rent-seeking

210 results back to index


pages: 288 words: 64,771

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality by Brink Lindsey

Airbnb, Asian financial crisis, bank run, barriers to entry, Bernie Sanders, Build a better mousetrap, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Cass Sunstein, collective bargaining, creative destruction, Credit Default Swap, crony capitalism, Daniel Kahneman / Amos Tversky, David Brooks, diversified portfolio, Donald Trump, Edward Glaeser, endogenous growth, experimental economics, experimental subject, facts on the ground, financial engineering, financial innovation, financial intermediation, financial repression, hiring and firing, Home mortgage interest deduction, housing crisis, income inequality, informal economy, information asymmetry, intangible asset, inventory management, invisible hand, Jones Act, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, knowledge worker, labor-force participation, Long Term Capital Management, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass immigration, mass incarceration, medical malpractice, Menlo Park, moral hazard, mortgage debt, Network effects, patent troll, plutocrats, principal–agent problem, regulatory arbitrage, rent control, rent-seeking, ride hailing / ride sharing, Robert Metcalfe, Robert Solow, Ronald Reagan, Savings and loan crisis, Silicon Valley, Silicon Valley ideology, smart cities, software patent, subscription business, tail risk, tech bro, too big to fail, total factor productivity, trade liberalization, tragedy of the anticommons, Tragedy of the Commons, transaction costs, tulip mania, Tyler Cowen, Uber and Lyft, uber lyft, Washington Consensus, white picket fence, winner-take-all economy, women in the workforce

Labor unions have often been able to increase the wages and job security of their members above what a competitive market would provide, with costs passed on to consumers. But most union members are, at best, middle class. Our cases feature dynamics that are very distinct from the rent-seeking of taxi drivers and union members. Bluntly put, class matters in the politics of rent-seeking. Class influences rent-seeking through the absence of organizational interest in counteracting its effects. The wealthy have invested in fighting some forms of rent-seeking, as evidenced by the environmental and school reform movements. Given the enormous philanthropic investment in nonprofit policy activity, by contrast, it is quite striking how little money has gone into the areas under investigation in this book.

Around the globe, bigger governments actually seem to do better in controlling corruption and clientelism than smaller ones.15 Beating back rent-seeking here in the United States will sometimes require increasing the size of government; in particular, we will need to increase its analytical capacity and develop forms of government activity that cost taxpayers more up front but that are less susceptible to rent-seeking than those we have today. Yes, rent-seeking is endemic to government, as all human institutions are flawed and subject to principal-agent problems. But some nations—and some states and localities within this country—control those problems much better than others, and their example demonstrates that real improvement is possible.

It is not necessary that America’s large foundations become convinced of the problem of rent-seeking overall. They must only recognize it in their chosen domain of action. The sheer heterogeneity of America’s wealthy is one of the reasons the idea of greater philanthropic attacks on rent-seeking is not a pipe dream. The large fortunes reaped in finance, for instance, do not need to be targeted at the source of philanthropists’ own wealth, so long as they are turned against the rents of record companies, pharmaceutical firms, doctors, and lawyers. Philanthropists need to be willing to invest patiently in anti-rent-seeking efforts in precisely the way their counterparts in the environmental and school reform movements did.


pages: 580 words: 168,476

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

affirmative action, Affordable Care Act / Obamacare, airline deregulation, Alan Greenspan, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, electricity market, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, Great Leap Forward, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Bogle, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low interest rates, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, Paul Volcker talking about ATMs, payday loans, Phillips curve, price stability, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, search costs, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, stock buybacks, subprime mortgage crisis, 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, Tragedy of the Commons, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

But instead of these market forces and politics balancing each other out, with the political process dampening the increase in inequality in periods when market forces might have led to growing disparities, instead of government tempering the excesses of the market, in America today the two have been working together to increase income and wealth disparities. RENT SEEKING Earlier, we labeled as rent seeking many of the ways by which our current political process helps the rich at the expense of the rest of us. Rent seeking takes many forms: hidden and open transfers and subsidies from the government, laws that make the marketplace less competitive, lax enforcement of existing competition laws, and statutes that allow corporations to take advantage of others or to pass costs on to the rest of society.

It’s not hard to become wealthy if the government sells you for $500 million a mine that’s worth $1 billion. Another form of rent seeking is the flip side: selling to government products at above market prices (noncompetitive procurement). The drug companies and military contractors excel in this form of rent seeking. Open government subsidies (as in agriculture) or hidden subsidies (trade restrictions that reduce competition or subsidies hidden in the tax system) are other ways of getting rents from the public. Not all rent seeking uses government to extract money from ordinary citizens. The private sector can excel on its own, extracting rents from the public, for instance, through monopolistic practices and exploiting those who are less informed and educated, exemplified by the banks’ predatory lending.

All told, more than $3.2 billion was spent on lobbying in 2011 alone.25 The main distortion is to our political system; the main loser, our democracy. But often rent seeking involves a real waste of resources that lowers the country’s productivity and well-being. It distorts resource allocations and makes the economy weaker. A byproduct of efforts directed toward getting a larger share of the pie is shrinkage of the pie. Monopoly power and preferential tax treatment for special interests have exactly this effect.26 The magnitude of “rent seeking” and the associated distortions in our economy, while hard to quantify precisely, are clearly enormous. Individuals and corporations that excel at rent seeking are amply rewarded. They may garner immense profits for their firms.


pages: 481 words: 120,693

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

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black Swan, Boris Johnson, Branko Milanovic, Bretton Woods, BRICs, Bullingdon Club, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, disruptive innovation, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial engineering, financial innovation, Flash crash, Ford Model T, Frank Gehry, Gini coefficient, Glass-Steagall Act, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Max Levchin, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, seminal paper, Sheryl Sandberg, short selling, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, Simon Kuznets, sovereign wealth fund, starchitect, stem cell, Steve Jobs, TED Talk, the long tail, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game

Finally, the age of globalization has brought one more twist to the story of rent-seeking and how it has helped to create the super-elite: like so much else, rent-seeking has now gone global. That’s not entirely a new story—multinationals have long paid bribes to secure contracts abroad, and some of the most lucrative examples of historic rent-seeking have involved overseas concessions, like the East India Company’s right to trade in India granted by the British Crown, or the Hudson’s Bay Company’s rights to the Canadian fur trade. But the international ripple effect of rent-seeking is today even more extensive. A fortune created by rent-seeking in one country can have a powerful effect thousands of miles away.

One of the key recommendations was that the United States shift to the British “light touch” regulatory philosophy. As rent-seeking wealth spills across borders from the country where it was granted to other parts of the world, as rent-seeking plutocrats do deals with one another, and as economic rules go global, the question Professor Rajan asked of the Bombay Chamber of Commerce may need to be adjusted. He asked his Indian audience if their country was at risk of political capture by rent-seeking national oligarchs. An equal, and probably greater, danger is the rise of an international rent-seeking global oligarchy. SIX PLUTOCRATS AND THE REST OF US If you really wanted to examine percentage-wise who was hurt the most on their income, it was Wall Street brokers.

It is quite another for multimillion-dollar compensation to be paid to bankers whose institutions were bailed out by taxpayer trillions, or private equity fund managers who pay 15 percent tax on most of their earnings, or for the CEOs of multinational companies to take home higher paychecks than their billion-dollar firms pay in tax in the United States. — That’s why today rent-seeking is a favorite theme for the left. But as a field of formal study, rent-seeking was most energetically elaborated by economists on the right: it is, after all, the product of state control and distribution of wealth, something the right has been in the business of trying to decrease. And as inequality rises in twenty-first-century America, some on the right have returned to the idea that the central economic ill is rent-seeking. Speaking about “The American Idea” at the Heritage Foundation in the fall of 2011, Paul Ryan, the wonkish Wisconsin congressman, argued that, rather than raise taxes on individuals, we should “lower the amount of government spending the wealthy now receive.”


pages: 409 words: 125,611

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

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

The crisis showed how it could wreak havoc on the economy. In a rent-seeking economy such as ours has become, private returns and social returns are badly out of whack. In their simplest form, rents are nothing more than redistributions from one part of society to the rent seekers. Much of the inequality in our economy has been the result of rent seeking, because, to a significant degree, rent seeking redistributes money from those at the bottom to those at the top. But there is a broader economic consequence: the fight to acquire rents is at best a zero-sum activity. Rent seeking makes nothing grow. Efforts are directed toward getting a larger share of the pie rather than increasing the size of the pie.

The magnitude of rent seeking in our economy, while hard to quantify, is clearly enormous. Individuals and corporations that excel at rent seeking are handsomely rewarded. The financial industry, which now largely functions as a market in speculation rather than a tool for promoting true economic productivity, is the rent-seeking sector par excellence. Rent seeking goes beyond speculation. The financial sector also gets rents out of its domination of the means of payment—the exorbitant credit and debit card fees and also the less well-known fees charged to merchants and passed on, eventually, to consumers. The money it siphons from poor and middle-class Americans through predatory lending practices can be thought of as rents.

Efforts are directed toward getting a larger share of the pie rather than increasing the size of the pie. But it’s worse than that: rent seeking distorts resource allocations and makes the economy weaker. It is a centripetal force: the rewards of rent seeking become so outsize that more and more energy is directed toward it, at the expense of everything else. Countries rich in natural resources are infamous for rent-seeking activities. It’s far easier to get rich in these places by getting access to resources at favorable terms than by producing goods or services that benefit people and increase productivity. That’s why these economies have done so badly, in spite of their seeming wealth.


pages: 443 words: 98,113

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay by Guy Standing

"World Economic Forum" Davos, 3D printing, Airbnb, Alan Greenspan, Albert Einstein, Amazon Mechanical Turk, anti-fragile, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Big bang: deregulation of the City of London, Big Tech, bilateral investment treaty, Bonfire of the Vanities, Boris Johnson, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cashless society, central bank independence, centre right, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, commons-based peer production, credit crunch, crony capitalism, cross-border payments, crowdsourcing, debt deflation, declining real wages, deindustrialization, disruptive innovation, Doha Development Round, Donald Trump, Double Irish / Dutch Sandwich, ending welfare as we know it, eurozone crisis, Evgeny Morozov, falling living standards, financial deregulation, financial innovation, Firefox, first-past-the-post, future of work, Garrett Hardin, gentrification, gig economy, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, housing crisis, income inequality, independent contractor, information retrieval, intangible asset, invention of the steam engine, investor state dispute settlement, it's over 9,000, James Watt: steam engine, Jeremy Corbyn, job automation, John Maynard Keynes: technological unemployment, labour market flexibility, light touch regulation, Long Term Capital Management, low interest rates, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market clearing, Martin Wolf, means of production, megaproject, mini-job, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Kinnock, non-tariff barriers, North Sea oil, Northern Rock, nudge unit, Occupy movement, offshore financial centre, oil shale / tar sands, open economy, openstreetmap, patent troll, payday loans, peer-to-peer lending, Phillips curve, plutocrats, Ponzi scheme, precariat, quantitative easing, remote working, rent control, rent-seeking, ride hailing / ride sharing, Right to Buy, Robert Gordon, Ronald Coase, Ronald Reagan, Sam Altman, savings glut, Second Machine Age, secular stagnation, sharing economy, Silicon Valley, Silicon Valley startup, Simon Kuznets, SoftBank, sovereign wealth fund, Stephen Hawking, Steve Ballmer, structural adjustment programs, TaskRabbit, The Chicago School, The Future of Employment, the payments system, The Rise and Fall of American Growth, Thomas Malthus, Thorstein Veblen, too big to fail, Tragedy of the Commons, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, Y Combinator, zero-sum game, Zipcar

The Economist has constructed an index of crony capitalism based on the wealth of billionaires in sectors such as casinos, oil and construction where, in its view, there is ample scope for rent seeking through cosy relations with government.2 It claims that rent seeking is worse in emerging-market economies, which account for two-thirds of ‘crony wealth’, with Russia heading the 2016 rankings of twenty-two countries. Britain, at fourteenth, comes top among industrialised economies, followed by the USA at sixteenth. However, the index does not include technology industries or much of finance as rent-seeking sectors, despite their lobbying power. In 2014 The Economist suggested that crony capitalism had peaked, but in 2016 it acknowledged that there was still reason to worry.

Including hedge-fund billionaires and other financiers would double the crony wealth share of total US billionaire wealth from 14 per cent to 28 per cent. Including the youthful billionaires of Silicon Valley would push it up even more. As The Economist admitted, ‘If technology were to be classified as a crony industry, rent-seeking wealth would be higher and rising steadily in the Western world.’ Moreover, The Economist’s narrow definition substantially understates crony capitalism. Its examples of rent seeking were ‘forming cartels’ and ‘lobbying for rules that benefit a firm at the expense of competitors and customers’. It thus omitted the most insidious way in which crony capitalism is extending its grip: political manipulation by the plutocracy and elite, who are funding politicians and political parties to favour the interest of rentiers (see Chapter 7).

Given the spread of intellectual property rules, development of the global capital-risk insurance system and the rent-seeking abilities of the plutocracy in crony capitalism, the existing situation is probably the most unfree market system in history. There has been a commodification of ideas, knowledge and information. While Paul Mason has interpreted the abundance of information as indicative of ‘postcapitalism’,52 the reality is actually a deepening penetration of capitalist logic and rules, in which rent seeking has been legitimised and strengthened by new global institutions and structures. Use of the word post-capitalism is revealing, as any word beginning with that prefix suggests a lack of direction.


pages: 421 words: 110,272

Deaths of Despair and the Future of Capitalism by Anne Case, Angus Deaton

Affordable Care Act / Obamacare, basic income, Bertrand Russell: In Praise of Idleness, Boeing 737 MAX, business cycle, call centre, collapse of Lehman Brothers, collective bargaining, company town, Corn Laws, corporate governance, correlation coefficient, crack epidemic, creative destruction, crony capitalism, declining real wages, deindustrialization, demographic transition, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Elon Musk, falling living standards, Fellow of the Royal Society, financial engineering, fulfillment center, germ theory of disease, income inequality, Jeff Bezos, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, labor-force participation, Les Trente Glorieuses, low skilled workers, Martin Wolf, meritocracy, Mikhail Gorbachev, obamacare, opioid epidemic / opioid crisis, pensions crisis, pill mill, randomized controlled trial, refrigerator car, rent-seeking, risk tolerance, shareholder value, Silicon Valley, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Tyler Cowen, universal basic income, working-age population, zero-sum game

After 1815, the notorious Corn Laws kept out imports of wheat until the local price was so high that people were at risk of starving; high prices of wheat, even if they hurt ordinary people, were very much in the interests of the land-owning aristocracy, who lived off the rents supported by the restriction on imports—rent-seeking of the classic and here literal kind, and rent-seeking that did not stop at killing people; laws that were “written in blood.” The Industrial Revolution had begun, there was a ferment of innovation and invention, and national income was rising. Yet working people were not benefiting. Mortality rates rose as people moved from the relatively healthy countryside to stinking, unsanitary cities.

But as we saw in chapter 14, it is not only globalization and the technology-infused labor market that are working against less educated workers. The exorbitant price of health insurance has caused firms to shed workers; this is not a natural disaster but rather one based on rent-seeking, politically protected profiteering, and weak enforcement of antitrust in the healthcare sector. Anticompetitive and rent-seeking behavior is not confined to healthcare. Mergers of firms can give employers power to set wages and working conditions in local markets. Large corporations can potentially use market power to raise prices. Such anticompetitive behavior hurts consumers, who face higher prices, and workers, who get hurt twice over, through lower wages and higher prices when they spend those wages.

That is why we are not disturbed by inequality in and of itself, but very concerned with the inequality that comes about through theft and rent-seeking, or through the involuntary upward redistribution that we have described throughout this book. To be clear, we are not denying that inequality can sometimes have consequences that undermine other important social goals—for example, if the rich use their wealth to corrupt democracy, or to agitate against public goods on which most people depend. But we are against the high marginal rates on top incomes that result from prioritarian calculations. Instead, we prefer to fight rent-seeking directly, which, if successful, will do much to reduce inequality.


pages: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

accounting loophole / creative accounting, agricultural Revolution, barriers to entry, business cycle, classic study, cognitive bias, cotton gin, creative destruction, David Ricardo: comparative advantage, Dean Kamen, Donald Trump, double entry bookkeeping, en.wikipedia.org, endogenous growth, Ernest Rutherford, experimental economics, financial innovation, Great Leap Forward, Gregor Mendel, Helicobacter pylori, independent contractor, informal economy, interchangeable parts, invention of radio, invention of the printing press, invisible hand, James Watt: steam engine, Jean Tirole, John Harrison: Longitude, Joseph Schumpeter, Kenneth Arrow, linear programming, market bubble, market design, mutually assured destruction, Nash equilibrium, new economy, open economy, PalmPilot, peer-to-peer, pirate software, placebo effect, price discrimination, profit maximization, rent-seeking, Richard Stallman, Robert Solow, seminal paper, Silicon Valley, Skype, slashdot, software patent, the market place, total factor productivity, trade liberalization, Tragedy of the Commons, transaction costs, Y2K

Indeed, even after their patent expired, Boulton and Watt were able to maintain a substantial premium over the market by virtue of having been first, despite the fact that their competitors had had thirty years to learn how to make steam engines. The wasteful effort to suppress competition and obtain special privileges is referred to by economists as rent-seeking behavior. History and common sense show it to be a poisoned fruit of legal monopoly. Watt’s attempt to P1: KNP head margin: 1/2 gutter margin: 7/8 CUUS245-01 cuus245 978 0 521 87928 6 April 29, 2008 17:24 4 Against Intellectual Monopoly extend the duration of his 1769 patent is an especially egregious example of rent seeking: the patent extension was clearly unnecessary to provide incentive for the original invention, which had already taken place. On top of this, we see Watt using patents as a tool to suppress innovation by his competitors, such as Hornblower, Wasborough, and others.

By way of contrast, 51 percent argue that trade secrecy is effective.23 Although in the simplest case patent law does not have an impact on trade secrecy, in cases where it is possible to expend real resources to make secrets less accessible, the innovator faces a real trade-off between private rent seeking through secrecy and public rent seeking through patents. This is true also in the case of copyright, as publicly enforced copyright is potentially an alternative to socially undesirable methods such as encryption and digital rights management that are designed to limit reproduction. There is a small literature in economics on this trade-off.24 One issue is how information that changes rival firm beliefs may work to the advantage of the firm releasing the information.

Monopolies innovate as little as possible and only when forced to; in general, they would rather spend time seeking rents via political protection while trying to sell at a high price their old refurbished products to the powerless consumers, via massive doses of advertising: “[Pharmaceutical] Companies today have found that the return on investment for legal tactics is a lot higher than the return on investment for R&D,” says Sharon Levine, the associate executive director of the HMO Kaiser Permanente. “Consumers today are paying an inordinate premium under the guise of the creating the stream of innovation in the future. But it’s actually funding lawyers.”37 Economists call this socially inefficient rent seeking. It is ugly, but the polite academic jargon rent seeking means “corruption” and all that comes with it. We have already mentioned the music industry, where corruption has become the standard marketing practice, as exemplified by the sorry story of payola. In industries that are highly monopolized and in which the returns from capturing the main distribution and information channels are enormous, the temptation to bend and then break the rules is too strong to resist, as public choice theory and economic common sense suggest.


pages: 310 words: 85,995

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

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

For this we need another handy economic concept – rent-seeking. Rent-seeking is a menace; here is an example. Suppose that a legislature passes a law that grants a monopoly to a group of producers. Why did the legislature do such a thing? Because the legislators were lobbied and coaxed with rewards. The regulation generated rents; the lobbying was rent-seeking. The distinguished economist Anne Krueger showed that lobbying, and other rent-seeking, will increase up to the point at which one extra dollar spent on it yields one extra dollar of rent. The resources devoted to rent-seeking are a total waste. The gains from agglomeration are rents: so, do they attract rent-seeking?

Or they squeeze their need for housing by delaying marriage, or delaying children. Each of these is a form of rent-seeking. Behaviour gets distorted in the competition to capture the lucrative rents of agglomeration. The rent-seeking does not increase the overall size of the pie, it just inflicts a collective loss of well-being upon mid-career people scrambling against each other. Potentially, these losses from rent-seeking are massive. By taxing the gains of agglomeration, we reduce the pressure for rent-seeking. Getting that job in the metropolis would still be worth doing, but since it would be less lucrative, people are less likely to be driven to extreme measures.

The gains from agglomeration are rents: so, do they attract rent-seeking? Economists have never posed that question and there is a simple reason for their neglect. If the Henry George Theorem is right and the gains accrue only to landowners, then there is no scope for rent-seeking. Land is in fixed supply and so not amenable to lobbying or any other action. But the Henry George Theorem is wrong. In a metropolis, most of the gains of agglomeration accrue to those people with high skills and little need for housing. Suddenly, many opportunities for rent-seeking open up. People elbow their way into jobs by lobbying well-connected relatives; they pay tutors for the extra study that gets them more credentials; they go to hundreds of interviews.


pages: 561 words: 87,892

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

"World Economic Forum" Davos, Admiral Zheng, Alan Greenspan, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, full employment, G4S, George Akerlof, German hyperinflation, Gini coefficient, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, junk bonds, knowledge economy, labour market flexibility, labour mobility, liberal capitalism, low interest rates, low skilled workers, market clearing, Martin Wolf, mass immigration, Meghnad Desai, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, old age dependency ratio, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, Savings and loan crisis, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, We are all Keynesians now, women in the workforce, working-age population, Y2K, Yom Kippur War

Obvious ways to increase rental payments include the development of economies of scale, the creation of barriers to entry which keep competitors out, becoming a Hollywood superstar, friendly government regulation (otherwise known as protectionism), military action, bribery, racism in its many forms and slavery. Apart from Hollywood, these examples suggest that nation states have strong incentives to collude with commercial interests. Rent-seeking is not confined to the private sector alone. In modern-day parlance, we might call linkages between governments and commercial interests ‘state capitalism’. Western governments have used the methods of state capitalism for hundreds of years in their bid to shape the world around them. Indeed, rent-seeking behaviour was, over the centuries, closely linked to colonization. The discovery and exploitation of lands and peoples offered an abundance of raw materials and cheap labour designed to furnish Western economic tastes.

(i) healthcare (i), (ii), (iii), (iv), (v), (vi), (vii) hedge funds (i), (ii), (iii) Hertz, Noreena (i) Hitler, Adolf (i) Hobbes, Thomas (i) Home Office (i) Hong Kong (i) ‘hot money’ inflows (i) housing market anarchy in capital markets (i), (ii) capital controls (i) population ageing (i) price stability (i), (ii), (iii), (iv) savings (i) trade (i) human capital theory (i) human ingenuity argument (i), (ii) Hume, David (i), (ii) Hungary (i) hunt for yield (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Huntingdon, Samuel (i) Hutton, Will (i), (ii) hyperinflation (i), (ii) IFS see Institute for Fiscal Studies IMF see International Monetary Fund immigration economic integration, political proliferation (i) nationalism (i) number of migrants to US (i) political economy and inequalities (i), (ii), (iii) population demographics (i) Spain and silver (i) Immigration Act (i), (ii) Immigration and Naturalization Act (1965) (i), (ii), (iii), (iv) imperialism (i), (ii), (iii), (iv), (v) imports (i), (ii), (iii), (iv), (v), (vi) income inequality globalization (i), (ii) political economy and inequalities (i) education (i) the emerging gap (i) emerging nations and income inequality in the developed world (i) food shortages (i) globalization (i) living with inequality (i) new modes of redistribution (i) not getting just rewards (i) a three-country model (i) too much domesticity (i) United Kingdom (i) winners and losers (i) price stability and economic instability (i) resource scarcity (i) state capitalism (i), (ii) Western progress (i), (ii), (iii) the West’s diminished status (i) income per capita argument (i) incomes China (i), (ii), (iii), (iv) political economy and inequalities (i), (ii) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi) rent-seeking behaviour (i) scarcity (i), (ii), (iii), (iv) trade (i), (ii), (iii), (iv) India anarchy in capital markets (i), (ii) Islam (i) political economy and inequalities (i), (ii), (iii), (iv), (v), (vi), (vii) population demographics (i), (ii), (iii) price stability and economic instability (i) rent-seeking behaviour (i) scarcity (i), (ii), (iii), (iv) state capitalism (i), (ii), (iii) trade (i), (ii), (iii), (iv), (v) the West’s diminished status (i), (ii), (iii), (iv), (v) Indonesia (i), (ii), (iii) Industrial and Commercial Bank of China Ltd (ICBC) (i) Industrial Revolution (i), (ii), (iii), (iv), (v), (vi) infant mortality rate (i), (ii), (iii) inflation anarchy in capital markets (i) economic integration, political proliferation (i) indulging the US no more (i), (ii) political economy and inequalities (i), (ii) population demographics (i), (ii), (iii) price stability and economic instability (i) back to the 1970s (i) defining and controlling inflation (i) emerging economies (i), (ii) inflation as an instrument of income and wealth distribution (i) inflation as a result of currency linkages (i) overview (i), (ii), (iii) from stability to instability (i) we are not alone (i) resource scarcity (i) state capitalism (i), (ii) trade (i), (ii) the West’s diminished status (i), (ii), (iii) information technology (i), (ii) Institute for Fiscal Studies (IFS) (i), (ii) interest rates anarchy in capital markets (i), (ii), (iii), (iv), (v), (vi) globalization (i) indulging the US no more (i), (ii) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi), (vii) savings (i) state capitalism (i), (ii), (iii) trade (i) the West’s diminished status (i), (ii) International Monetary Fund (IMF) (i), (ii), (iii), (iv), (v), (vi) International Olympic Committee (i), (ii) Internet (i) investment anarchy in capital markets (i), (ii), (iii), (iv), (v), (vi) capital flows and nation states (i), (ii) economic integration, political proliferation (i) nineteenth century (i) political economy and inequalities (i) population demographics (i), (ii), (iii) price stability and economic instability (i) protectionism (i) resource scarcity (i) state capitalism (i) trade (i), (ii), (iii) investment banks (i), (ii) ‘invisible hand’ (i), (ii), (iii), (iv), (v), (vi) Iran (i), (ii), (iii), (iv), (v) Iraq (i), (ii), (iii) Ireland (i), (ii) Islam (i), (ii), (iii) Isutani, Minoru (i) Italy (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Izvolsky, Count Alexander (i) Japan anarchy in capital markets (i), (ii), (iii), (iv) political economy and inequalities (i), (ii), (iii), (iv), (v) population demographics (i), (ii), (iii), (iv), (v), (vi), (vii) price stability and economic instability (i), (ii) scarcity (i), (ii) secrets of Western success (i), (ii) state capitalism (i), (ii), (iii), (iv) trade (i), (ii), (iii) US trade deficit (i) the West’s diminished status (i), (ii), (iii), (iv), (v) Jay, Peter (i) Jefferson, Thomas (i) jet airline industry (i) Jewish populations (i), (ii), (iii) Jin Mao Tower (i) Jones, Francis (i) Judt, Tony (i) junk bonds (i), (ii) juntas (i) Kamin, Steven B.

CHAPTER TWO THE SECRETS OF WESTERN SUCCESS The Western world’s economic development over the last five hundred years was not the result of productivity gains or market forces alone. Western nations became wealthier because they were increasingly able to rig the global economy to suit their own aims, using a combination of economic, political and military power. Specifically, they were able to engage in what economists call ‘rent-seeking behaviour’. In very simple terms, those who successfully seek rents are paid above the free market price. Most of us are rent seekers. We like to be paid more even if there has been no rise in demand for our services or increase in our efforts. For the successful rent seeker, the Malthusian constraint can be removed even while others are still suffering.


State-Building: Governance and World Order in the 21st Century by Francis Fukuyama

Asian financial crisis, behavioural economics, Berlin Wall, Bretton Woods, centre right, corporate governance, demand response, Doha Development Round, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, George Akerlof, Hernando de Soto, information asymmetry, liberal world order, Live Aid, Nick Leeson, Pareto efficiency, Potemkin village, precautionary principle, price stability, principal–agent problem, rent-seeking, road to serfdom, Ronald Coase, structural adjustment programs, Suez crisis 1956, tacit knowledge, technology bubble, The Market for Lemons, The Nature of the Firm, transaction costs, vertical integration, Washington Consensus, Westphalian system

It is common to characterize regimes in sub-Saharan Africa as “neopatrimonial”— that is, with political power used to service a clientelistic network of supporters of the country’s leaders (Joseph 1987; Fatton 1992). In some cases, as with Mobutu Sese Seko of Zaire, neopatrimonial regimes result in what Evans (1989) characterizes as “predatory” behavior, where a large part of society’s resources are stolen by a single individual. In others, it merely amounts to rent-seeking—that is, use of the public sector to reallocate property rights to the benefit of a particular interest—that is directed toward a single family, tribe, region, or ethnic group. As van de Walle (2001) points out, the neopatrimonial regime, usually embodied in the office of the president, exists side-by-side with a Weberian rational bureaucracy, often created in colonial times, that seeks to perform routine public administration tasks.

Other observers pointed out that it was not presidentialism per se but rather the type of electoral system used in the legislative branch that frequently led to major problems like political gridlock (e.g., the combination of a presidential system with legislative proportional representation that is typical in much of Latin America—see Horowitz 1990; Lijphart 1996; Lardeyret 1996; Cowhey and Haggard 2001). Tendencies toward rent-seeking and pork-barrel politics are encouraged under a number of conditions, such as multimember electoral districts, geographically small constituencies, and open-list proportional representation, though the embedding of patronage in the party system depends heavily on the historical sequencing of franchise expansion and bureaucratic reform (Shefter 1993).

In the end, the empirical relationship between democracy and development remains complex and ambiguous: It does not support either authoritarian transitions as a general approach to economic reform or democratization as a growth strategy. Barro’s (1997) cross-country survey shows that democracy is positively correlated with growth at low levels of development but then becomes negatively correlated at medium levels of per capita GDP. Patronage and rent-seeking (Turkey, Argentina, Brazil), populism (Venezuela), and corruption (Pakistan under Bhutto and Sharif) all remain democratic vices. It the missing dimensions of stateness 29 is hard to see a clear causal relationship between the wave of democratization that hit sub-Saharan Africa during the 1990s and the continent’s slightly improved economic performance in this period.


pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, bank run, banks create money, Basel III, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, clean tech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, Evgeny Morozov, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Glass-Steagall Act, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, independent contractor, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, John Bogle, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, low interest rates, margin call, Mark Zuckerberg, market bubble, means of production, military-industrial complex, Minsky moment, Money creation, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, Post-Keynesian economics, profit maximization, proprietary trading, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Robert Solow, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, Solyndra, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two and twenty, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, you are the product, zero-sum game

A common critique of contemporary capitalism is that it rewards ‘rent seekers' over true ‘wealth creators'. ‘Rent-seeking' here refers to the attempt to generate income, not by producing anything new but by overcharging above the ‘competitive price', and undercutting competition by exploiting particular advantages (including labour), or, in the case of an industry with large firms, their ability to block other companies from entering that industry, thereby retaining a monopoly advantage. Rent-seeking activity is often described in other ways: the ‘takers' winning out over the ‘makers', and ‘predatory' capitalism winning over ‘productive' capitalism.

This has essentially created a boundary - the fence in Figure 1 below - thereby establishing a conceptual boundary -sometimes referred to as a ‘production boundary' - between these activities.16 Inside the boundary are the wealth creators. Outside are the beneficiaries of that wealth, who benefit either because they can extract it through rent-seeking activities, as in the case of a monopoly, or because wealth created in the productive area is redistributed to them, for example through modern welfare policies. Rents, as understood by the classical economists, were unearned income and fell squarely outside the production boundary. Profits were instead the returns earned for productive activity inside the boundary.

The definition of value is always as much about politics, and about particular views on how society ought to be constructed, as it is about narrowly defined economics. Measurements are not neutral: they affect behaviour and vice versa (this is the concept of performativity which we encountered in the Preface). So the point is not to create a stark divide, labelling some activities as productive and categorizing others as unproductive rent-seeking. I believe we must instead be more forthright in linking our understanding of value creation to the way in which activities (whether in the financial sector or the real economy) should be structured, and how this is connected to the distribution of the rewards generated. Only in this way will the current narrative about value creation be subject to greater scrutiny, and statements such as ‘I am a wealth creator' measured against credible ideas about where that wealth comes from.


pages: 346 words: 89,180

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

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

Some tangible investment may also generate limited social returns: consider the fiber-optic cables installed by high-frequency trading firms for the sole purpose of shaving fractions of microseconds off trading times (described vividly by John Kay 2016). And not all money spent on rent-seeking generates an intangible investment, at least not in the main methodologies used to measure intangibles. But it does seem that rent-seeking or zero-sum investments are more common among intangible investments than among tangibles. This could have a bearing on investment and productivity figures. It is possible that the increase in intangible investment is concealing a rise in rent-seeking investments that do not increase GDP. This would not explain the fall-off in investment that has been observed in the economy, but it would help explain the fall-off in productivity and in TFP.

So for any given level of intangible investment, output would be lower, and TFP would fall. This risk provides a good reason for policymakers to guard against rent-seeking in an increasingly intangible economy. There is also the possibility that the rise of intangible investment may be encouraging more rent-seeking, which may be increasing the gap between leaders and laggards that we discussed earlier. A paper by James Bessen specifically asks whether the gap between leaders and laggards among US nonfinancial businesses has been caused by increasing intangible investment or by greater rent-seeking by leading firms. Bessen looks at the relationship between regulation in industries (measured by an index of regulation and by political lobbying expenditures) and the valuations of public companies.

An optimistic interpretation of this is that the legal and institutional structures behind a transformation to an intangible-intensive economy are being worked out and that until they are, there will be a disproportionate incentive for firms to spend more on rent-seeking relating to intangible investment. For example, as spillovers and scale effects become more important, existing tax and competition and IP rules get tested to destruction, requiring lobbying, legal arguments, and institutional reboots. This adjustment to a new type of economy will need a lot of spending by firms and governments that is not immediately productive. Thus a given dollar of business intangible spending has less productivity-raising effect. A more troubling interpretation is that these types of rent-seeking are linked to the inherent characteristics of intangibles, in particular their contestedness: this would imply that TFP growth will continue to be low until governments learn to do a much better job of preventing rent-seeking and designing the institutions an intangible economy needs.


pages: 614 words: 168,545

Rentier Capitalism: Who Owns the Economy, and Who Pays for It? by Brett Christophers

"World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Amazon Web Services, barriers to entry, Big bang: deregulation of the City of London, Big Tech, book value, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, business process, business process outsourcing, Buy land – they’re not making it any more, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cloud computing, collective bargaining, congestion charging, corporate governance, data is not the new oil, David Graeber, DeepMind, deindustrialization, Diane Coyle, digital capitalism, disintermediation, diversification, diversified portfolio, Donald Trump, Downton Abbey, electricity market, Etonian, European colonialism, financial deregulation, financial innovation, financial intermediation, G4S, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, greed is good, green new deal, haute couture, high net worth, housing crisis, income inequality, independent contractor, intangible asset, Internet of things, Jeff Bezos, Jeremy Corbyn, Joseph Schumpeter, Kickstarter, land bank, land reform, land value tax, light touch regulation, low interest rates, Lyft, manufacturing employment, market clearing, Martin Wolf, means of production, moral hazard, mortgage debt, Network effects, new economy, North Sea oil, offshore financial centre, oil shale / tar sands, oil shock, patent troll, pattern recognition, peak oil, Piper Alpha, post-Fordism, post-war consensus, precariat, price discrimination, price mechanism, profit maximization, proprietary trading, quantitative easing, race to the bottom, remunicipalization, rent control, rent gap, rent-seeking, ride hailing / ride sharing, Right to Buy, risk free rate, Ronald Coase, Rutger Bregman, sharing economy, short selling, Silicon Valley, software patent, subscription business, surveillance capitalism, TaskRabbit, tech bro, The Nature of the Firm, transaction costs, Uber for X, uber lyft, vertical integration, very high income, wage slave, We are all Keynesians now, wealth creators, winner-take-all economy, working-age population, yield curve, you are the product

What Marx did not anticipate, writes David Harvey, was that new forms of capitalist rent might also evolve within the evolutionary structures of capitalism and that rent-seeking might go well beyond that which he found both necessary and functional as well as politically tolerable for a mature form of capitalist development. Rent-seeking through speculation in land markets and resource endowments (like oil wells) is bad enough. But what are we to make of rent-seeking through ownership of intellectual property rights? These are the types of questions that contemporary analysts of rent are asking, as the rentier’s terrain has widened to incorporate, in Harvey’s words, ‘asset markets of all sorts’.7 In fact, there is one important type of asset that Harvey – who defines rent in this broadened sense as ‘a return to the monopoly power of private ownership of some crucial asset’ – excludes from his treatment of rentierism: financial assets.8 Like Marx, Harvey regards rent (earned by rentiers) and interest (earned by finance capital) as categorically different from one another.

Precisely because rights are now so strong and so well enforced, they encourage instead what is often referred to as ‘rent-seeking’. Rent-seeking is a tricky concept to operationalize in a book all about rent. Are not all rentiers rent-seekers, by definition? That is certainly one possible interpretation. Nonetheless, if ‘rent’ as defined in this book encompasses all types of income derived from the control of scarce assets under conditions of limited competition, then rent-seeking, as I understand it, entails a particular mode of rentierism: investing time and money more in sweating existing rent-generating assets than in carrying out the research and development necessary to create new ones.

But some display it much more emphatically than others, not least, in recent times, IP rentiers. The current, expansionist system of IP rights is clearly partly responsible. That that system promotes rent-seeking is the crux of Stiglitz’s argument against it: ‘Research is often directed not at producing new products but at extending, broadening and leveraging the monopoly power granted through the [existing] patent’.84 Indeed, Stiglitz believes that the current IP system is configured precisely with the purpose of generating rent-seeking opportunities. In his view, the utilitarian justification invariably given for robust IP protection is nothing more than a sham: ‘The IP standards advanced countries favour typically are designed not to maximise innovation and scientific progress, but to maximise the profits of big pharmaceutical companies and others.’85 Whether or not this conspiratorial reading is correct, what is clear is that, with the monopoly powers conferred by IP rights now being so robust, rent-seeking is incentivized and widely pursued.


pages: 288 words: 76,343

The Plundered Planet: Why We Must--And How We Can--Manage Nature for Global Prosperity by Paul Collier

agricultural Revolution, Berlin Wall, business climate, carbon tax, Doha Development Round, energy security, food miles, G4S, Global Witness, information asymmetry, Kenneth Arrow, megacity, new economy, offshore financial centre, oil shock, price elasticity of demand, profit maximization, rent-seeking, Ronald Coase, Scramble for Africa, search costs, sovereign wealth fund, stem cell, Stewart Brand, Tragedy of the Commons

In this society physical control of the asset is all that matters. This gives rise to three problems: mal-distribution, rent-seeking, and uncertainty. Mal-distribution comes about partly because the strong are advantaged over the weak, but it is compounded by chance: some territories are better endowed than others. If we imagine the population distinguished in the two dimensions of strength and luck, the natural assets are acquired disproportionately by those who are lucky and strong. “Rent-seeking” is the technical term for ways, including violence, to acquire ownership. Basic economics predicts that the value of natural assets, which technically are unearned “rents,” will be matched by the efforts to “seek” those rents, so that the potential social value of natural assets will be dissipated by the costs incurred.

If the government publicly decides to make a quantum leap in investment the outcome could be even worse than that. The political special-interest lobby groups that try to capture public spending are alerted that there is more money on the table and so exert themselves, through legitimate and illegitimate means. The resources burned up in such lobbying contests are called “rent-seeking.” If rent-seeking is frustrated by checks and balances such as veto points, the lobbies may try to dismantle them. Nuhu’s departure for Oxford was induced by effective lobbying, and dismantled one important check. Michael Ross, a political scientist from UCLA, aptly terms this higher-order destructiveness “rent-seizing.”

For example, a country might argue that it should have rights to emit carbon based on the carbon it was emitting when the cap was imposed. Or the right to emit as much carbon as some other country. Or because it is poor. Or because it did not emit any of the carbon that caused the problem. Rent-seeking over carbon rights can occur both nationally and internationally. At the national level it is already apparent in the U.S. Congress. Potentially, the assignment of carbon rights could make the huge rent-seeking machine that is the American agricultural lobby look like a side-show. Internationally, the scope for scams may well be even larger. Firms that want to continue emitting carbon simply need to purchase a piece of paper certifying that some firm somewhere elsewhere is emitting correspondingly less carbon than it otherwise would have done.


pages: 241 words: 81,805

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis by Tim Lee, Jamie Lee, Kevin Coldiron

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, backtesting, bank run, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, currency risk, debt deflation, disinformation, distributed ledger, diversification, financial engineering, financial intermediation, Flash crash, global reserve currency, implied volatility, income inequality, inflation targeting, junk bonds, labor-force participation, Long Term Capital Management, low interest rates, Lyft, margin call, market bubble, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, negative equity, Network effects, Ponzi scheme, proprietary trading, public intellectual, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, rising living standards, risk free rate, risk/return, sharing economy, short selling, short squeeze, sovereign wealth fund, stock buybacks, tail risk, TikTok, Uber and Lyft, uber lyft, yield curve

Fundamentally, therefore, in some sense carry is its own antithesis. Carry as Rent-Seeking The notion of carry as fundamentally being about power and control of resources calls to mind the economic concept of rent-seeking. Wikipedia defines rent-seeking as extracting an income “by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity.” Rent-seeking is usually thought about in terms of an industry group or interest group lobbying politicians in order to secure monopoly power.

It can be understood at an even more fundamental level, beyond merely financial markets, which we will touch on later in this book. In its more limited form, carry can be a motor, or at least a lubricant, for progress. The problem occurs when carry comes to dominate over other market behaviors or forces, in which case it can begin to manifest in forms that could be considered rent-seeking or even corruption or infringement of liberties. In financial carry trades, on the one side are those who could ultimately be desperate for liquidity, and on the other side are those—the carry traders—who are the suppliers of that liquidity. This can be perceived as an economic relationship, but in a broader context it could also be understood as a power relationship.

If the central bank succeeds in resurrecting the carry bubble, and hence broadening the carry regime further—as central banks finally did in 2009—then the illusion of central bank power can be restored, probably to an even greater extent than before. But really, more than being in control of it, the central bank is merely a captive of the carry regime; it is the vehicle for the broadening and extension of the carry regime and the rent-seeking opportunities that the regime ultimately permits. What this chapter has explained is that the carry regime is fundamentally deflationary in nature, but it has the effect of broadening the scope of money to encompass financial instruments that are not normally considered to be money, at least during the carry bubble phases.


pages: 462 words: 129,022

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

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

This is nothing more than a redistribution of income; it does not increase the nation’s overall wealth. The technical term in economics is “rent”—rent-seeking is associated with attempting to get a large share of the nation’s economic pie, in contrast with wealth creation, which strives to increase the size of the pie. Policymakers should zero in on any market in which there are excessive rents because they are a sign that the economy could perform more efficiently: the exploitation inherent in excessive rents actually weakens the economy. A successful fight against rent-seeking results in redirecting resources into wealth creation. Fourth, a less divided society, an economy with more equality, performs better.

Thus, at best, rents are unhelpful to growth and efficiency, at worst harmful. They can be harmful because they distort the economy, because they “crowd out” the kinds of “good” economic activity that is the basis of true wealth creation. We naturally describe the pursuit of higher incomes through acquiring more rents as rent-seeking. If talented individuals in society are attracted to rent-seeking—whether making more money through the exertion of monopoly power or scamming others in the financial sector or enticing them into gambling or other nefarious activities—then fewer talented individuals will be engaged in basic research, providing goods and services that individuals really want and need, and other activities that increase the real wealth of the nation.

It combines taking down impediments to growth and equality, such as those posed by corporations with excessive market power, and restoring balance, for instance, giving more bargaining power to workers. It entails providing more support for basic research and more encouragement to the private sector to engage in wealth creation rather than rent-seeking. The economy, of course, is a means to an end, not an end in itself. And the middle-class life that seemed a birthright of Americans in the years after World War II seems to be slipping out of the reach of a large swath of the country. We are a far richer country now than we were then. We can afford to ensure that this life is attainable for the vast majority of our citizens.


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

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

There are intermediate cases too of ‘soft power’ where goods are provided, but as a means of getting rent: social networking sites provide users with ways of keeping in contact with people but their income is mainly economic rent from letting out advertising space. Businesses can compete not only by providing better products more cheaply but by ‘rent-seeking’, that is, seeking control of assets and resources that can be used to extract rent from users. Joseph Stiglitz, former Chief Economist at the World Bank, claims that the return of the rich is largely the result of a massive growth in rent-seeking, particularly in the financial sector. He argues that this not only transfers income from one group to another, but has a negative effect on the economy because it diverts resources from productive uses that create wealth, to mere wealth extraction.22 Instead of being reinvested in production, the money is merely siphoned off to the unproductive rentier.

116 Actually, some of them would also have been active rentiers when they were awake, working to find more sources of rent, interest and capital gains. But the question remains: how can income in the form of salary for work be ‘unearned’? It can if the work involves extracting unearned income through rent-seeking, interest-charging or any of the other methods covered in this book. ‘Even today’s rent-seeking plutocrats work for a living – Carlos Slim or the Russian oligarchs owe their fortunes to rents they’ve captured themselves, not to estates conquered by distant ancestors,’ writes Chrystia Freeland.117 Remembering the definitions in Chapter Three of earned income as conditional on producing goods and services (‘use-values’), and unearned income as derived from control of existing assets that others lack but need, then the salary earned – or rather received – by someone whose work consists of extracting rent or interest and getting control of new sources belongs to the second category.

But once they were privatised – and this first happened during a period in which top rates of tax fell to 40% in the UK – the rich could pay what to them were trifling sums for their services, while the rest had to pay dearly.26 Politicians may wring their hands when privatised suppliers push their prices up far above inflation, but it’s also out of their hands. But there’s another new area in which rent-seeking is advancing. ‘Intellectual property’ may sound dull, but it’s opened up huge new possibilities for companies to extract rent from others, with major consequences. Intellectual property is the ownership of ideas and the representation of those ideas, covering trademarks, patents (allowing ownership of inventions – tangible or virtual – for specific periods of time) or copyright, protecting authorship of books, music, art, images and films, again for specific periods of time.


pages: 306 words: 82,765

Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb

anti-fragile, availability heuristic, behavioural economics, Benoit Mandelbrot, Bernie Madoff, Black Swan, Brownian motion, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cellular automata, Claude Shannon: information theory, cognitive dissonance, complexity theory, data science, David Graeber, disintermediation, Donald Trump, Edward Thorp, equity premium, fake news, financial independence, information asymmetry, invisible hand, knowledge economy, loss aversion, mandelbrot fractal, Mark Spitznagel, mental accounting, microbiome, mirror neurons, moral hazard, Murray Gell-Mann, offshore financial centre, p-value, Paradox of Choice, Paul Samuelson, Ponzi scheme, power law, precautionary principle, price mechanism, principal–agent problem, public intellectual, Ralph Nader, random walk, rent-seeking, Richard Feynman, Richard Thaler, Ronald Coase, Ronald Reagan, Rory Sutherland, Rupert Read, Silicon Valley, Social Justice Warrior, Steven Pinker, stochastic process, survivorship bias, systematic bias, tail risk, TED Talk, The Nature of the Firm, Tragedy of the Commons, transaction costs, urban planning, Yogi Berra

For instance, the economist and psycholophaster Richard Thaler, partner of the dangerous GMO advocate übernudger Cass Sunstein, interpreted this piece as saying that “there are not many non-idiots not called Taleb,” not realizing that people like him are less than 1 percent or even less than one-tenth of 1 percent of the population. CHAPTER 7: INEQUALITY AND SKIN IN THE GAME fn1 It came to my notice that in countries with high rent-seeking, wealth is seen as something zero-sum: you take from Peter to give to Paul. On the other hand, in places with low rent-seeking (say the United States before the Obama administration), wealth is seen as a positive-sum game, benefiting everybody. fn2 Complex regulations allow former government employees to find jobs helping firms navigate the regulations they themselves created.

But the worst casualty has been free markets, as the public, already prone to hating financiers, started conflating free markets and higher order forms of corruption and cronyism, when in fact it is the exact opposite: it is government, not markets, that makes these things possible by the mechanisms of bailouts. It is not just bailouts: government interference in general tends to remove skin in the game. The good news is that in spite of the efforts of a complicit Obama administration that wanted to protect the game and the rent-seeking bankers,fn3 the risk-taking business started moving toward small independent structures known as hedge funds. The move took place mostly because of the overbureaucratization of the system as paper shufflers (who think work is mostly about paper shuffling) overburdened the banks with rules—but somehow, in the thousands of pages of additional regulations, they avoided considering skin in the game.

So it may suffice to have a tiny percentage—say, no more than 5 percent—of an evenly spatially distributed population of non-genetically modified eaters for the entire population to have to eat non-GMO food. How? Say you have a corporate event, a wedding, or a lavish party to celebrate the fall of the Saudi Arabian regime, the bankruptcy of the rent-seeking investment bank Goldman Sachs, or the public reviling of Ray Kotcher, chairman of Ketchum the public relations firm, which is the enemy of scientists and scientific whistleblowers. Do you need to send a questionnaire asking people if they eat or don’t eat transgenic GMOs and reserve special meals accordingly?


pages: 436 words: 76

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

Alan Greenspan, Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, Bletchley Park, business cycle, California gold rush, Charles Babbage, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Dr. Strangelove, Dutch auction, Edward Lloyd's coffeehouse, electricity market, equity premium, equity risk premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, Fairchild Semiconductor, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, George Akerlof, George Gilder, Goodhart's law, Great Leap Forward, greed is good, Gunnar Myrdal, haute couture, Helicobacter pylori, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, junk bonds, Kenneth Arrow, Kevin Kelly, knowledge economy, Larry Ellison, light touch regulation, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Michael Milken, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson, pets.com, Phillips curve, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, proprietary trading, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, Right to Buy, risk tolerance, road to serfdom, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, Stuart Kauffman, telemarketer, The Chicago School, The Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, work culture , yield curve, yield management

These restrictions often create large rents, and firms will spend correspondingly large sums to get them. A government that creates or assigns these resources can impose heavy taxes, or large up-front fees, for their use-as with specific taxes on oil and mineral deposits, or the allocation of spectrum for mobile phone companies. These fees and taxes yield revenue and discourage rent seeking. Rent seeking impedes the functioning of a market economy-the pursuit of gains from trade through specialization and differences in capabilities. It limits innovation though disciplined pluralism. It corrodes the integrity of politics. These adverse political and economic effects often reinforce each other.

This is an intriguing result, but it probably does not reveal much of the truth about markets. In modern economies, many factors are scarce and there are many sources of rents. The acquisition and defense of rents, and bargaining and dispute over their distribution, are the main influences on income distribution. Rent Seeking ••••••••••••••••••••••••••••••••••••• Economic rents are returns to scarcities-the exceptional talents of individuals, the distinctive capabilities of corporations. But not all individuals have scarce talents, not all corporations have distinctive capabilities. If scarcity does not naturally exist, perhaps it can be invented, and rents garnered anyway.

Monopoly closes down disciplined pluralism and stifles innovation in products and technology. The monopoly often goes to the best lobbyist, not the best competitor. So gains from trade due to specialization and differences in capabilities are likely to be lost. Under disinterested government, it is difficult to earn rents by buying monopolies or tax concessions. Rent seeking is most common in rich states in areas of genuine public interest in restricting entrysuch as protection from untrained doctors, unsafe aircraft, and dishonest financial advisers. But all entry restrictions, whatever their rationale, can create rents, and those who have entered lobby for tightening entry restrictions still further.


pages: 370 words: 102,823

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato

Alan Greenspan, balance sheet recession, banking crisis, basic income, Bear Stearns, Bernie Sanders, Bretton Woods, business climate, business cycle, carbon tax, Carmen Reinhart, central bank independence, circular economy, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, degrowth, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, endogenous growth, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, Ford Model T, forward guidance, full employment, G4S, general purpose technology, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, low interest rates, low skilled workers, Martin Wolf, mass incarceration, military-industrial complex, Modern Monetary Theory, Money creation, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, ocean acidification, paradox of thrift, Paul Samuelson, planned obsolescence, Post-Keynesian economics, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Solyndra, Steve Jobs, stock buybacks, systems thinking, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, Tragedy of the Commons, transaction costs, trickle-down economics, universal basic income, vertical integration, very high income

The question then is: what is the relative role and importance of these alternative hypotheses? There is no easy way of providing a neat quantitative answer, but recent events and studies have lent persuasive weight to theories putting greater focus on rent-seeking and exploitation. We shall discuss this evidence in the next section, before turning to the institutional and political factors which are at the root of the recent structural changes in income distribution. Rent-seeking and top incomes The term ‘rent’ was originally used to describe the returns to land, since the owner of the land receives these payments by virtue of his or his ownership and not because of anything he or she does.

The chapters by Joseph Stiglitz and Colin Crouch look at two of the major gaps between orthodox economic theory and the reality of modern capitalism. Stiglitz addresses the growth of inequality over the past thirty years. He takes on the neoclassical view that wages and salaries reflect the marginal productivity of workers, showing that the very high incomes of corporate executives in fact reveal a form of ‘rent-seeking’, in which rewards are extracted without relation to productivity or economic desert. Moreover he points out—again contrary to the orthodox view—that such inequality is not the price that has to be paid for greater economic prosperity, but actually retards growth. Stiglitz offers a range of policy measures which would reverse recent trends, including changes to executive compensation schemes, macroeconomic policies to reduce unemployment, greater investment in education and the reform of capital taxation.

Within the orthodox framework, the existence of some market failure is a necessary but not sufficient condition for state intervention.26 If government is to step in, it is claimed that gains from the intervention must outweigh the associated costs due to ‘governmental failures’27 such as capture by private interests (cronyism, corruption, rent-seeking),28 misallocation of resources (for example, ‘picking losers’)29 or undue competition with private initiatives (‘crowding out’).30 There is thus a presumed trade-off between two inefficient outcomes, one of which is generated by free markets (market failure) and the other by public intervention (government failure).


pages: 740 words: 217,139

The Origins of Political Order: From Prehuman Times to the French Revolution by Francis Fukuyama

Admiral Zheng, agricultural Revolution, Andrei Shleifer, Asian financial crisis, Ayatollah Khomeini, barriers to entry, Berlin Wall, blood diamond, California gold rush, cognitive dissonance, colonial rule, conceptual framework, correlation does not imply causation, currency manipulation / currency intervention, Day of the Dead, demographic transition, Deng Xiaoping, double entry bookkeeping, endogenous growth, equal pay for equal work, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Francisco Pizarro, Garrett Hardin, Hernando de Soto, hiring and firing, invention of agriculture, invention of the printing press, John Perry Barlow, Khyber Pass, land reform, land tenure, means of production, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, RAND corporation, rent-seeking, Right to Buy, Scramble for Africa, selective serotonin reuptake inhibitor (SSRI), spice trade, Stephen Hawking, Steven Pinker, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, Tragedy of the Commons, transaction costs, Washington Consensus, zero-sum game

It is possible that patrimonial officeholding itself rests on a set of prior social conditions even as it is fostered by deliberate government policy. RENT-SEEKING SOCIETIES Ancien régime France was an early prototype of what is today called a rent-seeking society. In such a society, the elites spend all of their time trying to capture public office in order to secure a rent for themselves—in the French case, a legal claim to a specific revenue stream that could be appropriated for private use. Was this rent-seeking coalition a stable one? It lasted for almost two centuries and provided a political basis for France’s emergence as the dominant continental power.

Mancur Olson has made the general argument that entrenched interest groups tend to accumulate in any society over time, which aggregate into rent-seeking coalitions in order to defend their narrow privileges.19 They are much better organized than the broad mass of people in a society, whose interests often fail to be represented in the political system. The problem of a dysfunctional political equilibrium can be mitigated by democracy, which at least theoretically allows nonelites to have a greater share in political power. But even then there is usually a large disparity in the organizational capacity of elites and nonelites that prevents the latter from acting decisively. We have seen numerous examples of rent-seeking coalitions that have prevented necessary institutional change and therefore provoked political decay.

THE VICTORY OF SOCIETY OVER POLITICS NATION BUILDING BY FOREIGNERS CHINA VERSUS INDIA 13 - SLAVERY AND THE MUSLIM EXIT FROM TRIBALISM CREATION OF A MUSLIM STATE THE ORIGINS OF MILITARY SLAVERY 14 - THE MAMLUKS SAVE ISLAM MAMLUK DECAY STATES AS ORGANIZED CRIMINALS 15 - THE FUNCTIONING AND DECLINE OF THE OTTOMAN STATE A ONE-GENERATION ARISTOCRACY MILITARY SLAVERY PERFECTED THE OTTOMAN STATE AS A GOVERNING INSTITUTION REPATRIMONIALIZATION AND DECAY THE OTTOMAN LEGACY 16 - CHRISTIANITY UNDERMINES THE FAMILY EUROPEAN EXCEPTIONALISM MARX’S MISTAKE FROM STATUS TO CONTRACT THE SOCIAL BACKGROUND TO STATE BUILDING IN EUROPE PART THREE - The Rule of Law 17 - THE ORIGINS OF THE RULE OF LAW CONTEMPORARY CONFUSIONS CONCERNING THE RULE OF LAW HAYEK’S THEORY THAT LAW IS PRIOR TO LEGISLATION FROM CUSTOMARY TO COMMON LAW 18 - THE CHURCH BECOMES A STATE THE CATHOLIC CHURCH DECLARES INDEPENDENCE THE REAPPEARANCE OF ROMAN LAW LAW AND THE RISE OF THE MODERN STATE HOW THE MEDIEVAL CHURCH SET PRECEDENTS FOR CONTEMPORARY RULE OF LAW 19 - THE STATE BECOMES A CHURCH RULE OF LAW IN THE MIDDLE EAST SEPARATION OF MOSQUE AND STATE HOW THE RULE OF LAW FAILED TO SURVIVE CONTACT WITH THE WEST IN BOTH INDIA AND ISLAM WHY THE RULE OF LAW WAS STRONGER IN WESTERN EUROPE 20 - ORIENTAL DESPOTISM CHINA’S MODERNITY AFTER THE TANG-SONG TRANSITION THE EVIL EMPRESS WU THE MANDATE OF HEAVEN 21 - STATIONARY BANDITS GOOD GOVERNMENT, BAD GOVERNMENT THE “BAD EMPEROR” PROBLEM INSTITUTIONS AREN’T ENOUGH PART FOUR - Accountable Government 22 - THE RISE OF POLITICAL ACCOUNTABILITY EUROPE’S LATE STATE BUILDING THE MARCH OF EQUALITY HE WHO KNOWS ONLY ONE COUNTRY KNOWS NO COUNTRIES EUROPE’S EASTERN ZHOU PERIOD THE ROLE OF LAW IN EUROPEAN DEVELOPMENT A FRAMEWORK FOR STATE BUILDING 23 - RENTE SEEKERS THE BEGINNINGS OF PATRIMONIAL ABSOLUTISM THE INTENDANTS AND CENTRALIZATION THE LIMITS OF CENTRALIZED POWER AND THE IMPOSSIBILITY OF REFORM THE FAILURE OF RESISTANCE TO ABSOLUTISM IN FRANCE RENT-SEEKING SOCIETIES 24 - PATRIMONIALISM CROSSES THE ATLANTIC THE BANKRUPT SPANISH STATE TAXATION AND NO REPRESENTATION TRANSFER OF INSTITUTIONS TO THE NEW WORLD THE IRON LAW OF LATIFUNDIA 25 - EAST OF THE ELBE LORDSHIP AND BONDAGE CONSTITUTIONALISM AND DECLINE IN HUNGARY FREEDOM AND OLIGARCHY 26 - TOWARD A MORE PERFECT ABSOLUTISM SOURCES OF RUSSIAN ABSOLUTISM FREE ALTERNATIVES THE PEASANT-OWNING CARTEL AFTER PETER ABSOLUTISM ACHIEVED 27 - TAXATION AND REPRESENTATION THE ROOTS OF ENGLISH POLITICAL SOLIDARITY FREE CITIES AND THE BOURGEOISIE THE STRUGGLE OVER TAXATION THE GLORIOUS REVOLUTION TO THE AMERICAN AND FRENCH REVOLUTIONS 28 - WHY ACCOUNTABILITY?


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

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

Most of the campaign money does not come from interest group PACs, but rather from individual donors … It doesn’t seem accurate to view campaign contributions as a way of investing in political outcomes … Because politicians can readily raise campaign funds from individuals, rent-seeking donors lack the leverage to extract large private benefits from legislation. It is tempting to compare this statement to the “permanently high plateau” prediction for US stocks that Irving Fisher made in October 1929. To be fair, however, they did not claim to make a prediction about the future, as Fisher did. They were instead reflecting on the common wisdom at the time and, based on their reading of the evidence, they suggested a reorientation of research away from its focus on rent-seeking donors. Much has changed since then, and Luigi Zingales, an economist at the University of Chicago, worries in a 2017 article about a diabolic loop between economic power and political power.

For instance, if a good that can be produced for $10 is sold for $15 because it is protected by a patent, then the rent to the patent holder is $5. Some rents are protected by artificial restrictions. For example, draconian occupational licensing laws that restrict entry into certain professions protect those who already hold licenses from competition, allowing them to charge higher prices. When economists talk about “rent-seeking,” they refer to the attempt by individuals or by groups to tilt public policy in a way that establishes or increases those artificial advantages in their favor. This term does not necessarily have a moral connotation. It is rational for people to protect their rents. That does not make them bad people.

Put another way, if we hold the view that firms spend money on lobbying but it is useless, then we must recognize that this view is inconsistent with most of what we know about economics and human nature. It’s not strictly impossible, but I am not going to take this idea very seriously. Second, rent seeking is a zero-sum game, and zero-sum games are difficult to identify in the data. For instance, suppose firm A spends $100 to lobby for a regulatory change that would give it an advantage over firm B. Firm B then spends $200 to fight this change. Firm B prevails. What do we see? We see that they collectively spent $300 and that nothing has changed: the relative market shares, growth rates, and productivity of the two firms are the same as before.


pages: 338 words: 85,566

Restarting the Future: How to Fix the Intangible Economy by Jonathan Haskel, Stian Westlake

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Andrei Shleifer, Big Tech, Black Lives Matter, book value, Boris Johnson, Brexit referendum, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, Charles Lindbergh, charter city, cloud computing, cognitive bias, cognitive load, congestion charging, coronavirus, corporate governance, COVID-19, creative destruction, cryptocurrency, David Graeber, decarbonisation, Diane Coyle, Dominic Cummings, Donald Shoup, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, equity risk premium, Erik Brynjolfsson, Estimating the Reproducibility of Psychological Science, facts on the ground, financial innovation, Francis Fukuyama: the end of history, future of work, general purpose technology, gentrification, Goodhart's law, green new deal, housing crisis, income inequality, index fund, indoor plumbing, industrial cluster, inflation targeting, intangible asset, interchangeable parts, invisible hand, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, knowledge worker, lockdown, low interest rates, low skilled workers, Marc Andreessen, market design, Martin Wolf, megacity, mittelstand, new economy, Occupy movement, oil shock, patent troll, Peter Thiel, Phillips curve, postindustrial economy, pre–internet, price discrimination, quantitative easing, QWERTY keyboard, remote working, rent-seeking, replication crisis, risk/return, Robert Gordon, Robert Metcalfe, Robert Shiller, Ronald Coase, Sam Peltzman, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, six sigma, skeuomorphism, social distancing, superstar cities, the built environment, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber for X, urban planning, We wanted flying cars, instead we got 140 characters, work culture , X Prize, Y2K

But achieving institutional change requires more than just policy wonkery. It also requires that we build state capacity, design systems that strike the right balance between quantity and quality of investment, resist influence activities (or rent seeking), and bring about cultural change. A Framework: Trade-Offs and Institutional Design Two key graphs can help us understand the impact of improving state capacity, the importance of resisting rent seeking, and how the quantity versus quality of intangibles matters. The Trade-Off between Collective Goods and Influence and Information Costs Figure C.1 sets out the key constraint trade-off faced by economies.5 As you go up the vertical axis, the economy is able to provide more centralised collective goods per spend.

One example is intellectual property rules, which we discuss in chapter 4. Intellectual property rules help mitigate the problem of spillovers with intangible assets, but as intangibles become more important, the costs of patent thickets increase and the incentives for rights holders to lobby governments to change the rules in rent-seeking ways increase. Summary Institutions, the humanly devised rules of interaction, help with particular dimensions of exchange, such as commitment, collective action, and information. But those dimensions change in importance over time, and so institutions have to change too. Thus, with the rise in intangibles, the various components of exchange have had to change, along with the institutions that help those particular components.

What we need instead, according to the critique, is less but better education: more hard science degrees and more high-quality apprenticeships and technical training programmes (in which there is a high degree of synergy between the skills that students learn and the assets of businesses seeking to employ them). This type of education is of course the quality theory in action. Many common proposals for reform are responses to the three problems that beset IP regimes or public funding: the problem of imperfect rules, the risk of rent seeking, and the difficulty of making sure the systems adapt to technological change. Proposals for more discretionary funding agencies, along the lines of the blue-sky US Defense Advanced Research Projects Agency (DARPA), abound. The United Kingdom announced its own version in 2019, while in the United States something similar but larger was proposed in the Endless Frontiers Act, which was introduced into Congress in 2020.27 These plans, which give the funding staff greater discretion to pick radical projects, can be considered attempts to escape the tyranny of increasingly metricised and bureaucratic research funding systems, which are sometimes accused of being captured by academic interests.


pages: 577 words: 149,554

The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey by Michael Huemer

Cass Sunstein, Chelsea Manning, cognitive dissonance, cuban missile crisis, Daniel Kahneman / Amos Tversky, en.wikipedia.org, Eratosthenes, experimental subject, framing effect, Garrett Hardin, Gini coefficient, illegal immigration, impulse control, Isaac Newton, Julian Assange, laissez-faire capitalism, land bank, Machinery of Freedom by David Friedman, Milgram experiment, moral hazard, Phillip Zimbardo, profit maximization, profit motive, Ralph Nader, RAND corporation, rent-seeking, Ronald Coase, Stanford prison experiment, systematic bias, The Wealth of Nations by Adam Smith, Tyler Cowen, unbiased observer, uranium enrichment, WikiLeaks

As these examples illustrate, legal paternalism is quite widespread in modern Western society. All of these are unjustified laws. 7.1.3 Rent seeking Rent seeking is behavior designed to extract wealth from others, especially through the vehicle of the state, without providing compensatory benefits in return.6 The most straightforward example is a company lobbying the government for subsidies. But many of the policies that exemplify legal paternalism are also motivated partly by rent seeking. Consider the following. – Prescription drug laws. These laws transfer money from consumers to doctors and pharmacists.

Belief in authority is socially harmful. 7 What if There Is No Authority? 7.1 Some policy implications 7.1.1 Prostitution and legal moralism If there is no authority, legal moralism, as in the case of laws against prostitution, is unjustified. 7.1.2 Drugs and paternalism Legal paternalism, as in the case of drug laws, is unjustified. 7.1.3 Rent-seeking Laws motivated by rent-seeking are obviously unjustified. 7.1.4 Immigration Immigration restrictions are unjustified. 7.1.5 The Protection of individual rights Laws that protect individual rights are justified. 7.1.6 Taxation and government finance Taxation is justified if and only if voluntary methods of government finance prove unworkable. 7.2 The case of aid to the poor 7.2.1 Welfare and drowning children It is sometimes permissible to force someone to help a third party in an emergency.

These motives are analogous to those displayed in policies of types (3)–(9) listed above.23 The specific examples I have given of policy types (3)–(9) are not important, so long as one agrees that there are (a nontrivial number of) policies of each of these types. It does not greatly matter, for instance, whether one agrees that licensing laws are motivated by rent seeking as long as one agrees that a significant number of laws are motivated by rent seeking. The point is that the state has many policies and laws whose motivations do not justify the coercion required to implement them. This is a problem because the state’s authority is generally held to be comprehensive and content-independent. On a very strict reading of the comprehensiveness and content-independence conditions, the existence of just a few laws that the state is not entitled to make would preclude the state’s having genuine authority.


pages: 225 words: 61,388

Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa by Dambisa Moyo

affirmative action, Asian financial crisis, belling the cat, Bob Geldof, Bretton Woods, business cycle, buy and hold, colonial rule, correlation does not imply causation, credit crunch, diversification, diversified portfolio, en.wikipedia.org, European colonialism, failed state, financial engineering, financial innovation, financial intermediation, Hernando de Soto, income inequality, information asymmetry, invisible hand, Live Aid, low interest rates, M-Pesa, market fundamentalism, Mexican peso crisis / tequila crisis, microcredit, moral hazard, Multics, Ponzi scheme, rent-seeking, risk free rate, Ronald Reagan, seminal paper, sovereign wealth fund, The Chicago School, trade liberalization, transaction costs, trickle-down economics, Washington Consensus, Yom Kippur War

Others estimate that of the US$525 billion that the World Bank has lent to developing countries since 1946, at least 25 per cent (US$130 billion) has been misused. Vast sums of aid not only foster corruption – they breed it. Aid supports rent-seeking – that is, the use of governmental authority to take and make money without trade or production of wealth. At a very basic level, an example of this is where a government official with access to aid money set aside for public welfare takes the money for his own personal use. Obviously, there cannot be rent-seeking without a rent. And because foreign aid (the rent) is fungible – easily stolen, redirected or extracted – it facilitates corruption. Were donor conditionalities remotely effective, this would not be the case.

In The Wealth and Poverty of Nations, David Landes argues that the ideal growth and development model is one guaranteed by political institutions. Secure personal liberty, private property and contractual rights, enforced rule of law (not necessarily through democracy), an ombudsman-type of government, intolerance towards private rent-seeking and optimally sized government are mandatory. In Empire: How Britain Made the Modern World, Niall Ferguson points to the common-law system and the British-type civil administration as two institutions that promoted development. Ferguson also notes that it is a country’s underlying legal and political institutions that make it conducive to investment (and counter-disinvestment through less capital flight) and innovation.

But these things are meaningless in the absence of trust. And while trust is difficult to define or measure, when it is not there the networks upon which development depends break down or never even form. Foreign aid does not strengthen the social capital – it weakens it. By thwarting accountability mechanisms, encouraging rent-seeking behaviour, siphoning off scarce talent from the employment pool, and removing pressures to reform inefficient policies and institutions, aid guarantees that in the most aid-dependent regimes social capital remains weak and the countries themselves poor. In a world of aid, there is no need or incentive to trust your neighbour, and no need for your neighbour to trust you.


pages: 350 words: 103,270

The Devil's Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street . . . And Are Ready to Do It Again by Nicholas Dunbar

Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Black Swan, Black-Scholes formula, bonus culture, book value, break the buck, buy and hold, capital asset pricing model, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, delayed gratification, diversification, Edmond Halley, facts on the ground, fear index, financial innovation, fixed income, George Akerlof, Glass-Steagall Act, Greenspan put, implied volatility, index fund, interest rate derivative, interest rate swap, Isaac Newton, John Meriwether, junk bonds, Kenneth Rogoff, Kickstarter, Long Term Capital Management, margin call, market bubble, money market fund, Myron Scholes, Nick Leeson, Northern Rock, offshore financial centre, Paul Samuelson, price mechanism, proprietary trading, regulatory arbitrage, rent-seeking, Richard Thaler, risk free rate, risk tolerance, risk/return, Ronald Reagan, Salesforce, Savings and loan crisis, seminal paper, shareholder value, short selling, statistical model, subprime mortgage crisis, The Chicago School, Thomas Bayes, time value of money, too big to fail, transaction costs, value at risk, Vanguard fund, yield curve, zero-sum game

Such dangers are well understood in consumer financial markets.13 Where customers are confused about their buying decisions, they can fall prey to “rent seeking” by sophisticated vendors, who extract outsized profits without delivering real value for their customers. With bespoke over-the-counter derivatives and structured products, opaque pricing allows dealers to build hefty margins into the transaction. This means that the difference between the true manufacturing cost and what the customer actually pays can be earned as “rent” by the dealer over the life of the trade. So long as the customer feels that they are getting a good deal, such rent seeking can be extremely profitable for large financial institutions.

Since the late 1990s, financial institutions have earned billions annually in rent by selling these structured products to price-indifferent consumers and hedging their exposure over time.14 At first glance, institutional derivative customers would seem to offer fewer opportunities for rent seeking by banks. Shareholders require and reward managers to avoid the fog of confusion that makes consumers easy victims of rent seeking. The managers, in turn, expect the bankers that compete for their business to genuinely act in their best interest and not try to pull the wool over their eyes. “Our best relationship banks think intensively about our capital structure and hedging strategy,” is how the head of corporate finance at Lufthansa expresses it.

On a single transaction that reached $250 million in size, that meant J.P. Morgan could book a profit of over $10 million. One might say that there was no value being created here for Poste Italiane, just rent seeking by J.P. Morgan. If this wasn’t sufficient evidence of his lack of competence, Catasta made things worse by adjusting his derivatives, exposing himself to more trading costs and even more rent seeking. According to sources at the company, Catasta would periodically dismantle older deals and replace them with new ones, until July 2003. This last tweak—possibly a result of an earlier bet’s losing money—alone cost Poste Italiane €50 million.


Adam Smith: Father of Economics by Jesse Norman

active measures, Alan Greenspan, Andrei Shleifer, balance sheet recession, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Black Swan, Branko Milanovic, Bretton Woods, British Empire, Broken windows theory, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, cognitive dissonance, collateralized debt obligation, colonial exploitation, Corn Laws, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, David Ricardo: comparative advantage, deindustrialization, electricity market, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Fellow of the Royal Society, financial engineering, financial intermediation, frictionless, frictionless market, future of work, George Akerlof, Glass-Steagall Act, Hyman Minsky, income inequality, incomplete markets, information asymmetry, intangible asset, invention of the telescope, invisible hand, Isaac Newton, Jean Tirole, John Nash: game theory, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, lateral thinking, loss aversion, low interest rates, market bubble, market fundamentalism, Martin Wolf, means of production, mirror neurons, money market fund, Mont Pelerin Society, moral hazard, moral panic, Naomi Klein, negative equity, Network effects, new economy, non-tariff barriers, Northern Rock, Pareto efficiency, Paul Samuelson, Peter Thiel, Philip Mirowski, price mechanism, principal–agent problem, profit maximization, public intellectual, purchasing power parity, random walk, rent-seeking, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, scientific worldview, seigniorage, Socratic dialogue, South Sea Bubble, special economic zone, speech recognition, Steven Pinker, The Chicago School, The Myth of the Rational Market, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, time value of money, transaction costs, transfer pricing, Veblen good, Vilfredo Pareto, Washington Consensus, working poor, zero-sum game

On the relation between famines and democracy, see Amartya Sen, Poverty and Famines, Oxford University Press 1981; and more recently, Cormac Ó Gráda, Famine: A Short History, Princeton University Press 2009 Rent-seeking: this idea was first specifically developed by Gordon Tullock in ‘The Welfare Costs of Tariffs, Monopolies and Theft’, Western Economic Journal, 5.3, 1967. It was further developed, and the term ‘rent-seeking’ coined, by Anne Krueger in ‘The Political Economy of the Rent-Seeking Society’, American Economic Review, 64.3, 1974. See also Roger D. Congleton and Arye L. Hillman (eds.), Companion to the Political Economy of Rent-Seeking, Edward Elgar 2015 James Anderson on rent: see An Enquiry into the Nature of the Corn Laws, 1777.

Indeed, Smith appears to have been the first person to present a comprehensive analysis of what crony capitalism amounts to, and why it is damaging to business and government alike. In doing so he opened up and made prominent three sets of ideas which, further refined and developed, have become analytic tools of lasting significance. The first of these is the idea of rent-seeking. ‘Rent’ in this sense, or ‘economic rent’, is not quite the same thing as the rent received on land or property, though the ideas are related. We can refine the description given earlier—as unearned income received, over and above the returns generated in competitive markets—by thinking of it as the difference between the market price and the lowest price a seller would accept.

Smith does not have a theory of economic rent as such—the first steps towards one were taken in 1777, a year after publication of The Wealth of Nations, in a work by his contemporary and critic James Anderson of Hermiston—and as a result he appears to underestimate the possibility that companies can build up ‘good’ rents and thus sustainable competitive advantage by entirely legitimate means. But, as we have seen, Smith is acute in identifying and characterizing the special interests of his time, and the interrelated issues of rent-seeking, collusion, lobbying and their effects; and the wider links he draws between mercantilism and colonization are bold and illuminating. The second important idea in analysing crony capitalism is that there can be asymmetries of information and power between players in a market. Merchants can readily hoodwink politicians, as we have seen; and in commerce, far from believing that an invisible hand inevitably works to create conditions of equal competition in markets, Smith is alive to the possibilities for some market players to exploit and derive unfair advantage over others.


The Unknowers: How Strategic Ignorance Rules the World by Linsey McGoey

Alan Greenspan, An Inconvenient Truth, anti-globalists, antiwork, battle of ideas, behavioural economics, Big Tech, Black Lives Matter, Branko Milanovic, British Empire, Cambridge Analytica, carbon tax, Cass Sunstein, Clive Stafford Smith, conceptual framework, Corn Laws, corporate governance, corporate raider, Credit Default Swap, David Ricardo: comparative advantage, Donald Trump, drone strike, en.wikipedia.org, European colonialism, fake news, Frances Oldham Kelsey, hiring and firing, Howard Zinn, income inequality, it is difficult to get a man to understand something, when his salary depends on his not understanding it, joint-stock company, junk bonds, knowledge economy, market fundamentalism, mass incarceration, Michael Milken, minimum wage unemployment, Naomi Klein, new economy, Nick Leeson, p-value, Paul Samuelson, Peter Thiel, plutocrats, post-truth, public intellectual, race to the bottom, randomized controlled trial, rent-seeking, road to serfdom, Robert Mercer, Ronald Reagan, Scientific racism, selective serotonin reuptake inhibitor (SSRI), Social Justice Warrior, Steven Pinker, Suez crisis 1956, The Chicago School, The Wealth of Nations by Adam Smith, union organizing, Upton Sinclair, W. E. B. Du Bois, Washington Consensus, wealth creators

Ever since it was introduced, marginal productivity theory has been widely derided by scholars working inside and outside the economics mainstream, but it is still taught as orthodoxy at most US universities.11 One of the leading proponents today of marginal productivity theories is Gregory Mankiw, an economist at Harvard who argues that increased global wealth concentration – the fact the richest 1 percent of the global population control nearly two-thirds of the world’s resources – stems naturally from wealthy people making more valuable contributions to society than other people. He acknowledges that what classical economists like Smith saw as ‘rentier’ activities still do exist in theory, but he insists that rent-seeking plays little or no role in producing current wealth inequalities in countries such as the US. In his words (quotes taken from his article ‘Defending the One Percent’): if ‘a person’s high income results from political rent-seeking rather than producing a valuable product, the outcome is likely to be both inefficient and widely viewed as inequitable.’ But to his mind, this problem is exceedingly rare: ‘My own reading of the evidence is that most of the very wealthy got that way by making substantial economic contributions, not by gaming the system or taking advantage of some market failure or the political process.’12 His critics see this as nonsense.

First, government gifts to the rich were doled out too arbitrarily: he wanted the science of subsidies to improve. And second, he thought the revenue generated from government subsidies wasn’t shared fairly among the wider polity. Smith’s criticism of monopoly protections introduced a notion later described as ‘rent-seeking’ – the gaining of private benefits through disproportionate influence over government decision making. Smith also introduced a second aspect of rentier privileges, one that relates to the economic concept of ‘rent.’ By this, economists don’t mean the common meaning of rent; the eye-watering £2000 or so per month a two-bed flat in London costs to rent monthly (more in higher-end areas).

Marginal productivity theories deflected and obscured the criticism that Adam Smith and his peers directed at rentier profiteering and corporate abuses of power. My argument is that paying more attention to marginal productivity theories helps to create a plausible ‘ignorance pathway’ for understanding why 18th-century economic concerns about corporate rent-seeking were largely dropped as a major focus of mainstream economists over much of the 20th century.10 The new, marginal productivity theory of income distribution suggests that, under perfectly competitive markets, the remuneration that people receive from different economic activities tends to align naturally with the economic value that they have generated to society.


pages: 828 words: 232,188

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

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

The history of developing countries in Latin America, Africa, and the Middle East is littered with cases of industrial policy gone bad and collapsing in a flurry of corruption and rent seeking, like the Argentine effort to create a domestic car industry noted in chapter 18. For government intervention to work, the state must have what Peter Evans labels “embedded autonomy”: bureaucracies have to respond to social needs, but also must be free of pressures to satisfy rent-seeking political constituencies, allowing them to promote longer-term goals that serve a broad public interest. This kind of policy worked in Japan, South Korea, Taiwan, and China but failed elsewhere.

Public good may be invoked during election campaigns, but the state is not impersonal: favors are doled out to networks of political supporters in exchange for votes or attendance at rallies. This pattern of behavior is visible in countries from Nigeria to Mexico to Indonesia.2 Douglass North, John Wallis, and Barry Weingast have an alternative label for neopatrimonialism, what they call a “limited access order,” in which a coalition of rent-seeking elites use their political power to prevent free competition in both the economy and the political system.3 Daron Acemoglu and James Robinson use the term “extractive” to describe the same phenomenon.4 At one stage in human history, all governments could be described as patrimonial, limited access, or extractive.

Second, corruption acts as a highly regressive tax: while petty corruption on the part of minor, poorly paid officials exists in many countries, the vast bulk of misappropriated funds goes to elites who can use their positions of power to extract wealth from the population. Further, seeking such payoffs is often a time-consuming occupation that diverts the energies of the smartest and most ambitious people who could be creating wealth-generating private firms. Gaming the political system for private gain is what economists label “rent seeking.”2 It has been argued that bribery might increase efficiency by lubricating the process of getting business registrations, export licenses, or appointments with high officials. But this represents a very poor way of doing business: it would be much better if registration processes were quick, if export licenses didn’t exist at all, or if all individuals had easy and equal access to the government.


pages: 538 words: 121,670

Republic, Lost: How Money Corrupts Congress--And a Plan to Stop It by Lawrence Lessig

air traffic controllers' union, Alan Greenspan, asset-backed security, banking crisis, carbon tax, carried interest, circulation of elites, cognitive dissonance, corporate personhood, correlation does not imply causation, crony capitalism, David Brooks, Edward Glaeser, Filter Bubble, financial deregulation, financial innovation, financial intermediation, Glass-Steagall Act, Greenspan put, invisible hand, jimmy wales, low interest rates, Martin Wolf, meta-analysis, Mikhail Gorbachev, moral hazard, Pareto efficiency, place-making, profit maximization, public intellectual, Ralph Nader, regulatory arbitrage, rent-seeking, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, single-payer health, The Wealth of Nations by Adam Smith, too big to fail, TSMC, Tyler Cowen, upwardly mobile, WikiLeaks, Yochai Benkler, Zipcar

And these interests could leverage their power to achieve this rapaciousness because—in part at least—of the “self-reinforcing cycle of mutual financial dependency” between members of Congress and the lobbyists, as the American Bar Association’s Lobbying Task Force put it.8 Reagan couldn’t see this in the early 1970s when his philosophy was finally set. The dynamic hadn’t quite taken hold. No doubt there was “rent seeking”—efforts by special interests to secure favors through the government that they couldn’t get through the free market. But then, the level of this rent seeking was nothing close to the level that is now the new normal. It’s not the game that has changed. It is the scale. Reagan can be forgiven for missing this scale. Likewise with the alleged rapaciousness of bureaucrats.

This was Teddy Roosevelt’s view: “Corporate expenditures for political purposes… have supplied one of the principal sources of corruption in our political affairs.”51 But however clever political antitrust might be, a more fundamental response would be to weaken the ability of wealth to leverage political power. Never completely. That would not be possible. But at least enough to weaken the return from rent seeking, perhaps enough to make ordinary innovation seem more profitable. Any reform that would seek to weaken the ability of wealth to rent-seek would itself be resisted by wealth. So long as private money drives public elections, public officials will work hard to protect that private money. And if you doubt this, look to Wall Street: never has an industry been filled with more rabid libertarians; but never has an industry more successfully engineered government handouts when the gambling of those libertarians went south.

The theory of regulatory capture raises questions about whether cartel-like industries will use their power to extract rents in the market or through government. And indeed, as Posner writes, the strongest examples of successful rent seeking come from relatively competitive industries. See Posner, “Theories of Economic Regulation,” 335, 343–45. The success of the “deregulation” movement may have now shifted the rent-seeking game toward the focus that now concerns Rajan and Zingales. 15. Rajan and Zingales, Saving Capitalism from the Capitalists, 296. 16. Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v.


India's Long Road by Vijay Joshi

Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, book value, Bretton Woods, business climate, capital controls, carbon tax, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, Cornelius Vanderbilt, corporate governance, creative destruction, crony capitalism, decarbonisation, deindustrialization, demographic dividend, demographic transition, Doha Development Round, eurozone crisis, facts on the ground, failed state, financial intermediation, financial repression, first-past-the-post, floating exchange rates, foreign exchange controls, full employment, germ theory of disease, Gini coefficient, global supply chain, global value chain, hiring and firing, income inequality, Indoor air pollution, Induced demand, inflation targeting, invisible hand, land reform, low interest rates, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price elasticity of demand, price mechanism, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, race to the bottom, randomized controlled trial, rent-seeking, reserve currency, rising living standards, school choice, school vouchers, secular stagnation, Silicon Valley, smart cities, South China Sea, special drawing rights, The Future of Employment, The Market for Lemons, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, transaction costs, universal basic income, urban sprawl, vertical integration, working-age population

But history all over the world shows that entrepreneurship can be directed to productive or unproductive uses depending on the context.20 If the rewards are greater in unproductive rent-​ seeking than in productive activities, then that is where business energy will go.21 There is no doubt that liberalization in India has very been successful in channelling the energy of firms into innovative and productive uses.22 However, there is also evidence, especially in the recent past, that India’s corporate sector is vulnerable to rent-​seeking and unproductive entrepreneurship, a disease that could arrest the growth of productivity in the long run. The lesson is that while the state must redouble its efforts to liberalize, it must at the same time safeguard competition and restrain corruption and crony capitalism (see Chapter 11).

Super-​fast growth for a couple of decades or more is like running the distance of a marathon at the speed of a sprint. Most countries cannot make it. Many countries have brief high-​growth spurts that fizzle out due to lack of stamina. Fast-​growing countries slow down because they have fiscal explosions or fall prey to rent-​seeking oligarchies and crony capitalists or simply fail to sustain the pace of productivity improvement.11 In recent years, India has looked vulnerable to falling at each of these hurdles. I emphasize again that India’s aim is not just fast growth but high-​quality, fast growth. That sets the bar higher than fast growth pure and simple.

In India, a further twist was given to this kind of thinking by a ‘heavy industry’ strategy (based loosely on Soviet planning models), which was adopted in the Second Five Year Plan and used to justify the physical allocation of investment.5 It was taken for granted that extensive government intervention and controls were necessary to subdue or supplant the market, and make the private sector’s activities consonant with the planned trajectory of output.6 Once the controls were established, the dynamic of rent-​seeking took over and they proliferated to the point where no economic activity, unless of very small scale, could be legally pursued without obtaining dozens of permits and licences from different departments of government. Controls permeated every facet of business decision-​making including investment, output-​mix, pricing, credit, employment, entry, and exit.


pages: 151 words: 38,153

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

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

The contemporary concept of rent also includes income from privileges granted by government—import quotas, mining rights, subsidies, tax loopholes, and so on. Many economists use the term rent seeking to describe the multiple ways in which special interests manipulate government to enrich themselves at the expense of others. If you’re wondering why Washington, DC, and its environs have grown so prosperous in recent decades, it’s not because government itself has become gargantuan, it’s because rent seeking has. In short, rent is income received not because of anything a person or business produces but because of rights or power a person or business possesses.

Further, it not only adds no value to the economy but “distorts resource allocation and makes the economy weaker.”14 And finally: “There’s no begrudging the wealth accrued by those who have transformed our economy—the inventors of the computer, the pioneers of biotechnology. But, for the most part, these are not the people at the top of our economic pyramid. Rather, to a too large extent, it’s people who have excelled at rent seeking in one form or another.” EIGHTY YEARS AGO, JOHN MAYNARD KEYNES looked forward to what he called “the euthanasia of the rentier.” That day would come when the supply of capital was so large, relative to the demand for it, that the return to capital “would have to cover little more than [its] exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment.”

The revenue for this fund would have come from selling rights to dump carbon dioxide into our co-owned air. The story of these failures is both political and intellectual. In this chapter, I trace the transformation of a good idea—a market-based limit on carbon pollution—into a compromised and beaten one. This transformation was driven by the familiar Washington process of rent seeking, and its story yields a number of lessons. THE IDEA OF CAPPING FLOWS of harmful substances, and then letting markets allocate them, goes back to 1968, when a Canadian economist, the late John Dales, floated the idea in a book called Pollution, Property & Prices1 At the time, Dales wasn’t thinking about climate change; he was thinking about farmers who polluted streams with chemical runoffs.


pages: 381 words: 101,559

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

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, deal flow, Deng Xiaoping, diversification, diversified portfolio, Dr. Strangelove, 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, Great Leap Forward, guns versus butter model, high net worth, income inequality, interest rate derivative, it's over 9,000, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, power law, price mechanism, price stability, private sector deleveraging, proprietary trading, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, short squeeze, sovereign wealth fund, special drawing rights, special economic zone, subprime mortgage crisis, 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, vertical integration, War on Poverty, Washington Consensus, zero-sum game

Elites who manage the institutions of society slowly become more concerned with their own share of a shrinking pie than with the welfare of society as a whole. The elite echelons of society go from leading to leeching. Elites behave like parasites on the host body of society and engage in what economists call “rent seeking,” or the accumulation of wealth through nonproductive means—postmodern finance being one example. By 2011, evidence had accumulated to show that the United States was well down the return curve to the point where greater exertions by more people produced less for society while elites captured most of the growth in income and profits.

CEO pay increased 27 percent in 2010 versus 2009 while over twenty million Americans either were unemployed or had dropped out of the labor force but wanted a job. Of Americans with jobs, more worked for the government than in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. One of the best measures of the rent seeking relationship between elites and citizens in a stagnant economy is the Gini coefficient, a measure of income inequality; a higher coefficient means greater income inequality. In 2006, shortly before the recent recession began, the coefficient for the United States reached an all-time high of 47, which contrasts sharply with the all-time low of 38.6, recorded in 1968 after two decades of stable gold-backed money.

The Gini coefficient trended lower in 2007 but was near the all-time high again by 2009 and trending higher. The Gini coefficient for the United States is now approaching that of Mexico, which is a classic oligarchic society characterized by gross income inequality and concentration of wealth in elite hands. Another measure of elite rent seeking is the ratio of amounts earned by the top 20 percent of Americans compared to amounts earned by those living below the poverty line. This ratio went from a low of 7.7 to 1 in 1968 to a high of 14.5 to 1 in 2010. These trends in both the Gini coefficient and the wealth-to-poverty income ratio in the United States are consistent with Tainter’s findings on civilizations nearing collapse.


pages: 222 words: 70,132

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

"Friedman doctrine" OR "shareholder theory", "there is no alternative" (TINA), 1960s counterculture, affirmative action, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Amazon Mechanical Turk, American Legislative Exchange Council, AOL-Time Warner, Apple's 1984 Super Bowl advert, back-to-the-land, barriers to entry, basic income, battle of ideas, big data - Walmart - Pop Tarts, Big Tech, bitcoin, Brewster Kahle, Buckminster Fuller, Burning Man, Clayton Christensen, Cody Wilson, commoditize, content marketing, creative destruction, crony capitalism, crowdsourcing, data is the new oil, data science, David Brooks, David Graeber, decentralized internet, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dynabook, Edward Snowden, Elon Musk, equal pay for equal work, Erik Brynjolfsson, Fairchild Semiconductor, fake news, future of journalism, future of work, George Akerlof, George Gilder, Golden age of television, Google bus, Hacker Ethic, Herbert Marcuse, Howard Rheingold, income inequality, informal economy, information asymmetry, information retrieval, Internet Archive, Internet of things, invisible hand, Jacob Silverman, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, John Perry Barlow, John von Neumann, Joseph Schumpeter, Kevin Kelly, Kickstarter, labor-force participation, Larry Ellison, life extension, Marc Andreessen, Mark Zuckerberg, Max Levchin, Menlo Park, Metcalfe’s law, military-industrial complex, Mother of all demos, move fast and break things, natural language processing, Network effects, new economy, Norbert Wiener, offshore financial centre, packet switching, PalmPilot, Paul Graham, paypal mafia, Peter Thiel, plutocrats, pre–internet, Ray Kurzweil, reality distortion field, recommendation engine, rent-seeking, revision control, Robert Bork, Robert Gordon, Robert Metcalfe, Ronald Reagan, Ross Ulbricht, Sam Altman, Sand Hill Road, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Skinner box, smart grid, Snapchat, Social Justice Warrior, software is eating the world, Steve Bannon, Steve Jobs, Stewart Brand, tech billionaire, techno-determinism, technoutopianism, TED Talk, The Chicago School, the long tail, The Market for Lemons, The Rise and Fall of American Growth, Tim Cook: Apple, trade route, Tragedy of the Commons, transfer pricing, Travis Kalanick, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, vertical integration, We are as Gods, We wanted flying cars, instead we got 140 characters, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, you are the product

He noted, “The right has colonized the digital space around these subjects—Muslims, women, Jews, the Holocaust, black people—far more effectively than the liberal left.” Google, Amazon, and Facebook are classic “rent-seeking” enterprises. The New York Times columnist Adam Davidson explains the concept: In economics, a “rent” is money you make because you control something scarce and desirable, whether it’s an oil field or a monopolistic position in a market.… The left, right and center of the economics profession all agree that reducing rent-seeking behavior, and improving overall growth, is essential if we want to “make America great again.” Google and Facebook each have more than one billion customers while Amazon has 350 million.

Two senior Obama economic advisers, Peter Orszag and Jason Furman, published a paper entitled “A Firm-Level Perspective on the Role of Rents in the Rise in Inequality,” which makes the argument that the rise in “super-normal returns on capital” at firms with limited competition is leading to a rise in economic inequality. They describe these firms as “rent seeking.” Economic rents are the return to a factor of production in excess of what would be needed to keep it in the market.… For example, capital can extract rents by engaging in anti-competitive behavior to earn revenues well in excess of opportunity cost.… Moreover, labor market structure can lead to some elements of monopsony in certain industries, slanting the division of this labor contract rent towards the firm. The classic example of rent seeking we all deal with is our cable service, which costs more than it should and is less responsive than it should be because its local monopoly allows the company to make a better “deal” for itself.

The classic example of rent seeking we all deal with is our cable service, which costs more than it should and is less responsive than it should be because its local monopoly allows the company to make a better “deal” for itself. It is probably fair to ask whether Google, Facebook, and Amazon are rent-seeking firms—i.e., whether they monopolize the resources they use. Does the fact that Amazon can deny a publisher access to its vast customer base allow it to extract rents from publishers in excess of what it would be able to extract if there were multiple large sellers in the ebook market? Yes. Can Facebook and Google extract monopoly rents in excess of normal market prices from advertisers in return for the targeted access to their billions of users?


pages: 442 words: 130,526

The Billionaire Raj: A Journey Through India's New Gilded Age by James Crabtree

"World Economic Forum" Davos, accounting loophole / creative accounting, Asian financial crisis, behavioural economics, Big bang: deregulation of the City of London, Branko Milanovic, business climate, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial rule, commodity super cycle, Cornelius Vanderbilt, corporate raider, creative destruction, crony capitalism, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, facts on the ground, failed state, fake news, Francis Fukuyama: the end of history, global supply chain, Gunnar Myrdal, income inequality, informal economy, Joseph Schumpeter, land bank, liberal capitalism, Mahatma Gandhi, McMansion, megacity, Meghnad Desai, middle-income trap, New Urbanism, offshore financial centre, open economy, Parag Khanna, Pearl River Delta, plutocrats, Ponzi scheme, post-truth, public intellectual, quantitative easing, rent-seeking, Rubik’s Cube, Shenzhen special economic zone , Silicon Valley, Simon Kuznets, smart cities, special economic zone, spectrum auction, tech billionaire, The Great Moderation, Thomas L Friedman, transaction costs, trickle-down economics, vertical integration, Washington Consensus, WikiLeaks, yellow journalism, young professional

The first included companies in sectors that were mostly untouched by government, in which business success was assumed to come mostly from efficiency and innovation. The second featured businesses in what Walton called “rent-thick” sectors, meaning those where firms made money—or “rents”—via access to favors. Economists worry about what they call “rent seeking,” meaning the way some businesses earn profits beyond what they could make in a competitive market, for instance by owning the rights to land or resources or intellectual property. Some companies earned rents by lobbying or bribing, others from operating in cartels or as monopolies. The term “rentier” was sometimes used by left-wing thinkers to describe the same thing, meaning those who grabbed valuable resources, such as licenses to drill oil fields or develop real estate.

The term “rentier” was sometimes used by left-wing thinkers to describe the same thing, meaning those who grabbed valuable resources, such as licenses to drill oil fields or develop real estate. Digging into the data, Walton found a clear pattern. In the early years after its 1991 reforms India’s new billionaires operated mostly in areas like IT services, which had little in the way of rent-seeking. But as the economy took off and globalization jacked up demand for things like commodities and land, so the wealth of billionaires shot up most of all in rent-thick sectors, from mining and property to cement, infrastructure, and telecoms. Over the years since, the various billionaires’ fortunes had ebbed and flowed.

But most merely operated in sectors that were tied closely to the government, where they could put their connections to good use. There was even a special local word for the tycoons themselves: “promoters,” a term that referred to the individual or family who owned most of the equity in the business and who in turn tightly controlled its operations. The business of rent-seeking in India led many tycoons to build up sophisticated influence machines. Some, like Vijay Mallya, became politicians themselves. Others created modern versions of the old Reliance Industries “intelligence agency” in New Delhi, the sophisticated lobbying operation built up over the decades by Mukesh Ambani’s father.


pages: 464 words: 116,945

Seventeen Contradictions and the End of Capitalism by David Harvey

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

This has now led to an admission that monopoly power is more than an aberration but a systemic problem that arises out of what economists refer to as ‘rent seeking’. ‘To put it baldly,’ says the economist Joseph Stiglitz, ‘there are two ways to become wealthy: to create wealth or to take wealth away from others. The former adds to society. The latter typically subtracts from it, for in the process of taking it away, wealth gets destroyed.’1 Rent seeking is nothing more than a polite and rather neutral-sounding way of referring to what I call ‘accumulation by dispossession’. The virtue of Stiglitz’s somewhat truncated account of rent seeking or accumulation by dispossession is that it recognises the seamless way in which monopoly power in economic transactions is paralleled by monopoly power in the political process.

Regressive taxes and write-offs; regulatory capture (in which the foxes are put in charge of the henhouse); acquiring or leasing state or private assets at discount prices; inflated cost-plus contracts with state agencies; writing legislation to protect or subsidise particular interests (energy and agribusiness); buying political influence through campaign contributions – these are all political practices that give a free hand to big moneyed and monopolistic interests while permitting them to plunder the public treasury at the expense of the taxpayer. These political practices supplement conventional rent seeking in land and property markets; rents on resources and on patents, licences and intellectual property rights; plus excess returns due to monopoly pricing. Then there are all the quasi-legal ways of gaining excess profits. The creation of financial markets that lack any transparency or in which adequate information is lacking creates a fog of misunderstanding in which sharp practices are impossible to curb.

As Stiglitz remarks, ‘Some of the most important innovations in business in the last three decades have centered not on making the economy more efficient but on how better to ensure monopoly power or how better to circumvent government regulations intended to align social returns and private rewards.’2 What is missing from Stiglitz’s account of rent seeking as a strategy (though not from his account of the social outcomes) is the demolition of a wide range of democratic rights, including economic rights to pensions and health care, and free access to vital services such as education, police and fire protection, and state-funded programmes (like nutritional supplements and food stamps in the case of the USA) that have hitherto helped to support low-income populations at an adequate standard of living.


pages: 976 words: 235,576

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

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

But it is a mistake to leap from these uncontested facts to the conclusion that deregulated elite finance workers’ immense incomes arise from exploitation or rent seeking. If the techniques employed by deregulated finance make super-skilled finance workers especially productive, then no increase in rent seeking is required to explain the increase in finance-sector wages. The figures, which show that relatively fewer, relatively more-skilled workers are taking the same cut from a relatively rising share of GDP explain rising finance-sector wages in this way, without needing to resort to rising rent seeking. None of this demonstrates, nor does it even assert, that finance workers extract no rents.

Critics of inequality commonly attribute rising top incomes to personal vices rather than to economic structures, and to too little meritocracy rather than too much, arguing that superordinate workers get their extravagant incomes through nepotism and class snobbery, rent seeking that exploits economic power, or even outright fraud. These arguments resemble suggestions, discussed earlier, that top incomes must come from capital rather than labor. Like those suggestions, these charges have a point. Meritocrats retain all the familiar vices, and class snobbery, rent seeking, and fraud contribute—including outrageously—to the advantages that superordinate workers enjoy. But once again, the scale of the moral vices does not match (or even approach) the scale of the rise in elite incomes.

According to this view, elite schools and universities admit students based on cultural capital, class background, or legacy status rather than intelligence or academic ability, elite employers hire based on social networks and pedigree rather than skill or talent, and superordinate workers command their immense incomes through rent seeking or outright fraud. A second familiar criticism, developed in great detail by Thomas Piketty, attributes increasing economic inequality to a shift of income away from labor and in favor of capital and, in the extreme, to a rising oligarchy. According to this view, economic and political forces are reconcentrating wealth, redistributing income to become both more capital-intensive and more concentrated at the top, and by these means rebuilding an old-fashioned rentier elite as the economically and politically dominant caste in a twenty-first-century version of patrimonial capitalism.


pages: 566 words: 163,322

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

"World Economic Forum" Davos, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, commodity super cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, driverless car, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, financial engineering, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, global macro, Goodhart's law, guns versus butter model, hiring and firing, hype cycle, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Japanese asset price bubble, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, Larry Ellison, lateral thinking, liberal capitalism, low interest rates, Malacca Straits, Mark Zuckerberg, market bubble, Mary Meeker, mass immigration, megacity, megaproject, Mexican peso crisis / tequila crisis, middle-income trap, military-industrial complex, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, open immigration, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, tacit knowledge, tech billionaire, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, work culture , working-age population

Rising Japanese billionaires like Hiroshi Mikitani, an e-commerce magnate known for adopting ideas from American corporate culture and criticizing his countrymen for their lack of English proficiency, get a lot of media attention precisely because they are so unusual. It’s not a good sign when dynamism is seen as offbeat. Quality: The Good versus Bad Billionaires Though new faces on the billionaire list can be a favorable sign for the economy, this holds true only if they are good billionaires, emerging outside what economists call “rent-seeking industries.” These industries include construction, real estate, gambling, mining, steel, aluminum and other metals, oil, gas, and other commodity industries that mainly involve digging natural resources out of the ground. The competition in these sectors is often focused on securing access to a greater share of the national wealth in natural resources, not on growing the wealth in fresh, innovative ways.

These trends may have taken the edge off the anticorporate, antigrowth sentiment that had been building in Delhi over the prior decade. An Indian brokerage firm called Ambit started tracking the fate of crony capitalists through its “connected companies index,” which monitors seventy-five firms that operate in rent-seeking industries and are believed to have benefited significantly from close ties to government officials. The stock prices for these companies have collapsed with the growing backlash against political influence peddling and the public’s intense focus on corrupt deals. Between mid-2010 and mid-2015, India’s stock market rose 50 percent, while the connected companies’ index lost half its value, a sign that crony capitalism was in decline, along with the luster of making money on rising commodity prices.

Few new or good billionaires are to be found in nations where an aging regime has turned away from reform and cultivated a class of politically connected tycoons. Two of these regimes are in Putin’s Russia and Erdoan’s Turkey. The billionaire class in Turkey controls a rising share of the economy, and the share of wealth that comes from rent-seeking industries has spiked. Nine out of every ten Turkish billionaires live in Istanbul, long the commercial center of the country. Even billionaires who hail from the heartland of Anatolia tend to relocate to Istanbul, to be closer to the action. But no city rivals the concentration of wealth and power in Moscow.


pages: 95 words: 6,448

Mending the Net: Toward Universal Basic Incomes by Chris Oestereich

Abraham Maslow, basic income, en.wikipedia.org, future of work, Future Shock, Overton Window, profit motive, rent-seeking, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, universal basic income

And plenty of other potential pitfalls may lie waiting in the road ahead. Thinking about what problems might lurk, and designing experiments with those possibilities in mind, should help us arrive at a workable starting point. A few potential obstacles I see are (1) the likelihood of rent seeking, (2) the curtailment of welfare programs, and (3) the financialization of basic incomes. The economy is already rife with rent seeking; the pursuit of economic gain without reciprocation. Imagine what those who already pursue such “opportunities” might try when they learn that everyone will start receiving regularly scheduled checks. What would cartoonishly rapacious capitalists like Turing Pharmaceuticals,[19] the EpiPen’s maker Mylan,[20] and all the garden-variety profiteers who keep their inequitable dealings under the radar do in those circumstances?


pages: 543 words: 147,357

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

Abraham Maslow, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, bread and circuses, Bretton Woods, business cycle, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, disinformation, diversification, double helix, Edward Glaeser, financial deregulation, financial engineering, 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, general purpose technology, George Akerlof, Gini coefficient, Glass-Steagall Act, 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, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, language acquisition, Large Hadron Collider, liberal capitalism, light touch regulation, Long Term Capital Management, long term incentive plan, Louis Pasteur, low cost airline, low interest rates, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, mass immigration, means of production, meritocracy, Mikhail Gorbachev, millennium bug, Money creation, money market fund, moral hazard, moral panic, mortgage debt, Myron Scholes, Neil Kinnock, new economy, Northern Rock, offshore financial centre, open economy, plutocrats, power law, price discrimination, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, Right to Buy, rising living standards, Robert Shiller, Ronald Reagan, Rory Sutherland, Satyajit Das, Savings and loan crisis, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, systems thinking, tail risk, 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, three-masted sailing ship, too big to fail, unpaid internship, value at risk, Vilfredo Pareto, Washington Consensus, wealth creators, work culture , working poor, world market for maybe five computers, zero-sum game, éminence grise

Three leading theorists from Harvard and MIT – Kevin Murphy, Robert Vishny and Andrei Shleifer – argue in an important paper that countries in which talent pursues such rent-seeking activity rather than genuine entrepreneurship grow at a slower rate: ‘Pure entrepreneurial activities raise current income because resources are used more efficiently, contribute to growth because technology is improved, and take profits away from competitors.’19 Rent-seeking does the opposite. Moreover, as Schumpeter pointed out, the innovating entrepreneur who had to overcome the resistance of the conservative to change probably expended more energy and effort.

It might even indirectly contribute to growth if more efficient financial markets reduce the cost of capital. But the main gains from trading come from the transfer of wealth to the smart traders from the less astute who trade with them out of institutional needs or outright stupidity.’ Finance – along with the law and piracy – has always been a route to great wealth, a classic rent-seeking occupation. Today, it is even more so. In their defence, bankers and financiers usually point to ‘financial innovation’ as an attribute that society should desire and value, but their arguments are hamstrung by their own astonishing inability to distinguish between innovation that is economically and socially useful and that which is not.

The cases for inheritance tax – a tax on good luck – and social insurance – a means to counter bad luck – are both deeply rooted in human motivation. Moreover, fairness suggests that the operation of markets should be limited when they create economic ‘bads’. Fairness undermines the spurious justification for the explosion in executive pay and demands activism to ensure that entrepreneurship maximises genuine wealth-creation rather than rent-seeking. Obstacles to social mobility and self-improvement by the disadvantaged are similarly unfair. However, fairness poses a challenge to the political left in respect to need. The left has largely adopted a Rawlsian position on poverty: put simply, it believes that inequality is not driven by personal capacities, choices and values.


pages: 346 words: 90,371

Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane

agricultural Revolution, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, basic income, book value, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, debt deflation, deindustrialization, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, foreign exchange controls, full employment, garden city movement, George Akerlof, ghettoisation, Gini coefficient, Hernando de Soto, housing crisis, Hyman Minsky, income inequality, information asymmetry, knowledge worker, labour market flexibility, labour mobility, land bank, land reform, land tenure, land value tax, Landlord’s Game, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, means of production, Minsky moment, Money creation, money market fund, mortgage debt, negative equity, Network effects, new economy, New Urbanism, Northern Rock, offshore financial centre, Pareto efficiency, place-making, Post-Keynesian economics, price stability, profit maximization, quantitative easing, rent control, rent-seeking, Richard Florida, Right to Buy, rising living standards, risk tolerance, Robert Solow, Second Machine Age, secular stagnation, shareholder value, subprime mortgage crisis, the built environment, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, universal basic income, urban planning, urban sprawl, working poor, working-age population

As David Ricardo (and later Henry George) identified, the ability to extract economic rent is so powerful it can effectively monopolise much of the growth created in an economy, the vast bulk of which will not have been created by the landowners themselves. In its simplest conception, as the economy grows, landowners can increase the rent they charge non-owners to absorb all the additional value that their tenants (such as workers, shopkeepers and industrialists) generate. Rent-seeking seems intuitively unfair to many, but it is also inefficient. If the worker, the shopkeeper or the industrialist cannot benefit from their own efforts, but must watch it being extracted in the form of rent, why would they exert themselves or innovate? As is often noted by studies of the divergent economic health of different cities, successful urban centres around the world experience soaring land and housing costs, which ultimately threaten the very economic success of those cities, as valuable workers choose to move to less dynamic places where lower wages are more than compensated by much lower housing costs (Hsieh and Moretti, 2015).

Historical evidence suggests that markets in private property tend towards concentration, and to absorb a disproportionate share of growth (George, [1879] 1979; Ricardo, 1817). The result is growing wealth inequality, acute poverty for some, and inefficient capital allocation which dampens economic growth (which we explore in Chapter 6). As Joseph Stiglitz has put it, rent-seeking involves directing effort ‘toward getting a larger share of the pie rather than increasing the size of the pie’ (Stiglitz and Bilmes, 2012). 1.4 Summary of chapters The remainder of this book is laid out as follows. Chapter 2 describes the emergence of tradeable, privately owned landed property and the enclosure of previously common or feudal lands into private ownership.

Despite the stated policy goal of extending the opportunities of homeownership to more people, when trade-offs between different interest groups have to be made, government policy has invariably entrenched the growing divide between those who own homes and those who do not (see Chapter 5), with the result that homeownership has been in absolute decline in the UK since 2003 (DCLG, 2016). Ultimately, in its policies towards land and property, the state has legitimised what would be described in economic terms as ‘rent-seeking’ behaviour. 2.5 Hypothesis: property is liberty, property is theft It would seem that the transformation of land into private property brings both economic advantages and disadvantages. Thinkers have wrestled with this problem since the birth of political economy (the forerunner to economics) as a subject of study.


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

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

But it is more accurate to think of mercantilism as a different way to organize the relationship between the state and the economy—a vision that holds no less relevance today than it did in the eighteenth century. Mercantilist theorists such as Thomas Mun were in fact strong proponents of capitalism; they just propounded a different model than liberalism. The liberal model views the state as necessarily predatory and the private sector as inherently rent-seeking. So, it advocates a strict separation between the state and private business. Mercantilism, by contrast, offers a corporatist vision in which the state and private business are allies and cooperate in pursuit of common objectives, such as domestic economic growth or national power. The mercantilist model can be derided as state capitalism or cronyism.

we turned our analytical toolkit on the behavior of politicians and bureaucrats themselves. We began to examine political behavior using the same frameworks that we use for consumer and producer decisions in a market economy. Politicians became income-maximizing suppliers of policy favors; citizens became rent-seeking lobbies and special interests; and political systems became marketplaces in which votes and political influence are traded for economic benefits. Thus was born the field of rational-choice political economy and a style of theorizing that many political scientists readily emulated. The apparent payoff was that we could now explain why politicians did so many things that apparently violated economic rationality.

It may be used to provide aid donors with cover in case of failure, as a signal for new governments that they are the “good guys,” and by domestic lobbies to legitimize their own self-interested agenda.24 Paul DiMaggio and Walter Powell have coined the term “isomorphic mimicry” to denote the pressures that organizations face to become similar, even as they struggle to change.25 My colleague Matt Andrews documents how reform in poor countries through “isomorphic mimicry” results in the semblance of change, with little real progress achieved: a bureaucracy gets reorganized to look like those from advanced countries, but bureaucratic efficiency hardly improves.26 In a paper with Sharun Mukand, we develop a formal model of the incentives for governments to mimic other countries’ policies: implementing policies with a poor fit is costly, but so is experimentation—and an imperfectly informed electorate may be more likely to interpret domestic experimentation as an attempt at rent seeking, while being willing to accept emulation.27 What Do We Gain by Considering the Role of Ideas? I have tried to show that, for all the emphasis placed on them in political economy, vested interests play a considerably less significant role than appears at first sight. Indeed, because of their neglect of ideas, political-economy frameworks often do a poor job of accounting for policy change.


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Escape From Rome: The Failure of Empire and the Road to Prosperity by Walter Scheidel

agricultural Revolution, barriers to entry, British Empire, classic study, colonial rule, conceptual framework, creative destruction, currency manipulation / currency intervention, dark matter, disruptive innovation, Easter island, Eratosthenes, European colonialism, financial innovation, financial intermediation, flying shuttle, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, Joseph Schumpeter, knowledge economy, low interest rates, mandelbrot fractal, means of production, Multics, Network effects, out of africa, Peace of Westphalia, peer-to-peer lending, plutocrats, principal–agent problem, purchasing power parity, rent-seeking, Republic of Letters, secular stagnation, South China Sea, spinning jenny, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transaction costs, vertical integration, zero-sum game

The mature Roman empire sustained a standing army deployed in and increasingly replenished from frontier regions and augmented by provincial auxiliaries, whereas the Han empire (the much longer-lived successor to the Qin regime) gradually came to rely on a mixture of convicts, colonists, mercenaries, and “barbarian” contingents. In both cases, territorial expansion slowed and then ceased altogether. At the same time, rent-seeking local elites increasingly constrained central authority and state control (figure 7.1).5 FIGURE 7.1   Empires of the Old World, c. 200 CE. The two empires even failed in a similar fashion. The third century CE witnessed temporary splits into three subimperial states: however, Rome experienced a more robust recovery (from the 270s to the 390s CE) than Jin China (where unity was chiefly limited to a quarter century after 265 CE).

It was revived when state power recovered in the north during the later stages of the Period of Disunion. And it greatly gathered strength under the Song dynasty, which had established the strongest state in China thus far. This belief system did best when the state was strongest and the empire was intact—and thus able to provide sponsorship and material and status benefits to rent-seeking elites. It was at its most stable during the second millennium CE, when China was essentially either united or, at worst, split in two. All this speaks strongly in favor of explaining the success of this particular brand of elite Confucianism’s success with reference to the fortunes of empire, rather than the other way around.

The large volume of legislation betrays its incremental and piecemeal character, often enacted to grant special favors to proponents. By current standards, Parliament was corrupt, often favoring legislation that targeted specific constituencies in exchange for inducements. Even so, over the course of the eighteenth century, rent-seeking gave way to considerations of national interest: instead of pleasing the highest bidder, Parliament sought to arbitrate among competing interest groups. Moreover, the sheer volume of acts underlined their relevance and Parliament’s responsiveness to interest groups from across the country. These interactions strengthened the ties between center and regions, promoting integration.96 In Julian Hoppit’s words, parliamentary intervention in the aggregate represented “a commercialization of political power leading to an intensification of market relations within society.”


Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life by Alan B. Krueger

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, autonomous vehicles, bank run, behavioural economics, Berlin Wall, bitcoin, Bob Geldof, butterfly effect, buy and hold, congestion pricing, creative destruction, crowdsourcing, digital rights, disintermediation, diversified portfolio, Donald Trump, endogenous growth, Gary Kildall, George Akerlof, gig economy, income inequality, independent contractor, index fund, invisible hand, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kickstarter, Larry Ellison, Live Aid, Mark Zuckerberg, Moneyball by Michael Lewis explains big data, moral hazard, Multics, Network effects, obamacare, offshore financial centre, opioid epidemic / opioid crisis, Paul Samuelson, personalized medicine, power law, pre–internet, price discrimination, profit maximization, random walk, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, Saturday Night Live, Skype, Steve Jobs, the long tail, The Wealth of Nations by Adam Smith, TikTok, too big to fail, transaction costs, traumatic brain injury, Tyler Cowen, ultimatum game, winner-take-all economy, women in the workforce, Y Combinator, zero-sum game

As the team of economists wrote, “Term extension in existing works provides no additional incentive to create new works and imposes several kinds of additional costs.” The costs are higher prices for books, cartoons, T-shirts, costumes, and other products related to Mickey Mouse or Winnie the Pooh. Not surprisingly, owners of valuable copyrights have lobbied strongly for term extensions around the world, an activity that economists refer to as “rent-seeking.” Rent-seeking is an attempt to extract greater compensation without creating additional value for society. In other words, rent-seekers expend resources to obtain a larger slice of the pie, while doing nothing to increase the size of the pie. There is little evidence that copyright term extensions produce beneficial effects.

Figure 9.1 shows that music radio stations pay out a much smaller share of their revenues to music rights holders than do satellite music stations or streaming services.30 This creates a profitable business model for radio stations: music radio stations pay out only 4.6 percent of their operating budget for music, although music makes up two-thirds of their on-air content. And radio station owners, who are located in nearly every congressional district, and their trade group, the National Association of Broadcasters, have successfully lobbied to avoid paying performance royalties for decades, in a successful exercise of rent-seeking. Non-interactive streaming services, such as Sirius XM and Pandora, where users cannot select a specific song to play, qualify for a compulsory license with royalty rates set by the Copyright Royalty Board (CRB). But the neutrality principle is further muddied because the two services pay different royalty rates, as they are subject to different legal standards and different CRB rulings.

The Clinton administration did not anticipate that Google, which would later acquire YouTube, and other Internet service providers would become so large and powerful that it would be a Herculean task to unwind the temporary protection that DMCA afforded and legislate a more reasonable balance between content creators and Internet platforms. This is another example of the power of rent-seeking. Modernizing Copyright for a Digital World Early in this chapter I warned that music copyright rules can make your head spin. The lines that divide legitimate copyright protection from excessive copyright exploitation are blurred, the laws that dictate copyright fees and licensing requirements across different platforms are uneven, and the restrictions that govern the organizations that collect and distribute music royalties are antiquated.


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99%: Mass Impoverishment and How We Can End It by Mark Thomas

"there is no alternative" (TINA), "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, additive manufacturing, Alan Greenspan, Albert Einstein, anti-communist, autonomous vehicles, bank run, banks create money, behavioural economics, bitcoin, business cycle, call centre, Cambridge Analytica, central bank independence, circular economy, complexity theory, conceptual framework, creative destruction, credit crunch, CRISPR, declining real wages, distributed ledger, Donald Trump, driverless car, Erik Brynjolfsson, eurozone crisis, fake news, fiat currency, Filter Bubble, full employment, future of work, Gini coefficient, gravity well, income inequality, inflation targeting, Internet of things, invisible hand, ITER tokamak, Jeff Bezos, jimmy wales, job automation, Kickstarter, labour market flexibility, laissez-faire capitalism, Larry Ellison, light touch regulation, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, Modern Monetary Theory, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Nick Bostrom, North Sea oil, Occupy movement, offshore financial centre, Own Your Own Home, Peter Thiel, Piper Alpha, plutocrats, post-truth, profit maximization, quantitative easing, rent-seeking, Robert Solow, Ronald Reagan, Second Machine Age, self-driving car, Silicon Valley, smart cities, Steve Jobs, The Great Moderation, The Wealth of Nations by Adam Smith, Tyler Cowen, warehouse automation, wealth creators, working-age population

Over time, this constant rewriting of the rules results in an ever-greater concentration of wealth and power – it can be seen as the fundamental cause of the emergence of mass impoverishment. The process of manipulating public policy or economic conditions as a strategy for increasing profits is sometimes called ‘rent-seeking’ by economists because it enables one to appropriate the benefits of someone else’s work in the same way that a landlord can raise farm rents if farmers become more successful. There are so many different forms of rent-seeking – from exploiting tax loopholes to ensuring favourable privatizations; from creating monopolies to weakening the bargaining power of employees; from externalizing the costs of one’s business to society to capturing control of regulators; and, of course, literal rent on land or property – that it would be difficult to produce a comprehensive list.

There are so many different forms of rent-seeking – from exploiting tax loopholes to ensuring favourable privatizations; from creating monopolies to weakening the bargaining power of employees; from externalizing the costs of one’s business to society to capturing control of regulators; and, of course, literal rent on land or property – that it would be difficult to produce a comprehensive list. But if rent-seeking continues unchecked, so will mass impoverishment. Individuals with extreme wealth are able, if they choose, to have an impact on the dominant narrative in society disproportionate to their numbers but perhaps proportionate to their wealth, shaping public perceptions of reality in line with their own wishes and influencing the votes of thousands or even millions of their compatriots. They do not literally have more than one vote at the ballot box but they are able to influence the votes of millions.

The fourth proposal seems more contentious but even if enacted, it would still mean that ten firms or individuals between them could maintain absolute dominance over the principal media – and, to a large extent, over public discourse. Nevertheless, in many countries this would be a much better situation than currently exists. As Chapter Five pointed out, there are many ways of rent-seeking for those with their hands on the levers of power. Without the kind of democratic reform set out above, even if one government manages to pass effective legislation that reduces or even halts mass impoverishment, it will only be a matter of time until another government comes to power and undoes the good work.


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Cogs and Monsters: What Economics Is, and What It Should Be by Diane Coyle

3D printing, additive manufacturing, Airbnb, Al Roth, Alan Greenspan, algorithmic management, Amazon Web Services, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Big bang: deregulation of the City of London, biodiversity loss, bitcoin, Black Lives Matter, Boston Dynamics, Bretton Woods, Brexit referendum, business cycle, call centre, Carmen Reinhart, central bank independence, choice architecture, Chuck Templeton: OpenTable:, cloud computing, complexity theory, computer age, conceptual framework, congestion charging, constrained optimization, coronavirus, COVID-19, creative destruction, credit crunch, data science, DeepMind, deglobalization, deindustrialization, Diane Coyle, discounted cash flows, disintermediation, Donald Trump, Edward Glaeser, en.wikipedia.org, endogenous growth, endowment effect, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, Evgeny Morozov, experimental subject, financial deregulation, financial innovation, financial intermediation, Flash crash, framing effect, general purpose technology, George Akerlof, global supply chain, Goodhart's law, Google bus, haute cuisine, High speed trading, hockey-stick growth, Ida Tarbell, information asymmetry, intangible asset, Internet of things, invisible hand, Jaron Lanier, Jean Tirole, job automation, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, knowledge worker, Les Trente Glorieuses, libertarian paternalism, linear programming, lockdown, Long Term Capital Management, loss aversion, low earth orbit, lump of labour, machine readable, market bubble, market design, Menlo Park, millennium bug, Modern Monetary Theory, Mont Pelerin Society, multi-sided market, Myron Scholes, Nash equilibrium, Nate Silver, Network effects, Occupy movement, Pareto efficiency, payday loans, payment for order flow, Phillips curve, post-industrial society, price mechanism, Productivity paradox, quantitative easing, randomized controlled trial, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Robinhood: mobile stock trading app, Ronald Coase, Ronald Reagan, San Francisco homelessness, savings glut, school vouchers, sharing economy, Silicon Valley, software is eating the world, spectrum auction, statistical model, Steven Pinker, tacit knowledge, The Chicago School, The Future of Employment, The Great Moderation, the map is not the territory, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Uber for X, urban planning, winner-take-all economy, Winter of Discontent, women in the workforce, Y2K

Recently in development economics there has been great emphasis on the need for sound political institutions, including the rule of law but also inclusive institutions enabling successful entrepreneurship and new entry to the economic elite (Besley and Persson 2012; Acemoglu and Robinson 2012). The more recent institutional economics is also descended from the public choice school, which emphasises the role of incentives in politics and government as well as in purely ‘economic’ decisions. Mancur Olson argued that a successful economy depends on government overcoming rent-seeking behaviour by interest groups. Special interest groups with restricted or delineated membership, such as cartels, trade bodies, unions, or professions, will seek to persuade politicians to deliver policies that favour their members. These policies will rarely be the best outcome for other parts of society, but they have no incentive to organise or lobby against the policies (Olson 1982).

Amartya Sen forcefully demonstrated the importance of good politics for a sound economy in his work linking the presence of famine to the absence of democratic voice (Sen 1982). His account of the capabilities necessary for economic development includes political participation (Sen 2009). So economists are familiar with the importance of understanding institutions and indeed see their own participation in policy institutions as a contribution to overcoming rent-seeking behaviour. There are quite a few examples of the use of economist-centred institutions in government. In addition to independent agencies like central banks and competition authorities, another type is the expert report. Governments frequently commission an independent economist to take an impartial view of the evidence and make policy recommendations.

A few hundred pages of careful analysis lack political weight compared to the lobbying efforts of the special interests affected. This can equally derail economic analysis inside government, of course. Powerful lobby groups are—well, powerful. If interest group pressures make the independent report too weak a political instrument, other institutional embodiments of economic analysis as a counter to rent-seeking have been more effective. In the UK, Royal Commissions in the past typically had enough stature to enable governments to legislate against special interest groups. They are no longer used, though. In contrast, economic regulators have grown in number and are empowered to take decisions more or less independently of the political process, in the general public or consumer interest as set out in statute.


pages: 453 words: 111,010

Licence to be Bad by Jonathan Aldred

"Friedman doctrine" OR "shareholder theory", Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, availability heuristic, Ayatollah Khomeini, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Monday: stock market crash in 1987, Black Swan, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, Charles Babbage, clean water, cognitive dissonance, corporate governance, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, Edward Snowden, fake news, Fall of the Berlin Wall, falling living standards, feminist movement, framing effect, Frederick Winslow Taylor, From Mathematics to the Technologies of Life and Death, full employment, Gary Kildall, George Akerlof, glass ceiling, Glass-Steagall Act, Herman Kahn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jeff Bezos, John Nash: game theory, John von Neumann, Linda problem, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, meta-analysis, Mont Pelerin Society, mutually assured destruction, Myron Scholes, Nash equilibrium, Norbert Wiener, nudge unit, obamacare, offshore financial centre, Pareto efficiency, Paul Samuelson, plutocrats, positional goods, power law, precautionary principle, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, scientific management, Skinner box, Skype, Social Responsibility of Business Is to Increase Its Profits, spectrum auction, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, trickle-down economics, Vilfredo Pareto, wealth creators, zero-sum game

Another problem with excessive remuneration packages in finance is that they lure too many talented people into the sector – people who would make a greater economic contribution elsewhere. On top of this waste of human resources, there are the resources wasted solely on getting excessive remuneration – merely redistributing the pie, rather than enlarging it. More rent-seeking, in other words. A rough estimate of the scale of the waste comes from the classic rent-seeking activity, lobbying. In the US in 2011 alone over $3 billion was spent on lobbying.44 Turning to the other end of the income distribution, poverty is not just a tragedy for the poor. It is an appalling waste of productive capacity in the rest of the economy.

Holmström concluded that ‘bringing the market inside the firm is such a misguided idea, something I failed to understand [earlier] and advocates of market-like incentives in firms seem to miss today’.26 Better late than never, although the more inventive self-enrichment efforts of the top 1 per cent have now moved elsewhere. Most of these efforts involve changing the rules underpinning economic activity in their favour. Economists call it rent-seeking: any action undertaken with the principal purpose of redistributing income, wealth or resources in your favour – in contrast to most economic activity, which in some sense creates wealth or adds value to economy or society. The only objective of rent-seekers is grabbing a bigger slice of the pie; they do nothing to enlarge the pie for everyone.

air travel, commercial, 63–4 Akerlof, George, 223, 237, 248 altruism, 150–51, 159, 162–4 game theory’s denial of, 31–2, 41, 42–3 misunderstanding of, 13–14, 25, 31–2, 41–3, 112, 178–9 as not depleted through use, 14 seen as disguised selfishness, 11–12, 25, 112, 178–9 Amazon, 155, 178, 208 American Economic Association, 257, 258 Angrist, Joshua, 249 antitrust regulation, 56–8 Apple, 222–3 Aristotle, 14 Arrow, Ken awarded Nobel Prize, 71 and blood donations, 14, 163 at City College, New York, 74–5, 91 collective preference, 73–4, 75–7, 78–82 and democracy, 72–4, 75–7, 78–83, 95, 97 framework presented as scientific, 81–2, 124–5 and free marketeers, 78–9, 82 Impossibility Theorem, 72, 73–4, 75–7, 78–83, 89, 97 and mathematics, 71, 72, 73–5, 76–7, 82–3, 97 and Mont Pèlerin Society, 9 preference satisfaction’, 80–82, 97, 124–5, 129 and Ramsey, 189 at RAND, 70–71, 72–3, 74, 75–6, 77, 78 top-secret-level security clearance, 71–2 ‘A Cautious Case for Socialism’ (1978), 83 ‘On the Optimal Use of Winds for Flight Planning’, 71 Social Choice and Individual Values (1951), 71, 72, 75–7, 78–80, 97 artificial intelligence, 214, 242 Atlas Economic Research Foundation, 7–8 Austen, Jane, 134 austerity policies, recent, 258 Axelrod, Robert, 41 Babbage, Charles, 222 baby-market idea, 61, 138, 145, 146 Bachelier, Louis, 193 Baird, Douglas, 58–9 bandwagon effect, 110 Bank of England, 96, 120, 185, 211–12, 258 bankers excuse/permission to be greedy, 1–2, 204, 238 and Keynesian economics, 5 performance as wholly relative, 204 quantification and recklessness, 213 rigged pay-for-performance contracts, 229–30, 238 role in 2007 crisis, 1–2, 57, 182, 192 as serial offenders over uncertainty, 201 see also financial markets Barro, Josh, 63, 64 Bateson, Gregory, 28 battery-chicken farming, 7 Baumol, William, 90–92, 93, 94 BBC, 48, 98 Beaverbrook, Lord, 157 Becker, Gary amoral understanding of crime, 137, 152 and citizenship rights, 146 and Coase, 69 Freakonomics followers of, 130, 134, 148–9, 156 and Friedman, 126, 131 hidden assumptions of, 130–31, 133–4 human capital idea, 149 and individualism, 134, 135–8 and maximization, 129–31, 133–4, 147 as outsider, 50 and Posner, 56 rejects need for realistic assumptions, 132, 133–4, 148 and sale of body parts, 147–8 sees poor health as just a preference, 135, 136, 140 sees values as mere tastes, 136–8, 140 theories as deeply controversial, 127–9, 130 theories as slippery, 129, 133–4 and ‘universality’ of economics, 125, 126–31, 133–4, 135–8, 147–8 version of ‘rational’ behaviour, 128–9, 135, 140, 151 De Gustibus Non Est Disputandum (with Stigler, 1977), 135–6 The Economic Approach to Human Behavior (1976), 130 The Economics of Discrimination (1957), 126–7 A Treatise on the Family (1981), 127–8, 130–31, 133 behaviourism, 154–8, 237 behavioural economics context and culture, 175–6 framing effects, 170–71, 259 and incentives, 160, 171, 175, 176–7 methods from psychology, 170–71 and Nudge, 171–2 and orthodox economics, 173, 174–5, 247, 255 and physics envy, 175–6 problems with, 173–5, 250–51 ‘self-command’ strategies, 140 theory of irrationality, 12, 171, 250–51 and welfare maximization, 149 Bell, Alexander Graham, 222 bell curve distribution, 191–4, 195, 196, 201, 203–4, 218–19, 257 Bentham, Jeremy, 102 Berlin, Isiah, 166, 167–8 Beveridge Report (1942), 4 Bezos, Jeff, 208 Black, Duncan, 77–8, 95 Blackstone (private equity firm), 235 black swans, 192, 194, 201, 203–4 Blinder, Alan, The Economics of Brushing Teeth (1974), 136 blood donors, 14, 112, 162–3, 164, 169, 176 Borel, Émile, 185* Brennan, William, 56 broadcasting, 48–50, 98 spectrum auctions, 39–40, 47, 49–50 Buchanan, James McGill, 8, 83–5, 87–8, 89, 95, 115 Buffett, Warren, 229, 230, 236 Calcraft, John, 120, 121 Cameron, David, 172 Caplan, Brian, The Myth of the Rational Voter, 245–6 carbon markets, 47, 65–7 Carlson, Jack, 141–2 Carroll, Lewis (Charles Lutwidge Dodgson), 72, 77 cartels and monopolies, 101, 102, 103–4 Cheney, Dick, 232–3 Chicago, University of, 2, 4, 34, 40, 49–51 antitrust ideas, 56–8 Buchanan at, 84 and Coase, 49–52, 53–4, 55, 56–7, 61, 68–9, 132 Friedman’s dominance, 50, 132 law and economics movement, 40, 55, 56–63, 64–7 revolution of 1968 at, 56, 58–9 zero-transaction-costs assumption, 51–2, 68–9 Chicago law school, 55, 56, 58–9 child labour, 124, 146 China, 65 City College, New York, 74–5, 91 climate change average temperature rises, 205–6, 207 and carbon markets, 47, 65–6 ‘cashing in’ on carbon markets, 67 Coasean worldview on pollution, 65–7, 68 denialists, 8 ‘discount rate’ on future costs, 208–9, 212 discrimination against future generations, 208–9 and free-riding theory, 2, 99, 113–17, 120 Intergovernmental Panel on, 207 measurement in numerical terms, 206–11, 213 and precautionary principle, 211–12 premature deaths due to, 207–9 and Prisoner’s Dilemma, 27 Stern Review, 206, 209–10 threat to economic growth, 209 Coase, Ronald argument given status of theorem, 51–2, 67 awarded Nobel Prize, 52 background of, 47–8 and Chicago School, 49–52, 53–4, 56–7, 61, 68–9, 132 and created markets, 47, 65–7 dismissal of ‘blackboard economics’, 48, 54, 64, 67–9 on Duncan Black, 77 evening at Director’s house (early 1960), 49–51, 132 fundamental misunderstanding of work of, 51, 52–3, 67–9 hypothetical world invoked by, 50–51, 52, 54–5, 62, 68 as Illinois resident, 46–7 and Mont Pèlerin Society, 8 and public-sector monopolies, 48–51 and transaction costs, 51–3, 54–5, 61, 62, 63–4, 68 ‘The Nature of the Firm’ (1932 paper), 48 The Problem of Social Cost’ (1960 paper), 47, 48, 50–51, 52, 54–5, 59 cognitive dissonance, 113–14 Cold War, 18–19, 20, 21–2, 24, 27, 181 Cuban Missile Crisis (1962), 33–4, 140 and Ellsberg, 184, 197, 198, 200 and game theory, 18, 20, 21–2, 24, 27, 33–4, 35, 70, 73, 198 and Impossibility Theorem, 75–6 RAND and military strategy, 18, 20, 21–2, 24, 27, 33–4, 70, 73, 75–6, 141, 200, 213 and Russell’s Chicken, 33 and Schelling, 138, 139–40 Washington–Moscow hotline installed, 139–40 collective preference and Ken Arrow, 73–4, 75–7, 78–82 Black’s median voter theorem, 77, 95–6 Sen’s mathematical framework, 80–81 communism, 82, 84, 101, 104, 237 Compass Lexecon, 58, 68 Condorcet Paradox, 76, 77 conspiracy theories, 3, 8, 9 cooperation cartels, monopolies, price-fixing, 101, 102, 103–4 and decision-making processes, 108–10 and free-riding theory, 2, 101, 102, 103–10 office teamwork, 109–10, 112 older perspective on, 100–102, 108, 111, 122 and Scandinavian countries, 103 view of in game theory, 21–2, 23, 25–32, 36–8, 41–3 corporate culture and antitrust regulation, 57–8 changes due to Friedman, 2, 152 Chicago approach to regulation, 40 and climate change, 113, 114, 115 executive pay, 215–16, 219, 224, 228–30, 234, 238 Jensen and Murphy’s article, 229 ‘optimal contracting’/pay-for-performance, 228–30, 238 predatory pricing, 57 and tax evasion/avoidance, 105–6 cost disease, 90–92, 93, 94 Cowles Commission in Chicago, 78 CP/M (Control Program for Microcomputers), 222 criminal responsibility, 111, 137, 152 Cuban Missile Crisis (1962), 33–4, 140 Damasio, Antonio, 14 data geeks, 248–50 ‘dead peasants insurance’, 124 decision-making processes, 108–10, 122, 170–71 ‘anchoring effect’, 212 authority figure–autonomy contradiction, 180 avoidance of pure uncertainty, 198–9 axioms (abstract mathematical assumptions), 198 Ellsberg Paradox, 184, 199–200 Ellsberg’s experiment (1961), 182–4, 187, 197, 198–200, 205 Linda Problem, 202–3 orthodox decision theory, 183–4, 185–6, 189–91, 193–4, 198–200, 201–2, 203–5, 211, 212–14 and the Savage orthodoxy, 190–91, 197, 198–200, 203 scenario planning as crucial, 251 Von Neumann’s theory of decision-making, 189, 190, 203 see also probability; risk and uncertainty democracy and Ken Arrow, 72–4, 75–7, 78–83, 95, 97 Black’s median voter theorem, 77, 95–6 and crises of the 1970s, 85–6 and economic imperialism, 145–7 equal citizenship principle at heart of, 145–6, 151 free-riding view of voting, 99, 110, 112, 115–16, 120–21 marketing by political parties, 95–6 modern cynicism about politics, 94–7 paradox of voter turnout, 88–9, 95–6, 115–16 paradox of voting, 75–7 politicians’ support for depoliticization, 96–7 post-war scepticism about, 78–9 and public choice theory, 85–6, 95–7 replacing of with markets, 79 Sen’s mathematical framework, 80–81 voter turnout, 88–9, 95–6, 115–16, 120–21 see also voting systems Dennison, Stanley, 13 dentistry, 258–9, 261 Depression (1930s), 3 digital technology, 68, 214, 222–3 data revolution, 247–50 and rising inequality, 215, 220, 242 Director, Aaron, 4–5, 49–51, 132 Disney World, 123 Dodd–Frank Act, 256 Dodgson, Charles Lutwidge (Lewis Carroll), 72, 77 dot.com bubble, 192, 201 Douglas Aircraft Corporation, 18 Downs, Anthony, An Economic Theory of Democracy (1957), 86, 89, 95 Dr Strangelove (Kubrick film, 1964), 19, 35, 139 DreamTours Florida, 123 Drucker, Peter, 153 Dulles, John Foster, 20 Dundee School of Economics, 48, 77–8 Dürrenmatt, Friedrich, The Visit of the Old Lady, 166 earthquakes, 194–5 Econometrica (journal), 77–8 economic imperialism arrogance of, 246–7 auctioning of university places, 124, 149–50 continuing damage wrought by, 151–2 and democracy, 145–7 emerges into the limelight, 130 Freakonomics, followers of, 130, 134, 148–9, 156 and inequality, 145–7, 148, 151, 207 markets in citizenship duties, 146 origins of term, 125 price as measure of value, 149, 150, 151 purchase of immigration rights, 125, 146 and sale of body parts, 123, 124, 145, 147–8 sidelining of moral questions, 125–9, 135–8, 141–5, 146–7, 148–9, 151–2, 207 value of human life (‘statistical lives’), 141–5, 207 welfare maximization, 124–5, 129–31, 133–4, 146–7, 148–9 see also Becker, Gary economic theory Arrow establishes benchmark for, 71 Baumol’s cost disease, 90–92, 93, 94 Coase Theorem, 45–7, 48–55, 56–7, 61, 63–6 and data revolution, 247–50 exclusion of by data geeks, 248–50 and financial markets, 9, 12–13, 182, 253 as focus of economics courses, 260 Kahneman and Tversky’s theory of irrationality, 12, 171, 250–51 of labour, 237 marginal productivity theory, 223–4, 228 Pareto efficiency, 217–18, 256* perfect competition, 103, 193–4 profit-maximizing firms, 228–9 rent-seeking, 230, 238 theory of motivation, 157–8, 164, 166–7, 168–70, 178–9 see also game theory; homo economicus; public choice theory; social choice theory economics accidental economists, 47–8 and Arrow’s framework, 78–9, 82 causes of growth, 223, 239 created markets, 47, 65–7 crises of the 1970s, 85–6 digital technology, 68, 214 efficiency as fundamental, 63, 64–5, 141, 153, 155, 193–4, 201, 211, 217–18, 255 empirical research as still rare, 247–8 extension into non-economic aspects of life, 40, 54–60, 65, 123–31, 132–4, 135–6, 145–50 gulf between reality and theory, 10–13, 31–2, 41–3, 51–3, 64–9, 86–9, 133, 136, 144–5, 228–30, 250–53, 260–61 history of, 260 lack of objective ‘facts’, 253 modern debate on, 9 and Olson’s analysis, 104 our love–hate relationship with, 3, 245 as partially self-fulfilling, 12–13, 14, 159, 253 percentage of GDP impact of climate change, 206–11, 213 positional goods, 239–41 Posner’s wealth-maximization principle, 57–63, 64–7, 137 predatory pricing, 57 principles for new relationship with, 251–61 privatization, 50, 54, 88, 93–4 rise of game theory, 40–41 Smith’s enlightened self-interest, 11 value of human life (‘statistical lives’), 141–5, 207 vocational role of, 260 see also behavioural economics; free-market economics economics, aims/pretensions to be science arrogance of, 205, 245–7, 258 Arrow’s framework presented as scientific, 72, 81–2, 124–5 attitude to value judgements, 10, 60–61, 64–9, 112, 136–8, 173–4, 204–5, 218, 247 claims of game theory, 21, 24–6, 28–9, 32, 34, 35, 38, 41 and data revolution, 247–50 desire for neutral science akin to physics, 9–10, 20–21, 34–5, 41, 116, 125, 132–3, 151, 175–6, 187–90, 212, 217–18, 246–56 desire for science of social control, 153, 154, 155, 164, 167 Friedman’s ‘The Methodology of Positive Economics’, 132–3 hidden political/ethical agendas, 10, 213, 253, 255–8 measurement of risk in numerical terms, 181–4, 187, 189, 190–94, 196–7, 201–2, 203–5, 212–13 natural experiments, 248–50 Pareto improvements, 217–18 and physics envy, 9, 20–21, 41, 116, 175–6, 212, 247 and public choice theorists, 88 quantification of all risks and values, 201–2, 203, 212–13 real world as problem for, 10–13, 31–2, 42–3, 51–3, 64–9, 86–9, 133, 136, 144–5, 228–30, 250–53, 260–61 ‘some number is better than no number’ mantra, 212–13 uncertainty as obstacle to, 190–91, 212–13 and use of mathematics, 9–10, 26, 72, 247, 248, 255, 259 use of term ‘rational’, 12 Von Neumann and Morgenstern’s grand project, 20–21, 24–5, 26, 35, 125, 151, 189 and wealth-maximization approach, 58, 60 economists advice to former Soviet Bloc nations, 257 conflicts of interest, 256–7, 258 data geeks, 248–50 economics curriculum reform needed, 259–60 errors and misjudgements, 13–14, 16, 132–3, 144–5, 256*, 257–8, 260–61 failure to explain ideas, 254–5 insularity of, 246–7 Keynes’ dentistry comparison, 258–9, 261 lack of ethics codes, 257–8 misunderstanding of altruism, 13–14, 25, 31–2, 41–3, 112, 178–9 need to show more humility, 258–9, 260–61 as not separate from economy, 251–3 and ordinary people, 245–6, 254–5, 258, 261 self-image as unsentimental and honest, 10 sneering descriptions of virtuous behaviour, 112 stating of the obvious by, 134, 259 education auctioning of university places, 124, 149–50 Baumol’s cost disease, 91, 92, 93, 94 incentivization as pervasive, 156, 169 value of, 150, 169, 170 ‘efficient market hypothesis’, 193–4, 201, 255 Einstein, Albert, 17, 22, 33, 213 Eisenhower, Dwight D., 19, 20, 231 Ellsberg, Daniel, 182–4, 187, 197–8 Ellsberg Paradox, 184, 199–200 and the ‘Pentagon Papers’, 200 probability experiment (1961), 182–4, 187, 197, 198–200 ‘Risk, Ambiguity and the Savage Axioms’ (paper, 1961), 198–9, 200 Engelbart, Douglas, 222–3 Engels, Friedrich, 223 English, Bill, 222–3 Enlightenment thinking, 11, 185 Epstein, Richard, 127 ethics and morality and autonomy, 164, 165–6, 168, 169–70, 180 bad behaviour redefined as rational, 12 and blame for accidents, 55, 60–61 and Coase Theorem, 46–7, 54–5, 56–7, 61, 63–6 Coasean worldview on pollution, 66–7, 68 as conditioned and limited by economics, 3, 10, 15, 43, 55, 60–61, 64–5, 179, 204–5, 218, 247 cooperative behaviour in game theory, 29, 30–32 core principles of current economic orthodoxy, 253 distinction between values and tastes, 136–8 economists’ language on virtuous behaviour, 112 inequality as moral issue, 242–3 influence of recent economic ideas, 1–3, 15–16 Keynes on economics as moral science, 252–3 law and economics movement, 40, 55, 56–63, 64–7 moral disengagement, 162, 163, 164, 166 morally wrong/corrupting incentives, 168–9 and Nash program, 25 Nudge economists, 173–4, 251 Posner’s wealth-maximization principle, 57–63, 64–7, 137 Puzzle of the Harmless Torturers, 118–19 Ramsey Rule on discounting, 208–9, 212 sale of body parts, 123, 124, 145, 147–8 sidelined by economic imperialism, 125–9, 135–8, 141–5, 146–7, 148–9, 151–2, 207 small contributions as important, 110, 114–15, 122 Smith’s enlightened self-interest, 11 value of human life (‘statistical lives’), 141–5, 207 see also altruism; free-riding behaviour European Commission, 96 Facebook UK, 99 fairness, 1, 149, 218, 228, 253 and Coase, 54, 55 and free-riding behaviour, 107 and game theory, 43 and incentives, 177, 179 and lucky geniuses, 221–3 and Posner’s wealth-maximization principle, 60, 61, 62 see also inequality family life, 127–8, 130–31, 133, 156 famine relief, 99, 114–15 Farmer, Roger, 259 Federal Communications Commission (FCC), 48–9 Ferdinand, Archduke Franz, 185 financial crisis, global (2007–10) Becker on, 128–9 and bell curve thinking, 192, 193–4, 196, 257 ‘blame the regulators’ argument, 1–2 and financial economists, 9, 88, 260–61 persuasive power of extreme numbers, 181–2 and Posner’s wealth-maximization principle, 57 underlying maths of, 194, 195–6 financial markets Bachelier’s theory of speculation, 193 bell curve thinking, 192, 193–4, 195, 196–7, 201, 203–4, 257 benchmarking against the market, 204 Black Monday (1987), 192 deregulation of US banks, 194 derivatives, 253 dot.com bubble, 192, 201 East Asian crisis (1997), 192 and economic theory, 9, 12–13, 182, 253 economists’ ignorance of, 260–61 and First World War, 185 and fractals (scale-invariance), 194, 195–6, 201 orthodox decision theory, 190–91, 193–4, 201 persuasive power of extreme numbers, 181–2, 191, 192 and rent-seekers, 230, 238 rigged pay-for-performance contracts, 229–30, 238 First World War, 185, 210, 211–12 Fisher, Antony, 6–8 Forster, E.


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The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century by Rodrigo Aguilera

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, availability heuristic, barriers to entry, basic income, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, bitcoin, Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, carbon footprint, Carmen Reinhart, centre right, clean water, cognitive bias, collapse of Lehman Brothers, Colonization of Mars, computer age, Corn Laws, corporate governance, corporate raider, creative destruction, cryptocurrency, cuban missile crisis, David Graeber, David Ricardo: comparative advantage, death from overwork, decarbonisation, deindustrialization, Deng Xiaoping, Doha Development Round, don't be evil, Donald Trump, Doomsday Clock, Dunning–Kruger effect, Elon Musk, European colonialism, fake news, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, fundamental attribution error, gig economy, Gini coefficient, Glass-Steagall Act, Great Leap Forward, green new deal, Hans Rosling, housing crisis, income inequality, income per capita, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, Jeff Bezos, Jeremy Corbyn, Jevons paradox, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, karōshi / gwarosa / guolaosi, Kenneth Rogoff, Kickstarter, lake wobegon effect, land value tax, Landlord’s Game, late capitalism, liberal capitalism, long peace, loss aversion, low interest rates, Mark Zuckerberg, market fundamentalism, means of production, meta-analysis, military-industrial complex, Mont Pelerin Society, moral hazard, moral panic, neoliberal agenda, Network effects, North Sea oil, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, Overton Window, Pareto efficiency, passive investing, Peter Thiel, plutocrats, principal–agent problem, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, savings glut, Scientific racism, secular stagnation, Silicon Valley, Silicon Valley ideology, Slavoj Žižek, Social Justice Warrior, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Stanislav Petrov, Steven Pinker, structural adjustment programs, surveillance capitalism, tail risk, tech bro, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transatlantic slave trade, trolley problem, unbiased observer, universal basic income, Vilfredo Pareto, Washington Consensus, Winter of Discontent, Y2K, young professional, zero-sum game

But many critics of Olsen noted that while The Rise and Decline of Nations was being published, the US and UK were undergoing profound political and economic transformations under Reagan and Thatcher that would lift them from their 1970s stupor, even if the gains would not be distributed evenly across society. On the one hand, this would appear to confirm one of Olson’s original beliefs: that only a pure laissez-faire state, or an autocracy, could prevent rent-seeking, and this was as close to laissez-faire as any countries have come. But on the other hand, the rise in economic inequality that began with the Reagan and Thatcher revolutions also suggests that rent-seeking behavior by distributional coalitions simply got worse once one group of these coalitions, the unions, were neutered. This meant that there was little challenge to the deregulatory and liberalizing efforts of industry lobbies.

And in others like Russia, kleptocracy is self-sustaining when you a mutually reinforcing interest between economic elites and rulers in keeping it going.19 But in liberal democracies, oligarchy is much more insidious. The facade of democracy and rule of law, after all, must be preserved. Even so, it is not enough to consider a society captured to a greater or lesser degree by rent-seeking interest groups to be fully oligarchic insofar as political parties offer reasonable alternatives to each other; one of these alternatives being at the very least the promise of finding counterweights to these interest groups’ political influence. This would typically be the duty of left-of-center political parties, most of which notionally exist to represent the interests of the “have-nots”.

Olson’s thesis (largely adapted and expanded from an earlier book, The Logic of Collective Action) was that democracies had heterogenous interests which in turn lead to the formation of collective action groups to protect those interests.22 Many of these groups, which he called encompassing coalitions, would be broad and potentially lead to improved economic outcomes for the whole but would suffer from being too large and difficult to organize. Their size would also make the marginal benefits to each member quite small. In contrast, rent-seeking distributional coalitions would be smaller and better organized, but would lobby entirely on their own behalf to the detriment of society; for example, by convincing governments to tolerate uncompetitive economic practices like cartelization and protectionism. This would provide disproportionate marginal benefits to their smaller number of members.


pages: 272 words: 83,798

A Little History of Economics by Niall Kishtainy

Alvin Roth, behavioural economics, British Empire, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon tax, central bank independence, clean water, Corn Laws, Cornelius Vanderbilt, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Dr. Strangelove, Eugene Fama: efficient market hypothesis, first-price auction, floating exchange rates, follow your passion, full employment, George Akerlof, Great Leap Forward, greed is good, Hyman Minsky, inflation targeting, invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, loss aversion, low interest rates, market clearing, market design, means of production, Minsky moment, moral hazard, Nash equilibrium, new economy, Occupy movement, Pareto efficiency, Paul Samuelson, Phillips curve, prisoner's dilemma, RAND corporation, rent-seeking, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Solow, Ronald Reagan, sealed-bid auction, second-price auction, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, Vickrey auction, Vilfredo Pareto, washing machines reduced drudgery, wealth creators, Winter of Discontent

For example, if the government puts a tax on foreign cars then domestic car producers, protected from overseas competition, make big profits. By giving privileges to special groups of people, politicians hope to gain political support, perhaps even money. The prospect of earning extra profits for doing very little encourages ‘rent-seeking’. Businesses spend money trying to persuade the government to give them privileges. They might take government officials out for expensive lunches to try to get them to do what they want. They might set up an organisation to help their case, the American Association of Umbrella Manufacturers, perhaps.

They might set up an organisation to help their case, the American Association of Umbrella Manufacturers, perhaps. Organisations like this are often defended on the grounds that in a healthy democracy they help to air the views of varied groups of people. In public choice theory, they’re rent-seekers whose activities use up resources that could have been employed more usefully in a different way. Rent-seeking hurts consumers because if the markets for cars and umbrellas are protected from foreign competition then people have fewer cars and umbrellas to choose from. The problem is that consumers, being so many scattered people, would never find it individually worth their while to spend time organising their own group to prevent protection.

(i), (ii) Kerala (India) (i) Keynes, John Maynard (i), (ii), (iii), (iv), (v), (vi) Keynesian theory (i), (ii), (iii) Klemperer, Paul (i) Krugman, Paul (i), (ii) Kydland, Finn (i), (ii) labour (i) in ancient Greece (i) and market clearing (i) women as unpaid (i) labour theory of value (i), (ii) laissez-faire (i) landowners (i), (ii), (iii) Lange, Oskar (i) law of demand (i), (ii) leakage of spending (i) Lehman Brothers (i) leisure class (i) leisured, women as (i) Lenin, Vladimir Ilyich (i), (ii) Lerner, Abba (i) Lewis, Arthur (i) Lincoln, Abraham (i) List, Friedrich (i) loss aversion (i) Lucas, Robert (i), (ii) MacKay, Charles (i) Macmillan, Harold (i) macro/microeconomics (i) Malaysia, and speculators (i) Malthus, Thomas (i), (ii), (iii) Malynes, Gerard de (i), (ii) manufacturing (i), (ii) division of labour (i) see also Industrial Revolution margin (i) marginal costs (i), (ii) marginal principle (i), (ii), (iii) marginal revenue (i) marginal utility (i), (ii) market, the (i) market clearing (i) market design (i) market failure (i), (ii), (iii), (iv) ‘Market for Lemons, The’ (Akerlof) (i) market power (i) markets, currency (i), (ii) Marshall, Alfred (i), (ii), (iii), (iv), (v) Marx, Karl (i), (ii), (iii), (iv), (v), (vi), (vii) Marxism (i) mathematics (i), (ii), (iii) means of production (i) mercantilism (i), (ii) Mesopotamia (i) Mexico, pegged currency (i) micro/macroeconomics (i) Microsoft (i) Midas fallacy (i) minimum wage (i) Minsky, Hyman (i) Minsky moment (i), (ii) Mirabeau, Marquis de (i), (ii), (iii) Mises, Ludwig von (i), (ii), (iii), (iv) mixed economies (i), (ii) Mobutu Sese Seko (i) model villages (i) models (economic) (i), (ii), (iii), (iv) modern and traditional economies (i), (ii) monetarism (i) monetary policy (i), (ii) money (i), (ii), (iii), (iv), (v), (vi) see also coins; currency money illusion (i) money wages (i) moneylending see usury monopolies (i), (ii) monopolistic competition (i), (ii) monopoly, theory of (i) monopoly capitalism (i), (ii), (iii) monopsony (i) moral hazard (i), (ii) multiplier (i) Mun, Thomas (i), (ii), (iii) Muth, John (i) Nash, John (i), (ii) Nash equilibrium (i) national income (i), (ii), (iii), (iv), (v) National System of Political Economy (List) (i) Nelson, Julie (i) neoclassical economics (i) net product (i) Neumann, John von (i) New Christianity, The (Saint-Simon) (i) new classical economics (i) New Harmony (Indiana) (i) New Lanark (Scotland) (i) Nkrumah, Kwame (i), (ii) non-rival good (i) Nordhaus, William (i), (ii) normative economics (i), (ii) Obstfeld, Maurice (i) Occupy movement (i) oligopolies (i) opportunity cost (i), (ii) organ transplant (i) output per person (i) Owen, Robert (i) paper money (i), (ii) Pareto, Vilfredo (i) pareto efficiency (i), (ii) pareto improvement (i) Park Chung-hee (i) partial equilibrium (i) pegged exchange rate (i) perfect competition (i), (ii), (iii), (iv), (v) perfect information (i) periphery (i) phalansteries (i) Phillips, Bill (i) Phillips curve (i), (ii), (iii), (iv), (v), (vi), (vii) physiocracy (i), (ii) Pigou, Arthur Cecil (i), (ii), (iii) Piketty, Thomas (i), (ii), (iii) Plato (i), (ii), (iii) policy discretion (i) Ponzi, Charles (i) Ponzi finance (i) population and food supply (i), (ii), (iii) of women (i) positive economics (i) poverty (i), (ii), (iii), (iv), (v) in Cuba (i) Sen on (i) and utopian thinkers (i) Prebisch, Raúl (i) predicting (i) Prescott, Edward (i), (ii) price wars (i), (ii) primary products (i) prisoners’ dilemma (i) private costs and benefits (i) privatisation (i) productivity (i), (ii), (iii) profit (i), (ii), (iii), (iv) and capitalism (i), (ii) proletariat (i), (ii) property (private) (i), (ii), (iii), (iv), (v) and communism (i), (ii), (iii), (iv) protection (i), (ii), (iii) provisioning (i) public choice theory (i) public goods (i) quantity theory of money (i) Quesnay, François (i) Quincey, Thomas de (i), (ii) racism (i) Rand, Ayn (i) RAND Corporation (i), (ii) rate of return (i), (ii) rational economic man (i), (ii), (iii), (iv), (v) rational expectations (i), (ii), (iii), (iv), (v) real wages (i), (ii), (iii) recession (i) and governments (i), (ii), (iii) Great Recession (i) Keynes on (i), (ii) Mexican (i) redistribution of wealth (i) reference points (i) relative poverty (i) rent on land (i), (ii), (iii) rents/rent-seeking (i) resources (i), (ii) revolution (i), (ii), (iii), (iv) Cuban (i) French (i), (ii), (iii), (iv) Russian (i), (ii) Ricardo, David (i), (ii), (iii) risk aversion (i) Road to Serfdom, The (Hayek) (i) robber barons (i) Robbins, Lionel (i) Robinson, Joan (i) Roman Empire (i) Romer, Paul (i) Rosenstein-Rodan, Paul (i) Roth, Alvin (i), (ii) rule by nature (i) rules of the game (i) Sachs, Jeffrey (i) Saint-Simon, Henri de (i) Samuelson, Paul (i), (ii) savings (i), (ii) and Say’s Law (i) Say’s Law (i) scarcity (i), (ii), (iii), (iv), (v), (vi) Schumpeter, Joseph (i), (ii) sealed bid auction (i) second price auction (i) Second World War (i) securitisation (i) self-fulfilling crises (i) self-interest (i) Sen, Amartya (i), (ii) missing women (i), (ii), (iii) services (i) shading bids (i), (ii) shares (i), (ii), (iii), (iv), (v), (vi) see also stock market Shiller, Robert (i), (ii) signalling (i) in auctions (i) Smith, Adam (i), (ii), (iii), (iv), (v) social costs and benefits (i) Social Insurance and Allied Services (Beveridge) (i) social security (i), (ii) socialism (i), (ii), (iii), (iv), (v) socialist commonwealth (i) Socrates (i) Solow, Robert (i) Soros, George (i), (ii), (iii) South Africa, war with Britain (i) South Korea, and the big push (i) Soviet Union and America (i) and communism (i), (ii) speculation (i) speculative lending (i) Spence, Michael (i) spending government (fiscal policy) (i), (ii), (iii), (iv), (v), (vi), (vii) and recessions (i), (ii) and Say’s Law (i) see also investment stagflation (i), (ii) Stalin, Joseph (i) standard economics (i), (ii), (iii), (iv) Standard Oil (i) Stiglitz, Joseph (i) stock (i) stock market (i), (ii), (iii), (iv), (v) stockbrokers (i) Strassmann, Diana (i), (ii) strategic interaction (i), (ii) strikes (i) subprime loans (i) subsidies (i), (ii) subsistence (i) sumptuary laws (i) supply curve (i) supply and demand (i), (ii), (iii), (iv) and currencies (i) and equilibrium (i), (ii) in recession (i), (ii), (iii) supply-side economics (i) surplus value (i), (ii) Swan, Trevor (i) tariff (i) taxes/taxation (i) and budget deficit (i) carbon (i) and carbon emissions (i) and France (i) and public goods (i) redistribution of wealth (i) and rent-seeking (i) technology as endogenous/exogenous (i) and growth (i) and living standards (i) terms of trade (i) Thailand (i) Thaler, Richard (i) theory (i) Theory of the Leisure Class, The (Veblen) (i) Theory of Monopolistic Competition (Chamberlain) (i) Thompson, William Hale ‘Big Bill’ (i) threat (i) time inconsistency (i), (ii) time intensity (i) Tocqueville, Alexis de (i) totalitarianism (i) trade (i), (ii), (iii) and dependency theory (i) free (i), (ii), (iii) trading permit, carbon (i) traditional and modern economies (i), (ii) transplant, organ (i) Treatise of the Canker of England’s Common Wealth, A (Malynes) (i) Tversky, Amos (i), (ii) underdeveloped countries (i) unemployment in Britain (i) and the government (i) and the Great Depression (i) and information economics (i) and Keynes (i) and market clearing (i) and recession (i) unions (i), (ii) United States of America and free trade (i) and growth of government (i) industrialisation (i) and Latin America (i) Microsoft (i) recession (i), (ii) and the Soviet Union (i) and Standard Oil (i) stock market (i) wealth in (i) women in the labour force (i) unpaid labour, and women (i) usury (i), (ii), (iii) utility (i), (ii), (iii), (iv) utopian thinkers (i), (ii) Vanderbilt, Cornelius (i), (ii) Veblen, Thorstein (i), (ii), (iii) velocity of circulation (i), (ii) Vickrey, William (i) wage, minimum (i) Walras, Léon (i) Waring, Marilyn (i) wealth (i) and Aristotle (i), (ii) and Christianity (i) Piketty on (i) and Plato (i) Smith on (i) Wealth of Nations, The (Smith) (i), (ii) welfare benefits (i), (ii), (iii), (iv) welfare economics (i) Who Pays for the Kids?


pages: 297 words: 84,009

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

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

Or are many of America’s top CEOs somehow ripping off their own companies? What we’ll see is actually a pretty positive picture about America’s corporate leaders. In particular, CEO pay mostly—not entirely—reflects the productive contributions of talented individuals to very important companies, rather than corruption, rent-seeking, and personal enrichment. The best model for understanding the growth of CEO pay is that of limited CEO talent in a world where business opportunities for the top firms are growing rapidly. The scarcity of top-rate candidates sometimes causes corporate boards to make or stick with hiring mistakes, but overall the process has worked pretty well in allocating talent to important jobs and keeping that talent motivated.

By 2006, however, that premium rose to about 50 percent, and for top management it was about 250 percent. About half of that can be attributed to risk bearing, and another fifth follows from the greater size of financial firms. The rest is a mix of special talents for which educational degrees do not serve as a good proxy (ambition and drive?) and unproductive rent-seeking—in what proportions, we do not know.23 One likely possibility is that the highest-earning firms enjoy some economies of scale, due to the network effects of bringing together so many smart people. Those firms earn much more, and in turn they share some of those earnings by paying their employees more, most of all top management.

That could become a wasteful drain of resources from the rest of the economy, as too much talent would pursue monopoly profits rather than useful production for consumers. But such clusters of financial talent are difficult to build, just as few local banks try to take on Goldman Sachs and few global cities try to rival New York and London as financial centers. And so the rent-seeking costs and the talent drain costs of the financial sector are much less than the size of the large rewards at the top might indicate. Furthermore, the best direct evidence we have suggests that, as things stand right now, finance is not draining away America’s best talent from science and engineering.


pages: 261 words: 86,905

How to Speak Money: What the Money People Say--And What It Really Means by John Lanchester

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, asset allocation, Basel III, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, blood diamond, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collective bargaining, commoditize, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Dava Sobel, David Graeber, disintermediation, double entry bookkeeping, en.wikipedia.org, estate planning, fear index, financial engineering, financial innovation, Flash crash, forward guidance, Garrett Hardin, Gini coefficient, Glass-Steagall Act, global reserve currency, high net worth, High speed trading, hindsight bias, hype cycle, income inequality, inflation targeting, interest rate swap, inverted yield curve, Isaac Newton, Jaron Lanier, John Perry Barlow, joint-stock company, joint-stock limited liability company, junk bonds, Kodak vs Instagram, Kondratiev cycle, Large Hadron Collider, liquidity trap, London Interbank Offered Rate, London Whale, loss aversion, low interest rates, margin call, McJob, means of production, microcredit, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, negative equity, neoliberal agenda, New Urbanism, Nick Leeson, Nikolai Kondratiev, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, open economy, paradox of thrift, plutocrats, Ponzi scheme, precautionary principle, proprietary trading, purchasing power parity, pushing on a string, quantitative easing, random walk, rent-seeking, reserve currency, Richard Feynman, Right to Buy, road to serfdom, Ronald Reagan, Satoshi Nakamoto, security theater, shareholder value, Silicon Valley, six sigma, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Jobs, survivorship bias, The Chicago School, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, trickle-down economics, two and twenty, Two Sigma, Tyler Cowen, Washington Consensus, wealth creators, working poor, yield curve

In the opinion of some observers, one of the reasons why the current growing gap between the rich and the poor is especially dangerous is that it is being accompanied by a growth in “rent seeking” behavior. A typical feature of such behavior is the attempt to take a bigger piece of the existing pie, rather than to make the pie bigger. A useful definition of rent seeking was given by Matthew Taylor of the RSA: “using market position to make money without adding value.” When the rich lobby for tax breaks at a time of no economic growth, they are indulging in rent seeking. All corruption is a form of rent seeking. repo A repurchase agreement, in which A sells B something, while simultaneously promising to buy it back at a specified future date.


pages: 426 words: 118,913

Green Philosophy: How to Think Seriously About the Planet by Roger Scruton

An Inconvenient Truth, barriers to entry, carbon credits, carbon footprint, carbon tax, Cass Sunstein, Climategate, Climatic Research Unit, corporate social responsibility, demand response, Easter island, edge city, endowment effect, energy security, Exxon Valdez, failed state, food miles, garden city movement, Garrett Hardin, ghettoisation, happiness index / gross national happiness, Herbert Marcuse, hobby farmer, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, joint-stock company, joint-stock limited liability company, Kenneth Arrow, knowledge economy, Lewis Mumford, market friction, Martin Wolf, moral hazard, Naomi Klein, New Urbanism, Peter Singer: altruism, phenotype, precautionary principle, rent-seeking, Robert Solow, Ronald Coase, Sam Peltzman, Silicon Valley, Simon Kuznets, tacit knowledge, the built environment, The Death and Life of Great American Cities, the market place, Thomas Malthus, Tragedy of the Commons, transaction costs, University of East Anglia, urban planning, urban sprawl, Vilfredo Pareto, women in the workforce, zero-sum game

But it does mean that, in negotiating such a treaty, we are not dealing with a normal corporate agent, nor are we aiming at a change in the law that governs it. We are dealing with a massively powerful cartel of wealthy people, who control the law that purports to control them, and who cannot tolerate any erosion of their privileged status. Power is no longer centralized as it was under Mao Zedong; but the government must buy support from the rent-seeking elites in industry and local administration, and can do nothing that will undermine their privileges.290 Even if something of the Confucian spirit has returned, therefore, it is impossible to assume that the elites will respond to it. The point is developed in different terms by Douglass C. North, John Joseph Wallis and Barry R.

Such economies are often caught in a vicious circle of population growth, environmental degradation and natural resource depletion that ultimately can destabilize the social and political order.’ Arab Human Development Report 2009: Challenges to Human Security in the Arab Countries, UNDP Regional Bureau for Arab States, p. 118, www.arab-hdr.org/publications/other/ahdr/ahdr2009e.pdf. 16 On the theory of ‘rent seeking’, see Chapters 3 and 4. 17 Garrett Hardin, ‘The Tragedy of the Commons’, Science, 162.1, 1968, pp. 243 –8. 18 Thomas Hobbes, Leviathan, 1651; John Rawls, A Theory of Justice, 1971, 2005. 19 Edmund Burke, Reflections on the French Revolution, 1790; G. W. F. Hegel, Outlines of the Philosophy of Right, 1820; Joseph de Maistre, Le Principe Générateur des Constitutions, 1809. 20 I return to them in Chapters 7 and 8. 21 And whose antics are thoroughly discredited by Adam Zamoyski in Holy Madness: Compatriots, Patriots and Revolutionaries, 1776–1871, London and New York, 2001. 22 George Monbiot, The Age of Consent, London, 2003. 23 For an eloquent assessment of the adverse effects of globalization on the identity, and therefore the environment, of the English nation, see Paul Kingsnorth, Real England, London, 2008. 24 See Roger Scruton, The Need for Nations, London, 2004. 25 Criticisms of these institutions from the left are assembled on the websites of the Global Justice Center and the Global Justice Ecology Center.

Rilke’s ‘Archaischer Torso Apollos’ occurs in Neue Gedichte, 1907. 108 James Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, Ann Arbor, 1962. See also Gordon Tullock, ‘The Welfare Costs of Tariffs, Monopolies, and Theft’, Western Economic Journal, 5.3, June 1967; James Buchanan, ‘Rent-seeking, Non-compensated Transfers, and Laws of Succession’, Journal of Law and Economics, 26, April 1983, pp. 71–85; Cost and Choice: An Inquiry in Economic Theory, Indianapolis, 1999. 109 Ted Malloch, Spiritual Enterprise, New York, 2009. 110 See the Library of Congress summary of the Polish situation at www.countrystudies.us/poland/25.htm.


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Chokepoint Capitalism by Rebecca Giblin, Cory Doctorow

Aaron Swartz, AltaVista, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Black Lives Matter, book value, collective bargaining, commoditize, coronavirus, corporate personhood, corporate raider, COVID-19, disintermediation, distributed generation, Fairchild Semiconductor, fake news, Filter Bubble, financial engineering, Firefox, forensic accounting, full employment, gender pay gap, George Akerlof, George Floyd, gig economy, Golden age of television, Google bus, greed is good, green new deal, high-speed rail, Hush-A-Phone, independent contractor, index fund, information asymmetry, Jeff Bezos, John Gruber, Kickstarter, laissez-faire capitalism, low interest rates, Lyft, Mark Zuckerberg, means of production, microplastics / micro fibres, Modern Monetary Theory, moral hazard, multi-sided market, Naomi Klein, Network effects, New Journalism, passive income, peak TV, Peter Thiel, precision agriculture, regulatory arbitrage, remote working, rent-seeking, ride hailing / ride sharing, Robert Bork, Saturday Night Live, shareholder value, sharing economy, Silicon Valley, SoftBank, sovereign wealth fund, Steve Jobs, Steven Levy, stock buybacks, surveillance capitalism, Susan Wojcicki, tech bro, tech worker, The Chicago School, The Wealth of Nations by Adam Smith, TikTok, time value of money, transaction costs, trickle-down economics, Turing complete, Uber and Lyft, uber lyft, union organizing, Vanguard fund, vertical integration, WeWork

This new theory unleashed a powerful, slow-moving glacier of monopolization upon the world in the Reagan years, and it has now scraped away nearly all the beautiful and lively things in its path. Capitalism is supposed to be based on free markets, but markets have a natural tendency “toward monopoly, destructive extraction, and rent-seeking,” and so “require vigilant stewardship precisely to ensure they remain sufficiently marketlike.”6 That vigilance has been AWOL during the fifty-odd years of the Chicago School’s hands-off approach, and, as a result, competition in the US was virtually eliminated in an astonishing variety of industries.

The ferryman might also spend some of his excess profits on lobbying lawmakers to pass rules mandating a minimum number of boats be operating at any one time—making it hard for any new operator to start up. Where a person or corporation seeks to increase their profits through more favorable regulation, it’s called rent-seeking. We saw how regulatory capture can harm creative producers in the context of radio: changes to ownership laws allowed Clear Channel to buy its way to a dominant position, use that position to crush rivals, and use some of the resulting profits to maintain its outrageous advantage in not having to pay recording artists or labels for their music.

If rights reverted to creators every twenty-five years, the artists who were signed to those 4 percent royalties in the 1950s would have been able to secure 10 percent rates by the 1980s, and then 20 or 25 percent rates in the 2000s. That would mean the biggest labels would get less of a profit edge from their backlists than they do today, meaning less to spend on rent-seeking. It would also give newer competitors an opportunity to compete for that older catalog. Artists could choose companies offering fresh marketing investments, new exploitation opportunities, or higher royalties instead of just being stuck with the company that happened to sign them decades earlier (or more likely—a giant who swallowed up their original label).


pages: 182 words: 53,802

The Production of Money: How to Break the Power of Banks by Ann Pettifor

Alan Greenspan, Ben Bernanke: helicopter money, Bernie Madoff, Bernie Sanders, bitcoin, blockchain, bond market vigilante , borderless world, Bretton Woods, capital controls, Carmen Reinhart, central bank independence, clean water, credit crunch, Credit Default Swap, cryptocurrency, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, distributed ledger, Donald Trump, eurozone crisis, fiat currency, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, green new deal, Hyman Minsky, inflation targeting, interest rate derivative, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land bank, Leo Hollis, light touch regulation, London Interbank Offered Rate, low interest rates, market fundamentalism, Martin Wolf, mobile money, Money creation, Naomi Klein, neoliberal agenda, offshore financial centre, Paul Samuelson, Ponzi scheme, Post-Keynesian economics, pushing on a string, quantitative easing, rent-seeking, Satyajit Das, savings glut, secular stagnation, The Chicago School, the market place, Thomas Malthus, Tobin tax, too big to fail

This, I will argue, is the worst possible combination for society and the ecosystem as high and rising real rates of interest require high and rising rates of return from investment, from labour and from the earth’s finite assets. Most orthodox economists also have an unhealthy dislike of the state, which they accuse of ‘rent-seeking’ while simultaneously ignoring the rent-seeking of the private sector. As recently as October 2008 former governor of the US Federal Reserve Alan Greenspan made the orthodoxy explicit under cross-examination by a Congressional committee, chaired by Henry Waxman.7 The chairman reminded Mr Greenspan that he had once said, ‘I do have an ideology.

Gillian Tett, one of the few journalists bold enough to explore and challenge the world of international financiers and creditors, blames a ‘pattern of “social silence” … which ensured that the operations of complex credit were deemed too dull, irrelevant or technical to attract interest from outsiders, such as journalists and politicians.’8 Finance was indeed too dull and arcane to attract the interest of mainstream feminism and environmentalism. As a result of this ‘social silence’ citizens were unprepared for the crisis, and they remain on the whole ignorant of the workings of the financial system and its operations. The experience of financial deregulation has shown that capitalism insulated from popular democracy degenerates into rent-seeking, criminality and grand corruption. As Karl Polanyi predicted in his famous book The Great Transformation, societies are building resistance to the ‘self-regulating market comprising labour, land and money’ – or market fundamentalism, even when blind resistance appears irrational.9 In the US, as I write, the voters of the United States have sought protection from a demagogic president-elect who promised to defend them by erecting a wall between the United States and Mexico.


Falling Behind: Explaining the Development Gap Between Latin America and the United States by Francis Fukuyama

Andrei Shleifer, Atahualpa, barriers to entry, Berlin Wall, British Empire, business climate, Cass Sunstein, central bank independence, collective bargaining, colonial rule, conceptual framework, creative destruction, crony capitalism, European colonialism, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, Francisco Pizarro, Hernando de Soto, income inequality, income per capita, land reform, land tenure, Monroe Doctrine, moral hazard, New Urbanism, oil shock, open economy, public intellectual, purchasing power parity, rent-seeking, Ronald Reagan, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, upwardly mobile, Washington Consensus, zero-sum game

It also needed sustained public sector policies to reduce asset inequality through carefully planned investments in health, education, and public housing. As Campos and Root note, “Wealth sharing insured broad social support, thereby reducing the threat that the regime would fall to destructive rent seeking or insurgency. It encouraged the belief that the government was acting on behalf of citizens’ interests.”44 All too often, it is the “destructive rent seeking” among Latin America’s economic and political elites that preclude confidencebuilding strategies and set citizens against political authority. Creating a consensus about growth and development requires mutual trust and shared goals.

From this perspective, and as we explained in the previous section, even though there has been dramatic institutional change in Latin America since 1982, characterized by transitions from authoritarian to democratic rule and from relatively closed, state-led economies to open, market-driven economies, weak states whose jurisdiction and enforcement capacities have remained weak and open to traditional capacity-draining activities, such as rent seeking and moral hazard, have helped to reproduce the conditions that allow the survival and growth of high-stakes politics. To this element, we have to add others, namely, the persistence of dramatic socioeconomic inequality and widespread poverty, which have nurtured the zero-sum conditions that allow high-stakes politics to thrive and dominate in Latin America at the beginning of the twenty-first century.

Uncompetitive protected industries were made even more uncompetitive by overvalued exchange rates; this, combined with unconstrained fiscal spending, led to currency crises, devaluation, rising real interest rates, and a reversal of economic growth in a seemingly endless cycle. The package of liberal economic policies recommended by the International Monetary Fund and other multilateral lenders sought to break several links in this cycle by encouraging competition and openness, improving fiscal discipline, reducing opportunities for rent seeking, and eliminating the discretionary use of monetary policy to resolve fiscal problems via inflation. 272 Conclusion This medicine by and large worked: the runaway inflation that characterized Bolivia, Peru, Argentina, Brazil, and other countries during the 1980s was tamed by the 1990s.6 Elimination of the regressive tax represented by inflation then encouraged the return of flight capital and, indeed, increasing levels of foreign investment.


pages: 1,205 words: 308,891

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

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

Merchant guilds and associations were so widespread and so tenacious not because they efficiently solved economic problems, making everyone better off, but because they efficiently distributed resources to a powerful urban elite, with side benefits for rulers.11 People in the poorest countries nowadays, who assume not unreasonably that their economies are zero-sum, reckon that they can best advance by theft, graft, influence, corruption, rent-seeking. People in rich countries reckon, on the contrary, that the best way to advance is invention and betterment, which is why such countries became wealthy, at any rate until government expenditures got large enough to encourage rent-seeking to take over again.12 But anyway the “major growth phases” were periods in which income per person rose by factors of 2 or at most 3, not factors of 10 or 30 or 100. Economic history needs, in other words, to deemphasize, as Jones sometimes does not, in deference to the Continuists, the manufacturing-cum-regional-specialization that we call loosely “industrialization.”

Albert Hirschman quotes, and applies to the antibourgeois Spaniards of Castile, the backward-looking opinion of the Marquis de Vauvenargues (1715–1747) that “a man of quality, by fighting, acquires wealth more honorably and quickly than a meaner man by work.”1 It was the antique sentiment of the nobility. According to Tacitus the ancient German warrior thought it “tame and spiritless to accumulate slowly by the sweat of his brow what can be got quickly by the loss of a little blood.”2 In such a society the incentives to zero-sum rent seeking, as the economists put it nowadays, are plain enough. By contrast the Portuguese merchant and the “merchant knight” (cavaleiro-mercador, an impossible juxtaposition in most of Europe at the time) encouraged by Prince Henry the Navigator (1396–1460) and others in its vigorous royal family gave little Portugal the third European empire of trade, after those three centuries earlier of Venice and Genoa.

(Yet putting Amsterdam in the category of failure is a scientific mistake: I have noted that the place merely changed, as London did, from being chiefly manufacturing and merchanting to being chiefly banking and merchanting; and Florence is to this day a substantial industrial city; and Genoa is still the port of northern Italian industrialization.) Jones opines that “what kept growth episodes so few was mainly excessive rent-seeking on the part of the holders of political power.”10 Probably. The economic historian Sheilagh Ogilvie, for instance, presents evidence that medieval guilds of merchants were growth-killers—not the growth-makers that some recent theorists and historians of the neo-institutionalist school have posited.


The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us by Robert H. Frank, Philip J. Cook

accounting loophole / creative accounting, air freight, Alvin Roth, Apple's 1984 Super Bowl advert, business cycle, compensation consultant, Daniel Kahneman / Amos Tversky, delayed gratification, Garrett Hardin, global village, haute couture, income inequality, independent contractor, invisible hand, junk bonds, labor-force participation, longitudinal study, Marshall McLuhan, medical malpractice, Network effects, positional goods, prisoner's dilemma, rent-seeking, rising living standards, Ronald Reagan, school choice, Shoshana Zuboff, Stephen Hawking, stock buybacks, Tragedy of the Commons, transaction costs, trickle-down economics, winner-take-all economy

"Changes in the Structure of Wages in the 1980s: An Evaluation of Alternative Explanations," American Econom­ ic Review 82 (June 1992): 371-92. Brimelow, Peter, and Leslie Spencer. "The Plaintiff's Attorney's Great Honey Rush," Forbes, October 16, 1989, pp. 197 ff. Buchanan, James, Robert Tollison, and Gordon Tullock, eds. Toward a Theo­ ry o/the Rent-Seeking Society, College Station: Texas A&M Press, 1 980. Burrough, Bryan, and John Hellyar. Barbarians at the Gate. New York: Harper & Row, 1990. Bibliography 249 Byrne, John A. "The Craze for Consultants." Business Week, July 25, 1994, pp. 60-66. . "That's Some Pay Cap, Bill." Business �ek, April 25, 1994, p. 57.

"The Big Stars on Campus Are Now Research Labs." New York Times, December 4, 1994, pp. 1 , 38. Chass, Murray. "Motivation Upon Arrival for Henderson." New York Times, March 3 , 1 993, p. B lO. Chi, Victor. "Football Abolished at Santa Clara." San Jose Mercury News. Feb­ ruary 4, 1993 , pp. 1 G, 9G. Chung, Tai-Yeong. "Rent-Seeking Contest When the Prize Increases with Ag­ gregate Efforts." University of Western Ontario Department of Econom­ ics Research Report 9407, 1994. Clotfelter, Charles T. "Demand for Undergraduate Education." In Charles T. Clotfelter, Ronald G. Ehrenberg, Malcolm Getz, and John J. Siegfried, Economic Challenges in Higher Education.

.: Education­ al Testing Service, 1976-77. Comstock, G., and H. Paik. Television and the Amen'can Child. San Diego, CA: Academic Press, 1 99 1 . Congleton, Roger. "Competitive Process, Competitive Waste, and Institu­ tions." In J. Buchanan, R. Tollison, and G. Tullock, eds. Toward a Theory 0/ the Rent-Seeking Society. College Station: Texas A&M Press, 1 980, pp. 153-79. Conover, Carole. Conover Cover Girls. Englewood Cliffs, NJ: Prentice-Hall, 1 978. Cook, Philip J., and Robert H. Frank, "The Growing Concentration of Top Students at Elite Schools." In Charles Clotfelter and Michael Rothschild, eds.


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The Clash of the Cultures by John C. Bogle

Alan Greenspan, asset allocation, buy and hold, collateralized debt obligation, commoditize, compensation consultant, corporate governance, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, estate planning, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, Hyman Minsky, income inequality, index fund, interest rate swap, invention of the wheel, John Bogle, junk bonds, low interest rates, market bubble, market clearing, military-industrial complex, money market fund, mortgage debt, new economy, Occupy movement, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, Ponzi scheme, post-work, principal–agent problem, profit motive, proprietary trading, prudent man rule, random walk, rent-seeking, risk tolerance, risk-adjusted returns, Robert Shiller, seminal paper, shareholder value, short selling, South Sea Bubble, statistical arbitrage, stock buybacks, survivorship bias, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, Vanguard fund, William of Occam, zero-sum game

After all, innovation, information, instant communications, and competition have brought great benefits to our society. But I see our financial system as somehow separate and distinct from the other business and commercial systems that permeate our world. “Value-Creating” and “Rent-Seeking” There is a difference—a difference in kind—between what economists describe as “value-creating” activities that add value to society and “rent-seeking” activities that subtract value from society on balance. One provides new and improved products and services, delivered through ever more efficient channels and at prices that are more competitive, and the other simply shifts economic claims from one set of participants to another.

Creating Value versus Subtracting Value In yet another distortion aided and abetted by our financial system, too many of the best and brightest young people in our land, instead of becoming scientists, physicians, educators, or public servants, are attracted by the staggering financial incentives offered in the investment industry. These massive rewards serve to divert vital human resources from other, often more productive and socially useful, pursuits. Even in the field of engineering, “financial” engineering, which is essentially rent-seeking in nature, holds sway over “real” engineering—civil, electrical, mechanical, aeronautical, and so on—which is essentially value-creating. The long-term consequences of these trends simply cannot be favorable to our nation’s wealth, growth, productivity, and global competitiveness. Finally, the dominance of speculation in our financial affairs shifts our society’s focus from the enduring reality of corporate value creation, on which our nation ultimately depends, to the momentary illusion of stock prices.

Develop Limits on Leverage, Transparency for Derivatives, and Stricter Punishments for Financial Crimes We need stronger, smarter, and wiser regulation that is principles-based where possible, and rules-based in all other cases. No, I do not believe that our government should run our financial sector. But I would be willing to accept the cost of its inevitable bureaucratic drag on the system since, after all, most government activity itself is also rent-seeking rather than value-adding. Regulation is needed in order to: Establish and enforce sterner limits, as appropriate, on leverage and portfolio quality. Bring the opacity of today’s derivatives trading into the bright sunlight of transparency and openness, with public reporting of all transactions.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

"World Economic Forum" Davos, 23andMe, Abraham Maslow, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon credits, carbon footprint, carbon tax, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, Cornelius Vanderbilt, cotton gin, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Easter island, Edward Glaeser, Edward Jenner, electricity market, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, flying shuttle, Flynn Effect, food miles, Ford Model T, Garrett Hardin, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Herbert Marcuse, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, Jevons paradox, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Large Hadron Collider, Mark Zuckerberg, Medieval Warm Period, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, ocean acidification, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Ponzi scheme, precautionary principle, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Robert Solow, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, Thales and the olive presses, Thales of Miletus, the long tail, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, world market for maybe five computers, Y2K, Yogi Berra, zero-sum game

Had I only known it, experiments in laboratories by the economist Vernon Smith and his colleagues have long confirmed that markets in goods and services for immediate consumption – haircuts and hamburgers – work so well that it is hard to design them so they fail to deliver efficiency and innovation; while markets in assets are so automatically prone to bubbles and crashes that it is hard to design them so they work at all. Speculation, herd exuberance, irrational optimism, rent-seeking and the temptation of fraud drive asset markets to overshoot and plunge – which is why they need careful regulation, something I always supported. (Markets in goods and services need less regulation.) But what made the bubble of the 2000s so much worse than most was government housing and monetary policy, especially in the United States, which sluiced artificially cheap money towards bad risks as a matter of policy and thus also towards the middlemen of the capital markets.

Most past bursts of human prosperity have come to naught because they allocated too little money to innovation and too much to asset price inflation or to war, corruption, luxury and theft. In the Spain of Charles V and Philip II, the gigantic wealth of the Peruvian silver mines was wasted. The same ‘curse of resources’ has afflicted countries with windfalls ever since, especially those with oil (Russia, Venezuela, Iraq, Nigeria) that end up run by rent-seeking autocrats. Despite their windfalls, such countries experience lower economic growth than countries that entirely lack resources but get busy trading and selling – Holland, Japan, Hong Kong, Singapore, Taiwan, South Korea. Even the Dutch, those epitomes of seventeenth-century enterprise, fell under the curse of resources in the late twentieth century when they found too much natural gas: the Dutch disease, they called it, as their inflated currency hurt their exporters.

And it was they who began to trade with the ports of Italy. Italian peasants started to discover that instead of dividing their land among impoverished heirs they could send sons to town to trade with Maghribi Jews. Northern Italy, because of a stand-off between the Holy Roman emperor and the pope, was temporarily favoured by an absence of greedy rent-seeking kings. When Arab piracy and papal plunder paused under the influence of the first Otto, the towns of Lombardy and Tuscany found themselves free to set up their own governments, and since towns were there because of trade, these governments became dominated by the interests of merchants. Amalfi, Pisa, and above all Genoa began to flourish on the back of the Maghribi trade.


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The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It by Paul Collier

air freight, Asian financial crisis, blood diamond, Bob Geldof, British Empire, business cycle, Doha Development Round, export processing zone, failed state, falling living standards, Global Witness, income inequality, mass immigration, out of africa, rent-seeking, Ronald Reagan, structural adjustment programs, trade liberalization, zero-sum game

When Charles Soludo became governor of the Central Bank of Nigeria, his priority was to reform the banking sector, a notorious epicenter of rent seeking. Unsurprisingly, this was not popular with the rent seekers among the banks. They organized a fighting fund of around $2 million to campaign against him. Among other tactics, this enabled them to buy allies in the media. Charles did not have $2 million to oppose them; he just had guts and intelligence and the right arguments. As I write, he seems to have won, closing and merging sixty-four banks. Reform is tough, but it can triumph. The day after President Mwai Kibaki replaced the rent-seeking Daniel arap Moi in Kenya in 2002, ordinary Kenyan citizens frog-marched police officers who demanded the usual bribes to their own police stations to be arrested.

There is now a huge amount of money being directed by the Nigerian federal government to the delta region, and the oil companies are desperately spreading protection money—paying ransoms to free kidnapped workers is pretty well a daily occurrence. Within the region local politicians are fighting it out for control of all this money, and violent protest has become an orchestrated part of this political rent seeking. Grievance has evolved, over the course of a decade, into greed. Let us get back to the costs of conflict. Many of the costs are borne by neighboring countries. Diseases don’t respect frontiers, and the economic collapse also spreads. Since most countries are bordered by several others, the overall cost to neighbors can easily exceed the cost to the country itself.


pages: 290 words: 76,216

What's Wrong With Economics: A Primer for the Perplexed by Robert Skidelsky

additive manufacturing, agricultural Revolution, behavioural economics, Black Swan, Bretton Woods, business cycle, carbon tax, Cass Sunstein, central bank independence, cognitive bias, conceptual framework, Corn Laws, corporate social responsibility, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, degrowth, disruptive innovation, Donald Trump, Dr. Strangelove, full employment, George Akerlof, George Santayana, global supply chain, global village, Gunnar Myrdal, happiness index / gross national happiness, hindsight bias, Hyman Minsky, income inequality, index fund, inflation targeting, information asymmetry, Internet Archive, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labour market flexibility, loss aversion, Mahbub ul Haq, Mark Zuckerberg, market clearing, market friction, market fundamentalism, Martin Wolf, means of production, Modern Monetary Theory, moral hazard, paradox of thrift, Pareto efficiency, Paul Samuelson, Philip Mirowski, Phillips curve, precariat, price anchoring, principal–agent problem, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, shareholder value, Silicon Valley, Simon Kuznets, sunk-cost fallacy, survivorship bias, technoutopianism, The Chicago School, The Market for Lemons, The Nature of the Firm, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, transaction costs, transfer pricing, Vilfredo Pareto, Washington Consensus, Wolfgang Streeck, zero-sum game

Nobel Laureate Amartya Sen (b.1933) has pointed out that famines in poor countries are as much the consequence of a politically determined distribution of food as of natural shortage.16 Eradicable diseases like malaria and leprosy fail to be eradicated not because nature is niggardly but because some rulers prefer to spend the money buying arms and enriching themselves and their families. Economists may reasonably point out that such artificial scarcity is produced by bad politics, not by bad economics; and indeed they have been persistent critics of ‘rent-seeking’ by governments. However, they have been relatively blind to the ability of big private corporations to extract rent. Today the biggest rent-extractor is the cartel of big banks, which controls the means of financing production. The method of mainstream economists has blunted criticism of actual market distributions by setting out to ‘prove’ that in fully competitive markets consumers are sovereign and all the factors of production are paid what they produce.

The attempt in the 1970s to control inflation by wage and price controls led directly to a ‘crisis of governability’, as trade unions, particularly in Britain, refused to accept them. Large state subsidies to producer groups, both public and private, fed the typical corruptions of behaviour identified by the new right: rent-seeking, moral hazard, free-riding. Palpable evidence of government failure obliterated memories of market failure. The new generation of economists abandoned Keynes and, with the help of sophisticated mathematics, reinvented the classical economics of the self-regulating market. Battered by the inflationary crises of the 1970s, governments caved in to the ‘inevitability’ of free market forces.

The Strategy of Economic Development, New Haven: Yale University Press. Johnson, Harry (1977). ‘Keynes and the Developing World’, in Robert Skidelsky (ed.), The End of the Keynesian Era: Essays on the Disintegration of the Keynesian Political Economy, London: Macmillan. Krueger, Anne (1974). ‘The Political Economy of the Rent-Seeking Society’, American Economic Review, Vol. 64 (3): 291–303. Krugman, Paul (1987). ‘Is Free Trade Passé?’, Journal of Economic Perspectives, Vol. 1 (2): 131–44. Lewis, W. Arthur (1954). ‘Economic Development with Unlimited Supplies of Labour’, The Manchester School, Vol. 22 (2): 129–91. List, Friedrich (1909 [1841]).


pages: 412 words: 116,685

The Metaverse: And How It Will Revolutionize Everything by Matthew Ball

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", 3D printing, Airbnb, Albert Einstein, Amazon Web Services, Apple Newton, augmented reality, Big Tech, bitcoin, blockchain, business process, call centre, cloud computing, commoditize, computer vision, COVID-19, cryptocurrency, deepfake, digital divide, digital twin, disintermediation, don't be evil, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, game design, gig economy, Google Chrome, Google Earth, Google Glasses, hype cycle, intermodal, Internet Archive, Internet of things, iterative process, Jeff Bezos, John Gruber, Kevin Roose, Kickstarter, lockdown, Mark Zuckerberg, Metcalfe’s law, Minecraft, minimum viable product, Neal Stephenson, Network effects, new economy, non-fungible token, open economy, openstreetmap, pattern recognition, peer-to-peer, peer-to-peer model, Planet Labs, pre–internet, QR code, recommendation engine, rent control, rent-seeking, ride hailing / ride sharing, Robinhood: mobile stock trading app, satellite internet, self-driving car, SETI@home, Silicon Valley, skeuomorphism, Skype, smart contracts, Snapchat, Snow Crash, social graph, social web, SpaceX Starlink, Steve Ballmer, Steve Jobs, thinkpad, TikTok, Tim Cook: Apple, TSMC, undersea cable, Vannevar Bush, vertical integration, Vitalik Buterin, Wayback Machine, Y2K

The use of common standards also meant that it was easier and cheaper to hire and work with outside vendors, integrate third-party software and apps, and repurpose code. The fact that so many of these standards were free and open-source meant that individual innovations often benefited the entire ecosystem, while placing competitive pressures on paid, proprietary standards, and helping to check the rent-seeking tendencies of platforms sitting between the web and its users (e.g., device manufacturers, operating systems, browsers, and ISPs). Importantly, none of this prevented businesses from making a profit on the internet, deploying a paywall, or building proprietary technology. Rather, the “openness” of the internet enabled more companies to be built, in more areas, reaching more users, and achieving greater profits, while also preventing pre-internet giants (and, crucially, telecom companies) from controlling it.

The more a developer invests in a given IVWP, the harder it becomes for them to ever leave—not only will they need to reacquire their customers, they’ll have to rebuild from scratch. Thus, developers will be less likely to support new IVWPs that might offer superior functionality, economics, or growth potential—and existing IVWPs will face less pressure to improve. Over time, dominant IVWPs might even “rent-seek.” Over the past decade, most of the major platforms have been criticized for such behaviors. For example, many brands argue that changes made to Facebook’s Newsfeed algorithm effectively forced them to buy ads in order to reach the very Facebook users who had voluntarily “liked” their Facebook pages.

See augmented reality (AR); virtual reality (VR) “mobile internet era,” 12, 35, 63, 64, 240, 242–44, 269, 291 Mojang, 114 Monsters University, 36, 89–90 Moore’s Law, 100, 161 “most favored nations” (MFN) clauses, 180–81, 183 Motorola, 158, 212, 213 multiplayer games battle royale games, 32–33, 91–93, 98, 114–15, 117n, 146–47, 268, 275 computing and, 75 “massively multiplayer” online games, 55 matchmaking, 81, 176, 178 the problem of concurrent users (CCUs), 54–55, 90–92, 122, 146, 234, 245, 261, 268, 283 see also specific games and gaming platforms Multi-User Dungeons (MUDs) and related topics, 7–8, 12, 13–14, 30 Musk, Elon Neuralink, 154 SpaceX, xi, 4, 87 Starlink, 87 Tesla, 101, 166, 271 X.com, 61 MySpace, 34, 274 Nadella, Satya, xii, 18, 141, 239, 279–80 Naked Sun, The, 5 Namco, 173 NASA, ix NASDAQ, 309 National Advisory Committee for Aeronautics, ix National Basketball Association (NBA), 218, 259 National Football League (NFL), 139 National Science Foundation, x native apps, 26, 194–95 near-field communication (NFC), 142, 189, 199–200, 203 Nest Labs, 158 “netcode” solutions, 81–82 NetEase, 19–20 Netflix, 19, 49–53, 96, 100, 111, 187, 194, 196–98, 244, 270, 276n Netherlands, 203 Network Attached Storage (NAS) drive, 74 networking, 71–88, 85 acceptability thresholds in, 80–81 bandwidth and, 27, 41, 48–51, 64, 72–79, 80, 96, 100, 305 broadband operators, 15–16, 38, 49, 271 fiber optic networks, 27, 84, 87, 128 4G networks, 81, 87, 244, 245, 249 5G networks, 87, 243 the internet as a “network of networks,” 16, 23–24, 62 latency and, 27, 48–53, 64, 79–88, 95–96, 99–100, 230, 243, 248, 271, 305 network gateways, 130 rent-seeking and, 15, 299 3G networks, 243 undersea cables, 84–85, 85 Neuralink, 154 Neuromancer, 5–6, 8 Newsweek, 308 New World, 277 New York Times, xv, 4–5, 73, 224, 256 as an app, 149, 185, 194, 196, 202 Live Election feed, 49 Nexon, 105 NextVR, 144 Niantic, 115, 144, 275 Nike, 121, 139, 189–90, 208, 248, 264 Nintendo, 11, 104, 151–52, 173, 303 Nintendo Entertainment System (NES), 32, 173 Nintendo Switch, 30–32, 75, 97, 134, 174–76 Nintendo Wii, 132 Nokia, 136–37 non-fungible tokens (NFTs), 140, 216–22 avatars and identity, 218, 229, 293–94 fractionalization into fungible tokens/shares, 202 marketplaces, 202, 301 “minting” in, 217 speculation, 128, 220, 231 as useless, 220 nonprofit organizations, 227, 231 Nouns DAO, 229 Nuance Communication, 212 Nvidia, xii, 66, 97–98, 282 Android and, 213 GeForce Now, 131, 282, 286 market capitalization of, 166 NVM software development kit, 175 Omniverse, 136–37, 282 see also graphics processing units (GPUs); Huang, Jensen Nye, David, 242 “Oasis, The,” 22, 289 OBJ file format, 299 occlusion, 97 Oculus VR, xi, 21, 57, 143, 153, 160, 274, 276 Horizon Worlds, 115, 204, 277 Oculus Quest 2, 143, 145–47, 161–62 Population: One, 146–47, 268 Office of Scientific Research and Development (OSRD), ix–x OKCupid, 19, 261 Omniverse from Nvidia, 136–37, 282 OnLive!


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", accounting loophole / creative accounting, bank run, banking crisis, banks create money, behavioural economics, Bernie Madoff, bitcoin, Bitcoin Ponzi scheme, blockchain, borderless world, Bretton Woods, BRICs, business cycle, capital controls, capitalist realism, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, currency risk, David Graeber, debt deflation, dematerialisation, disintermediation, Dogecoin, emotional labour, eurozone crisis, fiat currency, financial engineering, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, gentrification, German hyperinflation, Goldman Sachs: Vampire Squid, Herbert Marcuse, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kickstarter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, Minsky moment, mobile money, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, National Debt Clock, Neal Stephenson, negative equity, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, post-Fordism, Post-Keynesian economics, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, Satoshi Nakamoto, scientific management, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

Meanwhile, the Fed faces an interest rate quandary: if it keeps rates low, the financial sector will be forced to gamble to achieve the growth in asset values it needs; if rates rise, real estate values will fall and the banks and pension funds will be forced even further into negative equity. If Hudson is right, we ought to be witnessing the end of two myths. The first is about free markets. We cannot continue to believe that they are free when they support rent seeking rather than real GDP, reward banks for pushing junk mortgages, and use credit rating agencies to make predatory finance look like sound wealth creation. Free markets need to be protected from fraud and rent seeking. The second myth is that central banks cause inflation by monetizing public spending. They do not cause inflation if the spending in question goes toward new production and employment. Instead, such spending is being diverted to support inflated asset prices and continued financial speculation.

Moreover, the state played a crucial role in that history—just as it continues doing so today.27 Third, Marx’s analysis of the role of the “modern bankocracy” opens up an analytical space in which finance can be understood in relation to a particular kind of accumulation, more akin to mercantilism and rent seeking than more conventional forms of capitalist production.28 Financial derivatives did not exist in Marx’s day. Nor did hedge funds or sovereign wealth funds. Nonetheless, his analysis of primitive accumulation provides a powerfully suggestive means of framing these forms of financial capitalism (McNally 2009; Ekman 2012).

Of greatest interest to us here is Harvey’s attempt to produce a full-fledged Marxist theory of money and credit that can be applied to the present day, taking account of developing connections between finance and the state, the near-disappearance of gold from the world’s monetary system, and the recent huge expansion of financial services as a major force in the dynamics of contemporary capitalism. In light of our discussion so far, Harvey’s approach is particularly interesting because he draws out the theme of primitive accumulation in Marx and applies it to key aspects of financial capitalism, such as rent seeking and debt. Harvey’s analysis is underpinned by the crucial assumption that capitalism needs to sustain an average compound growth rate of around 3 percent in order for most capitalists to make a reasonable profit (Harvey 2010b: 27). Anything less is problematic, and zero or negative growth defines a depression.


pages: 307 words: 82,680

A Pelican Introduction: Basic Income by Guy Standing

"World Economic Forum" Davos, anti-fragile, bank run, basic income, behavioural economics, Bernie Sanders, Bertrand Russell: In Praise of Idleness, Black Lives Matter, Black Swan, Boris Johnson, British Empire, carbon tax, centre right, collective bargaining, cryptocurrency, David Graeber, declining real wages, degrowth, deindustrialization, Donald Trump, Elon Musk, Fellow of the Royal Society, financial intermediation, full employment, future of work, gig economy, Gunnar Myrdal, housing crisis, hydraulic fracturing, income inequality, independent contractor, intangible asset, Jeremy Corbyn, job automation, job satisfaction, Joi Ito, labour market flexibility, land value tax, libertarian paternalism, low skilled workers, lump of labour, Marc Benioff, Mark Zuckerberg, Martin Wolf, mass immigration, mass incarceration, moral hazard, Nelson Mandela, nudge theory, offshore financial centre, open economy, Panopticon Jeremy Bentham, Paul Samuelson, plutocrats, precariat, quantitative easing, randomized controlled trial, rent control, rent-seeking, Salesforce, Sam Altman, self-driving car, shareholder value, sharing economy, Silicon Valley, sovereign wealth fund, Stephen Hawking, The Future of Employment, universal basic income, Wolfgang Streeck, women in the workforce, working poor, Y Combinator, Zipcar

Sixth, they encourage the provision of low-quality goods and services and disdain on the part of those delegated to administer or provide them. In the US, housing vouchers have been associated with increased concentration of impoverished people in poor neighbourhoods where the vouchers are more widely accepted by landlords.19 Seventh, they are prone to corruption and/or rent seeking by special interests. In the US, food stamps have been vigorously promoted by farm-state Republicans. In India, less than 10 per cent of the food the government buys for its Public Distribution System reaches the poor; almost half mysteriously disappears between warehouse and ration shop, and most of the rest is left to rot in government storage.20 Moving to a basic income scheme, based on direct provision of cash to the intended beneficiaries, would remove layers of intermediaries and their lobbying potential at a stroke.

Although food and other subsidies may seem to satisfy the Security Difference Principle by reaching out to the most insecure groups in society, some of the most vulnerable are locked out of such schemes. They surely fail the Paternalism Test Principle and the Rights-not-Charity Principle. They are also costly to administer, inefficient and prone to corruption and rent seeking. An experiment in Ecuador that ran simultaneous trials of cash assistance, food vouchers and in-kind food aid found that less than 10 per cent of those receiving cash would have preferred another form of assistance, whereas a quarter to a third of the others wanted to change.21 Those who received cash valued being able to use some of the money for other essentials, including savings.

In the Indian case, and probably elsewhere as well, there would be no need to introduce a basic income as an alternative to existing social programmes. A third method of funding is through the sovereign wealth fund, social dividend route mentioned in Chapter 7. This is eminently suited to developing countries rich in oil and other minerals, or valuable commodities such as timber, the revenues from which go mainly to rent-seeking elites. Many have already set up sovereign wealth funds, but these have been used mainly as investment vehicles to help stabilize future government finances. In Goa, India, the Goenchi Mati Movement is pressing for the proceeds of iron ore mining to go into a permanent fund, similar to Alaska’s Permanent Fund, which would be used to finance a citizen’s dividend.


pages: 286 words: 87,168

Less Is More: How Degrowth Will Save the World by Jason Hickel

air freight, Airbnb, Anthropocene, basic income, Bernie Sanders, Big bang: deregulation of the City of London, biodiversity loss, Boris Johnson, Bretton Woods, British Empire, capital controls, circular economy, cognitive dissonance, coronavirus, corporate governance, corporate personhood, cotton gin, COVID-19, David Graeber, decarbonisation, declining real wages, degrowth, deindustrialization, dematerialisation, disinformation, Elon Musk, energy transition, Extinction Rebellion, extractivism, Fairphone, Fellow of the Royal Society, flying shuttle, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, gender pay gap, green new deal, Greta Thunberg, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, Jeff Bezos, Jevons paradox, John Maynard Keynes: Economic Possibilities for our Grandchildren, land reform, liberal capitalism, lockdown, longitudinal study, low interest rates, Mahatma Gandhi, Mark Zuckerberg, McMansion, means of production, meta-analysis, microbiome, Money creation, moral hazard, mortgage debt, Murray Bookchin, Naomi Klein, negative emissions, new economy, ocean acidification, offshore financial centre, oil shale / tar sands, opioid epidemic / opioid crisis, out of africa, passive income, planetary scale, planned obsolescence, plutocrats, Post-Keynesian economics, quantitative easing, rent control, rent-seeking, retail therapy, Ronald Reagan, Rupert Read, Scramble for Africa, secular stagnation, shareholder value, sharing economy, Simon Kuznets, structural adjustment programs, the scientific method, The Spirit Level, transatlantic slave trade, trickle-down economics, universal basic income

When capital has bumped up against limits to profit-growth in the past, it has found fixes in things like colonisation, structural adjustment programmes, wars, restrictive patent laws, nefarious debt instruments, land grabs, privatisation, and enclosing commons like water and seeds. Why would it be any different this time? Indeed, a study by the ecological economist Beth Stratford finds that when capital faces resource constraints, this is exactly what happens: it turns to aggressive rent-seeking behaviour. It seeks to grab existing value wherever it can, with clever mechanisms to suck income and wealth from the public domain into private hands, and from the poor to the rich, exacerbating inequality. Now, some might argue that capitalism could theoretically find growth opportunities in completely immaterial goods.

This would push the richest to sell some of their assets, thus distributing wealth more fairly. But in an era of ecological crisis, we must be more ambitious than this. After all, nobody ‘deserves’ this kind of wealth. It’s not earned, it’s extracted: from underpaid workers, from cheap nature, from rent-seeking, from political capture and so on. Extreme wealth has a corrosive effect on our society, on our political system, and on the living world. We should have a democratic conversation about this: at what point does hoarding become destructive and unacceptable? $100 million? $10 million? $5 million?

As we saw in the previous chapter, reducing inequality is a powerful way to reduce ecological pressure. It cuts high-impact luxury consumption by the rich, and reduces competitive consumption across the rest of society. But it also removes pressures for unnecessary growth. The policies I’ve proposed here would lead to a disaccumulation of capital. This would cut rent-seeking behaviour, and the rich would lose their power to force us to extract and produce more than we need. The economy would shift away from unnecessary exchange-value and more towards use-value. It would also reduce political capture and improve the quality of democracy; and democracy, as we will see later, has intrinsic ecological value.


pages: 504 words: 126,835

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

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

While such an investment profile can occasionally be explained by firms making long-term bets on future value – many investments perform weakly before they start to pay off – the general view is rather that agency problems inside a firm spawn inefficient use of capital and investment spending.34 The exact nature of these agency problems varies, but the usual suspect is a misalignment of interests between owners, board executives, and management. Misalignment permeates most large organizations and helps to explain many of the unproductive habits of a firm. Rent-seeking behavior – for example, the desire to maximize the budget for a division even if it would be better to allocate resources to other parts of the firm to create value – preoccupies management. Sometimes executives can correct misallocation. However, quite often they, and perhaps even the owners, conform to rent-seeking bids and behavior because – to continue with the example – they need to “bribe” division heads or other key managers in the firm. In this way, misalignment of interests makes organizations succumb to the process of internal politics.

At https://www.stlouisfed.org/Publications/Regional-Economist/January-2013/Why-Are-Corporations-Holding-So-Much-Cash. Santos, Filipe M., and Kathleen M. Eisenhardt, “Organizational Boundaries and Theories of Organization.” Organization Science, 16.5 (2005): 491–508. Scharfstein, David S., and Jeremy C. Stein, “The Dark Side of Internal Capital Markets: Divisional Rent-seeking and Inefficient Investment.” NBER Working Paper No. 5969. National Bureau of Economic Research, Mar. 1997. Schmitz, Robert, “Why Can’t China Make a Good Ballpoint Pen?” Marketplace, Dec. 14, 2015. At http://www.marketplace.org/2015/12/10/world/why-cant-china-make-good-ballpoint-pen. Schoen, John W., “$2 Trillion Deficit for Public Pension Funds.”

Chance (Being There character) (i), (ii) multinational (global) companies characteristics of (i), (ii) and competition (i) and corporate cash savings (i) and dispersed ownership (i) and firm boundaries (i), (ii) and foreign direct investment (FDI) (i), (ii) and global trade (i), (ii) vs. home-market firms (i) and innovation (i) as logistics hubs (i) and market concentration (i), (ii) and market contestability (i) and private standards (i) and productivity (i), (ii) and R&D (i) and regionalization of Asia’s trade growth (i) and regulation (i) reputation of (i) and “slicing up” of value chains (i) and specialization (i), (ii) and supply chains (i) and transaction costs (i) see also big firms; globalization; globalization (overview) Musk, Elon (i), (ii), (iii) mutual funds (i), (ii) nanotechnology (i), (ii), (iii) NASA (i) Nasdaq, and sovereign wealth funds (i) national accounts (recorded data), vs. real value of improvements (i), (ii) National Science Foundation (US) (i) neoconservatism (i) neoliberalism (i) nepotism (i) net lending see corporate net lending Netherlands exports to China (i) taxi services and regulation (i) “new economy” (i) New England Journal of Medicine, medical devices study (i) New Machine Age thesis background: economic realities vs. technological blitz vision (i), (ii), (iii), (iv), (v), (vi), (vii); historical perspective (i) criticism of thesis: cyclical effects on productivity argument (i); jobs and technology issue (i); productivity/income decoupling issue (i), (ii); recorded data vs. real improvements argument (i), (ii); summary (i) and fear of artificial intelligence (i) and planning machine economic philosophy (i) and Robert Gordon on US labor productivity growth (i) see also The Second Machine Age (Brynjolfsson and McAfee) New York City dockers and containerization (i) taxi services and regulation (i), (ii) New York Stock Exchange (i), (ii), (iii), (iv), (v) see also Wall Street New York Times, on Bell’s telephone invention (i) NICs (newly industrialized countries) (i) Nietzsche, Friedrich (i), (ii) nimby (not-in-my-backyard) attitude (i) NM Electronics (Intel) (i), (ii), (iii) Nobel Peace Prize, and Twitter (i) “noise” (at work) (i) Nokia and corporate managerialism (i), (ii), (iii), (iv), (v), (vi) and Foxconn (i) and specialization (i) and tablet market (i) non-entrepreneurial planning (i) North American Free Trade Agreement (i) Norway, sovereign wealth fund (i), (ii), (iii) not-in-my-backyard (nimby) attitude (i) Obama, Barack (i), (ii) obsolescence see knowledge obsolescence occupational licenses (i), (ii), (iii), (iv) OECD (Organisation for Economic Co-operation and Development) on aging firms and innovation (i) on corporate savings (i) on “diffusion machine” and productivity (i) GDP forecasts (i) on intermediaries and shareholders’ income (i) on pension funds and PPRFs (i) on R&D skill deficiencies (i) on regulatory administration costs (i) on sovereign wealth funds (i) on taxi services (i) OECD countries product market regulation (PMR) indicators (i), (ii) R&D spending (i) start-ups (i) total assets by types of institutional investors (2001–13) (i), (ii) “off-license” sectors (i) “offshore” pattern of innovation (i) oligopolistic (or monopolistic) competition (i) Ollila, Jorma (i), (ii) Olson, Mancur (i) “one percent” (wealthiest group) (i) online services and diffusion of innovations (i), (ii) and recorded economic data (i) and regulation (i) see also internet open source technology, and socialism (i) organic cognition (i) Organisation for Economic Co-operation and Development see OECD; OECD countries organization industrial organization (i), (ii) vs. managerialism/technostructure (i) and multinationals (i) and specialization (i) Organization Man (i), (ii) organizational diversification (i), (ii) Osborne, Michael (i) outsourcing (i) ownership see capitalist ownership; institutional owners Palo Alto Research Center (PARC, Xerox) (i) “Panama Papers” story (i) Parisian taxis, and regulation (i) patents, and knowledge obsolescence (i) pay see incomes payment cycles (i) payment technologies (i) pensions and asset management industry (i) and gray capitalism (i), (ii), (iii), (iv) need for reform (i) pension crisis (i) pensioners vs. working-age households incomes (i) and principal–agent debate (i) private pensions (i), (ii) public/state pensions (i), (ii), (iii), (iv), (v); public pension funds and reserve funds (OECD, 2001–13) (i), (ii); public pension return funds (PPRFs) (i) see also retirement Pepsi (i) performance imperatives (i) performance measurements (i) performance tools (i), (ii) permission-based regulatory culture (i), (ii) permissionless innovation (i) pessimism, and capitalist decline (i) Pessoa, João Paolo (i) Pfleiderer, Paul (i) pharmaceutical sector and price regulations (i)n28 R&D investment (i), (ii) and regulation (i), (ii) Phelps, Edmund (i)n41 Mass Flourishing (i), (ii) Piketty, Thomas (i), (ii) PillCam digestive tract sensor (i) Pippi Longstocking (i) planning and corporate managerialism: planning machines (i), (ii), (iii); strategy (i); uncertainty and risk (i) Cybersyn project (i) and failing companies (i) and globalization (i) non-entrepreneurial planning (i) and regulation (i) and “scientific civilization” thinking (i) and spirit of bureaucracy (i) and Swedish economy (i) plastic cards (i) Pliny the Elder, Naturalis Historia (i) Plouffe, David (i) PMR (product market regulation) indicators (i), (ii) policy uncertainty, and investment (i), (ii) political romanticism (i) political world and capitalism as borderless space (i) cronyism , (i), (ii), (iii), (iv) dirigisme (France) (i) government intervention vs. liberalism (i) governments and globalization (i) governments and mobile technology (i) gray-haired voters (i) lobbying (i), (ii), (iii), (iv), (v) and regulation: 1980s–1990s policy changes (i); case of taxi services and Uber (i); political romanticism (i); social regulation (i); trend on the rise (i) and sovereign wealth funds (i), (ii), (iii) see also policy uncertainty; politics politics corporate politics (i), (ii), (iii), (iv) end of and digital age (i) populism (i), (ii), (iii), (iv), (v) see also political world populations aging (i), (ii), (iii) decline (i) populism (i), (ii), (iii), (iv) Porter, Michael (i), (ii) portfolio theory (i) Portugal, lesser dependence on larger enterprises (i) positioning (i), (ii), (iii), (iv) poverty, and globalization (i) PPRFs (public pension return funds) (i) see also pensions precautionary regulations (i), (ii), (iii), (iv) predictability (i), (ii), (iii), (iv), (v), (vi), (vii) see also uncertainty; volatility premature scaling (i), (ii) price index bias (i) Pricewaterhouse Coopers (PwC) on asset management industry (i) on compliance officers in US (i) productivity growth survey (i) on sovereign wealth funds (i) principal–agent problem (i) principal–agent theory (i) prioritizing, and strategy (i) private standards (i) probabilistic decision-making (i), (ii) product market regulation (PMR) indicators (i), (ii) production and computer technology (i) geography of production (i) lean production (i), (ii) and multinationals (i) production costs (i), (ii), (iii) unbundling of: first (i); second (i), (ii), (iii), (iv) see also specialization; supply chains; value chains productivity and containerization (of global trade) (i) and cyclical effects (i) and data economy (i) downward trend (i), (ii) and employment (i) and financial sector growth (i) and foreign operations (i)n46 and globalization (i), (ii), (iii) and ICT intensity (i), (ii) and incomes (decoupling thesis) (i), (ii) key to prosperity (i) low productivity and innovation diffusion problems (i) and market contestability (i), (ii) and multinationals (i), (ii) and regulation (i) and robots (i) total factor productivity (TFP) growth (i), (ii), (iii) and transaction costs (i) UK productivity puzzle (i) professional investment/investors (i), (ii), (iii) see also asset managers professions regulation of (i), (ii) see also occupational licenses profit margins and decoupling (productivity/incomes) thesis (i) and globalization (i), (ii) protectionism (i), (ii), (iii), (iv), (v) public markets and financialization of the economy (i) and mergers and acquisitions (i) public pension return funds (PPRFs) (i) see also pensions public relations campaigns (i), (ii) “put option” (i) PwC see Pricewaterhouse Coopers (PwC) quantitative valuation methods (i) quantum dots (QD) technology (i) R&D (research and development) and corporate net lending (i) and firm boundaries (i), (ii) and multinationals (i) and pharmaceutical products (i), (ii) and policy uncertainty (i) and productivity (i) R&D scoreboards (European Commission) (i), (ii) and regulation (i), (ii), (iii) vs. share buybacks at IBM (i) spending issues (i), (ii), (iii) and sunk costs (i) US R&D investment (i), (ii), (iii) and vertical specialization (i) see also incremental development Rajan, Raghuram (i) rating agencies (i), (ii), (iii) rationalism and globalist worldview (i), (ii) and societal change (i) Reagan, Ronald (i), (ii) real economy, vs. financial economy (i), (ii), (iii), (iv) reallocation of business, and deregulation (i) recorded data (national accounts) vs. real value of improvements (i), (ii) regulation after 1980s–1990s deregulation wave (i), (ii) and bureaucracy brake (Germany) (i) and compliance officers (i) and costs and time lags (i) and decline of capitalism (i), (ii) economic regulation (i), (ii) financial regulations (i), (ii), (iii), (iv) and globalization (i) and gray capitalism (i) and healthcare sector (i), (ii), (iii), (iv) index of regulatory freedom (i), (ii) and industrial policy (i), (ii) and innovation (i), (ii), (iii), (iv), (v), (vi) and labor (i), (ii), (iii), (iv), (v) and lobbying (i) and managerialism (i), (ii) and market contestability (i), (ii) moving-target regulations (i) and multinationals (i) and pensions (i) permission-based regulatory culture (i), (ii) and permissionless innovation (i) and planning (i) and political romanticism (i) and political world (i), (ii) prescriptive vs. proscriptive (i), (ii) private standards (i) and R&D (i), (ii), (iii) and size of companies (i) social regulation (i), (ii) and trade (i), (ii), (iii) see also deregulation; legislation; regulatory complexity/uncertainty regulatory accumulation (i) regulatory bodies (i) regulatory complexity/uncertainty cadmium example (i), (ii) energy sector case (i), (ii) impact on economic growth (i) impact on innovation (i), (ii), (iii), (iv), (v) precautionary regulations (i), (ii), (iii), (iv) regulatory conflicts (i) regulatory/policy uncertainty and investment allocation (i), (ii) rise of regulatory uncertainty (i) see also deregulation; regulation renewable energy see green/renewable energy rent-seeking (i), (ii), (iii) rentier capitalism (i), (ii), (iii), (iv), (v), (vi) rentier formula, resource allocation according to (i) rentiers (i), (ii) reputation management (i) research concept of in corporate world (i), (ii) scientific research (i) see also cancer research; incremental development; R&D Research in Motion (RiM) (i), (ii) retail, and globalization (i) retirement age of (i) savings (i), (ii), (iii), (iv), (v), (vi), (vii) see also pensions Ricardo, David, wine-for-cloth thesis (i) rich people vs. capitalists (i), (ii) high-net-worth individuals (i) mass affluent (i) “one percent” (wealthiest group) (i) risk banks’ proneness to (i) and globalist worldview (i), (ii) and uncertainty (i), (ii) Robertson, Dennis (i) Robinson, James (i) robotics/robots and Asimov/science fiction (i) impact of on society (i) and labor (i), (ii), (iii), (iv), (v); Foxconn example (i) and technology-frustrated generation (i) see also artificial intelligence; automation; driverless vehicles; New Machine Age thesis; technology Rodman, Dennis (i) Rolling Stone (magazine), “Why Isn’t Wall Street in Jail?”


pages: 420 words: 124,202

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

Albert Einstein, All science is either physics or stamp collecting, barriers to entry, Charles Babbage, collective bargaining, computer age, Copley Medal, creative destruction, David Ricardo: comparative advantage, decarbonisation, delayed gratification, Fellow of the Royal Society, flying shuttle, Flynn Effect, fudge factor, full employment, Higgs boson, independent contractor, invisible hand, Isaac Newton, Islamic Golden Age, iterative process, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, Joseph Schumpeter, Joseph-Marie Jacquard, knowledge economy, language acquisition, Lewis Mumford, moral hazard, Network effects, Panopticon Jeremy Bentham, Paul Samuelson, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, Ralph Waldo Emerson, rent-seeking, Robert Solow, Ronald Coase, Simon Kuznets, spinning jenny, tacit knowledge, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, three-masted sailing ship, transaction costs, transcontinental railway, zero-sum game, éminence grise

Economists have studied the human predilection for shutting out competitors once they have achieved a position of prosperity, and they refer to the behavior that follows as “rent seeking.” Rent-seeking behavior is simply the practice of earning income from an asset without currently working at it. Landlords are rent seekers, particularly to the degree that the land in question is unimproved, and inherited. So are monopolists. And so, indeed, are owners of copyrights and patents, so much so that one of the head-spinning challenges faced by Enlightenment thinkers like Adam Smith was to reconcile their antipathy to all forms of rent seeking, particularly in the form of state-chartered monopolies, with their enthusiasm for inventors and technological innovation.

In the first spinning machines, the operator had to simultaneously shape the winding and turn the spindles at precisely the same rate, so as to wind up the yarn—the term of art is “winding the cop”—without either stretching the yarn or allowing it to go slack. The craft was difficult enough that spinners became not only indispensable to the process, but highly protective of their place in it, exhibiting all the rent-seeking mania of a medieval guild. Along the way they transformed themselves from independent contractors into the nation’s most powerful and highly organized craft union. At one union meeting, a spinner argued violently against allowing “piecers” (the subordinates on the spinning line, who tie together threads when they break) to actually put up a cop of cotton yarn unless he was “a son, brother, or orphan nephew.”51 In the industry’s Lancashire heartland,52 mule spinners developed work rules in 1780 that remained in force until the 1960s, and partly in consequence, the new and improved ring-spinning machines, invented by the American John Thorp in 1828, which operated continuously and twisted fibers into yarn by attaching them to a rotating ring, didn’t catch on in Britain53 until the end of the nineteenth century.


pages: 484 words: 136,735

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky

"World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, Carmen Reinhart, classic study, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, eat what you kill, Edward Glaeser, electricity market, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, foreign exchange controls, full employment, geopolitical risk, George Akerlof, global rebalancing, Goodhart's law, Great Leap Forward, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, long and variable lags, Long Term Capital Management, low interest rates, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, military-industrial complex, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, Nelson Mandela, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, Paul Volcker talking about ATMs, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, systems thinking, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game

The response will be to try to overcome these problems with better institutions. Rather than abandoning hope in regulation and simply giving free rein to markets, Capitalism 4.0 will seek more intelligent policies that take account of known dysfunctions of government such as regulatory capture, rent-seeking,6 the political influence of special interests, and single-issue lobbies. It would be overoptimistic to imagine that such effort will be entirely successful. No one is likely to discover perfect answers to some of the deepest questions of social organization that have troubled political theorists since Plato and Aristotle,7 but an important part of any new approach will be to increase the flexibility of public policy and try to weaken the hold of the special interests that regulations create, some of which are found in the government itself.

No one is likely to discover perfect answers to some of the deepest questions of social organization that have troubled political theorists since Plato and Aristotle,7 but an important part of any new approach will be to increase the flexibility of public policy and try to weaken the hold of the special interests that regulations create, some of which are found in the government itself. One small way to soften the rigidities of regulation and limit the unproductive rent-seeking that tends to be created by government is to use sunset clauses on government rules of all kinds.8 Suppose, for example, that bank solvency regulations, employment laws, and even health and safety rules lapsed automatically and had to be redrawn every ten years. Far more thought and lobbying power would be devoted to serious debate about improving regulation and debating whether it was still needed, rather than exploiting and gaming a fixed set of rules.

Third, for Europe, an intellectual convergence with America will require policymakers and electorates to acknowledge some of the dysfunctional features of the European socio-economic system that have allowed special interests, such as agricultural lobbies and trade unions, to disguise what is essentially exploitative rent-seeking economic behavior, as culturally unique characteristics of the European model. The aftermath of the financial crisis will force Europe to adopt more market-oriented policies for trade, labor, and agriculture, and these policies will make its economic interactions with emerging economies more mutually beneficial and economically constructive.


pages: 457 words: 128,838

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

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

The ledgers they kept inside their institutions became the vital means through which societies kept track of the debts and payments that arose among their citizens. Thus the banks created the ultimate rent-seeking business, positioning themselves as fee-charging gatekeepers, managers of the financial traffic that made economies tick. Anyone sitting at the sending or receiving end of that traffic had no choice but to deal with a bank—much as Parisa Ahmadi did before the Film Annex changed its payment policy. As this new finance business grew and became more complex, other rent-seeking middlemen installed themselves as specialized providers of intermediated trust—from early bond and securities brokers, to insurance agents, to financial lawyers, to the payment processors and credit-card companies of our modern day.

But it also reflected a philosophical difference between believers in innovative projects who seek to profit by being first to market with new, cost-cutting business models, and believers in the prevailing ethos of Wall Street that Sandy Weill embodied. Wall Street banking is, if nothing else, a rent-seeking exercise. It would be inclined to preserve and strengthen centralized revenue streams such as credit-card transaction fees rather than expunge them. With the repeal of Glass-Steagall, and the waves of commercial-and-investment-bank mergers that followed Citigroup’s lead—Chase Manhattan with JP Morgan, Bank Boston with Fleet Bank and later with Bank of America—this ethos was now seizing control of the American financial system.

She should go to an ATM and withdraw as much money as she could. She didn’t understand why. Because, he told her, there was a chance U.S. banks wouldn’t open the next day. That frightening prospect—complete paralysis of the most important financial system in the world—was the price we paid for letting Wall Street deepen its model of centralized, rent-seeking power. The final social tab is still being tallied, but its costs go beyond what any bookkeeper can put into dollars and cents. One place it is felt is in the bitter taste that’s left in the mouths of citizens forced to prop up these banks. That has translated into a loss of trust in institutions generally, those of both Wall Street and Washington.


Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth by Stuart Ritchie

Albert Einstein, anesthesia awareness, autism spectrum disorder, Bayesian statistics, Black Lives Matter, Carmen Reinhart, Cass Sunstein, Charles Babbage, citation needed, Climatic Research Unit, cognitive dissonance, complexity theory, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, data science, deindustrialization, Donald Trump, double helix, en.wikipedia.org, epigenetics, Estimating the Reproducibility of Psychological Science, fake news, Goodhart's law, Growth in a Time of Debt, Helicobacter pylori, Higgs boson, hype cycle, Kenneth Rogoff, l'esprit de l'escalier, Large Hadron Collider, meta-analysis, microbiome, Milgram experiment, mouse model, New Journalism, ocean acidification, p-value, phenotype, placebo effect, profit motive, publication bias, publish or perish, quantum entanglement, race to the bottom, randomized controlled trial, recommendation engine, rent-seeking, replication crisis, Richard Thaler, risk tolerance, Ronald Reagan, Scientific racism, selection bias, Silicon Valley, Silicon Valley startup, social distancing, Stanford prison experiment, statistical model, stem cell, Steven Pinker, TED Talk, Thomas Bayes, twin studies, Tyler Cowen, University of East Anglia, Wayback Machine

The time and expertise of peer reviewers is the crux of the whole scientific system, providing the critical analysis that’s required for science to progress. Yet those reviewers are volunteers and aren’t employed by the journals. They are free labour, so they clearly can’t be what justifies the cost. Rather, Elsevier and other for-profit publishers are engaging in what economists call rent-seeking: gaining more profits without providing more value.68 One highly critical investigation of the scientific publication system noted its absurdities: It is as if the New Yorker or the Economist demanded that journalists write and edit each other’s work for free, and asked the government to foot the bill.

Outside observers tend to fall into a sort of stunned disbelief when describing this setup … A 2005 Deutsche Bank report referred to it as a ‘bizarre’ ‘triplepay’ system, in which ‘the state funds most research, pays the salaries of most of those checking the quality of research, and then buys most of the published product’.69 Once you remember that the fees universities pay to rent-seeking companies such as Elsevier are largely public funds, the whole thing begins to seem immoral: shouldn’t universities be making more efficient use of taxpayer money? It’s not even that we should be opposed to the profit motive, or to commercial publishers getting involved in science. But the irrational system of prestige that’s built up around the journal publishing system represents a market failure, impeding the necessary competition that could drive down its costs.

ABC News abortion Abu Ghraib prison abuse (2003) accidental discoveries Acta Crystallographica Section E acupuncture Afghan hounds Agence France-Presse AIDS (acquired immune deficiency syndrome) Alchemist, The (Bega) Alexander, Benita Alexander, Scott algorithms allergies Alzheimer, Aloysius Alzheimer’s Disease Amazon American Journal of Potato Research Amgen amygdala amyloid cascade hypothesis anaesthesia awareness Fujii affair (2012) outcome switching Anaesthesia & Analgesia animal studies antidepressants antipsychotics archaeology Arnold, Frances arsenic artificial tracheas asthma austerity Australia Austria autism aviation Babbage, Charles Bacon, Francis bacteria Bargh, John Bayer Bayes, Thomas Bayesian statistics BDNF gene Before You Know It (Bargh) Bega, Cornelis Begley, Sharon Belgium Bell Labs Bem, Daryl benzodiazepines bias blinding and conflict of interest De Vries’ study (2018) funding and groupthink and meaning well bias Morton’s skull studies p-hacking politics and publication bias randomisation and sexism and Bik, Elisabeth Bill & Melinda Gates Foundation Biomaterials biology amyloid cascade hypothesis Bik’s fake images study (2016) Boldt affair (2010) cell lines China, misconduct in Hwang affair (2005–6) Macchiarini affair (2015–16) meta-scientific research microbiome studies Morton’s skull studies Obokata affair (2014) outcome switching preprints publication bias replication crisis Reuben affair (2009) spin and statistical power and Summerlin affair (1974) Wakefield affair (1998–2010) biomedical papers bird flu bispectral index monitor black holes Black Lives Matter blinding blotting BMJ, The Boldt, Joachim books Borges, Jorge Luis Boulez, Pierre Boyle, Robert brain imaging Brass Eye vii British Medical Journal Brock, Jon bronchoscopy Broockman, David Brown, Nick Bush, George Walker business studies BuzzFeed News California Walnut Commission California wildfires (2017) Canada cancer cell lines collaborative projects faecal transplants food and publication bias and replication crisis and sleep and spin and candidate genes carbon-based transistors Cardiff University cardiovascular disease Carlisle, John Carlsmith, James Carney, Dana cash-for-publication schemes cataracts Cell cell lines Cell Transplantation Center for Open Science CERN (Conseil Européen pour la Recherche Nucléaire) chi-squared tests childbirth China cash-for-publication schemes cell line mix-ups in Great Famine (1959–1961) misconduct cases in randomisation fraud in chrysalis effect Churchill, Winston churnalism Cifu, Adam citations clickbait climate change cloning Clostridium difficile cochlear implants Cochrane Collaboration coercive citation coffee cognitive dissonance cognitive psychology cognitive tests coin flipping Colbert Report, The Cold War collaborative projects colonic irrigation communality COMPare Trials COMT gene confidence interval conflict of interest Conservative Party conspicuous consumption Cooperative Campaign Analysis Project (CCAP) ‘Coping with Chaos’ (Stapel) Cornell University coronavirus (COVID-19) Corps of Engineers correlation versus causation corticosteroids Cotton, Charles Caleb creationism Crowe, Russell Csiszar, Alex Cuddy, Amy CV (curriculum vitae) cyber-bullying cystic fibrosis Daily Mail Daily Telegraph Darwin Memorial, The’ (Huxley) Darwin, Charles Das, Dipak datasets fraudulent Observational publication bias Davies, Phil Dawkins, Richard De Niro, Robert De Vries, Ymkje Anna debt-to-GDP ratio Deer, Brian democratic peace theory Denmark Department of Agriculture, US depression desk rejections Deutsche Bank disabilities discontinuous mind disinterestedness DNA (deoxyribonucleic acid) domestication syndrome doveryai, no proveryai Duarte, José Duke University duloxetine Dutch Golden Age Dutch Organisation for Scientific Research Dweck, Carol economics austerity preprints statistical power and effect size Einstein, Albert Elmo Elsevier engineering epigenetics euthanasia evolutionary biology exaggeration exercise Experiment, The exploratory analyses extrasensory perception faecal transplants false-positive errors Fanelli, Daniele Festinger, Leon file-drawer problem financial crisis (2007–8) Fine, Cordelia Fisher, Ronald 5 sigma evidence 5-HT2a gene 5-HTTLPR gene fixed mindset Food and Drug Administration (FDA) Food Frequency Questionnaires food psychology Formosus, Pope foxes France Francis, Pope Franco, Annie fraud images investigation of motives for numbers Open Science and peer review randomisation Freedom of Information Acts French, Chris Fryer, Roland Fujii, Yoshitaka funding bias and fraud and hype and long-term funding perverse incentive and replication crisis and statistical power and taxpayer money funnel plots Future of Science, The (Nielsen) gay marriage Gelman, Andrew genetically modified crops genetics autocorrect errors candidate genes collaborative projects gene therapy genome-wide association studies (GWASs) hype in salami-slicing in Geneva, Switzerland geoscience Germany Getty Center GFAJ-1 Giner-Sorolla, Roger Glasgow Effect Goldacre, Ben Goldsmiths, University of London Golgi Apparatus good bacteria Good Morning America good scientific citizenship Goodhart’s Law Goodstein, David Google Scholar Górecki, Henryk Gould, Stephen Jay Gran Sasso, Italy grants, see funding Granularity-Related Inconsistency of Means (GRIM) grapes Great Recession (2007–9) Great Red Spot of Jupiter Green, Donald Gross Domestic Product (GDP) Gross, Charles ground-breaking results groupthink ‘Growth in a Time of Debt’ (Reinhart and Rogoff) growth mindset Guzey, Alexey gynaecology h-index H5N1 Haldane, John Burdon Sanderson Hankins, Matthew HARKing Harris, Sidney Harvard University headache pills heart attacks heart disease Heathers, James height Heilongjiang University Heino, Matti Henry IV (Shakespeare) Higgs Boson Hirsch, Jorge HIV (human immunodeficiency viruses) homosexuality Hong Kong Hooke, Robert Hossenfelder, Sabine Houston, Texas Hume, David Huxley, Thomas Henry Hwang, Woo-Suk hydroxyethyl starch hype arsenic life affair (2010) books correlation versus causation cross-species leap language and microbiome studies news stories nutrition and press releases spin unwarranted advice hypotheses Ig Nobel Prize images, fraudulent impact factor India insomnia International Journal of Advanced Computer Technology Ioannidis, John IQ tests Iraq War (2003–11) Italy Japan John, Elton Journal of Cognitive Education and Psychology Journal of Environmental Quality Journal of Negative Results in Biomedicine Journal of Personality and Social Psychology journals conflict of interest disclosure fraud and hype and impact factor language in mega-journals negligence and Open Science and peer review, see peer review predatory journals preprints publication bias rent-seeking replication studies retraction salami slicing subscription fees Jupiter Kahneman, Daniel Kalla, Joshua Karolinska Institute Krasnodar, Russia Krugman, Paul Lacon, or Many Things in Few Words (Cotton) LaCour, Michael Lancet Fine’s ‘feminist science’ article (2018) Macchiarini affair (2015–16) Wakefield affair (1998–2010) language Large Hadron Collider Le Texier, Thibault Lewis, Jason Lexington Herald-Leader Leyser, Ottoline Lilienfeld, Scott Loken, Eric Lost in Math (Hossenfelder) low-fat diet low-powered studies Lumley, Thomas Lysenko, Trofim Macbeth (Shakespeare) Macbeth effect Macchiarini, Paolo MacDonald, Norman machine learning Macleod, Malcolm Macroeconomics major depressive disorder Malaysia Mao Zedong MARCH1 Marcus, Adam marine biology Markowetz, Florian Matthew Effect Maxims and Moral Reflections (MacDonald) McCartney, Gerry McCloskey, Deirdre McElreath, Richard meaning well bias Measles, Mumps & Rubella (MMR) measurement errors Medawar, Peter medical research amyloid cascade hypothesis Boldt affair (2010) cell lines China, misconduct in collaborative projects Fujii affair (2012) Hwang affair (2005–6) Macchiarini affair (2015–16) meta-scientific research Obokata affair (2014) outcome switching pharmaceutical companies preprints pre-registration publication bias replication crisis Reuben affair (2009) spin and statistical power and Summerlin affair (1974) Wakefield affair (1998–2010) medical reversal Medical Science Monitor Mediterranean Diet Merton, Robert Mertonian Norms communality disinterestedness organised scepticism universalism meta-science Boldt affair (2010) chrysalis effect De Vries’ study (2018) Fanelli’s study (2010) Ioannidis’ article (2005) Macleod’s studies mindset studies (2018) saturated fats studies spin and stereotype threat studies mice microbiome Microsoft Excel Milgram, Stanley Mill, John Stuart Mindset (Dweck) mindset concept Mismeasure of Man, The (Gould) Modi, Narendra money priming Mono Lake, California Moon, Hyung-In Morton, Samuel Motyl, Matt multiverse analysis nanotechnology National Academy of Sciences National Aeronautics and Space Administration (NASA) National Institutes of Health National Science Foundation Nature cash-for-publication and cell line editorial (1981) impact factor language in Obokata affair (2014) Open Access and open letter on statistical significance (2019) replication research Schön affair (2002) Stapel affair (2011) Nature Neuroscience Nature Reviews Cancer NBC negligence cell line mix-ups numerical errors statistical power typos Netflix Netherlands replication studies in Stapel’s racism studies statcheck research neuroscience amyloid cascade hypothesis collaborative projects Macleod’s animal research studies replication crisis sexism and statistical significance and Walker’s sleep studies neutrinos New England Journal of Medicine New York Times New Zealand news media Newton, Isaac Nielsen, Michael Nimoy, Leonard No Country for Old Men Nobel Prize northern blots Nosek, Brian Novella, Steven novelty Novum Organum (Bacon) Nuijten, Michèle nullius in verba, numerical errors nutrition Obama, Barack obesity Obokata, Haruko observational datasets obstetrics ocean acidification oesophagus ‘Of Essay-Writing’ (Hume) Office for Research Integrity, US Oldenburg, Henry Open Access Open Science OPERA experiment (2011) Oransky, Ivan Orben, Amy Organic Syntheses organised scepticism Osborne, George outcome-switching overfitting Oxford University p-value/hacking alternatives to Fine and low-powered studies and microbiome studies and nutritional studies and Open Science and outcome-switching perverse incentive and pre-registration and screen time studies and spin and statcheck and papers abstracts citations growth rates h-index introductions method sections results sections salami slicing self-plagiarism university ranks and Parkinson’s disease particle-accelerator experiments peanut allergies peer review coercive citation fraudulent groupthink and LaCour affair (2014–15) Preprints productivity incentives and randomisation and toxoplasma gondii scandal (1961) volunteer Wakefield affair (1998–2010) penicillin Peoria, Illinois Perspectives in Psychological Science perverse incentive cash for publications competition CVs and evolutionary analogy funding impact factor predatory journals salami slicing self-plagiarism Pett, Joel pharmaceutical companies PhDs Philosophical Transactions phlogiston phosphorus Photoshop Physical Review physics placebos plagiarism Plan S Planck, Max plane crashes PLOS ONE pluripotency Poehlman, Eric politics polygenes polyunsaturated fatty acids Popper, Karl populism pornography positive feedback loops positive versus null results, see publication bias post-traumatic stress disorder (PTSD) power posing Prasad, Vinay pre-registration preclinical studies predatory journals preprints Presence (Cuddy) press releases Prevención con Dieta Mediterránea (PREDIMED) priming Princeton University Private Eye probiotics Proceedings of the National Academy of Sciences prosthetic limbs Przybylski, Andrew psychic precognition Psychological Medicine psychology Bargh’s priming study (1996) Bem’s precognition studies books Carney and Cuddy’s power posing studies collaborative projects data sharing study (2006) Dweck’s mindset concept Festinger and Carlsmith’s cognitive dissonance studies Kahneman’s priming studies LaCour’s gay marriage experiment politics and preprints publication bias in Shanks’ priming studies Stanford Prison Experiment Stapel’s racism studies statistical power and Wansink’s food studies publication bias publish or perish Pubpeer Pythagoras’s theorem Qatar quantum entanglement racism Bargh’s priming studies Morton’s skull studies Stapel’s environmental studies randomisation Randy Schekman Reagan, Ronald recommendation algorithms red grapes Redfield, Rosemary Reflections on the Decline of Science in England (Babbage) Reinhart, Carmen Rennie, Drummond rent-seeking replication; replication crisis Bargh’s priming study Bem’s precognition studies biology and Carney and Cuddy’s power posing studies chemistry and economics and engineering and geoscience and journals and Kahneman’s priming studies marine biology and medical research and neuroscience and physics and Schön’s carbon-based transistor Stanford Prison Experiment Stapel’s racism studies Wolfe-Simon’s arsenic life study reproducibility Republican Party research grants research parasites resveratrol retraction Arnold Boldt Fujii LaCour Macchiarini Moon Obokata Reuben Schön Stapel Wakefield Wansink Retraction Watch Reuben, Scott Reuters RIKEN Rogoff, Kenneth romantic priming Royal Society Rundgren, Todd Russia doveryai, no proveryai foxes, domestication of Macchiarini affair (2015–16) plagiarism in salami slicing same-sex marriage sample size sampling errors Sanna, Lawrence Sasai, Yoshiki saturated fats Saturn Saudi Arabia schizophrenia Schoenfeld, Jonathan Schön, Jan Hendrik School Psychology International Schopenhauer, Arthur Science acceptance rate Arnold affair (2020) arsenic life affair (2010) cash-for-publication and Hwang affair (2005) impact factor LaCour affair (2014–15) language in Macbeth effect study (2006) Open Access and pre-registration investigation (2020) replication research Schön affair (2002) Stapel affair (2011) toxoplasma gondii scandal (1961) Science Europe Science Media Centre scientific journals, see journals scientific papers, see papers Scientific World Journal, The Scotland Scottish Socialist Party screen time self-citation self-correction self-plagiarism self-sustaining systems Seoul National University SEPT2 Sesame Street sexism sexual selection Shakespeare, William Shanks, David Shansky, Rebecca Simmons, Joseph Simonsohn, Uri Simpsons, The skin grafts Slate Star Codex Sloan-Kettering Cancer Institute Smaldino, Paul Smeesters, Dirk Smith, Richard Snuppy social media South Korea Southern blot Southern, Edwin Soviet Union space science special relativity specification-curve analysis speed-accuracy trade-off Spies, Jeffrey spin Springer Srivastava, Sanjay Stalin, Joseph Stanford University Dweck’s mindset concept file-drawer project (2014) Prison Experiment (1971) Schön affair (2002) STAP (Stimulus-Triggered Acquisition of Pluripotency) Stapel, Diederik statcheck statistical flukes statistical power statistical significance statistical tests Status Quo stem cells Stephen VI, Pope stereotype threat Sternberg, Robert strokes subscription fees Summerlin, William Sweden Swift, Jonathan Swiss Federal Institute of Technology Sydney Morning Herald Symphony of Sorrowful Songs (Górecki) t-tests Taiwan taps-aff.co.uk tax policies team science TED (Technology, Entertainment, and Design) Texas sharpshooter analogy Thatcher, Margaret theory of special relativity Thinking, Fast and Slow (Kahneman) Thomson Reuters Tilburg University Titan totalitarianism toxoplasma gondii trachea translational research transparency Tribeca Film Festival triplepay system Trump, Donald trust in science ‘trust, but verify’ Tumor Biology Turkey Tuulik, Julia Twitter typos UK Reproducibility Network Ulysses pact United Kingdom austerity cash-for-publication schemes image duplication in multiverse analysis study (2019) National Institute for Health Research pre-registration in Royal Society submarines trust in science university ranks in Wakefield affair (1998–2010) United States Arnold affair (2020) arsenic life affair (2010) austerity Bargh’s priming study (1996) Bem’s precognition studies California wildfires (2017) Carney and Cuddy’s power posing studies Center for Nutrition Policy and Promotion climate science in creationism in Das affair (2012) De Vries’ drug study (2018) Department of Agriculture Dweck’s mindset concept Fryer’s police brutality study (2016) image duplication in Kahneman’s priming studies LaCour affair (2014–15) Morton’s skull studies Office for Research Integrity Poehlman affair (2006) pre-registration in public domain laws Reuben affair (2009) Stanford Prison Experiment Summerlin affair (1974) tenure Walker’s sleep studies Wansink affair (2016) universalism universities cash-for-publication schemes fraud and subscription fees and team science University College London University of British Columbia University of California Berkeley Los Angeles University of Connecticut University of East Anglia University of Edinburgh University of Hertfordshire University of London University of Pennsylvania unsaturated fats unwarranted advice vaccines Vamplew, Peter Vanity Fair Vatican Vaxxed Viagra vibration-of-effects analysis virology Wakefield, Andrew Walker, Matthew Wansink, Brian Washington Post weasel wording Weisberg, Michael Wellcome Trust western blots Westfall, Jake ‘Why Most Published Research Findings Are False’ (Ioannidis) Why We Sleep (Walker) Wiley Wiseman, Richard Wolfe-Simon, Felisa World as Will and Presentation, The (Schopenhauer) World Health Organisation (WHO) Yale University Yarkoni, Tal Yes Men Yezhov, Nikolai Z-tests Ziliak, Stephen Zimbardo, Philip Zola, Émile About the Author Stuart Ritchie is a lecturer in the Social, Genetic and Developmental Psychiatry Centre at King’s College London.


pages: 372 words: 92,477

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

"World Economic Forum" Davos, Admiral Zheng, affirmative action, Affordable Care Act / Obamacare, Asian financial crisis, assortative mating, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bernie Madoff, bike sharing, Boris Johnson, Bretton Woods, British Empire, cashless society, central bank independence, Chelsea Manning, circulation of elites, classic study, Clayton Christensen, Corn Laws, corporate governance, credit crunch, crony capitalism, Deng Xiaoping, Detroit bankruptcy, disintermediation, Disneyland with the Death Penalty, driverless car, Edward Snowden, Etonian, failed state, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, income inequality, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, Khan Academy, Kickstarter, knowledge economy, Kodak vs Instagram, labor-force participation, laissez-faire capitalism, land reform, Les Trente Glorieuses, liberal capitalism, Martin Wolf, means of production, Michael Milken, minimum wage unemployment, mittelstand, mobile money, Mont Pelerin Society, Nelson Mandela, night-watchman state, Norman Macrae, obamacare, oil shale / tar sands, old age dependency ratio, open economy, Parag Khanna, Peace of Westphalia, pension reform, pensions crisis, personalized medicine, Peter Thiel, plutocrats, popular capitalism, profit maximization, public intellectual, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, Shenzhen special economic zone , Silicon Valley, Skype, special economic zone, TED Talk, the long tail, three-martini lunch, too big to fail, total factor productivity, vertical integration, War on Poverty, Washington Consensus, Winter of Discontent, working-age population, zero-sum game

Some of the most far-seeing Chinese bureaucrats argue that SOEs will die a natural death as the Chinese economy matures: They should be understood as staging points on the road to full-blooded capitalism rather than ends in their own right.41 The reckoning in the rest of the world is even worse. Authoritarian modernization may have a successful record in Singapore and South Korea. But look at the Arab world: Egypt’s state capitalism was an excuse for rent seeking and incompetence (not least on the part of the dozens of companies, accounting for 10 percent of the economy, run by the military). Or look at sub-Saharan Africa: Crony capitalism is lowering growth and increasing inequality. For the state to direct capitalism, you need a strong and competent state—and sadly, most countries that are attracted to it have weak and incompetent ones.

Luigi Zingales of the University of Chicago’s Booth School of Business (who left Italy in 1988 because he felt his country was being destroyed by cronyism) calculates that the implicit subsidy that comes from banks being too big to fail is worth $34 billion a year.9 Two other economists, Thomas Philippon and Ariell Reshef, argue that between a third and a half of the huge increase in Wall Street pay has come from rents rather than productivity improvements.10 The fact that private-equity people can treat their income as capital gains is particularly disgraceful. And like agriculture, all this special treatment for finance creates red tape (witness Dodd-Frank) and distorts capitalism: Ever more finance is now being constructed in “dark pools” beyond the reach of regulators. There are innumerable other examples of rent-seeking special interests. If the government stopped subsidizing the production of fossil fuels, it could save $40 billion over the next decade.11 Spending on lobbying in Washington has more than doubled in the past fifteen years. The Supreme Court’s 2010 Citizens United decision has given companies carte blanche to spend freely on influencing elections.

., 1906), 72 Putin, Vladimir, 144, 153, 253 Pythagorean theorem, 31 Qianlong, Emperor of China, 41 racism, 88 Rauch, Jonathan, 231 Reagan, Ronald, 8, 28, 88, 91–92, 97, 198 Friedman and, 86 small-government ideology of, 95 see also Thatcher-Reagan revolution reason, religion as opponent of, 48 Reform, 203 Reformation, 48–49 Reinfeldt, Fredrik, 184 religion: freedom of, 224 reason as opponent of, 48 rent control, 82 rent seeking, 239 “Report on Manufacturers” (Hamilton), 150 Republic, The (Plato), 250 Republican Party, U.S., 123, 236–37 increased taxes opposed by, 100, 255 tax rises approved by, 12 Reshef, Ariell, 239 retirement age, 184–85, 242 Reykjavik City Council, 261 Ricardo, David, 49 Richelieu, Cardinal, 37 Right, 82, 93 government bloat and, 10–11, 98 government efficiency and, 187 and growth of big government, 10, 95, 98, 228, 230–31 privatization and, 234, 236–37 welfare services opposed by, 88, 185 rights: Fourth Revolution and, 270 liberal state’s expansion of, 7, 48, 49, 51 in nation-state, 30, 43–44 of property, 40, 43, 224 protection of, as primary role of liberal state, 45 see also freedom Rights of Man, The (Paine), 44 Ripley, Amanda, 206–7 road pricing, 217 Road to Serfdom, The (Hayek), 10, 83, 86 Rodrik, Dani, 262 Romney, Mitt, 217 “Roofs or Ceilings” (Friedman), 82 Roosevelt, Franklin Delano, 72–73, 252 Roosevelt, Theodore, 71–72, 258 rotten boroughs, 51, 125, 227, 251, 257, 269 see also gerrymandering Rousseau, Jean-Jacques, 44, 45 Rousseff, Dilma, 153 Royal Society, 42 Rumsfeld, Donald, 77, 253 Russia, 71 China and, 152 corruption in, 186 failure of democracy in, 253, 262 privatization in, 96 Singapore model admired by, 144 state capitalism in, 153, 154 Russian Revolution, 45 Rwanda, 144 Sacramento, Calif., 105, 106, 127 Sahni, Nikhil, 200 St.


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SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, assortative mating, bank run, barriers to entry, Bear Stearns, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, digital divide, diversification, Dunbar number, East Village, eat what you kill, Elon Musk, eurozone crisis, fake it until you make it, family office, financial engineering, financial repression, Gini coefficient, glass ceiling, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, Jim Simons, John Meriwether, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Roose, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, Money creation, money market fund, Myron Scholes, NetJets, Network effects, no-fly zone, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Ponzi scheme, power law, public intellectual, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, rolodex, Satyajit Das, search costs, shareholder value, Sheryl Sandberg, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, subprime mortgage crisis, systems thinking, tech billionaire, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, Tyler Cowen, women in the workforce, young professional

It is now at an all-time high and set to increase further: Today eighty people hold the same amount of wealth as the world’s 3.6 billion poorest, and the combined wealth of the richest 1 percent will soon overtake that of the other 99 percent.7 Many in this group of super-elites are financiers. This development has been exacerbated by the fact that the wealthy can capitalize on returns on ownership rather than solely on labor, a practice known as “rent-seeking.” In other words, they can let their money work for them, and over time these investments yield a higher rate of return than the economy’s rate of growth. In contrast, salaries derived from labor don’t rise as quickly as the returns on capital.8 The opportunity gap has also increased. Rather than perfect competition, our system creates superstars—or superhubs—and amplifies their rewards in a reinforcing feedback loop where the winners of the competition receive the means to win further competitions, so that all but a few competitors are eliminated.9 Tight interpersonal networks contribute to the unequal access to opportunities, and—as a consequence—people lose trust in the system.

During the course of the debt-fueled global growth over the last thirty years, the status resulting from jobs that carry a social value—such as the medical or educational professions—has been overtaken by the status money provides. People in finance have made increasingly more money and seen their status rise as a result. Salaries in the financial industry are typically significantly higher than salaries in other sectors. Executives can capitalize on those salaries through rent-seeking—returns on ownership rather than from labor or production—as they have access to investment opportunities to put that money to work for them. Location: Reputation Matters Reputation is an important facet of status, reflecting integrity and competence. We automatically assess other people based on their reputations and consider good character a precondition for doing business.

See Network power undue concentration of, 164 Power lunches, 124–125 Power of Alumni Networks, The, 42 “Power-law distribution,” 20 “Predators’ Ball,” 192 Predictions, 50 Preferential attachment, xxvi “Pricelings,” 103 Prince, Chuck, 56, 139–140, 203 Princeton University, 36, 50, 157, 199 Principles, 63, 71 Printing money, 178, 211 Private banks, 37 Private equity firms, 61, 144 Private parties, 126–128 Private sector, 164–165 Prostitution, 194 Protectionism, 212 Psychological detachment, 223–224 Psychopaths, 66 Public sector, 164–165, 168 Purcell, Philip, 139 Putin, Vladimir, 114–116, 219 Q Qatari ruling family, 171 R Racial discrimination, 198, 200, 201, 203 “Radical truth,” 71 Rainbow Room, 109–110 Rama, Edi, 27 Rand, Ayn, 71 Rania, Queen, 114 Reddit, 203 Reflexivity theory, 63 Regular banks, 37 Regulatory capture, 164, 217–218 Reinhart, Carmen, 107 Relational capital, 97 Relational capture, 163, 217 Renaissance Technologies, 87–88 Renova Group, 144 “Rent-seeking,” 12, 22 Renumeration, 87 Reputation integrity as source of, 59 methods of bolstering, 40 status and, 22–23 Research firms, 43 Reset, 203 Residences, 89–92 Residential mortgages, 12 Resilience gap, 156–158 “Revolving door” phenomenon description of, 10–11, 163, 218 Robert Rubin as example of, 163–170 Tony Blair as example of, 170–172 Rhodes, Bill, 131 Rice, Condoleezza, 172 “Rich-get-richer phenomenon,” xxvii, 19, 77, 92 Rikers Island, 39, 193 “Rise of the Overclass, The,” 80 Risk, 30 Risk management systems, 30, 64 Risk taking, 66, 225 Ritz Hotel, 132 Robbins, Tony, 23 Robertson, Julian, 27 Robin Hood charity gala, 75–76 Robin Hood Foundation, 75–76, 103 Robinson, James D.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Jeremy Corbyn, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, women in the workforce, Zipcar

We benefited from discussions with Michael Clemens, who shared some of his unpublished research with us. See also Michael Clemens, Economics and Emigration: Trillion Dollar Bills on the Sidewalk?, 25 Journal of Economic Perspectives 3 (2011). 4. Barry Baysinger, Robert B. Eckelund, Jr., & Robert D. Tollison, Mercantilism as a Rent-Seeking Society, in Roger D. Congleton, Arye L. Hillman, & Kai A. Konrad, eds., 40 Years of Research on Rent-Seeking 2: Applications: Rent-Seeking in Practice (Springer, 2008). 5. Furniss, Position of the Laborer in a System of Nationalism. 6. François Bourguignon & Christian Morrisson, Inequality Among World Citizens: 1820–1992, 92 American Economic Review 727 (2002). 7.


Lectures on Urban Economics by Jan K. Brueckner

accelerated depreciation, affirmative action, Andrei Shleifer, behavioural economics, company town, congestion charging, Edward Glaeser, invisible hand, market clearing, mortgage tax deduction, negative equity, New Economic Geography, profit maximization, race to the bottom, rent control, rent-seeking, Ronald Coase, The Nature of the Firm, transaction costs, urban sprawl

Local governments could produce public goods inefficiently as a result of inattention or laziness. Alternatively, local governments could be efficient producers, but they could engage in “rent seeking,” in which some tax revenue is diverted to uses that benefit local officials (nice offices, generous pensions, and so on) without helping consumers. Competition between jurisdictions might help to limit such undesirable behavior. Jurisdictions in which inefficiency or rent seeking leads to excessive taxes relative to the public goods provided will fail to attract residents who are voting with their feet. They will also fail to attract housing developers, who will build projects in jurisdictions with lower tax burdens.

., 179 Price elasticity, 117 Price function, hedonic, 33, 115–118, 136, 179, 180, 204, 242, 244 Pride of ownership, 129, 136 Prisons, 207, 209, 212–215, 219, 220 Production, centralized vs. dispersed, 16–18 Production function, 3, 7, 8, 34, 35 Production processes weight-gaining, 15 weight-losing, 14, 15 Productivity, 2, 5, 9, 10, 20, 66, 222–229 Property, abuse of, 133–136 Property rights, 196–199, 205 Property tax, 77, 78, 119–124, 127, 128, 134, 136, 169–172, 179–184 Property value, maximization of, 161, 182 Proportional rent subsidies, 146–155 Public-good congestion, 174, 176, 215, 216n Public transit, 26, 54, 70n, 107, 108 Pure public good, 174, 176n Quality of life, 84, 152, 187, 207, 231, 232, 241–245 Quigley, J., 118n, 154 Radial roads, 25, 56n, 68, 72n Raphael, S., 157 Rappaport, J., 54n, 245 Redevelopment, 62, 64, 69, 79 Rent control, 137, 138, 141–145, 157 Rent seeking, 185 Retail agglomeration, 18–21 Rhee, H.-J., 61n Rhode, P., 169n Index Ridker, R., 204 Roback J., 232, 233, 241 Rosen, S., 118 Rosenthal, S., 10, 55, 243, 244 Sacerdote, B., 219 Saks, R., 89 Savageau, D., 243 Scale constant returns to, 35, 112, 235 economies of, 1–5, 8, 16–21, 35 Scheinkman, J., 219 Schools, 77, 78, 160, 169, 172 Scotchmer, S., 177n Section 236 program, 152 Self-financing, 112 Self-selection, 80, 153, 205n Selod, H., 61n Sewage and sanitation districts, 178 Shipping, cost of, 6, 7, 11, 13 Shopping, 19 Shopping malls, 18, 19 Shoup, C., 221n Shoup, D., 108 Sinai, T., 129n Singapore, 77, 107 Sjoquist, D., 61n Slums, 145–153, 157 Small, K., 24n, 59n, 76n, 92n, 112n Smith, V., 204 Smolensky, E., 157 Social interaction, 69, 80 Social networks, 208, 218, 219, 230 Social planners, 73, 101, 104, 105, 163, 165 Social surplus, 192, 194, 198, 199 Sonstelie, J., 54n, 126, 128n, 179, 180 Souleles, N., 129n Spatial mismatch, 60, 61 Spatial structure, 23, 24, 27, 28, 31, 37, 43–45, 49–55, 76, 81 Special districts, 159, 177 State aid to localities, 172, 173 St.


pages: 172 words: 54,066

The End of Loser Liberalism: Making Markets Progressive by Dean Baker

Alan Greenspan, Asian financial crisis, banking crisis, Bear Stearns, Bernie Sanders, business cycle, collateralized debt obligation, collective bargaining, corporate governance, currency manipulation / currency intervention, Doha Development Round, financial innovation, full employment, Glass-Steagall Act, Home mortgage interest deduction, income inequality, inflation targeting, invisible hand, low interest rates, manufacturing employment, market clearing, market fundamentalism, medical residency, patent troll, pets.com, pirate software, price stability, public intellectual, quantitative easing, regulatory arbitrage, rent-seeking, Robert Shiller, Silicon Valley, too big to fail, transaction costs

This is the sort of activity that has quadrupled the financial sector’s share of the economy. It is not about allocating capital to its best uses or making savings more secure, it’s about finding clever ways to rip off taxpayers, productive businesses, and other actors. The economy will benefit from having less of this sort of inefficient rent-seeking behavior. While this may have seemed like a radical assessment a decade ago, even the IMF now recognizes that there are substantial rents in the financial sector and that governments should adopt policies to reduce the sector’s size.[86] Tremendous waste in the financial sector is not the only justification for reducing its size.

It is worth noting that a much higher share of doctors in the U.S. are specialists, who require more years of training, and therefore command higher salaries than family practitioners, than in most other wealthy countries. It is not clear that the greater number of specialists improves the quality of care, but it is likely that they are used in the United States in instances in which family practitioners would suffice. This sort of rent-seeking, with specialists inserting themselves into situations where their skills are not necessary, is exactly what would be expected when government interventions obstruct the normal workings of the market. [77] Once while on a panel discussing trade policy, I made a reference to the effort in the 1990s to tighten industry requirements in order to reduce the number of foreign-born doctors who could practice in this country.


pages: 868 words: 147,152

How Asia Works by Joe Studwell

affirmative action, anti-communist, Asian financial crisis, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collective bargaining, crony capitalism, cross-subsidies, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, failed state, financial deregulation, financial repression, foreign exchange controls, Gini coefficient, glass ceiling, Great Leap Forward, high-speed rail, income inequality, income per capita, industrial robot, Joseph Schumpeter, Kenneth Arrow, land reform, land tenure, large denomination, liberal capitalism, low interest rates, market fragmentation, megaproject, non-tariff barriers, offshore financial centre, oil shock, open economy, passive investing, purchasing power parity, rent control, rent-seeking, Right to Buy, Ronald Coase, South China Sea, The Wealth of Nations by Adam Smith, TSMC, urban sprawl, Washington Consensus, working-age population

Manufacturing firms are nurtured by the state in two ways: through protection and through subsidy. These interventions create breathing space for entrepreneurs while they learn to manufacture competitively. Unfortunately, protection and subsidy also bring with them a well-known risk – one which economists call ‘rent seeking’. In a developing country, rent seeking refers to the propensity of entrepreneurs to concentrate their efforts on obtaining protection and subsidies (rents) from the state without delivering the technological progress and competitiveness that economic development requires. The problem is a very real one and has undermined industrial development efforts in many poor countries.

What created the Canons, the Samsungs, the Acers and so on in Japan, Korea and Taiwan was the marriage of infant industry protection and market forces, involving (initially) subsidised exports and competition between manufacturers that vied for state support. The north-east Asian states found ways to overcome the problems that afflicted the ISI policies that were promoted in the 1950s (including by the World Bank in its early, ‘left-wing’ incarnation). Contrary to the claims of many economists, rent-seeking and crony capitalism did not inevitably undermine industrial policy so long as sufficient discipline could be wrapped around infant industry promotion. The mix of plan and market recalls the British development economist Ronald Dore’s contemporary observation about foreign perceptions of Japan at the height of its industrialisation: ‘Left-wing … observers come back from Japan convinced they have seen a shining example of state planning,’ he wrote.

Pierpont 171 Multimedia Super Corridor (MSC) 134, 306n157 MV Agusta 149, 150 Myanmar xx, 246 Nadzmi Mohd Salleh 149, 311n203 Nasser, Gamal Abdel 93 National Development and Reform Commission (NDRC) 97, 240, 255 National Resources Commission (NRC) 96–7 Naughton, Barry 255 Negros Occidental 34, 40–7 neo-classical economists 101–2, 103, 267 Netherlands 290n10 New People’s Army (NPA) 36–7, 38, 41, 45 New Zealand 61, 81 nihonjinron 179 Niigata 14 Nippon Kangyo 176 Nippon Steel 117, 142, 300n108 Nishiyama Kōichi 63, 178, 230 Nissan 8, 160, 276n8 Nolan, Peter 316n248 non-bank financial institutions (NBFIs) Korea 184–5, 319n27 Thailand 200, 201 non-government organisations (NGOs) 44–6 North Korea xviii agriculture 4 land reform xvi, 21, 22, 28 Nursalim 326n92 Ohkawa, Kazushi 100 Ohmae, Kenichi 131, 133 oil palm 68, 141 oligopolies, China 235, 236–7 Pakistan 66, 242 Papua New Guinea xx, 113 Park Chung Hee xxv, 65 agriculture 28–9, 66, 296n75 assassination 108, 122 Blue House 109–11 books 93, 129, 131 car industry 114, 121 and Chung Ju Yung 112, 137 coup 93, 298–9n96 finance 102, 179–82, 195, 327n96 HCI drive 95 and Japan 94, 101, 127 liberation aristocrats 111, 132 and Mahathir 304n142 manufacturing 92–5, 104 POSCO 95, 115, 116, 118 Seodaemun 111 and US 294–5n57 Park Tae Joon 116, 119 Paron Issarasena 314n230 Pasuk Phongpaichit 58 Perodua 146, 150, 313n216, 314n227 Perwaja 140, 141–5, 147, 308n183, 309n187, 309–10n191–2, 310n196 PetroChina 234, 235 Petronas 139, 141 Petronas Twin Towers 139 Pheng Yin Huah 144 Pheng family 144 Philippines 270 agriculture 6, 8 crony capitalism 108 democracy xxiv education xxii finance 169, 183, 188–93, 217, 218, 317n7 land reform xvii, 33–47, 56, 281n56, 281n61, 282n68, 283n74 manufacturing 106, 154–5, 163 rule of law xxv and US 69, 297n83 photovoltaic cells 252–3 Pitt, William 290n18 plantations 7, 52–5, 67–8, 284n87 population xxi China 264–5 POSCO (Pohang Iron and Steel Company) 95, 115–18, 119, 141, 145, 300n108 power equipment 242 Prawiro, Radius 211 Preston, Lewis T. 273n2 pribumi 207 Princip, Gavrilo 3 private sector 108, 157 China 235–6, 249–53 Korea 94 Malaysia 131, 132, 141, 152 Taiwan 186 protectionism 79–81, 82–3, 130, 134, 290–1n19, 20, 315n234 Proton 134, 143–49, 306n159, 310n198, 311n203, 312n204–5, 312n212 Prussia 79, 83, 85, 86, 101, 290n17, 291n25 Pusan 113 Pyle, Kenneth 85 Quek Leng Chan 138 Rahardja, Hendra 215, 328n108 railways 248, 260 Razak, Abdul 128, 141 Razak, Najib 307n163, 312n213 Razaleigh Hamzah 307n169, 308n172 Reden, Graf von 291n25 rediscounting 218 Indonesia 214 Japan 177, 178 Korea 179 Malaysia 195 Philippines 192, 193, 322n50 Thailand 199 Ren Zhengfei 246 Renault-Nissan 127, 302n127 rent seeking 75, 108, 156 Rhee, Syngman 22, 27, 28, 69, 99, 105, 110, 136 Riady, Mochtar 205, 325n85, 86 Ricardo, David 83, 101 rice China 226 Indonesia 50 Japan 62 Korea 63 Philippines 48–9 Thailand 57–8 Rin Kei Mei 311n203 Rizhao Steel 237 Roh Tae Woo 302n126 Rosovsky, Henry 100 Rostow, W.W. xv, 102, 172, 297n82, 316n6 rubber 6, 52–3, 55, 57, 67, 68, 141, 285n97 rule of law xxv Russia agriculture 4 banks xix, 317n8 and China 96 education xxiii financial deregulation 172 land reform 21, 24 manufacturing 81, 232 see also Soviet Union Sahashi Shigeru 78 Salim, Emil 214, 313n225, 328n105 Samsung 100, 105, 155, 246, 296n71, 300n110 car industry 126, 302n127 finance 93, 183 sangyō gōrika 90 Sany 244, 255, 333n38 Saudi Arabia 300–1n115 savings 317n7 Korea 182, 319n30 Malaysia 197 Philippines 188 Taiwan 319–20n30 Thailand 201 Schumpeter, Joseph 328n114 Sen, Amartya xxvi Seoul 108–9, 110 service sector 74, 288–9n3 India 164 Japan 161 shadow banking 258–9 Shanghai Automotive Industry Corp (SAIC) 127 Shanghai Electric 242 Shenhua Energy 234 Shibusawa Eiichi 87 Shih, Stan 251 Shin, Jang-Sup 162–3 Shinjin 126, 302n125 shipbuilding China 243 Korea 122 Singapore xiv, xix–xxi, 79, 270 casino resort 137, 307n164 and Malaysia 195 manufacturing xviii, 289n3 stock exchange 198 Sinopec 234 Smith, Adam 83, 95, 101, 290n18 social mobility 66, 288n125 Soedradjad Djiwandono 153, 213, 214, 326n95 Soeryadjaya, Edward 214, 215 Soeryadjaya, Edwin 153, 314n227 sogo shosha 130 solar power 240 Sony 78 South Korea see Korea Soviet Union xix economic development 75 education xxii, xxiii manufacturing 158 see also Russia soybeans 227 Spain 171, 316n4 Sri Lanka 53 SsangYong 126, 302n127 State Asset Supervision and Administration Commission (SASAC) 234, 240 state enterprises 158 China 82, 233–4, 239–50, 254, 264 Taiwan 82, 96, 97, 98–100, 102, 153, 239 steel 106–7, 300n108 Japan 159, 294n43 Korea 95, 116–17, 141–2, 145 Malaysia 140, 141–5, 149, 151, 308n183, 187, 309–10n191–2, 310n196 Stevenson, Sir James 53 Stevenson Restriction Scheme 53 stock markets 174, 218 China 254 Indonesia 212 Japan 177–8 Korea 184, 319n27 Malaysia 196, 197 Taiwan 187 Thailand 202 Sudirman Central Business District (SCBD) 212 Suehiro Akira 154 sugar 6, 67 China 227 Indonesia 51 Philippines 35, 43, 44–5, 46, 47 Taiwan 32, 276n5, 280n52 Suharto 56, 325n84 agriculture 51 finance 103, 203, 209–11, 313n225, 326n96 and Liem 204, 205 manufacturing 153 Suharto, Tommy 210, 215, 270, 326n96 Suji Kōji 81 Sukarno xxv, 69, 203, 326n89 agriculture 49 finance 203, 208 Sumarlin, Johannes 211, 212 Sumatra 51 Sumitomo 88 Sun Yat-sen 82, 93, 96, 290n16 Suntech 252–3 Sutowo, Ibnu 213, 327n101 Suzuki, Kazumasa 130, 304n140 Sweden 164 Syed Mokhtar al-Bukhary 138 Taipei 196 Taiwan xiii–xvi, xx, xxvii agriculture 3–4, 6–7, 8, 12, 47, 48, 62, 63 authoritarianism xxiv bureaucracy 97–8, 101, 290n10 capital controls 173 car ownership 310n197 economic development 69 education xxii–xxiii exchange rate 262–3 finance xvii–xviii, 157, 169, 170, 174, 185–8, 218–19 and Japan 82, 87 land reform xvi, xxvi, 3, 7–8, 9, 22, 26, 28, 30–3, 61, 68, 280n52 manufacturing xvi–xvii, 33, 69, 77, 78, 98–101, 103–4, 153, 158, 249, 251, 295n66 social mobility 65 state enterprises 83, 96, 97, 98–9, 239 steel 106, 107 and US 165, 297n83 Tan, Vincent 140, 308n176 Tan Tat Wai 142 Tanin 154 Tansil, Eddy 215 Task Force Mapalad 47 Tata Consultancy Services (TCS) 163 Tawney, R.H. 17 tea-housing 110 technological learning xiii, 74, 156, 223 China 223–4, 249 Korea 123, 126–7, 151, 181 Malaysia 129, 134, 136, 143, 144, 147 Philippines 155 Thailand 154 telecommunications 99, 244–5, 246 textile industry Japan 86, 87 Korea 94, 294n48 Thailand xiv, xv, 174, 270, 317n7 agriculture xvi, 56–60 finance 169, 188, 194, 198–201, 218 Hyundai 113 manufacturing xvii, 154, 157, 163, 302n131, 314n230 and US 69, 297n83 Thaksin Shinawatra 60, 287n114 Thieu, Nguyen Van 37, 281n62 Tokyo 14 Toyoda, Sakichi 292n27 Toyota 8, 127, 146, 153, 276n8, 288n125, 292n27, 302n129, 314n227 trade 84, 214 and agriculture 7–8 China 224 and manufacturing 74, 75–6, 77–8 and services 74 surpluses 158–9 Trebilcock, Clive 89 Tunku 128–9, 137, 303n134 Turkey 93 Turnbull, George 124 Ulsan 108–9, 114, 115, 120, 146 United Kingdom agriculture 9 and Malaysia 52–5, 105, 128 manufacturing 75, 84, 86 protectionism 80, 81, 83–4, 291n20 Proton 143 steel 106 and Thailand 200 trade surplus 158 United States agriculture 5, 61 banks 176, 177 and east Asian development 165–6, 316n249 finance 172, 173, 217 free market economics xiv, 268 grants and aid 297n83 Huawei 246–7 Hyundai 123, 124–5, 302n124 and Indonesia 69 interest rates 189 and Japan 90–1, 101–2, 291n22 and Korea 180, 181, 183, 318n22 and land reform 9, 22–5, 27, 30, 31, 32, 33, 34, 66–7, 68, 102, 165, 279n33, 279n38 manufacturing 101, 161, 170 and Philippines 33, 34, 48, 69, 190–1, 280n55, 322n46 protectionism 79, 80, 84, 291n19 Proton 142 rail network 247 steel 106, 117 and Taiwan 103–4 and Thailand 69, 201 trade surplus 158 Vajiravudh, King 57 Venezuela 242 Vietnam xix, xxvi, 166, 270 agriculture 4 Hyundai 113, 299n100, 101 land reform xvi, 4, 23, 36, 66, 281n62 Volvo 253 VW 302n129 Wada, Hiroo 69 Wade, Robert 85, 95, 103, 196 Wahaha 232 Wain, Barry 303n134 Wan Azmi Wan Hamzah 138, 308n170 Wang Chuanfu 252 Wang Yung-ching 66 Wanxiang 232 Washington Consensus xiv, 172–3, 174, 217, 274n3 Wealth of Nations, The (Smith) 290–1n19 West Germany 92, 152–3 Westinghouse 242, 333n37 wheat 226 Widjojo Nitisastro 209 Wilkinson, John 291n25 Williamson, John 274n3 Winata, Tomy 212, 327n98 wind turbines 240 Woo, Jung-en 103, 173, 186 World Bank xiv, 82, 104, 157, 271, 273n1–2 China 224, 329n3 deregulation 172, 217 Hong Kong and Singapore xiv, xix Indonesia 203, 212, 213 ISI policies 156 Korea 95, 96, 116, 118, 182, 184 macro-economic stability 156 microfinance 269 Philippines 191, 193, 322n52 private enterprise 157 Thailand 199, 200, 201 World is Flat, The (Friedman) 134 World Trade Organisation (WTO), China 228, 241 XCMG 244 Yahaya Ahmad 148 Yasuda 88 Year of Living Dangerously, The 203, 207 Yeoh, Francis 135 Yeoh family 135–6, 306n160–1 Yin, K.Y. 101, 102 Yingluck Shinawatra 287n114 Yokohama Specie 176 Yoshida Shigeru 91 Yoshihara Kunio xvi Yoshino Shinji 101 YTL 136, 306–7n160–1 zaibatsu 88, 90, 91, 94, 293n40 finance 170, 175, 177 Zhao Ziyang 232, 331n21 Zhou Yimin 248 Zhu Rongji 233, 235, 236–9, 249, 256, 331n21 Zimbabwe 7, 276n6 Zoomlion 244 ZTE 244–5, 246


pages: 775 words: 208,604

The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, classic study, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, confounding variable, corporate governance, cosmological principle, CRISPR, crony capitalism, dark matter, declining real wages, democratizing finance, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, global pandemic, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, synthetic biology, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

In some cases, it may well be possible to estimate how much elite fortunes owed to income from sources other than economic activity: if we are able to tell that Roman aristocrats of the second and first centuries BCE were simply too rich to have built up their wealth by farming and commerce alone, then more specific breakdowns ought to be feasible for more recent historical societies. Ancien régime France, which I briefly discuss later in this section, is merely one example. In the most general terms, there can be little doubt that personalized political connections and favors made a much larger contribution to elite wealth than they do in developed countries today. Rent-seeking elites in Latin America or Africa may come somewhat closer to what in global historical terms must count as traditional and indeed “normal” strategies of wealth appropriation and concentration. So do contemporary Russian “oligarchs,” who resemble some premodern elite groups in the extent to which both the creation and the preservation of their fortunes have depended on personalized political power relations.

Simple estimates of the likely scale of supply and demand suggest that landownership and related commercial activities could not have generated nearly enough income to make the Roman elite as rich as we know it became. And indeed, our sources emphasize the paramount significance of coercion as a source of top incomes and fortunes. Great wealth accrued from state administration outside Italy, and Roman-style governance was highly conducive to exploitation. Provincial administration was highly lucrative, and rent-seeking behavior was only weakly constrained by laws and courts set up to prosecute extortion; alliance-building and rent-sharing among the powerful provided insurance against indictment. Moreover, at a time when annual interest rates of 6 percent were common in Rome itself, wealthy Romans imposed rates of up to 48 percent on provincial cities, which were in desperate need of money to satisfy the demands of their governors.

However, generous raises for government officials and cognate knowledge workers such as schoolmasters may well have been driven in the first instance by a desire to keep up with those in the same bourgeois stratum who benefited from growing capital income. Thus commercial capital income seems to have had a striking knock-on effect on wages for certain socially privileged groups. Rent-seeking by elites had a polarizing effect on the income distribution.14 In the territory (contado) of Florence, wealth inequality documented by property registers grew from a low of 0.5 in the mid-fifteenth century to 0.74 around 1700. In the city of Arezzo, it rose from 0.48 in 1390 to 0.83 in 1792, and it grew from 0.58 to 0.83 in Prato between 1546 and 1763.


pages: 261 words: 57,595

China's Future by David Shambaugh

Berlin Wall, capital controls, demographic dividend, demographic transition, Deng Xiaoping, facts on the ground, financial intermediation, financial repression, Gini coefficient, Great Leap Forward, guns versus butter model, high net worth, high-speed rail, Kickstarter, knowledge economy, low skilled workers, market bubble, megacity, middle-income trap, Mikhail Gorbachev, military-industrial complex, New Urbanism, offshore financial centre, open economy, Pearl River Delta, rent-seeking, secular stagnation, short selling, South China Sea, special drawing rights, too big to fail, urban planning, Washington Consensus, working-age population, young professional

Deregulation and streamlining of a wide range of central, provincial, and local administrative regulations has been a priority, with a large number of previously needed government approvals abolished. The State Council has cancelled administrative approvals on 246 items. This is very positive as it keeps with the Third Plenum pledge to “allow the market to play the decisive factor in the economy,” and also reduces opportunities for bribes and rent-seeking by officials. The National Development and Reform Commission (NDRC), which previously exercised a stranglehold over economic planning, is being downsized and perhaps even broken up. It is also a main target of the anti-corruption campaign. An explicit bank deposit insurance system has been created for the first time, and pilot programs for issuance of local bonds have been set up in ten provinces and cities.

In other words, while necessary and welcome, the anti-corruption campaign is seriously stressing the system that has very much come to depend on it. Moreover, the campaign is targeting the behavioral manifestations of corruption (bribery, private villas, lavish lifestyles, luxury goods, mistresses)—not the systemic sources of corruption (lack of transparency, lack of autonomous media, lack of autonomous judiciary, rent-seeking, slack auditing and tax systems, and lack of political competition). But Xi’s hard personality and assertive policies belie a Party and political system that is extremely fragile on the inside, in my view. Chinese use the proverb waiying, neiruan ()—hard on the outside, soft on the inside—which is a fitting description of the condition of the Chinese communist regime today.


pages: 214 words: 57,614

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

affirmative action, Ayatollah Khomeini, Berlin Wall, Bretton Woods, cuban missile crisis, David Brooks, European colonialism, failed state, Francis Fukuyama: the end of history, information security, Internet Archive, John Perry Barlow, Mikhail Gorbachev, Monroe Doctrine, mutually assured destruction, New Journalism, no-fly zone, oil-for-food scandal, 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

Long-term attention to institutions and politics will have two benefits, given the convergence between the economic and political development agendas. The rule of law is extremely important for creating a climate in which investment and economic growth can take place; it also constitutes the "liberal" part of a liberal democracy. Controlling rent-seeking and clientelism, ensuring that public monies are spent on public goods and not on patronage, and reining in rapacious corruption simultaneously Social Engineering and Development promote development and help legitimate democratic political systems. Since the 1980s, international financial institutions like the IMF and World Bank have sought to use conditionality in structural adjustment loans as a means of artificially stimulating demand for reform in countries where it is low.

This reality has led Krasner and other observers to argue that we ought to move in the opposite direction, toward models of shared sovereignty in which states accept long-term help from the international community to provide certain basic governance services—importing good governance, in effect, from jurisdictions where it exists. 16 The most striking recent example of shared sovereignty is the Chad-Cameroon gas pipeline, in which the government of Chad agreed to put expected energy revenues from natural gas into a trust fund to be administered by the World Bank and other international trustees. Chad in effect agreed with Rethinking Institutions for World Order the international community that it could not be trusted to use its own energy revenues properly and needed external help to avoid being dragged into a morass of corruption and rent-seeking. The Chad-Cameroon pipeline was hugely controversial not only in Chad but in the rest of Africa, where many believed that it set a bad precedent for sovereignty. It is clear that if shared sovereignty is ever to become a more broadly accepted model, it will take place only under conditions where the external actor with M'hom governance functions are divided is regarded as legitimate.


pages: 430 words: 109,064

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

Alan Greenspan, American ideology, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Bonfire of the Vanities, bonus culture, book value, break the buck, business cycle, business logic, buy and hold, capital controls, Carmen Reinhart, central bank independence, Charles Lindbergh, collapse of Lehman Brothers, collateralized debt obligation, commoditize, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency risk, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Glass-Steagall Act, Gordon Gekko, greed is good, Greenspan put, Home mortgage interest deduction, Hyman Minsky, income per capita, information asymmetry, interest rate derivative, interest rate swap, junk bonds, Kenneth Rogoff, laissez-faire capitalism, late fees, light touch regulation, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, Martin Wolf, Michael Milken, money market fund, moral hazard, mortgage tax deduction, Myron Scholes, Paul Samuelson, Ponzi scheme, price stability, profit maximization, proprietary trading, race to the bottom, regulatory arbitrage, rent-seeking, Robert Bork, Robert Shiller, Ronald Reagan, Saturday Night Live, Satyajit Das, Savings and loan crisis, sovereign wealth fund, Tax Reform Act of 1986, The Myth of the Rational Market, too big to fail, transaction costs, Tyler Cowen, value at risk, yield curve

See also Michael Backman, Asian Eclipse: Exposing the Dark Side of Business in Asia (Singapore: John Wiley & Sons [Asia], 2001); chapter 14 has details on how the Suharto regime interacted with the private sector. On how subsidies were provided, see Andrew McIntyre, “Funny Money: Fiscal Policy, Rent-Seeking and Economic Performance in Indonesia,” in Mustaq H. Khan and Jomo Kwame Sundaram, eds., Rents, Rent-Seeking and Economic Development (Cambridge: Cambridge University Press, 2000). See also Adam Schwarz, A Nation in Waiting: Indonesia in the 1990s (Boulder, CO: Westview, 1994), chapter 6. 30. Real GDP per capita (constant prices: chain series), from Alan Heston, Robert Summers, and Bettina Aten, Penn World Table Version 6.3, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania, August 2009.

Claudia Goldin and Lawrence Katz have examined data on Harvard undergraduates and found that while only 5 percent of men in classes around 1970 were in finance fifteen years after graduation, that figure tripled to 15 percent for classes around 1990.79 The share of each class entering banking and finance careers grew from under 4 percent in the 1960s to 23 percent in recent years.80 At Princeton’s School of Engineering and Applied Science, “Operations Research and Financial Engineering” became the most popular undergraduate major.81 The banks thus became major beneficiaries of the American educational system. Whether society benefited is another question. Kevin Murphy, Andrei Shleifer, and Robert Vishny have argued that society benefits more when talented people become entrepreneurs who start companies and create real innovations than when they go into rent-seeking activities that redistribute rather than increase wealth.82 If this is true, then this diversion of talent to Wall Street constituted a real tax on economic growth over the last two decades. Among the economic and intellectual elites, finance became a highly prestigious and desirable profession.


pages: 205 words: 61,903

Survival of the Richest: Escape Fantasies of the Tech Billionaires by Douglas Rushkoff

"World Economic Forum" Davos, 4chan, A Declaration of the Independence of Cyberspace, agricultural Revolution, Airbnb, Alan Greenspan, Amazon Mechanical Turk, Amazon Web Services, Andrew Keen, AOL-Time Warner, artificial general intelligence, augmented reality, autonomous vehicles, basic income, behavioural economics, Big Tech, biodiversity loss, Biosphere 2, bitcoin, blockchain, Boston Dynamics, Burning Man, buy low sell high, Californian Ideology, carbon credits, carbon footprint, circular economy, clean water, cognitive dissonance, Colonization of Mars, coronavirus, COVID-19, creative destruction, Credit Default Swap, CRISPR, data science, David Graeber, DeepMind, degrowth, Demis Hassabis, deplatforming, digital capitalism, digital map, disinformation, Donald Trump, Elon Musk, en.wikipedia.org, energy transition, Ethereum, ethereum blockchain, European colonialism, Evgeny Morozov, Extinction Rebellion, Fairphone, fake news, Filter Bubble, game design, gamification, gig economy, Gini coefficient, global pandemic, Google bus, green new deal, Greta Thunberg, Haight Ashbury, hockey-stick growth, Howard Rheingold, if you build it, they will come, impact investing, income inequality, independent contractor, Jane Jacobs, Jeff Bezos, Jeffrey Epstein, job automation, John Nash: game theory, John Perry Barlow, Joseph Schumpeter, Just-in-time delivery, liberal capitalism, Mark Zuckerberg, Marshall McLuhan, mass immigration, megaproject, meme stock, mental accounting, Michael Milken, microplastics / micro fibres, military-industrial complex, Minecraft, mirror neurons, move fast and break things, Naomi Klein, New Urbanism, Norbert Wiener, Oculus Rift, One Laptop per Child (OLPC), operational security, Patri Friedman, pattern recognition, Peter Thiel, planetary scale, Plato's cave, Ponzi scheme, profit motive, QAnon, RAND corporation, Ray Kurzweil, rent-seeking, Richard Thaler, ride hailing / ride sharing, Robinhood: mobile stock trading app, Sam Altman, Shoshana Zuboff, Silicon Valley, Silicon Valley billionaire, SimCity, Singularitarianism, Skinner box, Snapchat, sovereign wealth fund, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Steven Pinker, Stewart Brand, surveillance capitalism, tech billionaire, tech bro, technological solutionism, technoutopianism, Ted Nelson, TED Talk, the medium is the message, theory of mind, TikTok, Torches of Freedom, Tragedy of the Commons, universal basic income, urban renewal, warehouse robotics, We are as Gods, WeWork, Whole Earth Catalog, work culture , working poor

Edwards, “Trends in Income From 1975 to 2018,” RAND Corporation, 2020, https:// www .rand .org /pubs /working _papers /WRA516 -1html.   73   extracting wealth from the poor : Jon Evans, “GrubHub/Seamless’s Pandemic Initiatives Are Predatory and Exploitative, and It’s Time to Stop Using Them,” TechCrunch , April 5, 2020, https:// techcrunch .com /2020 /04 /05 /its -time -to -stop -using -grubhub -seamless -forever /.   73   This is not creative destruction : Lachlan Carey and Amn Nasir, “Something for Nothing? How Growing Rent-Seeking Is at the Heart of America’s Economic Troubles,” Journal of Public and International Affairs , https:// jpia .princeton .edu /news /something -nothing -how -growing -rent -seeking -heart -americas -economic -troubles.   74   “some kinds of social change” : Jennifer Szalai, “Steven Pinker Wants You to Know Humanity Is Doing Fine. Just Don’t Ask About Individual Humans,” New York Times , February 28, 2018, https:// www .nytimes .com /2018 /02 /28 /books /review -enlightenment -now -steven -pinker .html.   74   The Dawn of Everything : David Graeber and David Wendgrow, The Dawn of Everything: A New History of Humanity (New York: Farrar, Straus and Giroux, 2021).   74   problem with Pinker’s oft-quoted statistics : Jeremy Lent, “Steven Pinker’s Ideas Are Fatally Flawed.


pages: 374 words: 114,660

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

Admiral Zheng, agricultural Revolution, Branko Milanovic, BRICs, British Empire, call centre, carbon tax, clean water, colonial exploitation, Columbian Exchange, compensation consultant, creative destruction, declining real wages, Downton Abbey, Easter island, Edward Jenner, end world poverty, financial engineering, financial innovation, Ford Model T, germ theory of disease, Gini coefficient, Glass-Steagall Act, Great Leap Forward, illegal immigration, income inequality, invention of agriculture, invisible hand, John Snow's cholera map, knowledge economy, Louis Pasteur, low skilled workers, new economy, off-the-grid, Paul Volcker talking about ATMs, purchasing power parity, randomized controlled trial, rent-seeking, rising living standards, Robert Solow, Ronald Reagan, Simon Kuznets, Steve Jobs, Steven Pinker, structural adjustment programs, The Spirit Level, too big to fail, trade route, Tragedy of the Commons, very high income, War on Poverty, zoonotic diseases

Among the countries that were conquered by European powers, the countries that were rich are now poor, and those that were poor are now rich. Such reversals of fortune should warn us against taking modern prosperity and modern economic growth for granted, as something that we have always known and that can never go away. Rent seeking can lead to economic growth being replaced by internecine warfare in which each group fights ever more viciously for shares of a declining total. Interest groups can feather the nests of a few at the expense of the many, each of whom loses so little that it is not worth organizing to prevent the plunder; the cumulative effects of many such groups can eat away an economy from within and stifle growth.42 Powerful and wealthy elites have choked off economic growth before, and they can do so again if they are allowed to undermine the institutions on which broad-based growth depends.

Great concentrations of wealth can undermine democracy and growth, stifling the creative destruction that makes growth possible. Such inequality encourages the previous escapees to block the escape routes behind them. Mancur Olson predicted that rich countries would decline like this, undermined by the rent seeking of an ever-growing number of focused interest groups pursuing their own self-interest at the expense of an uncoordinated majority.2 Slower growth makes distributional conflict inevitable, because the only way forward for me is at your expense. It is easy to imagine a world with little growth but endless distributional conflict between rich and poor, between old and young, between Wall Street and Main Street, between medical providers and their patients, and between the political parties that represent them.

Larry Bartels, 2010, Unequal democracy: The political economy of the new gilded age, Princeton University Press, and Martin Gilens, 2012, Affluence and influence: Economic inequality and political power in America, Princeton University Press. 36. Anne O. Krueger, 1974, “The political economy of the rent-seeking society,” American Economic Review 64(3): 291–303, and Jagdish N. Bhagwati, 1982, “Directly unproductive profit-seeking (DUP) activities,” Journal of Political Economy 90(5): 988–1002. 37. Gilens, Affluence and influence. 38. Joseph E. Stiglitz, 2012, The price of inequality: How today’s divided society endangers our future, Norton. 39.


pages: 404 words: 115,108

They Don't Represent Us: Reclaiming Our Democracy by Lawrence Lessig

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Aaron Swartz, Affordable Care Act / Obamacare, Berlin Wall, Bernie Sanders, blockchain, Cambridge Analytica, Cass Sunstein, Columbine, crony capitalism, crowdsourcing, data science, David Brooks, disinformation, do-ocracy, Donald Trump, fake news, Fall of the Berlin Wall, Filter Bubble, Francis Fukuyama: the end of history, Free Software Foundation, Gabriella Coleman, illegal immigration, income inequality, Jaron Lanier, Jeff Bezos, John Gilmore, Joi Ito, Mark Zuckerberg, obamacare, opioid epidemic / opioid crisis, Parag Khanna, plutocrats, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Ronald Reagan, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Skype, speech recognition, Steven Levy, surveillance capitalism, Upton Sinclair, Yochai Benkler

Funders are typically those who have something special to gain from government. Certain industries—telecom, IP—are keen to engage. Others are not. So while the rich, as Benjamin Page, Jason Seawright, and Matthew Lacombe demonstrate, are already more conservative, regardless of their politics, it is the especially interested who spend the most to drive the politics of rent-seeking, the practice of manipulating public policy to increase individual profit.126 But the inequality from gerrymandering does not benefit the rich. Safe-seat gerrymandering skews to the extremes and the extremes are not necessarily the rich. On the left, the most progressive push policies not favored by the rich (higher taxes).

Kuklinski, “The Delegate Theory of Representation,” American Journal of Political Science 23 (1979): 278; Pitkin, Representation, 127. 2.Mansbridge, A Selection Model, 21–23. 3.The Congressional Research Institute has done extensive work to demonstrate how the Legislative Reorganization Act of 1970 enabled, rather than disabled, rent-seeking in Congress. See the research collected on its site, available at link #235. 4.Mansbridge, A Selection Model, 42. 5.Nancy Rosenblum, On the Side of the Angels: An Appreciation of Parties and Partisanship (Princeton: Princeton University Press, 2008). 6.Khorri Atkinson, “Democrats Won the House with the Largest Midterms Margin of All Time,” Axios, November 26, 2018, available at link #236. 7.Lessig, Republic, Lost: Version 2.0, 224–29.

See also broadcasting random sampling, [68n5], 282n5 random selection vs. elections, 186–190 ranked-choice voting (RCV), 152–155, [165n36], 237–241, 261, 304n36, 314n7, 315n9 The Rational Public (Page & Shapiro), 76–77, 83, 126, 254 redistricting. See electoral districts; gerrymandering Reeves, Andrew, 41, 43 reform organizations, 255–258 rent-seeking, 62 Legislative Reorganization Act enabling, 224, 314n3 representative democracy agreeing collectively, 226–230 Article V convention to fix, 259–261 campaign money as favors, 57–62, 224–225 campaign money’s effect, 47–48, 150 deliberative polling, 175–178, 307n11 equal chance to vote, 12, 13–14, 17, 18–19, 22 governing separated from elections, 229–230 ideal democracy without representatives, 68–69 one person, one vote, 7–9, [165n36], 304n36 proportional vs.


pages: 451 words: 115,720

Green Tyranny: Exposing the Totalitarian Roots of the Climate Industrial Complex by Rupert Darwall

1960s counterculture, active measures, Affordable Care Act / Obamacare, Albert Einstein, Bakken shale, Berlin Wall, Bernie Sanders, California energy crisis, carbon credits, carbon footprint, centre right, clean tech, collapse of Lehman Brothers, creative destruction, decarbonisation, deindustrialization, dematerialisation, disinformation, Donald Trump, electricity market, Elon Musk, energy security, energy transition, facts on the ground, Fall of the Berlin Wall, Garrett Hardin, gigafactory, Gunnar Myrdal, Herbert Marcuse, hydraulic fracturing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, it's over 9,000, James Watt: steam engine, John Elkington, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liberal capitalism, market design, means of production, megaproject, Mikhail Gorbachev, mittelstand, Murray Bookchin, Neil Armstrong, nuclear winter, obamacare, oil shale / tar sands, Paris climate accords, Peace of Westphalia, peak oil, plutocrats, postindustrial economy, precautionary principle, pre–internet, recommendation engine, renewable energy transition, rent-seeking, road to serfdom, rolling blackouts, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley billionaire, Solyndra, Strategic Defense Initiative, subprime mortgage crisis, tech baron, tech billionaire, The Wealth of Nations by Adam Smith, Tragedy of the Commons, women in the workforce, young professional

Unlike global warming, alarm about acid rain is history. We can therefore view its complete life cycle. Acid rain had not been “solved.” It faded away. Retrofitting power stations to cut emissions of sulfur and nitrogen oxides, fitting catalytic converters on vehicles, did not create trillion-dollar rent-seeking opportunities remotely comparable to what global warming has with renewable energy. Environmental scares relying on the present tense run the risk of present-tense falsification. Scientists claimed trees were being damaged and forests would die. The evidence showed that they weren’t. By contrast, evidence of damage caused by predicted catastrophic global warming is, by its very nature, speculative, with predicted global temperatures up to 4.8 degrees centigrade (8.6 degrees Fahrenheit) higher by century end than the average for the second half of the nineteenth century.48 Climate scientists are notably reluctant to nail their colors to the mast and say by when observed global temperatures should catch up with computer model projections before they change their dire prognoses.

It would try to redeploy resources to “grid-parity” markets in Africa and South America.21 These markets accounted for 2.1 percent of Solar Century’s 2015 revenue.22 Thus, 97.9 percent of revenues and 100 percent of Solar Century’s £10.7 million profit depended on government support in one form or another, making Solar Century a fine example of twenty-first-century green rent seeking. Not bad for the former Greenpeace activist who held 30.7 percent of Solar Century’s shares. That 2010 London conference brought together Jeremy Leggett and Hermann Scheer for the last time. Four months later, Scheer was dead. “I miss that hero,” Leggett tweeted three years later.23 Scheer had been Leggett’s inspiration.

From being the voice of working people, the Democratic Party has become the political arm of the Climate Industrial Complex, tasked with monetizing environmentalism through a raft of government interventions of one kind or another paid for by working people, and aided by a GOP Congress when it approved generous extensions of the two main subsidies for renewables in the December 2015 budget deal. Nowhere has the capture of the American left by green rent seeking gone further than in California. “Progress comes from well-designed regulatory objectives,” Jerry Brown declared at the Paris climate conference, where he and Tom Steyer had taken a posse of green-tech executives. The four-term governor praised environmental regulations for forcing innovation, a policy that had resulted in refiners being fined for not adding nonexistent “advanced biofuels” after the technology flopped, and told a small crowd to “never underestimate the coercive power of the central state in the service of good.”


pages: 232 words: 70,361

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

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, behavioural economics, Berlin Wall, book value, business cycle, carbon tax, Cass Sunstein, classic study, collective bargaining, Cornelius Vanderbilt, corporate governance, cross-border payments, Donald Trump, financial deregulation, government statistician, income inequality, income per capita, independent contractor, informal economy, intangible asset, Jeff Bezos, labor-force participation, Lyft, Mark Zuckerberg, market fundamentalism, Mont Pelerin Society, mortgage debt, mortgage tax deduction, new economy, offshore financial centre, oil shock, patent troll, profit maximization, purchasing power parity, race to the bottom, rent-seeking, ride hailing / ride sharing, Ronald Reagan, shareholder value, Silicon Valley, single-payer health, Skype, Steve Jobs, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transfer pricing, trickle-down economics, uber lyft, very high income, We are the 99%

In recent years, the bottom 90% has paid almost as much as the top 0.1%. Complete details at taxjusticenow.org. From 1951 to 1978, the statutory rate of tax on corporate profits ranged from 48% to 52%. In contrast to the top-end individual income tax rates, these rates applied to all profits. They were not marginal rates designed to deter rent-seeking and curb excessive incomes. They were flat rates meant to generate revenue. And generate revenue they did. In the 1950s and early 1960s, corporate profits were effectively taxed at rates approaching 50%. For any dollar of profit made in America, half went straight to government. 2.3 THE KEY ROLE OF THE CORPORATE TAX FOR THE WEALTHY (Average tax rate of the top 0.1% income earners) Notes: The figure depicts the average tax rate and its composition by type of tax for the top 0.1% income earners since 1910.

These solely profit-driven individuals will innovate more boldly—faster and faster, making it harder and harder for regulators to catch up, or for people to learn about their fraud before falling for a new one. If low top tax rates encourage innovation, they must galvanize rent extraction. Among the many policies that can curb the power of established wealth and contain rent-seeking, the quasi-confiscatory taxation of very high incomes historically has proved effective. But it faces a major limitation: as we’ve seen, it’s become too easy for the very rich to own a lot of wealth while reporting little taxable income. Reinstating a 90% top marginal income tax rate would not make a meaningful difference to the tax bills of many of America’s billionaires.


pages: 295 words: 66,912

Walled Culture: How Big Content Uses Technology and the Law to Lock Down Culture and Keep Creators Poor by Glyn Moody

Aaron Swartz, Big Tech, bioinformatics, Brewster Kahle, connected car, COVID-19, disinformation, Donald Knuth, en.wikipedia.org, full text search, intangible asset, Internet Archive, Internet of things, jimmy wales, Kevin Kelly, Kickstarter, non-fungible token, Open Library, optical character recognition, p-value, peer-to-peer, place-making, quantitative trading / quantitative finance, rent-seeking, text mining, the market place, TikTok, transaction costs, WikiLeaks

Since copyright law gives distributors monopolies over popular works, the income generated by those works is much more highly concentrated than it otherwise would be.”625 The natural concentration of power not only raises prices and boosts profits to abnormal levels, it also encourages lobbying for new laws that further consolidate the dominant position of monopolists. Such behaviour is known as rent-seeking, which Wikipedia defines as ‘the effort to increase one’s share of existing wealth without creating new wealth.’626 For most publishing, recording and film companies, copyright is central to their business model. They will fight fiercely in order to preserve or even strengthen it. By contrast, those who are hurt by copyright’s intellectual monopoly may not even realise it, because copyright represents only a comparatively small extra cost for them.

cache=f1ba3f6 597 https://web.archive.org/web/20220617094352/https://www.hollywoodreporter.com/business/business-news/youtube-netflix-revenue-content-licensing-1235013502/ 598 https://web.archive.org/web/20220617094419/https://www.musicbusinessworldwide.com/youtube-just-generated-5bn-from-ads-in-a-quarter-and-youtube-music-has-over-30m-subscribers/ 599 https://web.archive.org/web/20220617094457/https://www.musicbusinessworldwide.com/youtubes-ads-business-is-now-bigger-than-the-entire-global-record-business2/ 600 https://web.archive.org/web/20220701141838/https://en.wikipedia.org/wiki/Universal_Music_Group 601 https://web.archive.org/web/20220617095249/https://qz.com/2062550/universal-music-groups-ipo-shows-the-potential-of-streaming/ 602 https://web.archive.org/web/20220705070707/https://en.wikipedia.org/wiki/Initial_public_offering 603 https://web.archive.org/web/20220531053439/https://www.vivendi.com/wp-content/uploads/2021/09/Universal-Music-Group-Prospectus-14-September-2021.pdf 604 https://web.archive.org/web/20220617095449/https://walledculture.org/interview-evan-greer-lia-holland-rethinking-copyright-fighting-creative-monopolies-and-more/ 605 https://web.archive.org/web/20220617095509/https://www.musicbusinessworldwide.com/universal-buys-bob-dylan-publishing-rights-acquiring-catalog-worth-hundreds-of-millions-of-dollars/ 606 https://web.archive.org/web/20220617095530/https://www.musicbusinessworldwide.com/neil-diamond-sells-complete-song-catalog-and-all-master-recordings-to-universal/ 607 https://web.archive.org/web/20220617095555/https://www.wsj.com/articles/tencent-in-talks-to-buy-stake-in-universal-music-group-11565078272 608 https://web.archive.org/web/20220617095627/https://www.musicbusinessworldwide.com/major-record-companies-are-losing-market-share-on-spotify-but-spotify-is-gaining-market-share-in-warners-own-revenues/ 609 https://web.archive.org/web/20220617095653/https://www.forbes.com/sites/stevenbertoni/2021/11/29/spotify-has-plans-to-move-beyond-music-and-become-the-instagram-and-tiktokofaudio/ 610 https://web.archive.org/web/20220617095449/https://walledculture.org/interview-evan-greer-lia-holland-rethinking-copyright-fighting-creative-monopolies-and-more/ 611 https://web.archive.org/web/20220701142134/https://en.wikipedia.org/wiki/Penguin_Random_House 612 https://web.archive.org/web/20201109153839/https://en.wikipedia.org/wiki/Simon_%26_Schuster 613 https://web.archive.org/web/20220701142307/https://en.wikipedia.org/wiki/Hachette_Book_Group 614 https://web.archive.org/web/20220629234053/https://en.wikipedia.org/wiki/HarperCollins 615 https://web.archive.org/web/20220630003959/https://en.wikipedia.org/wiki/Macmillan_Publishers 616 https://web.archive.org/web/20220617095734/https://www.justice.gov/opa/pr/justice-department-sues-block-penguin-random-house-s-acquisition-rival-publisher-simon 617 https://web.archive.org/web/20220617100520/https://www.hollywoodreporter.com/business/digital/activision-blizzard-microsoft-ea-disney-sony-buy-1235081056/ 618 https://web.archive.org/web/20220617100557/https://www.theverge.com/22910846/sony-bungie-acquisition-playstation-destiny-halo 619 https://web.archive.org/web/20220617100858/https://www.mordorintelligence.com/industry-reports/global-gaming-market 620 https://web.archive.org/web/20220617100924/https://www.globenewswire.com/news-release/2020/12/18/2147663/0/en/Global-Publishing-Industry-Almanac-2020.html 621 https://web.archive.org/web/20220516043610/https://www.forbes.com/sites/rosaescandon/2020/03/12/the-film-industry-made-a-record-breaking-100-billion-last-year/ 622 https://www.toptal.com/finance/market-research-analysts/state-of-music-industry 623 https://web.archive.org/web/20220617101104/https://www.niskanencenter.org/author/brink-lindsey/ 624 https://web.archive.org/web/20220617101209/https://www.niskanencenter.org/author/steles/ 625 https://web.archive.org/web/20220617101040/https://capturedeconomy.com/ 626 https://web.archive.org/web/20220617101233/https://en.wikipedia.org/wiki/Rent-seeking 627 https://web.archive.org/web/20220617104335/https://www.communia-association.org/2021/05/31/the-public-domain-belongs-to-all-and-is-often-defended-by-no-one-we-want-to-change-that/ 628 https://web.archive.org/web/20220617101040/https://capturedeconomy.com/ 629 https://web.archive.org/web/20220408054820/https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?


pages: 550 words: 124,073

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

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

The state, to be successful, can be thought of having four sets of tasks: (i) Imposing on business the requirement that product markets are competitive; this is a key requirement, for there is considerable evidence that competition (so long as not too intense) is a precondition for innovation. It requires a strong state to impose competition because businesses prefer protected markets with low-risk and high-profits which they can share with politicians. The first country to emerge as a modern capitalist economy, Britain, did not take off until the rampant rent-seeking and corruption that characterized the political system up until the end of the eighteenth century was eliminated (Popa 2015). (ii) Imposing on labor the requirement that businesses are allowed the right to manage and to cooperate with management. If labor is too powerful, it may prefer to control production and to limit innovation and skill replacement, or with cospecific skills in a technology to “hold up” management once the technology is installed.

We have underscored the role of coordination across companies in coordinated market economies or of their buying into the political and regulatory system in the United States, but these fundamental institutional weaknesses of capitalism remain. (iii) With a high stock of location cospecific investment and long-term oriented politicians, the gains from, and opportunities for, rent-seeking are limited. This political weakness of advanced capitalism extends into all areas outside the institutional framework. In particular, advanced capitalism has no impact on decisions over redistribution and poverty, or the protection of the low-skilled, including their unionization and the operation of low-skilled labor markets.

In National Identity and the Varieties of Capitalism: The Danish Experience, eds. J. L. Campbell, J. A. Hall, and O. K. Pedersen, 295–30. Montreal, Canada: McGill-Queen’s University Press. Krueger, Alan. 2012. “The Rise and Consequences of Inequality in the United States.” Unpublished speech. Krueger, Anne. 1974. “The Political Economy of the Rent-Seeking Society.” The American Economic Review 64 (3): 291–303. ———. 1990. “Government Failures in Development.” Journal of Economic Perspectives 4 (3): 9–25. Krugman, Paul. 1991a. “Increasing Returns and Economic Geography.” Journal of Political Economy 99 (3): 483–99. ———. 1991b. Geography and Trade.


pages: 687 words: 189,243

A Culture of Growth: The Origins of the Modern Economy by Joel Mokyr

Andrei Shleifer, barriers to entry, Berlin Wall, business cycle, classic study, clockwork universe, cognitive dissonance, Copley Medal, creative destruction, David Ricardo: comparative advantage, delayed gratification, deliberate practice, Deng Xiaoping, Edmond Halley, Edward Jenner, epigenetics, Fellow of the Royal Society, financial independence, flying shuttle, framing effect, germ theory of disease, Haber-Bosch Process, Herbert Marcuse, hindsight bias, income inequality, information asymmetry, invention of movable type, invention of the printing press, invisible hand, Isaac Newton, Jacquard loom, Jacques de Vaucanson, James Watt: steam engine, Johannes Kepler, John Harrison: Longitude, Joseph Schumpeter, knowledge economy, labor-force participation, land tenure, law of one price, Menlo Park, moveable type in China, new economy, phenotype, price stability, principal–agent problem, rent-seeking, Republic of Letters, Robert Solow, Ronald Reagan, seminal paper, South Sea Bubble, statistical model, survivorship bias, tacit knowledge, the market place, the strength of weak ties, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, transaction costs, ultimatum game, World Values Survey, Wunderkammern

It also codified and formalized the kind of institutions any society needed to maintain its technological momentum: the rule of law, checks and balances on the executive, and severe sanctions on more blatant and harmful forms of rent-seeking through corruption and highly inefficient forms of redistribution, although the Enlightenment was never able to eradicate rent-seeking altogether. As Brandt, Ma, and Rawski (2014) make clear, such institutions were lacking in post-1750 China and prevented it from taking advantage of the opportunities created by technological progress in the West, the way Japan did.

The historical riddle is what might be called the great dilemma of the new institutional economic history: much of the literature in economic history that is trying to explain differences in economic performance and living standards, both by economists and historians, has accepted in one way or another Douglass North’s call for the integration of institutions into our narrative of economic growth (Acemoglu and Robinson, 2012; Sened and Galiani, 2014). An economy that grows as a result of favorable institutions requires a world of well-delineated and respected property rights, enforceable contracts, law and order, a low level of opportunism and rent-seeking, a high degree of inclusion in political decision making and the benefits of growth, and a political organization in which power and wealth are as separate as is humanly possible. Such institutions—whether part of the formal political structure (as embodied for example in a constitution) or based on private-order institutions—are credited with many positive economic developments in the past: the rise of more effective product and factor markets (and thus more efficient allocations), the growth of international and interregional trade, and the accumulation of capital, to name a few.

Both of those types of preferences are not normally part of the analysis of economic preferences, but there is no inherent reason they should not be.16 A good example of process-regarding preferences is when an individual cares whether he or she earns income by creating wealth through entrepreneurial activity or by redistributing it from others through rent-seeking or corruption. Does one regard a dollar in the same way no matter how it was earned, or does one care whether it was made while providing a socially useful activity? Is a dollar earned the same as a dollar stolen? Such preferences could make a difference in the institutions that are critical to the emergence of a civil economy and economic growth (Bowles, 2004, pp. 109–11; Bowles and Gintis, 2011, pp. 10–11, 32–35).


Money and Government: The Past and Future of Economics by Robert Skidelsky

"Friedman doctrine" OR "shareholder theory", Alan Greenspan, anti-globalists, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Basel III, basic income, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Big bang: deregulation of the City of London, book value, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, constrained optimization, Corn Laws, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Graeber, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, Donald Trump, Eugene Fama: efficient market hypothesis, eurozone crisis, fake news, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, forward guidance, Fractional reserve banking, full employment, Gini coefficient, Glass-Steagall Act, Goodhart's law, Growth in a Time of Debt, guns versus butter model, Hyman Minsky, income inequality, incomplete markets, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, Kondratiev cycle, labour market flexibility, labour mobility, land bank, law of one price, liberal capitalism, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, long and variable lags, low interest rates, market clearing, market friction, Martin Wolf, means of production, Meghnad Desai, Mexican peso crisis / tequila crisis, mobile money, Modern Monetary Theory, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, new economy, Nick Leeson, North Sea oil, Northern Rock, nudge theory, offshore financial centre, oil shock, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, placebo effect, post-war consensus, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, random walk, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, rising living standards, risk/return, road to serfdom, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, shareholder value, short selling, Simon Kuznets, structural adjustment programs, technological determinism, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, tontine, too big to fail, trade liberalization, value at risk, Washington Consensus, yield curve, zero-sum game

In his Cycles of American History (1986) Arthur Schlesinger Jr defined a political economy cycle as ‘a continuing shift in national involvement between public purpose and private interest’. The swing he identified was between ‘liberal’ (what we would call social democratic) and ‘conservative’ epochs. The idea of the ‘crisis’ is central to both. Liberal periods succumb to the corruption of power, as idealists yield to time-servers, and conservative arguments against rent-seeking win the day. But the conservative era then succumbs to a corruption of money, as financiers use the freedom of deregulation to rip off the public. A crisis of under-regulated markets presages the return to a social democratic era. This idea fits the American historical narrative tolerably well.

The attempt in the 1970s to control inflation by wage and price controls led directly to a ‘crisis of governability’, as trade unions, particularly in Britain, refused to accept them. Large state subsidies to producer groups, both public and private, fed the typical corruptions of behaviour identified by the New Right: rent-seeking, moral hazard and free-riding. Palpable evidence of government failure obliterated earlier memories of market failure. The new generation of economists abandoned Keynes and, with the help of sophisticated mathematics, reinvented the classical economics of the self-correcting market. Battered by the crises of the 1970s, governments caved in to the ‘inevitability’ of free market forces.

Tax systems were made less progressive to ‘improve the incentives’ of the already rich. In the perfect markets lauded by neo-classical economists, capitalists and workers alike would be paid their economic worth. In this world, there is no rent or unearned income or free lunches. Or, rather, there was only ‘rent-seeking government’. The theoretical case against redistribution was clinched by the device of the ‘representative agent’. We now have a single consumer who is paid exactly what he produces. The case for redistribution on equity grounds has disappeared. Money still has a diminishing marginal utility, but all this does is to give the representative consumer a choice between income and leisure.


pages: 283 words: 73,093

Social Democratic America by Lane Kenworthy

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

But in practice that’s not what we observe. An expansion of America’s public social programs is likely to have little or no impact on competition. Does Big Government Mean Bad Government? A related argument, made by Alberto Alesina and George-Marios Angeletos, is that “a large government increases corruption and rent-seeking.”62 The more a government taxes and spends, in this view, the more it invites lobbying by interest groups for favors, and the more opportunity and incentive it creates for policy makers and other public officials to dispense such favors. Do big governments perform worse than small ones? There are various ways to measure the quality of government.63 A common indicator is the World Bank’s government effectiveness measure, which attempts to gauge public and expert perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies.

It isn’t in spite of their policies and institutions that the Nordic nations achieve economic security, equal opportunity, and shared prosperity together with strong economic performance. It’s because of them.159 America’s Path Growth of government spending is not, for the most part, a consequence of rent-seeking special interests or narrow-minded bureaucrats expanding their turf. It’s a product of affluence. As people and nations get richer, they are willing to allocate more money for insurance (protection against risks) and for fairness (extension of opportunity and security to those who are less fortunate).


pages: 319 words: 75,257

Trumpocalypse: Restoring American Democracy by David Frum

Affordable Care Act / Obamacare, anti-globalists, Bernie Sanders, carbon tax, centre right, coronavirus, currency manipulation / currency intervention, decarbonisation, deplatforming, disinformation, Donald Trump, Edward Snowden, employer provided health coverage, fake news, green new deal, Greta Thunberg, illegal immigration, immigration reform, labor-force participation, manufacturing employment, mass immigration, microaggression, Mikhail Gorbachev, Nate Silver, obamacare, offshore financial centre, open immigration, Paris climate accords, Peter Thiel, plutocrats, QAnon, rent-seeking, Ronald Reagan, Saturday Night Live, Silicon Valley, Steve Bannon, W. E. B. Du Bois

Slogans like “Medicare for All” distract voters and officials from the real problem: not who finances health-care costs, but who negotiates those costs. The US government is the biggest health-care purchaser on earth. It’s time to start acting like it, and not just on behalf of Medicare beneficiaries, but on behalf of all Americans whose incomes and standard of living is devoured by the health providers’ state-capture and rent-seeking. Reform is obviously urgently needed. Why is it so hard to achieve? People close to the system can witness the abuses being carried out right in front of them. Yet it is all but impossible to muster political mandates for action to squeeze the abuses out of the system. Why do Americans find it so uniquely difficult to act effectively in the public interest?

To claim, however, that you are supremely committed to reducing greenhouse gases, when in reality you are more concerned with regulating economic competition, dooms your likelihood of achieving either. It is hard enough to achieve the outcomes you actually seek; it is much harder to achieve the outcomes you are only pretending to seek—while actually seeking something very different. Putting government into the business of busting rent-seeking in the health-care industry—as the leading Democratic candidates for 2020 vowed to do—is already a public administration challenge for a generation. If successful, health-care reform will deliver in itself a big bump to worker pay and alleviate perhaps the single most harrowing anxiety faced by working Americans.


pages: 58 words: 18,747

The Rent Is Too Damn High: What to Do About It, and Why It Matters More Than You Think by Matthew Yglesias

Edward Glaeser, falling living standards, gentrification, Home mortgage interest deduction, income inequality, industrial robot, Jane Jacobs, land reform, mortgage tax deduction, New Urbanism, pets.com, rent control, rent-seeking, restrictive zoning, Robert Gordon, Robert Shiller, San Francisco homelessness, Saturday Night Live, Silicon Valley, statistical model, transcontinental railway, transit-oriented development, urban sprawl, white picket fence

By the same token, left-wing politics in developing countries often feature “land reform” as a prominent demand. Vast agricultural estates, unlike complicated industrial business enterprises, can be broken up into small chunks and given to farmers to work rent-free, rather than operated as plantations staffed by peasants stuck at subsistence-living standards. Today, economists often criticize “rent-seeking” behavior by businesses that try to use government regulation to stifle competition. Though literal land rents have vanished from today’s debate, much of the history of the United States consists of a quest to build a prosperous and egalitarian nation rather than one dominated by wealthy landowners.


pages: 772 words: 203,182

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

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

Here is columnist John Kay of the Financial Times in November 2009 looking back on this era: “America has a new generation of rent-seekers. The modern equivalents of castles on the Rhine are first-class lounges and corporate jets. Their occupants are investment bankers and corporate executives…. The scale of corporate rent-seeking activities by business and personal rent-seeking by senior individuals in business and finance has increased sharply. The outcome can be seen in the growth of Capitol Hill lobbying and the crowded restaurants of Brussels; in the structure of industries such as pharmaceuticals, media, defense equipment, and, of course, financial services; and in the explosion of executive remuneration.”36 Exploding American executive pay is sharply at odds with pay patterns in any other rich democracy.

This creates a soft de facto domestic content imperative that envelops many if not all board deliberations. That perspective means more jobs at home, with firms such as VW-Audi-Porsche passing up offshoring opportunities to keep Wolfsburg bustling and rich. And, codeterminism prevents short-termism and management rent-seeking. Voter and consumer expectations are important in sustaining this domestic orientation by enterprise management. Families and public policies tend to nurture stakeholder capitalism by prioritizing domestic products over those from low-wage competitors or firms practicing wage compression. The collapse of Walmart in Germany is instructive in that regard, as is the current Franco-German focus on crafting meaningful standards and enforcing strictures against products inappropriately claiming EU origin.

Here is a frank assessment of that nation’s contemporary political environment by Sydney Morning Herald reporter Tim Colbatch, writing in mid-2012: “Conservative leader Tony Abbott’s war against everything has made good government in Australia almost impossible…. Whatever it [the Labor party] proposes, he opposes.”29 CHAPTER 28 AMERICAN FAMILY CAPITALISM “Control of rent-seeking requires decentralization of economic power.”1 JOHN KAY, Financial Times, Nov. 10, 2009 “Many of the factors that have long driven American innovation have dried up. Droves of investors, disappointed by their returns, have abandoned the venture capital firms of Silicon Valley. At pharmaceutical companies, computer-driven research is making fewer discoveries than intuitive chemists once did.


pages: 318 words: 85,824

A Brief History of Neoliberalism by David Harvey

"World Economic Forum" Davos, affirmative action, air traffic controllers' union, Asian financial crisis, Berlin Wall, Bretton Woods, business climate, business cycle, California energy crisis, capital controls, centre right, collective bargaining, creative destruction, crony capitalism, debt deflation, declining real wages, deglobalization, deindustrialization, Deng Xiaoping, Fall of the Berlin Wall, financial deregulation, financial intermediation, financial repression, full employment, gentrification, George Gilder, Gini coefficient, global reserve currency, Great Leap Forward, illegal immigration, income inequality, informal economy, labour market flexibility, land tenure, late capitalism, Long Term Capital Management, low interest rates, low-wage service sector, manufacturing employment, market fundamentalism, mass immigration, means of production, megaproject, Mexican peso crisis / tequila crisis, military-industrial complex, Mont Pelerin Society, mortgage tax deduction, neoliberal agenda, new economy, Pearl River Delta, phenotype, Ponzi scheme, price mechanism, race to the bottom, rent-seeking, reserve currency, Ronald Reagan, Savings and loan crisis, Silicon Valley, special economic zone, structural adjustment programs, Suez crisis 1956, the built environment, The Chicago School, Tragedy of the Commons, transaction costs, union organizing, urban renewal, urban sprawl, Washington Consensus, We are all Keynesians now, Winter of Discontent

This condition is rarely, if ever, approximated in practice, and there are significant consequences.2 Better informed and more powerful players have an advantage that can all too easily be parlayed into procuring even better information and greater relative power. The establishment of intellectual property rights (patents), furthermore, encourages ‘rent seeking’. Those who hold the patent rights use their monopoly power to set monopoly prices and to prevent technology transfers except at a very high cost. Asymmetric power relations tend, therefore, to increase rather than diminish over time unless the state steps in to counteract them. The neoliberal presumption of perfect information and a level playing field for competition appears as either innocently utopian or a deliberate obfuscation of processes that will lead to the concentration of wealth and, therefore, the restoration of class power.

/Marxism 59, 148, 218 freedom concept 20, 21 freedom’s prospect 184–5, 189, 202 neoliberalism on trial 159, 180 media 40, 56, 80, 115, 156, 159 Megginson, W. 219 Mellon, A. 163 Menem, C. 104 Mercosur 79 Mertes, T. 221, 222 Mexico 138, 139, 150 consent, construction of 41, 53, 54 freedom concept 5, 15, 17, 29, 34, 36 freedom’s prospect 185, 186, 190, 199, 204 neoliberal state 73, 75, 76, 84–5 neoliberalism on trial 159, 162–5 uneven development 94, 95, 98–104, 115, 116, 118 see also PRI middle class 25, 61–2, 181 Middle East 12, 94, 109, 139 freedom’s prospect 197, 206 Islam 83, 186 neoliberal state 71, 83, 85 neoliberalism on trial 171, 173 see also Iraq; Islam migration 127, 129, 169–70 Miliband, R. 212 military consent, construction of 39, 40 -industrial complex 83 Keynesianism 88 militarization 82–3, 101, 107, 195 neoliberalism on trial 153, 179 see also war Millennium Summit 187 Mises, L. von 20 Mittelman, J. 215 Monbiot, G. 219 ‘Monday Club’ 8 monetarism 24–5 China 123–4 consent, construction of 51, 54, 59 Friedman 8, 20, 22, 44 uneven development 89, 93 monopoly 67, 80 Mont Pelerin Society 20, 21, 22, 36 Montreal Protocol 172 morality ‘moral majority’ 49–51 neoliberal state 82, 83–4, 211 see also religion Morrison, H. 55 Mosaddeq, M. 28 Mozambique 40, 116, 117, 118 multinationals 7, 35–6, 80 Muntaner, C. 220 Murdoch, R. 34, 35–6, 38, 166 Murphy, D. 220 Myers, N. 220 NAFTA 79, 93, 101, 103, 138 Nash, J. 213 nation/national ‘interest’ 66 monopoly on violence 180–1 nationalism 79, 85, 195–6, 197 and state separate 84–5 nationalization 55, 57–8, 99 NATO 56 natural resources see commons Navarro, V. 212, 220, 221 neoclassical economics 20 neocolonialism/imperialism 27–8, 56, 159, 181–2, 197 see also United States neoconservatism 50, 81–5, 166 return of 195–7, 201–2, 204–5 see also authoritarianism neoliberal state 2, 64–88, 161, 211–13 circumscribed see Sweden freedom concept 7–11, 20–1 intervention 20–1, 79 see also Keynes and nation separate 84–5 neoconservative answer 81–5 practice 70–81 redistributions 159, 160, 163–5 tensions and contradictions 67–70, 79–81 theoretical aims 64–7 see also welfare, public neoliberal theory and pragmatics distinct 21–2 rise of 19–31 state 64–7 turn, reasons for 9–19 neoliberalism 2 defined 2–3 see also China; consent; freedom; freedom’s prospect; neoliberal state; neoliberalism on trial; uneven development neoliberalism on trial 152–82 achievements 154–65 environment degraded 67–8, 172–5 see also accumulation by dispossession; commodification; rights Netherlands/Holland 27 Netter, J. 219 New York City 52, 63, 157 finance/banks 27, 28–9, 44–8, 73, 97–8, 100 New Zealand 3, 96, 140 NGOs (non-governmental organizations) 78, 177, 205 Nicaragua 27, 117 ‘9/11’ attack 5, 83, 195 Nixon, R. 13, 43, 45, 196 non-interference see deregulation non-intervention 69 Novacek, M. 220 Nozick, M. 211 OECD countries 17, 18, 110 Office of Management and Budget (US) 52 Ohmae, K. 212 oil 173 OPEC 12, 27, 197 oligarchy, Russian 32 oppositional culture 175–6 order, need for 82–3 PACs (political action committees) 49 Pahlavi, Shah M.R. 28 Panitch, L. 28, 208, 219 paranoia 82–3, 196 Park Chung Hee 107, 108 PATCO (US) 25, 59 Pearl River Delta 87, 131, 132 Peck, J. 207, 208, 213 Pelaez, E. 219 Perkins, J. 28 Perloff, J. 143 ‘personal responsibility’ 168–9 Peterson, I. 219 Petras, J. 106, 220 Philippines 31–2, 40, 206 uneven development 89, 94, 95, 96, 117 Piketty, T. 208 Pinochet, A. 7, 8 Piore, M. 212 planning and control 12, 75, 103, 156 as denial of freedom 37 see also central planning Podhoretz, N. 50 Poland 94, 95, 154 politics 69–70, 205 oppositional 78 see also Conservatives; Democrats; Republicans see also socialism/communism Pollin, R. 25 pollution 67–8, 100, 161, 172–5 Polyani, K. 183 freedom concept 36–7, 38 neoliberal state 70, 80–1 neoliberalism on trial 166–7, 168, 172, 219 Ponniah, T. 222 Popper, K. 20 pornography 165–6, 170 Portillo, L. 99 Portugal 12, 13, 15 Post, R. 212 postmodernism 4, 42, 47, 198 Poulantaz, N. 211 poverty, increasing 76, 96, 98 see also debt Powell, L. 43, 44 power international hegemon see United States regional hegemon see China see also class; coercion/force; corporations; elites; financial system pragmatics and neoliberalism distinct 21–2 Prasad, E. 128 pre-emptive action 296–7 against Iraq 6–7, 9, 35, 39, 153, 160, 184, 197 PRI (Partido Revolucionario Institucional) 84–5, 98–101, 150 see also Mexico prices, controlled 12 private property 7 see also commons privatization 3, 129 avoided in China 122 consent, construction of 60–1 freedom concept 6, 8, 17, 23 neoliberal state 65, 71, 76–7 neoliberalism on trial 154, 159–61, 163–4 uneven development 88, 99–101, 103, 104, 114 productivity and wages 25 propaganda 70, 80, 113 property rights 64 public assets taken over see privatization see also nationalization; neoliberal state; welfare public choice 54 public-private partnerships 76–8 Putin, V. 86 quality of life concept 156 Quirk, P. 219 Rapley, J. 210 rational expectations 54 Reagan, R. 1–2, 88, 172 consent, construction of 39, 40, 44, 48, 49, 51–2, 54, 59, 62–3 freedom concept 9, 24–6, 29 freedom’s prospect 190, 192 neoliberal state 73, 84 recession 23, 57, 152 Rees, G. 211 regulation see law Rehn-Meidner Plan 112 religion 81, 85, 171–2, 195 Christianity 49–51, 186 Islam 83, 186 see also morality ‘rent seeking’ 68 Republicans (US) consent, construction of 43, 45, 48–51 freedom concept 5–6, 13, 37–8, 39, 208 freedom’s prospect 184, 188, 190, 196, 197 neoliberal state 71, 77 neoliberalism on trial 152, 160, 164, 172, 173, 182 see also Bush; Nixon; Reagan research and development 134 see also technology resources, natural see commons retail trade 34, 38, 137, 190 Ricardo, D. 20 richest people 103–4 see also elites rights and abuse of 42, 196, 197–8, 204 neoliberal state 64, 68, 78, 84 neoliberalism on trial 160–5, 175–82 Robinson, W. 209 Rockefeller, J.D. 21 Roderick, J. 32 Rodrik, D. 220 Rohatyn, F. 46, 51 Roosevelt, F.


pages: 304 words: 80,965

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It by Stephen Davis, Jon Lukomnik, David Pitt-Watson

activist fund / activist shareholder / activist investor, Admiral Zheng, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, buy and hold, Carl Icahn, centralized clearinghouse, clean water, compensation consultant, computerized trading, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crowdsourcing, David Brooks, Dissolution of the Soviet Union, diversification, diversified portfolio, en.wikipedia.org, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, income inequality, index fund, information asymmetry, invisible hand, John Bogle, Kenneth Arrow, Kickstarter, light touch regulation, London Whale, Long Term Capital Management, moral hazard, Myron Scholes, Northern Rock, passive investing, Paul Volcker talking about ATMs, payment for order flow, performance metric, Ponzi scheme, post-work, principal–agent problem, rent-seeking, Ronald Coase, seminal paper, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, Steve Jobs, the market place, The Wealth of Nations by Adam Smith, transaction costs, Upton Sinclair, value at risk, WikiLeaks

Instead of looking at how mutual funds vote their shares, Lauren Cohen and Breno Schmidt investigated these funds’ investment choices and discovered something disturbing: mutual funds buy much more stock in companies whose 401(k) plans they administer, even when these companies are troubled enough to prompt other funds to sell.11 Cohen and Schmidt concluded that there is “a potentially large benefit to the 401(k) sponsor firm of having its price propped up” by the contracted mutual fund. Moreover, “the resulting loss to mutual fund investors … can be large.” No economist would be surprised by that finding: it is well known that accountability decreases “rent seeking,” the actions an agent might take to extract a benefit from the system. So it stands to reason that a lack of accountability will tend to increase self-serving actions, even if it damaged the interests of ultimate savers. Two last studies complete our tour of the limited state of knowledge of fund governance and performance.

See Responsible Endowments Coalition (REC) Regulation: atomized, 128–31, 154 bank, 128–29, 175, 259n47 behavioral economics and, 143–45 contemporary approach to, 128–31 designing better, 145–51 financial crisis and, 124–25 fostering accountability and, 147–49 ossified behavior and, 131, 137 oversight and, 150–51 purpose of, 125–28 relation to financial institutions, 145 relevant and unbiased information and, 149–50 supporting fiduciary duty, 146–47, 152–53, 225–26 systemic (See Systemic regulation) transparency and, 146 Regulatory regimes, Basel rules, 152 Basel I, 125, 254n1 Basel II, 43 Basel III, 43, 125, 175, 254n1, 254n2 Rent seeking, 102–3 Research funding, for new economic thinking, 189 Reserves, bank, 213, 214–16 Responsibility: regulation and abdication of, 130–31 trust in government and, 141. See also Fiduciary duty Responsible Endowments Coalition (REC), 118, 122 Responsible Investing Academy, 140 Retirement Commission of South Carolina, 206 Retirement savings, 193–99, 201, 241n39 fees charged on, 1–3, 53 liability-driven investing and, 54–56 redirecting, 13–14 switch to defined contribution plans, 99–100, 197–99.


Globalists: The End of Empire and the Birth of Neoliberalism by Quinn Slobodian

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, classic study, collective bargaining, David Ricardo: comparative advantage, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, full employment, Garrett Hardin, Greenspan put, Gunnar Myrdal, Hernando de Soto, invisible hand, liberal capitalism, liberal world order, Mahbub ul Haq, market fundamentalism, Martin Wolf, Mercator projection, Mont Pelerin Society, Norbert Wiener, offshore financial centre, oil shock, open economy, pattern recognition, Paul Samuelson, Pearl River Delta, Philip Mirowski, power law, price mechanism, public intellectual, quantitative easing, random walk, rent control, rent-seeking, road to serfdom, Ronald Reagan, special economic zone, statistical model, Suez crisis 1956, systems thinking, tacit knowledge, The Chicago School, the market place, The Wealth of Nations by Adam Smith, theory of mind, Thomas L Friedman, trade liberalization, urban renewal, Washington Consensus, Wolfgang Streeck, zero-sum game

In The Economics of the Color Bar, his most extensive application of neoliberal thought to the case of South Africa, Hutt self-­consciously applied insights from Milton Friedman about U.S. racism and echoed ­those of Gary Becker from the same time.165 Latter-­day scholars recall the book as a “conscience-­raising work” and a “profound and disturbing analy­sis that exposed the moral horror of apartheid in South Africa.”166 At its core, Hutt argued, racism is a form of rent-­seeking analogous to trade u ­ nions defending their own privilege against the entry of nonwhite workers.167 “The chief source of colour discrimination,” Hutt suggested, was “to be found in the natu­ral determination to defend economic privilege.”168 In his reading, racism was not of the market but outside of—­and in opposition to—­the market.

Like Schmitt, Hayek believed that the creation of law by demo­cratically elected state governments was leading to a degeneration of the Rechtsstaat into a Gesetzesstaat, or legislative state.141 He wrote that “the weakness of the 206 GLOBALISTS government of an omnipotent democracy was very clearly seen by the extraordinary German student of politics, Carl Schmitt, who in the 1920s prob­ably understood the character of the developing form of government better than most p ­ eople.”142 He quoted Schmitt’s essay from 1932 to the effect that “a pluralist party state w ­ ill become ‘total’ not from strength and force but out of weakness: it intervenes in all sectors of life, ­because it feels it has to fulfill the demands of all interested parties.”143 In other words, Hayek saw “unlimited” (or what Mises called “omnipotent”) democracy as leading to totalitarianism out of a logic of capture. His efforts at constitutional design from 1960 onward w ­ ere attempts to discover an institutional fix for the tendency of democracy to stray from economic order ­toward particularist rent-­seeking and, as Alexander Rüstow put it, the transformation of state policy and national bud­gets into the “prey” of special interests.144 He laid out the par­ameters of this institutional concept first in a speech at the Chamber of Commerce in Dortmund, published in the Frank­furter Allgemeine Zeitung.

See also Knowledge; Reason, abuse of Raw materials, 21, 43, 56, 71, 77, 101, 108, 131, 152; raw materials dictator, 65 Reagan, Ronald, 8, 14, 20, 23, 176 Reason, abuse of, 225, 259–260. See also Knowledge; Rationality Refugees, 120, 135, 145; refugee money, 145 Regnery, Henry, 168–169 Reisch, Richard, 66 Rent-­seeking, 173, 206 Republican Party, 161 Rhodesia, 149–151, 170–171; American-­ Rhodesian Association, 178; Rhodesia Information Ser­v ice, 177; Unilateral Declaration of In­de­pen­dence, 170, 175 Ricardo, David, 42, 50 Riedl, Richard, 37, 40 Rights: business, 145; capital, 13, 123, 135, 138, 145–146, 254, 277; civil, 150, 263; Commission on H ­ uman Rights, 220; to democracy, 278; to development, 220; to eat, 141; of expropriation, 265; ­human, 120, 176, 277–279; intellectual property, 257, 278; investor, 136–137, 144; to leave, 135, 145; market, 136, 277; negative, 121–123; private, 266; property, 25, 137, 141, 145, 279; to self-­determination, 248; social and economic, 120, 247, 264; to trade, 210, 277, 280; workers’, 266; xenos, 123, 137, 148, 220, 285 Risk, systemic, 270 Rist, Charles, 78 Rivera, Diego, 281, 283 Robbins, Lionel, 8, 23, 78, 94, 96, 98, 122, 207; on Eu­ro­pean integration, 184; federation proposals of, 22, 95, 99–104, 113–114, 116–118, 131, 133, 155, 186, 209–210, 251–252, 261, 265–266, 283; and Habsburg Empire, 109; interwar international collaborations and, 30, 72–76, 84; Mises Circle and, 31, 48; and MPS, 126–127 Rocke­fel­ler Foundation, 68, 73, 75 Roessler, Frieder, 8, 223, 244–247, 252 378 Index Romania, 69, 109, 134 Roo­se­velt, Franklin Delano, 88, 136, 158–159 Röpke, Wilhelm, 1, 8, 129; on capital rights, 137–138, 140, 207, 248; critique of juridicism, 254; critique of postwar development policy, 124, 138–139, 157–161; on culture and race, 22, 149–151, 156–157, 160, 169–172; on empire, 180, 194; on Eu­ro­pean integration, 183, 188, 191, 202; on global order, 10–11, 14, 30, 58, 84–85, 88–89, 251, 265; International Economic Disintegration, 76, 89, 98, 113; interwar international collaboration of, 21, 57–58, 72–74, 78, 79–80, 127; and MPS, 23, 126–127, 150; on Southern Africa, 149–154, 170–172; and U.S.


pages: 589 words: 147,053

The Age of Em: Work, Love and Life When Robots Rule the Earth by Robin Hanson

8-hour work day, artificial general intelligence, augmented reality, Berlin Wall, bitcoin, blockchain, brain emulation, business cycle, business process, Clayton Christensen, cloud computing, correlation does not imply causation, creative destruction, deep learning, demographic transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, experimental subject, fault tolerance, financial intermediation, Flynn Effect, Future Shock, Herman Kahn, hindsight bias, information asymmetry, job automation, job satisfaction, John Markoff, Just-in-time delivery, lone genius, Machinery of Freedom by David Friedman, market design, megaproject, meta-analysis, Nash equilibrium, new economy, Nick Bostrom, pneumatic tube, power law, prediction markets, quantum cryptography, rent control, rent-seeking, reversible computing, risk tolerance, Silicon Valley, smart contracts, social distancing, statistical model, stem cell, Thomas Malthus, trade route, Turing test, Tyler Cowen, Vernor Vinge, William MacAskill

In contrast, em clans have enormous inequality in clan size, resources, and respect. However, history gives little reason to expect much redistribution to address this kind of inequality. This kind of inequality is not very analogous to those that induced forager sharing, it does not lend itself to profitable rent-seeking, and it is very sensitive to how subclans are defined. Ems might also redistribute on the basis of speed, taking from fast ems to give to slow ones. But history also offers little precedent for this, and slower ems do not seem to be suffering much more in any clear way. Thus the main kind of redistribution that we have reason to expect in the em era is between the clans of a city, based on differences of average within-clan individual consumption.

Even when clans change their political alliances, and individual clan members emotionally accept such changes, there is probably a norm encouraging ems to appear to continue to work cooperatively with all members of their team, even members from conflicting clans. Without such a norm, team productivity could be overly disrupted. Factions Changing coalitions and political competition among coalitions can be socially expensive because of coalition “rent-seeking.” This is the effort that people spend to lobby for their faction or coalition among their associates. For example, people can feel pressured to favor current coalition partners when choosing spouses, neighbors, suppliers, customers, and so on. Not only does this process reduce the quality of such partners on other criteria, it creates costs to change partners when political coalitions change.

Not only does this process reduce the quality of such partners on other criteria, it creates costs to change partners when political coalitions change. People can also feel pressured to lobby for their faction; those who don’t may be punished for disloyalty. Political systems have long tried many solutions to curb the costs resulting from excess coalition change and rent-seeking, with varying and usually insufficient success. For example, raising the costs to change policy can discourage policy change, although this can make societies less adaptable to changing conditions. Also, identifying coalitions with abstract ideological positions can make coalitions harder to change, by suggesting that coalitions that change their positions are unprincipled or confused.


pages: 678 words: 216,204

The Wealth of Networks: How Social Production Transforms Markets and Freedom by Yochai Benkler

affirmative action, AOL-Time Warner, barriers to entry, bioinformatics, Brownian motion, business logic, call centre, Cass Sunstein, centre right, clean water, commoditize, commons-based peer production, dark matter, desegregation, digital divide, East Village, Eben Moglen, fear of failure, Firefox, Free Software Foundation, game design, George Gilder, hiring and firing, Howard Rheingold, informal economy, information asymmetry, information security, invention of radio, Isaac Newton, iterative process, Jean Tirole, jimmy wales, John Markoff, John Perry Barlow, Kenneth Arrow, Lewis Mumford, longitudinal study, machine readable, Mahbub ul Haq, market bubble, market clearing, Marshall McLuhan, Mitch Kapor, New Journalism, optical character recognition, pattern recognition, peer-to-peer, power law, precautionary principle, pre–internet, price discrimination, profit maximization, profit motive, public intellectual, radical decentralization, random walk, Recombinant DNA, recommendation engine, regulatory arbitrage, rent-seeking, RFID, Richard Stallman, Ronald Coase, scientific management, search costs, Search for Extraterrestrial Intelligence, SETI@home, shareholder value, Silicon Valley, Skype, slashdot, social software, software patent, spectrum auction, subscription business, tacit knowledge, technological determinism, technoutopianism, The Fortune at the Bottom of the Pyramid, the long tail, The Nature of the Firm, the strength of weak ties, Timothy McVeigh, transaction costs, vertical integration, Vilfredo Pareto, work culture , Yochai Benkler

Increasing patent protection, both in developing nations that are net importers of existing technology and science, and in developed nations that already have a degree of patent protection, and therefore some nontrivial protection for inventors, increases the costs that current innovators have to pay on existing knowledge more than it increases their ability to appropriate the value of their own contributions. When one cuts through the rent-seeking politics of intellectual property lobbies like the pharmaceutical companies or Hollywood and the recording industry; when one overcomes the honestly erroneous, but nonetheless conscience-soothing beliefs of lawyers who defend the copyright and patent-dependent industries and the judges they later become, the reality of both theory and empirics in the economics of intellectual property is that both in theory and as far as empirical evidence shows, there is remarkably little support in economics for regulating information, knowledge, and cultural production through the tools of intellectual property law. 84 Where does innovation and information production come from, then, if it does not come as much from intellectual-property-based market actors, as many generally believe?

Together, these legislative and judicial [pg 381] acts have formed what many have been calling a second enclosure movement: A concerted effort to shape the institutional ecology in order to help proprietary models of information production at the expense of burdening nonmarket, nonproprietary production. 152 The new enclosure movement is not driven purely by avarice and rent seeking--though it has much of that too. Some of its components are based in well-meaning judicial and regulatory choices that represent a particular conception of innovation and its relationship to exclusive rights. That conception, focused on mass-mediatype content, movies, and music, and on pharmaceutical-style innovation systems, is highly solicitous of the exclusive rights that are the bread and butter of those culturally salient formats.

The evidence suggests that, in fact, exclusive rights are detrimental to various downstream industries that rely on access to data. Despite these fairly robust observations from a decade of experience, there continues to be a threat that such a law will pass in the U.S. Congress. This continued effort to pass such a law underscores two facts. First, much of the legislation in this area reflects rent seeking, rather than reasoned policy. Second, the deeply held belief that "more property-like [pg 451] rights will lead to more productivity" is hard to shake, even in the teeth of both theoretical analysis and empirical evidence to the contrary. 791 Linking and Trespass to Chattels: New Forms of Information Exclusivity 792 Some litigants have turned to state law remedies to protect their data indirectly, by developing a common-law, trespass-to-server form of action.


pages: 354 words: 92,470

Grave New World: The End of Globalization, the Return of History by Stephen D. King

"World Economic Forum" Davos, 9 dash line, Admiral Zheng, air freight, Alan Greenspan, Albert Einstein, Asian financial crisis, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Sanders, bilateral investment treaty, bitcoin, blockchain, Bonfire of the Vanities, borderless world, Bretton Woods, Brexit referendum, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collateralized debt obligation, colonial rule, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, currency risk, David Ricardo: comparative advantage, debt deflation, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Snowden, eurozone crisis, facts on the ground, failed state, Fall of the Berlin Wall, falling living standards, floating exchange rates, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, global value chain, Global Witness, Great Leap Forward, hydraulic fracturing, Hyman Minsky, imperial preference, income inequality, income per capita, incomplete markets, inflation targeting, information asymmetry, Internet of things, invisible hand, Jeremy Corbyn, joint-stock company, Kickstarter, Long Term Capital Management, low interest rates, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, middle-income trap, moral hazard, Nixon shock, offshore financial centre, oil shock, old age dependency ratio, paradox of thrift, Peace of Westphalia, plutocrats, post-truth, price stability, profit maximization, quantitative easing, race to the bottom, rent-seeking, reserve currency, reshoring, rising living standards, Ronald Reagan, Savings and loan crisis, Scramble for Africa, Second Machine Age, Skype, South China Sea, special drawing rights, technology bubble, The Great Moderation, The Market for Lemons, the market place, The Rise and Fall of American Growth, trade liberalization, trade route, Washington Consensus, WikiLeaks, Yom Kippur War, zero-sum game

And with it, the ability of workers to earn excess ‘rents’ has declined. Elite workers, meanwhile, are increasingly compensated through both wages and capital, the latter in the form of shares and options. As a consequence, it is increasingly difficult to assess how much of their total compensation is based on merit and how much is, instead, a reflection of rent-seeking behaviour and, in some cases, their company’s monopoly profits. And elite workers increasingly have a habit of marrying each other. One consequence of the emancipation of women in the workplace is that status is determined not just by attendance at the debutantes’ ball, the level of education or parental background, but instead by simple earning power.

By reducing the cost of information – and by creating global online ‘hubs’ like Alibaba and Amazon, where buyers and sellers can ‘virtually’ meet one another – the global marketplace should expand, competition should intensify and pricing should become more transparent. All in all, the allocation of resources should improve, leaving output higher, prices lower and everyone – other than inefficient rent-seeking companies – happier. Yet this argument assumes that technology only works by reducing barriers to entry, limiting information asymmetries and encouraging price discovery. That’s much too narrow a view. Technology also fundamentally alters production techniques and hugely skews the distribution of income and wealth.


pages: 317 words: 98,745

Black Code: Inside the Battle for Cyberspace by Ronald J. Deibert

4chan, air gap, Any sufficiently advanced technology is indistinguishable from magic, Brian Krebs, call centre, citizen journalism, Citizen Lab, cloud computing, connected car, corporate social responsibility, crowdsourcing, cuban missile crisis, data acquisition, digital divide, disinformation, end-to-end encryption, escalation ladder, Evgeny Morozov, failed state, Firefox, Gabriella Coleman, global supply chain, global village, Google Hangouts, Hacker Ethic, Herman Kahn, informal economy, information security, invention of writing, Iridium satellite, jimmy wales, John Gilmore, John Markoff, Kibera, Kickstarter, knowledge economy, Lewis Mumford, low earth orbit, Marshall McLuhan, military-industrial complex, MITM: man-in-the-middle, mobile money, mutually assured destruction, Naomi Klein, new economy, Occupy movement, off-the-grid, Panopticon Jeremy Bentham, planetary scale, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, Silicon Valley, Silicon Valley startup, Skype, smart grid, South China Sea, Steven Levy, Streisand effect, Stuxnet, Ted Kaczynski, the medium is the message, Turing test, Twitter Arab Spring, undersea cable, unit 8200, We are Anonymous. We are Legion, WikiLeaks, Yochai Benkler, zero day

• • • There are at least three reasons for Somalia’s robust cellular infrastructure, all of them directly related to the disastrous civil war. When the country’s central government collapsed, so did “rent seeking,” a term coined by the economist Anne Krueger in 1974 to describe the actions of companies and/or governments to extract revenues by using their positions of market authority to raise prices (“rents”). State-owned telecommunications companies have been particularly prone to rent seeking: artificially inflated rates applied to long-distance calls have been used by governments the world over to extract revenues for the state. In developing countries, the situation was dire.


pages: 108 words: 27,451

Magic Internet Money: A Book About Bitcoin by Jesse Berger

Alan Greenspan, barriers to entry, bitcoin, blockchain, Bretton Woods, Cambridge Analytica, capital controls, carbon footprint, correlation does not imply causation, cryptocurrency, diversification, diversified portfolio, Ethereum, ethereum blockchain, fiat currency, Firefox, forward guidance, Fractional reserve banking, George Gilder, inflation targeting, invisible hand, Johann Wolfgang von Goethe, liquidity trap, litecoin, low interest rates, Marshall McLuhan, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Nixon shock, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, planned obsolescence, price mechanism, Ralph Waldo Emerson, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Robert Metcalfe, Satoshi Nakamoto, the medium is the message, Vitalik Buterin

By committing to a stable, long-term, and, in Bitcoin’s case, systematically enforceable monetary policy, it has rendered obsolete the trust assigned to central banks to morally mold money. 5.1.2 Revolution: Proof > Trust “Don’t Trust. Verify.” Bitcoin Proverb Bitcoin is a revolutionary advance in money. It tears down the primitive barriers preventing us from freely exchanging, measuring, and securely storing value on our own terms. Its trust-minimizing breakthrough reduces our dependence on rent-seeking middlemen, or “intermediaries,” to safeguard funds and process payments, and it also reduces their ability to censor the transmission of our proprietary data. With no need for permission from any financial institution, anyone can independently complete a transaction with their own digital signature – their “private key” – and everyone can verify its existence on the network’s public ledger.


pages: 586 words: 160,321

The Euro and the Battle of Ideas by Markus K. Brunnermeier, Harold James, Jean-Pierre Landau

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, battle of ideas, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, Brexit referendum, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, cross-border payments, currency peg, currency risk, debt deflation, Deng Xiaoping, different worldview, diversification, Donald Trump, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, financial deregulation, financial repression, fixed income, Flash crash, floating exchange rates, full employment, Future Shock, German hyperinflation, global reserve currency, income inequality, inflation targeting, information asymmetry, Irish property bubble, Jean Tirole, Kenneth Rogoff, Les Trente Glorieuses, low interest rates, Martin Wolf, mittelstand, Money creation, money market fund, Mont Pelerin Society, moral hazard, negative equity, Neil Kinnock, new economy, Northern Rock, obamacare, offshore financial centre, open economy, paradox of thrift, pension reform, Phillips curve, Post-Keynesian economics, price stability, principal–agent problem, quantitative easing, race to the bottom, random walk, regulatory arbitrage, rent-seeking, reserve currency, risk free rate, road to serfdom, secular stagnation, short selling, Silicon Valley, South China Sea, special drawing rights, tail risk, the payments system, too big to fail, Tyler Cowen, union organizing, unorthodox policies, Washington Consensus, WikiLeaks, yield curve

That is what I had to explain to Schacht [the president of the Nazi central bank], that the first cause of the stability of our currency is the concentration camp.”10 The decision on who should benefit from the allocation of foreign exchange became political and arbitrary. The institution invited a political process of rent-seeking, and it was those who could develop the closest contacts with the regime who benefited most. The allocation of scarce raw materials was in fact the basis of Nazi economic planning and also an initial instrument in the application of anti-Semitism: Jews were discriminated against as far as access to imports of raw materials, and their businesses suffered as a result.

The high-unemployment rate in the periphery invites proactive young people to emigrate to the productive core of the euro area. Their emigration makes the periphery rely even more on transfers. Instead of facilitating economic convergence, a productivity gap will be cemented. Fiscal transfers also distort economic activity. People in the periphery might find it more worthwhile to pursue rent-seeking activities and hunt for subsidies instead of doing something productive. Government payments, for instance, for civil servants, that might be appropriate for high-productivity parts of the country, may be too high in low-productivity areas, making government employment look more attractive than private sector work.

Some geostrategic theorists in Russia promoted such strategic investments as a way of building up a gradually increased command over what Lenin had dubbed the “controlling heights” of the economy of Russia’s Western neighbors and hence for an increased extension of influence. EUROPE’S DEPENDENCY ON RUSSIAN ENERGY But the most obvious instrument for Russian control came from its energy sector. The resource curse—in which abundant natural resources (above all energy) promote rent-seeking behavior—means that many large energy exporters are prone to corrupted politics and unstable policies and have a proclivity to blackmail. For modern Europe, the most obvious threat is posed by the extent of dependence on Russian gas. Although there were incidents in which disputes between Russia and Ukraine overpricing of long-term gas contracts led to a cutoff of supplies to some areas, notably in January 2009, when there were major shortages and cutoffs in Bulgaria and Romania, the issue only reached political and popular salience as a strategic threat to Europe in the aftermath of the collapse of the Yanukovych regime in Ukraine and the subsequent Russian annexation of the Crimea and destabilization of Eastern Ukraine.


pages: 626 words: 167,836

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

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

Inspired by the pioneering work of Douglass C. North, many economic historians have argued that it was only after the Glorious Revolution of 1688–89, when the English Parliament gained supremacy over the crown, that the preconditions for the Industrial Revolution were established.23 Before then, rent-seeking monarchs and other so-called economic parasites found it easier to extract revenue from others than to take part in productive activities, which required hard work. Article 4 of the Declaration of Rights of 1689 changed the rules of the game, as Britons could no longer be taxed without their consent.

The structure of power was shaped by the invention of agriculture, which meant that for the first time food could be stored, land could be owned, and individuals could accumulate a surplus of significance. This, in turn, led to the concept of property rights and a political structure to uphold those rights. The exchange of peasant labor for knightly protection created an unequal world, where rent seeking paid more handsomely than progress. The fear among the ruling classes that labor displacement would cause hardship, social unrest, and at worst a challenge to the political status quo meant that worker-replacing technologies frequently were resisted or even banned. This dynamic, in which the politically powerful had more to lose than they could gain from progress, kept the Western world in a technology trap where technologies that threatened people’s skills were forcefully resisted.

., 165 population curse, 64–67 populism, rise of, 277–85, 365 populist backlash, 293 populist renaissance, 21 populist revolutions, vulnerability to, 264 Port Clinton, Ohio, 250–51 Portuguese caravel ship, 51 power loom, arrival of, 15 prefabrication, 311 Price, Derek, 39 printing press, Gutenberg’s, 17 Procter and Gamble, 199 productivity, populations and, 64 Progressive Era, reform agenda of, 271 property rights: in American culture, 200; concept of, 62, 91; importance of, 20; in preindustrial societies, 33 Protestant Huguenots, 80 Protestant movement, 46 “proto-industrialization,” 68 prototypes: adoption of, 323; Amazon Go store, 312; developed, 261; imperfect, 298, 314; inventions turned into, 73 public clocks, 45 public infrastructure projects, 363 public schooling, 214 purchasing power, 191 Putnam, Robert, 250–51, 272, 276 railroads: arrival of, 108; declining importance of, 170; as enabling technology for revolutions, 85; network, expansion in Britain, 110; revenues (America), 208 Ramey, Valerie, 159, 332 redistributive taxing and spending, 271 Reform Acts of 1832 and 1867, 83 Reich, Robert, 235 relocation, 359–60 Renaissance, 51; as “age of instruments,” 59; beginnings of modern capitalism during, 70; great inventors of, 38; origin of, 51; productivity-enhancing technological improvements of, 54; technological advances of, 51 rent-seeking monarchs, 79 Restrepo, Pascual, 15, 144, 227, 242, 346 retraining, 353–54 Reuther, Walter, 191, 276, 356 Ricardo, David, 4, 116, 206, 345 right-to-work states, 257 robber barons, 208 Robinson, James, 19, 80 robots, 14; automobile assembly, 18; autonomous, 307; creation of new jobs for engineers, 15; flying, 312; human perception and, 318; jobs of machine operators taken over by, 14; middle-income jobs cut out by, 26; multipurpose, 242, 261, 327; of preindustrial times, 74; routine tasks performed by, 229 Rockefeller, John D., 208 Rodrik, Dani, 286–87 Roman alphabet, 47 Roman Empire: fall of, 41; most famous invention of, 38; slavery in, 74 Roosevelt, Franklin D., 157, 179, 211 Rousseau, Jean-Jacques, 62 royal trading monopolies, 80 Rural Electrification Administration, 157 Russell, Bertrand, 33, 78 Rust Belt, 279, 283, 291 Sanders, Bernie, 286 Savery, Thomas, 106, 317 Scheidel, Walter, 211 Schumpeter, Joseph, 73, 294 Schumpeterian growth, absence of, 72 Schumpeterian transformation, 49 scribes, 49, 50 Second Industrial Revolution, 22, 25, 148–73; agriculture, mechanization of, 189; American inequality during, 217; automotive industry, 202; child labor, as opportunity cost to education, 21; elimination of jobs created for machine operators during, 228; greatest virtue of, 155; mechanization following arrival of, 142; new tasks for labor spawned by, 202; skill-biased technological change, 213; skill demand raised by, 209; technological leadership of, 25; tractor use, expansion of, 196; urban-rural wage gap self-employment, 71 serfdom, 41 Shannon, Claude, 302 Sigismund I of Poland, King, 29 Silicon Valley, 257, 359 silk industry, beginnings of, 99 silk-throwing machine, 52 Simon, Herbert, 316, 336 Singer, Isaac, 149 Skill-biased technological change, 213 slavery, 39, 74 smartphone, spread of, 328 Smiles, Samuel, 110 Smith, Adam, 67, 69–70, 83, 228 Smithian growth, Schumpeterian vs., 58, 72 smokestack cities, 263 social class, Marx’s theory of, 265 socialism in America, 272 social media, 285 socioeconomic segregation, 26 Solow, Robert, 4, 180, 206, 325 speech recognition technology, 306 Spence, Michael, 292 spinning jenny, 102 spousal employment, 240 Sprague, Frank J., 152 steam engine: development of, 73; economic virtuosity of, 107; impact of on aggregate growth, 136; universal application of, 249 steel production, changed nature of, 13 Stephenson, George, 109 Stevenson, Betsey, 336 stocking-frame knitting machine, 10, 54, 76 strikes, protection of car companies from, 276 “stylized facts of growth,” 205 subjective well-being, 255 Summers, Lawrence, 261, 349 supercomputers, 290 supply of technology, obstacles to, 77 “symbolic analysts,” 235 task simplification, example of, 311 tax credits, 355–58 taxing and spending, redistributive, 271 tax revenue, 133 technological gap (1500–1700), 51 technology companies, location decisions of, 260 telephone operator, vanishing of, 201 telescope, 59 Tennessee Valley Authority (TVA) Act of 1933, 363 Tesla, Nikola, 152 textile industry, 38, 55, 95 Thirty Years’ War, 58 Thompson, E.


pages: 343 words: 101,563

The Uninhabitable Earth: Life After Warming by David Wallace-Wells

agricultural Revolution, Albert Einstein, anthropic principle, Anthropocene, Asian financial crisis, augmented reality, autism spectrum disorder, basic income, behavioural economics, Berlin Wall, bitcoin, Blockadia, British Empire, Buckminster Fuller, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, carbon-based life, Chekhov's gun, climate anxiety, cognitive bias, computer age, correlation does not imply causation, cryptocurrency, cuban missile crisis, decarbonisation, disinformation, Donald Trump, Dr. Strangelove, effective altruism, Elon Musk, endowment effect, energy transition, everywhere but in the productivity statistics, failed state, fiat currency, global pandemic, global supply chain, Great Leap Forward, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, it's over 9,000, Joan Didion, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kevin Roose, Kim Stanley Robinson, labor-force participation, life extension, longitudinal study, Mark Zuckerberg, mass immigration, megacity, megastructure, Michael Shellenberger, microdosing, microplastics / micro fibres, mutually assured destruction, Naomi Klein, negative emissions, Nick Bostrom, nuclear winter, ocean acidification, off-the-grid, Paris climate accords, Pearl River Delta, Peter Thiel, plutocrats, postindustrial economy, quantitative easing, Ray Kurzweil, rent-seeking, ride hailing / ride sharing, Robert Solow, Sam Altman, Silicon Valley, Skype, South China Sea, South Sea Bubble, Steven Pinker, Stewart Brand, Ted Nordhaus, TED Talk, the built environment, The future is already here, the scientific method, Thomas Malthus, too big to fail, universal basic income, University of East Anglia, Whole Earth Catalog, William Langewiesche, Y Combinator

It does not quite seem that way now, standing in the long shadow of the financial crisis and watching global warming beginning to darken the horizon. And yet, perhaps in part because we see the way that perspectives on climate change map neatly onto existing and familiar perspectives on capitalism—from burn-it-all-down leftists to naively optimistic and blinkered technocrats to rent-seeking, kleptocratic, growth-is-the-only-value conservatives—we tend to think of climate as somehow being contained within, or governed by, capitalism. In fact, the opposite: capitalism is endangered by climate. * * * — That Western capitalism may owe its dominance to the power of fossil fuels is not anything like consensus economic wisdom, but it also isn’t just a pet theory of the socialist Left.

Global warming could cultivate emergent forms of eco-socialism on one end of the spectrum, and could also conceivably produce a collapse of faith in anything but the market, on the other. Trade will surely endure, perhaps even thrive, as indeed it did before capitalism—individuals making trades and exchanges outside a single totalizing system to organize the activity. Rent-seeking, too, will continue, with those who can scrambling to accumulate whatever advantages they can buy—the incentive only increasing in a world more barren of resources, and more mournful of recent apparent abundance, now disappeared. This last is more or less the model that Naomi Klein memorably sketched out in The Shock Doctrine, in which she documents just how monolithically the forces of capital respond to crises of any kind—by demanding more space, power, and autonomy for capital.


pages: 304 words: 22,886

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler, Cass R. Sunstein

Al Roth, Albert Einstein, asset allocation, availability heuristic, behavioural economics, call centre, carbon tax, Cass Sunstein, choice architecture, continuous integration, currency risk, Daniel Kahneman / Amos Tversky, desegregation, diversification, diversified portfolio, do well by doing good, endowment effect, equity premium, feminist movement, financial engineering, fixed income, framing effect, full employment, George Akerlof, index fund, invisible hand, late fees, libertarian paternalism, loss aversion, low interest rates, machine readable, Mahatma Gandhi, Mason jar, medical malpractice, medical residency, mental accounting, meta-analysis, Milgram experiment, money market fund, pension reform, presumed consent, price discrimination, profit maximization, rent-seeking, Richard Thaler, Right to Buy, risk tolerance, Robert Shiller, Saturday Night Live, school choice, school vouchers, systems thinking, Tragedy of the Commons, transaction costs, Vanguard fund, Zipcar

Presumably, it was the hope of such competition that led the government to design the program in this partially privatized manner, in which the federal government hands out subsidies but relies on the private sector to distribute the loans. However, the competition has not focused on price. Instead, the lenders have engaged in what economists call rent-seeking activities. The idea is that if there are high profits to be made, suppliers will be willing to spend a lot of time and money to get that business. Because excess profits are available to the lenders who snag the student loan business, there are temptations to do whatever it takes to get to the head of the line.

., and retirement plans Lay, Kenneth lemmings Leslie, Phillip Lewin, Kurt libertarian paternalism, arguments against, see counterarguments; golden rule of, of government, in health care, and marriage, in politics, as Third Way, why stop there? life expectancy “lifestyle” funds Lincoln, Abraham loans: direct-to-consumer, federal, fixed-rate, and foreclosures, “good-faith estimate” on, home equity, interest rates on, microfinance, predatory, private, rent-seeking activities in, research findings on, risky, Stafford, student, and Truth in Lending Act, variable-rate Loewenstein, George Lollapalooza festival, Chicago London: bombing in World War II, pedestrians in Long, Bridget loss aversion lotteries low stakes Madrian, Brigitte magazine subscriptions, and inertia Maine, “intelligent assignment” choice architecture in mandated choice Manilow, Barry mappings markets, feedback in, free, incentives in, invisible hand in, trading systems in Markowitz, Harry marriage: anachronistic state control of, and children, choice architecture for, civil union vs., commitment in, cost/benefit analysis of, covenant, default rules for, discriminatory history of the institution of, and divorce, as domestic partnership agreement, expectations for, factors to be considered in, goals and intentions in, legal aspects of, mandatory waiting periods for, as precommitment strategy, prenuptial agreeements, recognition by religious organizations, same-sex, single state vs., status quo bias in, use of term, variations on a theme McAllen, Texas, Medicare Part D in McFadden, Daniel Medicaid, and Medicare Part D Medicare Advantage Medicare Part D, see prescription drug plan Medicare Web site mental accounting mere-measurement effect Merrell, Katie Métro, Le, Paris Meulbroek, Lisa microfinance loans mistakes, learning from MIT, Poverty Action Lab money: borrowing, as fungible, liquid assets of households, personal savings, for retirement, see retirement plans; Save More Tomorrow money illusion money market accounts Montana, social influence in mortgage brokers mortgages, and the American dream, annual percentage rate (APR), costs of, fees, fixed-rate, and foreclosures, “good-faith estimate” in, interest-only, online shopping for, points, prepayment penalties, and RECAP, research findings about, in sub-prime market, and teaser rates, and Truth in Lending Act, variable-rate motorcycle helmets music downloads mutual funds MySpace nail polish, no-bite National Association of Chain Drug Stores National Community Pharmacists Association National Environmental Policy Act (1972) Nazism negligence: defined, right to sue for negotiations, opening offers in Nelson, Willie neutrality New Deal No Child Left Behind Act noodge, meaning of term Norman, Don, The Design of Everyday Things nudge, use of term, nudges, evaluation of obesity, and conformity, and self-control, and social influence Occupational Safety and Health Administration (OSHA) One Size Fits All optical illusions optimism “opt-in” policy “opt-out” policy Oreopoulos, Phil organ donations, “brain dead” sources of, complexities in, default rule in, explicit consent in, inertia in, mandated choice, market in, presumed consent, rejection rate in, routine removal, social norms overconfidence ozone layer painting a ceiling paint store Parker, Tom, Rules of Thumb parking garages paternalism: asymmetric, and coercion, of government, “one-mouse-click,”; One Size Fits All, rejection of, stopping point for, use of term pedestrians peer pressure Pension Protection Act (2006) pensions, see retirement plans pesticides, warnings about Petrified Forest National Park, Arizona Planners planning fallacy pluralistic ignorance politics: brand switching in, libertarian paternalism in, predictions in, private-sector interests in, probability of voting, Third Way in, voting patterns pollution popcorn portfolio theory postcompletion errors practice, and feedback preferences Prelec, Drazen prescription drug plan, available alternative plans, confusing choices in, coverage in, defects of, design of, “doughnut hole” in, and drug prices, dual eligibles in, enrollment routes, failure to serve, flexible switching option in, individuals with no coverage, intelligent assignment in, key features of, lessons to be learned from, as Medicare Part D, minimum coverage requirements for, non-enrollment as default option, and pharmacy networks; poor choices made in, price differences in, random default, RECAP proposal for, restructuring of, simplicity needed in, Web site as tool for Prestwood, Charlie presumed consent, and organ removal prices, and incentives priming procrastination publicity principle public policy, and framing random processes: neutrality in, patterns in, “streak shooting,” Rawls, John Read, Daniel RECAP (Record, Evaluate, Compare Alternative Prices), and credit cards, and Medicare Part D, and mortgages, and student loans, and transparency recycling redistribution Reflective System, and Planners Regulation Z (Truth in Lending Act) representativeness required choice restaurant health inspection retirement plans: automatic enrollment in, automatic savings for, choice architecture in, choosing, complex choices in, conflicts of interest in, contribution rates, default options in, defined-benefit, defined-contribution, discretionary contributions to, diversification rule of, education about, enrollment decisions, ERISA, errors expected in, exclusive benefit rule of, feedback in, forced choice in, “free money” in, and government, incentives in, investments for, see investments; and job switching, mappings in, matching contributions to, and mindless choosing, obstacles to saving for, portable, postretirement income needed in, prudence rule of, “safe harbor status” for, Save More Tomorrow, saving for, simplicity in, status quo bias in, synchronized to pay raises, tax-favored savings accounts right to be wrong risk assessment risk-related behavior risk tolerance Robur Aktiefond Contura, Sweden Rogers, Kenny, “The Gambler,” Romalis, John Roosevelt, Franklin D.


pages: 311 words: 94,732

The Rapture of the Nerds by Cory Doctorow, Charles Stross

"World Economic Forum" Davos, 3D printing, Alan Greenspan, Ayatollah Khomeini, butterfly effect, cognitive dissonance, combinatorial explosion, complexity theory, Credit Default Swap, dematerialisation, Drosophila, epigenetics, Extropian, financial engineering, Future Shock, gravity well, greed is good, haute couture, heat death of the universe, hive mind, margin call, mirror neurons, negative equity, phenotype, plutocrats, rent-seeking, Richard Feynman, telepresence, Turing machine, Turing test, union organizing

Rather, it evolved over a period of centuries, from a tool of state censorship (you could prevent sedition by licensing big, heavy, old-fashioned metal-type printing presses) to a tool for revenue protection (Dickens and other Victorian writers were frequently on the edge of poverty because their works were copied without credit or royalty payment by any printer who could get their hands on them), and finally, recently, into a tool for rent-seeking by big corporations with paid lobbyists. Nobody in their right mind would have designed the current system—but we're stuck with it, largely because it's now a global mess, enshrined in law by international treaty: a many-headed hydra that would require broad international agreement in order to be replaced.

You may think that's hair-splitting, but it's an important point; if I complied with the letter of the law I wouldn't be able to use those ebooks after the ereader they were licensed for died of old age (probably within a couple of years), but the mere fact of my having paid for those books doesn't entitle me (in the eyes of the law) to preserve them in a readable format. This is an example of what Cory means when he says that copyright will ultimately make criminals out of all of us if we don't re-draw the boundary between the public domain and the private interest of everyone involved in copyright—from actual content creators to rent-seeking owners of the rights to stuff they've somehow acquired the legal title to. I'm not encouraging you to make copies of stuff other people made and to sell them for a profit without giving payback to the original creators and the publishers who helped edit and produce the work. That's not cool, unless the creators explicitly said you could do that.


pages: 371 words: 98,534

Red Flags: Why Xi's China Is in Jeopardy by George Magnus

"World Economic Forum" Davos, 3D printing, 9 dash line, Admiral Zheng, AlphaGo, Asian financial crisis, autonomous vehicles, balance sheet recession, banking crisis, Bear Stearns, Bretton Woods, Brexit referendum, BRICs, British Empire, business process, capital controls, carbon footprint, Carmen Reinhart, cloud computing, colonial exploitation, corporate governance, crony capitalism, currency manipulation / currency intervention, currency peg, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, financial deregulation, financial innovation, financial repression, fixed income, floating exchange rates, full employment, general purpose technology, Gini coefficient, global reserve currency, Great Leap Forward, high net worth, high-speed rail, hiring and firing, Hyman Minsky, income inequality, industrial robot, information security, Internet of things, invention of movable type, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, land reform, Malacca Straits, means of production, megacity, megaproject, middle-income trap, Minsky moment, money market fund, moral hazard, non-tariff barriers, Northern Rock, offshore financial centre, old age dependency ratio, open economy, peer-to-peer lending, pension reform, price mechanism, purchasing power parity, regulatory arbitrage, rent-seeking, reserve currency, rising living standards, risk tolerance, Shenzhen special economic zone , smart cities, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, speech recognition, The Wealth of Nations by Adam Smith, total factor productivity, trade route, urban planning, vertical integration, Washington Consensus, women in the workforce, working-age population, zero-sum game

It maintained the Great Wall of China over many centuries as a defensive and border control structure, and raised taxes to fund the imperial and military establishments. Important as the bureaucracy was to China’s development, it was not without weaknesses. Autocratic governance and administration fostered what we would call nowadays rent-seeking, or the manipulation of public policy or positions of power to influence or generate money or profit. Rent-seeking, often associated with corruption, is a recurring problem in China to this day. The bureaucracies of past dynasties provided continuity of administration and security, but they were also associated with the corrosive forces of patronage and corruption.


The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities by Mancur Olson

barriers to entry, British Empire, business cycle, California gold rush, collective bargaining, correlation coefficient, David Ricardo: comparative advantage, full employment, income per capita, Kenneth Arrow, market clearing, Norman Macrae, Pareto efficiency, Phillips curve, price discrimination, profit maximization, rent-seeking, Robert Solow, Sam Peltzman, search costs, selection bias, Simon Kuznets, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, urban decay, working poor

The organizations for collective action within societies that we are considering are therefore overwhelmingly oriented to struggles over the distribution of income and wealth rather than to the production of additional outputthey are "distributional coalitions" (or organizations that engage in what, in one valuable line of literature, is called "rent seeking").-" There has long been some intuitive apprehension of this, if not of the extent of social losses that it would pay such organizations to impose on society in efforts to get a larger share of social output. This intuitive apprehension is perhaps suggested by the special-interest group label sometimes used for such organizations.

For reprints of their initial articles and especially pertinent articles by Keith Cowling and Dennis Mueller, Richard Posner, and Barry Baysinger. Robert B. Ekelund, Jr., and Robert D. Tollison, plus other useful papers, see James M. Buchanan, Robert D. Tollison, and Gordon Tullock, eds., Toward a Theory of the Rent-Seeking Society (College Station, Tex.: Texas A. & M. University Press, 1980). 6. A measure that would reduce economic efficiency if introduced in a Pareto-efficient society could conceivably increase efficiency in a society with prior distortions. See R. G. Lipsey and R. K. Lancaster, "The General Theory of the Second Best," Review of Economic Studies 24, no. 63:11-32. 7.


pages: 104 words: 30,990

The Centrist Manifesto by Charles Wheelan

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, American Society of Civil Engineers: Report Card, Bernie Madoff, Bretton Woods, carbon tax, centre right, clean water, creative destruction, David Brooks, delayed gratification, demand response, high-speed rail, Home mortgage interest deduction, housing crisis, income inequality, invisible hand, obamacare, profit maximization, Ralph Nader, rent-seeking, Report Card for America’s Infrastructure, Ronald Reagan, Ronald Reagan: Tear down this wall, Solyndra, stem cell, the scientific method, transcontinental railway, Walter Mischel

America has never promised great outcomes for all, but it has always promised equal opportunity. At their best, the Democrats understand that when poor children are stuck in lousy schools, or when middle-class families cannot afford college, we are not fulfilling that promise. The Democrats are also right to focus on “rent seeking” by the very rich—the notion that the most privileged Americans (such as Wall Street bankers) are using their political clout to enrich and protect themselves in ways that make the rest of us worse off. There is no doubt that the 2008 financial crisis was caused in part by a regulatory system that allowed financial firms to earn staggering profits when times were good while leaving the government with the tab for huge private losses when the party was over.


pages: 112 words: 30,160

The Gated City (Kindle Single) by Ryan Avent

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

About 80% of Americans live in metropolitan areas, despite the fact that land there is generally more expensive than in the surrounding rural areas. One in three Americans lives in the country’s 15 largest cities alone. There is too much of a metropolitan component to modern life to chalk metropolitan ubiquity up to showing off and rent-seeking and nothing else. And there is another matter to consider -- cities are full of firms that produce for other markets. Why is this an issue? People have the option to live most anywhere they want. A person isn't going to take a job in an expensive city unless that job compensates him for the higher cost of living.


pages: 484 words: 104,873

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

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

The compensation paid to workers in the financial sector has also exploded over the past three decades, and is now about 70 percent more than the average for other industries.52 The assets held by banks have ballooned from about 55 percent of GDP in 1980 to 95 percent in 2000, while the profits generated in the financial sector have more than doubled from an average of about 13 percent of all corporate profits in the 1978–1997 timeframe to 30 percent in the period between 1998 and 2007.53 No matter how you choose to measure it, finance has grown dramatically as a share of economic activity in the United States and, to a somewhat less spectacular degree, in nearly all industrialized countries. The primary complaint leveled against the financialization of the economy is that much of this activity is geared toward rent seeking. In other words, the financial sector is not creating real value or adding to the overall welfare of society; it is simply finding ever more creative ways to siphon profits and wealth from elsewhere in the economy. Perhaps the most colorful articulation of this accusation came from Rolling Stone’s Matt Taibbi in his July 2009 takedown of Goldman Sachs that famously labeled the Wall Street firm “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”54 Economists who have studied financialization have found a strong correlation between the growth of the financial sector and inequality as well as the decline in labor’s share of national income.55 Since the financial sector is, in effect, imposing a kind of tax on the rest of the economy and then reallocating the proceeds to the top of the income distribution, it’s reasonable to conclude that it has played a role in a number of the trends we’ve looked at.

See personal consumption expenditure (PCE) Peltzman, Sam, 267 Peltzman effect, 267 Penn State, MOOCs and, 136 pensions, 222, 224 people analytics, 93 Perelman, Les, 130–131 per-employee valuations, technology sector and, 175 permanent income hypothesis, 210–211 personal consumption expenditure (PCE), 202n personal robots, 7 pharmacists, 172–173n pharmacy robotics, 153–155 Philippines, income inequality in, 46 Pierson, Paul, 57 Piketty, Thomas, 275 Pinker, Steven, 237 “Piquant” system, 99–100 plagiarism, MOOCs and, 136–137 Player Piano (Vonnegut), 32 PlayStation, 4 plutocracy, 219 plutonomy, 198 polarization, job-market, 50–51 politics advancing technology and, 57–58 financial elite’s influence over, 47–48, 59–60 guaranteed income concept and, 260–261, 278–279 post-scarcity economy, 247 Poterba, James, 222 poverty trap, 262 Prey (Crichton), 244 prices deflation and, 216–217 drug, 170–171 effect of automation on, 215–216 PrimeSense, 4 Princeton University, MOOCs and, 133 Principles of Economics (Frank & Bernanke), 37 Principles of Economics (Taylor & Weerapana), 37 productivity, 206–207 defined, 35n information technology and, 52 recessions and, 207–208 technological progress and, 33 wages and, xi, 33, 35–38, 38n product lifecycles, robots and, 11 professionals, erosion of employment for, xvi–xvi “Professionals Against Machine Scoring of Student Essays in High Stakes Assessment” (petition), 129, 130 progress, lack of broad-based, 64–65 proton beam facilities, 164 public universities, MOOCs and, 142 purchasing power distribution of, 197, 198 guaranteed income and, 265–266 jobs and, xvii “Quill” software, 84–86 Rabkin, Eric, 137 Race Against the Machine (Brynjolfsson & McAfee), 60 Radical Abundance (Drexler), 243, 246 radio-frequency identification (RFID), 154, 157 radiologists, artificial intelligence and, xv, 152 Rand, Ayn, 264 recessions investment and, 227 months for employment to recover, 45 productivity and, 207–208 stagnant income, rising costs, and, 217–218 See also Great Recession recursive improvement, Artificial General Intelligence and, 231–232 Redbox movie rental kiosks, 18–19 regulatory capture, 170 religious overtones of Singularity, 235 “Remaining Awake Through a Great Revolution” (King), 29–30 rent seeking, financialization and, 55–56 Republicans, income distribution preferred by, 47n reshoring, 8–12 resource depletion, technology and, xvii, 282–283 restocking, automated, 18–19 retail sector, 16–20, 87, 88. See also online retailing Rethink Robotics, 5, 7, 10 retirement income, 222 Reuther, Walter, 193 reverse engineering the brain, 237 RFID.


pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future by Paul Mason

air traffic controllers' union, Alan Greenspan, Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, basic income, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Bletchley Park, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, business process, butterfly effect, call centre, capital controls, carbon tax, Cesare Marchetti: Marchetti’s constant, Claude Shannon: information theory, collaborative economy, collective bargaining, commons-based peer production, Corn Laws, corporate social responsibility, creative destruction, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, disinformation, Downton Abbey, drone strike, en.wikipedia.org, energy security, eurozone crisis, factory automation, false flag, financial engineering, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, fulfillment center, full employment, future of work, game design, Glass-Steagall Act, green new deal, guns versus butter model, Herbert Marcuse, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, low interest rates, low skilled workers, market clearing, means of production, Metcalfe's law, microservices, middle-income trap, Money creation, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, Paul Samuelson, payday loans, Pearl River Delta, post-industrial society, power law, precariat, precautionary principle, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, Robert Metcalfe, scientific management, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, technological determinism, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, Twitter Arab Spring, union organizing, universal basic income, urban decay, urban planning, vertical integration, Vilfredo Pareto, wages for housework, WikiLeaks, women in the workforce, Yochai Benkler

Amid the candlelight of the pubs where the early trade unions met, David Ricardo suddenly had a whole new set of followers. The worker-intellectuals of the 1820s understood the revolutionary implication of the labour-theory: if the source of all wealth is work, then there’s a legitimate question about how that wealth should be distributed. Just as a rent-seeking aristocracy can be shown to be parasites on the productive economy, so too can capitalists be seen as parasites on the work of others. Their work is needed – but the factory system looks as if it is structured to deliver them excess rewards. ‘There is nothing more than the knowledge, skill and labour requisite [to set up a factory] on which the capitalist can found a claim to any share of the produce,’ wrote Thomas Hodgskin, a naval lieutenant turned socialist, in 1825.8 As illegal trade unions spread the doctrine of ‘Ricardian socialism’, the factory owners’ enthusiasm for the labour-theory waned.

The aim would be to ensure the global finance system could, in the short to medium term, return to its historic role: efficiently allocating capital between firms, sectors, savers and lenders, etc. The regulations could be a lot simpler than the Basel III Treaty, because they would be backed up by strict criminal enforcement and professional codes in banking, accountancy and law. The guiding principles would be to reward innovation and to penalize and discourage rent-seeking behaviour. For example, it would become a breach of professional ethics for a chartered accountant or qualified lawyer to propose a tax avoidance scheme, or for a hedge fund to store uranium in a warehouse to drive its spot price higher. In countries such as the UK, Singapore, Switzerland and the USA with globally oriented finance sectors, governments could offer a deal whereby, in return for coming clearly and transparently onshore, some limited lender of last resort facilities were made available to the remaining high-risk, profit-oriented finance firms.


pages: 576 words: 105,655

Austerity: The History of a Dangerous Idea by Mark Blyth

"there is no alternative" (TINA), accounting loophole / creative accounting, Alan Greenspan, balance sheet recession, bank run, banking crisis, Bear Stearns, Black Swan, book value, Bretton Woods, business cycle, buy and hold, capital controls, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, collateralized debt obligation, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, deindustrialization, disintermediation, diversification, en.wikipedia.org, ending welfare as we know it, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial repression, fixed income, floating exchange rates, Fractional reserve banking, full employment, German hyperinflation, Gini coefficient, global reserve currency, Greenspan put, Growth in a Time of Debt, high-speed rail, Hyman Minsky, income inequality, information asymmetry, interest rate swap, invisible hand, Irish property bubble, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, Long Term Capital Management, low interest rates, market bubble, market clearing, Martin Wolf, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Occupy movement, offshore financial centre, paradox of thrift, Philip Mirowski, Phillips curve, Post-Keynesian economics, price stability, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Solow, savings glut, short selling, structural adjustment programs, tail risk, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, Two Sigma, unorthodox policies, value at risk, Washington Consensus, zero-sum game

Public choice theory, like any universal gizmo, has not only helped revolutionize the institutional relationship between voters, politicians, and bankers in democratic societies, it has become, as Daniel Dennett said about evolution in Darwin’s Dangerous Idea, the “universal acid” that eats away everything it touches by turning everything into a principal-agent/rent-seeking problem.74 Think that countries in a currency union might actually come to each other’s aid out of a sense of solidarity? Don’t be so naïve. Moral hazard is ever present. Worried that you can’t tell what the future may hold? Don’t worry. Properly defined rules will make the future conform to your preferred vision. Terrified that profligate governments will not reform their economies when you compensate for their unemployment through transfers? You are right. They will not do so, they will “hide and rent seek” off your taxpayers; so their governments should be replaced with ones that you can trust.


pages: 408 words: 108,985

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

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

There are suggestions that it would also improve gender equality.5 There is no evidence that these lower rates at the top (or lower inheritance and net wealth taxes) have led to more growth. Indeed, empirical studies suggest that there is no relationship between lowering tax rates at the top and economic growth.6 But there is a persuasive argument that those lower taxes encourage rent-seeking, as it incentivizes attempts to increase profits by exploiting, for instance, market power or government relationships. Such behavior interferes with economic efficiency and undermines growth.7 Empirical studies also suggest that when heirs inherit a large sum they are not as motivated to work.8 Taxing inheritances, therefore, might even have positive effects on growth and employment.

Europe’s experience corresponded to that of the United States in which Reagan’s supply-side politics were no more successful. Lowering taxes, especially on the rich, did not lead to the predicted supply responses. It did lead to the anticipated increases in inequality. Also predictably, it led to more rent-seeking, which became more profitable. Liberalization increased gaps between social and private returns, which led to a diversion of resources from wealth creation to exploitation of market power and dominant positions. ‡ The change may be even greater than these numbers suggest. National labor income includes the incomes of bankers, CEOs, and other highly paid professionals.


pages: 375 words: 105,586

A Small Farm Future: Making the Case for a Society Built Around Local Economies, Self-Provisioning, Agricultural Diversity and a Shared Earth by Chris Smaje

agricultural Revolution, Airbnb, Alfred Russel Wallace, back-to-the-land, barriers to entry, biodiversity loss, Black Lives Matter, Boris Johnson, carbon footprint, circular economy, clean water, climate change refugee, collaborative consumption, Corn Laws, COVID-19, David Ricardo: comparative advantage, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, Donald Trump, energy transition, European colonialism, Extinction Rebellion, failed state, fake news, financial deregulation, financial independence, Food sovereignty, Ford Model T, future of work, Gail Bradbrook, garden city movement, Garrett Hardin, gentrification, global pandemic, Great Leap Forward, green new deal, Hans Rosling, hive mind, intentional community, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jevons paradox, land reform, mass immigration, megacity, middle-income trap, Murray Bookchin, Naomi Klein, Peace of Westphalia, peak oil, post-industrial society, precariat, profit maximization, profit motive, rent-seeking, rewilding, Rutger Bregman, Silicon Valley, Silicon Valley billionaire, Steven Pinker, Stewart Brand, Ted Nordhaus, the scientific method, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, vertical integration, Washington Consensus, Wolfgang Streeck, zero-sum game

Naomi Klein calls it ‘McGovernment’, a ‘happy meal of cutting taxes, privatizing services, liberalizing regulations, busting unions’ to remove impediments to private markets.125 In this way, the ideal of the creative and productive neoliberal market economy becomes the reality of rapacious and unfettered rent-seeking by global capital. Can national states reclaim capitalism for their wider citizenries? Can Main Street hold its own over Wall Street? This is the claim of some reformist economic thinkers, but it seems unlikely without wider system change in view of the expansionary logic of the M → Mʹ loop which now has few options but to abstract itself from bounded territory and ‘de-materialise’ from sites of actual production like farms and factories in favour of ‘virtual’ connections like computerised financial markets or distribution platforms – what’s sometimes called a capitalist ‘Empire’ where the symbolic economy is further freed to overrun physical reality.126 In that sense, many of the crises outlined earlier might be seen as warnings from the non-symbolic world not to get too dazzled by our symbolic goods.

We might also speak of an ‘ecological rent’ levied by the Earth on our present global political economy in currencies of climate stability, soil renewability, water availability and crop resilience, with payments overdue. I find it hard to see how the interlocking crises we face won’t be augmented, leading ultimately to breakdown in social systems and planetary systems, if we continue down these present paths of economic and ecological rent-seeking. But there’s an outside chance that recapturing the garden and turning to intensive smallholder agriculture may avert that outcome and restore well-being. Small-scale farming has persisted to the present often in hostile policy environments. If political institutions and scientific research were devoted to actively supporting it, there’s a good chance it could produce higher returns acre for acre than existing forms of capitalist farming (in fact, as we’ll see in Part II, sometimes it already does), while producing copious low-carbon, labour-intensive employment of the kind that green new dealers and ecological economists argue is necessary for sustainable prosperity.


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

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

They attribute the failures not so much to the low quality of the employees in the public administration, but to more fundamental issues that could not be corrected by simply hiring more and better-trained administrative staff. Weak institutions and unclear or poor rules within the public sector; specific attitudes and biases on the part of policymakers and high-level bureaucrats; pressures coming from powerful vested interests; rent-seeking in different parts of the public sector; increasing corruption and governance problems in general, at both the administrative and the political level; and, in more recent years, new problems that have become intrinsically more difficult to solve, due to the fact that markets have become more complex, public sectors have become larger and more difficult to control, and some problems have become global – all of these concerns are making government failures more likely, even with much improved national, 69 70 Termites of the State public administrations.

Putting it differently, the market might require more governmental intervention not to replace it in some aspects, as some economists and policymakers with leftist bents would like the government to do. Rather, the government would intervene to make the market function more closely to the way that an efficient market ought to function. The objective would be to remove, or at least to reduce, rent-seeking, abuses, cronyism, tax 230 Termites of the State avoidance, tax evasion, and other factors that have been playing a growing and, often, invisible role in today’s presumably “free” (but complex) market. In some sense it might be argued that this was the real call of the so-called Washington Consensus, the thinking that became popular in the 1990s but that was only partly and superficially followed by the actions then undertaken by some governments.

Many became convinced that the politicians who made the rules under which individuals and enterprises operated could be influenced, and were being influenced, by powerful lobbies, 388 Termites of the State or that they could even be bought by rich or well-connected individuals. See Cost, 2015. Complaints about the role of cronyism, revolving-door policies, rent-seeking, corruption, and other problems became more frequent, leading, in several countries, to a worrisome rise of populist forces. Initially, some had dismissed the complaints as class warfare. In the years that had followed the Great Depression of the 1930s and World War II, many governments had responded to the calls by economists and citizens for a larger government involvement in the economy by creating welfare states, or, as in the United States, by introducing new social programs, such as the War on Poverty.


pages: 829 words: 187,394

The Price of Time: The Real Story of Interest by Edward Chancellor

"World Economic Forum" Davos, 3D printing, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, asset allocation, asset-backed security, assortative mating, autonomous vehicles, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, bitcoin, blockchain, bond market vigilante , bonus culture, book value, Bretton Woods, BRICs, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cashless society, cloud computing, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, commodity super cycle, computer age, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cryptocurrency, currency peg, currency risk, David Graeber, debt deflation, deglobalization, delayed gratification, Deng Xiaoping, Detroit bankruptcy, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, double entry bookkeeping, Elon Musk, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, everywhere but in the productivity statistics, Extinction Rebellion, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global reserve currency, global supply chain, Goodhart's law, Great Leap Forward, green new deal, Greenspan put, high net worth, high-speed rail, housing crisis, Hyman Minsky, implied volatility, income inequality, income per capita, inflation targeting, initial coin offering, intangible asset, Internet of things, inventory management, invisible hand, Japanese asset price bubble, Jean Tirole, Jeff Bezos, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, land bank, large denomination, Les Trente Glorieuses, liquidity trap, lockdown, Long Term Capital Management, low interest rates, Lyft, manufacturing employment, margin call, Mark Spitznagel, market bubble, market clearing, market fundamentalism, Martin Wolf, mega-rich, megaproject, meme stock, Michael Milken, Minsky moment, Modern Monetary Theory, Mohammed Bouazizi, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, Northern Rock, offshore financial centre, operational security, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, peer-to-peer lending, pensions crisis, Peter Thiel, Philip Mirowski, plutocrats, Ponzi scheme, price mechanism, price stability, quantitative easing, railway mania, reality distortion field, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk free rate, risk tolerance, risk/return, road to serfdom, Robert Gordon, Robinhood: mobile stock trading app, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, Second Machine Age, secular stagnation, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, subprime mortgage crisis, Suez canal 1869, tech billionaire, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Haywood, time value of money, too big to fail, total factor productivity, trickle-down economics, tulip mania, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, Walter Mischel, WeWork, When a measure becomes a target, yield curve

Besides, the main beneficiaries of the great wealth bubble were the 1 per cent, while the rest of the 99 per cent struggled with weak income growth, unaffordable housing and excessive debts. Rising inequality, as economists never tire of pointing out, is not good for economic growth – especially the ‘bad inequality’ that arises from corporate rent-seeking of the type which thrived after 2008. Although ultra-low interest rates and massive securities purchases by central banks dampened market volatility, the financial system was weakened by the prolonged period of easy money. A frantic search for yield encouraged investors to take greater risks and underwriters to lower lending standards.

Kotkin, Joel, The Coming of Neo-Feudalism: A Warning to the Global Middle Class (New York, 2020). Krippner, Greta, Capitalizing on Crisis: The Political Origins of the Rise of Finance (London, 2011). Krippner, Greta, ‘The Financialization of the American Economy’, Socio-Economic Review, 2005. Krueger, Anne O., ‘The Political Economy of the Rent-seeking Society’, American Economic Review, 64 (3), June 1974: 291–303. Krugman, Paul, ‘The Hangover Theory’, Slate, 3 December 1998. Krugman, Paul, ‘The Myth of Asia’s Miracle’, Foreign Affairs, 73 (6), November/December 1994: 62–78. Kumhof, Michael, Rancière, Romain and Winant, Pablo, ‘Inequality, Leverage and Crises: The Case of Endogenous Default’, IMF Working Paper, November 2013.

Wei Gu and Chuin-Wei Yap, ‘China, Fighting Money Exodus, Squeezes Business’, Wall Street Journal, 8 March 2016. 122. Jamil Anderlini, Ben Bland, Gloria Cheung and Lucy Hornby, ‘Chinese Billionaire Abducted from Hong Kong’, Financial Times, 31 January 2017. 123. Shaw, Financial Deepening, p. 15. 124. See Anne O. Krueger, ‘The Political Economy of the Rent-seeking Society’, American Economic Review, 64 (3), June 1974. 125. Karl Marx, Capital, vol. III, ed. Friedrich Engels (London, 1894), p. 362 fn. 126. John Kenneth Galbraith, The Great Crash 1929 (London, 1993), pp. 152–3. 127. Yan Sun, Corruption and Market in Contemporary China (Ithaca, NY, 2018), p. 75. 128.


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The New Prophets of Capital by Nicole Aschoff

"World Economic Forum" Davos, 3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, American Legislative Exchange Council, Anthropocene, antiwork, basic income, biodiversity loss, Bretton Woods, clean water, collective bargaining, commoditize, crony capitalism, do what you love, feminist movement, follow your passion, food desert, Food sovereignty, glass ceiling, global supply chain, global value chain, helicopter parent, hiring and firing, income inequality, Khan Academy, late capitalism, Lyft, Mark Zuckerberg, mass incarceration, means of production, microapartment, performance metric, post-Fordism, post-work, profit motive, rent-seeking, Ronald Reagan, Rosa Parks, school vouchers, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Slavoj Žižek, structural adjustment programs, Susan Wojcicki, TED Talk, Tim Cook: Apple, urban renewal, women in the workforce, working poor, zero-sum game

Instead, getting the historical narrative right is important because the stories we tell “deeply affect the very way in which we understand the nature and the development of the market, as well as its interrelationship with the state and other institutions.”26 In the neoliberal narrative states are interlopers, under the thumb of rent-seeking politicians and bureaucrats, whose field of action should be restricted. The market, and the firm within it, is a natural thing following nature’s laws, and the state is an unnatural, potentially dangerous thing, following human laws. The implication of this historical narrative is that the state must always justify its actions—justify why it is messing with natural market processes that, according to neoliberals, don’t need its intervention.


pages: 453 words: 117,893

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems by Linda Yueh

3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bike sharing, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, export processing zone, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, general purpose technology, Gini coefficient, Glass-Steagall Act, global supply chain, Great Leap Forward, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low interest rates, low-wage service sector, manufacturing employment, market bubble, means of production, middle-income trap, mittelstand, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, technological determinism, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

So, the farmers do not earn more if they have to work harder to produce a bushel of corn. Thus, only the landowners gain from higher land prices owing to scarcity. They have not exerted any effort to earn the higher rents charged to farmers. This is in line with his view of landowners, of course, that they were rent-seekers. Rent-seeking is one of the most widely used economic concepts today, for example, to explain why political corruption persists in some oil-rich countries, since there is an incentive to seek to hoard the ‘rents’ from selling oil and not share it with the country as a whole. Ricardo’s model of international trade David Ricardo’s approach to international trade was rooted in his background, while his interest in economics was stimulated by The Wealth of Nations, so it is unsurprising that he further developed Adam Smith’s approach.

joint-stock companies Jones, Homer Journal of Economic Perspectives Journal of Political Economy JPMorgan Juncker Plan Kahn, Richard Kant, Immanuel Keynes, John Maynard and the backlash against globalization and the Bloomsbury Group and Bretton Woods System and budget deficits counter-cyclical policies and crowding out on depression/recession The Economic Consequences of the Peace fiscal activism and Friedman The General Theory of Employment, Interest and Money and government spending on government’s role in economy and Hayek and investors Keynesian revolution legacy life and times of and Marshall and Niemeyer and paradox of thrift at Paris Peace Conference Prices and Production and public investment and Robbins Robinson and Keynes/Keynesian economics and Schumpeter and ‘socializing investment’ A Tract on Monetary Reform and the Treasury A Treatise on Money wealth Keynes, John Neville Khrushchev, Nikita Knight, Frank Kodak Korea North South Krugman, Paul Krupp Kuznets, Simon labour force growth labour productivity and work incentive laissez-faire landowners Lassalle, Ferdinand Latin America currency crisis (1981–82) see also specific countries League of Nations Lehman Brothers Lenin, Vladimir Leontief, Wassily Lewis, Arthur Lewis, Barbara (‘Bobby’) Life Extension Institute Linda for Congress BBC documentary London London School of Economics and Political Science London Stock Exchange Long Depression (1880s) Lopokova, Lydia Louis XIV LSE see London School of Economics and Political Science Lucas, Jr, Robert Ma, Jack (Ma Yun) Maastricht Treaty macroprudential policy see also central banks; financial stability Malaysia Malthus, Thomas Manchester Mandela, Nelson manufacturing additive (3D printing) automation in China and deindustrialization GDP contribution in UK German high-tech and industrialization see also industrialization Japan ‘manu-services’ ‘March of the Makers’ mass-manufactured goods and national statistics reshoring rolling back deindustrialization process and Smith trade patterns changed by advanced manufacturing US Mao Zedong Maoism ‘March of the Makers’ marginal utility analysis marginalism market forces/economy ‘Big Bang’ (1986) competition see competition and economic equilibrium see economic equilibrium emerging economies see emerging economies Hayek and the supremacy of market forces ‘invisible hand’ and laissez-faire and Marx 4 self-righting markets supply and demand see supply and demand Marshall, Alfred on approach to economics and the backlash against globalization and the Cambridge School and decentralization Economics of Industry and education’s role in reducing inequality and inequality and Keynes and laissez-faire legacy life and times of marginal utility analysis and Marx and poverty Principles of Economics and utility theory Marshall, Mary, née Paley Marx, Heinrich Marx, Henriette, née Pressburg Marx, Jenny, née von Westphalen Marx, Karl and agriculture and the backlash against globalization Capital and capitalism and China and class Communist Manifesto (with Engels) communist theories A Contribution to the Critique of Political Economy doctoral thesis The Eighteenth Brumaire of Louis Bonaparte and Engels journalism life and times of and Marshall and rate of profit and Ricardo and Russia on service sector workers surplus value theory and the Young Hegelians Marx, Laura Marx, Louise Marxism and the Austrian School and unemployment see also Marx, Karl Mason, Edward mathematical economics Mauritius May, Theresa Meade, James median income Menger, Carl mercantilist policies see also Corn Laws Merkel, Angela Mexico middle class China and economic growth and economic inequality and European revolutionaries income and industrialization and Keynes and Heinrich Marx as proportion of world population and Schumpeter social resentment US Mill, James Mill, John Stuart On Liberty Principles of Political Economy Minsky, Hyman Mises, Ludwig von Mitchell, Wesley mobile phones/smartphones monetarism see also Friedman, Milton monetary policy and Friedman tools see also quantitative easing (QE) see also central banks monopolies and Marx natural and Robinson and Schumpeter and Smith and Sraffa monopsony Mont Pelerin Society Morgenthau, Henry mortgage-backed securities (MBS) mortgage lending and the 2008 financial crisis sub-prime Myanmar Myrdal, Gunnar Napoleon I Napoleon III Napoleonic Wars national/official statistics China UK US national debt Austria and central banks China and creditors and debt forgiveness and deficits euro area and foreign exchange reserves and investment Japan major economies owed to foreigners and quantitative easing and Ricardian equivalent UK US Vietnam National Health Service (UK) National Infrastructure Commission (UK) Navigation Acts neoclassical economics convergence hypothesis ‘neoclassical synthesis’ New Neoclassical Synthesis see also Fisher, Irving; Marshall, Alfred; Solow, Robert Neoclassical Synthesis see also Samuelson, Paul New Classicists see also Lucas, Jr, Robert New Deal New Institutional Economics see also North, Douglass New Keynesians see also Stiglitz, Joseph New Neoclassical Synthesis New Rhineland News (Cologne) New Rhineland News: Review of Political Economy (London) new trade theory New York Herald New York Times New York Tribune Newcomb, Simon Newsweek Niemeyer, Sir Otto Nissan Nixon, Richard Nokia non-tariff barriers (NTBs) Nordhaus, William North, Douglass and the backlash against globalization and development challenges doctoral thesis The Economic Growth of the United States from 1790 to 1860 and institutions Institutions, Institutional Change and Economic Performance life and times of Nobel Prize path dependence theory and Smith North, Elizabeth, née Case North Korea Northern Rock Oak Ridge National Laboratory Obama, Barack Occupy movement oil industry Organisation for Economic Co-operation and Development (OECD) Osborne, George Overseas Development Institute (ODI) Oxford University Balliol College Paine, Thomas Paley, Mary Paris Peace Conference path dependence theory see also North, Douglass Peel Banking Act Philips, Lion Philips (electronics company) physical capital Physiocrats Pigou, Arthur Cecil Piketty, Thomas pin-making Pinochet, Augusto Ponzi finance populism Portugal poverty aid and development see economic development challenges eradication/reduction frictional and Marshall and Marx and median income people lifted from in South Africa productivity and agriculture ‘benign neglect’ of Britain’s productivity puzzle and computers and economic growth and education and factor reallocation and Germany and Hayek incentives and industry/industrial revolution and innovation and investment Japan and jobs labour see labour productivity and land low and Marshall moving into higher sectors of and pricing raising and Schumpeter and secular stagnation slow economic and productivity growth and the future and specialization and technology total factor productivity and trade and wages Prohibition protectionism agricultural see also Corn Laws Navigation Acts public-private partnerships public investment and Keynes public spending general government spending see government spending public investment see public investment squeeze see also austerity Puerto Rico quantitative easing (QE) Quantity Theory of Money see also Friedman, Milton; monetarism; Equation of Exchange Rand, Ayn RAND Corporation rate of profit rational expectations theory Reagan, Ronald recession/depression debt-deflation theory of depression Great Depression see Great Depression (1930s) Great Recession (2009) Greece ‘hangover theory’ of Hayek on and Keynes Long Depression (1880s) second recession (1937–38: recession within the Depression) in UK 1970s redistribution Regional Comprehensive Economic Partnership (RCEP) Reich, Robert reindustrialization Reisinger, Anna Josefina Remington Rand rent-seeking research and development (R&D) investment China Research in Motion (RIM) retail trade Rhineland News Ricardian equivalence Ricardo, David and the backlash against globalization and class comparative advantage theory and the Corn Laws Essay on the Influence of a Low Price of Corn on the Profits of Stock The High Price of Bullion international trade theory as a landlord life and times of as a loan contractor and Marx On the Principles of Political Economy and Taxation and Schumpeter and Smith wealth Ricardo, Priscilla Robbins, Lionel Robinson, Austin Robinson, James Robinson, Joan The Accumulation of Capital and the AEA and the backlash against globalization and communism Economic Philosophy The Economics of Imperfect Competition Essays in the Theory of Employment and imperfect competition Introduction to the Theory of Employment and Keynes and Keynesian economics life and times of and monopolies monopsony theory and Schumpeter and unemployment wage determination theory robotics Rodrik, Dani Rolls-Royce Roosevelt, Franklin D New Deal Russia 1905 Revolution and Lenin and Marx Samsung Samuelson, Paul and the backlash against globalization Economics factor-price equalization theorem Nobel Prize savings for capital investment and inflation and Keynes and the ‘paradox of thrift’ Say, Jean-Baptiste Schmoller, Gustav von Schumpeter, Anna, née Reisinger Schumpeter, Gladys, née Seaver Schumpeter, Joseph and the backlash against globalization as banker/investor Business Cycles and capitalism Capitalism, Socialism and Democracy ‘creative destruction’, innovation and ‘The Crisis of the Tax State’ and the Econometric Society economics and entrepreneurs on Fisher and Hayek History of Economic Analysis and Keynes legacy life and times of The Nature and Content of Theoretical Economics and perfect competition and Ricardo and Robinson Theory of Economic Development wealth Schumpeter, Romaine Elizabeth, née Boody Schumpeter Group of Seven Wise Men Schwartz, Anna Jacobson Schwarzenegger, Arnold Scottish Enlightenment Seaver, Gladys Ricarde see Schumpeter, Gladys secular stagnation self-interest services sector China and deindustrialization financial services see financial services global trade in services human capital investment invisibility of liberalization ‘manu-services’ and Marx move away from and national statistics output measurement productivity and innovation and Smith Trade in Services Agreement (TiSA) UK US shadow banking Shiller, Robert silver Singapore Skidelsky, Robert skill-biased technical change skills shortage small and medium-sized enterprises (SMEs) smartphones/mobile phones Smith, Adam and the backlash against globalization as Commissioner of Customs for Scotland economic freedom on ‘invisible hand’ of market forces and laissez-faire economics legacy life and times of and manufacturing and Marx and North and Physiocracy on rate of profit and rebalancing the economy and Ricardo and the services sector and state intervention The Theory of Moral Sentiments The Wealth of Nations social capital social networks social services socialism communist see communism vs welfare state capitalism Solow, Barbara (‘Bobby’), née Lewis Solow, Robert and the backlash against globalization with Council of Economic Advisers doctoral thesis economic growth model ‘How Economic Ideas Turn to Mush’ John Bates Clark Medal and Keynesian economics life and times of Nobel Prize Presidential Medal of Freedom and technological progress Sony Sorrell, Sir Martin South Africa South Korea Soviet Union and China Cold War collapse of see also Russia Spain specialization spontaneous order Sraffa, Piero stagflation Stanley Black & Decker state government regulation intervention in the economy laissez-faire STEM (science, technology, engineering and mathematics) workers sterling Stigler, George Stiglitz, Joseph stocks and Fisher and interest rates US railroad Strachey, Lytton Strahan, William Strong, Benjamin Sturzenegger, Federico Summers, Lawrence supply and demand see also market forces/economy: ‘invisible hand’ Sustainable Development Goals (SDGs) Taiwan Tanzania tariffs taxation and austerity devolved powers of flat for government deficit spending before Great Depression and inequality and investment Japan and Marshall negative income tax to pay off national debt Pigouvian tax progressive and Reagan redistribution through Schumpeter on Smith on Taylor, John Taylor, Overton H.


Human Frontiers: The Future of Big Ideas in an Age of Small Thinking by Michael Bhaskar

"Margaret Hamilton" Apollo, 3D printing, additive manufacturing, AI winter, Albert Einstein, algorithmic trading, AlphaGo, Anthropocene, artificial general intelligence, augmented reality, autonomous vehicles, backpropagation, barriers to entry, basic income, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Big Tech, Bletchley Park, blockchain, Boeing 747, brain emulation, Brexit referendum, call centre, carbon tax, charter city, citizen journalism, Claude Shannon: information theory, Clayton Christensen, clean tech, clean water, cognitive load, Columbian Exchange, coronavirus, cosmic microwave background, COVID-19, creative destruction, CRISPR, crony capitalism, cyber-physical system, dark matter, David Graeber, deep learning, DeepMind, deindustrialization, dematerialisation, Demis Hassabis, demographic dividend, Deng Xiaoping, deplatforming, discovery of penicillin, disruptive innovation, Donald Trump, double entry bookkeeping, Easter island, Edward Jenner, Edward Lorenz: Chaos theory, Elon Musk, en.wikipedia.org, endogenous growth, energy security, energy transition, epigenetics, Eratosthenes, Ernest Rutherford, Eroom's law, fail fast, false flag, Fellow of the Royal Society, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, general purpose technology, germ theory of disease, glass ceiling, global pandemic, Goodhart's law, Google Glasses, Google X / Alphabet X, GPT-3, Haber-Bosch Process, hedonic treadmill, Herman Kahn, Higgs boson, hive mind, hype cycle, Hyperloop, Ignaz Semmelweis: hand washing, Innovator's Dilemma, intangible asset, interchangeable parts, Internet of things, invention of agriculture, invention of the printing press, invention of the steam engine, invention of the telegraph, invisible hand, Isaac Newton, ITER tokamak, James Watt: steam engine, James Webb Space Telescope, Jeff Bezos, jimmy wales, job automation, Johannes Kepler, John von Neumann, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Large Hadron Collider, liberation theology, lockdown, lone genius, loss aversion, Louis Pasteur, Mark Zuckerberg, Martin Wolf, megacity, megastructure, Menlo Park, Minecraft, minimum viable product, mittelstand, Modern Monetary Theory, Mont Pelerin Society, Murray Gell-Mann, Mustafa Suleyman, natural language processing, Neal Stephenson, nuclear winter, nudge unit, oil shale / tar sands, open economy, OpenAI, opioid epidemic / opioid crisis, PageRank, patent troll, Peter Thiel, plutocrats, post scarcity, post-truth, precautionary principle, public intellectual, publish or perish, purchasing power parity, quantum entanglement, Ray Kurzweil, remote working, rent-seeking, Republic of Letters, Richard Feynman, Robert Gordon, Robert Solow, secular stagnation, shareholder value, Silicon Valley, Silicon Valley ideology, Simon Kuznets, skunkworks, Slavoj Žižek, sovereign wealth fund, spinning jenny, statistical model, stem cell, Steve Jobs, Stuart Kauffman, synthetic biology, techlash, TED Talk, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, TikTok, total factor productivity, transcontinental railway, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, uranium enrichment, We wanted flying cars, instead we got 140 characters, When a measure becomes a target, X Prize, Y Combinator

Ates see the role of those ever-stronger market-leading companies as critical.30 They note increases in the companies’ power and wealth, and corresponding increases in aggressive patenting activity (more of which below). This bloating and ossification enables establishment firms to dominate markets without real change. Vested interests, always averse to the unknown, then cream off the rewards of their entrenchment. Rent-seeking trumps innovation. Many companies cosy up to government for easy contracts – crony capitalism is still here. Markets, including the commanding heights of tech, are gridlocked, the same blue-chip names paraded year after year. Incentives for wrenching change wither in this environment – indeed, sectors that have a near miss on a major merger or acquisition remain more innovative, see more new companies and investment come in.31 The results are the pronounced shifts, already observed, towards development and away from research; pressure to return earnings to shareholders rather than reinvest them; a consolidation of big, older companies unwilling to disrupt themselves; a requirement to prove financial return that infects everything from the arts to academia.32 Over 80 per cent of the value of the S&P 500 is in intangible assets, which only makes companies want to husband and protect such assets, not radically alter them.33 The holding of such assets, including software, has moreover been correlated with decreased dynamism: sectors associated with these investments see a greater persistence of firms and less leapfrogging.34 All this creates what Mazzucato calls a ‘parasitic innovation ecosystem’, where large, powerful incumbents coast on work done elsewhere.35 Away from the glossy brochures, the phalanx of buzzword-spouting management consultants, the calendar-filling conferences, is a system both short-termist and static, risk-averse and returns-driven, timid and defensive.

At this point humanity enters the most perilous phase of the road – what form these tools and ideas take will dictate everything. Over the medium term, R&D spend on the tools escalates. But despite the presence of those organisations, much of it is spent poorly and unevenly; focused on incremental innovations or rent-seeking behaviours or weaponised uses. Nonetheless, it's plausible to envisage huge ramps up coupled with tight focus – say a technological arms race between China and a Washington–Silicon Valley axis, ploughing the superpowers’ best minds and resources into a bleeding-edge generative technology. As in periods of the twentieth century, meaningful competition spurs the United States to new heights.


pages: 389 words: 111,372

Raising Lazarus: Hope, Justice, and the Future of America’s Overdose Crisis by Beth Macy

2021 United States Capitol attack, Affordable Care Act / Obamacare, Bernie Sanders, big-box store, Black Lives Matter, coronavirus, COVID-19, critical race theory, crowdsourcing, defund the police, Donald Trump, drug harm reduction, Easter island, fake news, Haight Ashbury, half of the world's population has never made a phone call, knowledge economy, labor-force participation, Laura Poitras, liberation theology, mandatory minimum, mass incarceration, medical malpractice, medical residency, mutually assured destruction, New Journalism, NSO Group, obamacare, off grid, opioid epidemic / opioid crisis, Overton Window, pill mill, Ponzi scheme, QAnon, RAND corporation, rent-seeking, Ronald Reagan, shareholder value, single-payer health, social distancing, The Chicago School, Upton Sinclair, working poor, working-age population, Y2K, zero-sum game

Maybe some of the $262 million the state offered to land the Google server farm would have been better spent preparing the laid-off factory workers and their children for a knowledge-based economy. From economist Tim Bartik’s point of view, the problem was power, or the lack of it: the victims of the corporations’ rent-seeking practices possessed zero political clout. “Going after data centers is not a solution,” said Bartik, of the Upjohn Institute. He hoped COVID-driven telecommuting might entice more people to relocate from cities to rural areas. But would many outsiders move to distressed places where schools were notoriously subpar?

Their top three goals, in order, were: staying alive, reducing harmful substance use, and improving mental health. “Completely stopping substance use was not in their top three,” Olsen said. But too many well-meaning bureaucrats, politicians, and health care providers don’t realize that they are active participants in a stigmatized structure born of racism, rent-seeking behaviors, and wrong-headed notions about a drug-free society that will never, ever exist. As the bioethicist Carl Erik Fisher writes: “We will not end addiction, but we must find ways of working with it: ways that are sometimes gentle, and sometimes vigorous, but never warlike, because it is futile to wage a war on our own nature.”


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

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

It withdraws some individuals from the labor force, weakens productive incentives, necessitates higher tax rates, and is often combined with static, insider-oriented labor market regulations. Furthermore if everyone approaches government looking for grants of money and resources, basic mechanisms of governance can break down, leading to rent-seeking, corruption and fiscal bloat. Alternatively, excess or poorly conceived welfare expenditures may create urban cultures of dependency and crime, which endanger social order. The empirical literature suggests that non- 40 See for instance Alesina and Rodrik (1994) and Persson and Tabellini (1994).


pages: 179 words: 42,081

DeFi and the Future of Finance by Campbell R. Harvey, Ashwin Ramachandran, Joey Santoro, Vitalik Buterin, Fred Ehrsam

activist fund / activist shareholder / activist investor, bank run, barriers to entry, bitcoin, blockchain, collateralized debt obligation, crowdsourcing, cryptocurrency, David Graeber, Ethereum, ethereum blockchain, fault tolerance, fiat currency, fixed income, Future Shock, initial coin offering, Jane Street, margin call, money: store of value / unit of account / medium of exchange, Network effects, non-fungible token, passive income, peer-to-peer, prediction markets, rent-seeking, RFID, risk tolerance, Robinhood: mobile stock trading app, Satoshi Nakamoto, seigniorage, smart contracts, transaction costs, Vitalik Buterin, yield curve, zero-coupon bond

MKR holders could, for instance, vote to pay themselves a dividend funded by the spread between the interest payments paid by vault holders and the DAI savings rate. The reward of receiving this dividend would need to be weighed against any negative community response (e.g., a backlash against rent seeking from a previously no-rent protocol) that might decrease the value of the protocol and the MKR token. A number of features make DAI attractive to users. Importantly, users can purchase and use DAI without having to generate it in a vault – they can simply purchase DAI on an exchange without needing to know the underlying mechanics of how they are created.


pages: 140 words: 42,194

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

agricultural Revolution, behavioural economics, Berlin Wall, Branko Milanovic, butterfly effect, conceptual framework, Daniel Kahneman / Amos Tversky, Fall of the Berlin Wall, framing effect, hedonic treadmill, impulse control, Peter Singer: altruism, rent-seeking, Robert Solow, social discount rate, Steven Pinker, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, zero-sum game

Past some margin, an overly generous level of wealth transfer harms economic growth. Many people end up working less, or working less hard, and the associated higher tax rates discourage entrepreneurship and can lead to economic stasis. Furthermore, if it is standard procedure to approach government for a handout, that will induce too much rent-seeking, dependency, corruption, and eventually fiscal imbalances and perhaps even insolvency or a financial crisis. Alternatively, excess or poorly conceived welfare expenditures may create urban cultures of dependency and crime, which endanger social order. The empirical literature suggests that non-infrastructure government spending is correlated positively with lower growth rates, with the caveat that those results are measuring traditional GDP rather than an alternative notion such as Wealth Plus.2 Excess transfers are bad for another reason, namely that they make it harder to absorb high numbers of immigrants from poorer countries.


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

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

Competitive market: requires large numbers of buyers and sellers who are all small relative to the market such that no one can individually influence the market price. (See Arrow’s Paradox.) Also requires free entry and exit, and perfect in­ formation. Deadweight loss of monopoly: the supposed cost of monopoly compared to a competitive market. It includes the loss of net benefit from a smaller quantity produced, the loss from ‘rent-seeking’ behaviour (the diversion of time, effort and expertise away from productive activities towards efforts to secure monopoly profits), and an equity cost of a less equitable distribution of income. Demand: the maximum price consumers are willing to pay for any given quantity demanded. Dynamic efficiency: an optimal rate of technological progress resulting from 291 optimal investments in research and development.

., 66–7, 140, 141, 142–3, 174, 185, 249–50, 251, 257 predictions: concerning incidence of taxation, 61–2; concerning minimum wages, 58–9; concerning rent controls, 59–61 predictive power, 32–5, 37, 62, 71, 246 preferences, 87–92; changing, problem of, 80–1; in food, 85; taken as given, 78–9 prescription drugs, marketing of, 83–5 price discrimination, 125 price elasticity: of demand, 46–7, 52; of supply, 48, 52 price floors, 63–4; government-regulated, 50–1 prices, 118, 177, 220, 223; ceilings, 62–3, 125, 127, 130, 244; determination of, 30; discounts, 129; government- rent controls, 49, 244; predictions concerning, 59–61 rent freeze: in New York, 70; in Paris, 70–1 rent-seeking behaviour, 124 rents: ceilings on, 31, 59; freezing of, 60 replication of results, problem of, 34 research and development (R&D), 135, 193 reswitching result, 181 retirement, compulsory, 173 returns to capital, 177–8 returns to scale, 98–9, 180–1 rhetoric of reaction, 208 Ricardo, David, 44, 177, 224, 227, 228 Rick, Frank, 179 risk, ignorance of, 161–2 Robinson, Joan, 1, 9, 93, 128, 150, 153, 179, 180, 219 robust equation, search for, 33–4 Rodrik, Dani, 5, 262 Roosevelt, F.


pages: 1,373 words: 300,577

The Quest: Energy, Security, and the Remaking of the Modern World by Daniel Yergin

"Hurricane Katrina" Superdome, "World Economic Forum" Davos, accelerated depreciation, addicted to oil, Alan Greenspan, Albert Einstein, An Inconvenient Truth, Asian financial crisis, Ayatollah Khomeini, banking crisis, Berlin Wall, bioinformatics, book value, borderless world, BRICs, business climate, California energy crisis, carbon credits, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, clean tech, Climategate, Climatic Research Unit, colonial rule, Colonization of Mars, corporate governance, cuban missile crisis, data acquisition, decarbonisation, Deng Xiaoping, Dissolution of the Soviet Union, diversification, diversified portfolio, electricity market, Elon Musk, energy security, energy transition, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, fear of failure, financial innovation, flex fuel, Ford Model T, geopolitical risk, global supply chain, global village, Great Leap Forward, Greenspan put, high net worth, high-speed rail, hydraulic fracturing, income inequality, index fund, informal economy, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), It's morning again in America, James Watt: steam engine, John Deuss, John von Neumann, Kenneth Rogoff, life extension, Long Term Capital Management, Malacca Straits, market design, means of production, megacity, megaproject, Menlo Park, Mikhail Gorbachev, military-industrial complex, Mohammed Bouazizi, mutually assured destruction, new economy, no-fly zone, Norman Macrae, North Sea oil, nuclear winter, off grid, oil rush, oil shale / tar sands, oil shock, oil-for-food scandal, Paul Samuelson, peak oil, Piper Alpha, price mechanism, purchasing power parity, rent-seeking, rising living standards, Robert Metcalfe, Robert Shiller, Robert Solow, rolling blackouts, Ronald Coase, Ronald Reagan, Sand Hill Road, Savings and loan crisis, seminal paper, shareholder value, Shenzhen special economic zone , Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, smart grid, smart meter, South China Sea, sovereign wealth fund, special economic zone, Stuxnet, Suez crisis 1956, technology bubble, the built environment, The Nature of the Firm, the new new thing, trade route, transaction costs, unemployed young men, University of East Anglia, uranium enrichment, vertical integration, William Langewiesche, Yom Kippur War

In his view, Venezuela was already becoming a petro-state, a victim of the alluring and malevolent “resource curse.”2 THE “REVERSED MIDAS TOUCH” In the 1980s and 1990s, oil could generate more than 70 percent of Venezuela’s central government’s revenues. In a petro-state, the competition for these revenues and the struggle over their distribution becomes the central drama of the nation’s economy, engendering patronage and clientelism and what is called “rent-seeking behavior.” That means that the most important “business” in the country (aside from oil production itself) is focused on getting some of the “rents” from oil—that is, some share of the government’s revenues. Entrepreneurship, innovation, hard work, and the development of a competitively oriented growth economy—all these are casualties of the system.

The economy becomes inflexible, losing its ability to adapt and change. Instead, as the edifice of the state-controlled economy grows, so do subsidies, controls, regulations, bureaucracy, grand projects, micromanagement—and corruption. Indeed, the vast amounts of revenues connected with oil and gas create a very rich brew for corruption and rent seeking. A group of Venezuelan academics summed up the problem this way: “By the middle of the twentieth century, there was already a deeply rooted conviction that Venezuela was rich because of oil, because of that natural gift that does not depend on productivity or the enterprising spirit of the Venezuelan people.”

Chapter 5: The Petro-State 1 Moises Naim, Paper Tigers and Minotaurs: The Politics of Venezuela’s Economic Reform (Washington, DC: Carnegie Endowment, 1993), p. 19; Herbert Adams Gibbons, The New Map of South America (London: Jonathan Cape, 1929), pp. 249, 252–53. 2 Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Simon and Schuster, 1990), p. 507 (“the devil”). 3 Terry L. Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997); Michael L. Ross, “The Political Economy of the Resource Curse,” World Politics 51 (1999): 297–322 (“rent-seeking behavior”); Christina Marcano and Alberto Barrera Tyszka, Hugo Chávez, trans. Kristina Cordero (New York: Random House, 2007), p. 15 (Venezuelan academics). 4 Naim, Paper Tigers and Minotaurs, p. 24 (“reversed Midas touch”); interview with Ngazi Okonjo-Iweala. 5 Karl, The Paradox of Plenty, p. 71, 123 (“change the world!”


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Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

"World Economic Forum" Davos, Airbnb, altcoin, Alvin Toffler, asset-backed security, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, business logic, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, commons-based peer production, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, currency risk, decentralized internet, digital capitalism, disintermediation, disruptive innovation, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Future Shock, Galaxy Zoo, general purpose technology, George Gilder, glass ceiling, Google bus, GPS: selective availability, Hacker News, Hernando de Soto, Higgs boson, holacracy, income inequality, independent contractor, informal economy, information asymmetry, information security, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Neal Stephenson, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, radical decentralization, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, search costs, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, Snow Crash, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, systems thinking, TaskRabbit, TED Talk, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Soul of a New Machine, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Tyler Cowen, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, vertical integration, Vitalik Buterin, wealth creators, X Prize, Y2K, Yochai Benkler, Zipcar

As a result, the Red Cross improvised a less desirable solution. Could a blockchain-based land title registry improve this situation by providing clear title and perhaps prevent unlawful expropriation? Foreign aid is perhaps the clearest example of the ineptitude of many governments and the rent-seeking behavior of unethical intermediaries, and is thus excellent grounds to explore blockchain solutions. The 2010 Haiti earthquake was one of the most devastating humanitarian crises of the past hundred years.53 While the government was paralyzed and the crisis raged on, thousands of “digital humanitarians” converged on the Internet to help first responders collect, triage, and visualize pleas for help from mobile phones of devastated Haitians.

Interview with Eric Piscini, July 13, 2015. 45. http://corporate.westernunion.com/Corporate_Fact_Sheet.html. 46. At the time of writing, Abra had not opened its doors in Canada. However, we were able to test Abra’s technology with Analie and her mother successfully with Abra’s help. 47. Interview with Bill Barhydt, August 25, 2015. 48. Ibid. 49. Ibid. 50. “Foreign Aid and Rent-Seeking, The Journal of International Economics, 2000, 438; http://conferences.wcfia.harvard.edu/sites/projects.iq.harvard.edu/files/gov2126/files/1632.pdf. 51. Ibid. 52. www.propublica.org/article/how-the-red-cross-raised-half-a-billion-dollars-for-haiti-and-built-6-homes. 53. “Mortality, Crime and Access to Basic Needs Before and After the Haiti Earthquake,” Medicine, Conflict and Survival 26(4) (2010). 54. http://unicoins.org/. 55.


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The Market for Force: The Consequences of Privatizing Security by Deborah D. Avant

barriers to entry, continuation of politics by other means, corporate social responsibility, failed state, Global Witness, hiring and firing, independent contractor, information asymmetry, interchangeable parts, Mikhail Gorbachev, military-industrial complex, Nelson Mandela, operational security, Peace of Westphalia, post-Fordism, principal–agent problem, private military company, profit motive, RAND corporation, rent-seeking, rolodex, Seymour Hersh, The Nature of the Firm, trade route, transaction costs

Strong states nonetheless have superior monitoring and sanctioning capacity that should lead them to be in a better position to control PSCs than weaker states. Strong states have mechanisms to extract revenue in a central tax system, an established system of contracting, and a variety of mechanisms to inhibit rent seeking by either the state or private agents. Though contracting for security services may be less ideal than 63 64 instance, argues for a distinction between strong and weak states on the bases of the state’s capacity, coherence, and legitimacy. Varying degrees of “stateness” are tied to the state’s ability to maintain firm control over the military and police; to influence members of society; to generate functionally complex organizations; and to have those agencies work together in a coherent fashion.

Kayode 4, 6 Fennell, James 4 Fenning, Richard 131 feudal lords 25, 27, 246 Finer, Samuel E. 68 fit see reinforcing process foreign military sales (FMS) 129 foreign policy by proxy 4, 65, 68, 152, 155 absence in South Africa 167 Frankfurt Zoological Society (FZS) 205 Frasure, Bob 153 Frederick, Nicholas, and Duncan (FND) 19, 160 Freeman, Jody 53, 55 Friedman, Milton 191 Fynwest 18 Game Rangers’ Association 210 Gantz, Peter 238 Garamba National Park 39, 77, 204–15, 237 Gardiner, Colonel Sam 259 Geneva Convention 232 Geolink 17 Global Development Four (GD4) 20 Global Impact 18 Global Options 18 Global Risk Holdings 20 globalization 31, 32–34, 144, 229, 257–58 GOAL 16 Goma Camps 39, 77, 192–203 governance 36, 63, 73, 79, 204, 230 role by commercial actors 190, 191–92 networked 241–43 Gowa, Joanne 135 Grant, Bruce 155 Gray Security 20, 160 Grunberg, Michael 86 Guenee, Bernard 245 Gulf War 6, 19, 29 guns for hire see mercenaries Gurkha Security Guards 18 in Sierra Leone 84–86, 96, 98, 225–26 Haliburton see Kellogg, Brown, and Root Hart Group 233 Hauser, Robert 195 Held, David 228–29 305 Henderson, David 191–92 Herbst, Jeffrey 221 Heritage Oil and Gas 159 Hobbes, Thomas 46 Hoffman, Jerry 131 Holbrook, Richard 153 Holy Roman Empire 230, 250 human rights see international norms/ values, human rights Human Rights Watch 189 Hungary 148 Huntington, Samuel 41 Hussein, Saddam 259 Ibis Air 18, 19 ICI Oregon 19, 20, 147, 149, 156 imperial force 244 information asymmetry 58, 59 Institut Zaı̈rois pour le Conservation de la Nature (IZCN became IUCN) 205, 206 institutional mechanisms see mechanisms of control institutional theory 38, 58, 72–76 model 40, 78, 79, 81, 145, 179–80, 229–30 and the US 132 see also new institutionalism institutionalization 55 interest motivated 72 International Alert 187 International Business Leaders’ Forum 197 international civilian police 20, 127 International Convention against the Recruitment, Use, Financing and Training of Mercenaries 230 International Defense and Security (IDAS) 18 International Law Concerning the Conduct of Hostilities 232 international law 52, 53, 69, 188, 230 and private security 230–36 and South Africa’s Regulation of Foreign Military Assistance Act 164–67 see also laws of war International Monetary Fund (IMF) 34, 35, 119 international non-governmental organizations (INGOs) 30, 38, 50, 69, 71–72, 73–74, 76, 148, 159, 170 Index as value motivated actors 71–72 literature on 179 in Iraq 2 and financing security 256 humanitarian INGOs 192–203 conservation INGOs 204–15 and Chad-Cameroon Pipeline 241 international norms/values 5, 43–44, 53, 54, 60–61, 62, 63, 64, 68, 69, 74–75, 76, 81, 130, 178, 181, 200, 219 and British PSCs 174–75 and American PSCs 157 conservation 207, 215 and extractive companies 191 human rights 61–76, 161, 181, 221, 224 and EO 164 and EO in Sierra Leone 96, 113 and MPRI in Croatia 110–13 rule of law 51, 61 and Sandline in Sierra Leone and South African PSCs 166 see also international law; laws of war international organizations (IOs) 50, 69, 148, 159, 257 International Peace Operations Association (IPOA) 222 International Port Services Training Group 18 International Rhino Foundation 206–15 Iran/Contra Scandal 115 Iraq 8, 29, 67, 121, 147, 157, 160, 170, 226, 233, 256, 260 participation of South African PSCs in 166, 237 Iraqi Army 1, 18, 130, 131 Iraqi Police 131 Italian City States 27, 230, 250 IUCN see Institut Zaı̈rois pour le Conservation de la Nature Jacobite Rebellion 28 Janowitz, Morris 42, 51–52 Jones, Bruce 196 Jupiter Mining Company 93 just war 246 Kabbah, Ahmed Tejan 95–98, 171, 173, 175 Kabila, Laurent 208 Kagame, Paul 195 Index Kaldor, Mary 251 Kamajors (Kamajoisia) 88–98, 171 Kaplan, Robert 34 Karzai, Hamid 20, 123 KAS Enterprises 18 Keegan, John 3 Kellogg, Brown, and Root (KBR) 20, 22, 147, 148, 149, 156, 262 Kemp, Elizabeth 209 KMS 169 Koroma, Johnny Paul 92–93, 96 Kosovo 201, 222 laws of war 51, 236 Levden 18 Levi, Margaret 1, 46 Liberalism 54 136 liberal values 52 see also international values Liberia 152 Lifeguard Security 20, 88, 93, 159, 160, 166 Liutingh, Lafras 87 logic of appropriateness 50, 54 logic of consequences 54 Logicon 18 Lonhro 85 Machiavelli, Niccolò 249 Mandela, Nelson 158, 164, 165 Mansfield, Count Von 249 March, James 254 market for force 25–30, 30–38, 39, 65–70, 219, 253 implications of 3–7, 53 from the US 146–49 transnational 7–22, 166, 175–77 McNeill, William 247, 250 mechanisms of control 6, 38, 56–57, 72, 79, 180, 230, 262 market 39, 67, 219–28 consumer 67, 144–45 consequential 6, 54, 70, 71, 143, 154, 178, 179 see also budgetary control, monitoring, screening and selection social 6, 55, 68–69, 71, 75, 178, 179 see also education, military professionalism: military professional norms and standards 306 mercenaries 8, 22–23, 29, 69, 172, 222, 227, 231, 247, 249 guns for hire/soldiers of fortune 4, 121, 213, 222 mercenary reputation 85 and Sandline 94 see also private armies Mesic, Stipe 108 Migdal, Joel 57, 82 military contractors 27, 28–30, 245–47 military effectiveness 59, 61, 62, 136, 139–40, 224–25 in Sierra Leone 114–96 in Croatia 110 in the US 138 see also control of force, functional control; reinforcing process of control Military Extraterritorial Jurisdiction Act (MEJA) 234, 235 Military Professional Resources International (MPRI, now part of L-3 Communications) 9, 18, 19, 20, 35, 122, 124, 129, 131, 134, 148, 152–55, 221, 245 in Angola 150 in Croatia 101–13, 128, 156, 255 Croatian Army Readiness Training Program 106 in Equatorial Guinea 150 in Nigeria 188 ROTC training in US 117–20, 121, 130 with KLA 222 military professionalism 42, 51–52, 61, 76, 130 and DSL 9 emerging international standard for 52, 222–24, 251 and EO training 91, 113 in Garamba 207–08 military professional networks 61, 62, 63, 64 military professional norms and standards 81–82, 118–19, 157, 200, 204, 219, 221, 223, 253 military professionals 52, 60, 63, 249 of MPRI in Nigeria 188 PSCs and 5, 61 PSCs in Britain 174 307 of Sandline in Sierra Leone 95 of MPRI in Croatia 112–13 militias 224 Milošević, Slobodan 153 Minnow, Martha 18, 23, 53 Mobile 16 Mobutu, President 17, 194, 196 Momoh, Joseph 83 monitoring 56, 57, 58, 66, 133, 222 difficulties for parliament in Croatia 106 in US 155 monopoly over force 25, 46, 66, 69 collectively held among states 145, 228, 253, 264 that emanates from state territory 143, 144 Montgomery, William 107 Mozambique 85, 170, 171 multi-lateral institutions 34, 37–38, 229, 238, 240 Multiple principles 75–76 in Garamba 204 in Sierra Leone 97–98 Musah, Abdel-Farau 4, 6 neomedievalism 262 new institutionalism 6, 45, 57, 254 see also institutional theory, model; economic institutionalism, sociological institutionalism Nigeria 39, 77, 255 oil in 182–92, 237 non-state actors 3, 31, 36–37, 70, 76, 78, 178 debate among 78, 190, 200–203, 212–15, 253 identity of 76, 190–91, 203, 218, 237 see also international non-government organizations, transnational corporations non-state financing for security see privatization of security, financing Norman, Sam Hinga 96 norms see social norms and practices North, Douglas 46 North Atlantic Treaty Organization (NATO) 34, 37, 109, 129, 130, 139, 148 Index Partnership for Peace Program (PfP) in Croatia 102, 106, 108, 109, 111, 112, 113, 131, 139 Northbridge 169, 173 O’Brien, Kevin 163, 166 O’Gara Protective Services 18 Obasanjo, Olusegun 188–95 Olsen, Johan 254 Olson, Mancur 46 OMB Circular A-76 35, 115 Omega Support Limited 160 Omega Training Group 122 Operation Iraqi Freedom 18, 132, 152, 238 Organi 8 186 Organization for African Unity (OAU) 161–63 Organization for Security and Cooperation in Europe (OSCE) 34 Ottoway, Marina 191 oversight see monitoring Pacific Architects and Engineers (PA&E) 19, 20 Papua New Guinea 170, 174 paramilitary forces 70, 71, 224 Parsons, Talcott 2, 239 patrimonial authority 58 Patriot Act 234, 235 peace dividend 35 Peace of Westphalia 25, 27 Penfold, Peter 173 Petronas 241 Picula, Tony 109 Pinkertons 22 political market failures 135 Powell, Walter 223 Prince of Wales Business Leaders’ Forum see International Business Leaders’ Forum private armies 4, 30 private security see privatization of security, market for force private security companies (PSCs) 1–3, 5, 8, 23–24, 29–30, 36, 37, 38, 40, 53, 54, 55, 58–65, 76, 77, 81, 129–31, 220, 259–60, 261 American PSCs 146 British PSCs 167 Index private security companies (PSCs) (cont.) commercial reputation and interest 85, 110 cowboy model 226–28 in Garamba 209 in Goma Camps 198–200 in Iraq 21–22, 239–40 nationality of personnel 2 services offered 16–22, 48 South African PSCs 158–67 “starched shirt” model 226, 228 private security consultant to WWF 211–12 private security industry 3–7 characteristics of 144 consumer demand for 144–45 revenues 8 privatization 22, 24–25, 32, 35–36, 38, 40, 47, 57, 58, 78, 80–81 privatization of security 39, 40, 49, 253, 254, 256, 259, 263 and the control of force 3, 4–5, 6–7, 40, 43 financing of security 70–76, 78, 178–218 see also market for force professional military see military professionalism public 23–24 public goods 27, 34, 62, 155 public institutions 46–48, 61–62, 76, 81, 140, 146 in South Africa 167 public sphere 3 public/private divide 23 choice 24 comparison between 4, 43 Ramsbotham, General Sir David 9 rational legal authority 45, 59, 63, 71 rationalist 56 rebel forces 70, 71 redistribution of power 60, 91–92, 145 in Croatia 110 in Sierra Leone 114–15 in the US 146 Redlich, Fritz 246 Refugees International 238 regulation 65–70, 144, 145 dilemmas of 144–45, 177 308 in Britain 170, 173, 175 in late Middle Ages 246 in South Africa 161 in US 149–51 reinforcing process of control 6, 7, 40–45, 56–57, 61, 62, 63, 65, 72, 76, 82, 113, 120, 136–38, 139–40, 218, 255, 256 in Italian City States 250 uncertainty of 251–52 Reno, Will 92, 185, 251 rent seeking 58 rentier state 181 Research Triangle Institute 2, 239 Resistancia Nacional Mocambicana (RENAMO) 172 Revolutionary United Front (RUF) 84 Robertson, Lord 222 Ron, James 201 Rubicon, International 169 SAIC 18, 121, 122, 124 Saladin 169 sanctioning 43, 58, 71 Sandline 17, 18, 19, 169 in Sierra Leone 92, 97, 98, 171, 172, 174–75, 232, 237 Saracen 19, 159, 160, 166, 210–11, 213 Saro-Wiwa, Ken 184, 186, 236 Saudi Arabia 152 Saudi Arabian forces 148 Saxena, Rakesh 93, 95 Schakowsky, Jan 129 screening and selection 56, 59, 133 Secrets 18 September 11th 7, 34, 160 service industries 66 Seven Years War 28 Sewell, John 102 Shearer, David 5, 6, 52–53, 55–56, 238 Shell, Royal Dutch 16, 77, 184–85, 187, 188–92, 236, 255 Shell business principles 190 Shell police 184 Shibata 160 Sierra Leone 7, 39, 68, 77, 139, 160, 170, 171, 172, 174–75, 225–26, 232, 237, 240, 255 and contracting for security services 82–98 309 Sierra Leone Army (RSLMF) 85–98 Sierra Leone People’s Party (SLPP) 84 Silver Shadow 19 Silverstein, Ken 4, 5, 156 Singer, Peter 16, 155 Sky Air Cargo Service 171 Sobel 84 social norms and practices 3, 49, 51, 63, 75, 81, 134, 143, 145 socialization 56 sociological institutionalism 49–54, 71, 79 soldiers of fortune see mercenaries Soruss 89 South Africa 39, 67, 77, 145, 220, 256, 260, 262 and citizens working illegally in Iraq 163, 235 human security 162, 158 Regulation of Foreign Military Assistance Act 161–63, 165 regulation of security service exports 157–67 regulatory environment 161 South African Defense Force (SADF) 164, 211 South African National Defense Force (SANDF) 211 Southern Cross Security (SCS) 19, 160, 166 sovereign transactions/services 47–49, 54, 58, 61, 81 sovereignty 43, 52, 59, 257–58, 264 Soyster, Harry “Ed” 104 Spicer, Tim 227–31 standards 56, 68, 71, 74 see also military professionalism: military professional norms and standards state, the 18, 23–24, 27, 45, 46, 257–58 definition of 1 state building 63, 76 see also strong states, weak states Stevens, Siaka 83, 84 Stirling, Sir David 169 Strasser, Valentine 89 Strategic Resources Corporation 160 strong states 7, 59, 60, 71, 256, 259 as distinguished from weak states in contracting for security 81–82 Sudan 160, 209 Index Sudanese People’s Liberation Army (SPLA) 205, 209 Sumairco 19 Susak, Gojko 101, 106 Taliban 224 Tallman, Gary 227 TASK International 21 Taylor, Charles 94 Terry, Fiona 196–97, 200, 201 Thatcher, Margaret 35 Thirty Years War 245, 247, 250 Thomson, Janice 30, 247 threat environment 21, 33–34, 62 THULE Global Security International 20 tip of the spear 16–22 Titan 2, 235 Tito 98 Total Security Services International 149 transaction cost economics 46–49 TransAfrica Logistics 159 transnational corporations (TNCs) 30, 38, 71, 72, 74, 76, 148, 180–192, 257 transnational market see market for force transparency 60, 74, 82, 154 Trojan Securities International 18, 21 Tudjman, Franjo 99–108, 139, 153 United Kingdom see Britain United Nations 34, 37, 69, 170, 171, 198, 199, 203 and private security 9, 198–200, 237–38 and South African PSCs 166 United Nations Department of Peace Keeping (DPKO) 195–200 United Nations Global Compact 187 United Nations High Commissioner for Refugees (UNHCR) 195–97, 201–02 United Nations peace missions 29, 37 and DSL 9 and private security 7, 19, 149 UNAMSIL 95 United Nations Special Rapporteur on the Use of Mercenaries 230–31 United States 1, 4, 7, 29, 31–32, 38, 39, 77, 139, 145, 220–28, 256, 259–61, 262 Index United States (cont.)


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Money Free and Unfree by George A. Selgin

Alan Greenspan, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, break the buck, Bretton Woods, business cycle, capital controls, central bank independence, centralized clearinghouse, Charles Lindbergh, credit crunch, Credit Default Swap, crony capitalism, disintermediation, Dutch auction, fear of failure, fiat currency, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, foreign exchange controls, Fractional reserve banking, German hyperinflation, Glass-Steagall Act, Hyman Minsky, incomplete markets, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, large denomination, liquidity trap, Long Term Capital Management, low interest rates, market microstructure, Money creation, money market fund, moral hazard, Network effects, Northern Rock, oil shock, Paul Samuelson, Phillips curve, plutocrats, price stability, profit maximization, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, Robert Gordon, Robert Solow, Savings and loan crisis, savings glut, seigniorage, special drawing rights, The Great Moderation, the payments system, too big to fail, transaction costs, Tyler Cowen, unorthodox policies, vertical integration, Y2K

A divergence between the preferences of fiscal authorities and citizen-consumers implies that political “markets” do not strongly tend to weed out policies that diminish aggregate wealth. On the contrast between “Chicago” and “Virginia” views on this broad question, see Lott (1997). 3. Margaret Levi (1988) offers a modern exposition of Puviani’s fiscal-predation thesis. An alternative “predatory” hypothesis is private rent seeking: government serves special interests by restricting competition. This hypothesis certainly helps explain a number of legal restrictions on private banks. But it can hardly explain the exclusion of private mints and banks of issue from the market in favor of a state-run monopoly. 4. On the (conjectural) evolution of private-market monetary arrangements in the absence of government intervention, see Selgin and White (1987). 5.

Laurence Laughlin (1898: 211); Commercial and Financial Chronicle (April 3, 1865: 422); and Hunt’s Merchants Magazine (Oct. 1867: 289; Apr. 1869: 247). 15. The $300 million ceiling on the aggregate issue of national bank notes had been raised to $354 million by the act of July 12, 1870. 16. One possible explanation for this otherwise curious provision of the act is that the banks, in rent-seeking fashion, wished to restrict costly interbank competition for circulation shares. Providing more redemption points could be a means of competing on note quality. 17. Phillip Cagan and Anna Schwartz (1991) point out, citing 1894 testimony by Treasury Secretary John G. Carlisle (and contradicting Bell 1912: 38–60), that in practice the subtreasuries in New York and eight other major cities redeemed national bank notes.


pages: 170 words: 51,205

Information Doesn't Want to Be Free: Laws for the Internet Age by Cory Doctorow, Amanda Palmer, Neil Gaiman

Airbnb, barriers to entry, Big Tech, Brewster Kahle, cloud computing, Dean Kamen, Edward Snowden, game design, general purpose technology, Internet Archive, John von Neumann, Kickstarter, Large Hadron Collider, machine readable, MITM: man-in-the-middle, optical character recognition, plutocrats, pre–internet, profit maximization, recommendation engine, rent-seeking, Saturday Night Live, Skype, Steve Jobs, Steve Wozniak, Stewart Brand, Streisand effect, technological determinism, transfer pricing, Whole Earth Catalog, winner-take-all economy

We get it only if we give up on the Hollywood-versus-Google narrative, and stop letting our creative output be hijacked in the service of censorship, surveillance, and control. I’m not anti-regulation. But we need to decide what kind of regulation we want. The Internet can have rules that encourage centralization—rules permitting network discrimination, rules protecting digital rights management, rules providing for easy takedown—and, with them, rent-seeking, abusive sharecropping, spying, and censorship. Or it can have rules that promote an open, pluralistic, networked public space where anyone can communicate; rules that encourage disclosure of security vulnerabilities; rules that encourage competition by allowing interoperable products and technologies.


The New Class War: Saving Democracy From the Metropolitan Elite by Michael Lind

"World Economic Forum" Davos, affirmative action, anti-communist, basic income, Bernie Sanders, Boris Johnson, Bretton Woods, Brexit referendum, business cycle, Cambridge Analytica, capital controls, Cass Sunstein, central bank independence, centre right, collective bargaining, commoditize, corporate governance, cotton gin, crony capitalism, deindustrialization, disinformation, Doha Development Round, Donald Trump, Edward Snowden, export processing zone, fake news, future of work, gentrification, global supply chain, guest worker program, Haight Ashbury, illegal immigration, immigration reform, independent contractor, invisible hand, Jeremy Corbyn, knowledge economy, Les Trente Glorieuses, liberal world order, low skilled workers, low-wage service sector, manufacturing employment, Mark Zuckerberg, mass immigration, means of production, Michael Milken, moral panic, Nate Silver, new economy, offshore financial centre, oil shock, open borders, plutocrats, Ponzi scheme, purchasing power parity, Ralph Nader, regulatory arbitrage, rent-seeking, Richard Florida, Ronald Reagan, scientific management, Silicon Valley, SoftBank, The Wealth of Nations by Adam Smith, Thorstein Veblen, Timothy McVeigh, trade liberalization, union organizing, universal basic income, upwardly mobile, WikiLeaks, Wolfgang Streeck, working poor

For pluralists, the notion that we can live in a world without elites is as fatuous and as dangerous as the notion that we can live in a world without power. If power checks power, elites countervail elites.1 The trade unions, party machines, and religious congregations of the past had their share of corruption, and so would their modern equivalents. Like all political systems, a democratic pluralist regime is vulnerable to “rent-seeking” by self-interested economic interests. But corruption is more easily exposed and contained in a system with a multitude of petty power brokers than in a centralized regime with a relatively small elite whose members tend to dominate the economy, the government, and the media. If it is successful, democratic pluralism, by incorporating all classes and major subcultures to some degree in policy making in the market, government, and cultural sectors, can reduce the sense of isolation and powerlessness that opportunistic demagogues can exploit.


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

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

As Samuels and Mercuro have noted, "There are no correct rights, price, and rent structure and attendant distribution. There is, rather, a contest over rights.... [T]he process of determining the legal change of economic interests to be protected as legal rights is the critical legal-economic process." Warren J. Samuels and Nicholas Mercuro, "A Critique of Rent-Seeking Theory," in Neoclassical Political Economy, ed. David C. Colander (Cambridge, Mass.: Ballinger, 1984), pp. 59, 65, emphasis in original. 14. Quoted by Jerold Waltman, "Origins of the Federal Income Tax," MidAmerica 62 (Oct. 1980): 155. According to John F. Witte, Aldrich's proposals originated in the Taft administration, which sought to "defuse a potential constitutional crisis between Congress and the Supreme Court."

Boston: Little Brown, 1976. Samuels, WarrenJ. "A Critique of Capitalism, Socialism, and Democracy." In Capitalism and Democracy: Schumpeter Revisited, ed. Richard D. Coe and Charles K. Wilber. Notre Dame, Ind.: University of Notre Dame Press, 1985. Samuels, Warren J., and Nicholas Mercuro. "A Critique of Rent-Seeking Theory." In Neoclassical Political Economy, ed. David C. Colander. Cambridge, Mass.: Ballinger, 1984. Schumpeter, Joseph A. Capitalism, Socialism, and Democracy. 3rd ed. New York: Harper & Row, 1950. Sen, Amartya K. "Rational Fools: A Critique of the Behavioral Foundations of Economic Theory." Philosophy & Public Affairs 6 (Summer 1977).


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Connectography: Mapping the Future of Global Civilization by Parag Khanna

"World Economic Forum" Davos, 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 9 dash line, additive manufacturing, Admiral Zheng, affirmative action, agricultural Revolution, Airbnb, Albert Einstein, amateurs talk tactics, professionals talk logistics, Amazon Mechanical Turk, Anthropocene, 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, Carl Icahn, charter city, circular economy, clean water, cloud computing, collateralized debt obligation, commoditize, complexity theory, continuation of politics by other means, corporate governance, corporate social responsibility, credit crunch, crony capitalism, crowdsourcing, cryptocurrency, cuban missile crisis, data is the new oil, David Ricardo: comparative advantage, deglobalization, deindustrialization, dematerialisation, Deng Xiaoping, Detroit bankruptcy, digital capitalism, digital divide, digital map, disruptive innovation, diversification, Doha Development Round, driverless car, Easter island, edge city, Edward Snowden, Elon Musk, energy security, Ethereum, ethereum blockchain, European colonialism, eurozone crisis, export processing zone, failed state, Fairphone, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, fixed income, forward guidance, gentrification, geopolitical risk, global supply chain, global value chain, global village, Google Earth, Great Leap Forward, Hernando de Soto, high net worth, high-speed rail, Hyperloop, ice-free Arctic, if you build it, they will come, illegal immigration, income inequality, income per capita, industrial cluster, industrial robot, informal economy, Infrastructure as a Service, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, LNG terminal, low cost airline, low earth orbit, low interest rates, manufacturing employment, mass affluent, mass immigration, megacity, Mercator projection, Metcalfe’s law, microcredit, middle-income trap, mittelstand, Monroe Doctrine, Multics, mutually assured destruction, Neal Stephenson, New Economic Geography, new economy, New Urbanism, off grid, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Parag Khanna, Peace of Westphalia, peak oil, Pearl River Delta, Peter Thiel, Philip Mirowski, Planet Labs, plutocrats, post-oil, post-Panamax, precautionary principle, private military company, purchasing power parity, quantum entanglement, Quicken Loans, QWERTY keyboard, race to the bottom, Rana Plaza, rent-seeking, reserve currency, Robert Gordon, Robert Shiller, Robert Solow, rolling blackouts, Ronald Coase, Scramble for Africa, Second Machine Age, sharing economy, Shenzhen special economic zone , 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, systems thinking, TaskRabbit, tech worker, TED Talk, telepresence, the built environment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, Tim Cook: Apple, trade route, Tragedy of the Commons, transaction costs, Tyler Cowen, UNCLOS, uranium enrichment, urban planning, urban sprawl, vertical integration, WikiLeaks, Yochai Benkler, young professional, zero day

Belgium scarcely exists as a united country but is rather dissolving into linguistic kinships as its Dutch-speaking provinces gravitate toward the Netherlands, French-speaking regions drift toward France, Flemish craft their own identity and diplomacy, and Brussels serves as the EU’s capital. The archetype of the modern Western multiethnic, liberal democratic nation-state is being chipped away as cities and provinces make concrete cost-benefit calculations in their engagements with rent-seeking capital cities. Nations are becoming federations of powerful local administrative centers. In recent years, the Catalans and the Scots have also moved decisively toward greater autonomy, gaining the substance of independence without (yet) the style. They have achieved “dev-max”—maximum devolution.

The Economic Consequences of the Peace. Harcourt, Brace, and Howe, 1920. ———. The General Theory of Employment, Interest, and Money. CreateSpace, 2011. Khan, Mushtaq H. “Beyond Good Governance: An Agenda for Developmental Governance.” SOAS, University of London, 2012. Khan, Mushtaq H., and K. S. Jomo. Rents, Rent-Seeking, and Economic Development: Theory and Evidence in Asia. Cambridge University Press, 2000. Khanna, Parag. How to Run the World: Charting a Course to the Next Renaissance. Random House, 2011. ———. The Second World: How Emerging Powers Are Redefining Global Competition in the Twenty-First Century.


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

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, Alan Greenspan, anti-communist, bank run, banking crisis, Basel III, Bear Stearns, benefit corporation, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, export processing zone, failed state, fake news, falling living standards, family office, financial deregulation, financial engineering, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, Global Witness, high net worth, Ida Tarbell, income inequality, index fund, invisible hand, Jeff Bezos, junk bonds, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, megaproject, Michael Milken, Money creation, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, stock buybacks, Suez crisis 1956, The Chicago School, Thorstein Veblen, too big to fail, Tragedy of the Commons, transfer pricing, two and twenty, vertical integration, Wayback Machine, wealth creators, white picket fence, women in the workforce, zero-sum game

Cut corporate taxes too far, and people will say, ‘Look, it’s undercutting income tax! Let’s cut the top rate of income tax to stop this!’ It’s a race to the bottom inside the tax system – not between two countries this time, but between two taxes.14 As ever, this race shifts yet more wealth and power upwards. Here’s another problem. Corporate tax cuts tend to reward predatory rent-seeking behaviour over genuine wealth creation. Compare a business that has invested £100 million in a factory and its 500 workers and generates £5 million in taxable profits, with a debt-fuelled, financialised share-flipper with five employees, which invests £2 million in IT systems, also for a £5 million annual profit.

On the cannibalisation of income tax by corporate tax cuts, see Andrew Baker and Richard Murphy, ‘Re-framing tax spillover’, SPERI (Sheffield Political Economy Research Institute), 14 March 2017. The Institute for Fiscal Studies briefing note, ‘The Changing composition of UK tax revenues’ (April 2016), says income taxes and National Insurance add up to 45 per cent of total tax revenues, while corporation tax contributes 7 per cent. 15. For more on tax cuts fostering rent-seeking, see Paul Krugman, ‘Monopoly Rents and Corporate Taxation (Wonkish)’, New York Times, 31 August 2017, which also makes strong points about the ‘incidence’ of corporate tax. On tax avoidance rewarding multinationals over domestic firms, see, for instance, Katharina Finke, ‘Tax Avoidance of German Multinationals and Implications for Tax Revenue: Evidence from a Propensity Score Matching Approach’, Centre for European Economic Research (ZEW), September 2013.


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

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

Academic reputations are built on new and imaginative demonstrations of market failure. But in public, the tendency is to close ranks and support free markets and free trade. This dynamic produces what I call the “barbarians are only on one side” syndrome. Those who want restrictions on markets are organized lobbyists, rent-seeking cronies, and their ilk, while those who want freer markets, even when they’re wrong, have their hearts in the right place and are therefore much less dangerous. Taking up the cause of the former gives ammunition to the barbarians, while siding with the latter is, at worst, an honest mistake with no huge consequences.


pages: 207 words: 59,298

The Gig Economy: A Critical Introduction by Jamie Woodcock, Mark Graham

Airbnb, algorithmic management, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, British Empire, business process, business process outsourcing, Californian Ideology, call centre, collective bargaining, commoditize, corporate social responsibility, crowdsourcing, data science, David Graeber, deindustrialization, Didi Chuxing, digital divide, disintermediation, emotional labour, en.wikipedia.org, full employment, future of work, gamification, gender pay gap, gig economy, global value chain, Greyball, independent contractor, informal economy, information asymmetry, inventory management, Jaron Lanier, Jeff Bezos, job automation, knowledge economy, low interest rates, Lyft, mass immigration, means of production, Network effects, new economy, Panopticon Jeremy Bentham, planetary scale, precariat, rent-seeking, RFID, ride hailing / ride sharing, Ronald Reagan, scientific management, self-driving car, sentiment analysis, sharing economy, Silicon Valley, Silicon Valley ideology, TaskRabbit, The Future of Employment, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, women in the workforce, working poor, young professional

Figure 8 Democratic ownership Illustration by John Philip Sage At the core of the platform cooperative idea is the fact that platforms operate as mediators: bringing together workers and customers. In the process, they take a substantial cut of the transactions – sometimes as high as 30 per cent. However, once the infrastructure has been set up, these platforms essentially become rent-seeking. Rather than providing anything new to either party using the platform, they collect a cut of other people’s work, often driving down wages to do so. As the costs of producing apps used by platforms have fallen dramatically over time, they are no longer the sole preserve of multi-billion-dollar companies.


pages: 226 words: 58,341

The New Snobbery by David Skelton

assortative mating, banking crisis, Black Lives Matter, Boris Johnson, Brexit referendum, British Empire, call centre, centre right, collective bargaining, coronavirus, corporate governance, corporate social responsibility, COVID-19, critical race theory, David Brooks, defund the police, deindustrialization, Etonian, Extinction Rebellion, financial deregulation, gender pay gap, glass ceiling, housing crisis, income inequality, Jeremy Corbyn, job automation, knowledge economy, lockdown, low skilled workers, market fundamentalism, meritocracy, microaggression, new economy, Northern Rock, open borders, postindustrial economy, race to the bottom, rent-seeking, Richard Florida, Right to Buy, rising living standards, shareholder value, social distancing, Social Justice Warrior, TED Talk, TikTok, wealth creators, women in the workforce

The industrial policy that allowed South Korea to enjoy decades of ‘hypergrowth’ and real wage growth of almost 20 per cent a year was predicated on favouring ‘positive-sum entrepreneurship’, defined as activities that benefit the wider economy and boost productive capacity – as opposed to ‘zero-sum entrepreneurship’, which represents short-term speculation and rent-seeking. Korea is also taking the lead in utilising technology in manufacturing, with over 800 robots per 10,000 workers, compared to 300 in Germany and eighty-five in the UK. This use of technology is enabling an increase in output with no net hit on jobs, with a recent European Commission paper finding that ‘robot adoption tends to be positively associated with aggregate employment’.6 For the Asian Tigers, government was able to utilise a sensible industrial strategy that used market signals to direct resources and protect early-stage innovation.


pages: 218 words: 62,889

Sabotage: The Financial System's Nasty Business by Anastasia Nesvetailova, Ronen Palan

Alan Greenspan, algorithmic trading, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Bernie Sanders, big-box store, bitcoin, Black-Scholes formula, blockchain, Blythe Masters, bonus culture, Bretton Woods, business process, collateralized debt obligation, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, critique of consumerism, cryptocurrency, currency risk, democratizing finance, digital capitalism, distributed ledger, diversification, Double Irish / Dutch Sandwich, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, gig economy, Glass-Steagall Act, global macro, Gordon Gekko, high net worth, Hyman Minsky, independent contractor, information asymmetry, initial coin offering, interest rate derivative, interest rate swap, Joseph Schumpeter, junk bonds, Kenneth Arrow, litecoin, London Interbank Offered Rate, London Whale, Long Term Capital Management, margin call, market fundamentalism, Michael Milken, mortgage debt, new economy, Northern Rock, offshore financial centre, Paul Samuelson, peer-to-peer lending, plutocrats, Ponzi scheme, Post-Keynesian economics, price mechanism, regulatory arbitrage, rent-seeking, reserve currency, Ross Ulbricht, shareholder value, short selling, smart contracts, sovereign wealth fund, Thorstein Veblen, too big to fail

What is there in the organization of the market that ensures businesses will concentrate only on innovation, and overlook all the other tools in the Veblenian arsenal of sabotage? Well, nothing, really. It is only the state, scorned and despised by Hayekians, that is in a position to try and do something about sabotage. Liberals are quick to point out that government officials are bent on rent seeking and are often corrupt (that is, they are corrupted by the very businesses whose freedom of action these liberals espouse). The free market of neoliberals, in contrast, is supposed to encourage innovation, as admittedly it did to an extent. In reality, however, the freer the market, the more ‘deregulated’ it is, the wider the scope for sabotage.


pages: 614 words: 174,226

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

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

By the mid-1960s, an acre of Taiwanese farmland produced eight times more food than an acre of U.S. farmland.92 In the longer term, the redistribution of land had two important consequences for Taiwan’s development. First, it created a broad base of consumers — and petty capitalists. Second, it minimized the numbers and political power of both rent-seeking elites and poor families dependent on the state. The development economist Gustav Ranis has observed that his colleagues struggled to influence policy in many developing nations because they had their priorities backward. Economists emphasized efficiency as the most important goal of public policy, while regarding political stability and distributional equity as benefits of the resulting growth.

In Chile, 33 percent of eighteen- to twenty-four-year-olds from the lowest income quintile were enrolled in college in 2017, compared with 53 percent of those from the top quintile.34 In the United States, differences in the quality of public education, and the rising cost of public universities, have produced similar, though less dramatic, effects. Economic inequality also distorts public policy as politicians face greater pressure to accommodate rent-seeking elites and to provide help to the poor. And inequality attenuates a sense of shared purpose, which makes it more difficult to maintain political support for the necessary levels of public investment in education, research, and infrastructure. The rise of inequality means the performance of the U.S. economy is not as strong as it may seem.


pages: 257 words: 64,285

The End of Traffic and the Future of Transport: Second Edition by David Levinson, Kevin Krizek

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, American Society of Civil Engineers: Report Card, autonomous vehicles, barriers to entry, Bay Area Rapid Transit, big-box store, bike sharing, carbon tax, Chris Urmson, collaborative consumption, commoditize, congestion pricing, crowdsourcing, DARPA: Urban Challenge, dematerialisation, driverless car, Dutch auction, Elon Musk, en.wikipedia.org, Ford Model T, Google Hangouts, high-speed rail, Induced demand, intermodal, invention of the printing press, jitney, John Markoff, labor-force participation, Lewis Mumford, lifelogging, Lyft, means of production, megacity, Menlo Park, Network effects, Occam's razor, oil shock, place-making, pneumatic tube, post-work, printed gun, Ray Kurzweil, rent-seeking, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, tacit knowledge, techno-determinism, technological singularity, Tesla Model S, the built environment, The future is already here, Thomas Kuhn: the structure of scientific revolutions, transaction costs, transportation-network company, Uber and Lyft, Uber for X, uber lyft, urban renewal, women in the workforce, working-age population, Yom Kippur War, zero-sum game, Zipcar

If firms don't need to go to extra effort to hire workers and machinery, (i.e. they would otherwise be idle or working at marginal tasks), prices will be stable. The analogy here is a bottleneck. At well below capacity, travelers can proceed at free flow speed. Only as capacity approaches does delay (higher prices) result. The Cynicism Hypothesis: While there are needs, money won't go to needs. Political rent-seeking will divert funds from what matters. Cynical as this may be, there is some evidence for this. The construction industry itself is indifferent to what is built, so will happily support any spending. It is the users and taxpayers who suffer from the misallocation of resources, not only in the opportunity cost of what isn't done, but the future maintenance burden of supporting what was done.


pages: 267 words: 71,123

End This Depression Now! by Paul Krugman

airline deregulation, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, bond market vigilante , Bretton Woods, business cycle, capital asset pricing model, Carmen Reinhart, centre right, correlation does not imply causation, credit crunch, Credit Default Swap, currency manipulation / currency intervention, debt deflation, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, Financial Instability Hypothesis, full employment, German hyperinflation, Glass-Steagall Act, Gordon Gekko, high-speed rail, Hyman Minsky, income inequality, inflation targeting, invisible hand, it is difficult to get a man to understand something, when his salary depends on his not understanding it, It's morning again in America, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Joseph Schumpeter, junk bonds, Kenneth Rogoff, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, low skilled workers, Mark Zuckerberg, Minsky moment, Money creation, money market fund, moral hazard, mortgage debt, negative equity, paradox of thrift, Paul Samuelson, price stability, quantitative easing, rent-seeking, Robert Gordon, Ronald Reagan, Savings and loan crisis, Upton Sinclair, We are all Keynesians now, We are the 99%, working poor, Works Progress Administration

It’s surely relevant here to note the sharp decline in unionization during the 1980s, which removed one major player that might have protested huge paychecks for executives. Recently Piketty and Saez have added a further argument: sharp cuts in taxes on high incomes, they suggest, have actually encouraged executives to push the envelope further, to engage in “rent-seeking” at the expense of the rest of the workforce. Why? Because the personal payoff to a higher pretax income has risen, making executives more willing to risk condemnation and/or hurt morale by pursuing personal gain. As Piketty and Saez note, there is a fairly close negative correlation between top tax rates and the top 1 percent’s share of income, both over time and across countries.


pages: 237 words: 66,545

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

Bernie Madoff, drop ship, Ethereum, fail fast, financial independence, global village, hiring and firing, housing crisis, independent contractor, messenger bag, passive income, race to the bottom, rent-seeking, ride hailing / ride sharing, side hustle, Steve Jobs, telemarketer

He’d sooner crawl under the table and starve at a holiday dinner than have that conversation. Clarence went on. “Forget about that example for a moment, because it’s not just about the specific items. With any reselling category, all you’re doing is marking up the price of something. You’re only profiting because the system is inefficient. Economists call this ‘rent-seeking,’ which is a fancy way of saying you’re not really adding anything of value. “Making money is good, for all the reasons we’ve talked about. But ultimately, you should learn to make money while also helping people in a meaningful way. That’s what the test is about. Don’t you want your grandma to be proud of you?


Spite: The Upside of Your Dark Side by Simon McCarthy-Jones

affirmative action, Atul Gawande, Bernie Sanders, Brexit referendum, Daniel Kahneman / Amos Tversky, dark triade / dark tetrad, Donald Trump, Elon Musk, en.wikipedia.org, experimental economics, Extinction Rebellion, greed is good, Greta Thunberg, income inequality, Jeremy Corbyn, Jon Ronson, loss aversion, Menlo Park, meta-analysis, Milgram experiment, New Journalism, Nick Bostrom, p-value, profit maximization, rent-seeking, rewilding, selective serotonin reuptake inhibitor (SSRI), shareholder value, Steven Pinker, TED Talk, The Wealth of Nations by Adam Smith, theory of mind, Tragedy of the Commons, ultimatum game, WikiLeaks

Kuziemko, “The ‘Last Place Aversion’ Paradox,” Scientific American, October 12, 2011, www.scientificamerican.com/article/occupy-wall-street-psychology/; I. Kuziemko et al., “‘Last-Place Aversion’: Evidence and Redistributive Implications,” Quarterly Journal of Economics 129, no. 1 (2014): 105–149. 2. B. Herrmann and H. Orzen, “The Appearance of Homo rivalis: Social Preferences and the Nature of Rent Seeking,” (CeDEx discussion paper series, No. 2008–10, 2008). These researchers do not suggest we create a new type of person called Homo rivalis but are keen to stress that most of us can act like this, under the right (or wrong) conditions. Our nature is somewhat fluid and is shaped by the conditions of society. 3.


pages: 231 words: 64,734

Safe Haven: Investing for Financial Storms by Mark Spitznagel

Albert Einstein, Antoine Gombaud: Chevalier de Méré, asset allocation, behavioural economics, bitcoin, Black Swan, blockchain, book value, Brownian motion, Buckminster Fuller, cognitive dissonance, commodity trading advisor, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, delayed gratification, diversification, diversified portfolio, Edward Thorp, fiat currency, financial engineering, Fractional reserve banking, global macro, Henri Poincaré, hindsight bias, Long Term Capital Management, Mark Spitznagel, Paul Samuelson, phenotype, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, random walk, rent-seeking, Richard Feynman, risk free rate, risk-adjusted returns, Schrödinger's Cat, Sharpe ratio, spice trade, Steve Jobs, tail risk, the scientific method, transaction costs, value at risk, yield curve, zero-sum game

This risk transfer is visible in all business activities: corporations end up obeying the financial analyst dictum to avoid tail insurance: in their eyes, a company that can withstand storms can be inferior to one that is fragile to the next slight downturn or rise in interest rates, if the latter's earning per share exceed the former's by a fraction of a penny! So the tools of modern finance helped create a “rent‐seeking” class of people whose interest diverged from those of their clients—and ones who get eventually bailed out by taxpayers. While the financial rent seekers were clearly the enemies of society, we found actually worse enemies: the imitators. For, at Universa, Spitz built a structure that tail‐hedged portfolios, hence insulated him from the need for delayed random gratification.


pages: 234 words: 67,589

Internet for the People: The Fight for Our Digital Future by Ben Tarnoff

4chan, A Declaration of the Independence of Cyberspace, accounting loophole / creative accounting, Alan Greenspan, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic management, AltaVista, Amazon Web Services, barriers to entry, Bernie Sanders, Big Tech, Black Lives Matter, blue-collar work, business logic, call centre, Charles Babbage, cloud computing, computer vision, coronavirus, COVID-19, decentralized internet, deep learning, defund the police, deindustrialization, desegregation, digital divide, disinformation, Edward Snowden, electricity market, fake news, Filter Bubble, financial intermediation, future of work, gamification, General Magic , gig economy, God and Mammon, green new deal, independent contractor, information asymmetry, Internet of things, Jeff Bezos, Jessica Bruder, John Markoff, John Perry Barlow, Kevin Roose, Kickstarter, Leo Hollis, lockdown, lone genius, low interest rates, Lyft, Mark Zuckerberg, means of production, Menlo Park, natural language processing, Network effects, Nicholas Carr, packet switching, PageRank, pattern recognition, pets.com, profit maximization, profit motive, QAnon, recommendation engine, rent-seeking, ride hailing / ride sharing, Sheryl Sandberg, Shoshana Zuboff, side project, Silicon Valley, single-payer health, smart grid, social distancing, Steven Levy, stock buybacks, supply-chain management, surveillance capitalism, techlash, Telecommunications Act of 1996, TikTok, transportation-network company, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, undersea cable, UUNET, vertical integration, Victor Gruen, web application, working poor, Yochai Benkler

Jeffrey Hardwick, Mall Maker: Victor Gruen, Architect of an American Dream (Philadelphia: University of Pennsylvania Press, 2004), 133. “Outlet for that …”: Victor Gruen and Laurence P. Smith, “Shopping Centers: The New Building Type,” Progressive Architecture (June 1952): 67–109. 86, Real malls are in the … On online mall rent-seeking, in addition to Sadowski, “The Internet of Landlords,” see Paul Langley and Andrew Leyshon, “Platform Capitalism: The Intermediation and Capitalization of Digital Economic Circulation,” Finance and Society 3, no. 1 (2017): 11–31. 88, In 1998, the same year … Steven Levy, In the Plex: How Google Thinks, Works, and Shapes Our Lives (New York: Simon and Schuster, 2011), 32–34.


pages: 662 words: 180,546

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

"there is no alternative" (TINA), Adam Curtis, Alan Greenspan, Alvin Roth, An Inconvenient Truth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, bond market vigilante , bread and circuses, Bretton Woods, Brownian motion, business cycle, capital controls, carbon credits, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, democratizing finance, disinformation, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, Flash crash, full employment, George Akerlof, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Phillips curve, Ponzi scheme, Post-Keynesian economics, precariat, prediction markets, price mechanism, profit motive, public intellectual, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, savings glut, school choice, sealed-bid auction, search costs, Silicon Valley, South Sea Bubble, Steven Levy, subprime mortgage crisis, tail risk, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, tontine, too big to fail, transaction costs, Tyler Cowen, vertical integration, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

Perhaps we can add to this that only societies which hold moral values essentially similar to our own have survived as free societies, while in others freedom has perished.112 Other MPS figures such as Buchanan entertained the notion that a certain specific type of moral order would support a neoliberal state, or that morals could reduce the costs of rent-seeking losers throwing monkey wrenches into government.113 It took a lot of effort, and a fair bit of pussyfooting around the danger of alienating the partisans of one denomination (often in some other part of the world) by coquetting with different denominations or versions of religion, but the project of intellectual accommodation with the religious right and the theocons within the neoliberal framework has been an ongoing project at the MPS, although one fraught with contradictions that have dogged the liberal project since the Enlightenment.114 These thirteen more or less echt-commandments gathered here characterize the rough shape of the program eventually arrived at by the Neoliberal Thought Collective.

Second, by developing such theories an economist can open the door to future wealth as a lobbyist or consultant. Third, the support of economists is critical to creating and maintaining special privileges for the financial services industry and for top corporate officers. By threatening to withdraw this support, economists can engage in rent-seeking. I call this last practice academic entrepreneurship. Is it really plausible that economists threaten top banks that in the absence of some kind of payoff, they will change the theories they teach in a direction that is less favorable to the banks? There are certainly cases in history of the following sequence: a.


Global Governance and Financial Crises by Meghnad Desai, Yahia Said

Asian financial crisis, bank run, banking crisis, Bretton Woods, business cycle, capital controls, central bank independence, corporate governance, creative destruction, credit crunch, crony capitalism, currency peg, deglobalization, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, floating exchange rates, frictionless, frictionless market, German hyperinflation, information asymmetry, Japanese asset price bubble, knowledge economy, liberal capitalism, liberal world order, Long Term Capital Management, low interest rates, market bubble, Meghnad Desai, Mexican peso crisis / tequila crisis, moral hazard, Nick Leeson, Nixon triggered the end of the Bretton Woods system, oil shock, open economy, Post-Keynesian economics, price mechanism, price stability, Real Time Gross Settlement, rent-seeking, short selling, special drawing rights, structural adjustment programs, Tobin tax, transaction costs, Washington Consensus

S. et al. (1997) Southeast Asia’s Misunderstood Miracle: Industrial Policy and Economic Development in Thailand, Malaysia and Indonesia, Westview, Boulder. Keynes, J. M. (1973) The General Theory of Employment, Interest and Money, 3rd edition, Macmillan, London. Khan, M. and Jomo, K. S. (eds) Rents, Rent-seeking and Economic Development: Theory and Evidence in Asia, Cambridge University Press, Cambridge. Krugman, P. (1994) ‘The myth of the Asian miracle’, Foreign Affairs, November–December. Krugman, P. (1998) ‘First-sale FDI’, processed Massachusetts Institute of Technology. Lane, T. (1999) ‘The Asian financial crisis: what have we learned?’


pages: 255 words: 75,172

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

affirmative action, Affordable Care Act / Obamacare, always be closing, American ideology, antiwork, battle of ideas, big-box store, Black Lives Matter, blue-collar work, collective bargaining, creative destruction, David Brooks, declining real wages, deindustrialization, desegregation, Detroit bankruptcy, Donald Trump, Edward Glaeser, ending welfare as we know it, Ferguson, Missouri, financial deregulation, full employment, gentrification, immigration reform, income inequality, independent contractor, invisible hand, job satisfaction, knowledge economy, knowledge worker, low skilled workers, machine readable, mass incarceration, minimum wage unemployment, mortgage tax deduction, new economy, obamacare, occupational segregation, payday loans, pink-collar, plutocrats, Powell Memorandum, profit motive, public intellectual, race to the bottom, Ralph Nader, rent-seeking, rising living standards, Ronald Reagan, shared worldview, stock buybacks, TED Talk, 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

As Návar sees it, one of the chief obstacles to building that kind of solidarity is a deep class analysis about why workers, including the white working class, have lost so much ground. Without a shared understanding of how capitalism has been reengineered by elites in the past three decades to encourage financial and capital rent-seeking behavior, the working class (and the middle class as well) can be easily steered toward scapegoating a group of people as the source of their problems. Without an understanding of how the rules have been rewritten, the lack of good jobs gets blamed on undocumented immigrants by both the white and the black working class.


pages: 284 words: 72,406

Scrum: The Art of Doing Twice the Work in Half the Time by Jeff Sutherland, Jj Sutherland

Abraham Maslow, Baxter: Rethink Robotics, business cycle, call centre, clean water, death of newspapers, fail fast, fundamental attribution error, Kaizen: continuous improvement, knowledge worker, meta-analysis, Milgram experiment, minimum viable product, pets.com, RAND corporation, rent-seeking, Richard Feynman, Rodney Brooks, Salesforce, Shai Danziger, Silicon Valley, Tony Hsieh, Toyota Production System, work culture

But problems show up when hierarchy or codified divisions of labor either haven’t been created by the group’s members or when those structures persist for long periods of time. We believe those structures inevitably begin to serve their own needs rather than those of Valve’s customers. The hierarchy will begin to reinforce its own structure by hiring people who fit its shape, adding people to fill subordinate support roles. Its members are also incented to engage in rent-seeking behaviors that take advantage of the power structure rather than focusing on simply delivering value to customers.3 It may seem that Valve would be vulnerable to freeloaders—to people who want to take advantage of the system—but peer review is constant. Sure, people get to decide what to work on, but if they can’t convince anyone else it’s a good idea, maybe it really isn’t.


pages: 264 words: 76,643

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

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

Many countries, especially ones in the developing world with weak institutions, fall prey to the so-called resource curse. Instead of using revenue to build the country’s future, they scramble to spend it as fast as possible. What should be a once-in-a-lifetime chance to improve a country’s prospects becomes what economists call a rent-seeking opportunity, with those in power and their hangers-on scrambling to make a quick buck. This applies not only to developing countries. Even the UK, a nation with generally well-functioning institutions, can be accused of squandering its oil revenues. Like Norway, Britain benefited from the vast quantities of petroleum discovered in the North Sea.


pages: 192

Kicking Awaythe Ladder by Ha-Joon Chang

Asian financial crisis, business cycle, central bank independence, classic study, clean water, colonial rule, Corn Laws, corporate governance, creative destruction, David Ricardo: comparative advantage, fear of failure, income inequality, income per capita, joint-stock company, joint-stock limited liability company, land bank, land reform, liberal world order, moral hazard, open economy, purchasing power parity, rent-seeking, scientific management, short selling, Simon Kuznets, tacit knowledge, The Wealth of Nations by Adam Smith, trade liberalization, Washington Consensus

Most patent laws were very lax in checking the originality of the invention. In the USA for example, before the 1836 overhaul of the patent law, patents were granted without any proof of originality. This not only led to the patenting of imported technologies, but also encouraged racketeers to engage in 'rent-seeking' by patenting devices already in use ('phony patents') and by demanding money from their users under threat of suit for infringement.53 Few countries allowed patents on chemical and pharmaceutical substances (as opposed to the processes), although this practice has been 'outlawed' by the TRIPS (trade-related intellectual property rights) agreement in the WTO, except for the poorest countries (and even then they are only exempt until 2006).54 These laws afforded only very inadequate protection, particularly in relation to the protection of foreign IPR, which is now becoming a major point of contention after the TRIPS agreement (for further details, see the references cited in section 2.3.3).


pages: 434 words: 77,974

Mastering Blockchain: Unlocking the Power of Cryptocurrencies and Smart Contracts by Lorne Lantz, Daniel Cawrey

air gap, altcoin, Amazon Web Services, barriers to entry, bitcoin, blockchain, business logic, business process, call centre, capital controls, cloud computing, corporate governance, creative destruction, cross-border payments, cryptocurrency, currency peg, disinformation, disintermediation, distributed ledger, Dogecoin, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, global reserve currency, information security, initial coin offering, Internet of things, Kubernetes, litecoin, low interest rates, Lyft, machine readable, margin call, MITM: man-in-the-middle, multilevel marketing, Network effects, offshore financial centre, OSI model, packet switching, peer-to-peer, Ponzi scheme, prediction markets, QR code, ransomware, regulatory arbitrage, rent-seeking, reserve currency, Robinhood: mobile stock trading app, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, smart contracts, software as a service, Steve Wozniak, tulip mania, uber lyft, unbanked and underbanked, underbanked, Vitalik Buterin, web application, WebSocket, WikiLeaks

In organizations, an administrator usually controls access to the entire system. Using a ledger system can allow multiple parties to access information without requiring one single gatekeeper. There’s nothing wrong with centralized databases. However, blockchain technology enables the sharing of information through consensus incentives instead of centralized rent-seeking (e.g., targeted advertising on social networks or taking a fee like online marketplaces do). Decentralization Versus Centralization Early cryptocurrency proponents embraced decentralization as a core part of the technology. However, many other blockchain platforms—particularly those being developed for organizations—are much more centralized.


pages: 693 words: 204,042

New York 2140 by Kim Stanley Robinson

Anthropocene, availability heuristic, back-to-the-land, Black-Scholes formula, Burning Man, central bank independence, creative destruction, credit crunch, crowdsourcing, decarbonisation, East Village, full employment, gentrification, happiness index / gross national happiness, hive mind, income inequality, invisible hand, Jane Jacobs, Ken Thompson, Kim Stanley Robinson, liquidity trap, Mason jar, mass immigration, megastructure, microbiome, music of the spheres, New Urbanism, offshore financial centre, Planet Labs, plutocrats, Ponzi scheme, precariat, quantitative easing, Reflections on Trusting Trust, rent-seeking, Social Justice Warrior, the built environment, too big to fail

On the ferry-boats the hundreds that cross, returning home, are more curious to me than you suppose, And you that shall cross from shore to shore years hence are more to me, and more in my meditations, than you might suppose … Others will enter the gates of the ferry and cross from shore to shore, Others will watch the run of the flood-tide, Others will see the shipping of Manhattan north and west, and the heights of Brooklyn to the south and east, Others will see the islands large and small; Fifty years hence, others will see them as they cross, the sun half an hour high, A hundred years hence, or ever so many hundred years hence, others will see them, Will enjoy the sunset, the pouring-in of the flood-tide, the falling-back to the sea of the ebb-tide … It avails not, time nor place—distance avails not, I am with you, you men and women of a generation or ever so many generations hence … Just as you feel when you look on the river and sky, so I felt, Just as any of you is one of a living crowd, I was one of a crowd, Just as you are refresh’d by the gladness of the river and the bright flow, I was refresh’d, Just as you stand and lean on the rail, yet hurry with the swift current, I stood yet was hurried— —Walt Whitman h) the city Strategic defaulting. Class-action suits. Mass rallies. Staying home from work. Staying out of private transport systems. Refusing consumer consumption beyond the necessities. Withdrawing deposits. Denouncing all forms of rent-seeking. Ignoring mass media. Withholding scheduled payments. Fiscal noncompliance. Loud public complaining. The interesting volume Why Civil Resistance Works makes the case that nonviolent civil resistance of various soft kinds is demonstrably more successful than violent resistance when it comes to actually achieving the stated goals of the resistance and changing things for the better.

The Householders’ Union’s wildcat noncompliance strike was famous and going strong; not paying rents and mortgages and calling that a political act was proving to be very popular. Markets were holding on by the skin of their teeth, loudly proclaiming everything was fine, but people now spoke of rent using the economists’ definition of the word, as any taking of money with no productive economic work created. Taking a cut, corruption, rent-seeking, these were suddenly used as synonyms. The householders’ strike even looked like a logical response to the bashing of the city by Mother Nature and the clueless intransigence of the absent rich in their empty uptown towers. Strike, therefore! and watch the house of cards fall. Everything that happened seemed to play to her campaign message.


Crisis and Dollarization in Ecuador: Stability, Growth, and Social Equity by Paul Ely Beckerman, Andrés Solimano

banking crisis, banks create money, barriers to entry, business cycle, capital controls, Carmen Reinhart, carried interest, central bank independence, centre right, clean water, currency peg, declining real wages, disintermediation, financial intermediation, fixed income, floating exchange rates, Future Shock, Gini coefficient, income inequality, income per capita, labor-force participation, land reform, London Interbank Offered Rate, Mexican peso crisis / tequila crisis, microcredit, Money creation, money: store of value / unit of account / medium of exchange, offshore financial centre, old-boy network, open economy, pension reform, price stability, rent-seeking, school vouchers, seigniorage, trade liberalization, women in the workforce

Ecuador’s main political parties are formed along regional lines, weakening central authority and forcing a style of policymaking that allocates resources, taxes, and quotas of political power in an effort to maintain regional balance.6 Economy-wide objectives such as economic growth and monetary stability are often displaced by the needs of regional balancing, redistribution, and rent-seeking. In turn, Ecuador, like most Latin American countries, is a highly socially stratified country. Wealthy people, elite landowners, and financial and industrial entrepreneurs coexist with a population that is mostly poor (see chapter 4) and with a large (at times politically active) indigenous population.


pages: 283 words: 81,163

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

air traffic controllers' union, Alan Greenspan, banking crisis, British Empire, business cycle, California energy crisis, collective bargaining, Cornelius Vanderbilt, corporate governance, corporate social responsibility, electricity market, financial deregulation, Fractional reserve banking, Hernando de Soto, Ida Tarbell, income inequality, invisible hand, Joseph Schumpeter, laissez-faire capitalism, McDonald's hot coffee lawsuit, means of production, medical malpractice, Menlo Park, minimum wage unemployment, Money creation, Norman Mailer, plutocrats, price stability, profit maximization, profit motive, Ralph Nader, rent control, rent-seeking, Robert Bork, rolling blackouts, Ronald Coase, Ronald Reagan, scientific management, Silicon Valley, statistical model, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, vertical integration, W. E. B. Du Bois, wealth creators, working poor, Works Progress Administration, zero-sum game

Of course, in every industry the less efficient competitors can be expected to snipe at their superior rivals, and in many instances sniping turns into an organized political crusade to get the government to enact laws or regulations that harm the superior competitor. Economists call this process “rent seeking”; in the language of economics, “rent” means a financial return on an investment or activity in excess of what the activity would normally bring in a competitive market. This sort of political crusade by less successful rivals is precisely what crippled the great Rockefeller organization. The governmental vehicle that was chosen to cripple Standard Oil was antitrust regulation.


pages: 261 words: 81,802

The Trouble With Billionaires by Linda McQuaig

"World Economic Forum" Davos, battle of ideas, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, British Empire, Build a better mousetrap, carried interest, Charles Babbage, collateralized debt obligation, computer age, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Douglas Engelbart, Douglas Engelbart, employer provided health coverage, financial deregulation, fixed income, full employment, Gary Kildall, George Akerlof, Gini coefficient, Glass-Steagall Act, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the telephone, invention of the wheel, invisible hand, Isaac Newton, Jacquard loom, John Bogle, Joseph-Marie Jacquard, laissez-faire capitalism, land tenure, lateral thinking, low interest rates, Mark Zuckerberg, market bubble, Martin Wolf, mega-rich, minimum wage unemployment, Mont Pelerin Society, Naomi Klein, neoliberal agenda, Northern Rock, offshore financial centre, Paul Samuelson, plutocrats, Ponzi scheme, pre–internet, price mechanism, proprietary trading, purchasing power parity, RAND corporation, rent-seeking, rising living standards, road to serfdom, Robert Solow, Ronald Reagan, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, trickle-down economics, Vanguard fund, very high income, wealth creators, women in the workforce

Rather, it’s that our highest earners have managed to shape the agenda in the past thirty years, using their influence to put in place laws – domestically and internationally – that favour their own interests. Rather than wealth creation, their main achievement has been ensuring the diversion to themselves of an enormous share of the wealth created, what is known in economics as ‘rent-seeking’. The growing concentration of income and wealth at the top is thus largely the product of deliberate policy changes affecting the corporate and financial world, as well as the gutting of labour laws and social programmes that protected those lower down the income ladder. The rise of a hugely rewarded class of financial professionals has been greatly facilitated, for instance, by the dismantling of financial regulations that were wisely put in place in the 1930s, following the 1929 crash.


pages: 237 words: 72,716

The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality by Roland Berger, David Grusky, Tobias Raffel, Geoffrey Samuels, Chris Wimer

"World Economic Forum" Davos, Bear Stearns, Branko Milanovic, business cycle, Caribbean Basin Initiative, Celtic Tiger, collective bargaining, corporate governance, corporate social responsibility, double entry bookkeeping, equal pay for equal work, fear of failure, financial innovation, full employment, Gini coefficient, hiring and firing, illegal immigration, income inequality, invisible hand, Long Term Capital Management, long term incentive plan, microcredit, military-industrial complex, Money creation, offshore financial centre, principal–agent problem, profit maximization, proprietary trading, rent-seeking, shareholder value, Silicon Valley, Silicon Valley startup, time value of money, very high income

Not only is this contrary to human nature, it does not promote a vibrant economy where a portion of the population using competitive skills and higher productivity creates a more active, innovative economy, as well as greater inequality. Skewed income distribution is not necessarily a sign of cronyism, rent seeking, or predatory practices. Indeed, some scholars suggest that an “efficient inequality range,” between a Gini of .25 and .40, creates economic efficiency, in which case almost all OECD countries fit within an efficient range.1 Again, the point is not to contest the need to reduce exces- 1 Giovanni Andrea Cornia, and Julius Court, Inequality, Growth and Poverty in the Era of Liberalization and Globalization, UNU World Institute for Development Economics Research, 2001.


pages: 362 words: 83,464

The New Class Conflict by Joel Kotkin

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, Alvin Toffler, American Society of Civil Engineers: Report Card, back-to-the-city movement, Bob Noyce, Boston Dynamics, California gold rush, Californian Ideology, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, classic study, Cornelius Vanderbilt, creative destruction, crony capitalism, David Graeber, degrowth, deindustrialization, do what you love, don't be evil, Downton Abbey, driverless car, Edward Glaeser, Elon Musk, energy security, falling living standards, future of work, Future Shock, Gini coefficient, Google bus, Herman Kahn, housing crisis, income inequality, independent contractor, informal economy, Internet of things, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John von Neumann, Joseph Schumpeter, Kevin Kelly, Kevin Roose, labor-force participation, Larry Ellison, Lewis Mumford, low interest rates, low-wage service sector, Marc Andreessen, Mark Zuckerberg, Mary Meeker, mass affluent, McJob, McMansion, medical bankruptcy, microapartment, Nate Silver, National Debt Clock, New Economic Geography, new economy, New Urbanism, obamacare, offshore financial centre, Paul Buchheit, payday loans, Peter Calthorpe, plutocrats, post-industrial society, public intellectual, RAND corporation, Ray Kurzweil, rent control, rent-seeking, Report Card for America’s Infrastructure, Richard Florida, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Solyndra, Steve Jobs, stock buybacks, tech worker, techlash, technoutopianism, The Death and Life of Great American Cities, Thomas L Friedman, Tony Fadell, too big to fail, transcontinental railway, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, upwardly mobile, urban planning, urban sprawl, Virgin Galactic, War on Poverty, women in the workforce, working poor, young professional

It is possible that as these firms move further from their entrepreneurial roots, many take on what anthropologist David Graeber describes as “a timid, bureaucratic spirit” that responds to the needs of investors and focuses on preserving already established business lines. Many observers, from Adam Smith and Karl Marx to Joseph Schumpeter, agree that monopoly creation, rent seeking, and price fixing are the natural instincts of the monied classes rather than risk taking, hard work, and free enterprise.82 Over time, this yearning for oligarchy could also threaten a host of other large firms, in media and finance in particular, which have been subject to what one analyst calls the “super-sizing” of big business.


pages: 334 words: 82,041

How Did We Get Into This Mess?: Politics, Equality, Nature by George Monbiot

Affordable Care Act / Obamacare, Alfred Russel Wallace, Anthropocene, bank run, bilateral investment treaty, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, creative destruction, credit crunch, David Attenborough, dematerialisation, demographic transition, drone strike, en.wikipedia.org, first-past-the-post, full employment, Gini coefficient, hedonic treadmill, income inequality, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, invisible hand, land bank, land reform, land value tax, Leo Hollis, market fundamentalism, meta-analysis, Mont Pelerin Society, moral panic, Naomi Klein, Northern Rock, obamacare, oil shale / tar sands, old-boy network, peak oil, place-making, planned obsolescence, plutocrats, profit motive, rent-seeking, rewilding, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, urban sprawl, We are all Keynesians now, wealth creators, World Values Survey

It is easy to calculate and hard to avoid: you can’t hide your land in London in a secret account in the Cayman Islands. And it could probably discharge the entire deficit. It is altogether remarkable, in these straitened and inequitable times, that land value tax is not at the heart of the current political debate. Perhaps it is a sign of how powerful the rent-seeking class in Britain has become. While the silence surrounding this obvious solution exposes Labour’s limitations, it also exposes the contradiction at heart of the Conservative Party. The Conservatives claim, in David Cameron’s words, to be ‘the party of enterprise’.16 But those who benefit most from its policies are those who are rich already.


pages: 297 words: 83,651

The Twittering Machine by Richard Seymour

4chan, anti-communist, augmented reality, behavioural economics, Bernie Sanders, Big Tech, Black Lives Matter, Cal Newport, Californian Ideology, Cass Sunstein, Chelsea Manning, citizen journalism, classic study, colonial rule, Comet Ping Pong, correlation does not imply causation, credit crunch, crisis actor, crowdsourcing, dark triade / dark tetrad, disinformation, don't be evil, Donald Trump, Elon Musk, Erik Brynjolfsson, Evgeny Morozov, fake news, false flag, Filter Bubble, Gabriella Coleman, gamification, Google Chrome, Google Earth, hive mind, informal economy, Internet of things, invention of movable type, invention of writing, James Bridle, Jaron Lanier, Jeremy Corbyn, Jon Ronson, Jony Ive, Kevin Kelly, Kevin Roose, knowledge economy, late capitalism, Lewis Mumford, liberal capitalism, Mark Zuckerberg, Marshall McLuhan, meta-analysis, Mohammed Bouazizi, moral panic, move fast and break things, Network effects, new economy, packet switching, patent troll, Philip Mirowski, post scarcity, post-industrial society, post-truth, RAND corporation, Rat Park, rent-seeking, replication crisis, sentiment analysis, Shoshana Zuboff, Silicon Valley, Silicon Valley ideology, Skinner box, smart cities, Snapchat, Social Justice Warrior, Steve Bannon, Steve Jobs, Stewart Brand, Stuxnet, surveillance capitalism, TaskRabbit, technological determinism, technoutopianism, TED Talk, the scientific method, Tim Cook: Apple, Timothy McVeigh, Twitter Arab Spring, undersea cable, upwardly mobile, white flight, Whole Earth Catalog, WikiLeaks

Spotify, renting its musical product through a cloud-based streaming service, collects digital information from customers that enables far more precise marketing. General Electric, offering a cloud platform to allow industrial firms to connect production processes by sensor and chip all over the world, makes production systems legible in the form of electronic writing. This also permits a new form of rent-seeking. Instead of selling products, increasingly firms adopting the ‘platform’ structure just lease them as services. Rolls-Royce, rather than selling a jetliner engine, will now rent it out at an hourly rate. The social industry giants have created a new form of advertising platform. The flow of marketing revenue is being massively redirected from newspapers to Facebook and Google.


pages: 324 words: 80,217

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

Affordable Care Act / Obamacare, AI winter, Apollo 13, Bernie Sanders, bitcoin, Black Lives Matter, Boeing 747, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, centre right, Charlie Hebdo massacre, charter city, crack epidemic, CRISPR, crowdsourcing, David Graeber, Deng Xiaoping, deplatforming, Donald Trump, driverless car, East Village, Easter island, Elon Musk, fake news, Flynn Effect, Francis Fukuyama: the end of history, Francisco Pizarro, ghettoisation, gig economy, Golden age of television, green new deal, Haight Ashbury, helicopter parent, hive mind, Hyperloop, immigration reform, informal economy, intentional community, Intergovernmental Panel on Climate Change (IPCC), Islamic Golden Age, Jeff Bezos, Jeremy Corbyn, Joan Didion, Kevin Kelly, Kickstarter, knowledge worker, life extension, low interest rates, mass immigration, mass incarceration, means of production, megacity, meritocracy, microaggression, move fast and break things, multiplanetary species, Neal Stephenson, Neil Armstrong, New Journalism, Nicholas Carr, Norman Mailer, obamacare, Oculus Rift, open borders, opioid epidemic / opioid crisis, out of africa, Panopticon Jeremy Bentham, Paris climate accords, peak TV, Peter Thiel, plutocrats, pre–internet, private spaceflight, QAnon, quantitative easing, radical life extension, rent-seeking, Robert Bork, Robert Gordon, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Snapchat, Snow Crash, Social Justice Warrior, social web, Steve Bannon, Steve Jobs, Steven Pinker, technoutopianism, TED Talk, the built environment, The Rise and Fall of American Growth, Tyler Cowen, Tyler Cowen: Great Stagnation, wage slave, WeWork, women in the workforce, Y2K

What has changed, according to the less solutionist and more pessimistic analysis, is that we’ve entered an age of economic limits—an era of “secular stagnation,” as the chastened neoliberal Larry Summers wrote in 2013, in which “the presumption that normal economic and policy conditions will return at some point cannot be maintained.” For the pessimists, the unusual features of the post-2007 landscape—the persistently low interest rates, the low rate of inflation, the disappointing rate of growth, the great fortunes parked in rent-seeking rather than risk-taking—are actually inevitabilities in a developed world where there just aren’t enough impressive enterprises to invest in; a developed world that inflates bubbles and then pops them (or invests in Theranos and then repents) because that’s all there is for capital to do; a developed world slowly growing accustomed to unexpected limits on its future possibilities.


pages: 308 words: 85,880

How to Fix the Future: Staying Human in the Digital Age by Andrew Keen

"World Economic Forum" Davos, 23andMe, Ada Lovelace, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, AlphaGo, Andrew Keen, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, basic income, Bernie Sanders, Big Tech, bitcoin, Black Swan, blockchain, Brewster Kahle, British Empire, carbon tax, Charles Babbage, computer age, Cornelius Vanderbilt, creative destruction, crowdsourcing, data is the new oil, death from overwork, DeepMind, Demis Hassabis, Didi Chuxing, digital capitalism, digital map, digital rights, disinformation, don't be evil, Donald Trump, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, European colonialism, fake news, Filter Bubble, Firefox, fulfillment center, full employment, future of work, gig economy, global village, income inequality, independent contractor, informal economy, Internet Archive, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joi Ito, Kevin Kelly, knowledge economy, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Mitch Kapor, move fast and break things, Network effects, new economy, Nicholas Carr, Norbert Wiener, OpenAI, Parag Khanna, peer-to-peer, Peter Thiel, plutocrats, post-truth, postindustrial economy, precariat, Ralph Nader, Ray Kurzweil, Recombinant DNA, rent-seeking, ride hailing / ride sharing, Rutger Bregman, Salesforce, Sam Altman, Sand Hill Road, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, Skype, smart cities, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Jobs, Steve Wozniak, subscription business, surveillance capitalism, Susan Wojcicki, tech baron, tech billionaire, tech worker, technological determinism, technoutopianism, The Future of Employment, the High Line, the new new thing, Thomas L Friedman, Tim Cook: Apple, Travis Kalanick, Triangle Shirtwaist Factory, Uber and Lyft, Uber for X, uber lyft, universal basic income, Unsafe at Any Speed, Upton Sinclair, urban planning, WikiLeaks, winner-take-all economy, Y Combinator, Yogi Berra, Zipcar

According to the Financial Times columnist Philip Stephens, Margrethe Vestager is the woman who is saving digital capitalism from the digital capitalists. The problem with free market capitalism, digital or otherwise, Stephens says, is its natural and perhaps even inevitable tendency toward winner-take-all monopolies. “Unconstrained, enterprise curdles into monopoly, innovation into rent-seeking,” Stephens argues. “Today’s swashbuckling ‘disrupters’ set up tomorrow’s cozy cartels.”1 Thus his portrayal of Vestager as someone with the potential to be the twenty-first-century version of Teddy Roosevelt, the US president who deployed the 1890 Sherman Antitrust Act against industrial winner-take-all leviathans of the late nineteenth century such as Standard Oil and the American Tobacco Company.


pages: 296 words: 83,254

After the Gig: How the Sharing Economy Got Hijacked and How to Win It Back by Juliet Schor, William Attwood-Charles, Mehmet Cansoy

1960s counterculture, Airbnb, algorithmic management, Amazon Mechanical Turk, American Legislative Exchange Council, back-to-the-land, barriers to entry, bike sharing, Californian Ideology, carbon footprint, clean tech, collaborative consumption, collaborative economy, Community Supported Agriculture, COVID-19, creative destruction, crowdsourcing, deskilling, driverless car, en.wikipedia.org, financial independence, future of work, gentrification, George Gilder, gig economy, global supply chain, global village, haute cuisine, income inequality, independent contractor, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jean Tirole, Jeff Bezos, jitney, job satisfaction, John Perry Barlow, John Zimmer (Lyft cofounder), Kevin Kelly, Lyft, Marshall McLuhan, Mason jar, mass incarceration, Mitch Kapor, Network effects, new economy, New Urbanism, Occupy movement, peer-to-peer rental, Post-Keynesian economics, precariat, profit maximization, profit motive, race to the bottom, regulatory arbitrage, rent gap, rent-seeking, ride hailing / ride sharing, Ruby on Rails, selection bias, sharing economy, Silicon Valley, Silicon Valley ideology, Skype, smart cities, social distancing, Stewart Brand, TaskRabbit, technological determinism, technoutopianism, Telecommunications Act of 1996, The Nature of the Firm, the payments system, Tragedy of the Commons, transaction costs, transportation-network company, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, urban planning, wage slave, walking around money, Whole Earth Catalog, women in the workforce, working poor, Yochai Benkler, Zipcar

They then relied on the idealist discourse to gain public support and deter regulators and politicians from opposing them. The platforms argue for dismantling existing regulatory regimes on the grounds that they stifle innovation and threaten the sector’s economic viability. The companies position themselves as efficient, low-cost, and proconsumer,25 while opponents are maligned as antiprogress, Luddite, and rent-seeking. Perhaps not surprisingly, a Koch Brothers–funded project against taxi regulation was used nearly word-for-word by Uber in its messaging.26 The companies are using the right-wing antigovernment playbook. In ride-hail, denigrating the competition was a bit like shooting fish in a barrel. Decades of caps on taxi licenses, racial discrimination by drivers, and coziness with regulators had eroded public support for the industry.


pages: 318 words: 82,452

The End of Policing by Alex S. Vitale

Affordable Care Act / Obamacare, anti-communist, Black Lives Matter, Broken windows theory, citizen journalism, Columbine, deindustrialization, desegregation, Donald Trump, drug harm reduction, Edward Snowden, equal pay for equal work, Ferguson, Missouri, gentrification, ghettoisation, hiring and firing, Housing First, illegal immigration, immigration reform, income inequality, independent contractor, Laura Poitras, mandatory minimum, mass immigration, mass incarceration, moral panic, Occupy movement, open borders, open immigration, rent-seeking, Ronald Reagan, San Francisco homelessness, strikebreaker, The Bell Curve by Richard Herrnstein and Charles Murray, traumatic brain injury, white flight

Police can enact harsh penalties, and those engaged in illegal activity usually have the resources to buy them off. Furthermore, enforcement is largely discretionary, so there is tremendous temptation for police to look the other way in return for bribes or actively pursue bribes as a form of “rent seeking,” in which they use their position to maximize extorted earnings. In many parts of the world, police corruption in relationship to prostitution is endemic, with most sex workers conducting financial and even sexual relationships with police.10 It is considered an unavoidable cost of doing business for workers and part of the expected base salary for police, along with bribes to avoid traffic tickets and free meals and goods from local businesses.


pages: 426 words: 83,128

The Journey of Humanity: The Origins of Wealth and Inequality by Oded Galor

agricultural Revolution, Alfred Russel Wallace, Andrei Shleifer, Apollo 11, Berlin Wall, bioinformatics, colonial rule, Columbian Exchange, conceptual framework, COVID-19, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, deindustrialization, demographic dividend, demographic transition, Donald Trump, double entry bookkeeping, Easter island, European colonialism, Fall of the Berlin Wall, Francisco Pizarro, general purpose technology, germ theory of disease, income per capita, intermodal, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, James Hargreaves, James Watt: steam engine, Joseph-Marie Jacquard, Kenneth Arrow, longitudinal study, loss aversion, Louis Pasteur, means of production, out of africa, phenotype, rent-seeking, rising living standards, Robert Solow, Scramble for Africa, The Death and Life of Great American Cities, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, Walter Mischel, Washington Consensus, wikimedia commons, women in the workforce, working-age population, World Values Survey

Geography also determines the availability of natural resources such as fossil fuels and natural minerals. These have tended to provide a sizeable windfall in the short run but are often considered a ‘resource curse’ in the longer run, as they divert resources from human-capital intensive sectors and promote non-productive rent-seeking activities. Some have argued that plentiful coal mines provided Britain with a head start in the development of steam engine technologies and thus contributed to the early onset of its Industrial Revolution, but it remains the case that other countries with large quantities of coal, such as China, did not industrialise until much later.


pages: 257 words: 80,698

Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals by Oliver Bullough

Alan Greenspan, Bellingcat, Big bang: deregulation of the City of London, Big Tech, bitcoin, Black Lives Matter, blockchain, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, capital controls, coronavirus, COVID-19, crowdsourcing, cryptocurrency, cuban missile crisis, Downton Abbey, Etonian, financial deregulation, financial innovation, full employment, Global Witness, John Bercow, Julian Assange, light touch regulation, lockdown, Nixon triggered the end of the Bretton Woods system, offshore financial centre, race to the bottom, rent-seeking, Ronald Reagan, Shoshana Zuboff, Silicon Valley, Suez canal 1869, Suez crisis 1956, surveillance capitalism, the High Line, WikiLeaks

It is well established that large reserves of oil or gas almost invariably corrupt countries – think of Angola, Nigeria, Venezuela or indeed Russia – since those in power battle to control the money flows rather than serve the public. Ukraine became very corrupt as well, but in a different way: the corruption derived not from controlling the gas, but from the pipelines that moved it, and thus the ability to reward supporters with valuable shipments, or export licences. This wasn’t so much rent-seeking behaviour as toll-seeking. Insiders in Russia and Ukraine teamed up to create shady intermediary companies which took gas from Gazprom at the Russian border, sold it to high-paying Europeans and split the proceeds. Often they paid for the gas not with money but with goods, and barter transactions added a layer of opacity to the deals, which made them even harder for ordinary citizens to understand.


pages: 927 words: 216,549

Empire of Guns by Priya Satia

banking crisis, British Empire, business intelligence, Corn Laws, cotton gin, deindustrialization, delayed gratification, European colonialism, Fellow of the Royal Society, flying shuttle, hiring and firing, independent contractor, interchangeable parts, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Khyber Pass, Lewis Mumford, Menlo Park, military-industrial complex, Panopticon Jeremy Bentham, rent-seeking, Scramble for Africa, Silicon Valley, spinning jenny, technological determinism, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transatlantic slave trade, zero-sum game

By contrast, French imperial demand had never been sufficient to prompt intense division of labor in artisanal arms making: French artillery engineers influenced by Enlightenment principles of rationality and republican idealism could not yield on musket design; the French government liquidated the French East India Company in 1793; and war devastated French land. Criticism of contracting as rent-seeking became strongest in Britain, because rent-seeking crumbled elsewhere. All European states harbored ambitions for industrial growth, but British state institutions’ ties to and rivalries with chartered companies made it capable of compromising in a manner that allowed it to experiment with industrial organization and make industry capable of cheaply producing mass quantities.


pages: 606 words: 87,358

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

"World Economic Forum" Davos, 3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, commodity super cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, export processing zone, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, Kickstarter, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Robert Solow, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, tacit knowledge, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

Since the local king wanted to be paid for the wood, the priest sent back to Egypt for more trade goods to seal the deal. The trade goods were eventually delivered almost a year later. The papyrus lists them as consisting of jars of gold and silver, royal linen, veils, 500 ox-hides, and 500 ropes. Some adherents to the doctrine condemned trade and traders on moral grounds—accusing them of what we would call rent-seeking behavior. Buying low and selling high was immoral since the trader’s own labor was not engaged in the making of the goods. Others praised trade as part of the divine plan to induce economic intercourse across the universal fellowship of humanity. As the Middle Ages progressed, the European conceptualization of trade shifted from the divine to the bottom line.


pages: 356 words: 91,157

The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It by Richard Florida

affirmative action, Airbnb, back-to-the-city movement, basic income, Bernie Sanders, bike sharing, blue-collar work, business climate, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbine, congestion charging, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, Donald Trump, East Village, edge city, Edward Glaeser, failed state, Ferguson, Missouri, gentrification, Gini coefficient, Google bus, high net worth, high-speed rail, income inequality, income per capita, industrial cluster, informal economy, Jane Jacobs, jitney, Kitchen Debate, knowledge economy, knowledge worker, land value tax, low skilled workers, Lyft, megacity, megaproject, Menlo Park, mortgage tax deduction, Nate Silver, New Economic Geography, new economy, New Urbanism, occupational segregation, off-the-grid, opioid epidemic / opioid crisis, Paul Graham, plutocrats, RAND corporation, rent control, rent-seeking, restrictive zoning, Richard Florida, rising living standards, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, SimCity, sovereign wealth fund, streetcar suburb, superstar cities, tech worker, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, upwardly mobile, urban decay, urban planning, urban renewal, urban sprawl, white flight, young professional

While there is certainly a place for neighborhood preservation and environmental conservation, NIMBYs do more than keep “bad” things out of cities and neighborhoods. Well-intended or not, when they reflexively block any and all development, they not only preserve their own housing values but also put a brake on the very clustering that drives innovation and economic growth. In many cases, NIMBYism reflects what economists refer to as rentier or rent-seeking behavior. An economic rent is essentially an extraordinary return that comes about through little or no real effort. And what could be easier than sitting on property and watching its value go up, especially since the gain comes largely from what is going on in the city and neighborhood? Concern over unproductive rentier behavior hearkens all the way back to eighteenth-century economists, who were writing at a time when land, not capital, was the dominant factor of production.


pages: 327 words: 90,542

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril by Satyajit Das

"there is no alternative" (TINA), "World Economic Forum" Davos, 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Alan Greenspan, Albert Einstein, Alfred Russel Wallace, Anthropocene, Anton Chekhov, Asian financial crisis, banking crisis, Bear Stearns, Berlin Wall, bitcoin, bond market vigilante , Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, digital divide, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial engineering, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, geopolitical risk, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, Great Leap Forward, Greenspan put, happiness index / gross national happiness, high-speed rail, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), it is difficult to get a man to understand something, when his salary depends on his not understanding it, It's morning again in America, Jane Jacobs, John Maynard Keynes: technological unemployment, junk bonds, Kenneth Rogoff, Kevin Roose, knowledge economy, knowledge worker, Les Trente Glorieuses, light touch regulation, liquidity trap, Long Term Capital Management, low interest rates, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, middle-income trap, Mikhail Gorbachev, military-industrial complex, Minsky moment, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, PalmPilot, passive income, peak oil, peer-to-peer lending, pension reform, planned obsolescence, plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Robert Solow, Ronald Reagan, Russell Brand, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, Stephen Fry, systems thinking, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

Prices have decreased by around 10 percent over the last five years. Return on investment in the garment trade has decreased from 50 to 20 percent, which is close to the cost of debt in Bangladesh. In turn, this drives further cost-reduction measures. The problems are compounded by weak government, corruption, rent-seeking, and poor administration. Bangladeshi building regulations are not enforced. Trade unions are aggressively suppressed. The owner of Rana Plaza was linked with one of Bangladesh's major political parties and allegedly used his influence to obtain approvals from the authorities, even though the building extensions did not comply with standards.


pages: 323 words: 90,868

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

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

Expensive, exclusive cities are the furnace in which a very rich, persistent class of elite professionals is forged Social capital thrives where it is in the individual interest of those contributing to it to continue their contributions. But while social capital is rewarding in its own right to those who are a part of the community, and further boosts the economic potential of those communities, it also creates a powerful rent-seeking institution: a community that sees its mission, in part, as protecting the wealth of the community by excluding others. 8 Hyperglobalization and the Never-Developing World So far, this book has dwelt primarily on rich countries. The rich world is a small club, home to about one billion people, or 15 per cent of the global population, but which accounts for about half of global GDP.


pages: 324 words: 90,253

When the Money Runs Out: The End of Western Affluence by Stephen D. King

Alan Greenspan, Albert Einstein, Apollo 11, Asian financial crisis, asset-backed security, banking crisis, Basel III, Bear Stearns, Berlin Wall, Bernie Madoff, bond market vigilante , British Empire, business cycle, capital controls, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, congestion charging, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-subsidies, currency risk, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, fixed income, floating exchange rates, Ford Model T, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, junk bonds, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, low interest rates, market clearing, mass immigration, Minsky moment, moral hazard, mortgage debt, Neil Armstrong, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, old age dependency ratio, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, risk free rate, Savings and loan crisis, seminal paper, South Sea Bubble, sovereign wealth fund, technology bubble, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, trickle-down economics, Washington Consensus, women in the workforce, working-age population

One way to measure output is by totting up the cost of all the inputs: the wage bill, reflecting the cost of labour, the level of profits, reflecting the cost of capital, and the like. Yet there are two problems with this approach. First, in an insufficiently competitive market, wages and profits may overstate the output being produced: those involved may instead simply be engaged in rent-seeking behaviour. Second, whereas input costs are known today, the ultimate ‘output’ of the financial sector won't be known for many years, if ever. If the financial sector's role is to allocate resources efficiently over time – to meet the interests of savers and investors – we can only know tomorrow whether today's financial decisions will pay off.


pages: 209 words: 89,619

The Precariat: The New Dangerous Class by Guy Standing

8-hour work day, banking crisis, barriers to entry, basic income, behavioural economics, Bertrand Russell: In Praise of Idleness, bread and circuses, call centre, Cass Sunstein, centre right, collective bargaining, company town, corporate governance, crony capitalism, death from overwork, deindustrialization, deskilling, emotional labour, export processing zone, fear of failure, full employment, Herbert Marcuse, hiring and firing, Honoré de Balzac, housing crisis, illegal immigration, immigration reform, income inequality, independent contractor, information security, it's over 9,000, job polarisation, karōshi / gwarosa / guolaosi, labour market flexibility, labour mobility, land reform, libertarian paternalism, low skilled workers, lump of labour, marginal employment, Mark Zuckerberg, mass immigration, means of production, mini-job, moral hazard, Naomi Klein, nudge unit, old age dependency ratio, Panopticon Jeremy Bentham, pension time bomb, pensions crisis, placebo effect, post-industrial society, precariat, presumed consent, quantitative easing, remote working, rent-seeking, Richard Thaler, rising living standards, Ronald Coase, Ronald Reagan, science of happiness, shareholder value, Silicon Valley, technological determinism, The Market for Lemons, The Nature of the Firm, The Spirit Level, Tobin tax, transaction costs, universal basic income, unpaid internship, winner-take-all economy, working poor, working-age population, young professional

The dominant image of the precariat stems from numerical flexibility, through what were long called ‘atypical’ or ‘non-standard’ forms of labour. Mainstream companies are contracting out much of their labour, while preserving a small salariat (corporate citizens) whose loyalty they value and with whom they share a key asset – knowledge, the rent-seeking capacity of tertiary firms. If knowledge is shared too widely, companies lose control of the asset. The salariat are citizens with voting rights in their firms, consulted or taken into account in a range of decisions. These rights are implicitly accepted by the owners or major shareholders, who have voting rights on the strategic decisions of the enterprise or organisation.


pages: 382 words: 92,138

The Entrepreneurial State: Debunking Public vs. Private Sector Myths by Mariana Mazzucato

Apple II, banking crisis, barriers to entry, Bretton Woods, business cycle, California gold rush, call centre, carbon footprint, carbon tax, Carmen Reinhart, circular economy, clean tech, computer age, creative destruction, credit crunch, David Ricardo: comparative advantage, demand response, deskilling, dual-use technology, endogenous growth, energy security, energy transition, eurozone crisis, everywhere but in the productivity statistics, Fairchild Semiconductor, Financial Instability Hypothesis, full employment, G4S, general purpose technology, green transition, Growth in a Time of Debt, Hyman Minsky, incomplete markets, information retrieval, intangible asset, invisible hand, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, knowledge worker, linear model of innovation, natural language processing, new economy, offshore financial centre, Philip Mirowski, popular electronics, Post-Keynesian economics, profit maximization, Ralph Nader, renewable energy credits, rent-seeking, ride hailing / ride sharing, risk tolerance, Robert Solow, shareholder value, Silicon Valley, Silicon Valley ideology, smart grid, Solyndra, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tony Fadell, too big to fail, total factor productivity, trickle-down economics, vertical integration, Washington Consensus, William Shockley: the traitorous eight

Burlamaqui (2012) argues that this problem cannot be solved through fixing market failures, but must be thought about more broadly in terms of market shaping – through the concept of ‘knowledge governance’. He states: ‘From a knowledge-governance perspective, the critical question that should be asked here is: when does extended protection cease to work for generating Schumpeterian profits and become a base for rent-seeking and rent extraction?’ (Burlamaqui 2012, 5). He argues that a tool for governing publicly funded knowledge would be for the government to retain a golden share of patents that emerge from publicly funded research, making sure that the owner of the patent behaves cooperatively, e.g. licensing the patent broadly and fairly after an initial period of protection.


pages: 324 words: 93,606

No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy by Linsey McGoey

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, agricultural Revolution, American Legislative Exchange Council, Bear Stearns, bitcoin, Bob Geldof, cashless society, clean water, cognitive dissonance, collapse of Lehman Brothers, colonial rule, corporate governance, corporate social responsibility, crony capitalism, effective altruism, Etonian, Evgeny Morozov, financial innovation, Food sovereignty, Ford paid five dollars a day, germ theory of disease, hiring and firing, Howard Zinn, Ida Tarbell, impact investing, income inequality, income per capita, invisible hand, Jane Jacobs, John Elkington, Joseph Schumpeter, Leo Hollis, liquidationism / Banker’s doctrine / the Treasury view, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, meta-analysis, Michael Milken, microcredit, Mitch Kapor, Mont Pelerin Society, Naomi Klein, Neil Armstrong, obamacare, Peter Singer: altruism, Peter Thiel, plutocrats, price mechanism, profit motive, public intellectual, Ralph Waldo Emerson, rent-seeking, road to serfdom, Ronald Reagan, school choice, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Slavoj Žižek, Steve Jobs, strikebreaker, subprime mortgage crisis, tacit knowledge, technological solutionism, TED Talk, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, urban planning, W. E. B. Du Bois, wealth creators

Instead, they act as lucrative gifts for established corporations that seek to dominate markets by keeping small players at bay.27 The system mostly benefits that strata of the international elite that Chrystia Freeland, a former Reuters executive and current Member of Parliament in Canada, terms ‘rent-seeking plutocrats – those who owe their fortunes chiefly to favourable political decisions’.28 The more stringent property rights become, the more serious a toll they take on the US economy, limiting the ability of smaller firms to compete against big guns such as Microsoft or IBM.29 Adam Smith once warned of this very problem.


pages: 556 words: 46,885

The World's First Railway System: Enterprise, Competition, and Regulation on the Railway Network in Victorian Britain by Mark Casson

banking crisis, barriers to entry, Beeching cuts, British Empire, business cycle, classic study, combinatorial explosion, Corn Laws, corporate social responsibility, David Ricardo: comparative advantage, Garrett Hardin, gentrification, high-speed rail, independent contractor, intermodal, iterative process, joint-stock company, joint-stock limited liability company, Kickstarter, knowledge economy, linear programming, low interest rates, megaproject, Network effects, New Urbanism, performance metric, price elasticity of demand, railway mania, rent-seeking, strikebreaker, the market place, Tragedy of the Commons, transaction costs, vertical integration

He argues for the institutionalization of collusion as a general cause of economic decline in nations, and he uses Britain as an exemplary case. His focus is on two types of horizontal combination: combinations of workers—namely trades unions—and combinations of firms—namely trade associations and cartels. These combinations are designed to raise wages and prices by eliminating competition; in other words, they are generated by ‘rent seeking’ rather than ‘efficiency-seeking’ behaviour (Baumol 1994). According to Olson, lengthy apprenticeship schemes and restrictive practices reduced occupational mobility. The labour market became segmented into Railways in the Victorian Economy 41 distinctive crafts, with particular types of job reserved for members of particular unions.

So far as firms were concerned, government became increasingly willing to listen to demands for the protection of domestic and colonial markets. As the international competitiveness of British labour declined, so trade associations became increasingly vociferous. Government failed to take a tough line with firms in mature manufacturing industries that had switched from efficiency-seeking to rent-seeking activities. 2 . 6 . C U LT U R A L E X P L A NAT I O N S O F E N T R E P R E N E U R I A L D EC L I N E Decline in late Victorian Britain is popularly attributed to premature gentrification. In the second half of the nineteenth century, it is claimed, the social gulf between artisans and aristocrats widened.


pages: 297 words: 103,910

Free culture: how big media uses technology and the law to lock down culture and control creativity by Lawrence Lessig

Brewster Kahle, Cass Sunstein, content marketing, creative destruction, digital divide, Free Software Foundation, future of journalism, George Akerlof, Innovator's Dilemma, Internet Archive, invention of the printing press, Joi Ito, Kenneth Arrow, Kevin Kelly, knowledge economy, Louis Daguerre, machine readable, new economy, prediction markets, prisoner's dilemma, profit motive, rent-seeking, Richard Florida, Richard Stallman, Ronald Coase, Ronald Reagan, Saturday Night Live, Silicon Valley, software patent, synthetic biology, transaction costs

This economists' brief was signed by seventeen economists, including five Nobel Prize winners, including Ronald Coase, James Buchanan, Milton Friedman, Kenneth Arrow, and George Akerlof. The economists, as the list of Nobel winners demonstrates, spanned the political spectrum. Their conclusions were powerful: There was no plausible claim that extending the terms of existing copyrights would do anything to increase incentives to create. Such extensions were nothing more than "rent-seeking"—the fancy term economists use to describe special-interest legislation gone wild. The same effort at balance was reflected in the legal team we gathered to write our briefs in the case. The Jones Day lawyers had been with us from the start. But when the case got to the Supreme Court, we added three lawyers to help us frame this argument to this Court: Alan Morrison, a lawyer from Public Citizen, a Washington group that had made constitutional history with a series of seminal victories in the Supreme Court defending individual rights; my colleague and dean, Kathleen Sullivan, who had argued many cases in the Court, and who had advised us early on about a First Amendment strategy; and finally, former solicitor general Charles Fried.


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

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

Trade • 21 • T H E U N D E R C O V E R E C O N O M I S T unions, lobby groups, people studying for a professional qualification, and even national governments like them too. Every day people all around us are trying to avoid competition or reap the rewards of others who have succeeded in doing so. Economists call this type of behavior “creating rents” and “rent-seeking.” It’s not easy to do this. It turns out that the world is a naturally competitive place, and it is no simple matter to steer clear of competition. This is fortunate, because although competition is uncomfortable if you are on the wrong end of it, it is pleasant to be on the right end, as the customer.


pages: 353 words: 98,267

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

Alan Greenspan, Alvin Roth, AOL-Time Warner, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, behavioural economics, Berlin Wall, British Empire, capital controls, carbon tax, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Easter island, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial engineering, flying shuttle, Ford paid five dollars a day, full employment, George Akerlof, Glass-Steagall Act, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, longitudinal study, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, Monkeys Reject Unequal Pay, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, precautionary principle, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Ronald Reagan, search costs, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game

This approach proved particularly fitting for the emergent capitalist economies that were beginning to develop in Northern European cities, where wealth was inherently less stable than among the landed feudal aristocracy. The Church never established the same alliances with entrepreneurs that it had developed with European nobility. Rather, entrepreneurs resisted its rent seeking and opposed its meddling in economic enterprise. So they chose the competing product. SIN VS. THE SECULAR WORLD Belief in a divine origin of the world has suffered a battering over the past few centuries. In the West, science has gradually replaced God in the schema of the physical world since Nicolaus Copernicus proved the earth was not at the center of everything in the sixteenth century, raising the question of why an omnipresent, omniscient God of everything would care so much about events on a little planet in some corner of the universe.


pages: 348 words: 97,277

The Truth Machine: The Blockchain and the Future of Everything by Paul Vigna, Michael J. Casey

3D printing, additive manufacturing, Airbnb, altcoin, Amazon Web Services, barriers to entry, basic income, Berlin Wall, Bernie Madoff, Big Tech, bitcoin, blockchain, blood diamond, Blythe Masters, business process, buy and hold, carbon credits, carbon footprint, cashless society, circular economy, cloud computing, computer age, computerized trading, conceptual framework, content marketing, Credit Default Swap, cross-border payments, crowdsourcing, cryptocurrency, cyber-physical system, decentralized internet, dematerialisation, disinformation, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Dunbar number, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, failed state, fake news, fault tolerance, fiat currency, financial engineering, financial innovation, financial intermediation, Garrett Hardin, global supply chain, Hernando de Soto, hive mind, informal economy, information security, initial coin offering, intangible asset, Internet of things, Joi Ito, Kickstarter, linked data, litecoin, longitudinal study, Lyft, M-Pesa, Marc Andreessen, market clearing, mobile money, money: store of value / unit of account / medium of exchange, Network effects, off grid, pets.com, post-truth, prediction markets, pre–internet, price mechanism, profit maximization, profit motive, Project Xanadu, ransomware, rent-seeking, RFID, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, smart contracts, smart meter, Snapchat, social web, software is eating the world, supply-chain management, Ted Nelson, the market place, too big to fail, trade route, Tragedy of the Commons, transaction costs, Travis Kalanick, Turing complete, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, universal basic income, Vitalik Buterin, web of trust, work culture , zero-sum game

This is one reason why researchers at the BOE speculated that differential interest rates would be needed—lower for central bank digital currencies but higher for bank deposits, perhaps—to discourage a destructive exodus of funds and smoothly manage the transition to digital currency. Nonetheless, many central bankers concur that gradually getting banks out of the payment business would be a positive thing. In theory, it reduces costs and inefficiencies, since profit-seeking banks (some might call them rent-seeking) are no longer acting as a tollgate to the economy’s commercial activity. Just as importantly, there would be less pressure on governments and central banks to bail out banks than there was in 2008, when it was feared that a looming collapse would cut off the economy’s payments lifeline. Central banks know too well now just how that crisis, which forced them to drive interest rates to zero and left them powerless to do more, seriously curtailed their capacity to stimulate economic growth.


pages: 332 words: 100,601

Rebooting India: Realizing a Billion Aspirations by Nandan Nilekani

Airbnb, Atul Gawande, autonomous vehicles, barriers to entry, bitcoin, call centre, carbon credits, cashless society, clean water, cloud computing, collaborative consumption, congestion charging, DARPA: Urban Challenge, data science, dematerialisation, demographic dividend, digital rights, driverless car, Edward Snowden, en.wikipedia.org, energy security, fail fast, financial exclusion, gamification, Google Hangouts, illegal immigration, informal economy, information security, Khan Academy, Kickstarter, knowledge economy, land reform, law of one price, M-Pesa, machine readable, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, mobile money, Mohammed Bouazizi, more computing power than Apollo, Negawatt, Network effects, new economy, off-the-grid, offshore financial centre, price mechanism, price stability, rent-seeking, RFID, Ronald Coase, school choice, school vouchers, self-driving car, sharing economy, Silicon Valley, single source of truth, Skype, smart grid, smart meter, software is eating the world, source of truth, Steve Jobs, systems thinking, The future is already here, The Nature of the Firm, transaction costs, vertical integration, WikiLeaks, work culture

Customers must have the freedom of choice, in this case being able to carry out transactions with a representative from any bank through the creation of an interoperable payments network. The economics of the system must be such that participants find it easier to make money legitimately rather than through corruption and rent-seeking. By creating standardized and simple processes, scaling up the network to include millions of customers becomes easier. Thanks to the ‘network effect’, each individual added to the system enriches it exponentially, creating a large enough user base that it expands under its own momentum. And finally, all solutions must recognize and harness the energy of the Indian market.


pages: 337 words: 101,440

Revolution Française: Emmanuel Macron and the Quest to Reinvent a Nation by Sophie Pedder

"World Economic Forum" Davos, Airbnb, Berlin Wall, Bernie Sanders, bike sharing, carbon tax, centre right, clean tech, DeepMind, disruptive innovation, Donald Trump, Downton Abbey, driverless car, Erik Brynjolfsson, eurozone crisis, failed state, fake news, Fall of the Berlin Wall, Future Shock, ghettoisation, growth hacking, haute couture, Jean Tirole, knowledge economy, liberal capitalism, mass immigration, mittelstand, new economy, post-industrial society, public intellectual, rent-seeking, ride hailing / ride sharing, Second Machine Age, sharing economy, Sheryl Sandberg, Silicon Valley, Tony Fadell, Travis Kalanick, urban planning, éminence grise

And his technique required a clear-out of old-school politicians, reminiscent of the call by the nineteenth-century political theorist Saint-Simon. Indeed, there is very much something of a Saint-Simonian about Macron, in his faith in technical competence and meritocracy, as well as his determination to sweep aside the class of rent-seeking career politicians and replace them with technocrats. In office, he put technical experts in government, among them Jean-Michel Blanquer (education) and Dr Agnès Buzyn (health), and has surrounded himself with technocrats at the Elysée, the nerve centre of his highly centralised administration, under the tight grip of his chief of staff and old ally, Alexis Kohler.


pages: 417 words: 97,577

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

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

He found that since 2000, political activity and regulation account for most of the rise in valuations and profits. In the past, the returns came from investments in machinery and research and development, especially during the 1990s.77 That spending improved company products, created new technology, and drove the real economy. Today most of the rise in profitability is from rent seeking and influence peddling. The correlation between lobbying, regulation, and profits is concentrated in a small number of politically influential industries. Bessen's research found that most of the effect is accounted for by a handful of industries: pharmaceuticals/ chemicals, petroleum refining, transportation equipment/defense, utilities, and communications.


pages: 388 words: 99,023

The Emperor's New Road: How China's New Silk Road Is Remaking the World by Jonathan Hillman

"World Economic Forum" Davos, British Empire, cable laying ship, capital controls, colonial rule, coronavirus, COVID-19, Deng Xiaoping, Donald Trump, drone strike, energy security, facts on the ground, high-speed rail, intermodal, joint-stock company, Just-in-time delivery, land reform, low interest rates, M-Pesa, Malacca Straits, megaproject, moral hazard, offshore financial centre, rent-seeking, Scramble for Africa, Silicon Valley, smart cities, South China Sea, special economic zone, Suez canal 1869, Suez crisis 1956, supply-chain management, trade route, transcontinental railway, undersea cable, union organizing, Washington Consensus

The Marshall Plan was a focused effort, concentrated on a narrow set of countries, spanning under five years, and involving a finite set of activities. Since leaving the station, China’s BRI has become a gravy train without a conductor. Its fevered pace has already exceeded China’s ability to accurately measure, let alone manage, these activities. Corruption and rent-seeking are thriving in the chaos. Conceptually, China’s BRI is closer to the War on Terror: poorly defined and ever expanding. There is no end in sight. Domestically and internationally, Xi has support to forge ahead. A pledge to pursue the BRI was added to the Chinese Communist Party’s constitution in 2017, suggesting that Xi’s vision could extend even beyond his lifetime tenure.


pages: 362 words: 97,288

Ghost Road: Beyond the Driverless Car by Anthony M. Townsend

A Pattern Language, active measures, AI winter, algorithmic trading, Alvin Toffler, Amazon Robotics, asset-backed security, augmented reality, autonomous vehicles, backpropagation, big-box store, bike sharing, Blitzscaling, Boston Dynamics, business process, Captain Sullenberger Hudson, car-free, carbon footprint, carbon tax, circular economy, company town, computer vision, conceptual framework, congestion charging, congestion pricing, connected car, creative destruction, crew resource management, crowdsourcing, DARPA: Urban Challenge, data is the new oil, Dean Kamen, deep learning, deepfake, deindustrialization, delayed gratification, deliberate practice, dematerialisation, deskilling, Didi Chuxing, drive until you qualify, driverless car, drop ship, Edward Glaeser, Elaine Herzberg, Elon Musk, en.wikipedia.org, extreme commuting, financial engineering, financial innovation, Flash crash, food desert, Ford Model T, fulfillment center, Future Shock, General Motors Futurama, gig economy, Google bus, Greyball, haute couture, helicopter parent, independent contractor, inventory management, invisible hand, Jane Jacobs, Jeff Bezos, Jevons paradox, jitney, job automation, John Markoff, John von Neumann, Joseph Schumpeter, Kickstarter, Kiva Systems, Lewis Mumford, loss aversion, Lyft, Masayoshi Son, megacity, microapartment, minimum viable product, mortgage debt, New Urbanism, Nick Bostrom, North Sea oil, Ocado, openstreetmap, pattern recognition, Peter Calthorpe, random walk, Ray Kurzweil, Ray Oldenburg, rent-seeking, ride hailing / ride sharing, Rodney Brooks, self-driving car, sharing economy, Shoshana Zuboff, Sidewalk Labs, Silicon Valley, Silicon Valley startup, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, SoftBank, software as a service, sovereign wealth fund, Stephen Hawking, Steve Jobs, surveillance capitalism, technological singularity, TED Talk, Tesla Model S, The Coming Technological Singularity, The Death and Life of Great American Cities, The future is already here, The Future of Employment, The Great Good Place, too big to fail, traffic fines, transit-oriented development, Travis Kalanick, Uber and Lyft, uber lyft, urban planning, urban sprawl, US Airways Flight 1549, Vernor Vinge, vertical integration, Vision Fund, warehouse automation, warehouse robotics

It makes money on its investments in traction monopolies, and fosters an innovation that improves its beneficiaries’ lives and eases pressure on public finances. The alternative—allowing the housing market to collapse as retirees move en masse into care centers—is unthinkable. But what happens when such policies turn a traction monopoly into a vital service deemed “too big to fail”? Will health-system savings simply be gobbled by a rent-seeking traction company? Aside from the ethical concerns, the numbers involved in this web of money are so enormous that the future solvency of the welfare state may well hang in the balance. Even as tomorrow’s global traction monopolies take shape, we don’t yet know where their ambitions end. Google set out a mere two decades ago “to organize all the world’s information.”


pages: 357 words: 99,456

Hate Inc.: Why Today’s Media Makes Us Despise One Another by Matt Taibbi

4chan, affirmative action, anti-communist, Berlin Wall, Bernie Sanders, Chelsea Manning, commoditize, crack epidemic, David Brooks, disinformation, Donald Trump, drone strike, failed state, fake news, Fall of the Berlin Wall, false flag, financial deregulation, Francis Fukuyama: the end of history, Glass-Steagall Act, Gordon Gekko, greed is good, green new deal, Howard Zinn, illegal immigration, immigration reform, interest rate swap, Julian Assange, Kickstarter, Marshall McLuhan, microdosing, moral panic, Nate Silver, no-fly zone, Parents Music Resource Center, Peter Thiel, pink-collar, Ponzi scheme, pre–internet, profit motive, quantitative easing, Ralph Nader, rent-seeking, rolodex, Ronald Reagan, Rubik’s Cube, Saturday Night Live, Seymour Hersh, Silicon Valley, social contagion, Stephen Hawking, Steve Bannon, Steven Pinker, Tipper Gore, traveling salesman, unpaid internship, WikiLeaks, working poor, Y2K

Stories of couples having to drive a hundred miles at high speed to have their babies delivered are no longer uncommon. We suffer from profound and worsening inequality in income and criminal justice outcomes, a complete lack of job security for most, crumbling infrastructure (aggravated by extraordinary inefficiency and waste in government), an epidemic of anti-competitive practice and rent-seeking among the biggest companies, and devastating environmental threats on multiple fronts, from overfished oceans to a toxic “garbage patch” twice the size of Texas floating in the Pacific. These and a hundred other problems are common to the entire global population, not just Republicans or Democrats in the United States.


pages: 341 words: 98,954

Owning the Sun by Alexander Zaitchik

"World Economic Forum" Davos, American Legislative Exchange Council, anti-communist, back-to-the-land, Berlin Wall, business cycle, classic study, colonial rule, coronavirus, corporate personhood, COVID-19, crowdsourcing, desegregation, Donald Trump, energy transition, informal economy, invisible hand, It's morning again in America, knowledge economy, lone genius, Louis Pasteur, Mahatma Gandhi, Menlo Park, Mont Pelerin Society, Nelson Mandela, oil shock, Philip Mirowski, placebo effect, Potemkin village, profit motive, proprietary trading, Ralph Nader, rent-seeking, road to serfdom, Robert Bork, Ronald Reagan, shareholder value, Silicon Valley, Stewart Brand, supercomputer in your pocket, The Chicago School, Unsafe at Any Speed, Upton Sinclair, Whole Earth Catalog

One of that official’s reluctant Indian counterparts, Prabhat Patnaik, has described the road to TRIPS as “a parody of the wildest conspiracy theory.” The negotiations that resulted in the globalization of U.S.-style medical monopoly were not so much held over a table as conducted on a rack. It was the only way to enforce a concept as peculiar and universally rejected as rent-seeking from medicines. This is the story of how one of history’s worst ideas took root against centuries of tradition and came to dominate the world. One ORIGINS Rise of the Great American Patent MANKIND’S FIRST ATTEMPTS AT A RUDIMENTARY SCIENTIFIC process date to the Late Stone Age. Roughly ten thousand years ago, villages along the Fertile Crescent began using observation, trial, and error to cultivate flax, wheat, and barley.


pages: 331 words: 95,582

Golden Gates: Fighting for Housing in America by Conor Dougherty

Airbnb, bank run, basic income, Bay Area Rapid Transit, Bernie Sanders, Big Tech, big-box store, business logic, California gold rush, carbon footprint, commoditize, death of newspapers, desegregation, do-ocracy, don't be evil, Donald Trump, edge city, Edward Glaeser, El Camino Real, emotional labour, fixed income, fixed-gear, gentrification, Golden Gate Park, Google bus, Haight Ashbury, Home mortgage interest deduction, housing crisis, illegal immigration, income inequality, Joan Didion, Marc Andreessen, Marc Benioff, mass immigration, new economy, New Urbanism, passive income, Paul Buchheit, Peter Thiel, rent control, rent-seeking, Richard Florida, Ronald Reagan, Salesforce, San Francisco homelessness, self-driving car, sharing economy, side hustle, side project, Silicon Valley, single-payer health, software is eating the world, South of Market, San Francisco, The Rise and Fall of American Growth, universal basic income, urban planning, urban renewal, vertical integration, white flight, winner-take-all economy, working poor, Y Combinator, Yom Kippur War, young professional

The more popular modular construction became, the louder this fight would get. It was out of fashion to believe you could do well and good at the same time. Too many scars from the financial crisis, too many tech monopolies, too many flippers who evicted entire buildings then used a coat of paint and some tile to rationalize doubling the rent. Too many rent-seeking schemes that portrayed a capitalism that had lost its way. Rick still believed it. He’d spent his life jumping between the worlds of do-gooding and moneymaking and had come away believing that each needed the other for progress to occur. Governments had good intentions and lofty ideals, but they always lost their way on costs and in the case of housing seemed unable to actually accomplish the things taxes and legislation set out to do.


pages: 406 words: 105,602

The Startup Way: Making Entrepreneurship a Fundamental Discipline of Every Enterprise by Eric Ries

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, AOL-Time Warner, autonomous vehicles, barriers to entry, basic income, Ben Horowitz, billion-dollar mistake, Black-Scholes formula, Blitzscaling, call centre, centralized clearinghouse, Clayton Christensen, cognitive dissonance, connected car, corporate governance, DevOps, Elon Musk, en.wikipedia.org, fault tolerance, financial engineering, Frederick Winslow Taylor, global supply chain, Great Leap Forward, hockey-stick growth, index card, Jeff Bezos, Kickstarter, Lean Startup, loss aversion, machine readable, Marc Andreessen, Mark Zuckerberg, means of production, minimum viable product, moral hazard, move fast and break things, obamacare, PalmPilot, peer-to-peer, place-making, rent-seeking, Richard Florida, Sam Altman, Sand Hill Road, scientific management, secular stagnation, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, Steve Jobs, TechCrunch disrupt, the scientific method, time value of money, Toyota Production System, two-pizza team, Uber for X, universal basic income, web of trust, Y Combinator

Those are the levers we need to move to create not just innovative companies but an innovative culture. A lot of current pro-business policy has to do with profitability, but that’s only one aspect of a healthy economy. And not all profitability leads to increased dynamism in the economy: Think of the many rent-seeking behaviors that make it harder—not easier—for new companies to form. We hear a lot about “unicorn” companies, startups that grow into billion-dollar successes, or even hundreds of billions of dollars. But the truth is, these near-mythical success stories are not what create a continuously evolving system of opportunity.


pages: 382 words: 107,150

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

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

Michelle Venetucci Harvey, “The Farmworkers’ Journey: NAFTA, Agricultural Exceptionalism and California Farmworkers,” Spinning Spoons, February 16, 2012; Laura Carlsen, “Under NAFTA, Mexico Suffered and the United States Felt Its Pain,” New York Times, November 24, 2013. 4. Rocha, “Strawberry Fields and Undocumented Workers Forever?”; Miriam J. Wells, Strawberry Fields: Politics, Class, and Work in California Agriculture (Ithaca, NY: Cornell University Press, 1996); Julie Guthman, “Life Itself Under Contract: Rent-Seeking and Biopolitical Devolution Through Partnerships in California’s Strawberry Industry,” Journal of Peasant Studies 40, no. 1 (2017): 100–17, posted online October 28, 2016. 5. MICOP, 2016 Annual Report (December 2016), www.mixteco.org/2016/12/micops-2016-annual-report/. 6. Interview with Maricela Morales, Santa Barbara, CA, September 7, 2015.


pages: 417 words: 109,367

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

3D printing, additive manufacturing, agricultural Revolution, Albert Einstein, Anthropocene, Asilomar, autonomous vehicles, biodiversity loss, business cycle, carbon tax, Cass Sunstein, Climatic Research Unit, commodity super cycle, conceptual framework, corporate governance, creative destruction, credit crunch, David Attenborough, decarbonisation, dematerialisation, demographic transition, disinformation, disruptive innovation, diversified portfolio, double helix, energy security, failed state, financial independence, Ford Model T, Garrett Hardin, Gary Taubes, Great Leap Forward, hydraulic fracturing, income inequality, Induced demand, Intergovernmental Panel on Climate Change (IPCC), invisible hand, knowledge economy, meta-analysis, Naomi Klein, negative emissions, Neolithic agricultural revolution, ocean acidification, oil shale / tar sands, oil shock, pattern recognition, peak oil, Peter Calthorpe, phenotype, planetary scale, precautionary principle, price stability, profit motive, purchasing power parity, race to the bottom, RAND corporation, Recombinant DNA, rent-seeking, rewilding, Stewart Brand, synthetic biology, systematic bias, Tesla Model S, trade liberalization, Tragedy of the Commons, two and twenty, University of East Anglia, uranium enrichment, women in the workforce, yield curve

“In a purely dialectical fashion, technological progress creates the very forces that eventually destroy it.” As Jonathan Adler notes, “Economic interests also have reason to adopt precautionary appeals insofar as such appeals enable these groups to erect barriers to competing technologies or firms, close markets, or otherwise use environmental regulations as a tool for rent-seeking.” Candlemakers, after all, cannot be expected to hail the invention of the electric lightbulb, nor hostlers the advent of automobiles, nor canal-boat owners the building of railways, nor coal miners the development of nuclear power. Applying the precautionary approach, candlemakers will urge rejection of the competing technology, citing the dangers of electric shock; hostlers, of car crashes; canal-boat owners, of train engine smoke; and miners, of the risks of radiation.


pages: 518 words: 107,836

How Not to Network a Nation: The Uneasy History of the Soviet Internet (Information Policy) by Benjamin Peters

Albert Einstein, American ideology, Andrei Shleifer, Anthropocene, Benoit Mandelbrot, bitcoin, Brownian motion, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, commons-based peer production, computer age, conceptual framework, continuation of politics by other means, crony capitalism, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, disinformation, Dissolution of the Soviet Union, Donald Davies, double helix, Drosophila, Francis Fukuyama: the end of history, From Mathematics to the Technologies of Life and Death, Gabriella Coleman, hive mind, index card, informal economy, information asymmetry, invisible hand, Jacquard loom, John von Neumann, Kevin Kelly, knowledge economy, knowledge worker, Lewis Mumford, linear programming, mandelbrot fractal, Marshall McLuhan, means of production, megaproject, Menlo Park, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, Network effects, Norbert Wiener, packet switching, Pareto efficiency, pattern recognition, Paul Erdős, Peter Thiel, Philip Mirowski, power law, RAND corporation, rent-seeking, road to serfdom, Ronald Coase, scientific mainstream, scientific management, Steve Jobs, Stewart Brand, stochastic process, surveillance capitalism, systems thinking, technoutopianism, the Cathedral and the Bazaar, the strength of weak ties, The Structural Transformation of the Public Sphere, transaction costs, Turing machine, work culture , Yochai Benkler

66 These anecdotes constitute what we might call revolts in miniature. They are an expression of private unrest—of local resistance to a society whose public institutions did not have to serve the public. A liberal economic analysis to these problems might describe the informal networks of competing private interest as variously productive or rent-seeking, depending on whether the activity at hand created or depleted economic resources. Varied critics of the Soviet economy have interpreted the collapse of the public interests of the state and the private interests of the market into the command economy to be a hallowing out of means for Soviet citizens to seek their own self-interest through formal mechanisms.67 Consequently, informal means, whether creating islands of penny capitalism or engaging in systematic corruption, are all that is available.68 The liberal economic critique accuses the public state of systematically smothering and driving underground private self-interest.


pages: 355 words: 63

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

Andrei Shleifer, business climate, business cycle, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, foreign exchange controls, Gini coefficient, government statistician, Gunnar Myrdal, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, low interest rates, manufacturing employment, Money creation, Network effects, New Urbanism, open economy, PalmPilot, Productivity paradox, purchasing power parity, rent-seeking, Robert Solow, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, Tragedy of the Commons, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

Quarterly Journalof Economics 106, no. 2 (May):327-368. Svensson, Jakob. 1997. ”When Is Foreign Aid Policy Credible? Aid Dependence and Conditionality.” World Bank working paper 1740, March. Svensson, Jakob. 1998. ”Reforming Donor Institutions: Aid Tournaments.” Mimeo. World Bank, April. Svensson, Jakob. 2000. “Foreign Aid and Rent-Seeking.” Journal of International Economics 51,no. 2 (August): 437-461. Talbot, Ian. 1998. Pakistan: A Modern History. New York: St. Martin’s Press. Theobald, Robin. 1990. Corruption, Development, and Underdevelopmen. Durham, N.C.: Duke University Press. Thorp, Willard. 1956. ”American Policy and the Soviet Economic Offensive.”


Capitalism, Alone: The Future of the System That Rules the World by Branko Milanovic

affirmative action, Asian financial crisis, assortative mating, barriers to entry, basic income, Berlin Wall, bilateral investment treaty, Black Swan, Branko Milanovic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, dematerialisation, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, ghettoisation, gig economy, Gini coefficient, global supply chain, global value chain, Great Leap Forward, high net worth, household responsibility system, income inequality, income per capita, invention of the wheel, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, low skilled workers, Lyft, means of production, new economy, offshore financial centre, Paul Samuelson, plutocrats, post-materialism, purchasing power parity, remote working, rent-seeking, ride hailing / ride sharing, Robert Solow, Silicon Valley, single-payer health, special economic zone, Tax Reform Act of 1986, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, uber lyft, universal basic income, Vilfredo Pareto, Washington Consensus, women in the workforce, working-age population, Xiaogang Anhui farmers

He finds that the “surplus income” (the share of monopoly profit in output value) increased in the United States from virtually 0 in 1986 to 22 percent in 2015 (table 7). On monopsony power, see Azar, Marinescu, and Steinbaum (2017). 15. See Branko Milanovic, “Bob Solow on Rents and Decoupling of Productivity and Wages,” Globalinequality blog, May 2, 2015, http://glineq.blogspot.com/2015/05/bob-solow-on-rents-and-decoupling-of.html. 16. The market power, or rent-seeking, explanation for the rising share of capital versus labor has been adduced by a number of economists, including by Angus Deaton in an interview with editors of the ProMarket blog on February 8, 2018: https://promarket.org/angus-deaton-discussed-driver-inequality-america-easier-rent-seekers-affect-policy-much-europe/. 17.


EuroTragedy: A Drama in Nine Acts by Ashoka Mody

Alan Greenspan, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, book scanning, book value, Bretton Woods, Brexit referendum, call centre, capital controls, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, credit crunch, currency risk, Daniel Kahneman / Amos Tversky, debt deflation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, fear index, financial intermediation, floating exchange rates, forward guidance, George Akerlof, German hyperinflation, global macro, global supply chain, global value chain, hiring and firing, Home mortgage interest deduction, income inequality, inflation targeting, Irish property bubble, Isaac Newton, job automation, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, Kickstarter, land bank, liberal capitalism, light touch regulation, liquidity trap, loadsamoney, London Interbank Offered Rate, Long Term Capital Management, low interest rates, low-wage service sector, Mikhail Gorbachev, mittelstand, money market fund, moral hazard, mortgage tax deduction, neoliberal agenda, offshore financial centre, oil shock, open borders, pension reform, precautionary principle, premature optimization, price stability, public intellectual, purchasing power parity, quantitative easing, rent-seeking, Republic of Letters, Robert Gordon, Robert Shiller, Robert Solow, short selling, Silicon Valley, subprime mortgage crisis, The Great Moderation, The Rise and Fall of American Growth, too big to fail, total factor productivity, trade liberalization, transaction costs, urban renewal, working-age population, Yogi Berra

Instead, the bill for rescuing MPS continued to increase. Perhaps the unelected technocrat Monti would implement structural reforms. But Monti barely left an impression. The ultimate great hope was Renzi. Perhaps Renzi would upend the old and corrupt political order, which he said was engaged merely in “rent-​seeking.” Then Italy would make a truly new start. Renzi correctly identified Italy’s core problem to be its entrenched networks of patronage, which had long flourished beneath the cacophony of Italian politics. In the early and mid-​1990s, the mani pulite (“clean hands”) judicial inquiries had exposed leading Italian politicians and weakened centralized corruption.220 However, corruption merely spread to regional and municipal governments, where it 386   e u r o t r a g e d y continued as a plague.

Münchrath, Jens, Yasmin Osman, and Christopher Cermak. 2014. “At Loggerheads: Man with an Iron Will.” Handelsblatt Global, December 17. Mundell, Robert. 1961. “A Theory of Optimum Currency Areas.” American Economic Review 51: 657–​665. Murphy, Kevin, Andrei Shleifer, and Robert Vishny. 1993. “Why Is Rent-​Seeking So Costly to Growth?” American Economic Review 83, no. 2: 409–​414. Murphy, Richard. 1994. “Kohl Distances Himself from Party’s EU Reform Idea.” Reuters News, September 5. Murray, Michael. 2003. “Fund Managers Missed the Anglo Irish Boat.” Sunday Business Post, November 30. Murray Brown, John. 2009.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, book value, Branko Milanovic, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, central bank independence, centre right, circulation of elites, 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, Future Shock, German hyperinflation, Gini coefficient, Great Leap Forward, 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, Kenneth Arrow, low interest rates, market bubble, means of production, meritocracy, Money creation, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, power law, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Robert Solow, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, Suez canal 1869, Suez crisis 1956, The Nature of the Firm, the payments system, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, twin studies, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

What, then, gives us the vague sense that social inequality today is very different from social inequality in the age of Balzac and Austen? Is this just empty talk with no purchase on reality, or can we identify objective factors to explain why some people think that modern capital has become more “dynamic” and less “rent-seeking?” FIGURE 3.1. Capital in Britain, 1700–2010 National capital is worth about seven years of national income in Britain in 1700 (including four in agricultural land). Sources and series: see piketty.pse.ens.fr/capital21c. The Metamorphoses of Capital in Britain and France I will begin by looking at changes in the capital structure of Britain and France since the eighteenth century.

., 606n32, 608n12, 639n48, 640n53 Rancière, Jacques, 655n59 Rancière, Romain, 606n32 Rastignac’s dilemma, 238–­242, 379, 407–­409, 412, 497 Rate of interest, 52–­53, 210, 584n15, 598n10 Rate of profit, 52, 227–­230, 584n14 Rate of return on capital: in­e­qual­ity and, 1, 23, 25–­27, 84; first fundamental law of capitalism and, 52–­55; average long-­run, 53; determination of, 199–­212; pure, 201, 205–­206, 208–­209, 353–­355; historical perspective on, 206–­208; in twenty-­first century, 208–­209, 375; uses of capital and, 212–­213; marginal productivity of capital and, 213–­215; too much capital and, 215–­217, 223, 227–­230; capital’s comeback and, 232–­233; growth rate and, 232–­233, 351, 353–­361, 364–­366, 431, 571–­572; time preference and stability of, 258–­361; inheritance and, 377–­378; inflation and, 452–­455; pensions and, 488–­489 Rate of return on land, 53–­54 Rauh, Joshua, 607n41 Rawls, John, 480, 630n21, 631n22, 652n45 Reagan, Ronald, 42, 98, 309 Real estate: urban, 6, 197–­198; as capital/assets, 48, 55, 122, 164, 179, 210, 598n11; return on, 53–­54, 626n28; pricing of, 57–­58, 144–­145, 149–­150, 171–­173, 176, 187–­188, 191; rental value of, 209; own­ership of by centile, 260; size effects and, 454; taxes, 501, 517 Recession (2008–­2009), 472–­474, 553–­554 “Reconstruction capitalism,” 397 Redemption fund proposal, 544, 559, 647n9, 649n27 Redistribution: inflation and, 133–­134, 544–­547; social state and, 479–­481; of petroleum rents, 537–­538; through immigration, 538–­539; central banks and, 547–­553; United States and, 638n33 Regional blocs, 61–­64 Regressive taxation, 255, 355, 374, 495–­497 Regulation: transparency and, 519; global tax on capital and, 534–­536; of central banks, 548, 552–­553, 557–­558 Renault, Louis, 137 Renault Company, 137, 139 Rent control, 149, 153 Rentiers: society of, 264, 276–­278, 293, 370, 372–­373; fall of, 274, 369; basic arithmetic of, 410–­411; petits, 418–­421; as enemy of democracy, 422–­424 Rent(s): land, 5–­6, 39, 53–­54, 56; capital and, 113, 115–­116; meaning of, 422–­424; on natural resources, 459, 537–­539, 627n44 Rent-­seeking, 115–­116 Replacement incomes, 477–­479, 602n9 Residence and taxation, 562 Residential capital, 48, 51–­52 Retail ser­vice sector, 91 Retained earnings, 176–­178 Retirement: pension funds and, 391–­392, 478, 627n47; future of, 487–­490, 633n47 Retirement, life-­cycle theory and, 384, 391–­392 Return on capital.


pages: 395 words: 116,675

The Evolution of Everything: How New Ideas Emerge by Matt Ridley

"World Economic Forum" Davos, adjacent possible, affirmative action, Affordable Care Act / Obamacare, Albert Einstein, Alfred Russel Wallace, AltaVista, altcoin, An Inconvenient Truth, anthropic principle, anti-communist, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Boeing 747, Boris Johnson, British Empire, Broken windows theory, carbon tax, Columbian Exchange, computer age, Corn Laws, cosmological constant, cotton gin, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, cryptocurrency, David Ricardo: comparative advantage, demographic transition, Deng Xiaoping, discovery of DNA, Donald Davies, double helix, Downton Abbey, driverless car, Eben Moglen, Edward Glaeser, Edward Lorenz: Chaos theory, Edward Snowden, endogenous growth, epigenetics, Ethereum, ethereum blockchain, facts on the ground, fail fast, falling living standards, Ferguson, Missouri, financial deregulation, financial innovation, flying shuttle, Frederick Winslow Taylor, Geoffrey West, Santa Fe Institute, George Gilder, George Santayana, Glass-Steagall Act, Great Leap Forward, Greenspan put, Gregor Mendel, Gunnar Myrdal, Henri Poincaré, Higgs boson, hydraulic fracturing, imperial preference, income per capita, indoor plumbing, information security, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, Japanese asset price bubble, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Khan Academy, knowledge economy, land reform, Lao Tzu, long peace, low interest rates, Lyft, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, meta-analysis, military-industrial complex, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, Necker cube, obamacare, out of africa, packet switching, peer-to-peer, phenotype, Pierre-Simon Laplace, precautionary principle, price mechanism, profit motive, RAND corporation, random walk, Ray Kurzweil, rent-seeking, reserve currency, Richard Feynman, rising living standards, road to serfdom, Robert Solow, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, scientific management, Second Machine Age, sharing economy, smart contracts, South Sea Bubble, Steve Jobs, Steven Pinker, Stuart Kauffman, tacit knowledge, TED Talk, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, twin studies, uber lyft, women in the workforce

Around them crowd thousands more whose income is privately earned in fees, but to a startling degree comes straight from the lavish coffers of the state: bankers, lawyers, architects, environmentalists and others. The affairs of Parliament, I am (not entirely) surprised to discover, are dominated by rent-seeking professions demanding that Leviathan sluices money towards them, whether to administer regulations, inquire into trends, judge cases, or build power stations. Businessmen are the worst. It is a myth that they love the evolutionary, free market; in practice they seek privilege and monopoly at the drop of a legislative hat.


pages: 437 words: 113,173

Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance by Ian Goldin, Chris Kutarna

"World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Airbnb, Albert Einstein, AltaVista, Asian financial crisis, asset-backed security, autonomous vehicles, banking crisis, barriers to entry, battle of ideas, Bear Stearns, Berlin Wall, bioinformatics, bitcoin, Boeing 747, Bonfire of the Vanities, bread and circuses, carbon tax, clean water, collective bargaining, Colonization of Mars, Credit Default Swap, CRISPR, crowdsourcing, cryptocurrency, Dava Sobel, demographic dividend, Deng Xiaoping, digital divide, Doha Development Round, double helix, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, epigenetics, experimental economics, Eyjafjallajökull, failed state, Fall of the Berlin Wall, financial innovation, full employment, Galaxy Zoo, general purpose technology, Glass-Steagall Act, global pandemic, global supply chain, Higgs boson, Hyperloop, immigration reform, income inequality, indoor plumbing, industrial cluster, industrial robot, information retrieval, information security, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invention of the printing press, Isaac Newton, Islamic Golden Age, Johannes Kepler, Khan Academy, Kickstarter, Large Hadron Collider, low cost airline, low skilled workers, Lyft, Mahbub ul Haq, Malacca Straits, mass immigration, Max Levchin, megacity, Mikhail Gorbachev, moral hazard, Nelson Mandela, Network effects, New Urbanism, non-tariff barriers, Occupy movement, On the Revolutions of the Heavenly Spheres, open economy, Panamax, Paris climate accords, Pearl River Delta, personalized medicine, Peter Thiel, post-Panamax, profit motive, public intellectual, quantum cryptography, rent-seeking, reshoring, Robert Gordon, Robert Metcalfe, Search for Extraterrestrial Intelligence, Second Machine Age, self-driving car, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, smart grid, Snapchat, special economic zone, spice trade, statistical model, Stephen Hawking, Steve Jobs, Stuxnet, synthetic biology, TED Talk, The Future of Employment, too big to fail, trade liberalization, trade route, transaction costs, transatlantic slave trade, uber lyft, undersea cable, uranium enrichment, We are the 99%, We wanted flying cars, instead we got 140 characters, working poor, working-age population, zero day

In China, more than one-third of all wealth is in the hands of the 1 percent.70 Corrupt officials, many now disgraced, have amassed private fortunes through their control of state assets and their authority to award licenses and contracts without independent oversight. Angola, blessed with vast natural resources, is essentially a kleptocracy whose leaders “live in an African version of St. Tropez,” as The Economist put it, while 90 percent of residents in the capital, Luanda, have no running water.71 The above are all examples of what economists call “rent seeking”—making money by taking wealth from others in society instead of creating it anew. But democratic institutions can also be captured and corrupted by influential elites, and made to serve their interests in ways that harm the broad economy. In the US, too, the top 1 percent hold more than one-third of all wealth.72 Legislatures have enormous power to transfer wealth up or down the social ladder: by expanding or shrinking welfare programs; by shifting the tax burden between rich and poor, between investors and wage earners, or between corporations and private citizens; through the pricing and sale of state assets and public goods like railroads, postal systems, oil patches and wireless spectrum; by deregulating or re-regulating industries; by making it harder or easier for persons or corporations to clear their debts through bankruptcy; by deciding whether monetary policy should target low inflation or full employment.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

"World Economic Forum" Davos, accounting loophole / creative accounting, Ada Lovelace, Adam Curtis, Airbnb, Alan Greenspan, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, behavioural economics, Ben Bernanke: helicopter money, bitcoin, Bletchley Park, blockchain, Bretton Woods, Brexit referendum, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, crowdsourcing, cryptocurrency, data science, David Graeber, deep learning, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, Glass-Steagall Act, Higgs boson, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, Large Hadron Collider, Lewis Mumford, liquidity trap, London Whale, low interest rates, low skilled workers, M-Pesa, machine readable, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, Michael Milken, MITM: man-in-the-middle, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, power law, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, robo advisor, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, seigniorage, seminal paper, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, Stuart Kauffman, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Vitalik Buterin, Von Neumann architecture, Washington Consensus

The interest rate, in part, is attributed to the risk premium of lending money. But this interest rate value is also based on the immediate purchasing power creation ability of money. As money can immediately offer liquidity to the borrower, the borrower pays interest also, in part, for money’s liquidity benefits. The result is intense rent-seeking behavior by those who have the privilege of issuing privately created money. The Chicago Plan was a formulation to address these key issues of monetary economics. Following the Great Depression, American macroeconomists such as Henry Simons of the University of Chicago (hence Chicago Plan) and Irving Fisher of Yale University, proposed fundamental monetary reforms and called for the separation of monetary and credit functions of commercial banks.


pages: 397 words: 112,034

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

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

According to the trilateral agreement signed in 2008, a new constitution should be established in 2011 and would then be followed by fresh elections. Most observers agree that the ruling ZANU-PF party would be routed in anything resembling a free and fair election in Zimbabwe. This, along with a fear of losing control of patronage and rent-seeking activities, explains ZANU-PF’s reluctance to abide by the spirit of the unity agreement. Unless the Southern African Development Community (SADC) in general, and South African president Jacob Zuma in particular, are willing to apply real pressure to ZANU, there may be a prolonged period of political impasse.


pages: 364 words: 112,681

Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back by Oliver Bullough

Alan Greenspan, banking crisis, Bernie Madoff, bitcoin, blood diamond, Bretton Woods, Brexit referendum, BRICs, British Empire, capital controls, central bank independence, corporate governance, cryptocurrency, cuban missile crisis, dark matter, diversification, Donald Trump, energy security, failed state, financial engineering, Flash crash, Francis Fukuyama: the end of history, full employment, Global Witness, high net worth, if you see hoof prints, think horses—not zebras, income inequality, joint-stock company, land bank, liberal capitalism, liberal world order, mass immigration, medical malpractice, Navinder Sarao, offshore financial centre, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, rent-seeking, Richard Feynman, risk tolerance, Sloane Ranger, sovereign wealth fund, Suez crisis 1956, WikiLeaks

They’re offshore bandits. ‘The confusion surrounding the term corruption stems from modern societies that have come to take political legitimacy for granted and liberally transpose the term to societies based on wholly different objectives and structures,’ the paper concludes. ‘When analyzed in the light of rent-seeking dictatorship, “corruption” is systemic rather than coincidental.’ And increasingly, the system is escaping its borders. Why shouldn’t it? After all, its papers are all in order. 9 THE MAN WHO SELLS PASSPORTS Deep inside the Savoy Hotel in central London is a large room with white and gold walls.


pages: 374 words: 113,126

The Great Economists: How Their Ideas Can Help Us Today by Linda Yueh

3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bike sharing, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, export processing zone, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, general purpose technology, Gini coefficient, Glass-Steagall Act, global supply chain, Great Leap Forward, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low interest rates, manufacturing employment, market bubble, means of production, middle-income trap, mittelstand, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, technological determinism, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

So, the farmers do not earn more if they have to work harder to produce a bushel of corn. Thus, only the landowners gain from higher land prices owing to scarcity. They have not exerted any effort to earn the higher rents charged to farmers. This is in line with his view of landowners, of course, that they were rent-seekers. Rent-seeking is one of the most widely used economic concepts today, for example, to explain why political corruption persists in some oil-rich countries, since there is an incentive to seek to hoard the ‘rents’ from selling oil and not share it with the country as a whole. Ricardo’s model of international trade David Ricardo’s approach to international trade was rooted in his background, while his interest in economics was stimulated by The Wealth of Nations, so it is unsurprising that he further developed Adam Smith’s approach.


pages: 349 words: 114,038

Culture & Empire: Digital Revolution by Pieter Hintjens

4chan, Aaron Swartz, airport security, AltaVista, anti-communist, anti-pattern, barriers to entry, Bill Duvall, bitcoin, blockchain, Boeing 747, bread and circuses, business climate, business intelligence, business process, Chelsea Manning, clean water, commoditize, congestion charging, Corn Laws, correlation does not imply causation, cryptocurrency, Debian, decentralized internet, disinformation, Edward Snowden, failed state, financial independence, Firefox, full text search, gamification, German hyperinflation, global village, GnuPG, Google Chrome, greed is good, Hernando de Soto, hiring and firing, independent contractor, informal economy, intangible asset, invisible hand, it's over 9,000, James Watt: steam engine, Jeff Rulifson, Julian Assange, Kickstarter, Laura Poitras, M-Pesa, mass immigration, mass incarceration, mega-rich, military-industrial complex, MITM: man-in-the-middle, mutually assured destruction, Naomi Klein, national security letter, Nelson Mandela, new economy, New Urbanism, no silver bullet, Occupy movement, off-the-grid, offshore financial centre, packet switching, patent troll, peak oil, power law, pre–internet, private military company, race to the bottom, real-name policy, rent-seeking, reserve currency, RFC: Request For Comment, Richard Feynman, Richard Stallman, Ross Ulbricht, Russell Brand, Satoshi Nakamoto, security theater, selection bias, 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, twin studies, union organizing, wealth creators, web application, WikiLeaks, Y2K, zero day, Zipf's Law

Levine, in "Against Intellectual Monopoly", write acidly: A realistic view of intellectual monopoly is that it is a disease rather than a cure. It arises not from a principled effort to increase innovation, but from an evil combination of medieval institutions -- guilds, royal licenses, trade restrictions -- and the rent-seeking behavior of would be monopolists seeking to fatten their purse at the expense of public prosperity. This cancer is attacking the most vital centers of our economy: metastasis is near and so it is time to face the intellectual monopoly threat squarely, and to take action. CSIRO's patents (Thank you, US Patent and Trademark Office!)


pages: 523 words: 112,185

Doing Data Science: Straight Talk From the Frontline by Cathy O'Neil, Rachel Schutt

Amazon Mechanical Turk, augmented reality, Augustin-Louis Cauchy, barriers to entry, Bayesian statistics, bike sharing, bioinformatics, computer vision, confounding variable, correlation does not imply causation, crowdsourcing, data science, distributed generation, Dunning–Kruger effect, Edward Snowden, Emanuel Derman, fault tolerance, Filter Bubble, finite state, Firefox, game design, Google Glasses, index card, information retrieval, iterative process, John Harrison: Longitude, Khan Academy, Kickstarter, machine translation, Mars Rover, Nate Silver, natural language processing, Netflix Prize, p-value, pattern recognition, performance metric, personalized medicine, pull request, recommendation engine, rent-seeking, selection bias, Silicon Valley, speech recognition, statistical model, stochastic process, tacit knowledge, text mining, the scientific method, The Wisdom of Crowds, Watson beat the top human players on Jeopardy!, X Prize

In the book that introduced the much beloved (or dreaded) epsilons and deltas into real analysis, the great mathematician Augustin-Louis Cauchy blamed statisticians for the French Revolution: “Let us cultivate the mathematical sciences with ardor, without wanting to extend them beyond their domain; and let us not imagine that one can attack history with formulas, nor give sanction to morality through theories of algebra or the integral calculus.” These narratives fit nicely into the celebration of disruption so central to Silicon Valley libertarianism, Schumpeterian capitalism, and certain variants of tech journalism. However powerful in extirpating rent-seeking forms of political analysis and other disciplines, the dichotomy mistakes utterly the real skills and knowledge that appear often to give the data sciences the traction they have. The preceding chapters—dedicated to the means for cultivating the diverse capacities of the data scientist—make mincemeat of any facile dichotomy of the data expert and the traditional expert.


pages: 386 words: 112,064

Rich White Men: What It Takes to Uproot the Old Boys' Club and Transform America by Garrett Neiman

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Albert Einstein, basic income, Bernie Sanders, BIPOC, Black Lives Matter, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, confounding variable, coronavirus, COVID-19, critical race theory, dark triade / dark tetrad, data science, Donald Trump, drone strike, effective altruism, Elon Musk, gender pay gap, George Floyd, glass ceiling, green new deal, high net worth, Home mortgage interest deduction, Howard Zinn, impact investing, imposter syndrome, impulse control, income inequality, Jeff Bezos, Jeffrey Epstein, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge worker, Larry Ellison, liberal capitalism, Lyft, Mahatma Gandhi, mandatory minimum, Mark Zuckerberg, mass incarceration, means of production, meritocracy, meta-analysis, Michael Milken, microaggression, mortgage tax deduction, move fast and break things, Nelson Mandela, new economy, obamacare, occupational segregation, offshore financial centre, Paul Buchheit, Peter Thiel, plutocrats, Ralph Waldo Emerson, randomized controlled trial, rent-seeking, Ronald Reagan, Rutger Bregman, Sheryl Sandberg, Silicon Valley, Snapchat, sovereign wealth fund, Steve Jobs, subprime mortgage crisis, TED Talk, The Bell Curve by Richard Herrnstein and Charles Murray, Travis Kalanick, trickle-down economics, uber lyft, universal basic income, Upton Sinclair, War on Poverty, white flight, William MacAskill, winner-take-all economy, women in the workforce, work culture , working poor

Compared with companies that face more competition, monopolies produce less and charge more. At a societal level, that means a smaller economic pie coupled with higher prices, which reduces what consumers can afford to buy. As monopolistic firms gain power, they dedicate a growing share of their attention to rent-seeking activities, like tax evasion. While the IRS has 15,000 staffers, large corporations employ a combined 250,000 accountants.12 These armies of financial wizards enable companies to manipulate their tax bills. For example, in a recent year, Google claimed that it made $23 billion in Bermuda—which doesn’t have a corporate income tax—and nothing in the United States, even though most of its revenue comes from American consumers.13 A principal reason why corporate profits are at a seventy-year high is that corporations are covering a smaller share of the federal tax bill than they have in decades.


The Future of Technology by Tom Standage

air freight, Alan Greenspan, barriers to entry, business process, business process outsourcing, call centre, Clayton Christensen, computer vision, connected car, corporate governance, creative destruction, disintermediation, disruptive innovation, distributed generation, double helix, experimental economics, financial engineering, Ford Model T, full employment, hydrogen economy, hype cycle, industrial robot, informal economy, information asymmetry, information security, interchangeable parts, job satisfaction, labour market flexibility, Larry Ellison, Marc Andreessen, Marc Benioff, market design, Menlo Park, millennium bug, moral hazard, natural language processing, Network effects, new economy, Nicholas Carr, optical character recognition, PalmPilot, railway mania, rent-seeking, RFID, Salesforce, seminal paper, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, six sigma, Skype, smart grid, software as a service, spectrum auction, speech recognition, stem cell, Steve Ballmer, Steve Jurvetson, technological determinism, technology bubble, telemarketer, transcontinental railway, vertical integration, Y2K

Some in Silicon Valley now liken the climate to that of the late 1970s, when government and military contractors employed more than 20% of the region’s workforce. Will the it industry ever become as intertwined with government as, say, the car or media sectors? Nobody knows; but if it does, says Google’s Eric Schmidt, high-tech will lose its innovative spark and, just like other sectors, turn to rent-seeking. 35 THE FUTURE OF TECHNOLOGY Déjà vu all over again If history is any guide, the IT industry’s future will be about services and customer power ou would expect eric schmidt, one of Silicon Valley’s leading lights, to have an oversized inner geek. But these days, he sounds more like a closet historian.


pages: 494 words: 116,739

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

Abraham Maslow, Albert Einstein, Apollo 11, behavioural economics, Berlin Wall, Bernie Madoff, blood diamond, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, commoditize, computer vision, conceptual framework, delayed gratification, digital divide, do well by doing good, Edward Glaeser, Edward Jenner, en.wikipedia.org, end world poverty, epigenetics, Erik Brynjolfsson, Evgeny Morozov, Francis Fukuyama: the end of history, fundamental attribution error, gamification, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, Larry Ellison, Lewis Mumford, liberation theology, libertarian paternalism, longitudinal study, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Neil Armstrong, Nelson Mandela, Nicholas Carr, North Sea oil, One Laptop per Child (OLPC), Panopticon Jeremy Bentham, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, Powell Memorandum, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Sheryl Sandberg, Silicon Valley, Simon Kuznets, Stanford marshmallow experiment, Steve Jobs, Steven Pinker, technological determinism, technological solutionism, technoutopianism, TED Talk, The Fortune at the Bottom of the Pyramid, the long tail, Twitter Arab Spring, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K

National newspapers quoted the prime minister proclaiming, “This is [the] first time in the world. History has been created today.”9 Evolving Mass Values India’s changes recapitulate elements of developed-world history. Like India today, the United States was buoyed by an entrepreneurial spirit. A battle against America’s rent-seeking political corruption was fought effectively in the nineteenth century.10 Consumer culture, now burgeoning in India, was all but invented in the United States circa 1920. And Indian pride in their Mars orbiter echoes American sentiment toward Apollo 11, the world’s first moon landing. Despite huge differences in culture and history, there is no denying the commonalities among societies that experience socioeconomic growth.


pages: 433 words: 125,031

Brazillionaires: The Godfathers of Modern Brazil by Alex Cuadros

"World Economic Forum" Davos, affirmative action, Asian financial crisis, benefit corporation, big-box store, bike sharing, BRICs, buy the rumour, sell the news, cognitive dissonance, creative destruction, crony capitalism, Deng Xiaoping, Donald Trump, Elon Musk, facts on the ground, family office, financial engineering, high net worth, index fund, invisible hand, Jeff Bezos, Mark Zuckerberg, megaproject, NetJets, offshore financial centre, profit motive, prosperity theology / prosperity gospel / gospel of success, rent-seeking, risk/return, Rubik’s Cube, savings glut, short selling, Silicon Valley, sovereign wealth fund, stem cell, stock buybacks, tech billionaire, The Wealth of Nations by Adam Smith, too big to fail, transatlantic slave trade, We are the 99%, William Langewiesche

Lemann said once that he hopes to build companies of “lasting greatness.” He said he wants his model of corporate management to outlive him. To put this another way, he wants to build an empire and to leave his mark on history. But in the end, his corporate alchemy struck me as a sophisticated form of rent seeking: claiming a piece of the economic pie rather than making the pie larger. In the long run, this may prove counterproductive even for him. Take Lemann’s efficiency to its logical end, and few consumers will be able to afford his beer. Henry Ford had a similar insight in 1914, when he doubled wages so that his workers could afford a Model T.


pages: 405 words: 121,999

The Human Tide: How Population Shaped the Modern World by Paul Morland

active measures, agricultural Revolution, Ayatollah Khomeini, Berlin Wall, British Empire, clean water, Corn Laws, demographic dividend, demographic transition, Donald Trump, European colonialism, failed state, Fall of the Berlin Wall, feminist movement, global pandemic, Great Leap Forward, mass immigration, megacity, Mikhail Gorbachev, Mohammed Bouazizi, Nelson Mandela, open immigration, Ponzi scheme, RAND corporation, rent-seeking, sceptred isle, stakhanovite, Thomas Malthus, transatlantic slave trade, women in the workforce, working-age population

According to the Academic Ranking of World Universities, four Israeli institutions make it into the top 200 while only one Arab institution does so.39 Data from 1987 suggested that the production of ‘frequently cited’ academic papers in Egypt was two-thousandths of the level in Israel and even in Kuwait, with its oil wealth, frequently cited papers were at less than one-seventieth of the Israeli level.40 As ever, the cause of the region’s ills are not demographic alone. Oil has turned out to be a curse in many places where democratic institutions are not already fully embedded, cultivating a rent-seeking rather than an entrepreneurial culture. Where the state controls a great source of relatively easily accessed wealth such as oil, the most lucrative way of enriching oneself is to get a position as close to the trough as possible rather than setting up a business or offering a service of real value.


pages: 424 words: 121,425

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

access to a mobile phone, affirmative action, Alan Greenspan, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Bear Stearns, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, disruptive innovation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, junk bonds, Kickstarter, low interest rates, M-Pesa, McMansion, Michael Milken, microcredit, mobile money, Money creation, moral hazard, mortgage debt, new economy, Own Your Own Home, Paul Volcker talking about ATMs, 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 and loan crisis, savings glut, subprime mortgage crisis, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, W. E. B. Du Bois, white flight, working poor

A majority of states in 1895 had no mention of branches in their laws. In some states, silence has been taken as permitting and in others, as forbidding branches. 42. Richard S. Carnell, Jonathan R. Macey, and Geoffrey P. Miller, The Law of Financial Institutions, 5th ed. (New York: Aspen, 2013), 13. 43. Calomiris and Haber see this as Populist rent-seeking. They claim that because Populists controlled the legislatures, they created a banking system that was fragile by design but that served their needs. Calomiris and Haber, Fragile by Design, 459. 44. Starting in the deregulatory era in the United States, some revisionist scholars claimed that the era was not as bad as previously thought, but these claims have been largely rebutted.


pages: 471 words: 124,585

The Ascent of Money: A Financial History of the World by Niall Ferguson

Admiral Zheng, Alan Greenspan, An Inconvenient Truth, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Bear Stearns, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, business cycle, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, classic study, collateralized debt obligation, colonial exploitation, commoditize, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, equity risk premium, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, Future Shock, German hyperinflation, Greenspan put, Herman Kahn, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, iterative process, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Meriwether, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour mobility, Landlord’s Game, liberal capitalism, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, Nelson Mandela, Nick Bostrom, Nick Leeson, Northern Rock, Parag Khanna, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, rolling blackouts, Ronald Reagan, Savings and loan crisis, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, stocks for the long run, structural adjustment programs, subprime mortgage crisis, tail risk, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Thorstein Veblen, tontine, too big to fail, transaction costs, two and twenty, undersea cable, value at risk, W. E. B. Du Bois, Washington Consensus, Yom Kippur War

In England (the country for which we have the best price data) the cost of living increased by a factor of seven in the same period; not a high rate of inflation these days (on average around 2 per cent per year), but a revolutionary increase in the price of bread by medieval standards. Within Spain, the abundance of silver also acted as a ‘resource curse’, like the abundant oil of Arabia, Nigeria, Persia, Russia and Venezuela in our own time, removing the incentives for more productive economic activity, while at the same time strengthening rent-seeking autocrats at the expense of representative assemblies (in Spain’s case the Cortes).17 What the Spaniards had failed to understand is that the value of precious metal is not absolute. Money is worth only what someone else is willing to give you for it. An increase in its supply will not make a society richer, though it may enrich the government that monopolizes the production of money.


pages: 510 words: 120,048

Who Owns the Future? by Jaron Lanier

3D printing, 4chan, Abraham Maslow, Affordable Care Act / Obamacare, Airbnb, augmented reality, automated trading system, barriers to entry, bitcoin, Black Monday: stock market crash in 1987, book scanning, book value, Burning Man, call centre, carbon credits, carbon footprint, cloud computing, commoditize, company town, computer age, Computer Lib, crowdsourcing, data science, David Brooks, David Graeber, delayed gratification, digital capitalism, digital Maoism, digital rights, Douglas Engelbart, en.wikipedia.org, Everything should be made as simple as possible, facts on the ground, Filter Bubble, financial deregulation, Fractional reserve banking, Francis Fukuyama: the end of history, Garrett Hardin, George Akerlof, global supply chain, global village, Haight Ashbury, hive mind, if you build it, they will come, income inequality, informal economy, information asymmetry, invisible hand, Ivan Sutherland, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Kevin Kelly, Khan Academy, Kickstarter, Kodak vs Instagram, life extension, Long Term Capital Management, machine translation, Marc Andreessen, Mark Zuckerberg, meta-analysis, Metcalfe’s law, moral hazard, mutually assured destruction, Neal Stephenson, Network effects, new economy, Norbert Wiener, obamacare, off-the-grid, packet switching, Panopticon Jeremy Bentham, Peter Thiel, place-making, plutocrats, Ponzi scheme, post-oil, pre–internet, Project Xanadu, race to the bottom, Ray Kurzweil, rent-seeking, reversible computing, Richard Feynman, Ronald Reagan, scientific worldview, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, smart meter, stem cell, Steve Jobs, Steve Wozniak, Stewart Brand, synthetic biology, tech billionaire, technological determinism, Ted Nelson, The Market for Lemons, Thomas Malthus, too big to fail, Tragedy of the Commons, trickle-down economics, Turing test, Vannevar Bush, WikiLeaks, zero-sum game

There doesn’t have to be direct manipulation, but instead an automated, sterile “unintentional manipulation” that seems external to human agency and therefore is above the law. Owning a top server on a network is like collecting rent from the network, but that doesn’t mean one gets there through “rent seeking.” Traditionally, market positions are set to compete in a pseudo-Darwinian way. Society benefits precisely from the fact that more possibilities will be tested and explored than could ever have been considered from the perspective of a single player, even one with a dominant information perspective.


pages: 441 words: 124,798

Dopesick: Dealers, Doctors, and the Drug Company That Addicted America by Beth Macy

Affordable Care Act / Obamacare, Apollo 11, centre right, crack epidemic, David Sedaris, deindustrialization, Donald Trump, drug harm reduction, fulfillment center, invisible hand, labor-force participation, mandatory minimum, mass incarceration, McMansion, medical residency, meta-analysis, obamacare, offshore financial centre, opioid epidemic / opioid crisis, pill mill, RAND corporation, rent-seeking, single-payer health, urban renewal, War on Poverty, working poor

He wondered whether drug cartels were the economy’s new invisible hand—a modern-day Adam Smith creeping around America’s suburbs, cities, and small towns, proffering stamped bags of dope. The economist had assumed the free-market economy would operate efficiently as long as everyone was able to work for his or her own self-interest, but he had not foreseen the elevation of rent-seeking behavior: the outsized greed of pharmaceutical companies and factory-closing CEOs, and the creation of a class of people who were unable to work. * In 2017, two decades after OxyContin erupted in Lee County, Virginia’s Board of Medicine ordered that, to prevent doctor-shopping, all doctors were to check the drug-monitoring system every time they issued a prescription.


pages: 1,060 words: 265,296

Wealth and Poverty of Nations by David S. Landes

Admiral Zheng, affirmative action, agricultural Revolution, Atahualpa, Ayatollah Khomeini, Bartolomé de las Casas, book value, British Empire, business cycle, Cape to Cairo, classic study, clean water, colonial rule, Columbian Exchange, computer age, David Ricardo: comparative advantage, deindustrialization, deskilling, European colonialism, Fellow of the Royal Society, financial intermediation, Francisco Pizarro, germ theory of disease, glass ceiling, high-speed rail, illegal immigration, income inequality, Index librorum prohibitorum, interchangeable parts, invention of agriculture, invention of movable type, invisible hand, Isaac Newton, it's over 9,000, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Just-in-time delivery, Kenneth Arrow, land tenure, lateral thinking, Lewis Mumford, mass immigration, Mexican peso crisis / tequila crisis, MITM: man-in-the-middle, Monroe Doctrine, Murano, Venice glass, new economy, New Urbanism, North Sea oil, out of africa, passive investing, Paul Erdős, Paul Samuelson, Philip Mirowski, rent-seeking, Right to Buy, Robert Solow, Savings and loan crisis, Scramble for Africa, Simon Kuznets, South China Sea, spice trade, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade, Vilfredo Pareto, zero-sum game

Much o f this Asian trade was spontaneous and improvisational—a kind o f Brownian movement. One went where the cargoes were, bouncing from port to port. This is the way of what later came to be known as tramp steamers; these were tramp sailing ships. Along with this went a shift out o f trade into what the economist would call rent-seeking activities. In particular, the Portuguese sought to use their power to batten on the trade o f others. They became the robber barons of the Indian Ocean. All merchant vessels were required to purchase a Portuguese trading license. Those that did not were li­ able to seizure. The shift to racketeering and local trade made possible important economies: many fewer ships went out from Europe to Asia.

A free, efficient market would have reduced profit margins per unit of merchandise, even while it increased the return to capital. But the V O C would not have liked that either. What Jan Compagnie wanted was to exclude competitors, impose prices in the Indies, and maintain wide differentials between buy and sell. There lay maximum profits. That was not business; that was power and its uses—what the economist calls rent-seeking. Besides, these men of the V O C were pragmatists. They cheered the prospect of peace with Spain in 1609—finally, after some eighty years of cold and hot war. The peace accord called for a division o f turf on the basis of the status quo, and the company wanted to alter the sta­ tus quo in anticipation.

, this is the machine at 100 percent efficiency, designed without regard to the vagaries o f history and fate and the passions of human nature. The most efficient, development-oriented societies of today, say those of East Asia and the industrial nations of the West, are marred by all man­ ner o f corruption, failures o f government, private rent-seeking. This paradigm nevertheless highlights the direction o f history. These are 219 BRITAIN AND T H E OTHERS the virtues that have promoted economic and material progress. They represent a marked deviation from earlier social and political arrange­ ments; and it is not a coincidence that the first industrial nation came closest earliest to this new kind o f social order.


pages: 1,164 words: 309,327

Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris

active measures, Andrei Shleifer, AOL-Time Warner, asset allocation, automated trading system, barriers to entry, Bernie Madoff, Bob Litterman, book value, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, equity risk premium, fault tolerance, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, information security, interest rate swap, invention of the telegraph, job automation, junk bonds, law of one price, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market clearing, market design, market fragmentation, market friction, market microstructure, money market fund, Myron Scholes, National best bid and offer, Nick Leeson, open economy, passive investing, pattern recognition, payment for order flow, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, proprietary trading, race to the bottom, random walk, Reminiscences of a Stock Operator, rent-seeking, risk free rate, risk tolerance, risk-adjusted returns, search costs, selection bias, shareholder value, short selling, short squeeze, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, vertical integration, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game

These securities have not been very successful because portfolio managers apparently will not buy insurance when they can easily observe its high cost. 28.4 THE POLITICS OF REGULATORY INTERVENTION The clamor for regulatory responses to crashes undoubtedly influences the policies that regulators ultimately adopt. When regulators and traders understand the political aspects of regulation well, better regulations probably result. This section therefore briefly discusses the political economy of regulation. We consider two models of regulation. The first involves regulatory risk, and the second involves rent seeking. The first model helps us understand why regulators may regulate even when their regulations will produce little or no economic value. The second model helps us understand how regulated people and institutions can use the regulatory process for their private benefit. We illustrate these discussions with two regulations that came out of the 1987 stock market crash: New York Stock Exchange Rules 80A and 80B. 28.4.1 Regulatory Risk Following the October 1987 stock market crash, the markets adopted a coordinated trading halt rule that was almost meaningless.

No such mandate for extreme change followed the 1987 crash. 28.4.2 Regulatory Capture The other circuit breaker adopted by the New York Stock Exchange following the 1987 stock market crash was the Rule 80A collar on index arbitrage program trading. Although a similar analysis of regulatory risks may explain why the Exchange adopted this rule, an analysis of rent-seeking behavior (self-interest) is more insightful. Arbitrageurs compete with specialists to supply liquidity. Both traders move liquidity between buyers and sellers who are unable or unwilling to trade with each other. Arbitrageurs construct hedge portfolios to move liquidity from one market to another at one point in time.


pages: 503 words: 131,064

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

Abraham Maslow, airport security, Alvin Toffler, barriers to entry, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, commoditize, corporate governance, crack epidemic, credit crunch, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, Dunbar number, experimental economics, Fall of the Berlin Wall, financial deregulation, Future Shock, Garrett Hardin, George Akerlof, hydraulic fracturing, impulse control, income inequality, information security, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Bogle, John Nash: game theory, joint-stock company, Julian Assange, language acquisition, longitudinal study, mass incarceration, meta-analysis, microcredit, mirror neurons, moral hazard, Multics, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, off-the-grid, offshore financial centre, Oklahoma City bombing, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, Recombinant DNA, 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, Timothy McVeigh, too big to fail, traffic fines, Tragedy of the Commons, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K, Yochai Benkler, zero-sum game

And the healthcare industry got a law passed limiting its liability for care improperly delayed or denied. In a sense, what corporations are doing here is reversing the principal–agent relationship. They're deliberately manipulating institutional pressures so they can directly benefit from them. In economics, changing laws to suit your desires without adding any value is known as rent-seeking. One way to manipulate laws is through licensing requirements. Over the past several years, there have been debates in several states about licensing interior designers. It's either a necessary measure to keep charlatans out of the busi-ness, or an onerous, pro-cartel, anti-competitive system.


pages: 496 words: 131,938

The Future Is Asian by Parag Khanna

3D printing, Admiral Zheng, affirmative action, Airbnb, Amazon Web Services, anti-communist, Asian financial crisis, asset-backed security, augmented reality, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Basel III, bike sharing, birth tourism , blockchain, Boycotts of Israel, Branko Milanovic, British Empire, call centre, capital controls, carbon footprint, cashless society, clean tech, clean water, cloud computing, colonial rule, commodity super cycle, computer vision, connected car, corporate governance, CRISPR, crony capitalism, cross-border payments, currency peg, death from overwork, deindustrialization, Deng Xiaoping, Didi Chuxing, Dissolution of the Soviet Union, Donald Trump, driverless car, dual-use technology, energy security, European colonialism, factory automation, failed state, fake news, falling living standards, family office, financial engineering, fixed income, flex fuel, gig economy, global reserve currency, global supply chain, Great Leap Forward, green transition, haute couture, haute cuisine, illegal immigration, impact investing, income inequality, industrial robot, informal economy, initial coin offering, Internet of things, karōshi / gwarosa / guolaosi, Kevin Kelly, Kickstarter, knowledge worker, light touch regulation, low cost airline, low skilled workers, Lyft, machine translation, Malacca Straits, Marc Benioff, Mark Zuckerberg, Masayoshi Son, megacity, megaproject, middle-income trap, Mikhail Gorbachev, money market fund, Monroe Doctrine, mortgage debt, natural language processing, Netflix Prize, new economy, off grid, oil shale / tar sands, open economy, Parag Khanna, payday loans, Pearl River Delta, prediction markets, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, Ronald Reagan, Salesforce, Scramble for Africa, self-driving car, Shenzhen special economic zone , Silicon Valley, smart cities, SoftBank, South China Sea, sovereign wealth fund, special economic zone, stem cell, Steve Jobs, Steven Pinker, supply-chain management, sustainable-tourism, synthetic biology, systems thinking, tech billionaire, tech worker, trade liberalization, trade route, transaction costs, Travis Kalanick, uber lyft, upwardly mobile, urban planning, Vision Fund, warehouse robotics, Washington Consensus, working-age population, Yom Kippur War

In the Philippines, officials now speak not just of public-private partnerships (PPPs) but add a fourth P: public-private partnerships for the people. The term Asian values used to imply deference to authority by a condescending government. But since the 1980s, Asians have demonstrated that even entrenched elites can be confronted and ousted once the population is sufficiently fed up with their rent-seeking profligacy. Asians have traded in their infatuation with the gilded class for single-minded demands for quality governance. Becoming more liberal and democratic does not mean that they will fail to toss out ineffective elected leaders in favor of technocratic doers. Thailand’s military junta, which took power in 2014, has found strong support within a highly liberal society for its management of the country—for the time being.


pages: 505 words: 133,661

Who Owns England?: How We Lost Our Green and Pleasant Land, and How to Take It Back by Guy Shrubsole

Adam Curtis, Anthropocene, back-to-the-land, Beeching cuts, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, centre right, congestion charging, Crossrail, deindustrialization, digital map, do-ocracy, Downton Abbey, false flag, financial deregulation, fixed income, fulfillment center, Garrett Hardin, gentrification, Global Witness, Goldman Sachs: Vampire Squid, Google Earth, housing crisis, housing justice, James Dyson, Jeremy Corbyn, Kickstarter, land bank, land reform, land tenure, land value tax, linked data, loadsamoney, Londongrad, machine readable, mega-rich, mutually assured destruction, new economy, Occupy movement, offshore financial centre, oil shale / tar sands, openstreetmap, place-making, plutocrats, profit motive, rent-seeking, rewilding, Right to Buy, Ronald Reagan, Russell Brand, sceptred isle, Stewart Brand, the built environment, the map is not the territory, The Wealth of Nations by Adam Smith, Tragedy of the Commons, trickle-down economics, urban sprawl, web of trust, Yom Kippur War, zero-sum game

Renting out land, after all, requires little effort on the part of the landowner. As historian M.L. Bush argues, throughout its history the English aristocracy has remained ‘rigidly divorced … from direct production’ and ‘preferred the rentier role’ as a means of getting filthy rich without getting their hands dirty. It’s this combination of inherited wealth and rent-seeking indigence that has drawn down much scorn upon the aristocracy in previous eras. ‘The rent of land is naturally a monopoly price,’ pointed out the classical free-market economist Adam Smith. ‘It is not at all proportioned to what the landlord may have laid out upon the improvement of the land … but to what the [tenant] can afford to give.’


pages: 494 words: 142,285

The Future of Ideas: The Fate of the Commons in a Connected World by Lawrence Lessig

AltaVista, Andy Kessler, AOL-Time Warner, barriers to entry, Bill Atkinson, business process, Cass Sunstein, commoditize, computer age, creative destruction, dark matter, decentralized internet, Dennis Ritchie, disintermediation, disruptive innovation, Donald Davies, Erik Brynjolfsson, Free Software Foundation, Garrett Hardin, George Gilder, Hacker Ethic, Hedy Lamarr / George Antheil, history of Unix, Howard Rheingold, Hush-A-Phone, HyperCard, hypertext link, Innovator's Dilemma, invention of hypertext, inventory management, invisible hand, Jean Tirole, Jeff Bezos, John Gilmore, John Perry Barlow, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, Larry Wall, Leonard Kleinrock, linked data, Marc Andreessen, Menlo Park, Mitch Kapor, Network effects, new economy, OSI model, packet switching, peer-to-peer, peer-to-peer model, price mechanism, profit maximization, RAND corporation, rent control, rent-seeking, RFC: Request For Comment, Richard Stallman, Richard Thaler, Robert Bork, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, smart grid, software patent, spectrum auction, Steve Crocker, Steven Levy, Stewart Brand, systematic bias, Ted Nelson, Telecommunications Act of 1996, the Cathedral and the Bazaar, The Chicago School, tragedy of the anticommons, Tragedy of the Commons, transaction costs, vertical integration, Yochai Benkler, zero-sum game

Coase, “The Federal Communications Commission,” Journal of Law & Economics 2 (1959): 1, 14. 16 Hazlett has been prolific in advancing this argument. See, e.g., Hazlett and Sosa, “Chilling the Internet? Lessons from FCC Regulation of Radio Broadcasting,” Michigan Telecommunications & Technology Law Review 4 (1997-98): 35; Hazlett, “Physical Scarcity, Rent Seeking, and the First Amendment,” Columbia Law Review 97 (1997): 905; Hazlett, “Assigning Property Rights to Radio Spectrum Users: Why Did FCC License Auctions Take 67 Years?,” Journal of Law & Economics 41 (1998): 529; Hazlett, “Spectrum Flash Dance: Eli Noam's Proposal for 'Open Access' to Radio Waves,” Journal of Law & Economics 41 (1998): 805; Hazlett and Sosa, “Was the Fairness Doctrine a 'Chilling Effect'?


pages: 422 words: 131,666

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

Abraham Maslow, Adam Curtis, addicted to oil, affirmative action, Alan Greenspan, Amazon Mechanical Turk, An Inconvenient Truth, anti-globalists, AOL-Time Warner, banks create money, Bear Stearns, benefit corporation, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, congestion pricing, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, digital divide, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, General Motors Futurama, gentrification, Glass-Steagall Act, global village, Google Earth, greed is good, Herbert Marcuse, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, military-industrial complex, moral hazard, multilevel marketing, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, planned obsolescence, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, public intellectual, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, scientific management, 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, vertical integration, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game

Carlos and Stephen Nicholas, “Theory and History: Seventeeth Century Joint-Stock Chartered Trading Companies,” The Journal of Economic History 56.4 (1996): 916-24. S.R.H. Jones and Simon P. Ville, “Theory and Evidence: Understanding Chartered Trading Companies,” The Journal of Economic History 56.4 (1996): 925-26. S.R.H. Jones and Simon P. Ville, “Efficient Transactors or Rent-Seeking Monopolists? The Rationale for Early Chartered Trading Companies,” The Journal of Economic History 56.4 (1996): 898-915. Shaw Livermore, “Unlimited Liability in Early American Companies,” The Journal of Political Economy 43.5 (1935): 674-87. Janice E. Thomson, Mercenaries, Pirates, and Sovereigns: State-Building and Extraterritorial Violence in Early Modern Europe (Princeton, N.J.: Princeton University Press, 1994). 8 “The state ought to rejoice” John Brathwaite and Peter Drahos, Global Business Regulation (New York: Cambridge University Press, 2000), 445. 12 “The class of citizens who provide” James Madison, Letters and Other Writings of James Madison (Philadelphia: J.


pages: 452 words: 134,502

Hacking Politics: How Geeks, Progressives, the Tea Party, Gamers, Anarchists and Suits Teamed Up to Defeat SOPA and Save the Internet by David Moon, Patrick Ruffini, David Segal, Aaron Swartz, Lawrence Lessig, Cory Doctorow, Zoe Lofgren, Jamie Laurie, Ron Paul, Mike Masnick, Kim Dotcom, Tiffiniy Cheng, Alexis Ohanian, Nicole Powers, Josh Levy

4chan, Aaron Swartz, Adam Curtis, Affordable Care Act / Obamacare, Airbnb, Bernie Sanders, Big Tech, Burning Man, call centre, Cass Sunstein, Chelsea Manning, collective bargaining, creative destruction, crony capitalism, crowdsourcing, digital rights, disinformation, don't be evil, dual-use technology, facts on the ground, Firefox, Free Software Foundation, Hacker News, hive mind, hockey-stick growth, immigration reform, informal economy, jimmy wales, John Perry Barlow, Julian Assange, Kickstarter, liquidity trap, lolcat, machine readable, Mark Zuckerberg, obamacare, Occupy movement, offshore financial centre, Overton Window, peer-to-peer, plutocrats, power law, prisoner's dilemma, radical decentralization, rent-seeking, Silicon Valley, Skype, Streisand effect, technoutopianism, The future is already here, WikiLeaks, Y Combinator, Yochai Benkler

There are sharp, important, ideological divides about the role of the state in the economy, the need for a social safety net, and the like. But there are important points of solidarity that should not be obscured by party stripe or reductionist ideological labels: nobody likes corporate welfare (as the left would call it) or rent-seeking (as it’s named by the right) unless one is among those insiders directly benefitting from said largess. The left and right came together to fight against the bank bailouts and to audit the Federal Reserve. There’s a substantial antiwar, pro-civil liberties flank that identifies as conservative/libertarian.


pages: 464 words: 139,088

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

Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, classic study, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial engineering, financial innovation, financial intermediation, floating exchange rates, foreign exchange controls, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Glass-Steagall Act, Great Leap Forward, Hyman Minsky, inflation targeting, invisible hand, Japanese asset price bubble, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, lateral thinking, liquidity trap, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, no-fly zone, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, proprietary trading, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Solow, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, The Rise and Fall of American Growth, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

Depositors and others who lend money to banks believe that they are in effect lending to the government.37 The belief that when in trouble banks will be bailed out by the state because they are too important to fail leads to an implicit subsidy, which means a larger banking system than is justified by the underlying economics. Second, many of the examples of high personal remuneration, especially in the form of bonuses, in the financial sector reflect not high productivity but what economists call rent-seeking behaviour. In other words, the remuneration is far higher than is necessary to persuade people to work in the industry. Financial markets are places where delusion and greed find common cause. Many of the transactions in complex financial instruments are zero-sum – a clever trader makes money out of a less clever one.


pages: 471 words: 127,852

Londongrad: From Russia With Cash; The Inside Story of the Oligarchs by Mark Hollingsworth, Stewart Lansley

"World Economic Forum" Davos, Berlin Wall, Big bang: deregulation of the City of London, Bob Geldof, Bullingdon Club, business intelligence, company town, Cornelius Vanderbilt, corporate governance, corporate raider, credit crunch, crony capitalism, Donald Trump, energy security, Etonian, F. W. de Klerk, Global Witness, income inequality, kremlinology, Larry Ellison, Londongrad, mass immigration, mega-rich, Mikhail Gorbachev, offshore financial centre, paper trading, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, power law, rent-seeking, Ronald Reagan, Skype, Sloane Ranger

White, ‘The Rise of the Russian Business Elite’, Communist and Post-Communist Studies, 38 (2005), p. 298. 29Quoted in A. Osborn, ‘The World’s Richest Russian Is Sued for $3 billion in London’, Independent on Sunday, 25 February 2007. 30Interview with Financial Times, 13 July 2007. 31P. Boone and D. Rodionov, ‘Rent Seeking in Russia and the CIS’, Brunswick UBS, Warburg, Moscow, 2002. 32Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism, Allen Lane, 2007, p. 249. 33Interviewed in Counterpunch, 27 February 2004. 34‘Question Time’, BBC Television, 7 June 2007. 35M. E. de Boyrie, S. J. Pak and J.


Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

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

Other concerns over price regulation involve incentives and regulatory capture. Economic regulation attracts special interest groups to lobby the government for regulatory measures that benefit them to the detriment of society overall. If the government algorithm sets (or regulates) price levels, 216 Intervention then rent-seeking behav ior can impose additional social costs. For example, the U.S. Federal Energy Regulatory Commission’s merger review policies were criticized for relying on data supplied by the regulated entities, rather than conducting its own independent fact gathering and analysis of market definition.42 The risk that sector regulators, even the most dedicated ones, may fail to understand and predict market dynamics, is real.


pages: 519 words: 148,131

An Empire of Wealth: Rise of American Economy Power 1607-2000 by John Steele Gordon

accounting loophole / creative accounting, Alan Greenspan, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buttonwood tree, California gold rush, Charles Babbage, clean water, collective bargaining, Corn Laws, Cornelius Vanderbilt, corporate governance, cotton gin, cuban missile crisis, disintermediation, double entry bookkeeping, failed state, Fairchild Semiconductor, financial independence, flying shuttle, Ford Model T, Frederick Winslow Taylor, full employment, Glass-Steagall Act, global village, Ida Tarbell, imperial preference, industrial research laboratory, informal economy, interchangeable parts, invisible hand, Isaac Newton, it's over 9,000, Jacquard loom, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, junk bonds, lone genius, Louis Pasteur, low interest rates, margin call, Marshall McLuhan, means of production, megaproject, Menlo Park, Mikhail Gorbachev, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, New Urbanism, postindustrial economy, price mechanism, Ralph Waldo Emerson, RAND corporation, rent control, rent-seeking, reserve currency, rolodex, Ronald Reagan, Savings and loan crisis, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, three-masted sailing ship, trade route, transaction costs, transcontinental railway, undersea cable, vertical integration, Yom Kippur War

The economic effects of what Charles Warren, author of the classic work The Supreme Court in United States History, called the “emancipation Proclamation of American Commerce,” were immediate. Fares from New Haven to New York fell by 40 percent thanks to competition, and the number of steamboats operating in New York waters jumped in less than two years from six to forty-three. But the long-term effects were even more profound. States stopped granting monopolies of any sort to rent-seeking influential citizens, as all of them were now presumptively unconstitutional. Other barriers to interstate commerce, erected for parochial benefit, fell as well. Thus, thanks to Gibbons v. Ogden, the United States became the world’s largest truly common market, just as the power of steam to move goods cheaply over long distances—a power merely hinted at by the steamboat—was about to grow exponentially.


pages: 582 words: 160,693

The Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State by James Dale Davidson, William Rees-Mogg

affirmative action, agricultural Revolution, Alan Greenspan, Alvin Toffler, bank run, barriers to entry, Berlin Wall, borderless world, British Empire, California gold rush, classic study, clean water, colonial rule, Columbine, compound rate of return, creative destruction, Danny Hillis, debt deflation, ending welfare as we know it, epigenetics, Fall of the Berlin Wall, falling living standards, feminist movement, financial independence, Francis Fukuyama: the end of history, full employment, George Gilder, Hernando de Soto, illegal immigration, income inequality, independent contractor, informal economy, information retrieval, Isaac Newton, John Perry Barlow, Kevin Kelly, market clearing, Martin Wolf, Menlo Park, money: store of value / unit of account / medium of exchange, new economy, New Urbanism, Norman Macrae, offshore financial centre, Parkinson's law, pattern recognition, phenotype, price mechanism, profit maximization, rent-seeking, reserve currency, road to serfdom, Ronald Coase, Sam Peltzman, school vouchers, seigniorage, Silicon Valley, spice trade, statistical model, telepresence, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, transaction costs, Turing machine, union organizing, very high income, Vilfredo Pareto

William Pfaf{ The Wrath ofNations: Civilization and the Furies ofNationalism (New York: Simon & Schuster, ~993), p.17. 2. William H. McNeill, "Reasserting the Polyethnic Norm," in John Hutchinson and Anthony D. Smith, eds., Nationalism (Oxford: Oxford University Press, 1994), p.300. 3. Michael Billig, Banal Nationalism (London: Sage Publications, 1995), p.16. 4. See Gordon Tullock, Rent-Seeking (Aldersehot Harts, England: E. Elgar, 1993). 5. John B. Morrall, Political Thought in Medieval Times (New York: Harper, 1958), p. 48. 6. For example, see the facade of the cathedral at Angoul&me, France. 7. See Karen A. Rasler and William R. Thompson, War and State Making: The Shaping of the Global Powers.


pages: 371 words: 36,271

Libertarian Idea by Jan Narveson

centre right, invisible hand, means of production, Menlo Park, night-watchman state, Pareto efficiency, Peter Singer: altruism, prisoner's dilemma, psychological pricing, rent-seeking, zero-sum game

Speaking of the “pre-market bargain,” he argues, “it is hard to believe that individuals will reach a meaningful agreement, even on the savings made possible by taking advantage of economies of scale in the provision of protection. Because of what the future holds, once the property rights scheme is in place, 193 the pre-market bargain is likely to be superseded almost immediately by strategic manipulation and rent-seeking behavior. Let me be blunt. The point of the bargain is to distribute and make possible gains associated with an efficient provision of protection. The net effect, however, of the dynamic mechanism and incentives put in place is to promote inefficiency and to undermine the terms of the original agreement.”8 Moreover, “To say that the terms of rational political association are specified as the outcome of rational bargaining is not to say that all political decisions are to be resolved by bargaining.


pages: 423 words: 149,033

The fortune at the bottom of the pyramid by C. K. Prahalad

"World Economic Forum" Davos, barriers to entry, business cycle, business process, call centre, cashless society, clean water, collective bargaining, corporate social responsibility, deskilling, digital divide, disintermediation, do well by doing good, farmers can use mobile phones to check market prices, financial intermediation, Hernando de Soto, hiring and firing, income inequality, information asymmetry, late fees, Mahatma Gandhi, market fragmentation, microcredit, new economy, profit motive, purchasing power parity, rent-seeking, shareholder value, The Fortune at the Bottom of the Pyramid, time value of money, transaction costs, vertical integration, wealth creators, working poor

Even though intangible in the short term, the self-confidence created by the professional treatment is changing the way farmers conduct themselves. Sanchalaks and even a commission agent noted this change in farmer attitudes. ITC Gains ■ Disintermediation savings. The commissions paid to the agents were not excessive, but the true cost of intermediation, including the rent seeking, was between 2.5 percent and 3 percent of procurement costs. A 0.5 percent commission to the sanchalak has replaced this. ■ Freight costs. Direct reimbursement of transport costs to the farmer is estimated to be half of what ITC used to pay the commission agents for transport to their factory


pages: 790 words: 150,875

Civilization: The West and the Rest by Niall Ferguson

Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, Ayatollah Khomeini, Berlin Wall, BRICs, British Empire, business cycle, clean water, collective bargaining, colonial rule, conceptual framework, Copley Medal, corporate governance, creative destruction, credit crunch, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, Deng Xiaoping, discovery of the americas, Dissolution of the Soviet Union, Easter island, European colonialism, Fall of the Berlin Wall, financial engineering, Francisco Pizarro, full employment, Great Leap Forward, Gregor Mendel, guns versus butter model, Hans Lippershey, haute couture, Hernando de Soto, income inequality, invention of movable type, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, joint-stock company, Joseph Schumpeter, Kickstarter, Kitchen Debate, land reform, land tenure, liberal capitalism, Louis Pasteur, Mahatma Gandhi, market bubble, Martin Wolf, mass immigration, means of production, megacity, Mikhail Gorbachev, new economy, Pearl River Delta, Pierre-Simon Laplace, power law, probability theory / Blaise Pascal / Pierre de Fermat, profit maximization, purchasing power parity, quantitative easing, rent-seeking, reserve currency, retail therapy, road to serfdom, Ronald Reagan, savings glut, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special economic zone, spice trade, spinning jenny, Steve Jobs, Steven Pinker, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Great Moderation, the market place, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, total factor productivity, trade route, transaction costs, transatlantic slave trade, undersea cable, upwardly mobile, uranium enrichment, wage slave, Washington Consensus, women in the workforce, work culture , World Values Survey

The reason North America’s ex-colonies did so much better than South America’s was because British settlers established a completely different system of property rights and political representation in the North from those built by Spaniards and Portuguese in the South. (The North was an ‘open access order’, rather than a closed one run in the interests of rent-seeking, exclusive elites.)31 European empires were able to penetrate Africa not just because they had the Maxim gun; they also devised vaccines against tropical diseases to which Africans were just as vulnerable. In the same way, the earlier industrialization of the West reflected institutional advantages: the possibility of a mass consumer society existed in the British Isles well before the advent and spread of steam power or the factory system.


pages: 488 words: 144,145

Inflated: How Money and Debt Built the American Dream by R. Christopher Whalen

Alan Greenspan, Albert Einstein, bank run, banking crisis, Bear Stearns, Black Swan, book value, Bretton Woods, British Empire, business cycle, buy and hold, California gold rush, Carl Icahn, Carmen Reinhart, central bank independence, classic study, commoditize, conceptual framework, Cornelius Vanderbilt, corporate governance, corporate raider, creative destruction, cuban missile crisis, currency peg, debt deflation, falling living standards, fiat currency, financial deregulation, financial innovation, financial intermediation, floating exchange rates, Ford Model T, Fractional reserve banking, full employment, Glass-Steagall Act, global reserve currency, housing crisis, interchangeable parts, invention of radio, Kenneth Rogoff, laissez-faire capitalism, land bank, liquidity trap, low interest rates, means of production, military-industrial complex, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, mutually assured destruction, Nixon triggered the end of the Bretton Woods system, non-tariff barriers, oil shock, Paul Samuelson, payday loans, plutocrats, price stability, pushing on a string, quantitative easing, rent-seeking, reserve currency, Ronald Reagan, Savings and loan crisis, special drawing rights, Suez canal 1869, Suez crisis 1956, The Chicago School, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, Upton Sinclair, women in the workforce

Indeed, in the last 30 years there has been a large increase in income and wealth inequality in advanced economies. This rise is due to many factors: winner-take-all effects of an information society; trade integration of China, India, and other emerging markets in the global economy; knowledge and skill-biased technological innovation; rise in finance and increased rent-seeking and oligopoly in financial markets. This increase in inequality led to a “keeping up with the Joneses effect”: households in the United States and Europe could not maintain their living standards and spending and lifestyle goals as wages and labor incomes rose less than productivity, with the share of income going to capital and to the wealthy rising.


The Cigarette: A Political History by Sarah Milov

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", activist lawyer, affirmative action, airline deregulation, American Legislative Exchange Council, barriers to entry, British Empire, business logic, collective bargaining, corporate personhood, deindustrialization, fixed income, Frederick Winslow Taylor, G4S, global supply chain, Herbert Marcuse, imperial preference, Indoor air pollution, information asymmetry, invisible hand, Kitchen Debate, land tenure, military-industrial complex, new economy, New Journalism, Philip Mirowski, pink-collar, Potemkin village, precariat, price stability, profit maximization, race to the bottom, Ralph Nader, rent-seeking, scientific management, Silicon Valley, structural adjustment programs, technological determinism, The Chicago School, Torches of Freedom, trade route, union organizing, Unsafe at Any Speed, Upton Sinclair, vertical integration, War on Poverty, women in the workforce

McConnell especially discusses the way in which agricultural interest groups and the USDA maintained a high-level integration. Marver Bernstein’s thesis of the “life cycle” of regulatory agencies was particularly influential to economists’ understanding of “captive agencies” as promoting economic inefficiencies through the rent-seeking behavior of regulated industries. See Marver Bernstein, Regulating Business by Independent Commission (Princeton: Princeton University Press, 1955). For the right-wing version of the capture thesis, see George J. Stigler, “The Theory of Economic Regulation,” Bell Journal of Economics and Management Science 2, No. 1 (1971): 3–21; Richard A.


The New Map: Energy, Climate, and the Clash of Nations by Daniel Yergin

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", 3D printing, 9 dash line, activist fund / activist shareholder / activist investor, addicted to oil, Admiral Zheng, Albert Einstein, American energy revolution, Asian financial crisis, autonomous vehicles, Ayatollah Khomeini, Bakken shale, Bernie Sanders, BRICs, British Empire, carbon tax, circular economy, clean tech, commodity super cycle, company town, coronavirus, COVID-19, decarbonisation, deep learning, Deng Xiaoping, Didi Chuxing, disruptive innovation, distributed generation, Donald Trump, driverless car, Edward Snowden, Elon Musk, energy security, energy transition, failed state, Ford Model T, geopolitical risk, gig economy, global pandemic, global supply chain, green new deal, Greta Thunberg, hydraulic fracturing, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), inventory management, James Watt: steam engine, John Zimmer (Lyft cofounder), Kickstarter, LNG terminal, Lyft, Malacca Straits, Malcom McLean invented shipping containers, Masayoshi Son, Masdar, mass incarceration, megacity, megaproject, middle-income trap, Mikhail Gorbachev, mutually assured destruction, new economy, off grid, oil rush, oil shale / tar sands, oil shock, open economy, paypal mafia, peak oil, pension reform, power law, price mechanism, purchasing power parity, RAND corporation, rent-seeking, ride hailing / ride sharing, rolling blackouts, Ronald Reagan, Russian election interference, self-driving car, Silicon Valley, smart cities, social distancing, South China Sea, sovereign wealth fund, Suez crisis 1956, super pumped, supply-chain management, TED Talk, trade route, Travis Kalanick, Twitter Arab Spring, Uber and Lyft, uber lyft, ubercab, UNCLOS, UNCLOS, uranium enrichment, vertical integration, women in the workforce

They may well have to live with periods of lower revenues, which will mean austerity and lower economic growth, with greater risk of turmoil and political instability. This emphasizes the need for these countries to address their over-reliance on oil. The overweening scale of the domestic oil business crowds out entrepreneurship and other sectors in many oil-exporting countries; it can promote rent-seeking and corruption. It also overvalues the exchange rate, hurting non-oil businesses. In the future, even with a rebound in prices, countries will need to manage oil revenues more prudently, with an eye on the longer term. That means more restrained budgeting and building up a sovereign wealth fund, which can invest outside the country and develop non-oil streams of revenues, helping to diversify the economy and hedge against lower oil and gas prices.


pages: 807 words: 154,435

Radical Uncertainty: Decision-Making for an Unknowable Future by Mervyn King, John Kay

Airbus A320, Alan Greenspan, Albert Einstein, Albert Michelson, algorithmic trading, anti-fragile, Antoine Gombaud: Chevalier de Méré, Arthur Eddington, autonomous vehicles, availability heuristic, banking crisis, Barry Marshall: ulcers, battle of ideas, Bear Stearns, behavioural economics, Benoit Mandelbrot, bitcoin, Black Swan, Boeing 737 MAX, Bonfire of the Vanities, Brexit referendum, Brownian motion, business cycle, business process, capital asset pricing model, central bank independence, collapse of Lehman Brothers, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, DeepMind, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, Donald Trump, Dutch auction, easy for humans, difficult for computers, eat what you kill, Eddington experiment, Edmond Halley, Edward Lloyd's coffeehouse, Edward Thorp, Elon Musk, Ethereum, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, fear of failure, feminist movement, financial deregulation, George Akerlof, germ theory of disease, Goodhart's law, Hans Rosling, Helicobacter pylori, high-speed rail, Ignaz Semmelweis: hand washing, income per capita, incomplete markets, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Jeff Bezos, Jim Simons, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, John von Neumann, Kenneth Arrow, Kōnosuke Matsushita, Linda problem, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, market bubble, market fundamentalism, military-industrial complex, Money creation, Moneyball by Michael Lewis explains big data, Monty Hall problem, Nash equilibrium, Nate Silver, new economy, Nick Leeson, Northern Rock, nudge theory, oil shock, PalmPilot, Paul Samuelson, peak oil, Peter Thiel, Philip Mirowski, Phillips curve, Pierre-Simon Laplace, popular electronics, power law, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, railway mania, RAND corporation, reality distortion field, rent-seeking, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Solow, Ronald Coase, sealed-bid auction, shareholder value, Silicon Valley, Simon Kuznets, Socratic dialogue, South Sea Bubble, spectrum auction, Steve Ballmer, Steve Jobs, Steve Wozniak, Suez crisis 1956, Tacoma Narrows Bridge, Thales and the olive presses, Thales of Miletus, The Chicago School, the map is not the territory, The Market for Lemons, The Nature of the Firm, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Thomas Malthus, Toyota Production System, transaction costs, ultimatum game, urban planning, value at risk, world market for maybe five computers, World Values Survey, Yom Kippur War, zero-sum game

The most common profile of the successful entrepreneur today is the individual who draws on his or her past experience in a larger organisation, and works from inception with a team of like-minded individuals. And such individuals can contribute to society only in a supportive social context. There is no shortage of entrepreneurial talent in Nigeria, but too much of it is directed to opportunistic scams and rent seeking. Barack Obama was widely criticised for his Roanoke campaign speech of 2012 in which he said ‘if you’ve been successful, you didn’t get there on your own’. 13 But if you look further at what he said you see that he got it exactly right: ‘when we succeed, we succeed because of our individual initiative, but also because we do things together’. 14 Perhaps the most remarkable of all lone geniuses was Srinivasa Ramanujan, the destitute Indian mathematician who failed his college exams, learnt mathematics from a public library book, impressed an Indian revenue official enough to be offered a job, and whose letter to G.


pages: 511 words: 151,359

The Asian Financial Crisis 1995–98: Birth of the Age of Debt by Russell Napier

Alan Greenspan, Asian financial crisis, asset allocation, bank run, banking crisis, banks create money, Berlin Wall, book value, Bretton Woods, business cycle, Buy land – they’re not making it any more, capital controls, central bank independence, colonial rule, corporate governance, COVID-19, creative destruction, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, Deng Xiaoping, desegregation, discounted cash flows, diversification, Donald Trump, equity risk premium, financial engineering, financial innovation, floating exchange rates, Fractional reserve banking, full employment, Glass-Steagall Act, hindsight bias, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, if you build it, they will come, impact investing, inflation targeting, interest rate swap, invisible hand, Japanese asset price bubble, Jeff Bezos, junk bonds, Kickstarter, laissez-faire capitalism, lateral thinking, Long Term Capital Management, low interest rates, market bubble, mass immigration, means of production, megaproject, Mexican peso crisis / tequila crisis, Michael Milken, Money creation, moral hazard, Myron Scholes, negative equity, offshore financial centre, open borders, open economy, Pearl River Delta, price mechanism, profit motive, quantitative easing, Ralph Waldo Emerson, regulatory arbitrage, rent-seeking, reserve currency, risk free rate, risk-adjusted returns, Ronald Reagan, Savings and loan crisis, savings glut, Scramble for Africa, short selling, social distancing, South China Sea, The Wealth of Nations by Adam Smith, too big to fail, yield curve

The same foreign investors who not just tolerated but endorsed such behaviour in the economic boom, labelled it as crony capitalism in the economic bust. This was a very different form of capitalism where rule by one person was more important than rule of law, but foreign investors treated it as if it entailed the same risks. Foreign capital was at best amoral and perhaps immoral as it sought to ride on the coattails of such rent-seeking activity and hypocritical in condemning it when things went wrong. How the Suharto family business interests were to be dealt with in the economic crisis severely complicated the bailout plan proposed by the IMF. The rent extracting was ramping up in late 1996 but nobody cared – until they did.


pages: 585 words: 165,304

Trust: The Social Virtue and the Creation of Prosperity by Francis Fukuyama

Alvin Toffler, barriers to entry, Berlin Wall, blue-collar work, business climate, business cycle, capital controls, classic study, collective bargaining, corporate governance, corporate raider, creative destruction, deindustrialization, Deng Xiaoping, deskilling, double entry bookkeeping, equal pay for equal work, European colonialism, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global village, Gunnar Myrdal, hiring and firing, industrial robot, Jane Jacobs, job satisfaction, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kanban, Kenneth Arrow, land reform, liberal capitalism, liberation theology, low skilled workers, manufacturing employment, mittelstand, price mechanism, profit maximization, RAND corporation, rent-seeking, Ronald Coase, scientific management, Silicon Valley, Steve Jobs, Steve Wozniak, The Death and Life of Great American Cities, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, transfer pricing, traveling salesman, union organizing, vertical integration, W. E. B. Du Bois

Contemporary cartels include not just oil producers and suppliers of gold and diamonds but professional associations like the American Medical Association or the National Educational Association, which set standards for entry into the medical and teaching professions, respectively, or labor unions that regulate the entry of new workers into the labor market.11 In a developed democracy like the United States, virtually all significant sectors of society are represented in the political process through well-organized interest groups. The latter seek to advance or protect their positions not merely through economic activity but through rent seeking or by exercising influence over the political process. The countries of medieval and early modern Europe were in many respects highly communitarian societies, with a large number of overlapping sources of communal authority—princely, ecclesiastical, seigneurial, and local—constraining the behavior of individuals.


pages: 604 words: 165,488

Mr Five Per Cent: The Many Lives of Calouste Gulbenkian, the World's Richest Man by Jonathan Conlin

accounting loophole / creative accounting, anti-communist, banking crisis, British Empire, carried interest, cotton gin, Ernest Rutherford, estate planning, Fellow of the Royal Society, light touch regulation, military-industrial complex, MITM: man-in-the-middle, Network effects, Pierre-Simon Laplace, rent-seeking, stakhanovite, Suez canal 1869, vertical integration, Yom Kippur War

See also Aram Turabian to CSG, 10 June 1928. PRS00318. 6. Balances as at 31 December 1932. LDN02750. 7. Calculation based on Mikdashi’s figures. Zuhayr Mikdashi, A Financial Analysis of Middle Eastern Oil Concessions: 1901–1965 (New York: Frederick A. Praeger, 1966), App. 2, Table 34. 8. For rent-seeking by Nuri al-Said and ‘Abd al-Muhsin al-Sa’dun, see Peter Sluglett, Britain in Iraq: Contriving King and Country (London: I. B. Tauris, 2007), p. 258, note 60. 9. Cited in NSG, TPC memo, 3 March 1928. LDN02938. 10. When the Iraqi prime minister ‘Abd al-Muhsin al-Sa’dun visited London in 1923 he wrote to Gulbenkian, but this was probably just a courtesy call.


pages: 693 words: 169,849

The Aristocracy of Talent: How Meritocracy Made the Modern World by Adrian Wooldridge

"World Economic Forum" Davos, Ada Lovelace, affirmative action, Alan Greenspan, Albert Einstein, assortative mating, barriers to entry, Bernie Sanders, Black Lives Matter, Bletchley Park, borderless world, Boris Johnson, Brexit referendum, business intelligence, central bank independence, circulation of elites, Clayton Christensen, cognitive bias, Corn Laws, coronavirus, corporate governance, correlation coefficient, COVID-19, creative destruction, critical race theory, David Brooks, Dominic Cummings, Donald Trump, Double Irish / Dutch Sandwich, Etonian, European colonialism, fake news, feminist movement, George Floyd, George Gilder, Gini coefficient, glass ceiling, helicopter parent, Home mortgage interest deduction, income inequality, intangible asset, invention of gunpowder, invention of the printing press, Isaac Newton, Jeff Bezos, Jeremy Corbyn, Jim Simons, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, land tenure, London Interbank Offered Rate, Long Term Capital Management, Louis Pasteur, Mahatma Gandhi, Mark Zuckerberg, means of production, meritocracy, meta-analysis, microaggression, mortgage tax deduction, Myron Scholes, offshore financial centre, opioid epidemic / opioid crisis, Panopticon Jeremy Bentham, Peter Thiel, plutocrats, post-industrial society, post-oil, pre–internet, public intellectual, publish or perish, Ralph Waldo Emerson, RAND corporation, rent-seeking, Richard Florida, Ronald Reagan, scientific management, sexual politics, shareholder value, Sheryl Sandberg, Silicon Valley, spinning jenny, Steve Bannon, Steven Pinker, supply-chain management, surveillance capitalism, tech bro, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thorstein Veblen, three-martini lunch, Tim Cook: Apple, transfer pricing, Tyler Cowen, unit 8200, upwardly mobile, Vilfredo Pareto, W. E. B. Du Bois, wealth creators, women in the workforce

They can cite the authority of William Gladstone, who wrote a letter to Lord John Russell in January 1845 predicting that a competitive examination which emphasized classics and mathematics would favour the aristocracy: I have a strong impression that the aristocracy of this country are even superior in natural gifts, on the average, to the mass: but it is plain that with their acquired advantages, their insensible education, irrespective of book-learning, they have an immense superiority.50 Both Gladstone and his latter-day echo chamber miss the point: the most important test of the new system was not whether it promoted social mobility but whether it changed the nature of the state. The old regime was essentially a rent-seeking regime: people saw civil service positions as rents to be enjoyed rather than duties to perform. The new regime was about problem-solving: people held their positions only in so far as they could advance the state’s interests rather than line their own pockets. These examinations forced the old upper class to reform itself from within: effort that once went into lobbying politicians for baubles now went into lobbying schools and universities to improve their performance and urging children to keep their nose to the grindstone.


Economic Origins of Dictatorship and Democracy by Daron Acemoğlu, James A. Robinson

Andrei Shleifer, British Empire, business cycle, colonial rule, conceptual framework, constrained optimization, Corn Laws, declining real wages, Edward Glaeser, European colonialism, Gunnar Myrdal, income inequality, income per capita, invisible hand, Jean Tirole, John Markoff, Kenneth Rogoff, land reform, minimum wage unemployment, Nash equilibrium, Nelson Mandela, oil shock, open economy, Pareto efficiency, rent-seeking, seminal paper, strikebreaker, total factor productivity, transaction costs, Washington Consensus, William of Occam, women in the workforce

Risk, Diversification, and Growth,” Journal of Political Economy, 105, 709–51. 381 382 Bibliography Acemoglu, Daron, and Fabrizio Zilibotti (1999) “Information Acquisition in Development,” Journal of Economic Growth, 4, 5–38. Ades, Alberto (1995) “Economic Development with Endogenous Political Participation,” Economics and Politics, 7, 93–117. Ades, Alberto, and Thierry Verdier (1996) “The Rise and Fall of Elites: A Theory of Economic Development and Social Polarization in Rent-Seeking Societies,” CEPR Discussion Paper #1495. Aguilera Peña, Mario (1985) Los Comuneros: Guerra Social y Lucha Anticolonia, Bogotá: Universidad Nacional de Colombia. Alesina, Alberto (1988) “Credibility and Political Convergence in a Two-Party System with Rational Voters,” American Economic Review, 78, 796–805.


pages: 741 words: 179,454

Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Alan Greenspan, Albert Einstein, algorithmic trading, Andy Kessler, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, BRICs, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, carbon credits, Carl Icahn, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, deal flow, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Dr. Strangelove, Dutch auction, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Fall of the Berlin Wall, financial engineering, financial independence, financial innovation, financial thriller, fixed income, foreign exchange controls, full employment, Glass-Steagall Act, global reserve currency, Goldman Sachs: Vampire Squid, Goodhart's law, Gordon Gekko, greed is good, Greenspan put, happiness index / gross national happiness, haute cuisine, Herman Kahn, high net worth, Hyman Minsky, index fund, information asymmetry, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", job automation, Johann Wolfgang von Goethe, John Bogle, John Meriwether, joint-stock company, Jones Act, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, Marshall McLuhan, Martin Wolf, mega-rich, merger arbitrage, Michael Milken, Mikhail Gorbachev, Milgram experiment, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, NetJets, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, Phillips curve, planned obsolescence, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, Reminiscences of a Stock Operator, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Thaler, Right to Buy, risk free rate, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Satyajit Das, savings glut, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, stock buybacks, survivorship bias, tail risk, Teledyne, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, two and twenty, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond, zero-sum game

Investors hired advisers, who hired consultants, who hired fund managers, who hired other fund managers, who bought products from banks, who laid off the risk with other banks or investors. Everybody along the chain earned a share of the action. There is no “try before you buy” with financial products. Marketed on the basis of past returns, complex and long-term in nature, financial products lend themselves to economic rent seeking. When fund management fees were reduced by migration to low-cost index tracking funds, investment managers tempted investors into new higher margin products, structured investments, private equity and hedge funds, with the promise of high returns. Simple derivatives were repackaged into complicated and opaque exotic structures to increase profit margins.


pages: 661 words: 185,701

The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance by Eswar S. Prasad

access to a mobile phone, Adam Neumann (WeWork), Airbnb, algorithmic trading, altcoin, bank run, barriers to entry, Bear Stearns, Ben Bernanke: helicopter money, Bernie Madoff, Big Tech, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bretton Woods, business intelligence, buy and hold, capital controls, carbon footprint, cashless society, central bank independence, cloud computing, coronavirus, COVID-19, Credit Default Swap, cross-border payments, cryptocurrency, deglobalization, democratizing finance, disintermediation, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, eurozone crisis, fault tolerance, fiat currency, financial engineering, financial independence, financial innovation, financial intermediation, Flash crash, floating exchange rates, full employment, gamification, gig economy, Glass-Steagall Act, global reserve currency, index fund, inflation targeting, informal economy, information asymmetry, initial coin offering, Internet Archive, Jeff Bezos, Kenneth Rogoff, Kickstarter, light touch regulation, liquidity trap, litecoin, lockdown, loose coupling, low interest rates, Lyft, M-Pesa, machine readable, Mark Zuckerberg, Masayoshi Son, mobile money, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, offshore financial centre, open economy, opioid epidemic / opioid crisis, PalmPilot, passive investing, payday loans, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price anchoring, profit motive, QR code, quantitative easing, quantum cryptography, RAND corporation, random walk, Real Time Gross Settlement, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, risk/return, Robinhood: mobile stock trading app, robo advisor, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seigniorage, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, smart contracts, SoftBank, special drawing rights, the payments system, too big to fail, transaction costs, uber lyft, unbanked and underbanked, underbanked, Vision Fund, Vitalik Buterin, Wayback Machine, WeWork, wikimedia commons, Y Combinator, zero-sum game

Freedom and Liberty Building on concerns about the threats that government intrusion poses to individual liberties and privacy, Libertarians argue that CBDC might pose risks to certain basic tenets of an open democratic society. One argument is that cash is used in activities that might run afoul of laws but that are nonetheless welfare enhancing. High tax rates, it is claimed, choke off productivity, and certain regulation exists only to protect rent seeking or to enhance the power of regulators seeking bribes. In this telling, the benefits of revenue gains from restricting cash could be overwhelmed by the potential loss from discouraging economic activity that is underground but beneficial. The ubiquitous street vendors in India conduct their transactions almost exclusively in cash, paying no taxes and subject to little regulation but certainly providing an essential service.


pages: 1,445 words: 469,426

The Prize: The Epic Quest for Oil, Money & Power by Daniel Yergin

anti-communist, Ascot racecourse, Ayatollah Khomeini, bank run, Berlin Wall, book value, British Empire, Carl Icahn, colonial exploitation, Columbine, continuation of politics by other means, cuban missile crisis, disinformation, do-ocracy, energy security, European colonialism, Exxon Valdez, financial independence, fudge factor, geopolitical risk, guns versus butter model, Ida Tarbell, informal economy, It's morning again in America, joint-stock company, junk bonds, land reform, liberal capitalism, managed futures, megacity, Michael Milken, Mikhail Gorbachev, Monroe Doctrine, new economy, North Sea oil, oil rush, oil shale / tar sands, oil shock, old-boy network, postnationalism / post nation state, price stability, RAND corporation, rent-seeking, Ronald Reagan, shareholder value, stock buybacks, Suez canal 1869, Suez crisis 1956, Thomas Malthus, tontine, vertical integration, Yom Kippur War

(New York: Bailliere Bros., 1865), chap. 1; Henry, Early and Later History of Petroleum, p. 53; Kendall Beaton, "Dr. Gesner's Kerosene: The Start of American Oil Refining," Business History Review 29 (March 1955), pp. 35-41 ("new liquid hydrocarbon"); Gregory Patrick Nowell, "Realpolitik vs. Transnational Rent-Seeking: French Mercantilism and the Development of the World Oil Cartel, 1860-1939" (Ph.D., Massachusetts Institute of Technology 1988), pp. 104-08; Business History Review, ed., Oil's First Century (Boston: Harvard Business School, 1960), pp. 8 ("coal oils"), 19 ("impetuous energy"). [4] R. J. Forbes, Bitumen and Petroleum in Antiquity (Leiden: E.

Baton Rouge: Louisiana State University Press, 1962. Nomura, Kichisaburo. "Stepping Stones to War." United States Naval Institute Proceedings 77 (September 1951): 927-31. Nordhauser, Norman. The Quest for Stability: Domestic Oil Regulation, 1917-1935. New York: Garland, 1979. Nowell, Gregory Patrick. "Realpolitik vs. Transnational Rent-seeking: French Mercantilism and the Development of the World Oil Cartel, 18601939." Ph.D. dissertation, Massachusetts Institute of Technology, 1988. Nutting, Anthony. Nasser. New York: E. P. Dutton, 1972. ---------. No End of a Lesson: The Story of Suez. London: Constable, 1967. O'Brien, Dennis J.


pages: 669 words: 210,153

Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers by Timothy Ferriss

Abraham Maslow, Adam Curtis, Airbnb, Alexander Shulgin, Alvin Toffler, An Inconvenient Truth, artificial general intelligence, asset allocation, Atul Gawande, augmented reality, back-to-the-land, Ben Horowitz, Bernie Madoff, Bertrand Russell: In Praise of Idleness, Beryl Markham, billion-dollar mistake, Black Swan, Blue Bottle Coffee, Blue Ocean Strategy, blue-collar work, book value, Boris Johnson, Buckminster Fuller, business process, Cal Newport, call centre, caloric restriction, caloric restriction, Carl Icahn, Charles Lindbergh, Checklist Manifesto, cognitive bias, cognitive dissonance, Colonization of Mars, Columbine, commoditize, correlation does not imply causation, CRISPR, David Brooks, David Graeber, deal flow, digital rights, diversification, diversified portfolio, do what you love, Donald Trump, effective altruism, Elon Musk, fail fast, fake it until you make it, fault tolerance, fear of failure, Firefox, follow your passion, fulfillment center, future of work, Future Shock, Girl Boss, Google X / Alphabet X, growth hacking, Howard Zinn, Hugh Fearnley-Whittingstall, Jeff Bezos, job satisfaction, Johann Wolfgang von Goethe, John Markoff, Kevin Kelly, Kickstarter, Lao Tzu, lateral thinking, life extension, lifelogging, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Mason jar, Menlo Park, microdosing, Mikhail Gorbachev, MITM: man-in-the-middle, Neal Stephenson, Nelson Mandela, Nicholas Carr, Nick Bostrom, off-the-grid, optical character recognition, PageRank, Paradox of Choice, passive income, pattern recognition, Paul Graham, peer-to-peer, Peter H. Diamandis: Planetary Resources, Peter Singer: altruism, Peter Thiel, phenotype, PIHKAL and TIHKAL, post scarcity, post-work, power law, premature optimization, private spaceflight, QWERTY keyboard, Ralph Waldo Emerson, Ray Kurzweil, recommendation engine, rent-seeking, Richard Feynman, risk tolerance, Ronald Reagan, Salesforce, selection bias, sharing economy, side project, Silicon Valley, skunkworks, Skype, Snapchat, Snow Crash, social graph, software as a service, software is eating the world, stem cell, Stephen Hawking, Steve Jobs, Stewart Brand, superintelligent machines, TED Talk, Tesla Model S, The future is already here, the long tail, The Wisdom of Crowds, Thomas L Friedman, traumatic brain injury, trolley problem, vertical integration, Wall-E, Washington Consensus, We are as Gods, Whole Earth Catalog, Y Combinator, zero-sum game

I think what I needed to do was decamp and realize that technology was going to be a boom area. And even though I wanted to do science rather than technology, it’s better to be in an expanding world and not quite in exactly the right field, than to be in a contracting world where peoples’ worst behavior comes out. [In the latter,] your mind is grooved in defensive and rent-seeking types of ways. Life is too short to be petty and defensive and cruel to other people who are seeking to innovate alongside you.” PARTING ADVICE? “What I would really like is for those of you who have been told that you’re learning disabled, or you’re not good at math, or that you’re terrible at music, or something like that, to seek out unconventional ways of proving that wrong.


pages: 767 words: 208,933

Liberalism at Large: The World According to the Economist by Alex Zevin

"there is no alternative" (TINA), activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, anti-communist, Asian financial crisis, bank run, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, business cycle, capital controls, carbon tax, centre right, Chelsea Manning, collective bargaining, Columbine, Corn Laws, corporate governance, corporate social responsibility, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, desegregation, disinformation, disruptive innovation, do well by doing good, Donald Trump, driverless car, Edward Snowden, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, Gini coefficient, Glass-Steagall Act, global supply chain, guns versus butter model, hiring and firing, imperial preference, income inequality, interest rate derivative, invisible hand, It's morning again in America, Jeremy Corbyn, John von Neumann, Joseph Schumpeter, Julian Assange, junk bonds, Khartoum Gordon, land reform, liberal capitalism, liberal world order, light touch regulation, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, means of production, Michael Milken, Mikhail Gorbachev, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, new economy, New Journalism, Nixon triggered the end of the Bretton Woods system, no-fly zone, Norman Macrae, Northern Rock, Occupy movement, Philip Mirowski, plutocrats, post-war consensus, price stability, quantitative easing, race to the bottom, railway mania, rent control, rent-seeking, road to serfdom, Ronald Reagan, Rosa Parks, Seymour Hersh, Snapchat, Socratic dialogue, Steve Bannon, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade liberalization, trade route, unbanked and underbanked, underbanked, unorthodox policies, upwardly mobile, War on Poverty, WikiLeaks, Winter of Discontent, Yom Kippur War, young professional

Rather it was protection – a flawed, unnatural system of government interference with commerce – that was the enemy, ‘prejudicial to all classes of the community’.11 It was not a matter for ‘class enmity … the interest of all classes was the same’, and Wilson spoke privately, on this score, of ‘the rubbish they have been talking at Manchester’.12 It is unlikely Cobden and Bright were ever won over to this line of thinking, so different from their broadsides against the parasitism of rent-seeking aristocrats. Cobden even ventured a small criticism at the time. ‘I think you have lost sight of one gain to the aristocratic land-lords … the political power arising out of the present state of their tenantry – and political power in this country has been pecuniary gain.’13 Whatever its flaws, however, the pamphlet proved strategically invaluable.


pages: 827 words: 239,762

The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Albert Einstein, Apollo 13, barriers to entry, Bayesian statistics, Bear Stearns, Bernie Madoff, Bob Noyce, Bonfire of the Vanities, business cycle, business process, butterfly effect, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Clayton Christensen, cloud computing, collateralized debt obligation, collective bargaining, commoditize, compensation consultant, corporate governance, corporate raider, corporate social responsibility, creative destruction, deskilling, discounted cash flows, disintermediation, disruptive innovation, Donald Trump, eat what you kill, Fairchild Semiconductor, family office, financial engineering, financial innovation, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global pandemic, Gordon Gekko, hiring and firing, Ida Tarbell, impact investing, income inequality, invisible hand, Jeff Bezos, job-hopping, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, Kōnosuke Matsushita, London Whale, Long Term Capital Management, market fundamentalism, Menlo Park, Michael Milken, new economy, obamacare, oil shock, pattern recognition, performance metric, Pershing Square Capital Management, Peter Thiel, planned obsolescence, plutocrats, profit maximization, profit motive, pushing on a string, Ralph Nader, Ralph Waldo Emerson, RAND corporation, random walk, rent-seeking, Ronald Coase, Ronald Reagan, Sam Altman, Sand Hill Road, Saturday Night Live, scientific management, shareholder value, Sheryl Sandberg, Silicon Valley, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steve Jurvetson, survivorship bias, TED Talk, The Nature of the Firm, the scientific method, Thorstein Veblen, Tragedy of the Commons, union organizing, urban renewal, vertical integration, Vilfredo Pareto, War on Poverty, William Shockley: the traitorous eight, women in the workforce, Y Combinator

“[There] is [also] widespread malpractice in compensation setting which seems to indicate rent-extraction. For example, 30 percent of firms from 1996 to 2005 seem to have used ‘options backdating’ (which consists in choosing the ‘grant dates’ ex-post to allow for the minimal strike price of at-the-money options). [Evidence] for rent-seeking among CEOs is substantial.”14 More recently, a February 2016 study by three professors at the University of Michigan’s Stephen M. Ross School of Business concluded that between 2008 and 2014, executives continued to use manipulative devices, including backdating, to increase their compensation by some 6 percent.15 Roughly 80 percent of life, Woody Allen has explained, is simply showing up.


pages: 851 words: 247,711

The Atlantic and Its Enemies: A History of the Cold War by Norman Stone

affirmative action, Alvin Toffler, Arthur Marwick, Ayatollah Khomeini, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, British Empire, business cycle, central bank independence, Deng Xiaoping, desegregation, disinformation, Dissolution of the Soviet Union, European colonialism, facts on the ground, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, gentrification, Gunnar Myrdal, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Herbert Marcuse, illegal immigration, income per capita, interchangeable parts, Jane Jacobs, Joseph Schumpeter, junk bonds, labour mobility, land reform, long peace, low interest rates, mass immigration, means of production, Michael Milken, Mikhail Gorbachev, military-industrial complex, Mitch Kapor, Money creation, new economy, Norman Mailer, North Sea oil, oil shock, Paul Samuelson, Phillips curve, Ponzi scheme, popular capitalism, price mechanism, price stability, RAND corporation, rent-seeking, Ronald Reagan, Savings and loan crisis, scientific management, Seymour Hersh, Silicon Valley, special drawing rights, Steve Jobs, Strategic Defense Initiative, strikebreaker, Suez crisis 1956, The Death and Life of Great American Cities, trade liberalization, trickle-down economics, V2 rocket, War on Poverty, Washington Consensus, Yom Kippur War, éminence grise

One such, Alfred Sherman, dismissed economics as jumped-up accountancy: paper-money inflation just reflected the power of labour and the trade unions to impose transfer payments; he also saw the interest of the Keynesians themselves in the power of the State in organizing the transfers, the productive parts of the economy having to pay for it all. It was described in the United States as ‘rent-seeking’, as political economists tried to find a theory to fit what had been happening. A bureaucracy, complete with its own wooden language, was established to effect the transfers, and it taxed the middle: as Sherman said, the State turns everybody into a proletarian or a functionary. This was again a very old argument.


pages: 1,242 words: 317,903

The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby

airline deregulation, airport security, Alan Greenspan, Alvin Toffler, Andrei Shleifer, anti-communist, Asian financial crisis, balance sheet recession, bank run, barriers to entry, Bear Stearns, behavioural economics, Benoit Mandelbrot, Black Monday: stock market crash in 1987, bond market vigilante , book value, Bretton Woods, business cycle, central bank independence, centralized clearinghouse, classic study, collateralized debt obligation, conceptual framework, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Dr. Strangelove, energy security, equity premium, fiat currency, financial deregulation, financial engineering, financial innovation, fixed income, Flash crash, forward guidance, full employment, Future Shock, Glass-Steagall Act, Greenspan put, Hyman Minsky, inflation targeting, information asymmetry, interest rate swap, inventory management, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, Kenneth Rogoff, Kickstarter, Kitchen Debate, laissez-faire capitalism, Lewis Mumford, Long Term Capital Management, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, Neil Armstrong, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Northern Rock, paper trading, paradox of thrift, Paul Samuelson, Phillips curve, plutocrats, popular capitalism, price stability, RAND corporation, Reminiscences of a Stock Operator, rent-seeking, Robert Shiller, Robert Solow, rolodex, Ronald Reagan, Saturday Night Live, Savings and loan crisis, savings glut, secular stagnation, short selling, stock buybacks, subprime mortgage crisis, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tipper Gore, too big to fail, trade liberalization, unorthodox policies, upwardly mobile, We are all Keynesians now, WikiLeaks, women in the workforce, Y2K, yield curve, zero-sum game

As recently as 1978, he had suggested that budget policy, not monetary policy, was the key driver of prices; and even when he was not blaming the budget deficit, he resisted the idea that the Fed was responsible, instead pointing the finger at cost-push factors: commodity-price shocks, over-mighty labor unions, rent-seeking monopolists, regulations that created bottlenecks and scarcities.1 On occasions when he acknowledged the power of interest rates, he nonetheless took refuge behind a version of Greenspan’s conundrum. In congressional testimony in July 1975, he noted that it was long-term interest rates that really influenced the economy, and that “all of us recognize that the influence the Federal Reserve has on long-term rates is negligible.”2 In declaring unambiguously that the Fed did have the power to control inflation, Burns was announcing the arrival of a new consensus.


pages: 1,157 words: 379,558

Ashes to Ashes: America's Hundred-Year Cigarette War, the Public Health, and the Unabashed Triumph of Philip Morris by Richard Kluger

air freight, Albert Einstein, book value, California gold rush, cognitive dissonance, confounding variable, corporate raider, desegregation, disinformation, double entry bookkeeping, family office, feminist movement, full employment, ghettoisation, independent contractor, Indoor air pollution, junk bonds, medical malpractice, Mikhail Gorbachev, plutocrats, power law, publication bias, Ralph Nader, Ralph Waldo Emerson, RAND corporation, rent-seeking, risk tolerance, Ronald Reagan, selection bias, stock buybacks, The Chicago School, the scientific method, Torches of Freedom, trade route, transaction costs, traveling salesman, union organizing, upwardly mobile, urban planning, urban renewal, vertical integration, War on Poverty

University of North Carolina Press, 1948. Tollison, Robert D., ed. Clearing the Air: Perspectives on Environmental Tobacco Smoke. D. C. Heath/Lexington Books, 1988. ———, ed. Smoking and Society: Toward a More Balanced Assessment. D. C. Heath/Lexington Books, 1986. ———, and Richard E. Wagner. Smoking and the State: Social Costs, Rent Seeking, and Public Policy. D. C. Heath/Lexington Books, 1988. Troyer, Ronald J., and Gerald E. Markle. Cigarettes: The Battle over Smoking. Rutgers University Press, 1983. U.S. Surgeon General. Smoking and Health: Report of the Advisory Committee to the Surgeon General. U.S. Public Health Service, 1964. ———.