race to the bottom

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pages: 511 words: 132,682

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

affirmative action, Airbnb, Albert Einstein, Andrei Shleifer, Bernie Sanders, Boeing 737 MAX, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, Donald Trump, en.wikipedia.org, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, income inequality, income per capita, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta analysis, meta-analysis, Milgram experiment, mortgage debt, Network effects, out of africa, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, winner-take-all economy

Ultimately, all the competitors would have to agree to de-escalate.66 But if they did agree to limit competition, as we’ll later see, they could face significant civil and criminal penalties and even end up in prison. Why Can’t the Victims De-escalate the Race to the Bottom? We now confront the penultimate missing piece of the puzzle. In situations where the competitors’ individual and collective interests diverge, we can have a race to the bottom that even powerful competitors cannot stop. But in many markets the beneficiaries of competition have a choice. They can stop this toxic competition by opting out. So why don’t they? One problem is that the intended beneficiaries of competition may be trapped in their own arms race. Rather than prevent (or at least slow down) the race to the bottom, they may actually accelerate the downward spiral. To return to our example: Why do so many students rely on rankings to apply to the top-30 national universities and liberal arts schools, despite their college counselors’ encouragement to diversify their college search?

And since other strategies for achieving those same aims are far more complicated and far less predictable, competition has become the backbone of many countries’ economic policies. Problem is, it sometimes fails to deliver. When it does, it often leaves individuals and society worse off. The invisible hand then becomes nothing more than a sleight of hand. So when is competition a race to the bottom rather than to the top? There are two basic circumstances in which that happens: FIRST, when the competitors’ individual interests are not aligned with their collective interests, or with society’s collective interests. SECOND, when either the competitors or the intended beneficiaries of competition—or both—are harmed by this race to the bottom, but no one can independently de-escalate it. This may sound complex, but once we understand these two conditions, we’ll recognize many examples of toxic competition around us. But let’s not jump into economic theory just yet.

In both scenarios, it was in each hockey player’s interest to gain a competitive advantage. But in one case competition produced results that were toxic to all, in the other, beneficial to all. To distinguish between good and bad competition, between races to the top and races to the bottom, we must ask whether the competitors’ individual and collective interests are aligned. Basically, if all the competitors do the same thing, do they end up collectively better off—or worse? So when you are seeking an edge over a rival, consider what will happen if others follow your lead and take similar measures. If everyone ends up worse off, with no advantage going to anyone, you’re in a race to the bottom that benefits neither you nor society. When Competition Harms Its Intended Beneficiary: Public School Education In our simple scenario of helmetless hockey players, the arms race harms primarily the competitors themselves.


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

Again, to change the market rules related to corporate purpose and corporate behavior is not unprecedented government interference in markets; it is purely about how we the people want to structure our creation, the corporate entity, to better serve the economic dignity of the American people. PREVENTING THE RACE TO THE BOTTOM IN TRADE AND TAX POLICY When we think of how we structure competition for high roads or races to the bottom, tax and trade policies must also be prominent. I was first involved with the fight to ensure environmental standards and International Labour Organization core labor standards in trade agreements in the 1990s. Although these efforts were often met with resistance from more conservative market purists, they presented a classic case not of limiting competition but of structuring competition to promote economic dignity, rather than denigrating it through race-to-the-bottom tactics. Without such standards and enforcement, trading partners could easily choose to increase their competitive edge and grab new markets by actually worsening already weak workers’ rights and environmental standards.

But these critiques miss that, done right, consumer standards can promote better, not less, competition. Structuring markets to reward competition principally on quality, price, and performance, and not race-to-the-bottom behavior, can lead competitive actors to focus on the elements that deliver better products and services to consumers and other stakeholders, without the concern that treating workers, consumers, and the environment with a level of basic decency might jeopardize their competitive advantage. Of course, rules that encourage high-road competition might impede profit margins compared to existing practices, where there is an open lane toward race-to-the-bottom competition. To the extent a textile manufacturer’s profit margins require forcing workers to labor in extremely dangerous factories or rely on suppliers using ten-year-olds in Vietnam, regulations that limit these practices will reduce the company’s profit margins.

It can also make virtuous dissent by individual workers near impossible. When our nation had its breakdown of all common sense on housing finance, there was likely little room for a virtuous midlevel employee in 2006 to refuse to engage in such reckless subprime lending, because the market was structured to reward his competitors and peers at his own company for race-to-the-bottom competition. Virtuous employees may have indeed lost promotions, bonuses, and even their jobs. Structuring markets to prevent race-to-the-bottom competition ensures that we do not create business environments where no good deed and virtue go unpunished. PUNCHING STEPHEN CURRY As a thought experiment, imagine a slightly altered set of rules and regulations for the National Basketball Association (NBA). Consider for a second if the NBA had always allowed each team to throw a limited number of punches per game at the opposing team.


pages: 302 words: 84,428

Mastering the Market Cycle: Getting the Odds on Your Side by Howard Marks

activist fund / activist shareholder / activist investor, Albert Einstein, business cycle, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, financial innovation, fixed income, if you build it, they will come, income inequality, Isaac Newton, job automation, Long Term Capital Management, margin call, money market fund, moral hazard, new economy, profit motive, quantitative easing, race to the bottom, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, secular stagnation, short selling, South Sea Bubble, stocks for the long run, superstar cities, The Chicago School, The Great Moderation, transaction costs, VA Linux, Y2K, yield curve

The resulting opportunity to lend is likely to be at too high a price: a yield that’s too low and/or risk that’s excessive. Thus an overheated auction in the credit market—as elsewhere—is likely to produce a “winner” who’s really a loser. This is the process I call the race to the bottom. On the other hand, there are times when buyers show up for auctions in small numbers, and the few who do attend are interested in buying only at giveaway prices. The bidding stalls, and the result is low prices, eye-popping yields, and loan structures that afford excellent protection. Unlike the overheated climate that spawns the race to the bottom, ice-cold markets in which no one’s eager to lend can create real winners. The degree of openness of the credit window depends almost entirely on whether providers of capital are eager or reticent, and it has a profound impact on economies, companies, investors, and the prospective return and riskiness of the investment opportunities that result.

Rather, the ready availability of leverage made it easy to invest heavily in assets whose prices had risen a great deal, and in innovative, untested, synthetic, levered investment products, many of which would go on to fail. Perhaps most importantly among the contributing factors, the period was marked by risky behavior on the part of financial institutions. When the world is characterized by benign macro events, hyper-financial activity and financial innovation, there is a tendency for providers of capital to compete for market share in a process I call “the race to the bottom” (I’ll make reference later on to a memo of that name). The mood in the years 2005–07 was summed up by Citigroup CEO Charles Prince in June 2007, virtually on the eve of the Global Financial Crisis, in a statement that became emblematic of the era: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music’s playing, you’ve got to get up and dance. We’re still dancing.”

But cognizance of cycles makes it clear that eventually it will. This kind of risk tolerance and risk obliviousness plays an essential part in the up-phase that precedes—and sets the scene for—every dramatic down-phase. As the period 2005–07 was rolling along, it presented a great opportunity to observe events that made manifest market participants’ attitudes toward risk, and to reach helpful conclusions. I believe the following excerpt from “The Race to the Bottom,” a memo I wrote on the subject in February 2007—just a few months before the first indication that bad times were coming—provides an excellent example. It demonstrates the potential value of inferences drawn from isolated and perhaps anecdotal experiences: While the last few years have given me many opportunities to marvel at excesses in the capital markets, in this case the one that elicited my battle cry—“that calls for a memo”—hit the newspapers in England during my last stay.


pages: 482 words: 149,351

The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, anti-communist, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, failed state, falling living standards, family office, financial deregulation, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global supply chain, high net worth, income inequality, index fund, invisible hand, Jeff Bezos, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Plutocrats, Ponzi scheme, price mechanism, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, The Chicago School, Thorstein Veblen, too big to fail, transfer pricing, wealth creators, white picket fence, women in the workforce, zero-sum game

The free-rider problem is ‘one of those things you hear about in your first term of economics, then never hear about it again’, says John Christensen, who co-founded the finance curse concept with me. ‘It is one of the biggest dark continents in economics.’ The answer to the second of my three questions for policymakers then is clear: ‘competition’ between states on corporate taxes is indeed a race to the bottom which increases inequality and harms the world at large. The third question is bigger, in fact it is one of the great economic questions of all time. It is this: whether or not ‘competition’ is a harmful race to the bottom that hurts the world at large, does it make sense for my country or state to ‘compete’ from the perspective of local self-interest? Schreck used to think not, at least for his area, but now he seems less certain. ‘In Lenexa we used to just say no,’ he said. ‘But you have to get in the game, and once you’re in the game, it’s hard to get back out, the argument being that half of something is better than all of nothing.

When the world finally started to wake up to Tiebout’s paper, the year after his death, it would kick off a debate about one of the most important questions in the modern global economy: what happens when rich people, banks, multinational firms or profits shift across borders in response to different incentives like corporate tax cuts, financial deregulation and so on? This debate goes to the heart of questions around what has been called the competitiveness of nations, and whether competing on things like corporate tax cuts or environmental standards is a good thing or an unhealthy race to the bottom. In the end, Tiebout’s ideas would end up magnified, then distorted and used as ideological underpinning for a wide range of policies that generate the finance curse. Which is not what the leftist Charlie Tiebout would have wanted at all. History shows that inequality usually only gets properly upended after large, violent shocks.8 For Tiebout’s generation, it was the Second World War that provided the shock.

After these ideas began to enter mainstream politics in the late 1970s the inevitable results included corruption, oligarchy, bank bail-outs and the growth of international organised crime.18 As these intellectual and political changes unfolded, a series of events was starting to play out on the ground in the US which would expose Tiebout’s ideas in ways he would never have intended. Rather than demonstrating how governments could ‘compete’ with each other and thus be efficient, as he had once thought, the emerging ‘competition’ between the states was revealing itself to be a powerful tool for big financial and corporate interests to get what they wanted from states and nations by playing them off against each other in a vicious race to the bottom. (For the rest of this book, I will call this latter form ‘competition’ – in inverted commas – as opposed to competition in private markets). In 1973, just four years after Oates published his paper, Idaho’s Democrat governor Cecil Andrus had a meeting with David Packard, the boss of the fast-growing computer company Hewlett-Packard. The company was looking to build a major new computer plant, and had narrowed its options down to Idaho or Oregon.


pages: 408 words: 108,985

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

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

Corporations care about their after-tax return, so they are sensitive not just to wages, the efficiency of labor, the overall business environment, transport costs, and other factors of production, but also to the taxes they have to pay. In the very short run, the one variable countries can change to attract businesses is the corporate income tax rate. Economists predicted that this would result in a race to the bottom, as companies could produce in a low-tax jurisdiction but enjoy access to the entire European Union and its markets. We see evidence of this race to the bottom. Between 1995 and 2018, the average corporate income tax rates for the EU went down from 35 percent to 22 percent.9 This trend can be expected to continue as France, Greece, the Netherlands, and Sweden have already announced further reductions of corporate income tax rates.10 By offering lower tax rates, countries gain jobs and some tax revenues, perhaps less than at higher tax rates, but the increased tax base, they hope, more than compensates.

Before that, the main voices heard were those of the bankers themselves, who had argued that loosening regulations would create a more dynamic financial system, which would contribute to a stronger European economy from which all would benefit. Besides, the bankers argued, there was a global marketplace into which they, their profits, and their jobs would disperse unless there was deregulation. Indeed, around the world, there was a race to the bottom as countries competed to attract the attention of footloose bankers. As neoliberals talked about the supposed growth and employment benefits of deregulation, they neglected the costs—both the macroeconomic risks that might arise from a poorly regulated financial sector that is engaged in excessive risk taking, and the microeconomic costs arising from the financial sector’s exploitation of its market power and consumer and investor ignorance.

With all that money to invest on behalf of savers, European asset managers—out to prove themselves better than their competitors in the easy, short-term metric of returns without adequate regard to risk—were only too happy to buy all manner of securities issued by banks. The credit rating agencies played a critical role in this scam, as they gave AAA ratings to securities that did not deserve them, engaging in massive fraud in a race to the bottom with other rating agencies. Wholesale funding (versus the retail approach of wooing depositors) exploded in Europe even more than in the United States. In 2008, it amounted to 60 percent of total funding for the largest 16 banks in Europe. This was twice as high as for large US banks.9 Banks also saw an opportunity to increase their activities as so-called market makers, by holding inventories of securities, standing ready to buy and sell and making a profit from the buy-sell spreads.


pages: 232 words: 70,361

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay by Emmanuel Saez, Gabriel Zucman

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Berlin Wall, business cycle, Cass Sunstein, collective bargaining, corporate governance, Donald Trump, financial deregulation, income inequality, income per capita, informal economy, intangible asset, Jeff Bezos, labor-force participation, Lyft, Mark Zuckerberg, market fundamentalism, Mont Pelerin Society, mortgage debt, mortgage tax deduction, new economy, offshore financial centre, oil shock, patent troll, profit maximization, purchasing power parity, race to the bottom, rent-seeking, ride hailing / ride sharing, Ronald Reagan, shareholder value, Silicon Valley, single-payer health, Skype, Steve Jobs, The Wealth of Nations by Adam Smith, transfer pricing, trickle-down economics, uber lyft, very high income, We are the 99%

Tax coordination among countries is a utopia and the only future is a race to the bottom. No matter how sincerely held they may be, no matter how widely shared, these beliefs are incorrect. Instead of engaging in a giant fiscal free-for-all, we can coordinate our policies, as we’ve successfully done in many other areas of international relations. Rest assured, we know that some countries and social groups derive large benefits from globalization in its current form—but other forms are possible. We will study, in the pages that follow, the arithmetic of tax competition and the central role it has played in the prosperity of a few. But we’ll also see how a handful of countries acting together could whistle the end of this game. We will see how defensive measures could be taken against tax havens, and how today’s race to the bottom can be replaced by a race to the top.

But as with other forms of commercialization of state sovereignty, these gains come at the expense of the rest of the planet. The breaks that tax havens offer to big companies impose a cost on the rest of us, a “negative externality” in economics lingo. They feed a race to the bottom, leading to a world where, to prevent capital from moving abroad, most nations are compelled to adopt tax rates that are too low—lower than the rates they would otherwise democratically choose. The fundamental problem behind the current forms of international coordination is that they do not tackle, and in fact legitimize, the undemocratic forces of tax competition. And indeed, tax competition has intensified since the start of the BEPS process, and the global race to the bottom in corporate tax rates has accelerated. Since 2013, Japan cut its rate from 40% to 31%; the United States from 35% to 21%; Italy from 31% to 24%; Hungary from 19% to 9%; a number of Eastern European states are following the same route.

Some countries, the experts agreed, will always offer lower taxes than their neighbors if it’s in their interest to do so. Mobile profits will seek the lowest tax burden. There may be ways to fix egregious forms of abuse. But taxing multinational companies at high rates? In a more and more tightly integrated global economy? Hopeless. This view is wrong. There is nothing in globalization that requires that the corporate tax should disappear. The choice is ours. The race to the bottom that rages today is a decision we’ve collectively made—perhaps not fully consciously or explicitly, certainly not a choice that was debated transparently and democratically, but a choice nonetheless. We could have chosen to coordinate, and we’ve chosen not to. We could have chosen to prevent multinationals from booking profits in low-tax places, but we let them do it. We can make other choices, starting today.


pages: 555 words: 80,635

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

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

For example, if multinational mining companies respond to environmental regulations by forsaking countries with environmental regulations in favor of countries that allow environmentally hazardous production methods, that can lead to a “race to the bottom,” where countries try to outdo one another by lowering regulatory burdens and cutting taxes in hopes of winning businesses’ favor. Evidence suggests that a race to the bottom may be of particular concern in the case of extractive industries such as oil drilling and mining, especially in developing countries. In the past, this race to attract extractive industries has led to excessive resource depletion and toxic pollution, made all the more painful by disappointing gains in job creation and economic growth.21 It is important to note that disparate environmental regulations do not necessarily trigger a race to the bottom. For example, a multinational company that needs to comply with a higher-standard jurisdiction may find it more cost-effective to use one uniform production method throughout its operations.

Even larger controversy focuses on mechanisms for investor-state dispute settlement, which allows companies to sue governments through ad hoc arbitration proceedings; many argue these should be replaced by a reliance on domestic laws. In these two areas, current trade agreements strike many as too broad. Yet despite these important examples, there are also ways in which broader agreements may make good sense. For example, if countries are concerned about tax or regulatory competition, international agreements offer a means to avoid a “race to the bottom.” Governments could use agreements to commit to higher standards, reducing global companies’ ability to pit governments against each other. Shunning the Trans-Pacific Partnership In a New York Times poll back in May 2015, 78 percent of respondents said they knew “not much” or “nothing at all” about the Trans-Pacific Partnership (TPP). Yet, within a year, the TPP had become a hot topic in the 2016 election season, drawing fire from both ends of the political spectrum.

Ships registered with stricter rules receive benefits that those sailing under “flags of convenience” do not: fewer port detainments, more fish market access, and smoother labor relations with dock workers. This has caused a “race to the middle” in shipping standards, as low-standard registries have raised their standards to give registered ships the same benefits.22 Concern 4: Can National Governments Tax Global Firms? The possibility of a race to the bottom in corporate tax policy is also a very real concern. In response to the mobility of multinational corporate investment, many governments have sought to create more attractive tax environments to lure investments, jobs, and tax revenues to their jurisdiction. These efforts have led to steady declines in corporate tax rates in recent decades (fig. 7.5). Despite the declining tax rates, corporate revenues have been relatively flat in many peer countries, leading some to suspect that tax competition is not a concern.


pages: 322 words: 87,181

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

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

But competition works in diverse ways. In economic models of “monopolistic competition,” producers compete not just on price but on variety—by differentiating their products from others’.32 Similarly, national jurisdictions can compete by offering institutional “services” that are differentiated along the dimensions I discussed earlier. One persistent worry is that institutional competition sets off a race to the bottom. To attract mobile resources—capital, multinational enterprises, and skilled professionals—jurisdictions may lower their standards and relax their regulations in a futile dynamic to outdo other jurisdictions. Once again, this argument overlooks the multidimensional nature of institutional arrangements. Tougher regulations or standards are presumably put in place to achieve certain objectives: they offer compensating benefits elsewhere.

We may all wish to be free to drive at any speed we want, but few of us would move to a country with no speed limit at all where, as a result, deadly traffic accidents would be much more common. Similarly, higher labor standards may lead to happier and more productive workers; tougher financial regulation to greater financial stability; and higher taxes to better public services, such as schools, infrastructure, parks, and other amenities. Institutional competition can foster a race to the top. The only area in which some kind of race to the bottom has been documented is corporate taxation. Tax competition has played an important role in the remarkable reduction in corporate taxes around the world since the early 1980s. In a study on OECD countries, researchers found that when other countries reduce their average statutory corporate tax rate by 1 percentage point, the home country follows by reducing its tax rate by 0.7 percentage points.33 The study indicated that international tax competition takes place only among countries that have removed their capital controls.

In a study on OECD countries, researchers found that when other countries reduce their average statutory corporate tax rate by 1 percentage point, the home country follows by reducing its tax rate by 0.7 percentage points.33 The study indicated that international tax competition takes place only among countries that have removed their capital controls. When such controls are in place, capital and profits cannot move as easily across national borders and there is no downward pressure on capital taxes. So, the removal of capital controls appears to be a factor in driving the reduction in corporate tax rates. On the other hand, there is scant evidence of similar races to the bottom in labor and environmental standards or in financial regulation. The geographically confined nature of the services (or public goods) offered by national jurisdictions often presents a natural restraint on the drive toward the bottom. If you want to partake of those services, you need to be in that jurisdiction. But corporate tax competition is also a reminder that the costs and benefits need not always neatly cancel each other.


pages: 429 words: 120,332

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens by Nicholas Shaxson

Asian financial crisis, asset-backed security, bank run, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, collapse of Lehman Brothers, computerized trading, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, Double Irish / Dutch Sandwich, failed state, financial deregulation, financial innovation, Fractional reserve banking, full employment, high net worth, income inequality, Kenneth Rogoff, laissez-faire capitalism, land reform, land value tax, light touch regulation, Long Term Capital Management, Martin Wolf, money market fund, New Journalism, Northern Rock, offshore financial centre, oil shock, old-boy network, out of africa, passive income, plutocrats, Plutocrats, Ponzi scheme, race to the bottom, regulatory arbitrage, reserve currency, Ronald Reagan, shareholder value, The Spirit Level, too big to fail, transfer pricing, Washington Consensus

The end result was that the biggest banks were able to grow large enough to attain “too big to fail” status—which helped them in turn to become increasingly influential in the bastions of political power in Washington, eventually getting a grip on both main political parties, Democrat and Republican—a grip that is so strong that it amounts to political capture. Part of this process has involved a constant race to the bottom between jurisdictions. When a tax haven degrades its taxes or financial regulations or deepens its secrecy facilities to attract hot money from elsewhere, other havens degrade theirs too, to stay in the race. Meanwhile, financiers threaten politicians in the United States and other large economies with the offshore club—“don’t tax or regulate us too heavily or we’ll leave,” they cry—and the onshore politicians quail and relax their own laws and regulations.

Deregulation, freer flows of capital, and lower taxes since the 1970s—most people think that these globalizing changes have resulted primarily from grand ideological shifts and deliberate policy choices ushered in by such leaders as Margaret Thatcher and Ronald Reagan. Ideology and leaders matter, but few have noticed this other thing: the role of the secrecy jurisdictions in all of this—the silent warriors of globalization that have been acting as berserkers in the global economy, forcing other nations to engage in the competitive race to the bottom, and in the process cutting swaths through the tax systems and regulations of nation states, rich and poor, whether they like it or not. The secrecy jurisdictions have been the heart of the globalization project from the beginning. Finally, a word about culture and attitudes. In January 2008 the accountancy giant KPMG ranked Cyprus at the very top of a league table of European jurisdictions, according to the “attractiveness” of their corporate tax regimes.53 Yet Cyprus, a “way station for international scoundrels,” as one offshore promoter admits, is among the world’s murkiest tax havens: possibly the biggest conduit for criminal money out of the former Soviet Union and the Middle East into the international financial system.

The notorious “merchant of death” Viktor Bout, inspiration for the character played by Nicholas Cage in the Hollywood film Lord of War, alleged arms runner to the Taliban and other murderous organizations around the globe, operated through businesses in Texas, Delaware, and Florida.27 “US shell companies are attractive vehicles for those seeking to launder money, evade taxes, finance terrorism, or conduct other illicit activity anonymously,” said Republican Senator Norm Coleman, then chairman of the U.S. Senate Permanent Subcommittee on Investigations. “Competition among States to attract company filing revenue and franchise taxes has, in some instances, resulted in a race to the bottom.”28 A New York Times article from 1986 describes the antics of one Delaware lieutenant-general who flew to Taiwan, Hong Kong, China, Indonesia, Singapore, and the Philippines, clutching a pamphlet boasting that Delaware could “Protect You from Politics.”29 The official was, the article noted, “looking forward to a rich harvest of Hong Kong flight capital” after the British pullout in 1997.


pages: 389 words: 98,487

The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor, and Why You Can Never Buy a Decent Used Car by Tim Harford

Albert Einstein, barriers to entry, Berlin Wall, business cycle, collective bargaining, congestion charging, Corn Laws, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Fall of the Berlin Wall, George Akerlof, information asymmetry, invention of movable type, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, market design, Martin Wolf, moral hazard, new economy, Pearl River Delta, price discrimination, Productivity paradox, race to the bottom, random walk, rent-seeking, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, sealed-bid auction, second-price auction, second-price sealed-bid, Shenzhen was a fishing village, special economic zone, spectrum auction, The Market for Lemons, Thomas Malthus, trade liberalization, Vickrey auction

We saw in chapter 4 that the economist’s concept of externalities gives us a powerful tool to appreciate the risks of environmental damage, and externality charges give us a solution. Many—perhaps most—economists understand the risks of environmental damage and want action to preserve the environment. But the link between trade and environmental damage just doesn’t stand up to close scrutiny. There are three reasons for concern. The first concern is of a “race to the bottom”: companies rush overseas to produce goods under cheaper, more lenient environmental laws, while hapless governments oblige them by creating those lenient laws. The second is that physically moving goods around inevitably consumes resources and causes pollution. The third worry is that if trade promotes economic growth, it must also harm the planet. While each has some initial plausi-bility, the idea that trade is bad for the environment is based on weak thinking and little evidence.

But what about investment in poor countries? The environmentalist Vandana Shiva speaks for many when she declares that “pollution moves from the rich to the poor. The result is a global environmental apartheid.” Strong words—but are they true? In theory, they might be true. Companies that can produce goods more cheaply will be at a competitive advantage. They can also move around more easily in a world of free trade. So the “race to the bottom” is a possibility. Then again, there are reasons to suspect that it’s a fantasy. Environmental regulations are not a major cost; labor is. If American environmental standards are really so strict, why do the most pollution-intensive American firms spend only 2 percent of their revenues on dealing with pollution? Most spend much less. When companies move abroad they are seeking cheap labor, not a pollution haven.

Even if it was possible to save some costs by cutting environmental corners, many firms build factories everywhere in the world using the same latest, cleanest technology from the developed world, simply because that kind of standardization itself saves costs. As an analogy: if ten-year-old computer chips were still produced in bulk, they would be simpler and cheaper to make than modern chips, but nobody bothers any more. It’s now hard to buy an old computer even if you want to. And these arguments leave aside the possibility that firms want to offer high environmental standards to please their workers and their customers. So . . . a “race to the bottom” is possible in theory; but there are also good grounds for doubting its existence. So leaving theory to one side, what are the facts? First, that foreign investment in • 215 • T H E U N D E R C O V E R E C O N O M I S T rich countries is far more likely to go into polluting industries than foreign investment in poor countries. Second, foreign investment in polluting industries is the fastest growing segment of foreign investment coming into the United States.


pages: 250 words: 9,029

Everything Bad Is Good for You: How Popular Culture Is Making Us Smarter by Steven Johnson

Columbine, complexity theory, corporate governance, delayed gratification, edge city, Flynn Effect, game design, Marshall McLuhan, pattern recognition, profit motive, race to the bottom, sexual politics, social intelligence, Steve Jobs, the market place

Why is this tendency toward E V h R Y T H I N G B A D I S G O O D F O R Yo u I 57 increased complexity happening i n the fi rst place ? It i s a truth nearly universally acknowledged that pop culture caters to our base instincts; mass society dumbs down and simplifies; it races to the bottom. The rare flowerings of "quality programming" only serve to remind us of the over­ all downward slide. But no matter how many times this re­ frain is belted out, it doesn't get any more accurate. As we've seen, precisely the opposite seems to be happening: the sec­ ular trend is toward greater cognitive demands, more depth , more participation. And if you accept that premise, you ' re forced then to answer the question : Why? For decades, the race to the bottom served as a kind of Third Law of Thermodynamics for mass society : all other things being equal, pop culture will decline into simpler forms. But if entropy turns out not to govern the world of mass society­ if our entertainment is getting smarter after all-we need a new model to explain the trend .

Or, we could lose audience by inserting little "tricks" that cause the loss of audience. . . . Thought, that's tune­ out, education, tune-out. Melodrama's good, you know, a little tear here and there, a little morality tale, that's good. Positive. That's least objectionable. It's my job to keep my 32, not to cause any tune-out a priori in terms of ads or concepts, to make sure there's no tune-out in the shows vis-a-vis the competition. LOP is a pure-breed race-to-the-bottom model : you cre­ ate shows designed on the scale of minutes and seconds, with the fear that the slightest challenge-"thought, " say, or "education"-will send the audience scurrying to the other networks. Contrast LOP with the model followed by The Sopranos-what you might call the Most Repeatable Pro- 162 ST E V E N J O H N SO N gramming model. MRP shows are designed on the scale of years, not seconds.

The story of the last thirty years of popular culture is the story of rising complexity and in­ creased cognitive demands, an ascent that runs nicely par­ allel to-and may well explain-the upward track of our IQ scores. But there are hidden costs to the Sleeper Curve. It's cruci al that we abandon the Brave New World scenario where mindless amusement always wins out over more chal­ lenging fare , that we do away once and for all with George Wi l l 's vision of an "increasingly infantilized society. " Pop E V E R Y T H I N G B A D I S G O O D F O R Yo u 1 85 culture is not a race to the bottom, and it's high time we accepted-even celebrated-that fact. But even the most salutary social development comes with peripheral effects that are less desirable. The rise of the Internet has forestalled the death of the typographic universe-and its replacement by the society of the image-predicted by McLuhan and Postman. Thanks to e-mail and the Web, we're readi ng text as much as ever, and we're writing more.


pages: 543 words: 153,550

Model Thinker: What You Need to Know to Make Data Work for You by Scott E. Page

"Robert Solow", Airbnb, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Alvin Roth, assortative mating, Bernie Madoff, bitcoin, Black Swan, blockchain, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Checklist Manifesto, computer age, corporate governance, correlation does not imply causation, cuban missile crisis, deliberate practice, discrete time, distributed ledger, en.wikipedia.org, Estimating the Reproducibility of Psychological Science, Everything should be made as simple as possible, experimental economics, first-price auction, Flash crash, Geoffrey West, Santa Fe Institute, germ theory of disease, Gini coefficient, High speed trading, impulse control, income inequality, Isaac Newton, John von Neumann, Kenneth Rogoff, knowledge economy, knowledge worker, Long Term Capital Management, loss aversion, low skilled workers, Mark Zuckerberg, market design, meta analysis, meta-analysis, money market fund, Nash equilibrium, natural language processing, Network effects, p-value, Pareto efficiency, pattern recognition, Paul Erdős, Paul Samuelson, phenotype, pre–internet, prisoner's dilemma, race to the bottom, random walk, randomized controlled trial, Richard Feynman, Richard Thaler, school choice, sealed-bid auction, second-price auction, selection bias, six sigma, social graph, spectrum auction, statistical model, Stephen Hawking, Supply of New York City Cabdrivers, The Bell Curve by Richard Herrnstein and Charles Murray, The Great Moderation, The Rise and Fall of American Growth, the rule of 72, the scientific method, The Spirit Level, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, urban sprawl, value at risk, web application, winner-take-all economy, zero-sum game

Lyapunov Theorem Given a discrete time dynamical system consisting of the transition rule xt+1 = G(xt), the real-valued function F(xt) is a Lyapunov function if F(xt) ≥ M for all xt and if there exists an A > 0 such that If F is a Lyapunov Function for G, then starting from any x0, there exists a t∗, such that G(xt∗) = xt∗, and the system attains an equilibrium in finite time. We first construct a Lyapunov function within the Race to the Bottom Game, which captures strategic environments in which players choose levels of support such that each player prefers to provide just less than the average level. The Race to the Bottom Game Each of N players proposes a level of support in {0, 1,… 100} in each period. The player closest to of the average level of support wins a prize in that period. The game can be used to explain reductions in state government spending for social programs such as support for the indigent. No governor or state legislature wants to appear heartless.

It is straightforward to show that the maximum level of support from any player satisfies the conditions for a Lyapunov function. The maximum level of support has a minimum at zero. And in each period the maximum level of support falls by at least 1 given that levels of support take integer values. Thus, at some point, everyone proposes zero support. The players have raced to the bottom. In this example, the model produces an undesirable result. To prevent a race to the bottom requires changing the game. To increase support for the indigent, a federation could shift to federal funding or impose a floor on spending.2 As an aside, suppose that we allow players to choose any real number in the interval between zero and 100 rather than integer values. If in each round, players chooses a level of support equal to of the previous mean, the average level of support will decrease over time but it will never attain the equilibrium of zero.

You will learn to identify when you are allowing ideology to supplant reason and have richer, more layered insights into the implications of policy initiatives, whether they be proposed greenbelts or mandatory drug tests. These benefits will accrue from an engagement with a variety of models—not hundreds, but a few dozen. The models in this book offer a good starting collection. They come from multiple disciplines and include the Prisoners’ Dilemma, the Race to the Bottom, and the SIR model of disease transmission. All of these models share a common form: they assume a set of entities—often people or organizations—and describe how they interact. The models we cover fall into three classes: simplifications of the world, mathematical analogies, and exploratory, artificial constructs. In whatever form, a model must be tractable. It must be simple enough that within it we can apply logic.


pages: 432 words: 127,985

The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry by William K. Black

accounting loophole / creative accounting, affirmative action, Andrei Shleifer, business climate, cognitive dissonance, corporate governance, corporate raider, Donald Trump, fear of failure, financial deregulation, friendly fire, George Akerlof, hiring and firing, margin call, market bubble, money market fund, moral hazard, offshore financial centre, Ponzi scheme, race to the bottom, Ronald Reagan, short selling, The Market for Lemons, transaction costs

“COMPETITION IN LAXITY” Economists describing how regulators competed for “customers” by promising to be laxer in supervision coined two of the most telling phrases to come out of the S&L debacle: “competition in laxity” and “race to the bottom.” The novel aspect is that economists endorsed these pejorative terms because the race was toward greater deregulation. In the early 1980s, economists knew that regulation was the problem, so anything that reduced regulation was desirable. Richard Pratt shared this mindset when President Reagan appointed him Bank Board chairman in 1981. FOR THE BANK BOARD, THE RACE TO THE BOTTOM WAS A SHORT ONE The Bank Board was at the bottom of the federal financial regulatory heap before Pratt’s deregulation and desupervision. Jim Ring Adams (1990, 40) aptly described it as “the doormat” of federal regulators.

And, in fact, the agency did not take effective action against any control fraud during Pratt’s tenure. Indeed, the agency took few enforcement actions. The goodwill mergers and the wave of new entrants that Pratt encouraged diverted critical supervisory resources into (non)resolutions at precisely the time they were desperately needed to counter the wave of control frauds. TEXAS AND CALIFORNIA—THE STATES THAT WON THE RACE TO THE BOTTOM Another term for “competition in laxity” was “the race to the bottom.” S&Ls could change freely from a federal to a state charter (the permission from the government to run an S&L) and still be insured by the FSLIC. The charter determined what the S&L could invest in. Texas led the race by deregulating in the 1970s, and California followed the lead. Many federally chartered S&Ls in those states converted to state charters.

Texas had the equivalent of a “most favored nation” clause in its charters that allowed Texas-chartered S&Ls to do whatever federally chartered ones could, so the rush to convert to federal charters was greatest in California. California responded to the Garn–St Germain Act with the Nolan Act (named after its sponsoring senator, the notably corrupt and soon-to-be-convicted Pat Nolan). The Nolan Act became effective on January 1, 1983. It won the race to the bottom by going directly to the bottom. A California-chartered S&L could invest 100 percent of its assets in anything (with the commissioner’s approval). Despite Nolan’s corruption, this was not a conspiracy, but a bungled mess of epic proportions. No one was clever enough to design this disaster. The conversion of large numbers of California-chartered S&Ls into federal ones caused the state legislature and the industry to push for immediate adoption of the Nolan Act.15 A similar dynamic occurred in Texas.


pages: 515 words: 142,354

The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz, Alex Hyde-White

bank run, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bretton Woods, business cycle, buy and hold, capital controls, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

They are just following rules. But this rigid application of rules, in the absence of common deposit insurance, may make it even riskier for depositors to keep their money in the banks of a weak country: it may exacerbate the problem of divergence. REGULATORY RACES TO THE BOTTOM Europe not only allowed capital to flow freely within its borders but also financial firms and products—no matter how poorly they are regulated at home. The single-market principle for financial institutions and capital, in the absence of adequate EU regulation, led to a regulatory race to the bottom, with at least some of the costs of the failures borne by other jurisdictions. The failure of a financial institution imposes costs on others (evidenced so clearly in the crisis of 2008), and governments will not typically take into account these “cross-border costs.”

The failure of the eurozone to create a true stability framework has thus contributed to inequality. The EU (and this analysis thus goes beyond the eurozone) must adopt two further sets of policies: First, it needs to limit the race to the bottom, the kind of tax competition that worked so well for a few countries like Luxembourg but at the expense of others. This is a real example of an externality—of an action by one country that imposes harms on others. And yet Europe has failed to take adequate action, partially because many in Europe are enamored of the idea of low taxes and a small state, and this kind of race to the bottom suits them fine. Secondly, given the easy mobility around the European Union, the major responsibility for redistribution must lie at the EU level.39 The EU should follow the United States in levying taxes based on citizenship, wherever individuals are domiciled or resident.

The failure of a financial institution imposes costs on others (evidenced so clearly in the crisis of 2008), and governments will not typically take into account these “cross-border costs.” Indeed, especially before the 2008 global financial crisis, each country faced pressures to reduce regulations. Financial firms threatened that they would leave unless regulations were reduced.14 This regulatory race to the bottom would have existed within Europe even without the euro. Indeed, the winners in the pre-2008 contest were Iceland and the UK, neither of which belong to the eurozone (and Iceland doesn’t even belong to the EU). The UK prided itself on its system of light regulation, which meant essentially self-regulation, an oxymoron. The bank managers put their own interests over those of shareholders and bondholders, and the banks as institutions put their interests over those of their clients. The UK’s Barclays bank confessed to having manipulated the market for LIBOR, the London interbank lending rate upon which some $350 trillion of derivatives and other financial products are based.15 Still, the eurozone was designed with the potential to make all of this worse.


pages: 357 words: 94,852

No Is Not Enough: Resisting Trump’s Shock Politics and Winning the World We Need by Naomi Klein

Airbnb, basic income, battle of ideas, Berlin Wall, Bernie Sanders, Brewster Kahle, Celebration, Florida, clean water, collective bargaining, Corrections Corporation of America, desegregation, Donald Trump, drone strike, Edward Snowden, Elon Musk, energy transition, financial deregulation, greed is good, high net worth, Howard Zinn, illegal immigration, income inequality, Internet Archive, Kickstarter, late capitalism, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, Mikhail Gorbachev, moral panic, Naomi Klein, Nate Silver, new economy, Occupy movement, offshore financial centre, oil shale / tar sands, open borders, Peter Thiel, plutocrats, Plutocrats, private military company, profit motive, race to the bottom, Ralph Nader, Ronald Reagan, Saturday Night Live, sexual politics, sharing economy, Silicon Valley, too big to fail, trade liberalization, transatlantic slave trade, Triangle Shirtwaist Factory, trickle-down economics, Upton Sinclair, urban decay, women in the workforce, working poor

Rather than hope that Trump is going to magically transform into Bernie Sanders, and choose this one arena in which to be a genuine advocate for anyone who isn’t related to him, we would do far better to ask some tough questions about how it’s been possible for a gang of unapologetic plutocrats, with open disdain for democratic norms, to hijack an issue like corporate free trade in the first place. The Race to the Bottom Trump has made trade deals a signature issue for two reasons. The first, on full display that day at the White House, is that it’s a great way to steal votes from the Democrats. The right-wing pundit Charles Krauthammer—no fan of unions—declared on Fox News that Trump’s cozy union summit was a “great act of political larceny.” The second reason is that Trump—who we know believes his own super-negotiator PR—has said he can negotiate better deals than his predecessors.

What Trump’s admiration for Puzder suggests is that his real plan for luring back manufacturing is to suppress rights, wages, and protections to such a degree that working in a factory will be a lot like working at Hardee’s under Andrew Puzder. In other words, it’s yet another plan to take from the vulnerable to benefit the already outrageously rich. What we are witnessing is not a silver lining of any sort. It’s the push to the finish line in the “race to the bottom” that opponents of these corporate trade deals always feared. Yes, It’s Possible to Make Bad Trade Deals Worse Trump is not planning to remove the parts of trade deals that are most damaging to workers—the parts, for instance, that prohibit policies which are designed to favor local, over foreign, production. Or the parts that allow corporations to sue national governments if they introduce laws—including laws designed to create jobs and protect workers—that businesses deem to be unfairly cutting into their profits.

Teamsters and Turtles—Together at Last! One area of concern was how these deals were leading to devastating job losses, leaving behind rust belts from Detroit to Buenos Aires, while companies such as Ford and Toyota looked for ever-cheaper places to produce. But for the most part, our opposition was not grounded in Trump-style protectionism; it was trying to stem the beginning of what already looked like a race to the bottom, a new world order that was negatively impacting workers and the environment in every country. We were arguing for a model of trade that would start with the imperative to protect people and the planet. That was crucial then—it’s urgent now. The movement was even starting to win. We defeated the proposed Free Trade Area of the Americas. We brought World Trade Organization negotiations to a standstill.


pages: 498 words: 145,708

Consumed: How Markets Corrupt Children, Infantilize Adults, and Swallow Citizens Whole by Benjamin R. Barber

addicted to oil, AltaVista, American ideology, Berlin Wall, Bertrand Russell: In Praise of Idleness, Bill Gates: Altair 8800, business cycle, Celebration, Florida, collective bargaining, creative destruction, David Brooks, delayed gratification, Donald Trump, double entry bookkeeping, G4S, game design, George Gilder, Gordon Gekko, greed is good, Hernando de Soto, illegal immigration, informal economy, invisible hand, Joseph Schumpeter, laissez-faire capitalism, late capitalism, liberal capitalism, Marc Andreessen, McJob, microcredit, Naomi Klein, new economy, New Journalism, Norbert Wiener, nuclear winter, Panopticon Jeremy Bentham, pattern recognition, presumed consent, profit motive, race to the bottom, Ralph Nader, road to serfdom, Robert Bork, Ronald Reagan, Saturday Night Live, Silicon Valley, spice trade, Steve Jobs, telemarketer, The Fortune at the Bottom of the Pyramid, the market place, The Wisdom of Crowds, Thomas L Friedman, Thorstein Veblen, trade route, X Prize

While Johnson does not quite endorse the nutritional merits of cream pies, he must revel in the recent studies suggesting chocolate is good for us (after all), and he obviously grasps what Howard Stern teaches so well: that shock/shlock sells only if it feels subversive and hence progressive. “Where most commentators assume a race to the bottom and a dumbing down—‘an increasingly infantilized society,’ in George Will’s words,” Johnson enthuses, “I see a progressive story: mass culture growing more sophisticated, demanding more cognitive engagement with each passing year.”55 Johnson sets himself squarely against the kind of cultural criticism implied by the idea of an “infantilist” ethos that purportedly spurns nuance and complexity. Consumerism’s “cultural race to the bottom is a myth; we do not live in a fallen state of cheap pleasures that pale beside the intellectual riches of yesterday. And we are not innate slackers, drawn inexorably to the least offensive and least complicated entertainment available.

The selling of the body, which with the passing of actual slavery became a metaphor for coercive exchanges that were largely invisible (Marx and Foucault), has today become a toxic but remarkably well tolerated exemplar of the subordination of identity to commerce, and includes the selling of the constituent elements of the human genome. Roughly 20 percent of the genome has now been patented for private commercial use, and the trend is accelerating. As with so many other elements in the global race to the bottom, it is globalization that drives privatization: the quest for genetic patents is a function of the globalization of research. If “we” don’t do it, the Koreans or the French or the Chinese will. And since consumables along with the “need” for them must in any case be marketed globally for capitalism in its late consumer phase to flourish, bioengineering, cloning, and other advanced forms of genetic research are bound to be put into corporate hands.

For whatever the causes, and in South Africa they may go back to “the failure of the state, both during and after apartheid…to create jobs, health care, housing, and education accessible to the vast majority of the population,” the fact is that “when justice and social-control methods are ceded to the private sector—to private security firms, to vigilante groups, to simple mob justice…democracy becomes an empty promise.”72 Inequality is built into the market system, which too often becomes a race to the top for those who are wealthy, and a race to the bottom for everyone else. Inequality is not incidental to privatization, it is its very premise. The implicit tactic employed by the well off is to leave behind those who get more in public services than they contribute as taxpayers in a residual “public” sector (a kind of self-financing leper colony that cannot self-finance) and throw in with those who have plenty to contribute in their own private “commons.”


pages: 123 words: 32,382

Grouped: How Small Groups of Friends Are the Key to Influence on the Social Web by Paul Adams

Airbnb, Cass Sunstein, cognitive dissonance, David Brooks, information retrieval, invention of the telegraph, planetary scale, race to the bottom, Richard Thaler, sentiment analysis, social web, statistical model, The Wisdom of Crowds, web application, white flight

See the 2007 research paper “Marketing actions can modulate neural representations of experienced pleasantness” by researchers at Caltech and Stanford. 13. These examples are taken from Jonah Lehrer’s book How We Decide (Houghton Mifflin, 2009). 14. Find out more on Itamar Simonson’s research in the 1993 article “Get closer to your customers by understanding how they make choices.” 9. Marketing and advertising on the social web The problems facing interruption marketing Interruption marketing is a race to the bottom For the past 100 years, marketers have mostly relied on interruption marketing to get their message across, and viewed each new technology as a new way to interrupt people from what they were currently doing to get them to consume their message instead. Our TV programs are interrupted by ads. Our concentration while driving is interrupted by ads. Our magazine stories are interrupted by ads.

We are being bombarded by more and more competing information, yet our capacity for processing and remembering this information remains the same. The increased competition for that attention means marketers must increase the frequency of their communication, exacerbating the problem. We’re seeing advertising appear in more and more unusual places. No one owns this problem and so it gets worse and worse.1 Interruption marketing is a race to the bottom. The most common way for marketers to increase their chances of being noticed is to increase the frequency of their campaigns. More people are likely to notice it, but it creates immense volumes of noise. On average, you need to run an ad 27 times before someone remembers it: Only one out of every nine ads is noticed, and people need to see the ad three times to remember it, so it takes 27 impressions for it to sink in.2 People no longer trust marketers One clear trend over the past 50 years is that people are more wary of advertising, and trust businesses less than they used to.3 In fact, this is so prevalent that researcher Dan Ariely has found that mistrust in marketing information negatively colors our entire perception of a product, even when we have direct experience to the contrary.

Starting with small requests for behavioral change often eventually leads to attitudinal change. People will increasingly turn to their friends for information The amount of information accessible to us is increasing exponentially, but our capacity for processing ideas and memory will remain the same. In a world of too much information, marketing and advertising based on interrupting people, or trying to shift their attention from something else, is a race to the bottom. In this information rich world that we have created, people will increasingly turn to their friends for advice. Marketing will need to focus activities on gaining permission to market to people by being credible, trustworthy, interesting, and useful, and by marketing to small, connected groups of friends. The next few years Rebuilding your business around people is not a choice Facebook, Twitter, and Zynga are overwhelming evidence of the shift to a web built around people.


pages: 196 words: 57,974

Company: A Short History of a Revolutionary Idea by John Micklethwait, Adrian Wooldridge

affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Charles Lindbergh, Corn Laws, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, double entry bookkeeping, Etonian, hiring and firing, industrial cluster, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, mittelstand, new economy, North Sea oil, race to the bottom, railway mania, Ronald Coase, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, tulip mania, wage slave, William Shockley: the traitorous eight

In 1830, the Massachusetts state legislature decided that companies did not need to be engaged in public works to be awarded the privilege of limited liability. In 1837, Connecticut went further and allowed firms in most lines of business to become incorporated without special legislative enactment. This competition between the states was arguably the first instance of a phenomenon that would later be dubbed “a race to the bottom,” with local politicians offering greater freedom to companies to keep their business (just as they would much later dangle tax incentives in front of car companies to build factories in their states). All the same, it is worth noting that the states gave away these privileges grudgingly, often ignoring the Dartmouth College ruling and often hedging in “their” companies with restrictions, both financial and social.

By 1901, two-thirds of all American firms with $10 million or more of capital were incorporated in the state, allowing New Jersey to run a budget surplus of almost $3 million by 1905 and paying for a rash of new public works. Inevitably, other states fought back. Virginia turned itself into what one legal treatise called a “snug harbour for roaming and piratical corporations.” The New York legislature was forced to enact a special charter for the General Electric Company to prevent it from absconding to New Jersey. But the big winner of this particular “race to the bottom” would be Delaware. By the time the Great Depression struck, the state had become home to more than a third of the industrial corporations on the New York Stock Exchange: twelve thousand companies claimed legal residence in a single office in downtown Wilmington.21 Most of the other industrial trusts converted to holding companies, too. They, unlike Rockefeller, often did so at the instigation of the most powerful trust of them all, the “money trust,” as Congressman Charles Lindbergh dubbed the masters of Wall Street.

A FRANCHISE UNDER THREAT The trouble with all these economic forecasts is that they ignore a decisive variable: politics. A persistent theme of this book has been the jostling for power between the company and government. The balance has unquestionably swung in the company’s favor. The modern firm is not in the same position as the East India Company, which had to go cap in hand to parliament every twenty years to renew its charter. Companies have often profited from “races to the bottom” by forcing governments and American states to compete for their favors. They have also encroached on the prerogatives of nation-states and embedded themselves in the body politic: think of the effect of corporate advertising or modern corporate control of the media. Companies have sometimes been able to outfight even the most powerful governments: IBM survived the American government’s biggest antitrust case of the 1970s; Microsoft seems to have thwarted the biggest assault of the 1990s.


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

Even Obama, who prided himself in his efforts to lower the cost of medicine, in the TPP (the Trans-Pacific Partnership Agreement) betrayed his principles. 11.The race to the bottom takes many other forms: banks, for instance, said that unless regulations were loosened, they would relocate their activities elsewhere. The result was a regulatory race to the bottom. The 2008 global financial crisis was among its consequences. 12.Taxes are only one of many variables that affect where firms locate, as we have already noted. But even focusing just on taxes, lowering taxes will induce firms to relocate if the country from which we are trying to steal jobs doesn’t respond. If they lower their taxes, we get no advantage. At the end, the only winners from this race to the bottom are the corporations who stirred up this race in the first place. 13.See chapters 1 and 9 for some of the evidence and the theoretical analyses that explain why these tax measures did not have the benefits claimed by their advocates. 14.In part, because of the large deficit that the tax cut will generate, in part because the bill favored real estate speculation and discouraged economic activity in the most dynamic parts of the economy, and especially their investments in infrastructure and education.

The tech giants know how to wield their power in many arenas.77 Amazon used the enticement of thousands of jobs to get cities across the country bidding to have it set up its second headquarters in those cities through, for instance, lower taxes—shifting the tax burden onto others, of course. Small firms can’t do this, and so it gives an enormous advantage to Amazon over local retailers. We need a legal framework that prevents these races to the bottom.78 Intellectual property rights and competition There is one area where government sanctions monopolies: when a patent is given, the innovator gets temporary monopoly power. As we move to a knowledge-based economy, intellectual property rights (IPR) are likely to play an increasing role. The monopoly power means that knowledge is not being used efficiently and prices are higher than they otherwise would be.

Corporations persuaded governments that, unless they lower the corporate tax rate, they will relocate abroad. There are some footloose firms that have actually done this, giving some credibility to the argument.10 Of course, having achieved lower corporate taxes in one country, they turn around to other nations, saying that if they don’t lower their taxes businesses will leave. Not surprisingly, corporations love this race to the bottom.11 The argument that we had to lower corporate tax rates to compete with others was invoked by Republicans as they slashed the corporate tax rate from 35 percent to 21 percent in 2017,12 just as it had been used earlier, in 2001 and 2003, as taxes on capital gains and dividends were cut. The earlier tax cuts didn’t work—they didn’t lead to higher savings, an increase in labor supply, or higher growth,13 and there is no reason to expect that the 2017 cut will either.


pages: 409 words: 125,611

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

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

This was important, because it allowed a steady flow of cash into the housing market, which in turn provided the fuel for the housing bubble. The rating agencies’ behavior may have been affected by the perverse incentive of being paid by those that they rated, but I suspect that even without these incentive problems, their models would have been badly flawed. Competition, in this case, had a perverse effect: It caused a race to the bottom—a race to provide ratings that were most favorable to those being rated. Mortgage brokers played a key role: They were less interested in originating good mortgages—after all, they didn’t hold the mortgages for long—than in originating many mortgages. Some of the mortgage brokers were so enthusiastic that they invented new forms of mortgages: The low- or no-documentation loans to which I referred earlier were an invitation to deception, and came to be called liar loans.

But there is a far better solution, and one that the individual U.S. states have discovered: have corporations pay taxes based on the economic activity they conduct in the United States, on the basis of a simple formula reflecting their sales, their production, and their research activities here, and tax corporations that invest in the United States at lower rates than those that don’t. In this way we could increase investment and employment here at home—a far cry from the current system, in which we in effect encourage even U.S. corporations to produce elsewhere. (Even if U.S. taxes are no higher than the average, there are some tax havens—like Ireland—that are engaged in a race to the bottom, trying to recruit companies to make their country their tax home.) Such a reform would end the corporate stampede toward “inversions,” changing a corporation’s tax home to avoid taxes. Where they claim their home office is would make little difference; only where they actually do business would. Other sources of revenue would benefit our economy and our society. Two basic principles of taxation are that it is better to tax bad things than good; and it is better to tax factors in what economists call “inelastic supply”—meaning that the amounts produced and sold won’t change when taxes are imposed on them.

(Japan, which has curbed executive pay, is a notable exception.) American innovations in rent seeking—enriching oneself not by making the size of the economic pie bigger but by manipulating the system to seize a larger slice—have gone global. Asymmetric globalization has also exerted its toll around the globe. Mobile capital has demanded that workers make wage concessions and governments make tax concessions. The result is a race to the bottom. Wages and working conditions are being threatened. Pioneering firms like Apple, whose work relies on enormous advances in science and technology, many of them financed by government, have also shown great dexterity in avoiding taxes. They are willing to take, but not to give back. Inequality and poverty among children are a special moral disgrace. They flout right-wing suggestions that poverty is a result of laziness and poor choices; children can’t choose their parents.


pages: 317 words: 101,475

Chavs: The Demonization of the Working Class by Owen Jones

Asperger Syndrome, banking crisis, Berlin Wall, Boris Johnson, British Empire, call centre, collapse of Lehman Brothers, credit crunch, deindustrialization, Etonian, facts on the ground, falling living standards, first-past-the-post, ghettoisation, Gini coefficient, hiring and firing, housing crisis, illegal immigration, income inequality, informal economy, low skilled workers, low-wage service sector, mass immigration, Neil Kinnock, Occupy movement, pension reform, place-making, plutocrats, Plutocrats, race to the bottom, Right to Buy, rising living standards, The Bell Curve by Richard Herrnstein and Charles Murray, The Spirit Level, too big to fail, unpaid internship, upwardly mobile, We are the 99%, wealth creators, Winter of Discontent, women in the workforce, working-age population

Why, the argument went, should private sector workers with comparatively meagre pensions subsidize the generous settlements of the public sector? There was no doubt that there had been a collapse in private sector pension provision. At the beginning of 2012, the Association of Consulting Actuaries warned that nine out of ten private sectordefined benefit schemes were closed to new entrants. But what was being proposed was a race to the bottom; public sector pensions should be dragged down, not private sector pensions dragged up. The majority of public sector workers saw this rhetoric for what it really was: on 30 June 2011, hundreds of thousands of teachers and civil servants went on strike. But with the Government still refusing to make significant concessions, trade union ballots across the public sector delivered overwhelming support for industrial action.

The workers, with no means of defending themselves from this calamity, resorted to pelting managers with apples and oranges. 'It's a disgrace, I feel as though I've been used,' said one." It is not just agency and temporary workers who suffer because of job insecurity and outrageous terms and conditions. Fellow workers are forced to compete with people who can be hired far more cheaply. Everyone's wages are pushed down as a result. This is the 'race to the bottom' of pay and conditions. It might sound like a throwback to the Victorian era, but this could be the future for millions of workers as businesses exploit economic crisis for their own ends. In a document entitled The Shape of BusinessThe Next Ten Years, the Confederation of British Industry (CBI)-which represents major employers--claimed that the crash was the catalyst for a new era in business.

The real reasons for the strike, carefully obscured by the mainstream media, shed light on some of the complexities underlying the workingclass anti-immigration backlash in modem Britain. The Lindsey refinery's employer, IREM, had hired cheap, non-unionized workers from abroad. Not only did this threaten to break the workers' union, italso meant everyone else's wages and conditions would be pushed down in a 'race to the bottom'. 'We've got more in common with people around this world than with the employers who are doing this to us,' said Keith Gibson, one of the leaders of the strike and a member of the Trotskyist Socialist Party. BNP figures who tried to jump on the bandwagon were barred from the picket line. The demands of the strike committee included the unionization of immigrant labour, trade union assistance for immigrant workers and the building of links with construction workers on the continent.


pages: 356 words: 103,944

The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

affirmative action, Asian financial crisis, bank run, banking crisis, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, collective bargaining, colonial rule, Corn Laws, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, Doha Development Round, en.wikipedia.org, endogenous growth, eurozone crisis, financial deregulation, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, George Akerlof, guest worker program, Hernando de Soto, immigration reform, income inequality, income per capita, industrial cluster, information asymmetry, joint-stock company, Kenneth Rogoff, land reform, liberal capitalism, light touch regulation, Long Term Capital Management, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, microcredit, Monroe Doctrine, moral hazard, night-watchman state, non-tariff barriers, offshore financial centre, oil shock, open borders, open economy, Paul Samuelson, price stability, profit maximization, race to the bottom, regulatory arbitrage, savings glut, Silicon Valley, special drawing rights, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tobin tax, too big to fail, trade liberalization, trade route, transaction costs, tulip mania, Washington Consensus, World Values Survey

Federal Reserve vice chairman, worrying that international outsourcing will cause unprecedented dislocations for the U.S. labor force; Martin Wolf, the Financial Times columnist and one of the most articulate advocates of globalization, expressing his disappointment with the way financial globalization has turned out; and Larry Summers, the Clinton administration’s “Mr. Globalization” and economic adviser to President Barack Obama, musing about the dangers of a race to the bottom in national regulations and the need for international labor standards. While these worries hardly amount to the full frontal attack mounted by the likes of Joseph Stiglitz, the Nobel Prize–winning economist, they still constitute a remarkable shift in the intellectual climate. Moreover, even those who have not lost heart often disagree vehemently about where they would like to see globalization go.

The Compact aims to transform international corporations into vehicles for the advancement of social and economic goals. Such a transformation would benefit the communities in which these corporations and their affiliates operate. But, as Ruggie explains, there would be additional advantages. Improving large corporations’ social and environmental performance would spur emulation by other, smaller firms. It would alleviate the widespread concern that international competition creates a race to the bottom in labor and environmental standards at the expense of social inclusion at home. And it would allow the private sector to shoulder some of the functions that states are finding increasingly difficult to finance and carry out, as in public health and environmental protection, narrowing the governance gap between international markets and national governments.7 Arguments on behalf of new forms of global governance—whether of the delegation, network, or corporate social responsibility type—raise troubling questions.

Bank regulators with a more realistic sense of the efficacy of Basel rules’ impact on capital adequacy or the quality of U.S. credit rating practices would have paid more attention to the risks that their financial institutions at home were incurring. Our reliance on global governance also muddles our understanding of the rights of nation states to establish and uphold domestic standards and regulations, and the maneuvering room they have for exercising those rights. The worry that this maneuvering room has narrowed too much is the main reason for the widespread concern about the “race to the bottom” in labor standards, corporate taxes, and elsewhere. Ultimately, the quest for global governance leaves us with too little real governance. Our only chance of strengthening the infrastructure of the global economy lies in reinforcing the ability of democratic governments to provide those foundations. We can enhance both the efficiency and the legitimacy of globalization if we empower rather than cripple democratic procedures at home.


pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

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

For if the developing countries pay lower wages, do not protect their environment, and have insufferably long working hours, then won’t their cheap output eliminate our higher paying jobs, forcing us to lower our standards and our wages? We will have to keep working harder and longer to keep up. Firms and capital quickly migrate to where the lowest wages and the worst working conditions exist. It will be a ‘‘race to the bottom.’’ The one with the lowest social standard will win and will corner the investments and export revenues. Theoretically this seems a tough case to answer. The only trouble is that it has no foundation in reality. The world has not witnessed a deterioration of working conditions or wages in the past few decades, but precisely the opposite. And the explanation is simple. Consumers aren’t looking to buy goods from people who are poorly paid; they just want products that are good and as inexpensive as possible, whoever makes them.

They can choose to take things easier if they feel that they are working too much; they can pressure their employers for better conditions through such means as unions, and the employer can review the work situation. Each individual can opt out of certain things so as not to feel permanently at the beck and call of others. You don’t have to check your e-mail over the weekend, and there is no law against turning on the answering machine. Big is beautiful In the anti-globalists’ worldview, multinational corporations are leading the race to the bottom. By moving to developing countries and taking advantage of poor people and lax regulations, they are making money hand over fist and forcing other governments to adopt ever less restrictive policies. On this view, tariffs and barriers to foreign investment become a kind of national defense, a protection against a ruthless entrepreneurial power seeking to profiteer at people’s expense. The alternative is an empire of enormous multinationals ruling the world, regardless of what people think or want.

The West has to follow suit and lower its own environmental standards in order to stay in business. That is a dismal thesis, with the implication that when people obtain better opportunities, resources, and technology, they use them to abuse nature. Does there really have to be a conflict between development and the environment? The notion that there has to be a conflict runs into the same problem as the whole idea of a race to the bottom: it doesn’t tally with reality. There is no exodus of industry to countries with poor environmental standards, and there is no downward pressure on the level of global environmental protection. Instead, the bulk of American and European investments goes to countries with environmental regulations similar to their own. There has been much talk of American factories moving to Mexico since NAFTA was signed.


pages: 209 words: 80,086

The Global Auction: The Broken Promises of Education, Jobs, and Incomes by Phillip Brown, Hugh Lauder, David Ashton

active measures, affirmative action, barriers to entry, Branko Milanovic, BRICs, business process, business process outsourcing, call centre, collective bargaining, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, deindustrialization, deskilling, disruptive innovation, Frederick Winslow Taylor, full employment, future of work, glass ceiling, global supply chain, immigration reform, income inequality, industrial cluster, industrial robot, intangible asset, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, low skilled workers, manufacturing employment, market bubble, market design, neoliberal agenda, new economy, Paul Samuelson, pensions crisis, post-industrial society, profit maximization, purchasing power parity, QWERTY keyboard, race to the bottom, Richard Florida, Ronald Reagan, shared worldview, shareholder value, Silicon Valley, sovereign wealth fund, stem cell, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, transaction costs, trickle-down economics, winner-take-all economy, working poor, zero-sum game

There is a recognition that low-cost countries are developing their own knowledge workers capable of achieving global standards that were previously assumed to be out of reach by anyone other than Western workers. Thomas Friedman’s account of the “flattening” of the world economy has been widely debated. He sees little reason to worry about America’s middle classes being embroiled in a global race to the bottom because he focused on the race to the top. The knowledge wars are, he believes, forcing Americans to raise their game in the competition for the best and most innovative ideas, leading him to conclude, America, as a whole, will do fine in a flat world with free trade— provided it continues to churn out knowledge workers who are able 22 The Global Auction to produce idea-based goods that can be sold globally and who are able to fill the knowledge jobs that will be created as we not only expand the global economy but connect all the knowledge pools in the world.

In an interview with economic advisors in Washington during the Bush administration, we asked about the interests of American Managing in the Global Auction 111 corporations in investing in the country’s workforce. We were asked to turn off our recording equipment and in hushed voices, the two officials described their growing misgivings about the impact of free trade agreements working against the interests of American workers but to the benefit of American corporations. The consequences of this shift in economic power also led Robert Scott to conclude, “This shift has increased the global ‘race to the bottom’ in wages and environmental quality and closed thousands of U.S. factories, decimating employment in a wide range of communities, states, and entire regions of the United States. U.S. national interests have suffered while U.S. multinationals have enjoyed record profits on their foreign direct investments.” 23 The financial crash highlighted the economic catastrophe resulting from the failure of federal authorities to regulate financial markets, and the global auction highlights the social catastrophe of failing to regulate the relationship among education, jobs, and rewards.

This would reduce the risks managers take and enable them to focus more on the development of productive assets rather than inflating share prices or company profits for personal gain. Governments around the world, including the U.S. administration, also need to change the rules of the global auction. This would include new rules for the conduct of corporations and their executives designed to limit the race to the bottom that the reverse auction implies for many college-educated as well as less qualified workers. International labor A New Opportunity 159 standards would have to be reformed, allowing workers to counterbalance the power of global corporations by strengthening their rights to act collectively across national borders. Equally, at the same time that low-cost competition is a legitimate facet of the global auction, the exploitation of cheap labor (including child labor) is not legitimate and will require the introduction of a minimum wage for all countries based on national per capita income.


pages: 465 words: 109,653

Free Ride by Robert Levine

A Declaration of the Independence of Cyberspace, Anne Wojcicki, book scanning, borderless world, Buckminster Fuller, citizen journalism, commoditize, correlation does not imply causation, creative destruction, crowdsourcing, death of newspapers, Edward Lloyd's coffeehouse, Electric Kool-Aid Acid Test, Firefox, future of journalism, Googley, Hacker Ethic, informal economy, Jaron Lanier, Joi Ito, Julian Assange, Justin.tv, Kevin Kelly, linear programming, Marc Andreessen, Mitch Kapor, moral panic, offshore financial centre, pets.com, publish or perish, race to the bottom, Saturday Night Live, Silicon Valley, Silicon Valley startup, Skype, spectrum auction, Steve Jobs, Steven Levy, Stewart Brand, subscription business, Telecommunications Act of 1996, Whole Earth Catalog, WikiLeaks

decision, online activists worried it set a precedent that would allow any country to impose its laws on the online world. “We now risk a race to the bottom,” said Alan Davidson, an attorney with the Center for Democracy and Technology who has since become the top lobbyist at Google. “The most restrictive rules about Internet content—influenced by any country—could have an impact on people around the world.”11 This is certainly worth worrying about, but it could be seen as a very American view. In Western Europe, voters tend to see regulations on commerce as a way to protect their rights rather than limit them; generally speaking, they tend to want freedom from the market, rather than for it. So they worry about another kind of race to the bottom, where the least restrictive rules in the world undermine their laws—on hate speech, consumer protection, and especially privacy.

Sites that use pirated material to draw an audience drag down the price of online advertising to the point where companies that produce new material have trouble competing. Media companies that sell products online have to lower prices in order to compete with pirated versions of those same products sold by companies that bear none of the production costs. By making it essentially optional to pay for content, piracy has set the price of digital goods at zero. The result is a race to the bottom, and the inevitable response of media companies has been cuts—first in staff, then in ambition, and finally in quality. This devaluation could also hurt the Internet, since professional media provides much of the value in a broadband subscription. A 2010 study by the Pew Research Center’s Project for Excellence in Journalism found that more than 99 percent of blog links to news stories went to mainstream media outlets like newspapers and networks.15 File-sharing services are filled with copyrighted music.16 Seven of the ten most popular clips in YouTube history are major-label music videos.17 Amid the Internet’s astonishing array of choices, statistics show that most consumers continue to engage with the same kind of culture they did before—only in a way that’s not sustainable for those who make it.

Right now, cable television is an expensive, inefficient system that encourages competition for quality. In almost every way, it’s the exact opposite of the more efficient Internet, where more content is pirated than purchased and the producers of shows are pressured into giving them away before another company can do it for them. Competition concerns cost and Google search ranking, and the winners are sites like the Huffington Post. If cable worked like the Internet, the result would be a race to the bottom: shows that are free to watch, cheap to make, and easy to forget. The company that represents the greatest threat to television may be Google. In May 2010, the search giant announced Google TV, a platform that brings the Internet to a TV screen. As with Boxee, that means users can easily download video illegally as well as buy it. And as with Boxee, the conglomerates that own television channels are less than thrilled with that idea.


pages: 405 words: 109,114

Unfinished Business by Tamim Bayoumi

algorithmic trading, Asian financial crisis, bank run, banking crisis, Basel III, battle of ideas, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, buy and hold, capital controls, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, currency peg, Doha Development Round, facts on the ground, Fall of the Berlin Wall, financial deregulation, floating exchange rates, full employment, hiring and firing, housing crisis, inflation targeting, Just-in-time delivery, Kenneth Rogoff, liberal capitalism, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, market bubble, Martin Wolf, moral hazard, oil shale / tar sands, oil shock, price stability, prisoner's dilemma, profit maximization, quantitative easing, race to the bottom, random walk, reserve currency, Robert Shiller, Robert Shiller, Rubik’s Cube, savings glut, technology bubble, The Great Moderation, The Myth of the Rational Market, the payments system, The Wisdom of Crowds, too big to fail, trade liberalization, transaction costs, value at risk

In the 1992 Maastricht Treaty that determined the structuring of the future currency union, European leaders decided to keep responsibility for supervising and rescuing banks at the level of individual member countries rather that centralizing at the union level, the arrangement typical in other monetary unions such as the United States. The decision to retain national supervision was crucial as it undermined the European banking system in two ways. Competition across national supervisors meant that they increasingly became supporters for their own major banks. This led to the creation of large “national champions” and promoted a supervisory “race to the bottom” as regulators looked to boost the competitive position of their own champions by not being too intrusive. In addition, the fact that in the end almost all entry into other European countries was through subsidiaries meant that the costs of the eventual crisis were bottled up in individual countries. The quip from former Bank of England governor Mervyn King, that banks live internationally but die nationally, was especially true within the Euro area.

The push for consistent capital standards originated from concerns that differing national rules were providing some banks with a competitive advantage compared to their international competitors by allowing them to hold thinner capital buffers. Bank capital is intrinsically risky as owners are the first to lose their money in the case of financial distress. Accordingly, investors demand a higher rate of return on capital compared to safer forms of borrowing such as bonds or deposits. The concern was that competition across supervisors was creating a regulatory “race to the bottom” in which each country tried to make their banks more competitive by diluting the requirements on their expensive capital buffers, leading to inappropriately thin buffers across the board.17 The risk had been underlined by the international repercussions of major bank failures, such as that of Continental Illinois Bank in 1984. Even so, while national regulators were putting increasing emphasis on rules on bank capital, in 1985 there was “considerable variation in the mode and details of the capital regulation . . . and little apparent interest in most supervisors in harmonizing their capital regulations”.18 A crucial breakthrough came in 1986 when, rather to their surprise, negotiators from the US and UK rapidly settled on a common set of capital standards.19 The two countries were particularly influential members of the Basel Committee, reflecting both the size of their economies and the importance of the New York and London financial markets for international banking.

The split between centralized bank supervision and national responsibility for bank rescues risks undermining the effectiveness of centralized ECB supervision of Euro area banks. This is because it replaces one set of misaligned incentives with another set. The problem with the pre-crisis system was that national regulators were responsible for both bank supervision and support, creating incentives for a regulatory race to the bottom. The new system generates a new misalignment of incentives since national regulators, who have responsibility for bank support, will generally want to minimize their assessment of banking problems and the associated costs which will put them at odds with the ECB, which is responsible for supervision. Indeed, this already seems to be occurring in the case of the Italian banks where the ECB is keener on a comprehensive approach to cleaning up the problems of the system than the Italian authorities.


pages: 197 words: 49,240

Melting Pot or Civil War?: A Son of Immigrants Makes the Case Against Open Borders by Reihan Salam

Affordable Care Act / Obamacare, Bonfire of the Vanities, charter city, delayed gratification, Donald Trump, Edward Glaeser, ghettoisation, guest worker program, illegal immigration, immigration reform, income inequality, income per capita, industrial robot, interchangeable parts, job automation, low skilled workers, low-wage service sector, mass immigration, megacity, new economy, obamacare, open borders, race to the bottom, self-driving car, Silicon Valley, special economic zone, two tier labour market, upwardly mobile, urban decay, working poor

Classification: LCC JV6483 .S25 2018 | DDC 325.73—dc23 LC record available at https://lccn.loc.gov/2018033512 While the author has made every effort to provide accurate telephone numbers, internet addresses, and other contact information at the time of publication, neither the publisher nor the author assumes any responsibility for errors, or for changes that occur after publication. Further, the publisher does not have any control over and does not assume any responsibility for author or third-party websites or their content. Version_1 To my sisters CONTENTS TITLE PAGE COPYRIGHT DEDICATION Introduction CHAPTER ONE The Unfinished Melting Pot CHAPTER TWO Somebody Else’s Babies CHAPTER THREE Race to the Bottom CHAPTER FOUR Jobs Robots Will Do CHAPTER FIVE It’s a Small World CHAPTER SIX Nation Building Conclusion ACKNOWLEDGMENTS NOTES INDEX ABOUT THE AUTHOR Introduction A few years ago, a cable news producer asked me to appear on his television program to discuss a grisly murder in which, if I recall correctly, a Muslim immigrant had hacked someone to death in the name of Islam.

As the political scientist Morris Levy suggested to The New York Times, Americans “dislike the idea of a permanent second-class citizen,” as it cuts against “a core set of values that people think of as really elemental to being American.”52 The United States does have long-term guest-worker programs, to be sure, but they typically give guest workers the right to bring over their dependents. Overstaying guest-worker visas is common, and, of course, people on temporary visas often have citizen children. The babies of low-skill immigrants are as much our babies as the babies of high-skill immigrants. And, as of now, we are letting them down. CHAPTER THREE Race to the Bottom As a little kid, I was an accidental ethnic pioneer. On the first day of kindergarten, I remember being teased for being an “Indian,” which is to say an indigenous person. I vaguely recall that my family found the teasing more baffling than offensive, and so I brushed it off. In short order, the teasing stopped and I befriended most of my classmates. Because my family’s Bengali-speaking friends had scattered to suburbs in Long Island and New Jersey, the kids I was closest to in Brooklyn were drawn from a wide range of backgrounds.

Politico, March 19, 2018. www.politico.com/magazine/story/2018/03/19/how-america-fell-behind-the-world-on-immigration-217658. 52. Bui, Quoctrung and Caitlin Dickerson. “What Can the U.S. Learn From How Other Countries Handle Immigration?” The New York Times, February 16, 2018. www.nytimes.com/interactive/2018/02/16/upshot/comparing-immigration-policies-across-countries.html. CHAPTER THREE: RACE TO THE BOTTOM 1. Krogstad, Jens Manuel and Ana Gonzalez-Barrera. “A majority of English-speaking Hispanics in the U.S. are bilingual.” Pew Research Center, March 24, 2018. www.pewresearch.org/fact-tank/2015/03/24/a-majority-of-english-speaking-hispanics-in-the-u-s-are-bilingual. 2. Inspired by Richard Alba. 3. Alba, Richard. “The Likely Persistence of a White Majority.” American Prospect, January 11, 2016. prospect.org/article/likely-persistence-white-majority-0. 4.


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The Great Firewall of China by James Griffiths;

A Declaration of the Independence of Cyberspace, activist fund / activist shareholder / activist investor, Albert Einstein, anti-communist, bitcoin, borderless world, call centre, Chelsea Manning, Deng Xiaoping, don't be evil, Donald Trump, Edward Snowden, gig economy, jimmy wales, Mark Zuckerberg, megacity, Mikhail Gorbachev, Mitch Kapor, mobile money, Occupy movement, pets.com, profit motive, QR code, race to the bottom, RAND corporation, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, Silicon Valley startup, Skype, Snapchat, South China Sea, Steve Jobs, Stewart Brand, Stuxnet, technoutopianism, undersea cable, WikiLeaks, zero day

., 4:2007cv02151’, California Northern District Court. 19198964, ‘Excerpts from Document Eleven issued by the General Offices of the Communist Party of China and the State Council’, Democracy Forum, 20 April 2004, as cited by the Committee to Protect Journalists, https://cpj.org/awards/2005/shi-tao.php 20X. Liu, ‘An open letter to Jerry Yang, chairman of Yahoo! Inc. regarding the arrest of Shi Tao’ in ‘Race to the Bottom’: corporate complicity in Chinese internet censorship, New York NY: Human Rights Watch, 2006, https://www.hrw.org/reports/2006/china0806/14.htm 21L. Rao, ‘The most expensive sake that Alibaba’s Jack Ma ever had’, Fortune, 25 September 2015, http://fortune.com/2015/09/25/yahoo-alibaba-investment-jack-ma/ Part 2 Chapter 6 1‘How censorship works in China: a brief overview’ in ‘Race to the Bottom’: corporate complicity in Chinese internet censorship, New York NY: Human Rights Watch, 2006, https://www.hrw.org/reports/2006/china0806/3.htm 2R. Faris, J. Palfrey, E. Zuckerman, H. Roberts and J.

Ye, ‘The Great Firewall of China’, Wired, 1 June 1997, https://www.wired.com/1997/06/china-3/ 16Computer Information Network and Internet Security, Protection and Management Regulations, State Council, 1997. 17J. Griffiths, ‘VPN down: China goes after Astrill, other anti-censorship apps in run up to WW2 anniversary parade’, South China Morning Post, 26 August 2015, http://www.scmp.com/tech/apps-gaming/article/1852658/vpn-down-china-goes-after-astrill-other-anti-censorship-apps-run 18‘How censorship works in China: a brief overview’ in ‘Race to the Bottom’: corporate complicity in Chinese internet censorship, New York NY: Human Rights Watch, 2006, https://www.hrw.org/reports/2006/china0806/3.htm 19G. Walton, China’s Golden Shield: corporations and the development of surveillance technology in the People’s Republic of China, Montreal: International Centre for Human Rights and Democratic Development, 2001, https://web.archive.org/web/20020206170828/http://www.ichrdd.ca/english/commdoc/publications/globalization/goldenShieldEng.html 20J.

Sulzberger, ‘China’s leaders; in Jiang’s words: “I hope the Western world can understand China better”’, The New York Times, 10 August 2001, https://www.nytimes.com/2001/08/10/world/china-s-leaders-jiang-s-words-hope-western-world-can-understand-china-better.html 3‘Jiang renews warning against “pernicious” internet’, Agence France-Presse, 11 July 2001. 4‘How censorship works in China: a brief overview’ in ‘Race to the Bottom’: corporate complicity in Chinese internet censorship, New York NY: Human Rights Watch, 2006, https://www.hrw.org/reports/2006/china0806/3.htm 5‘Golden Shield project’, Guangdong Hongan Group, 2012, https://web.archive.org/web/20150416093636/http://www.gdhongan.com:80/industroy.asp?ChannelID=7# 6J. Kahn, ‘China has world’s tightest internet censorship, study finds’, The New York Times, 4 December 2002, https://www.nytimes.com/2002/12/04/world/china-has-world-s-tightest-internet-censorship-study-finds.html 7Wengui v Li [2018] 8:2018cv00259 (Maryland District Court), https://dockets.justia.com/docket/maryland/mddce/8:2018cv00259/412429 8J.


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Why We Can't Afford the Rich by Andrew Sayer

accounting loophole / creative accounting, Albert Einstein, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, Boris Johnson, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, high net worth, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, Kickstarter, labour market flexibility, laissez-faire capitalism, land value tax, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, plutocrats, Plutocrats, popular capitalism, predatory finance, price stability, pushing on a string, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, WikiLeaks, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

‘Avoidance’ is not illegal, ‘evasion’ is illegal, but when the systems are deliberately opaque, it’s hard to tell which category they fit, though avoidance certainly goes against the spirit of the law. The second myth is that corporations have a duty to avoid tax in order to meet their obligation to maximise shareholder value. But there is no such obligation in law. Tax havens compete with one another to attract the rich and their wealth, creating a race to the bottom (‘tax competition’) that continually pressures other countries to lower their own taxes, or at least those that most affect the rich. Escaping financial regulations also creates a race to the bottom to deregulate onshore economies. Rates of corporation tax have fallen across the rich countries since the 1970s. Companies that hide activities offshore can undercut those companies that actually do pay their tax; those that do pay may complain but, not surprisingly, many decide that if they can’t beat them, they may as well join them.

Up until the 1970s their returns were similar to those from shares in non-finance companies (less than 10% per year), but from then on they rose to well over 20%. That the banks chose to hand over so much of their enormous profits to shareholders at a time when they needed to build up their capital base speaks volumes about the irrationality of shareholder capitalism. In the 1980s, governments began to extol the virtues of ‘flexible labour markets’, a brilliant euphemism for reduced protection, bargaining power and security for workers and a race-to-the-bottom for cheaper labour. In this new environment, slow growth of wages and salaries meant that aggregate demand for goods and services also grew more slowly, making it harder for companies to make a profit from investment in new capacity and products. Two things reduced or postponed the damage; first, the rise in women’s employment, which increased household income for many, and second, the dramatic expansion of consumer debt, particularly mortgages and credit cards, although eventually this depressed demand and consumption because the borrowers had to pay off the interest.

While they will no doubt be justified as ‘cutting red tape’, their aim is to maximise the economic and political power of international business by minimising government restrictions on their operations, whether they are for protecting public health, employment conditions or the environment, or simply for allowing governments to control their economies. The most likely – and intended – outcome is a race to the bottom in standards. The treaties also look set to extend corporations’ intellectual property rights, preventing individuals and other companies, including smaller businesses across the world, from benefiting from their innovations without paying them rent. As we saw in Parts One and Two, companies themselves typically benefit from countless freely available innovations of the commons, yet their powers to privatise their own innovations are being extended.


Refuge: Transforming a Broken Refugee System by Alexander Betts, Paul Collier

Alvin Roth, anti-communist, centre right, charter city, corporate social responsibility, Donald Trump, failed state, Filter Bubble, global supply chain, informal economy, Kibera, mass immigration, megacity, mobile money, Mohammed Bouazizi, mutually assured destruction, open borders, Peace of Westphalia, peer-to-peer, race to the bottom, randomized controlled trial, rising living standards, risk/return, school choice, special economic zone, structural adjustment programs, trade route, urban planning, zero-sum game

The cooperation problem in the refugee regime can be thought of as what game theorists would describe as a ‘suasion game’: one in which weaker players are left with little choice but to cooperate and stronger players are left with little incentive to cooperate.12 This explains in part why fewer than 1 per cent of the world’s refugees get access to resettlement in third countries beyond their region of origin. It explains why UNHCR’s assistance programmes around the world are chronically under-funded. It explains why distant countries in the global North, who take a relatively tiny proportion of the world’s refugees, constantly compete with one another in a ‘race to the bottom’ in terms of asylum standards in order to encourage refugees to choose another country’s territory rather than their own. In the absence of clear rules, attempts by UNHCR to overcome this collective action failure have had to be ad hoc and episodic. The organization relies upon annual voluntary contributions for almost all of its budget, rather than having access to assessed, multi-year funding contributions.

Yet it is crucial that if refugee protection is to be sustainable, better answers be found, premised upon collective rather than unilateral action and reinforcing rather than undermining the quantity and quality of protection available to refugees. It is in the historical absence of a clear set of principles and mechanisms for responsibility-sharing that, gradually, almost all states have found themselves in a race to the bottom in term of standards of protection. MISSING MODELS: WHY CAMPS ARE NOT ENOUGH The principal way in which the refugee regime provides protection is ineffective and outdated. Since the 1980s the dominant model has been the long-term provision of assistance in refugee camps and closed settlements. A model designed to provide immediate access to food, clothing, and shelter during humanitarian emergencies has become the way in which the international community provides refugees with long-term support.

Intellectually, it was understood that freedom of movement within the common area would only be sustainable if immigration standards and practices could be harmonized. The Commission gradually negotiated a Common European Asylum System (CEAS) – a series of common criteria for qualification (who is a refugee?), adjudication (how do we determine who is a refugee?), and reception (what rights should asylum-seekers and refugees receive?). The aim was to avoid a ‘race to the bottom’ in terms of standards, reduce the likelihood of refugees engaging in ‘asylum shopping’, and ensure no one state ended up with a disproportionate share of refugees because of its having more generous policies. That was the theory. In practice, the system was dysfunctional from the start. States adopted different asylum standards. Recognition rates for different nationalities, the required duration of residency before asylum-seekers would be allowed to work, and social-security entitlements, for example, all varied markedly across Europe.


pages: 497 words: 123,718

A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption by Steven Hiatt; John Perkins

addicted to oil, airline deregulation, Andrei Shleifer, Asian financial crisis, Berlin Wall, big-box store, Bob Geldof, Bretton Woods, British Empire, capital controls, centre right, clean water, colonial rule, corporate governance, corporate personhood, deglobalization, deindustrialization, Doha Development Round, energy security, European colonialism, financial deregulation, financial independence, full employment, global village, high net worth, land reform, large denomination, liberal capitalism, Long Term Capital Management, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, Naomi Klein, new economy, North Sea oil, offshore financial centre, oil shock, Ponzi scheme, race to the bottom, reserve currency, Ronald Reagan, Scramble for Africa, statistical model, structural adjustment programs, too big to fail, trade liberalization, transatlantic slave trade, transfer pricing, union organizing, Washington Consensus, working-age population, Yom Kippur War

Hundreds of billions in loans were supposed to bring progress, yet the programs have never lived up to their promise. Instead, governing elites amass obscene fortunes while the poor shoulder the burden of paying off the debts. A former World Bank staffer, Steve Berkman presents an inside investigator’s account of how these schemes work to divert development money into the pockets of corrupt elites and their First World partners. 9 The Philippines, the World Bank, and the Race to the Bottom Ellen Augustine “Development” and “modernization” became code words for U.S. efforts to prop up the regime of President Ferdinand Marcos, with the World Bank serving as a conduit for the financing of Marcos’ dictatorship. Some 800 leaked documents from the World Bank itself tell how the Bank financed martial law and made the Philippines the test case for its export-led development strategy based on multinational corporations—with disastrous results for both democracy and economic development. 10 Exporting Destruction Bruce Rich Export credit agencies have quietly become the world’s largest financial institutions, backing $788 billion in trade in 2004.

a Liberian official asked World Bank staffer Steve Berkman, clearly expecting him to hand over a satchel full of cash. In “The World Bank and the $100 Billion Question,” Berkman provides an insider’s account of how and why the Bank looks the other way as corrupt elites steal funds intended for development aid. • In the 1970s, the Philippines were a showcase for the World Bank’s debt-based model of development and modernization. In “The Philippines, the World Bank, and the Race to the Bottom,” Ellen Augustine tells how billions in loans were central to U.S. efforts to prop up the Marcos dictatorship, with the World Bank serving as a conduit. • Export credit agencies have a single job: to enrich their countries’ corporations by making it easier for poor countries to buy their products and services. In “Exporting Destruction,” Bruce Rich turns a spotlight on the secretive world of ECAs and the damage they have caused in selling nuclear plants to countries that cannot manage them and pushing arms in war-torn regions

It is all just “business as usual,” and will continue that way until some catastrophe descends on them, by which time it will be too late to do anything about it. POSTSCRIPT: By the time Marcos was overthrown in 1986, the foreign debt of the Philippines exceeded $28 billion, including around $675 million in debts incurred by companies run by Marcos’ cronies and guaranteed by Philippine government institutions. As Ellen Augustine notes in chapter 9, “The Philippines, the World Bank, and the Race to the Bottom,” the Philippine people are still struggling to repay debt accumulated during the Marcos era. —S.H. 3 Offshore banking havens enable the extraction of $500 billion a year from the Third World–a flow of dirty money that has become essential to global elites. Dirty Money: Inside the Secret World of Offshore Banking John Christensen Kuala Lumpur, July 1985: Maybe it was the heat, or perhaps the Guinness and Courvoisier had dulled my senses, but something about what the man next to me was saying didn’t quite add up.


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

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

And one-half of all new mortgages in 2006 were liar-loans requiring little or no documentation. The average down payment for first-time buyers fell from 10 percent in 1989 to a bare 2 percent by 2007.33 Deregulation added to the blaze. A majority of these unconventional loans came to be made by unregulated mortgage firms or S&Ls “not subject to routine supervision,” according to Barry Ritholtz, CEO of the quantitative research firm Fusion IQ.34 Stolid firms refusing to join this race to the bottom in credit standards were penalized with shrinking market share and falling share prices. Alan Greenspan’s fingerprints were everywhere as the housing bubble expanded before the 2004 election, including successfully urging Wall Street to expand home equity loans. Such loans to households totaled $1.79 trillion during 2003–2005, adding spending comparable to an astounding 6 percent of GDP annually, a nice fillip for the reelection campaign of President George W.

That substantial level for the minimum wage provided a solid economic floor beneath American incomes during the golden age. It also proved to be a muscular antipoverty mechanism, setting a living wage floor sufficient to prevent abject family poverty. The logic of the minimum wage is straightforward: without a robust market for labor or a wage floor beneath them, history since the industrial revolution teaches that market forces produce a race to the bottom for wages. The American experience during my first years of work demonstrated how successful minimum wages can be. During its peak years in the late 1960s and early 1970s, America enjoyed the lowest poverty rates ever in its history (11.1 percent in 1973) and higher real wages than today. And the lowest recorded rate of childhood impoverishment ever in America was in 1969, at 13.8 percent.44 Most persuasive is that year after year in this period, America recorded among the lowest unemployment levels in postwar history despite the high minimum wage.

The real story of globalization is what happened in Australia and northern Europe. In America, global integration is a convicted wage killer. But we know that not all Americans suffered. Its dynamic forces improved resource allocation, greatly expanded world trade, and became a wealth machine for a thin slice of America. That meant greater rewards to owners of capital, innovators, and the most skilled, whose shares of national income rose. But for others, a race to the bottom in wages ensued, with workers in Milwaukee, Brooklyn, and Dallas competing one-on-one with workers in Sri Lanka, New Delhi, and Shanghai. And the biggest losers have been less skilled workers and high-wage union shops targeted by the offshoring and wage compression features of Reaganomics. European economies are much more integrated and influenced by world trade than is America’s. Logically, losses and labor market churning from global integration should have been even more severe in Europe.


Making Globalization Work by Joseph E. Stiglitz

affirmative action, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, Berlin Wall, business process, capital controls, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Gini coefficient, global reserve currency, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Jones Act, Kenneth Arrow, Kenneth Rogoff, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, new economy, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, trickle-down economics, union organizing, Washington Consensus, zero-sum game

The Extractive Industries Transparency Initiative21 I described earlier how greater transparency would discourage corruption, making it more likely that developing countries would receive full value for their natural resources. The advanced industrial countries can help ensure transparency by simply saying: no one gets a tax deduction for money spent on royalties or other payments to foreign governments unless they fully disclose what was paid and how much of the resource in question was extracted. Without such a broad agreement, there will continue to be a race to the bottom, and the companies and countries most willing to engage in corrupt practices, and least willing to be transparent, will have an advantage over the others. 2. Reducing arms sales Even worse than corruption is the armed conflict that mineral and oil resources finance. Again, the international community could do more to make it more difficult and more expensive to acquire arms. We have a responsibility to choke off supply at the source—the manufacturers of arms who profit from this nasty business—or at least impose a heavy tax on the sale of arms and to check the source of the money which pays for them.22 3.

Enforcement We have described a variety of good practices, ways in which developed countries can help the developing world ensure that citizens reap the benefits of the resources that lie within their countries—by enhancing transparency, discouraging bribery and corruption, and protecting the environment. But these measures cannot and should not be left to goodwill. The amounts of money at stake are too large, the incentives for a race to the bottom too great. There must be effective enforcement. Trade agreements can be used to force “good behavior.” Trade sanctions can be used against companies and countries that engage in unfair trade practices—and failing to subscribe to the extractive industries transparency initiative and other anti-bribery measures should be treated as an unfair trade practice. We can make globalization work, or at least work better, for those in resource-rich countries.

But there are large barriers to entry—the development of a mine can cost more than a billion dollars, and entails a great deal of risk. If one company leaves, another may not fill the gap—or if it does, it may demand even more unfavorable terms. Globalization has compounded the problems arising from the misalignment of incentives in modern corporations. Competition among developing countries to attract investment can result in a race to the bottom, as companies seek a home with the weakest labor and environmental laws. As the case of Bhopal illustrates, the ability to hide behind borders makes it even more difficult to hold corporations and their officers accountable. Furthermore, the speed with which assets can be moved from one country to another means that even if there is a monetary judgment against a firm in one country, it may be impossible to collect.


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The Divide: A Brief Guide to Global Inequality and Its Solutions by Jason Hickel

Andrei Shleifer, Asian financial crisis, Atahualpa, Bartolomé de las Casas, Bernie Sanders, Bob Geldof, Bretton Woods, British Empire, Cape to Cairo, capital controls, carbon footprint, clean water, collective bargaining, colonial rule, David Attenborough, David Graeber, David Ricardo: comparative advantage, declining real wages, dematerialisation, Doha Development Round, Elon Musk, European colonialism, falling living standards, financial deregulation, Fractional reserve banking, Francisco Pizarro, full employment, Hans Rosling, happiness index / gross national happiness, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Watt: steam engine, laissez-faire capitalism, land reform, land value tax, liberal capitalism, Live Aid, Mahatma Gandhi, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, Nelson Mandela, offshore financial centre, oil shale / tar sands, out of africa, plutocrats, Plutocrats, purchasing power parity, race to the bottom, rent control, road to serfdom, Ronald Reagan, Scramble for Africa, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, structural adjustment programs, The Chicago School, The Spirit Level, trade route, transatlantic slave trade, transfer pricing, trickle-down economics, Washington Consensus, WikiLeaks, women in the workforce, Works Progress Administration

But as structural adjustment forced open markets across the global South during the 1980s and 1990s, companies – enabled by new transport technologies such as containerised shipping – suddenly had another option open to them: they could just pull up stakes and move to Bangladesh or Mexico, where labour was a fraction of the cost. In fact, companies found they had the power to scan the globe in search not only of cheaper labour, but of the cheapest possible labour. And developing countries, in turn, found that in order to successfully attract foreign investment they had to compete with one another to drive wages down. It became a global ‘race to the bottom’ towards ever cheaper labour and ever lower standards. The solidarity that marked the rise of the South in the 1960s was suddenly replaced with cutthroat competition. In the countries of the G7, corporations gained the upper hand over their workers at last – at least in industries that were amenable to offshoring, like manufacturing. If their workers become too demanding, they could always threaten to move elsewhere.

For Latin America, the inequality ratio grew by 42 per cent, and for the Middle East and North Africa it grew by 38 per cent. South Asia, where structural adjustment was not forcibly applied to the same extent, managed to shrink the inequality ratio during this period by 15 per cent, although the absolute gap between the per capita incomes of South Asia and the United States continued to grow.47 Source: World Development Indicators The race-to-the-bottom effect triggered by structural adjustment and globalisation is one of the main drivers behind this ever-widening gap. In the 1960s developing countries were losing $161 billion (in 2015 dollars) each year through what economists call ‘unequal exchange’, the difference between the real value of the goods that a developing country exports and the market prices that it gets for those goods. We can think of this as an expression of undervalued labour.

The last incumbent spent 100 days abroad in a single year, and visited more than twenty countries. At the time of writing, the new Lord Mayor was lobbying hard to turn Kenya into a tax haven. The problem with tax havens is not only that they facilitate the theft of capital, or that they prevent governments from capturing revenues, but also that they induce what analysts call ‘tax competition’ or ‘tax warfare’. Tax havens have set off a kind of global race to the bottom, with countries competing to offer low tax rates to foreign investors in order to attract them in. This constant pressure to reduce taxes makes it very difficult for parliaments and governments to make rational decisions about tax legislation, or to plan their budgets into the future. Some economists nonetheless believe that the global tax haven system is justifiable according to neoliberal theory: they claim that money should be allowed to move freely around the world in search of the best tax rates.


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Overdressed: The Shockingly High Cost of Cheap Fashion by Elizabeth L. Cline

big-box store, business cycle, clean water, East Village, feminist movement, income inequality, informal economy, invention of the sewing machine, Maui Hawaii, McMansion, megacity, race to the bottom, Skype, special economic zone, trade liberalization, Triangle Shirtwaist Factory, upwardly mobile, Veblen good

Anthony Lilore, a thirty-year veteran of the fashion industry and an advocate for Save the Garment Center, agrees that the increasing informalization of fashion has made consumers cheaper. “Fashion used to be tailored clothing, not bespoke, but a much more structured garment bought at department stores,” he says. “That men walk around in T-shirts and elastic waistband pants has very definitely impacted the notion of what fashion is and contributed to the race to the bottom.” The less skill involved in making our clothes, the cheaper it becomes, and the less we are willing to pay for it. The more basic clothes are, the less it matters where they’re made. A tank top can be made anywhere in the world. The same cannot be said of a well-made dress, which requires a highly skilled seamstress. Does this mean we should return to wearing dresses so elaborate we have to be helped into them?

Lily then offered to sell me the Forever 21 embroidered dress for $9 a pop. That’s rich, I thought. I could make a knockoff of what might just be a knockoff. Lily also gave me a price quote for the florette dress, $11. She said, “The cost is rising, but I will try my best to give you my best price because we are friends.” Over the past two decades, American consumers have accepted, and benefited from, the race to the bottom in fashion. The competition in garment manufacturing has been beyond fierce, with only those with the lowest prices surviving. According to some Chinese suppliers, net margins are still somewhere between 3 percent and 5 percent.1 Returned orders, cancellations, or lapses in the production lineup are common occurrences and they can all easily put a factory under. The profits that are created are kept by those in charge.

This might just be where the apparel industry is headed.” Local production also makes it easier for a designer to be watchful of factory conditions. Abuses and sweatshops still occur in the United States, but smaller production shops and a more locally minded industry focused on low-volume, better-made garments would improve accountability and correct some of fashion’s labor problems. Increasing the price of fashion would also help correct the race to the bottom in garment worker wages. “It’s a lot easier to keep an eye on what’s going on by keeping things local,” EPIC’s Tristan Scott says, although many of their designers produce in such small batches that the pieces are sewn in their own homes or personal studios. Some factory owners complain that state and federal labor laws are too strict, putting them at a competitive disadvantage. But the garment industry needs watchdogs, as history’s shown, or conditions quickly erode.


Green Economics: An Introduction to Theory, Policy and Practice by Molly Scott Cato

Albert Einstein, back-to-the-land, banking crisis, banks create money, basic income, Bretton Woods, Buy land – they’re not making it any more, carbon footprint, central bank independence, clean water, Community Supported Agriculture, congestion charging, corporate social responsibility, David Ricardo: comparative advantage, deskilling, energy security, food miles, Food sovereignty, Fractional reserve banking, full employment, gender pay gap, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), job satisfaction, land reform, land value tax, Mahatma Gandhi, market fundamentalism, mortgage debt, passive income, peak oil, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, reserve currency, the built environment, The Spirit Level, Tobin tax, University of East Anglia, wikimedia commons

In the market for textiles, for example, there is fierce competition between poorer countries, which produce more than half the world’s textile exports and nearly three-quarters of its clothing exports.17 Producer countries enjoyed some protection through the 136 GREEN ECONOMICS Multi-Fibre Arrangement (originally negotiated by developed countries to protect their post-war markets against imports) until this was removed under WTO pressure at the end of 2004. This has led to the collapse of an important sector of production in countries whose workers were paid slightly more – the so-called ‘race to the bottom’ in production.18 From a development economics perspective and in a book with a strong focus on poverty alleviation, Tom Lines argues the case for a fundamental restructuring of commodities markets. He also suggests informal cooperation between poorer countries dependent on commodities to earn foreign exchange to increase their market power: For example, in May 2005 a new government in Ecuador (which exports more bananas than any other country) signed a decree to regulate the volume of bananas leaving the country.

Localization to replace globalization In his ‘global manifesto’ for localization Colin Hines defines globalization as follows: Globalization n. 1. the process by which governments sign away the rights of their citizens in favour of speculative investors and transnational corporations. 2. The erosion of wages, social welfare standards and environmental regulations for the sake of international trade. 3. The imposition world-wide of a consumer monoculture. Widely but falsely believed to be irreversible – See also financial meltdown, casino economy, Third World debt and 140 GREEN ECONOMICS race to the bottom (16th century: from colonialism, via development).1 This is, as Hines himself concedes, a blunt and indeed a savage critique. He sees globalization not as a positive move but rather as an economic delocalization or dismantling of local economies on a global basis. Woodin and Lucas refer to globalization as ‘the economics of insecurity’, making a strong case that it was a politically motivated project justified on the basis of economic efficiency but in reality operating for the benefit of transnational corporations or TNCs: There is plenty of evidence to show that the beneficiaries of this massive expansion in international trade are the transnational corporations (TNCs) that control it.

per cent of all fruit consumed in the UK now come from overseas.4 The problem for the proponents of localization is that the rules of the economic game are stacked against them. Although globalization has resulted in a single economy for sales, there is no global rate for wages, nor internationally agreed standards of employment or environmental protection. In such a world it is inevitable that there will be what critics of globalization refer to as a ‘race to the bottom’, where all production will shift to countries which have the lowest environmental and employment standards. The impossibility of competition between workers in Western economies, protected by minimum wage legislation, and those in the poorer nations is clear from the comparison of wage rates illustrated in Figure 9.2. Increasingly this has led to a situation where everything is made in China.


pages: 301 words: 88,082

The Great Tax Robbery: How Britain Became a Tax Haven for Fat Cats and Big Business by Richard Brooks

accounting loophole / creative accounting, bank run, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, carried interest, Celtic Tiger, collateralized debt obligation, commoditize, Corn Laws, corporate social responsibility, crony capitalism, Double Irish / Dutch Sandwich, financial deregulation, haute couture, intangible asset, interest rate swap, Jarndyce and Jarndyce, mega-rich, Northern Rock, offshore financial centre, race to the bottom, shareholder value, short selling, supply-chain management, The Chicago School, The Wealth of Nations by Adam Smith, transfer pricing

Corporation tax avoidance transactions dating from before 2004 but by now reaching the higher courts were regularly going the taxman’s way as judges reasserted the ‘Ramsay’ principle of looking at schemes in the round. Of the last eight such cases, the Revenue had won five. Income tax avoidance schemes were almost without exception being decided in the Revenue’s favour. But in the international taxation ‘race to the bottom’ that the government was keen to accelerate, an easy ride from the tax authorities was paraded as a competitive national advantage just like plummeting corporate tax rates and lax offshore avoidance laws. Treasury minister David Gauke spelt it out: ‘How companies experience the UK tax system is as important to tax competitiveness as the headline rates that we set.’‌36 Multinationals, he was pleased to report, were telling him that ‘HMRC compares very favourably’ with foreign tax authorities (small business would not have been so complimentary).‌37 The government and the country’s most senior tax inspector had become salesmen, and what they were selling was Britain’s tax system.

They were to appear at a seminar hosted by notorious tax-dodger General Electric – represented by its UK tax director and chairman of the HMRC-Industry Business Tax Forum, Will Morris – at the right-wing American Enterprise Institute. The title was ‘UK Tax Reform: a Roadmap for the US?’ and it was part of a concerted campaign to get US tax rates and offshore tax rules reduced to something like the UK’s in the global race to the bottom. The international tax-slashing circus would not, of course, have been complete without the Oxford Business Centre’s Professor Devereux jetting in to provide his contribution. ‘We [the UK] have been quite fortunate in our leaders over a few years,’ he remarked by way of explanation for getting the offshore corporate tax breaks on the statute book.‌48 Or as Morris had put it a few months before: ‘We have business talking to government, we have government talking to advisers, we have everybody essentially trying to move in the same direction.’‌49 This was supposedly the modern way to make policy.

This, however, was precisely the opposite of what the British government was doing by effectively trashing its own CFC laws (as OECD tax chief Pascal Saint-Amans would point out to a US congressional committee in June 2013). This exposes the limitations of the OECD’s work. Most essential changes to the corporate tax system require domestic law changes and, however laudable the organisation’s pronouncements, there is no sign that these will be forthcoming. With the UK leading the race to the bottom on corporate tax, our government comprehensively undermines the international effort against multinationals’ tax avoidance. As Cameron waxed lyrical and the OECD beavered away, down at the British tax avoidance club the Treasury and Britain’s biggest tax avoiders were reshaping the law to frustrate their sentiments and intentions. With some straightforward offshore planning the biggest multinationals can now take their tax rates way below any headline rate the government announces.


pages: 510 words: 120,048

Who Owns the Future? by Jaron Lanier

3D printing, 4chan, Affordable Care Act / Obamacare, Airbnb, augmented reality, automated trading system, barriers to entry, bitcoin, book scanning, Burning Man, call centre, carbon footprint, cloud computing, commoditize, computer age, crowdsourcing, David Brooks, David Graeber, delayed gratification, digital Maoism, Douglas Engelbart, en.wikipedia.org, Everything should be made as simple as possible, facts on the ground, Filter Bubble, financial deregulation, Fractional reserve banking, Francis Fukuyama: the end of history, George Akerlof, global supply chain, global village, Haight Ashbury, hive mind, if you build it, they will come, income inequality, informal economy, information asymmetry, invisible hand, Jaron Lanier, Jeff Bezos, job automation, John Markoff, Kevin Kelly, Khan Academy, Kickstarter, Kodak vs Instagram, life extension, Long Term Capital Management, Marc Andreessen, Mark Zuckerberg, meta analysis, meta-analysis, Metcalfe’s law, moral hazard, mutually assured destruction, Network effects, new economy, Norbert Wiener, obamacare, packet switching, Panopticon Jeremy Bentham, Peter Thiel, place-making, plutocrats, Plutocrats, Ponzi scheme, post-oil, pre–internet, race to the bottom, Ray Kurzweil, rent-seeking, reversible computing, Richard Feynman, Ronald Reagan, scientific worldview, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, smart meter, stem cell, Steve Jobs, Steve Wozniak, Stewart Brand, Ted Nelson, The Market for Lemons, Thomas Malthus, too big to fail, trickle-down economics, Turing test, Vannevar Bush, WikiLeaks, zero-sum game

The Mechanical Turk is not really that different from other Siren Servers, but it is so up front about its nature that it stands out. Those who take assignments through it often seem to even enjoy the fun of emulating an intelligent machine for someone else’s profit.1 The charade has a triply dismal quality. Of course there is the “race to the bottom” process that lowers wages absolutely as much as possible,2 making temp jobs in the fast-food industry seem like social climbing on-ramps in comparison. Yet there are people ready to step up and take such roles. More than a few recruits appear to be the live-at-home kids of middle-class Americans, whiling away their time.3 Whenever there is a networked race to the bottom, there is a Siren Server that connects people and owns the master database about who they are. If they knew each other, comprehensively, they might organize a union or some other form of levee. The second dismal quality is that artificial-intelligence algorithms are getting better, so gradually it will become more possible to not even acknowledge the contributions of real people to the degree done now.

Over time, people will hopefully adjust to the idea that you have to pay others as you would like to be paid. The more interests a person perceives in common with others, even when commonalities are best illuminated by theatrical effects, the more likely the market will function well, and grow. The psychology of a social contract will eventually take hold. In isolation, economic symmetry might pose a risk of a race to the bottom. Wouldn’t everyone initially want stuff for free, and then never be able to compete with the expectation of free stuff from others in order to start charging? This is approximately what happens when a traditional economy stalls and falls into a depression. Recall, though, the “legacy” portion of the calculation of price described earlier. The “instant” portion of a price is vulnerable to the same old Keynesian catastrophes that have always plagued markets, but the legacy portion is something new, only possible in an information economy run by large computers enabled by Moore’s Law.

., 75, 91, 266–67 New York Times, 109 Nobel Prize, 40, 118, 143n nodes, network, 156, 227, 230, 241–43, 350 “no free lunch” principle, 55–56, 59–60 nondeterministic music, 23n nonlinear solutions, 149–50 nonprofit share sites, 59n, 94–95 nostalgia, 129–32 NRO, 199–200 nuclear power, 133 nuclear weapons, 127, 296 nursing, 97–100, 123, 296n nursing homes, 97–100, 269 Obama, Barack, 79, 100 “Obamacare,” 100n obsolescence, 89, 95 oil resources, 43, 133 online stores, 171 Ono, Yoko, 212 ontologies, 124n, 196 open-source applications, 206, 207, 272, 310–11 optical illusions, 121 optimism, 32–35, 45, 130, 138–40, 218, 230n, 295 optimization, 144–47, 148, 153, 154–55, 167, 202, 203 Oracle, 265 Orbitz, 63, 64, 65 organ donors, 190, 191 ouroboros, 154 outcomes, economic, 40–41, 144–45 outsourcing, 177–78, 185 Owens, Buck, 256 packet switching, 228–29 Palmer, Amanda, 186–87 Pandora, 192 panopticons, 308 papacy, 190 paper money, 34n parallel computers, 147–48, 149, 151 paranoia, 309 Parrish, Maxfield, 214 particle interactions, 196 party machines, 202 Pascal, Blaise, 132, 139 Pascal’s Wager, 139 passwords, 307, 309 “past-oriented money,” 29–31, 35, 284–85 patterns, information, 178, 183, 184, 188–89 Paul, Ron, 33n Pauli exclusion principle, 181, 202 PayPal, 60, 93, 326 peasants, 565 pensions, 95, 99 Perestroika (Kushner), 165 “perfect investments,” 59–67, 77–78 performances, musical, 47–48, 51, 186–87, 253 perpetual motion, 55 Persian Gulf, 86 personal computers (PCs), 158, 182n, 214, 223, 229 personal information systems, 110, 312–16, 317 Pfizer, 265 pharmaceuticals industry, 66–67, 100–106, 123, 136, 203 philanthropy, 117 photography, 53, 89n, 92, 94, 309–11, 318, 319, 321 photo-sharing services, 53 physical trades, 292 physicians, 66–67 physics, 88, 153n, 167n Picasso, Pablo, 108 Pinterest, 180–81, 183 Pirate Party, 49, 199, 206, 226, 253, 284, 318 placebos, 112 placement fees, 184 player pianos, 160–61 plutocracy, 48, 291–94, 355 police, 246, 310, 311, 319–21, 335 politics, 13–18, 21, 22–25, 47–48, 85, 122, 124–26, 128, 134–37, 149–51, 155, 167, 199–234, 295–96, 342 see also conservatism; liberalism; libertarianism Ponzi schemes, 48 Popper, Karl, 189n popular culture, 111–12, 130, 137–38, 139, 159 “populating the stack,” 273 population, 17, 34n, 86, 97–100, 123, 125, 132, 133, 269, 296n, 325–26, 346 poverty, 37–38, 42, 44, 53–54, 93–94, 137, 148, 167, 190, 194, 253, 256, 263, 290, 291–92 power, personal, 13–15, 53, 60, 62–63, 86, 114, 116, 120, 122, 158, 166, 172–73, 175, 190, 199, 204, 207, 208, 278–79, 290, 291, 302–3, 308–9, 314, 319, 326, 344, 360 Presley, Elvis, 211 Priceline, 65 pricing strategies, 1–2, 43, 60–66, 72–74, 145, 147–48, 158, 169–74, 226, 261, 272–75, 289, 317–24, 331, 337–38 printers, 90, 99, 154, 162, 212, 269, 310–11, 316, 331, 347, 348, 349 privacy, 1–2, 11, 13–15, 25, 50–51, 64, 99, 108–9, 114–15, 120–21, 152, 177n, 199–200, 201, 204, 206–7, 234–35, 246, 272, 291, 305, 309–13, 314, 315–16, 317, 319–24 privacy rights, 13–15, 25, 204, 305, 312–13, 314, 315–16, 321–22 product design and development, 85–89, 117–20, 128, 136–37, 145, 154, 236 productivity, 7, 56–57, 134–35 profit margins, 59n, 71–72, 76–78, 94–95, 116, 177n, 178, 179, 207, 258, 274–75, 321–22 progress, 9–18, 20, 21, 37, 43, 48, 57, 88, 98, 123, 124–40, 130–37, 256–57, 267, 325–31, 341–42 promotions, 62 property values, 52 proprietary hardware, 172 provenance, 245–46, 247, 338 pseudo-asceticism, 211–12 public libraries, 293 public roads, 79–80 publishers, 62n, 92, 182, 277–78, 281, 347, 352–60 punishing vs. rewarding network effects, 169–74, 182, 183 quants, 75–76 quantum field theory, 167n, 195 QuNeo, 117, 118, 119 Rabois, Keith, 185 “race to the bottom,” 178 radiant risk, 61–63, 118–19, 120, 156, 183–84 Ragnarok, 30 railroads, 43, 172 Rand, Ayn, 167, 204 randomness, 143 rationality, 144 Reagan, Ronald, 149 real estate, 33, 46, 49–52, 61, 78, 95–96, 99, 193, 224, 227, 239, 245, 255, 274n, 289n, 296, 298, 300, 301 reality, 55–56, 59–60, 124n, 127–28, 154–56, 161, 165–68, 194–95, 203–4, 216–17, 295–303, 364–65 see also Virtual Reality (VR) reason, 195–96 recessions, economic, 31, 54, 60, 76–77, 79, 151–52, 167, 204, 311, 336–37 record labels, 347 recycling, 88, 89 Reddit, 118n, 186, 254 reductionism, 184 regulation, economic, 37–38, 44, 45–46, 49–50, 54, 56, 69–70, 77–78, 266n, 274, 299–300, 311, 321–22, 350–51 relativity theory, 167n religion, 124–25, 126, 131, 139, 190, 193–95, 211–17, 293, 300n, 326 remote computers, 11–12 rents, 144 Republican Party, 79, 202 research and development, 40–45, 85–89, 117–20, 128, 136–37, 145, 154, 215, 229–30, 236 retail sector, 69, 70–74, 95–96, 169–74, 272, 349–51, 355–56 retirement, 49, 150 revenue growth plans, 173n revenues, 149, 149, 150, 151, 173n, 225, 234–35, 242, 347–48 reversible computers, 143n revolutions, 199, 291, 331 rhythm, 159–62 Rich Dad, Poor Dad (Kiyosaki), 46 risk, 54, 55, 57, 59–63, 71–72, 85, 117, 118–19, 120, 156, 170–71, 179, 183–84, 188, 242, 277–81, 284, 337, 350 externalization of, 59n, 117, 277–81 risk aversion, 188 risk pools, 277–81, 284 risk radiation, 61–63, 118–19, 120, 156, 183–84 robo call centers, 177n robotic cars, 90–92 robotics, robots, 11, 12, 17, 23, 42, 55, 85–86, 90–92, 97–100, 111, 129, 135–36, 155, 157, 162, 260, 261, 269, 296n, 342, 359–60 Roman Empire, 24–25 root nodes, 241 Rousseau, Jean-Jacques, 129 Rousseau humor, 126, 129, 130–31 routers, 171–72 royalties, 47, 240, 254, 263–64, 323, 338 Rubin, Edgar, 121 rupture, 66–67 salaries, 10, 46–47, 50–54, 152, 178, 270–71, 287–88, 291–94, 338–39, 365 sampling, 71–72, 191, 221, 224–26, 259 San Francisco, University of, 190 satellites, 110 savings, 49, 72–74 scalable solutions, 47 scams, 119–21, 186, 275n, 287–88, 299–300 scanned books, 192, 193 SceneTap, 108n Schmidt, Eric, 305n, 352 Schwartz, Peter, 214 science fiction, 18, 126–27, 136, 137–38, 139, 193, 230n, 309, 356n search engines, 51, 60, 70, 81, 120, 191, 267, 289, 293 Second Life, 270, 343 Secret, The (Byrne), 216 securitization, 76–78, 99, 289n security, 14–15, 175, 239–40, 305–8, 345 self-actualization, 211–17 self-driving vehicles, 90–92, 98, 311, 343, 367 servants, 22 servers, 12n, 15, 31, 53–57, 71–72, 95–96, 143–44, 171, 180, 183, 206, 245, 358 see also Siren Servers “Sexy Sadie,” 213 Shakur, Tupac, 329 Shelley, Mary, 327 Short History of Progress, A (Wright), 132 “shrinking markets,” 66–67 shuttles, 22, 23n, 24 signal-processing algorithms, 76–78, 148 silicon chips, 10, 86–87 Silicon Valley, 12, 13, 14, 21, 34n, 56, 59, 60, 66–67, 70, 71, 75–76, 80, 93, 96–97, 100, 102, 108n, 125n, 132, 136, 154, 157, 162, 170, 179–89, 192, 193, 200, 207, 210, 211–18, 228, 230, 233, 258, 275n, 294, 299–300, 325–31, 345, 349, 352, 354–58 singularity, 22–25, 125, 215, 217, 327–28, 366, 367 Singularity University, 193, 325, 327–28 Sirenic Age, 66n, 354 Siren Servers, 53–57, 59, 61–64, 65, 66n, 69–78, 82, 91–99, 114–19, 143–48, 154–56, 166–89, 191, 200, 201, 203, 210n, 216, 235, 246–50, 258, 259, 269, 271, 272, 280, 285, 289, 293–94, 298, 301, 302–3, 307–10, 314–23, 326, 336–51, 354, 365, 366 Siri, 95 skilled labor, 99–100 Skout, 280n Skype, 95, 129 slavery, 22, 23, 33n Sleeper, 130 small businesses, 173 smartphones, 34n, 39, 162, 172, 192, 269n, 273 Smith, Adam, 121, 126 Smolin, Lee, 148n social contract, 20, 49, 247, 284, 288, 335, 336 social engineering, 112–13, 190–91 socialism, 14, 128, 254, 257, 341n social mobility, 66, 97, 292–94 social networks, 18, 51, 56, 60, 70, 81, 89, 107–9, 113, 114, 129, 167–68, 172–73, 179, 180, 190, 199, 200–201, 202, 204, 227, 241, 242–43, 259, 267, 269n, 274–75, 280n, 286, 307–8, 317, 336, 337, 343, 349, 358, 365–66 see also Facebook social safety nets, 10, 44, 54, 202, 251, 293 Social Security, 251, 345 software, 7, 9, 11, 14, 17, 68, 86, 99, 100–101, 128, 129, 147, 154, 155, 165, 172–73, 177–78, 182, 192, 234, 236, 241–42, 258, 262, 273–74, 283, 331, 347, 357 software-mediated technology, 7, 11, 14, 86, 100–101, 165, 234, 236, 258, 347 South Korea, 133 Soviet Union, 70 “space elevator pitch,” 233, 342, 361 space travel, 233, 266 Spain, 159–60 spam, 178, 275n spending levels, 287–88 spirituality, 126, 211–17, 325–31, 364 spreadsheet programs, 230 “spy data tax,” 234–35 Square, 185 Stalin, Joseph, 125n Stanford Research Institute (SRI), 215 Stanford University, 60, 75, 90, 95, 97, 101, 102, 103, 162, 325 Starr, Ringo, 256 Star Trek, 138, 139, 230n startup companies, 39, 60, 69, 93–94, 108n, 124n, 136, 179–89, 265, 274n, 279–80, 309–10, 326, 341, 343–45, 348, 352, 355 starvation, 123 Star Wars, 137 star (winner-take-all) system, 38–43, 50, 54–55, 204, 243, 256–57, 263, 329–30 statistics, 11, 20, 71–72, 75–78, 90–91, 93, 110n, 114–15, 186, 192 “stickiness,” 170, 171 stimulus, economic, 151–52 stoplights, 90 Strangelove humor, 127 student debt, 92, 95 “Study 27,” 160 “Study 36,” 160 Sumer, 29 supergoop, 85–89 supernatural phenomena, 55, 124–25, 127, 132, 192, 194–95, 300 supply chain, 70–72, 174, 187 Supreme Court, U.S., 104–5 surgery, 11–13, 17, 18, 98, 157–58, 363 surveillance, 1–2, 11, 14, 50–51, 64, 71–72, 99, 108–9, 114–15, 120–21, 152, 177n, 199–200, 201, 206–7, 234–35, 246, 272, 291, 305, 309–11, 315, 316, 317, 319–24 Surviving Progress, 132 sustainable economies, 235–37, 285–87 Sutherland, Ivan, 221 swarms, 99, 109 synthesizers, 160 synthetic biology, 162 tablets, 85, 86, 87, 88, 113, 162, 229 Tahrir Square, 95 Tamagotchis, 98 target ads, 170 taxation, 44, 45, 49, 52, 60, 74–75, 77, 82, 149, 149, 150, 151, 202, 210, 234–35, 263, 273, 289–90 taxis, 44, 91–92, 239, 240, 266–67, 269, 273, 311 Teamsters, 91 TechCrunch, 189 tech fixes, 295–96 technical schools, 96–97 technologists (“techies”), 9–10, 15–16, 45, 47–48, 66–67, 88, 122, 124, 131–32, 134, 139–40, 157–62, 165–66, 178, 193–94, 295–98, 307, 309, 325–31, 341, 342, 356n technology: author’s experience in, 47–48, 62n, 69–72, 93–94, 114, 130, 131–32, 153, 158–62, 178, 206–7, 228, 265, 266–67, 309–10, 325, 328, 343, 352–53, 362n, 364, 365n, 366 bio-, 11–13, 17, 18, 109–10, 162, 330–31 chaos and, 165–66, 273n, 331 collusion in, 65–66, 72, 169–74, 255, 350–51 complexity of, 53–54 costs of, 8, 18, 72–74, 87n, 136–37, 170–71, 176–77, 184–85 creepiness of, 305–24 cultural impact of, 8–9, 21, 23–25, 53, 130, 135–40 development and emergence of, 7–18, 21, 53–54, 60–61, 66–67, 85–86, 87, 97–98, 129–38, 157–58, 182, 188–90, 193–96, 217 digital, 2–3, 7–8, 15–16, 18, 31, 40, 43, 50–51, 132, 208 economic impact of, 1–3, 15–18, 29–30, 37, 40, 53–54, 60–66, 71–74, 79–110, 124, 134–37, 161, 162, 169–77, 181–82, 183, 184–85, 218, 254, 277–78, 298, 335–39, 341–51, 357–58 educational, 92–97 efficiency of, 90, 118, 191 employment in, 56–57, 60, 71–74, 79, 123, 135, 178 engineering for, 113–14, 123–24, 192, 194, 217, 218, 326 essential vs. worthless, 11–12 failure of, 188–89 fear of (technophobia), 129–32, 134–38 freedom as issue in, 32–33, 90–92, 277–78, 336 government influence in, 158, 199, 205–6, 234–35, 240, 246, 248–51, 307, 317, 341, 345–46, 350–51 human agency and, 8–21, 50–52, 85, 88, 91, 124–40, 144, 165–66, 175–78, 191–92, 193, 217, 253–64, 274–75, 283–85, 305–6, 328, 341–51, 358–60, 361, 362, 365–67 ideas for, 123, 124, 158, 188–89, 225, 245–46, 286–87, 299, 358–60 industrial, 49, 83, 85–89, 123, 132, 154, 343 information, 7, 32–35, 49, 66n, 71–72, 109, 110, 116, 120, 125n, 126, 135, 136, 254, 312–16, 317 investment in, 66, 181, 183, 184, 218, 277–78, 298, 348 limitations of, 157–62, 196, 222 monopolies for, 60, 65–66, 169–74, 181–82, 187–88, 190, 202, 326, 350 morality and, 50–51, 72, 73–74, 188, 194–95, 262, 335–36 motivation and, 7–18, 85–86, 97–98, 216 nano-, 11, 12, 17, 162 new vs. old, 20–21 obsolescence of, 89, 97 political impact of, 13–18, 22–25, 85, 122, 124–26, 128, 134–37, 199–234, 295–96, 342 progress in, 9–18, 20, 21, 37, 43, 48, 57, 88, 98, 123, 124–40, 130–37, 256–57, 267, 325–31, 341–42 resources for, 55–56, 157–58 rupture as concept in, 66–67 scams in, 119–21, 186, 275n, 287–88, 299–300 singularity of, 22–25, 125, 215, 217, 327–28, 366, 367 social impact of, 9–21, 124–40, 167n, 187, 280–81, 310–11 software-mediated, 7, 11, 14, 86, 100–101, 165, 234, 236, 258, 347 startup companies in, 39, 60, 69, 93–94, 108n, 124n, 136, 179–89, 265, 274n, 279–80, 309–10, 326, 341, 343–45, 348, 352, 355 utopian, 13–18, 21, 31, 37–38, 45–46, 96, 128, 130, 167, 205, 207, 265, 267, 270, 283, 290, 291, 308–9, 316 see also specific technologies technophobia, 129–32, 134–38 television, 86, 185–86, 191, 216, 267 temperature, 56, 145 Ten Commandments, 300n Terminator, The, 137 terrorism, 133, 200 Tesla, Nikola, 327 Texas, 203 text, 162, 352–60 textile industry, 22, 23n, 24, 135 theocracy, 194–95 Theocracy humor, 124–25 thermodynamics, 88, 143n Thiel, Peter, 60, 93, 326 thought experiments, 55, 139 thought schemas, 13 3D printers, 7, 85–89, 90, 99, 154, 162, 212, 269, 310–11, 316, 331, 347, 348, 349 Thrun, Sebastian, 94 Tibet, 214 Time Machine, The (Wells), 127, 137, 261, 331 topology, network, 241–43, 246 touchscreens, 86 tourism, 79 Toyota Prius, 302 tracking services, 109, 120–21, 122 trade, 29 traffic, 90–92, 314 “tragedy of the commons,” 66n Transformers, 98 translation services, 19–20, 182, 191, 195, 261, 262, 284, 338 transparency, 63–66, 74–78, 118, 176, 190–91, 205–6, 278, 291, 306–9, 316, 336 transportation, 79–80, 87, 90–92, 123, 258 travel agents, 64 Travelocity, 65 travel sites, 63, 64, 65, 181, 279–80 tree-shaped networks, 241–42, 243, 246 tribal dramas, 126 trickle-down effect, 148–49, 204 triumphalism, 128, 157–62 tropes (humors), 124–40, 157, 170, 230 trust, 32–34, 35, 42, 51–52 Turing, Alan, 127–28, 134 Turing’s humor, 127–28, 191–94 Turing Test, 330 Twitter, 128, 173n, 180, 182, 188, 199, 200n, 201, 204, 245, 258, 259, 349, 365n 2001: A Space Odyssey, 137 two-way links, 1–2, 227, 245, 289 underemployment, 257–58 unemployment, 7–8, 22, 79, 85–106, 117, 151–52, 234, 257–58, 321–22, 331, 343 “unintentional manipulation,” 144 United States, 25, 45, 54, 79–80, 86, 138, 199–204 universities, 92–97 upper class, 45, 48 used car market, 118–19 user interface, 362–63, 364 utopianism, 13–18, 21, 30, 31, 37–38, 45–46, 96, 128, 130, 167, 205, 207, 265, 267, 270, 283, 290, 291, 308–9, 316 value, economic, 21, 33–35, 52, 61, 64–67, 73n, 108, 283–90, 299–300, 321–22, 364 value, information, 1–3, 15–16, 20, 210, 235–43, 257–58, 259, 261–63, 271–75, 321–24, 358–60 Values, Attitudes, and Lifestyles (VALS), 215 variables, 149–50 vendors, 71–74 venture capital, 66, 181, 218, 277–78, 298, 348 videos, 60, 100, 162, 185–86, 204, 223, 225, 226, 239, 240, 242, 245, 277, 287, 329, 335–36, 349, 354, 356 Vietnam War, 353n vinyl records, 89 viral videos, 185–86 Virtual Reality (VR), 12, 47–48, 127, 129, 132, 158, 162, 214, 283–85, 312–13, 314, 315, 325, 343, 356, 362n viruses, 132–33 visibility, 184, 185–86, 234, 355 visual cognition, 111–12 VitaBop, 100–106, 284n vitamins, 100–106 Voice, The, 185–86 “voodoo economics,” 149 voting, 122, 202–4, 249 Wachowski, Lana, 165 Wall Street, 49, 70, 76–77, 181, 184, 234, 317, 331, 350 Wal-Mart, 69, 70–74, 89, 174, 187, 201 Warhol, Andy, 108 War of the Worlds, The (Wells), 137 water supplies, 17, 18 Watts, Alan, 211–12 Wave, 189 wealth: aggregate or concentration of, 9, 42–43, 53, 60, 61, 74–75, 96, 97, 108, 115, 148, 157–58, 166, 175, 201, 202, 208, 234, 278–79, 298, 305, 335, 355, 360 creation of, 32, 33–34, 46–47, 50–51, 57, 62–63, 79, 92, 96, 120, 148–49, 210, 241–43, 270–75, 291–94, 338–39, 349 inequalities and redistribution of, 20, 37–45, 65–66, 92, 97, 144, 254, 256–57, 274–75, 286–87, 290–94, 298, 299–300 see also income levels weather forecasting, 110, 120, 150 weaving, 22, 23n, 24 webcams, 99, 245 websites, 80, 170, 200, 201, 343 Wells, H.


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

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

Add to this, aspirational voters concerned that they and/or their children get jobs in these advanced sectors. This does not imply support for a particular party, left or right, but instead that electable parties have a reputation for effective management of advanced economies. (iii) Advanced capital is geographically embedded in the advanced nation-state rather than footloose: The third element of our approach rules out “race to the bottom” welfare states and/or imposition of subsistence wages in the advanced sectors, and more generally it also justifies advanced governments making huge investments in education, training, and research, which footloose companies might otherwise carry abroad perhaps with their skilled workforces. The value added of advanced companies is geographically embedded in their skilled workforces, via skill clusters, social networks, the need for colocation of workforces, and skills cospecific across workers and—given their limited codifiability—the implicit nature of a large proportion of skills.

Trade facilitates specialization in lines of production in which companies have a comparative advantage because of the institutional framework. Trade therefore also entrenches and facilitates cross-national differences in institutions, and this is reinforced by foreign direct investment. We see more tendencies toward convergence in nontraded, low-wage service sectors where flexibilization of labor contracts is a common trend in the past two decades. Still, most evidence confirms that there have not been races to the bottom in redistribution or corporate tax rates. Moreover, in all these cases differential outcomes are determined in our analysis by domestic political coalitions. Thus we conclude that it is to be expected that governments of advanced countries with strong advanced capitalist sectors are the dominant powers in the contemporary world—not the EU, nor multinationals, nor transnational standard-setters, public or private. 6.

Second, the European Monetary System (EMS), the Single Market, and the Maastricht Treaty contributed to this shift in many countries. To be sure, the implications of European integration have been complex, even contradictory. For some it has been seen as a way of introducing the chill winds of competition and intensifying the pressure to deregulate and eliminate the excesses of the welfare state, while for others it has been seen as a way of halting the race to the bottom. What is important here is that integration supported labor market decentralization. By eliminating capital controls and making realignments more difficult, the EMS solidified the exchange-rate commitment and the credibility of the non-accommodating monetary policies needed to restrain wage demands in more decentralized labor markets. By making central-bank independence and fiscal retrenchment conditions for qualifying for monetary union, the Maastricht Treaty reinforced the credibility of that macropolicy stance.


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We the Corporations: How American Businesses Won Their Civil Rights by Adam Winkler

1960s counterculture, affirmative action, Affordable Care Act / Obamacare, anti-communist, Bernie Sanders, British Empire, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate personhood, corporate social responsibility, desegregation, Donald Trump, financial innovation, glass ceiling, income inequality, invisible hand, joint-stock company, laissez-faire capitalism, land reform, obamacare, offshore financial centre, plutocrats, Plutocrats, Powell Memorandum, profit maximization, profit motive, race to the bottom, Ralph Nader, Ralph Waldo Emerson, refrigerator car, Robert Bork, Ronald Reagan, Rosa Parks, shareholder value, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, the scientific method, too big to fail, trade route, transcontinental railway, Unsafe at Any Speed, Upton Sinclair, yellow journalism

Bostwick noted that “so many trusts and big corporations were paying tribute to the State of New Jersey that the authorities had become greatly perplexed as to what should be done with the surplus revenue.”15 STANDARD OIL FORMED AN IMMENSELY SUCCESSFUL TRUST, AND EFFORTS TO BREAK UP THE TRUSTS WOULD LEAD TO THE EXPANSION OF CORPORATE RIGHTS. Decades later, long after the trusts had been defeated, some corporate law scholars would argue that New Jersey’s reforms were the beginning of a “race to the bottom.” States seeking the revenue from incorporation fees continually made corporate law more permissive, which attracted corporate executives freed up by the new rules. Over time, the traditional corporate law doctrines limiting the power of corporate officers were rendered largely meaningless; corporate law became mainly a template that private parties could use to organize their affairs. After New Jersey’s windfall, Delaware was one of several states to follow suit.

In the 1890s, insurance company boards had adopted a policy of deference to the firms’ chief executives—one that would become commonplace in public corporations in the following decades. Even though the boards of the major insurance companies were a “Who’s Who” of New York financial, business, and political elites, the directors acted powerless. “In fine,” the Nation observed, “directors do not direct.”27 Had the policyholders somehow overcome their collective action problem, they faced a series of other hurdles created by the recent corporate law reforms. The “race to the bottom” that began when New Jersey loosened its laws to lure reincorporation by large corporations, like Standard Oil and American Tobacco, translated into increasingly lax rules of corporate governance. Older rules that held managers liable for negligent decision-making were replaced by the “business judgment rule,” which effectively immunized management from liability for bad decisions so long as those decisions were made in good faith to serve the business.

By then, the 51-year-old jurist had already proven himself to be the most influential and charismatic figure in the world of corporate law. Prior to becoming the chief justice of Delaware, Strine served for sixteen years on Delaware’s Court of Chancery, the nation’s leading court for corporate law. Delaware, with over 60 percent of Fortune 500 companies and more than 900,000 businesses incorporated in the state, had won the so-called “race to the bottom” begun at the end of the nineteenth century when New Jersey loosened its laws to attract Rockefeller’s Standard Oil and other trusts. Although New Jersey eventually strengthened its corporate code, Delaware followed the Garden State’s earlier example and continually made its corporate law rules more permissive and friendly to management, becoming the leading state of choice for America’s corporations.


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Days of Destruction, Days of Revolt by Chris Hedges, Joe Sacco

Berlin Wall, Bernie Sanders, clean water, collective bargaining, corporate personhood, dumpster diving, Exxon Valdez, Goldman Sachs: Vampire Squid, Howard Zinn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, laissez-faire capitalism, Mahatma Gandhi, mass immigration, mass incarceration, Naomi Klein, Nelson Mandela, Occupy movement, oil shale / tar sands, race to the bottom, Ralph Nader, Silicon Valley, Steve Jobs, strikebreaker, union organizing, urban decay, wage slave, white flight, women in the workforce

Bury me and Elbert in the same grave by little Eddy. Goodbye. Ellen, goodbye Lily, goodbye Jemmie, goodbye Horace. Is 25 minutes after two. There is a few of us alive yet. Jake and Elbert. Oh God for one more breath. Ellen remember me as long as you live. Goodbye darling.” 4 DAYS OF SLAVERY Immokalee, Florida In America today we are seeing a race to the bottom, the middle class is collapsing, poverty is increasing. What I saw in Immokalee is the bottom in the race to the bottom. —SENATOR BERNIE SANDERS Hoping for work in the La Fiesta parking lot, Immokalee, Florida. RODRIGO ORTIZ, A TWENTY-SIX-YEAR-OLD FARMWORKER—A SHORT man in a tattered baseball cap and soiled black pants that are too long—stands forlornly in the half-light in front of the La Fiesta Supermarket on South 3rd Street in Immokalee, Florida.

This shows you that when any industry devolves from being an industry with a fulltime work force with benefits and overtime, pensions, or whatever, to a subpoverty minimum-wage workforce—not salaried, day labor—you start seeing more cases of forced labor. We are starting to see labor trafficking in the garment industry and in hotels and construction. It devolves. I’m surprised it hasn’t happened in meatpacking, where salaries have also gotten lower and the benefits have gotten worse. I had hoped that agriculture would become more like other industries, but I fear that in our race to the bottom other industries are beginning to resemble agriculture. The advances made by the Coalition of Immokalee Workers on behalf of the tomato workers, however, are among the few bright spots in the nation’s agricultural fields, advances made outside the formal structures of power by the workers themselves. “What is happening in the tomato industry is huge and promising,” Germino says. “It is something new and genuinely exciting.


We Need New Stories: Challenging the Toxic Myths Behind Our Age of Discontent by Nesrine Malik

affirmative action, Affordable Care Act / Obamacare, barriers to entry, Bernie Sanders, Boris Johnson, British Empire, centre right, cognitive dissonance, continuation of politics by other means, currency peg, Donald Trump, feminist movement, financial independence, Francis Fukuyama: the end of history, gender pay gap, ghettoisation, glass ceiling, illegal immigration, invisible hand, mass immigration, moral panic, Nate Silver, obamacare, old-boy network, payday loans, planetary scale, Ponzi scheme, race to the bottom, Ronald Reagan, Saturday Night Live, sexual politics, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, Thomas L Friedman, transatlantic slave trade

The focus is on the climate at Google, one of the more progressive companies in tech, and how it makes people ‘feel’ about the views that they hold. It is merely the climate to which he is objecting, rather than specific instances where a far left ideologically orthodox liberal company closed ranks against a white man for saying the truth. This is a microcosm of how, when small changes are introduced in order to encourage those from different backgrounds up the ladder, this is seen as inefficient, a race to the bottom. Believing in meritocracy is also a way of owning one’s success as something attributable to one’s good qualities, rather than accident of birth. Harvard Business Review calls this ‘advantage blindness’ whereby relatively powerful people become unable to see the impact of their behaviour on those less privileged, and also unable to acknowledge the extent of their own privilege, as it is the norm.

The British journalist Isabel Oakeshott tweeted that if he were disciplined by his party for ‘perfectly reasonable exercise of free speech, something has gone terribly wrong with the party leadership,’ saying that it was ‘Deplorable to see [the Tory leadership] pandering to the whinings of the professionally offended in this craven way.’ Free speech, according to this definition, came to mean that no one had any right to object to what anyone ever said. Which not only meant that no one should object to Johnson’s comments but, in turn, that no one should object to their objection. Free speech logic, rather than the pursuit of a lofty Enlightenment value, became a race to the bottom where the alternative to being ‘professionally offended’ is never to be offended at all. This logic today demands silence from those who are defending themselves from abuse or hate speech. It is, according to the drector of the Institute of Race Relations, ‘the privileging of freedom of speech over freedom to life’. Our alleged free speech crisis was never really about free speech. The backdrop to the myth is rising anti-immigration sentiment and Islamophobia.

But it didn’t stop at Muslims and Jews, it expanded to bullying girls, students of different sexual orientation and ultimately into targeting students who simply did not support Trump. Violence and damage to school property increased and the overwhelming majority of educators ‘saw a negative impact on students’ mood and behavior following the election’. As Trump himself would say, so much winning. Similarly, free speech absolutism creates a polarisation, a race to the bottom where licence is confused with freedom, where free speech is used as a technical excuse to commodify the spectacle of pain. When conspiracy theorist Alex Jones was kicked off digital platforms for suggesting that the Sandy Hook massacre was fabricated (among other theories) he asked, ‘Now, who will stand against tyranny and who will stand for free speech?’ Shortly after, a defamation suit was brought against him (one of many) – his defence was the First Amendment.


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Digital Dead End: Fighting for Social Justice in the Information Age by Virginia Eubanks

affirmative action, Berlin Wall, call centre, cognitive dissonance, creative destruction, desegregation, Fall of the Berlin Wall, future of work, game design, global village, index card, informal economy, invisible hand, Kevin Kelly, knowledge economy, labor-force participation, low-wage service sector, microcredit, new economy, post-industrial society, race to the bottom, rent control, Shoshana Zuboff, Silicon Valley, South of Market, San Francisco, telemarketer, Thomas L Friedman, trickle-down economics, union organizing, urban planning, web application, white flight, women in the workforce, working poor

Uninsured women are nearly 50 percent more likely to die four to seven years following an initial diagnosis of breast cancer than insured women. The minimum wage is a poverty wage. The federal minimum wage was enacted in 1938 to put a firm floor under workers and their families, strengthen the economy by increasing consumer purchasing power, create new jobs, foster growth in lagging regions, and prevent a “race to the bottom,” with employers moving to the cheapest possible labor state. In 1938, the minimum wage brought a family of three with one full-time worker above the federal poverty line. [Talk about how the poverty line was calculated based on food cost as the highest cost of a household. Today, a household’s heaviest financial burden is housing.] The current minimum wage doesn’t bring one worker with one child above the federal poverty line.

Source Jessie Willis, How We Measure Poverty: A History and Brief Overview, http://www.ocpp .org/poverty/how.htm (2000). Talk about differences in expenses between then and now. Is food a family’s biggest expense? If not, what is? Why did they do it? The federal minimum wage was enacted to put a firm floor under workers and their families, strengthen the economy by increasing consumer purchasing power, create new jobs, foster economic growth in lagging regions, and prevent a “race to the bottom,” with employers moving to the cheapest possible labor state. Exercise (20 minutes) Does it add up? Does the minimum wage still make sense? Break the group into six small groups (using money). Give each group one of the family profiles and ask them to calculate whether or not they think the family will make it, given the wages the family is earning and the assistance it is are receiving. Be sure to look for holes in the profiles: What did we overlook?

Many responsible businesses report improvements in the quality of products and services. With higher wages, workers have more purchasing power, which buoys the economy. Ben Cohen has gone on to found Sweat X, which makes “sweatshop-free clothes for large organizations like universities.” Play Oprah’s tape. (5 minutes) (How does globalism throw a new wrinkle in the whole thing? Connect back to original aim of the 1938 federal wage being to prevent a race to the bottom. How might an international minimum wage be calculated?) Exercise (15 minutes) Calculating self-sufficiency How would you define a self-sufficiency or equity wage? Return to the chart developed earlier showing what the minimum wage doesn’t take into account. What else would we have to take into account for a truly just minimum wage, one based on minimum needs? Let’s figure it out together for Rensselaer County: THE WAGE IS RIGHT game show.


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Reimagining Capitalism in a World on Fire by Rebecca Henderson

Airbnb, asset allocation, Berlin Wall, Bernie Sanders, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, collaborative economy, collective bargaining, commoditize, corporate governance, corporate social responsibility, crony capitalism, dark matter, decarbonisation, disruptive innovation, double entry bookkeeping, Elon Musk, Erik Brynjolfsson, Exxon Valdez, Fall of the Berlin Wall, family office, fixed income, George Akerlof, Gini coefficient, global supply chain, greed is good, Hans Rosling, Howard Zinn, Hyman Minsky, income inequality, index fund, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, Kickstarter, Lyft, Mark Zuckerberg, means of production, meta analysis, meta-analysis, microcredit, mittelstand, Mont Pelerin Society, Nelson Mandela, passive investing, Paul Samuelson, Philip Mirowski, profit maximization, race to the bottom, ride hailing / ride sharing, Ronald Reagan, Rosa Parks, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, sovereign wealth fund, Steven Pinker, stocks for the long run, Tim Cook: Apple, total factor productivity, Toyota Production System, uber lyft, urban planning, Washington Consensus, working-age population, Zipcar

The Fifth Piece: Rebuilding Our Institutions and Fixing Our Governments Creating shared value, learning to cooperate, and mobilizing the power of finance will all drive progress. But there are too many problems that we cannot solve without the power of government. Even if a significant fraction of America’s firms adopts a high road labor strategy, it seems very unlikely that their commitment could significantly reduce inequality. Too many firms will have short-term incentives to take the low road and race to the bottom.9 Many firms believe they simply cannot afford the cost of raising wages. Moreover, unilaterally driving up wages is unlikely to be sustainable without moves to address the full range of factors that drive inequality in the first place, from changes in the tax code to the decline in organized labor representation, to the increasing dominance of very large firms and the failure of the US educational system to keep pace with the demands of the modern workplace.

But heading off the worst consequences of global warming will require decommissioning many existing fossil fuel plants—and that’s a process that without a change in the rules is very unlikely to be profitable. Building an engaged, well-paid workforce can be a potent source of competitive advantage—but it can be hard to pay people well and to treat them decently when one’s competitors are busy racing to the bottom. Many firms would like to see the quality of local education improve, but very few can build a case for being the only firm willing to invest in making it happen. Many firms would like to see an end to corruption or an increase in the quality of local legal institutions, but most cannot make progress against either goal on their own. Hiro himself faces a variant of this issue. He believes that averting the worst effects of climate change is very much in the best interest of his beneficiaries.

I’m told that there is a room in which many of them meet. The rumor is that they look at each other and say, “You go first.” My students ask me if this kind of thing doesn’t make me nervous. Do we really want the world’s largest asset owners to exercise this kind of collective power? To me, this is an easy question. These owners are already exercising enormous power—in the service of pushing the firms in their portfolio to race to the bottom. It’s critically important that they make a deliberate decision to trigger a race to the top instead. A central element of a reimagined capitalism is a reimagined financial sector—one that takes its collective responsibilities to the world seriously and is willing to act on them. IN SUMMARY, SELF-REGULATION is a potentially powerful way to mobilize the world’s business community in support of creating collective shared value.


The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan

Berlin Wall, Cass Sunstein, corporate governance, corporate personhood, corporate social responsibility, creative destruction, energy security, Exxon Valdez, IBM and the Holocaust, joint-stock company, laissez-faire capitalism, market fundamentalism, Naomi Klein, new economy, race to the bottom, Ralph Nader, Ronald Reagan, shareholder value, South Sea Bubble, The Wealth of Nations by Adam Smith, Triangle Shirtwaist Factory, urban sprawl

The campaign really picked up steam beginning in the 1970s, however, as is discussed in Chapter 4. 36. Quoted in Richard Gwyn, "The True Allegiance of Canadian Corporations," Toronto Star, April 28, 1999. 37. See, for discussions of globalization, Anthony Giddens, Runaway World: How Globalisation Is Running Our Lives (London: Profile Books, 1999); Joseph E. Stiglitz, Globalization and Its Discontents (New York: W. W. Norton and Company, 2002); Alan Tonelson, The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade Are Sinking American Living Standards (Boulder, Colo.: Westview Press, 2000); Saskia Sassen, Losing Control: Sovereignty in an Age of Globalization (New York: Columbia University Press, 1996); William K. Tabb, The Amoral Elephant: Globalization and the Struggle for Social Justice in the Twenty-first Century (New York: Monthly Review Press, 2001); Gary Teeple, Globalization and the Decline of Social Reform into the Twenty-first Century (Toronto: Garamond Press, 2000); William Greider, One World, Ready or Not: The Manic Logic of Global Capitalism (New York: Simon & Schuster, 1997). 38.

Corporations became irresponsible, Monks said in an interview, when "the atom of ownership" was broken and "owners became one group of people and managers became another, suddenly nobody became responsible to society." 9. Monks, The Emperor's Nightingale, 163 ("same"), 171 ("safe"). 10. Interview with Robert Monks ("effective"). 11. Interview with Elaine Bernard. 12. Interviews with Ira Jackson, Charles Kernaghan, and Debora Spar. 13. Interview with Robert Monks. Back Matter Page 40 Progressive Corporate Law with Progressive Social Movements." Tulane Law Review 76 (2002), 1227-12 52. Tonelson, Alan. The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade Are Sinking American Living Standards. Boulder, Colo.: Westview Press, 2000. Tysbine, Alex. Water Privatization: A Broken Promise. Washington, D.C.: Public Citizen, 2001. Useem, Michael. The Inner Circle: Large Corporations and the Rise of Business Political Activity in the US and UK. New York: Oxford University Press, 1984. Vogel, David.


American Secession: The Looming Threat of a National Breakup by F. H. Buckley

Affordable Care Act / Obamacare, Andrei Shleifer, Bernie Sanders, British Empire, Cass Sunstein, colonial rule, crony capitalism, desegregation, diversified portfolio, Donald Trump, Francis Fukuyama: the end of history, hindsight bias, illegal immigration, immigration reform, income inequality, old-boy network, race to the bottom, Republic of Letters, reserve currency, Ronald Coase, transaction costs, Washington Consensus, wealth creators

The regression line slants upward from the corrupt states in the lower right, which people are leaving, to the more honest ones in the upper left, to which people are moving. Honest states are richer than corrupt ones, as we saw in Figure 6.1, and this makes them more desirable places to live. Home rule would result in more competition between states to provide honest governance and the most efficient set of rules. But the competition could also become a “race to the bottom” in some ways. If states compete for migrants through their welfare payouts, they might have an incentive to reduce them in order to attract the employed and healthy, and discourage everyone else. States might then compete to see who can cut welfare the most.18 Home rule would also amount to an opt-out of national equalization programs aimed at ensuring that Americans in the poorest states are properly cared for.

Roberts, John Roland, Jeanne-Marie Roman Empire Rousseau, Jean-Jacques: on federal state; and Hume; on small states Rubin, Jennifer Ruiz Evans, Marcus Russia; expansionism of; and Finland; Napoleon in; separatism in Sale, Kirkpatrick same-sex marriage Sanders, Bernie Saudi Arabia Scarborough, Joe Schaaf, Libby Schmitt, Carl Schumer, Chuck Scotland Seddon, James segregation Serbia Sessions, Jeff Seven Years’ War Seward, William Sherman, Roger Singapore Sitwell, Edith slavery; and Civil War; legal protection of Slovakia social media Social Security social trust social welfare; in Finland; in Quebec; “race to the bottom” in Sons of Confederate Veterans Soros, George South Africa South Carolina; and Civil War; federal employees in; General Assembly; and nullification crisis southern culture Southern Poverty Law Center Soviet Union: breakup of; constitutional “rights” in; and Finland; Orwell on Spain Spanish-American War Sparta Spirit of the Laws (Montesquieu) Stanton, Edwin Stars and Bars Steinle, Kate Stendhal (Marie-Henri Beyle) Stephens, Alexander Stiglitz, Joseph Story, Joseph Sudan Suez crisis sugar industry Sunstein, Cass super PACs Syria Taney, Roger B. tariffs; interstate; and lobbyists; and nullification Tea Party movement Teilhard de Chardin, Pierre Texas; Austin; and Civil War bonds Texas v.


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We Are All Fast-Food Workers Now: The Global Uprising Against Poverty Wages by Annelise Orleck

airport security, American Legislative Exchange Council, anti-communist, Bernie Sanders, big-box store, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, card file, clean water, collective bargaining, corporate social responsibility, deindustrialization, Deng Xiaoping, Donald Trump, Ferguson, Missouri, financial deregulation, Food sovereignty, gig economy, global supply chain, global value chain, immigration reform, indoor plumbing, Kickstarter, land reform, land tenure, Mahatma Gandhi, mass immigration, McJob, means of production, new economy, payday loans, precariat, race to the bottom, Rana Plaza, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Reagan, Rosa Parks, shareholder value, Skype, special economic zone, Triangle Shirtwaist Factory, union organizing, War on Poverty, women in the workforce, working poor

If you stand up and fight for change, you can win.”5 CHAPTER 9 PEOPLE POWER MOVEMENTS IN THE TWENTY-FIRST CENTURY AKTER’S ASSERTION THAT “in Bangladesh it is not 2011; it’s 1911” explains a lot. For, it is true not just of Bangladesh but of low-wage workers everywhere. Four decades into the neoliberal revolution, the repeal and erosion of labor protections, shrinking labor unions, precarious employment, stagnant wages, declining buying power, and a global race to the bottom in safety standards have turned the clock back for workers. And it has not been a small step back, but a giant leap. From Arkansas chicken processing plants to Philippine flip-flop factories, low-wage workers are having to again fight for rights already fought for and won one hundred years earlier. Regression is a difficult concept to absorb, especially for those who live in the world’s most affluent countries.

With quotas lifted, countries where labor was cheap, unions weak, and labor laws few quickly came to dominate the clothing trade. China, India, Vietnam, Bangladesh, and Cambodia became engines of a “fast-fashion” revolution, eroding wages and working conditions in countries and regions that once had strong labor movements: the Philippines, Mexico, Central America, and the United States. Garment workers speak of “a global race to the bottom,” says Filipina organizer Asuncion Binos. “We in the Philippines have come a long way down.” By the 2010s, countries with decent wage and labor protections could only compete if they established export zones where strikes were banned and labor regulations suspended. Global lenders offered rewards for creating “special economic zones.” The garment workers’ musical group the Messenger Band sings about the process as it unfolded in Cambodia.

“UNI Walmart Global Union Alliance Is Launched to Support Walmart Workers,” National Union of Public and General Employees, Canada, https://www.nupge.ca/content/uni-walmart-global-union-alliance-launched-support-walmart-workers. 6. T. A. Frank, “A Brief History of Walmart,” Washington Monthly, April 2006; International Directory of Company Histories, vol. 63 (Detroit: St. James Press, 2004); Dina Specter, “Walmart,” Business Insider, November 15, 2012; Ellen Israel Rosen, “The Walmart Effect: The World Trade Organization and the Race to the Bottom,” Chapman Law Review (Spring 2005). 7. “Kalpona Akter at Walmart’s Annual Shareholder Meeting,” June 10, 2013, YouTube video, https://www.youtube.com/watch?v=AcC-yCyF4fo; “Bring Bangladesh Voices to Walmart’s Headquarters,” Indiegogo, 2013, https://www.indiegogo.com/projects/bring-two-bangladeshi-garment-workers-to-the-walmart-shareholder-meeting; Clare O’Connor, “Former Bangladesh Sweatshop Worker to Billionaire Walton Family: Use Your Wal-Mart Fortune to Stop Worker Deaths,” Forbes, June 7, 2013. 8.


pages: 241 words: 63,981

Dirty Secrets How Tax Havens Destroy the Economy by Richard Murphy

banking crisis, barriers to entry, Bernie Sanders, centre right, corporate governance, Donald Trump, Double Irish / Dutch Sandwich, en.wikipedia.org, high net worth, income inequality, intangible asset, light touch regulation, moral hazard, Occupy movement, offshore financial centre, race to the bottom, Social Responsibility of Business Is to Increase Its Profits, The Wealth of Nations by Adam Smith, transfer pricing, Washington Consensus

At the same time, governments, sensing the threat that hot money has created, have reacted with a rash of investment incentives, not limited to cutting the corporation tax rates they offer. This leaves us in the unfortunate position of having no clear sign yet that anti–tax abuse initiatives, like the OECD’s, are going to deliver when the same governments that promoted them are also major participants in the corporation tax race to the bottom. The benefits that tax havens have supplied to the world’s major corporations seem set to continue for the time being, unless some radical changes in the design of tax systems take place (see Chapter 6). Other regulatory relaxations also exist. For example, a significant part of what is called the captive insurance market is located in tax havens. Captive insurance companies are owned by the same companies that they insure: if you are big enough you can, after all, insure your own risks.

The tax haven operations are critical to this, and as many tax partners in these firms will confirm, they make good fees from advising clients on which locations best suit their needs at a particular time. Precisely because they monitor this situation so accurately, these firms are also far from independent participants in the process. They all lobby to promote their clients’ needs, and in the process are active participants in the regulatory and economic race to the bottom that tax havens facilitate. As a result, it is almost impossible to see tax havens and these large accountancy firms as independent of one another. Some lawyers have a roughly similar status – though it is unusual to find a major onshore firm of lawyers operating offshore. Instead, most of this business is operated by what is called the ‘magic circle’ of offshore law firms. There is some dispute as to which firms constitute this magic circle, and all have much more limited reach than the big four firms of accountants, although all of them tend to operate in a number of tax havens simultaneously.


pages: 580 words: 168,476

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

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

But because of the dominant role we play in the global economy, we do have opportunities to help shape globalization—opportunities not available to others. In reshaping globalization, we have to realize that there has occurred a race to the bottom from which we have all suffered. The United States is in the best position to stop this (if its politics would allow it); it can fight for better worker rights and conditions, better financial regulations, better environmental conditions. But other countries, working together, can also fight against the race to the bottom. Even the advocates of globalization should understand that tempering globalization is in their interests. For if globalization is not managed better than it has been, there is a real risk of a retreat, into protectionism or forms of beggar-thy-neighbor policies.

The differences in the return to capital are minuscule compared with those on the return to labor.20 But the financial markets have been driving globalization, and while those who work in financial markets constantly talk about efficiency gains, what they really have in mind is something else—a set of rules that benefits them and increases their advantage over workers. The threat of capital outflow, should workers get too demanding about rights and wages, keeps workers’ wages low.21 Competition across countries for investment takes on many forms—not just lowering wages and weakening worker protections. There is a broader “race to the bottom,” trying to ensure that business regulations are weak and taxes are low. In one arena, finance, this has proven especially costly and especially critical to the growth in inequality. Countries raced to have the least-regulated financial system for fear that financial firms might decamp for other markets. Some in the U.S. Congress worried about the consequences of this deregulation, but they felt helpless: America would lose jobs and a major industry if it didn’t comply.

The new reality is that, given the magnitude of the recession of 2008 and given the magnitude of the structural transformation our economy is going through, there will be large numbers of long-term unemployed for the foreseeable future. Government programs (like the earned-income tax credit, Medicaid, food stamps, and Social Security) have proven very effective in reducing poverty. More spending on these programs could reduce poverty even more. Tempering globalization: creating a more level playing field and ending the race to the bottom Globalization and technology both contribute to the polarization of our labor market, but they are not abstract market forces that just arrive from on high; rather, they are shaped by our policies. We have explained how globalization—especially our asymmetric globalization—is tilted toward putting labor in a disadvantageous bargaining position vis-à-vis capital. While globalization may benefit society as a whole, it has left many behind—not a surprise given that, to a large extent, globalization has been managed by corporate and other special interests for their benefit.


pages: 561 words: 157,589

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

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

As Harvard Business School lecturer and former CEO of Stop & Shop José Alvarez writes, “Zeynep Ton has proven what great leaders know instinctively—an engaged, well-paid workforce that is treated with dignity and respect creates outsized returns for investors. She demonstrates that the race to the bottom in retail employment doesn’t have to be the only game being played.” Economists have long recognized this phenomenon. They call wages higher than the lowest that the market would otherwise offer “efficiency wages.” That is, they represent the wage premium that an employer pays for reduced turnover, higher employee quality, lower training costs, and many other significant benefits. In Chapters 11 and 12, we’ll look at the key drivers of the race to the bottom in wages, and why we need to rewrite the rules of business. But even without radically changing the game, businesses can gain enormous tactical advantage by better understanding how to improve the algorithms they use to manage their workers, and by providing workers with better tools to manage their time, connect with customers, and do all of the other things they do to deliver improved service.

Do they use the format that will do the most justice to the subject (a deep, authoritative piece of research, a so-called longread), or do they decide that it’s more profitable to harvest attention with short, punchy articles, perhaps even with deceptive headlines, that generate higher views and more advertising dollars? Do they choose video over text, even when text would let them do a better job? The need to get attention from search engines and social media is a major factor in the dumbing down of news media and a style of reporting that leads even great publications to a culture of hype, fake controversies, and other techniques to drive traffic. The race to the bottom has in part been a result of the primary shift of news industry revenue from subscription to advertising and from a secure base of local readers to chasing readers via social media. Subscription-based publications have an incentive to serve their readers; advertising-based publications have an incentive to serve their advertisers. As described in Chapter 8, search-based pay-per-click advertising can help to align the incentives, but it too can be gamed, and in any event it represents only half of digital ad spending, which in turn is only a fraction of total advertising spending.

I was positioned as the techno-optimist in the debate, because I have argued that eliminating human jobs is a choice, not a necessity. When we focus on what needs doing, and what might be possible when humans are augmented by new technology, it is clear that there is plenty of work to go around for both humans and machines. It is only our acceptance of the notion that financial efficiency is the primary fitness function for the economy that locks us into the race to the bottom, in which humans are seen as a cost to be eliminated. But in the debate with Martin and in subsequent conversations with attendees at the event, I found myself thinking and saying things that hadn’t occurred to me before. Stanford’s Rob Reich, the moderator of the discussion, said to me afterward, “I thought going into this that Martin was the radical. But I realized that you’re the real radical.


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

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

Once the national policy is set, though, communities should abide by them so that the national market is seamless, to everyone’s benefit. In contrast, international agreements, such as those on the harmonization of regulations, are rarely arrived at in a democratic spirit, as I have argued. This is why I believe countries should have a more bottom-up deliberative process on what they regulate and what they adhere to, and the ability to pick and choose in most such agreements. RACE TO THE BOTTOM . . . One concern countries have is a race to the bottom. If there is no harmonization of regulations, will countries that adopt the lowest standards benefit their firms, giving them a competitive advantage? This danger is emphasized, often by countries that fear their preferred position demands too much of their own firms. They prefer everyone to be disadvantaged by onerous regulations, rather than their firms alone.

It may be that this was a Machiavellian attempt by supporters of southern European countries to torpedo the entire move by escalating it to international levels. Regardless, the episode highlights the problems with harmonization—regulators cartelize and spread unnecessary and inappropriate regulation across countries, preventing competition between jurisdictions from highlighting the costs of such regulations. Finally, what about the race to the bottom? Regulators agreed to common bank capital requirements in the various Basel Accords because they feared that if given the flexibility, some regulators might impose inordinately low requirements on their banks. Yet this fear is questionable. If higher bank capital reduces risks, why wouldn’t the bank regulators in each country internalize the need to set capital requirements for their domestic banks at adequate levels?

., 157, 158, 397 Kleiner, Morris, 207 knowledge, diffusion of, 204–6 Krueger, Alan, 207 Kyoto Protocol, 365 laissez-faire, 77–78, 81, 83 landowners, 37, 58, 72, 74 gentry, 54–58, 64–66, 71, 72 Lasch, Christopher, 227 Latin America, 72, 93, 96 Lee Kuan Yew, 247 LEGO, 391 lending, see loans Le Pen, Marine, 236 Lerner, Josh, 362 Levine, David, 382–83 liberal democracy, 74–75 liberalism, 83, 160 liberalization, 206 in China, 248–67, 276 in India, 269–71, 273, 276 private sector’s reaction to, 194–201, 207–8 liberal market democracies, xiii, xx, xxvii libertarianism, 115 limited-access societies, 97–98 Lindsey, Brink, 205 loans, 44–45, 48 contract in, 29–31 see also usury lobbying, 378, 389 localism, xxi, xxviii, 285, 286, 303 inclusive, xxii, 22, 285–87, 289–302, 327, 351, 394 long-term benefits of, 303 location, importance of, 219–21 Long, Huey, 136 looms, 18–19, 116, 188 Louis XIV, King, 60, 65, 66 Luce, Edward, 227 Luther, Martin, 46 Madison, James, 97, 218 magnates, decline of, 53–54 Mahajan, Vijay, 337 Malthus, Thomas Robert, 83 Mann, Horace, 121 manufacturing, 152, 184–85, 206 Mao Zedong, 247–50 markets, xiii, xv, xvii–xviii, xx, xxii, xxvii–xxviii, 25–27, 50, 56, 77–106, 145, 154, 172, 173, 243–44, 283, 184, 285–87, 304, 393, 394 community adjustment to, 388–92 community and state buffers against volatility in, 127–38 community loss of faith in, 115–19 community values and, 390–92 competition in, see competition data in, 384–86 definition of, xiv democracy and, 106, 110 emerging, 245, 271; see also China; India fairness in, 115–16 freeing, 80–81 laissez-faire and, 77–78, 81, 83 liberalization of, see liberalization liberal market democracies, xiii, xx, xxvii perceived legitimacy of players in, 110–12 philosophy for, 81–84 reforming, 373–92 separation from community, xiv–xv state and, 304 transactions in, 3, 4 unbridled, 84–87 see also trade marriage, 231, 235 Marshall Plan, 149–51, 365 marshmallow test, 222–23 Marx, Karl, 49, 78, 87–91 Marxism, 87–91, 112, 115, 249, 287 Maximum Feasible Misunderstanding (Moynihan), 158 McClure’s Magazine, 103 McKinley, William, 106 McLean, Malcolm, 181 meatpacking industry, 104, 107–8 Medicare, 241, 324 mercantilism, 62–65, 80 Merchant of Venice, The (Shakespeare), 30 meritocracy, 390, 393 children and, 224–25, 228 in China, 257, 265 Merkel, Angela, 241 military technologies, 42–44, 51, 53 Mill, Harriet, 81 Mill, John Stuart, 81–83 minorities, 218, 219, 289, 296–97 affirmative action and, 300–302 see also African Americans; immigration, immigrants Mischel, Walter, 223 misery index, 163 Mitterand, François, 168 Mokyr, Joel, 20, 21 monarchy, 51–53, 56–59, 61–63, 65, 73 monasteries, 54, 57, 72 moneylending, see loans Monnet, Jean, 154 monopolies, 58–62, 64, 80, 81, 87, 91, 97, 99, 105, 106, 108, 109, 112, 201–7, 283, 379–82 antitrust laws and, 101, 103–4, 381–82 Montegrano, 12–14, 113, 227 Moore, Barrington, 73 Moretti, Enrico, 220 Morgan, John Pierpont, 99, 104 Morse, Adair, 220 Moynihan, Daniel Patrick, 158, 340 multilateral institutions, 367–70 Murphy, Kevin, 196 Murray, Charles, 227 muskets, 42–43 Muslims, 21, 35, 36, 241, 242, 272, 277 Napoleon I, 126 nationalism, xvii, 64, 184, 330, 397 civic, 297–99, 302 ethnic, 215–17; see also populist nationalism mercantilism and, 63 populist, see populist nationalism Nation at Risk, A, 232–33 nation-states, 26, 42, 50, 51–52, 61–62 Nehru, Jawaharlal, 267, 270, 287, 298 neighborhoods, 297 isolation index and, 333 sorting and, see residential sorting see also community Netville, 331–32 Neumann, Franz, 112 New Deal, 134–35 New Localism, The (Katz and Nowak), 303 news consumption, and diversity of opinions, 332–33 New York Times, 19, 98, 218, 387 Nixon, Richard, 98, 108 North, Douglass, 70, 97 Nowak, Jeremy, 303 Obama, Barack, xvii, 158, 235, 240 India visited by, 273 Obama, Michelle, 240 Obamacare, 144, 214, 239–41 Oceana (Harrington), 58 oil industry, 84–86, 99, 103, 107, 111 Oliver, Douglas, 9 one percent, 102, 191–94 On Liberty (Mill), 81–83 open-access societies, 98 Opium Wars, 349–50 Organization for Economic Co-operation and Development (OECD), 189–90 Our Towns: A 100,000-Mile Journey into the Heart of America (Fallows and Fallows), 344 Owen, Robert, 88 Owens, Ann, 226 Papal Revolution, 38, 40 parents, 222–31, 343 Paris Agreement, 365 parliaments, 77, 78–79 English, 57, 60–62, 65–70, 74, 77, 84, 105 patents, 204–6, 362, 382–84 patriotism, 298 peasants, 37–38, 73, 74, 78 see also feudalism, feudal communities Peltzman, Sam, 202 Perez, Carlotta, 118 Petersen, Mitchell, 15, 219 pharmaceutical drugs and companies, 183, 184, 204, 354, 362–63, 384 Physiocrats, 77 Piketty, Thomas, 191 Pilsen community, xxii–xxvi, 12, 298, 344, 381 Pirenne, Henri, 45 plague (Black Death), 40, 41–42 Polanyi, Karl, 84 police officers, 312 politics: conflict over, 234–36 isolation index and, 332–33 left-wing, xiii, xix, xxvii, 214, 217, 394 right-wing, xiii, xix, 214–17, 394 Polybius, 118 population aging, 260, 284, 286, 292–93, 324, 342–43, 348, 396 population diversity, see diversity population growth, 83, 152, 162–63 populism, xiii, xix, xxviii, 63, 136, 137, 211, 213–44, 284 in China, 276–79 and conflict over values and politics, 234–36 in Europe, 241–43 Global Financial Crisis and, 236–43 growing divide and, 218–19 in India, 272, 276–78 left-wing, 214, 217 Obamacare and, 239–41 Populist movement at turn of nineteenth century, 23, 26, 79, 98–101, 102, 105–6, 112, 244, 265 reemergence in the industrial West, 213–44 right-wing, 214–17 types of, 214–18 populist nationalism, xiii, xix–xx, xxi, xxvii, 144, 216–17, 241–44, 246, 276–79, 286, 289, 295–300, 302, 352, 353 in China, 276–79 in Europe, 241–43 in India, 276–78 why it cannot work, 296–97 Populist Revolt, The (Hicks), 99 Portugal, 148, 238 Poterba, James, 140 poultry farms, 354–55, 357 poverty, 396 African Americans and, 157 Elberfeld system of assistance, 129–31, 320 War on, 158, 160, 229 Powell, Enoch, 159 presidential election of 2016, 235, 236, 333, 354 Price, Brendan, 185 Princeton University, 125 printing press, 41–42, 46 private sector, 107–8, 111, 139, 147, 283, 284, 352, 371 liberalization and, 194–201, 207–8 Progressives, 26, 79, 98–99, 102–6, 112, 124, 134, 137, 244, 265 property, 26, 52, 57, 58, 74, 79, 83, 103, 115, 352, 362, 374, 394 competition and, 286 intellectual, see intellectual property land, see landowners taxes on, 121, 123 as theft, 110–11 protectionism, 108, 258–59, 278, 306, 353–56, 364 Protestant Ethic and the Spirit of Capitalism, The (Weber), 47 Protestant Reformation, 40–41, 47, 49 Protestants, 48, 49 public hearings, 389–90 Putnam, Robert, 227, 334 Quakers, 16–17, 230 race, see ethnicity and race race to the bottom, 358–60 railroad industry, 85, 87, 99, 101 Ramanathan, Swati, 312 Ramcharan, Rodney, 72 ranchers, 9–10, 11 Rand, Ayn, 80, 391 R&D, 183–84 Rashtriya Swayamsevak Sangh (RSS), xix, 277 Rauh, Joshua, 192 Rawls, John, 115 Raymundo, Raul, xxiii, xxvi Reagan, Ronald, 165, 194, 232 Reeves, Richard, 224 Reformation, 40–41, 47, 49 regulation(s), 103–5, 107–8, 165, 172 antitrust, 202 of banks, 358–60 communities and, 285, 304, 306–7, 341, 357 competition and, 165, 387–88 deregulation, 165–67, 194, 197 harmonization of, 354–63, 365, 371 relief efforts, 131–33, 135 see also safety nets religion, 49, 51, 64 Protestant Reformation, 40–41, 47, 49 Protestants, 48, 49 see also Catholic Church Republicans, 235–36 residential sorting, 144, 177, 222, 227, 314 by income, 307–9 race and immigration and, 229–31 resources, policies on, 365 Resurrection Project, xxiii–xxvi Ritter, Jay, 201 Robinson, James, 94 Rockefeller, John D., 84–91, 98, 103, 104, 108, 200 Rodgers, Daniel, 334 Rodrik, Dani, 364–65, 371 Roman Republic, 58 Romney, Mitt, 235 Roosevelt, Franklin, 134–37, 156 Roosevelt, Theodore, 106 Rosen, Sherwin, 193 Russell, John, 95 Russia, 97, 287, 292, 354, 369 wealthy in, 111 Saez, Emmanuel, 191 safety nets, 139, 173, 290 caregivers and, 319–20 community and, 127–38, 318–25 in Europe, 156 government support in, 322–24 health care, see health care paying for, 324–25 for peasants, 37–38 in U.K., 155–56 in U.S., 133–34, 156, 157–58, 320–21, 324 welfare, 129, 137, 148, 158, 230 Salam, Reihan, 235 Sandel, Michael, 389–90 Sanders, Bernie, 214 Satyanath, Shaker, 112 schools, see education and schools Schumpeter, Joseph, 203, 379 Schwartz, Heather, 225–26 science, 21 “Second Coming, The” (Yeats), 141 Second Federal Bank, xxv SeeClickFix, 311–12 Sen, Amartya, 287 Shakespeare, William, 30 Shapiro, Jesse, 332–33 Share Our Wealth Society plan, 136 Shleifer, Andrei, 197 Sinclair, Upton, 104 Singapore, 247, 291, 318 Singh, Manish, 336 Singh, Manmohan, 270 Siuai people, 9 smartphones, 175, 178, 182–83 Smith, Adam, 17, 64, 77, 80–81, 83, 84, 87, 91, 105, 200 Smoot Hawley Act, 138 socialism, 132, 138, 145–47, 168, 250 in India, 267–69, 391 socializing the young, 5–7 social media, 330, 354, 386 social relationships, 7–8 social safety nets, see safety nets Social Security, 134–38, 187, 241, 324 Sokoloff, Kenneth, 72, 96 sorting, see residential sorting South Sea Company, 68, 69–70 sovereignty, 349–72 and controlling flows, 351–54 and harmonization of regulation, 354–63 Soviet Union, 91, 145–47, 153–54, 250, 251, 267, 287, 367 Spain, 148, 162, 169, 237, 238, 353–54 Spence, Michael, 234 stagflation, 163 Standard Oil, 86, 99, 103, 107 Stanford marshmallow test, 222–23 state, xiii, xv, xvii–xviii, xx–xxi, xxvii–xxviii, 25–27, 50, 139, 140, 172, 283–86, 304, 393 anti-state ideology and, 176 buffers against market volatility, 127–38 Church and, 45–46 community and, 303–25, 345–46 constitutionally limited, 52–74, 83 definition of, xiii–xiv growth of, 145 international responsibilities and, 363–67, 372, 397 laissez-faire and, 77–78, 81, 83 markets and, 304 relief efforts from, 131–33 separation from community, xiv–xv strong but limited, rise of, 51–75 sustainable financing for, 65–71 steel industries, 87, 99, 122, 185, 186, 253, 261, 338, 364, 366 European Coal and Steel Community, 150 student loans, 317–18 suffrage, see voting, suffrage Summers, Larry, 197 Supreme Court, U.S., 103, 384 Sweden, 138 Swift, Taylor, 193 Talleyrand, Charles Maurice de, 66 Tarbell, Ida, 103, 200 tariffs, 61, 63–64, 80–81, 100, 108, 138, 150–51, 164, 181–83, 217, 242, 258–59, 271, 277, 352–53, 356, 363, 364, 366, 371 General Agreement on Tariffs and Trade, 146, 150, 353 Tawney, Richard, 34–35, 46 taxes, 59, 61–62, 102–5, 156–57, 163–64, 206, 308–9, 364 for education, 121, 123 property, 121, 123 tax holidays, 341 tax incentives, 345 on towns, 59–60 universal basic income and, 322–23 tax preparation, 179, 180 Tea Party movement, 239–41, 242, 333 technology, xii, xxviii, 117, 160–62, 175–76, 283, 284, 286, 287 automation in, 18, 84, 179, 180, 284 China and, 261–62, 278 community and, 119, 335, 344–45 disruptive change from, xii–xiii, xix education and, 122–23 feudal community and, 41–42 financial crises and, 118 incomes and, 188–94 job losses from, xii, xviii public anxiety about, 116–18 winner-take-most effects of, 191–94 see also Industrial Revolution; Information and Communications Technology revolution Teles, Steven, 205 Thatcher, Margaret, 165–66, 194 three pillars, xiii, 25–27, 393, 394 balance between, xvii–xviii, 175, 394 see also community; markets; state Tiananmen Square protests, 250–51 Tiv people, 7–8 Tönnies, Ferdinand, 3–4 totalitarian regimes, 97 trade, 62–64, 80–81, 143, 146, 149–51, 154, 160, 164–65, 172, 181, 245, 271, 283, 307, 352–53, 363, 371 “beggar thy neighbor” policies and, 364 communications costs and, 181, 182 communities and, xviii–xx, 335, 352 European, with Muslim lands, 36 ICT revolution and, 143–44, 173, 181–88 incomes and, 188–94 protectionism and, 108, 258–59, 278, 306, 353–56, 364 tariffs and, see tariffs transportation costs and, 181–82 Trade Related Intellectual Property Rights Agreement (TRIPS), 362 training and socializing the young, 5–7 transactions: in communities, 3, 8–9, 10–11 market, 3, 4 Trotsky, Leon, 90 Trump, Donald, 235 Truly Disadvantaged, The (Wilson), 230 Turkey, xix, 97, 167, 190, 245 Uber, 196 Unified Payments Interface (UPI), 386 unions, 165, 198, 206, 360, 361 United Kingdom, 173 Companies Act in, 377 health care in, 156 income in, 191, 192 in Opium Wars, 349–50 safety net in, 155–56 United Nations, 367 United States, 143, 145, 149, 246, 298 African Americans in, see African Americans agriculture in, 184 China and, 278 Civil War in, 74, 93, 133–34 competitive market in, 98–105 Constitution of, 71 diversity in population of, 134 financial crises in, 87–88, 118 GI Bill in, 156, 157 Gilded Age in, 87 gold standard in, 100 government debt in, 324 growth of, 148, 162 health care in, 158, 203 hegemony of, 148, 367–69 immigration and, 137, 159–60, 292 Industrial Revolution in, 121 manufacturing in, 184–85 Marshall Plan of, 149–51, 365 in postwar period, 148 presidential election of 2016, 235, 236, 333, 354 safety net in, 133–34, 157–58, 320–21, 324 schools in, 119–25, 127, 190–91, 233–34, 317 South of, 72, 74 Supreme Court, 103, 384 voting rights in, 92–93, 96 Western settlers in, 72, 99–100 universal basic income (UBI), 322–23 universities, see colleges and universities University of Chicago, xxiii, xxvi, 87, 124–25, 164, 290–91 University of Rochester, 223 usury: Catholic Church and, 34–42, 44–46, 49 favorable public attitudes toward, 44 intellectual support for ban on, 39–40 prohibition on, 31–32 rationale for proscribing, 32–34 values: community, and tolerance for markets, 390–92 conflict over, 234–36 Virginia, 58 Voigtländer, Nico, 112 Volcker, Paul, 163 Voth, Hans-Joachim, 112 voting and suffrage, xxvii, 26, 79, 105 extension of franchise, 91–98 wages, see income and wages Wallis, John, 97 Washington Post, 108 wealth, 111, 395–96 Wealth of Nations, The (Smith), 80 weavers, 18–19, 116, 188 Weber, Max, 47, 38 Weingast, Barry, 70, 97–98 welfare, 129, 137, 148, 158, 230 Wellman, Andrew, 331 Whigs, 67, 95 William of Orange, 67 Wilson, William Junius, 230, 231 Wilson, Woodrow, 125 Wolf, Martin, 355 workers, 75, 78, 79, 87, 89, 97, 127–28 education and capabilities of, 313–18 insurance plans for, 132 rights of, 360–61 strikes by, 102 unions for, 165, 198, 206, 360, 361 see also income and wages; jobs working at a distance, 219, 220 World Bank, 151, 253–54 World Trade Organization (WTO), 353, 356, 362 World Values Survey, 297 World War I, 103, 112, 124 World War II, xxvii, 138, 139, 140, 143, 145, 146, 155–57, 210, 243, 367 Marshall Plan and, 149–51, 365 postwar period, 148–54 Wulf, Julie, 193 Xi Jinping, 261, 278 Xiushui Market, 255 Yeats, W.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

affirmative action, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Bretton Woods, business cycle, capital controls, Cass Sunstein, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial innovation, floating exchange rates, full employment, Gini coefficient, global reserve currency, global village, high net worth, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Just-in-time delivery, Kenneth Rogoff, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, price stability, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, sovereign wealth fund, special drawing rights, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Washington Consensus, Westphalian system, WikiLeaks, women in the workforce, yield curve

He believes that such actions will only impede the recovery of the global economy and set the stage for more capital erosion through loan losses. Andrew Sheng offers the case for a Tobin tax to finance global public goods. He reviews the origin of the idea in the 1970s and the recent proposal of it by Lord Adair Turner of the Financial Services Authority in London. Sheng says that the world is caught in a collective action trap that encourages a race to the bottom for financial regulation and taxation. He believes that a Tobin tax offers many advantages, including money to finance global public goods, increased data availability on financial transactions, and a tax on bank profits to reduce the bonuses that encourage speculative activity. Sheng estimates that the global value of foreign exchange turnover is $800 trillion and that the value of stock market trading is $101 trillion.

It is useful to remember that the present fiscal trend of accelerating expenditure and decreasing tax revenues in order to restore excess consumption, which in turn is funded by excess leverage despite limited global resources, is just a race to another crisis. The world is caught in a collective action trap. The gaming nature of nation-state and private-sector behavior is such that there is a tendency to race to the bottom. No country is able to tighten monetary policy alone for fear of inviting hot money that negates the policy. Additionally, no country is able to tighten financial regulation for fear of business migrating to other financial centers. Furthermore, no country is able to raise taxation for fear of massive tax arbitrage. The Triffin Dilemma Goes Global In hindsight, global imbalances were caused by the violation of the Triffin Dilemma writ large.

Global public goods are currently funded by equity (based on the Bretton Woods system that allocates weighted voting quotas to participating institutions) or by direct national grants. These mechanisms are not sustainable. We need a global tax to fund global public goods. But for a turnover tax to work, it is vital that all of the G-20 countries agree to impose a single, uniform rate of, say, 0.005 percent to avoid a race to the bottom from the onset. This would put into place the module of fiscal standardization and tax mechanism that improves conditions for future coordination in monetary policy and financial regulation. The tax can be collected at the national level based on buyer-pay. The tax collected could be credited to a global fund, with a formula that would allow national governments to use part of the proceeds to resolve domestic crisis problems.


pages: 372 words: 116,005

The Secret Barrister: Stories of the Law and How It's Broken by Secret Barrister

cognitive bias, Donald Trump, G4S, glass ceiling, haute cuisine, Intergovernmental Panel on Climate Change (IPCC), mandatory minimum, race to the bottom, Schrödinger's Cat, statistical model

Everyone in the robing room and no doubt everyone in the judges’ dining hall rolls their eyes at the mention of these names. Alternatively, they might instruct an ‘independent’ barrister whose independent commitment to professional ethics is not a bar to him slipping Keres a tasty percentage of his brief fee in return for his instructions. Advocates’ fees are paid separately to litigators’ fees and directly to the advocate, to avoid the market distortion and dirty race to the bottom that would ensue if solicitors instructed barristers based not on ability but on how much of the advocacy fee they were willing to shovel the solicitor’s way. And the vast majority of solicitors and barristers observe this strict separation. But every robing room will echo with whispers over that one barrister whose steady influx of high-quality work from a single, Keres-esque firm belies his modest talents, and in less-sober moments at Christmas parties, confessions will slip from mulled lips as to the existence of the informalized, forbidden referral fee lying at the heart of that arrangement.

Between 2010 and 2015, the National Offender Management Service (NOMS), which, until 2017 (when it was reimagined as HM Prison and Probation Service), was responsible for prisons in England and Wales, had its budget cut by £900 million.33 In order to make nearly £1 billion of savings, prison staffing levels were reduced by 30 per cent. As of 2016, there were 13,720 fewer staff in the public prison estate looking after 450 more people.34 In a drag race to the bottom, ‘benchmarking’ was introduced, in which publicly run jails were required to peg their costs to the same level as the ‘most efficient’ – read ‘cheapest’ – in the private sector. One of the reasons that private sector prisons were so ‘efficient’ is that for seventeen years they have had higher rates of overcrowding than public sector prisons – shoving more prisoners into tinier spaces.35 A quarter of the prison population is overcrowded, with prisoners doubling up in cells designed for one person,36 in order to secure an arbitrary 20 per cent reduction in the cost of prison places (now at £35,000 per year).37 Around the same time, Chris Grayling MP, Secretary of State for Justice between 2012 and 2015, announced his populist plans to make prisons, already hideous tombs of violence, death and terror, ‘less lax’ and more ‘spartan’, introducing severe restrictions on prisoners’ ‘privileges’ – which famously included an unlawful ban on prisoners being sent books38 – and displaying a bizarrely prurient obsession with stopping inmates having sex.39 It was not enough to deprive people of their liberty; their lives had to be made extra intolerable to satisfy the public’s perceived lust for blood.

Their judgments, in the High Court, Court of Appeal and Supreme Court, have immediate, real-life effects, not only to the applicant or appellant in front of them but to the defendants, victims and public in millions of criminal cases in which precedent is applied. Our constitution relies upon the judges to ensure that government acts in accordance with laws passed by Parliament, and to intervene when the state overreaches to infringe our freedoms. A diminution in quality among the judiciary ultimately diminishes us all. The race-to-the-bottom in criminal justice thus stretches all the way to the top. Every component of the system is infiltrated to some degree by negligent, reckless or malicious maladministration. Of itself, this is hardly unique; professionals in every other area of public life could no doubt regale at similar length legitimate complaints of underfunding and managerial or ministerial incompetence. But where I fear law differs, to return to my opening theme, is in how seldom the failings are echoed outside our tiny professional bubble; and, on the rare occasions that a scandal in justice is dragged into the spotlight, in how fleetingly and superficially the scrutiny endures.


pages: 237 words: 67,154

Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet by Trebor Scholz, Nathan Schneider

1960s counterculture, activist fund / activist shareholder / activist investor, Airbnb, Amazon Mechanical Turk, barriers to entry, basic income, bitcoin, blockchain, Build a better mousetrap, Burning Man, capital controls, citizen journalism, collaborative economy, collaborative editing, collective bargaining, commoditize, conceptual framework, crowdsourcing, cryptocurrency, Debian, deskilling, disintermediation, distributed ledger, Ethereum, ethereum blockchain, future of work, gig economy, Google bus, hiring and firing, income inequality, information asymmetry, Internet of things, Jacob Appelbaum, Jeff Bezos, job automation, Julian Assange, Kickstarter, lake wobegon effect, low skilled workers, Lyft, Mark Zuckerberg, means of production, minimum viable product, moral hazard, Network effects, new economy, offshore financial centre, openstreetmap, peer-to-peer, post-work, profit maximization, race to the bottom, ride hailing / ride sharing, SETI@home, shareholder value, sharing economy, Shoshana Zuboff, Silicon Valley, smart cities, smart contracts, Snapchat, TaskRabbit, technoutopianism, transaction costs, Travis Kalanick, Uber for X, uber lyft, union organizing, universal basic income, Whole Earth Catalog, WikiLeaks, women in the workforce, Zipcar

Besides the explosion in the number of temporary and contract jobs, nearly half of the new jobs created in the so-called “recovery” pay only a bit more than minimum wage. Three-fourths of Americans are living paycheck to paycheck, with little to no emergency savings to rely on if they lose their job. Income inequality is now as bad as it was in 1928, just before the Great Depression. Incredibly, the share of wealth held by the bottom 90 percent is no higher today than during our grandparents’ time. It’s as if the New Deal had never existed. RACE TO THE BOTTOM IN THE FREELANCE SOCIETY Now a new and alarming mash-up of Silicon Valley technology and Wall Street greed is thrusting upon us the latest economic trend: the so-called sharing (or gig) economy. Companies like Uber, Instacart, Upwork, and TaskRabbit allegedly are “liberating workers” to become “independent entrepreneurs” and the “CEOs of their own businesses.” In reality, these workers also are contractors, with little choice but to hire themselves out for ever-smaller jobs (“gigs”) at low wages and with no safety net, while the companies profit.

A mere eight hundred employees (two-thirds of whom are contractors) oversee an army of ten million freelancers from all over the world who compete against each other, scrounging for jobs in an online labor auction in which the bidders offering the lowest wages usually win. The types of jobs on the auction block include website and app designers, software developers, logo and graphic designers, translators, architects, engineers, and more. Workers from India, Thailand, and the developing world compete against developed world workers, undercutting each other’s wages. It’s a race to the bottom. As contractors, these workers don’t receive safety-net benefits because they aren’t “employees” of whoever hires them. They also aren’t paid while they are hustling for their next gig, a never-ending activity. Increasingly, these sorts of online job brokerages comprise a bigger chunk of the overall work force. TaskRabbit, CrowdFlower, Work Market, HourlyNerd (for hiring freelance MBAs), Thumbtack, and Freelancer.com (all of which either currently or in the past have used a similar online auction price structure) have infinitely expanded the geographic range and size of the contingent labor job applicant pool.


pages: 243 words: 66,908

Thinking in Systems: A Primer by Meadows. Donella, Diana Wright

affirmative action, agricultural Revolution, Albert Einstein, Buckminster Fuller, business cycle, clean water, Dissolution of the Soviet Union, game design, Gunnar Myrdal, illegal immigration, invisible hand, Just-in-time delivery, Kickstarter, means of production, Mikhail Gorbachev, Nelson Mandela, peak oil, race to the bottom, Ralph Waldo Emerson, Ronald Reagan, Stanford prison experiment, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Whole Earth Review

That’s a perverse feedback, a reinforcing loop that leads to collapse. It is not price information but population information that is needed. It’s important that the missing feedback be restored to the right place and in compelling form. To take another tragedy of the commons example, it’s not enough to inform all the users of an aquifer that the groundwater level is dropping. That could initiate a race to the bottom. It would be more effective to set the cost of water to rise steeply as the pumping rate begins to exceed the recharge rate. Other examples of compelling feedback are not hard to find. Suppose taxpayers got to specify on their return forms what government services their tax payments must be spent on. (Radical democracy!) Suppose any town or company that puts a water intake pipe in a river had to put it immediately downstream from its own wastewater outflow pipe.

That’s why my systems intuition was sending off alarm bells as the new world trade system was explained to me. It is a system with rules designed by corporations, run by corporations, for the benefit of corporations. Its rules exclude almost any feedback from any other sector of society. Most of its meetings are closed even to the press (no information flow, no feedback). It forces nations into reinforcing loops “racing to the bottom,” competing with each other to weaken environmental and social safeguards in order to attract corporate investment. It’s a recipe for unleashing “success to the successful” loops, until they generate enormous accumulations of power and huge centralized planning systems that will destroy themselves. 4. Self-Organization—The power to add, change, or evolve system structure The most stunning thing living systems and some social systems can do is to change themselves utterly by creating whole new structures and behaviors.


pages: 279 words: 71,542

Digital Minimalism: Choosing a Focused Life in a Noisy World by Cal Newport

Burning Man, Cal Newport, Donald Trump, financial independence, game design, index fund, Jaron Lanier, Kevin Kelly, Kickstarter, lifelogging, longitudinal study, Mark Zuckerberg, Pepto Bismol, pre–internet, price discrimination, race to the bottom, ride hailing / ride sharing, Silicon Valley, Skype, Snapchat, Steve Jobs

In a 2016 profile in the Atlantic, Harris blamed the lack of changes to the “inertia” of the organization and a lack of clarity about what he was advocating. The primary source of friction, of course, is almost certainly more simple: Minimizing distraction and respecting users’ attention would reduce revenue. Compulsive use sells, which Harris now acknowledges when he claims that the attention economy drives companies like Google into a “race to the bottom of the brain stem.” So Harris quit, started a nonprofit called Time Well Spent with the mission of demanding technology that “serves us, not advertising,” and went public with his warnings about how far technology companies are going to try to “hijack” our minds. In Washington, DC, where I live, it’s well-known that the biggest political scandals are those that confirm a negative that most people already suspected to be true.

“a moment can feel”: Laurence Scott, The Four-Dimensional Human: Ways of Being in the Digital World (New York: W. W. Norton, 2016), xvi. The tycoons of social media: “Social Media is the New Nicotine | Real Time with Bill Maher (HBO),” YouTube video, 4:54, posted May 12, 2017, https://www.youtube.com/watch?v=KDqoTDM7tio. “This thing is a slot machine”: Tristan Harris, interview with Anderson Cooper, 60 Minutes, https://www.cbsnews.com/video/brain-hacking. “race to the bottom”: Bianca Bosker, “The Binge Breaker,” Atlantic, November 2016, https://www.theatlantic.com/magazine/archive/2016/11/the-binge-breaker/501122. “serves us, not advertising”: This quote comes from an earlier version of the website for Time Well Spent. The organization has since been rebranded as the Center for Humane Technology, and has a new website and new copy: http://humanetech.com. Before 2013, Adam Alter had little interest in technology: Adam Alter, phone interview by the author, August 23, 2017.


pages: 232 words: 71,024

The Decline and Fall of IBM: End of an American Icon? by Robert X. Cringely

AltaVista, Bernie Madoff, business cycle, business process, cloud computing, commoditize, compound rate of return, corporate raider, full employment, if you build it, they will come, immigration reform, interchangeable parts, invention of the telephone, Khan Academy, knowledge worker, low skilled workers, Paul Graham, platform as a service, race to the bottom, remote working, Robert Metcalfe, Robert X Cringely, shareholder value, Silicon Valley, six sigma, software as a service, Steve Jobs, Toyota Production System, Watson beat the top human players on Jeopardy!, web application

Gerstner’s service business that saved the company 20 years ago will be eventually jettisoned, probably to a combination of U.S. and international buyers. The Global Services business could be sold to one or more Indian companies while the current federal business could be sold to one of IBM’s U.S. competitors. Meanwhile, IBM will move its business toward hardware and applications delivered by vendor partners who will carry the Service Level Agreement (SLA) penalty risk. In short, it’s a race to the bottom and only IBM executives are winning. Ultimately it will be IBM’s customers, employees, and shareholders who will be the losers. Yes, but some readers tell me, that’s just services, not the real IBM. There is no real IBM—not any longer. The company has become a cash cow. In IBM’s view, you never feed a cash cow—just take money out until the cow is dead. Before we move on, let’s examine that SLA penalty issue because I think there’s an aspect of this that’s misunderstood in the marketplace.

This happens while the execs have 100K lunches; yet cancel our holiday pizza party. I do not see the end of where this is going. As people have mentioned, if you were a client that just got screwed by this Lean effort, would you renew with IBM? The people I am starting to feel real sorry for are the poor saps who will be left holding the bag when all of the layoffs are done. Our workload, for most folks, is crazy now, but just wait. It seems like it’s a race to the bottom with Sam at the wheel. I don’t see the benefit EXCEPT to break up the company and raid the pension fund. SOMETHING FISHY IS GOING ON AT IBM. Is there any hope left for IBM? | May 04, 2007 | 7:35PM Unpaid overtime is mandatory IBM has been 'lean' for a long time. It's been eight years since I've been allowed to order business cards (cost: $10). When I go see a customer, I just claim I 'forgot' my cards.


pages: 407 words: 121,458

Confessions of an Eco-Sinner: Tracking Down the Sources of My Stuff by Fred Pearce

additive manufacturing, air freight, Berlin Wall, blood diamonds, British Empire, car-free, carbon footprint, clean water, congestion charging, corporate social responsibility, credit crunch, demographic transition, Fall of the Berlin Wall, food miles, ghettoisation, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Kibera, Kickstarter, mass immigration, megacity, Nelson Mandela, new economy, oil shale / tar sands, out of africa, peak oil, Pearl River Delta, profit motive, race to the bottom, Shenzhen was a fishing village, Silicon Valley, South China Sea, Steve Jobs, the built environment, urban planning, urban sprawl, women in the workforce

Unwilling to pay Maral’s wage rates, the big brands in Europe and North America are switching much of their business to the very cheapest factories paying the very lowest wages. ‘H&M buys mostly from Bangladesh now, and M&S is increasingly doing the same,’ Maral’s managers told me. Even M&S? That company used to have a reputation for buying where quality was best. But twice in recent years it has come close to collapse because of uncompetitive pricing. So it has transformed itself into a prime player in what economists call the ‘race to the bottom’. When price is all and the customer wants a £3 T-shirt, then, if the cutters and sewers and ironers and packers come cheaper in Dhaka, that is where they will be employed. So, fascinated as I was by my fairtrade organic detour, it was to Dhaka that I went next. 13 Trouser Snakes: The Strange Truth of Dhaka’s Sweatshops FIVE WOMEN LIVED in the room altogether. Three of them, Aisha, Akhi and Miriam, lined up on one bed.

While the buyers are in charge, all this talk from the CSR people is just corporate window dressing, however well-meaning the people involved might be.’ The truth is that retailers talk about little else but price. How they are moving from Sri Lanka or India or Mauritius to Bangladesh or Cambodia or China to take advantage of lower wages. The only limitation seems to have been the quota systems set up in European and North American governments to protect their own domestic industries. But the quotas are now being abolished. And the ‘race to the bottom’ in the mass marketing of cheap clothes is intensifying. Nazma dismissed Western hand wringing, and said she thought that it would be pressure from within that would ultimately clean up the industry. But she pleaded with customers in Europe not to respond to the obvious injustice with boycotts. The jobs, poor as many were, empowered women. ‘Women are becoming an economic force. This is the first time they have had jobs outside the home.

M&S bought them from a company called, coincidentally, Spencer’s Apparel, part of the large Medlar Group. The fabric that made the jeans came from the Nassa Group, which was Wal-Mart’s ‘International Supplier of the Year’ in 2002. But M&S didn’t want to give me an introduction to the companies, and without that the companies weren’t interested in talking to me. So I asked Khorshed about them. They weren’t the worst, he said, but not the best either. Just one of the pack in the race to the bottom. I wanted to follow where my jeans came from back to the cotton fields. And here came a surprise. Bangladesh’s largest garment makers want to cement their position in the market by making their own fabric. So they have been scouring the world for supplies of cheap cotton. In the past three years, Bangladesh has become the largest consumer of cotton from the Central Asian state of Uzbekistan. 14 White Gold: My T-shirt, Slave Labour and the Death of the Aral Sea IT IS AN old story, but with an unpalatable new twist.


pages: 482 words: 121,173

Tools and Weapons: The Promise and the Peril of the Digital Age by Brad Smith, Carol Ann Browne

Affordable Care Act / Obamacare, AI winter, airport security, Albert Einstein, augmented reality, autonomous vehicles, barriers to entry, Berlin Wall, Boeing 737 MAX, business process, call centre, Celtic Tiger, chief data officer, cloud computing, computer vision, corporate social responsibility, Donald Trump, Edward Snowden, en.wikipedia.org, immigration reform, income inequality, Internet of things, invention of movable type, invention of the telephone, Jeff Bezos, Mark Zuckerberg, minimum viable product, national security letter, natural language processing, Network effects, new economy, pattern recognition, precision agriculture, race to the bottom, ransomware, Ronald Reagan, Rubik’s Cube, school vouchers, self-driving car, Shoshana Zuboff, Silicon Valley, Skype, speech recognition, Steve Ballmer, Steve Jobs, The Rise and Fall of American Growth, Tim Cook: Apple, WikiLeaks, women in the workforce

But we worried that there would be little practical impact if we took the high road only to be undercut by companies that imposed no safeguards or restrictions at all, whether those companies were on the other side of Seattle or on the other side of the Pacific. Facial recognition, like so many AI-based technologies, improves with larger quantities of data. This creates an incentive to do as many early deals as possible and hence the risk of a commercial race to the bottom, with tech companies forced to choose between social responsibility and market success. The only way to protect against this race to the bottom is to build a floor of responsibility that supports healthy market competition. And a solid floor requires that we ensure that this technology, and the organizations that develop and use it, are governed by the rule of law. We drew insights from the historical regulation of other technologies. There are many markets in which a balanced approach to regulation has created a healthier dynamic for consumers and producers alike.

Brad Smith, “Facial Recognition Technology: The Need for Public Regulation and Corporate Responsibility,” Microsoft on the Issues (blog), Microsoft, July 13, 2018, https://blogs.microsoft.com/on-the-issues/2018/07/13/facial-recognition-technology-the-need-for-public-regulation-and-corporate-responsibility/. Back to note reference 14. Nitasha Tiku, “Microsoft Wants to Stop AI’s ‘Race to the Bottom,’” Wired, December 6, 2018, https://www.wired.com/story/microsoft-wants-stop-ai-facial-recognition-bottom/. Back to note reference 15. Eric Ries, The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth (New York: Currency, 2017), 96. Back to note reference 16. Brookings Institution, Facial recognition: Coming to a Street Corner Near You, December 6, 2018, https://www.brookings.edu/events/facial-recognition-coming-to-a-street-corner-near-you/.


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

Boihng this down into a soundbite: capitalism has always produced poverty alongside wealth, and capitalism has from the first been an international and internationalizing system—so it makes little sense to try to isolate the "global" aspect as the major culprit in the production of inequality. The MNC Those who identify globalization as the major force behind the production of inequality frequently point to an alleged "race to the bottom," driven by multinational corporations (MNCs) who constantly ransack the globe searching for low costs and high returns.This too isn't as easy a case to prove as one might think. After the New Economy Despite popular images of multinationals scouring the world for maximum return, going abroad seems to lower, rather than raise, profits (CHck and Harrison 2000). Firms operating internationally show a lower return on assets and a lower stock market value relative to assets than do otherwise similar domestic firms.

See income pensions, Enron-style, 35 Petras, James, 150,178 Pets.com, 196 phlogiston, 51 place, meaning of, 147-148 Plender, John, 35 Polanyi, Karl, 167 polarization, 29, 225; see also income distribution; wealth distribution pohtics of finance, 202-207 267 and income distribution, 79—81 market democracy, 22 polls New Economy, 31—32,231 poverty and, 110 Pope, Carl, 162 pop culture, stock market and, 187 portfolio investment, 176 Porto Alegre, 185 potential GDP, 47 poverty, 105-114 absolute vs. relative, 109—111 composition of the poor, 111-114 defining, over time, 106-109 global perspective, 129-130,133-141 historical perspective, 106,111—114 popular perceptions, 110 see also income distribution "poverty line," coinage of phrase, 237 Prins, Nomi, 196 privatization, 221,231 productivity 1960s enthusiasm, 8 acceleration in, accounting for, 56-62 and the business cycle, 47 competing estimates, 60-61 definitions, 41—42 and deflation, 228 and earnings, 45, 56 high-tech vs. rest, 52—54 historical perspective, 48 by industry, 49, 64—67 international comparisons, 41—42 labor, 41 measurement problems, 42—45, 58—60 multifactor (total factor), 41,45 historical perspective, 49 outsourcing and, 51-52 where it went, 56 and workload, 39—41 work hours, measuring, 67 profitability historical view, 203—204 MNCs and, 157 prosocial behavior, 76 protectionism, 220 public subsidy to private sector, 6 purchasing power parity, 131, 238 quabty changes, measuring, 43—45 declines in, 55-56 inputs, adjusting for, 58 Quattrone, Frank, 199 Qwest, 197 race educational attainment, 98—99 Gilder on, 12-13 wealth distribution and, 125—126 race to the bottom, 155 racism and nationahsm, 239 neo- or diflferentiahst, 172—173 Ramone, Joey, 190 Rand, Ayn, 15 Rapaille, G. Clothaire, 146 Reagan, Ronald, 8 recessions, political purpose, 182 regionahzation, 159 Reich, Robert, 71,74 retail trade, 64-66 Riflcin, Jeremy, 68 Robinson, Joan, 235 Robinson, William, 175-176 Rockefeller, David, 232 Rubin, Robert, 218 ruling class, global, 174—178 Russell, Marta, 100 sad militants, 185 Sakakibara, Eisuke, 228 Index Sale, Kirkpatrick, 168 Salomon Smith Barney, 197 scale, economic, 167-168 Scandinavia, very wired, 6 Schama, Simon, 23 Schrager, Ian, 233 Schwab, Klaus, 175-178 Seattle, anti-WTO protests, 32,160 sex, Gilder on, 11—13 sexual preference and pay, 100 sex discrimination, 94—101 international comparisons, 101—102 Shakespeare, 188 shareholder activism, 214 Shiller, Robert, 6-8,25-27,194 Shiva, Vandana, 162,168-169 Shorrock.Tim, 171 Sichel, Daniel, 57 Silicon Valley, income distribution, 105 Silicon Valley Toxics CoaUtion, 232 Sinai, Allen, 4 Singhne, Peter, 18 Skilhng, Jeffirey, 33 skills, job, 73-77 returns to, 86—87 skin shade and pay, 99 Smith, Adam, 109-110, 163,173 Smith, Patti, 183 Smith, Paul, 6 social democracy, 139-143,182 social movements, new, 179 Social Security, 227 Solow, Robert, 3 sovereignty, 170 space, shrinkage of, 146 speedup, 215, 229 Spencer, Herbert, 37 state, retreat of, 150-152 Stigbtz, Joseph, 193 Stiroh,Kevin,51,57 stock market 1990s bubble, history, 188-189 analysts' role, 194—200 anomalies, 194 book value, defined, 233 brokers' fees and salaries, 201-202 and corporate profitability, 203—204 and corporate restructuring, 214-215 economics of, 187-188,192-195 and evolution of the corporation, 212-217 excess volatiHty, 194 happiness of investors, 212 and managers' pay, 216—217 and pop culture, 187 psychology of, 25—26 trading frequency and returns, 190—191, 234,239 wisdom of, 35 see also finance stock options, 216—217 and wealth distribution, 126—127 stock ownership, distribution of, 24, 122-124 stress, management by, 25 stylish shoes, 165 Summers, Lawrence, 5,231 surveillance, 68,77—78 Survey of Consumer Finances, 118—119 Survey of Income and Program Participation, 118 symbolic analysts, 71,72 synergy vs. conflict, 197-200 Taylorism, 78 technology not evil, 2 and social movements, 179 telecommunications industry, 196—198 telegraph, 7 telemarketers, 68 TheGlobe.com, 189 269 TheStreet.com, 31 dme, acceleration of, 146 Tocqueville, Alexis de, 82,139 Tompkins, Doug, 161-162 total factor productivity.


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

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

For instance, some prediction machines trained on human-generated data have already “learned” treacherous biases and stereotypes. We end the book in part five by applying our economists’ tool kit to questions that affect society more broadly, examining five of the most common AI debates: Will there still be jobs? Yes. Will this generate more inequality? Perhaps. Will a few large companies control everything? It depends. Will countries engage in race-to-the-bottom policy making and forfeit our privacy and security to give their domestic companies a competitive advantage? Some will. Will the world end? You still have plenty of time to derive value from this book. KEY POINTS * * * Economics offers clear insights regarding the business implications of cheaper prediction. Prediction machines will be used for traditional prediction tasks (inventory and demand forecasting) and new problems (like navigation and translation).

This system relies entirely on its facial analysis to authorize payment. Furthermore, incumbent Baidu is using a facial recognition AI to authenticate customers collecting their rail tickets and tourists accessing attractions.22 By contrast, in Europe, privacy regulation makes data access far more stringent than elsewhere, which may shut out European firms from AI leadership altogether. These factors may create a race to the bottom as countries compete to relax privacy restrictions to improve their AI position. However, citizens and consumers value privacy; it’s not a regulation that only companies care about. There is a basic trade-off between intrusion and personalization and a potential for customer dissatisfaction associated with acquiring user data. At the same time, a potential benefit arises from being better able to personalize predictions.


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The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations by David Pilling

Airbnb, banking crisis, Bernie Sanders, Big bang: deregulation of the City of London, Branko Milanovic, call centre, centre right, clean water, collapse of Lehman Brothers, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, dark matter, Deng Xiaoping, Diane Coyle, Donald Trump, double entry bookkeeping, Erik Brynjolfsson, falling living standards, financial deregulation, financial intermediation, financial repression, Gini coefficient, Goldman Sachs: Vampire Squid, Google Hangouts, Hans Rosling, happiness index / gross national happiness, income inequality, income per capita, informal economy, invisible hand, job satisfaction, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, Monkeys Reject Unequal Pay, mortgage debt, off grid, old-boy network, Panopticon Jeremy Bentham, peak oil, performance metric, pez dispenser, profit motive, purchasing power parity, race to the bottom, rent-seeking, Robert Gordon, Ronald Reagan, Rory Sutherland, science of happiness, shareholder value, sharing economy, Simon Kuznets, sovereign wealth fund, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, transaction costs, transfer pricing, trickle-down economics, urban sprawl, women in the workforce, World Values Survey

Then he added, as if it might be of some comfort, “I think we have limited possibility of the same crisis. Probably the next financial crisis will be a little bit different.” * * * — Just to be absolutely clear: the 2008 banking crisis, whose effects were still rippling through the world nearly a decade later, cannot be blamed on the way we account for financial services in our national accounts. The crisis had its roots in race-to-the-bottom deregulation, naive faith in the capacity of markets to self-correct, and a perverse “shareholder-value” ideology that allowed a few thousand masters-of-the-universe bankers to ransack their own institutions while simultaneously feeling good about themselves. There were many other factors, from the hugely increased (and unnecessary) mathematical complexity of financial instruments to the inherently corrupt relationship between the ratings agencies and the clients who paid them.

Expecting to die younger than your parents is worse. It goes against what Westerners in general, and Americans in particular, have taken for granted.”5 Growing inequality explained some of what was going on. Median wages had more or less stagnated since the 1970s, partly due to a loss of bargaining power by unions, a trend that has been replicated in most of the industrial world as the tenets of free-market capitalism encouraged a race to the bottom. In the US the share of economic output going to wages has been falling steadily for decades, with more going to corporate profits and capital. That exacerbates inequalities and penalizes people who have to work for a living, particularly those with skills that can be outsourced, mechanized, or computerized. Many of the best blue-collar jobs came with health benefits and on-the-job training, but some of those jobs have gone to China, southeast Asia, India, or Mexico.


pages: 491 words: 77,650

Humans as a Service: The Promise and Perils of Work in the Gig Economy by Jeremias Prassl

3D printing, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, Andrei Shleifer, autonomous vehicles, barriers to entry, call centre, cashless society, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, disruptive innovation, Donald Trump, Erik Brynjolfsson, full employment, future of work, George Akerlof, gig economy, global supply chain, hiring and firing, income inequality, information asymmetry, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, low skilled workers, Lyft, Mahatma Gandhi, Mark Zuckerberg, market friction, means of production, moral hazard, Network effects, new economy, obamacare, pattern recognition, platform as a service, Productivity paradox, race to the bottom, regulatory arbitrage, remote working, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Rosa Parks, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Singh, software as a service, Steve Jobs, TaskRabbit, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, transaction costs, transportation-network company, Travis Kalanick, two tier labour market, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, working-age population

Elance-Odesk, Annual Impact Report (Elance-Odesk 2014), 23, https://blog-static. odesk.com/content/Elance-oDeskAnnualImpactReport2014.pdf, archived at * * * 162 Notes https://perma.cc/48BE-G7U7; Lilly Irani and M. Six Silberman, ‘Turkopticon: interrupting worker invisibility in Amazon Mechanical Turk’ (2013) CHI 2013, Changing Perspectives, Paris, France; ‘Is digital expert knowledge facing a race to the bottom?’, a-connect (undated), http://www.a-connect.com/acknowledge/is- digital-expert-knowledge-facing-a-race-to-the-bottom/, archived at https:// perma.cc/8ZJ3-P3X4. This tallies with research commissioned by the World Bank, which estimates that a typical online freelancer on Elance-oDesk (now Upwork) or Freelancer.com will work 20–40 hours per week and earn US$200– 750 per month, whilst only ‘a small subset of highly skilled workers . . . can earn up to $3000 per month’: Siou Chew Kuek, Cecilia Paradi-Guilford, Toks Fayomi, Soari Imaizumi, and Panos Ipeirotis, ‘The Global Opportunity in Online Outsourcing’ (World Bank 2015), 42, http://www.ipeirotis.com/wp-content/ uploads/2015/05/The-World-Bank-The-Global-Opportunity-in-Online- Outsourcing.pdf, archived at https://perma.cc/2AGP-TME6 42.


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Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover by Katrina Vanden Heuvel, William Greider

Asian financial crisis, banking crisis, Bretton Woods, business cycle, buy and hold, capital controls, carried interest, central bank independence, centre right, collateralized debt obligation, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, declining real wages, deindustrialization, Exxon Valdez, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, full employment, housing crisis, Howard Zinn, Hyman Minsky, income inequality, information asymmetry, John Meriwether, kremlinology, Long Term Capital Management, margin call, market bubble, market fundamentalism, McMansion, money market fund, mortgage debt, Naomi Klein, new economy, offshore financial centre, payday loans, pets.com, plutocrats, Plutocrats, Ponzi scheme, price stability, pushing on a string, race to the bottom, Ralph Nader, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, sovereign wealth fund, structural adjustment programs, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, wage slave, Washington Consensus, women in the workforce, working poor, Y2K

That difference—deference to the status quo versus a vision for reform—is the nut of the argument between the two sides. When I asked Rubin to consider labor’s critique and its argument for global labor standards, I was pleasantly surprised that he did not brush off the question. Instead, we had an engaging back-and-forth. Without global rights for workers to organize and some version of a minimum wage pegged to each country’s economic conditions, the “race to the bottom” is sure to continue, I suggest. When workers start mobilizing for higher wages, multinationals counter by moving production to the next available cheap labor market. Middle-class wages fall at the top, but the bottom does not rise as rapidly as it should. “But it’s a complicated question,” Rubin responds. Improving the distribution of incomes in poorer countries “is in everybody’s interest,” he agrees.

There would also be explicit rules on exchange rate rigging—a more effective way of tackling the China issue than threatening it with tariffs. Then there is improving the financial system’s own risk-han-dling mechanisms. Obama should attack the British position. Prime Minister Gordon Brown advocates more effective cross-border financial regulation, but not so much as to endanger the City of London’s standing as home of minimal regulation—in a race to the bottom with New York. This has to change. Obama should pick up the Financial Stability Forum’s proposal that global trade in financial derivatives be organized in licensed exchanges. If London wants the current casino, let the bulk of the trade be organized out of New York. But more importantly, the U.S. should insist that there be an international college of financial regulators which it will host, fund and coordinate.


pages: 273 words: 87,159

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

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

Journal of Political Economy 66 (4) (August): 281–302. Minow, Martha. 2003. “Public and Private Partnerships: Accounting for the New Religion.” Harvard Law Review 115 (5) (March): 1229–1284. Morgenson, Gretchen. 2015. “A Student Loan System Stacked against the Borrower.” New York Times, October 9. Mortenson, Thomas G. 2012. “State Funding: A Race to the Bottom.” American Council on Education, Winter. http://www.acenet.edu/the-presidency/columns-and-features/Pages/state-funding-a-race-to-the-bottom.aspx. Accessed September 22, 2016. Moss, David A. 2002. When All Else Fails: Government as the Ultimate Risk Manager. Cambridge, MA: Harvard University Press. Murray, Charles. 2012. Coming Apart: The State of White America, 1960–2010. New York: Crown. National Center for Education Statistics. 2015. “Postsecondary Attainment: Differences by Socioeconomic Status.” http://nces.ed.gov/programs/coe/indicator_tva.asp.


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

Mostly, their struggle is to place a lower limit on academic effort, but perhaps there also needs to be an upper limit. While we cannot afford to fall behind global standards, the teenage years should not be turned into a junior version of the toxic rivalries of an investment bank. As to those toxic rivalries, a story that hit the headlines in 2013 was of a summer intern at an investment bank, so keen to impress that he worked a twenty-hour day before dropping dead. This is an extreme instance of a race to the bottom that drives groups of people to become workaholics. Everybody would gain from working less, but no individual dares to step out of line: they would lose out in the race for promotion, and by breaching prevailing norms they would lose esteem. This is a classic co-ordination problem and it has a straightforward solution – public policy. Long hours of work can be discouraged by taxation, or curtailed through regulation.

In practice, it hasn’t: the globalization of companies has not been matched by the globalization of regulation. The capacity to tax and regulate remains firmly lodged at the national level. As I discussed in Chapter 6, our supranational co-ordination mechanisms – the OECD, the IMF, the EU, the G7 and the G20 – have lost the capacity to forge binding reciprocal obligations underpinned by enlightened self-interest. Each nation prefers to compete in a race to the bottom. This defeat of governance has been the ugliest reality of modern globalization. Having been the epicentre of the problem, in its presidency of the G8 in 2013, Britain began to lead the way in trying to address it.* For example, the UK pioneered a crackdown on ‘shell companies’ through which lawyers conceal asset ownership; the country now has a compulsory public register of the true ownership of all British companies, closing a major conduit for corrupt money.


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Connectography: Mapping the Future of Global Civilization by Parag Khanna

"Robert Solow", 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 9 dash line, additive manufacturing, Admiral Zheng, affirmative action, agricultural Revolution, Airbnb, Albert Einstein, amateurs talk tactics, professionals talk logistics, Amazon Mechanical Turk, Asian financial crisis, asset allocation, autonomous vehicles, banking crisis, Basel III, Berlin Wall, bitcoin, Black Swan, blockchain, borderless world, Boycotts of Israel, Branko Milanovic, BRICs, British Empire, business intelligence, call centre, capital controls, charter city, clean water, cloud computing, collateralized debt obligation, commoditize, complexity theory, continuation of politics by other means, corporate governance, corporate social responsibility, credit crunch, crony capitalism, crowdsourcing, cryptocurrency, cuban missile crisis, data is the new oil, David Ricardo: comparative advantage, deglobalization, deindustrialization, dematerialisation, Deng Xiaoping, Detroit bankruptcy, digital map, disruptive innovation, diversification, Doha Development Round, edge city, Edward Snowden, Elon Musk, energy security, Ethereum, ethereum blockchain, European colonialism, eurozone crisis, failed state, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, fixed income, forward guidance, global supply chain, global value chain, global village, Google Earth, Hernando de Soto, high net worth, Hyperloop, ice-free Arctic, if you build it, they will come, illegal immigration, income inequality, income per capita, industrial cluster, industrial robot, informal economy, Infrastructure as a Service, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, LNG terminal, low cost airline, low cost carrier, low earth orbit, manufacturing employment, mass affluent, mass immigration, megacity, Mercator projection, Metcalfe’s law, microcredit, mittelstand, Monroe Doctrine, mutually assured destruction, New Economic Geography, new economy, New Urbanism, off grid, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Parag Khanna, Peace of Westphalia, peak oil, Pearl River Delta, Peter Thiel, Philip Mirowski, plutocrats, Plutocrats, post-oil, post-Panamax, private military company, purchasing power parity, QWERTY keyboard, race to the bottom, Rana Plaza, rent-seeking, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Scramble for Africa, Second Machine Age, sharing economy, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, six sigma, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, Stuxnet, supply-chain management, sustainable-tourism, TaskRabbit, telepresence, the built environment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, Tim Cook: Apple, trade route, transaction costs, UNCLOS, uranium enrichment, urban planning, urban sprawl, WikiLeaks, young professional, zero day

With as much as 70 percent of China’s budget consumed by local government expenses, many scholars argue that China is already de facto federalized and should become more formally so.3 Indeed, the central government no longer sets or rewards growth rate targets for provinces, indicating they are expected to determine economic strategies for themselves.4 Inland provinces are thus leveraging China’s improved infrastructure to draw companies from the high-wage coastal cities toward the lower-wage interior. Meanwhile, a “race to the bottom” competition for manufacturing jobs is playing out in America today reminiscent of Asia in the 1980s. Tennessee is reimbursing much of the up-front cost South Korea’s tire maker Hankook will incur to set up its first U.S. plant in Clarksville, where it will become the largest employer in the city. On the other side of Nashville is Smyrna, a town that barely existed until Nissan came in 1983, after which the population quadrupled to more than forty thousand.

Illinois thus reveals how anachronistic the idea of politically (rather than economically) defined states is today. As the longtime Chicago Tribune columnist and urban expert Richard Longworth has written, “Midwestern states make no sense as units of government.”7 Kansas City is shared by Kansas and Missouri, but the two states battle to get companies to relocate across State Line Road rather than uniting against global competition. Indiana’s municipalities are also engaged in a Tennessee-style race to the bottom to attract low-wage jobs, undermining Indianapolis’s effort to become a high-wage tech hub. Some second-tier cities have managed to stay afloat by effectively privatizing themselves. The Port of Corpus Christi, for example, was the first American territory to be granted a foreign trade zone license by the Department of Commerce in 1985, making it a self-governing private entity independent of the city with the same name and taking no federal, state, or city tax revenues.*1 After decades of service as a key port for oil imports and almost zero exports, it has become a major gateway for outbound shale oil exports from the Eagle Ford formation only a hundred kilometers away.*2 In 2009, it began a $1 billion joint venture with Tianjin Pipe Corporation, which hails from China’s leading port, to produce 500,000 tons per year of seamless pipe essential for oil and gas wells.

Similarly, a franchise business can be more accountable due to strict rules set forth by a powerful parent company. McDonald’s has more capacity to inspect itself, and more incentive to protect its brand, than any government can devote to monitoring it. Similarly, the West African societies where children work in cocoa fields don’t raise wages or build schools the way Nestlé can.*1 — SUPPLY CHAINS WERE ONCE thought of as spurring a race to the bottom; now it is clear they are how countries race to the top. Even China and India needed to open to foreign investment to attract supply chains, stimulate reforms, and generate the capital necessary to spread development. As the Nobel laureates Robert Solow and Edmund Phelps have pointed out, foreign firms pay higher wages, bring in new technology, and boost worker skills and productivity. They inject dynamism and capitalize on people’s resourcefulness.


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

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

There are two reasons why wealth taxes are so politically difficult. First, because of effective lobbying. High-net-worth individuals finance the campaigns of politicians on the left and on the right, and few are in favor of wealth taxation, even when they are otherwise quite liberal. Second, it is easy to avoid the taxes, legally or not, particularly in small European countries where people can move or park their wealth abroad. This gives rise to a race to the bottom on tax rates. We should not lose sight of the fact, however, that all of this happens in part because the world tolerates tax evasion: most tax codes have loopholes galore and the penalties for parking money abroad are ineffective. As we saw, countries with a simple tax code with few loopholes lose less from evasion when taxes go up than the United States.71 Gabriel Zucman has convincingly argued that there are many relatively straightforward things that would help a lot in limiting tax evasion and tax avoidance.

Among his ideas are to create a global financial registry that would keep track of wealth no matter where it is (making it possible to tax wealth no matter where it is parked), to reform the corporate tax system such that the global profits of multinational firms are apportioned to where they make their sales, and to more strongly regulate banks and law firms that help people evade taxes through tax havens.72 Identifying a set of steps is of course not sufficient. There needs to be the political will to implement them. The three steps Zucman recommends may be particularly tricky since they involve international cooperation, and the men (yes, almost always men) at the top right now do not seem to be all that able to join together to get things done. Without that, countries may be tempted to engage in a race to the bottom in taxation in the hope of attracting talent and capital. Preferential tax schemes for high-skilled foreign workers have been introduced in Belgium, Denmark, Finland, the Netherlands, Portugal, Spain, Sweden, and Switzerland. In Denmark, for example, high-earning foreigners pay only a 30 percent flat tax for three years (against a top rate of 62 percent for the Danish). This was very effective in attracting high-income foreigners to Denmark, which may be good for Denmark, but bad for other countries.

The recent round of tax reforms undertaken by the centrist Macron government has made tax less progressive: the flat tax was raised, the wealth tax is gone, and taxes on capital have been pared back. The official justification is that this is necessary to make France able to attract capital away from other countries. It may well be true, but it runs the risk of forcing other countries in Europe to cut taxes as well, prompting a race to the bottom. The American experience warns us this may be very hard to reverse. European countries need to cooperate to hold the line on their taxes. Developing-country governments raise even less money than the United States. The median low-income country raises less than 15 percent of GDP in taxes as compared to nearly 50 percent in Europe (and 34 percent in the OECD on average). To some extent, the underdevelopment of the tax system is a consequence of the nature of the economy; a large part of the economy is taken up by tiny firms or remote farms whose income is hard to verify.


pages: 401 words: 93,256

Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life by Rory Sutherland

3D printing, Alfred Russel Wallace, barriers to entry, basic income, Black Swan, butterfly effect, California gold rush, call centre, Captain Sullenberger Hudson, Cass Sunstein, cognitive dissonance, Daniel Kahneman / Amos Tversky, Dava Sobel, delayed gratification, Donald Trump, double helix, Downton Abbey, Elon Musk, Firefox, George Akerlof, gig economy, Google Chrome, Google X / Alphabet X, Grace Hopper, Hyperloop, Ignaz Semmelweis: hand washing, IKEA effect, information asymmetry, James Dyson, John Harrison: Longitude, loss aversion, low cost airline, Mason jar, Murray Gell-Mann, Peter Thiel, placebo effect, race to the bottom, Richard Feynman, Richard Thaler, Rory Sutherland, shareholder value, Silicon Valley, social intelligence, Steve Jobs, supply-chain management, the map is not the territory, The Market for Lemons, The Wealth of Nations by Adam Smith, ultimatum game, universal basic income, Upton Sinclair, US Airways Flight 1549, Veblen good

Even Darwin’s great contemporary and collaborator Wallace hated the idea of sexual selection; for some reason, it sits in the category of ideas that most people – and especially intellectuals – simply do not want to believe. 3.11: On the Importance of Identity Remember that without distinctiveness, mutualism of the kind found in bees and flowers cannot work, because an improvement in a flower’s product quality would not result in a corresponding increase in the bees’ loyalty. Without identity and the resulting differentiation, a breed of flower would give away extra nectar for no gain, as the next time, the bees would simply visit the less-generous-but-identical-looking flower next to it. Over time, flowers would end up in a ‘race to the bottom’, producing as little costly nectar as possible and relying on their similar appearance to other, more generous flowers to preserve the bees’ supply of nectar and to maintain the incentive for them to continue travelling from plant to plant. We need to consider whether the same process occurs in business, as well as in nature. Are brands essential to making capitalism work? 3.12: Hoverboards and Chocolate: Why Distinctiveness Matters Many of you reading this may be too young to remember fighting over Cabbage Patch dolls or Buzz Lightyear figures, but let us pause to recall what wasn’t quite the hot craze of Christmas 2015, because it provides a valuable lesson in the wider economic importance of brands.

.* Finally, while we were still wondering whether to take the plunge, news spread that several boards had burst into flames while charging, in one case setting fire to a house. The problem was confined to a few makes, but without knowing which specific brands to avoid, it sullied the whole category. Without the brand feedback mechanism, there was no incentive for any one manufacturer to make a safer, better version of the board, since they were not positioned to reap the gains. As a result, the market became a commoditised race to the bottom, in which both innovation and quality control fail. Why make a better product if no one knows it was you who made it? So no one did make a better board, and the whole category more or less died as a result. It may correct itself if better boards arise, or if a shrewd company such as Samsung cannily attaches its name to the best. Noticeably, brands such as Juul and Vype are starting to emerge in the similarly haphazard vaping market.


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

Additionally, at an October 2015 labor conference hosted by the White House, President Barack Obama discussed ways of protecting the new workforce in an hour-long town hall discussion he moderated with Michelle Miller, the co-founder of coworker.org, after highlighting the opportunities created by the future of work heralded by platforms like Uber, Lyft, and TaskRabbit in an earlier keynote speech. But what exactly do these opportunities look like? On one side of the argument, there are the Liss-Riordans of the world who may consider the future of work—at least as it is currently unfolding in the sharing economy—as a near-certain race to the bottom. Among the most vocal proponents of this view is the former labor secretary and University of California professor Robert Reich. Asserting that a better name for the sharing economy would be the “share-the-scraps economy,” Reich posits: “Customers and workers are matched online. Workers are rated on quality and reliability. The big money goes to the corporations that own the software. The scraps go to the on-demand workers.”8 In this dystopian view of the future, work will be defined by low wages, the elimination of benefits, and high levels of job insecurity.

Will the sharing economy ultimately represent the rise of the microentrepreneur—a generation of self-employed workers who are empowered to work whenever they want from any location and at whatever level of intensity needed to achieve their desired standard of living? Or will it represent the culmination of the end of broad-based and high standards of living that the United States witnessed in the 1950s and 1960s—a disparaging race to the bottom that leaves workers around the world working more hours for less money and with minimal job security and benefits? Put another way, will the future of work be populated by successful microentrepreneurs, like David with his fleet of cars on Turo, ThreeBirdNest’s Alicia Shaffer on Etsy, and Don Dennis running his business from the island of Gigha? Or will the future be populated by disenfranchised workers who scurry between platforms as they hunt for their next wedge of piecework?


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

Without inequality, there could never be progress: “The main spring of progress is the desire of individuals to better their condition …”100 While the northern states were home to cut-throat capitalism and to a natural war between labor and capital, Calhoun described each plantation as a microcosm of harmony between labor and capital, embodied by the person of the plantation owner.101 One of the most prolific anonymous editorial writers on slavery, Virginia lawyer George Fitzhugh, advocated slavery as a form of paternalistic social organization for workers. As had the New York Working Men, Fitzhugh argued that competition promoted a race to the bottom in living standards. He claimed that workers and their employers in the North were only linked by the impersonal cash nexus, and that a manual worker had almost no power compared with the man who would or would not hire him. But Fitzhugh went beyond the arguments of northern workers by arguing that dependent relationships were better because they caused an affectionate tie: between husbands and wives, parents and children, and masters and slaves.102 He argued that in the best-case scenario, all workers would be enslaved.103 In the north, newspaper editors went wild, printing and reprinting Fitzhugh’s anonymous editorials while alleging a southern conspiracy to deprive white workers of their liberties.104 Historian Peter Kolchin argues that slaveholders in the United States (in contrast with the Russian serf-holders he compares them to) were able to defend slavery freely because of the free press in the United States.

Fears about the slowing of the economy in general are met with calls for the education of the workforce, as though that, rather than increasing consumer demand, will guarantee that every individual somehow has a high-paying job. In fact, automation has caused the hollowing out of the wage structure; the highest-paid people continue to be highly paid, while middle- and low-skilled workers conduct a race to the bottom for lower-skilled jobs. Without some degree of redistribution and the provision of more public goods “such as food, housing, education and health care that are necessary for a modern life to go well,” there is no guarantee that economic output will have any relationship to well-being.72 The path of the Patient Protection and Affordable Care Act (ACA, 2010) provides a good illustration of the problems caused by divergent partisan ideologies and powerful framing narratives.


pages: 543 words: 157,991

All the Devils Are Here by Bethany McLean

Asian financial crisis, asset-backed security, bank run, Black-Scholes formula, Blythe Masters, break the buck, buy and hold, call centre, collateralized debt obligation, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Exxon Valdez, fear of failure, financial innovation, fixed income, high net worth, Home mortgage interest deduction, interest rate swap, laissez-faire capitalism, Long Term Capital Management, margin call, market bubble, market fundamentalism, Maui Hawaii, money market fund, moral hazard, mortgage debt, Northern Rock, Own Your Own Home, Ponzi scheme, quantitative trading / quantitative finance, race to the bottom, risk/return, Ronald Reagan, Rosa Parks, shareholder value, short selling, South Sea Bubble, statistical model, telemarketer, too big to fail, value at risk, zero-sum game

“People shop deals all the time,” he shrugged. Ratings shopping was a classic example of why Alan Greenspan’s theory of market discipline didn’t work in the real world. The market competition between the rating agencies, which Greenspan assumed would make companies better, actually made them worse. “The only way to get market share was to be easier,” says Jerome Fons, a longtime Moody’s managing director. “It was a race to the bottom.” A former structured finance executive at Moody’s says, “No rating agency could say, ‘We’re going to change and be more conservative.’ You wouldn’t be in business for long if you did that. We all understood that.” “It turns out ratings quality has surprisingly few friends,” Moody’s chief executive, Raymond McDaniel, told his board in 2007. “Ideally, competition would be primarily on the basis of ratings quality, with a second component of price and a third component of service.

Says Kevin Stein, the associate director of the California Reinvestment Coalition: “Banks said, ‘We don’t have to comply.’ The OCC said, ‘They don’t have to comply.’ The state legislatures said, ‘If we can’t pass a law that regulates federally chartered banks operating in our state, then we’re not going to regulate state-chartered lenders, because then they can’t compete.’ It was a legislative and regulatory race to the bottom.” Finally, subprime loans continued to make their way, unchecked, into the national banking system, thanks to securitization. It really didn’t matter who originated them. States had no way of cutting off that all-important funding source. And the national regulators, with their energy focused on making sure that “their” institutions were free from pesky state laws, idly stood by. What none of the regulators could see was the most obvious fact of all: if cities and states all over the country felt the need to enact their own laws—as twenty-five states, eleven localities, and the District of Columbia had by 2004, according to a GAO report—didn’t that suggest there was a problem that needed fixing?

In a 2005 memo about Washington Mutual, the FDIC summed up the prevailing sentiment: “Management believes, however, that the impact on WMB [of a housing downturn] would be manageable, since the riskiest segments of production are sold to investors, and that these investors will bear the brunt of a bursting housing bubble.” And what did Wall Street think about the way the subprime business had gone mad? Wall Street didn’t care, either. If anything, Wall Street was encouraging the subprime companies in their race to the bottom. Lousier loans meant higher yields. “A company would come to us and say, ‘We can’t believe your FICO doesn’t go to 580,’ ” recalls a former Morgan Stanley executive. “ ‘You’re 620, but Lehman will go to 580.’ ” Here was the ultimate consequence of the delinking of borrower and lender, which securitization had made possible: no one in the chain, from broker to subprime originator to Wall Street, cared that the loans they were making and selling were likely to go bad.


pages: 574 words: 164,509

Superintelligence: Paths, Dangers, Strategies by Nick Bostrom

agricultural Revolution, AI winter, Albert Einstein, algorithmic trading, anthropic principle, anti-communist, artificial general intelligence, autonomous vehicles, barriers to entry, Bayesian statistics, bioinformatics, brain emulation, cloud computing, combinatorial explosion, computer vision, cosmological constant, dark matter, DARPA: Urban Challenge, data acquisition, delayed gratification, demographic transition, different worldview, Donald Knuth, Douglas Hofstadter, Drosophila, Elon Musk, en.wikipedia.org, endogenous growth, epigenetics, fear of failure, Flash crash, Flynn Effect, friendly AI, Gödel, Escher, Bach, income inequality, industrial robot, informal economy, information retrieval, interchangeable parts, iterative process, job automation, John Markoff, John von Neumann, knowledge worker, longitudinal study, Menlo Park, meta analysis, meta-analysis, mutually assured destruction, Nash equilibrium, Netflix Prize, new economy, Norbert Wiener, NP-complete, nuclear winter, optical character recognition, pattern recognition, performance metric, phenotype, prediction markets, price stability, principal–agent problem, race to the bottom, random walk, Ray Kurzweil, recommendation engine, reversible computing, social graph, speech recognition, Stanislav Petrov, statistical model, stem cell, Stephen Hawking, strong AI, superintelligent machines, supervolcano, technological singularity, technoutopianism, The Coming Technological Singularity, The Nature of the Firm, Thomas Kuhn: the structure of scientific revolutions, transaction costs, Turing machine, Vernor Vinge, Watson beat the top human players on Jeopardy!, World Values Survey, zero-sum game

If the antagonists are powerful states, the clash could be bloody.34 (A “surgical strike” against the rival’s AI project might risk triggering a larger confrontation and might in any case not be feasible if the host country has taken precautions.35) * * * Box 13 A risk-race to the bottom Consider a hypothetical AI arms race in which several teams compete to develop superintelligence.32 Each team decides how much to invest in safety—knowing that resources spent on developing safety precautions are resources not spent on developing the AI. Absent a deal between all the competitors (which might be stymied by bargaining or enforcement difficulties), there might then be a risk-race to the bottom, driving each team to take only a minimum of precautions. One can model each team’s performance as a function of its capability (measuring its raw ability and luck) and a penalty term corresponding to the cost of its safety precautions.

The 2010 Flash Crash 3. What would it take to recapitulate evolution? 4. On the kinetics of an intelligence explosion 5. Technology races: some historical examples 6. The mail-ordered DNA scenario 7. How big is the cosmic endowment? 8. Anthropic capture 9. Strange solutions from blind search 10. Formalizing value learning 11. An AI that wants to be friendly 12. Two recent (half-baked) ideas 13. A risk-race to the bottom CHAPTER 1 Past developments and present capabilities We begin by looking back. History, at the largest scale, seems to exhibit a sequence of distinct growth modes, each much more rapid than its predecessor. This pattern has been taken to suggest that another (even faster) growth mode might be possible. However, we do not place much weight on this observation—this is not a book about “technological acceleration” or “exponential growth” or the miscellaneous notions sometimes gathered under the rubric of “the singularity.”


pages: 381 words: 101,559

Currency Wars: The Making of the Next Gobal Crisis by James Rickards

Asian financial crisis, bank run, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, high net worth, income inequality, interest rate derivative, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, private sector deleveraging, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, sovereign wealth fund, special drawing rights, special economic zone, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, War on Poverty, Washington Consensus, zero-sum game

Finally it was the turn of France and England to devalue again. In 1936, France broke with gold and became the last major country to emerge from the worst effects of the Great Depression while England devalued again to regain some of the advantage it had lost against the dollar after FDR’s devaluations in 1933. In round after round of devaluation and default, the major economies of the world raced to the bottom, causing massive trade disruption, lost output and wealth destruction along the way. The volatile and self-defeating nature of the international monetary system during that period makes Currency War I the ultimate cautionary tale for today as the world again confronts the challenge of massive unpayable debt. Currency War I began in 1921 in Weimar Germany when the Reichsbank, Germany’s central bank, set about to destroy the value of the German mark through massive money printing and hyperinflation.

Such blocs can arise spontaneously according to well-known models of self-organization in complex systems. Regional currency blocs could quickly devolve into regional trading blocs with diminished world trade, undoubtedly the opposite of what the advocates of multiple reserve currencies such as Eichengreen envision. Eichengreen expects what he calls healthy competition among multiple reserve currencies. He discounts models of unhealthy competition and dysfunction—what economists call a “race to the bottom,” which can arise when leading central banks lock in regional dominance through network effects and simultaneously abuse their reserve status by money printing. The best advice for advocates of the multiple reserve currency model is “Be careful what you wish for.” This is an untested and untried model, absent gold or some single currency anchor. The missing-anchor problem may be one reason why the dollar continues to dominate despite its difficulties.


pages: 417 words: 97,577

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

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

In legal circles, the term private government is most commonly associated with Robert Lee Hale. “There is government,” he wrote, “whenever one person or group can tell others what they must do and when those others have to obey or suffer a penalty.”18 Under Hale's definition, the tech giants are effectively governments unto themselves. In tax matters, the companies stand effectively beyond the laws of national governments, playing one country against another in a race to the bottom. Their arrangements mock national governments. Facebook, Google, and other tech companies have used arrangements known as a “Double Irish” and a “Dutch Sandwich,” to shield the majority of their international profits from the taxman. They shift revenue from one Irish subsidiary to a Dutch company with no employees, and then on to a Bermuda mailbox owned by another Ireland-registered company.19 It is a farce, and it is all perfectly legal.

For the biggest tech firms, competing against startups has become a one-way bet. Key Thoughts from the Chapter The top technology companies in the United States now have a market capitalization that exceeds the GDP of all countries in Western Europe. For the biggest tech firms, competing against startups has become a one-way bet. In tax matters, the companies stand effectively beyond the laws of national governments, playing one country against another in a race to the bottom. The power of platforms makes them a different class of companies. They set the rules that govern their world. We simply live in it. Chapter Six Toll Roads and Robber Barons I would rather earn 1% off a hundred people's efforts than 100% of my own efforts. —John D. Rockefeller Imagine a world where a giant corporation watched your daily habits and knew all your likes, dislikes, who you spoke to, what you bought, whether you paid your bills on time, and what you talked about with friends?


pages: 382 words: 100,127

The Road to Somewhere: The Populist Revolt and the Future of Politics by David Goodhart

Affordable Care Act / Obamacare, agricultural Revolution, assortative mating, Big bang: deregulation of the City of London, borderless world, Boris Johnson, Branko Milanovic, Bretton Woods, British Empire, call centre, capital controls, carbon footprint, central bank independence, centre right, coherent worldview, corporate governance, credit crunch, deglobalization, deindustrialization, Donald Trump, Downton Abbey, Edward Glaeser, en.wikipedia.org, Etonian, European colonialism, eurozone crisis, falling living standards, first-past-the-post, gender pay gap, gig economy, glass ceiling, global supply chain, global village, illegal immigration, income inequality, informal economy, job satisfaction, knowledge economy, labour market flexibility, low skilled workers, market friction, mass immigration, mittelstand, Neil Kinnock, New Urbanism, non-tariff barriers, North Sea oil, obamacare, old-boy network, open borders, Peter Singer: altruism, post-industrial society, post-materialism, postnationalism / post nation state, race to the bottom, Richard Florida, Ronald Reagan, selection bias, shareholder value, Skype, Sloane Ranger, stem cell, Thomas L Friedman, transaction costs, trickle-down economics, ultimatum game, upwardly mobile, wages for housework, white flight, women in the workforce, working poor, working-age population, World Values Survey

‘That these nations have managed to generate comparable amounts of wealth under different rules is an important reminder that there is not a single blueprint for economic success.’ A new settlement is needed between the nation state and the international economic order that allows for a greater variety of institutional forms reflecting different national preferences and traditions. Some people, especially on the left, fear that without rigorous harmonisation of institutional regimes there will be a race to the bottom on labour, environmental or financial regulation (the same argument is made within the EU). This fear is not groundless but is exaggerated, and the only area where there seems to be some evidence for it is in corporate taxation. Most institutional money is risk averse and sees low regulation countries as risky. In any case if there can be global agreement through the WTO to bring down barriers to trade why not also tougher agreements to establish clear minimum standards in these areas?

He writes: ‘Advocates of globalisation lecture the rest of the world about how countries must change their policies and institutions to expand their international trade and to become more attractive to foreign investors. This way of thinking confuses means for ends. Globalisation should be an instrument for achieving the goals that societies seek: prosperity, stability, freedom, and quality of life. Whether globalisation sets off a “race to the bottom” or not, we can break the deadlock between the proponents and opponents of globalisation by accepting a simple principle: countries can uphold national standards in labor markets, finance, taxation, and other areas and can do so by raising barriers at the border, if necessary, when international trade and finance demonstrably threaten domestic practices that enjoy democratic support.’15 Rodrik argues that this principle rules out extremism on both sides.


pages: 411 words: 98,128

Bezonomics: How Amazon Is Changing Our Lives and What the World's Best Companies Are Learning From It by Brian Dumaine

activist fund / activist shareholder / activist investor, AI winter, Airbnb, Amazon Web Services, Atul Gawande, autonomous vehicles, basic income, Bernie Sanders, Black Swan, call centre, Chris Urmson, cloud computing, corporate raider, creative destruction, Danny Hillis, Donald Trump, Elon Musk, Erik Brynjolfsson, future of work, gig economy, Google Glasses, Google X / Alphabet X, income inequality, industrial robot, Internet of things, Jeff Bezos, job automation, Joseph Schumpeter, Kevin Kelly, Lyft, Marc Andreessen, Mark Zuckerberg, money market fund, natural language processing, pets.com, plutocrats, Plutocrats, race to the bottom, ride hailing / ride sharing, Sand Hill Road, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Snapchat, speech recognition, Steve Jobs, Stewart Brand, supply-chain management, Tim Cook: Apple, too big to fail, Travis Kalanick, Uber and Lyft, uber lyft, universal basic income, wealth creators, web application, Whole Earth Catalog

Williams-Sonoma has differentiated itself with one of the most robust Internet operations in retail, bringing in over half its revenue online, and has assembled a database of 60 million customers. Its brick-and-mortar stores, which the company calls “billboards for our brands,” along with glossy catalogs, help drive online sales where margins are significantly higher than at the stores. A custom selection of products also helps retailers avoid the kind of race-to-the-bottom price wars for which Amazon is famous. In other words, one way to compete with Amazon on price is not to compete on price. That’s a lesson that Crate & Barrel CEO Neela Montgomery has taken to heart as she works to upgrade this upscale German furniture chain by modernizing stores and investing heavily in social media. Amazon sells furniture online, as do other retailers such as Wayfair and Overstock.

The challenge for retailers such as Crate & Barrel arises when Amazon begins to penetrate more of the market by cutting out retailers and going directly to manufacturers. Bezos is now offering furniture makers white-glove delivery service of their products, which includes a no-hassle returns policy. Furniture makers simply sell on Amazon and leave the rest of the delivery and all the paperwork and complexity of returns to the giant. Another way to avoid a race to the bottom with Amazon is to sell products that need a lot of hand-holding. Best Buy, the consumer electronics retailer, is one business that by all rights should’ve been crushed by Amazon. In the early 2000s, the Minnesota company had stores in malls with shrinking traffic, and carried TVs, small appliances, and computers—for the most part commodity products that can be bought on Amazon for less and delivered faster.


pages: 398 words: 105,917

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism by Richard Brooks

accounting loophole / creative accounting, asset-backed security, banking crisis, Big bang: deregulation of the City of London, blockchain, BRICs, British Empire, business process, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Strachan, Deng Xiaoping, Donald Trump, double entry bookkeeping, Double Irish / Dutch Sandwich, energy security, Etonian, eurozone crisis, financial deregulation, forensic accounting, Frederick Winslow Taylor, G4S, intangible asset, Internet of things, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, light touch regulation, Long Term Capital Management, low cost airline, new economy, Northern Rock, offshore financial centre, oil shale / tar sands, On the Economy of Machinery and Manufactures, Ponzi scheme, post-oil, principal–agent problem, profit motive, race to the bottom, railway mania, regulatory arbitrage, risk/return, Ronald Reagan, savings glut, short selling, Silicon Valley, South Sea Bubble, statistical model, supply-chain management, The Chicago School, too big to fail, transaction costs, transfer pricing, Upton Sinclair, WikiLeaks

Dickman, 1990, UKHL 2. 15. Financial Reporting Council chair Sir Ron Dearing, deputy chair Philip Couse, ex-Coopers, plus Stock Exchange chairman Andrew Hugh Smith and CBI president Sir Trevor Holdsworth were among those concerned. 16. Prem Sikka, Jim Cousins and Austin Mitchell, Race to the Bottom: the Case of the Accountancy Firms, Association for Accountancy and Business Affairs, 2004. 17. ICAEW Council, quoted in Accountancy magazine, April 1994, cited in Napier, ‘Intersections of Law and Accountancy’. 18. Sikka, Cousins and Mitchell, Race to the Bottom. 19. Financial Times, 11 June 1998. 20. Written parliamentary answer, 7 November 1996. Hansard, Col. 618. 21. House of Commons Trade and Industry Select Committee, 16 February 1999. 22. Levitt’s ‘Numbers Game’ speech, New York University Centre for Law and Business, 28 September 1998. 23.


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

Discussing an unconditional basic income in one country 217 BASIC INCOME may have made plenty of sense at the time of the brief British debate in the 1920s, at the time of the intense North-�American debate in the late 1960s, and perhaps even at the time of the Eu�ro�pean debates that started in the 1980s. But how could it possibly make any sense in the twenty-�first �century, in an era in which information, capital, goods, and �people are crossing national borders as they have never done before? In this new context, are the prospects for a national basic income not deeply altered? Indeed, have they not dramatically collapsed?5 Race to the Bottom Why is the economic sustainability of an unconditional basic income threatened by globalization? �Because of the operation of two mechanisms. One has to do with its attractiveness to potential beneficiaries, the other with its unattractiveness to potential contributors. Neither mechanism constitutes a threat to a welfare state mainly governed by the insurance princi�ple, but both operate fully in the case of an unconditional basic income.

Tackling Selective Emigration The upshot of this exploration of the milder versions of the exclusionary strategy against selective immigration is that they do not provide a credible and attractive alternative to the harder one: shutting the door on many who would like to enter. Regrettably no doubt, if generous national (or, more generally, subglobal) basic incomes are to be made sustainable in the era of globalization, it Â�will therefore not be posÂ�siÂ�ble to dispense with some version of the exclusionary strategy.23 Even this may not be enough to avert a race to the bottom, however. The threat posed by the selective emigration of net contributors also needs to be addressed.24 How? One might first think of a strategy strictly symmetric to the one deemed appropriate to limit selective immigration. If it is okay to keep net beneficiaries out, why would it not be okay to keep net contributors in? One strong reason is that the right to emigrate is systematically regarded as a fundamental Â�human right, whereas the right to immigrate is not.25 Â�There is some hyÂ�pocÂ�risy in this asymmetry, as Â�people’s right to get out is meaningless if there Â� is no country willing to let them in.

Such obstacles make it more difficult for net beneficiaries to coordinate, or�ga�nize, and fight together.59 As a result of the conjunction of �these two mechanisms, one can expect institutionalized re�distribution to be less generous, other �things equal, in more heterogeneous socie�ties than in more homogeneous ones.60 If globalization means a constant flow of mi�grants, then invoking a race to the bottom driven by tax and social competition would not even be necessary to predict gloomy prospects for a generous unconditional basic income in a globalized context. The economic constraint �will not be binding if the po�liti�cal con- 242 Vi able i n the G lo bal Era? M ulti -L evel Basi c Income straint tightened by growing ethnic diversity stops re�distribution before its economic sustainability is at risk.


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 a view that says in America, we are greater together—when everyone engages in fair play, everyone gets a fair shot, everyone does their fair share. So what does that mean for restoring middle-class security in today’s economy? It starts by making sure that everyone in America gets a fair shot at success. The truth is, we’ll never be able to compete with other countries when it comes to who’s best at letting their businesses pay the lowest wages or pollute as much as they want. That’s a race to the bottom that we can’t win—and shouldn’t want to win. Those countries don’t have a strong middle class. They don’t have our standard of living. …The fact is, this crisis has left a deficit of trust between Main Street and Wall Street. And major banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit. At minimum, they should be remedying past mortgage abuses that led to the financial crisis, and working to keep responsible homeowners in their home.


pages: 160 words: 6,876

Shaky Ground: The Strange Saga of the U.S. Mortgage Giants by Bethany McLean

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, collateralized debt obligation, crony capitalism, housing crisis, mortgage debt, negative equity, obamacare, race to the bottom

Fiderer asked a simple question: If there were really 31 million “risky” mortgages, and Fannie and Freddie were responsible for half of them, why was the peak rate of serious delinquency for GSE-backed loans only about 1.8 million? The reason is that Pinto defines “risk” far differently than most and includes a large number of loans that, measured by loss rates, didn’t turn out to be particularly risky. Another reality check is that if Fannie and Freddie led the race to the bottom, then you would expect to see much higher loss rates on their loans. Instead, the opposite is true. The FCIC researchers ended up rejecting Pinto’s analysis because they found that the loss rates on the GSEs’ loans were actually far smaller than those on comparable private-sector loans. But they did meet with him multiple times, and produced two detailed memos about mortgage performance, one of which was a direct response to his analysis.


pages: 179 words: 43,441

The Fourth Industrial Revolution by Klaus Schwab

3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, Buckminster Fuller, call centre, clean water, collaborative consumption, commoditize, conceptual framework, continuous integration, crowdsourcing, digital twin, disintermediation, disruptive innovation, distributed ledger, Edward Snowden, Elon Musk, epigenetics, Erik Brynjolfsson, future of work, global value chain, Google Glasses, income inequality, Internet Archive, Internet of things, invention of the steam engine, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, life extension, Lyft, mass immigration, megacity, meta analysis, meta-analysis, more computing power than Apollo, mutually assured destruction, Narrative Science, Network effects, Nicholas Carr, personalized medicine, precariat, precision agriculture, Productivity paradox, race to the bottom, randomized controlled trial, reshoring, RFID, rising living standards, Sam Altman, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, smart cities, smart contracts, software as a service, Stephen Hawking, Steve Jobs, Steven Levy, Stuxnet, supercomputer in your pocket, TaskRabbit, The Future of Employment, The Spirit Level, total factor productivity, transaction costs, Uber and Lyft, uber lyft, Watson beat the top human players on Jeopardy!, WikiLeaks, winner-take-all economy, women in the workforce, working-age population, Y Combinator, Zipcar

Although the human cloud is in its infancy, there is already substantial anecdotal evidence that it entails silent offshoring (silent because human cloud platforms are not listed and do not have to disclose their data). Is this the beginning of a new and flexible work revolution that will empower any individual who has an internet connection and that will eliminate the shortage of skills? Or will it trigger the onset of an inexorable race to the bottom in a world of unregulated virtual sweatshops? If the result is the latter – a world of the precariat, a social class of workers who move from task to task to make ends meet while suffering a loss of labour rights, bargaining rights and job security – would this create a potent source of social unrest and political instability? Finally, could the development of the human cloud merely accelerate the automation of human jobs?


pages: 138 words: 43,748

Conscience of a Conservative: A Rejection of Destructive Politics and a Return to Principle by Jeff Flake

4chan, Affordable Care Act / Obamacare, battle of ideas, Berlin Wall, cognitive dissonance, crony capitalism, David Brooks, Donald Trump, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global supply chain, immigration reform, impulse control, invisible hand, Mark Zuckerberg, obamacare, Potemkin village, race to the bottom, road to serfdom, Ronald Reagan, Silicon Valley, uranium enrichment, zero-sum game

We were sitting on the House floor one day, and Mike joked that we were like Minutemen who had finally arrived at the battlefront only to be told that the revolution was over. We were desperate to engage big ideas, in a setting of intellectual curiosity and vigorous debate. I kept that Armey-Archer T-shirt so that I could remember a time when Republicans thought about ideas and enjoyed those good-spirited and consequential debates. It seems that time is gone, replaced by a race to the bottom to see who can be meaner and madder and crazier. It is not enough to be conservative anymore. You have to be vicious. Of course, this culture of vicious dehumanization is bipartisan. But in the election of 2016, our side outdid itself. It helps if you ascribe the absolute worst motives to your opponents, traffic in outlandish conspiracy theories, abandon reason and any old-fashioned notions of the common good, and have an unquenchable appetite for destruction.


pages: 145 words: 41,453

You Are What You Read by Jodie Jackson

delayed gratification, Filter Bubble, framing effect, Hans Rosling, Mahatma Gandhi, Nelson Mandela, New Journalism, race to the bottom, Steve Jobs, Steven Pinker, yellow journalism

In this pursuit of profit, organisations churn out stories in order to appear on the first page of search engines like Google. They can publish content based on search engine algorithms that favour sites with large amounts of up-to-date and relevant information. This means content staff at some organisations are expected to write between five and ten articles a day. The race to the top of search engines has inadvertently led to a race to the bottom in terms of quality journalism. Stories are decided on based on their ‘traffic potential, revenue potential, turnaround time and at the bottom of the list editorial quality’.6 We have seen the same phenomenon in the UK. The Daily Mail has achieved a readership of 31.1 million readers a month, making it the number-one news organisation in the UK in terms of readership. However, much of its news is not actually quality news.


pages: 188 words: 40,950

The Case for Universal Basic Income by Louise Haagh

back-to-the-land, basic income, battle of ideas, Bertrand Russell: In Praise of Idleness, bitcoin, blockchain, cryptocurrency, delayed gratification, Diane Coyle, full employment, future of work, housing crisis, income inequality, job-hopping, land reform, low skilled workers, Mark Zuckerberg, mini-job, moral hazard, new economy, offshore financial centre, precariat, race to the bottom, rent control, road to serfdom, Silicon Valley, Skype, smart contracts, trickle-down economics, universal basic income

Notably, libertarian basic income supporters also claim basic income is important because it supports individuals’ power to choose in a continual form, and in this sense adhere to a (delimited) form of humanist commitment.15 On the other hand, as argued in chapter 1, humanism may still be at risk if basic income is understood in terms of an otherwise minimal welfare state. As an example, World Bank advocates of market equilibrium economics have turned recently to argue for a ‘revenue neutral switch from existing welfare programs to a basic income’ of a global ‘basic income capitalism’ variety.16 In this case, offering basic income as a poverty remedy in the context of the global ‘race to the bottom’17 places basic income strategically as a compensatory redistributive policy in a context of low-skill, fragmented employment, and debt-finance of welfare and services.18 The humanism within basic income is put to the service of an economic agenda that is not humanist in orientation or application. Human Development and Humanist Justice Addressing the above problems, I want to explore how an institutional perspective, backed up by research on human motivation and health, supplements the well-known human development approach (HDA), in such a way that basic income can be defended within this paradigm.


pages: 460 words: 122,556

The End of Wall Street by Roger Lowenstein

Asian financial crisis, asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Black Swan, break the buck, Brownian motion, Carmen Reinhart, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fear of failure, financial deregulation, fixed income, high net worth, Hyman Minsky, interest rate derivative, invisible hand, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, Martin Wolf, money market fund, moral hazard, mortgage debt, negative equity, Northern Rock, Ponzi scheme, profit motive, race to the bottom, risk tolerance, Ronald Reagan, Rubik’s Cube, savings glut, short selling, sovereign wealth fund, statistical model, the payments system, too big to fail, tulip mania, Y2K

Perhaps as a form of insurance for some cataclysm to come, Mozilo granted sweetheart mortgages (on preferred terms) to a host of political and business luminaries.b11 But his company appeared to be thriving. From ’00 to ’04, Countrywide’s share price nearly quadrupled, and over the ensuing few years Mozilo personally reaped $474 million in stock sales.12 Mortgage banking inevitably produces a race to the bottom. Thanks to competitive pressures, bad loan practice drives out good, and Mozilo’s influence on the industry was considerable. The only way for rivals to compete was to go after the same business as Countrywide. Washington Mutual, a century-old Seattle-based thrift, had more conventional banking bloodlines, but in the new century it experienced a rebirth. WaMu had been run since 1990 by Kerry Killinger, a Des Moines music teacher’s son who, as a student at the University of Iowa, had fixed up houses to build his capital.13 He parlayed his profits into a career as a securities analyst with a small investment firm, which WaMu acquired in 1982.

See collateralized debt obligations (CDOs) cooling of market for credit rating agencies and example of fall in prices of foreign-held Goldman Sachs and growth of insurance claims on Lehman Brothers and Merrill Lynch and mortgage bubble and payment waterfall prime risk taking and subprime mortgages and swimming pool metaphor for total amount floated in mortgage banking, as race to the bottom mortgage bubble banking regulators and banks’ late stage desperation in bursting of Citigroup and credit and developing disaster, evidence of Federal Reserve’s role in Freddie Mac and Fannie Mae and mass hallucination in Merrill Lynch and mortgage securitization and reasons for ripple effect of Wall Street and Washington Mutual and mortgage lenders. See also specific lenders closings of nonbank mortgages/mortgage debt adjustable rate.


pages: 424 words: 121,425

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

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

Inflationary pressures caused the initial deregulation of interest rates by the states, but it was a Supreme Court decision that ultimately eradicated real interest rate caps in the country. In Marquette National Bank v. First Omaha Service Corporation, the Supreme Court said that a credit card lender could export the interest rates of one state to any other. Banks immediately lobbied for and were granted the same privilege. Predictably, lenders began to charter in states with the highest rates, which they then exported nationwide. This in turn caused a “race to the bottom” as states competed for lending businesses by lowering borrower protections and increasing usury limits.32 The U.S. Supreme Court case allowing rates to be exported did not apply to payday lenders because the industry was not prevalent at the time. However, payday lenders were able to quickly take advantage by “borrowing” bank charters, a practice dubbed “rent-a-bank,” in order to “benefit” from high interest rates.

These drastic errors took on a life of their own, and instead of being quickly corrected, have been cited by every single scholar or policymaker who blamed the CRA for the financial crisis. Although it may be absurd to implicate the CRA, is there any truth in blaming the weaker underwriting standards espoused by both the Clinton and the Bush administrations? The claim is that in an effort to increase home lending to low-income and middle-class borrowers, policymakers allowed the GSEs Fannie Mae and Freddie Mac to lower standards for mortgages and created a race to the bottom that other mortgage buyers were all too willing to join. This increased mortgage lending in general and exacerbated the bubble. However, these lowered standards did not create the subprime market, which was the main cause of the financial crisis. Again, policymakers started pushing these initiatives in the 1990s—well before the subprime market heated up. In fact, the GSEs’ market share of mortgages went from 50 percent to 30 percent from 2002 to 2005.


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

When reward depends primarily on relative performance, unrestricted choices by rational individuals often yield results that no one favours. To explain why, Frank (2005b) uses the example of hockey players. In an unregulated competitive situation, an individual player would prefer not to wear a helmet since it confers an advantage over those players wearing helmets – the better vision and hearing more than compensate for the increased risk of injury. But if all players go without helmets, it’s a race to the bottom – everyone faces more risk and no one benefits. That’s why, when they vote in secret ballots, hockey players almost always favour compulsory helmets. As we document in Chapter 4, abundant evidence has shown that relative income is an important determinant of well-being – for fairness and status reasons among others. Even people who don’t care about relative income per se have powerful reasons for caring where they stand in the distribution of income.

This is most relevant for developing countries that produce raw materials and for some oil-producing countries. But are tariffs that create a high-cost domestic industry the answer? Perhaps a country could promote other kinds of exports (e.g. tourism, education and other services) through investments in education and infrastructure. Since we can’t compete against low-wage foreign labour, tariffs prevent a ‘race to the bottom’ Textbooks argue that this is also false. High-wage countries sell goods to low-wage countries (and vice versa), so clearly it’s possible to ‘compete’ against low-wage labour. Comparative advantage shows that it is relative, not absolute, costs which matter for the ability to trade. Wage differences reflect productivity differences, as we saw in the ‘textbook’ part of Chapter 8.2 1.6 The global trading system Countries make agreements among themselves about trade policy.


pages: 154 words: 47,880

The System: Who Rigged It, How We Fix It by Robert B. Reich

affirmative action, Affordable Care Act / Obamacare, Bernie Madoff, Bernie Sanders, business cycle, clean water, collective bargaining, corporate governance, corporate raider, corporate social responsibility, Credit Default Swap, crony capitalism, cryptocurrency, Donald Trump, ending welfare as we know it, financial deregulation, Gordon Gekko, immigration reform, income inequality, Jeff Bezos, job automation, London Whale, Long Term Capital Management, market fundamentalism, mass incarceration, mortgage debt, Occupy movement, Ponzi scheme, race to the bottom, Robert Bork, Ronald Reagan, shareholder value, too big to fail, trickle-down economics, union organizing, women in the workforce, working poor, zero-sum game

Because only 6.4 percent of today’s private-sector workers are unionized, most employers do not have to match union contracts—which puts unionized firms at a competitive disadvantage. As I’ve noted, public policies have enabled and encouraged this systemic change. More states have adopted so-called right-to-work laws. The National Labor Relations Board, understaffed and overburdened, has barely enforced collective bargaining. The result has been a race to the bottom. Given these changes in the system, it’s not surprising that corporate profits have increased as a portion of the total economy while wages have declined. Those whose income derives directly or indirectly from profits—corporate executives, Wall Street traders, and shareholders—have done exceedingly well. Those dependent on wages have not. The underlying problem is not that most Americans are worth less than they had been or that they have been living beyond their means.


pages: 422 words: 131,666

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

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

The credit column of the corporate balance sheet remains intact. Those on the other side of the trade have little choice in the matter. They are debtor nations, whose loans have been restructured by an IMF with only corporate interests or misapplied international trade theories in mind. A free-trade landscape sloped to the interests of corporate colonialism leads to what progressive economists call a “race to the bottom.” Nations compete to offer the best prices and the fewest obstacles for corporations to come set up shop. If this means preventing unions from forming, lowering environmental standards, or even subsidizing the construction of factories, so be it. With no minimum standards established between them or through international regulation, whoever stoops the lowest wins the contract. This downward leveling supports the West’s consumption via credit while inhibiting local production of goods by developing nations for their own use.

The cost of basic staples like food and clothing go up, as local consumers are now forced to compete against those in much wealthier nations for the same products. The net result is that the disparity of wealth and standards of living between the rich and poor nations gets worse, not better. People living in the developing world might take heart in the fact that corporate colonialism no longer distinguishes between the localities it undermines. The phrase “race to the bottom” was first used, in fact, by Supreme Court Justice Louis Brandeis in 1933 to describe the way American states were falling over themselves to attract corporate business. Just like developing nations undercutting each other’s labor and environmental interests to win factory contracts, U.S. states were busy rewriting their charters and laws to the benefit of companies who incorporated there.


pages: 515 words: 132,295

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

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

Shifting to a tax code that doesn’t give debt such preferential treatment would be a great way to shift the buyback dynamic, and this is a topic I will cover in much more depth in chapter 9. Cracking down on overseas tax havens and closing corporate loopholes is another obvious measure that’s long overdue. This is especially true given the fact that most other G8 nations are considering similar proposals, which would help offset some of the threat of a corporate race to the bottom, in which corporations offshore to the most attractive tax havens. Similarly, taxing capital gains on a sliding scale, with higher rates for shorter holding periods and lower rates for longer ones, could discourage the seekers of quick gains from distorting the markets. (Bonus pay might also be spread out over time and linked not to share prices but to real business performance, something that a number of firms are beginning to experiment with.)

Basically, this strategy funnels the profits from the knowledge economy, where the innovation actually occurred, to a different economy that offers the cheapest cash haven. Firms can go further and add a “Dutch sandwich” onto this maneuver. Because there are European Union tax agreements in place that allow money to move freely between EU countries, American firms can set up Dutch subsidiaries and transfer more money from more countries into Irish subsidiaries. The whole thing creates a global race to the bottom, which underscores one of the key problems of tax avoidance: the so-called “tragedy of the commons” where, in the end, everyone loses. This is a key reason that the G8, the OECD, and other international bodies are making global tax reform a big priority. (Ireland in particular, under pressure from other countries like the United States, is now reconsidering some of its dicey exceptions.)13 There are plenty of crazy exemptions and rules that enrich the takers by encouraging debt in the consumer sphere, too.


pages: 504 words: 129,087

The Ones We've Been Waiting For: How a New Generation of Leaders Will Transform America by Charlotte Alter

"side hustle", 4chan, affirmative action, Affordable Care Act / Obamacare, basic income, Berlin Wall, Bernie Sanders, carbon footprint, clean water, collective bargaining, Columbine, corporate personhood, correlation does not imply causation, Credit Default Swap, crowdsourcing, David Brooks, Donald Trump, double helix, East Village, ending welfare as we know it, Fall of the Berlin Wall, feminist movement, Ferguson, Missouri, financial deregulation, Francis Fukuyama: the end of history, gig economy, glass ceiling, Google Hangouts, housing crisis, illegal immigration, immigration reform, income inequality, Intergovernmental Panel on Climate Change (IPCC), job-hopping, Kevin Kelly, knowledge economy, Lyft, mandatory minimum, Marc Andreessen, Mark Zuckerberg, mass incarceration, McMansion, medical bankruptcy, move fast and break things, move fast and break things, Nate Silver, obamacare, Occupy movement, passive income, pre–internet, race to the bottom, RAND corporation, Ronald Reagan, sexual politics, Silicon Valley, single-payer health, Snapchat, TaskRabbit, too big to fail, Uber and Lyft, uber lyft, universal basic income, unpaid internship, We are the 99%, white picket fence, working poor, Works Progress Administration

more than a dozen schools: National Association for College Admission Counseling, chart provided to the author. in the next five years: National Center for Education Statistics, Fast Facts, “Enrollment,” nces.ed.gov/fastfacts/display.asp?id=98. the American Council on Education: Thomas G. Mortensen, “State Funding: A Race to the Bottom,” American Council on Education, Winter 2012, acenet.edu/the-presidency/columns-and-features/Pages/state-funding-a-race-to-the-bottom.aspx. over the same period: “25 Years of Declining State Support for Public Colleges,” The Chronicle of Higher Education, March 3, 2014, chronicle.com/interactives/statesupport. acceptance letters said yes: National Association for College Admission Counseling, charts provided to the author. average of eighty-seven every day: New England Center for Investigative Reporting and American Institute for Research: hechingerreport.org/ranks-of-nonacademic-staffs-at-colleges-continues-to-outpace-enrollment-faculty/.


Stacy Mitchell by Big-Box Swindle The True Cost of Mega-Retailers, the Fight for America's Independent Businesses (2006)

big-box store, business climate, business cycle, clean water, collective bargaining, corporate personhood, European colonialism, Haight Ashbury, income inequality, inventory management, invisible hand, Jane Jacobs, low skilled workers, Maui Hawaii, Menlo Park, new economy, New Urbanism, price discrimination, race to the bottom, Ray Oldenburg, RFID, Ronald Reagan, The Chicago School, The Death and Life of Great American Cities, The Great Good Place, union organizing, urban planning, women in the workforce, zero-sum game

Chamber of Commerce, which espouses the virtues of small business but pushes a policy agenda that strongly favors large corporations. For years, local businesses have largely aligned themselves with this agenda, endorsing the idea of a single, unified pro-business politics. But that alignment is beginning to break apart, as more local business owners see little future for themselves in a world of race-to-the-bottom labor and environmental standards that reward footloose global mobility and penalize community roots. “We want to see hundreds of Independent Business Alliances across the country,” said Milchen. “Ultimately, the goal is to create a national shift in the culture and a challenge to the assertion that what’s good for transnational corporations is good for America.” There is nothing inevitable about the decline of locally owned businesses.

“Home Depot Campaign Bucks,” Sprawl-Busters Newsflash, Feb. 4, 2000; Dan McGillvray, “$174,000 Helped Augusta Crossing Win,” Kennebec Journal, July 15, 2005; Rachel Peterson, “Wal-Mart Spent Triple Its Prop. 100 Foes,” Arizona Daily Sun, June 19, 2005; Mark Shaƒer, “Wal-Mart Backers Win a Squeaker in Flagstaƒ,” Arizona Republic, May 18, 2005. 17. See Liza Featherstone’s insightful article on Wal-Mart’s racial politics, “Race to the Bottom,” Nation, Mar. 28, 2005. John McGettrick, interview, Sept. 18, 2005. For more on Ikea in Red Hook, see longtime urban advocate Mary Campbell Gallagher’s excellent blog at www.bigcitiesbigboxes.com. Mark N. Ramirez, “ ‘Big-Box’ Stores: A Matter of Class?” Bennington Banner, Mar. 30, 2005; Meg Campbell, member of Citizens for a Greater Bennington, interview, Apr. 7, 2005. 292 NOTES 18. “Council Gives In to Wal-Mart,” Grand Island Independent, Jan. 30, 2004; Michael Melio, interview, Jan. 24, 2006; Peggy McGehee, attorney for Westbrook Our Home, e-mail communication, June 26, 2005. 19.


Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

Airbnb, Albert Einstein, algorithmic trading, barriers to entry, cloud computing, collaborative economy, commoditize, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, demand response, disintermediation, disruptive innovation, double helix, Downton Abbey, Erik Brynjolfsson, experimental economics, Firefox, framing effect, Google Chrome, index arbitrage, information asymmetry, interest rate derivative, Internet of things, invisible hand, Jean Tirole, John Markoff, Joseph Schumpeter, Kenneth Arrow, light touch regulation, linked data, loss aversion, Lyft, Mark Zuckerberg, market clearing, market friction, Milgram experiment, multi-sided market, natural language processing, Network effects, new economy, offshore financial centre, pattern recognition, prediction markets, price discrimination, price stability, profit maximization, profit motive, race to the bottom, rent-seeking, Richard Thaler, ride hailing / ride sharing, road to serfdom, Robert Bork, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, supply-chain management, telemarketer, The Chicago School, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, Travis Kalanick, turn-by-turn navigation, two-sided market, Uber and Lyft, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, women in the workforce, yield management

This third-party vendor’s “platform analyzes over 100 discrete data points per SKU, including competitors’ prices” to help “retailers re-price millions of products in real-time.”13 Boomerang “makes soft ware that online retailers use to evaluate competitors’ pricing on similar goods, and then analyze a variety of factors to decide when to match prices, or drop them lower or push them higher than a competitors’.”14 Among Boomerang’s customers are Staples, Sears, and Groupon Goods.15 Boomerang also promotes how its clients can avoid an algorithm-fueled price war: A new upstart, Jet.com, is building an online product cata logue with 30 million-SKUs and has pledged to underprice Amazon. What does Hub and Spoke 49 this mean to you? An opportunity to take control of your pricing, and turn a destructive “Race to the Bottom” pledge into a level playing field where you can compete. Amazon’s pricing machine will surely match Jet.com’s aggressive prices to prevent customer churn. For retailers, blindly matching prices is not an answer. Top 100 retailers are utilizing Boomerang’s innovative pricing technology to develop real-time pricing strategies to compete and grow profits.16 No one accuses Boomerang or its clients of fi xing prices.

Our concerns go deeper, to the core of the new market dynamics—where entry is possible, but expansion will likely be controlled by super-platforms; where choice is ample, but competition is limited; and where disruptive innovative threats emerge, but are eliminated through acquisitions or exclusionary practices. The competitive façade masks the wealth transfer, and the targets of anticompetitive practices—the buyers—are often unaware of the extent of the manipulation. Thus, the competition agency must look beyond the façade to see whether competitors are racing to the bottom in finding new ways to exploit us. So while technology can increase price transparency (which should be a good thing as it lowers consumers’ search costs), the pricing algorithms at times can foster tacit collusion—when sellers’ pricing algorithms, by quickly reacting to price changes, diminish the incentive to discount. If market participants’ algorithms can attain a God View, then enforcers must consider the possibility of tacit collusion beyond price and highly concentrated industries.


pages: 515 words: 143,055

The Attention Merchants: The Epic Scramble to Get Inside Our Heads by Tim Wu

1960s counterculture, Affordable Care Act / Obamacare, AltaVista, Andrew Keen, anti-communist, Apple II, Apple's 1984 Super Bowl advert, barriers to entry, Bob Geldof, borderless world, Brownian motion, Burning Man, Cass Sunstein, citizen journalism, colonial rule, East Village, future of journalism, George Gilder, Golden Gate Park, Googley, Gordon Gekko, housing crisis, informal economy, Internet Archive, Jaron Lanier, Jeff Bezos, jimmy wales, Live Aid, Mark Zuckerberg, Marshall McLuhan, McMansion, Nate Silver, Network effects, Nicholas Carr, placebo effect, post scarcity, race to the bottom, road to serfdom, Saturday Night Live, science of happiness, self-driving car, side project, Silicon Valley, slashdot, Snapchat, Steve Jobs, Steve Wozniak, Steven Levy, Ted Nelson, telemarketer, the built environment, The Chicago School, the scientific method, The Structural Transformation of the Public Sphere, Tim Cook: Apple, Torches of Freedom, Upton Sinclair, upwardly mobile, white flight, zero-sum game

But among those less secure in their prospects, revealing embarrassments or personal failings, appearing less than fully clothed on red carpets, and sometimes engaging in even more extreme exhibitionism would be the secret to besting their rivals in a zero-sum game. What People ultimately created was a platform for attracting attention through self-revelation that remained something short of tawdry, a kind of self-flaunting for the polite mainstream. Both People and the celebrity attention merchants have continued to gain from the new confessional culture, since the fans can never get enough. Once the race to the bottom had begun, it was nigh impossible to return to the old status quo—being a celebrity in the new sense now meant telling all, or facing the consequences. People was important in and of itself, but also for what it spawned, directly and indirectly. Profits drew imitators, as they inevitably do; in 1977, even the New York Times Company could not resist launching Us Weekly, a close copy of People.

While not the beginning of celebrity or celebrity culture, People was nevertheless a turning point in both, the start of the “celebrification” of the entire mainstream, including, as we shall see, the lives of many with no reasonable basis for expecting to become famous. Some would experience this as fulfilling the promise of a better life through technology, others as the logical extreme of a race to the bottom begun by the penny papers in the nineteenth century. * * * *1 Liebling also complained about the Grey Lady’s politics at the time, saying that the Times was “a political hermaphrodite capable of intercourse with conservatives of both parties at the same time.” *2 In its first decade, Time hastily declared Mussolini a “virile, vigorous” man of “remarkable self control, rare judgement, and an efficient application of his ideas to the solving of existing problems.”


pages: 165 words: 48,594

Democracy at Work: A Cure for Capitalism by Richard D. Wolff

asset-backed security, Bernie Madoff, business cycle, collective bargaining, Credit Default Swap, declining real wages, feminist movement, financial intermediation, Howard Zinn, income inequality, John Maynard Keynes: technological unemployment, laissez-faire capitalism, means of production, moral hazard, mortgage debt, Occupy movement, Ponzi scheme, profit maximization, quantitative easing, race to the bottom, Ronald Reagan, too big to fail, trickle-down economics, wage slave, women in the workforce, Works Progress Administration

Less developed countries, even more than the developed ones, need secure, stable jobs in enterprises that do not maneuver to get exemptions from regulations concerning wages, working conditions, and the environment. If a genuine commitment exists to assisting economic development in the places that need it most, the WSDE model would be far preferable to facilitating capitalist competition and its “race to the bottom” among all economies. 10.4 WSDEs and the State: Political Flows Earlier in this book (in section 7.1), I distinguished one kind of worker inside an enterprise, whose labor produces a surplus, from another kind whose labor enables the production of surpluses. I illustrated the distinction by comparing the software workers who produce new games with the cleaners who tidy up the workspace each evening.


pages: 167 words: 50,652

Alternatives to Capitalism by Robin Hahnel, Erik Olin Wright

affirmative action, basic income, crowdsourcing, inventory management, iterative process, Kickstarter, loose coupling, means of production, Pareto efficiency, profit maximization, race to the bottom, transaction costs

But the cost reduces to spending some extra time and resources to set up a judicial procedure to settle foreseeable disputes over membership in communities of affected parties. There is actually one other “cost”—although I think Erik will agree with me that it is actually not a “cost” but a “benefit.” Our mechanism doesn’t work if communities have significantly different incomes because it would lead to a race to the bottom effect where pollution was unfairly and inefficiently located nearer poor communities. Only in a highly egalitarian economy such as the participatory economy we propose does it appear possible to design a mechanism that reveals accurate quantitative estimates of the damage from pollution. Risk and Innovation Any group of workers who can submit a proposal during the planning procedure that is approved as socially responsible, i.e. whose social benefit to cost ratio is at least one, will receive the inputs it requests to start producing when the year begins.


pages: 198 words: 52,089

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

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

His conclusion is that in a free market, merit aid has become a discount used to attract the “right kind” of student—that is, the kind with parents that can pay full tuition.27 In the 1980s, as Burd tells it, some schools realized that they could steal good, wealthy applicants away from other schools by offering them modest amounts of financial aid (around $2,000–$5,000 a year). At first, this worked. The schools would throw out some breadcrumbs and attract wealthy students who basically paid full price. The problem is that this inevitably becomes a race to the bottom. Here is Burd’s example: If a school offers a single low-income student a full scholarship of $20,000, the school may feel good about itself, but it’s out $20,000. But if it can attract four affluent students to its campus instead, by offering them each a $5,000 discount off full tuition, it can collect the balance in revenue and come out way ahead financially. Such competitive discounting to the affluent may not be equitable, and it may not be sustainable over the long term, but once the cycle starts it can be very difficult for any one institution to resist unless they all do.


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

After all, gay couples might be more likely to choose to reside—and do business—in states that allow such marriages than in states that do not. Under Enrich’s theory, this too would unfairly “tilt” the “playing field” by pressuring noncomplying states to legalize such marriages.35 Concerns about a “race to the bottom,”36 wherein states would cut taxes and decrease regulations to attract businesses, are overblown. States face a natural disincentive to enact reckless tax policies: such 181 The Right to Earn a Living policies cost them revenue. This counteracts pressures to lower taxes in ways that harm the general public. In fact, forbidding states to “divert” interstate commerce would create the opposite of a race to the bottom, namely, a “ratchet” effect under which states would be free to raise, but not to lower, taxes; to increase, but not to decrease, their regulatory burdens. States would not be allowed to implement policies that might draw businesses or citizens away from neighboring states.


pages: 570 words: 158,139

Overbooked: The Exploding Business of Travel and Tourism by Elizabeth Becker

airport security, Asian financial crisis, barriers to entry, Berlin Wall, BRICs, car-free, carbon footprint, clean water, collective bargaining, colonial rule, computer age, corporate governance, Costa Concordia, Deng Xiaoping, European colonialism, Exxon Valdez, Fall of the Berlin Wall, Frank Gehry, global village, happiness index / gross national happiness, haute cuisine, indoor plumbing, Kickstarter, Masdar, Murano, Venice glass, open borders, out of africa, race to the bottom, Ralph Nader, Scramble for Africa, Silicon Valley, statistical model, sustainable-tourism, the market place, union organizing, urban renewal, wage slave, young professional, éminence grise

And in our case, what we are able to do is, we are able to generate fantastic opportunities for people from a variety of countries around the world. “Typically what they are able to earn from us is significantly greater than what they are earning if they would have stayed where they were,” Goldstein said. “So our view, not surprisingly, is that we provide fantastic employment opportunities to people from around the world that would not otherwise exist.” Goldstein’s argument is what academics call the “race to the bottom” justification, a throwback to the early twentieth century before societies mandated minimum wages, improved labor conditions and the right to collective bargaining. While those rights were codified in national laws and are enforced within national boundaries, they are laws that the cruise companies can ignore. Twenty years ago cruise ship wages would have been a decent sum, especially for highly motivated people trying to escape abject poverty.

., 285 poachers, 214, 218, 219–21, 222, 239 China and, 234–35 pollution: air, 38, 71, 82, 85, 163–64, 332–33, 338 from air travel, 38, 354 in Bali, 197 in China, 302, 332–33, 338, 340 from cruise ships, 20, 30, 34, 82, 85, 134, 156–64 in Dubai, 196–97 fresh water, 98, 104, 302 ocean, 20, 34, 156–63, 196–97 Polo, Marco, 23 Pol Pot, 108 Pope, Adam, 233 population growth, tourism and, 38 Poretz, Donald and Susan, 294 Pouillon, Olivier, 197 poverty reduction, tourism and, 19–20, 35, 230, 376, 390 Pran, Dith, 87, 92 preservation, development vs., 111–12, 184–85, 326–27, 339, 340 Prestige oil spill, 158 Pritchett, V. S., 28 Pritzker family, 134 public relations, blurred lines between travel writers and, 26–27, 30, 31–32, 33 Qatar, 172 Qin Shi Huang Di, 331 Qiu Xialolong, 326 Quai Branly Museum, 56 Quakers, in Costa Rica, 253–54 Quest, Richard, 173, 193 “race to the bottom,” 145 Raffles Hotels, 90–91 Rainforest Alliance, 264 rainforests, 246, 258, 271 Rainier, Mount, 346 Rajapaksa, Mahinda, 278 Rashid Al-Maktoum, Sheikh, 171, 172 Razan Khalifa Al Mubarak, Princess, 197–98 Reid, Harry, 362 Renaissance Hotel Group, 313 Reno, Janet, 159 Republican Party: government spending on tourism opposed by, 352–53, 365, 367 in 2012 election, 366–67 Resorts World Sentosa, 113 retirees: in France, 72–73 as tourists, 18, 37 rhinos, threatened extinction of, 221 Rialto Bridge, Venice, 78–79 Rice, Condoleezza, 273 Ridge, Tom, 359 Riklis, Meshulam, 136 Riley, Richard, 199 Rio de Janeiro, Brazil, 276 as 2016 Olympics host, 273, 276, 362 Risi, Marcelo, 34, 35 Road of Lost Innocence, The (Mam), 117 Robb, Graham, 51 Robinson, James, III, 14–15, 270 Rome, pilgrimages to, 182 Romero, Oscar, 254 Romney, Mitt, 367 Roosevelt, Franklin D., 354, 384 Roosevelt, Theodore, 239, 384 Roots (Haley), 242–43 “Roots” tours, 242–44 Roth, Toby, 352 Rough Guide to the World (TV show), 271 Rousseff, Dilma, 365 Royal Caribbean International, 125, 128, 130, 134, 136, 140–41, 143, 151, 247, 256, 257 art sales lawsuit against, 148 Diamonds International and, 128, 149–50 illegal waste water dumping by, 158–59 ship registry of, 140 waste treatment systems of, 161 Rushmore, Mount, 345 Ruskin, John, 82 Saadiyat Island, 191 sable (African antelope), 215, 217 safaris, see Africa, national parks in, safaris in St.


pages: 554 words: 158,687

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

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

In particular, the tendency of the euro to rise against the dollar in the 2000s has benefited the German financial sector but also German industrial capital by facilitating its relocation across Europe.48 FIG. 5 Evolution of nominal unit labour costs in the eurozone A striking feature of the development of the eurozone has been the emergence of a division between core and periphery, the latter including at least Spain, Portugal, Ireland, and Greece.49 The split between core and periphery has emanated from a ‘race to the bottom’ in eurozone labour markets. Member countries have been obliged to adopt a common monetary policy determined by the European Central Bank, while the exercise of fiscal policy has been severely restricted by the Stability and Growth Pact, setting limits on budget deficits at 3 percent of GDP and national debt at 60 percent of GDP. Even though the pact has been frequently breached, it has still operated as a straitjacket on fiscal policy. Given the rigidity of monetary and fiscal policy, member countries have been encouraged to apply pressure on labour wages and conditions in order to generate competitiveness in the internal eurozone market. FIG. 6 Eurozone current account balances as percentage of GDP The ‘race to the bottom’ has been won by German capitalists who have succeeded in keeping wage growth low as well as creating entire areas devoid of trade union organization in both the old East and West Germany.


pages: 668 words: 159,523

Coffeeland: One Man's Dark Empire and the Making of Our Favorite Drug by Augustine Sedgewick

affirmative action, Alfred Russel Wallace, British Empire, business cycle, California gold rush, collective bargaining, European colonialism, family office, Fellow of the Royal Society, Food sovereignty, Frederick Winslow Taylor, Honoré de Balzac, imperial preference, Joan Didion, Johann Wolfgang von Goethe, land reform, land tenure, Louis Pasteur, mass immigration, Monroe Doctrine, Philip Mirowski, race to the bottom, refrigerator car, the scientific method, The Structural Transformation of the Public Sphere, trade route, wage slave, women in the workforce, working poor, zero-sum game

The cases that came across his desk made him wonder why the California landscapes that looked so placid produced such bitter conflict between employers and employees. McWilliams began to “spend long hours in the library” and “make forays into the San Joaquin Valley to see . . . just what went on in the fields and in the labor camps.” There, beneath the surface of that “quiet word,” agriculture, he found a clamorous “large-scale, intensive, diversified, mechanized” race to the bottom. In his 1939 book Factories in the Field, McWilliams described how, beginning around 1870, after the California gold rush had slowed down, a new class of “industrial agriculturalists” took over California’s land and economy. They made water flow backward, conjured gardens from wastelands, and in the process became as rich as sheikhs. The source of their extraordinary power and wealth was a “miserable . . . intimidated . . . starving, destitute” army of migrant laborers, the latest group of new arrivals always pitted against the previous.

In August 1932, six months after a harvest cut short by an attempted revolution and its genocidal suppression, in the middle of the worst year of the worst global economic crisis in the history of the modern world economy, an American diplomat noticed, to his surprise, an “actual increase in the acreage under coffee.”41 This was hardly a logical response to the market. Coffee sales had been very slow, and European sales in particular were vanishingly small, pushing prices even lower and forcing El Salvador to look almost exclusively to the U.S. market.42 Nevertheless, backed by the military dictatorship, Salvadoran coffee planters “chose expansion,” racing to the bottom.43 It was a risky strategy, with no guarantee of profit or personal safety, and not every planter had the resources or stomach for it. Yet while some of his neighbors gave up their plantations during the early years of the Depression, valuing their savings and their lives more than their coffee—and reasonably so, given the fall in prices—James Hill was emboldened by the arrival of the trouble he had predicted.


pages: 214 words: 57,614

America at the Crossroads: Democracy, Power, and the Neoconservative Legacy by Francis Fukuyama

affirmative action, Ayatollah Khomeini, Berlin Wall, Bretton Woods, cuban missile crisis, David Brooks, European colonialism, failed state, Francis Fukuyama: the end of history, Internet Archive, Mikhail Gorbachev, Monroe Doctrine, mutually assured destruction, New Journalism, race to the bottom, RAND corporation, rent-seeking, road to serfdom, Ronald Reagan, Ronald Reagan: Tear down this wall, transaction costs, uranium enrichment, War on Poverty, Washington Consensus

There were, of course, countries like South Korea, Taiwan, and China that took full advantage of globalization to open up export markets and grow. But the other industrialized democracies were comfortable with their welfare states and often saw the American drive to liberalize markets around the world not as a well-intentioned effort to promote reform but as an American attempt to impose its American Exceptionalism own antistatist values on the rest of the world in a "race to the bottom." Much of the drive to Americanize the global economy came out of the private sector and the challenge posed by newly competitive U.S. companies and financial institutions. But American government policy was highly supportive of economic liberalization as well, in ways that generated a backlash that often went unperceived in Washington. The Washington Consensus was a package of orthodox economic liberalization measures that were often attached as conditions to structural adjustment lending packages by international financial institutions like the International Monetary Fund (IMF) and the World Bank for developing countries. 14 Had this type of U.S.


pages: 394 words: 57,287

Unleashed by Anne Morriss, Frances Frei

"side hustle", Airbnb, Donald Trump, future of work, gig economy, glass ceiling, Grace Hopper, Jeff Bezos, Netflix Prize, Network effects, performance metric, race to the bottom, ride hailing / ride sharing, Silicon Valley, Steve Jobs, TaskRabbit, Tony Hsieh, Toyota Production System, Travis Kalanick, Uber for X, women in the workforce

The model reliably generated a list of competitively priced bids for users, who then chose their tasker based largely on price and availability. In the language of strategy, the auction system had the effect of generating value for customers at the top of the value stick by shrinking the surplus of its supplier-taskers. Although magic was happening at the high end of the tasker skill spectrum, where taskers were often well compensated for their expertise, many lower-skilled taskers were being bid down in a race-to-the-bottom to offer the cheapest possible price for their labor. (See figure 5-5.) FIGURE 5-5 The original TaskRabbit value stick It also took a long time for taskers to sort through jobs and find the ones they wanted—taskers spent, on average, two hours a week searching open tasks. The time and pain of dealing with the system were additional burdens, and so while user and tasker numbers were at their highest in 2013, there was some troubling news buried underneath this headline: the company’s fulfillment rate was only 50 percent.


pages: 196 words: 55,862

Riding for Deliveroo: Resistance in the New Economy by Callum Cant

Airbnb, call centre, collective bargaining, deskilling, Elon Musk, future of work, gig economy, housing crisis, illegal immigration, information asymmetry, invention of the steam engine, Mark Zuckerberg, means of production, new economy, Pearl River Delta, race to the bottom, ride hailing / ride sharing, sharing economy, Silicon Valley, strikebreaker, union organizing, Winter of Discontent, women in the workforce

The dominant private platforms, enabled by venture capital, already run at a significant loss in many of their locations in an effort to undermine competitors. Given that a co-op could not call on similar cash reserves, it’s hard to see how it could compete. The results of this twofold pressure might well produce effects that undermine the whole purpose of a cooperative. In order to try to protect the market share of their cooperative, workers would likely accept lower wages, and so get locked into an intractable race to the bottom they were supposed to have escaped. Self-exploitation, not much different from the effects of a piece wage, would be the condition of viability. So, this is the first sticking point of platform cooperativism: on an economic level, it takes no account of competitive pressure. Given that food platforms are already running each other into the ground to dominate a market with no clear profit margins, the opportunities for the development of large co-op competitors seem limited.7 One strategy with extensive historical precedent that might be used to prevent a platform co-op going under in the face of a venture capital-funded onslaught would be an equally aggressive strategy of state intervention.


pages: 222 words: 60,207

Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup by Andrew Zimbalist

airline deregulation, business cycle, carbon footprint, East Village, en.wikipedia.org, full employment, Gini coefficient, income inequality, longitudinal study, Nelson Mandela, New Urbanism, principal–agent problem, race to the bottom, selection bias, urban planning, young professional

See also BBC News, May 30, 2013, and HBO Real Sports, November 19, 2013. 20. Stephanie Baker and Ilya Arkhipov, “Rich Russians Sparring with Putin over $48 Billion Olympics Bet,” Bloomberg.com, November 26, 2013. 21. Thomas Grove, “Special Report: Russia's $50 Billion Olympic Gamble,” Reuters, February 21, 2013. 22. Ed Hula III, “Investment Bank Asks for Bailout on Sochi Losses,” Around the Rings, July 7, 2014. 23. Human Rights Watch, “Race to the Bottom: Exploitation of Migrant Workers ahead of Russia's 2014 Winter Olympic Games in Sochi” (February 6, 2013). 24. Daniel Sandford, “Putin's Olympic Steamroller in Sochi,” BBC News Europe, February 6, 2013. 25. Boykoff, “Celebration Capitalism and the Sochi 2014 Winter Olympics,” p. 56. 26. Nikolas von Twickel, “Sochi Is a Hard Nut to Crack for PR Gurus,” Moscow Times, February 7, 2013. 27.


Global Financial Crisis by Noah Berlatsky

accounting loophole / creative accounting, asset-backed security, banking crisis, Bretton Woods, capital controls, Celtic Tiger, centre right, circulation of elites, collapse of Lehman Brothers, collateralized debt obligation, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, Doha Development Round, energy security, eurozone crisis, financial innovation, Food sovereignty, George Akerlof, God and Mammon, Gordon Gekko, housing crisis, illegal immigration, income inequality, market bubble, market fundamentalism, mass immigration, moral hazard, new economy, Northern Rock, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, South China Sea, structural adjustment programs, too big to fail, trade liberalization, transfer pricing, working poor

African countries should learn from the examples of other southern countries . . . where governments are taking back what was sold off to multinational corporations. The same IFIs are behind the attacks against the state that translated into the destruction of the public sector to the benefit of foreign capital. They imposed the privatisation of stateowned enterprises in the name of ‘private sector development’ and ‘efficiency’. And private sector development required engaging in a race to the bottom in order to attract foreign direct investment (FDI). To that end, African countries raced to sell off state-owned enterprises, mining industries and natural resources. In several countries, there were even ‘ministries of 193 The Global Financial Crisis privatisation’ whose main mission was to sell off some of the most profitable public assets with little positive return for their countries.


pages: 219 words: 62,816

"They Take Our Jobs!": And 20 Other Myths About Immigration by Aviva Chomsky

affirmative action, Bernie Sanders, British Empire, call centre, colonial exploitation, colonial rule, deindustrialization, Donald Trump, European colonialism, full employment, guest worker program, illegal immigration, immigration reform, informal economy, invisible hand, longitudinal study, low skilled workers, mass immigration, mass incarceration, new economy, out of africa, postindustrial economy, race to the bottom, Ronald Reagan, Rosa Parks, structural adjustment programs, The Chicago School, thinkpad, trickle-down economics, union organizing, War on Poverty, Washington Consensus, women in the workforce

Workers in these countries gain in some ways when Nike, Liz Claiborne, or Dell opens a factory there. They gain because jobs are created; but they also lose because the new jobs are dependent on employers’ keeping wages, benefits, and government regulation low. If workers, or governments, start to demand a greater share of the profits, the company can simply close down and move to a cheaper location. This phenomenon creates what some analysts have termed the “race to the bottom.” Workers and governments compete with each other to offer businesses lower taxes, lower wages, and a more “business-friendly environment” in order to attract or preserve scarce jobs. The competition may be more devastating in already poor Third World countries, but it’s going on in the United States as well, as communities pour resources into schemes to attract businesses.2 By maintaining and exploiting global inequalities, the U.S. economic system has managed to create a high-profit/cheap-product model.


pages: 203 words: 63,257

Neutrino Hunters: The Thrilling Chase for a Ghostly Particle to Unlock the Secrets of the Universe by Ray Jayawardhana

Albert Einstein, Alfred Russel Wallace, anti-communist, Arthur Eddington, cosmic microwave background, dark matter, Ernest Rutherford, invention of the telescope, Isaac Newton, Johannes Kepler, Magellanic Cloud, New Journalism, race to the bottom, random walk, Richard Feynman, Schrödinger's Cat, Skype, Solar eclipse in 1919, South China Sea, Stephen Hawking, undersea cable, uranium enrichment

THE HUNT HEATS UP 3 Jens Stoltenberg: Video of the Norwegian prime minister’s speech on the centenary of Amundsen’s arrival at the South Pole is available at www.telegraph.co.uk/news/worldnews/antarctica/8956091/100th-anniversary-of-Roald-Amundsen-reaching-South-Pole-is-honoured.html. The Antarctic Sun reports on the celebration are at http://antarcticsun.usap.gov/features/contentHandler.cfm?id=2555 and http://antarcticsun.usap.gov/features/contenthandler.cfm?id=2554. 3 centenary of Amundsen: There are many excellent books on Antarctic exploration, and The New York Times published an article titled “Amazing Race to the Bottom of the World” by John Noble Wilford on December 12, 2011, to mark the centenary. 4 I went to Antarctica: See my article “The Meteorite Hunters” in the November/December 2011 issue of Muse magazine (Chicago: Carus Publishing Company; www.musemagkids.com). 6 small flags that: Francis Halzen kindly sent me photographs taken by his colleagues so that I could see what IceCube looked like on the Amundsen centennial. 6 IceCube: Description of IceCube is based, in part, on a telephone interview with Francis Halzen conducted by the author on December 12, 2011, and on material on the project website at http://icecube.wisc.edu/. 6 phototubes: Though I have used the term “phototube” for simplicity, in fact these are photomultiplier tubes (PMTs for short); incident light generates an electric current in the PMT, which is then amplified up to tens of millions of times to make the detection easier. 8 “If you’re trying”: This Janet Conrad quote is from a telephone interview conducted by the author on March 4, 2013. 8 Boris Kayser: Quotes are from a telephone interview conducted by the author on August 9, 2012. 9 Hitoshi Murayama: Quotes are from a Skype interview with the author on March 28, 2012. 10 Klaatu: Lyrics of their song “Little Neutrino” are available at www.klaatu.org/lyrics/347est_lyrics.html. 10 popular sitcom: Quotes are from the fourth episode, titled “The Griffin Equivalency,” of the second season of The Big Bang Theory. 11 OPERA: The initial CERN press release and the subsequent updates are available at http://press.web.cern.ch/press-releases/2011/09/opera-experiment-reports-anomaly-flight-time-neutrinos-cern-gran-sasso. 11 “If the Europeans”: Quoted from Michael D.


pages: 221 words: 55,901

The Globalization of Inequality by François Bourguignon

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

The difficulty here comes less from competition with emerging countries than from competition with other de- 188 Conclusion veloped countries. Given the deep transformations taking place in rich countries, in the midst of the deindustrialization brought on by emerging economies, each country is attempting to garner the maximum number of advantages to itself in the sphere of international competition. It is this competition that threatens to provoke a “race to the bottom” in terms of redistribution. It is out of concern for remaining competitive with respect to other developed countries that certain countries have tried to moderate wage increases and social protection, while encouraging entrepreneurship and innovation by cutting their tax rates relative to their neighbors. Aside from the areas in which states still have some autonomy, the question arises as to whether the fight against inequalities should be a common undertaking, rather than the initiative of isolated countries.


pages: 239 words: 62,311

The Next Factory of the World: How Chinese Investment Is Reshaping Africa by Irene Yuan Sun

barriers to entry, Bretton Woods, capital controls, clean water, Computer Numeric Control, deindustrialization, demographic dividend, Deng Xiaoping, Donald Trump, European colonialism, floating exchange rates, full employment, global supply chain, invisible hand, job automation, low skilled workers, M-Pesa, manufacturing employment, means of production, mobile money, post-industrial society, profit motive, purchasing power parity, race to the bottom, RAND corporation, Ronald Reagan, Shenzhen was a fishing village, Silicon Valley, Skype, special economic zone, structural adjustment programs, Triangle Shirtwaist Factory, union organizing, Washington Consensus, working-age population

… Taken all together—the pressure and worry about global competition on one side, thin regulations and enforcement capacity on the other—the result is a combustible state of affairs that poses acute dangers to the health and well-being of Africans. Global competition tempts countries to give foreign investors ever more incentives to invest—tax holidays for attracting firms to special economic zones are a favorite these days—and possibly to not look too closely when labor or environmental incidents occur. This raises the specter of a sort of race to the bottom—that with the arrival of each new factory, labor and environmental standards will lower, and the benefits to receiving countries will decrease. And attracting and keeping foreign investors takes government officials an enormous amount of time, stealing scarce human capital from other important tasks, such as investigating troubling incidents or even designing smart regulations to prevent such incidents in the future.


pages: 220 words: 64,234

Fewer, Better Things: The Hidden Wisdom of Objects by Glenn Adamson

big-box store, blood diamonds, blue-collar work, Buckminster Fuller, carbon footprint, crowdsourcing, dematerialisation, dumpster diving, haute couture, informal economy, Jacquard loom, Joseph-Marie Jacquard, Mason jar, race to the bottom, trade route, white flight

He has an interesting response to this question: “I think people do like good materials. But we’re in a time when the constraints of production and the scaling up that our industries require don’t leave much room for fineness, or actually that much interest, in the fabric.” When price competition drives down the cost of upholstery fabric to seven dollars per yard, it doesn’t allow someone like Bodenner much room to operate. This race to the bottom has left most people without much experience of good cloth, such as people a century or two ago would certainly have had. “We have left a more careful consideration of materials behind, for price and production speed,” he says. “However, I think we miss it. I think people want it back—they just don’t have it.” Chapter 7 LEARNING BY DOING Here’s a thought experiment: Imagine that the skill of playing the violin had died out long ago and been forgotten, and you stumbled across a Stradivarius in an attic.


pages: 270 words: 64,235

Effective Programming: More Than Writing Code by Jeff Atwood

AltaVista, Amazon Web Services, barriers to entry, cloud computing, endowment effect, Firefox, future of work, game design, Google Chrome, gravity well, job satisfaction, Khan Academy, Kickstarter, loss aversion, Marc Andreessen, Mark Zuckerberg, Merlin Mann, Minecraft, Paul Buchheit, Paul Graham, price anchoring, race to the bottom, recommendation engine, science of happiness, Skype, social software, Steve Jobs, web application, Y Combinator, zero-sum game

That’s below the threshold of impulse purchase and squarely in no-brainer territory for anything decent that I happen to be interested in. But applications that cost $5 or more? Outrageous! Highway robbery! This is all very strange, as a guy who is used to spending at least $30 for software of any consequence whatsoever. I love supporting my fellow software developers with my wallet, and the iPhone App Store has never made that easier. While there’s an odd aspect of race to the bottom that I’m not sure is entirely healthy for the iPhone app ecosystem, the idea that software should be priced low enough to pass the average user’s “why not” threshold is a powerful one. What I think isn’t well understood here is that low prices can be a force multiplier all out of proportion to the absolute reduction in price. Valve software has been aggressively experimenting in this area; consider the example of the game Left 4 Dead: Valve co-founder Gabe Newell announced during a DICE keynote today that last weekend’s half-price sale of Left 4 Dead resulted in a 3000 percent increase in sales of the game, posting overall sales (in dollar amount) that beat the title’s original launch performance.


pages: 272 words: 64,626

Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler

23andMe, Andy Kessler, bank run, barriers to entry, Berlin Wall, Bob Noyce, British Empire, business cycle, business process, California gold rush, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, commoditize, computer age, creative destruction, disintermediation, Douglas Engelbart, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, Kickstarter, knowledge economy, knowledge worker, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, wealth creators, Yogi Berra

Or classifieds, or music sales, or telephone calls, or video, or real-time highway traffic, or comedy, or news or social networking, gaming, recipes, or whatever anyone wants that can be delivered with zero marginal costs and provides it anywhere and everywhere. No vertical integration. Think about how different this is from media today. The technology of sticking a microphone in front of someone, or turning on a camera or switching a phone call, was perfected years ago. It’s not about technology anymore. It’s about programming content, not computers, to attract viewers. With a few decent exceptions, it has been a race to the bottom. Will a horizontal online world create a race to the top? More like higher highs and lower lows. At the edge, people pick what to do and watch according to their taste. And there is no accounting for taste. Or as Jay McInerney wrote, “taste is just a matter of taste.” But now getting packets through that bumper car of an Internet to create a virtual pipe actually takes someone writing code and designing easy-to-use services.


pages: 244 words: 66,977

Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It by Tien Tzuo, Gabe Weisert

3D printing, Airbnb, airport security, Amazon Web Services, augmented reality, autonomous vehicles, blockchain, Build a better mousetrap, business cycle, business intelligence, business process, call centre, cloud computing, cognitive dissonance, connected car, death of newspapers, digital twin, double entry bookkeeping, Elon Musk, factory automation, fiat currency, Internet of things, inventory management, iterative process, Jeff Bezos, Kevin Kelly, Lean Startup, Lyft, manufacturing employment, minimum viable product, natural language processing, Network effects, Nicholas Carr, nuclear winter, pets.com, profit maximization, race to the bottom, ride hailing / ride sharing, Sand Hill Road, shareholder value, Silicon Valley, skunkworks, smart meter, social graph, software as a service, spice trade, Steve Ballmer, Steve Jobs, subscription business, Tim Cook: Apple, transport as a service, Uber and Lyft, uber lyft, Y2K, Zipcar

The competition of 30 publications competing for 15 seats gets insane. A bunch of the publications are going to die or be forced to find another way to fund themselves.” And, of course, this entire Hunger Games scenario can also quickly implode once the advertising market turns south after a recession. Finally, ads have all sorts of other insidious effects, like turning content providers into clickbait factories. Ads fund the race to the bottom. Ex–Politico president Jim VandeHei calls it the “crap trap.” As Jessica Lessin of The Information says: “I still believe it’s much safer to build a business that doesn’t need any advertising to survive. Doing so forces you to focus 100% on your value to your readers. It’s the only way to make sure that what the news publishers deliver to readers in the future is smarter, more informed and more relevant than in the past.”


pages: 246 words: 68,392

Gigged: The End of the Job and the Future of Work by Sarah Kessler

Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, basic income, bitcoin, blockchain, business cycle, call centre, cognitive dissonance, collective bargaining, crowdsourcing, David Attenborough, Donald Trump, East Village, Elon Musk, financial independence, future of work, game design, gig economy, income inequality, information asymmetry, Jeff Bezos, job automation, law of one price, Lyft, Mark Zuckerberg, market clearing, minimum wage unemployment, new economy, payday loans, post-work, profit maximization, QR code, race to the bottom, ride hailing / ride sharing, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, TaskRabbit, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, union organizing, universal basic income, working-age population, Works Progress Administration, Y Combinator

His hypothesis was that because the gig economy website made it less of a hassle to find workers to complete these jobs, more people sought services, which pushed wages up. For digital-only tasks like graphic design or writing, however, wages of Bay Area gig workers were lower than those of their peers who found gigs offline. Though they lived in one of the most expensive areas in the United States, online, they were competing with workers everywhere.25 Kristy found the same problem when she experimented with Upwork. “I found a race to the bottom,” she said. “I couldn’t compete with people living in countries where the income was lower, but the education was the same and their experience was the same.” I found the same problem when I tried to make it in the gig economy while reporting for a magazine story. “Furloughed? Try Freelancing on Fiverr,” advised a Yahoo news headline during the government shutdown of 2013.26 Fiverr was so named because, at launch, it asked workers to offer their services for a flat rate of $5 (workers now can set different rates).


pages: 245 words: 64,288

Robots Will Steal Your Job, But That's OK: How to Survive the Economic Collapse and Be Happy by Pistono, Federico

3D printing, Albert Einstein, autonomous vehicles, bioinformatics, Buckminster Fuller, cloud computing, computer vision, correlation does not imply causation, en.wikipedia.org, epigenetics, Erik Brynjolfsson, Firefox, future of work, George Santayana, global village, Google Chrome, happiness index / gross national happiness, hedonic treadmill, illegal immigration, income inequality, information retrieval, Internet of things, invention of the printing press, jimmy wales, job automation, John Markoff, Kevin Kelly, Khan Academy, Kickstarter, knowledge worker, labor-force participation, Lao Tzu, Law of Accelerating Returns, life extension, Loebner Prize, longitudinal study, means of production, Narrative Science, natural language processing, new economy, Occupy movement, patent troll, pattern recognition, peak oil, post scarcity, QR code, race to the bottom, Ray Kurzweil, recommendation engine, RFID, Rodney Brooks, selection bias, self-driving car, slashdot, smart cities, software as a service, software is eating the world, speech recognition, Steven Pinker, strong AI, technological singularity, Turing test, Vernor Vinge, women in the workforce

We are talking about jobs that pay $200 a month for a 12 hour per day, 6 to 7 days per week. And people there aspire to get these jobs. They have little to no insurance, benefits, vacation, no safety rules, no right to complain. Sure, if you work there and you do not like it you can always leave the job, but somebody else will gladly take your place. It should be clear that we cannot think to outcompete them with a race to the bottom, by bringing manufacturing jobs back here at lower prices. It simply is not going to happen, nor should it. The time when with a high school education, a lot of good will, and hard work got you a decent middle class lifestyle are long gone. Those jobs that have been outsourced are not coming back, period. And even those overseas jobs are now threatened by the rapid advances in automation and robotics.


pages: 305 words: 69,216

A Failure of Capitalism: The Crisis of '08 and the Descent Into Depression by Richard A. Posner

Andrei Shleifer, banking crisis, Bernie Madoff, business cycle, collateralized debt obligation, collective bargaining, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, debt deflation, diversified portfolio, equity premium, financial deregulation, financial intermediation, Home mortgage interest deduction, illegal immigration, laissez-faire capitalism, Long Term Capital Management, market bubble, money market fund, moral hazard, mortgage debt, Myron Scholes, oil shock, Ponzi scheme, price stability, profit maximization, race to the bottom, reserve currency, risk tolerance, risk/return, Robert Shiller, Robert Shiller, savings glut, shareholder value, short selling, statistical model, too big to fail, transaction costs, very high income

There would be only one effect of the bank's altruism —of its willingness to sacrifice profits enabled by taking a slight risk of bankruptcy that most financial executives would think tolerable, as the risk would be unlikely to materialize for a number of years during which they would be making huge amounts of money: the bank would lose out in competition with its daring competitors. And they would be daring, because financial intermediation, being an inherently risky business activity, attracts people who are comfortable with risk. There was a race to the bottom —or the top, depending on one's perspective. The most daring, aggressive players in the financial sandbox would ramp up the riskiness of their lending or other investing, and this would increase their returns, at least in the short run. Their timid competitors would be forced to match the daring ones' strategy or drop out of the competition. I am told that some bank officials asked the federal regulatory agencies to rein in their competitors, but to no avail.


pages: 317 words: 71,776

Inequality and the 1% by Danny Dorling

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

To win the bid, the task rabbit must be willing to bid below what they think others will put in as their lowest bid. The job might be to clean a garage, paint an apartment or buy groceries. The firm that matches up these temporary servants and their not-too-fussy masters, and carries out criminal record checks on them, is called Taskrabbit.com. Rabbits receive star ratings based on what previous masters thought of them.88 Task rabbits are frontrunners in a race to the bottom. If task rabbits are an extreme case, ‘temps’ are the new normal. Temps range from casual day labourers to university teaching assistants hired for ten months, or ten days. Many of the 1 per cent revel in a world in which the increasingly fragmented 99 per cent have ever-decreasing bargaining power. Nowhere in Europe is such revelry clearer to see than in the place which is home to most of the UK 1 per cent: London.


pages: 265 words: 69,310

What's Yours Is Mine: Against the Sharing Economy by Tom Slee

4chan, Airbnb, Amazon Mechanical Turk, asset-backed security, barriers to entry, Berlin Wall, big-box store, bitcoin, blockchain, citizen journalism, collaborative consumption, congestion charging, Credit Default Swap, crowdsourcing, data acquisition, David Brooks, don't be evil, gig economy, Hacker Ethic, income inequality, informal economy, invisible hand, Jacob Appelbaum, Jane Jacobs, Jeff Bezos, Khan Academy, Kibera, Kickstarter, license plate recognition, Lyft, Marc Andreessen, Mark Zuckerberg, move fast and break things, move fast and break things, natural language processing, Netflix Prize, Network effects, new economy, Occupy movement, openstreetmap, Paul Graham, peer-to-peer, peer-to-peer lending, Peter Thiel, pre–internet, principal–agent problem, profit motive, race to the bottom, Ray Kurzweil, recommendation engine, rent control, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, software is eating the world, South of Market, San Francisco, TaskRabbit, The Nature of the Firm, Thomas L Friedman, transportation-network company, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, ultimatum game, urban planning, WikiLeaks, winner-take-all economy, Y Combinator, Zipcar

Interviewed by the Washington Post, a Homejoy spokesperson gave the standard Sharing Economy line, emphasizing the quality of the service by claiming that “only 30 percent of applicants make it through to become cleaners,” but was somehow unable to find answers to more pressing questions. He “declined to disclose any of the company’s other metrics, such as the average wage earned by its cleaners in a week or the distance they travel to jobs.” Sharing Economy entrepreneurs like to talk about “earning a little extra money” and making life a little more affordable, but Anthony Walker shows that the business model is a race to the bottom for the service providers. The most that can be said for the practice of replacing actual jobs with the kind of precarious, state-subsidized work that Walker gets from Homejoy is that it is better than nothing, but it is undermining other workers as it does so, and while Walker gets some money he has no chance of moving on to actual employment. Kevin Roose of New York magazine was living in the San Francisco Bay area and asked for a house cleaning through Homejoy.


pages: 237 words: 66,545

The Money Tree: A Story About Finding the Fortune in Your Own Backyard by Chris Guillebeau

"side hustle", Bernie Madoff, Ethereum, financial independence, global village, hiring and firing, housing crisis, passive income, race to the bottom, rent-seeking, ride hailing / ride sharing, Steve Jobs, telemarketer

“So think about all those different sellers you saw,” Clarence said. “Which one would you want to be?” “You mean besides the guy with the giant panda? . . . Okay, good question. Well, I probably wouldn’t want to be one of the people selling sodas and pretzels. It doesn’t seem like they could make much money, especially since anyone else could do the same thing.” “Right. Selling a commodity is almost never a good idea. It’s a race to the bottom in terms of pricing, and like you said, there’s nothing unique about any particular seller.” Jake thought for a moment. “It also seems like it’s really important to know your market. One of the guys I saw kept trying to sell me a case of diapers. I suppose he had nothing to lose by trying, but that’s not something I plan to need for a long time.” “Yes, that’s also a good point,” Clarence said.


pages: 233 words: 71,775

The Joy of Tax by Richard Murphy

banking crisis, banks create money, carried interest, correlation does not imply causation, en.wikipedia.org, failed state, full employment, Gini coefficient, high net worth, land value tax, means of production, offshore financial centre, quantitative easing, race to the bottom, savings glut, seigniorage, The Spirit Level, The Wealth of Nations by Adam Smith, transfer pricing

This is being matched by a demand for the increased devolution of taxing powers that must be met if the demand for representation is to be achieved. However, as the discussion of tax competition in Chapter 6 made clear, without care and without appropriately designed delegated authority there is a real risk that those granted the power to tax might be persuaded to use it to promote a form of competition that is, at the very least, unhealthy and even counterproductive. A race to the bottom in tax that can (and may be intended to) deny government the right to withdraw revenues from the economy, can mean that the scale of services supplied must be cut. There is enormous potential for conflict here that has to be avoided. There are obvious ways to overcome this risk by good design that correctly matches policy and tax objectives. The first is to devolve the power to tax land to regional and local government.


pages: 247 words: 68,918

The End of the Free Market: Who Wins the War Between States and Corporations? by Ian Bremmer

affirmative action, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, centre right, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, cuban missile crisis, Deng Xiaoping, diversified portfolio, Doha Development Round, Exxon Valdez, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, invisible hand, joint-stock company, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, low skilled workers, mass immigration, means of production, megacity, Mikhail Gorbachev, mutually assured destruction, Naomi Klein, Nelson Mandela, new economy, offshore financial centre, open economy, race to the bottom, reserve currency, risk tolerance, shareholder value, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, trade route, tulip mania, uranium enrichment, Washington Consensus, Yom Kippur War, zero-sum game

The Antarctic Treaty system has prevented military deployments and promoted scientific cooperation for forty years on the world’s only uninhabited continent. The Gulf Cooperation Council enables six Arab states to develop an effective common market for goods and services. But none of these organizations has eroded the sovereign power of its member states. 7 The best recent reports on China’s system of censorship include Rebecca MacKinnon, “China’s Censorship 2.0: How Companies Censor Bloggers,” First Monday blog, vol. 14, no. 2-2 Feb. 2009; Race to the Bottom: Corporate Complicity in Chinese Internet Censorship, Human Rights Watch, Aug. 2006; and Journey to the Heart of Internet Censorship, Reporters Without Borders, Oct. 2007. 8 Naomi Klein, No Logo (Toronto: Knopf, 1999), xxiii. 9 Sarah Anderson and John Cavanagh, The Top 200: The Rise of Corporate Global Power (Washington, D.C.: Institute for Policy Studies, Dec. 2000), based on statistics from Forbes magazine. 10 Frances Maguire, “The New Masters of the Universe,” Banker, Jan. 2, 2006. 11 United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2008: Transnational Corporations and the Infrastructure Challenge (New York/Geneva). 12 These critics had plenty of vivid stories to make their charges stick: Union Carbide’s chemical plant in Bhopal, India, which accidentally released tons of toxic gas in December 1984, killing several thousand people over a period of several years; the Exxon Valdez oil spill that badly damaged Alaska’s Prince William Sound in March 1989; the reported use of poorly paid and treated workers, and even child labor, in footwear factories producing shoes for Nike, Puma, Reebok, and Adidas in countries like Pakistan, Bangladesh, Indonesia, and Vietnam; Philip Morris’s allegedly aggressive marketing of carcinogenic cigarettes in developing countries; and the refusal of big pharmaceutical companies to allow patented HIV/AIDS drugs to be reproduced cheaply in the African countries that arguably needed them most.


pages: 593 words: 189,857

Stress Test: Reflections on Financial Crises by Timothy F. Geithner

Affordable Care Act / Obamacare, asset-backed security, Atul Gawande, bank run, banking crisis, Basel III, Bernie Madoff, Bernie Sanders, break the buck, Buckminster Fuller, Carmen Reinhart, central bank independence, collateralized debt obligation, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, David Brooks, Doomsday Book, eurozone crisis, financial innovation, Flash crash, Goldman Sachs: Vampire Squid, housing crisis, Hyman Minsky, illegal immigration, implied volatility, Kickstarter, London Interbank Offered Rate, Long Term Capital Management, margin call, market fundamentalism, Martin Wolf, McMansion, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, Nate Silver, negative equity, Northern Rock, obamacare, paradox of thrift, pets.com, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, RAND corporation, regulatory arbitrage, reserve currency, Saturday Night Live, savings glut, selection bias, short selling, sovereign wealth fund, The Great Moderation, The Signal and the Noise by Nate Silver, Tobin tax, too big to fail, working poor

We had a dizzying array of regulators, and a political climate in which some of them could pose for official photos with regulation-slashing chain saws. We also had all sorts of regulatory gaps, with nobody responsible for the entire system. And Wall Street, as President Bush later said, had gotten drunk. Financial firms were chasing higher returns through increasingly leveraged and risky trades even though they knew they were racing to the bottom; as Citigroup CEO Charles Prince memorably explained, “as long as the music is playing, you’ve got to get up and dance.” When a top Morgan Stanley executive named Vikram Pandit left the firm in 2005, we had lunch and he passed along the not-so-novel wisdom that the shift from private partnerships to public companies had poisoned the culture of Wall Street, encouraging executives to focus on quarterly profits and the exorbitant stock options that came with them.

We just had to focus on what approach was most likely to work, and hope the public would judge us on the results rather than the optics. AT THE start of April, President Obama and I went to London for his first G-20 conference, a high-profile test of the international community’s ability to work together to attack the crisis. During the Depression, nations had turned inward, erecting new trade barriers in a damaging race to the bottom, embracing austerity while global demand withered. We were determined not to repeat those mistakes. Our fortunes were closely tied up with the rest of the world, and it would be tough to turn the U.S. economy around if the global economy continued to contract. Some G-20 nations, particularly Germany and France, wanted the meetings to focus primarily on long-term international regulatory reforms that could help mitigate the next crisis.


pages: 238 words: 73,824