race to the bottom

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pages: 250 words: 9,029

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

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Columbine, complexity theory, corporate governance, delayed gratification, edge city, Flynn Effect, game design, Marshall McLuhan, pattern recognition, profit motive, race to the bottom, 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: 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

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Albert Einstein, barriers to entry, Berlin Wall, collective bargaining, congestion charging, Corn Laws, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Fall of the Berlin Wall, George Akerlof, invention of movable type, John Nash: game theory, John von Neumann, market design, Martin Wolf, moral hazard, new economy, 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: 515 words: 142,354

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

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bank run, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bretton Woods, 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, investor state dispute settlement, invisible hand, Kenneth Rogoff, knowledge economy, labour market flexibility, labour mobility, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, 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 Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, 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: 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

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accounting loophole / creative accounting, affirmative action, Andrei Shleifer, business climate, cognitive dissonance, corporate governance, Donald Trump, fear of failure, financial deregulation, friendly fire, George Akerlof, hiring and firing, margin call, market bubble, 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: 196 words: 57,974

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

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affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Corn Laws, corporate governance, corporate social responsibility, credit crunch, crony capitalism, double entry bookkeeping, Etonian, hiring and firing, 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: 123 words: 32,382

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

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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: 465 words: 109,653

Free Ride by Robert Levine

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A Declaration of the Independence of Cyberspace, Anne Wojcicki, book scanning, borderless world, Buckminster Fuller, citizen journalism, correlation does not imply causation, crowdsourcing, death of newspapers, Edward Lloyd's coffeehouse, Firefox, future of journalism, Googley, Hacker Ethic, informal economy, Jaron Lanier, Julian Assange, Kevin Kelly, linear programming, 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: 317 words: 101,475

Chavs: The Demonization of the Working Class by Owen Jones

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Asperger Syndrome, banking crisis, Berlin Wall, 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, Hugh Fearnley-Whittingstall, illegal immigration, income inequality, informal economy, low skilled workers, low-wage service sector, Occupy movement, pension reform, place-making, Plutocrats, plutocrats, race to the bottom, 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%, 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

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affirmative action, Asian financial crisis, bank run, banking crisis, bilateral investment treaty, borderless world, Bretton Woods, British Empire, 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, 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, joint-stock company, Kenneth Rogoff, labour market flexibility, labour mobility, land reform, Long Term Capital Management, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, 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, 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: 209 words: 80,086

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

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affirmative action, barriers to entry, Branko Milanovic, BRICs, business process, business process outsourcing, call centre, collective bargaining, corporate governance, credit crunch, David Ricardo: comparative advantage, deindustrialization, deskilling, Frederick Winslow Taylor, full employment, future of work, glass ceiling, global supply chain, immigration reform, income inequality, industrial robot, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, labour market flexibility, low skilled workers, manufacturing employment, market bubble, market design, neoliberal agenda, new economy, pensions crisis, post-industrial society, profit maximization, purchasing power parity, QWERTY keyboard, race to the bottom, Richard Florida, Ronald Reagan, 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

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: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

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accounting loophole / creative accounting, Albert Einstein, asset-backed security, banking crisis, banks create money, Bretton Woods, British Empire, call centre, capital controls, carbon footprint, collective bargaining, corporate social responsibility, 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, Goldman Sachs: Vampire Squid, high net worth, income inequality, investor state dispute settlement, Isaac Newton, James Dyson, job automation, Julian Assange, labour market flexibility, laissez-faire capitalism, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, means of production, moral hazard, mortgage debt, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Plutocrats, plutocrats, 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, Winter of Discontent, working poor, Yom Kippur War

‘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.

 

pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

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

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. 209 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: 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

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airline deregulation, Andrei Shleifer, Asian financial crisis, Berlin Wall, big-box store, 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, 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.

 

Making Globalization Work by Joseph E. Stiglitz

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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, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, inventory management, invisible hand, Kenneth Rogoff, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, 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

The Extractive Industries Transparency Initiative" 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 156 MAKING GLOBALIZATION WORK 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.

Just as developing countries guarantee that they will not expropriate investments, the developed countries where the oil companies are registered would guarantee that any environmental damage will be fully repaired, with clear and high standards set out for what that means. 7 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 Lifting the Resource Curse 159 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. 196 MAKING GLOBALIZATION WORK 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.

 

pages: 256 words: 76,433

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

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

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.

 

pages: 510 words: 120,048

Who Owns the Future? by Jaron Lanier

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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, computer age, crowdsourcing, David Brooks, David Graeber, delayed gratification, digital Maoism, en.wikipedia.org, 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, invisible hand, Jacquard loom, Jaron Lanier, Jeff Bezos, job automation, Kevin Kelly, Khan Academy, Kickstarter, Kodak vs Instagram, life extension, Long Term Capital Management, Mark Zuckerberg, meta analysis, meta-analysis, moral hazard, mutually assured destruction, Network effects, new economy, Norbert Wiener, obamacare, packet switching, Peter Thiel, place-making, Plutocrats, plutocrats, Ponzi scheme, post-oil, pre–internet, race to the bottom, Ray Kurzweil, rent-seeking, reversible computing, Richard Feynman, Richard Feynman, Ronald Reagan, 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

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

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affirmative action, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Bretton Woods, capital controls, Cass Sunstein, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, 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, invisible hand, Just-in-time delivery, Kenneth Rogoff, labour market flexibility, labour mobility, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, 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, 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: 289 words: 99,936

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

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affirmative action, Berlin Wall, call centre, cognitive dissonance, 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, labour market flexibility, low-wage service sector, microcredit, new economy, post-industrial society, race to the bottom, rent control, 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.

 

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

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Berlin Wall, Cass Sunstein, corporate governance, corporate personhood, corporate social responsibility, 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.

 

pages: 278 words: 82,069

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

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Asian financial crisis, banking crisis, Bretton Woods, capital controls, carried interest, central bank independence, centre right, collateralized debt obligation, conceptual framework, corporate governance, 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, kremlinology, Long Term Capital Management, margin call, market bubble, market fundamentalism, McMansion, 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: 306 words: 78,893

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

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

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.

 

pages: 243 words: 66,908

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

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affirmative action, agricultural Revolution, Albert Einstein, Buckminster Fuller, clean water, Dissolution of the Soviet Union, game design, illegal immigration, invisible hand, Just-in-time delivery, means of production, Mikhail Gorbachev, peak oil, race to the bottom, Ralph Waldo Emerson, Ronald Reagan, 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: 543 words: 157,991

All the Devils Are Here by Bethany McLean

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Asian financial crisis, asset-backed security, bank run, Black-Scholes formula, call centre, collateralized debt obligation, corporate governance, 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, 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

“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

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agricultural Revolution, AI winter, Albert Einstein, algorithmic trading, anthropic principle, anti-communist, artificial general intelligence, autonomous vehicles, barriers to entry, bioinformatics, brain emulation, cloud computing, combinatorial explosion, computer vision, cosmological constant, dark matter, DARPA: Urban Challenge, data acquisition, delayed gratification, demographic transition, Douglas Hofstadter, Drosophila, Elon Musk, en.wikipedia.org, 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 von Neumann, knowledge worker, 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

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: 407 words: 121,458

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

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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, Isaac Newton, Kibera, megacity, new economy, oil shale / tar sands, out of africa, peak oil, 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: 497 words: 144,283

Connectography: Mapping the Future of Global Civilization by Parag Khanna

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1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, 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, complexity theory, 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, diversification, Doha Development Round, edge city, Edward Snowden, Elon Musk, energy security, ethereum blockchain, European colonialism, eurozone crisis, failed state, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, 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 robot, informal economy, Infrastructure as a Service, interest rate swap, Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, labour market flexibility, labour mobility, LNG terminal, low cost carrier, manufacturing employment, mass affluent, megacity, Mercator projection, microcredit, mittelstand, Monroe Doctrine, mutually assured destruction, New Economic Geography, new economy, New Urbanism, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Peace of Westphalia, peak oil, Peter Thiel, 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, 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.

 

pages: 580 words: 168,476

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

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

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: 381 words: 101,559

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

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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, 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, Kenneth Rogoff, labour mobility, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, money: store of value / unit of account / medium of exchange, Network effects, New Journalism, Nixon shock, offshore financial centre, oil shock, open economy, paradox of thrift, 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

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: 332 words: 89,668

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

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

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: 375 words: 88,306

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

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3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, bitcoin, blockchain, Burning Man, call centre, collaborative consumption, collaborative economy, collective bargaining, corporate social responsibility, cryptocurrency, David Graeber, distributed ledger, employer provided health coverage, Erik Brynjolfsson, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, George Akerlof, gig economy, housing crisis, Howard Rheingold, Internet of things, inventory management, invisible hand, job automation, job-hopping, Kickstarter, knowledge worker, Kula ring, Lyft, megacity, minimum wage unemployment, moral hazard, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer lending, 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, 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, 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: 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

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, banking crisis, 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, 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

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

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Affordable Care Act / Obamacare, collateralized debt obligation, housing crisis, mortgage debt, 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 di≠erently than most and includes a large number of loans that 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 BETHANY McLEAN COLUMBIA GLOBAL REPORTS 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: 399 words: 155,913

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

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barriers to entry, big-box store, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate social responsibility, Edward Glaeser, housing crisis, joint-stock company, Joseph Schumpeter, labour mobility, minimum wage unemployment, positional goods, price stability, profit motive, race to the bottom, Ralph Nader, RAND corporation, rent control, Silicon Valley, The Wealth of Nations by Adam Smith, trade route, transaction costs, Upton Sinclair, urban renewal

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: 460 words: 122,556

The End of Wall Street by Roger Lowenstein

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Asian financial crisis, asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Black Swan, 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, moral hazard, mortgage debt, Northern Rock, Ponzi scheme, profit motive, race to the bottom, risk tolerance, Ronald Reagan, 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: 422 words: 131,666

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

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

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: 570 words: 158,139

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

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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, 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: 424 words: 121,425

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

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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, 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.

 

pages: 515 words: 132,295

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

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3D printing, accounting loophole / creative accounting, additive manufacturing, Airbnb, algorithmic trading, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, corporate governance, 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, interest rate derivative, interest rate swap, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, knowledge economy, labor-force participation, labour mobility, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, 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, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, 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

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: 214 words: 57,614

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

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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: 221 words: 55,901

The Globalization of Inequality by François Bourguignon

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

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.

 

Global Financial Crisis by Noah Berlatsky

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accounting loophole / creative accounting, asset-backed security, banking crisis, Bretton Woods, capital controls, Celtic Tiger, centre right, collapse of Lehman Brothers, collateralized debt obligation, 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, Gordon Gekko, housing crisis, illegal immigration, income inequality, market bubble, market fundamentalism, 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: 167 words: 50,652

Alternatives to Capitalism by Robin Hahnel, Erik Olin Wright

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3D printing, affirmative action, crowdsourcing, inventory management, iterative process, Kickstarter, loose coupling, means of production, 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: 179 words: 43,441

The Fourth Industrial Revolution by Klaus Schwab

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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, conceptual framework, continuous integration, crowdsourcing, disintermediation, 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, 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, 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, The Spirit Level, total factor productivity, transaction costs, Uber and 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: 222 words: 60,207

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

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airline deregulation, carbon footprint, East Village, en.wikipedia.org, full employment, Gini coefficient, income inequality, New Urbanism, principal–agent problem, race to the bottom, 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.

 

pages: 272 words: 83,378

Digital Barbarism: A Writer's Manifesto by Mark Helprin

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Albert Einstein, anti-communist, Berlin Wall, carbon footprint, computer age, crowdsourcing, hive mind, invention of writing, Jacquard loom, Jacquard loom, Plutocrats, plutocrats, race to the bottom, semantic web, Silicon Valley, Silicon Valley ideology, the scientific method, Yogi Berra

You can concentrate on quality, fill a niche or a greater need, and invest the time, money, and work to make it stand out, as many have done, although with no guarantee of success. Or, you can make it sensational, appealing to whatever it is that for obvious reasons will immediately turn our attentions from just about anything to violence, threat, insanity, or sex. That is why television’s mainstays are dead bodies, teasingly exposed bosoms, and exploding cars. And so, in “blogging,” as in much else, begins the mad race to the bottom. Blogging’s anonymity makes it the intellectual twin of road rage. But unlike road rage it is not and cannot be subject to law. The only defense against its lowliness is to know it for what it is and call it thus. In the great scheme of things, the reaction to my article is, of course, as unimportant as the article itself. This is not false humility. I am well aware of the place an op-ed article on copyright occupies in a world of limitless heartbreak and tragedy.

 

pages: 238 words: 73,824

Makers by Chris Anderson

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3D printing, Airbnb, Any sufficiently advanced technology is indistinguishable from magic, Apple II, autonomous vehicles, barriers to entry, Buckminster Fuller, Build a better mousetrap, business process, crowdsourcing, dark matter, David Ricardo: comparative advantage, death of newspapers, dematerialisation, Elon Musk, factory automation, Firefox, future of work, global supply chain, global village, industrial robot, interchangeable parts, Internet of things, inventory management, James Hargreaves, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, Kickstarter, Lean Startup, manufacturing employment, Mark Zuckerberg, means of production, Menlo Park, Network effects, profit maximization, race to the bottom, Richard Feynman, Richard Feynman, Ronald Coase, self-driving car, side project, Silicon Valley, Silicon Valley startup, Skype, slashdot, South of Market, San Francisco, spinning jenny, Startup school, stem cell, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith, transaction costs, trickle-down economics, Whole Earth Catalog, X Prize, Y Combinator

All succumbed to the lure of labor arbitrage abroad, while wage pressure made union relations increasingly toxic at home. To be sure, many of these smaller manufacturers lost on their merits: their products were no better than imported goods and their costs uncompetitive. But others failed because they lost their distribution channels to the few consumers who still wanted their specialized goods (or just wanted to buy American). The grinding race to the bottom of price competition at the big-box retailers made it increasingly hard to find niche goods. Fast-forward a half century, and two things have changed. First, thanks to desktop fabrication and easy access to manufacturing capacity, anyone with an idea can start a business making real things. And second, thanks to the Web, they can sell those things globally. The barriers against entry to entrepreneurship in physical goods are dropping like a stone.

 

pages: 283 words: 73,093

Social Democratic America by Lane Kenworthy

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

Suppose we need, as I suggest in chapter 3, an additional 10 percent of GDP to fund new social programs, expansion of existing ones, and demography-imposed increases in the cost of Social Security and Medicare. Is that feasible? If so, what’s the best way to do it? Let’s begin with feasibility. Is heavy taxation still possible in a world where firms, institutions, and wealthy individuals can move their money anywhere they like? The answer, at least so far, is yes. Globalization has not induced a race to the bottom in taxation. Many rich nations have reduced their top statutory rates, but they’ve offset this by reducing tax exemptions and deductions. Effective tax rates have therefore changed little, and taxes as a share of GDP have not fallen.1 Indeed, the rich nations with big governments are no more likely than others to have large public deficits and debt. As figure 4.1 shows, the social democratic Nordic countries have comparatively low levels of government debt.

 

pages: 272 words: 64,626

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

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23andMe, Andy Kessler, bank run, barriers to entry, Berlin Wall, British Empire, business process, California gold rush, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, computer age, disintermediation, 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, 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, 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: 247 words: 81,135

The Great Fragmentation: And Why the Future of All Business Is Small by Steve Sammartino

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3D printing, additive manufacturing, Airbnb, augmented reality, barriers to entry, Bill Gates: Altair 8800, bitcoin, BRICs, Buckminster Fuller, citizen journalism, collaborative consumption, cryptocurrency, Elon Musk, fiat currency, Frederick Winslow Taylor, game design, Google X / Alphabet X, haute couture, helicopter parent, illegal immigration, index fund, Jeff Bezos, jimmy wales, Kickstarter, knowledge economy, Law of Accelerating Returns, market design, Metcalfe's law, Minecraft, minimum viable product, Network effects, new economy, post scarcity, prediction markets, pre–internet, profit motive, race to the bottom, random walk, Ray Kurzweil, recommendation engine, remote working, RFID, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, skunkworks, Skype, social graph, social web, software is eating the world, Steve Jobs, too big to fail, web application

Retail was once one of the most simple business models — find a geography, buy a product, sell at margin — while it’s now one of the most complex. What was once a mum-and-pop business possibility is quickly becoming a sophisticated, technology-driven, multi-channel mind warp. It’s hardest for the retailers selling what everyone else sells. Selling well-known, widely-distributed products online is simply a race to the bottom, a price war that can only be won by the most efficient operator. It’s quickly turning into a game of logistics more than it is about customer engagement. The world of today is an infinite store, where everything is available at the best price possible to anyone, anywhere. The retail revolution Retail is going through a revolution, but unlike many of the other industries being impacted by fragmented technology, it’s not the first one retail has been through.

 

pages: 261 words: 78,884

$2.00 A Day: Living on Almost Nothing in America by Kathryn Edin, H. Luke Shaefer

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Affordable Care Act / Obamacare, clean water, ending welfare as we know it, future of work, Home mortgage interest deduction, housing crisis, impulse control, indoor plumbing, informal economy, low-wage service sector, race to the bottom, randomized controlled trial, Ronald Reagan, War on Poverty, working poor, Works Progress Administration

What low-wage employers now seem to demand are workers whose lives have infinite give and 24-7 dedication, for little in return. Only an employer who is guaranteed a steady stream of desperate job applicants could require a worker to be on call, ready to come in if needed, with no promise of hours. Labor practices such as work loading and on-call shifts are important tools for service sector employers, especially retail chains trying to offer the lowest prices. Simply put, in the face of this race to the bottom, it’s hard for those employers who want to do right by their workers to stay in the game. Recent research has found that when a new Walmart opens in a community, it causes an overall loss in jobs in that community because other stores—including some that might pay better or offer stable hours—can’t compete. That’s what happened to Rae’s previous job at the neighborhood Kmart. That store was shut down when a brand-new Walmart Supercenter opened close by.

 

pages: 241 words: 83,523

A Swamp Full of Dollars: Pipelines and Paramilitaries at Nigeria's Oil Frontier by Michael Peel

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banking crisis, British Empire, colonial rule, energy security, informal economy, megacity, offshore financial centre, Plutocrats, plutocrats, race to the bottom, Scramble for Africa, trade route, UNCLOS, wage slave

It all brings to mind the comment a journalist colleague of mine made to me after discovering that one of the collapsed US energy company Enron’s many alleged misdeeds was to fake a sale of power plants mounted on barges off Nigeria’s coast. Enron and Nigeria, he noted, seemed two particularly well-matched business partners. Not many anti-corruption campaigners think the arrival of the world’s new economic powers in the Gulf of Guinea will help improve behaviour. Instead, activists talk gloomily of their fears of a ‘race to the bottom’, as the Western multinationals and their new challengers compete ever more aggressively for business. When Nigeria auctioned off 25 exploration blocks in 2006 – many to companies from Asian countries keen to expand their energy resources – the Financial Times reported widespread allegations of ‘political favouritism and back-room dealing’. In December 2008, research by Transparency International, the anti-corruption group, said companies from China, India, Russia, Mexico and Brazil were perceived as the worst offenders among leading world economies in terms of paying bribes to win business overseas.

 

pages: 270 words: 64,235

Effective Programming: More Than Writing Code by Jeff Atwood

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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, 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

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: 305 words: 69,216

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

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Andrei Shleifer, banking crisis, Bernie Madoff, 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, moral hazard, mortgage debt, 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: 255 words: 75,172

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

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

The first Operation Dixie was a failed campaign by the Congress of Industrial Unions to organize workers in the South in the postwar years. It failed largely because of the hardened racial lines of Jim Crow and the prohibitions on strikes set in place under Taft-Hartley. The defeat of Operation Dixie resounds powerfully today, both in terms of the emaciation of the unionized workforce and the race to the bottom engendered by the South’s long-standing animus to anything that smacks of cross-race solidarity. In February 2014, after months of intense organizing and even active support from the company, the United Auto Workers lost the election to unionize Volkswagen’s plant in Chattanooga, Tennessee. It was a bruising defeat, made even more so by the fact that the election was exceedingly close—712 to 626, just 86 votes shy of what would have been a game-changing victory for the southern working class.

 

pages: 268 words: 74,724

Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank by John Tamny

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Airbnb, bank run, banks create money, Bernie Madoff, bitcoin, Bretton Woods, Carmen Reinhart, correlation does not imply causation, Credit Default Swap, crony capitalism, crowdsourcing, Donald Trump, Downton Abbey, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, Home mortgage interest deduction, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liquidity trap, Mark Zuckerberg, market bubble, moral hazard, mortgage tax deduction, NetJets, offshore financial centre, oil shock, peak oil, Peter Thiel, price stability, profit motive, quantitative easing, race to the bottom, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Steve Jobs, The Wealth of Nations by Adam Smith, too big to fail, Uber for X, War on Poverty, yield curve

Thanks to this highly profitable movie franchise, Downey is the world’s highest paid actor, with earnings of $75 million per year.13 As one media account put it, Downey “is a walking, talking multi-billion-dollar business.”14 What might surprise readers it that 2015’s highest paid actor couldn’t even get a movie made when the twenty-first century began. Downey’s addiction to drugs and alcohol led to jail time, rehab, fights in prison, and even a 911 call from a neighbor who found an out-of-sorts Downey asleep in her eleven-year-old child’s bed. Amid his self-inflicted race to the bottom, Downey couldn’t make movies because the costs involved were too steep. Movies are expensive to make and difficult to finance even for the top producers, and Downey’s habits rendered him wholly unreliable. No sane insurance company would write a policy for a production that had him attached. Put simply, Downey was too much of a credit risk.15 This lack of credit turned out to be a blessing for Downey.

 

pages: 265 words: 69,310

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

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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, Mark Zuckerberg, move fast and break things, natural language processing, Netflix Prize, Network effects, new economy, Occupy movement, openstreetmap, Paul Graham, 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, Uber and Lyft, Uber for X, 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: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

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Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamonds, borderless world, BRICs, British Empire, call centre, carbon footprint, charter city, clean water, cleantech, cloud computing, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, facts on the ground, failed state, friendly fire, global village, Google Earth, high net worth, index fund, informal economy, invisible hand, labour mobility, laissez-faire capitalism, Masdar, megacity, microcredit, mutually assured destruction, Naomi Klein, New Urbanism, offshore financial centre, oil shock, open economy, out of africa, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

Rather than railing against poorly enforced labor standards, the NGO Ethical Trading Initiative works directly with the governments of Bangladesh and other countries. Social Accountability International (SAI), a multi-stakeholder nonprofit, has certified facilities in fifty-seven countries across seventy industries and funds itself through contracts with businesses looking for ways to improve labor conditions. SAI’s certification and codes of conduct do far more for labor rights than empty appeals from the ILO. Rather than “racing to the bottom”—always seeking the cheapest labor—more and more foreign companies are driving the “race to the top,” spreading good management practices, training workers with new skills, and offering better salaries than what is offered domestically. Exporting good businesses is among the smartest diplomatic strategies the West can pursue to create tangible change worldwide. If we want to achieve “decent work” for the poor, then we must globalize the work.

 

pages: 593 words: 189,857

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

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Affordable Care Act / Obamacare, asset-backed security, Atul Gawande, bank run, banking crisis, Basel III, Bernie Madoff, Bernie Sanders, Buckminster Fuller, Carmen Reinhart, central bank independence, collateralized debt obligation, correlation does not imply causation, 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, London Interbank Offered Rate, Long Term Capital Management, margin call, market fundamentalism, Martin Wolf, McMansion, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, Nate Silver, 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, 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: 387 words: 110,820

Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

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barriers to entry, Berlin Wall, big-box store, cognitive dissonance, computer age, Daniel Kahneman / Amos Tversky, delayed gratification, deskilling, Donald Trump, Edward Glaeser, fear of failure, Ford paid five dollars a day, Frederick Winslow Taylor, George Akerlof, global supply chain, global village, greed is good, Howard Zinn, income inequality, interchangeable parts, inventory management, invisible hand, James Watt: steam engine, Joseph Schumpeter, Just-in-time delivery, knowledge economy, loss aversion, market design, means of production, mental accounting, Ponzi scheme, price anchoring, price discrimination, race to the bottom, Richard Thaler, Ronald Reagan, side project, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, traveling salesman, ultimatum game, Victor Gruen, washing machines reduced drudgery, working poor, yield management

“But consolidation has meant that when the large agribusiness interests decide to change course abruptly and, say, invest in biofuels, that can lead to severe disruptions in food markets in the short run.” The United States is the world’s largest exporter of food and as such dominates world food policy. But in recent years we have become increasingly dependent on imports in a frantic effort to keep food prices low. Left to their own devices, global food markets pretty much follow the same “race to the bottom” model followed by other unfettered markets. Subsidies and economies of scale have made grain and everything it is made of—including the animals that eat it—increasingly cheap. In hard times all but the poorest Americans tend not to cut back on food consumption but, rather, gravitate toward getting what we perceive to be “more for less.” Responding to rising food prices and a sinking economy in the early months of 2009, Americans cut back on fresh fruits and vegetables but increased their consumption of fast food.

 

pages: 348 words: 99,383

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

Amazon: amazon.comamazon.co.ukamazon.deamazon.fr

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

The model worked reasonably well when most of the originators were from established firms such as commercial banks. As Freddie and Fannie moved up the risk scale, however, they loosened their underwriting standards to meet the affordable-housing (that is, subprime) goals established by Congress. The whole origination market relaxed its standards to compete with Freddie and Fannie. Driven by Freddie and Fannie, the private originators created a competitive race to the bottom as the bubble continued (funded by the Federal Reserve) and it appeared that no matter how low the standards, home loans would not default. Of course, Standard & Poor’s (S&P), Moody’s, and Fitch played a major role in this process. They dramatically overrated bonds backed by high-risk mortgages. Their special government sanction (via the SEC) gave them credibility. They were also misled by the artificial economic environment created by the Federal Reserve.

 

pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

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Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Gordon Gekko, greed is good, Home mortgage interest deduction, Hyman Minsky, income per capita, interest rate derivative, interest rate swap, Kenneth Rogoff, laissez-faire capitalism, late fees, Long Term Capital Management, market bubble, market fundamentalism, Martin Wolf, moral hazard, mortgage tax deduction, Ponzi scheme, price stability, profit maximization, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, sovereign wealth fund, The Myth of the Rational Market, too big to fail, transaction costs, value at risk, yield curve

And while each regulator nominally had its own sphere of jurisdiction—bank holding companies for the Fed, national banks for the OCC, and so on—financial institutions that fell under multiple regulatory agencies were allowed to select their primary regulator. As a result, regulatory agencies had to compete for funding by convincing financial institutions to accept their regulation, which created the incentives for a “race to the bottom,” in which agencies attract “customers” by offering relatively lax regulatory enforcement. The OTS stood out in this competition. According to William Black, a law professor and former official at the Federal Home Loan Bank Board, “The reputation of the Office of Thrift Supervision was that it was the weakest, and the laxest, and it was indeed outright friendly to the worst of the non-prime lending.”22 American International Group (AIG), a massive insurance company with one of the largest derivatives trading operations in the world, opened a savings and loan—and then chose the OTS as its primary regulator, even though the agency, with its focus on mortgage lending, had no chance of monitoring the risks taken on by AIG’s infamous Financial Products division.

 

pages: 390 words: 96,624

Consent of the Networked: The Worldwide Struggle for Internet Freedom by Rebecca MacKinnon

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A Declaration of the Independence of Cyberspace, Bay Area Rapid Transit, Berlin Wall, business intelligence, Cass Sunstein, Chelsea Manning, citizen journalism, cloud computing, cognitive dissonance, collective bargaining, conceptual framework, corporate social responsibility, Deng Xiaoping, digital Maoism, don't be evil, Filter Bubble, Firefox, future of journalism, illegal immigration, Jaron Lanier, Jeff Bezos, Julian Assange, Mark Zuckerberg, Mikhail Gorbachev, national security letter, online collectivism, pre–internet, race to the bottom, Richard Stallman, Ronald Reagan, sharing economy, Silicon Valley, Silicon Valley startup, Skype, Steve Crocker, Steven Levy, WikiLeaks

CHAPTER 9: DO NO EVIL 131 In April 2011, Mike Lazaridis, co-CEO of Research in Motion (RIM), maker of BlackBerry, sat down for an interview with the BBC’s Rory Cellan-Jones: Full video of the exchange is at http://news.bbc.co.uk/2/hi/programmes/click_online/9456798.stm (accessed June 27, 2011). 133 Shi Tao: For a detailed account and list of sources related to the Shi Tao case and Yahoo, see Human Rights Watch, Race to the Bottom: Corporate Complicity in Chinese Internet Censorship, 2006, www.hrw.org/reports/2006/china0806; and Rebecca MacKinnon, “Shi Tao, Yahoo!, and the Lessons for Corporate Social Responsibility,” working paper, December 27, 2007, http://rconversation.blogs.com/YahooShiTaoLessons.pdf. 136 the year Microsoft launched MSN Spaces in China, 2005, was also the year the Chinese blogosphere exploded: For a detailed account of the evolution of the Chinese blogosphere and government controls, see Rebecca MacKinnon, “Flatter World and Thicker Walls?

 

pages: 299 words: 83,854

Shortchanged: Life and Debt in the Fringe Economy by Howard Karger

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big-box store, blue-collar work, corporate social responsibility, credit crunch, delayed gratification, financial deregulation, illegal immigration, labor-force participation, late fees, London Interbank Offered Rate, low skilled workers, microcredit, mortgage debt, New Journalism, New Urbanism, offshore financial centre, payday loans, predatory finance, race to the bottom, Silicon Valley, Telecommunications Act of 1996, telemarketer, underbanked, working poor

Fringe lenders then market and distribute them. Lenders with rent-a-bank partnerships often charge higher interest rates, make larger loans, or make repeat loans that violate state laws. Despite warnings from federal bank regulators, FDIC-insured bank involvement in fringe lending may be continuing. In turn, consumer groups have criticized the FDIC for being too lax in ending rent-a-bank arrangements.36 A RACE TO THE BOTTOM A key reason why consumers use payday lenders is to avoid bounced-check fees. In 2003 banks charged $30 billion in ATM, bounced-check, and overdraft fees, accounting for 30% of their operating profit.37 Federal law allows banks to process checks in any order they choose, and some maximize their NSF profits by using a big-to-small processing system.38 For example, if a bank customer writes four checks in one day, many banks will clear the largest check first, even if it was written last.

 

pages: 349 words: 114,038

Culture & Empire: Digital Revolution by Pieter Hintjens

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4chan, airport security, anti-communist, anti-pattern, barriers to entry, Bill Duvall, bitcoin, blockchain, business climate, business intelligence, business process, Chelsea Manning, clean water, congestion charging, Corn Laws, correlation does not imply causation, cryptocurrency, Debian, Edward Snowden, failed state, financial independence, Firefox, full text search, German hyperinflation, global village, GnuPG, Google Chrome, greed is good, Hernando de Soto, hiring and firing, informal economy, invisible hand, James Watt: steam engine, Jeff Rulifson, Julian Assange, Kickstarter, M-Pesa, mutually assured destruction, Naomi Klein, national security letter, new economy, New Urbanism, Occupy movement, offshore financial centre, packet switching, patent troll, peak oil, pre–internet, private military company, race to the bottom, rent-seeking, reserve currency, RFC: Request For Comment, Richard Feynman, Richard Feynman, Richard Stallman, Satoshi Nakamoto, security theater, Skype, slashdot, software patent, spectrum auction, Steve Crocker, Steve Jobs, Steven Pinker, Stuxnet, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trade route, transaction costs, union organizing, web application, WikiLeaks, Y2K, zero day, Zipf's Law

Everyone benefits, is employed, and makes enough money to buy a $10 camera. -- 1stworld, on Slashdot The economic impact of seven billion citizens joining digital society is vast and only just starting to be understood. Where this will take us is not clear. We can however already see the trends: All markets have more participants. In any given area of activity, the number of people who participate and compete has greatly increased. Rather than creating a race to the bottom, we see increasing specialization and diversity of suppliers, and lucrative new businesses constantly emerge. All markets are more equal. The tools available to even the smallest players give them real power within their markets. Smaller players are more educated and informed. The cost of getting information has fallen to near zero and today the size of larger players actively works against them.

 

pages: 262 words: 83,548

The End of Growth by Jeff Rubin

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Ayatollah Khomeini, Bakken shale, banking crisis, Berlin Wall, British Empire, call centre, carbon footprint, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, decarbonisation, deglobalization, energy security, eurozone crisis, Exxon Valdez, Fall of the Berlin Wall, fiat currency, flex fuel, full employment, ghettoisation, global supply chain, Hans Island, happiness index / gross national happiness, housing crisis, hydraulic fracturing, illegal immigration, income per capita, Jane Jacobs, labour mobility, McMansion, Monroe Doctrine, moral hazard, new economy, Occupy movement, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, quantitative easing, race to the bottom, reserve currency, Ronald Reagan, South China Sea, sovereign wealth fund, The Chicago School, The Death and Life of Great American Cities, Thomas Malthus, Thorstein Veblen, too big to fail, uranium enrichment, urban planning, urban sprawl, women in the workforce, working poor, Yom Kippur War

As I mentioned earlier, by flooding the system with cash, the Federal Reserve’s quantitative easing program is also working to devalue the US dollar. A cheaper dollar is both good for US manufacturing, making goods cheaper at home and abroad, and punitive to foreign producers trying to crack the US market. In a job-hungry world, even free market–loving America is becoming more protectionist. Globalization’s so-called race to the bottom to capitalize on the lowest wage rate anywhere in the world is about to hit some big roadblocks in the static economy just ahead. The contours of our economy are already changing, at least in North America. The lost manufacturing jobs of yesteryear are coming home. Over the next decade, manufacturing will account for a larger share of employment and a larger percentage of GDP. That shift is already apparent in the strength of the recovery in US manufacturing since the recession.

 

pages: 369 words: 98,776

The God Species: Saving the Planet in the Age of Humans by Mark Lynas

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back-to-the-land, Berlin Wall, carbon footprint, clean water, Climategate, Climatic Research Unit, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic transition, Haber-Bosch Process, ice-free Arctic, invention of the steam engine, James Watt: steam engine, megacity, meta analysis, meta-analysis, moral hazard, Negawatt, New Urbanism, oil shale / tar sands, out of africa, peak oil, planetary scale, quantitative easing, race to the bottom, Ronald Reagan, special drawing rights, Stewart Brand, University of East Anglia

If the Sixth Mass Extinction is allowed to continue—or still worse, accelerate further—then the chance of a global-scale ecosystem collapse can only continue to grow. THE PRICE OF PANDAS The current crisis in biodiversity tells us loud and clear that conventional approaches to conservation have failed. “Paper parks”—named but barely protected—in developing countries are routinely violated by poachers and loggers. What areas are set aside for nature reserves are too small and too fragmented. At sea fishermen compete with each other in a global race to the bottom, knowing that if they do not catch the last bluefin tuna, someone else will. No wonder the 2010 Global Biodiversity Outlook report is full of ominous words and phrases like “serious declines,” “extensive fragmentation and degradation,” “overexploitation,” and “dangerous impacts.” To meet the planetary boundary, we need to make urgent changes in policy. Biodiversity loss is fundamentally an enormous market failure, because the people that profit from destroying biodiversity are not generally the same people who lose out when the rain forests, mangroves, and coral reefs are finally gone.

 

pages: 357 words: 99,684

Why It's Still Kicking Off Everywhere: The New Global Revolutions by Paul Mason

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back-to-the-land, balance sheet recession, bank run, banking crisis, Berlin Wall, capital controls, centre right, citizen journalism, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, currency manipulation / currency intervention, currency peg, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, Francis Fukuyama: the end of history, full employment, ghettoisation, illegal immigration, informal economy, land tenure, low skilled workers, means of production, megacity, Mohammed Bouazizi, Naomi Klein, Network effects, New Journalism, Occupy movement, price stability, quantitative easing, race to the bottom, rising living standards, short selling, Slavoj Žižek, Stewart Brand, strikebreaker, union organizing, We are the 99%, Whole Earth Catalog, WikiLeaks, Winter of Discontent, women in the workforce, working poor, working-age population, young professional

Globally, even without the financial crisis, the arithmetic of ageing would have made it impossible for the existing financial system—of saving via pensions invested in the equity and debt markets—to go on serving the middle class. Now however, the realization is dawning that the generation who started work in 2010, and who will retire in 2050, will have been poor through much of their working lives; they will be ‘asset poor’—unless the house-price bubble can be pumped up again—and dependent on a generation being born today to join the ‘race to the bottom’ in terms of wages and lifestyles. 10. This evaporation of a promise is compounded in the more repressive societies and emerging markets because—even where you get rapid economic growth—it cannot absorb the demographic bulge of young people fast enough to deliver rising living standards for enough of them. 11. To amplify: I can’t find the quote, but one of the historians of the French Revolution of 1789 wrote that it was not the product of poor people but of poor lawyers.

 

pages: 385 words: 101,761

Creative Intelligence: Harnessing the Power to Create, Connect, and Inspire by Bruce Nussbaum

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3D printing, Airbnb, Albert Einstein, Berlin Wall, Black Swan, clean water, collapse of Lehman Brothers, Credit Default Swap, crony capitalism, crowdsourcing, Danny Hillis, declining real wages, demographic dividend, Elon Musk, en.wikipedia.org, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, follow your passion, game design, housing crisis, Hyman Minsky, industrial robot, invisible hand, James Dyson, Jane Jacobs, Jeff Bezos, jimmy wales, John Gruber, Joseph Schumpeter, Kickstarter, lone genius, manufacturing employment, Mark Zuckerberg, Martin Wolf, new economy, Paul Graham, Peter Thiel, race to the bottom, reshoring, Richard Florida, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, six sigma, Skype, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, Tesla Model S, The Chicago School, The Design of Experiments, the High Line, The Myth of the Rational Market, thinkpad, Tim Cook: Apple, too big to fail, tulip mania, We are the 99%, Y Combinator, young professional, Zipcar

“Profit arises out of the inherent, absolute unpredictability of things, out of the sheer, brute fact that the results of human activity cannot be anticipated and then only in so far as even a probability calculation in regard to them is impossible and meaningless.” Knight did not believe in the efficiency of markets, arguing instead that when companies operate for efficiency, and compete on price, profits tend to fall—and sometimes fall to zero. Put another way, efficiency drives a race to the bottom. Creativity, on the other hand, generates products and services that, because of their originality and utility, can have big profit margins and bigger profits. For Knight, social uncertainty and chance were sources of new knowledge, opportunity, and profits. He was also keenly aware that focusing on “wants” alone was insufficient. “The chief thing which the common-sense individual actually wants is not satisfaction for the wants which he has, but more, and better wants,” Knight wrote.

 

pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future by Paul Mason

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Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business process, butterfly effect, call centre, capital controls, Claude Shannon: information theory, collaborative economy, collective bargaining, Corn Laws, corporate social responsibility, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, Downton Abbey, en.wikipedia.org, energy security, eurozone crisis, factory automation, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, full employment, future of work, game design, income inequality, inflation targeting, informal economy, Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kevin Kelly, knowledge economy, knowledge worker, late capitalism, low skilled workers, market clearing, means of production, Metcalfe's law, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, payday loans, post-industrial society, precariat, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, union organizing, universal basic income, urban decay, urban planning, wages for housework, women in the workforce

Later we’ll explore how modelling the disappearance of labour value like this could translate into the actual design of strategies for transition; and how issues around energy fit in. For now, however, let’s look at how capitalism might evolve to meet these economic challenges. WHAT WOULD INFO-CAPITALISM LOOK LIKE? The rise of free information and free machines is new. But the cheapening of inputs through productivity is as old as capitalism itself. What stops capitalism from becoming a systemic race to the bottom is the creation of new markets, new needs, and raising the amount of socially necessary labour time used to meet these needs (fashion instead of rags, TVs instead of magazines); this in turn raises the amount of labour time embodied in each machine, product or service. If this inbuilt reflex could work properly, faced with the information revolution, what we’d get is a fully fledged info-capitalism.

 

pages: 336 words: 93,672

The Future of the Brain: Essays by the World's Leading Neuroscientists by Gary Marcus, Jeremy Freeman

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23andMe, Albert Einstein, bioinformatics, bitcoin, brain emulation, cloud computing, complexity theory, computer age, computer vision, conceptual framework, correlation does not imply causation, crowdsourcing, dark matter, data acquisition, Drosophila, epigenetics, Google Glasses, iterative process, linked data, mouse model, optical character recognition, pattern recognition, personalized medicine, phenotype, race to the bottom, Richard Feynman, Richard Feynman, Ronald Reagan, semantic web, speech recognition, stem cell, Steven Pinker, supply-chain management, Turing machine, web application

A typical extracellular electrophysiological recording of neural activity in tissue records electrical potential differences between one electrode placed in-tissue near the neural activity and a second electrode “far away.” This is not the case for our motes: both electrodes are on board the tiny device and are placed very close together. This makes it very hard to measure the tiny electrical changes that arise across these electrodes. To some extent, the tiny electronics can be made more sensitive by pumping in more power. This creates a race to the bottom: smaller motes capture less power but need more power to record the tiny signals. Somewhere around a 50 µm diameter, our calculations show you cannot deliver enough power to power the sensor electronics. The second challenge involves simultaneous gathering and distinguishing information from multiple sensing sites. For functional neural mapping applications, which will likely require the full, digitized neural signal, each node will generate > 1 kbps of neural data that needs to be continuously streamed to the interrogator.

 

pages: 363 words: 94,139

Jony Ive: The Genius Behind Apple's Greatest Products by Leander Kahney

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Apple II, banking crisis, British Empire, Dynabook, global supply chain, interchangeable parts, Jony Ive, race to the bottom, RFID, side project, Silicon Valley, Steve Ballmer, Steve Jobs, Steve Wozniak, Steven Levy, the built environment, thinkpad, Tim Cook: Apple

PDAs were on the rise, thanks to the success of handhelds like the Palm Pilot, but to Jobs, the Newton was a distraction. He wanted Apple to concentrate on computers, its core product. Jobs aimed at making innovative products again, but he didn’t want to compete in the broader market for personal computers, which was dominated by companies making generic machines for Microsoft’s Windows operating system. These companies competed on price, not features or ease of use. Jobs figured theirs was a race to the bottom. Instead, he argued, there was no reason that well-designed, well-made computers couldn’t command the same market share and margins as a luxury automobile. A BMW might get you to where you are going in the same way as a Chevy that costs half the price, but there will always be those who will pay for the better ride in the sexier car. Rather than competing with commodity PC makers like Dell, Compaq and Gateway, why not make only first-class products with high margins so that Apple could continue to develop even better first-class products?

 

pages: 362 words: 99,063

The Education of Millionaires: It's Not What You Think and It's Not Too Late by Michael Ellsberg

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affirmative action, Black Swan, Burning Man, corporate governance, financial independence, follow your passion, future of work, hiring and firing, job automation, knowledge worker, Lean Startup, Mark Zuckerberg, means of production, meta analysis, meta-analysis, new economy, Peter Thiel, profit motive, race to the bottom, Sand Hill Road, shareholder value, side project, Silicon Valley, Skype, Steve Ballmer, telemarketer, Tony Hsieh

“The art here, the experience of seeing it, that’s free. Anyone can walk in this place, look around, get it, and leave. The souvenir part—the experience part, the owning-the-table-for-two-hours part—that’s what they make money from. “McDonald’s fooled us into believing that the purpose of industry was to churn out standardized quantity at low cost. This place reminds us that, no, there’s an alternative to racing to the bottom. And that is, racing to the top.” Are you ready to race toward the top and combine money with meaning? Keep reading—the remaining stories and skills in this book show you how. ■ PORTRAIT OF THE ARTIST AS A YOUNG FUCKUP: HOW I WENT FROM BROKE, MISERABLE WANNABE SUPERSTAR TO FINANCIALLY SECURE, CREATIVELY ENGAGED PROFESSIONAL AUTHOR I told you I wouldn’t recommend anything to you that I hadn’t applied in my own life.

 

pages: 309 words: 100,573

Cockpit Confidential: Everything You Need to Know About Air Travel: Questions, Answers, and Reflections by Patrick Smith

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airline deregulation, airport security, Atul Gawande, call centre, Captain Sullenberger Hudson, collective bargaining, inflight wifi, low cost carrier, Maui Hawaii, Mercator projection, New Urbanism, pattern recognition, race to the bottom, Skype, Tenerife airport disaster

To be impartial, I might mention the knee-breaking seat pitch and treacherous cuisine of EgyptAir and Royal Air Maroc, but exceptions like these are uncommon. How we got to such a shameful position is the subject of debate. Is it a fiscal thing? A cultural thing? A little of both? It has been a long, hard slide, and most folks agree that it began at or around the moment president Jimmy Carter attached his signature to the Airline Deregulation Act of 1979. From that moment on it was a race to the bottom, with competitive chaos inspiring a battle so fierce that, from the airlines’ perspectives, undercutting the competition became more important than pleasing customers. By 2001, the few remaining extravagances were curtailed in the battening-down that began after September 11. In my opinion, there’s something systemic at hand that transcends the bottom line. It is easy to assume that with a falloff in profits comes a falloff in the quality of your product, but what we have today is the nadir of a prolonged decline that was ongoing even through the mid-1990s—the airlines’ most profitable period in history.

 

pages: 318 words: 85,824

A Brief History of Neoliberalism by David Harvey

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affirmative action, Asian financial crisis, Berlin Wall, Bretton Woods, business climate, capital controls, centre right, collective bargaining, crony capitalism, debt deflation, declining real wages, deglobalization, deindustrialization, Deng Xiaoping, Fall of the Berlin Wall, financial deregulation, financial intermediation, financial repression, full employment, George Gilder, Gini coefficient, global reserve currency, illegal immigration, income inequality, informal economy, labour market flexibility, land tenure, late capitalism, Long Term Capital Management, low-wage service sector, manufacturing employment, market fundamentalism, means of production, Mexican peso crisis / tequila crisis, Mont Pelerin Society, mortgage tax deduction, neoliberal agenda, new economy, phenotype, Ponzi scheme, price mechanism, race to the bottom, rent-seeking, reserve currency, Ronald Reagan, Silicon Valley, special economic zone, structural adjustment programs, the built environment, The Chicago School, transaction costs, union organizing, urban renewal, urban sprawl, Washington Consensus, Winter of Discontent

is substituted for social protections (pensions, health care, protections against injury) that were formerly an obligation of employers and the state. Individuals buy products in the markets that sell social protections instead. Individual security is therefore a matter of individual choice tied to the affordability of financial products embedded in risky financial markets. The second prong of attack entails transformations in the spatial and temporal co-ordinates of the labour market. While too much can be made of the ‘race to the bottom’ to find the cheapest and most docile labour supplies, the geographical mobility of capital permits it to dominate a global labour force whose own geographical mobility is constrained. Captive labour forces abound because immigration is restricted. These barriers can be evaded only by illegal immigration (which creates an easily exploitable labour force) or through short-term contracts that permit, for example, Mexican labourers to work in Californian agribusiness only to be shamelessly shipped back to Mexico when they get sick and even die from the pesticides to which they are exposed.

 

pages: 385 words: 103,561

Pinpoint: How GPS Is Changing Our World by Greg Milner

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Ayatollah Khomeini, British Empire, data acquisition, Dava Sobel, Edmond Halley, Eratosthenes, experimental subject, Flash crash, friendly fire, Hedy Lamarr / George Antheil, Internet of things, Isaac Newton, John Harrison: Longitude, Kevin Kelly, land tenure, lone genius, Mars Rover, Mercator projection, place-making, polynesian navigation, precision agriculture, race to the bottom, Silicon Valley, Silicon Valley startup, skunkworks, smart grid, the map is not the territory

Commercial airlines aren’t the only ones reaping the benefits. In Memphis, Federal Express can add nine flight operations per hour, with annual savings of almost $22 million. Residents of Louisville, Kentucky, can breathe easier, knowing that arrivals at United Parcel Service’s central processing facility are burning 7,761 fewer gallons of fuel. In a world of low margins, scarce resources, and race-to-the-bottom competition, GPS is a powerful means to chip away at costs. When Alaska Airlines began to use GPS in 1996, it was a watershed moment for the aviation industry and also for GPS, heralding its integration into what governments and security specialists call the critical infrastructure—an inclusive term that refers to the systems, installations, and industries that make modern life possible.

 

pages: 440 words: 108,137

The Meritocracy Myth by Stephen J. McNamee

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affirmative action, Affordable Care Act / Obamacare, Bernie Madoff, British Empire, collective bargaining, computer age, conceptual framework, corporate governance, deindustrialization, delayed gratification, demographic transition, desegregation, deskilling, equal pay for equal work, estate planning, failed state, fixed income, gender pay gap, Gini coefficient, glass ceiling, helicopter parent, income inequality, informal economy, invisible hand, job automation, joint-stock company, labor-force participation, low-wage service sector, marginal employment, Mark Zuckerberg, mortgage debt, mortgage tax deduction, new economy, New Urbanism, obamacare, occupational segregation, pink-collar, Plutocrats, plutocrats, Ponzi scheme, post-industrial society, prediction markets, profit motive, race to the bottom, random walk, school choice, Scientific racism, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trickle-down economics, upwardly mobile, We are the 99%, white flight, young professional

Bernhardt et al. found that 90 percent of white male workers in the most recent cohort are doing worse now than their counterparts at corresponding ages from the earlier cohort. Median wage growth has fallen by 21 percent, and the distributions of remaining gains have become more unequal. While a small core of the most recent cohort is holding its own, for the most part the net wage decline is a “race to the bottom” (Bernhardt et al. 2001, 174). The growth of income inequality in recent decades is not associated with individuals surging ahead but rather with a few holding on while most have lost ground. The small core of workers holding their own are mostly college graduates. But even here, nearly two-thirds of all college graduates in the more recent cohort fared worse than college graduates in the previous cohort.

 

pages: 391 words: 97,018

Better, Stronger, Faster: The Myth of American Decline . . . And the Rise of a New Economy by Daniel Gross

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Airbnb, American Society of Civil Engineers: Report Card, asset-backed security, Bakken shale, banking crisis, BRICs, British Empire, business process, business process outsourcing, call centre, Carmen Reinhart, clean water, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, demand response, Donald Trump, Frederick Winslow Taylor, high net worth, housing crisis, hydraulic fracturing, If something cannot go on forever, it will stop, illegal immigration, index fund, intermodal, inventory management, Kenneth Rogoff, labor-force participation, LNG terminal, low skilled workers, Mark Zuckerberg, Martin Wolf, Maui Hawaii, McMansion, mortgage debt, Network effects, new economy, obamacare, oil shale / tar sands, oil shock, peak oil, Plutocrats, plutocrats, price stability, quantitative easing, race to the bottom, reserve currency, reshoring, Richard Florida, rising living standards, risk tolerance, risk/return, Silicon Valley, Silicon Valley startup, six sigma, Skype, sovereign wealth fund, Steve Jobs, superstar cities, the High Line, transit-oriented development, Wall-E, Yogi Berra, Zipcar

Even though the United States doesn’t try very hard, and imposes needless barriers on itself, between 2005 and 2011 service exports rose more rapidly than goods exports did. And there’s room for much more. Rising wealth around the world means greater demand for services. Developing countries build exports—goods or services—by taking the low road: set up a factory to make cheap lightbulbs or build a low-wage call center, and you’re off. But it’s not all about a race to the bottom. The United States exports a lot of very expensive services—money management, education, health care, tourism—that have previously been unaffordable for the vast majority of humanity and that are getting more affordable. Like the Collinses of Wallquest before 2008, most American businesses were content to sell to their friends and neighbors and never gave much thought to selling overseas.

 

The End of Accounting and the Path Forward for Investors and Managers (Wiley Finance) by Feng Gu

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Affordable Care Act / Obamacare, barriers to entry, business process, Claude Shannon: information theory, Clayton Christensen, conceptual framework, corporate governance, Daniel Kahneman / Amos Tversky, discounted cash flows, diversified portfolio, double entry bookkeeping, Exxon Valdez, financial innovation, fixed income, hydraulic fracturing, index fund, inventory management, Joseph Schumpeter, knowledge economy, moral hazard, new economy, obamacare, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, race to the bottom, risk/return, Robert Shiller, Robert Shiller, shareholder value, Steve Jobs, The Great Moderation, value at risk

This, along with our first proposal to avoid the valuation in financial reports of nontraded assets/liabilities, will go a long way to restore the reliability of financial information.30 And now for our third and last proposal. III. MITIGATE ACCOUNTING COMPLEXITY Here is the Lev-Gu law of the dynamics of regulation: Regulatory systems strive to be even more complex than the structures or institutions they were charged to regulate. A race to the bottom, so to speak. If you doubt the universality of our law, think of the 1,990 pages of the original 2009 Affordable Health Care Act (Obamacare), ballooning to about 20,000 pages four years later,31 or the Dodd–Frank Wall Street Reform and Consumer Protection Act, originally at 848 pages, and mushrooming to 13,789 pages as of July 2013 (and still going strong—the length, we mean).32 And not only in America: No regulatory agency rivals the European Union in scope, intrusion, and complexity of regulation.

 

pages: 372 words: 109,536

The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money by Frederik Obermaier

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banking crisis, blood diamonds, credit crunch, crony capitalism, Deng Xiaoping, Edward Snowden, family office, high net worth, income inequality, liquidationism / Banker’s doctrine / the Treasury view, Mikhail Gorbachev, mortgage debt, offshore financial centre, optical character recognition, out of africa, race to the bottom, We are the 99%, WikiLeaks

The right loophole can always be found in one or other of the tax havens: if the company in the Seychelles can’t do it, then the Panamanian trust or the foundation in Bermuda probably can – or alternatively a combination of two, three or four of these elements. In our globalized world it seems there is hardly a single law that cannot be circumvented or have its impact lessened with the help of a few shell companies. The British author Nicholas Shaxson sums this up rather neatly: ‘Offshore is not only a place, an idea, a way of doing things, and a weapon of the financial industry. It is also a process: a race to the bottom to where the rules, laws and outward signs of democracy are worn away little by little.’1 Used systematically, offshore offers an opportunity for an almost complete abdication of responsibility. It is very nearly impossible, we keep hearing in background discussions, for authorities to establish a chain of proof that holds up in court if the investigators come up against a network of shell companies strung out across five, ten or thirty tax havens.

 

Industry 4.0: The Industrial Internet of Things by Alasdair Gilchrist

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3D printing, additive manufacturing, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, business intelligence, business process, chief data officer, cloud computing, connected car, cyber-physical system, deindustrialization, fault tolerance, global value chain, Google Glasses, hiring and firing, industrial robot, inflight wifi, Infrastructure as a Service, Internet of things, inventory management, job automation, low skilled workers, millennium bug, pattern recognition, platform as a service, pre–internet, race to the bottom, RFID, Skype, smart cities, smart grid, smart meter, smart transportation, software as a service, stealth mode startup, supply-chain management, trade route, web application, WebRTC, WebSocket, Y2K

This value-add could be based on quality, price, quantity, or perceived value for the money. However, these strategies rarely worked for long, as the competitor having a low barrier to entry simply followed successful differentiation tactics. For example, competitors could match quantity and up their lot size to match or do better. Worse, if the price was the differentiator, the competitor could lower their prices, which results in what is termed a race to the bottom. Selling Light, Not Light Bulbs What the customer ultimately wants the goods for is to provide a service (provide air transportation in the previous example), but it could also be to produce light in the case of a light bulb. This got manufacturers looking at the problem from a different perspective; what if instead of selling light bulbs, you sold light? This out-of-the-box thinking produced what is known as the outcome economy, where manufacturers actually charged for the use of the product rather than the product itself.

 

pages: 417 words: 109,367

The End of Doom: Environmental Renewal in the Twenty-First Century by Ronald Bailey

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3D printing, additive manufacturing, agricultural Revolution, Albert Einstein, autonomous vehicles, Cass Sunstein, Climatic Research Unit, Commodity Super-Cycle, conceptual framework, corporate governance, credit crunch, David Attenborough, decarbonisation, dematerialisation, demographic transition, diversified portfolio, double helix, energy security, failed state, financial independence, Gary Taubes, hydraulic fracturing, income inequality, invisible hand, knowledge economy, meta analysis, meta-analysis, Naomi Klein, oil shale / tar sands, oil shock, pattern recognition, peak oil, phenotype, planetary scale, price stability, profit motive, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, Stewart Brand, Tesla Model S, trade liberalization, University of East Anglia, uranium enrichment, women in the workforce, yield curve

The problem is occurring in an open-access commons, an area no one owns and for whose stewardship no one is responsible. The classic examples are fisheries. Frequently they are an open-access resource that is being overexploited. If a fisher leaves a fish in the water to spawn, the next guy will catch it and sell it. Thus no individual fisher has the incentive to protect the health and productivity of the fishery. It’s a race to the bottom, with both fish and fishers losing out. Similarly, pollutants are pumped into rivers and into the air and tropical forests are chopped down because all too often anyone can use those resources without paying for the costs of the harm they cause. One such commons problem I considered in my 1992 book was the “ozone hole” over Antarctica that was produced by chlorofluorocarbon (CFC) refrigerants floating up into the stratosphere.

 

pages: 366 words: 94,209

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

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3D printing, Airbnb, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Burning Man, business process, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, crowdsourcing, cryptocurrency, disintermediation, diversified portfolio, Elon Musk, Erik Brynjolfsson, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, loss aversion, Lyft, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, TaskRabbit, trade route, transportation-network company, Turing test, Uber and Lyft, Uber for X, unpaid internship, Y Combinator, young professional, Zipcar

It must also respect the particular character of the resource being managed and the people who have worked with that resource the longest. Managing a fixed supply of minerals is different from managing a replenishing supply of timber. Finally, size and place matter. It’s easier for a town to manage its water supply than for the planet to establish water-sharing rules.78 In short, a commons must be bound by people, place, and rules. Contrary to prevailing wisdom, it’s not an anything-goes race to the bottom. It is simply a recognition of boundaries and limits. It’s pooled, multifaceted investment in pursuit of sustainable production. It is also an affront to the limitless expansion sought by pure capital. If anything, the notion of a commons’ becoming “enclosed” by privatization is a misnomer: privatizing a commons breaks the boundaries that protected its land and labor from pure market forces.

 

pages: 344 words: 93,858

The Post-American World: Release 2.0 by Fareed Zakaria

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affirmative action, agricultural Revolution, airport security, anti-communist, Asian financial crisis, battle of ideas, Berlin Wall, Bretton Woods, BRICs, British Empire, call centre, capital controls, central bank independence, centre right, collapse of Lehman Brothers, conceptual framework, Credit Default Swap, currency manipulation / currency intervention, delayed gratification, Deng Xiaoping, double entry bookkeeping, failed state, Fall of the Berlin Wall, financial innovation, global reserve currency, global supply chain, illegal immigration, interest rate derivative, knowledge economy, Mahatma Gandhi, Martin Wolf, mutually assured destruction, new economy, oil shock, open economy, out of africa, postindustrial economy, purchasing power parity, race to the bottom, reserve currency, Ronald Reagan, Silicon Valley, Silicon Valley startup, South China Sea, Steven Pinker, The Great Moderation, Thomas L Friedman, Thomas Malthus, trade route, Washington Consensus, working-age population, young professional

For the last thirty years, America had the lowest corporate tax rates of the major industrialized countries. Today, it has the second highest. American rates have not gone up; others have come down. Germany, for example, long a staunch believer in its high-taxation system, cut its rates (starting in 2008) in response to moves by countries to its east, like Slovakia and Austria. This kind of competition among industrialized countries is now widespread. It is not a race to the bottom—Scandinavian countries have high taxes, good services, and strong growth—but a quest for growth. American regulations used to be more flexible and market friendly than all others. That’s no longer true. London’s financial system was overhauled in 2001, with a single entity replacing a confusing mishmash of regulators, one reason that London’s financial sector now beats out New York’s on some measures.

 

Frugal Innovation: How to Do Better With Less by Jaideep Prabhu Navi Radjou

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3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, barriers to entry, Baxter: Rethink Robotics, Bretton Woods, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cloud computing, collaborative consumption, collaborative economy, connected car, corporate social responsibility, crowdsourcing, Elon Musk, financial innovation, global supply chain, income inequality, industrial robot, Internet of things, job satisfaction, Khan Academy, Kickstarter, late fees, Lean Startup, low cost carrier, M-Pesa, Mahatma Gandhi, megacity, minimum viable product, more computing power than Apollo, new economy, payday loans, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, precision agriculture, race to the bottom, reshoring, ride hailing / ride sharing, risk tolerance, Ronald Coase, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, software as a service, Steve Jobs, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, transaction costs, unbanked and underbanked, underbanked, women in the workforce, X Prize, yield management, Zipcar

Rather, we invest in innovative technologies like Water<Less and processes like Wellthread that can be applied across multiple product lines, making sustainability a core design principle for all our products. We want to gradually build a rich design-for-sustainability toolkit that we would share with our suppliers, and even our competitors. The hypercompetitive apparel sector is known for its race to the bottom. We want to initiate a race to the top by uplifting the sustainability standards of the entire industry. As well as saving on production costs, Levi Strauss’s sustainably designed products are generating greater customer goodwill and boosting employee morale. Employees in its stores – especially those in their 20s and 30s – rave about the Water<Less, Waste<Less and Wellthread products, which they find cool.

 

pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

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accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, German hyperinflation, Gini coefficient, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, very high income, We are the 99%

Conversely, the spectacular decrease in the progressivity of the income tax in the United States and Britain since 1980, even though both countries had been among the leaders in progressive taxation after World War II, probably explains much of the increase in the very highest earned incomes. At the same time, the recent rise of tax competition in a world of free-flowing capital has led many governments to exempt capital income from the progressive income tax. This is particularly true in Europe, whose relatively small states have thus far proved incapable of achieving a coordinated tax policy. The result is an endless race to the bottom, leading, for example, to cuts in corporate tax rates and to the exemption of interest, dividends, and other financial revenues from the taxes to which labor incomes are subject. One consequence of this is that in most countries taxes have (or will soon) become regressive at the top of the income hierarchy. For example, a detailed study of French taxes in 2010, which looked at all forms of taxation, found that the overall rate of taxation (47 percent of national income on average) broke down as follows.

For the countries of Europe, the priority now should be to construct a continental political authority capable of reasserting control over patrimonial capitalism and private interests and of advancing the European social model in the twenty-first century. The minor disparities between national social models are of secondary importance in view of the challenges to the very survival of the common European model.35 Another point to bear in mind is that without such a European political union, it is highly likely that tax competition will continue to wreak havoc. The race to the bottom continues in regard to corporate taxes, as recently proposed “allowances for corporate equity” show.36 It is important to realize that tax competition regularly leads to a reliance on consumption taxes, that is, to the kind of tax system that existed in the nineteenth century, where no progressivity is possible. In practice, this favors individuals who are able to save, to change their country of residence, or both.37 Note, however, that progress toward some forms of fiscal cooperation has been more rapid than one might imagine at first glance: consider, for example, the proposed financial transactions tax, which could become one of the first truly European taxes.

 

pages: 489 words: 111,305

How the World Works by Noam Chomsky, Arthur Naiman, David Barsamian

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affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bernie Sanders, Bretton Woods, British Empire, business climate, capital controls, clean water, corporate governance, deindustrialization, Fall of the Berlin Wall, feminist movement, glass ceiling, Howard Zinn, income inequality, interchangeable parts, Isaac Newton, joint-stock company, labour market flexibility, land reform, Monroe Doctrine, offshore financial centre, Plutocrats, plutocrats, race to the bottom, Ralph Nader, Ronald Reagan, Rosa Parks, single-payer health, strikebreaker, Telecommunications Act of 1996, transfer pricing, union organizing, War on Poverty, working poor

Legislators had planned a big tax break for Massachusetts businesses generally, but restricted it to Raytheon and other “defense contractors.” It’s an old story. Until the late 19th century, corporations were limited to functions explicitly determined by the state charters. That requirement effectively disappeared when New Jersey offered to drop it. Corporations began incorporating in New Jersey instead of New York, thus forcing New York to also drop the requirement and setting off a “race to the bottom.” The result was a substantial increase in the power of private tyrannies, providing them with new weapons to undermine liberty and human rights, and to administer markets in their own interest. The logic is the same when GM decides to invest in Poland, or when Daimler-Benz transfers production from Germany, where labor is highly paid, to Alabama, where it isn’t. By playing Alabama off against another competitor, North Carolina, Daimler-Benz received subsidies, protected markets and risk protection from “the people.”

 

pages: 374 words: 114,600

The Quants by Scott Patterson

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Albert Einstein, asset allocation, automated trading system, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, buttonwood tree, buy low sell high, capital asset pricing model, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Emanuel Derman, Eugene Fama: efficient market hypothesis, fixed income, Gordon Gekko, greed is good, Haight Ashbury, index fund, invention of the telegraph, invisible hand, Isaac Newton, job automation, John Nash: game theory, law of one price, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, merger arbitrage, NetJets, new economy, offshore financial centre, Paul Lévy, Ponzi scheme, quantitative hedge fund, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sergey Aleynikov, short selling, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise

The decision set the stage for one of the most frustrating years in Asness’s investing career. AQR also made misplaced bets on the direction of interest rates, currencies, commercial real estate, and convertible bonds—pretty much everything under the sun. As the losses piled up, investors were getting antsy. AQR was supposed to hold up in market downturns, just as it had in 2001 and 2002 during the dot-com blowup. Instead, AQR was racing to the bottom along with the rest of the market. In October and November Asness went on a long road trip, visiting nearly every investor in his fund, traveling in a private jet to locations as far afield as Tulsa, Oklahoma, and Sydney, Australia. For the rare down moments, he pulled out his Kindle, Amazon.com’s wireless reading device, which was loaded with books ranging from How Math Explains the World to Anna Karenina to When Markets Collide by Mohamad El-Erian, a financial guru at bond giant Pimco.

 

pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

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23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, Plutocrats, plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, wage slave, working poor, working-age population, Y2K, Yogi Berra

If Europeans find their shoes made cheaply in Vietnam, then they have more to spend on getting their hair done and there are more nice jobs for Europeans in hair salons and fewer dull ones in shoe factories. Sure, manufacturers will and do seek out countries that tolerate lower wages and lower standards – though, prodded by Western activists, in practice their main effect is then to raise the wages and standards in such places, where they most need raising. It is less of a race to the bottom, more of a race to raise the bottom. Nike’s sweatshops in Vietnam, for example, pay wages three times as high as local state owned factories and have far better facilities. That drives up wages and standards. During the period of most rapid expansion of trade and out-sourcing, child labour has halved since 1980: if that is driving down standards, let there be more of it. The apotheosis of the city Trade draws people to cities and swells the slums.

 

pages: 481 words: 120,693

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

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

(The British government had to nationalize RBS in 2008 and spent billions to cover its loses; RBC in 2012 was one of the top twenty banks in the world, with a market capitalization of $74 billion.) A Canadian finance executive who spent the 1990s in Toronto, then moved to Asia, and now lives in London sheepishly recalls thinking: “Come on, guys, get in the game! The world’s changing.” — The regulatory race to the bottom between New York and London—and the plutocracy’s eager and misguided complicity in that contest—is an important cause of the 2008 financial crisis. But it is also a crucial episode in another story: the rise of the super-elite. Much of the story of the rise of the 1 percent, and especially of the 0.1 percent, is the story of the rise of finance. And less regulation, more complexity, and more risk are important reasons why finance has become a bigger part of so many developed Western economies, particularly the United States and the United Kingdom, and why financiers’ income has overtaken that of almost everyone else.

 

pages: 503 words: 131,064

Liars and Outliers: How Security Holds Society Together by Bruce Schneier

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airport security, barriers to entry, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, corporate governance, crack epidemic, credit crunch, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, experimental economics, Fall of the Berlin Wall, financial deregulation, George Akerlof, hydraulic fracturing, impulse control, income inequality, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Nash: game theory, joint-stock company, Julian Assange, meta analysis, meta-analysis, microcredit, moral hazard, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, offshore financial centre, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, rent-seeking, RFID, Richard Thaler, risk tolerance, Ronald Coase, security theater, shareholder value, slashdot, statistical model, Steven Pinker, Stuxnet, technological singularity, The Market for Lemons, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, traffic fines, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K

It's in their collective group interest for prices to remain high; they collectively make a greater profit if they all charge $6 for a sandwich. But by keeping their prices high, each of them runs the risk of their competitors acting in their self-interest and undercutting them. And since they can't trust the others not to do that, they all preemptively lower their prices and all end up selling sandwiches at $5 each. In economics this is known as the “race to the bottom.” Societal Dilemma: Setting prices. Society: All the merchants. Group interest: Make the most money as a group. Competing interest: Make the most money individually, and in the short term. Group norm: Keep prices high. Corresponding defection: Undercut the competition. To encourage people to act in the group interest, the society implements a variety of societal pressures. Moral: The group encourages loyalty.

 

pages: 532 words: 155,470

One Less Car: Bicycling and the Politics of Automobility by Zack Furness, Zachary Mooradian Furness

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active transport: walking or cycling, affirmative action, American Society of Civil Engineers: Report Card, back-to-the-land, Build a better mousetrap, Burning Man, car-free, carbon footprint, clean water, colonial rule, conceptual framework, dumpster diving, Enrique Peñalosa, European colonialism, feminist movement, ghettoisation, Golden Gate Park, interchangeable parts, intermodal, Internet Archive, Jane Jacobs, market fundamentalism, means of production, Naomi Klein, New Urbanism, peak oil, place-making, post scarcity, race to the bottom, Ralph Nader, ride hailing / ride sharing, Ronald Reagan, Silicon Valley, sustainable-tourism, the built environment, The Death and Life of Great American Cities, Thomas L Friedman, Thorstein Veblen, urban planning, Whole Earth Catalog, Whole Earth Review, working poor, Yom Kippur War

For example, Schwinn not only supported the same companies that eventually became its primary competition (notably Giant) and missed out on the opportunity to become a major player in both BMX and mountain bike production—its management apparently referred to the mountain bike as a fad—it also made a number of shrewd moves to avoid reinvesting in either its Chicago production plant or its experienced workforce.43 When Chicago Schwinn workers unionized under the UaW and went on strike in 1980, the company responded frostily and went on to close the plant in 1983, moving its equipment and engineers to the Giant Bicycle Company factory in Taichung, Taiwan.44 Schwinn proceeded to open a new manufacturing plant in Greenville, Mississippi, where it hired inexperienced bike makers for lower pay, in a facility located seventy-five miles from the nearest interstate highway.45 The plant lost more than $30 million and was closed in 1991, just one year prior to the company’s bankruptcy declaration.46 While Schwinn is now widely seen as a textbook case for how not to run a company in the so-called postindustrial era, its story is rarely used to highlight the negative impacts of globalization on the environment, on the U.S. workers who lose their jobs and trade unions, and on the multitudes of Mexican and asian workers who are subsequently and systematically exploited. rather, we are meant to see the company’s missed opportunities, lack of innovation, and brand deterioration as the hallmarks of its failure, as opposed to seeing the entire bicycle industry as a symbol of everything wrong with globalization and the corporate race to the bottom. indeed, one of the most symbolic events to highlight the negative effects of globalization on american workers took place at another bike factory in July 1998, when Huffy Bicycle Corporation, then largest in the United States, closed down its Celina, Ohio factory and fired the entire staff of nearly a thousand workers despite high overall sales that year (previous years were financially tumultuous).

 

pages: 379 words: 114,807

The Land Grabbers: The New Fight Over Who Owns the Earth by Fred Pearce

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Asian financial crisis, banking crisis, big-box store, blood diamonds, British Empire, Cape to Cairo, carbon footprint, clean water, credit crunch, Deng Xiaoping, Elliott wave, en.wikipedia.org, energy security, farmers can use mobile phones to check market prices, index fund, Jeff Bezos, land reform, land tenure, Mahatma Gandhi, market fundamentalism, megacity, Mohammed Bouazizi, Nikolai Kondratiev, offshore financial centre, out of africa, quantitative easing, race to the bottom, Ronald Reagan, smart cities, structural adjustment programs, too big to fail, urban planning, urban sprawl, WikiLeaks

He promised to supply land grabbers with workers at twenty-five cents an hour, which he boasted is less than half the rate in Indonesia, a seventh that in Malaysia, and a tenth that in Brazil. Land leases cost as little as two dollars per acre per year, he said. Water was free, and taxes virtually nonexistent. There were “no restrictions of foreign exchange; no limits on expat employees; full repatriation of profits, dividends and royalties and 100 percent foreign ownership permitted.” Competitors in the “race to the bottom” to play host for palm oil will find Sierra Leone already there. The huge areas of forestland in the DRC, along with its good soils and year-round rains, make it another potential honey pot, as it was in the days of Lever Brothers. Elwyn Blattner, the New Jersey inheritor of the Blattner Group’s land assets, is as friendly with the country’s new rulers as he was with Mobutu, and still operates a rubber plantation and thousands of acres of oil palm across the country.

 

pages: 543 words: 147,357

Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society by Will Hutton

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Andrei Shleifer, asset-backed security, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, corporate governance, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, diversification, double helix, Edward Glaeser, financial deregulation, financial innovation, financial intermediation, first-past-the-post, floating exchange rates, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, Hyman Minsky, I think there is a world market for maybe five computers, income inequality, inflation targeting, interest rate swap, invisible hand, Isaac Newton, James Dyson, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, Long Term Capital Management, Louis Pasteur, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, means of production, Mikhail Gorbachev, millennium bug, moral hazard, mortgage debt, new economy, Northern Rock, offshore financial centre, open economy, Plutocrats, plutocrats, price discrimination, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, Rory Sutherland, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, unpaid internship, value at risk, Washington Consensus, working poor, éminence grise

We need to know that an airplane will fly and that a nuclear power plant will not blow up. They cannot be tamed by trial-and-error learning when the potential for catastrophic losses means that the first error will also be the last trial. Regulation creates the market. If financial products had been regulated like drugs – so they were tested before being introduced on the market – banks would have engaged less in a race to the bottom introducing ever more worthless financial instruments. The crash need not have been so severe. Credit-rating agencies, whose task was to provide the crucial gold standard of trustworthiness, failed. Regulators therefore have a role to play in the financial sector, sometimes expressing consumer preferences that are unrepresented in the current array of goods and services but are expressed through, say, elections.

 

pages: 320 words: 87,853

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

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

The Securities and Exchange Commission (created during the Great Depression) wants to assure that investors understand how much risk they are taking on,32 but the government itself does not want to be in the business of rating and ranking investments.33 So the SEC registers private, for-profit credit rating agencies (CRAs) to make such judgments by designating them as Nationally Recognized Statistical Rating Organizations (NRSROs).34 The CRAs Moody’s, Fitch, and Standard & Poor’s (S&P) are the leading NRSROs.35 They rate investments from the super safe (AAA) to the more speculative, and even—less politely—junk.36 This “outsourcing” of regulation saved the government money and headaches as long as the CRAs maintained integrity and competence.37 But both gradually eroded over time, accelerated by their need to compete for the business of the very entities they were rating.38 When bankers crafting mortgage-backed securities began shopping around for the most pliable rater, the agencies’ commitment to objective statistical analysis began to show some strain.39 Before 2005, an AAA rating was a prized asset; only about 1 percent of AAA-rated investments incurred a default.40 But a Senate report in 2011 found that “90% of the AAA ratings given to subprime residential mortgage-backed securities originated in 2006 and 2007 were later downgraded by the credit rating agencies to junk status.” 41 Rating agencies furiously competed to rate the flood of securities generated during the housing bubble. Like runaway “grade inflation” that cheapens straight A report cards, rating inflation has eroded the meaning (if not the value) of AAA ratings. There were plenty of convenient rationales at hand: the U.S. economy was remarkably strong, population rise meant housing prices could only go up, computer-driven productivity would lift all incomes.42 The credit raters were soon in a race to the bottom in laxity. As sociologist Will Davies observes, those “tasked with representing, measuring and judging capitalist activity are also seeking to profit from” it, and there is little to connect probity in the former activities to prospering in the present.43 110 THE BLACK BOX SOCIETY Their crudity eventually captured media attention, as various “gotcha” statements emerged. “Let’s hope we are all wealthy and retired by the time this house of cards falters,” one internal e-mail said.

 

pages: 598 words: 134,339

Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World by Bruce Schneier

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23andMe, Airbnb, airport security, AltaVista, Anne Wojcicki, augmented reality, Benjamin Mako Hill, Black Swan, Brewster Kahle, Brian Krebs, call centre, Cass Sunstein, Chelsea Manning, citizen journalism, cloud computing, congestion charging, disintermediation, Edward Snowden, experimental subject, failed state, fault tolerance, Ferguson, Missouri, Filter Bubble, Firefox, friendly fire, Google Chrome, Google Glasses, hindsight bias, informal economy, Internet Archive, Internet of things, Jacob Appelbaum, Jaron Lanier, Julian Assange, Kevin Kelly, license plate recognition, linked data, Lyft, Mark Zuckerberg, Nash equilibrium, Nate Silver, national security letter, Network effects, Occupy movement, payday loans, pre–internet, price discrimination, profit motive, race to the bottom, RAND corporation, recommendation engine, RFID, self-driving car, Silicon Valley, Skype, smart cities, smart grid, Snapchat, social graph, software as a service, South China Sea, stealth mode startup, Steven Levy, Stuxnet, TaskRabbit, telemarketer, Tim Cook: Apple, transaction costs, Uber and Lyft, urban planning, WikiLeaks, zero day

Under Seal 1; Under Seal 2 [Lavabit], Case Nos. 13-4625, 13-4626, United States Court of Appeals for the Fourth Circuit, https://www.aclu.org/sites/default/files/assets/stamped_lavabit_amicus.pdf. Empeopled LLC (24 Oct 2013), “Brief of amicus curiae,” United States of America v. Under Seal 1; Under Seal 2 [Lavabit], Case Nos. 13-4625, 13-4626, United States Court of Appeals for the Fourth Circuit, http://justsecurity.org/wp-content/uploads/2013/10/empeopled-lavabit-amicus.pdf. On four occasions in the early 2000s: Rebecca MacKinnon (2006), “‘Race to the bottom’: Corporate complicity in Chinese Internet censorship,” Human Rights Watch, http://www.hrw.org/reports/2006/china0806/5.htm. lobbying for legislative restrictions: Thomas Lee (25 May 2014), “Mind your business: Slow flex of tech’s lobbying muscle,” San Francisco Chronicle, http://www.sfgate.com/technology/article/Mind-Your-Business-Slow-flex-of-tech-s-lobbying-5504172.php. Joseph Menn (5 Jun 2014), “U.S. technology companies beef up security to thwart mass spying,” Reuters, http://www.reuters.com/article/2014/06/05/us-cybersecurity-tech-idUSKBN0EG2BN20140605.

 

pages: 448 words: 142,946

Sacred Economics: Money, Gift, and Society in the Age of Transition by Charles Eisenstein

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Albert Einstein, back-to-the-land, bank run, Bernie Madoff, big-box store, Bretton Woods, capital controls, clean water, collateralized debt obligation, credit crunch, David Ricardo: comparative advantage, debt deflation, deindustrialization, delayed gratification, disintermediation, diversification, fiat currency, financial independence, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, global supply chain, happiness index / gross national happiness, hydraulic fracturing, informal economy, invisible hand, Jane Jacobs, land tenure, Lao Tzu, liquidity trap, lump of labour, McMansion, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, new economy, oil shale / tar sands, Own Your Own Home, peak oil, phenotype, Ponzi scheme, profit motive, quantitative easing, race to the bottom, Scramble for Africa, special drawing rights, spinning jenny, technoutopianism, the built environment, Thomas Malthus, too big to fail

Ultimately, income will not be taxed at all, freeing us from onerous record-keeping responsibilities and intrusive government monitoring. 4. ECONOMIC AND MONETARY LOCALIZATION Motivation: As community has disintegrated around the world, people yearn for a return to local economies where we know personally the people we depend on. We want to be connected to people and places, not adrift in an anonymous global monoculture. Moreover, global commodity production puts localities into competition with each other, fomenting a “race to the bottom” in wages and environmental regulations. Moreover, when production and economic exchange are local, the social and environmental effects of our actions are much more obvious, reinforcing our innate compassion. Transition and policy: The trend toward local economy has already started. Spiking energy costs and ecological awareness prompt businesses to source more supplies locally, and millions of consumers are awakening to the health benefits of locally grown, fresh food.

 

pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

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affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, capital controls, Cass Sunstein, central bank independence, clean water, collapse of Lehman Brothers, congestion charging, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, Joseph Schumpeter, Kenneth Rogoff, libertarian paternalism, low skilled workers, lump of labour, Malacca Straits, market bubble, microcredit, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional

Therein lies one of the powerful benefits of globalization: Trade makes countries richer; richer countries care more about environmental quality and have more resources at their disposal to deal with pollution. Economists reckon that many kinds of pollution rise as a country gets richer (when every family buys a motorcycle) and then fall in the later stages of development (when we ban leaded gasoline and require more efficient engines). Critics of trade have alleged that allowing individual countries to make their own environmental decisions will lead to a “race to the bottom” in which poor countries compete for business by despoiling their environments. It hasn’t happened. The World Bank recently concluded after six years of study, “Pollution havens—developing countries that provide a permanent home to dirty industries—have failed to materialize. Instead, poorer nations and communities are acting to reduce pollution because they have decided that the benefits of abatement outweigh the costs.”21 Climate change is a trickier case, in that carbon emissions are a zero-sum situation, at least in developing countries in the near term.

 

pages: 545 words: 137,789

How Markets Fail: The Logic of Economic Calamities by John Cassidy

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Albert Einstein, Andrei Shleifer, anti-communist, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black-Scholes formula, Bretton Woods, British Empire, capital asset pricing model, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, global supply chain, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, laissez-faire capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Network effects, Nick Leeson, Northern Rock, paradox of thrift, Ponzi scheme, price discrimination, price stability, principal–agent problem, profit maximization, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, unorthodox policies, value at risk, Vanguard fund

A drive to maintain or expand market share made the rating agencies willing participants in this shopping spree. It was also relatively easy for the major banks to play the agencies off one another because of the opacity of the structured transactions and the high potential fees earned by the winning agency. Originators of structured securities typically chose the agency with the lowest standards, engendering a race to the bottom in terms of rating quality. While the methods used to rate structured securities have rightly come under fire, in my opinion, the business model prevented analysts from putting investor interests first. While all this was happening, the nation’s top financial cop, the chairman of the Fed, was averting his eyes. In a September 2007 interview with the CBS show 60 Minutes, Greenspan conceded that while he had been aware of widespread abuses in the subprime market, “I had no notion of how significant they had become until very late.

 

pages: 501 words: 134,867

A Line in the Tar Sands: Struggles for Environmental Justice by Tony Weis, Joshua Kahn Russell

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Bakken shale, bilateral investment treaty, call centre, carbon footprint, clean water, colonial exploitation, conceptual framework, corporate social responsibility, decarbonisation, Deep Water Horizon, en.wikipedia.org, energy security, energy transition, Exxon Valdez, failed state, global village, guest worker program, happiness index / gross national happiness, hydraulic fracturing, immigration reform, investor state dispute settlement, invisible hand, LNG terminal, market fundamentalism, means of production, Naomi Klein, new economy, Occupy movement, oil shale / tar sands, peak oil, profit maximization, race to the bottom, smart grid, special economic zone, working poor

The Alberta Federation of Labour, for example, has fluctuated on the issue of migrant workers in the tar sands. Generally, they are opposed to migrant worker programs and have done commendable, extensive work to highlight the deplorable working conditions. But recently, in at least two high-profile incidents,5 they also spoke out against the “displacement” of Canadian workers by migrant workers in the tar sands. This approach needs to be challenged, because it signals a “race to the bottom”: laying off union workers to bring in precarious labour is a way for the government and big business to dismantle workers’ rights across the board. If we don’t recognize the economic and social conditions that make migrant workers vulnerable in the first place, we further marginalize and isolate them with divisive rhetoric, which is also, frankly, quite entitled and racist. Union politics of “protectionism” in this era of austerity and scarcity mean that migrant workers of colour, rather than the state and capital, get scapegoated as the problem.

 

pages: 414 words: 119,116

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

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

Solutions to improving working conditions should be applied globally, but examples of local action show how working life can be transformed – witness the scavengers of India or the young unemployed of Wales. A worrying trend is that work will increasingly be stratified into well-paid empowering work for people with education and skills and the reverse for those without. Global competition can lead to a race to the bottom. Worse working conditions and cheaper labour costs make a country more attractive for transnational corporations. Highlighting the problem is a step towards addressing it. I said in Chapter 5 that education was central because it provided the key connection between early life and the grown-up world of work. I could say the same here. Work is central because it provides the crucial link between earlier life and those older years, beyond working age, that are stretching ever further.

 

pages: 388 words: 125,472

The Establishment: And How They Get Away With It by Owen Jones

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anti-communist, Asian financial crisis, bank run, battle of ideas, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, centre right, citizen journalism, collapse of Lehman Brothers, collective bargaining, don't be evil, Edward Snowden, Etonian, eurozone crisis, falling living standards, Francis Fukuyama: the end of history, full employment, glass ceiling, hiring and firing, housing crisis, inflation targeting, investor state dispute settlement, James Dyson, laissez-faire capitalism, market fundamentalism, Monroe Doctrine, Mont Pelerin Society, moral hazard, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, open borders, Plutocrats, plutocrats, profit motive, quantitative easing, race to the bottom, rent control, road to serfdom, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, stakhanovite, statistical model, The Wealth of Nations by Adam Smith, transfer pricing, union organizing, unpaid internship, Washington Consensus, Winter of Discontent

But there are good reasons to believe that the head of G4S, David Taylor-Smith, was right when in June 2012 he suggested private companies would be in control of large swathes of the police within five years. The rationale of Britain’s police force from the beginning was ‘policing by consent’. Now, Britain faces the prospect of police forces policing by consent of their shareholders rather than their communities. The logical end result of the Establishment mantra is a race to the bottom in the quality of service and the rights of workers. After all, companies slicing off chunks of the public sector are driven by one thing: profit. And there are few better methods of boosting their profit streams than slashing workers’ wages and undermining their terms and conditions. Like other current working contractors, Terry Williams cannot give his real name when talking about his job, because if he does so he risks losing it.

 

pages: 437 words: 115,594

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

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

Economists Rachel Heath of the University of Washington and Mushfiq Mobarak of Yale University estimate that around 15 percent of Bangladeshi women between the ages of sixteen and thirty are employed in the garment industry. They find compelling evidence that women’s employment in the garment industry has had a significant positive effect on reducing fertility rates, delaying marriage, and increasing girls’ educational attainment.14 Although some fear that global integration creates a “race to the bottom” with falling wages, the increase in investment and economic activity more typically has led to rising wages—fairly significant rises. The wage increases are largest in “tradable” sectors: firms that have integrated into world markets by exporting or competing with imports. According to the World Bank, wages in traded goods and services for both unskilled workers (such as sewing machine operators) and skilled workers (chemical engineers) have risen by 60 percent in real terms since the mid-1990s.

 

pages: 399 words: 116,828

When Work Disappears: The World of the New Urban Poor by William Julius Wilson

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affirmative action, citizen journalism, collective bargaining, conceptual framework, declining real wages, deindustrialization, deliberate practice, desegregation, Donald Trump, edge city, ending welfare as we know it, full employment, George Gilder, ghettoisation, glass ceiling, income inequality, informal economy, labor-force participation, labour market flexibility, low skilled workers, low-wage service sector, manufacturing employment, new economy, New Urbanism, pink-collar, race to the bottom, RAND corporation, school choice, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, upwardly mobile, urban decay, urban renewal, War on Poverty, working poor, working-age population, Works Progress Administration

“Social Isolation and the Labor Market: Black Americans in Chicago.” Paper presented at the Chicago Urban Poverty and Family Life Conference, October 10–12, Chicago. Peeples, Faith, and Rolf Loeber. 1994. “Do Individual Factors and Neigh-borhood Context Explain Ethnic Differences in Juvenile Delinquency?” Journal of Quantitative Criminology 10:141–57. Petersen, Paul E. 1995. “State Responses to Welfare Reform: A Race to the Bottom.” In Welfare Reform: An Analysis of Issues, edited by Isabel V. Sawhill, pp. 7–11. Washington, D.C.: Urban Institute Press. Plotnick, Robert D. 1990. “Determinants of Teenage Out-of-Wedlock Childbearing.” Journal of Marriage and the Family 52:735–46. Price, Hugh. 1994. Keynote address. National Urban League Annual Conference, Indianapolis, July 24. Prothrow-Stith, Deborah. 1991. Deadly Consequences.

 

pages: 475 words: 155,554

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge by Faisal Islam

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Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, British Empire, capital controls, carbon footprint, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, crony capitalism, dark matter, deindustrialization, Deng Xiaoping, disintermediation, energy security, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, financial repression, floating exchange rates, forensic accounting, forward guidance, full employment, ghettoisation, global rebalancing, global reserve currency, hiring and firing, inflation targeting, Irish property bubble, Just-in-time delivery, labour market flexibility, London Whale, Long Term Capital Management, margin call, market clearing, megacity, Mikhail Gorbachev, mini-job, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, North Sea oil, Northern Rock, offshore financial centre, open economy, paradox of thrift, pension reform, price mechanism, price stability, profit motive, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, reshoring, rising living standards, Ronald Reagan, savings glut, shareholder value, sovereign wealth fund, The Chicago School, the payments system, too big to fail, trade route, transaction costs, two tier labour market, unorthodox policies, uranium enrichment, urban planning, value at risk, working-age population

‘American investment banks then snapped up all the British banks that then directed those American pools of money that were outside of America in London.’ London was clearly far more than the financial equivalent of George Orwell’s ‘Airstrip One’. But seeing the City as essentially a part of Wall Street is a useful way of looking at the boom and the bust. It did seem as if London was where Wall Street did its dry-cleaning. There can be no doubt that the UK FSA started the race to the bottom on lenient treatment of derivative exposures. It boasted about the business won through this approach. Wall Street regulators tried hard to keep up. David Cameron himself, in a speech to the City after the crisis began in March 2008, fully endorsed the strategy of outcompeting Wall Street on deregulation. ‘The UK has a long history of benefiting from over-regulation elsewhere,’ he told his audience.

 

pages: 527 words: 147,690

Terms of Service: Social Media and the Price of Constant Connection by Jacob Silverman

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23andMe, 4chan, A Declaration of the Independence of Cyberspace, Airbnb, airport security, Amazon Mechanical Turk, augmented reality, Brian Krebs, California gold rush, call centre, cloud computing, cognitive dissonance, correlation does not imply causation, Credit Default Swap, crowdsourcing, don't be evil, Edward Snowden, feminist movement, Filter Bubble, Firefox, Flash crash, game design, global village, Google Chrome, Google Glasses, hive mind, income inequality, informal economy, information retrieval, Internet of things, Jaron Lanier, jimmy wales, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, license plate recognition, life extension, Lyft, Mark Zuckerberg, Mars Rover, Marshall McLuhan, meta analysis, meta-analysis, Minecraft, move fast and break things, national security letter, Network effects, new economy, Nicholas Carr, Occupy movement, optical character recognition, payday loans, Peter Thiel, postindustrial economy, prediction markets, pre–internet, price discrimination, price stability, profit motive, quantitative hedge fund, race to the bottom, Ray Kurzweil, recommendation engine, rent control, RFID, ride hailing / ride sharing, self-driving car, sentiment analysis, shareholder value, sharing economy, Silicon Valley, Silicon Valley ideology, Snapchat, social graph, social web, sorting algorithm, Steve Ballmer, Steve Jobs, Steven Levy, TaskRabbit, technoutopianism, telemarketer, transportation-network company, Turing test, Uber and Lyft, Uber for X, universal basic income, unpaid internship, women in the workforce, Y Combinator, Zipcar

March 23, 2014. nymag.com/daily/intelligencer/2014/03/upworthy-team-explains-its-success.html. 126 An opinion . . . he doesn’t hold: Joe Eskenazi. “Top 5 Ways Bleacher Report Rules the World!” SF Weekly. Oct. 3, 2012. sfweekly.com/2012-10-03/news/bleacher-report-sports-journalism-internet-espn-news-technology/full. 126 “don’t expect to find any original reporting”: ibid. 126 aggregate . . . search engine optimization: ibid. 127 “hyperbolic headlines”: ibid. 127 “Here’s a labor force”: Ryan Chittum. “Bleacher Report and the Race to the Bottom.” Columbia Journalism Review. Oct. 5, 2012. cjr.org/the_audit/sf_weekly_on_what_bleacher_rep.php. 128 $200 million: Eskenazi. “Top 5 Ways Bleacher Report Rules the World!” 129 “emerging culture of surveillance”: David Lyon. “The Culture of Surveillance: Who’s Watching Whom, Now?” Lecture, University of Sydney. March 1, 2012. sydney.edu.au/sydney_ideas/lectures/2012/professor_david_lyon.shtml. 129 “They quite literally”: Barton Gellman and Laura Poitras.

 

pages: 475 words: 149,310

Multitude: War and Democracy in the Age of Empire by Michael Hardt, Antonio Negri

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affirmative action, Berlin Wall, Bretton Woods, British Empire, conceptual framework, David Graeber, Defenestration of Prague, deskilling, Fall of the Berlin Wall, feminist movement, Francis Fukuyama: the end of history, friendly fire, global village, Howard Rheingold, Howard Zinn, illegal immigration, Joseph Schumpeter, labour mobility, land reform, land tenure, late capitalism, means of production, Naomi Klein, new economy, private military company, race to the bottom, RAND corporation, reserve currency, Richard Stallman, Slavoj Žižek, The Chicago School, The Structural Transformation of the Public Sphere, Thomas Malthus, Thorstein Veblen, Tobin tax, transaction costs, union organizing, War on Poverty, Washington Consensus

Many labor unions, particularly in the dominant countries, protest the fact that the mere threat of the mobility of capital—the threat, for example, of moving production and jobs to another country where state regulations and/or labor costs are lower and more favorable—can convince states to abandon or temper their own regulatory powers. States conform to and even anticipate the needs of capital for fear of being subordinated in the global economic system. This creates a sort of race to the bottom among nation-states in which the interests of labor and society as a whole take a backseat to those of capital. Neoliberalism is generally the name given to this form of state economic policy. Neoliberalism, as we claimed in part 2, is not really a regime of unregulated capital but rather a form of state regulation that best facilitates the global movements and profit of capital. Once again, in the era of neoliberalism, it might be helpful to think of the state as the executive committee assigned the task of guaranteeing the long-term well-being of collective capital.

 

pages: 537 words: 158,544

Second World: Empires and Influence in the New Global Order by Parag Khanna

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Admiral Zheng, affirmative action, anti-communist, Asian financial crisis, Bartolomé de las Casas, Branko Milanovic, British Empire, call centre, capital controls, central bank independence, cognitive dissonance, colonial rule, complexity theory, crony capitalism, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, Edward Glaeser, energy security, European colonialism, facts on the ground, failed state, flex fuel, Francis Fukuyama: the end of history, friendly fire, Gini coefficient, global reserve currency, global supply chain, haute couture, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Islamic Golden Age, Khyber Pass, knowledge economy, land reform, low skilled workers, means of production, megacity, Monroe Doctrine, oil shale / tar sands, oil shock, open borders, open economy, Pax Mongolica, pirate software, Plutonomy: Buying Luxury, Explaining Global Imbalances, Potemkin village, price stability, race to the bottom, RAND corporation, reserve currency, rising living standards, Ronald Reagan, Silicon Valley, Skype, South China Sea, special economic zone, stem cell, Stephen Hawking, Thomas L Friedman, trade route, trickle-down economics, uranium enrichment, urban renewal, Washington Consensus, women in the workforce

To strengthen its nonfunctional equity markets, China has outsourced raising capital for its banks to Hong Kong and Singapore. And to deal with vast nonperforming assets resulting from years of reckless lending, it allows major foreign banks to buy ever-larger stakes—and thus share the risk while using their expertise to clean up the mess.23 China benefits from foreign know-how, and the first world sweats to keep up. In the past foreign firms subcontracted only low-wage component assembly to China, but the “race to the bottom” is over: China now competes with first-world Singapore and Taiwan for electronics assembly and modular manufacturing. Germans workers now put in overtime to compete with the very Chinese workers they once trained—that is, if their entire design and manufacturing units have not already been moved to China. China has even reverse-engineered European weapons and then dumped the supplier.24 Shanghai Automotive may eventually put both General Motors and Volkswagen out of business in China, upgrading its models with their technology and then selling its cars for less—soon in the United States.

 

pages: 523 words: 143,139

Algorithms to Live By: The Computer Science of Human Decisions by Brian Christian, Tom Griffiths

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4chan, Ada Lovelace, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, algorithmic trading, anthropic principle, asset allocation, autonomous vehicles, Berlin Wall, Bill Duvall, bitcoin, Community Supported Agriculture, complexity theory, constrained optimization, cosmological principle, cryptocurrency, Danny Hillis, delayed gratification, dematerialisation, diversification, double helix, Elon Musk, fault tolerance, Fellow of the Royal Society, Firefox, first-price auction, Flash crash, Frederick Winslow Taylor, George Akerlof, global supply chain, Google Chrome, Henri Poincaré, information retrieval, Internet Archive, Jeff Bezos, John Nash: game theory, John von Neumann, knapsack problem, Lao Tzu, linear programming, martingale, Nash equilibrium, natural language processing, NP-complete, P = NP, packet switching, prediction markets, race to the bottom, RAND corporation, RFC: Request For Comment, Robert X Cringely, sealed-bid auction, second-price auction, self-driving car, Silicon Valley, Skype, sorting algorithm, spectrum auction, Steve Jobs, stochastic process, Thomas Malthus, traveling salesman, Turing machine, urban planning, Vickrey auction, Walter Mischel, Y Combinator

But they also all want to take just slightly less vacation than each other, to be perceived as more loyal, more committed, and more dedicated (hence more promotion-worthy). Everyone looks to the others for a baseline, and will take just slightly less than that. The Nash equilibrium of this game is zero. As the CEO of software company Travis CI, Mathias Meyer, writes, “People will hesitate to take a vacation as they don’t want to seem like that person who’s taking the most vacation days. It’s a race to the bottom.” This is the tragedy of the commons in full effect. And it’s just as bad between firms as within them. Imagine two shopkeepers in a small town. Each of them can choose either to stay open seven days a week or to be open only six days a week, taking Sunday off to relax with their friends and family. If both of them take a day off, they’ll retain their existing market share and experience less stress.

 

pages: 540 words: 168,921

The Relentless Revolution: A History of Capitalism by Joyce Appleby

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1919 Motor Transport Corps convoy, agricultural Revolution, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, collateralized debt obligation, collective bargaining, Columbian Exchange, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, Doha Development Round, double entry bookkeeping, epigenetics, equal pay for equal work, European colonialism, facts on the ground, failed state, Firefox, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gordon Gekko, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, knowledge economy, land reform, Livingstone, I presume, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, moral hazard, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transatlantic slave trade, transcontinental railway, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War

Some criticize the outsized clout in the WTO of the multinational corporations in agribusiness, pharmaceuticals, and financial services.3 The WTO exercises too much caution, others say, in its enforcement of quarantines designed to protect humans, animals, and plants. Caution seems to abound; many of the WTO’s accords for cutting tariffs won’t go into effect for another twenty years. Within the European Union and the United States there are plenty of critics of the World Trade Organization as well. Organized labor resists heartily having to compete with low-wage labor around the world. The race to the bottom by international corporations has prompted a vigorous campaign to include labor standards in future WTO accords. Opponents to this campaign say that the WTO can’t take up every good cause supported by Westerners. Considering that labor is central to all production, its concerns hardly seem peripheral. Libertarians resent the active role given to a highly bureaucratized international organization (France alone has 147 people working at the WTO).

 

pages: 829 words: 229,566

This Changes Everything: Capitalism vs. The Climate by Naomi Klein

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1960s counterculture, battle of ideas, Berlin Wall, big-box store, bilateral investment treaty, British Empire, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, Climategate, cognitive dissonance, colonial rule, Community Supported Agriculture, complexity theory, crony capitalism, decarbonisation, deindustrialization, dematerialisation, Donald Trump, Downton Abbey, energy security, energy transition, equal pay for equal work, Exxon Valdez, failed state, Fall of the Berlin Wall, feminist movement, financial deregulation, food miles, Food sovereignty, global supply chain, hydraulic fracturing, ice-free Arctic, immigration reform, income per capita, Internet Archive, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, market fundamentalism, moral hazard, Naomi Klein, new economy, Nixon shock, Occupy movement, offshore financial centre, oil shale / tar sands, open borders, patent troll, planetary scale, post-oil, profit motive, quantitative easing, race to the bottom, Ralph Waldo Emerson, Rana Plaza, Ronald Reagan, smart grid, special economic zone, Stephen Hawking, Stewart Brand, structural adjustment programs, Ted Kaczynski, the scientific method, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, transatlantic slave trade, trickle-down economics, Upton Sinclair, uranium enrichment, urban planning, urban sprawl, wages for housework, walkable city, Washington Consensus, Whole Earth Catalog, WikiLeaks

The disastrous track record of the past three decades of neoliberal policy is simply too apparent. Each new blast of statistics about how a tiny band of global oligarchs controls half the world’s wealth exposes the policies of privatization and deregulation for the thinly veiled license to steal that they always were. Each new report of factory fires in Bangladesh, soaring pollution in China, and water cut-offs in Detroit reminds us that free trade was exactly the race to the bottom that so many warned it would be. And each news story about an Italian or Greek pensioner who took his or her own life rather than try to survive under another round of austerity is a reminder of how many lives continue to be sacrificed for the few. The failure of deregulated capitalism to deliver on its promises is why, since 2009, public squares around the world have turned into rotating semipermanent encampments of the angry and dispossessed.

 

pages: 662 words: 180,546

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

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Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, Bretton Woods, Brownian motion, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, full employment, George Akerlof, Goldman Sachs: Vampire Squid, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, invisible hand, Jean Tirole, joint-stock company, Kenneth Rogoff, knowledge economy, l'esprit de l'escalier, labor-force participation, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, payday loans, Ponzi scheme, precariat, prediction markets, price mechanism, profit motive, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, school choice, sealed-bid auction, Silicon Valley, South Sea Bubble, Steven Levy, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, War on Poverty, Washington Consensus, We are the 99%, working poor

Because the market is the greatest information conveyor known to mankind, if home owners got the feeling of being bamboozled and hornswoggled, it was entirely due to their own personal mental deficiencies and lack of attention to the cornucopia of choice made available through financial innovations such as adjustable rate, no-documentation, no-down-payment loans. If their optimal stupidity rendered them easy marks, it was their own fault for insufficient investment in human capital. Of course, the rival critical narrative detects a concerted effort to render the information as deceptive and corrupt as possible, to entrap all those newbie risk-takers: Experts often describe the run-up to the financial crisis as a “race to the bottom.” In reality it was a veritable track-and-field meet of such contests: some of them played out in the marketplace, others inside the government. Out in the financial marketplace, in the 2000s, opaquely marketed subprime products pioneered by unregulated, fly-by-night, nonbank mortgage lenders began to take off in the mainstream. Much as in the credit card business—where the boldly marketed 4.9 percent teaser rate masks the 18.9 percent rate that will eventually kick in—these were often mortgages that masked exploding costs down the line.

 

pages: 777 words: 186,993

Imagining India by Nandan Nilekani

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affirmative action, BRICs, British Empire, business process, business process outsourcing, call centre, clean water, colonial rule, corporate governance, cuban missile crisis, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, distributed generation, farmers can use mobile phones to check market prices, full employment, ghettoisation, glass ceiling, global supply chain, Hernando de Soto, income inequality, informal economy, joint-stock company, knowledge economy, labour market flexibility, land reform, LNG terminal, load shedding, Mahatma Gandhi, market fragmentation, Mikhail Gorbachev, Network effects, new economy, New Urbanism, open economy, pension reform, Potemkin village, price mechanism, race to the bottom, rent control, rolodex, Ronald Reagan, school vouchers, Silicon Valley, smart grid, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, trickle-down economics, unemployed young men, upwardly mobile, urban planning, urban renewal, women in the workforce, working poor, working-age population

The new wealth of the 1990s gave the central governments the leeway to drive structural changes in policy, issuing more transparent guidelines for grants and loans to states and making states more secure about letting go of indirect taxes. The rise of markets were also changing how state governments looked at taxes—the competition between states for private investment through the 1990s had forced them into a race to the bottom in corporate tax sops. It was not a surprise, then, that they were giving the idea of a national tax system a second look. The big fear for the states about moving toward VAT was that it would reduce their independence, and the center would appropriate their revenue and tax collecting powers. The UPA government took up VAT reforms where the NDA government left off, but the challenge in convincing the states remained.

 

pages: 1,351 words: 385,579

The Better Angels of Our Nature: Why Violence Has Declined by Steven Pinker

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1960s counterculture, affirmative action, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, availability heuristic, Berlin Wall, Bonfire of the Vanities, British Empire, Broken windows theory, California gold rush, Cass Sunstein, citation needed, clean water, cognitive dissonance, colonial rule, Columbine, computer age, conceptual framework, correlation coefficient, correlation does not imply causation, crack epidemic, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, demographic transition, desegregation, Doomsday Clock, Douglas Hofstadter, Edward Glaeser, en.wikipedia.org, European colonialism, experimental subject, facts on the ground, failed state, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, fudge factor, full employment, ghettoisation, Gini coefficient, global village, Henri Poincaré, impulse control, income inequality, informal economy, invention of the printing press, Isaac Newton, lake wobegon effect, libertarian paternalism, loss aversion, Marshall McLuhan, McMansion, means of production, mental accounting, meta analysis, meta-analysis, Mikhail Gorbachev, mutually assured destruction, open economy, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, race to the bottom, Ralph Waldo Emerson, random walk, Republic of Letters, Richard Thaler, Ronald Reagan, Rosa Parks, Saturday Night Live, security theater, Skype, Slavoj Žižek, South China Sea, statistical model, stem cell, Steven Levy, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, theory of mind, transatlantic slave trade, transatlantic slave trade, Turing machine, ultimatum game, uranium enrichment, V2 rocket, Walter Mischel, WikiLeaks, women in the workforce

In this heart-stopping sequence, a conscience guided by principle, obedience, reciprocity, and sympathy for a stranger pulls Huck in the wrong direction, and an immediate tug on his sympathy from a friend (bolstered in the reader’s mind by a conception of human rights) pulls him in the right one. It is perhaps the finest portrayal of the vulnerability of the human moral sense to competing convictions, most of which are morally wrong. REASON Reason appears to have fallen on hard times. Popular culture is plumbing new depths of dumbth, and American political discourse has become a race to the bottom.206 We are living in an era of scientific creationism, New Age flimflam, 9/11 conspiracy theories, psychic hotlines, and resurgent religious fundamentalism. As if the proliferation of unreason weren’t bad enough, many commentators have been mustering their powers of reason to argue that reason is overrated. During the honeymoon following George W. Bush’s inauguration in 2001, editorialists opined that a great president need not be intelligent, because a good heart and steadfast moral clarity are superior to the triangulations and equivocations of overeducated mandarins.