million—is indelibly engraved in its name, and its preferred mechanism—charging polluters and paying dividends to all—has the potential to rally broad support. IN THE PAST, EACH GENERATION of Americans believed it would live better than the one that came before it. That’s what we meant by “progress.” But though we continue to advance in technological ways, we’re no longer progressing in intergenerational betterment. That part of the American dream has died. Perhaps it can’t be saved, and we should just accept that fact. That’s what economist Tyler Cowen argues in his 2013 book, Average Is Over. Twenty-first-century America will be “much more unfair and much less equal,” he says. About ten percent of Americans will be wealthy while the rest grow increasingly poor. Aid from government will be inadequate, and millions will live in shantytowns like those in Mexico and Brazil. On the upside, everyone will enjoy free Wi-Fi and limitless entertainment.23 Other plausible futures are even grimmer: climate mayhem, financial collapse, a surveillance state.


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Why Liberalism Failed by Patrick J. Deneen

David Brooks, Donald Trump, en.wikipedia.org, Francis Fukuyama: the end of history, income inequality, mortgage debt, Nicholas Carr, plutocrats, Plutocrats, price mechanism, Ronald Reagan, shared worldview, Steven Levy, the scientific method, Thomas L Friedman, Tyler Cowen: Great Stagnation, women in the workforce, zero-sum game

The history of institutional name changes is instructive: https://en.wikipedia.org/wiki/List_of_university_and_college_name_changes_in_the_United_States. 11. Wendell Berry, “Faustian Economics: Hell Hath No Limits,” Harper’s, May 2008, 37–38. CHAPTER 6. THE NEW ARISTOCRACY 1. Murray, Coming Apart. 2. Locke, Second Treatise of Government, 23, 26. 3. F. A. Hayek, The Constitution of Liberty, ed. Ronald Hamowy (Chicago: University of Chicago Press, 2011), 96. 4. Ibid., 95–96. 5. Tyler Cowen, Average Is Over: Powering America Past the Age of the Great Stagnation (New York: Dutton, 2013), 258. 6. Ibid. 7. John Stuart Mill, On Liberty, in Gray, On Liberty and Other Essays, 12–13. 8. Ibid., 65. 9. Ibid., 67. 10. Ibid., 68. 11. Ibid., 72. 12. Edmund Burke, Reflections on the Revolution in France, ed. J. G. A. Pocock (Indianapolis: Hackett, 1987), 76. 13. Ibid., 29, 49. 14. Robert B. Reich, “Secession of the Successful,” New York Times, January 20, 1991; Christopher Lasch, The Revolt of the Elite and the Betrayal of Democracy (New York: Norton, 1994). 15.

Recent years have proven the foresight of Kurt Vonnegut’s first novel, Player Piano, that an iron logic within market capitalism—namely the perpetual effort to suppress wages either by finding new low-wage markets or replacing humans with machines or computers—will increasingly reduce all but a few forms of work to drudgery and indignity. This recognition has led to a return of Locke’s basic wager that a system that provided material comfort, no matter the vastness of inequality and absent likely prospects of growth and mobility between classes, would nevertheless satisfy most members of society. The most recent muse of Lockean liberalism is the economist Tyler Cowen, whose book Average Is Over echoes the basic contours of Locke’s argument. While noting that liberalism and market capitalism perpetuate titanic and permanent forms of inequality that might have made dukes and earls of old blush, Cowen argues that we are at the end of a unique period in American history, a time of widespread belief in relative equality and shared civic fate, and entering an age in which we will effectively see the creation of two separate nations.

Carr, Nicholas G. The Shallows: What the Internet Is Doing to our Brains. New York: Norton, 2010. Cavanaugh, William T. “‘Killing for the Telephone Company’: Why the Nation-State Is Not the Keeper of the Common Good.” In Migrations of the Holy: God, State, and the Political Meaning of the Church. Grand Rapids, MI: Eerdmans, 2011. Cowen, Tyler. Average Is Over: Powering America Past the Age of the Great Stagnation. New York: Dutton, 2013. Crawford, Matthew. Shop Class as Soul Craft: An Inquiry into the Value of Work. New York: Penguin, 2010. Croly, Herbert. The Promise of American Life. 1909; Cambridge: Harvard University Press, 1965. Deneen, Patrick. “Against Great Books: Questioning our Approach to the Western Canon.” First Things, January 2013. Dewey, John. The Early Works of John Dewey, 1882–1898.


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The Economic Singularity: Artificial Intelligence and the Death of Capitalism by Calum Chace

3D printing, additive manufacturing, agricultural Revolution, AI winter, Airbnb, artificial general intelligence, augmented reality, autonomous vehicles, banking crisis, basic income, Baxter: Rethink Robotics, Berlin Wall, Bernie Sanders, bitcoin, blockchain, call centre, Chris Urmson, congestion charging, credit crunch, David Ricardo: comparative advantage, Douglas Engelbart, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Flynn Effect, full employment, future of work, gender pay gap, gig economy, Google Glasses, Google X / Alphabet X, ImageNet competition, income inequality, industrial robot, Internet of things, invention of the telephone, invisible hand, James Watt: steam engine, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, knowledge worker, lifelogging, lump of labour, Lyft, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Milgram experiment, Narrative Science, natural language processing, new economy, Occupy movement, Oculus Rift, PageRank, pattern recognition, post scarcity, post-industrial society, post-work, precariat, prediction markets, QWERTY keyboard, railway mania, RAND corporation, Ray Kurzweil, RFID, Rodney Brooks, Sam Altman, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, software is eating the world, speech recognition, Stephen Hawking, Steve Jobs, TaskRabbit, technological singularity, The Future of Employment, Thomas Malthus, transaction costs, Tyler Cowen: Great Stagnation, Uber for X, uber lyft, universal basic income, Vernor Vinge, working-age population, Y Combinator, young professional

He advocates forecasting by means of prediction markets, where people place bets on particular economic or policy outcomes, like the level of unemployment at some future date. He argues that prediction markets give us a financial stake in being accurate when we make forecasts, rather than just trying to look good to our peers. Tyler Cowen A professor at George Mason University and co-author of an extremely popular blog, Tyler Cowen was New Jersey's youngest ever chess champion. He is a man with prodigiously broad knowledge and interests, and although he proposes some key ideas forcefully, there is always some nuance, and he dislikes simplistic and modish solutions. In two recent books, “the Great Stagnation” (2011) and “Average is Over” (2014), he paints a picture of America's future which is slightly depressing, but not apocalyptic. He is alive to the prospect of dramatically improved AI, and the effect it will have on employment.

Humans can undermine the game of a computer by throwing in some surprise moves which don't make much sense in the short term, or by deploying an intuitive strategy. Matches between humans working with computers are called advanced chess, or centaur chess. Kasparov himself initiated the first high-level centaur chess competition in Leon, in Spain, in 1998, and competitions have been held there regularly ever since. Tyler Cowen (one of the sceptics about machine automation that we met in chapter 3.3) explores this form of chess extensively in his book, “Average is Over”. Some people believe this phenomenon of humans teaming up with computers to form centaurs is a metaphor for how we can avoid most jobs being automated by machine intelligence. The computer will take care of those aspects of the job (or task) which are routine, logical and dull, and the human will be freed up to deploy her intuition and creativity.

In chapter 3.1 we saw that in their book “The Second Machine Age”, MIT professors Erik Brynjolfsson and Andrew McAfee believe that for many years to come, humans will be better than machines at generating new ideas, and complex forms of communication. They think that capitalism should be defended and retained, but they sound less confident about what will happen in the medium term. They argue for an overhaul of the US education system, but they don’t sound convinced that will be enough, and they speculate that a negative income tax may eventually become necessary. Tyler Cowen, whom we encountered in chapter 3.3 as the author of “Average is Over”, is certainly not breezy in his assessment of the outlook, nor is he tentative. He is confident that UBI will not be needed, and he does not expect riots. But his prognosis is lugubrious. He foresees 10-15% of the population being extremely wealthy, and the rest getting by on incomes which are stagnant at best, but putting up with it because many of them are too old to riot, and they are pacified by the excellent cheap entertainment that technology provides.


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The Internet Is Not the Answer by Andrew Keen

"Robert Solow", 3D printing, A Declaration of the Independence of Cyberspace, Airbnb, AltaVista, Andrew Keen, augmented reality, Bay Area Rapid Transit, Berlin Wall, bitcoin, Black Swan, Bob Geldof, Burning Man, Cass Sunstein, citizen journalism, Clayton Christensen, clean water, cloud computing, collective bargaining, Colonization of Mars, computer age, connected car, creative destruction, cuban missile crisis, David Brooks, disintermediation, disruptive innovation, Donald Davies, Downton Abbey, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, Filter Bubble, Francis Fukuyama: the end of history, Frank Gehry, Frederick Winslow Taylor, frictionless, full employment, future of work, gig economy, global village, Google bus, Google Glasses, Hacker Ethic, happiness index / gross national happiness, income inequality, index card, informal economy, information trail, Innovator's Dilemma, Internet of things, Isaac Newton, Jaron Lanier, Jeff Bezos, job automation, Joi Ito, Joseph Schumpeter, Julian Assange, Kevin Kelly, Kickstarter, Kodak vs Instagram, Lean Startup, libertarian paternalism, lifelogging, Lyft, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Martin Wolf, Metcalfe’s law, move fast and break things, move fast and break things, Nate Silver, Nelson Mandela, Network effects, new economy, Nicholas Carr, nonsequential writing, Norbert Wiener, Norman Mailer, Occupy movement, packet switching, PageRank, Panopticon Jeremy Bentham, Paul Graham, peer-to-peer, peer-to-peer rental, Peter Thiel, plutocrats, Plutocrats, Potemkin village, precariat, pre–internet, RAND corporation, Ray Kurzweil, ride hailing / ride sharing, Robert Metcalfe, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Skype, smart cities, Snapchat, social web, South of Market, San Francisco, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, TaskRabbit, Ted Nelson, telemarketer, The Future of Employment, the medium is the message, the new new thing, Thomas L Friedman, Travis Kalanick, Tyler Cowen: Great Stagnation, Uber for X, uber lyft, urban planning, Vannevar Bush, Whole Earth Catalog, WikiLeaks, winner-take-all economy, working poor, Y Combinator

Solow, “We’d Better Watch Out,” New York Times Book Review, July 12, 1987. 74 Timothy Noah, The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It (New York: Bloomsbury, 2012), p. 7. 75 Eduardo Porter, “Tech Leaps, Job Losses and Rising Inequality,” New York Times, April 15, 2014. 76 Loukas Karabarbounis and Brent Neiman, “The Global Decline of Labor Share,” Quarterly Journal of Economics, 2014. 77 Thomas B. Edsall, “The Downward Ramp,” New York Times, June 10, 2014. 78 Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013), p. 53. 79 Ibid., p. 229. 80 Ibid., pp. 198–200. 81 Joel Kotkin, “California’s New Feudalism Benefits a Few at the Expense of the Multitude,” Daily Beast, October 5, 2013. 82 Paul Krugman, “Sympathy for the Luddites,” New York Times, June 13, 2013, nytimes.com/2013/06/14/opinion/krugman-sympathy-for-the-luddites.html?_r=0&pagewanted=print.

Bradford DeLong has suggested that the more central a role information technology plays in traditionally skillful professions like law or medicine, the fewer jobs there might be.75 Loukas Karabarbounis and Brent Neiman, two economists from the University of Chicago’s business school, have found that since the mid-1970s, the relative amount of income going to workers has been in decline around the world.76 Meanwhile the research of three Canadian economists, Paul Beaudry, David Green, and Benjamin Sand, found a similarly steep decline of midlevel jobs—a depressing development that MIT’s David Autor, Northeastern University’s Andrew Sum, and the president of the Economic Policy Institute, Larry Mishel, have also discovered with their research.77 Many others share this concern about the destructive impact of technology on the “golden age” of labor. The George Mason University economist Tyler Cowen, in his 2013 book, Average Is Over, concurs, arguing that today’s big economic “divide” is between those whose skills “complement the computer” and those whose don’t. Cowan underlines the “stunning truth” that wages for men, over the last forty years, have fallen by 28%.78 He describes the divide in what he calls this new “hyper-meritocracy” as being between “billionaires” like the Battery member Sean Parker and the homeless “beggars” on the streets of San Francisco, and sees an economy in which “10 to 15 percent of the citizenry is extremely wealthy and has fantastically comfortable and stimulating lives.”79 Supporting many of Frank and Cook’s theses in their Winner-Take-All Society, Cowen suggests that the network lends itself to a superstar economy of “charismatic” teachers, lawyers, doctors, and other “prodigies” who will have feudal retinues of followers working for them.80 But, Cowen reassures us, there will be lots of jobs for “maids, chauffeurs and gardeners” who can “serve” wealthy entrepreneurs like his fellow chess enthusiast Peter Thiel.

But, rather than being political, today’s personal revolution is all about money and wealth. In our digital age, the personal is the economic. And there’s nothing liberating about it at all. Just as the Kodak tragedy decimated the economic heart of Rochester, so the Internet is destroying our old industrial economy—transforming what was once a relatively egalitarian system into a winner-take-all economy of what Tyler Cowen calls “billionaires and beggars.” Rather than just a city, it’s a whole economy that is losing its center. For all Silicon Valley’s claims that the Internet has created more equal opportunity and distribution of wealth, the new economy actually resembles a donut—with a gaping hole in the middle where, in the old industrial system, millions of workers were once paid to manufacture valuable products.


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The Half-Life of Facts: Why Everything We Know Has an Expiration Date by Samuel Arbesman

Albert Einstein, Alfred Russel Wallace, Amazon Mechanical Turk, Andrew Wiles, bioinformatics, British Empire, Cesare Marchetti: Marchetti’s constant, Chelsea Manning, Clayton Christensen, cognitive bias, cognitive dissonance, conceptual framework, David Brooks, demographic transition, double entry bookkeeping, double helix, Galaxy Zoo, guest worker program, Gödel, Escher, Bach, Ignaz Semmelweis: hand washing, index fund, invention of movable type, Isaac Newton, John Harrison: Longitude, Kevin Kelly, life extension, Marc Andreessen, meta analysis, meta-analysis, Milgram experiment, Nicholas Carr, P = NP, p-value, Paul Erdős, Pluto: dwarf planet, publication bias, randomized controlled trial, Richard Feynman, Rodney Brooks, scientific worldview, social graph, social web, text mining, the scientific method, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Tyler Cowen: Great Stagnation

—Universe Today “Arbesman’s enthusiasm and humor maintains our interest in subjects many readers may not have encountered before….[The Half-Life of Facts] does what popular science should do—both engages and entertains.” —Kirkus Reviews “A fascinating and necessary look at the pace of human knowledge.” —Maria Popova, Brain Pickings “What does it mean to live in a world drowning in facts? Consider The Half-Life of Facts the new go-to book on the evolution of science and technology.” —Tyler Cowen, professor of economics, George Mason University, author of An Economist Gets Lunch “The Half-Life of Facts is fun and fascinating, filled with wide-ranging stories and subtle insights about how facts are born, dance their dance, and die. In today’s world where knowledge often changes faster than we do, Sam Arbesman’s new book is essential reading.” —Steven Strogatz, professor of mathematics, Cornell University, author of The Joy of X “The Half-Life of Facts teaches you that it is possible, in fact, to drink from a fire hose.

What this means is that the ease of discovery doesn’t drop by the same amount every year—it declines by the same fraction each year, a sort of reverse compound interest. For example, the sizes of asteroids discovered annually get 2.5 percent smaller each year. In the first few years, the ease of discovery drops off quickly; after early researchers pick the low-hanging fruit, it continues to “decay” for a long time, becoming slightly harder without ever quite becoming impossible. There is even a similarity in one view of medicine. As Tyler Cowen, an economist at George Mason University, has noted, if you tally the number of major advances, or definitive moments, in modern medicine (as chronicled by James Le Fanu) in each decade of the middle of the twentieth century, you get an eventual decline: “In the 1940s there are six such moments, seven moments in the 1950s, six moments in the 1960s, a moment in 1970 and 1971 each, and from 1973 [to] 1998, a twenty-five-year period, there are only seven moments in total.”

PLoS Computational Biology 7, no. 6 (June 2011): e1002072. 22 the sizes of asteroids discovered annually: More precisely, the dates used were for multi-opposition observations, required for a high level of accuracy of computing orbits. The date of discovery is a less stringent threshold when it comes to asteroids, so this analysis simply uses a more stringent criterion. 23 “In the 1940s there are six such moments”: Cowen, Tyler. “The Great Stagnation in Medicine.” Marginal Revolution, 2011. www.marginalrevolution.com/marginalrevolution/2011/02/the-great-stagnation-in-medicine.xhtml. 23 a Swedish medical student named Ivar Sandström: Carney, J. Aidan. “The Glandulae Parathyroideae of Ivar Sandström: Contributions from Two Continents.” American Journal of Surgical Pathology 20, no. 9 (1996): 1123–44. 24 if you uttered the statement: Price. Little Science, Big Science. CHAPTER 3: THE ASYMPTOTE OF TRUTH 26 Marjorie Courtenay-Latimer, a young woman in South Africa: Goodall, Jane, Gail Hudson, and Thane Maynard.


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

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

For all the many transatlantic differences, our basic economic experience is the same: persistent stagnation, chronic disappointment, and a growing conflict between the promise of progress and a reality where everything seems—surprisingly, depressingly—to stay the same. The Limits of Neoliberalism There is no shortage of theories to explain this “great stagnation” (to borrow a phrase from one of the theorizers, the George Mason University economist Tyler Cowen), and there is also no need to simply choose between them. Like most broad trends, the economic decadence of the developed world is overdetermined, and almost every serious attempt at explanation will contain some element of truth. The most politically appealing theories—the ones animating our populist and socialist insurgencies—tend to blame neoliberalism itself, claiming that the medicine for 1970s stagflation has proven to be poison in large doses.

My diagnosis of our condition is a journalist’s, and, as such, it owes debts to many more expert thinkers who will be quoted amply in the pages to come. Since the 2008 financial crisis and the Great Recession exposed almost a decade’s worth of Western growth as an illusion, a diverse cast of economists and political scientists and other figures on both the left and the right have begun to talk about stagnation and repetition and complacency and sclerosis as defining features of this Western age: Tyler Cowen and Robert Gordon, Thomas Piketty and Francis Fukuyama, David Graeber and Peter Thiel, and many others. This book is, in part, an attempt to synthesize their various perspectives into a compelling account of our situation. But it also weaves the social sciences together with observations on our intellectual climate, our popular culture, our religious moment, our technological pastimes, in the hopes of painting a fuller portrait of our decadence than you can get just looking at political science papers on institutional decay or an economic analysis of the declining rate of growth.

For the pessimists, the unusual features of the post-2007 landscape—the persistently low interest rates, the low rate of inflation, the disappointing rate of growth, the great fortunes parked in rent-seeking rather than risk-taking—are actually inevitabilities in a developed world where there just aren’t enough impressive enterprises to invest in; a developed world that inflates bubbles and then pops them (or invests in Theranos and then repents) because that’s all there is for capital to do; a developed world slowly growing accustomed to unexpected limits on its future possibilities. The most convincing theorists of limits include Cowen, in his 2011 book The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, and his fellow economist Robert Gordon, in his magisterial 2016 work, The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. Both authors would agree with portions of the arguments I’ve just sketched about neoliberalism pushed too far or misapplied, and an economy stalled by inequality or captured by a self-dealing upper class.


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

assortative mating, autonomous vehicles, blue-collar work, Bonfire of the Vanities, Branko Milanovic, business cycle, call centre, collective bargaining, computer age, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, Deng Xiaoping, easy for humans, difficult for computers, Erik Brynjolfsson, Everybody Ought to Be Rich, feminist movement, Frank Levy and Richard Murnane: The New Division of Labor, Gini coefficient, Gunnar Myrdal, income inequality, industrial robot, invisible hand, job automation, Joseph Schumpeter, longitudinal study, low skilled workers, lump of labour, manufacturing employment, moral hazard, oil shock, pattern recognition, Paul Samuelson, performance metric, positional goods, post-industrial society, postindustrial economy, purchasing power parity, refrigerator car, rent control, 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, Vilfredo Pareto, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, Yom Kippur War

Frank and Cook argue that corporate boards’ desire to hire known-quantity chief executives from outside the company, described earlier in this chapter, has made the market for CEOs winner-take-all as well. 10: Why It Matters General Sources Arthur C. Brooks, The Battle: How the Fight Between Free Enterprise and Government Will Shape America’s Future (New York: Basic Books, 2010). Matthew Continetti, “About Inequality,” Weekly Standard, Nov. 14, 2011, at http://www.weeklystandard.com/articles/about-inequality_607779.html?page=1. Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011). ———“The Inequality That Matters,” American Interest 6, no. 3 (Jan.–Feb. 2011), at http://www.the-american-interest.com/article.cfm?piece=907. Barbara Ehrenreich, Nickel and Dimed: On (Not) Getting By in America (New York: Metropolitan Books, 2001). Mickey Kaus, The End of Equality (New York: Basic Books, 1992).

Living conditions improve over time. J. P. Morgan never had access to sulfa drugs or iPhones or fresh vegetables in wintertime. And the gap between Morgan’s quality of life and that of the typical American during his lifetime was in many important ways larger than the gap today between Bill Gates’s quality of life and that of the typical American. In Morgan’s day, as the George Mason economist Tyler Cowen puts it, “the average person had little formal education, worked six days a week or more, often at hard physical labor, never took vacations, and could not access most of the world’s culture.” But people do not experience life as an interesting moment in the evolution of human living standards. They experience it in the present and weigh their own experience against that of the living. In a famous 1998 study by the economists Sara Solnick (then at the University of Miami, now at the University of Vermont) and David Hemenway of the Harvard School of Public Health, subjects were asked which they’d prefer: to earn $50,000 while knowing everyone else earned $25,000, or to earn $100,000 while knowing everyone else earned $200,000.

Currently forty states provide funding to expand preschool education, though most limit enrollment to low-income families. Nationally, 27 percent of all four-year-olds are enrolled in pre-K programs. That’s roughly equivalent to the number of fourteen-to seventeen-year-olds that were enrolled in high school during the late teens of the previous century. This might be the pool of “smart, uneducated kids” that Tyler Cowen is looking for—“low-hanging fruit” from whom we can derive future productivity gains merely by putting them in school. Research on early education suggests the benefits could be considerable. A 2011 study by the Harvard economist Raj Chetty and five others (including Berkeley’s Emmanuel Saez) found that a one-percentile increase in scores on tests administered to Tennessee kindergarteners at the end of the school year was associated with a $94 increase in annual wages at age twenty-seven—and that’s after the numbers were adjusted to take into account variations in family background.


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

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

For central bankers this is the equivalent of being a captain headed for a rocky shoal and finding that your wheel will no longer turn the ship. This coincidence of very cheap borrowing and the apparent unwillingness of businesses to invest was what Larry Summers was talking about when he popularized the term “secular stagnation” in a 2013 lecture to the IMF.1 One immediate explanation for this weird mix of cheap money and low investment is simply that the demand for investment has fallen. In his 2011 bestseller The Great Stagnation, economist Tyler Cowen suggested that developed countries might have exhausted easy sources of good investments, such as settling new land or getting children to spend more years in education. Most memorably, he argued that technological progress might have slowed down, or, more specifically, that the economic benefit of new discoveries was less than had been the case in the past. The economist and economic historian Robert Gordon developed this theme in his influential 2016 book The Rise and Fall of American Growth, in which he argued that the inventions over the twentieth century, such as electricity, indoor plumbing, and the like, were part of “one big wave of innovation” that will not be repeated.

Paying for citizens to go to school for longer was, for much of twentieth century, an important way that governments increased productivity; the economists Claudia Goldin and Lawrence Katz documented the vital role of education in the economic growth of the United States, pointing out, for example, that while 62 percent of the 1930 US birth cohort graduated from high school, 85 percent of the 1975 cohort did (Goldin and Katz 2008). Robert Gordon and Tyler Cowen have argued that there are diminishing returns here—children and young people can only spend so long in school or college—and that this will prove to be a major brake on US economic growth in the future (Gordon 2016; Cowen 2011). Working out how to defy these diminishing returns has proved challenging. Goldin and Katz suggest more targeted support at all stages of education to increase the supply of educated workers: more very early stage support, lower class sizes for middle schools, and more support for college.

In Measuring Capital in the New Economy, edited by Carol A. Corrado, John Haltiwanger, and Daniel Sichel. University of Chicago Press. ———. 2009. “Intangible Capital and U.S. Economic Growth.” Review of Income and Wealth 55 (3): 661–85. Corrado, Carol A., M. O’Mahony, and Lea Samek. 2015. “Measuring Education Services as Intangible Social Infrastructure.” SPINTAN Working Paper Series, No. 19. Cowen, Tyler. 2011. The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. Penguin eSpecial from Dutton. CQ Researcher. 2016. “The Iron and Steel Industry.” http://library.cqpress.com/cqresearcher/document.php?id=cqresrre1930050100. Crawford, Rowena, Dave Innes, and Cormac O’Dea. 2016. “Household Wealth in Great Britain: Distribution, Composition and Changes 2006–12.”


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The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future by Andrew Yang

3D printing, Airbnb, assortative mating, augmented reality, autonomous vehicles, basic income, Ben Horowitz, Bernie Sanders, call centre, corporate governance, cryptocurrency, David Brooks, Donald Trump, Elon Musk, falling living standards, financial deregulation, full employment, future of work, global reserve currency, income inequality, Internet of things, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, Khan Academy, labor-force participation, longitudinal study, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, megacity, Narrative Science, new economy, passive income, performance metric, post-work, quantitative easing, reserve currency, Richard Florida, ride hailing / ride sharing, risk tolerance, Ronald Reagan, Sam Altman, self-driving car, shareholder value, Silicon Valley, Simon Kuznets, single-payer health, Stephen Hawking, Steve Ballmer, supercomputer in your pocket, technoutopianism, telemarketer, The Wealth of Nations by Adam Smith, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, unemployed young men, universal basic income, urban renewal, white flight, winner-take-all economy, Y Combinator

., Camden after the Fall: Decline and Renewal in a Post-Industrial City (Philadelphia: University of Pennsylvania Press, 2006), pp. 12–13. …“a major metropolitan area run by armed teenagers with no access to jobs or healthy food”…: Matt Taibbi, “Apocalypse, New Jersey: A Dispatch from America’s Most Desperate Town,” Rolling Stone, December 11, 2013. … since 1970 the difference between the most and least educated U.S. cities has doubled…: Tyler Cowen, Average Is Over: Powering America beyond the Age of the Great Stagnation (New York: Penguin Books, 2013), pp. 172–173. Fifty-nine percent of American counties saw more businesses close than open…: “Dynamism in Retreat: Consequences for Regions, Markets and Workers,” Economic Innovation Group, February 2017. California, New York, and Massachusetts accounted for 75 percent of venture capital in 2016…: Richard Florida, “A Closer Look at the Geography of Venture Capital in the U.S.”

When jobs and prosperity start deserting a town, the first people to leave are the folks who have the best opportunities elsewhere. Relocating is a significant life change—moving away from friends and family requires significant courage, adaptability, and optimism. Imagine living somewhere where your best people always leave, where the purpose of excelling seems to be to head off to greener pastures. Over time it would be easy to develop a negative outlook. You might double down on pride and insularity. The economist Tyler Cowen observed that since 1970 the difference between the most and least educated U.S. cities has doubled in terms of average level of education—that is, more and more educated people are congregating in the same cities and leaving others. Business dynamism is now vastly unevenly distributed. Fifty-nine percent of American counties saw more businesses close than open between 2010 and 2014. During the same period, only five metro areas—New York, Los Angeles, Miami, Houston, and Dallas—accounted for as many new businesses as the rest of the nation combined.

The Annual Time Use survey in 2014 indicated high levels of time spent “attending gambling establishments,” “tobacco and drug use,” “listening to the radio,” and “arts and crafts as a hobby,” with over 8 hours per day spent on “socializing, relaxing and leisure.” The same surveys showed lower likelihood of volunteering or attending religious services than for men in the workforce, despite having considerably more time. “Every society has a ‘bad men’ problem,” says Tyler Cowen, the economist and author of Average Is Over. He projects a future where a relative handful of high-productivity individuals create most of the value, while low-skilled people become preoccupied with cheap digital entertainment to stay happy and organize their lives. Games have come a long way since I was a kid, and they’re about to take yet another leap forward. Virtual reality headsets are creating experiences that will take simulations to a whole new level.


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The New Class Conflict by Joel Kotkin

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

Ronald Brownstein, “Eclipsed,” National Journal, May 28, 2011, http://www.nationaljournal.com/columns/political-connections/white-working-class-americans-see-future-as-gloomy-20110526; Ronald Brownstein, “Meet the New Middle Class: Who They Are, What They Want, and What They Fear,” Atlantic, April 25, 2013, http://www.theatlantic.com/business/archive/2013/04/meet-the-new-middle-class-who-they-are-what-they-want-and-what-they-fear/275307; Phil Izzo, “Bleak News for Americans’ Income,” Wall Street Journal, October 14, 2011. 48. Rich Morin and Seth Motel, “A Third of Americans Now Say They Are in the Lower Classes,” Pew Research Social & Demographic Trends, September 10, 2012, http://www.pewsocialtrends.org/2012/09/10/a-third-of-americans-now-say-they-are-in-the-lower-classes. 49. Brownstein, “Eclipsed.” 50. Tyler Cowen, Average is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013), pp. 23–24. 51. Ibid., p. 36; D. Robert Worley, “In Defense of Conservative Thought,” Huffington Post, September 18, 2012, http://www.huffingtonpost.com/d-robert-worley/conservatives-progressives_b_1879200.html. 52. Sustainable Silicon Valley (website), http://www.sustainablesv.org. 53. Marcus Wohlsen, “Silicon Valley’s Elite Don’t Want to Secede.

The black unemployment rate remains more than double the white jobless rate and reaches 40 percent among youths. Rule from Our Betters? The hardening of class lines, and the growing concentration of disposable income, sends signals through everything from the political economy to consumer culture. Many theorists, both on the right and the left, suggest the time has come to accept a more stratified, less permeable social order. Conservatives and libertarians, such as economist Tyler Cowen, argue that “average” intelligence and skills are no longer sufficient for social advance. Some 15 percent of the population may do very well, he argues, but the vast majority will have to accept limited prospects for themselves and their offspring. The prospect he lays out essentially recalls the hierarchies of the Middle Ages, or at best the Victorian era. The most suitable niche for the lower orders, he notes, lies in servicing the needs of high earners, “for example as trainers, nannies, and cleaners.”

After the Great Recession, the American blue-collar worker has been pitied, but certainly not helped, by the Clerisy, many of whom believe that there is no hope for manufacturing or similar outmoded jobs in an information age. Blue-collar workers were described in major media as “bitter” and “psychologically scarred,” and even as an “endangered species.” Americans, noted one economist, suffered a “recession,” but those with blue collars endured a “depression.”26 This perspective extends across ideological lines. Libertarian economist Tyler Cowen suggests that an “average” skilled worker can expect to subsist on little but rice and beans in the future U.S. economy. If they choose to live on the East or West Coast, they may never be able to buy a house and will remain marginal renters for life.27 Left-leaning Slate in 2012 declared that manufacturing and construction jobs, sectors that powered the Yeomanry’s upward mobility in the past, “aren’t coming back.”28 Rather than a republic of Yeoman, we could end up instead, as one left-wing writer put it, living at the sufferance of our “robot overlords,” as well as those who program and manufacture them, likely using other robots to do so.29 Contempt for the middle orders is often barely concealed among those most comfortably ensconced in the emerging class order.


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Head, Hand, Heart: Why Intelligence Is Over-Rewarded, Manual Workers Matter, and Caregivers Deserve More Respect by David Goodhart

active measures, Airbnb, Albert Einstein, assortative mating, basic income, Berlin Wall, Bernie Sanders, big-box store, Boris Johnson, Branko Milanovic, British Empire, call centre, Cass Sunstein, central bank independence, centre right, computer age, corporate social responsibility, COVID-19, Covid-19, David Attenborough, David Brooks, deglobalization, deindustrialization, delayed gratification, desegregation, deskilling, different worldview, Donald Trump, Elon Musk, Etonian, Fall of the Berlin Wall, Flynn Effect, Frederick Winslow Taylor, future of work, gender pay gap, gig economy, glass ceiling, illegal immigration, income inequality, James Hargreaves, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labour market flexibility, longitudinal study, low skilled workers, Mark Zuckerberg, mass immigration, new economy, Nicholas Carr, oil shock, pattern recognition, Peter Thiel, pink-collar, post-industrial society, post-materialism, postindustrial economy, precariat, reshoring, Richard Florida, Scientific racism, Skype, social intelligence, spinning jenny, Steven Pinker, superintelligent machines, The Bell Curve by Richard Herrnstein and Charles Murray, The Rise and Fall of American Growth, Thorstein Veblen, twin studies, Tyler Cowen: Great Stagnation, universal basic income, upwardly mobile, wages for housework, winner-take-all economy, women in the workforce, young professional

Three decades or more since we first began to talk of living in a computer age, the total number of workers employed in the development and production of computer hardware, software and applications, is still only 4 per cent of the total workforce in the US, and the US Bureau of Labor Statistics predicts just 135,000 new jobs in software development over 2014 to 2024, versus 458,000 additional personal care aides, and 348,000 home health aides. Total employment in the giant mobile phone, software and Internet companies which dominate global equity values is a minute drop in the global labour market. Facebook, with a market capitalization of $500 billion, employs just 25,000 people.45 Turner takes issue with Tyler Cowen’s book Average Is Over: Powering America Beyond the Age of the Great Stagnation in which he argues that rising income inequality is inevitable but will not lead to social revolt, because low earners will still enjoy adequate living standards as long as housing costs are kept low. Cowen imagines a future in which “say 10 to 15 per cent of the citizenry is extremely wealthy and has fantastically comfortable and stimulating lives” while “much of the rest of the country will have stagnant or maybe falling wages in dollar terms, but a lot more opportunities for cheap fun and cheap education” because of the free or near free services that the Internet makes available.46 The average citizen will not be able to afford to live well in the successful big cities… but will migrate to those parts of the United States, such as Texas, where plentiful land and easy zoning rules make housing affordable.

., Skills Shift: Automation and the Future of the Workforce, McKinsey Global Institute (MGI) Discussion Paper, May 2018. 40 Ibid. 41 Ibid. 42 “EY Transforms Its Recruitment Selection Process for Graduates, Undergraduates and School Leavers,” press release from Ernst and Young, August 3, 2015. 43 “EY: How to Excel in a Strengths-Based Graduate Interview,” Target Jobs, https://targetjobs.co.uk/employers/ey/ey-how-to-excel-in-a-strengths-based-graduate-interview-323859. 44 See UK High Pay Centre. 45 Adair Turner, Capitalism in the Age of Robots: Work, Income and Wealth in the 21st Century, Lecture given at the School of Advanced International Studies, John Hopkins University, April 10, 2018, 29. 46 Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013). Chapter Ten: Cognitive Diversity and the Future of Everything 1 David Brooks, Intelligence Squared lecture, October 20, 2015. 2 Iain McGilchrist, The Master and His Emissary: The Divided Brain and the Making of the Western World (New Haven, CT: Yale University Press, 2009). 3 Jonathan Rowson and Iain McGilchrist, Divided Brain, Divided World: Why the Best Part of Us Struggles to be Heard, RSA, February 2013, 4–5, https://www.thersa.org/globalassets/pdfs/blogs/rsa-divided-brain-divided-world.pdf. 4 Richard Layard, Can We Be Happier?

Caplan, Bryan, The Case Against Education: Why the Education System Is a Waste of Time and Money (Princeton, NJ: Princeton University Press, 2018). Cavendish, Camilla, Extra Time: 10 Lessons for an Ageing World (London: HarperCollins, 2019). Christodoulou, Daisy, Seven Myths About Education (London: Routledge, 2014). Collier, Paul, The Future of Capitalism: Facing the New Anxieties (London: Allen Lane, 2018). Cowen, Tyler, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013). Crawford, Matthew, The Case for Working with Your Hands: Or Why Office Work Is Bad for Us and Fixing Things Feels Good (London: Penguin, 2011). Deaton, Angus, “Why is Democratic Capitalism Failing So Many People?” The Tri-Nuffield Conference lecture (June 2019). Dench, Geoff (ed.), The Rise and Rise of Meritocracy (Oxford: Blackwell Publishing, 2006). ———. What Women Want: Evidence from British Social Attitudes (London: Hera Trust, 2010).


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The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

"Robert Solow", Airbnb, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, Clayton Christensen, Colonization of Mars, commoditize, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Elon Musk, Erik Brynjolfsson, fear of failure, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, high net worth, hiring and firing, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, technological singularity, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, Yogi Berra

Much of the recent literature on corporate governance, business development, and strategy that we have read has felt like a copy of the original thought derived from the works of Peter Drucker, Michael Porter, Henry Minzberg, Philip Kotler, and Igor Ansoff. There are several thinkers today that can be put in the same category. If you get bored by all those who just repeat the conventional wisdom about the economy and how it evolves, pick any work from these economic thinkers and you will immediately be reinvigorated: David Autor, Tyler Cowen, Deirdre McCloskey, Malcolm Gladwell, David Graeber, Deepak Lal, Joel Mokyr, Matt Ridley, Richard Sennett, Robert Solow, Lawrence Summers, Peter Thiel, and Martin Wolf. Their works have contributed to our thinking for this book. Likewise, there are many successful investors and entrepreneurs whose thinking about innovation and business creation have inspired us. Innovation happens through entrepreneurship and it is impossible to grasp innovation without understanding the business motivations behind it.

The figure tracks the development of productivity in Group of Seven (G7) countries – all economies at the technological frontier – and shows the average labor productivity growth between 1995 and 2012 to be 1.2 percentage points lower than that between 1970 and 1980. Between 1995 and 2009, Europe’s labor productivity grew by just 1 percent annually.13 Figure 2.3 G7 labour productivity growth Like the United States, the other G7 countries seem to have exhausted the usual sources of productivity growth, especially the growth from the first (1760–1840) and second (1870–1970) industrial revolutions. That tallies with economist Tyler Cowen’s catchy summary of declining strength in the American economy, that it has “eaten all the low-hanging fruits of modern history and got sick.”14 Translated into economic prose, this means that new technologies do not create much economic growth, or at least are not making as large a contribution as in the past. Many other studies confirm this view, and lead to the conclusion that the recent waves of innovation in sectors like software do not compare well with the economic effects of past achievements, like the combustion engine, electricity, and modern household technology.

15. 5.OECD, OECD Economic Outlook (2014), 224. 6.Maddison, “Confessions of a Chiffrephile,” 27. 7.Krugman, The Age of Diminishing Expectations. 8.See, for instance, Hall and Jones, “Why Do Some Countries Produce So Much More.” 9.See, for instance, Comin, Hobijn, and Rovito, “Five Facts You Need to Know.” 10.In Chapter 8 we will discuss the issue of mismeasurement of productivity and other economic indicators. 11.For the United States, the post-recovery spurt in TFP growth is due to a sharp increase in 2009 that turned the moving trend upward for later years. The actual rates of TFP growth in 2010–13 are smaller. 12.Gordon, “Is US Economic Growth Over?” offers a condensed version of Gordon’s productivity analysis. The full analysis of US living standards is in Gordon, The Rise and Fall of American Growth. 13.Gill and Raiser, Golden Growth, 12, fig. 5. 14.Cowen, The Great Stagnation. 15.OECD, “The Future of Productivity.” 16.Pellegrino and Zingales, “Diagnosing the Italian Disease.” 17.Altomonte et al., “Assessing Competitiveness.” 18.Navaretti et al., “The Global Operations of European Firms.” 19.Zingales, A Capitalism for the People, 5. 20.Leung and Rispoli, “The Distribution of Gross Domestic Product.” 21.Cardarelli and Lusinyan, “US Total Factor Productivity Slowdown.” 22.van der Marel, “The Importance of Complementary Policy.” 23.Cette, Fernald, and Mojon, “The Pre-Global-Financial-Crisis Slowdown.” 24.OECD, Skills Outlook 2013. 25.Base and Svioska, “Productivity Growth.” 26.McGowan and Andrews, “Labour Market Mismatch and Labour Productivity.” 27.Browne, “S&P 500 Firms Hoard Cash as CAPEX Declines.” 28.Krantz, “$194B!


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Inventing the Future: Postcapitalism and a World Without Work by Nick Srnicek, Alex Williams

3D printing, additive manufacturing, air freight, algorithmic trading, anti-work, back-to-the-land, banking crisis, basic income, battle of ideas, blockchain, Boris Johnson, Bretton Woods, business cycle, call centre, capital controls, carbon footprint, Cass Sunstein, centre right, collective bargaining, crowdsourcing, cryptocurrency, David Graeber, decarbonisation, deindustrialization, deskilling, Doha Development Round, Elon Musk, Erik Brynjolfsson, Ferguson, Missouri, financial independence, food miles, Francis Fukuyama: the end of history, full employment, future of work, gender pay gap, housing crisis, income inequality, industrial robot, informal economy, intermodal, Internet Archive, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, late capitalism, liberation theology, Live Aid, low skilled workers, manufacturing employment, market design, Martin Wolf, mass immigration, mass incarceration, means of production, minimum wage unemployment, Mont Pelerin Society, neoliberal agenda, New Urbanism, Occupy movement, oil shale / tar sands, oil shock, patent troll, pattern recognition, Paul Samuelson, Philip Mirowski, post scarcity, post-work, postnationalism / post nation state, precariat, price stability, profit motive, quantitative easing, reshoring, Richard Florida, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Slavoj Žižek, social web, stakhanovite, Steve Jobs, surplus humans, the built environment, The Chicago School, The Future of Employment, Tyler Cowen: Great Stagnation, universal basic income, wages for housework, We are the 99%, women in the workforce, working poor, working-age population

Faltering Innovation Confronts the Six Headwinds, Working Paper, National Bureau of Economic Research, August 2012, at nber.org; Lawrence Summers, ‘US Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound’, Business Economics 49: 2 (2014); Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011); Coen Teulings and Richard Baldwin, eds, Secular Stagnation: Facts, Causes and Cures (London: CEPR, 2014). 134.Cowen, Great Stagnation, pp. 47–8. 135.Thor Berger and Carl Benedikt Frey, Industrial Renewal in the 21st Century: Evidence from US Cities? (Oxford Martin School Working Paper, 2014). 136.Calculated based on data from: Bureau of Labor Statistics, ‘Table 1. Private Sector Gross Jobs Gains and Losses by Establishment Age’; Bureau of Labor Statistics, ‘Table 5.

Brian Arthur, The Nature of Technology: What It Is and How It Evolves (London: Penguin, 2009). 10.Tony Smith, ‘Red Innovation’, Jacobin 17 (2015), p. 75. 11.Mariana Mazzucato, Erik Brynjolfsson and Michael Osborne, ‘Robot Panel’, presented at the FT Camp Alphaville, London, 15 July 2014, available at youtube.com. 12.Michael Hanlon, ‘The Golden Quarter’, Aeon Magazine, 3 December 2014, at aeon.co; Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011), p. 13. 13.This is one of the primary conclusions of Mariana Mazzucato’s important book The Entrepreneurial State: Debunking Public vs. Private Sector Myths (London: Anthem, 2013). 14.For a lengthy analysis of how Apple cynically deployed state-developed technologies to build the iPhone, see ibid., Chapter 5. 15.The fact that so many megaprojects continue to go ahead despite their history of cost overruns and lack of profitability is deemed a paradox by one study: Bent Flyvbjerg, Nils Bruzelius and Werner Rothengatter, Megaprojects and Risk: An Anatomy of Ambition (Cambridge: Cambridge University Press, 2003), pp. 3–5. 16.André Gorz, Paths to Paradise: On the Liberation from Work, transl.


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In Our Own Image: Savior or Destroyer? The History and Future of Artificial Intelligence by George Zarkadakis

3D printing, Ada Lovelace, agricultural Revolution, Airbnb, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, animal electricity, anthropic principle, Asperger Syndrome, autonomous vehicles, barriers to entry, battle of ideas, Berlin Wall, bioinformatics, British Empire, business process, carbon-based life, cellular automata, Claude Shannon: information theory, combinatorial explosion, complexity theory, continuous integration, Conway's Game of Life, cosmological principle, dark matter, dematerialisation, double helix, Douglas Hofstadter, Edward Snowden, epigenetics, Flash crash, Google Glasses, Gödel, Escher, Bach, income inequality, index card, industrial robot, Internet of things, invention of agriculture, invention of the steam engine, invisible hand, Isaac Newton, Jacquard loom, Jacques de Vaucanson, James Watt: steam engine, job automation, John von Neumann, Joseph-Marie Jacquard, Kickstarter, liberal capitalism, lifelogging, millennium bug, Moravec's paradox, natural language processing, Norbert Wiener, off grid, On the Economy of Machinery and Manufactures, packet switching, pattern recognition, Paul Erdős, post-industrial society, prediction markets, Ray Kurzweil, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, social intelligence, speech recognition, stem cell, Stephen Hawking, Steven Pinker, strong AI, technological singularity, The Coming Technological Singularity, The Future of Employment, the scientific method, theory of mind, Turing complete, Turing machine, Turing test, Tyler Cowen: Great Stagnation, Vernor Vinge, Von Neumann architecture, Watson beat the top human players on Jeopardy!, Y2K

It suggests that almost half of the professions from which people earn a living today will be stamped out by mid-century, because intelligent machines will be doing those jobs better, faster and more economically. Unlike the previous machine age of the first Industrial Revolution, the next one will not threaten manual blue-collar jobs, but those of highly paid, expert, white-collar workers. Doctors, lawyers, engineers, accountants, managers, designers, architects, are forecasted to become victims of computer automation. According to American economist Tyler Cowen, in the near future only an elite 10–15 per cent of the working population will have the intellectual capacity to master tomorrow’s AI technology, and that will make them very rich indeed.16 The rest of us will have to make do with low incomes and rather unfulfilling lives, or – at best – work as service providers to the rich. It is a very bleak vision of the future, yet the economic trends of recent decades seem to support it.

They will ignore their teachers, be oblivious to the feelings of the human others, become confused with social interaction, and single-mindedly pursue their own interests. This latter category of intelligent machines may in fact prove to be the majority, if not the rule. They will exhibit reclusive types of behaviour similar to some of those we presently associate with autism.24 These behaviours could be the result of social selection. In his book Average Is Over, Tyler Cowen argues that success in the twenty-first century is already becoming synonymous with the ability to work with computers. My personal experience within the IT industry and Internet start-ups has been that the most brilliant programmers are often very shy of other people and social interaction. Science and technology have become so competitive nowadays that success in these professions most often comes to those exhibiting high IQs and maximum dedication to the lab or the computer terminal.

If computer systems become resistant to cyber attacks, and if nothing serious such as the Y2K or the 2010 flash crash happens, then our trust in intelligent computers will increase. Indeed, there may come a time when intelligent computers will be seen as the solution to all of humanity’s problems, including how to better govern ourselves. The end of liberty Most of the ideas, or warnings, offered today about the future effects of Artificial Intelligence point to the labour market. Several economists, such as Tyler Cowen, have argued that AI will cost many white-collar jobs. However, their analysis assumes that all other things will remain more or less equal, for instance our political system of parliamentary representation, or our free economies of prices mostly regulated by markets. But this is not necessarily so. Indeed, history has already shown us that major technological changes are the causes of social and economic paradigm shifts.


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Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies by Jeremy Siegel

Asian financial crisis, asset allocation, backtesting, banking crisis, Black-Scholes formula, break the buck, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, capital asset pricing model, carried interest, central bank independence, cognitive dissonance, compound rate of return, computer age, computerized trading, corporate governance, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, Deng Xiaoping, discounted cash flows, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Financial Instability Hypothesis, fixed income, Flash crash, forward guidance, fundamental attribution error, housing crisis, Hyman Minsky, implied volatility, income inequality, index arbitrage, index fund, indoor plumbing, inflation targeting, invention of the printing press, Isaac Newton, joint-stock company, London Interbank Offered Rate, Long Term Capital Management, loss aversion, market bubble, mental accounting, money market fund, mortgage debt, Myron Scholes, new economy, Northern Rock, oil shock, passive investing, Paul Samuelson, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price stability, purchasing power parity, quantitative easing, random walk, Richard Thaler, risk tolerance, risk/return, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, stocks for the long run, survivorship bias, technology bubble, The Great Moderation, the payments system, The Wisdom of Crowds, transaction costs, tulip mania, Tyler Cowen: Great Stagnation, Vanguard fund

Except for the top 1 percent of the income distribution, Gordon predicts the vast majority of the U.S. population will experience growth of only 0.5 percent per year, less than one-quarter the long-term average. Others have echoed Professor Gordon’s pessimism and complain that discoveries today have not changed people’s lives as fundamentally as they did a century ago. Tyler Cowen, an economist at George Mason University and author of The Great Stagnation, has voiced his belief that the developed world is on a technological plateau and that all the low-hanging fruit has already been discovered.13 Indeed, look at Table 4-1. It shows the most important life-changing inventions of the past 100 years. Those that took place in the first half of that period appear far more important than those of the second half in transforming the life of the average individual.14 TABLE 4-1 Life-Changing Inventions of the Past 100 Years There are some in Silicon Valley who also believe that the United States is in a downtrend.

Productivity growth was slightly higher immediately following World War II, but since 1960, productivity growth in the United States has shown no significant downward trend. 12. Robert Gordon, “Is U.S. Economic Growth Over? Faltering Innovation Confronts Six Headwinds,” NBER #18315, August 2012. For a rejoinder, see the response by John Cochrane of the University of Chicago in his blog at http://johnhcochrane.blogspot.com/2012/08/gordon-on-growth.html. 13. Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, New York: Dutton Adult, 2011. 14. These are not the dates when these items were discovered but when they became operational or widespread in the general population in the United States and most other advanced economies. 15. As quoted in The Economist, January 12, 2013, p. 21. 16.

See Government policy Graham, Benjamin Buffett on, 363 on dividends, 179–180 on gambling fever, 3 on price/book ratios, 185 on price/earnings ratios, 183–184 on security analysis, 173, 176 on speculation, 157 on stock performance, 357 on technical analysis, 311, 324 value-oriented approach of, 11 Gramlich, Edward, 30 Gramm-Leach-Bliley Act, 53 Grantham, Jeremy, 17 Great Crash of 1929, 3–5, 289–291 Great Depression Federal Reserve System and, 214–215 financial crisis of 2008 and, 22–23, 33–34 gold standard and, 213–215 Great Recession vs., 39–46, 56 inflation and, 211 stock volatility and, 300–303 U.S. Treasury bonds in, 23 Great Financial Crisis. See Financial crisis of 2008 Great Moderation, 23–24, 37 Great Recession crisis of 2008 and, 23 deflation in, 41 forecasting, 238 GDP in, 40 government budget deficits in, 57 Great Depression vs., 39–46, 56 real estate market in, 45 shareholder value in, 153 Great Stagnation ,69 Greenspan, Alan in 2008 financial crisis, 30–31, 36 on “irrational exuberance,” 14, 162 on rising stock market, 164 Greenwood Associates, 366 Gross, Bill, 16, 69 Gross domestic product (GDP). See GDP (gross domestic product) Gruber, Martin, 364 Gulf of Tonkin, 253–254 Guttenberg, Johannes, 70 Hall, Robert E., 232–233 Hamilton, Alexander, 91 Hamilton, William, 312 Harding, President Warren, 247 Hassett, Kevin, 16 Healthcare sector, 121–125, 205 Hedge funds, 17 Hedging against risk, 220–221, 282 Henry, Patrick, 75 HFTs (High-frequency traders), 297 High-frequency traders (HFTs), 297 Himmelberg, Charles, 29 Hiroshima, 253 History of aggregation bias, 161 of bond yields, 164–166 of book values, 166–168 of CAPE ratios, 162–164 of corporate profits, 166 of earnings yield, 159–162 of earnings yields, 164–166 of equity, 3–19 expectations and, 374 of Federal Reserve, 164–166, 213–214 of fundamentally weighted indexation, 371–372 of GDP, 166 of inflation, 209–210 of operating earnings, 150–152 of price/earnings ratios, 159–160 of profit margins, 168–169 of S&P 500, 119–120, 145–146 of stock market valuation, 157–169 of stock volatility, 300–303 of stocks as investments, 7–10 of tax code, 141–142 Holding on to losing trades, 347–349 Holding periods, 101–102 Holiday effect.


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Stuffocation by James Wallman

3D printing, Airbnb, back-to-the-land, Berlin Wall, big-box store, Black Swan, BRICs, carbon footprint, Cass Sunstein, clean water, collaborative consumption, commoditize, creative destruction, crowdsourcing, David Brooks, Fall of the Berlin Wall, happiness index / gross national happiness, hedonic treadmill, high net worth, income inequality, Intergovernmental Panel on Climate Change (IPCC), James Hargreaves, Joseph Schumpeter, Kitchen Debate, Martin Wolf, mass immigration, McMansion, means of production, Nate Silver, Occupy movement, Paul Samuelson, post-industrial society, 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

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. And read Chris Goodall, Sustainability (London: Hodder & Stoughton, 2012). Keep up with the latest news via Goodall’s excellent blog www.carboncommentary.com. This chapter was also informed by Tyler Cowen, The Great Stagnation (New York: Dutton, 2011), and Robert J Gordon, “Is US Economic Growth Over? Faltering Innovation Confronts the Six Headwinds”, Centre for Economic Policy Research, September 2012. “In 2007, the average American bought almost twice as many items of clothing each year compared to 1991. But by 2012, the number they were buying had stopped rising, and even fallen slightly, from 67 to 64 items.”

But, interestingly, there is a 6.23 from Manchester’s Paddington station to Middlesbrough that packs so many commuters on it has been dubbed the “Sardine Express”. Can Dave Save Us from Stuffocation? The tale of the average Palaeolithic woman comes from Geoffrey Miller, Spent: Sex, Evolution and the Secrets of Consumerism (New York: William Heinemann, 2009). For the rise of “clock-time” and what the Industrial Revolution did to our working week, read Benjamin Kline Hunnicutt’s works mentioned above. For more on threshold earners, see Tyler Cowen, “The Inequality That Matters”, The American Interest, January/February 2011. For an excellent deconstruction of that article, read political columnist Reihan Salam, “Threshold Earners and Gentleman Hackers”, National Review, 28 December 2010. “There is no sign of the ‘social snowball’ or ‘tipping point’ that would suggest that the medium chill is set to make the leap along the adoption curve.”


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

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

My Department of Economics at UIC was amiable toward my mixing of the humanities with the mathematical social sciences. And the two other departments from which I also recently retired at UIC, of English and of Communication, let me gladly learn and gladly teach the human sciences. Joel Mokyr, as I said, and Robert Wuetherick gave me astoundingly detailed and useful comments on this volume. Tyler Cowen and Jack Goldstone made helpful suggestions at a late stage. Jonathan Feinstein and Gregory Clark participated in an illuminating electronic discussion of Bourgeois Dignity at Cato Unbound, a blog of the Cato Institute, as did Matt Ridley, who has been cordially encouraging in other ways as well. By the miracle of e-mail I have had advice from Ajit Sinha of IGIDR in Mumbai, Allan Tulchin, and Gary North.

The poor will dissipate what little they have among their supposedly numerous children. Yet if on account of Adam Smith’s hoped-for “universal opulence which extends itself to the lowest ranks of the people” all have access to excellent education—which is a proper subject for social policy—and if the poor are so rich (because the Great Enrichment) that they too have fewer children, which is the case, then the tendency to rising variance will be attenuated.12 The economist Tyler Cowen reminds me, further, that “low” birth rates also include zero children, which would make lines die out—as indeed they often did, even in royal families, well nourished. Nonexistent children, such as those of Grand Duke of Florence Gian Gastone de’ Medici in 1737, can’t inherit either financial or human capital. And the effect of inherited wealth on children is commonly to remove their ambition, as one can witness daily on Rodeo Drive, or in Bettencourt’s daughter.

[Yet] it achieves what usually only love can do: the divination of the innermost wishes of the other, even before he himself becomes aware of them. . . . Modern competition is described as the fight of all against all, but at the same time it is the fight of all for all.13 8 Or from the Right and Middle And there are doubts from the right, too. Some students of the economy, such as Robert Gordon, Lawrence Summers, Erik Brynjolfsson, Andrew McFee, Edmund Phelps, Edward E. Gordon, Jeffrey Sachs, Laurence Kotlikoff, and Tyler Cowen, have argued recently that countries in the position of the United States, on the frontier of betterment, are facing a slowdown, with a skill shortage, and that technological unemployment will be the result.1 Maybe. The economists would acknowledge that in the past couple of centuries numerous other learned commentators have predicted similar slowdowns—such as the Keynesian economists in the late 1930s and the 1940s, confident in their theory of “stagnationism”—only to find their predictions once again falsified by the continuing Great Enrichment.2 The classical economists of the first three-quarters of the nineteenth century, Marx included, expected landlords, or in Marx’s case capitalists, to engorge the national product.


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Only Humans Need Apply: Winners and Losers in the Age of Smart Machines by Thomas H. Davenport, Julia Kirby

AI winter, Andy Kessler, artificial general intelligence, asset allocation, Automated Insights, autonomous vehicles, basic income, Baxter: Rethink Robotics, business intelligence, business process, call centre, carbon-based life, Clayton Christensen, clockwork universe, commoditize, conceptual framework, dark matter, David Brooks, deliberate practice, deskilling, digital map, disruptive innovation, Douglas Engelbart, Edward Lloyd's coffeehouse, Elon Musk, Erik Brynjolfsson, estate planning, fixed income, follow your passion, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, game design, general-purpose programming language, global pandemic, Google Glasses, Hans Lippershey, haute cuisine, income inequality, index fund, industrial robot, information retrieval, intermodal, Internet of things, inventory management, Isaac Newton, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joi Ito, Khan Academy, knowledge worker, labor-force participation, lifelogging, longitudinal study, loss aversion, Mark Zuckerberg, Narrative Science, natural language processing, Norbert Wiener, nuclear winter, pattern recognition, performance metric, Peter Thiel, precariat, quantitative trading / quantitative finance, Ray Kurzweil, Richard Feynman, risk tolerance, Robert Shiller, Robert Shiller, Rodney Brooks, Second Machine Age, self-driving car, Silicon Valley, six sigma, Skype, social intelligence, speech recognition, spinning jenny, statistical model, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, superintelligent machines, supply-chain management, transaction costs, Tyler Cowen: Great Stagnation, Watson beat the top human players on Jeopardy!, Works Progress Administration, Zipcar

Mindell, Digital Apollo: Human and Machine in Spaceflight (Cambridge, MA: MIT Press, 2008). 9. John Maynard Keynes, Essays in Persuasion (New York: Norton, 1963), 358–73. 10. David H. Autor, “Polanyi’s Paradox and the Shape of Employment Growth,” prepared for the Federal Reserve Bank of Kansas City’s economic policy symposium on “Reevaluating Labor Market Dynamics,” September 3, 2014, http://economics.mit.edu/files/9835. 11. Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013). 12. CareerSearch, “Career Advice on How to Become an Insurance Underwriter,” http://www.careersearch.com/careers/real-estate-and-insurance/insurance-underwriter/. 13. Mike Batty and Alice Kroll, “Automated Life Underwriting: A Survey of Life Insurance Utilization of Automated Underwriting Systems,” prepared for the Society of Actuaries, 2009, file:///C:/Users/jkirby/Downloads/research-life-auto-underwriting.pdf. 14.

If you’re a knowledge worker hoping to keep your job (and prosper) in the age of smart machines, you’ve got to learn a lot, change what you do, and sometimes swallow your pride at the prospect of becoming their helper. Learning from Freestyle Chess Several writers who touch on what we are calling mutual augmentation do so with reference to chess. It’s definitely a realm in which some humility on the part of humans is called for. In one-on-one matches, we know the best chess players are computers these days. Yet the trouncing isn’t so complete as you might have been led to believe. The economist Tyler Cowen (not surprisingly, a chess champion in his youth) and The Second Machine Age authors Erik Brynjolfsson and Andrew McAfee use the example of “freestyle chess,” in which human chess players are free to use as much help from computers as they wish.11 The two of us personally don’t play chess much (we like to get paid for thinking that hard), but we gather that under these rules, people often manage to beat the best programs.


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The Theft of a Decade: How the Baby Boomers Stole the Millennials' Economic Future by Joseph C. Sternberg

Affordable Care Act / Obamacare, Airbnb, American Legislative Exchange Council, Asian financial crisis, banking crisis, Basel III, Bernie Sanders, blue-collar work, centre right, corporate raider, Detroit bankruptcy, Donald Trump, Edward Glaeser, employer provided health coverage, Erik Brynjolfsson, eurozone crisis, future of work, gig economy, Gordon Gekko, hiring and firing, Home mortgage interest deduction, housing crisis, job satisfaction, job-hopping, labor-force participation, low skilled workers, Lyft, Marc Andreessen, Mark Zuckerberg, minimum wage unemployment, mortgage debt, mortgage tax deduction, Nate Silver, new economy, obamacare, oil shock, payday loans, pension reform, quantitative easing, Richard Florida, Ronald Reagan, Saturday Night Live, Second Machine Age, sharing economy, Silicon Valley, sovereign wealth fund, TaskRabbit, total factor productivity, Tyler Cowen: Great Stagnation, uber lyft, unpaid internship, women in the workforce

Philip Oreopoulos, Till von Wachter, and Andrew Heisz, “The Short- and Long-Term Career Effects of Graduating in a Recession,” American Economic Journal: Applied Economics 4, no. 1 (2012). 31. Richard Florida, “Preface to the Original Edition,” in The Rise of the Creative Class, Revisited (New York: Basic Books, 2012). 32. Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: Norton, 2014). 33. Tyler Cowen, Average Is Over: Powering America Beyond the Age of the Great Stagnation (New York: Plume, 2013). 34. Paul Beaudry, David A. Green, and Benjamin M. Sand, “The Great Reversal in the Demand for Skill and Cognitive Tasks,” National Bureau of Economic Research Working Paper No. 18901, March 2013. 35. Joseph G. Altonji, Lisa B. Kahn, and Jamin D. Speer, “Cashier or Consultant? Labor Market Entry Conditions, Field of Study, and Career Success,” Journal of Labor Economics 43, no. 1, pt. 2 (2016). 36.

More recently, Erik Brynjolfsson and Andrew McAfee’s influential 2014 book The Second Machine Age argued that the American economy inevitably will be characterized by a “bounty” of fabulous economic gains for workers and entrepreneurs with the right skills, but also a widening “spread” between those winners and the growing army of losers whose jobs will disappear under a tidal wave of technological change.32 That book won approving reviews or front-cover blurbs from public figures many Millennials have grown up respecting, such as New York Times columnist Thomas Friedman, Netscape founder Marc Andreessen, and someone whose job title is “chief maverick” at Wired magazine. Millennials to the Right end of the political spectrum who distrust those figures could instead turn to books like Average Is Over by free-market blogger and professor Tyler Cowen, who in 2013 presented a similar argument about the future of work, with a somewhat more dystopian twist: “I imagine a world where, say, 10 to 15 percent of the citizenry is extremely wealthy and has fantastically comfortable and stimulating lives, the equivalent of current-day millionaires, albeit with better health care. Much of the rest of the country will have stagnant or maybe even falling wages in dollar terms but a lot more opportunities for cheap fun and also cheap education.”33 The one thing both Left and Right seem to be able to agree on is that there won’t be any jobs for Millennials (and Gen Zers after us) in the vast middle of the skills and aptitude—and wages—spectrum.


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Social Democratic America by Lane Kenworthy

affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, business cycle, Celtic Tiger, centre right, clean water, collective bargaining, corporate governance, David Brooks, desegregation, Edward Glaeser, endogenous growth, full employment, Gini coefficient, hiring and firing, Home mortgage interest deduction, illegal immigration, income inequality, invisible hand, Kenneth Arrow, labor-force participation, manufacturing employment, market bubble, minimum wage unemployment, new economy, postindustrial economy, purchasing power parity, race to the bottom, rent-seeking, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, school choice, shareholder value, sharing economy, Skype, Steve Jobs, too big to fail, Tyler Cowen: Great Stagnation, union organizing, universal basic income, War on Poverty, working poor, zero day

Moreover, even if productivity growth is sluggish in low-end services, it may, as Baumol himself points out, be rapid in other parts of the economy.44 Technological advance and improvements in work organization can yield leaps forward. The computer and communications revolutions already have generated considerable advance in manufacturing, finance, and an array of other services. They will soon do so in medicine, education, and elsewhere. In recent years, several analysts, including Robert Gordon and Tyler Cowen, have expressed pessimism about the likelihood of further productivity-enhancing innovations.45 The information technology revolution has largely run its course, they say, and in any case it never boosted productivity to the same degree as earlier innovations such as steam engines, railroads, electricity, the assembly line, indoor heating and air conditioning, running water, sewers, roads, and the internal combustion engine.

Congressional Budget Office (CBO). 2008. “Recent Trends in the Variability of Individual Earnings and Household Income.” Washington, DC. Congressional Budget Office (CBO). 2010. “Average Federal Tax Rates and Income, by Income Category, 1979–2007.” Washington, DC. CONSAD Research Corp. 2009. “An Analysis of Reasons for the Disparity in Wages Between Men and Women.” Pittsburgh. Cowen, Tyler. 2011. The Great Stagnation. New York: Penguin. Cox, W. Michael and Richard Alm. 1999. Myths of Rich and Poor. New York: Basic Books. Cramer, Reid and David Newville. 2009. “Children’s Savings Accounts.” Washington, DC: New America Foundation. Currie, Janet. 2006. The Invisible Safety Net. Princeton, NJ: Princeton University Press. Currie, Janet. 2011. “Inequality at Birth: Some Causes and Consequences.” American Economic Review 101 (Papers and Proceedings): 1–22.


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Capitalism in America: A History by Adrian Wooldridge, Alan Greenspan

"Robert Solow", 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, agricultural Revolution, air freight, Airbnb, airline deregulation, American Society of Civil Engineers: Report Card, Asian financial crisis, bank run, barriers to entry, Berlin Wall, Bonfire of the Vanities, Bretton Woods, British Empire, business climate, business cycle, business process, California gold rush, Charles Lindbergh, cloud computing, collateralized debt obligation, collective bargaining, Corn Laws, corporate governance, corporate raider, creative destruction, credit crunch, debt deflation, Deng Xiaoping, disruptive innovation, Donald Trump, edge city, Elon Musk, equal pay for equal work, Everybody Ought to Be Rich, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, fixed income, full employment, George Gilder, germ theory of disease, global supply chain, hiring and firing, income per capita, indoor plumbing, informal economy, interchangeable parts, invention of the telegraph, invention of the telephone, Isaac Newton, Jeff Bezos, jimmy wales, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, labor-force participation, Louis Pasteur, low skilled workers, manufacturing employment, market bubble, Mason jar, mass immigration, means of production, Menlo Park, Mexican peso crisis / tequila crisis, minimum wage unemployment, mortgage debt, Myron Scholes, Network effects, new economy, New Urbanism, Northern Rock, oil rush, oil shale / tar sands, oil shock, Peter Thiel, plutocrats, Plutocrats, popular capitalism, post-industrial society, postindustrial economy, price stability, Productivity paradox, purchasing power parity, Ralph Nader, Ralph Waldo Emerson, RAND corporation, refrigerator car, reserve currency, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Sand Hill Road, savings glut, secular stagnation, Silicon Valley, Silicon Valley startup, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, Steve Wozniak, strikebreaker, supply-chain management, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, total factor productivity, trade route, transcontinental railway, tulip mania, Tyler Cowen: Great Stagnation, union organizing, Unsafe at Any Speed, Upton Sinclair, urban sprawl, Vannevar Bush, War on Poverty, washing machines reduced drudgery, Washington Consensus, white flight, wikimedia commons, William Shockley: the traitorous eight, women in the workforce, Works Progress Administration, Yom Kippur War, young professional

Without America’s intervention in the Second World War, Adolf Hitler might well have subdued Europe. Without America’s unwavering commitment to the Cold War, Joseph Stalin’s progeny might still be in power in Eastern Europe and perhaps much of Asia. Uncle Sam provided the arsenal of democracy that saved the twentieth century from ruin. This is a remarkable story. But it is also a story with a sting in the tail: today, productivity growth has all but stalled. Tyler Cowen has talked about a “great stagnation.” Lawrence Summers has revived Alvin Hansen’s phrase, “secular stagnation.” Robert Gordon’s study of the American economy since the Civil War is called The Rise and Fall of American Growth. America is being defeated by China and other rising powers in one industry after another. The number of new companies being created has reached a modern low. The labor market is becoming stickier.

Mallaby, The Man Who Knew, 617. 6. Ibid., 466. 7. See Carmen M. Reinhardt and Kenneth S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2011). Twelve. America’s Fading Dynamism 1. Deirdre Nansen McCloskey, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (Chicago: University of Chicago Press, 2016), 500. 2. Tyler Cowen, The Complacent Class: The Self-Defeating Quest for the American Dream (New York: St. Martin’s Press, 2017). 25. Cowen’s book has been an invaluable source of data and references for this chapter. 3. Oscar Handlin and Lilian Handlin, Liberty in Expansion 1760–1850 (New York: Harper & Row, 1989), 13. 4. See Patrick Foulis, “The Sticky Superpower,” Economist, October 3, 2016. 5. Chang-Tai Hsieh and Enrico Moretti, “Why Do Cities Matter?

They also fail to take into account the fact that the Federal Reserve’s ability to influence interest rates through the federal funds rate (which is the only interest rate that the Fed controls) has been limited by the global savings glut. The “easy money” critics are right to argue that a low federal funds rate (at only 1 percent between mid-2003 and mid-2004) lowered interest rates for ARMs. But originations of ARMs peaked two years before the peak in home prices. Market demand obviously did not need ARM financing to elevate home prices during the last two years of the expanding bubble. THE GREAT STAGNATION One reason the 2008 financial crisis did not develop into a Great Depression, as happened in the 1930s, was the superior quality of the official response. Policy makers were lucky to have the example of the 1930s to draw upon as well as a great deal of thought and experience since. They were also skilled enough to make the best of their advantages: the Federal Reserve and the Treasury worked together smoothly to respond to emerging problems quickly and concoct practical but innovative solutions.


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Four Futures: Life After Capitalism by Peter Frase

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

In the United States, the Bureau of Labor Statistics reports that from 2007 to 2014, the annual rate of change was only 1.4 percent. That’s a pace lower than at any time since the 1970s and half what was seen during the postwar boom years. This leads some to argue that the anecdotal accounts of great breakthroughs in robotics and computation are misleading, because they aren’t actually being translated into economic results. The economists Tyler Cowen and Robert Gordon are most closely associated with this view.15 Doug Henwood, of the Left Business Observer, makes a similar case from the Left.16 For more conservative economists like Cowen and Gordon, the problem is largely technical. The new technologies aren’t really all that great, at least from an economic perspective, compared to breakthroughs like electricity or the internal combustion engine.

,” Mother Jones, May/June 2013. 6Brynjolfsson and McAfee, The Second Machine Age, pp. 7–8. 7Frey and Osborne, “The Future of Employment.” 8Martin Ford, Rise of the Robots: Technology and the Threat of a Jobless Future, New York: Basic Books, 2015. 9Katie Drummond, “Clothes Will Sew Themselves in Darpa’s Sweat-Free Sweatshops,” Wired.com, June 6, 2012. 10Leanna Garfield, “These Warehouse Robots Can Boost Productivity by 800%,” TechInsider.io, February 26, 2016. 11Ilan Brat, “Robots Step into New Planting, Harvesting Roles,” Wall Street Journal, April 23, 2015. 12Shulamith Firestone, The Dialectic of Sex: The Case for Feminist Revolution, New York: Farrar, Straus and Giroux, 1970. 13Soraya Chemaly, “What Do Artificial Wombs Mean for Women?” Rewire.news, February 23, 2012. 14Drum, “Welcome Robot Overlords.” 15Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better, New York: Penguin, 2011; Robert J. Gordon, “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds,” National Bureau of Economic Research Working Paper Series, Cambridge, MA: National Bureau of Economic Research, August 2012. 16Doug Henwood, “Workers: No Longer Needed?”


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The Upside of Inequality by Edward Conard

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

John Cochrane, “Toward a Run-Free Financial System,” National Bureau of Economic Research, 2014, https://faculty.chicagobooth.edu/john.co chrane/research/papers/run_free.pdf. Edward Lazear, “How Not to Prevent the Next Financial Meltdown,” Wall Street Journal, October 2, 2015, http://www.wsj.com/articles/how-not-to-pre vent-the-next-financial-meltdown-1443827426. 30. Conard, Unintended Consequences. 31. Robert Gordon, The Rise and Fall of American Growth (Princeton, NJ: Princeton University Press, 2016). Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011). 32. John Maynard Keynes, The Economic Consequences of Peace (New York: Harcourt, Brace and Howe, 1920). 33. Paul Krugman, “The Conscience of a Liberal: Stimulus Arithmetic (Wonkish but Important),” New York Times, January 6, 2009, http://krugman.blogs.ny times.com/2009/01/06/stimulus-arithmetic-wonkish-but-important. 34.

Adrian and Will took a chance on my first book when no one else dared. It’s an understatement to say that my business partner, Mitt Romney, winning the Republican nomination for president generated interest in my first book. That interest gave me a second career. The American Enterprise Institute’s stamp of approval and the endorsements of many top economists—Glenn Hubbard, Greg Mankiw, Tyler Cowen, Nouriel Roubini, Andrei Shliefer, and others—persuaded some skeptical readers and journalists to take a more thoughtful look at my work. My research assistant, Steve Bogden, ensured that I considered every relevant economic study. I doubt there is a person who has surveyed as much of the economic landscape as Steve. Matt Rousu and Ben Ho also chipped in with valuable research, criticism, and insights.


pages: 497 words: 150,205

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

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

He set up SpaceX, a space travel company. Now he wants to build a Hyperloop – basically a solar-powered maglev train in a vacuum tube that would whisk passengers along at 760 miles (1,220 kilometres) an hour, three times faster than a high-speed train, and cost ten times less to build.705 Gloomsters argue that technological progress is grinding to a halt. The low-hanging fruit have all been picked, argues Tyler Cowen in The Great Stagnation.706 Nothing can ever compare to the great leap forward ushered in by electricity and other advances during the second wave of the Industrial Revolution between 1870 and 1900, such as cars, running water, petroleum and chemicals, claims Robert Gordon of Northwestern University.707 “Many of the original and spin-off inventions of IR #2 could happen only once – urbanisation, transportation speed, the freedom of females from the drudgery of carrying tons of water per year, and the role of central heating and air conditioning in achieving a year-round constant temperature.”

Interestingly, though, the highest enterprise rates are found among UK-born blacks (11.3 per cent). 699 http://startupmanifesto.eu/files/manifesto.pdf 700 http://www.economist.com/node/21559618 701 http://www.economist.com/node/17680631 702 http://www.eif.org/news_centre/publications/eif_-annual_report_2012.pdf 703 http://www.economist.com/news/finance-and-economics/21588384-stock-exchanges-are-courting-small-firms-never-capital-remedy 704 http://www.europecrowdfunding.org/2013/01/the-european-crowdfunding-network-on-euronews/ 705 http://www.bbc.co.uk/news/technology-23681266 706 Tyler Cowen, The Great Stagnation, Dutton: 2011 707 Robert J Gordon, “Is US Economic Growth Over? Faltering innovation confronts the six headwinds”, NBER working paper #18315, August 2012 708 http://www.economist.com/news/briefing/21569381-idea-innovation-and-new-technology-have-stopped-driving-growth-getting-increasing 709 http://www.voxeu.org/article/technological-progress-thing-past 710 Tools such as DNA sequencing machines and cell analysis through flow cytometry are revolutionising molecular microbiology.

Meanwhile, the British government is trying to inflate yet another housing bubble ahead of the election due in 2015. The UK’s recent burst of growth looks dangerously unsustainable: even though wages are still falling, debt-laden consumers are saving less and in some cases borrowing to spend more. It is not a pretty picture. The Great Stagnation Things aren’t just bad now. The future seems bleak too. Prominent economists talk of a “new normal” of permanently low growth, a “great stagnation” of innovation and even of the “end of growth” in the West altogether. (Others, on the contrary, think innovation is speeding ahead, but fear that humans will lose the “race against the machine” and that robots will steal people’s jobs.) There are certainly many worrying signs. The twin engines of higher living standards – productive investment and productivity growth – have long been faltering.


pages: 403 words: 87,035

The New Geography of Jobs by Enrico Moretti

assortative mating, Bill Gates: Altair 8800, business climate, call centre, cleantech, cloud computing, corporate raider, creative destruction, desegregation, Edward Glaeser, financial innovation, global village, hiring and firing, income inequality, industrial cluster, Jane Jacobs, Jeff Bezos, Joseph Schumpeter, knowledge economy, labor-force participation, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, medical residency, Menlo Park, new economy, peer-to-peer lending, Peter Thiel, Productivity paradox, Richard Florida, Sand Hill Road, Silicon Valley, Skype, special economic zone, Startup school, Steve Jobs, Steve Wozniak, thinkpad, Tyler Cowen: Great Stagnation, Wall-E, Y Combinator, zero-sum game

What they all have in common is that they make intensive use of human capital and human ingenuity. A growing number of skeptics have questioned the importance of innovation for the American economy, arguing that the increase in jobs is not large enough to offset the losses in manufacturing. Intel’s former CEO Andy Grove has famously criticized America’s “misplaced faith in the power of startups to create U.S. jobs.” Tyler Cowen’s influential book The Great Stagnation argued that companies like Facebook or Twitter do not have many employees, because they rely on their users for most of the content and are simply too small to replace the titans of the past, like Ford and General Motors. But the picture that emerges from the data is more complex. Take employment in the Internet sector. Before even looking at the numbers, I suspected that Internet jobs had to be growing.

See United Kingdom Great Divergence, [>]–[>], [>]–[>] and cities as intellectual environments, [>] and forces of agglomeration, [>], [>]–[>] (see also Forces of agglomeration) as geography of inequality, [>]–[>] and charity, [>]–[>] and divorce rate, [>]–[>], [>] and labor-market size, [>]–[>] and life expectancy, [>]–[>] and magnification of differences, [>]–[>] and political participation, [>]–[>] in immigration quality, [>] reversal of in failing cities, [>] and “spatial mismatch,” [>] Great Migration (1920s), [>] Great Recession (2008–2010), [>], [>]–[>], [>], [>], [>], [>], [>], [>] Great Stagnation, The (Cowen), [>] Greece, PISA scores of, [>] Green R&D, [>], [>]. See also Clean-tech companies; Solar-panel industry Greenstone, Michael, [>] Greenville-Spartanburg, South Carolina, [>] Griffith, D. W., [>]–[>] Grove, Andy, [>] Hallock, Kevin, [>] Hanauer, Nick, [>] Hanson, Gordon, [>] Harlem, [>], [>] Health services, employment in, [>] Heckman, James, [>], [>] Henderson, Rebecca, [>] Hendrix, Jimi, [>], [>] Hewlett-Packard, [>], [>], [>] High-school dropout rate, [>]–[>] High-tech sector, [>] and academic stars, [>] and multiplier effect, [>], [>]–[>], [>] and outsourcing, [>] productivity in, [>] as self-magnifying, [>], [>], [>] in Silicon Valley, [>] See also Biotech industry; Innovation sector Hipsters, manufacturing, [>]–[>] Historical factors, in economic fate of cities, [>], [>]–[>] Hitchcock, Alfred, [>] Hollywood, [>]–[>] Homcy, Charles, [>] Honeywell, [>] Hong Kong, [>], [>] Honolulu, and cost of living, [>] Hospitals, [>] Houma-Thibadoux, Louisiana, [>] Houston, [>], [>], [>], [>], [>], [>], [>] Huawei (Chinese firm), [>] Hub SoMa, [>] HubSpot, [>] Human capital, [>], [>] and American century, [>]–[>] and economic-development policies, [>] externalities from, [>]–[>] (see also Knowledge spillovers) global competition for, [>] and good working conditions, [>]–[>] salaries, [>], [>] and immigration, [>]–[>] and innovation sector, [>] investment in, [>]–[>] under-investment in (U.S.), [>] and local prosperity, [>] in twenty-first century, [>] under-supply of (U.S.), [>] and U.S. math mediocrity, [>]–[>] U.S. policies to increase stock of through education, [>]–[>] (see also College education; Education) through immigration, [>], [>] Human Capital (Becker), [>]–[>] Human ecosystems, [>] Hungary, PISA scores of, [>] Hunt, Jennifer, [>], [>] IBM as advanced manufacturer, [>] in Austin, [>] and Cadence, [>], [>] and high-tech multiplier, [>] location of, [>] patents produced by, [>] Iceland, PISA scores of, [>] Ideas, diffusion of, [>]–[>].


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, altcoin, bank run, banking crisis, bitcoin, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cryptocurrency, David Graeber, disintermediation, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, hacker house, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

Visa, MasterCard, and Western Union: Employee tallies taken from 2013 annual reports for Visa Inc., MasterCard Inc., and Western Union Holding Inc. Andreessen Horowitz venture capitalist: Chris Dixon, phone interview with Michael J. Casey, June 25, 2014. Asked to describe the job market: Daniel Larimer, interviewed by Michael J. Casey, April 8, 2014. As Tyler Cowen noted in his book: Tyler Cowan, Average Is Over: Powering America Beyond the Age of the Great Stagnation (Dutton, 2013). Yale’s Robert Shiller: Joe Weisenthal, “Robert Shiller: Bitcoin Is an Amazing Example of a Bubble,” Business Insider, January 24, 2014, http://www.businessinsider.com/robert-shiller-bitcoin-2014-1#ixzz3Cmp0YFyx. New York University’s Nouriel Roubini: Erik Holm, “Nouriel Roubini: Bitcoin Is a ‘Ponzi Game,’” March 10, 2014, Wall Street Journal, MoneyBeat blog, http://blogs.wsj.com/moneybeat/2014/03/10/nouriel-roubini-bitcoin-is-a-ponzi-game/.

Not all, and perhaps not many, laid-off workers can easily pick themselves up and parlay their knowledge into making an income from speculative trading on a BitShares prediction market. To many it will seem like a form of gambling. To subject their lives to such uncertainty is anathema to people who’ve expected a salaried job to last a lifetime and to provide security and permanence. People will have to figure out how to apply their particular skills to this Brave New World and, if they can’t apply them, how to rapidly acquire the right skills. As Tyler Cowen noted in his book Average Is Over, “The key questions will be: Are you good at working with intelligent machines or not? Are your skills a complement to the skills of the computer, or is the computer doing better without you? Worst of all, are you competing against the computer?” Cowen’s thesis, which drew in part from the “work is over” theory, wasn’t a rosy one for Middle America. It attributed much of that social sector’s recent economic stagnation to the ever-increasing speed of technological change, which for the first time appears to be displacing jobs faster than the economy can draw upon the growth unleashed by that technology to create new jobs.


pages: 389 words: 119,487

21 Lessons for the 21st Century by Yuval Noah Harari

1960s counterculture, accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, algorithmic trading, augmented reality, autonomous vehicles, Ayatollah Khomeini, basic income, Bernie Sanders, bitcoin, blockchain, Boris Johnson, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon-based life, cognitive dissonance, computer age, computer vision, cryptocurrency, cuban missile crisis, decarbonisation, deglobalization, Donald Trump, failed state, Filter Bubble, Francis Fukuyama: the end of history, Freestyle chess, gig economy, glass ceiling, Google Glasses, illegal immigration, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, job automation, knowledge economy, liberation theology, Louis Pasteur, low skilled workers, Mahatma Gandhi, Mark Zuckerberg, mass immigration, means of production, Menlo Park, meta analysis, meta-analysis, Mohammed Bouazizi, mutually assured destruction, Naomi Klein, obamacare, pattern recognition, post-work, purchasing power parity, race to the bottom, RAND corporation, Ronald Reagan, Rosa Parks, Scramble for Africa, self-driving car, Silicon Valley, Silicon Valley startup, transatlantic slave trade, Tyler Cowen: Great Stagnation, universal basic income, uranium enrichment, Watson beat the top human players on Jeopardy!, zero-sum game

For a general survey of methods, see: Jose David Fernández and Francisco Vico, ‘AI Methods in Algorithmic Composition: A Comprehensive Survey’, Journal of Artificial Intelligence Research 48 (2013), 513–82. 12 Eric Topol, The Patient Will See You Now: The Future of Medicine is in Your Hands (New York: Basic Books, 2015); Robert Wachter, The Digital Doctor: Hope, Hype and Harm at the Dawn of Medicine’s Computer Age (New York: McGraw-Hill Education, 2015); Simon Parkin, ‘The Artificially Intelligent Doctor Will Hear You Now’, MIT Technology Review 9 March 2016; James Gallagher, ‘Artificial intelligence “as good as cancer doctors”’, BBC, 26 January 2017. 13 Kate Brannen, ‘Air Force’s lack of drone pilots reaching “crisis” levels’, Foreign Policy, 15 January 2015. 14 Tyler Cowen, Average is Over: Powering America Beyond the Age of the Great Stagnation (New York: Dutton, 2013); Brad Bush, ‘How combined human and computer intelligence will redefine jobs’, TechCrunch, 1 November 2016. 15 Ulrich Raulff, Farewell to the Horse: The Final Century of Our Relationship (London: Allen Lane, 2017); Gregory Clark, A Farewell to Alms: A Brief Economic History of the World (Princeton: Princeton University Press, 2008), 286; Margo DeMello, Animals and Society: An Introduction to Human-Animal Studies (New York: Columbia University Press, 2012), 197; Clay McShane and Joel Tarr, ‘The Decline of the Urban Horse in American Cities’, Journal of Transport History 24:2 (2003), 177–98. 16 Lawrence F.

, Artificial Intelligence 199–200 (2013), 93–105. 18 ‘Google’s AlphaZero Destroys Stockfish in 100-Game Match’, Chess.com, 6 December 2017; David Silver et al., ‘Mastering Chess and Shogi by Self-Play with a General Reinforcement Learning Algorithm’, arXiv (2017), https://arxiv.org/pdf/1712.01815.pdf; see also Sarah Knapton, ‘Entire Human Chess Knowledge Learned and Surpassed by DeepMind’s AlphaZero in Four Hours’, Telegraph, 6 December 2017. 19 Cowen, Average is Over, op. cit.; Tyler Cowen, ‘What are humans still good for? The turning point in freestyle chess may be approaching’, Marginal Revolution, 5 November 2013. 20 Maddalaine Ansell, ‘Jobs for Life Are a Thing of the Past. Bring On Lifelong Learning’, Guardian, 31 May 2016. 21 Alex Williams, ‘Prozac Nation Is Now the United States of Xanax’, New York Times, 10 June 2017. 22 Simon Rippon, ‘Imposing Options on People in Poverty: The Harm of a Live Donor Organ Market’, Journal of Medical Ethics 40 (2014), 145–50; I.


pages: 596 words: 163,682

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

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

James Poterba, “Demographic Structure and the Political Economy of Public Education,” Journal of Policy Analysis and Management 16, no. 1 (1997): 48–66. CHAPTER 5: THE PRESSURE TO PROMISE 1. Tony Judt, Postwar: A History of Europe Science 1945 (New York: Penguin Books, 2005), 236. 2. Robert J. Gordon, The Rise and Decline of American Growth: The U.S. Standard of Living Since the Civil War (Princeton, NJ: Princeton University Press, 2016), 120. 3. See Tyler Cowen, The Great Stagnation: How America Ate All the Low-hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011). 4. See Harold James, Europe Reborn, A History 1914–2000 (New York: Routledge, 2015), 231–33. 5. Markus K. Brunnermeier, Harold James, and Jean-Pierre Landau, The Euro and the Battle of Ideas (Princeton, NJ: Princeton University Press, 2018). 6.

As Europe and Japan got closer to the known frontier of innovation and productive efficiency in the early 1970s, though, they had to shift from imitating ideas and best practices elsewhere to innovating on their own. With the frontier expanding more slowly, their growth also slowed. Most economists envisage growth for economies at the frontier as periods of path-breaking innovation (when the key innovations of the technological revolution emerge) followed by steady development and implementation until most of the gains from that innovation have been reaped. Tyler Cowen of George Mason University and Robert Gordon of Northwestern University argue that most of the possibilities of the Second Industrial Revolution had been exhausted by the end of the 1960s.22 For instance, the big innovation that made commercial air travel more attractive than travel by ocean liner was reasonably safe and fast jet planes with pressurized air cabins. During my lifetime, commercial planes have gotten a lot safer and the rides relatively cheaper.

Moynihan, Maximal Feasible Misunderstanding: Community Action in the War on Poverty (New York: Free Press), 168. 19. Milkis and Mileur, Great Society. 20. Judt, Postwar, 334. 21. Enoch Powell, “Rivers of Blood” (speech), Conservative Association meeting, Birmingham, UK, April 20, 1968, transcript, http://www.telegraph.co.uk/comment/3643823/Enoch-Powells-Rivers-of-Blood-speech.html. 22. Gordon, Rise and Decline of American Growth; Cowen, Great Stagnation. 23. Gordon, Rise and Decline of American Growth, 13. 24. Paul A. David, “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox,” The American Economic Review 80, no. 2, (May, 1990): 355–61. 25. James, Europe Reborn, 390–91. 26. See Chad Syverson, “Challenges to Mismeasurement Explanations for the U.S. Productivity Slowdown,” Journal of Economic Perspectives 31 (Spring 2016): 165–86. 27.


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What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right by George R. Tyler

8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, bank run, banking crisis, Basel III, Black Swan, blood diamonds, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Gordon Gekko, hiring and firing, income inequality, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, pension reform, performance metric, pirate software, plutocrats, Plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Sand Hill Road, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Jensen, “Capitalism Isn’t Broken,” Wall Street Journal, March 29, 1996, A-10. 29 Norbert Häring, “Man As a Yardstick,” Handelsblatt, Aug. 19, 2010. 30 Charles Lane, “Obama’s Leaky Bucket,” Washington Post, Dec. 20, 2011. 31 Andrew G. Berg and Jonathan D. Ostry, “Equality and Efficiency: Is There a Trade-off Between the Two or Do They Go Hand in Hand,” Finance and Development, International Monetary Fund, Washington, September 2011. 32 David Brooks, “The Biggest Issue,” New York Times, July 29, 2008. See also Tyler Cowen, The Great Stagnation (New York: A Penguin Group e-Special from Dutton, 2011). 33 Claudia Goldin and Lawrence F. Katz, The Race Between Education and Technology (Cambridge, MA: Harvard University Press, 2008). 34 This includes: Alan Blinder, Edward N. Wolff, Deborah Reed, Daniel Cohen, Gordon Lafer, Frank Levy, and Peter Temin. For a survey of their analyses, see Edward C. Kokkelenberg’s book review in “Human Resources, Management, and Personnel,” Industrial & Labor Relations Review, vol. 61, issue 4, 2008.

The effect of a minimum wage increase on the overall price level is likely to be small … small enough that they are far outweighed by fluctuations in prices for products such as gasoline and apparel.”69 CHAPTER 20 OFFSHORING AND THE APPLE PROBLEM “Manufacturing in America is in serious decline, with 40,000 factory closures and more than 4 million jobs lost over the last decade.”1 Manufacturing: A Better Future for America, Alliance for American Manufacturing, 2009 “We stood by as big American companies became global companies with no more loyalty or connection to the United States than a GPS device.”2 ROBERT REICH, Aftershock “The problem with that strategy is that for the past two decades we have allowed our industrial and technological base to deteriorate as talent and capital were grossly misallocated toward other sectors of the economy….”3 STEVEN PEARLSTEIN, Washington Post, September 2010 “American companies often save on costs by finding lower wages abroad, not by enhancing the abilities of American workers.”4 TYLER COWEN, George Mason University, August 2011 “These are the jobs that have created the Midwestern middle class for generations. Manufacturing jobs paid for college educations, including mine. They have been cut in half over the past two decades.”5 JEFFREY IMMELT, CEO, General Electric, December 2009 Lord Uxbridge was Wellington’s deputy commander as the combined forces arrayed against Napoleon fought desperately in Belgium against the fearsome French cuirassiers and cannoneers who had conquered Europe.

See also OECD, “Special Feature: The Tax Treatment of Minimum Wages, Taxing Wages 2005/2006,” 26 and Table S.3, http://www.oecd.org/about/39005490.pdf. 67 Bruno Crepon and Rozenn Desplatz, “A New Evaluation of the Effects of Reduced Social Security Charges on Low Wages,” Economie et statistique no. 348, Insee, May 2002. 68 David Neumark and William L. Wascher, Minimum Wages, 97. 69 Ibid., 248, 252. CHAPTER 20 1 “Manufacturing: A Better Future for America,” ed. Richard McCormack, Alliance for American Manufacturing, 2009. 2 Robert Reich, Aftershock, 56. 3 Steven Pearlstein, “The Bleak Truth About Unemployment,” Washington Post, Sept. 8, 2010. 4 Tyler Cowen, “The Sad Statistic That Trumps the Others,” New York Times, Aug. 21, 2011. 5 Jeffrey Immelt, “Renewing American Leadership,” General Electric, Dec. 9, 2009. 6 Max Hastings “The West’s Crisis of Honest Leaders,” Financial Times, Aug. 15, 2011. 7 “Public Says American Work Life Is Worsening, But Most Workers Remain Satisfied with Their Jobs,” Social Trends Project, Pew Research Center, September 2006. 8 “The Story so Far,” Economist, Jan. 19, 2013, 5. 9 Justin R.


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The Sum of Small Things: A Theory of the Aspirational Class by Elizabeth Currid-Halkett

assortative mating, back-to-the-land, barriers to entry, Bernie Sanders, BRICs, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, David Brooks, deindustrialization, Deng Xiaoping, discrete time, disruptive innovation, Downton Abbey, East Village, Edward Glaeser, en.wikipedia.org, Etonian, Geoffrey West, Santa Fe Institute, income inequality, iterative process, knowledge economy, longitudinal study, Mason jar, means of production, NetJets, new economy, New Urbanism, plutocrats, Plutocrats, post scarcity, post-industrial society, profit maximization, Richard Florida, selection bias, Silicon Valley, The Design of Experiments, the High Line, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, Thorstein Veblen, Tony Hsieh, Tyler Cowen: Great Stagnation, upwardly mobile, Veblen good, women in the workforce

The roots of this phenomenon can be traced to the dating market of urban centers (particularly as people marry like, rather than marrying “up” or “down,” a twenty-first-century trend economists term “assortative mating”23). Smart people want to be around other smart people not just for work, but also for friendships and romantic relationships, and over time that results in highly stratified hyper-educated affluent places where, as the economist Tyler Cowen remarked, “Money and talent become clustered in high-powered, two-earner families determined to do everything possible to advance the interests of their children.”24 The social and economic interplay of urban inhabitants enables and promotes cities as the ultimate sites of consumption. A sizable number of the people in today’s metropolis are more highly skilled and as a result more highly paid than most and they demand luxurious consumption options—whether art galleries, prestigious preschools, or cocktail bars.

Piketty believes that the inequality that is so profound in the current day is actually inherent to capitalism’s basic structure, and that the six-decade stretch of greater income equality observed in the middle of the twentieth century is not to occur again.16 What these statistics mean is that most Americans can no longer afford to engage in the conspicuous consumption that has underpinned their “happiness.” Normal middle-class Americans have had their homes repossessed, their credit ratings slashed, and their ability to establish their identity through consumption almost entirely eradicated. We need to find a new way to live. These observations on America coincide with what is known by economists and policymakers as the Great Stagnation—the alarming finding that the median wage hasn’t grown since 1973, rising only by 10% in real terms over the past 37 years. In short, 90% of America hasn’t gained a penny over the past four decades. The numbers show it: Median income for the middle class dropped from $73,000 in 2000 to $69,500 in 2011, while median net worth of this household plummeted to $93,150, from almost $130,000 in 2000 and a high of $152,000 in 2008 (all figures are in 2011 dollars).17 Goods may be cheaper, but that doesn’t mean much if you don’t have a paycheck to cover them (and must rely on credit cards instead).

., 60 Gilt, 12 Glaeser, Ed, 152–53, 172 Glassell Park, 110–16 global cities, 17, 150, 181 globalization: cities affected by, 150–51; and clothing industry, 132–34; and conspicuous production, 134–37; deindustrialization as consequence of, 16; economic benefits of, 146; middle class arising from, 191–98, 232n33; middle class harmed by, 187; and service economy, 17 Golden, Janet, 91 Golden Gate Mothers Group, 88 Gonzalez, Marta, 159–60 Gothot Ideal, 114 Great Exhibition (London, 1851), 9 Great Recession, 14, 52, 69, 75, 168, 187, 189 Great Stagnation, 189 Greenfield, Jerry, 143–44 Greenfield, Karl Taro, 105 Greif, Mark, 104, 117, 125 Grindr, 173–74 habitus, 48, 95, 178, 224n20 Halfpapp, Elisabeth, 101 Handbury, Jessie, 156, 157 happiness, 182–83, 195 happiness-income paradox, 183 Harvey, Corky, 82, 83 health care, 72, 73f Heffetz, Ori, 35–36, 38, 41 hidden amenities, 157, 164, 172–75 hipsters, 57–58 Hispanics, consumption patterns of, 37 Holt, Douglas, 52, 53–54 home births, 93–94, 226n42 homeownership, 165–66 household furnishings, 169–70 housekeepers, 168 housework, 66 housing costs, 164–68, 187 Houston, 162, 165, 170, 172 Hsieh, Tony, 152 Hurst, Erik, 35 Hutchinson, T.


pages: 327 words: 88,121

The Vanishing Neighbor: The Transformation of American Community by Marc J. Dunkelman

Affordable Care Act / Obamacare, Albert Einstein, assortative mating, Berlin Wall, big-box store, blue-collar work, Bretton Woods, Broken windows theory, business cycle, call centre, clean water, cuban missile crisis, dark matter, David Brooks, delayed gratification, different worldview, double helix, Downton Abbey, Fall of the Berlin Wall, Filter Bubble, Francis Fukuyama: the end of history, George Santayana, Gini coefficient, glass ceiling, global supply chain, global village, helicopter parent, if you build it, they will come, impulse control, income inequality, invention of movable type, Jane Jacobs, Khyber Pass, Louis Pasteur, Marshall McLuhan, McMansion, Nate Silver, obamacare, Occupy movement, Peter Thiel, post-industrial society, Richard Florida, rolodex, Saturday Night Live, Silicon Valley, Skype, social intelligence, Stanford marshmallow experiment, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, the medium is the message, Tyler Cowen: Great Stagnation, urban decay, urban planning, Walter Mischel, War on Poverty, women in the workforce, World Values Survey, zero-sum game

Unfortunately, the evidence to date hasn’t borne that theory out. By several estimates, American innovation has slowed of late, as massive investments in fields like green energy and pharmaceuticals have failed to produce the return that investments in information technology generated just a few decades ago.29 (Some of that analysis, we should note, predates the new development of “fracking.”) George Mason University economist Tyler Cowen recently argued that innovation in the United States has actually stagnated, noting that we’ve picked the low-hanging fruit of technologies produced by previous generations and are burning through the competitive advantages those breakthroughs bestowed on today’s economy.30 Peter Thiel, a cofounder of PayPal and a powerful figure in the world of venture capital, has sounded a similar alarm, arguing that whatever advances Silicon Valley has spurred of late have been cancelled out by America’s failure to make progress on other technological and scientific fronts.31 No fair assessment can blame the stagnation of American innovation entirely on the structure of American community.

Granovetter’s paper predates Burt’s work by decades; nevertheless, they were both focused on the same question. 24Johnson, Where Good Ideas Come From, 61. 25Sean Safford, Why the Garden Club Couldn’t Save Youngstown (Cambridge, Mass.: Harvard University Press, 2009), 15–16. 26Safford, Why the Garden Club Couldn’t Save Youngstown, 22, 31–32, 63–68. 27Safford, Why the Garden Club Couldn’t Save Youngstown, 83, 92–95. 28Locke, Remaking the Italian Economy, 134. 29Michael Mandel, “The Failed Promise of Innovation in the U.S.,” Bloomberg Businessweek, June 3, 2009. 30Tyler Cowen, The Great Stagnation (New York: Dutton, 2011). 31http://news.cnet.com/8301-31921_3-20096067-281/peter-thiel-thinks-tech-innovation-has-stalled/. 32Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin Press, 2011). 33Richard Florida, The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life (New York: Basic Books, 2002). 34Elsa Brenner, “In Westchester County, the Platinum Mile Is Reinvented, Again,” New York Times, January 3, 2012. 35Charles V.


pages: 222 words: 70,132

Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by Jonathan Taplin

1960s counterculture, affirmative action, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, American Legislative Exchange Council, Apple's 1984 Super Bowl advert, back-to-the-land, barriers to entry, basic income, battle of ideas, big data - Walmart - Pop Tarts, bitcoin, Brewster Kahle, Buckminster Fuller, Burning Man, Clayton Christensen, commoditize, creative destruction, crony capitalism, crowdsourcing, data is the new oil, David Brooks, David Graeber, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dynabook, Edward Snowden, Elon Musk, equal pay for equal work, Erik Brynjolfsson, future of journalism, future of work, George Akerlof, George Gilder, Google bus, Hacker Ethic, Howard Rheingold, income inequality, informal economy, information asymmetry, information retrieval, Internet Archive, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, Kevin Kelly, Kickstarter, labor-force participation, life extension, Marc Andreessen, Mark Zuckerberg, Menlo Park, Metcalfe’s law, Mother of all demos, move fast and break things, move fast and break things, natural language processing, Network effects, new economy, Norbert Wiener, offshore financial centre, packet switching, Paul Graham, paypal mafia, Peter Thiel, plutocrats, Plutocrats, pre–internet, Ray Kurzweil, recommendation engine, rent-seeking, revision control, Robert Bork, Robert Gordon, Robert Metcalfe, Ronald Reagan, Ross Ulbricht, Sam Altman, Sand Hill Road, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, smart grid, Snapchat, software is eating the world, Steve Jobs, Stewart Brand, technoutopianism, The Chicago School, The Market for Lemons, The Rise and Fall of American Growth, Tim Cook: Apple, trade route, transfer pricing, Travis Kalanick, trickle-down economics, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, We wanted flying cars, instead we got 140 characters, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator

Even Silicon Valley heroes such as Elon Musk and his Tesla car are merely producing what Christensen calls “performance-improving innovations [that] replace old products with new and better models. They generally create few jobs because they’re substitutive: When customers buy the new product, they usually don’t buy the old product.” While economists of such different political affiliations as Paul Krugman, Larry Summers, and Tyler Cowen all have written extensively about the cause of the joblessness and “secular stagnation” in the US economy that has endured since 2000, they never examine the role that monopoly capitalism might play in this crisis. If the rise of monopoly can be seen as a cause of economic stagnation, why has it endured? Because, as Peter Thiel points out in his book, “whereas a competitive firm must sell at a market price, a monopoly owns its market, so it can set its own prices.

But the story of progress in art is all about edgy material. Imagine Picasso having to persuade an executive at Pernod to support his earliest cubist paintings. Or a Coca-Cola marketer in Chicago listening to Louis Armstrong’s breakthrough “West End Blues” and wondering, “Will it help sell soda?” I think the growth of advertising in our time is symbolic of a deep crisis in capitalism. I have written earlier in this book of the great stagnation—the period since the early 1970s when median wages refused to rise even though productivity was rising dramatically. In the face of such wage stagnation, firms have to spend more money on marketing to get consumers to keep buying. As you wander down the supermarket aisle perusing endless varieties of detergent, all basically containing the same ingredients, the only distinguishing factor is the marketing pitch.


pages: 464 words: 127,283

Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia by Anthony M. Townsend

1960s counterculture, 4chan, A Pattern Language, Airbnb, Amazon Web Services, anti-communist, Apple II, Bay Area Rapid Transit, Burning Man, business process, call centre, carbon footprint, charter city, chief data officer, clean water, cleantech, cloud computing, computer age, congestion charging, connected car, crack epidemic, crowdsourcing, DARPA: Urban Challenge, data acquisition, Deng Xiaoping, digital map, Donald Davies, East Village, Edward Glaeser, game design, garden city movement, Geoffrey West, Santa Fe Institute, George Gilder, ghettoisation, global supply chain, Grace Hopper, Haight Ashbury, Hedy Lamarr / George Antheil, hive mind, Howard Rheingold, interchangeable parts, Internet Archive, Internet of things, Jacquard loom, Jane Jacobs, jitney, John Snow's cholera map, Joi Ito, Khan Academy, Kibera, Kickstarter, knowledge worker, load shedding, M-Pesa, Mark Zuckerberg, megacity, mobile money, mutually assured destruction, new economy, New Urbanism, Norbert Wiener, Occupy movement, off grid, openstreetmap, packet switching, Panopticon Jeremy Bentham, Parag Khanna, patent troll, Pearl River Delta, place-making, planetary scale, popular electronics, RFC: Request For Comment, RFID, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart grid, smart meter, social graph, social software, social web, special economic zone, Steve Jobs, Steve Wozniak, Stuxnet, supply-chain management, technoutopianism, Ted Kaczynski, telepresence, The Death and Life of Great American Cities, too big to fail, trade route, Tyler Cowen: Great Stagnation, undersea cable, Upton Sinclair, uranium enrichment, urban decay, urban planning, urban renewal, Vannevar Bush, working poor, working-age population, X Prize, Y2K, zero day, Zipcar

Its creators faced a similar dilemma over how to design and build it. The origins and the economic importance of the Internet are part of a much larger debate about the nature of technological innovation and economic growth. The industrial revolution reshaped the material basis of society, introducing technologies and products we still use today. But there are widely differing views on just how that happened. Pessimists like economist Tyler Cowen believe that a handful of breakthrough innovations drove America’s economic engine over the last one hundred years. He sees the decline of productivity growth, the pace of improvement in output per unit of input (labor, capital, machinery), in the US economy as a sign that we have finally exhausted the stockpile of the breakthroughs of the late nineteenth and early twentieth century. He writes: “Today . . . apart from the seemingly magical internet, life in broad material terms isn’t so different from what it was in 1953.

The wonders portrayed in The Jetsons, the space-age television cartoon from the 1960s, have not come to pass. . . . Life is better and we have more stuff, but the pace of change has slowed down compared to what people saw two or three generations ago.” Not only does Cowen argue that big breakthroughs are the true source of technological progress, he doesn’t see anything new in the pipeline of the same magnitude. The result, he concludes, is an inevitable “great stagnation.”36 Where Cowen sees scarcity, Google’s chief economist Hal Varian sees abundance. For Varian, the big breakthroughs of the industrial revolution happened only after, and only because of, a new substrate of interoperable technological components that were invented first. In a 2008 interview, he described this process of “combinatorial innovation”: “if you look historically, you’ll find periods in history where there would be the availability of . . . different component parts that innovators could combine or recombine to create new inventions.

., Patrick Geddes in India, 11. 32Quoted in Welter, Biopolis, 18. 33Nicolai Ouroussoff, “Outgrowing Jane Jacobs and Her New York, New York Times, April 30, 2006, http://www,nytimes.com/2006/04/30/weekinreview/30jacobs.html. 34Campanella, “Jane Jacobs and the Death and Life of American Planning.” 35Fareed Zakaria, “Special Address: At the Intersection of Globalization and Urbanization,” SmarterCities Forum, Rio de Janeiro, Brazil, November 9, 2011. 36Tyler Cowen, The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011), Kindle edition, location 93. 37“Hal Varian on How the Web Challenges Managers,” video interview with James Manyika, McKinsey & Co., last modified January 2009, http://www.mckinseyquarterly.com/Hal_Varian_on_how_the_Web_challenges_ managers_2286. 38Joi Ito, “The Internet, innovation and learning,” last modified December 5, 2011, http://joi.ito.com/weblog/2011/12/05/the-internet-in.html. 39Ito, “The Internet, innovation and learning.” 40Michael Hiltzik, “So, who really did invent the Internet?”


pages: 486 words: 150,849

Evil Geniuses: The Unmaking of America: A Recent History by Kurt Andersen

affirmative action, Affordable Care Act / Obamacare, airline deregulation, airport security, always be closing, American ideology, American Legislative Exchange Council, anti-communist, Apple's 1984 Super Bowl advert, artificial general intelligence, autonomous vehicles, basic income, Bernie Sanders, blue-collar work, Bonfire of the Vanities, bonus culture, Burning Man, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, centre right, computer age, coronavirus, corporate governance, corporate raider, COVID-19, Covid-19, creative destruction, Credit Default Swap, cryptocurrency, deindustrialization, Donald Trump, Elon Musk, ending welfare as we know it, Erik Brynjolfsson, feminist movement, financial deregulation, financial innovation, Francis Fukuyama: the end of history, future of work, game design, George Gilder, Gordon Gekko, greed is good, High speed trading, hive mind, income inequality, industrial robot, interchangeable parts, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jeff Bezos, jitney, Joan Didion, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, knowledge worker, low skilled workers, Lyft, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, Menlo Park, Naomi Klein, new economy, Norbert Wiener, Norman Mailer, obamacare, Peter Thiel, Picturephone, plutocrats, Plutocrats, post-industrial society, Powell Memorandum, pre–internet, Ralph Nader, Right to Buy, road to serfdom, Robert Bork, Robert Gordon, Robert Mercer, Ronald Reagan, Saturday Night Live, Seaside, Florida, Second Machine Age, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Stewart Brand, strikebreaker, The Death and Life of Great American Cities, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, union organizing, universal basic income, Unsafe at Any Speed, urban planning, urban renewal, very high income, wage slave, Wall-E, War on Poverty, Whole Earth Catalog, winner-take-all economy, women in the workforce, working poor, young professional, éminence grise

The medical term of art is comorbidity. The outbreak of mass nostalgia in the 1970s that then developed into a general cultural listlessness, in other words, is comorbid with what happened to our political economy. One illness didn’t exactly cause the other illness, but each made the other more serious, and harder to cure. The economics professor (and author and blogger and podcaster) Tyler Cowen has written intelligently about our national stagnation and “the growing number of people in our society who accept, welcome, or even enforce a resistance to things new, different, or challenging.” He also thinks we reached a tipping point on this score in the 1990s. “Americans are in fact working much harder than before to postpone change,” he wrote in his 2017 book The Complacent Class, or to avoid it altogether, and this is true whether we’re talking about corporate competition, changing residences or jobs, or building things.

That’s probably because Cowen is a product and promoter of that turn—incubated as a student at George Mason University in the early 1980s just as the libertarian right turned it into a headquarters. He is now a George Mason professor and director of its Mercatus Center, the think tank created by Charles Koch, with whom he has a mutual admiration society.*1 Cowen correctly points to many symptoms of the disease he calls the Great Stagnation, but he’s evidently too ideologically blindered to specify all its causes and comorbidities or to recommend emergency treatment. His free-market faith obliges him to conclude that the only real problem is the slower rate of economic growth for most of the last half-century. Furthermore, he thinks the long American economic heyday from the late 1800s through the 1970s came to its natural conclusion because we’d picked and eaten all “the low-hanging fruit” that produced easy growth—cheap land, fossil fuels, new technologies, mass education.

Climate change is an absolutely new challenge for which the past provides no models to cope. Will we finally summon the will to stop this willful self-destruction? With our government in the corrupting grip of big business and the rich as it was more than a century ago, America—the land of the new, past master at meeting unprecedented challenges—would prefer not to. *1 Cowen dedicated his short 2011 book The Great Stagnation to Peter Thiel, who he calls “one of the greatest and most important public intellectuals of our entire time. Throughout the course of history, he will be recognized as such.” Thiel is the libertarian billionaire cofounder of PayPal who donated $1.25 million to the 2016 Trump campaign. *2 To his credit, in his 2018 book Stubborn Attachments, Cowen grants that his libertarianism is nondoctrinaire enough to allow that a few problems, such as the climate crisis, do require massive government action


pages: 292 words: 85,151

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It) by Salim Ismail, Yuri van Geest

23andMe, 3D printing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, Ben Horowitz, bioinformatics, bitcoin, Black Swan, blockchain, Burning Man, business intelligence, business process, call centre, chief data officer, Chris Wanstrath, Clayton Christensen, clean water, cloud computing, cognitive bias, collaborative consumption, collaborative economy, commoditize, corporate social responsibility, cross-subsidies, crowdsourcing, cryptocurrency, dark matter, Dean Kamen, dematerialisation, discounted cash flows, disruptive innovation, distributed ledger, Edward Snowden, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, game design, Google Glasses, Google Hangouts, Google X / Alphabet X, gravity well, hiring and firing, Hyperloop, industrial robot, Innovator's Dilemma, intangible asset, Internet of things, Iridium satellite, Isaac Newton, Jeff Bezos, Joi Ito, Kevin Kelly, Kickstarter, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, Lean Startup, life extension, lifelogging, loose coupling, loss aversion, low earth orbit, Lyft, Marc Andreessen, Mark Zuckerberg, market design, means of production, minimum viable product, natural language processing, Netflix Prize, NetJets, Network effects, new economy, Oculus Rift, offshore financial centre, PageRank, pattern recognition, Paul Graham, paypal mafia, peer-to-peer, peer-to-peer model, Peter H. Diamandis: Planetary Resources, Peter Thiel, prediction markets, profit motive, publish or perish, Ray Kurzweil, recommendation engine, RFID, ride hailing / ride sharing, risk tolerance, Ronald Coase, Second Machine Age, self-driving car, sharing economy, Silicon Valley, skunkworks, Skype, smart contracts, Snapchat, social software, software is eating the world, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, subscription business, supply-chain management, TaskRabbit, telepresence, telepresence robot, Tony Hsieh, transaction costs, Travis Kalanick, Tyler Cowen: Great Stagnation, uber lyft, urban planning, WikiLeaks, winner-take-all economy, X Prize, Y Combinator, zero-sum game

Much of this movement has grown out of the realization that the ownership of assets, even if mission-critical, is better handled by experts. So, in that sense, the rise of ExOs is a deepening of the specialization trend that started 10,000 years ago: only focus on those areas in which you are really outperforming. This not only maximizes profits, but in a world with pervasive digital reputational systems, also sets your image at the highest possible level, as author Tyler Cowen says in the title of his book: Average is Over. Airline operators used to build their own engines, an intricate and high-risk operation. Then GE and Rolls Royce, both experts in manufacturing engines, began offering leasing programs. Today, airlines pay for engines by the number of hours flown. In other words, something as expensive and complex as an aircraft engine has now become a rented, pay-as-you-go asset, rather than an expensive internal business unit.

How the Mighty Fall: And Why Some Companies Never Give In. JimCollins. Collins, J., & Hansen, M. T. (2011). Great By Choice: Uncertainty, Chaos, and Luck - -Why Some Thrive Despite Them All. HarperBusiness. Cooper, B., & Vlaskovits, P. (2013). The Lean Entrepreneur: How Visionaries Create Products, Innovate with New Ventures, and Disrupt Markets. Wiley. Cowen, T. (2013). Average Is Over: Powering America Beyond the Age of the Great Stagnation. Dutton Adult. Cusumano, M. A. (2001). Strategic Thinking for the Next Economy. Jossey-Bass. Cusumano, M. A. (2010). Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Uncertain World. Oxford University Press. Davidow, W. H., & Malone, M. S. (1992). The Virtual Corporation: Structuring and Revitalizing the Corporation for the 21st Century. HarperCollins Publishers.


pages: 223 words: 10,010

The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley

"Robert Solow", banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business cycle, business process, call centre, capital controls, collective bargaining, corporate governance, corporate raider, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, Everybody Ought to Be Rich, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, light touch regulation, Long Term Capital Management, low skilled workers, manufacturing employment, market bubble, Martin Wolf, mittelstand, mobile money, Mont Pelerin Society, Myron Scholes, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, Right to Buy, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population

The revised structure of executive rewards that emerged from the mid-1980s—especially in finance—and the chase for shareholder value were not just key drivers of rising inequality. They also led to perverse business incentives. As it became easier to make big money through business strategies that were essentially unproductive, trading, investment and restructuring decisions changed in ways that often weakened the foundations of the economy. According to the American economist, Tyler Cowen, the author of the influential book, The Great Stagnation, the increased concentration at the top mattered because it had been largely generated within finance, encouraging banks to ‘take far too many risks and go way out on a limb, often in a correlated fashion.’ Over time, Cowen argues, the way the finance sector operates ‘corrodes productivity, because what the banks do bears almost no resemblance to a process of getting capital into the hands of those who can make most efficient use of it.


pages: 524 words: 143,993

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

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

But the other component of economic growth – rising productivity – is even more important than demography in determining the rate of growth over the long run. It is also the principal determinant of incomes per head. Nobody knows what will happen to productivity over the coming decades, but some well-informed people have put forward reasonable arguments that it must slow. Among these are Robert Gordon of Northwestern University and Tyler Cowen of George Mason University.34 An important reason why the pace of innovation might be slowing is that many opportunities have already been exploited: the population of the high-income countries is already highly educated and highly urbanized; the economy has already exploited the most readily available natural resources; people have already enjoyed the fruit of many life- and economy-transforming innovations, such as running water and sanitation, inoculation, electricity, chemicals, pharmaceuticals, the internal combustion engine, civil aviation, telephony, the computer and the internet.

See Robert Arnott and Denis Chaves, ‘A New “New Normal” in Demography and Economic Growth’, 27 August 2013, http://www.indexuniverse.com/docs/magazine/2/2013_229.pdf. 33. See International Monetary Fund, Fiscal Adjustment in an Uncertain World, Fiscal Monitor, April 2013, Fig. 2, p. 6. 34. See Robert Gordon, ‘Is U. S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds’, National Bureau of Economic Research Working Paper No. 18315, August 2012, www.nber.org; TylerCowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (London: Dutton/Penguin, 2011). 35. Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Technologies (New York and London: W. W. Norton, 2014), and Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Employment and the Economy (Lexington, MA: Digital Frontier Press, 2011). 36.

Committee on the Global Financial System. ‘Macroprudential Instruments and Frameworks: A Stocktaking of Issues and Experiences’, CGFS Papers No. 38, May 2010. http://www.bis.org/publ/cgfs38.pdf. Congressional Budget Office. ‘Trends in the Distribution of Household Incomes between 1979 and 2007’, October 2011. http://www.cbo.gov/sites/default/files/cbofiles/attachments/10-25-HouseholdIncome.pdf. Cowen, Tyler. The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011). Crafts, Nicholas and Peter Fearndon. The Great Depression of the 1930s: Lessons for Today (Oxford: Oxford University Press, 2013). Croft, Jane, Kate Burgess and George Parker. ‘B&B Set to be Taken into Public Ownership’, Financial Times, 29 September 2008. Darling, Alistair.


pages: 459 words: 103,153

Adapt: Why Success Always Starts With Failure by Tim Harford

Andrew Wiles, banking crisis, Basel III, Berlin Wall, Bernie Madoff, Black Swan, car-free, carbon footprint, Cass Sunstein, charter city, Clayton Christensen, clean water, cloud computing, cognitive dissonance, complexity theory, corporate governance, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dava Sobel, Deep Water Horizon, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edmond Halley, en.wikipedia.org, Erik Brynjolfsson, experimental subject, Fall of the Berlin Wall, Fermat's Last Theorem, Firefox, food miles, Gerolamo Cardano, global supply chain, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, Jarndyce and Jarndyce, John Harrison: Longitude, knowledge worker, loose coupling, Martin Wolf, mass immigration, Menlo Park, Mikhail Gorbachev, mutually assured destruction, Netflix Prize, New Urbanism, Nick Leeson, PageRank, Piper Alpha, profit motive, Richard Florida, Richard Thaler, rolodex, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, South China Sea, special economic zone, spectrum auction, Steve Jobs, supply-chain management, the market place, The Wisdom of Crowds, too big to fail, trade route, Tyler Cowen: Great Stagnation, web application, X Prize, zero-sum game

Officer, ‘Purchasing power of British pounds from 1264 to present’, MeasuringWorth, 2009, http://www.measuring-worth.com/ppoweruk/ 83 ‘Positive black swans’: Nassim Nicholas Taleb, The Black Swan (New York: Random House, 2007). 85 We should now build: McKinstry, Spitfire, p. 12. 86 He soon discovered some remarkable examples: Richard Dawkins, The Greatest Show on Earth (London: Bantam, 2009), pp. 254–73. 87 Bright ideas emerge from the swirling mix of other ideas: See also Richard Florida, ‘The world is spiky’, The Atlantic Monthly, October 2005, my The Logic of Life (2008), Matt Ridley’s The Rational Optimist (2010) and Steven Johnson’s Where Good Ideas Come From (2010). 87 A playboy politician most famous as a campaigner against lesbianism: McKinstry, Spitfire, pp.17–18. 88 ‘Bloody good cup of tea, Mitchell’: McKinstry, Spitfire, p. 20. 88 ‘It’s either him or me!’: McKinstry, Spitfire, p. 31. 88 ‘Freak machines’: McKinstry, Spitfire, p. 29. 89 England’s pride was intact: McKinstry, Spitfire, p. 32. 89 ‘The Battle of Britain was won by Chamberlain’: McKinstry, Spitfire, p.194. 89 One might think that there is no problem enouraging innovation: as this book was going to press, Tyler Cowen’s book The Great Stagnation (Dutton, 2011) appeared. Owen’s book offers further evidence of an innovation slowdown in addition to that presented here. 90 Even the design of niche cars: Chris Anderson, ‘In the next industrial revolution, atoms are the new bits’, Wired, February 2010, http://www.wired.com/magazine/2010/01/ff_newrevolution/ 90 ‘Failure for free’: Clay Shirky, Here Comes Everybody (London: Penguin, 2008). 90 US health secretary Margaret Heckler announced: http://www.pbs.org/newshour/bb/health/jan-june01/aids_6-27.html 92 The whole process has become harder: Benjamin F.


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Seventeen Contradictions and the End of Capitalism by David Harvey

accounting loophole / creative accounting, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business climate, California gold rush, call centre, central bank independence, clean water, cloud computing, collapse of Lehman Brothers, colonial rule, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, deskilling, drone strike, end world poverty, falling living standards, fiat currency, first square of the chessboard, first square of the chessboard / second half of the chessboard, Food sovereignty, Frank Gehry, future of work, global reserve currency, Guggenheim Bilbao, Gunnar Myrdal, income inequality, informal economy, invention of the steam engine, invisible hand, Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Just-in-time delivery, knowledge worker, low skilled workers, Mahatma Gandhi, market clearing, Martin Wolf, means of production, microcredit, new economy, New Urbanism, Occupy movement, peak oil, phenotype, plutocrats, Plutocrats, Ponzi scheme, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, short selling, Silicon Valley, special economic zone, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, Tyler Cowen: Great Stagnation, wages for housework, Wall-E, women in the workforce, working poor, working-age population

The general public reaction was that Gordon probably had a point but that he was too pessimistic on the future impact of innovations. Martin Wolf, an influential economist with the Financial Times, however, accepted much of what Gordon had to say and concluded that economic elites in the high-income world would welcome the future that Gordon described but everyone else would like it ‘vastly less. Get used to this. It will not change.’ Other contributions would be Tyler Cowen, The Great Stagnation: How America Ate all the Low-Hanging Fruit of Modern History, Got Sick and Will (Eventually) Feel Better, E-special from Dutton, 2011. All these arguments are, however, US-focused. 3. The Thelluson case is described in Hudson, The Bubble and Beyond. 4. Cited in Karl Marx, Capital, Volume 3, Harmondsworth, Penguin, p. 519. 5. Angus Maddison, Phases of Capitalist Development, Oxford, Oxford University Press, 1982; Contours of the World Economy, 1–2030 AD, Oxford, Oxford University Press, 2007. 6.


pages: 497 words: 123,778

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

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

Schott, “The Surprisingly Swift Decline of US Manufacturing Employment,” American Economic Review 106, no. 7 (2016): 1632–1662; Thomas Kemeny, David Rigby, and Abigail Cooke, “Cheap Imports and the Loss of US Manufacturing Jobs,” World Economy 38, no. 10 (2015): 1555–1573; and William J. Carrington and Bruce Fallick, “Why Do Earnings Fall with Job Displacement?” Federal Reserve Bank of Cleveland Working Paper no. 14–05, June 19, 2014, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2456813. 12. See Lawrence H. Summer, “U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound,” Business Economics 49 (2014): 65–73; and Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011). For a nuanced discussion of the prospects of a convergence between countries like China, on the one hand, and North America as well as Western Europe, on the other, read Dani Rodrik, “The Future of Economic Convergence,” Jackson Hole Symposium of the Federal Reserve Bank of Kansas City, 2011, http://drodrik.scholar.harvard.edu/files/dani-rodrik/files/future-economic-convergence.pdf?


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Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance

addicted to oil, Burning Man, cleantech, digital map, El Camino Real, Elon Musk, global supply chain, Hyperloop, industrial robot, Jeff Bezos, Kickstarter, low earth orbit, Mark Zuckerberg, Maui Hawaii, Menlo Park, Mercator projection, money market fund, multiplanetary species, optical character recognition, orbital mechanics / astrodynamics, paypal mafia, performance metric, Peter Thiel, pre–internet, risk tolerance, Ronald Reagan, Sand Hill Road, self-driving car, side project, Silicon Valley, Silicon Valley startup, Steve Jobs, technoutopianism, Tesla Model S, transaction costs, Tyler Cowen: Great Stagnation, We wanted flying cars, instead we got 140 characters, X Prize

As for whether Musk is leading the technology industry to new heights like Gates and Jobs, the professional pundits remain mixed. One camp holds that SolarCity, Tesla, and SpaceX offer little in the way of real hope for an industry that could use some blockbuster innovations. For the other camp, Musk is the real deal and the brightest shining star of what they see as a coming revolution in technology. The economist Tyler Cowen—who has earned some measure of fame in recent years for his insightful writings about the state of the technology industry and his ideas on where it may go—falls into that first camp. In The Great Stagnation, Cowen bemoaned the lack of big technological advances and argued that the American economy has slowed and wages have been depressed as a result. “In a figurative sense, the American economy has enjoyed lots of low-hanging fruit since at least the seventeenth century, whether it be free land, lots of immigrant labor, or powerful new technologies,” he wrote.


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Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy by Francis Fukuyama

Affordable Care Act / Obamacare, Andrei Shleifer, Asian financial crisis, Atahualpa, banking crisis, barriers to entry, Berlin Wall, blood diamonds, British Empire, centre right, clean water, collapse of Lehman Brothers, colonial rule, conceptual framework, crony capitalism, deindustrialization, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edward Snowden, Erik Brynjolfsson, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gini coefficient, Hernando de Soto, Home mortgage interest deduction, income inequality, information asymmetry, invention of the printing press, iterative process, Kickstarter, knowledge worker, labour management system, land reform, land tenure, life extension, low skilled workers, manufacturing employment, means of production, Menlo Park, Mohammed Bouazizi, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, open economy, out of africa, Peace of Westphalia, Port of Oakland, post-industrial society, post-materialism, price discrimination, quantitative easing, RAND corporation, rent-seeking, road to serfdom, Ronald Reagan, Scientific racism, Scramble for Africa, Second Machine Age, Silicon Valley, special economic zone, stem cell, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, too big to fail, trade route, transaction costs, Tyler Cowen: Great Stagnation, Vilfredo Pareto, women in the workforce, World Values Survey, zero-sum game

The developed world has been on a high-productivity trajectory for only a little over two hundred of the fifty thousand or so years that the human species has existed in its current form. We assume today that revolutionary new technologies equivalent to steam power and the internal combustion engine will continue to appear into the future. But the laws of physics do not guarantee such a result. It is entirely possible that the first 150 years of the Industrial Revolution captured what Tyler Cowen calls the “low-hanging fruit” of productivity advance, and that while future innovations will continue, the rate at which they improve human welfare will fall. Indeed, a number of laws of physics suggest that there might be hard limits on the carrying capacity of the planet to sustain growing populations at high standards of living. Moreover, even if technological innovation continues to occur at a high rate, there is no guarantee that it will provide large numbers of jobs for middle-class people in the manner of the early-twentieth-century assembly line.

., and John R. Meyer. 1979. “The Economics of Slavery in the Ante Bellum South: Comment.” American Economic Review 66(2):95–130. Cornford, James. 1963. “The Transformation of Conservatism in the Late Nineteenth Century.” Victorian Studies 7:35–66. Cortés Condé, Roberto. 2009. The Political Economy of Argentina in the Twentieth Century. New York: Cambridge University Press. Cowen, Tyler. 2011. The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. New York: Dutton. Cox, Gary. 2013. “The Power of the Purse and the Reversionary Budget.” Unpublished paper. Cox, Gary, Douglass North, and Barry Weingast. 2013. “The Violence Trap: A Political-Economic Approach to the Problem of Development.” Unpublished paper. Craig, Gordon A. 1964.


pages: 481 words: 120,693

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

activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Boris Johnson, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, disruptive innovation, 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, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, 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, starchitect, stem cell, Steve Jobs, the new new thing, 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, zero-sum game

Good to Great: Why Some Companies Make the Leap . . . and Others Don’t. HarperBusiness, 2001. Congressional Budget Office. “Trends in the Distribution of Household Income Between 1979 and 2007.” October 2011. Cost, Jay. Spoiled Rotten: How the Politics of Patronage Corrupted the Once Noble Democratic Party and Now Threatens the American Republic. Broadside Books, 2012. Cowen, Tyler. The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. Dutton, 2011. Crowley, Roger. City of Fortune: How Venice Ruled the Seas. Random House, 2012. Diamond, Peter, and Emmanuel Saez. “The Case for a Progressive Tax: From Basic Research to Policy Recommendations.” Journal of Economic Perspectives 25:4 (Fall 2011). pp. 165–90. Djilas, Milovan.


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

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

The Son Also Rises: Surnames and the History of Social Mobility. Princeton, NJ: Princeton University Press, 2014. Clinton, Hillary Rodham. Hard Choices. New York: Simon & Schuster, 2014. Coates, John. The Hour between Dog and Wolf: Risk-taking, Gut Feelings and the Biology of Boom and Bust. New York: Penguin Press, 2012. Cowen, Tyler. Average Is Over: Powering America Beyond the Age of the Great Stagnation. New York: DUTTON / The Penguin Group, 2013. Das, Satyajit. Extreme Money: Masters of the Universe and the Cult of Risk. Upper Saddle River, NJ: FT Press, 2011. Davis, Gerald F. Managed by the Markets: How Finance Reshaped America. Oxford: Oxford University Press, 2009. Dobbs, Richard, James Manyika, and Jonathan Woetzel. No Ordinary Disruption: The Four Global Forces Breaking All the Trends.


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The End of Alchemy: Money, Banking and the Future of the Global Economy by Mervyn King

"Robert Solow", Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Hyman Minsky, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, lateral thinking, liquidity trap, Long Term Capital Management, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, The Rise and Fall of American Growth, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

Connolly, Bernard (1997), ‘Kohl’s Compromise Won’t Satisfy French Demands’, Wall Street Journal, 5 June. Cooper, Russell and Andrew John (1988), ‘Coordinating Coordination Failures in Keynesian Models’, Quarterly Journal of Economics, Vol. 103, No. 3, pp. 441–63. Cowen, David, Richard Sylla and Robert Wright (2006), ‘Alexander Hamilton, Central Banker: Crisis Management During the U.S. Financial Panic of 1972’, Business History Review, Vol. 83, No. 1, pp. 61–86. Cowen, Tyler (2011), ‘The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better’, Penguin eSpecial. Crowe, Christopher and Ellen Meade (2007), ‘The Evolution of Central Bank Governance around the World’, Journal of Economic Perspectives, Vol. 21, No. 4, pp. 69–90. Davidsson, Johan Bo (2011), ‘An Analytical Overview of Labour Market Reforms Across the EU: Making Sense of the Variation’, European University Institute, mimeo.


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

Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, 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, creative destruction, 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, John Markoff, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, lateral thinking, liberal capitalism, Malacca Straits, Mark Zuckerberg, market bubble, mass immigration, 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, Paul Samuelson, 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 Future of Employment, 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

“China’s Stock Plunge Is Scarier Than Greece.” Wall Street Journal, July 7, 2015. Studwell, Joe. How Asia Works: Success and Failure in the World’s Most Dynamic Region. New York: Grove, 2013. Surowiecki, James. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations. New York: Doubleday, 2004. Tilton, Andrew. “Still Wading Through ‘Great Stagnations.’ ” Goldman Sachs Global Investment Research, September 17, 2014. ——. “Growth Recovery and Trade Stagnation Evidence from New Data.” Goldman Sachs Global Investment Research, June 5, 2015. Vogel, Ezra. Japan as Number One: Lessons for America. New York: Harper & Row, 1979. “What Is the Trade Slowdown Telling Us?” Gavekal Research, September 30, 2015. Wu, Harry. “China’s Growth and Productivity Performance Debate Revisited—Accounting for China’s Sources of Growth with a New Data Set.”


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

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

The confidence that some economists have in the existence of the aforementioned two “free lunches” in today’s economies has made it possible to call for large increases in public spending both in the United States and in European countries, in the belief that these increases can be achieved at almost zero costs, while producing great benefits by injecting needed demand in economies facing “great stagnation.” In the early decades after World War II, major goals of economic theory and of the work of economists were, first, to look for and to identify areas in which private markets had failed, or could fail; and, second, to study ways in which governments could intervene and correct the market failures, through public spending, tax expenditures, or other ways. The important goals, besides the stabilization of national income at full employment, were the elimination or reduction of economic risks for citizens; some 50 Termites of the State redistribution of income, in order to achieve a more equitable income distribution; and the maintenance of growth and price stability.