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3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yield management
The same goes for the other individuals who developed Google’s search software and Facebook’s social network. Even though this wave of innovation is credited by the Patent Office to firms rather than individuals, it was made possible by individual inventors and entrepreneurs more directly than the earlier twentieth-century inventions of Bell Labs and the other large corporate research organizations. THE HISTORICAL RECORD: THE GROWTH OF TOTAL FACTOR PRODUCTIVITY We previously learned in figures 1–2 and 16–5 that growth in total factor productivity (TFP) was much faster between 1920 and 1970 than either before 1920 or since 1970. Now we take a closer look at the behavior of TFP growth for the years since 1970. Shown by vertical bars in figure 17–2 are the growth rates of TFP for 1890–1920, 1920–1970, and three subperiods since 1970. The first of these intervals, 1970–94, exhibits TFP growth of only 0.57 percent per year, less than a third of the 1.89 percent growth rate achieved in the fifty years before 1970.
See elderly people September 11th terrorist attacks, 406 servants, 47, 107, 276 service occupations, 53; women in, 274 services: impact of technology on, 578; spending for, 39 sewer systems, 51, 124, 217, 323 sewing machines, 293 sex, 486 sharecropping, 265–66; debts for, 291–92 Sharp, Jacob, 143 Shergold, Peter, 79, 279 Sherman Antitrust Act (1890), 313, 318 shipping disasters, 239 shipyards, 549 Shockley, William, 571 shopping centers and malls, 365–66 Sichel, Daniel, 110 sickness funds (health insurance), 236 Sidley Austin (law firm), 618 Sikorsky Igor, 394 Sildenafil (Viagra; drug), 486 Simpson, Gary, 409 Sinclair, Upton, 82, 221–22, 267, 313 Singer Sewing Machine Company, 293 Singing in the Rain (film), 201 60 Minutes (television program), 433 slaughterhouses, 267 small towns: automobiles in, 163–65; housing in, 110–12; teenagers in, 283 smartphones, 433, 437–38, 523, 577–78; Internet on, 456; personal use of, 581 Smith, C. R., 395–96 smog, 474 smoking, 472 social change, 630–32 social media, 456–57 social networks, 456–57 Social Security Act (1935), 315, 516, 520; financial strains for, 518; future payments under, 607; payments under, 500 Solow, Robert M.: on growth accounting, 543; on impact of computers, 17, 577, 579; Solow’s residual (total factor productivity; TFP), 16, 568–69 Solow’s residual (total factor productivity; TFP), 16, 568–69 Sombart, Werner, 503 sound: added to motion pictures, 200–201; See also phonograph; radio southern states: age of housing in, 99; agriculture in (1870), 55–56; blacks in (1870), 58–59; diet in, 40, 66; health in (1870), 52; homicide rates in, 241; housing for black tenant farmers in, 111–12; middle-class urban housing in, 46; retailing in, 77 Spanish flu pandemic (1918–19), 214–15 sports, 434 Spotify (website), 436 Sprague, Frank J., 146, 148 standardization of parts, 561–62 standard of living: in 1870, 27–30; after 1940, 485–87; changes in, 321; forecasting future of, 634–39; inequality in, 606; irregular advance of, 13–18; life expectancy and, 242–44; measurement of, 8–13, 208; revolution in (1870 - 1940), 316; tied to railroads, 137 Standard Oil, 313 Starr, Paul, 461, 477, 482 Star Wars (films), 420 State Farm (firm), 309 state governments: automobiles regulated by, 314; regulation of businesses by, 313, 629 steam boilers, 126 steam engines, 48–49; cable cars powered by, 146; commuter railroads powered by, 143; railroads powered by, 132–42, 168 Steckel, Richard, 83, 84 steel industry, 267–69 Stein, Rebecca, 208, 216, 219 stem cell therapy, 479 Stephenson, George, 568 stereoscopes, 198 Stevenson, Robert Louis, 141 stock exchanges, 582 stock options, 619 stove, 358 streetcars, 146–47, 149, 159; replaced by automobiles, 160 streetcar suburbs, 105, 107–8 street lights, 116–17 Streightoff, Frank, 45–46 streptomycin, 466 student loan debt, 512–13, 626, 648; delayed marriage tied to, 632 suburbs, 331, 333; after 1940, 363–70, 372; in nineteenth century, 104–5, 107–8 subways, 148 Sun City (Arizona), 517 supermarkets, 78–79, 334, 341–43 superstars, 618 Supreme Court (U.S.): on birth control, 486; on Standard Oil, 313 surgeons, 225 syphilis, 465 Taco Bell Restaurants, 344 Talbot Henry Fox, 197 tape recorders, 428 Tarbell, Ida, 280, 313 Target (firm), 349, 371, 617 tariffs, 554–55 Tavernise, Sabrina, 485 Tawney, R.
One of my current classes is a freshman seminar titled “Did Economics Win the Two World Wars?” which has provided the opportunity over 15 years to read extensively on the economics of the home front during World War II. This background helped lead me to the conclusion of Chapter 16, that the Great Depression and World War II taken together constitute the major explanation of the sharp jump in total factor productivity that occurred between the 1920s and 1950s. When it came time to write about the improving postwar quality of clothing, houses, household appliances, TV sets, and automobiles, I returned to my previous role as a critic of conventional measures of price indexes. Many of the estimates in Chapters 10 through 12 of changes in quality come from my 1990 book, The Measurement of Durable Goods Prices.
Ada Lovelace, Albert Einstein, Arthur Eddington, Claude Shannon: information theory, David Ricardo: comparative advantage, Douglas Hofstadter, frictionless, frictionless market, George Akerlof, Gödel, Escher, Bach, income inequality, income per capita, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, job satisfaction, John von Neumann, New Economic Geography, Norbert Wiener, p-value, phenotype, price mechanism, Richard Florida, Ronald Coase, Silicon Valley, Simon Kuznets, Skype, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, working-age population
GDP considers the production of goods and services within a country. GNP considers the goods and services produced by the citizens of a country, whether or not those goods are produced within the boundaries of the country. 5. Simon Kuznets, “Modern Economic Growth: Findings and Reflections,” American Economic Review 63, no. 3 (1973): 247–258. 6. Technically, total factor productivity is the residual or error term of the statistical model. Also, economists often refer to total factor productivity as technology, although this is a semantic deformation that is orthogonal to the definition of technology used by anyone who has ever developed a technology. In the language of economics, technology is the ability to do more—of anything—with the same cost. For inventors of technology, technology is the ability to do something completely new, which often involves the development of a new capacity.
., 152–154, 162 Study of Disadvantaged Youth, 113 Tacit knowledge, knowhow and, 78, 80 Tasmanians, 169–170 Teams, physical embodiment of knowledge/knowhow in, 73–74 Technological transfer, 143 Technologies, social networks and, 44 Tesla, Nikola, 59, 60, 62, 69 TFP. See Total factor productivity (TFP) Theory of dissipative structures, 28 Theory of social capital, 111 Thermodynamic potentials, 31–32 Thermodynamics of the universe, 25–41 Thoreau, Henry David, 43 Time, irreversibility of, 25–26 in statistical system, 37–40 Time travel, birth as, 3–5 Toothpaste, access to practical use of creativity and, 65–66 Torres Islanders, 170 Toshiba, 92 Total factor productivity (TFP), 147 TP-Link, 92 Transaction cost theory, 89–91, 93, 123 economic sociology and, 117–118 trust and reduction of, 117–118 Transition points breaks in knowhow carrying capacity of networks and, 167–168 in structures of networks, 107 Travel, cost of market interactions and rates of, 95, 96–99 Tree, information processing by, 35–36 Triadic closure, formation of social networks and, 114 Trust, 109, 111 developed vs. developing countries and, 124 familial networks and, 121–123 formation of large networks and, 116–117, 118 formation of large social networks and, 123 formation of professional networks and, 115–117 reduction of transaction costs and, 117–118 social networks and, 119–121, 123 Trust (Fukuyama), 115 Turing, Alan, xiv Tweet, information contained in, 13–14 Twitter, 13–14, 92, 101 Uncertainty principle, 39 United Nations, bureaucratic burden and, 103 United States formation of large networks in, 115, 116 migration of manufacturing to China from, 161–162 Universe both frozen and dynamic, 35 organization of, xii, xviii, 30–31 thermodynamics of, 25–41 University of Notre Dame, 109 Value, of knowledge and knowhow, 61–62 Venezuela, 60 Vidal, Marc, 110 von Braun, Wernher, 143 von Neumann, John, 14–15 Watt, James, 60, 146 Wealth augmentation of human capacity and, 68–69 economic development vs., 60–61 Weaver, Warren, xiv, xv–xvi Weill, David, 148 Westinghouse, George, 59 What Is Life?
Simon Kuznets, the Russian-born economist who fathered GDP, had finished creating the system of national accounts a couple of decades earlier, helping generate the economic metric that dominated the twentieth century.4 Solow’s model, however, did not measure up well when it was compared with empirical data. As Kuznets famously remarked in his Nobel Prize acceptance speech, “The earlier theory that underlies these measures defined the productive factors in a relatively narrow way, and left the rise in productivity as an unexplained gap, as a measure of our ignorance.”5 Kuznets’ “measure of our ignorance” is what we know technically as total factor productivity (TFP). TFP is how economists refer to the gaps between the economic output predicted by a model and the one observed in the empirical data. (This gap is interpreted as the amount of output that an economy can produce with a given endowment of inputs).6 This gap motivated economists to build on Solow’s work, and during the second half of the twentieth century economists advanced a plethora of new economic growth models that improved the model of Solow.7 The new models included new factors and new mathematical tools to address the process of factor production and accumulation.
The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan
3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, bitcoin, blockchain, Burning Man, call centre, collaborative consumption, collaborative economy, collective bargaining, corporate social responsibility, cryptocurrency, David Graeber, distributed ledger, employer provided health coverage, Erik Brynjolfsson, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, George Akerlof, gig economy, housing crisis, Howard Rheingold, Internet of things, inventory management, invisible hand, job automation, job-hopping, Kickstarter, knowledge worker, Kula ring, Lyft, megacity, minimum wage unemployment, moral hazard, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer lending, profit motive, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, universal basic income, Zipcar
In a series of recent talks, the economist Robert Gordon from Northwestern University has lamented the slowdown in US productivity growth and, in particular, the absence of clear evidence that the digital revolution of the last two decades has had a significant impact on the growth rates of total factor productivity. A now-famous slide from one of his recent articles is replicated in figure 5.2.21 Figure 5.2 Growth rate of total factor productivity for each ten-year period (i.e., for the decades ending 1900 to 2010). Total factor productivity (TFP) increases when on average, over time, more output is produced with the same inputs—physical capital, financial capital, and labor. An increase in productivity in turn increases the rate at which an economy grows. As platforms expand beyond increasing the “capital impact” of digital goods that Shirky spoke of, and move toward increasing, over the next couple of decades, the impact of labor, financial capital, and especially physical capital, this particular effect of digital technologies will quite possibly expand into much broader swaths of the economy, such as real estate, transportation, energy, healthcare, and labor of myriad forms.
Figure 0.2 Some sharing economy platforms and the venture capital they have raised as of December 2015. Figure 2.1 Sharing economy platforms across a few industries, 2015. Figure 2.2 Example of a Traity profile. Figure 3.1 A simple schematic of the MYB framework. Figure 3.2 A schematic of Gansky’s Meshy-ness Grid. Figure 3.3 Collaborative Economy Honeycomb. Figure 5.1 Vehicle usage in the United States (compiled from NHTS data as of 2009). Figure 5.2 Growth rate of total factor productivity for each ten-year period (i.e., for the decades ending 1900 to 2010). Figure 5.3 The geographic footprint of Airbnb listings in New York City. Figure 5.4 Lower-income neighborhoods in San Francisco are more active users of peer-to-peer car rental. Figure 6.1 The “de Blasio” button, part of 2015 Uber campaign to fight a proposed cap on providers. Figure 6.2 The many facets of trust in the sharing economy.
background screening, 50–51 contractor classification and, 160, 161 new social safety net and, 191 platform, 43–44 platform independence, 194 pricing, supply, and merchandizing, 194 TechCrunch, 11 Telang, Rahul, 112 Teran, Dan, 160 “There’s an Uber for Everything” (Fowler), 11 Thierer, Adam, 146 Thin sharing economies, 34 Threadless, 76 ThreeBirdNest, 107, 125, 177 3-D printing, 57–58 Thumbtack, 3, 6, 77, 164 Tiger Global Management, 25 TimeRepublik, 35 TimesFree, 43 Timms, Henry, 23, 136 Tincq, Benjamin, 23–25, 199 Tool libraries, 15 Total factor productivity (TFP), 116–117 Trade School, 43, 82 Traity, 64–65, 98 Transparency, mandated, 157 Transportation Network Companies (TNCs), 153 Trust, 4, 6, 12, 28, 35, 39, 47–50 brand-based, 144–146 history of (in world trade), 142–143 digitization of, 60–65 reputation and, 97–98 Tujia, 6, 121 Tumblr, 85 Turkle, Sherry, 45 Turo, 3, 80, 107, 177, 190 Tusk, Bradley, 136 Tuzhilin, Alexander, 112 Twitter, 29, 85 Uber, 2, 3, 6, 10, 19, 48, 154, 161, 186, 197, 203 class-action lawsuit and, 160 consumer behavior changed by “data Darwinism” and, 200–201 data science and, 157, 200–201 driver classifications, 159, 160, 176, 182, 183 driver protests, 200 entrepreneurial nature of, 192, 194 financing of, 25 gift economy aspects, 35 impact on traditional taxis, 122–123 local network effects, 119–120 as microbusiness, 77, 113 new social safety net and, 191 platform, 84 platform independence, 194 pricing, supply, and merchandizing, 194, 195 regulatory challenges, 135 social capital and, 62, 64 trust and, 145 UberPool, 66 “Uber Alles” (Surowecki), 19 Ulbricht, Ross, 86 Union Square Ventures (USV), 17, 23, 25, 85–86, 90, 157, 189 United States Conference of Mayors, 131, 147 Universal Avenue, 77 UnSYSTEM, 85–86 Upwork, 77, 162, 163.
Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed by Andrew Jackson (economist), Ben Dyson (economist)
bank run, banking crisis, banks create money, Basel III, Bretton Woods, call centre, capital controls, cashless society, central bank independence, credit crunch, David Graeber, debt deflation, double entry bookkeeping, eurozone crisis, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, Hyman Minsky, inflation targeting, informal economy, land reform, London Interbank Offered Rate, market bubble, market clearing, Martin Wolf, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Northern Rock, price stability, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, risk-adjusted returns, seigniorage, shareholder value, short selling, South Sea Bubble, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, unorthodox policies
For example, for a bakery the quantity of factor inputs would include ingredients, equipment (capital), the kitchen (land) as well as the people (labour) doing the baking. The second factor which contributes to potential output is ‘total factor productivity’ (TFP). TFP is the output in an economy over and above that which is accounted for by the quantity of inputs. Some think of it as the skill of those within the economy in combining inputs, or alternatively the level of technology in the economy. If we return to our example of the baker, then total factor productivity could measure the skill of the person doing the baking. It may also represent an improvement in the technology used by the baker. Putting the two together, Potential Output (Y*) is dependent on the ‘quantity of factor inputs’ and ‘total factor productivity’ so that: eq. 4.5 Potential output therefore measures the maximum level of output that an economy could achieve if everyone who wanted to work was working as efficiently as they could and every machine was running at full capacity.
As with money creation for consumer spending, this increases the purchasing power in the economy (the MI R portion of MR), but also increases the quantity of goods produced – the productive capacity of the economy. For example, investment includes money spent on research and development, which can lead to the discovery of new technology, inventions, and production techniques that increase the potential output of the economy beyond its current level (i.e. they increase ‘total factor productivity’). Credit creation for investment also allows firms to put in place new technologies or production techniques (i.e. increase the quantity of factor inputs). In a situation where the economy is operating below potential output (less than full employment, however it is defined) credit creation for productive purposes will increase the quantity of goods and services produced in the economy, without bidding up the price of any inputs (as they are currently idle).
Against Intellectual Monopoly by Michele Boldrin, David K. Levine
accounting loophole / creative accounting, agricultural Revolution, barriers to entry, cognitive bias, David Ricardo: comparative advantage, Dean Kamen, Donald Trump, double entry bookkeeping, en.wikipedia.org, Ernest Rutherford, experimental economics, financial innovation, 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, linear programming, market bubble, market design, mutually assured destruction, Nash equilibrium, new economy, open economy, pirate software, placebo effect, price discrimination, profit maximization, rent-seeking, Richard Stallman, Silicon Valley, Skype, slashdot, software patent, the market place, total factor productivity, trade liberalization, transaction costs, Y2K
To summarize, (1) before 1930, only some mechanical and chemical inventions related to agriculture could be patented. (2) In 1930, the Plant Patent Act offered patent protection to asexually reproduced plants. (3) In 1970, the Plant Variety Protection Act extended such protection to plants P1: KNP head margin: 1/2 gutter margin: 7/8 CUUS245-03 cuus245 978 0 521 87928 6 May 8, 2008 13:56 54 Against Intellectual Monopoly that are sexually reproduced. (4) Between 1980 and 1987, patent protection was extended to the products of biotechnology. One would expect this progressive extension of “intellectual property” protection to bring about a dramatic acceleration in useful innovation, at least since the early 1970s. One measure of useful innovation is what economists call total factor productivity (TFP): how much output (of food, for example) can be produced from given inputs (labor and land, for example). So, we might expect that the growth rate of TFP in the agricultural section accelerated in response to all this additional patentability. This is not the case, as the historical data clearly show: in the United States, agricultural TFP has been growing at a remarkably constant pace since the end of the Second World War.11 More precisely, the average growth rate from 1948 to 1970 was essentially the same as from 1970 to 1992 – that is, about 50 percent – and it seems to have marginally slowed down after that.
In just four years, between 1997 and 2001, patent applications exploded by a spectacular 50 percent.2 Part of the radioactive fallout from this explosion in patent applications was the increase in the membership of the “intellectual property” section of the American Bar Association, which went from 5,500 to almost 22,000.3 If patents beget prosperity and innovation, we might expect that this explosion in patenting coincided with a vast technological improvement. Of course, it did not. A common measure of technological improvement is the increase in total factor productivity (TFP) – as mentioned in the previous chapter, this measures how much additional output can be produced from a given combination of inputs by using those inputs better. Higher TFP means, for example, more and better cars from the same labor and using other factors such as metal and plastic. Rough-and-ready aggregate measures of TFP growth do not display a strong trend during the past fifty years.
See also copyright; 10, 158–159 ideas; ideas, copies of; intellectual intellectual monopoly unnecessary for, monopoly; non-compete clauses; 15 patents lack of under monopoly, 43, 151, 187 abolition of, 253–257 limited by patents, 4, 42, 49–50, 83–84 control of after sale, 8 in newspapers, 29 desirable features of world without, patent law as reflection of state of, 191 125–126 patents and reduction of, 83–84 duration of and market size, 175 and patents in software, 197 effect on world history, 263–264 possible under abolition of patents, 186 efforts to expand, 246–248 reasons for, 62–63 elimination of government from, risk in, 144–145, 174 252–253 and sharing of information, 136–137 goal of complete elimination, 264–265 social value of, 57 history of in Europe, 43–47 in software without patent protection, 16 as incentive, 6 in steam engines, See also steam engines levels of and R&D/BDP ratio, 196t studies of patents and, 192, 198t, and monopoly profits, 6 subsidies for, 260–261 vs. ordinary property, 123–124 and Total Factor Productivity (TFP), 54 overuse argument for, 177–179 innovators. See also first-mover advantage; in poor and developing countries, innovation; producers 247–248 and promise of large initial rents, 132–133 and R&D as fraction of GDP, 195–196 rents of compared to imitators, 133 reasons to abolish, 243–244 rewarding of, 6 recent vintage of, 15 insufficient rent, 135 reform of, 244–245, 257–259 intellectual colonization, 38 strengthening of, 192, 194–196, 197–198 intellectual imperialism, 81 suggestions for reform in, 248–262 intellectual monopoly.
Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette
Asian financial crisis, asset allocation, Berlin Wall, Bretton Woods, Brownian motion, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, quantitative trading / quantitative ﬁnance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve
Because its momentum has become so dependent on rising private borrowing and rising capital gains, the real economy of the United States is at the mercy of the stock market to an unusual extent. A crash would probably have a much larger effect on output and employment now than in the past . However, there is one key ingredient that has been left out of this analysis: productivity gains. Recall that labor productivity is deﬁned as real output per hour of work. Similarly, total factor productivity is deﬁned as real output per unit of all inputs. Total factor productivity reﬂects, in part, the overall efﬁciency with which inputs are transformed into outputs. It is often associated with technology, but it also reﬂects the impact of a host of other factors, like economies of scale, any unaccounted inputs, resource reallocations, and so on. When productivity grows, the growth of the economy (GDP) can be larger than the growth of the difference between the amounts pumped in (government spending and exports) and siphoned out (taxes and imports), because more output per input creates internally new wealth at the aggregate level.
As a consequence, it seems that Godley’s arguments do not apply directly. According to the ofﬁcial U.S. productivity statistics prepared by the U.S. Bureau of Labor Statistics, the average annual growth of total factor productivity was 2.7% between 1995 and 1999 (such a large growth rate implies that productivity would be 70% higher after 20 years). Clearly, the rate of productivity growth can have an enormous effect on real output and living standards. Productivity growth is a fundamental measure of economic health, and all of the major measures of aggregate labor and total factor productivity have recently shown improvements after long spells of sluggishness. If this improved performance continues, strong overall performance of real growth and low inﬂation may be sustained, although the short-run linkage of productivity to real income (and to output, after the very shortest period) is not as tight as some might expect .
What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale
affirmative action, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Bretton Woods, capital controls, Cass Sunstein, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial innovation, floating exchange rates, full employment, Gini coefficient, global reserve currency, global village, high net worth, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, invisible hand, Just-in-time delivery, Kenneth Rogoff, labour market flexibility, labour mobility, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, price stability, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, sovereign wealth fund, special drawing rights, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Washington Consensus, women in the workforce, yield curve
Businesses will have to pay more for entry-level workers and then work harder to retain them for longer because they will not be so easy to replace. The macroeconomic consequences of the Lewis turning point are large. Before the turning point, the capitalist economy grows mainly through an accumulation of factors—labor and capital. The efficiency with which these factors are used—in economists’ jargon, “total factor productivity,” or TFP—is secondary. After the turning point, sheer factor accumulation slows down, and efficiency or TFP gains must become the main driver of economic growth. The most important question now confronting Asian bulls such as ourselves is: Can Asia evolve from “growth through accumulation of factors” to “growth through productivity”? A Structural Rebalancing Toward Consumption The answer to the above question would require a full book, but regardless of the longer-term trend, one thing now seems obvious: A certain amount of economic rebalancing will occur naturally as households will grab a bigger share of national income, thus increasing their consumption power.
STOP-GO POLICIES: A sequence of alternations in official policy between trying to expand and contract effective demand, which was put in place in the United Kingdom in the 1950s and 1960s. SUBSISTENCE AGRICULTURE: Farming in which the bulk of a farmer’s output is devoted to the feeding of himself and his family, with little excess available to be sold to third parties. TECHNOCRAT: A bureaucrat who is intensively trained in engineering, economics, or a form of technology. TOTAL FACTOR PRODUCTIVITY: The portion of output that is not explained by the amount of input used in production. TRAGEDY OF THE COMMONS: A metaphor that illustrates that it is hard to coordinate and pay for public goods. Individuals have no incentive to limit consumption of a public good, and thus the public good is overwhelmed with demand. TRANCHE: A division or portion of something. TRANSSHIPMENT: The movement of cargo between ships or between two different modes of transport.
See Troubled Asset Relief Program (TARP) tar sands industry, xviii tax cuts, xvii; in Canada, xviii; in US, 5 taxes: Canada, 20; consumption-based taxes, 261–263; corporate taxes, 260; energy taxes, 260; excise taxes, 262; income taxes, 6, 260–262; payroll taxes, 261–262; sales taxes, 262; Tobin tax, xxvii, 250–255; turnover tax, 253–255; value-added tax (VAT), xxviii, 6, 43, 262 tax policy, xxvii–xxviii; Canada, 20, 26; Mexico, xix, 42–43; public debt and, 259–260; South Africa, 136; US, 6, 60, 260–261 technology: climate change and, 227; hydrocarbons and, 181–183 telecoms, 26 television, 298 Term Asset-Backed Securities Loan Facility (TALF), 277 testosterone, 290 Thailand, 7 Thaler, Richard, 291 Tobin, James, 250 Tobin tax, xxvii, 250–255 “too-big-too-fail” bailouts, 266, 267, 268 total factor productivity (TFP), 87 toxic securities, 238–239 transparency, 280–282 Trichet, Jean-Claude, 237–238 Triffin Dilemma, 252–253 Troubled Asset Relief Program (TARP), 3, 277 turnover tax, 253–255 Tversky, Amos, 289 Uganda, xxii, xxv, 126 unemployment rate, xvi, 4 United Kingdom: climate change policy of, xxvi; domestic demand in, 140; as financial capital, 244–245; fiscal deficit in, 257; fiscal policy of, 59, 71; government debt in, 160–161; Tobin tax and, 251–252 United Nations Development Programme (UNDP), 184 United Nations Framework Convention on Climate Change (UNFCCC), 220–222 United States: banking sector in, xxvii, 235–241; Canada and, 13–14, 24; climate change and, xxvi, 224–225; corporate sector in, xvi, 4, 8; economic recovery in, xvi–xvii, 3–11, 13–14, 65–66; as engine of world demand, 96, 140; environmental policies, 5, 27; financial system of, 157; fiscal deficit in, 10–11, 70, 257; fiscal policy of, xvii, 6, 10–11; fiscal stimulus program in, 4; government debt, 160; growth rate in, 5, 13–14; household sector in, 8; housing sector in, 9; industrial production in, 65; monetary policy of, 7–10; partisan politics in, 5–6; politics in, 269–270; productivity gains in, xvi, 4; public policy of, xvi–xvii; stimulus measures in, 4, 13; tax policy of, 6, 63, 260–261 Uribe, Alvaro, 33 Uruguay, 48, 49–50 US consumers, xv US dollar: alternatives to, 158; devaluation of, xvii, 7, 25; gold prices and, 173–174; as reserve currency, xxiv, 153–165; weakening, and commodity prices, 53 US government securities, 160 value-added tax (VAT), xxviii, 6, 43, 262 Van Alstyne, Marshal, 296 Venezuela, 48–49, 50, 51, 183 Volcker Rule, 267, 268 web-based communities, 296 Weber, Alex, 285 welfare expenditures, South Africa, 137–138 Wellink, Nout, 248 West Africa, xxii, 126–127 Westphalian system, 251 World Bank, 119, 154 world economy, 12–14; in 2010–2011, 94–95; recovery of, xv; trends underpinning, 78–80 yen, xxiv, 9, 97, 98, 167 yield curves, 82–83 Yoshida, Shigeru, 105 Zambia, 118, 125 ZANU-PF, 125 Zapatistas, 35 Zedillo, Ernesto, 35 Zimbabwe, xxii, 125 Zoellick, Robert, 169 “zombie” firms, 112 Zuma, Jacob, 125, 128, 134–137
The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee
2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, British Empire, business intelligence, business process, call centre, clean water, combinatorial explosion, computer age, computer vision, congestion charging, corporate governance, crowdsourcing, David Ricardo: comparative advantage, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, game design, global village, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, inventory management, James Watt: steam engine, Jeff Bezos, jimmy wales, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, Mars Rover, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, pattern recognition, payday loans, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Rodney Brooks, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen: Great Stagnation, Vernor Vinge, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K
A decade after the computer productivity paradox was popularized, Harvard’s Dale Jorgenson, working with Kevin Stiroh at the New York Federal Reserve Bank did a careful growth accounting and concluded, “A consensus has emerged that a large portion of the acceleration through 2000 can be traced to the sectors of the economy that produce information technology or use IT equipment and software most intensively.”12 But it’s not just the computer-producing sectors that are doing well. Kevin Stiroh of the New York Federal Reserve Bank found that industries that were heavier users of IT tended to be more productive throughout the 1990s. This pattern was even more evident in recent years, according to a careful study by Harvard’s Dale Jorgenson and two coauthors. They found that total factor productivity growth increased more between the 1990s and 2000s in IT-using industries, while it fell slightly in those sectors of the economy that did not use IT extensively.13 It’s important to note that the correlation between computers and productivity is not just evident at the industry level; it occurs at the level of individual firms as well. In work Erik did with Lorin Hitt of the University of Pennsylvania Wharton School, he found that firms that use more IT tend to have higher levels of productivity and faster productivity growth than their industry competitors.14 The first five years of the twenty-first century saw a renewed wave of innovation and investment, this time less focused on computer hardware and more focused on a diversified set of applications and process innovations.
” † That’s a good thing, because there are natural limits to how much we can increase inputs, especially labor. They’re subject to diminishing returns—no one is going to work more than twenty-four hours a day, or employ more than 100 percent of the labor force. In contrast, productivity growth reflects ability to innovate—it’s limited only by our imaginations. * Output divided by labor and physical capital inputs is often more ambitiously called ‘total factor productivity.’ However, that term can be a bit misleading, because there are other inputs to production. For instance, companies can make major investments in intangible organizational capital. The more kinds of inputs we are able to measure, the better we can account for overall output growth. As a result, the residual that we label “productivity” (not explained by growth of inputs) will get smaller.
Stiroh, “Information Technology and the U.S. Productivity Revival: What Do the Industry Data Say?,” American Economic Review 92, no. 5 (2002): 1559–76; and D. W. Jorgenson, M. S. Ho, and J. D. Samuels, “Information Technology and U.S. Productivity Growth: Evidence from a Prototype Industry Production Account,” Journal of Productivity Analysis, 36, no. 2 (2011): 159–75, especially table 5, which shows the total factor productivity growth was about ten times higher in IT-using sectors than in sectors that did not use IT extensively. 14. See E. Brynjolfsson and L. M. Hitt, “Computing Productivity: Firm-level Evidence,” Review of Economics and Statistics 85, no. 4 (2003): 793–808. Similarly, Stanford University’s Nicholas Bloom, Harvard University’s Rafaela Sadun, and the London School of Economics’ John Van Reenen found that American firms were particularly adept at implementing management practices that maximized the value of IT, and this lead to measurable productivity improvements, as documented.
Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen
algorithmic trading, Andrei Shleifer, asset allocation, backtesting, bank run, banking crisis, barriers to entry, Black-Scholes formula, Brownian motion, buy low sell high, capital asset pricing model, commodity trading advisor, conceptual framework, corporate governance, credit crunch, Credit Default Swap, currency peg, David Ricardo: comparative advantage, declining real wages, discounted cash flows, diversification, diversified portfolio, Emanuel Derman, equity premium, Eugene Fama: efficient market hypothesis, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, Gordon Gekko, implied volatility, index arbitrage, index fund, interest rate swap, late capitalism, law of one price, Long Term Capital Management, margin call, market clearing, market design, market friction, merger arbitrage, mortgage debt, New Journalism, paper trading, passive investing, price discovery process, price stability, purchasing power parity, quantitative easing, quantitative trading / quantitative ﬁnance, random walk, Renaissance Technologies, Richard Thaler, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, shareholder value, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, systematic trading, technology bubble, time value of money, total factor productivity, transaction costs, value at risk, Vanguard fund, yield curve, zero-coupon bond
., the gross domestic product (GDP), often referred to with the symbol Y. This output is produced by the country’s labor (L) and capital (K). The labor L refers to the number of people who work. A country’s physical capital K refers to its machines, plants, natural resources, computers, trucks, and infrastructure that are put to use. The output supplied can be thought of as using production function F: where TFP is the total factor productivity, which measures how good the technology is, how well educated and skillful the population is, and how efficiently capital and people are allocated to the most productive sectors. In the long run, that is all there is to it: Output is what the country can produce with the people and machines that it has. Prices and wages adjust to ensure that supply equals demand, and long-run GDP simply depends on the labor, capital, and production technology.
See also merger arbitrage Taylor principle, 189 Taylor rule, 7t, 189–90, 189n, 191, 194; monetary easing and, 195 tech bubble. See Internet bubble of late 1990s telecom mergers, 318–19 terminal value of a stock, 91 term loan, 118 term premium, 168, 249, 249n terms of trade, 199 term structure of interest rates, 242–43, 243f, 250; trading on the curvature of, 251–55, 252f, 253f, 254f; trading on the level of, 250; trading on the slope of, 250–51. See also yield curve TFP (total factor productivity), 192 thematic global macro traders, 12, 200 theta, 280, 280f Tiger Cub funds, 108 Tiger Management Corporation, 1, 108 time decay, in convertible bond arbitrage, 280, 280f time lags, in backtesting, 47 time series momentum strategies, 209–10; margin requirements for, 225; position sizing in, 213, 213n, 214, 219–20, 225; single-assets example (1985 to 2012), 212–14, 214–17f. See also managed futures investing time series momentum strategies, diversified: example of (1985 to 2012), 214, 218–19, 218t; explanation of returns from, 219–21, 220f; hypothetical fee for, 223, 224; managed futures fund returns and, 221, 222t, 223; versus S&P 500, 219, 219f, 220, 220f time series regression, 51–52, 53 TIPS (Treasury inflation-protected securities), 192 T-Mobile, 319 total factor productivity (TFP), 192 tracking error, 22, 30 tracking error risk, 30 track record of hedge fund, 38 trading rules: broad classes of, 47–48; defined, 47; implementation costs and, 64 trading signals, 47; multivariate regression on, 51, 53 trading strategies.
See also managed futures investing time series momentum strategies, diversified: example of (1985 to 2012), 214, 218–19, 218t; explanation of returns from, 219–21, 220f; hypothetical fee for, 223, 224; managed futures fund returns and, 221, 222t, 223; versus S&P 500, 219, 219f, 220, 220f time series regression, 51–52, 53 TIPS (Treasury inflation-protected securities), 192 T-Mobile, 319 total factor productivity (TFP), 192 tracking error, 22, 30 tracking error risk, 30 track record of hedge fund, 38 trading rules: broad classes of, 47–48; defined, 47; implementation costs and, 64 trading signals, 47; multivariate regression on, 51, 53 trading strategies. See hedge fund strategies transaction costs, 63–64; adjusting backtests for, 50; of arbitrage trades, 235; Asness on, 160, 163; estimating expected values of, 69–70; implementation shortfall and, 70–72; liquidity of securities and, 63; of managed futures strategies, 224–25; market liquidity risk and, 42–45, 63; as market makers’ profit, 154; measuring, 67–69; optimal trading in light of, 64–67, 66f; in portfolio optimization, 57; reduced by short-selling, 123; sources of, 63 “Travolta” collar deal, 302, 302f Treasury bonds: hedging interest-rate risk with, 283; on-the-run versus off-the-run, 13, 241, 257, 258f, 259; swaps and, 259, 260.
Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey
Admiral Zheng, agricultural Revolution, Albert Einstein, BRICs, British Empire, butterfly effect, Carmen Reinhart, clockwork universe, computer age, Corn Laws, dark matter, David Ricardo: comparative advantage, Donald Trump, Edward Lorenz: Chaos theory, European colonialism, experimental economics, financial innovation, Fractional reserve banking, full employment, George Akerlof, germ theory of disease, Gini coefficient, greed is good, Howard Zinn, income per capita, interchangeable parts, invention of agriculture, invention of air conditioning, invention of writing, invisible hand, Isaac Newton, James Watt: steam engine, John Maynard Keynes: technological unemployment, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, means of production, Naomi Klein, New Economic Geography, New Urbanism, purchasing power parity, rent-seeking, road to serfdom, Robert Gordon, Ronald Coase, Ronald Reagan, Scientific racism, Scramble for Africa, Shenzhen was a fishing village, Simon Kuznets, Slavoj Žižek, spinning jenny, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, tulip mania, union organizing, Upton Sinclair, urban renewal, V2 rocket, very high income, working poor, World Values Survey, Yogi Berra
But the “as much” and “not . . . enough” are nothing like the 20 to 30 times gap of real income per head between poor India and rich England nowadays that he claims to be explaining. True, Rodolfo Manuelli and Ananth Seshadri have argued somewhat plausibly, in line with dogma from the (usually empirically vacuous) claims of growth theory, that quite large gaps can be explained by a small difference in efficiency (strictly speaking, what economists call “total factor productivity”). The small difference is supposed to make for greater returns to education and training, and still greater accumulations of human capital in rich countries.27 Maybe. The trouble is that their model implies that a small change in the ethical evaluation of education at any time would have had the same strong effects, which it did not for instance in early Modern Europe. Shakespeare’s and Molière’s contemporaries benefited from a much improved system of education in England and France, as the historian George Huppert has shown, and the merchant academies in both countries were vigorous among the Protestants.
“The rise of our standard of living,” wrote Hayek, “is due at least as much to an increase in knowledge” as to accumulation of capital.3 The great economist Simon Kuznets, notes his student Richard Easterlin, believed that “the ‘givens’ of economics — technology, tastes, and institutions — are the key actors in historical change, and hence most economic theory has, at best, only limited relevance to understanding long-term change.”4 Mokyr and Goldstone and Jacob and Tunzelmann and I and some others would go one step further, to ideas. It was ideas of steam engines and light bulbs and computers that made Northwestern Europe and then much of the rest of the world rich, not new accumulations from saving. As Nicholas Crafts wrote: “The hallmark of the Industrial Revolution was the emergence of a society that was capable of sustained technological progress and faster total factor productivity growth.”5 The new society was one of innovation. **** Many scholars with whom I agree on many other points, however, think that it was in particular the ideas of the Scientific Revolution that caused the innovation.6 Lay people (not the scholars) speak loosely in a portmanteau phrase of “science-and-technology” making us better off. The phrase makes it possible to ignore the political and social change, the bourgeois Revaluation, that put the science to work.
Warren Nutter and Alexander Gerschenkron and Abram Bergson, stood in the 1950s and 1960s against the prevailing elite opinion that socialism in Eastern Europe had successfully forced fast growth superior to what capitalism would have achieved there.58It was later discovered that after the heroic age of the 1930s the Soviet growth rate fell steadily, reaching such low levels in the 1980s that the growth of productivity relative to inputs was negative.59 Indeed, in 1995 the World Bank economists William Easterly and Stanley Fischer reckoned that only in the 1950s was Soviet total factor productivity greater than zero.60 The capital input in Soviet ideology was treated as a free good, and consequently was overused, in “extensive growth.” Build giant factories and full speed ahead. 368 Nonetheless as late as 1984 John Kenneth Galbraith was writing that “the Soviet system has made great material progress in recent years is evident both from the statistics and from the general urban scene. . . .
The Entrepreneurial State: Debunking Public vs. Private Sector Myths by Mariana Mazzucato
Apple II, banking crisis, barriers to entry, Bretton Woods, California gold rush, call centre, carbon footprint, Carmen Reinhart, cleantech, computer age, credit crunch, David Ricardo: comparative advantage, demand response, deskilling, energy security, energy transition, eurozone crisis, everywhere but in the productivity statistics, Financial Instability Hypothesis, full employment, Growth in a Time of Debt, Hyman Minsky, incomplete markets, information retrieval, invisible hand, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, natural language processing, new economy, offshore financial centre, popular electronics, profit maximization, Ralph Nader, renewable energy credits, rent-seeking, ride hailing / ride sharing, risk tolerance, shareholder value, Silicon Valley, Silicon Valley ideology, smart grid, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, total factor productivity, trickle-down economics, Washington Consensus, William Shockley: the traitorous eight
Figure 13 Origins of popular Apple products Figure 14 Global new investment in renewable energy (US$, billions) Figure 15 Government energy R&D spend as % GDP in 13 countries, 2007 Figure 16 Subsectors of venture capital within clean energy Figure 17 The global market for solar and wind power (US$, billions), 2000–2011 LIST OF ACRONYMS AEIC American Energy Innovation Council ARPA-E Advanced Research Projects Agency – Energy (US Department of Energy) ARRA American Recovery and Reinvestment Act ATP Advanced Technology Program BIS Department of Business, Innovation and Skills (UK) BNDES Banco Nacional de Desenvolvimento Econômico e Social (Brazilian Development Bank) CBI Confederation of British Industries CBO Congressional Budget Office (UK) CERN European Organization for Nuclear Research, Geneva DARPA Defense Advanced Research Projects Agency (USA) DECC Department of Energy and Climate Change (UK) DEMOS UK think tank DoD US Department of Defense DoE US Department of Energy DRAM Dynamic random-access memory EC European Commission, Brussels EPA Environmental Protection Agency (USA) EPRI Electric Power Research Institute FDA Food and Drug Administration (USA) FINNOV FINNOV EC FP7 project (www.finnov-fp7.eu) FIT Feed-in tariff GDP Gross domestic product GE General Electric GMR Giant magnetoresistance GPS Global positioning system GPT General purpose technology GW Gigawatt GWEC Global Wind Energy Council HM Treasury Her Majesty’s Treasury (UK) IP Intellectual property IPO Initial public offering on stock market IPR Intellectual property rights MIT Massachusetts Institute of Technology MITI Ministry of International Trade and Industry (Japan) MRC Medical Research Council (UK) MW Megawatt NAS National Academy of Sciences (USA) NBER National Bureau of Economic Research (USA, non-profit) NESTA National Endowment for Science, Technology and the Arts (UK) NIH National Institutes of Health (USA) NIST National Institute of Standards and Technology (USA) NME New molecular entity NNI National Nanotechnology Initiative (USA) NSF National Science Foundation (USA) NYT New York Times (USA) OECD Organisation for Economic Co-operation and Development OSTP Office of Science and Technology Policy (USA) OTA Office of Technology Assessment (USA) OTP Office of Tax Policy (USA) PhRMA Pharmaceutical Research and Manufacturers of America (trade association) PIRC Public Interest Research Centre (USA, non-profit) PV Photovoltaic R&D Research and development S&P 500 Standard & Poor’s (S&P) stock market index, based on the market capitalizations of 500 leading companies publicly traded in the US SBIC Small Business Investment Company (USA) SBIR Small Business Innovation Research (USA) SITRA Suomen itsenäisyyden juhlarahasto (Finnish Innovation Fund) SMEs Small and medium enterprises SRI Stanford Research Institute (USA, non-profit) SST (American) Supersonic Transport project TFT Thin-film transistor TFP Total factor productivity TW Terawatt VC Venture capital WIPO World Intellectual Property Organization ACKNOWLEDGEMENTS The book could not have been written without the intellectual stimulus and hard work of many colleagues and friends. First and foremost were inspirational exchanges with two of the world’s best economic historians: Carlota Perez and Bill Lazonick. Carlota’s work, and our constant discussions, on the role of the State in different phases of technological revolutions, has challenged me to think hard about the changing role of different types of ‘capital’ – finance and production – over time.
Most of the effect is from age: young firms (and business start-ups) contribute substantially to both gross and net job creation. Productivity should be the focus, and small firms are often less productive than large firms. Indeed recent evidence has suggested that some economies that have favoured small firms, such as India, have in fact performed worse. Hsieh and Klenow (2009), for example, suggest that 40–60 per cent of the total factor productivity (TFP) difference between India and the United States is due to misallocation of output to too many small and low-productivity SMEs in India. As most small start-up firms fail, or are incapable of growing beyond the stage of having a sole owner-operator, targeting assistance to them through grants, soft loans or tax breaks will necessarily involve a high degree of waste. While this waste is a necessary gamble in the innovation process (Janeway 2012), it is important to at least guide the funding process with what we know about ‘high growth’ innovative firms rather than some folkloristic notion of the value of SMEs as an aggregate category – which actually means very little.
The Impulse Society: America in the Age of Instant Gratification by Paul Roberts
2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, accounting loophole / creative accounting, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, asset allocation, business process, Cass Sunstein, centre right, choice architecture, collateralized debt obligation, collective bargaining, corporate governance, corporate social responsibility, crony capitalism, David Brooks, delayed gratification, double helix, factory automation, financial deregulation, financial innovation, full employment, game design, greed is good, If something cannot go on forever, it will stop, impulse control, income inequality, inflation targeting, invisible hand, job automation, Joseph Schumpeter, knowledge worker, late fees, Long Term Capital Management, loss aversion, low skilled workers, new economy, Nicholas Carr, obamacare, Occupy movement, oil shale / tar sands, performance metric, postindustrial economy, profit maximization, Report Card for America’s Infrastructure, reshoring, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, technoutopianism, the built environment, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, Walter Mischel, winner-take-all economy
Doi: http://www.theatlantic.com/past/docs/issues/83may/eastrbrk.htm. Edsall, Thomas B. “The Obamacare Crisis.” New York Times, Nov. 19, 2013. Doi: http://www.nytimes.com/2013/11/20/opinion/edsall-the-obamacare-crisis.html?pagewanted=1&_r=2&smid=tw-share&&pagewanted=all. Field, Alexander J. “The Impact of the Second World War on U.S. Productivity Growth.” Economic History Review 61, no. 3 (2008): 677. ———. “The Origins of U.S. Total Factor Productivity Growth in the Golden Age.” Cleometrica 1, no. 1 (April 2007): 19, 20. Fisher, Richard. “Ending ‘Too Big to Fail’: A Proposal for Reform before It’s Too Late (with Reference to Patrick Henry, Complexity and Reality).” Remarks by the president of the Federal Reserve Bank of Dallas to the Committee for the Republic. Washington, DC, January 16, 2013. Accessed December 1, 2013, Doi: http://www.dallasfed.org/news/speeches/fisher/2013/fs130116.cfm.
Recent Social Trends in the United States: Report on the President’s Research Committee on Social Trends, with a Foreword by Herbert Hoover (New York: McGraw-Hill, 1933), pp. 866–67, at http://archive.org/stream/recentsocialtren02presrich#page/867/mode/1up. 10. Franklin D. Roosevelt Inaugural Address, March 4, 1933, available at History Matters: The U.S. Survey Course on the Web, http://historymatters.gmu.edu/d/5057/. 11. Alexander J. Field, “The Origins of U.S. Total Factor Productivity Growth in the Golden Age,” Cleometrica 1, no. 1 (April 2007): 19, 20. 12. Alexander J. Field, “The Impact of the Second World War on U.S. Productivity Growth,” Economic History Review 61, no. 3 (2008): 677. 13. Gary Nash, “A Resilient People, 1945–2005,” in Voices of the American People, Volume 1 (New York: Pearson, 2005), p. 865. 14. “US Real GDP by Year,” http://www.multpl.com/us-gdp-inflation-adjusted/table. 15.
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, clean water, collective bargaining, colonial rule, conceptual framework, Copley Medal, corporate governance, credit crunch, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, Deng Xiaoping, discovery of the americas, Dissolution of the Soviet Union, European colonialism, Fall of the Berlin Wall, Francisco Pizarro, full employment, 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, land reform, land tenure, Louis Pasteur, Mahatma Gandhi, market bubble, Martin Wolf, means of production, megacity, Mikhail Gorbachev, new economy, probability theory / Blaise Pascal / Pierre de Fermat, profit maximization, purchasing power parity, quantitative easing, rent-seeking, reserve currency, 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, 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, transatlantic slave trade, upwardly mobile, uranium enrichment, wage slave, Washington Consensus, women in the workforce, World Values Survey
We also tried to dye them but it was also very difficult to get your hands on dye … They were so popular that people snatched them from our hands.106 The critical point was that the success of Western consumer industries was now matched, mirror-like, by the miserable underperformance of their Soviet counterparts. Not only was growth now vanishingly low after 1973 (below 1 per cent); total factor productivity was declining. Some state enterprises were actually subtracting value from the raw materials they processed. Just as Hayek had warned, in the absence of meaningful prices, resources were misallocated; corrupt officials restricted output to maximize their own illicit gains; workers pretended to work and, in return, managers pretended to pay them. Not only the industrial capital stock but also the human capital stock was not being maintained; nuclear power stations crumbled; alcoholism soared.
., ‘Wages, Prices, and Living Standards’. 37. Mazzini, ‘To the Italians’. 38. Bismarck, Reminiscences, Vol. I, ch. 13. 39. Schorske, Fin-de-Siècle Vienna. 40. H. C. Martin, ‘Singer Memories’: http://www.singermemories.com/index.html. 41. Maddison, World Economy, tables B-10, B-21. 42. Kennedy, Rise and Fall, p. 190. 43. Bairoch, ‘International Industrialization Levels’. 44. Broadberry, ‘Total Factor Productivity’. 45. Fordham, ‘ “Revisionism” Reconsidered’. 46. Clark and Feenstra, ‘Technology in the Great Divergence’, table 8. 47. Dyos and Aldcroft, British Transport, table 4. 48. Maurer and Yu, Big Ditch, p. 145. 49. Clark and Feenstra, ‘Technology in the Great Divergence’. 50. Clark, Farewell to Alms, table 15.3. 51. McKeown, ‘Global Migration’, p. 156. 52. Carter et al.
The Fourth Industrial Revolution by Klaus Schwab
3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, Buckminster Fuller, call centre, clean water, collaborative consumption, conceptual framework, continuous integration, crowdsourcing, disintermediation, distributed ledger, Edward Snowden, Elon Musk, epigenetics, Erik Brynjolfsson, future of work, global value chain, Google Glasses, income inequality, Internet Archive, Internet of things, invention of the steam engine, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, life extension, Lyft, megacity, meta analysis, meta-analysis, more computing power than Apollo, mutually assured destruction, Narrative Science, Network effects, Nicholas Carr, personalized medicine, precariat, precision agriculture, Productivity paradox, race to the bottom, randomized controlled trial, reshoring, RFID, rising living standards, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, smart cities, smart contracts, software as a service, Stephen Hawking, Steve Jobs, Steven Levy, Stuxnet, The Spirit Level, total factor productivity, transaction costs, Uber and Lyft, Watson beat the top human players on Jeopardy!, WikiLeaks, winner-take-all economy, women in the workforce, working-age population, Y Combinator, Zipcar
As we live in a society where more than a quarter of the children born today in advanced economies are expected to live to 100, we will have to rethink issues such the working age population, retirement and individual life-planning.16 The difficulty that many countries are showing in attempting to discuss these issues is just a further sign of how we are not prepared to adequately and proactively recognize the forces of change. Productivity Over the past decade, productivity around the world (whether measured as labour productivity or total-factor productivity (TFP)) has remained sluggish, despite the exponential growth in technological progress and investments in innovation.17 This most recent incarnation of the productivity paradox – the perceived failure of technological innovation to result in higher levels of productivity – is one of today’s great economic enigmas that predates the onset of the Great Recession, and for which there is no satisfactory explanation.
accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, capital controls, corporate governance, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, Y2K
Clothaire, 146 Reagan, Ronald, 8 recessions, political purpose, 182 regionahzation, 159 Reich, Robert, 71,74 retail trade, 64-66 Riflcin, Jeremy, 68 Robinson, Joan, 235 Robinson, William, 175-176 Rockefeller, David, 232 Rubin, Robert, 218 ruling class, global, 174—178 Russell, Marta, 100 sad militants, 185 Sakakibara, Eisuke, 228 Index Sale, Kirkpatrick, 168 Salomon Smith Barney, 197 scale, economic, 167-168 Scandinavia, very wired, 6 Schama, Simon, 23 Schrager, Ian, 233 Schwab, Klaus, 175-178 Seattle, anti-WTO protests, 32,160 sex, Gilder on, 11—13 sexual preference and pay, 100 sex discrimination, 94—101 international comparisons, 101—102 Shakespeare, 188 shareholder activism, 214 Shiller, Robert, 6-8,25-27,194 Shiva, Vandana, 162,168-169 Shorrock.Tim, 171 Sichel, Daniel, 57 Silicon Valley, income distribution, 105 Silicon Valley Toxics CoaUtion, 232 Sinai, Allen, 4 Singhne, Peter, 18 Skilhng, Jeffirey, 33 skills, job, 73-77 returns to, 86—87 skin shade and pay, 99 Smith, Adam, 109-110, 163,173 Smith, Patti, 183 Smith, Paul, 6 social democracy, 139-143,182 social movements, new, 179 Social Security, 227 Solow, Robert, 3 sovereignty, 170 space, shrinkage of, 146 speedup, 215, 229 Spencer, Herbert, 37 state, retreat of, 150-152 Stigbtz, Joseph, 193 Stiroh,Kevin,51,57 stock market 1990s bubble, history, 188-189 analysts' role, 194—200 anomalies, 194 book value, defined, 233 brokers' fees and salaries, 201-202 and corporate profitability, 203—204 and corporate restructuring, 214-215 economics of, 187-188,192-195 and evolution of the corporation, 212-217 excess volatiHty, 194 happiness of investors, 212 and managers' pay, 216—217 and pop culture, 187 psychology of, 25—26 trading frequency and returns, 190—191, 234,239 wisdom of, 35 see also finance stock options, 216—217 and wealth distribution, 126—127 stock ownership, distribution of, 24, 122-124 stress, management by, 25 stylish shoes, 165 Summers, Lawrence, 5,231 surveillance, 68,77—78 Survey of Consumer Finances, 118—119 Survey of Income and Program Participation, 118 symbolic analysts, 71,72 synergy vs. conflict, 197-200 Taylorism, 78 technology not evil, 2 and social movements, 179 telecommunications industry, 196—198 telegraph, 7 telemarketers, 68 TheGlobe.com, 189 269 TheStreet.com, 31 dme, acceleration of, 146 Tocqueville, Alexis de, 82,139 Tompkins, Doug, 161-162 total factor productivity. See Productivity transnational capitalist class, 175—176 transnational corporations. See multinational corporations transparency, 223 Triplett, Jack, 51,55 tulip-bulb mania, 23 unemployment, political uses of, 206—207 U.S. Agency for International Development, 163 U.S. Census Bureau, 88-89 utopianism. New Economy, 37-38, 229-230 venture capitalists, 201—202 Verizon, 38 Vietnam war, 182,205 Volcker, Paul, 208-209 voting turnout by income level, 81 wages.
The Rise of the Network Society by Manuel Castells
Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, borderless world, British Empire, capital controls, complexity theory, computer age, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, disintermediation, double helix, Douglas Engelbart, edge city, experimental subject, financial deregulation, financial independence, floating exchange rates, future of work, global village, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, James Watt: steam engine, job automation, job-hopping, knowledge economy, knowledge worker, labor-force participation, labour market flexibility, labour mobility, laissez-faire capitalism, low skilled workers, manufacturing employment, Marshall McLuhan, means of production, megacity, Menlo Park, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, planetary scale, popular electronics, post-industrial society, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Robert Gordon, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Ted Nelson, the built environment, the medium is the message, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl
g Mainland business sector (i.e. excluding shipping as well as crude petroleum and gas extraction). Overall, there was a moderate rate of growth of productivity for the 1870–1950 period (never surpassing 2 percent for any country or subperiod, except for Canada), a high rate of growth during the 1950–73 period (always over 2 percent, except for the UK) with Japan leading the charge; and a low growth rate in 1973–93 (very low for the US and Canada), always below 2 percent in total factor productivity, except for Italy in the 1970s. Even if we account for the specificity of some countries, what appears clearly is that we observe a downward trend of productivity growth starting roughly around the same time that the information technology revolution took shape in the early 1970s. Highest growth rates of productivity took place during the 1950–73 period when industrial technological innovations which came together as a system during the Second World War were woven into a dynamic model of economic growth.
But by the early 1970s, the productivity potential of these technologies seemed to be exhausted, and new information technologies did not appear to reverse the productivity slowdown for the next two decades.15 Indeed, in the United States, the famous “residual”, after accounting for about 1.5 points of annual productivity growth during the 1960s, made no contribution at all in 1972–92.16 In a comparative perspective, calculations by the reliable Centre d’Etudes Prospectives et d’Informations Internationales17 show a general reduction of total factor productivity growth for the main market economies during the 1970s and 1980s. Even for Japan, the role of capital in productivity growth was more important than that of multifactor productivity for the 1973–90 period. This decline was particularly marked in all countries for service activities, where new information-processing devices could be thought to have increased productivity, if the relationship between technology and productivity were simple and direct.
The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly
Andrei Shleifer, business climate, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, financial repression, Gini coefficient, Hernando de Soto, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, large denomination, manufacturing employment, Network effects, New Urbanism, open economy, Productivity paradox, purchasing power parity, rent-seeking, Ronald Reagan, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War
Belser 2000. 13. United Nations Development Programs Human Development Report 1996. 14. Lucas 1990. I use a capital share of0.4 as Lucas did. The ratio of capital stocks would have to be (15)"(1/.4), which is 871. 15. Pritchett 199%. 16. Baumol1986. 17. De Long 1988. 18. See also the study by Pack and Page 1994, which also gave an important role to capital accumulation and showed a fairly low total factor productivity growth estimate for Singapore. 19. Klenow and Rodriguez-Clare 1997 20. Easterly and Levine 2000. 21. Data from King and Levine 1994. 22. Devarajan, Easterly, and Pack 1999. 23. Hsieh 1999 24. World Bank, 1995a, p. 35. Notes 298 Intermezzo: Dry Cornstalks 1. Tremblay. and Capon 1988, pp. 197-198. Chapter 4 1. From Bulletin: The MajovProject Caribbean 1990, p. 9. in the Field of Education in Latin Arnevica and the 2.
Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato
3D printing, balance sheet recession, banking crisis, Bernie Sanders, Bretton Woods, business climate, Carmen Reinhart, central bank independence, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, forward guidance, full employment, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, Martin Wolf, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, paradox of thrift, 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, Steve Jobs, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, trickle-down economics, universal basic income, very high income
Similar problems with measurement and analysis have led many economists and policy-makers to see a conflict between growth potential and environmental concerns. Orthodox economics has long struggled to deal appropriately with the role of natural resources in the economy. Decades of low and decreasing costs of energy and raw materials made it seem reasonable to ignore their impact, and thus both the concepts of output per hour and of the ambitiously named ‘total factor productivity’ fail to measure the productivity of resources. Nor have many attempts been made to incorporate the role of innovation in resource use. In 1956, Solow proposed that the nature of technology should be recognised as being wider than just the contributions of capital and labour, measuring its total contribution as the unexplained ‘residual’ after those had been taken into account.4 Half a century later, with environmental and energy issues becoming pressing concerns, Ayers and colleagues suggested introducing the efficiency of energy into the models.5 But such approaches do not go very far in analysing the role of concrete innovations in productivity and growth, much less in guiding growth and employment policy.
3D printing, Airbnb, Asian financial crisis, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, cleantech, collaborative consumption, collapse of Lehman Brothers, collective bargaining, corporate governance, credit crunch, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, debt deflation, Diane Coyle, Downton Abbey, Edward Glaeser, Elon Musk, en.wikipedia.org, energy transition, eurozone crisis, fear of failure, financial deregulation, first-past-the-post, forward guidance, full employment, Gini coefficient, global supply chain, Growth in a Time of Debt, hiring and firing, hydraulic fracturing, Hyman Minsky, Hyperloop, immigration reform, income inequality, interest rate derivative, Irish property bubble, James Dyson, Jane Jacobs, job satisfaction, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, liquidity trap, margin call, Martin Wolf, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, North Sea oil, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, open economy, price stability, private sector deleveraging, pushing on a string, quantitative easing, Richard Florida, rising living standards, risk-adjusted returns, Robert Gordon, savings glut, school vouchers, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, smart meter, software patent, sovereign wealth fund, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, working-age population, Zipcar
Their modest agenda: to revolutionise the economy and society, everything from education, entertainment and e-commerce to design, drones and big data. Where do new ideas come from – and how do they generate economic growth? These are perhaps the most important questions in economics, yet orthodox theory has very little to say about them. Statistically, most growth in advanced economies is accounted for by “total factor productivity growth” – generating more output for a given input of capital and labour – but that is just a black box. In effect, new technologies are assumed to fall like manna from heaven. A slightly more sophisticated analysis emphasises the importance of investment in both skills and research and development (R&D). That view is reflected in European policymaking. In the EU’s ten-year plan for delivering “smart, sustainable and inclusive growth”, the Europe 2020 programme, the two targets for delivering smart growth are raising the proportion of Europeans who graduate from university to 40 per cent and boosting investment in R&D to 3 per cent of GDP.589 But while investment in skills and research can be important, they are merely inputs to innovation.
Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs, Arthur A. Ekirch, Jr.
Alistair Cooke, clean water, collective bargaining, credit crunch, declining real wages, endowment effect, fiat currency, full employment, hiring and firing, income per capita, Joseph Schumpeter, laissez-faire capitalism, manufacturing employment, means of production, minimum wage unemployment, Plutocrats, plutocrats, post-industrial society, price discrimination, profit motive, rent control, rent-seeking, Richard Thaler, road to serfdom, Ronald Reagan, 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
Edwin Mansfield, The Economics of Technological Change (New York: Norton, 1968); Nathan Rosenberg, ed., The Economics of Technological Change: Selected Readings (Harmondsworth, Middlesex: Penguin, 1971); idem, Perspectives on Technology (New York: Cambridge University Press, 1976). 33. On technological change as a residual, see M. Ishaq Nadiri, "Some Approaches to the Theory and Measurement of Total Factor Productivity: A Survey," Journal of Economic Literature 8 (Dec. 1970): 1137-1177. On ideological change as a residual, see Douglass C. North, "Structure and Performance: The Task of Economic History," ibid. 16 (Sept. 1978): 973; Joseph P. Kalt and M. A. Zupan, "Capture and Ideology in the Economic Theory of Politics," American Economic Review 74 (June 1984): 291-295. 34. Karl R. Popper, The Poverty of Historicism (New York: Harper Torchbooks, 1964); Ronald A.
Andrei Shleifer, Atahualpa, barriers to entry, Berlin Wall, British Empire, business climate, Cass Sunstein, central bank independence, collective bargaining, colonial rule, conceptual framework, 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, labour market flexibility, land reform, land tenure, Monroe Doctrine, moral hazard, New Urbanism, oil shock, open economy, 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
Burgeoning ﬁscal deﬁcits, attempts to monetize deﬁcits through growth in money supplies, hyperinﬂation, and overvalued exchange rates in Mexico, Brazil, Argentina, Peru, and other countries set the stage for the debt crisis of the 1980s and the subsequent drop in real growth rates throughout Latin America. The United States, on the other hand, controlled the inﬂationary spiral set off by the oil crisis relatively quickly in the early 1980s and put into place a series of liberalizing economic policies that laid the groundwork for two decades of almost uninterrupted growth in per capita income. Indeed, growth in total factor productivity, which had been declining through much of the postwar period, began an upward trend in the late 1990s as a series of innovations in information and communications technology began to take root. The 1990s and early years of the twenty-ﬁrst century brought to most Latin American countries a return to economic orthodoxy and stable macroeconomic indicators. This set the stage in a number of countries for a return to growth, though not to an appreciable closing of the gap with the United States, due in part to the latter’s relatively good economic performance.
3D printing, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, 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, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labor-force participation, Malacca Straits, Mark Zuckerberg, market bubble, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Peter Thiel, pets.com, Plutocrats, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, working-age population
The aim: a practical person’s guide for spotting the rise and fall of nations, in real time. * Global GDP growth is measured here in market-determined exchange-rate terms. † This figure refers to potential growth, which we calculate by taking the sum of productivity growth and employment growth from the Conference Board Total Economy Database. ‡ Technically, productivity growth is the sum of increases in labor quality, capital deepening, and total factor productivity. 1 PEOPLE MATTER Is the talent pool growing? AT FIRST I DIDN’T THINK THERE WAS MUCH MYSTERY TO the lackluster global recovery. After 2008, when the United States fell into a deep recession and the world soon followed, economists argued that the recovery would be painfully slow because this was a “systemic crisis,” not an ordinary recession, and I was persuaded. Their research showed that following a crisis that devastates the financial system, an economy typically experiences weak growth for four to five years even after the end of the recession.
Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, California gold rush, 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, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, haute couture, illegal immigration, income inequality, invention of the telephone, invention of the wheel, invisible hand, John Nash: game theory, John von Neumann, Kevin Kelly, knowledge economy, labour market flexibility, late capitalism, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, pets.com, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Washington Consensus, women in the workforce, yield curve, yield management
The property of an allocation of resources in which no one can be made better off without making someone else worse off A change that makes some people better off and no one worse off A dynamic process in which behavior is affected indefinitely by initial conditions. The initial sale of a good or service (especially of a security). Labor productivity in output per unit oflabor (per head, per hour worked). Total factor productivity is output per unit of all inputs (including, in particular, capital inputs). Productivity without qualification usually (but not always) refers to labor productivity. The rate of exchange between different currencies at which a representative bundle of goods would cost the same in each country or currency zone. The right to sell a security at a fixed price at a future date, even if its market price has subsequently fallen.
Hopes and Prospects by Noam Chomsky
Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, British Empire, capital controls, colonial rule, corporate personhood, Credit Default Swap, cuban missile crisis, David Ricardo: comparative advantage, deskilling, en.wikipedia.org, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, Howard Zinn, Hyman Minsky, invisible hand, market fundamentalism, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, moral hazard, new economy, nuremberg principles, open borders, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ralph Waldo Emerson, RAND corporation, Ronald Reagan, structural adjustment programs, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, trade liberalization, uranium enrichment, Washington Consensus
To mention one, international economist David Felix shows that trade growth slowed in the neoliberal period in the rich (G-7) societies (with the sole exception of the United States, which had been well below the G-7 average). The same is true of growth of gross fixed investment. Capital flow of course sharply increased, but “the flows have been transferring ownership but little real resources on balance.” Furthermore, “the growth of labor, capital, and total factor productivity have all fallen precipitously since the 1960s in the OECD [Organisation for Economic Co-operation and Development] countries.”11 In brief, the twenty-five years of economic sovereignty, state-coordinated economic growth, and capital controls under the Bretton Woods system led to better social and economic results than the following twenty-five years of neoliberalism, by just about every relevant measure, and by significant margins.
The Relentless Revolution: A History of Capitalism by Joyce Appleby
1919 Motor Transport Corps convoy, agricultural Revolution, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, collateralized debt obligation, collective bargaining, Columbian Exchange, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, Doha Development Round, double entry bookkeeping, epigenetics, equal pay for equal work, European colonialism, facts on the ground, failed state, Firefox, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gordon Gekko, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, knowledge economy, land reform, Livingstone, I presume, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, moral hazard, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transatlantic slave trade, transcontinental railway, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War
David Khoudour-Casteras, “The Impact of Bismarck’s Social Legislation on German Emigration before World War I,” eScholarship Repository, University of California; http://repositories.edlib.org/berkely.econ211/spring2005/, 4–45; Trebilcock, Industrialization of Continental Powers, 65–77; Hubert Kiesewetter, Industrielle Revolution in Deutschland, 1815–1914, Neue Historische Bibliothek (Frankfurt, 1989), 90. 14. Thomas Weiss, “U.S. Labor Force Estimates and Economic Growth, 1800 to 1860,” in R. Gallman and J. Wallis, eds., The Standard of Living in Early Nineteenth Century America (Chicago, 1992), 8–10; Lee A. Craig and Thomas Weiss, “Hours at Work and Total Factor Productivity Growth in 19th-Century U.S. Agriculture,” Advances in Agricultural Economic History, 1 (2000): 1–30; Weiss, “American Economic Miracle”: 20. 15. Nelson Lichtenstein, State of the Union: A Century of American Labor (Princeton, 2002), 4; Karen Orren, Belated Feudalism: Labor, The Law, And Liberal Developments In The United States (Cambridge, 1992); Irwin Unger, The Greenback Era: A Social and Political History of American Finance, 1865–1879 (Princeton, 1964), 22. 16.
The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan
air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business process, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, labour market flexibility, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, new economy, North Sea oil, oil shock, open economy, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K
At some point, globalization's vast economic migration—the epochmaking shift of fully half of the world's three-billion-person labor force from behind the walls of economies that were centrally planned, in part or in whole, to competitive world markets—will be complete, or as complete as it can possibly get. *Low inflation reflected flat nonfarm business unit labor cost, t h e result of solid growth in p r o ductivity, which in t u r n was t h e result of increased investment in, b u t especially t h e delayed application of, t h e earlier technologies. Professor David demonstrated t h e extraordinary lag from technological advance to its consequence in rapidly rising total factor productivity, a measure of applied technology and other insights. T h a t disinflationary episode lasted only a few years, coming to an end with t h e Vietnam military buildup. A m u c h larger continuing disinflation was to c o m e as a consequence of t h e end of t h e cold war. t R e c e n t decades' productivity growth derives largely from t h e continuous i m p r o v e m e n t and filling o u t of networks of interrelated technologies.
accounting loophole / creative accounting, banking crisis, banks create money, barriers to entry, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, Fractional reserve banking, full employment, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, invisible hand, iterative process, John von Neumann, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, open economy, place-making, Ponzi scheme, profit maximization, quantitative easing, RAND corporation, random walk, risk tolerance, risk/return, Robert Shiller, Robert Shiller, Ronald Coase, Schrödinger's Cat, scientific mainstream, seigniorage, six sigma, South Sea Bubble, stochastic process, The Great Moderation, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, total factor productivity, tulip mania, wage slave
The Keynesians had it all wrong. In the Great Depression, employment was not low because investment was low. Employment and investment were low because labor market institutions and industrial policies changed in a way that lowered normal employment. (Prescott 1999: 1–3; emphases added) Prescott’s culprit for these changes, predictably, is the government: ‘government policies that affect TFP [total factor productivity] and hours per working-age person are the crucial determinants of the great depressions of the 20th century […]’ (Kehoe and Prescott 2002: 1). The reason that Prescott and his fellow freshwater economists were led to such a frankly crazy interpretation of the Great Depression is that their model allowed no other alternative. As a reminder, their model, in a nutshell, is the following.