minimum wage unemployment

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The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics by Rod Hill, Anthony Myatt

American ideology, Andrei Shleifer, Asian financial crisis, bank run, barriers to entry, Bernie Madoff, business cycle, cognitive dissonance, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, different worldview, endogenous growth, equal pay for equal work, Eugene Fama: efficient market hypothesis, experimental economics, failed state, financial innovation, full employment, gender pay gap, Gini coefficient, Gunnar Myrdal, happiness index / gross national happiness, Home mortgage interest deduction, Howard Zinn, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, liberal capitalism, low skilled workers, market bubble, market clearing, market fundamentalism, Martin Wolf, medical malpractice, minimum wage unemployment, moral hazard, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, positional goods, prediction markets, price discrimination, principal–agent problem, profit maximization, profit motive, publication bias, purchasing power parity, race to the bottom, Ralph Nader, random walk, rent control, rent-seeking, Richard Thaler, Ronald Reagan, shareholder value, The Myth of the Rational Market, the payments system, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, union organizing, working-age population, World Values Survey, Yogi Berra

There have been three surveys published, the results of which are contained in Table 2.3. 32 Generally agreed Agreed with provisos Disagreed 1979* 1992† 2003‡ 68 22 10 56.5 22.4 20.5 45.6 27.9 26.5 Note: * Kearl et al. 1979; † Alston et al. 1992; ‡ Fuller and Geide-Stevenson 2003 From Table 2.3 we see that to get 79 per cent agreeing with the minimum wage proposition on the 1992 survey, one must add the ‘generally agree’ category to the ‘agree with provisos’ category. This is a bit of a liberty, isn’t it? What if the proviso is related to the size of the minimum wage increase? For example, a doubling of the minimum wage would increase youth unemployment, but a 20 per cent increase would not. If that were the proviso then the economists who ‘agreed with provisos’ would hold ‘heretical’ beliefs. They are not singing from the same hymn book as the textbooks because (as we will see in the next chapter) the textbook prediction is that any increase in minimum wages would increase unemployment. Since we really don’t know what the provisos are, we simply shouldn’t group the two categories. Comparing the results of the three surveys, we see a clear trend: a decline in the percentage of those who generally agreed and a rise in the percentage of those who disagreed.

David Levine, editor of the Berkeley journal Industrial Relations, attributed this phenomenon to ‘author biases’, which he diplomatically defined as ‘conscious or unconscious biases in searching for a robust equation’ (2001: 161). What does searching for a ‘robust’ equation mean? The point is that testing 33 2  |  Introducing economic models table 2.3 Percent in agreement with the proposition: ‘minimum wages increase unemployment among young and unskilled workers’ hypotheses is not an easy matter. For the minimum wage proposition, other things besides minimum wages affect the unemployment of young and unskilled workers, and these other influences need to be ‘controlled’ for, taken into account. For example, we need to control for the number of school leavers entering the labour market searching for jobs, and for the overall state of the economy, whether we are in a recession or boom. And so on, and so on.

. . . . . . . . . . . . . . 196 10 Trade and globalization without the rose-tinted glasses . . . . 219 11 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 243 Postscript: a case study on the global financial meltdown . . . 256 Notes | 264 Bibliography | 274 Glossary | 291 Index | 297 Tables and figures Tables 2.1 Labour’s productivity in England and Canada . . . . . . . . . . . . . . 28 2.2 Changes in world output . . . . . . . . . . . . . . . . . . . . . . . . 30 2.3 Percent in agreement with the proposition: ‘minimum wages increase ­unemployment among young and unskilled workers’ . . . . . . . . . . 33 3.1 Types of market structure . . . . . . . . . . . . . . . . . . . . . . . . 54 3.2 Tax incidence applications used in ten major North American textbooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4.1 Mary’s benefit from eating pizzas . . . . . . . . . . . . . . . . . . . . 75 5.1 Inputs and output in the short run . . . . . . . . . . . . . . . . . . . 94 5.2 Costs in the short run . . . . . . . . . . . . . . . . . . . . . . . . . . 95 5.3 Downward-sloping demand and marginal revenue . . . . . . . . . . . 100 6.1 A pay-off matrix illustrating the prisoner’s dilemma . . . . . . . . . . . 129 6.2 Repeated plays when Esso plays ‘tit-for-tat’ . . . . . . . . . . . . . . . 130 7.1 Classification of types of goods . . . . . . . . . . . . . . . . . . . . . 153 7.2 Percentage changes in age-standardized cancer incidence rates . . . . . 163 8.1 Marginal cost of labour for a monopsonist . . . . . . . . . . . . . . . 175 9.1 Taxation as a percentage of GDP, OECD countries, 2005 . . . . . . . . . 197 9.2 Measures of income inequality . . . . . . . . . . . . . . . . . . . . . 199 9.3 Distribution of household net worth . . . . . . . . . . . . . . . . . . 200 9.4 Percentage of children in households with less than half of median household income, circa 2000 . . . . . . . . . . . . . . . . . . . . . 202 10.1 International trade, 2007 . . . . . . . . . . . . . . . . . . . . . . . . 220 10.2 Estimates of the stock of foreign direct investment, by sector, 2006 . . . 239 11.1 Conventional economics and the blank cells of Akerlof and Shiller . . . 244 11.2 Conventional textbook economics and the blank cells of Robert Prasch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 1.1 2.1 2.2 2.3 3.1 3.2 3.3 3.4 3.5 Figures Marginal thinking . . . . . . . . . . . . . . . . . . . . . . . . . . . .


pages: 850 words: 254,117

Basic Economics by Thomas Sowell

affirmative action, air freight, airline deregulation, American Legislative Exchange Council, bank run, barriers to entry, big-box store, British Empire, business cycle, clean water, collective bargaining, colonial rule, corporate governance, correlation does not imply causation, cross-subsidies, David Brooks, David Ricardo: comparative advantage, declining real wages, Dissolution of the Soviet Union, diversified portfolio, European colonialism, fixed income, Fractional reserve banking, full employment, global village, Gunnar Myrdal, Hernando de Soto, hiring and firing, housing crisis, income inequality, income per capita, index fund, informal economy, inventory management, invisible hand, John Maynard Keynes: technological unemployment, joint-stock company, Just-in-time delivery, Kenneth Arrow, knowledge economy, labor-force participation, land reform, late fees, low cost airline, low cost carrier, low skilled workers, means of production, Mikhail Gorbachev, minimum wage unemployment, moral hazard, offshore financial centre, oil shale / tar sands, payday loans, price discrimination, price stability, profit motive, quantitative easing, Ralph Nader, rent control, road to serfdom, Ronald Reagan, Silicon Valley, surplus humans, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transcontinental railway, Vanguard fund, War on Poverty

In 2003, The Economist magazine reported: “Switzerland’s unemployment neared a five-year high of 3.9% in February.”{339} Swiss labor unions have been trying to get a minimum wage law passed, arguing that this would prevent “exploitation” of workers. However, the Swiss cabinet still rejected the proposed minimum wage law in January 2013.{340} Its unemployment rate at that time was 3.1 percent.{341} Singapore likewise has no minimum wage law and its unemployment rate has likewise been 2.1 percent.{342} Back in 1991, when Hong Kong was still a British colony, it too had no minimum wage law, and its unemployment rate was under 2 percent.{343} In the United States, during the Coolidge administration—the last administration before there was any federal minimum wage law—the annual unemployment rate got as low as 1.8 percent.{344} The explicit minimum wage rate understates the labor costs imposed by European governments, which also mandate various employer contributions to pension plans and health benefits, among other things.

However, the Swiss cabinet still rejected the proposed minimum wage law in January 2013.{340} Its unemployment rate at that time was 3.1 percent.{341} Singapore likewise has no minimum wage law and its unemployment rate has likewise been 2.1 percent.{342} Back in 1991, when Hong Kong was still a British colony, it too had no minimum wage law, and its unemployment rate was under 2 percent.{343} In the United States, during the Coolidge administration—the last administration before there was any federal minimum wage law—the annual unemployment rate got as low as 1.8 percent.{344} The explicit minimum wage rate understates the labor costs imposed by European governments, which also mandate various employer contributions to pension plans and health benefits, among other things. Higher costs in the form of mandated benefits have the same economic effect as higher costs in the form of minimum wage laws. Europe’s unemployment rates shot up when such government-mandated benefits, to be paid for by employers, grew sharply during the 1980s and 1990s. In Germany, such benefits accounted for half of the average labor cost per hour. By comparison, such benefits accounted for less than one-fourth the average labor costs per hour in Japan and the United States.{345} Average hourly compensation of manufacturing employees in the European Union countries in general is higher than in the United States or Japan.{346} So is unemployment. Comparisons of Canada with the United States show similar patterns.

Over a five-year period, Canadian provinces had minimum wage rates that were a higher percentage of output per capita than in American states, and unemployment rates were correspondingly higher in Canada, as was the average duration of unemployment, while the Canadian rate of job creation lagged behind that in the United States. Over this five-year period, three Canadian provinces had unemployment rates in excess of 10 percent, with a high of 16.9 percent in Newfoundland, but none of the 50 American states averaged unemployment rates in double digits over that same five-year period.{347} A belated recognition of the connection between minimum wage laws and unemployment by government officials has caused some countries to allow their real minimum wage levels to be eroded by inflation, avoiding the political risks of trying to repeal these laws explicitly, when so many voters think of these laws as being beneficial to workers. Such laws are in fact beneficial to those workers who continue to be employed—those who are on the inside looking out, but at the expense of the unemployed who are on the outside looking in.


pages: 72 words: 21,361

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

As technology continues to advance in the second half of the chessboard, taking on jobs and tasks that used to belong only to human workers, one can imagine a time in the future when more and more jobs are more cheaply done by machines than humans. And indeed, the wages of unskilled workers have trended downward for over 30 years, at least in the United States. We also now understand that technological unemployment can occur even when wages are still well above subsistence if there are downward rigidities that prevent them from falling as quickly as advances in technology reduce the costs of automation. Minimum wage laws, unemployment insurance, health benefits, prevailing wage laws, and long-term contracts—not to mention custom and psychology—make it difficult to rapidly reduce wages.3 Furthermore, employers will often find wage cuts damaging to morale. As the efficiency wage literature notes, such cuts can be demotivating to employees and cause companies to lose their best people. But complete wage flexibility would be no panacea, either.


pages: 294 words: 77,356

Automating Inequality by Virginia Eubanks

autonomous vehicles, basic income, business process, call centre, cognitive dissonance, collective bargaining, correlation does not imply causation, deindustrialization, disruptive innovation, Donald Trump, Elon Musk, ending welfare as we know it, experimental subject, housing crisis, IBM and the Holocaust, income inequality, job automation, mandatory minimum, Mark Zuckerberg, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, New Urbanism, payday loans, performance metric, Ronald Reagan, self-driving car, statistical model, strikebreaker, underbanked, universal basic income, urban renewal, War on Poverty, working poor, Works Progress Administration, young professional, zero-sum game

The Wagner Act granted workers the right to organize, but allowed segregated trade unions. Most importantly, in response to threats that southern states would not support the Social Security Act, both agricultural and domestic workers were explicitly excluded from its employment protections. The “southern compromise” left the great majority of African American workers—and a not-insignificant number of poor white tenant farmers, sharecroppers, and domestics—with no minimum wage, unemployment protection, old-age insurance, or right to collective bargaining. New Deal programs also enshrined the male breadwinner as the primary vehicle for economic support of women and families. Federal protections were tied to wages, union membership, unemployment insurance, and pensions. But by incentivizing long-term wage-earning and full-time, year-round work, the protections privileged men’s employment patterns over women’s.


pages: 348 words: 99,383

The Financial Crisis and the Free Market Cure: Why Pure Capitalism Is the World Economy's Only Hope by John A. Allison

Affordable Care Act / Obamacare, American ideology, bank run, banking crisis, Bernie Madoff, business cycle, clean water, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, fiat currency, financial innovation, Fractional reserve banking, full employment, high net worth, housing crisis, invisible hand, life extension, low skilled workers, market bubble, market clearing, minimum wage unemployment, money market fund, moral hazard, negative equity, obamacare, Paul Samuelson, price mechanism, price stability, profit maximization, quantitative easing, race to the bottom, reserve currency, risk/return, Robert Shiller, Robert Shiller, The Bell Curve by Richard Herrnstein and Charles Murray, too big to fail, transaction costs, yield curve, zero-sum game

Because of unemployment insurance, healthcare, and multiple regulatory costs, the $7.25 minimum wage turns into a cost of more than $9 per hour for the small business owner. Unfortunately, many entry-level and unskilled workers cannot create $9 per hour in value, so they are not employable. Unbelievably, there are economists who argue that the minimum wage does not create unemployment. We must wonder about their motivation. The law of supply and demand is a long-proven law; in other words, it is not negotiable. Also, if the minimum wage does not create unemployment, why not set it at $100 per hour, or maybe $200 per hour? The minimum-wage laws are the primary cause of unnecessary unemployment. The typical victims of the minimum-wage laws are the individuals that the laws are supposed to help by guaranteeing that these workers get a “living wage.” Instead, these potential employees get no wage. Remember the discussion of the construction workers who must make the transition to other employment.

From immediately before the financial crisis until today, the minimum wage has been raised from $5.15 per hour to $7.25 per hour, or 41 percent. The prices for practically all other goods and services have either fallen or risen only a little. So in the face of a severe economic correction, the government has raised the price of labor far above the market-clearing price. The minimum-wage laws are the primary cause of the high unemployment levels in the United States today. In a free market, labor rates (wages) for many jobs would have fallen just as prices for other goods and services have fallen. Many jobs that have left the United States for China would have stayed in the United States. Instead of laying off employees, many businesses would have cut wages and kept their employees. Unemployment would be much lower than it is today.

This combination would eliminate all but the natural market unemployment process where individuals are seeking new jobs and would quickly reduce unemployment from today’s 9.1 percent to 4 percent or less. (A number of economists are estimating that the effective unemployment rate may be as high as 16 to 18 percent, as many individuals have simply dropped out of the workforce and are not included in government statistics.) By the way, the Federal Reserve understands that the excessive minimum-wage rates are a primary cause of unemployment. Bernanke’s drive to create inflation is designed to lower real minimum-wage rates by decreasing the value of the dollar while the minimum wage is not raised. For example, 3 percent inflation compounded over five years will reduce the real minimum-wage rate by almost 16 percent. This will encourage a higher level of employment. Unfortunately, there will be significant long-term damage to the economy because of the resource misallocation that inflation always creates.


pages: 226 words: 59,080

Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik

airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, business cycle, butterfly effect, capital controls, Carmen Reinhart, central bank independence, collective bargaining, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price stability, prisoner's dilemma, profit maximization, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

The United States should eliminate agricultural subsidies. (85%) 7. A large federal budget deficit has an adverse effect on the economy. (83%) 8. A minimum wage increases unemployment among young and unskilled workers. (79%) Unless you skipped the previous chapters, the degree of consensus on these propositions should surprise you. For at least four of the eight, we have already seen models that contradict them. Rent controls (ceilings on what landlords can charge) do not necessarily restrict the supply of housing if landlords behave monopolistically, trade restrictions do not necessarily reduce efficiency, fiscal stimulus does not necessarily work, and minimum wages do not necessarily raise unemployment. In all of these cases, there are models with imperfect competition, imperfect markets, or imperfect information where the reverse outcome prevails.


pages: 401 words: 109,892

The Great Reversal: How America Gave Up on Free Markets by Thomas Philippon

airline deregulation, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, barriers to entry, bitcoin, blockchain, business cycle, business process, buy and hold, Carmen Reinhart, carried interest, central bank independence, commoditize, crack epidemic, cross-subsidies, disruptive innovation, Donald Trump, Erik Brynjolfsson, eurozone crisis, financial deregulation, financial innovation, financial intermediation, gig economy, income inequality, income per capita, index fund, intangible asset, inventory management, Jean Tirole, Jeff Bezos, Kenneth Rogoff, labor-force participation, law of one price, liquidity trap, low cost airline, manufacturing employment, Mark Zuckerberg, market bubble, minimum wage unemployment, money market fund, moral hazard, natural language processing, Network effects, new economy, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, price discrimination, profit maximization, purchasing power parity, QWERTY keyboard, rent-seeking, ride hailing / ride sharing, risk-adjusted returns, Robert Bork, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, Silicon Valley, Snapchat, spinning jenny, statistical model, Steve Jobs, supply-chain management, Telecommunications Act of 1996, The Chicago School, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, Travis Kalanick, Vilfredo Pareto, zero-sum game

In fact, in almost all developed economies, we observe a decrease in job turnover, which is driven by a steep decline in voluntary separations. Worker flows have declined since the 1990s.a In other words, people are less likely to quit their jobs now than in the past. When I first saw these numbers, I was reminded of a discussion I had with my own grandfather about being a worker in France in the 1950s and 1960s. Employment protections—in the form of minimum wages, unemployment insurance, severance pay, long-term contracts, and the ability to sue one’s employer for wrongful termination—were much lower than today. Overall, it certainly looked like firms held more sway over their workers then. I asked him if he felt the pressure as a worker, and he looked at me as if he was surprised by the question. “I guess not,” he said: “if the boss or the firm did not treat you well, you simply did not show up the next morning and went to work across the street.”


pages: 877 words: 182,093

Wealth, Poverty and Politics by Thomas Sowell

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

Another complication is that people working for minimum wages are a small fraction of the people working, so that what happens to the employment of minimum wage workers can be lost in statistics about the total employment in an industry, due to all sorts of other fluctuations in the employment of a larger number of other workers. But if, instead of surveying surviving firms after a minimum wage increase, data are collected on unemployment rates among particular groups of inexperienced and low-skilled workers, such as black teenagers, a more accurate picture of the effects of minimum wages on unemployment can be obtained. d About ten percent of the black population in America had been free before the Civil War, and these “free persons of color” had a head start that made their descendants so much more experienced and more educated that they remained the elite of the black population on into the middle of the twentieth century.

Ten years after passage of the federal minimum wage law in the United States— the Fair Labor Standards Act of 1938— the wartime inflation during the intervening decade had so raised prices and wages that the minimum wage specified in that law was below what inexperienced and unskilled workers were already being paid, so that by 1948 it was in most places the same as if there were no minimum wage law. This allows us to see what unemployment was like for inexperienced youths at a time of a virtual absence of a minimum wage law, and then later in its presence, as the minimum wage rate was successively raised over the years to catch up, and then keep up, with inflation. The unemployment rate among black 16- and 17-year-old males in 1948 was just under 10 percent. The last year in which it was under 10 percent was 1953.

From 1971 through 1994, the unemployment rate among black 16- and 17-year-old males never fell below 30 percent, and exceeded 40 percent in nine of those years, while 50 percent was exceeded twice. From 1995 on, the 16-17-year-old male category was consolidated into a new 16-19-year-old male category. Unemployment for this new category ranged from a low of 23.8 percent to a high of 52.2 percent from 1995 through 2009.7 Despite complications in trying to determine empirically the effects of minimum wage laws on the unemployment rates of black teenage males,c when their unemployment rates under minimum wage rates that keep going up, along with inflation, have for more than half a century been some multiple of what their unemployment rate was when inflation rendered the official minimum wage rate ineffective, the results are too blatant to be ignored or evaded. Empirical evidence has likewise seldom been mentioned by those who make a common claim, advanced by Kristof among many others, that “Slavery and post-slavery oppression left a legacy of broken families” among blacks.8 But the plain fact is that the proportion of black children living with only one parent was never as great during the first hundred years after slavery as it became in the first thirty-five years after the great expansion of the welfare state, beginning in the 1960s.


pages: 310 words: 85,995

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

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

But I am writing this section in Singapore, and from my desk I have a panoramic view of an outstandingly prosperous city that has been achieved by public planning. When I first visited the city in 1980 it had just raised the minimum wage in order to drive out what the government recognized was a doomed sector – garments. The strategy met with scathing critiques from the market fundamentalists: minimum wages would just create high unemployment. In America and Europe, the government as co-ordinator indeed has an embarrassing history of politically skewed interventions, but East Asia is a valuable corrective: co-ordination can work. Singapore’s founder, Lee Kwan Yew, also understood both the economics and the ethics of agglomeration. His policies reflected this: ‘I saw no reason why private landowners should profit from an increase in land value brought about by economic development and the infrastructure paid for with public funds.’8 Here is an approach that superficially seems the least distorting.

Every professor, however pedestrian, has lifetime job security: otherwise we might get anxious and this could interfere with our ability to think great thoughts (doubtless, other professors will come up with further justifications). Meanwhile, my award-winning actor nephew, working in a sector saturated with job-seekers, looks forward to a lifetime of transience. In rethinking employment rights, ideology is not going to help: while the ideologues of the left abhor a market for labour, those of the right sanctify it. The most common free-market critique is that minimum wages cause unemployment. Unemployment is the most salient indication that something is amiss, but it is not always the most important. A labour market has two distinct functions. The one that matters for unemployment is to pair up job-seekers with a particular skill with the jobs that firms create for those skills: what is going on is matching. But the function that matters for mass prosperity is the creation of those skills: investment.


pages: 823 words: 220,581

Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned? by Steve Keen

"Robert Solow", accounting loophole / creative accounting, banking crisis, banks create money, barriers to entry, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, business cycle, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, fixed income, Fractional reserve banking, full employment, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, information asymmetry, invisible hand, iterative process, John von Neumann, Kickstarter, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, money market fund, open economy, Pareto efficiency, Paul Samuelson, place-making, Ponzi scheme, profit maximization, quantitative easing, RAND corporation, random walk, risk tolerance, risk/return, Robert Shiller, Robert Shiller, Ronald Coase, Schrödinger's Cat, scientific mainstream, seigniorage, six sigma, South Sea Bubble, stochastic process, The Great Moderation, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, total factor productivity, tulip mania, wage slave, zero-sum game

This argument, which strictly speaking applies to labor in the aggregate, is extended by analogy to a disaggregated level in order to explain why some workers get much higher wages than others. 6.4 Supply and demand determine the equilibrium wage in the labor market At a policy level, this model is used to emphasize the futility of minimum wage legislation, demand management policies, and any other attempts to interfere with the free working of the market mechanism in this most political of markets. If a government attempts to improve workers’ incomes by legislating a minimum wage, then this will result in unemployment, because it will increase the number of hours workers are willing to work, while reducing the demand from employers because the wage will now exceed the marginal product of labor. The gap between the increased hours offered and the reduced hours demand represents involuntary unemployment at this artificially high wage level. 6.5 Minimum wage laws cause unemployment Demand management measures – trying to boost aggregate demand to increase employment – will also fail, because they can’t alter the marginal physical product of labor, which can only be done by raising the productivity of labor on the supply side.

A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data available eISBN 9781780322209 CONTENTS Tables, figures and boxes Preface to the second edition Preface to the first edition 1 Predicting the ‘unpredictable’ 2 No more Mr Nice Guy Part 1 Foundations: the logical flaws in the key concepts of conventional economics 3 The calculus of hedonism 4 Size does matter 5 The price of everything and the value of nothing 6 To each according to his contribution Part 2 Complexities: issues omitted from standard courses that should be part of an education in economics 7 The holy war over capital 8 There is madness in their method 9 Let’s do the Time Warp again 10 Why they didn’t see it coming 11 The price is not right 12 Misunderstanding the Great Depression and the Great Recession Part 3 Alternatives: different ways to think about economics 13 Why I did see ‘It’ coming 14 A monetary model of capitalism 15 Why stock markets crash 16 Don’t shoot me, I’m only the piano 17 Nothing to lose but their minds 18 There are alternatives Bibliography Index TABLES, FIGURES AND BOXES Tables 2.1 Anticipations of the housing crisis and recession 3.1 ‘Utils’ and change in utils from consuming bananas 3.2 Utils arising from the consumption of two commodities 3.3 The commodities in Sippel’s ‘Revealed Preference’ experiment 4.1 Demand schedule for a hypothetical monopoly 4.2 Costs for a hypothetical monopoly 4.3 Sales and costs determine the level of output that maximizes profit 4.4 Cost and revenue for a ‘perfectly competitive’ industry identical in scale to hypothetical monopoly 5.1 Input and output data for a hypothetical firm 5.2 Cost drawings for the survey by Eiteman and Guthrie 5.3 Empirical research on the nature of cost curves 7.1 Sraffa’s hypothetical subsistence economy 7.2 Production with a surplus 7.3 Relationship between maximum and actual rate of profit and the wage share of surplus 7.4 The impact of the rate of profit on the measurement of capital 10.1 Anderson’s ranking of sciences 12.1 The alleged Money Multiplier process 13.1 A hypothetical example of the impact of decelerating debt on aggregate demand 13.2 The actual impact of decelerating debt on aggregate demand 14.1 A pure credit economy with paper money 14.2 The dynamics of a pure credit economy with no growth 14.3 Net incomes 14.4 A growing pure credit economy with electronic money 15.1 Von Neumann’s procedure for working out a numerical value for utility 15.2 The Allais ‘Paradox’ 15.3 The Allais ‘Paradox’ Part 2 16.1 The solvability of mathematical models 17.1 Marx’s unadjusted value creation table, with the rate of profit dependent upon the variable-to-constant ratio in each sector 17.2 Marx’s profit distribution table, with the rate of profit now uniform across sectors 17.3 Steedman’s hypothetical economy 17.4 Steedman’s physical table in Marx’s value terms 17.5 Steedman’s prices table in Marx’s terms 17.6 Profit rate and prices calculated directly from output/wage data 17.7 Marx’s example where the use-value of machinery exceeds its depreciation Figures 2.1 US inflation and unemployment from 1955 2.2 Bernanke doubles base money in five months 2.3 Private debt peaked at 1.7 times the 1930 level in 2009 3.1 Rising total utils and falling marginal utils from consuming one commodity 3.2 Total utils from the consumption of two commodities; 3.3 Total ‘utils’ represented as a ‘utility hill’ 3.4 The contours of the ‘utility hill’ 3.5 Indifference curves: the contours of the ‘utility hill’ shown in two dimensions 3.6 A rational consumer’s indifference map 3.7 Indifference curves, the budget constraint, and consumption 3.8 Deriving the demand curve 3.9 Upward-sloping demand curve 3.10 Separating out the substitution effect from the income effect 3.11 Engel curves show how spending patterns change with increases in income 3.12 A valid market demand curve 3.13 Straight-line Engel ‘curves’ 3.14 Economic theory cannot rule out the possibility that a market demand curve may have a shape like this, rather than a smooth, downward-sloping curve 4.1 Leijonhufvud’s ‘Totems’ of the Econ tribe 4.2 Stigler’s proof that the horizontal firm demand curve is a fallacy 4.3 Profit maximization for a monopolist: marginal cost equals marginal revenue, while price exceeds marginal cost 4.4 Profit maximization for a perfectly competitive firm: marginal cost equals marginal revenue, which also equals price 4.5 A supply curve can be derived for a competitive firm, but not for a monopoly 4.6 A competitive industry produces a higher output at a lower cost than a monopoly 4.7 The standard ‘supply and demand’ explanation for price determination is valid only in perfect competition 4.8 Double the size, double the costs, but four times the output 4.9 Predictions of the models and results at the market level 4.10 Output behavior of three randomly selected firms 4.11 Profit outcomes for three randomly selected firms 4.12 Output levels for between 1- and 100-firm industries 5.1 Product per additional worker falls as the number of workers hired rises 5.2 Swap the axes to graph labor input against quantity 5.3 Multiply labor input by the wage to convert Y-axis into monetary terms, and add the sales revenue 5.4 Maximum profit occurs where the gap between total cost and total revenue is at a maximum 5.5 Deriving marginal cost from total cost 5.6 The whole caboodle: average and marginal costs, and marginal revenue 5.7 The upward-sloping supply curve is derived by aggregating the marginal cost curves of numerous competitive firms 5.8 Economic theory doesn’t work if Sraffa is right 5.9 Multiple demand curves with a broad definition of an industry 5.10 A farmer who behaved as economists advise would forgo the output shown in the gap between the two curves 5.11 Capacity utilization over time in the USA 5.12 Capacity utilization and employment move together 5.13 Costs determine price and demand determines quantity 5.14 A graphical representation of Sraffa’s (1926) preferred model of the normal firm 5.15 The economic theory of income distribution argues that the wage equals the marginal product of labor 5.16 Economics has no explanation of wage determination or anything else with constant returns 5.17 Varian’s drawing of cost curves in his ‘advanced’ microeconomics textbook 6.1 The demand for labor curve is the marginal revenue product of labor 6.2 The individual’s income–leisure trade-off determines how many hours of labor he supplies 6.3 An upward-sloping individual labor supply curve 6.4 Supply and demand determine the equilibrium wage in the labor market 6.5 Minimum wage laws cause unemployment 6.6 Demand management policies can’t shift the supply of or demand for labor 6.7 Indifference curves that result in less work as the wage rises 6.8 Labor supply falls as the wage rises 6.9 An individual labor supply curve derived from extreme and midrange wage levels 6.10 An unstable labor market stabilized by minimum wage legislation 6.11 Interdependence of labor supply and demand via the income distributional effects of wage changes 7.1 The standard economic ‘circular flow’ diagram 7.2 The rate of profit equals the marginal product of capital 7.3 Supply and demand determine the rate of profit 7.4 The wage/profit frontier measured using the standard commodity 9.1 Standard neoclassical comparative statics 9.2 The time path of one variable in the Lorenz model 9.3 Structure behind the chaos 9.4 Sensitive dependence on initial conditions 9.5 Unstable equilibria 9.6 Cycles in employment and income shares 9.7 A closed loop in employment and wages share of output 9.8 Phillips’s functional flow block diagram model of the economy 9.9 The component of Phillips’s Figure 12 including the role of expectations in price setting 9.10 Phillips’s hand drawing of the output–price-change relationship 9.11 A modern flow-chart simulation program generating cycles, not equilibrium 9.12 Phillips’s empirically derived unemployment–money-wage-change relation 10.1 Hicks’s model of Keynes 10.2 Derivation of the downward-sloping IS curve 10.3 Derivation of the upward-sloping LM curve 10.4 ‘Reconciling’ Keynes with ‘the Classics’ 10.5 Unemployment–inflation data in the USA, 1960–70 10.6 Unemployment–inflation data in the USA, 1950–72 10.7 Unemployment–inflation data in the USA, 1960–80 10.8 The hog cycle 11.1 Supply and demand in the market for money 11.2 The capital market line 11.3 Investor preferences and the investment opportunity cloud 11.4 Multiple investors (with identical expectations) 11.5 Flattening the IOC 11.6 How the EMH imagines that investors behave 11.7 How speculators actually behave 12.1 Inflation and base money in the 1920s 12.2 Inflation and base money in the post-war period 12.3 Bernanke’s massive injection of base money in QE1 12.4 Change in M0 and unemployment, 1920–40 12.5 Change in M1 and unemployment, 1920–40 12.6 Change in M0 and M1, 1920–40 12.7 M0–M1 correlation during the Roaring Twenties 12.8 M0–M1 correlation during the Great Depression 12.9 Bernanke’s ‘quantitative easing’ in historical perspective 12.10 The volume of base money in Bernanke’s ‘quantitative easing’ in historical perspective 12.11 Change in M1 and inflation before and during the Great Recession 12.12 The money supply goes haywire 12.13 Lindsey, Orphanides, Rasche 2005, p. 213 12.14 The empirical ‘Money Multiplier’, 1920–40 12.15 The empirical ‘Money Multiplier’, 1960–2012 12.16 The disconnect between private and fiat money during the Great Recession 13.1 Goodwin’s growth cycle model 13.2 My 1995 Minsky model 13.3 The vortex of debt in my 1995 Minsky model 13.4 Cyclical stability with a counter-cyclical government sector 13.5 Australia’s private debt-to-GDP ratio, 1975–2005 13.6 US private debt to GDP, 1955–2005 13.7 Aggregate demand in the USA, 1965–2015 13.8 US private debt 13.9 The change in debt collapses as the Great Recession begins 13.10 The Dow Jones nosedives 13.11 The correlation of debt-financed demand and unemployment 13.12 The housing bubble bursts 13.13 The Credit Impulse and change in employment 13.14 Correlation of Credit Impulse and change in employment and GDP 13.15 Relatively constant growth in debt 13.16 The biggest collapse in the Credit Impulse ever recorded 13.17 Growing level of debt-financed demand as debt grew faster than GDP 13.18 The two great debt bubbles 13.19 Change in nominal GDP growth then and now 13.20 Real GDP growth then and now 13.21 Inflation then and now 13.22 Unemployment then and now 13.23 Nominal private debt then and now 13.24 Real debt then and now 13.25 Debt to GDP then and now 13.26 Real debt growth then and now 13.27 The collapse of debt-financed demand then and now 13.28 Debt by sector – business debt then, household debt now 13.29 The Credit Impulse then and now 13.30 Debt-financed demand and unemployment, 1920–40 13.31 Debt-financed demand and unemployment, 1990–2011 13.32 Credit Impulse and change in unemployment, 1920–40 13.33 Credit Impulse and change in unemployment, 1990–2010 13.34 The Credit Impulse leads change in unemployment 14.1 The neoclassical model of exchange as barter 14.2 The nature of exchange in the real world 14.3 A nineteenth-century private banknote 14.4 Bank accounts 14.5 A credit crunch causes a fall in deposits and a rise in reserves in the bank’s vault 14.6 A bank bailout’s impact on loans 14.7 A bank bailout’s impact on incomes 14.8 A bank bailout’s impact on bank income 14.9 Bank income grows if debt grows more rapidly 14.10 Unemployment is better with a debtor bailout 14.11 Loans grow more with a debtor bailout 14.12 Profits do better with a debtor bailout 14.13 Bank income does better with a bank bailout 14.14 Modeling the Great Moderation and the Great Recession – inflation, unemployment and debt 14.15 The Great Moderation and the Great Recession – actual inflation, unemployment and debt 14.16 Modeling the Great Moderation and the Great Recession – output 14.17 Income distribution – workers pay for the debt 14.18 Actual income distribution matches the model 14.19 Debt and GDP in the model 14.20 Debt and GDP during the Great Depression 15.1 Lemming population as a constant subject to exogenous shocks 15.2 Lemming population as a variable with unstable dynamics 17.1 A graphical representation of Marx’s dialectics Boxes 10.1 The Taylor Rule 13.1 Definitions of unemployment PREFACE TO THE SECOND EDITION Debunking Economics was far from the first book to argue that neoclassical economics was fundamentally unsound.

This imperfection in the theory – the possibility of backward-bending labor supply curves – is sometimes pointed out to students of economics, but then glossed over with the assumption that, in general, labor supply curves will be upward sloping. But there is no theoretical – or empirical – justification for this assumption. This strong assumption would be of little consequence if economists didn’t derive such strong conclusions from their model of the labor market. Declarations that minimum wage legislation is ineffective and causes unemployment, or that demand management policies can’t alter the rate of unemployment, are hardly insignificant pronouncements. Their truth is dependent in part on the supply curve for labor being upward sloping. 6.10 An unstable labor market stabilized by minimum wage legislation For example, if the aggregate demand and supply curves for labor both slope downwards, then the ‘equilibrium’ of the two could be unstable: falling supply could be met by falling demand, resulting in runaway unemployment.


pages: 145 words: 43,599

Hawai'I Becalmed: Economic Lessons of the 1990s by Christopher Grandy

Bretton Woods, business climate, business cycle, dark matter, endogenous growth, inventory management, Jones Act, Long Term Capital Management, market bubble, Maui Hawaii, minimum wage unemployment, open economy, purchasing power parity, Silicon Valley, Telecommunications Act of 1996

While Card and Krueger question some of the data used in the replication, they conclude that there have been no employment effects of the New Jersey minimum wage increase.15 Even more recent work on the minimum wage raises the intriguing possibility that the disemployment effects may not appear in lost jobs but in the form of jobs not being created in the first place.16 That is, raising the minimum wage may increase the equilibrium level of unemployment in an economy. An increase in the minimum wage raises the employer’s cost of hiring. Even if the higher cost is not sufficient to lay off existing workers, it may be enough to discourage the addition of more workers. Over time, this effect could lead to an upward drift in the unemployment rate. Preliminary evidence suggests that a 10% increase in the minimum wage can raise the unemployment rate by one half of a percentage point. Thus, if true, the disemployment effects are to be found not in the number of lost jobs but in the number of jobs not created in the first place.


pages: 772 words: 203,182

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

Its complexity further reduces its effectiveness: there are 50 pages of instructions for single mothers and others to follow when filing for the tax benefit.51 Finally, like food stamps and other support received by the working poor, the EITC is an opaque taxpayer subsidy to low-wage employers whose balance sheets in many instances are far stronger than those of taxpayers. Do Minimum Wages Cost Jobs? Minimum wages redistribute income from employers and customers to lower-wage workers. The business community contends the minimum wage causes unemployment. They are correct that an economic tradeoff exists, but misidentify it: a high minimum wage reduces poverty—not employment—a myth we now examine. Economists assume that employers react to high minimum wages by hiring fewer workers. It just makes intuitive sense. That logic led the United Kingdom, under Prime Ministers Margaret Thatcher and John Major, to honor executive suite pleas and abolish minimum wages in the early 1990s during that nation’s flirtation with Reaganomics.

Peter Dolton, Rosazza-Bondibene Chiara, and Jonathan Wadsworth from the University of London, for example, divided the United Kingdom into hundreds of geographic subunits. Beginning before restoration of the minimum wage in 1999, their 10-year study determined that “the minimum wage over the entire period of time has a neutral effect on employment.”56 No evidence of an unemployment effect exists in northern Europe either. Indeed, economists there have come to learn that high and rising minimum wages coexist with job creation and falling unemployment. For example, the French unemployment rate fell to a 25-year low in June 2008 before the Wall Street recession despite minimum wages hovering around $10 per hour. With Germany considering establishing a nationwide minimum wage, some six research institutes were commissioned by the Federal Ministry of Labor in recent years to examine the potential impact on employment of that step.

Stigler as far back as 1946, who contended that labor markets are imperfect, characterized by poor information.62 Another explanation harkens back to the earliest days of the Industrial Revolution, when employers dominated labor markets. Either because of employer collusion or isolated locations, the wages on offer from employers were frequently set below the employees’ actual value to the enterprise. That is why Winston Churchill supported minimum wages a century ago to counter what he termed “employee exploitation.”63 Higher minimum wages are not likely to produce unemployment in such circumstances. In contrast, if minimum wages are set above workers’ value, as perceived by employers, they will certainly reduce employment. David Neumark and William Wascher, for example, concluded that the minimum wage hike to $7.25 per hour in July 2009 cost 300,000 jobs. Yet, the overall impact of any minimum wage increase even in these circumstances is small for two reasons.


pages: 320 words: 90,526

Squeezed: Why Our Families Can't Afford America by Alissa Quart

Affordable Care Act / Obamacare, Airbnb, Automated Insights, autonomous vehicles, barriers to entry, basic income, Bernie Sanders, business intelligence, Donald Trump, Downton Abbey, East Village, Elon Musk, full employment, future of work, gig economy, glass ceiling, haute couture, income inequality, Jaron Lanier, job automation, late capitalism, Lyft, minimum wage unemployment, moral panic, new economy, nuclear winter, obamacare, Ponzi scheme, post-work, precariat, price mechanism, rent control, ride hailing / ride sharing, school choice, sharing economy, Silicon Valley, Skype, Snapchat, surplus humans, TaskRabbit, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, union organizing, universal basic income, upwardly mobile, wages for housework, women in the workforce, working poor

the cost of child care: The labor protections that were part of the New Deal’s National Labor Relations Act of 1935 allowed private-sector employees to unionize. Domestic workers, almost certainly due to racism, were excluded. Southern lawmakers also insisted that job protections for farmworkers and domestic workers, many of whom were black, should be excluded from President Franklin D. Roosevelt’s Fair Labor Standards Act of 1938. Informal workers were also denied social benefits, like minimum wage, and unemployment compensation. Eighty years later, on a state level, things are now changing somewhat. In 2010, for instance, New York enacted the Domestic Workers’ Bill of Rights, which establishes an eight-hour workday and other protections. “When you say you have kids”: Ai-jen Poo has been leading her campaign to reframe care work, as she said in one interview, “from poverty-wage work that is invisible and undervalued into professional jobs with opportunities for career advancement.”


pages: 357 words: 95,986

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

Under these conditions, it is no surprise to see that many of the most promising political struggles in recent years have identified themselves as populist movements rather than class movements.18 By ‘populism’, we do not mean a sort of mindless mass movement, or a lowest-common-denominator revolt, or a movement with any particular political content.19 Populism is instead a type of political logic by which a collection of different identities are knitted together against a common opponent and in search of a new world.20 From the anti-globalisation movements, to Syriza in Greece, Podemos in Spain, numerous Latin American movements, and Occupy across the Western world, these movements have mobilised large cross-sections of society rather than just particular class identities.21 These populist movements have originated out of the frustration of unmet demands. Under normal democratic circumstances, demands are dealt with separately and within existing institutions – for instance, minimum wage increases, unemployment benefits and healthcare provision. Small changes are granted, but institutional arrangements, including society as a whole, are never questioned. In this fashion, existing hegemonies can be reinforced and threats generally modulated effectively. By contrast, a populist movement begins to emerge when these demands – for fair pay, social housing, childcare, and so on – are increasingly blocked.


pages: 186 words: 49,595

Revolution in the Age of Social Media: The Egyptian Popular Insurrection and the Internet by Linda Herrera

citizen journalism, crowdsourcing, Google Earth, informal economy, Julian Assange, knowledge economy, minimum wage unemployment, Mohammed Bouazizi, moral panic, Nelson Mandela, Occupy movement, RAND corporation, Rosa Parks, Silicon Valley, Skype, Slavoj Žižek, WikiLeaks

Egyptians have several other demands, like improving health and education. But as a start we should all move together to achieve one demand at a time by putting pressure on the government. As the people, our role is to direct the government, hold them accountable, evaluate their performance, and define the priorities, not vice versa. In the document, poverty is reduced to two demands: raising the minimum wage, and providing unemployment benefits to university graduates for a limited period. These goals come across as ad hoc when compared to the more pointed demands of eliminating the Emergency Law, removing Interior Minister Habib al-Adly from office, and limiting presidential terms. The campaigners proved incapable of formulating ideas about how to achieve an alternative economic order and address the structural causes of poverty and skewed wealth distribution.


pages: 424 words: 119,679

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

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

Some inequality is caused by concentration of earnings at the top; some is caused by the United States welcoming (as it should) large numbers of immigrants, who both reduce household median earnings and create downward pressure on wages; and some is caused by the low minimum wage, which zings entry-level workers. Several states have minimum wages that do keep pace with inflation: California’s is $10.50 an hour. High state minimum wages do not seem to spike unemployment, as sometimes predicted. California’s unemployment with a high minimum wage is fourth-tenths of a percent above unemployment in Texas, which has a low minimum wage. The twin goals of reducing unemployment and promoting social justice suggest that anyone working forty hours a week at the federal minimum wage should be able to support a small family. At $7.25 an hour, forty hours of work for fifty weeks produces about $13,500 in after-tax income, enough to support only one person.


pages: 273 words: 34,920

Free Market Missionaries: The Corporate Manipulation of Community Values by Sharon Beder

anti-communist, battle of ideas, business climate, corporate governance, en.wikipedia.org, full employment, income inequality, invisible hand, liquidationism / Banker’s doctrine / the Treasury view, minimum wage unemployment, Mont Pelerin Society, new economy, old-boy network, popular capitalism, Powell Memorandum, price mechanism, profit motive, Ralph Nader, rent control, risk/return, road to serfdom, Ronald Reagan, school vouchers, shareholder value, spread of share-ownership, structural adjustment programs, The Chicago School, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, Torches of Freedom, trade liberalization, traveling salesman, trickle-down economics, Upton Sinclair, Washington Consensus, wealth creators, young professional

Everyone knows that we are subject today to a high degree of governmental control, but too many may come to believe that the efficiency being displayed by industry derives from this wartime incident of centralized planning and administration, rather than the qualities inherent within industry itself. 45 In the immediate post-war period, key business organizations were concerned about government intervention and controls on the one hand, and union activity on the other – Big Government and Big Labour. Proposals for further government intervention included price controls, a rising minimum wage, expanded unemployment insurance and tax reforms. Unions were active and in some cases demanding not just improved pay and conditions, income security and full employment through government spending, but also a say in corporate decisions 24 FREE MARKET MISSIONARIES in areas such as pricing and investment. They were advocating social planning and expansion of the welfare state.46 The way in which business in the US used its power and resources to oppose unionism was unique in scale and comprehensiveness.


pages: 345 words: 92,849

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

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

(Writing in 1998, Krugman found it “remarkable” that “this rather iffy result [from Card and Krueger] has been seized upon by some liberals as a rationale for making large minimum wage increases a core component of the liberal agenda. . . . Clearly these advocates very much want to believe that the price of labor—unlike that of gasoline, or Manhattan apartments—can be set based on considerations of justice, not supply and demand, without unpleasant side effects.”23 Later Krugman would come out in favor of enormous minimum wage hikes, declaring that it wouldn’t increase unemployment.24) Now let’s say you do find a job. The lower your pay, the more you have to work to achieve a given standard of living. But other regulations can make it harder for you to get the hours you want. Government-mandated overtime pay may make it too expensive for an employer to let you work more than a certain number of hours a week. And now Obamacare, by forcing certain employers to offer health insurance to employees who work more than 30 hours a week, has created an incentive for limiting hours even further.


pages: 261 words: 103,244

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

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

In such a dynamic framework, even an increase in unemployment is no proof that minimum wages are hurting more than they help (Acemoglu 2001). 198 ECONOMISTS AND THE POWERFUL One thing is clear, though: since a minimum wage makes sure that more of the surplus from the cooperation of labor and capital goes to the workers, most employers and their allies will oppose a (high) minimum wage. Money for nothing – Unemployment insurance When Karl Marx, Adam Smith or Arthur Pigou complained that employers exploited workers who were desperate for every penny, there were no unemployment benefits and only the most rudimentary social security. In many underdeveloped countries, this is still a sad reality. In modern industrial countries, however, most of the unemployed get unemployment benefits or reasonably generous welfare payments.

The OECD stressed that the labor market institutions of various lowunemployment countries in Europe differed a great deal. This implies that there is no unambiguous right or wrong with regard to achieving a low rate of unemployment. Stringent employment protection for regular contracts is now considered to have only a small negative impact on long-run productivity, while higher minimum wages and a more generous level and duration of unemployment policies have a positive impact (OECD 2007). Why then did such a strong consensus among economists develop in the first place? The answer is likely found in the distributional consequences of the policies advanced. Unlike the consequences for growth and employment, these are pretty clear. They are without fail in favor of the wealthy and high-income earners and to the detriment of labor (Freeman 2007).


pages: 124 words: 39,011

Beyond Outrage: Expanded Edition: What Has Gone Wrong With Our Economy and Our Democracy, and How to Fix It by Robert B. Reich

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, banking crisis, business cycle, carried interest, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, full employment, Home mortgage interest deduction, job automation, Mahatma Gandhi, minimum wage unemployment, money market fund, Nelson Mandela, new economy, Occupy movement, offshore financial centre, plutocrats, Plutocrats, Ponzi scheme, race to the bottom, Ronald Reagan, single-payer health, special drawing rights, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, trickle-down economics, women in the workforce, working poor, zero-sum game

It’s not true on the wage side if you control for level of education, but it wasn’t even true on the benefits side until private sector benefits fell off a cliff. Meanwhile, all across America, public sector workers are being “furloughed,” which is a nice word for not collecting any pay for weeks at a time. It’s no great feat to create lots of lousy jobs. A few years ago the Republican congresswoman Michele Bachmann remarked that if the minimum wage were repealed, “we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level.” If you accept her logic, why stop there? After all, slavery was a full-employment system. Conservative economists have it wrong. The underlying problem isn’t that most Americans have priced themselves out of the global/high-tech labor market. It’s that most Americans are receiving a smaller share of the American pie.


pages: 756 words: 120,818

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

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

The call by President Xi at the 2017 Communist Party Congress for the party to focus more on providing people with a “better, happier life” is a nod in this direction.14 As such, it would be a logical chapter in China’s path to development, and not at all unlike Franklin D. Roosevelt’s New Deal. The New Deal was a watershed in the United States in many respects, one of which was that it marked the full evolution of the United States from an emerging to a developed nation. Some of the measures proposed by Roosevelt administration members such as Frances Perkins—a minimum wage and unemployment compensation, for example15—are already in place in China or are incarnated in the form of “iron rice bowls.”* But the Chinese system is not as comprehensive, or one might say generous, as those in other developed countries. China’s Ministry of Civil Affairs website shows that a relatively low number of rural households (approximately 20 million) receive subsistence allowances (about USD 50 per month).16 This is tiny compared to the benefits in more developed socioeconomic models (e.g., Denmark) and underlines the fact that very high saving rates in China exist on a precautionary basis, so that people have cash available for medical and economic emergencies.


Infotopia: How Many Minds Produce Knowledge by Cass R. Sunstein

affirmative action, Andrei Shleifer, availability heuristic, Build a better mousetrap, c2.com, Cass Sunstein, cognitive bias, cuban missile crisis, Daniel Kahneman / Amos Tversky, Edward Glaeser, en.wikipedia.org, feminist movement, framing effect, hindsight bias, information asymmetry, Isaac Newton, Jean Tirole, jimmy wales, market bubble, market design, minimum wage unemployment, prediction markets, profit motive, rent control, Richard Stallman, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, slashdot, stem cell, The Wisdom of Crowds, winner-take-all economy

Such circumstances might be found when, for example, a company president is asking a group of informed advisors about the proper course of action, or when a dean at a university is asking a faculty whether to hire a certain job candidate, or when a head of a government agency is consulting a group of scientists about whether a particular 42 / Infotopia pollution problem is likely to be serious. In all of these cases, there is reason to trust the people who are being asked, and hence the average answer is peculiarly likely to be right. But it would make no sense to make policy by asking everyone in the world whether the United States should sign the Kyoto Protocol, or whether genetic engineering poses serious risks, or whether a significant increase in the minimum wage would increase unemployment, or whether the death penalty has a deterrent effect on crime, or whether rent control policies help or hurt poor tenants. In these cases, there is a great risk that error and confusion at the individual level will be replicated at the level of group averages. The implications for group behavior and democracy are mixed. To the extent that the goal is to arrive at the correct judgments on facts, the Condorcet Jury Theorem affords no guarantees.


pages: 255 words: 75,172

Sleeping Giant: How the New Working Class Will Transform America by Tamara Draut

affirmative action, Affordable Care Act / Obamacare, always be closing, American ideology, battle of ideas, big-box store, blue-collar work, collective bargaining, creative destruction, David Brooks, declining real wages, deindustrialization, desegregation, Detroit bankruptcy, Donald Trump, Edward Glaeser, ending welfare as we know it, Ferguson, Missouri, financial deregulation, full employment, immigration reform, income inequality, invisible hand, job satisfaction, knowledge economy, knowledge worker, low skilled workers, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, obamacare, occupational segregation, payday loans, pink-collar, plutocrats, Plutocrats, Powell Memorandum, profit motive, race to the bottom, Ralph Nader, rent-seeking, rising living standards, Ronald Reagan, shared worldview, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, trickle-down economics, union organizing, upwardly mobile, War on Poverty, white flight, women in the workforce, young professional

But, importantly, Gilens found that “the starkest difference in responsiveness to the affluent and the middle class occurs on economic policy, a consequence of high-income Americans’ stronger opposition to taxes and corporate regulation.”19 In fact, if policy outcomes more generally reflected the preferences of the poor and the middle class, it’s probable that we’d have a higher minimum wage, more generous unemployment benefits, stricter regulation of big business, and a more progressive tax code.20 Given what we know about the causes of the Great Recession and its devastating and disproportional impact on the working class, the outsized role of the affluent on economic policy is particularly concerning. The deregulation of the financial industry—a long-pursued goal of Wall Street titans and the investor class—played a key role in the financial collapse and allowed millions of working-class homeowners to be preyed upon by mortgage brokers whose compensation depended on duping homeowners into refinancing their safe loans with ones with exploding interest rates.


pages: 454 words: 139,350

Jihad vs. McWorld: Terrorism's Challenge to Democracy by Benjamin Barber

airport security, anti-communist, Apple's 1984 Super Bowl advert, Ayatollah Khomeini, Berlin Wall, borderless world, Bretton Woods, British Empire, computer age, Corn Laws, Corrections Corporation of America, David Brooks, deindustrialization, Deng Xiaoping, digital map, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, George Gilder, global village, invisible hand, Joan Didion, Kevin Kelly, laissez-faire capitalism, late capitalism, Live Aid, market fundamentalism, Marshall McLuhan, minimum wage unemployment, new economy, Norbert Wiener, North Sea oil, pirate software, postnationalism / post nation state, profit motive, race to the bottom, Right to Buy, road to serfdom, Ronald Reagan, The Wealth of Nations by Adam Smith, Thomas L Friedman, undersea cable, young professional, zero-sum game

Their effort had (in Thomas Friedman’s charming image) all the impact of “a zoo keeper trying to calm a starved gorilla by offering it a raisin for lunch.”21 Free-market advocates like Wriston boast about the failure of the Bretton Woods Treaty (by which sovereign nations tried to govern the international currency exchange after World War II)—proof that “Big Brother” (his caricature of all states, democratic as well as autocratic) has been forced out of business. Unfortunately, Big Brother’s role as a guardian of social justice has also been superseded and the many junior siblings who have displaced him turn out to be both more intimidating and far less accountable. National regulatory commissions can curtail in-country labor exploitation with minimum wage laws, unemployment insurance, and safety regulations, but who can set and enforce such standards for the global market where unrooted companies can chase low-wage labor from country to country as they please? Far more today than in the nineteenth century, the workers of the world need to unite to offset the exploitative consequences of monopoly capital on a global scale. Yet never has there been less likelihood that they could do so.


pages: 290 words: 82,871

The Hidden Half: How the World Conceals Its Secrets by Michael Blastland

air freight, Alfred Russel Wallace, banking crisis, Bayesian statistics, Berlin Wall, central bank independence, cognitive bias, complexity theory, Deng Xiaoping, Diane Coyle, Donald Trump, epigenetics, experimental subject, full employment, George Santayana, hindsight bias, income inequality, manufacturing employment, mass incarceration, meta analysis, meta-analysis, minimum wage unemployment, nudge unit, oil shock, p-value, personalized medicine, phenotype, Ralph Waldo Emerson, random walk, randomized controlled trial, replication crisis, Richard Thaler, selection bias, the map is not the territory, the scientific method, The Wisdom of Crowds, twin studies

Index abstract formulas 141 Academy of Medical Sciences 133 adoption studies 41 aid, economic development 141 aid-effectiveness craze, the 153 alcohol consumption 180 AllTrials campaign 114–5 Altman, Doug 129–30 Amano, Yukiya 185 ambiguity 209–10 Amgen 111–2 Analysis (radio programme) 102 analytic validity 158, 263n18 anarchy 224 aphorisms 68–9, 149 apprenticeships 205–6 argument, beliefs and habits of 186 asthma 135 Attanasio, Orazio 225–9, 230 Autho, David 219–23 average knowledge 173 background influences 23–34 background norms, rejecting 24–5 bacon 161–3, 162–3 Banerjee, Abhijit 150–4, 157 Bangladesh 80–2, 82, 101–2, 158, 261n6 Bank of England 103, 216 Bank of Japan 103 Basbøll, Thomas 244–5 baseline data 165 base-rate neglect 176–7 basic laws 140 Bateson, William 245 BBC 88, 98 Beatles, the 52–3, 259n33 Begley, Glenn 111–7 behaviour context-specific 42–3 environmental cues 65–7 behavioural economics 157 Behavioural Insight Team 155, 156, 232 beliefs 60 contradictory 63–4 inconsistency of 60–6 justification 60–1, 63 manipulation 62–3 power of information on 66–8 self-contradiction 61–2 Berlin, Isaiah 199 betting, on knowledge 236–7 big causes, power of 35 big events causal intricacy 193–6 complexity 185–7 difficulty determining causality 188–96 power of circumstance 196–9 big picture, the 215–6 Bijani, Ladan 40–1 Bijani, Laleh 40–1 biographies 49 biological randomness 43–4 biomedical science, research standards 129–36 Bolsover 217–8 Boorstin, Daniel 17, 136, 138, 264n24 Booth, Charles 146–7 BP 211 brain, the 64 plasticity 56 self-justifying 83 breast cancer 45–6, 46 Brexit referendum 18–9, 20, 90, 214–8, 223–4, 241 Bunnings 77 Burckhardt, Jacob 255n20 Burke, Edmund 269n1 Burns, Terry 102–3 business decisions, failures 210–1 cancer 45–8 breast 45–6, 46 lung 174–5 risk 162–3, 166, 174–5 screening 132–3 Cancer Research UK 133 canned laughter 154–5 capitalism 118 Carillion 211 Carp, Joshua 123–4 Cartwright, Nancy 79, 79–82, 82, 193–4, 195, 202–3, 203–4, 263n18 causal instincts 123 causal interactions, complexity 239 causal intricacy 193–4 causal models 242–4, 243, 269–70n3 causal theorizing 212–4 causality assumption of 212–4 difficulty determining 188–96 existence of 276–7n12 hard 225–9 importance of 212 mechanical models 242–4, 243 in one person 48 cause and effect dependable 203–4 patterns of 23, 25–6, 26 supposed 248 unreliable 204 causes and causal influences 90, 94 competing 248 criminals 29 interaction 193–6 and luck 178 secret life of 8–11 simple 184–5 cells, biographical stories 47–8 certainty, desire for 235 Chadwick, Edwin 146–7 chance 14, 37–8, 247, 281n1 chaos theory 56–7, 276n10 Chater, Nick 59, 60, 63, 64–5, 66–7 Chernobyl disaster 185 child and adolescent development 23–6, 41–2 child mental health 206–7 childhood influences 23–5 delinquent boys 26–34 China, rise of 218–23, 279n19 choice, situated 31–3, 34 choice blindness 62 choices 60 Cialdini, Robert 154–5 Cifu, Adam 131–2 circumstances 70 power of 196–9 claims inflation 130 climate change 238–9 Clinton, Hillary 222 Cochrane Collaboration, the 189–90 cognition 64 cognitive biases 14 cognitive limitations 14, 214 Comaroff, John 107–8 common sense 69–70 comparative cost analysis 173 competence 236–7 complacency 237 complexity adding 244 big events 185–7 facing 15 hidden 184–201 of reality 245 complexity theory 276n10 complexity-avoidance 187 complications, hidden 187 Conan Doyle, Arthur 108 confidence 72 consistency 68–75, 202–4, 260n6, 260n8 constructive realism 17 consumer behaviour 77 context 41–2, 72, 101 context-specific behaviour 72 context-specific learning 42–3 control alternative to 248–9 elusiveness of 85–6 powers of 195 conviction 104 coping strategies 16–7, 225–46 adapting 230–3 betting 236–7 communicate uncertainty 237–9 embracing uncertainty 234–6 exceptions 244–5 experiment 230–3 governing for uncertainty 239–41 managing for uncertainty 241–2 metaphors 242–4 negative capability 234 relax 246 triangulation 233–4 use of probability 242 Corbyn, Jeremy 20 corporate power 241 cost/benefit analysis, cows 117–22 cows, cost/benefit analysis 117–22 Coyle, Diane 216, 262n12 Crabbe, John 85–7 credibility 238–9 credibility crisis 18 crime causes of 142–4 heroes and villains view 142 opportunist 144–5 reduced opportunity 144–5 theory of 142–6, 143 victims and survivors view 142–3 criminals causal influences 29 childhood influences 26–34 desisters 30 high rate chronics 30 life-course persistent offenders 28–9 life-courses 28, 236 variables 31 critical factors 83–5 crowds, wisdom of 149 cultural difference 79–82, 79–85 Daniels, Denise 43–4, 57 Darwin, Charles 50–1 data granularity 216–7 interpretation 98–100 Dawid, Philip 276–7n12 De Rond, Mark 198, 201 de Vries, Ymkje Anna 114 deadweight cost 205–6 debate 98 decision making 58–60 influences 32–3 situated choice 31–3 deep preferences 65 deeper rationale, construction of 60 Deepwater Horizon 211 defining characteristics 43 degrees of freedom 122–9 delinquent boys 26–34 dementia 176–7, 274n16 democracy 20 Deng Xiaoping 219 Denrell, Jerker 199, 201 desires 59 details importance of 49–54 neglecting 151–2 problem of 229 selective 26 determinism 28 development economics 150–3 developmental difference, sources of variation 9–11 developmental noise 10 difference 15 pockets of 214–24 Dilnot, Andrew 237, 275n3 disciplined pluralism 231 disorder 45 forces of 11–3 doubt 238 Down’s syndrome 166 drugs comparative cost analysis 173 impact 171–2 medical effect 167–9, 169, 170–4 non-responders 172 Numbers-Needed-to-Treat (NNTs) 168, 169, 170, 173–4 predictive weakness 170–3 duelling certainties 235 Duflo, Esther 83, 84, 141, 150–3, 157–8, 158–9, 230–1 ecological validity 263n18 economic development, aid 141 economic forecasting 92, 102–7 economic recovery 217–8 economics 233 economy, the 87–100, 91, 93, 94, 95 education 151–2, 206–7, 275– 6n7 Einstein, Albert 140–1 Emerson, Ralph Waldo 68 enigmatic variation 13–6, 48 environment context 72 non-shared 37 shared 35 environmental influences 43–4 epidemiology 181 epigenetics 6–7 erratic influences 60 essential you, the 59–60 estimates 89–91, 96 European Central Bank 103 evidence 21 balance of 114 conclusive 186, 187 the Janus effect 121, 122–9 limitations of 117–22 statistical significance 137 strength of 137 evidence-based medicine 133–4 exceptions 214–24, 244–5 expectations 35 big 196 frustration of 15 of regularity 47, 202–4 unrealistic 182 experience, influence of 33, 34, 55–7 experiment 230–3 expertise, crisis of 18–9 experts, credibility crisis 18–9 external validity 101, 158, 263n18, 264n19 extreme performance 199 failure 204–11 fairness 66–7 false negatives 113–4 false positives 113–4, 122 falsification 245 family, changes of 41 farmer and a chicken, the 202–4 fate 30 fears, exaggerated 46 Financial Times 77 First World War 108 Fitzroy, Robert 50 flat mind, the 60, 60–8 Flaubert, Gustave 139 forecasting 109 former Yugoslavia 108 foxes 199 France 186–7 Freedman, Sir Lawrence 108, 109 freedom 236 Fukushima nuclear power station meltdown 185–7 fundamentals 141 identifying 153 further education 208–9 Galbraith, John Kenneth 110 Gartner, Klaus 87 Gash, Tom 142–3 Gates, Bill 199 GDP data 262n12 growth estimation 88–100, 91, 93, 94, 95, 262–3n14 local 214–5, 216, 218 Gelman, Andrew 124–5, 244 gene–environment interaction 6–7 general principles 140 generalities 174 generalization 76–8, 146, 152, 263n18 genes and genetics influence of 34–7, 39–41, 44, 45–7 overclaiming 134–5 power of 33, 45 genetic risk 45–7 genius, dangerous 212–4 genotype 8 Germany 185, 186, 188 Gillam, John 77 global financial crisis, 2008–9 104, 106, 210, 235 globalization 213 Gove, Michael 18–9 granularity 216–7 ground truth 217 groupthink 149 guarantees, lack of 160 Guardian 207 Gupta, Rajeev 117, 118 Haldane, Andy 216–7, 218 Harford, Tim 156–7, 237 Harris, Judith Rich 40–2, 72 Hayek, Friedrich 105–6 health screening 177 heart disease 163–6 hedgehogs 199 Henry (ex-delinquent) 32 Hensall, Abigail 39–40, 41 Hensall, Brittany 39–40, 41 herd mentality 154–5 hidden causes 35–8 hidden half, the coping strategies 225–46 ignoring 202–24 mystery of 35 power of 44–5 hidden trivia 8–9 hindsight 78 hindsight bias 83 history 107–8 lessons of 109 Homebase 76–7 Honda, US motorcycle market penetration 196–9 hubris 77 human sameness irregularity 45–9 limits of 34–45 human understanding, fundamentals 213 Human Zoo, The (radio programme) 60–6 humility 224, 248–9 IBM 199 ibuprofen 163–5 ideological divide 240 ideologies 9–10 idiosyncratic influence 53–4 ignorance 21, 107 disguising 242 the shock of 7 imagination 138 impulsive judgement, value of 149 incarceration rates, United States of America 222, 240, 280n10 incidentals, effect of 51–2 incoherency problem, the 149 inconsistency beliefs 60–6 justifiable 70–1 incredible certitude 209 Indian Express 117 individual differences 56 individuality conjoined twins 39–42 neurological foundation of 56 industrial policy 208 inflation 102–7 influences background 23–34 childhood 26–34 criminals 26–34 decision making 32–3 environmental 43–4 erratic 60 hidden 204 microenvironmental 8–9, 253–4n12 information power of 66–8 selective 66–7 Institute for Fiscal Studies 205–6 Institute for Government 208–9 intangible differences 253n11 intangible variation 10, 229 interaction, problems of 193–6 internal validity 101–2, 158 International Journal of Epidemiology 43 intuition 54, 204 Ioannidis, John 121, 133–6 irrationality, human 14 irregularity 94 disruptive power of 224 frustration of 15 human 45–9 influence 12 problem of 229 underestimating 214–24 Islamic State 108 it’s-all-because problem 91, 96 James, Henry 29, 56 James, William 141 Janus effect, the 121, 122–9 Johansen, Petter 62 Johnson, Samuel 214 Johnson, Wendy 71–2 Jones, Susannah Mushatt 162–3, 165 journalism 237–8 Juno (film) 193 Kaelin, William 130 Kawashima, Kihachiro 197 Kay, John 16, 68, 197, 231, 232 Keats, John 138–9, 234 Kempermann, Gerd 56, 57 Keynes, John Maynard 107, 271n9 Keynesianism 103 King, Mervyn 103, 104, 106, 110 Kinnell, Galway 28 Knausgaard, Karl Ove 86–7 Knight, Frank 107 Knightian uncertainty 107 knowledge 12–3, 170 advance of 20–1 average 173 betting on 236–7 credibility crisis 18 critical factors 83–5 failures of 19, 76–8, 79–82 fallibility of 248 generalizable 234 generalization 76–8 illusion of 136, 138 lessons of the past 102–7, 107–10 in medicine 182 negative capability 138–9 as obstacle to progress 17 obvious 82 paths to 136–9 plausibility mistaken for 132 practical 30–1 pretence of 105–6 probabilistic 160, 161, 163–4, 172–3 and probability 180 problem of scale 177–80 provenance 116 relevant 82–5 replication crisis 111–7 subverting 76–110 and time variations 87–100, 91, 93, 94, 95 transfer 37, 76–8, 83, 101–2 unknowns 85–7 validity 100–2 validity across time 107–10 weakest-link principle 79–82 Krugman, Paul 210 Lancet 225–6 Langley, Winnie 51, 165, 178 Laub, John 26–34, 42 law-like effects, claims about 21 learning styles 207 Leicester City Football Club 199–201 Leon (ex-delinquent) 31–2 Leyser, Ottoline 114 life, mechanics of 51 life-course persistent offenders 28–9 limits and limitations 16–7, 44, 75 base-rate neglect 176–7 of cleverness 278n14 individual level 174–6, 178–9, 181–3 lack of guarantees 160 marginal probabilistic outcomes 176–7 medical effect 167–9, 169, 170–4 on prediction 165–6 on probability 160–83 problem of scale 161–6, 174– 6, 177–80, 181–3 Liskov Substitution Principle 261n3 Little Britain (TV comedy) 192 Liu, Chengwei 198, 201 lives, understanding 29 location shift 264n20 Loken, Erik 124–5 long-acting reversible contraceptives (LARCS) 190 luck 37–8, 48, 178, 198 lung cancer 174–5 Lyko, Frank 1, 2 machine mode thinking 151–2 Macron, Emmanuel 20 Manski, Charles 209, 235 Mao Zedong 218 marginal probabilistic outcomes 176–7 marmorkrebs 1–9, 4, 10, 12, 12–3, 22, 35, 81, 182, 252n2 Marteau, Theresa 65 Martin, George 52 May, Theresa 208 Mayne, Stephen 77 measurement 99–100 mechanical relationships 212, 242, 244 mechanical thinking 242–4, 243 media stigma 192–3 medical effect, drugs 167–9, 169, 170–4 medical reversal 131–3 medicine comparative cost analysis 173 knowledge in 182 non-responders 172 Numbers-Needed-to-Treat (NNTs) 168, 169, 170, 173–4 personalized 181–3 predictive weakness 170–3 probability and 167–9, 169, 170–4 memory 56, 102–7 Mendelian randomization 233 Menon, Anand 214–5 mental shortcuts 14–5 mere facts 202–3 meta-science 19, 20 methodological revisions 97–8, 120 mice 55 microenvironmental influences 8–9, 253–4n12 micro-irregularity 35–7 micro-particulars 128 Microsoft 147–50, 199 Miller, Helen 66–7, 67 mind, the flat 59–60, 60–8 shape 59 models and modelling 140, 242–4, 243, 269–70n3 moment when, the 52 morality, changing 108 More or Less (radio programme) 237 Munafò, Marcus 234 Nadella, Satya 147–8 National Survey of Family Growth 192 National Surveys of Sexual Attitudes and Lifestyles 191–2 nationalism 108 Nature 2, 112, 136, 168, 174 nature/nurture debate 3, 5–6, 9–10 negative capability 138–9, 234 neurology 58 New England Journal of Medicine 131–2 Newcastle upon Tyne 214 Newton, Isaac 140–1 noise 14 definition 10 developmental 10 as intellectual dross 11 re-appraisal of 11–3 non-shared environment 37 Nosek, Brian 129 noses 49–51 Nottingham 217 Numbers-Needed-to-Treat (NNTs) 168, 169 nurture, influence of 44 O’Connor, Sarah 217–8 Office for National Statistics 89, 92, 98, 99–100, 216 O’Neill, Onora 238 opinions 21, 59 order 11–2, 13 organ donation campaign 155–6 outside influence 44 overclaiming 134–5 overconfidence 21 overseas business expansion 76–8 Oxfam, sexual abuse scandal 210 Paphides, Pete 52–3 parental behaviour 41 parents, impact of 41 Parris, Matthew 63 parthenogenesis 1–2 particularism 271–2n15 particularity problem, the 93 past, the, lessons of 102–7, 107–10 pattern-making instinct 21 patterns 13 pendulums 57 perceptual systems 64 performance 72–5 personalized medicine 181–3 Peto, Richard 47–8 phenotypes 8 physiognomy, and character 50 plausibility 132 Plomin, Robert 43–4, 49, 57 pluralism 231–2 polarization 235 policy making 231–2 appraisal 277n4 chances of success 208 failures 204–9 governing for uncertainty 239–41 and probability 178–9 secret of 209 seminar 207–8 sequential changes 208 political assumptions, fall of 20 political beliefs 60–6 population validity 263n18 populism, rise of 20 poverty 240–1 Prasad, Vinayak 131–2 precision 183 predictability 28 predictive weakness 165–6, 170–3 preferences 59, 62 deep 65 priming 126–8 probabilistic knowledge 160, 161, 163–4, 170, 172–3 probability 54, 70, 107, 258n25, 272n2 advantages 177–80 base-rate neglect 176–7 difference in 30 fear of low probabilities 166 individual level 174–6, 178–9, 181–3 limits and limitations 160–83 marginal 176–7 medical effect 167–9, 169, 170–4 paradox 170 and policy making 178–9 predictive weakness 165–6 problem of scale 161–6, 174– 6, 177–80, 181–3 recognizing significance 161 risk evaluation 161–6 suggestion of knowledge 180 use of 242 usefulness 161 problems, conceptualizing 17 productivity growth 209–10 progress, knowledge as obstacle to 17 psychoanalysis 58 psychology 58 Pullinger, John 278n14 Pullman, Philip 37 quantification, risk and risk-taking 162–5 racism 125–6 radical uncertainty 106, 107 Radio, Andrew 102 rage to conclude, the 139 randomized controlled trials, value of 280n6 randomness, pure 9 Ranieri, Claudio 200–1 rationality 68, 260n6, 260n8 reality 230, 245, 254n14 reciprocity 155 reflection 65–6 regularity 73, 160 assumption of 212–4 expectations of 47, 202–4 search for 212, 230 statistical 240–1 replication crisis 18, 111–7, 117– 22, 129, 136, 138 Replication Project 129 research 111–39 balance of evidence 114 breadth 130 claims inflation 130 confidence in 115–6 credibility crisis 18 decision rules 136–9 depth 130 evidence-based medicine 133–4 false negatives 113–4 false positives 113–4, 122 fragility 128–9 freedom 122–9 half wrong 113, 115–6 the Janus effect 121, 122–9 limitations of 117–22 micro-particulars 128 multiple analyses 125–6 multiple conclusions 117–22 overclaiming 134–5 priming 126–8 redemption 20 replication crisis 111–7, 117– 22, 129, 136, 138 rigour 19 scepticism 115–6 standards 129–36 statistical significance 122 triangulation 138 validity 101–2 research-credibility crisis 18 rigour 19, 246 risk and risk-taking 70–1, 107, 186 alcohol consumption 180 cancer 162–3, 166, 174–5 communication of 133 evaluation 161–6 heart disease 163–6 quantification 162–5, 166 quantified 187 risk-perception 71 Rockhill, Beverly 181 Rolling Stone magazine 23 Rose, Geoffrey 175–6 Rowntree Joseph 146–7 Royal Bank of Scotland 211 Russell, Bertrand 202, 202–3 samples, validity 100–2 Sampson, Robert 26–34, 42, 236 sanitation 225–9 Santayana, George 109 scale, problem of 161–6, 174–6, 177–80, 181–3 scepticism 105, 115–6, 128, 206 schizophrenia 34–6, 256n10 Science 56 Scientific American 55 Scotland, Triple-P parenting programme 206 screening 132–3, 177 searing memory, doctrine of the 102–7 selection bias 244 self-understanding 67 Sense about 115 serendipitous events 43, 52–3 sex education, role of 189–90 short-term gene–environment interaction 7 significance, recognizing 161 Silberzahn, Raphael 125–6 Simmons, Joseph 122–3 situated choice 31–3, 34, 42 situations, appraisal of 72 sliding-doors moments 50 small differences, power of 56–7 small effects, influence of 49–54 small experiences, influence of 35–7 smartphones 97, 191 Smith, George Davey 50, 51, 234, 281n1 social contexts 31, 195 social media 191 social mobility 240–1 social policy 195 social proof 154–6 social reformers 146–7 social science, utility of 146–50 special theory of relativity 140–1 Spiegelhalter, David 180, 244–5 spontaneous interaction 9 stagflation 103 statins 171 statistical regularities 240–1 statistical significance 122, 137 stents, use of 131 stories and storytelling 25–6, 53–4, 244–5, 247, 248, 258n25, 258n27 structural forces 54 Sun, the 51 support factors 194 Surfers Against Sewage 70–1 surgeons, skills 73–4 system 1 thinking 149 systematic forces 54 systems-level thinking 153 Tamil Nadu 79–82, 101–2 Tangiers, Morocco 84 technology, changing 108 Teen Mom (TV show) 193 teenage pregnancy rate decline in 184, 188–96 estimates 275n3 terrible simplifiers 255n20 Tesco 77, 211 Thaler, Richard 157 theories 140–59 analytic validity 158 arguments about 150–4 of crime 142–6, 143 development economics 150–3 fitness 157 implementation 152 limitations 157 and practice 141 refining 156–7 relevance 157–8 social science 146–50 tension in 154–9 using 156–7 ‘thick’ description 86 time, validity across 107–10 Time magazine 193 time variations, and knowledge 87–100, 91, 93, 94, 95 The Times 63 toilets 225–9 Toshiba 211 trade-offs 190–1 trends 54 trials 156 triangulation 138, 233–4 Triple-P parenting programme 206–7 trivia, importance of 84–5 true uncertainty 107 Trump, Donald 20, 218, 222, 223–4 trust 238 trust deficit 218 trustworthiness 238 Tufte, Edward 139 turning points, variety 49–54 TV crime shows 143, 143 twins and twin studies conjoined 39–42 identical 34–7, 39, 256n10 Tyson, Mike 23, 23–6 Tyson, Rodney 24–5, 255n3 Uhlmann, Eric 125–6 uncertainty 89–90, 100, 209– 12, 254n14 admitting 238 communicating 237–9 data 89–91 embracing 234–6 erratic 93 governing for 239–41 Knightian 107 language of 238 managing for 241–2 in medicine 167–9, 169, 170–4 perpetual 230 radical 106, 107 true 107 uncertainty laundering 268n33 understanding hidden half of 13 limiting effects on 14 limits of 54 unemployment 221–2, 263n17 unintended consequences 105, 229 United States of America China trade 220–3 incarceration rates 222, 240, 280n10 labour market 221 minimum wage 266–7n10 unemployment 221–2 universal gravitational attraction, theory of 140–1 unknowns 85–7, 206 unusual, the 195 upbringing 23–5 Uyeno, Lori 47 validity across time 107–10 analytic 158, 263n18 ecological 263n18 external 101, 158, 263n18, 264n19 internal 101–2, 158 knowledge 100–2, 107–10 population 263n18 research 101–2 samples 100–2 values 59, 232 variation, sources of 5–8 Volkswagen, diesel emissions scandal 211 Wall Street Journal 219 Wallace, Alfred Russel 259n33 Walmart 77 Watts, Duncan 68, 69, 147–50 weakest-link principle 79–82 Wedgwood, Josiah 50–1 Wellington, Duke of 51 Wesfarmers 76–7 West Germany, motorcycle thefts 142–4 Western, Bruce 54 Wilson, Harold 99 World Bank Independent Evaluation Group 79 World Health Organization 162 world picture 63–4 Wright, Sewall 253n11


pages: 283 words: 81,163

How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present by Thomas J. Dilorenzo

banking crisis, British Empire, business cycle, collective bargaining, corporate governance, corporate social responsibility, financial deregulation, Fractional reserve banking, Hernando de Soto, income inequality, invisible hand, Joseph Schumpeter, laissez-faire capitalism, means of production, medical malpractice, Menlo Park, minimum wage unemployment, Norman Mailer, plutocrats, Plutocrats, price stability, profit maximization, profit motive, Ralph Nader, rent control, rent-seeking, Robert Bork, Ronald Coase, Ronald Reagan, Silicon Valley, statistical model, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, wealth creators, working poor, Works Progress Administration, zero-sum game

At a time when underemployment or unemployment of resources (including labor resources) was of tragic proportions, the focus of the government was to restrict output and employment even further with supply-reducing cartel schemes and limitations on hours worked. The scheme was destined to fail. First, if wages are forced up by government fiat, the effect is to reduce the demand for labor, which creates more unemployment. It is well known that the minimum-wage law causes unemployment, especially among lower-skilled workers. But at least the minimum-wage law applies primarily to entry-level employees and is therefore limited in the amount of harm it can do. The NIRA was an economy-wide minimum-wage (and maximum-hour) program, which rendered the job-destroying effect of the minimum-wage law universal. Second, higher prices caused by a government-run cartel scheme may increase the incomes of sellers, but only by reducing the incomes of buyers by an equivalent amount.


pages: 283 words: 73,093

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

Roads, bridges, and other infrastructure grease the wheels of business activity. Limited liability and bankruptcy provisions encourage risk taking. Affordable high-quality childcare increases parental employment and boosts the capabilities of less advantaged kids. Access to medical care improves health and reduces anxiety. Child labor restrictions, antidiscrimination laws, minimum wages, job safety regulations, consumer safety protections, unemployment insurance, and a host of other policies help to ensure social peace. There surely is a tipping point at which government taxing and spending begins to harm the economy. But where are we in relation to that point? We have the experiences of the world’s rich countries to draw upon in answering this question. This evidence doesn’t give us a full and final answer, but it strongly suggests that America hasn’t reached the tipping point.


pages: 517 words: 147,591

Small Wars, Big Data: The Information Revolution in Modern Conflict by Eli Berman, Joseph H. Felter, Jacob N. Shapiro, Vestal Mcintyre

basic income, call centre, centre right, clean water, crowdsourcing, demand response, drone strike, experimental economics, failed state, George Akerlof, Google Earth, HESCO bastion, income inequality, income per capita, information asymmetry, Internet of things, iterative process, land reform, mandatory minimum, minimum wage unemployment, moral hazard, natural language processing, RAND corporation, randomized controlled trial, Ronald Reagan, school vouchers, statistical model, the scientific method, trade route, unemployed young men, WikiLeaks, World Values Survey

Difference-in-differences studies are like natural experiments in that they exploit a “treatment” that is taking place in one location and not another but compare the change over time in the treatment group to that in a control group: a raise in the minimum wage in New Jersey allowed researchers to compare the effect over time on fast-food employees to a control group in Pennsylvania where the minimum wage stayed the same. The findings refuted the argument that hikes in the minimum wage cause unemployment. David Card and Alan B. Krueger, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,” American Economic Review 84, no. 4 (1994): 772–93. Regression discontinuity design we discuss presently. But a famous early example of the technique was a 1960 study that showed that students who received a certificate of merit, compared to those who just missed the cutoff, were more likely to receive scholarships—but the recognition didn’t affect their long-term goals.


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

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

Whatever one's terms, no one can reasonably deny that the political economy of 1939 differed hugely from that of 1929. Moreover, many of the institutional innovations of the 1930s remain embedded in the socioeconomic order today: acreage allotments, price supports, and marketing controls in agriculture, detailed regulation of private securities markets, extensive federal intrusion in union-management relations, enormous governmental lending and insurance activities, the minimum wage, national unemployment insurance, Social Security pensions and welfare payments, production and sale of electrical power by the federal government, fiat money wholly without commodity backing-the list goes on and on. All of 159 History 160 these familiar politico-economic institutions have functioned continuously since the 1930s. My thesis is that the institutional revolution of the 1930s depended crucially on the existence of national emergency, a condition that was partly real, partly contrived, enormously exploited for political purposes.


pages: 399 words: 155,913

The Right to Earn a Living: Economic Freedom and the Law by Timothy Sandefur

American ideology, barriers to entry, big-box store, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Edward Glaeser, housing crisis, joint-stock company, Joseph Schumpeter, minimum wage unemployment, positional goods, price stability, profit motive, race to the bottom, Ralph Nader, RAND corporation, rent control, Robert Bork, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, The Wealth of Nations by Adam Smith, trade route, transaction costs, Upton Sinclair, urban renewal, wealth creators

As Justice McReynolds pointed out in his dissenting opinion in Nebbia, there was nothing rational about prohibiting low-cost milk during a national Depression.15 The rational basis test does not require that the law actually make sense—but simply asks whether a legislator might have thought that the law was 127 The Right to Earn a Living good for the public. As the Court has noted more recently, “[W]e never require a legislature to articulate its reasons for enacting a statute.”16 Even where the facts demonstrate that a law cannot accomplish its alleged purpose, courts will not find it unconstitutionally irrational.17 Economists are in almost universal agreement, for example, that minimum-wage laws increase unemployment and raise prices, particularly on those goods and services purchased by the poor.18 Yet no amount of expert testimony by economists could persuade a court to find the minimum wage unconstitutional under this test. Indeed, the legislature is not even required to have any actual evidence that a proposed law would work. The reasonableness of an economic regulation is “not subject to courtroom fact-finding and may be based on rational speculation unsupported by evidence or empirical data.”19 Instead, a judge using the rational basis test asks whether there is any conceivable reason to uphold the law—and it is “entirely irrelevant for constitutional purposes” whether the justification that the judge finds to be sufficient is actually the same reason that the legislature had in mind.20 In other words, even if lawmakers actually meant to do something unconstitutional, or even if they had no particular goal in mind at all, courts will uphold the law if they can think of some other, legitimate purpose that might also be advanced by the law.

I use the term “justice” in its precise sense. The term has, unfortunately, often been abused in the name of “social justice,” a meaningless concept. See Hayek, Law, Legislation and Liberty, vol. 2. 28. Adkins v. Children’s Hospital, 261 U.S. 525 (1923). 29. Washington v. Glucksberg, 521 U.S. 702, 760 (1997) (Souter, J., dissenting). 30. Arkes, The Return of George Sutherland, p. 13. The effects of these minimum wage laws were, in fact, to increase unemployment for women. Clifford F. Thies, “The First Minimum Wage Laws,” Cato Journal 10, no. 3 (Winter 1991): 715–46. Michael McGerr notes that the American Federation of Labor sought “[t]o shore up male wages [by] . . . favor[ing] equal pay for women. Of course, if men and women received the same wages, then men were more likely to get the jobs.” McGerr, A Fierce Discontent: The Rise and Fall of the Progressive Movement in America, 1870–1920 (New York: Free Press, 2003), p. 132. 31.


pages: 267 words: 79,905

Creating Unequal Futures?: Rethinking Poverty, Inequality and Disadvantage by Ruth Fincher, Peter Saunders

barriers to entry, ending welfare as we know it, financial independence, full employment, Gini coefficient, income inequality, income per capita, labour market flexibility, labour mobility, longitudinal study, low skilled workers, low-wage service sector, marginal employment, minimum wage unemployment, New Urbanism, open economy, pink-collar, positional goods, purchasing power parity, shareholder value, spread of share-ownership, The Bell Curve by Richard Herrnstein and Charles Murray, urban planning, urban renewal, very high income, women in the workforce, working poor, working-age population

The Five Economists suggest that curtailing Award safety net increases would lead to a reduction in aggregate wages growth but this proposition is overly optimistic. It ignores the extent to which wages growth is largely unregulated among the two-thirds of the workforce outside the Award stream. Restraint in relative wages aims to make less skilled workers more employable by making their labour cheaper. Overseas research on the minimum wage has focused on whether raising the level of the minimum wage leads to increased unemployment for those workers on the minimum wage. This is basically the same logic which says that reducing wages for the less skilled leads to better employment outcomes. Careful examination of the overseas research suggests that the theoretical debate in this area is inconclusive and depends heavily on what kind of assumptions are made about how the labour market works. In terms of empirical research, the conventional wisdom has been that raising wages does lead to increased unemployment, but research during the 1990s has seriously eroded confidence in this position (Industrial and Labor Relations Review Symposium 1992; Card and Krueger 1995 and 1998; Neumark and Wascher 1997; Abowd et al. 1999; Dolado et al. 1996).


pages: 128 words: 35,958

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

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

Jackson, “Income Gap Mentality,” Boston Globe, April 19, 2006. 28. The 1989 edition of Paul Samuelson’s economics textbook said that both unions and minimum wage laws caused unemployment. This was not a controversial view. A 1987 New York Times editorial called for the end of minimum wage laws, citing “a virtual consensus among economists that the minimum wage is an idea whose time has passed.” One of the first attempts to study the actual effects of minimum wage laws, published in 1994 by the Princeton economists David Card and Alan B. Krueger, found that a 1992 increase in New Jersey’s minimum wage had not produced a measurable increase in unemployment. This was heresy, and the response was suitably overheated. The Nobel laureate James Buchanan wrote in the Wall Street Journal that allowing evidence to contradict theory was a disgrace.


pages: 229 words: 61,482

The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want by Diane Mulcahy

Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, basic income, Clayton Christensen, cognitive bias, collective bargaining, creative destruction, David Brooks, deliberate practice, diversification, diversified portfolio, fear of failure, financial independence, future of work, gig economy, helicopter parent, Home mortgage interest deduction, housing crisis, job satisfaction, Kickstarter, loss aversion, low skilled workers, Lyft, mass immigration, mental accounting, minimum wage unemployment, mortgage tax deduction, negative equity, passive income, Paul Graham, remote working, risk tolerance, Robert Shiller, Robert Shiller, Silicon Valley, Snapchat, TaskRabbit, Uber and Lyft, uber lyft, universal basic income, wage slave, Y Combinator, Zipcar

It won’t eliminate bad jobs and poorly paid workers, but what it can do is offer some positive change for these low-skill workers. In the Gig Economy, these workers have the chance to gain more control and have more flexibility and autonomy in their working lives. Uber drivers work under similar circumstances that most taxi drivers always have: they are contractors with no benefits, no overtime or minimum wage, and no access to unemployment insurance. But there are many more people willing to be Uber drivers than taxi drivers, in part because they can control when and how much they work. Similarly, the economic plight of an on-demand worker for a company like TaskRabbit or Postmates is not materially different from that of a low-wage hourly worker in a fast food restaurant or retail store. They both have low wages and no benefits, but workers who wouldn’t dream of applying for a job in a fast food restaurant are willing to work on platforms like TaskRabbit or Postmates partly because they can do so when and how much they wish.


pages: 275 words: 77,955

Capitalism and Freedom by Milton Friedman

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

Many proponents of minimum wage laws quite properly deplore extremely low rates; they regard them as a sign of poverty; and they hope, by outlawing wage rates below some specified level, to reduce poverty. In fact, insofar as minimum wage laws have any effect at all, their effect is clearly to increase poverty. The state can legislate a minimum wage rate. It can hardly require employers to hire at that minimum all who were formerly employed at wages below the minimum. It is clearly not in the interest of employers to do so. The effect of the minimum wage is therefore to make unemployment higher than it otherwise would be. Insofar as the low wage rates are in fact a sign of poverty, the people who are rendered unemployed are precisely those who can least afford to give up the income they had been receiving, small as it may appear to the people voting for the minimum wage. This case is in one respect very much like public housing. In both, the people who are helped are visible the people whose wages are raised; the people who occupy the publicly built units.


pages: 1,034 words: 241,773

Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Steven Pinker

3D printing, access to a mobile phone, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, anti-communist, Anton Chekhov, Arthur Eddington, artificial general intelligence, availability heuristic, Ayatollah Khomeini, basic income, Berlin Wall, Bernie Sanders, Black Swan, Bonfire of the Vanities, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, clockwork universe, cognitive bias, cognitive dissonance, Columbine, conceptual framework, correlation does not imply causation, creative destruction, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, decarbonisation, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, distributed generation, diversified portfolio, Donald Trump, Doomsday Clock, double helix, effective altruism, Elon Musk, en.wikipedia.org, end world poverty, endogenous growth, energy transition, European colonialism, experimental subject, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, frictionless, frictionless market, germ theory of disease, Gini coefficient, Hans Rosling, hedonic treadmill, helicopter parent, Hobbesian trap, humanitarian revolution, Ignaz Semmelweis: hand washing, income inequality, income per capita, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), invention of writing, Jaron Lanier, Joan Didion, job automation, Johannes Kepler, John Snow's cholera map, Kevin Kelly, Khan Academy, knowledge economy, l'esprit de l'escalier, Laplace demon, life extension, long peace, longitudinal study, Louis Pasteur, Martin Wolf, mass incarceration, meta analysis, meta-analysis, Mikhail Gorbachev, minimum wage unemployment, moral hazard, mutually assured destruction, Naomi Klein, Nate Silver, Nathan Meyer Rothschild: antibiotics, Nelson Mandela, New Journalism, Norman Mailer, nuclear winter, obamacare, open economy, Paul Graham, peak oil, Peter Singer: altruism, Peter Thiel, precision agriculture, prediction markets, purchasing power parity, Ralph Nader, randomized controlled trial, Ray Kurzweil, rent control, Republic of Letters, Richard Feynman, road to serfdom, Robert Gordon, Rodney Brooks, rolodex, Ronald Reagan, Rory Sutherland, Saturday Night Live, science of happiness, Scientific racism, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Kuznets, Skype, smart grid, sovereign wealth fund, stem cell, Stephen Hawking, Steven Pinker, Stewart Brand, Stuxnet, supervolcano, technological singularity, Ted Kaczynski, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, total factor productivity, union organizing, universal basic income, University of East Anglia, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, urban renewal, War on Poverty, We wanted flying cars, instead we got 140 characters, women in the workforce, working poor, World Values Survey, Y2K

Can we imagine a day in which the most famous columnists and talking heads have no predictable political orientation but try to work out defensible conclusions on an issue-by-issue basis? A day in which “You’re just repeating the left-wing [or right-wing] position” is considered a devastating gotcha? In which people (especially academics) will answer a question like “Does gun control reduce crime?” or “Does a minimum wage increase unemployment?” with “Wait, let me look up the latest meta-analysis” rather than with a patellar reflex predictable from their politics? A day when writers on the right and left abandon the Chicago Way of debating (“They pull a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue”) and adopt the arms-controllers’ tactic of Graduated Reciprocation in Tension-Reduction (make a small unilateral concession with an invitation that it be reciprocated)?


pages: 261 words: 81,802

pages: 441 words: 113,244

Seasteading: How Floating Nations Will Restore the Environment, Enrich the Poor, Cure the Sick, and Liberate Humanity From Politicians by Joe Quirk, Patri Friedman

3D printing, access to a mobile phone, addicted to oil, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, barriers to entry, Branko Milanovic, British Empire, Buckminster Fuller, Burning Man, business climate, business cycle, business process, California gold rush, Celtic Tiger, Charles Lindbergh, clean water, Colonization of Mars, Dean Kamen, Deng Xiaoping, drone strike, Elon Musk, en.wikipedia.org, failed state, financial intermediation, Gini coefficient, happiness index / gross national happiness, income inequality, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, joint-stock limited liability company, Kickstarter, low skilled workers, Machinery of Freedom by David Friedman, Mark Zuckerberg, megacity, minimum wage unemployment, Network effects, new economy, obamacare, offshore financial centre, open borders, paypal mafia, peak oil, Peter H. Diamandis: Planetary Resources, Peter Thiel, price stability, profit motive, Ronald Coase, Ronald Reagan, Shenzhen was a fishing village, Silicon Valley, special economic zone, standardized shipping container, stem cell, trade route, UNCLOS, UNCLOS, undersea cable, young professional

Seventeen percent of all Singaporean households possess at least $1 million US in disposable wealth, and that’s excluding capital wealth invested in business and property in a place where property is one of the world’s most expensive. Income tax is capped at 20 percent. Singaporeans get rich quick. According to a wealth report released by Barclays Bank in 2013, 51 percent of Singapore’s wealthy people have taken less than ten years to become millionaires. Western polemicists from the Left and the Right claim Singapore as their own. With no minimum wage, Singapore maintains an unemployment rate of a little more than 2 percent. Singapore’s efficient government maintains large budget surpluses and universal health care. The orderly, litter-free society has been the publicly expressed envy of citizens in a few neighboring countries suffering rampant corruption. Today Singapore’s primary social concern is coping with all the immigrants flocking to work there. Almost half their workforce is non-Singaporean, because so many workers choose to live there.


pages: 246 words: 68,392

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The Fourth Revolution: The Global Race to Reinvent the State by John Micklethwait, Adrian Wooldridge

Admiral Zheng, affirmative action, Affordable Care Act / Obamacare, Asian financial crisis, assortative mating, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bernie Madoff, Boris Johnson, Bretton Woods, British Empire, cashless society, central bank independence, Chelsea Manning, circulation of elites, Clayton Christensen, Corn Laws, corporate governance, credit crunch, crony capitalism, Deng Xiaoping, Detroit bankruptcy, disintermediation, Edward Snowden, Etonian, failed state, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, income inequality, Khan Academy, Kickstarter, knowledge economy, Kodak vs Instagram, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, Martin Wolf, means of production, minimum wage unemployment, mittelstand, mobile money, Mont Pelerin Society, Nelson Mandela, night-watchman state, Norman Macrae, obamacare, oil shale / tar sands, old age dependency ratio, open economy, Parag Khanna, Peace of Westphalia, pension reform, pensions crisis, personalized medicine, Peter Thiel, plutocrats, Plutocrats, popular capitalism, profit maximization, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, Silicon Valley, Skype, special economic zone, too big to fail, total factor productivity, War on Poverty, Washington Consensus, Winter of Discontent, working-age population, zero-sum game


pages: 375 words: 88,306

The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan

additive manufacturing, Airbnb, AltaVista, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, basic income, bitcoin, blockchain, Burning Man, call centre, collaborative consumption, collaborative economy, collective bargaining, commoditize, corporate social responsibility, cryptocurrency, David Graeber, distributed ledger, employer provided health coverage, Erik Brynjolfsson, Ethereum, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, George Akerlof, gig economy, housing crisis, Howard Rheingold, information asymmetry, Internet of things, inventory management, invisible hand, job automation, job-hopping, Kickstarter, knowledge worker, Kula ring, Lyft, Marc Andreessen, megacity, minimum wage unemployment, moral hazard, moral panic, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, peer-to-peer rental, profit motive, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Ross Ulbricht, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, uber lyft, universal basic income, Zipcar

Third, the true underlying issue isn’t really about a desire among workers for full-time employment, but rather about a desire to obtain the benefits currently and exclusively associated with that status. As Fox notes, since the 1944 ruling—which for collective bargaining purposes categorized the newsboys as employees—workers classified as employees “now enjoy a wide variety of federal, state and local protections, from minimum-wage and overtime laws to unemployment insurance, that aren’t available to independent contractors.”3 This is an important distinction for a number of reasons, most saliently because the specter of future litigation may actually be preventing workers from getting benefits funded by the platforms. Since one of the IRS’s criteria for determining whether a worker is an employee is whether that worker gets benefits, a platform that considers benefits for its independent-contractor workers as, for example, a retention strategy, or a way of attracting new workers, will shy away from this to avoid potential class-action lawsuits.


pages: 590 words: 153,208

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

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

Since CETA was spending over $10 billion annually in the late seventies and much of the money was going to unionized municipal workers and middle-class social servants, the simultaneous rises in unemployment, labor force withdrawal, and small-business failure in the inner city are not as surprising as they may seem. Indeed, in view of welfare, unemployment compensation, and minimum-wage policies that further harden the core of ghetto unemployment, the uselessness of CETA seems obvious and inevitable. A key effect of such programs, however, is not financial, since, particularly in the ghetto, few businesses resort to bank loans. Here the main effect is to deprive ghetto businesses of potential low-cost labor. By paying the minimum wage and more for work far less stressful than the petty manufacturing, retailing, and other menial jobs available in the lower reaches of the private sector, the CETA jobs raised still further the labor costs of small businesses and decreased their number and profitability.



pages: 374 words: 97,288

The End of Ownership: Personal Property in the Digital Economy by Aaron Perzanowski, Jason Schultz

3D printing, Airbnb, anti-communist, barriers to entry, bitcoin, blockchain, carbon footprint, cloud computing, conceptual framework, crowdsourcing, cryptocurrency, Donald Trump, Edward Snowden, en.wikipedia.org, endowment effect, Firefox, George Akerlof, Hush-A-Phone, information asymmetry, intangible asset, Internet Archive, Internet of things, Isaac Newton, loss aversion, Marc Andreessen, means of production, minimum wage unemployment, new economy, peer-to-peer, price discrimination, Richard Thaler, ride hailing / ride sharing, rolodex, self-driving car, sharing economy, Silicon Valley, software as a service, software patent, software studies, speech recognition, Steve Jobs, subscription business, telemarketer, The Market for Lemons, transaction costs, winner-take-all economy

In cities big and small, there is evidence that Airbnb contributes to rent increases for residents.2 As more housing units are devoted to the sharing economy, fewer are available for locals to rent. Long-term renters have even been evicted to make room for vacationers.3 The unseen costs of the sharing economy are also borne by the increasing number of workers classified as independent contractors. By insisting on that classification for its drivers, Uber—currently valued at over $50 billion—avoids paying the minimum wage, payroll taxes, health insurance, unemployment benefits, and workers compensation for the vast majority of its workers.4 That cost shifting isn’t apparent to Uber users. All they see is the few dollars they saved compared to a taxi and the free bottle of water. These problems are hardly insurmountable. They are largely the function of business models that have outpaced the law. But the law will catch up. Airbnb is under increased scrutiny by local authorities.


Basic Income: A Radical Proposal for a Free Society and a Sane Economy by Philippe van Parijs, Yannick Vanderborght

"Robert Solow", Airbnb, Albert Einstein, basic income, Berlin Wall, Bertrand Russell: In Praise of Idleness, centre right, collective bargaining, cryptocurrency, David Graeber, declining real wages, diversified portfolio, Edward Snowden, eurozone crisis, Fall of the Berlin Wall, feminist movement, full employment, future of work, George Akerlof, illegal immigration, income per capita, informal economy, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, Marshall McLuhan, means of production, minimum wage unemployment, open borders, Paul Samuelson, pension reform, precariat, price mechanism, profit motive, purchasing power parity, quantitative easing, race to the bottom, road to serfdom, Second Machine Age, secular stagnation, selection bias, sharing economy, sovereign wealth fund, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, universal basic income, urban planning, urban renewal, War on Poverty, working poor

If a parade of �people of increasing heights is used to represent the distribution of earnings, the �giants at the end get taller from de�cade to de� cade, the walkers of average height come �later and �later in the pro�cession, and �there are more and more dwarfs whose earnings do not reach the level of what is regarded as a decent income, or are at risk of falling �under it.4 Such a polarization of earning power can be expected to manifest itself in dif�fer�ent ways, depending on the institutional context. Where the level of remuneration is and remains firmly protected by minimum-�wage legislation, collective bargaining, and generous unemployment insurance, the result tends to be massive losses of jobs. Where such protections are or become weaker, the results tend to be dramatic increases in the numbers of �people having to scrape by, �doing precarious jobs that pay miserable wages. 5 Such trends are 5 BASIC INCOME already vis�i�ble, but if the predicted effects of the new wave of automation materialize, they �will get much worse.


pages: 306 words: 78,893

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

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

That is, since conventional economists believe as a matter of faith that market rates of pay are fair compensation for a worker s productive contribution, any inexpHcable anomaUes in pay must be the result of things a boss can see that elude the academics model. Those of us w^ho are not constrained by a faith in the correlation of pay and productivity, or v^ho don't accept conventional definitions of what constitutes productive labor, will want to look elsewhere. Leading culprits are racial, sexual, and other forms of discrimination; the declining power of unions; the eroding value of the minimum wage; cutbacks in social spending (welfare and unemployment benefits act as a kind of floor under the wage—as the floor is lowered, so too are wages, especially at the bottom); persistent labor market turbulence (layofis, restructurings, givebacks) that put workers on the defensive and weaken their bargaining power; relatively high rates of unemployment, even in good times (not true in the late 1990s, but true for the twenty previous years^); and, more controversially, the increasing importance of international trade and immigration.


pages: 976 words: 235,576

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

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

The broad survey of opinion among Americans from the top fifth of the income distribution that revealed distinctive social liberalism also revealed distinctive—indeed more distinctive—economic conservatism: the richest fifth of Americans are much more hostile than the bottom four-fifths to progressive taxation, economic regulation, and social welfare spending. Americans from the top tenth of the income distribution display similarly conservative economic views: when compared to median Americans, the rich are substantially more hostile to high top marginal tax rates, substantially more inclined to reduce capital gains and inheritance taxes, substantially less inclined to raise the minimum wage or increase unemployment benefits, and substantially more skeptical of government regulation of corporations and industry. The Phillips Exeter survey also revealed that three to five times as many students were conservative on economic issues as on social ones. Truly rich Americans are, if anything, more economically conservative still. The participants in the Chicago survey (of the top 1 percent) were less than one-third as likely as Americans overall to favor policies, across a wide range of specific measures, that are designed to secure jobs and increase pay for working-class Americans.


pages: 221 words: 55,901

pages: 190 words: 53,409

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


pages: 330 words: 77,729

pages: 376 words: 118,542

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

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

Wartime inflation had made that so low in real terms as to be unimportant. The minimum wage was then raised sharply to 75 cents in 1950, to $1.00 in 1956. In the early fifties the unemployment rate for teenagers averaged 10 percent compared with about 4 percent for all workers—moderately higher, as one would expect for a group just entering the labor force. The unemployment rates for white and black teenagers were roughly equal. After minimum wage rates were raised sharply, the unemployment rate shot up for both white and black teenagers. Even more significant, an unemployment gap opened between the rates for white and black teenagers. Currently, the unemployment rate runs around 15 to 20 percent for white teenagers; 35 to 45 percent for black teenagers.7 We regard the minimum wage rate as one of the most, if not the most, antiblack laws on the statute books.


pages: 586 words: 159,901

Wall Street: How It Works And for Whom by Doug Henwood

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, affirmative action, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, information asymmetry, interest rate swap, Internet Archive, invisible hand, Irwin Jacobs, Isaac Newton, joint-stock company, Joseph Schumpeter, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, Louis Bachelier, market bubble, Mexican peso crisis / tequila crisis, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, plutocrats, Plutocrats, price mechanism, price stability, prisoner's dilemma, profit maximization, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond


pages: 492 words: 70,082

Immigration worldwide: policies, practices, and trends by Uma Anand Segal, Doreen Elliott, Nazneen S. Mayadas

affirmative action, Asian financial crisis, Berlin Wall, borderless world, British Empire, Celtic Tiger, centre right, conceptual framework, credit crunch, demographic transition, deskilling, en.wikipedia.org, European colonialism, Fall of the Berlin Wall, financial independence, full employment, global village, guest worker program, illegal immigration, immigration reform, income inequality, income per capita, informal economy, knowledge economy, labor-force participation, labour mobility, longitudinal study, low skilled workers, mass immigration, minimum wage unemployment, moral panic, Nelson Mandela, New Urbanism, open borders, phenotype, South China Sea, structural adjustment programs, trade route, transaction costs, upwardly mobile, urban planning, women in the workforce

Gender proportion was female:male 1:4 in the 1990s. Both single and married workers migrated to Thailand, bringing along with them their dependents. Most migrants were Buddhists. As for those from Myanmar, a sizable number were from ethnic Karen, Mon, and Table 20–2. GNP, GDP, Minimum Wage, Income of the Poorest, Unemployment Rate, and Population of Cambodia, Loas, Myanmar, and Thailand (2003) Country Cambodia Loas Myanmar Thailand GNP (per capita) (US$) GDP (per capita) (US$) Minimum Wage (per month) (US$) Income Distribution (Poorest 20%) (%) Unemployment Rate (%) Population 260 320 N/A 2,160 1555.83 1756.29 1733.45 6936.87 40 41.7 30 126.6 6.9 7.6 NA 6.4 2.5 5.7 5.1 2.2 13,363,421 6,068,117 42,720,196 64,265,276 Sources: www.nationmaster.com, www.worldbank.org, www.boi.go.th, www.Phiengch.free.fr, www.aworldconnected.org. 308 Nations with Increasing Immigrant Populations 2,204,795 (100%) Skilled workers with work permit 81,195 (3.7%) 800,000 (36.3%) Estimated undocumented workers Undocumented 36% Undocumented Skilled 4% Await citizenship Asylum-Seekers Unskilled Overstay Overstay 19% 409,258 (18.6%) Overstay Await citizenship 23% Unskilled 13% Unskilled Labor with work permit 288,780 (13.1%) Asylum-Seekers 5% Asylum-seeker 111,139 (5.04%) Skilled Aliens waiting citizenship and those permitted by ministry of Interior to stay temporarily in Thailand (514,424 (23.3%) Figure 20-2.


pages: 303 words: 75,192

pages: 332 words: 89,668

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

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

Environmental regulations are seen not as preserving streams and forests for future generation; they are viewed as ways of interfering with the free use of private property.”8 Reaganomics also emphasized deregulation. Proponents argued that government regulations required businesses to spend money on compliance that they might otherwise have spent on growing productive capacity.9 Reagan attacked the minimum wage, which he argued was a cause of unemployment, and attempted to institute a subminimum wage for young people, which was blocked by a House Democratic majority. As the minimum wage lost ground against inflation, Democrats in the House and Senate were ultimately forced to accept a subminimum “training wage” for certain kinds of on-the-job training, in order for any increase in the regular minimum wage to occur.10 Finally, Reagan’s programs included cutbacks in spending on social services, education, and welfare.


pages: 336 words: 95,773

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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

One of the most remarkable things about the economic expansion of the second half of the nineteenth century was that it took place without the distraction of inflation. The “official liberalism” of Supreme Court justices and bankers reflected general educated opinion. There was a broad and deep consensus that the market was a stern but ultimately benign ruler: obey the market and society would get richer; disobey the market and not only would society get poorer but you would reap all sorts of perverse consequences. Minimum wages would lead inexorably to higher unemployment, for example. Laissez-faire economics ruled not just in the economics departments but across the broad range of intellectual life. William Lawrence, an Episcopal bishop, said that there was “an elementary equation” between men’s wealth and God’s grace.”10 Lawyers believed that freedom of contract was at the heart of Anglo-Saxon law. From the 1860s onward, a new school of social Darwinists argued that laissez-faire was supported by evolution as well as God.


pages: 364 words: 104,697

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Capitalism: the unknown ideal by Ayn Rand

Albert Einstein, anti-communist, Berlin Wall, British Empire, business cycle, East Village, Ford paid five dollars a day, full employment, Isaac Newton, laissez-faire capitalism, means of production, minimum wage unemployment, profit motive, the market place, trade route, transcontinental railway, urban renewal, War on Poverty, yellow journalism

The overall result: goods and services that would have been produced are not brought into existence. b. As a result of the high wage rates, employers can afford to hire fewer workers; as a result of curtailed production, employers need fewer workers. Thus, one group of workers obtains unjustifiably high wages at the expense of other workers who are unable to find jobs at all. This—in conjunction with minimum wage laws—is the cause of widespread unemployment. Unemployment is the inevitable result of forcing wage rates above their free-market level. In a free economy, in which neither employers nor workers are subject to coercion, wage rates always tend toward the level at which all those who seek employment will be able to obtain it. In a frozen, controlled economy, this process is blocked. As a result of allegedly “pro-labor” legislation and of the monopolistic power that labor unions enjoy, unemployed workers are not free to compete in the labor market by offering their services for less than the prevailing wage rates; employers are not free to hire them.


pages: 289

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

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

Still another step toward equity would be to eliminate the provision in tax law that exempts from taxation the increase in the value of financial assets passed on through inheritance.3 The Minimum Wage The most frequently proposed policy measure to boost the growth rate of real wages at the bottom is to increase the federal minimum wage, which is currently set at $7.25. This is 12 percent less than the average value of the minimum wage in the 1960s, expressed in 2014 prices.4 Over the same 50 years, real compensation per hour rose by 115 percent, an indicator of how inadequate was the legislated real value of the minimum wage in keeping up with overall compensation.5 Standard economic theory implies that an increase in the minimum wage would raise the unemployment rate of the low-wage workers. However, a substantial body of economic research indicates little or no employment effect. The current economic situation of 2015–16 is a particularly appropriate time to raise the minimum wage, as the U.S. labor market currently has a record number of job openings and is creating low-skill jobs at a relatively rapid rate. Earned Income Tax Credit The EITC rewards low-income parents for working and has had a large positive effect on net income for its beneficiaries.


pages: 462 words: 129,022

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

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

Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118, no. 1 (2003): 1–39. Tables and figures updated to 2017 and available on Emmanuel Saez’s website: https://eml.berkeley.edu/~saez/. 20.Table A-4 in the Census Bureau Income and Poverty Report, available at https://www.census.gov/content/dam/Census/library/publications/2017/demo/P60-259.pdf. 21.FRED economic data. It used to be thought that increasing minimum wages would inevitably lead to significant increases in unemployment. But since the path-breaking work of David Card and Alan B. Krueger (“Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,” American Economic Review 84, no. 4 [1994]: 772–93), there is a growing consensus that that is not the case, partly because of the prevalence of market power in labor markets (discussed in chapter 4).


pages: 840 words: 202,245

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

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


pages: 626 words: 167,836

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

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

One rare source of information is letters written to the Roosevelt administration during the Great Depression. These letters include policy proposals by ordinary citizens that provide some insight into the concerns of the American public. Using a sample of eight hundred letters, Woirol recently classified a small percentage of their proposals.38 Most common were plans intended to increase consumer purchasing power through the implementation of minimum wages, price controls, government loans, pension or unemployment insurance programs, and direct job-creation plans. Other plans favored the expansion of public employment in work projects of various kinds. But some citizens also favored policies to stop job displacement forces: 5 percent of the letters argued for restrictions on labor-saving machinery. While Woirol’s sample might not be representative of the American public, it does suggest that even during the years of most extreme hardship, few people believed that restrictions on machinery were a good idea.


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

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

In fact, politics is the single biggest factor determining views on climate change. This split has widened because the right has moved right, not because the left has moved left. Republican presidents Eisenhower, Nixon, and Ford all supported the Equal Rights Amendment. In 1960, the GOP platform embraced “free collective bargaining” between management and labor. Republicans boasted of “extending the minimum wage to several million more workers” and “strengthening the unemployment insurance system and extension of its benefits.” Under Dwight Eisenhower, top earners were taxed at 91 percent; in 2015, it was 40 percent. Planned Parenthood has come under serious attack from nearly all Republican presidential candidates running in 2016. Yet a founder of the organization was Peggy Goldwater, wife of the 1968 conservative Republican candidate for president Barry Goldwater.


pages: 667 words: 149,811

Economic Dignity by Gene Sperling

active measures, Affordable Care Act / Obamacare, autonomous vehicles, basic income, Bernie Sanders, Cass Sunstein, collective bargaining, corporate governance, David Brooks, desegregation, Detroit bankruptcy, Donald Trump, Double Irish / Dutch Sandwich, Elon Musk, employer provided health coverage, Erik Brynjolfsson, Ferguson, Missouri, full employment, gender pay gap, ghettoisation, gig economy, Gini coefficient, guest worker program, Gunnar Myrdal, housing crisis, income inequality, invisible hand, job automation, job satisfaction, labor-force participation, late fees, liberal world order, longitudinal study, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass incarceration, mental accounting, meta analysis, meta-analysis, minimum wage unemployment, obamacare, offshore financial centre, payday loans, price discrimination, profit motive, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, single-payer health, speech recognition, The Chicago School, The Future of Employment, The Wealth of Nations by Adam Smith, Toyota Production System, traffic fines, Triangle Shirtwaist Factory, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, working poor, young professional, zero-sum game

Steve Benen, “Rubio: People ‘Can’t Live’ on Minimum Wage, but No Increase,” MSNBC, October 15, 2015, http://www.msnbc.com/rachel-maddow-show/rubio-people-cant-live-minimum-wage-no-increase. Brooks writes, “So governments at every level should forget about increasing minimum wages—which is where the usual conservative argument ends. But they should also experiment with reducing minimum wages to help people trapped in long-term unemployment . . . For example, Michael Strain of the American Enterprise Institute has proposed that the federal government let employers hire long-term unemployed people at $4 per hour and then itself transfer an additional $4 per hour to each of these workers. Another promising idea is the expansion of an existing subsidy, the Earned Income Tax Credit, a refundable tax credit for low-income people who work.”


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The Fissured Workplace by David Weil

accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, banking crisis, barriers to entry, business cycle, business process, buy and hold, call centre, Carmen Reinhart, Cass Sunstein, Clayton Christensen, clean water, collective bargaining, commoditize, corporate governance, corporate raider, Corrections Corporation of America, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, declining real wages, employer provided health coverage, Frank Levy and Richard Murnane: The New Division of Labor, George Akerlof, global supply chain, global value chain, hiring and firing, income inequality, information asymmetry, intermodal, inventory management, Jane Jacobs, Kenneth Rogoff, law of one price, loss aversion, low skilled workers, minimum wage unemployment, moral hazard, Network effects, new economy, occupational segregation, Paul Samuelson, performance metric, pre–internet, price discrimination, principal–agent problem, Rana Plaza, Richard Florida, Richard Thaler, Ronald Coase, shareholder value, Silicon Valley, statistical model, Steve Jobs, supply-chain management, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, ultimatum game, union organizing, women in the workforce, yield management

Other times, large businesses complied because they perceived that their scale made them particularly vulnerable to inspections, penalties, or public scrutiny.9 By shedding employment to other subordinate businesses, fissured employment altered those incentives. Lead businesses that, for example, shed janitorial and security work to contractors or franchised service providers no longer faced the responsibility for compliance with minimum wage or overtime standards, or even ensuring that payroll, unemployment, or workers’ compensation insurance taxes were being paid for those workers. Activities that are shed by lead organizations are often taken up by smaller businesses. Given the competitive markets in which they operate, smaller employers face intense pressure to reduce costs. Noncompliance with a gamut of workplace standards is often the end result. Some of the highest rates of violations of basic labor standards occur in industries where fissuring is common.


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