Vilfredo Pareto

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pages: 251 words: 69,245

The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality by Branko Milanovic

Berlin Wall, Branko Milanovic, colonial rule, crony capitalism, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, endogenous growth, Fall of the Berlin Wall, financial deregulation, full employment, Gini coefficient, high net worth, illegal immigration, income inequality, income per capita, Joseph Schumpeter, means of production, open borders, Pareto efficiency, plutocrats, Plutocrats, purchasing power parity, Simon Kuznets, very high income, Vilfredo Pareto, Washington Consensus, zero-sum game

See also Essay I on both Pareto’s and Kuznets’ theories of income distribution. 2 See Branko Milanovic, “Why We All Do Care About Inequality (but Are Loathe to Admit It),” Challenge 50, no. 6 (2007): 109-120. 3 David Kynaston, review of Family Britain, 1951-57, by Nicholas Spice, London Review of Books, April 8, 2010, 14. 4 It is somewhat extraordinary to realize that when Pareto was less than a year old, he lived within a kilometer of two illustrious neighbors: Karl Marx and his family, who, like the Paretos, lived nearby on the left bank, and Alexis de Tocqueville, then minister of foreign affairs, who lived near Place de la Madeleine on the right bank. For Pareto, born at 10 rue Guy-de-la Brosse, in the Fifth Arrondissement, see Pier Carlo Ferrera, “Appunti e precisazioni su alcuni aspetti della biografia di Vilfredo Pareto,” Paretiana, no. 160. For Marx, living from June 3 to August 24, 1849, at 45 rue de Lille, in the Seventh Arrondissement, see Saul K. Padover, Karl Marx: An Intimate Biography (New York: Meridian, 1980), 359-360. For Tocqueville, see his Souvenirs (Paris: Gallimard, 1999), 239. I am grateful to Andrea Brandolini for the information on Pareto. 5 Raymond Aron, Main Currents in Sociological Thought (New York: Pelican, 1967), 2:176. 6 Vilfredo Pareto, Manual of Political Economy, translated by Ann S. Schwirr (New York: Augustus M. Kelley, 1971), 2. 7 “This is why Pareto will always remain apart among professors and sociologists.

Vignette 1.3 - Who Was the Richest Person Ever? Vignette 1.4 - How Unequal Was the Roman Empire? Vignette 1.5 - Was Socialism Egalitarian? Vignette 1.6 - In What Parisian Arrondissement Should You Live in the ... Vignette 1.7 - Who Gains from Fiscal Redistribution? Vignette 1.8 - Can Several Countries Exist in One? Vignette 1.9 - Will China Survive in 2048? Vignette 1.10 - Two Students of Inequality: Vilfredo Pareto and Simon Kuznets CHAPTER 2 Vignette 2.1 - Why Was Marx Led Astray? Vignette 2.2 - How Unequal Is Today’s World? Vignette 2.3 - How Much of Your Income Is Determined at Birth? Vignette 2.4 - Should the Whole World Be Composed of Gated Communities? Vignette 2.5 - Who Are the Harraga? Vignette 2.6 - The Three Generations of Obamas Vignette 2.7 - Did the World Become More Unequal During Deglobalization?

This way of looking at income distribution through the prism of social classes did not change much with the key turning point in the history of economics, the replacement of classical “political economy” by the “marginalist revolution” that started around 1870 and focused on individual optimization rather than on broad economic evolution of social classes, nor did it change later with the synthesis of the two strands (classical and marginalist) under the title of “neoclassical Marshallian economics” (from the Cambridge economist Alfred Marshall) and its establishment in the mainstream position. It was only in the early 1900s that the distribution of income among individuals (not among classes) attracted the attention of Vilfredo Pareto, a Franco-Italian economist who taught at the University of Lausanne in Switzerland. (His contribution is highlighted in Vignette 1.10.) It was around the same time that the data on personal income distribution became available for the first time. This went hand in hand with economic development (countries becoming richer) and a broader fiscal role of the state. The early statistical information about income distribution emerged because of nation-states’ need to collect direct taxes in a “fairer” way—that is, according to income—and to increase total tax intake, to spend it for public education, workers’ invalidity, and, above all, war.


pages: 364 words: 101,286

The Misbehavior of Markets: A Fractal View of Financial Turbulence by Benoit Mandelbrot, Richard L. Hudson

Albert Einstein, asset allocation, Augustin-Louis Cauchy, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black-Scholes formula, British Empire, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, carbon-based life, discounted cash flows, diversification, double helix, Edward Lorenz: Chaos theory, Elliott wave, equity premium, Eugene Fama: efficient market hypothesis, Fellow of the Royal Society, full employment, Georg Cantor, Henri Poincaré, implied volatility, index fund, informal economy, invisible hand, John Meriwether, John von Neumann, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market microstructure, Myron Scholes, new economy, paper trading, passive investing, Paul Lévy, Paul Samuelson, plutocrats, Plutocrats, price mechanism, quantitative trading / quantitative finance, Ralph Nelson Elliott, RAND corporation, random walk, risk tolerance, Robert Shiller, Robert Shiller, short selling, statistical arbitrage, statistical model, Steve Ballmer, stochastic volatility, transfer pricing, value at risk, Vilfredo Pareto, volatility smile

Mandelbrot, Benoit B. 1960. The Pareto-Lévy law and the distribution of income. International Economic Review 1: 79-106. • Reprint: Mandelbrot 1997a.• Reprint: Vilfredo Pareto: Critical Assessments. Edited by John C. Wood and Michael McLure. London: Routledge, 1999, IV, 155-182. • Reprint: Income Distribution, Edited by Michael Sattinger. The International Library of Critical Writings in Economics. Series Editor: Mark Blaug. Edward Elgar, Cheltenham, UK 2000. Mandelbrot, Benoit B. 1961. Stable Paretian random functions and the multiplicative variation of income. Econometrica 29: 517-543. • Reprint: Chapter E11 of Mandelbrot 1997a. • Reprint: Vilfredo Pareto: Critical Assessments. Edited by John C. Wood and Michael McLure. London: Routledge, 1999, IV, 183-209. Mandelbrot, Benoit B. 1962a. Paretian distributions and income maximization.

Officer, R. R. 1972. The distribution of stock returns. Journal of the American Statistical Association 67: 807-812. Pandey, G., S. Lovejoy, and D. Schertzer. 1998. Multifractal analysis of daily river flows including extremes for basins of five to two million square kilometers, one day to 75 years. Journal of Hydrology 208: 62-81. Pareto, Vilfredo. 1896. Cours d’économie politique. Reprinted in Oeuvres Complètes, 1966, Vol.I. Geneva: Librairie Droz. Pareto, Vilfredo. 1909. Manuel d’économie politique. Traduction française sur l’édition italienne par Alfred Bonnet (revue par l’auteur). Paris : Marcel Giard & Brière. Reprinted in Oeuvres Complètes, 1966, Vol VII. Geneva: Librairie Droz. Patel, Navroz. 2001. Econophysics—does it work? Risk March 2001: 33-34. Peitgen, Heinz-Otto and Dietmar Saupe. 1988.

The area of a square plot of land grows by the power of two with its side. If the side doubles, the area quadruples; if the side triples, the area rises nine-fold. Another example: Gravity weakens by the inverse power of two with distance. If a spaceship doubles its distance from Earth, the gravitational pull on it falls to a fourth its original value. In economics, one classic power law was discovered by Italian economist Vilfredo Pareto a century ago. It describes the distribution of income in the upper reaches of society. That power law concentrates much more of a society’s wealth among the very few; a bell curve would be more equitable, scattering incomes more evenly around an average. Now we reach one of my main findings. A power law also applies to positive or negative price movements of many financial instruments. It leaves room for many more big price swings than would the bell curve.


pages: 296 words: 78,227

The 80/20 Principle: The Secret to Achieving More With Less by Richard Koch

Albert Einstein, always be closing, barriers to entry, business cycle, business process, delayed gratification, fear of failure, income inequality, inventory management, Johann Wolfgang von Goethe, knowledge worker, profit maximization, rolodex, Ronald Reagan, Vilfredo Pareto, wage slave

Cotter refers in passing to Pareto (p. xxi), but neither Pareto nor the 80/20 Principle (under any name) is mentioned outside the introduction, and Pareto does not even appear in the index. Like many writers, Cotter is anachronistic in attributing the 80/20 formulation itself to Pareto: “Vilfredo Pareto was a French-born economist who observed 100 years ago that 20% of the factors in most situations account for 80% of what happens (that is, 20% of a company’s customers generate 80% of its profits). He called it Pareto’s Law” (p. xxi). In fact, Pareto never used the expression “80/20” or anything like it. What he called his “law” was in fact a mathematical formula (given in note 4), which is some way removed from (although the ultimate source of) the 80/20 Principle as we know it today. 3 Living with the car, (1996) The Economist (22 June): 8. 4 Vilfredo Pareto (1896/7) Cours d’Economique Politique, Lausanne University. Despite the conventional mythology, Pareto did not use the “80/20” phrase in his discussion of income inequality or anywhere else.

3 Pareto’s discovery: systematic and predictable lack of balance The pattern underlying the 80/20 Principle was discovered in 1897, about 100 years ago, by Italian economist Vilfredo Pareto (1848–1923). His discovery has since been called many names, including the Pareto Principle, the Pareto Law, the 80/20 Rule, the Principle of Least Effort, and the Principle of Imbalance; throughout this book we will call it the 80/20 Principle. By a subterranean process of influence on many important achievers, especially business people, computer enthusiasts and quality engineers, the 80/20 Principle has helped to shape the modern world. Yet it has remained one of the great secrets of our time—and even the select band of cognoscenti who know and use the 80/20 Principle only exploit a tiny proportion of its power. So what did Vilfredo Pareto discover? He happened to be looking at patterns of wealth and income in nineteenth-century England.

I returned to Cape Town, thoroughly dejected. And then, a minor miracle. The British publisher who had commissioned the work, a man well known for looking on the gloomy side, faxed me (remember faxes?) to say that despite the PR fiasco, the book was “selling very well.” In fact, the book has sold more than 700,000 copies worldwide and been translated into twenty-four languages. More than a century since Vilfredo Pareto noted the consistently lopsided relationship between inputs and outputs, and a decade since this book reinterpreted Pareto’s principle, I think we can now say that the principle has stood the test of time. There has been massive feedback, mainly positive, from readers and reviewers. Throughout the world, a large number of individuals, perhaps hundreds of thousands, have found the principle useful, at work and in their careers, and increasingly in the whole of their lives.


pages: 261 words: 103,244

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

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

It is worth explaining exactly how these came about, for they introduced the depersonalization of economics such that we no longer consider the rich and the poor as the British economists of the nineteenth century did: now we aim to maximize output, measured in a rather particular but seemingly objective way, above all else. Power and accolades flow to those who can think of any way of increasing output still further – whether or not it is feasible, or for that matter wise. The story begins with the Italian economist Vilfredo Pareto who, after an exhaustive empirical study of individual rich and poor families, attacked the notion that one could compare and sum up individual utilities to arrive at a judgment about societal welfare. He argued that rich people and poor people might have such fundamentally different tastes that it would be impossible to compare their utilities. According to Pareto, you could only say that one alternative was socially preferable to another if it made at least one person better off and no other person worse off (Pareto 1906/1971).

More demand for labor should lead to higher wages, which in turn provides additional income for workers. These workers will want to buy more goods, which in turn means higher prices for goods and a higher value of using additional labor. Thus using more labor might raise instead of lower the value of the marginal product of labor, in which case the determinacy of the theory breaks down (Keen 2001/2008). One of the pioneers of neoclassical economics, Vilfredo Pareto, already pointed out that the mainstay of the neoclassical theory of income distribution among labor and capital was rather fragile. He noted that it would break down if competition was less than perfect and if the amount of labor to be employed with each unit of capital could not be varied freely (e.g. as in the case of the bus and bus drivers where you cannot use a bus efficiently at any given time without a driver, or with more than one driver) (Fonseca 2009).

“A Statistical Method for Measuring ‘Marginal Utility’ and Testing the Justice of a Progressive Income Tax.” In Economic Essays Contributed in Honour of John Bates Clark, ed. Jacob Hollander. New York: Macmillan. . 1936. 100% Money. New York: Adelphi. . 1936/2009. 100 Money and the Public Debt. Thai Sunset Publications. FitzRoy, Felix and Kornelius Kraft. 2005. “Co-determination, Efficiency and Productivity.” British Journal of Industrial Relations 43: 233–47. Fonseca, Gonzalo L. 2009. “Vilfredo Pareto, 1848–1923.” The History of Economic Thought website. http://homepage.newschool.edu/~het/profiles/pareto.htm (accessed February 27, 2011). Foster, Julia, John Haltiwanger and Chad Syverson. 2010. “The Slow Growth of New Plants: Learning about Demand?” Working paper. Frank, Robert H., Thomas D. Gilovich and Dennis T. Regan. 1993. “Does Studying Economics Inhibit Cooperation?” Journal of Economic Perspectives 7: 159–71.


pages: 185 words: 43,609

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel, Blake Masters

Airbnb, Albert Einstein, Andrew Wiles, Andy Kessler, Berlin Wall, cleantech, cloud computing, crony capitalism, discounted cash flows, diversified portfolio, don't be evil, Elon Musk, eurozone crisis, income inequality, Jeff Bezos, Lean Startup, life extension, lone genius, Long Term Capital Management, Lyft, Marc Andreessen, Mark Zuckerberg, minimum viable product, Nate Silver, Network effects, new economy, paypal mafia, Peter Thiel, pets.com, profit motive, Ralph Waldo Emerson, Ray Kurzweil, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Singularitarianism, software is eating the world, Steve Jobs, strong AI, Ted Kaczynski, Tesla Model S, uber lyft, Vilfredo Pareto, working poor

Kaczynski, Ted Karim, Jawed Karp, Alex, 11.1, 12.1 Kasparov, Garry Katrina, Hurricane Kennedy, Anthony Kesey, Ken Kessler, Andy Kurzweil, Ray last mover, 11.1, 13.1 last mover advantage lean startup, 2.1, 6.1, 6.2 Levchin, Max, 4.1, 10.1, 12.1, 14.1 Levie, Aaron lifespan life tables LinkedIn, 5.1, 10.1, 12.1 Loiseau, Bernard Long-Term Capital Management (LTCM) Lord of the Rings (Tolkien) luck, 6.1, 6.2, 6.3, 6.4 Lucretius Lyft MacBook machine learning Madison, James Madrigal, Alexis Manhattan Project Manson, Charles manufacturing marginal cost marketing Marx, Karl, 4.1, 6.1, 6.2, 6.3 Masters, Blake, prf.1, 11.1 Mayer, Marissa Medicare Mercedes-Benz MiaSolé, 13.1, 13.2 Michelin Microsoft, 3.1, 3.2, 3.3, 4.1, 5.1, 14.1 mobile computing mobile credit card readers Mogadishu monopoly, monopolies, 3.1, 3.2, 3.3, 5.1, 7.1, 8.1 building of characteristics of in cleantech creative dynamism of new lies of profits of progress and sales and of Tesla Morrison, Jim Mosaic browser music recording industry Musk, Elon, 4.1, 6.1, 11.1, 13.1, 13.2, 13.3 Napster, 5.1, 14.1 NASA, 6.1, 11.1 NASDAQ, 2.1, 13.1 National Security Agency (NSA) natural gas natural secrets Navigator browser Netflix Netscape NetSecure network effects, 5.1, 5.2 New Economy, 2.1, 2.2 New York Times, 13.1, 14.1 New York Times Nietzsche, Friedrich Nokia nonprofits, 13.1, 13.2 Nosek, Luke, 9.1, 14.1 Nozick, Robert nutrition Oedipus, 14.1, 14.2 OfficeJet OmniBook online pet store market Oracle Outliers (Gladwell) ownership Packard, Dave Page, Larry Palantir, prf.1, 7.1, 10.1, 11.1, 12.1 PalmPilots, 2.1, 5.1, 11.1 Pan, Yu Panama Canal Pareto, Vilfredo Pareto principle Parker, Sean, 5.1, 14.1 Part-time employees patents path dependence PayPal, prf.1, 2.1, 3.1, 4.1, 4.2, 4.3, 5.1, 5.2, 5.3, 8.1, 9.1, 9.2, 10.1, 10.2, 10.3, 10.4, 11.1, 11.2, 12.1, 12.2, 14.1 founders of, 14.1 future cash flows of investors in “PayPal Mafia” PCs Pearce, Dave penicillin perfect competition, 3.1, 3.2 equilibrium of Perkins, Tom perk war Perot, Ross, 2.1, 12.1, 12.2 pessimism Petopia.com Pets.com, 4.1, 4.2 PetStore.com pharmaceutical companies philanthropy philosophy, indefinite physics planning, 2.1, 6.1, 6.2 progress without Plato politics, 6.1, 11.1 indefinite polling pollsters pollution portfolio, diversified possession power law, 7.1, 7.2, 7.3 of distribution of venture capital Power Sellers (eBay) Presley, Elvis Priceline.com Prince Procter & Gamble profits, 2.1, 3.1, 3.2, 3.3 progress, 6.1, 6.2 future of without planning proprietary technology, 5.1, 5.2, 13.1 public opinion public relations Pythagoras Q-Cells Rand, Ayn Rawls, John, 6.1, 6.2 Reber, John recession, of mid-1990 recruiting, 10.1, 12.1 recurrent collapse, bm1.1, bm1.2 renewable energy industrial index research and development resources, 12.1, bm1.1 restaurants, 3.1, 3.2, 5.1 risk risk aversion Romeo and Juliet (Shakespeare) Romulus and Remus Roosevelt, Theodore Royal Society Russia Sacks, David sales, 2.1, 11.1, 13.1 complex as hidden to non-customers personal Sandberg, Sheryl San Francisco Bay Area savings scale, economies of Scalia, Antonin scaling up scapegoats Schmidt, Eric search engines, prf.1, 3.1, 5.1 secrets, 8.1, 13.1 about people case for finding of looking for using self-driving cars service businesses service economy Shakespeare, William, 4.1, 7.1 Shark Tank Sharma, Suvi Shatner, William Siebel, Tom Siebel Systems Silicon Valley, 1.1, 2.1, 2.2, 2.3, 5.1, 5.2, 6.1, 7.1, 10.1, 11.1 Silver, Nate Simmons, Russel, 10.1, 14.1 singularity smartphones, 1.1, 12.1 social entrepreneurship Social Network, The social networks, prf.1, 5.1 Social Security software engineers software startups, 5.1, 6.1 solar energy, 13.1, 13.2, 13.3, 13.4 Solaria Solyndra, 13.1, 13.2, 13.3, 13.4, 13.5 South Korea space shuttle SpaceX, prf.1, 10.1, 11.1 Spears, Britney SpectraWatt, 13.1, 13.2 Spencer, Herbert, 6.1, 6.2 Square, 4.1, 6.1 Stanford Sleep Clinic startups, prf.1, 1.1, 5.1, 6.1, 6.2, 7.1 assigning responsibilities in cash flow at as cults disruption by during dot-com mania economies of scale and foundations of founder’s paradox in lessons of dot-com mania for power law in public relations in sales and staff of target market for uniform of venture capital and steam engine Stoppelman, Jeremy string theory strong AI substitution, complementarity vs.

But this very misattribution reinforces the message: having invested the principal of a lifetime’s brilliance, Einstein continues to earn interest on it from beyond the grave by receiving credit for things he never said. Most sayings are forgotten. At the other extreme, a select few people like Einstein and Shakespeare are constantly quoted and ventriloquized. We shouldn’t be surprised, since small minorities often achieve disproportionate results. In 1906, economist Vilfredo Pareto discovered what became the “Pareto principle,” or the 80-20 rule, when he noticed that 20% of the people owned 80% of the land in Italy—a phenomenon that he found just as natural as the fact that 20% of the peapods in his garden produced 80% of the peas. This extraordinarily stark pattern, in which a small few radically outstrip all rivals, surrounds us everywhere in the natural and social world.


pages: 302 words: 84,881

The Digital Party: Political Organisation and Online Democracy by Paolo Gerbaudo

Airbnb, barriers to entry, basic income, Bernie Sanders, bitcoin, call centre, centre right, creative destruction, crowdsourcing, disintermediation, disruptive innovation, Donald Trump, Edward Snowden, feminist movement, gig economy, industrial robot, Jaron Lanier, Jeff Bezos, jimmy wales, Joseph Schumpeter, Mark Zuckerberg, Network effects, Occupy movement, offshore financial centre, oil shock, post-industrial society, precariat, Ralph Waldo Emerson, Richard Florida, Richard Stallman, Ruby on Rails, self-driving car, Silicon Valley, Skype, Slavoj Žižek, smart cities, Snapchat, social web, software studies, Stewart Brand, technoutopianism, Thomas L Friedman, universal basic income, Vilfredo Pareto, WikiLeaks

Wattenberg, eds, Parties without partisans: political change in advanced industrial democracies (Oxford: Oxford University Press, 2002). 68. Michels, Political parties, p.342. 69. Michels, Political parties. 70. Michels, Political parties, p.365. 71. Gaetano Mosca and Vilfredo Pareto were two social science academics, both active in Turin at the beginning of the 20th century, who emphasised the tendency of societies to be dominated by elite groups: Gaetano Mosca, The ruling class (Elementi di scienza politica) (New York; London: McGraw-Hill, 1939); and Vilfredo Pareto, Manual of political economy (Oxford: Oxford University Press, 2014). 72. Weber, Economy and society. 73. Michels, Political parties, p.364. 74. Antonio Gramsci, Selections from the prison notebooks, Vol. 294, ed. and transl. by Quintin Hoare and Geoffrey Nowell Smith (London: Lawrence and Wishart, 1971). 75.

Democrazia senza partiti, Vol. 2. Rome: Edizioni di Comunità, 2013. Orwell, George. George Orwell: a life in letters. New York: W.W. Norton, 2013. Ostrogorski, Moisei. (1902). Democracy and the organization of political parties, Vol. 2. New York: Macmillan. Panebianco, Angelo. (1988). Political parties: organization and power. Cambridge, UK: Cambridge University Press. Pareto, Vilfredo. The mind and society, Vol. 1. New York: Harcourt, Brace, 1935. Pareto, Vilfredo. Manual of political economy. New York: Augustus M. Kelly, 1971. Parry, G. Political elites. Colchester, UK: ECPR Press, 2005. Poulantzas, Nicos. Fascism and dictatorship: the third international and the problem of fascism. New York: New Left Books, 1974. Putnam, Robert D. ‘Bowling alone: America’s declining social capital.’ In Lane Crothers and Charles Lockhart, eds, Culture and politics: a reader (pp.223–234).


pages: 247 words: 43,430

Think Complexity by Allen B. Downey

Benoit Mandelbrot, cellular automata, Conway's Game of Life, Craig Reynolds: boids flock, discrete time, en.wikipedia.org, Frank Gehry, Gini coefficient, Guggenheim Bilbao, Laplace demon, mandelbrot fractal, Occupy movement, Paul Erdős, peer-to-peer, Pierre-Simon Laplace, sorting algorithm, stochastic process, strong AI, Thomas Kuhn: the structure of scientific revolutions, Turing complete, Turing machine, Vilfredo Pareto, We are the 99%

, Connected Graphs, Connected Graphs, Dijkstra marking, Connected Graphs source node, Dijkstra visiting, Connected Graphs noise, Zipf, Pareto, and Power Laws, Spectral Density non-linear system, The Axes of Scientific Models normal accident theory, SOC, Causation, and Prediction normal distribution, Continuous Distributions NumPy, Implementing CAs, Fractal CAs O Obama, Barack, Analysis of Algorithms object-oriented design, Hashtables objective truth, A New Kind of Thinking objectivity, Explanatory Models observable, Explanatory Models one, two, many, The Axes of Scientific Models optional parameters, Representing Graphs order of growth, Order of Growth, FIFO Implementation, Cumulative Distributions, Implementing CAs, Spectral Density os module, Summing Lists overrides, Representing Graphs P paradigm shift, Paradigm Shift? parameters, Watts and Strogatz, Zipf’s Law, Continuous Distributions, Pareto Distributions, Thomas Schelling, Traffic Jams, Boids Pareto distribution, Pareto Distributions Pareto World, Pareto Distributions Pareto, Vilfredo, Pareto Distributions path length, Watts and Strogatz paths, What’s a Graph?, What’s a Graph?, Connected Graphs peer-to-peer architecture, A New Kind of Engineering perception, Realism percolation, Percolation performance error, FIFO Implementation period, Randomness, Turmites Perrow, Charles, SOC, Causation, and Prediction phase chance, Paul Erdős: Peripatetic Mathematician, Speed Freak philosophical realism, Realism philosophy, What Is This Book About?

Write a function called plot_ccdf that takes a list of values and the corresponding list of probabilities and plots the CCDF on a log-y scale. To test your function, use expovariate from the random module to generate 100 values from an exponential distribution. Plot the CCDF on a log-y scale, and see if it falls on a straight line. Pareto Distributions The Pareto distribution is named after the economist Vilfredo Pareto, who used it to describe the distribution of wealth; see http://en.wikipedia.org/wiki/Pareto_distribution. Since then, people have used it to describe phenomena in the natural and social sciences, including sizes of cities and towns, of sand particles and meteorites, and of forest fires and earthquakes. The Pareto distribution is characterized by a CDF with the following form: The parameters xm and determine the location and shape of the distribution. xm is the minimum possible value.


pages: 312 words: 91,835

Global Inequality: A New Approach for the Age of Globalization by Branko Milanovic

"Robert Solow", Asian financial crisis, assortative mating, Berlin Wall, bitcoin, Black Swan, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial exploitation, colonial rule, David Ricardo: comparative advantage, deglobalization, demographic transition, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Gunnar Myrdal, income inequality, income per capita, invisible hand, labor-force participation, liberal capitalism, low skilled workers, Martin Wolf, means of production, mittelstand, moral hazard, Nash equilibrium, offshore financial centre, oil shock, open borders, Paul Samuelson, place-making, plutocrats, Plutocrats, post scarcity, post-industrial society, profit motive, purchasing power parity, Ralph Nader, Second Machine Age, seigniorage, Silicon Valley, Simon Kuznets, special economic zone, stakhanovite, trade route, transfer pricing, very high income, Vilfredo Pareto, Washington Consensus, women in the workforce

The Evolution of Global Bilateral Migration, 1960–2000.” World Bank Economic Review 25(1): 12–56. Page, Benjamin I., Larry M. Bartels, and Jason Seawright. 2013. “Democracy and the Policy Preferences of Wealthy Americans.” Perspectives on Politics 11(1): 51–73. Pamuk, Şevket. 2007. “The Black Death and the Origins of the ‘Great Divergence’ across Europe, 1300–1600.” European Review of Economic History 11(3): 289–317. Pareto, Vilfredo. 1966. Vilfredo Pareto: Sociological Writings, edited by S. E. Finer. New York: Praeger. Piketty, Thomas. 2001a. Les Hauts revenus en France au 20e siècle: inégalités et redistribution, 1901–1998. Paris: B. Grasset. Piketty, Thomas. 2001b. “Income Inequality in France 1901–98.” Centre for Economic Policy Research Discussion Paper, no. 2876, July. Available at http://piketty.pse.ens.fr/fichiers/public/Piketty2001a.pdf.

It can thus be seen that Kuznets’s theory, and more generally any theory based on the idea of an inevitable decrease of income inequality in the advanced stages of capitalist development, seems incapable of fitting the facts that characterize the history of income inequality in the twentieth century, at least as far as France is concerned” (Piketty 2001a, 147–148; my translation). 37. In the 1990s, the estates left by the richest 1 percent of the top 1 percent (among those who left estates) were worth only one-fourth of what they had been in 1900–1910 (Piketty 2001a, 139; 2001b, 24). 38. Exploitation was taken as a given even by the most free-market-oriented economists. Here is Vilfredo Pareto, not exactly a thirdworldist wont to complain about capitalist exploitation, writing in 1921: “We have … to take account of the exploitation of vast regions of Africa and Asia [as a way to increase colonizers’ income]. This will very likely prove to be of special benefit to England, the United States and France; but it can be of little or no benefit to Italy which has picked up merely the scraps which these voracious gourmands have let fall from their festive boards” (Pareto 1966, 325; originally from “Trasformazione della democratia,” 1921). 39.

See also colonialism; imperialism; Industrial Revolution and industrialization 1910, 1918, 245n1 1913 exports, foreign assets, migration, 241n2 1970s–1980s, 6, 11, 18, 22–23, 24, 157, 246n10 1970–2013, 169–170, 219–221 1975–2015 (China), 176–180 1980 and after, 4, 54–55, 71–72, 91, 92–93 1988–2008. See high globalization period 1988–2011, 118–119. See also twenty-first and twenty-second centuries nominal dollars, 244n24 occupations, 84, 103, 140, 263n5. See also financial sector; industrial sector; service sector Olson, Mancur, 96 one-percenters. See rich people and money one-person households, 248n23 Page, Benjamin I., 163, 189 Pamuk, Şevket, 63 Pareto, Vilfredo, 250n38 patent rights, 258n7 peaceful processes, 103 pensions, 101, 207 “peripheral” markets, 18 Pestel, Eduard, 257n3 Pigou, Arthur, 260n23 Piketty, Thomas: theory of, 47–50; on war, 64, 94, 97–98, 250n36; on Great Leveling, 97; on capital income, 107, 182; on one-percenters, 184; on inheritance taxes, 221; on formal equality, 227; maximum steady-state inequality and, 245n4; on Kuznets hypothesis, 250n36; on elite schools, 263n4; on CO2 emissions, 263n9 plague, 62–64, 247n16, 247n18 Plotnick, Robert, 71 plutocracy: democracy/globalization and, 7, 210; middle class and, 10–45; defined, 22; globalization and, 45, 214; United States and, 75, 199, 200, 204; rule of law and, 138–139; birth of, 190; wealth and, 244n21.


pages: 151 words: 38,153

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

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

They develop policies for housing, education, the environment, and so on, but treat our economic system itself—in which every silo affects every other—as off-limits. Wealth distribution is a particularly systemic phenomenon, a result of how all parts of our economy interact. It can’t be understood without viewing it at that level, nor can it be fixed without treating it at that level. The Italian economist Vilfredo Pareto was among the first to notice that something in modern economies consistently concentrates wealth at the top. Early in the twentieth century, he observed that about 20 percent of the people in Italy owned about 80 percent of the land.1 Looking further, he saw the same pattern throughout Europe. This led him to posit that in market economies, about 20 percent of the people will always acquire about 80 percent of the wealth … because that’s how market economies work.

See New money Monopoly game, 4, 67, 91 Monopoly profits and rent, 51–52 Multistakeholder equilibrium, 7 Murkowski, Lisa, 130 Murphey, Dwight, 82–83 Mutual funds, 83 N National Football league, 126 National Fund, 9 Natural gas, 115 Natural resources dividends and countries with, 130–131 resource curse and, 130–131 Natural Resources Defense Council, 99–100 Need-based distribution, 83–84 Negative income tax, 80–81 New money, 144 Federal Reserve on creating, 144 fees for creating, 94 issuing, 91–92 Nixon, Richard, 34, 80–81, 134 Nonlabor income, 27–28 Alaska model and, 74 citizen’s income, 79–80 guaranteed minimum income, 80–81 pre-distribution and, 125–126 shared ownership and, 86–87 universal stock ownership, 81–83 work and, 122–123 North Carolina Cherokees, plan by, 128 Norway, 114, 129 Nurses, 23–24 O Obama, Barack, 21 in 2008 campaign, 107–108 and carbon capping legislation, 110 economic stimulus package, 37 health care reforms and, 54 payroll tax credit and, 77 Occupations. See Jobs Occupy Wall Street, 13–14 Offsets to carbon capping, 103–105 Oil. See also Alaska model dividends in countries with, 130 Oregon, wind energy dividends in, 128 O’Reilly, Bill, 86 Organization for Economic Cooperation and Development, 95 Orszag, Peter, 102 Outsourcing, 16–17 P Paine, Thomas, 1, 3, 7–9, 39, 70, 137 Palin, Sarah, 75, 76, 94 Pareto, Vilfredo, 30–31 Parijs, Philippe van, 130 Patents, rent from, 144 Peabody Energy, 102 Pelosi, Nancy, 109 Pensions as deferred wage, 27 defined-benefits pensions, 123 Perkins, Frances, 38 Pigou, Arthur, 63–64, 113 Pitt, William, 8 Pollin, Robert, 143 Pollution. See also Carbon capping carbon pollution permits, 93 co-owned wealth and, 88 externalities and, 63 Pollution, Property & Prices (Dales), 98 Poverty Alaska model and, 74 job training and, 25 Powell, Colin, 130 Power law, 30–31 Pragmatism, 121 Pre-distribution of wealth, 125–127 Price-setting, 63–64 Private wealth, 49 Privileges, rent and income from, 52–53 “The Problem of Social Cost” (Coase), 98–99 Progress and Poverty (George), 51 Property rights.


pages: 252 words: 73,131

The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan

"Robert Solow", Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy

Abstracting from the specifics of any particular situation allowed economists to create general models, which in turn empowered them to make general predictions and, in the words of sociologist Kieran Healy, to ultimately “dispense advice on everything from childrearing to global climate change.”1 That’s not to say that the classical and neoclassical economists didn’t use math. They did. Karl Marx’s thousands of pages of passionate argumentation included extended technical discussions that, as economic historian Robert Heilbroner put it, are argued “to a point of mathematical exhaustion.” His contemporary, the Frenchman Léon Walras, identified economics as, fundamentally, a mathematical discipline, and Vilfredo Pareto, an Italian engineer and sometime economist, used his mathematical background to further the discipline as well. But, as Gérard Debreu, a Nobel Prize–winning economist and president of the American Economics Association, wrote in 1991, it was only with the closing of World War II that “economic theory entered a phase of intensive mathematization that profoundly transformed [the] profession.”2 In 1940, less than 3 percent of the refereed pages of the thirtieth volume of the American Economic Review “ventured to include rudimentary mathematical expressions.”

These early economists aimed to tackle big questions about how the economy worked (and whether it could be made to work better), weighing in on such important matters as market function (and dysfunction), the origin of value, business cycles, and unemployment. It was set in motion by Smith and carried on for one hundred years thereafter by the classical economists—David Ricardo, Thomas Malthus, Karl Marx, Vilfredo Pareto, among others. It was continued for nearly one hundred years more by neoclassical economists like Thorstein Veblen, John Maynard Keynes, and an enduring hero of free-market proponents, Joseph Schumpeter. Pareto, who lived from 1848 until 1923, is emblematic of both the worldliness and precision of these towering figures in the history of economic thought. He was well experienced in matters of business but also well schooled in the language of math that was already deployed to describe economics and commerce.

., 22 Liu, Qihong, 128–129 Lyft car service, 173 MAD (doctrine of nuclear deterrence by mutually assured destruction), 26 mail-in-bids, for auctions, 83–84 “The Market for Lemons” (Akerlof), 44–51, 64 market frictions, 169–174 market fundamentalists, 16–17 market insights, 14–15 market makers, 107–110, 118–121 markets 18th-century book, 90–91 competitive, 35, 124–126, 172–174, 180–181 design, 133, 137–142 dysfunction of, 36, 75–77, 143 economics of platform, 107–112 equilibrium, 33 fixed-price versus auctions, 96–97 food bank system, 154–160 image problem of, 152–153 labor, 48, 64–66 lemon, 44–51, 58–59, 64, 112 multisided, 108–112, 118–124 one-sided, 108–112 in POW camps, 4, 7–13, 175–177 rules for platform, 112–117 school choice in Sweden, 151–152 selfishness in, 177–179 technology and, 169–173 trade with uninformed parties, 166–169 transformation of, 13–17 two-sided, 108–112, 118–124 See also auctions; economics; platforms Marx, Karl, 20, 23 matching problems middle school dance partners, 131–132, 134, 137–140 student to school, 138–139, 141–142, 143–149 mathematics algebraic topology, 44–45 economic theory transformed by, 15, 19–27 game theory, 136 general equilibrium model, 29, 31–34, 36–37, 40, 45, 76 kidney exchange algorithm, 163–165 models, 20, 24–25, 30 in real world economics, 35–37 Samuelson connecting economics and, 28–29 Shapley-Gale algorithm, 137–140 Matsuzaka, Daisuke, 79–81, 87–89 Maxwell, James Clark, 24 McManus, Brian, 73–75 mechanism design, 133, 134 medical residency programs, 140 merchant from Prato, 105–107 middle school dance-matching, 131–132, 134, 137–140 Milgrom, Paul, 70–71, 98, 102–103 mobile market platform, 116 modeling applied theory, 45, 50, 75–76 competition, 35, 166, 172–173 congestion pricing, 86, 94 dysfunction of, 75–77 economic, 15, 24–29 mathematical, 20, 24–25, 30 reality-based economic, 35–37, 45, 49–51, 141 models auction, 82–84 eBay, 43, 46, 48 general equilibrium, 31–34, 36–37, 40, 76 lemons, 44–51, 58–59, 64, 112 Solow, 35 See also platforms; signaling model Moldovanu, Benny, 90–91 money burning costs, 70–71 money-back guarantees, 69–71 Morals & Markets: The Development of Life Insurance in the United States (Zelizer), 153 Morgenstern, Oskar, 25–27 mortality rates, of Japanese vs German POW camps, 10–13 MS-13 gang, 67 multisided markets, 108–112, 118–124 multisided platform, 14 multiunit Vickrey auction, 93 Murphy, Frank, 9 Nasar, Sylvia, 29 Nash, John, 32 National Archives’ World War II Prisoners of War Data File, 11 network externalities, 121–124 New England Program for Kidney Exchange, 164–165 New York Department of Education, 143–144, 145, 149 Nobel Prize in Economics, 34 See also Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel noncustomers, paying, 123–124 Nordstrom’s return policy, 69–70 no-risk money-back guarantees, 69–71 normal good, 180 no-trade rule, Japanese POW camps, 10–13 nuclear deterrence, 26 Omidyar, Pierre, 39–40 one-sided markets, 108–112 online retail, 41–43, 52–55 optimized efficiency, 85–86, 133 organ sales, 160–161 organizations, sick, 142–143 out-of-town bids, for auctions, 83–84 Pareto, Vilfredo, 20, 21–22 Pareto efficiency, 22 Penny Black stamp, 82–84 Percy P. Woods store, 1–2 person’s life, value of, 166–167 philanthropic commitments, 72–75 Pillow Pets, 128–129 platforms babysitting, 121 Champagne fairs as, 126–128 competition, 124–126 credit card, 113–116 economics of, 107–112 greed in, 128–129 mobile market, 116 multisided, 14 rules for, 112–117 video game system, 116 See also economics Podolny, Joel, 39, 43 poker, bluffing in, 26 See also chess; Cold War Pontiff, Jeffrey, 11–12 posting system, 79–81, 100–101 POW camps, 7–13, 175–177 power law distributions, 22 practice, market, 14–15 Prendergast, Canice, 154–160 “Price and Advertising Signals of Product Quality” (Milgrom and Roberts), 70–71 price discovery, 83 priceless, when something is, 132–133 prisoners’ dilemma game, 178–179 property, expected value of, 56 Radford, R.


pages: 290 words: 76,216

What's Wrong with Economics? by Robert Skidelsky

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

Marx wrote, ‘The ideas of the ruling class are in any epoch the ruling ideas . . . The ruling ideas are nothing more than the ideal expression of the dominant material relationships that make the one class the ruling one; therefore the ideas of its dominance’. Class power is per se illegitimate. A revolutionary seizure of power is necessary as a prelude to abolishing it, by abolishing classes.6 3. The Machiavellian (or cynical) theory of elite power. For Vilfredo Pareto, economist, sociologist, political scientist, what Marx envisaged as a social struggle for the control of power is simply the struggle for power between incumbent and opposition elites. ‘The sole appreciable result of most revolutions’, he wrote, ‘has been the replacement of one set of politicians by another set.’ Socialism is a form of false consciousness; it leads not to the triumph of humanitarianism, but the imposition of another cage of bondage.

Power: A Radical View, London: Palgrave Macmillan. Marx, Karl and Engels, Friedrich (2004 [1848]). Manifesto of the Communist Party. Online: Marxists Internet Archive. https://www.marxists.org/archive/marx/works/1848/communist-manifesto/index.htm Mill, John Stuart (1869). On Liberty, London: Longmans, Green, Reader and Dyer. Packard, Vance (1957). The Hidden Persuaders, New York: McKay. Pareto, Vilfredo (1991 [1920]). The Rise and Fall of Elites: An Application of Theoretical Sociology, New Jersey: Transaction Publishers. Robinson, Joan (1962). Economic Philosophy, London: Watts. Robinson, Joan (1969). The Economics of Imperfect Competition (2nd ed.), London: Palgrave Macmillan. Russell, Bertrand (1938). Power: A New Social Analysis, London: Allen & Unwin. Skidelsky, Robert (2018). Money and Government, London: Allen Lane; New Haven: Yale University Press.

(i) Foley, Duncan (i), (ii) Foucault, Michel (i), (ii) Frankenstein (Shelley) (i) free trade advent of (i) critiques of (i) economic growth (i), (ii), (iii), (iv) free trade/protectionism clash (i), (ii) Friedman, Milton (i), (ii) Galbraith, John Kenneth (i), (ii), (iii), (iv) game theory (i), (ii) Georgescu-Roegen, Nicholas (i) German Historical School (i), (ii), (iii) globalization free trade doctrine (i) impact on absolute poverty rates (i) market-led (i), (ii) Gramsci, Antonio (i) Habermas, Jürgen (i) Hahn, Frank (i), (ii) Hayek, Friedrich (i), (ii) heterodox economics (i), (ii), (iii), (iv) Hicks, John (i), (ii) hierarchies of wants (i) Hirsch, Fred (i) history biases of (i) conservatism of (i) cycles in (i) within a different approach to understanding (i) of economic doctrines (i) within economic study (i) stages of development thesis (i) see also economic history history of economic thought methodological debates (i) paradigm persistence (i) the study of (i), (ii), (iii) see also economic history Hobsbawm, Eric (i) Hodgson, Geoffrey (i), (ii), (iii) holism (i), (ii), (iii) homo economicus ethical objections to (i) fictionality of (i) model of (i), (ii), (iii) as a product of capitalism (i) rational behaviour of (i), (ii) income redistribution/justice of distribution (i) individuals agency of (i) behaviour within groups (i) constancy of human nature belief (i), (ii), (iii), (iv) and the Enlightenment (i) fallacy of composition (i) human behaviour within economic models (i), (ii), (iii), (iv) institutions’s influence on (i) methodological individualism (i), (ii), (iii), (iv), (v), (vi) in methodology (i) in neoclassical economics (i), (ii), (iii) in pre-modern society (i) representative agent hypothesis (i), (ii) within social networks (i) as sole choosing units (i), (ii), (iii) uncertainty and human behaviour (i), (ii), (iii), (iv), (v), (vi) utility maximisation (i), (ii), (iii) see also behavioural economics; homo economicus industrialisation free trade in industrialising countries (i), (ii) Marxist thought on industrial societies (i), (ii), (iii), (iv) role of the state (i) sociological thought on (i) Institutional Economics (i), (ii), (iii) institutionalism neoclassical (i) overview of (i) institutions the church (i) defined (i) digital technology and (i) influence on the individual (i) the institutional order (i), (ii) non-market coordination (i) principal-agent problem (i) public choice theory (i) role in economic growth (i), (ii), (iii) self-interest within (i) the state as (i) utility maximisation by (i) see also firms; states Jevons, William Stanley (i), (ii) Johnson, Harry (i) Jones, Richard (i) Kahneman, Daniel (i) Kaldor, Nicholas (i) Kant, Immanuel (i) Keppler, Joseph (i) Keynes, John Maynard ethics in economics (i) moral basis for economics (i) ontology of economics in (i) on power (i) the qualities of an economist (i) in relation to equilibrium theory (i) on the role of economics (i) theory of probability (i) on uncertainty (i), (ii), (iii) Keynesian economics 1970s reaction against (i), (ii), (iii) for employment (i) equilibrium (i) Keynesian revolution (i), (ii) macroeconomic forecasting models (i), (ii), (iii) role of the individual (i) Knight, Frank (i) Kondratieff cycle (i) Krugman, Paul (i), (ii), (iii) Kuhn, Thomas (i), (ii), (iii) Kuznets, Simon (i), (ii) labour theory of value (i) Lagarde, Christine (i) Lakatos, Imre (i), (ii), (iii) laws, economic ceteris paribus warnings (i), (ii), (iii) critiques of (i) deductive theories (i) economic generalizations (i) inductive theories (i) modelling and (i) orthodox economics theories (i) stadial theory (i) see also models Lawson, Tony (i), (ii) Leontief, Wassily (i) Leslie, Cliffe (i) liberalism liberal/collectivist cycles (i) liberal power (i) liberal theory of the state (i) liberalisation policies in developing economies (i), (ii) List, Friedrich (i), (ii), (iii) Lo, Andrew (i) Locke, John (i), (ii), (iii) Lucas, Robert (i), (ii) Lukes, Steven (i) macroeconomic theory Keynesian macroeconomic forecasting (i), (ii), (iii) macroeconomic models (i), (ii) as micro-founded (i), (ii) Maddison, Angus (i) Maine, Henry (i) mainstream economics see neoclassical economics Malthus, Thomas (i), (ii), (iii) marginalist revolution (i), (ii), (iii), (iv) market economies (i) markets auction markets (i) competitive market systems (i) consumer sovereignty (i), (ii), (iii) expanded world of business (i) general equilibrium (GE) in (i), (ii), (iii) the invisible hand of (i), (ii) market imperfections (i) market maximisation (i) market-led globalization (i), (ii) market/society relationship (i) monopolies in (i) monopolistic competition (i) monopsony power (i) oligopolies (i) origins of trade (i) pre-modern markets (i), (ii), (iii) role of institutions (i) self-regulating markets (i) state intervention in (i), (ii) transaction cost theory (i), (ii) uncertainty and (i), (ii) see also trade Marshall, Alfred (i), (ii), (iii), (iv) Marx, Karl class analysis (i), (ii) Frankenstein as a metaphor for capitalism (i) labour theory of value (i) the moral cost of progress (i) need for social bonds (i) power relations (i) in relation to equilibrium theory (i) Marxism on bourgeois economics (i) on equilibrium theory (i) hegemonic power concept (i) on industrial society (i), (ii), (iii), (iv) theory of class power (i), (ii), (iii) theory of exploitation (i) mass consumption (i) maths mathematical language (i), (ii) mathematical modelling (i) role in economics (i), (ii) McCloskey, Deirdre (i), (ii) means choice of means (i) as data (i) opportunity costs (i) scarcity of (i), (ii), (iii) scarcity of time and (i) wealth and (i) means-end problem (i), (ii), (iii) Menger’s Hierarchy of Wants (i) methodological holism (i) methodological individualism (i), (ii), (iii), (iv), (v), (vi) methodology classical economics (i) homo economicus function within (i) human nature and (i) the individual in (i) marginal revolution (i) methodological debates (i) methodological persistence (i) of neoclassical economics (i) paradigm persistence (i) paradigm shifts (i), (ii) pluralism within (i) protective belts in research (i) relationship with sociology (i) the scientific method (i) the social in (i) the study of (i), (ii) subjective value theory (i) utility maximisation as (i), (ii), (iii) microeconomics (i), (ii), (iii) Mill, John Stuart (i), (ii), (iii) Miller Atlas of Brazil (i) models agent-based modelling (i) complex system modelling (i) econometric testing (i), (ii) within economic study (i), (ii) to establish laws (i) establishing the facts (i), (ii) fallibility of (i) falsification of theories (i), (ii) freezing technique (i), (ii) frictions (i) human behaviour within (i), (ii), (iii), (iv) logic and mathematical proof (i) macroeconomic models (i), (ii) Malthusian population problem (i), (ii) mathematical modelling (i) method for (i) of monopolies (i) network analysis (i) open and closed systems (i), (ii), (iii), (iv) Phillips Curve (i) platonic modelling (i) Popper’s verification principle (i) predictability (i), (ii) a priori modelling (i), (ii) in relation to reality (i) rhetoric and (i) shocks, notion of (i) the study of (i) system dynamics (i) testing hypotheses (i) time-series analysis (i) see also homo economicus; laws, economic money within economic study (i) efficiency of choice and (i) as a means to an end (i), (ii) theory of money (i) for well-being (i), (ii) see also wealth monopolies (i) morality anomie (i) contracts and (i), (ii) just price doctrine (i) moral agency (i) moral behaviour (i) moral restraint for limiting population growth (i) morally efficient behaviour (i), (ii), (iii) of ownership (i) in relation to strategic rationality (i) see also ethics Nakamura, Emi (i) natural resources (i), (ii) neoclassical economics authority of (i), (ii) the individual and (i), (ii), (iii) institutionalism (i) methodology (i) overview of (i) parody of the state (i) within the political landscape (i) role of social relationships (i) New Institutional Economics (i) North, Douglass (i) Nozick, Robert (i) oligopolies (i) Olson, Mancur (i) ontology in Keynesian economics (i) lack of institutional mapping in (i) in relation to epistemology (i), (ii) open systems (i) opportunity costs (i) paradigm persistence (i) Pareto, Vilfredo (i) Parker, William (i) Phillips Curve (i) philosophy (i), (ii), (iii) physics concept of gravity (i), (ii) the laws of physics and economics (i) Pigou, Arthur (i) pluralism as alternative to heterodoxy (i) within economic methodology (i) in economic theory (i) parable of the blind men and the elephant (i), (ii), (iii) Polanyi, Karl (i), (ii), (iii), (iv) political economy (i), (ii), (iii), (iv) political science (i), (ii) Popper, Karl (i), (ii) positional goods (i) post-modernism (i) power advertising as a form of (i) agenda power (i), (ii) blunt/hard power (i) defined (i) disinterested power (i) economic theory and (i) in economics (i), (ii), (iii), (iv) economics/business relationship (i) forms of (i) hegemonic/ideological power (i) inducements (i) legitimacy of (i) liberal power (i) Machiavellian power (i), (ii) Marxist critiques of bourgeoise economics (i) Marxist theory of class power (i), (ii), (iii), (iv), (v) of monopolies (i) monopolistic competition (i) monopsony power (i) oligopolies (i) as a positional good (i) relationship with ideas (i), (ii) Prebisch, Raúl (i) pre-modern society just price doctrine (i) markets in (i), (ii), (iii) sociology on (i), (ii), (iii) principal-agent problem (i) probability cardinal probabilities (i) Keynes’s theory of probability (i) in neoclassical epistemology (i) uncertainty as (i) production possibility frontier (PPF) (i) property ownership enclosure of the commons (i), (ii), (iii) exploitation of labour (i) justice of property rights (i) Lockean thought (i), (ii) protectionism (i), (ii), (iii), (iv) psychology biases of (i) within a different approach to understanding (i) in economic studies (i) see also homo economicus public choice theory (i) rational expectation theory (i), (ii) rationality communicative rationality (i) decision-making process (i) deviations from in behavioural economics (i), (ii) efficiency of choice (i) future conditions of uncertainty (i), (ii) neoclassical model of (i), (ii) rational behaviour of homo economicus (i), (ii) rational belief/true belief distinction (i) rational vs irrational human behaviour (i), (ii), (iii), (iv), (v) strategic rationality (i) Rawls, John (i), (ii) Raworth, Kate (i) religion (i), (ii) representative agent hypothesis (i), (ii) research dominance of orthodox economics in (i) external interests and influences (i), (ii) intellectual independence of (i) paradigm persistence (i) protective belts in (i) rhetoric (i) Ricardo, David (i), (ii), (iii), (iv), (v), (vi) risk defined (i) risk-taking and profit (i), (ii), (iii) risk/uncertainty distinction (i) Robbins, Lionel definition of economics (i), (ii), (iii) on economic history (i) ethics and economics (i), (ii), (iii) on psychology (i) scarcity perspective (i), (ii), (iii), (iv), (v), (vi) on scientific generalizations (i) the state of well-being (i) Robinson, Joan (i), (ii) Roscoe, Philip (i) Routh, Guy (i) Samuelson, Paul (i), (ii), (iii), (iv), (v) Sargent, Thomas (i), (ii) Say, J.B.


pages: 484 words: 136,735

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

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

Although he organized his economic theory in Principles of Political Economy (1848) around the idea of this hyperrational being, the term Homo Economicus originated in the writing of Mill’s late nineteenth-century critics. See Joseph Persky, “Retrospectives: The Ethology of Homo Economicus,” The Journal of Economic Perspectives 9:2 (Spring, 1995): 221-231. 2 Named after the Italian mathematician Vilfredo Pareto, who first explicitly formulated this definition. See John Cunningham Wood and Michael McLure, eds., Vilfredo Pareto: Critical Assessments, 331. 3 The period of phenomenal technological and economic progress based on the development of electrical, chemical, steel, and petroleum industries from 1865 to 1900 is often described as the Second Industrial Revolution. See David S. Landes, Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present, Chapters 4 and 5. 4 The three body problem has proven problematic to physicists since Newton.

Morgan Stanley Morris, Charles Mortgage market reform Mudd, Daniel Myths burdening grandchildren national bankruptcy Naisbitt, John National Association of Realtors’ monthly index of home resale prices New Asian Hemisphere, The (Mahbubani) New Deal New Normal New Paradigm for Financial Markets, The (Soros) Newton, Sir Isaac Nixon, Richard Northern Rock collapse/response, Britain Obama, Barack/administration Capitalism 4.0 and critics of economic policies economic recovery and fiscal stimulus plan health care reform and hope and See also Economic recovery/2009 government response OECD (Organisation for Economic Co-operation and Development) Oil use/industry dependence on oil and environment and government role in reduction oil shock (2008) OPEC reduction taxes and theory of peak oil true costs/benefits and unearned rent and See also Energy issues Opinions/polls O’Rourke, P. J. Outsourcing Ozone layer Pareto, Vilfredo Pareto Optimality Paris Commune Pascal, Blaise/Wager Paulson, Henry/financial crisis (2007-09) blunders by comparison to Andrew Mellon description/personality Fannie Mae/Freddie Mac seizure Goldman Sachs reputation and market fundamentalism and personal tax exemption post-crisis debate and short sellers and TARP and See also Bush, George W./ administration; Lehman Brothers collapse Pension/health entitlements People’s Daily, China Personalities importance Petronius, Gaius Phelps, Edmund Planck, Max Platform Companies (Platco) Plato “Policy Ineffectiveness Proposition” (Sargent/Wallace) Prince, Charles Protectionism Protestant Ethic and the Spirit of Capitalism, The (Weber) Public Choice theory Rajan, Ranghuram Ramo, Joshua Rand, Ann Rational Expectations Hypothesis (REH) Rationality concept Reagan, Ronald See also Thatcher-Reagan revolution Reflexivity description See also Theory of Reflexivity Reich, Robert Reinhart, Carmen Ricardian Equivalence theory, Barro Ricardo, David Robinson, Joan Rogoff, Kenneth Roosevelt, Franklin Rowthorn, Robert Rumsfeld, Donald Samuelson, Paul Sargent, Thomas Sarkozy, Nicolas Savings Schumpeter, Joseph Seabright, Paul Sen, Amartya Shakespeare Shiller, Robert Short sellers Simon, Herbert Simon, John Singh, Jaswant Skidelsky, Robert Slaughter, Anne-Marie Smith, Adam Capitalism 1 and ideas/impact “invisible hand” of competitive markets concept Smith, Vernon Solow, Robert Sorkin, Andrew Ross Soros, George boom-bust cycles and boom-bust cycles/Theory of Reflexivity “market fundamentalism” term/concept South Sea Bubble/effects Sovereign wealth funds Specialization Spence, Michael Stagflation 1970s causes/conditions for description threat of Stiglitz, Joe Stimulus.

The late nineteenth century economists were able to show that this process of endless calculation could theoretically produce, through the magic of perfectly competitive markets, not only a general equilibrium in which all workers, machines, and resources were full employed, but also, under some restrictive (and unrealistic) assumptions, an optimum, or efficient, allocation of resources that offered the maximum amount of satisfaction, or utility, for society as a whole. The notion of optimality used by economists from the late nineteenth century onward had limited practical relevance, but a huge ideological significance. Proposed by the Italian statistician Vilfredo Pareto, who later became an inadvertent hero of the Italian fascist movement, this concept stated merely that no one in society could be made better off without someone else suffering a loss. Pareto Optimality2 deliberately and consciously ignored the critical questions of interpersonal comparisons: Could the world be improved in some sense by taking a crust of bread from Rockefeller and giving it to a starving child?


Statistics in a Nutshell by Sarah Boslaugh

Antoine Gombaud: Chevalier de Méré, Bayesian statistics, business climate, computer age, correlation coefficient, experimental subject, Florence Nightingale: pie chart, income per capita, iterative process, job satisfaction, labor-force participation, linear programming, longitudinal study, meta analysis, meta-analysis, p-value, pattern recognition, placebo effect, probability theory / Blaise Pascal / Pierre de Fermat, publication bias, purchasing power parity, randomized controlled trial, selection bias, six sigma, statistical model, The Design of Experiments, the scientific method, Thomas Bayes, Vilfredo Pareto

We can see this by drawing a straight line from the bend in the cumulative frequency line (which represents the cumulative number of defects from the two largest sources, Body and Accessory) to the right-hand y-axis. This is a simplified example and violates the 80:20 rule (discussed in the next sidebar about Vilfredo Pareto) because only a few major causes of defects are shown. In a more realistic example, there might be 30 or more competing causes, and the Pareto chart is a simple way to sort them out and decide which processes should be the focus of improvement efforts. This simple example does serve to display the typical characteristics of a Pareto chart. The bars are sorted from highest to lowest, the frequency is displayed on the left-hand y-axis and the percent on the right, and the actual number of cases for each cause are displayed within each bar. Vilfredo Pareto Vilfredo Pareto (1843–1923) was an Italian economist who discovered what is now called the Pareto principle, also known as the principle of “the vital few and the trivial many” or “the 80:20 rule.”

.)), Probability Tables for Common Distributions NNT (Number Needed to Treat), Attributable Risk, Attributable Risk Percentage, and Number Needed to Treat nominal data, Nominal Data–Nominal Data, Glossary of Statistical Terms about, Nominal Data–Nominal Data definition of, Glossary of Statistical Terms nonparametric statistics, Data Transformations, Nonparametric Statistics, Nonparametric Statistics, Glossary of Statistical Terms about, Nonparametric Statistics definition of, Glossary of Statistical Terms parametric statistics and, Data Transformations, Nonparametric Statistics nonprobability sampling, Nonprobability Sampling–Nonprobability Sampling, Glossary of Statistical Terms nonresponse bias, Bias in Sample Selection and Retention, Glossary of Statistical Terms norm group, Percentiles norm-referenced, Percentiles, Test Construction scoring, Percentiles tests, Test Construction normal distribution, The Normal Distribution–The Normal Distribution, The Histogram normal distribution, standard, The Standard Normal Distribution–The t-Distribution normal score, The Normal Distribution–The Normal Distribution, Percentiles normalized scores, The Normal Distribution–The Normal Distribution null hypothesis, Hypothesis Testing number line, Linear regression, Laws of Arithmetic Number Needed to Treat (NNT), Attributable Risk, Attributable Risk Percentage, and Number Needed to Treat numeric and string data, String and Numeric Data O observational studies, Observational Studies–Observational Studies observed score, Glossary of Statistical Terms observed values, The Chi-Square Test odds ratio, The Odds Ratio–The Odds Ratio odds, calculating, The Odds Ratio OLS (Ordinary Least Squares) regression equation, Independent and Dependent Variables omnibus F-test, Post Hoc Tests one-group pretest-posttest design, Quasi-Experimental Studies one-sample t-test, The One-Sample t-Test–Confidence Interval for the One-Sample t-Test one-way ANOVA, The t-Test, One-Way ANOVA–One-Way ANOVA about, One-Way ANOVA–One-Way ANOVA t-test and, The t-Test online resources, Online Resources–Online Textbooks operationalization, Operationalization, Glossary of Statistical Terms opportunity loss table, Minimax, Maximax, and Maximin ordinal data, Ordinal Data–Ordinal Data, Categorical Data, The R×C Table–The R×C Table, Measures of Agreement–Measures of Agreement, The Wilcoxon Rank Sum Test, The Wilcoxon Rank Sum Test, Glossary of Statistical Terms about, Ordinal Data–Ordinal Data, Categorical Data definition of, Glossary of Statistical Terms mean rank, The Wilcoxon Rank Sum Test measures of agreement, Measures of Agreement–Measures of Agreement rank sum, The Wilcoxon Rank Sum Test R×C table, The R×C Table–The R×C Table ordinal variables, correlation statistics for, Ordinal Variables, Ordinal Variables–Ordinal Variables, Ordinal Variables, Ordinal Variables–Ordinal Variables, Ordinal Variables, Ordinal Variables, Ordinal Variables–Ordinal Variables gamma, Ordinal Variables–Ordinal Variables Kendall’s tau-a, Ordinal Variables, Ordinal Variables Kendall’s tau-b, Ordinal Variables–Ordinal Variables Kendall’s tau-c, Ordinal Variables Somers’s d, Ordinal Variables–Ordinal Variables Spearman’s rank-order coefficient, Ordinal Variables Ordinary Least Squares (OLS) regression equation, Independent and Dependent Variables orthogonality, in research design structure, Ingredients of a Good Design outliers, Outliers–Outliers overfitting, Overfitting–Overfitting P p-values, p-values–p-values, The Z-Statistic about, p-values–p-values of Z value, The Z-Statistic Paasche index, Index Numbers–Index Numbers Packel, Edward, The Mathematics of Games and Gambling, Closing Note: The Connection between Statistics and Gambling parallel-forms (multiple-forms) reliability, Reliability parameters, in descriptive statistics, Inferential Statistics, Populations and Samples parametric statistics, Data Transformations, Nonparametric Statistics, Glossary of Statistical Terms Pareto charts (diagrams), Pareto Charts–Pareto Charts Pareto, Vilfredo, Pareto Charts partial correlation, Methods for Building Regression Models PCA (Principal Components Analysis), Factor Analysis–Factor Analysis, Factor Analysis, Factor Analysis–Factor Analysis Pearson correlation coefficient, Correlation Statistics for Categorical Data, Binary Variables, The Pearson Correlation Coefficient, Association–Association, Scatterplots–Relationships Between Continuous Variables, Relationships Between Continuous Variables–Relationships Between Continuous Variables, The Pearson Correlation Coefficient–Testing Statistical Significance for the Pearson Correlation, Testing Statistical Significance for the Pearson Correlation–Testing Statistical Significance for the Pearson Correlation, The Coefficient of Determination about, Correlation Statistics for Categorical Data, Binary Variables, The Pearson Correlation Coefficient about correlation coefficient, The Pearson Correlation Coefficient–Testing Statistical Significance for the Pearson Correlation associations, Association–Association coefficient of determination, The Coefficient of Determination relationships between continuous variables, Relationships Between Continuous Variables–Relationships Between Continuous Variables scatterplots as visual tool, Scatterplots–Relationships Between Continuous Variables testing statistical significance for, Testing Statistical Significance for the Pearson Correlation–Testing Statistical Significance for the Pearson Correlation Pearson’s chi-square test, The Chi-Square Test (see chi-square test) peer review process, journal, The Peer Review Process–The Peer Review Process percent agreement measures, Measures of Agreement percentages, interpreting, Power for the Test of the Difference between Two Sample Means (Independent Samples t-Test) percentiles, Percentiles–Percentiles permutations, Factorials, Permutations, and Combinations–Factorials, Permutations, and Combinations permutations of elements, Permutations phi coefficient, Binary Variables–Binary Variables, Item Analysis physical vs. social sciences, definition of treatments, Specifying Treatment Levels pie charts, Pie Charts placebo, Glossary of Statistical Terms placebo effect, Blinding, Glossary of Statistical Terms playing cards, Dice, Coins, and Playing Cards point estimates, calculating, Confidence Intervals point-biserial correlation coefficient, The Point-Biserial Correlation Coefficient–The Point-Biserial Correlation Coefficient, Item Analysis polynomial regression, Polynomial Regression–Polynomial Regression populations, Inferential Statistics, Inferential Statistics, Populations and Samples–Probability Sampling, Descriptive Statistics and Graphic Displays–Populations and Samples, The Mean–The Mean, The Variance and Standard Deviation, The Variance and Standard Deviation, Population in descriptive statistics, Descriptive Statistics and Graphic Displays–Populations and Samples, The Mean–The Mean, The Variance and Standard Deviation, The Variance and Standard Deviation calculating variance, The Variance and Standard Deviation formula for standard deviation, The Variance and Standard Deviation mean, The Mean–The Mean samples and, Descriptive Statistics and Graphic Displays–Populations and Samples in inferential statistics, Inferential Statistics, Inferential Statistics, Populations and Samples–Probability Sampling mean, Inferential Statistics samples and, Populations and Samples–Probability Sampling variance, Inferential Statistics issues in research design with, Population positive discrimination, Item Analysis post hoc test, Post Hoc Tests–Post Hoc Tests, Glossary of Statistical Terms posttest only design, Quasi-Experimental Studies posttest-only non-equivalent groups design, Quasi-Experimental Studies power, Glossary of Statistical Terms power analysis, Power Analysis–Power Analysis, Ingredients of a Good Design power of coincidence, issues in research design with, The Power of Coincidence Practical Nonparametric Statistics (Conover), Nonparametric Statistics presidential elections, predictions of, Exercises pretest-posttest design with comparison group, Quasi-Experimental Studies prevalence, Prevalence and Incidence–Prevalence and Incidence, Prevalence and Incidence, Glossary of Statistical Terms primary data, Basic Vocabulary Principal Components Analysis (PCA), Factor Analysis–Factor Analysis probability, Defining Probability–Intersection of nonindependent events, Expressing the Probability of an Event–Expressing the Probability of an Event, Conditional Probabilities–Conditional Probabilities conditional, Conditional Probabilities–Conditional Probabilities definition of, Defining Probability–Intersection of nonindependent events of events, Expressing the Probability of an Event–Expressing the Probability of an Event probability distributions, in inferential statistics, Probability Distributions–The Binomial Distribution probability sampling, Probability Sampling–Probability Sampling, Glossary of Statistical Terms probability tables for distributions, Probability Tables for Common Distributions–The Chi-Square Distribution, The Standard Normal Distribution–The t-Distribution, The t-Distribution–The t-Distribution, The Binomial Distribution–The Binomial Distribution, The Chi-Square Distribution–The Chi-Square Distribution about, Probability Tables for Common Distributions–The Chi-Square Distribution binomial distribution, The Binomial Distribution–The Binomial Distribution chi-square distribution, The Chi-Square Distribution–The Chi-Square Distribution standard normal distribution, The Standard Normal Distribution–The t-Distribution t-distribution, The t-Distribution–The t-Distribution probability theory, Probability–Probability, About Formulas–About Formulas, About Formulas–Combinations, Defining Probability–Intersection of nonindependent events, Bayes’ Theorem–Bayes’ Theorem, Closing Note: The Connection between Statistics and Gambling–Closing Note: The Connection between Statistics and Gambling about, Probability–Probability Bayes’ theorem and, Bayes’ Theorem–Bayes’ Theorem defining probability, Defining Probability–Intersection of nonindependent events definitions in, About Formulas–Combinations formulas, About Formulas–About Formulas gambling and, Closing Note: The Connection between Statistics and Gambling–Closing Note: The Connection between Statistics and Gambling product-moment correlation coefficient, The Pearson Correlation Coefficient propensity score, Observational Studies properties of equality, Solving Equations proportion, Proportions: The Large Sample Case–Proportions: The Large Sample Case, Ratio, Proportion, and Rate, Ratio, Proportion, and Rate, Glossary of Statistical Terms about, Ratio, Proportion, and Rate definition of, Glossary of Statistical Terms formula for, Ratio, Proportion, and Rate large-sample Z tests for, Proportions: The Large Sample Case–Proportions: The Large Sample Case prospective cohort study, Basic Vocabulary prospective study, Basic Vocabulary, Glossary of Statistical Terms proxy measurement, Proxy Measurement–Proxy Measurement, Glossary of Statistical Terms pseudo-chance-level parameter, Item Response Theory psychological and educational statistics, Educational and Psychological Statistics–Educational and Psychological Statistics, Percentiles–Percentiles, Standardized Scores–Standardized Scores, Test Construction–Test Construction, Classical Test Theory: The True Score Model–Classical Test Theory: The True Score Model, Reliability of a Composite Test–Reliability of a Composite Test, Measures of Internal Consistency–Coefficient Alpha, Item Analysis–Item Analysis, Item Response Theory–Item Response Theory about, Educational and Psychological Statistics–Educational and Psychological Statistics classical test theory, Classical Test Theory: The True Score Model–Classical Test Theory: The True Score Model item analysis, Item Analysis–Item Analysis item response theory, Item Response Theory–Item Response Theory measures of internal consistency, Measures of Internal Consistency–Coefficient Alpha percentiles, Percentiles–Percentiles reliability of composite test, Reliability of a Composite Test–Reliability of a Composite Test standardized scores, Standardized Scores–Standardized Scores test construction, Test Construction–Test Construction psychometrics, Educational and Psychological Statistics publication bias, Quick Checklist Q quadratic regression model, Polynomial Regression–Polynomial Regression Quality Improvement (QI), Quality Improvement–Run Charts and Control Charts quasi-experimental, Basic Vocabulary–Basic Vocabulary, Quasi-Experimental Studies–Quasi-Experimental Studies research design type, Basic Vocabulary–Basic Vocabulary studies, Quasi-Experimental Studies–Quasi-Experimental Studies quota sampling, Nonprobability Sampling R R programming language, Graphic Methods, R–R random errors, Random and Systematic Error–Random and Systematic Error, Glossary of Statistical Terms definition of, Glossary of Statistical Terms vs. systematic errors, Random and Systematic Error–Random and Systematic Error random measurement error, Classical Test Theory: The True Score Model–Classical Test Theory: The True Score Model Random-Digit-Dialing (RDD) techniques, Bias in Sample Selection and Retention randomization, Confounding, Stratified Analysis, and the Mantel-Haenszel Common Odds Ratio randomized block design, Blocking and the Latin Square range, Glossary of Statistical Terms range and interquartile range, The Range and Interquartile Range–The Range and Interquartile Range rank sum, The Wilcoxon Rank Sum Test Rasch model, Item Response Theory Rasch, Georg, Item Response Theory rate, Ratio, Proportion, and Rate–Ratio, Proportion, and Rate, Crude, Category-Specific, and Standardized Rates–Crude, Category-Specific, and Standardized Rates, Glossary of Statistical Terms about, Ratio, Proportion, and Rate–Ratio, Proportion, and Rate crude rate as, Crude, Category-Specific, and Standardized Rates–Crude, Category-Specific, and Standardized Rates definition of, Glossary of Statistical Terms ratio, Ratio, Proportion, and Rate, Glossary of Statistical Terms about, Ratio, Proportion, and Rate definition of, Glossary of Statistical Terms ratio data, Ratio Data–Ratio Data, Glossary of Statistical Terms about, Ratio Data–Ratio Data definition of, Glossary of Statistical Terms raw time series, Time Series real numbers, properties of, Properties of Real Numbers recall bias, Information Bias, Glossary of Statistical Terms rectangular coordinates (Cartesian coordinates), Graphing Equations–Graphing Equations rectangular data file, storing data electronically in, Codebooks–The Rectangular Data File regression, Independent and Dependent Variables–Independent and Dependent Variables, Introduction to Regression and ANOVA, Linear Regression–Linear Regression, Assumptions–Assumptions, Calculating Simple Regression by Hand–Calculating Simple Regression by Hand, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Dummy Variables–Dummy Variables, Methods for Building Regression Models–Backward removal, Logistic Regression–Converting Logits to Probabilities, Multinomial Logistic Regression–Multinomial Logistic Regression, Polynomial Regression–Polynomial Regression, Polynomial Regression–Polynomial Regression, Polynomial Regression–Polynomial Regression, Overfitting–Overfitting, Quasi-Experimental Studies about, Introduction to Regression and ANOVA arbitrary curve-fitting, Overfitting–Overfitting calculating by hand, Calculating Simple Regression by Hand–Calculating Simple Regression by Hand cubic regression model, Polynomial Regression–Polynomial Regression independent variables and dependent variables, Independent and Dependent Variables–Independent and Dependent Variables linear, Linear Regression–Linear Regression, Assumptions–Assumptions about, Linear Regression–Linear Regression assumptions, Assumptions–Assumptions logistic, Logistic Regression–Converting Logits to Probabilities modeling principles, Multiple Regression Models–Multiple Regression Models multinomial logistic, Multinomial Logistic Regression–Multinomial Logistic Regression multiple linear, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Multiple Regression Models–Multiple Regression Models, Dummy Variables–Dummy Variables, Methods for Building Regression Models–Backward removal about, Multiple Regression Models–Multiple Regression Models adding interaction term, Multiple Regression Models–Multiple Regression Models assumptions, Multiple Regression Models creating a correlation matrix, Multiple Regression Models–Multiple Regression Models dummy variables, Dummy Variables–Dummy Variables methods for building regression models, Methods for Building Regression Models–Backward removal regression equation for data, Multiple Regression Models–Multiple Regression Models results for individual predictors, Multiple Regression Models–Multiple Regression Models standardized coefficients, Multiple Regression Models variables in model, Multiple Regression Models–Multiple Regression Models polynomial, Polynomial Regression–Polynomial Regression quadratic regression model, Polynomial Regression–Polynomial Regression to the mean, Quasi-Experimental Studies regression equations, independent variables and dependent variables in, Independent and Dependent Variables–Independent and Dependent Variables regression to the mean, Quasi-Experimental Studies related samples t-test, Repeated Measures t-Test–Confidence Interval for the Repeated Measures t-Test relational databases, for data management, Spreadsheets and Relational Databases–Spreadsheets and Relational Databases relative frequency, Frequency Tables, Bar Charts–Bar Charts relative risk, The Risk Ratio–The Risk Ratio reliability, Reliability and Validity–Triangulation, Reliability–Reliability, Glossary of Statistical Terms about, Reliability–Reliability definition of, Glossary of Statistical Terms validity and, Reliability and Validity–Triangulation reliability coefficient, Reliability of a Composite Test reliability index, Reliability of a Composite Test repeated measures (related samples) t-test, Repeated Measures t-Test–Confidence Interval for the Repeated Measures t-Test research articles, Writing the Article–Writing the Article, Common Problems–Common Problems, Quick Checklist–Quick Checklist, Issues in Research Design–The Power of Coincidence, Descriptive Statistics–Extrapolation and Trends, Extrapolation and Trends–Linear regression checklist for statistics based investigations, Quick Checklist–Quick Checklist common problems with, Common Problems–Common Problems critiquing descriptive statistics, Descriptive Statistics–Extrapolation and Trends incorrect use of tests in inferential statistics, Extrapolation and Trends–Linear regression issues in research design, Issues in Research Design–The Power of Coincidence writing, Writing the Article–Writing the Article research design, Research Design, Basic Vocabulary–Basic Vocabulary, Basic Vocabulary, Basic Vocabulary, Basic Vocabulary, Basic Vocabulary, Basic Vocabulary, Basic Vocabulary, Observational Studies–Observational Studies, Quasi-Experimental Studies–Quasi-Experimental Studies, Experimental Studies–Experimental Studies, Ingredients of a Good Design–Ingredients of a Good Design, Gathering Experimental Data–Blocking and the Latin Square, Specifying Treatment Levels, Specifying Response Variables, Blinding, Retrospective Adjustment, Blocking and the Latin Square, Example Experimental Design–Example Experimental Design, Communicating with Statistics–Writing for Your Workplace, Issues in Research Design–The Power of Coincidence about, Research Design blinding, Blinding blocking and Latin square, Blocking and the Latin Square classification of studies, Basic Vocabulary communicating with statistics, Communicating with Statistics–Writing for Your Workplace data types, Basic Vocabulary example of, Example Experimental Design–Example Experimental Design experimental studies, Experimental Studies–Experimental Studies factor in, Basic Vocabulary factorial design, Basic Vocabulary gathering experimental data, Gathering Experimental Data–Blocking and the Latin Square hypothesis testing vs. data mining, Specifying Response Variables ingredients of good design, Ingredients of a Good Design–Ingredients of a Good Design issues in, Issues in Research Design–The Power of Coincidence observational studies, Observational Studies–Observational Studies physical vs. social sciences definition of treatments, Specifying Treatment Levels quasi-experimental studies, Quasi-Experimental Studies–Quasi-Experimental Studies retrospective adjustment, Retrospective Adjustment style of notation, Basic Vocabulary types of, Basic Vocabulary–Basic Vocabulary unit of analysis in study, Basic Vocabulary response variables, specifying in experimental design, Specifying Response Variables–Specifying Response Variables responses, experimental, Experimental Studies restriction, Confounding, Stratified Analysis, and the Mantel-Haenszel Common Odds Ratio results section, Writing the Article, Evaluating the Whole Article critiquing in articles, Evaluating the Whole Article writing, Writing the Article retrospective adjustment, Retrospective Adjustment retrospective study, Basic Vocabulary, Glossary of Statistical Terms risk ratio, The Risk Ratio–Attributable Risk, Attributable Risk Percentage, and Number Needed to Treat Robinson, W.S., Basic Vocabulary rolling average, Time Series roots, properties of, Properties of Roots–Properties of Roots Rosenbaum, Paul, Observational Studies Rubin, Donald, Observational Studies Rubin, Roderick J.A., String and Numeric Data–Missing Data run charts and control charts, Run Charts and Control Charts R×C table (contingency table), The R×C Table–The R×C Table S Safari Books Online, Safari® Books Online sample size calculations, Sample Size Calculations–Power for the Test of the Difference between Two Sample Means (Independent Samples t-Test) sample space, definition of, Sample Space–Sample Space samples, Inferential Statistics, Inferential Statistics, Populations and Samples–Probability Sampling, Populations and Samples, Descriptive Statistics and Graphic Displays–Populations and Samples, The Variance and Standard Deviation, The Variance and Standard Deviation, The One-Sample t-Test–Confidence Interval for the One-Sample t-Test, The Independent Samples t-Test–Confidence Interval for the Independent Samples t-Test, Repeated Measures t-Test–Confidence Interval for the Repeated Measures t-Test in descriptive statistics, Descriptive Statistics and Graphic Displays–Populations and Samples, The Variance and Standard Deviation, The Variance and Standard Deviation calculating variance, The Variance and Standard Deviation formula for standard deviation, The Variance and Standard Deviation populations and, Descriptive Statistics and Graphic Displays–Populations and Samples in inferential statistics, Inferential Statistics, Inferential Statistics, Populations and Samples–Probability Sampling mean, Inferential Statistics populations and, Inferential Statistics, Populations and Samples–Probability Sampling one-sample t-test, The One-Sample t-Test–Confidence Interval for the One-Sample t-Test related samples t-test, Repeated Measures t-Test–Confidence Interval for the Repeated Measures t-Test two-sample t-test, The Independent Samples t-Test–Confidence Interval for the Independent Samples t-Test U.S.


pages: 500 words: 145,005

Misbehaving: The Making of Behavioral Economics by Richard H. Thaler

"Robert Solow", 3Com Palm IPO, Albert Einstein, Alvin Roth, Amazon Mechanical Turk, Andrei Shleifer, Apple's 1984 Super Bowl advert, Atul Gawande, Berlin Wall, Bernie Madoff, Black-Scholes formula, business cycle, capital asset pricing model, Cass Sunstein, Checklist Manifesto, choice architecture, clean water, cognitive dissonance, conceptual framework, constrained optimization, Daniel Kahneman / Amos Tversky, delayed gratification, diversification, diversified portfolio, Edward Glaeser, endowment effect, equity premium, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, George Akerlof, hindsight bias, Home mortgage interest deduction, impulse control, index fund, information asymmetry, invisible hand, Jean Tirole, John Nash: game theory, John von Neumann, Kenneth Arrow, Kickstarter, late fees, law of one price, libertarian paternalism, Long Term Capital Management, loss aversion, market clearing, Mason jar, mental accounting, meta analysis, meta-analysis, money market fund, More Guns, Less Crime, mortgage debt, Myron Scholes, Nash equilibrium, Nate Silver, New Journalism, nudge unit, Paul Samuelson, payday loans, Ponzi scheme, presumed consent, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, random walk, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, South Sea Bubble, Stanford marshmallow experiment, statistical model, Steve Jobs, Supply of New York City Cabdrivers, technology bubble, The Chicago School, The Myth of the Rational Market, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, ultimatum game, Vilfredo Pareto, Walter Mischel, zero-sum game

HELPING OUT: 2004–PRESENT 31. Save More Tomorrow 32. Going Public 33. Nudging in the U.K. Conclusion: What Is Next? Notes Bibliography List of Figures Acknowledgments Index The foundation of political economy and, in general, of every social science, is evidently psychology. A day may come when we shall be able to deduce the laws of social science from the principles of psychology. —VILFREDO PARETO, 1906 PREFACE Before we get started, here are two stories about my friends and mentors, Amos Tversky and Daniel Kahneman. The stories provide some hints about what to expect in this book. Striving to please Amos Even for those of us who can’t remember where we last put our keys, life offers indelible moments. Some are public events. If you are as old as I am, one may be the day John F.

But with this caveat duly noted, he moved on and the rest of the profession followed suit. His discounted utility model with exponential discounting became the workhorse model of intertemporal choice. FIGURE 5 It may not be fair to pick this particular paper as the tipping point. For some time, economists had been moving away from the sort of folk psychology that had been common earlier, led by the Italian economist Vilfredo Pareto, who was an early participant in adding mathematical rigor to economics. But once Samuelson wrote down this model and it became widely adopted, most economists developed a malady that Kahneman calls theory-induced blindness. In their enthusiasm about incorporating their newfound mathematic rigor, they forgot all about the highly behavioral writings on intertemporal choice that had come before, even those of Irving Fisher that had appeared a mere seven years earlier.

The Design of Everyday Things. New York: Basic Books. O’Donoghue, Ted, and Matthew Rabin. 1999. “Procrastination in Preparing for Retirement.” In Henry Aaron, ed., Behavioral Dimensions of Retirement Economics, 125–56. Washington, DC: Brooking Institution, and New York: Russell Sage Foundation. ———. 2003. “Studying Optimal Paternalism, Illustrated by a Model of Sin Taxes.” American Economic Review 93, no. 2: 186–91. Pareto, Vilfredo. (1906) 2013. Manual of Political Economy: A Variorum Translation and Critical Edition. Reprint edited by Aldo Montesano et al. Oxford: Oxford University Press. Peter, Laurence J., and Raymond Hull. 1969. The Peter Principle: Why Things Always Go Wrong. New York: William Morrow. Pope, Devin G., and Maurice E. Schweitzer. 2011. “Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes.”


pages: 285 words: 86,174

Twilight of the Elites: America After Meritocracy by Chris Hayes

affirmative action, Affordable Care Act / Obamacare, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, carried interest, circulation of elites, Climategate, Climatic Research Unit, collapse of Lehman Brothers, collective bargaining, creative destruction, Credit Default Swap, dark matter, David Brooks, David Graeber, deindustrialization, Fall of the Berlin Wall, financial deregulation, fixed income, full employment, George Akerlof, Gunnar Myrdal, hiring and firing, income inequality, Jane Jacobs, jimmy wales, Julian Assange, Kenneth Arrow, Mark Zuckerberg, mass affluent, mass incarceration, means of production, meta analysis, meta-analysis, money market fund, moral hazard, Naomi Klein, Nate Silver, peak oil, plutocrats, Plutocrats, Ponzi scheme, Ralph Waldo Emerson, rolodex, The Spirit Level, too big to fail, University of East Anglia, Vilfredo Pareto, We are the 99%, WikiLeaks, women in the workforce

So while the history of enfranchisement moves steadily—if slowly—in the direction of inclusion, the social contract must also accommodate the fact that management of affairs of state and market grow evermore complex and specialized. The result is a cycle of populism, anti-elite revolt, and oligarchic retrenchment, with each new ruling elite displacing its predecessor. “History,” as the Italian political economist Vilfredo Pareto once said, “is the graveyard of aristocracies.” And so it was for the Eastern Establishment that Mills chronicled. Its hold on power was thoroughly (and forever) disrupted by a number of social upheavals that culminated in the 1960s. As famously chronicled in David Halberstam’s The Best and the Brightest, Vietnam permanently destroyed the credibility of the “Wise Men” who straddled the upper echelons of both private business and public service.

During the late nineteenth century and into the twentieth, as democratic experiments spread throughout Europe, a group of theorists set themselves to the task of analyzing how it was that a small subset of citizens could retain de facto control over a society despite the downward pressures of democratization. One of those theorists was Robert Michels, whose Iron Law of Oligarchy offered a model for how to think about our own meritocracy. Michels’s fellow theorists of the elite—Vilfredo Pareto, Gaetano Mosca, and José Ortega y Gasset—shared a similar descriptive analysis, though because they were hostile to egalitarianism, they viewed this as a feature rather than a bug. To them the “elite” was made up of both those with the most power and also those who deserved the most power. Central to their theories was a kind of proto-meritocratic vision of cream rising to the top, a conception of rule by the best, brightest, and noblest that stretches all the way back to the vision of the Greeks.

The Foreclosure of America: Life Inside Countrywide Home Loans and the Selling of the American Dream. New York: Penguin, 2010. Michels, Robert. Political Parties: A Sociological Study of the Oligarchical Tendencies of Modern Democracy. Translated by Eden and Cedar Paul. New York: The Free Press, 1962. Mills, C. Wright. The Power Elite. New York: Oxford University Press, 1956. Moynihan, Daniel Patrick. Secrecy: The American Experience. New Haven, Conn.: Yale University Press, 1998. Pareto, Vilfredo. The Rise and Fall of Elites: An Application of Theoretical Sociology. 1968. Reprint, New Brunswick, N.J.: Transaction Publishers, 1991. Putnam, Robert D. The Comparative Study of Political Elites. Englewood Cliffs, N.J.: Prentice Hall, Inc., 1976. Schleef, Debra J. Managing Elites: Professional Socialization in Law and Business Schools. Lanham, Md.: Rowman & Littlefield Publishers, Inc., 2006.


pages: 545 words: 137,789

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

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

Newton, Isaac New York Cotton Exchange New Yorker, The New York Mets baseball team New York State Common Retirement Fund New York Stock Exchange New York Times, The Book Review New York University (NYU) Stern School of Business New York Yankees baseball team Nightingale, Florence “NINJA” mortgage loans Nixon, Richard Nobel Prize noise traders Nordhaus, William Northern Rock Norway Nothaft, Frank Obama, Barack Objectivist Newsletter, The October Revolution oligopoly “On an Economic Equation System and a Generalization of the Brouwer Fixed Point Theorem” (von Neuman) O’Neal, Stan On Liberty (Mill) Only Yesterday (Allen) “On the Economic Theory of Socialism” (Lange) “On the Impossibility of Informationally Efficient Markets” (Grossman and Stiglitz) Organisation for Economic Cooperation and Development Organization of Petroleum Exporting Countries (OPEC) O’Rourke, Kevin O’Toole, Bob Ove Arup Ownit Mortgage Solutions Oxford University Pacific Investment Management Company Padilla, Mathew paradox of thrift Pareto, Vilfredo Pareto efficiency Parker Brothers Pasternak, Boris Paulson, Henry “Hank” Pearl Harbor, Japanese attack on Pender, Kathleen Penn Square Bank Pennsylvania, University of, Wharton School of Business Pentagon Papers, The Pericles Phelps, Edmund Philadelphia 76ers basketball team Philippines Phillips, A. W. (“Bill”) Phillips Curve Pickens, T. Boone Pigou, Arthur C.

Rather than confining myself to expounding the arguments of Friedrich Hayek, Milton Friedman, and their fellow members of the “Chicago School,” I have also included an account of the formal theory of the free market, which economists refer to as general equilibrium theory. Friedman’s brand of utopian economics is much better known, but it is the mathematical exposition, associated with names like Léon Walras, Vilfredo Pareto, and Kenneth Arrow, that explains the respect, nay, awe with which many professional economists view the free market. Even today, many books about economics give the impression that general equilibrium theory provides “scientific” support for the idea of the economy as a stable and self-correcting mechanism. In fact, the theory does nothing of the kind. I refer to the idea that a free market economy is sturdy and well grounded as the illusion of stability.

In Britain, in the second half of the century, scholars such as William Stanley Jevons, Francis Ysidro Edgeworth, and Alfred Marshall began to apply the methods of calculus in a more systematic fashion, developing formal theories—or “models”—of how consumers and firms behave, many of which are still taught today. Most of these theories applied to individual firms and businesses. Building on the Tableau Economique (Economic Table) that François Quesnay, the eighteenth-century philosopher, had constructed, Léon Walras and Vilfredo Pareto, who both taught at the University of Lausanne, set out to create a coherent mathematical theory of the entire economy. Walras was born in northern France in 1834 and died in 1910. After trying his hand at fiction, journalism, and mine engineering, he followed the advice of his father, an economist, and devoted himself to economics. During the 1860s, Walras published articles on various topics, but it was his 1874 treatise, Elements of Pure Economics, that established him as a major figure.


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

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

He added that “if Communism [with its central planning] achieves a certain success, it will achieve it, not as an improved economic technique, but as a religion” (ibid., p. 305). Furthermore, “any religion … [has] power against the egotistic atomism of the irreligious” (ibid., p. 306). Keynes’s view on the religious side of socialism was similar to those that, in 1900, had been expressed by the Italian economist Vilfredo Pareto in a review of a book on socialism, written by G. le Bon, a French sociologist, called Psychologie du socialism. As Keynes would comment twenty-five years later, Pareto had commented on the religious appeal of socialism. It should also be noted that some aspects of socialism have historically attracted, and continue to attract, the Catholic Church, as can be seen by reading Pope Francis’s recent pronouncements and the encyclical letter Laudato Si’ (2015).

It would be neutralized by lower private spending, due to the anticipation, by the taxpayers, of the higher future taxes. The “Scienza delle Finanze,” the Italian school of thought mentioned earlier, had been aware of, and had discussed, the realism of the Ricardian Equivalence hypothesis, because of the frequent fiscal deficits that had characterized the Italian public finances after the unification of Italy in 1861 (see Tanzi, 2012). The famous Italian economist Vilfredo Pareto had dismissed that hypothesis and had concluded that it was too far-fetched to have much practical relevance. He had expressed strong doubts that individuals would be so rational and so well-informed as to be able to make the needed calculations and to anticipate the future tax payments that would fall on them when the public debt was to be repaid (see the reference to Pareto in Tanzi, 2000a, p. 1).

Therefore, over the longer run, redistributive policies cannot but fail to make societies and economies worse off than they would be without the policies. If one accepts that the market works efficiently and also accepts the ethical validity of the market results, the aforementioned view and the described outcome could be justified by the traditional interpretation of the Pareto Optimum, the criterion that has dominated welfare economics for much of the past century, since Vilfredo Pareto, an Italian economist, first proposed it at the beginning of the twentieth century. The criterion states that if one group, for example, the top 1 percent of the population, is made better off by economic growth, without making the remaining 99 percent worse off (in an absolute sense), the change in the income and Recent Concerns about Inequality 319 the wealth of the top 1 percent must be considered welfare enhancing.


pages: 226 words: 59,080

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

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

More precisely, under the stated assumptions of the theorem, the market economy delivers as much economic output as any economic system possibly could. There is no way to improve on this outcome, in the sense that no reshuffling of resources could possibly leave someone better off without making some others worse off.* Note that this definition of efficiency—Pareto efficiency, named after the Italian polymath Vilfredo Pareto—pays no attention to equity or other possible social values: a market outcome in which one person receives 99 percent of total income would be “efficient” as long as his losses from any reshuffle exceeded the gains that would accrue to the rest of society. Distributional complications aside, this is a powerful result—one that is not obvious. If today we associate markets readily with efficiency, it is largely because of more than two centuries of—let’s not beat around the bush—indoctrination about the benefits of markets and capitalism.

.: CCT program in, 4 congestion pricing and, 2–3 New York Times, 136 Nobel Prize, 31, 32, 33, 49n, 50, 69, 131, 136, 154, 157, 203, 208 North, Douglass, 98 Obama, Barack, 135, 152 offshoring, 141 Ohlin, Bertil, 139 oil industry: OPEC and, 130–31 price controls in, 94–97 supply and demand in, 14, 99 value theory and, 119–20 Ollion, Etienne, 79n, 200n “On Exactitude in Science” (Borges), 43–44 Oportunidades, 4, 105 opportunity costs, 70 Organization for Economic Co-operation and Development (OECD), 109, 164 Organization of Petroleum Exporting Countries (OPEC), 130 Ostrom, Elinor, 203n output, economic, business cycles and, 126 outsourcing, 149, 194 Oxford University, 197n, 198 Pakistan, 106 panics, financial, 155 parables, models and, 20 Pareto, Vilfredo, 48 Pareto efficiency, xiii, 14, 48 partial-equilibrium (single market) analysis, 56, 58, 91 Passions and the Interest, The (Hirschman), 195 patents, 151 path dependence, 42, 43 Pauli, Wolfgang, 80 perfectly competitive market models, 21, 27, 28, 47, 69n, 71, 122, 180 personal distribution of income, 121 Peterson Institute, 159 Pfleiderer, Paul, 26 “Physicist Experiments with Cultural Studies, A” (Sokal), 79n physics, theories and, 113 pluralism, economics and, 196–208 political science, mathematics and, 30–31, 34 Pollin, Robert, 77 pollution, carbon emissions and, 188–90, 191–92 Portugal, 207 comparative advantage principle and, 52–53 positive spillovers, 100 positivism, 81 Posner, Richard, 152 possibilism, 210n–11n “Possibilism: An Approach to Problem-Solving Derived from the Life and Work of Albert O.


pages: 274 words: 93,758

Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

"Robert Solow", Andrei Shleifer, asset-backed security, Bernie Madoff, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, desegregation, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, market bubble, Menlo Park, mental accounting, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, short selling, Silicon Valley, the new new thing, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, Vilfredo Pareto, wage slave

Levitt, “Keith Chen’s Monkey Research,” New York Times, June 5, 2005. 15. Venkat Lakshminarayanan, M. Keith Chen, and Laurie R. Santos, “Endowment Effect in Capuchin Monkeys,” Philosophical Transactions of the Royal Society B: Biological Sciences 363, no. 1511 (December 2008): 3837–44. 16. Adam Smith, The Wealth of Nations (New York: P. F. Collier, 1909; originally published 1776), p. 19. Emphasis added. 17. For a version of Pareto’s original writings, see Vilfredo Pareto, Manual of Political Economy: A Critical and Variorum Edition, ed. Aldo Montesano et al. (Oxford: Oxford University Press, 2014). This edition derives from Manuale di Economia, published in Italy in 1906, and also a later edition in French. 18. In 1954, Kenneth Arrow and Gerard Debreu published a joint article that proved the existence of such an equilibrium under rather general conditions.

Accessed March 18, 2005. http://www.oyez.org/cases/2000-2009/2008/2008_08_205. Packard, Vance. The Hidden Persuaders: What Makes Us Buy, Believe—and Even Vote—the Way We Do. Brooklyn: Ig Publishing, 2007. Original edition, New York: McKay, 1957. Paltrow, Scot J. “Executive Life Seizure: The Costly Comeuppance of Fred Carr.” Los Angeles Times, April 12, 1991. Accessed May 1, 2015. http://articles.latimes.com/1991-04-12/business/fi-342_1_executive-life. Pareto, Vilfredo. Manual of Political Economy: A Critical and Variorum Edition. Edited by Aldo Montesano, Alberto Zanni, Luigino Bruni, John S. Chipman, and Michael McClure. Oxford: Oxford University Press, 2014. “The Path to Prosperity.” Wikipedia. Accessed December 15, 2014. http://en.wikipedia.org/wiki/The_Path_to_Prosperity. Patterson, James T. Restless Giant: The United States from Watergate to Bush v.

., 184n32 oranges, Sunkist, 51, 53 Oreskes, Naomi, 216n16 Organ, Hector, 141–42 Orman, Suze, 15–17, 21, 153, 187n1, 188n3 O’Shea, James E., 220nn18–19 overweight individuals, xv, 94 Owen, David, 225n22 Oxford English Dictionary, x–xi OxyContin, 210n45 Packard, Vance, Hidden Persuaders, 7, 53–54, 186n21, 186n26 PACs. See political action committees Palmolive soap, 50 Paltrow, Scott J., 222n18 Panel Study of Income Dynamics, 70 Pantry Pride, 129–30 Pareto, Vilfredo, 185n17 Pareto optimality, 5, 74, 171, 186n18 Patterson, James T., 228n6 Patterson, Thom, 214n18 Paul, David, 128 Paulson, Henry M., 76, 189–90n1, 190n4, 204–5n16 Paulson, John, 143, 193n33 Pavlov Poke, 100 Pear, Robert, 211n52 Penn Central, 27–28 Pennsylvania Railroad, 130 Perelman, Ronald, 129–30 personal financial insecurity, xiii, 17–20, 182–83n19 Pfizer, 89, 209n27 pharmaceutical industry: arthritis drugs, 86–90; drug prices, 94–95; lobbyists, 94–95; marketing by, 87–90, 92–94, 211n53; medical education, 90, 93; patents of, 211n53; phishing by, 87–95; quack remedies, xiv, 84–85.


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

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

We would then have a less open upper class, higher inequality, and lower social mobility, represented by point Z2. This of course would be a recipe for the creation of a (semi-) permanent upper class. FIGURE 2.7. The long- and short-term relationship between inequality and intergenerational mobility It is perhaps not sufficiently appreciated how similar were the views of Marx and the Italian economist Vilfredo Pareto on the role of the ruling class (in Marx’s terminology) or the elite (in Pareto’s). Both believed that every society contains, or has contained, a distinct upper class, and that such an upper class uses ideology to present its own interests as general interests and thus to maintain its hegemony over those it rules. How to think about today’s elite in liberal meritocratic capitalism Their view differed, however, about the importance of ownership of the means of production as the principal basis for class distinction, and about the importance of the way in which production is organized.

Cambridge, MA: MIT Press. Orléan, André. 2011. L’empire de la valeur: refonder l’économie. Paris: Seuil. Overbeek, Hans. 2016. “Globalizing China: A Critical Political Economy Perspective on China’s Rise.” In Handbook of Critical International Political Economy: Theories, Issues and Regions, ed. Alan Cafruny, Leila Simona Talani, and Gonzalo Pozo-Martin, 309–329. London: Palgrave Macmillan. Pareto, Vilfredo. 1935. The Mind and Society, vol. 4 [Trattato di Sociologia Generale]. New York: Harcourt Brace. Pei, Minxin. 2006. China’s Trapped Transition. Cambridge, MA: Harvard University Press. Pei, Minxin. 2016. China’s Crony Capitalism. Cambridge, MA: Harvard University Press. Piketty, Thomas. 2014. Capital in the Twenty-First Century, trans. Arthur Goldhammer. Cambridge, MA: Harvard University Press.

See Household surveys National revolutions, in Third World, 79–82 Nations, intergenerational transmission of collectively acquired wealth among, 158–159 Native populations, reconciling concerns of with desires of migrants, 142–147 Natural liberty, 12 Navigation Act, Smith on, 114, 248n45 NBS survey, 104 Neiman, Brent, 24 Neo-Hobbsian capitalism, 210 Neoliberalism, 209–210 Netherlands, GDP per capita, 211, 212 NGOs (nongovernmental organizations), moral money laundering and, 169–170 Niceness: commercialized society and, 177; commodification and, 193, 194, 196 Nobel Factor, The (Offer & Söderberg), 51 Norway, inequality in income from capital and labor in, 26–27, 29 Novokmet, Filip, 105, 168 Oakland (California), universal basic income in, 202 Obama, Barack, 57, 186 Offer, Avner, 51, 203 Offshoring, 152–153 Oligarchy, movement from democracy to, 56 One-off grants, 201, 242n43 On New Democracy (Mao), 245n12 “On Representative Government” (Mill), 57 Open capital accounts, worldwide corruption and, 163, 168–170, 174 Organized labor, decline in power of, 25, 42–43 Origins of Political Order, The (Fukuyama), 115 Outsourcing, 136; of family activities / services, 190; of internal family legal code, 189; of morality, 180–184 Overbeek, Hans, 116 Owners, division of net product between workers and, 14–16 Page, Benjamin, 56 Panama Papers, 169 Paradise Papers, 169 Pareto, Vilfredo, 65 Partimonialization of the state, 120 Party officials in China, corruption and, 108–112 Paul (apostle), 155 Peace, capitalism and, 206–207 Pei, Minxin, 109–111, 164 People’s capitalism, 48, 215, 216 Piketty, Thomas: on capital flight out of Russia, 168; on income shares of capital and labor, 15; on inherited wealth, 62; on private wealth in China, 103–104; on ratio between capital and income, 27; on rising share of labor income in top 1 percent, 18; systemic and incidental factors driving inequality up, 22, 23 Piñera, José, 167–168 Pinochet, Augusto, 167 Plato, 4, 68–69 Plutocratic political capitalism, 217–218 Polanyi, Karl, 195 Political campaigns, public funding of, 217 Political capitalism, 67–128; China and, 67, 87–91; competition with liberal meritocratic capitalism, 10–11; corruption and, 120–121; countries with systems of, 96–98; durability and global attractiveness of, 112–128; economic rise of Asia and, 5–6; “export” of Chinese, 118–128; inequality in China and, 98–112; key features of, 91–98; liberal capitalism vs., 207–211; place of communism in history and, 68–78; plutocratic, 217–218; possible evolution of, 215–218; role of communist revolutions in bringing capitalism to Third World and, 67, 78–91; systemic characteristics and systemic contradictions of, 91–96; transferability of Chinese, 123–125; viability of, 128 Political control, of upper class, 56–59 Political effects of political capitalism’s success in China, 9 Political elites, autonomy of in political capitalism, 11 Political freedom, trade-off between income and, 208–209 Political power, distribution in China, 116 Politico-capitalist class, in China, 94, 116 Polyarchy, 119 Popper, Karl, 244n3 Postcapitalism (Mason), 194, 255n18 Post–Cold War world, contours of, 1–11; capitalism as the only socioeconomic system, 2–5; rise of Asia and the rebalancing of the world, 2, 5–11 Private companies, in China, 88–89 Private investment, in China, 89–90 Private life, in daily capitalism, 190–196 Private sphere: commodification of, 194–196; interaction with public sphere, 189–190 Private wealth, increase in China in, 103–104 Production: “Asiatic” mode of, 74, 75, 245n7; folding household into capitalist mode of production, 189–190; free movement of factors of, 136–141; global fragmentation of, 251n13; global value chains and organization of, 147–148; household mode of, 189; people as capitalist centers of production, 194–196; wage labor outside the home, 189 Production and pricing decisions in China, 90–91 Production possibility frontier, 87 Progressive taxation, attempting to redress inequality and, 45 Property rights: in China, 116–117; global value chains and, 148 Protestant Ethic and the Spirit of Capitalism, The (Weber), 91 Protestantism, capitalism and, 179 Protocommmunist policies, 46 Public education: liberal capitalism and, 13, 43–44; need for increase in funding and improvement of, 217.


The Ethical Algorithm: The Science of Socially Aware Algorithm Design by Michael Kearns, Aaron Roth

23andMe, affirmative action, algorithmic trading, Alvin Roth, Bayesian statistics, bitcoin, cloud computing, computer vision, crowdsourcing, Edward Snowden, Elon Musk, Filter Bubble, general-purpose programming language, Google Chrome, ImageNet competition, Lyft, medical residency, Nash equilibrium, Netflix Prize, p-value, Pareto efficiency, performance metric, personalized medicine, pre–internet, profit motive, quantitative trading / quantitative finance, RAND corporation, recommendation engine, replication crisis, ride hailing / ride sharing, Robert Bork, Ronald Coase, self-driving car, short selling, sorting algorithm, speech recognition, statistical model, Stephen Hawking, superintelligent machines, telemarketer, Turing machine, two-sided market, Vilfredo Pareto

The key thing to realize is that any model that is not on this boundary is a “bad” model that we should eliminate from consideration, because we can always improve on either its fairness score or its accuracy (or both) without hurting the other measure by moving to a point on this boundary. The technical name for this boundary is the Pareto frontier or Pareto curve, and it constitutes the set of “reasonable” choices for the trade-off between accuracy and fairness. Pareto frontiers, which are named after the 19th-century Italian economist Vilfredo Pareto, are actually more general than just accuracy-fairness trade-offs, and can be used to quantify the “good” solutions to any optimization problem in which there are multiple competing criteria. One of the most common examples is the “efficient frontier” in portfolio management, which quantifies the trade-off between returns and risk (or volatility) in stock investing. The Pareto frontier of accuracy and fairness is necessarily silent about which point we should choose along the frontier, because that is a matter of judgment about the relative importance of accuracy and fairness.

See also societal norms and values nuclear weapons, 180–81 online shopping algorithms, 116–21, 123–24 Open Science Foundation, 161 optimization and algorithmic violations of fairness and privacy, 96 and data collection bias, 90 and definitions of fairness, 70–72 and differential privacy, 44–45 and echo chamber equilibrium, 125 and equilibrium in game theory, 98–99 and “fairness gerrymandering,” 87 and fairness vs. accuracy, 75–83 and interpretability of model outputs, 174–75 “Maxwell solution,” 105–11 and navigation problems, 102–4, 112 and online shopping algorithms, 116, 122 Pareto optimal solutions, 128, 193 and product recommendation algorithms, 123–24 statistical parity vs. optimal decision-making, 72 threat of optimization gone awry, 179–88 and unintended results, 189–90 and unique challenges of algorithms, 10 outcome trees, 140 outliers, 122 overfitting data, 31, 136, 159, 167 pairwise correlations, 57–58 parable on machine learning pitfalls, 182–83 Pareto, Vilfredo, 81 Pareto frontier (Pareto curves), 63, 81–86, 89, 128, 193 parity, statistical, 84 Partnership on AI to Benefit People and Society, 15 patient records. See medical records and data Pentland, Sandy, 145–46 performance reporting, 140–41 personal data, 171 personalized medicine, 191–92 p-hacking, 144–46, 153–59, 161, 169–70. See also adaptive data analysis phone apps, 2 physiology research, 141–43 plausible deniability, 41 policy, 82–84 political affiliation data, 25–26, 51–52 political bias, 14–15 portfolio management, 81 post hoc rationalization, 191.


Bulletproof Problem Solving by Charles Conn, Robert McLean

active transport: walking or cycling, Airbnb, Amazon Mechanical Turk, asset allocation, availability heuristic, Bayesian statistics, Black Swan, blockchain, business process, call centre, carbon footprint, cloud computing, correlation does not imply causation, Credit Default Swap, crowdsourcing, David Brooks, Donald Trump, Elon Musk, endowment effect, future of work, Hyperloop, Innovator's Dilemma, inventory management, iterative process, loss aversion, meta analysis, meta-analysis, Nate Silver, nudge unit, Occam's razor, pattern recognition, pets.com, prediction markets, principal–agent problem, RAND corporation, randomized controlled trial, risk tolerance, Silicon Valley, smart contracts, stem cell, the rule of 72, the scientific method, The Signal and the Noise by Nate Silver, time value of money, transfer pricing, Vilfredo Pareto, walkable city, WikiLeaks

Doing an order of magnitude analysis should provide a minimum, most likely, and maximum estimate, not simply the maximum. Often the best knock‐out analysis, which we referred to in the previous chapter, is an order of magnitude analysis to show how changes would improve an outcome or make little difference. Efficient analysis is often helped by the 80:20 rule, sometimes called the Pareto Principle after the Italian economist Vilfredo Pareto, who first noticed this relationship. It describes the common phenomenon that 80% of outcomes come from 20% of causes. If you plot percent of consumption of a product on the Y‐axis and percent of consumers on the X‐axis you will often see that 20% of consumers account for 80% of sales of a product or service. The point of doing 80:20 analyses is again to focus your analytical effort on the most important factors.

See Net present value Nursing outcomes, improvement, 67e Nussbaumer Knaflic, Cole, 182, 190 O Obesity analysis, 238–239 call to action, 239–243 case study, 143–146 high‐leverage problems, support, 242 incentives, 241 interventions, UK cost curve, 239e McKinsey Global Institute (MGI) study, 143, 236–239 policy variables, income/education (impact), 240 prevalence, measurement, 144, 144e problem, cleaving/definition, 237–238 rates, increase, 240 regulatory interventions, 237 social networks, impact, 241–242 walkability/active transport, 242–243 wicked problem, 236–237 Observations/complications, usage, 95 Occam's Razor, 114 Ohno, Taichi, 128 One‐day answers, 95–97, 184–185 example, 96 structuring, 95 Options, value, 216 Order of magnitude analysis, 114, 137 Ostrom, Elinor, 244 Outcomes, 196 distribution, 122–123, 122e economic outcomes, 158 policy/parameter change, impact, 157 prediction, 140 production, 130 value, 117–118 Output, sale, 214 Outside views, solicitation, 105 Overfishing common‐resource problem, 244 definition, 244 Morro Bay, case study, 247–250 obstacles, 246–247 restructuring, 246–247 solutions, 245–246, 245e wicked problem, 243–250 Over optimism, 101 P Pacific Fishery Management Council (PFMC), 244 Pacific salmon abundance/diversity, 54e change, vision (setting), 231e long‐term strategy portfolio, management (case study), 226–233 preservation, problem statement refinement, 34–39 problem statement evolution, 38e problem worksheet, 36e regional/topical strategies, management, 230–233 saving, case study, 53–58, 57e strategy portfolio, 229e TOC example, 227e Pain points, 44 Palter, Robert, 122 Pareto Principle, 114–115 Pareto Thinking, 129 Pareto, Vilfredo, 114 Payoff table, preparation, 171–172 Pearl, Judea, 151 Personal assets/savings, importance, 210 Personal problem solving, cleaving frame examples, 80 Perspective taking, 104 PFMC. See Pacific Fishery Management Council PISA. See Program for International Student Assessment Plautius, Aulus, 69 Play. See Work/play Porter, Michael, 220 Portfolio, visualization, 229 Predictions, making, 160, 164–165 Pre‐mortem analysis, 105–106 Price/volume (cleaving frame example), 76 PriceWaterhouse Coopers, 170 Primary outcomes, improvement, 126 Principal/agent (cleaving frame example), 76 Prioritization, 98.


pages: 330 words: 77,729

Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes by Mark Skousen

"Robert Solow", Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, business climate, business cycle, creative destruction, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, full employment, Hernando de Soto, housing crisis, Hyman Minsky, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, liberation theology, liquidity trap, means of production, microcredit, minimum wage unemployment, money market fund, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, unorthodox policies, Vilfredo Pareto, zero-sum game

All these tools are found in today's microeconomics, the theory of individual consumers and producers. It is the toolbox economists employ today to analyze and illustrate a theory of consumer and firm behavior. The European Wizards of Economics: Walras, Pareto, and Edgeworth Marshall's work was followed up by the work of others in Europe and America who helped professionalize economics. Leon Walras (1834-1910) from France, Vilfredo Pareto (1848-1923) from Italy, and Francis Edgeworth (1845-1926) from Ireland introduced sophisticated mathematical methods and attempted to validate Adam Smith's invisible hand doctrine in mathematical form. The invisible hand idea, that laissez-faire leads to the common good, has become known as the first fundamental theorem of welfare economics (as noted in chapter 1). Welfare economics deals with the issues of efficiency, justice, economic waste, and the political process in the economy.

Smith's view of. 36 Money Orbis Books, 103, 104 as a commodity, 129 Oulanem (Marx), 72-73 elimination of, 89 Overworked American (Schor), 97-98 Marxist view of, 99-100 role of, 125 Padover, Saul K., 64 q, 69 See also Exchange; Gold; Monetary Paradox of thrift, 173-174, 179, 208 models and policy; Money, quantity Paradoxes theory of diamond-water, 50-51, 108«1-109«1 Money, Interest and Prices (Patinkin), 178 thrift, 173-174, 179, 208 Money, quantity theory of value, 108 Fisher's, 126-127 Pareto, Vilfredo, 115-116 Friedman vs. Keynes, 196-197 Pareto optimality, 116-117 Hume's views of, 44 Patinkin, Don, 178 Smith's view of, 36 Pendulum, ix-x Monopoly, 30-31, 86 Peuchet, Jacques, 73 Montesquieu, Charles de Secondat, 39, Phillips, A.W„ 187 40-41 Phillips curve, 187, 197-198 Monthly Review, 101 Phrenology, 77-78 Moral behavior, 30 Pigou, Arthur C., 178 Multiplier Pin factory, 10 balanced budget, 172, 176 Plato, 38-39 Friedman on, 197 Player, The (Marx), 72 full employment, 160-162 Poetry savings, 180 about Marx, 71 Musgrave, Richard, 209-210 Marx's, 72-73 Pollution fees, 214 National debt, 176-177 Poor people National income, 171-172, 182, 197 benefit from capitalism, 32-34 Natural liberty, 7, 10-11 Yunus and,204-205 Keynes' critique of, 149 Popper, Karl, 96-97 principles of, 11, 18 Population studies, 51-52 standard of living and, 31-32 Positive Theory of Capital (Bohm-Bawerk), See also Classical model 112 Natural rate Poverty of Philosophy (Marx), 96 interest, 130 Price unemployment, 197 determined by demands, 109 Neoclassical economics.


pages: 317 words: 87,566

The Happiness Industry: How the Government and Big Business Sold Us Well-Being by William Davies

1960s counterculture, Airbnb, business intelligence, corporate governance, dematerialisation, experimental subject, Exxon Valdez, Frederick Winslow Taylor, Gini coefficient, income inequality, intangible asset, invisible hand, joint-stock company, lifelogging, market bubble, mental accounting, nudge unit, Panopticon Jeremy Bentham, Philip Mirowski, profit maximization, randomized controlled trial, Richard Thaler, road to serfdom, Ronald Coase, Ronald Reagan, science of happiness, selective serotonin reuptake inhibitor (SSRI), sentiment analysis, sharing economy, Slavoj Žižek, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, social intelligence, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Chicago School, The Spirit Level, theory of mind, urban planning, Vilfredo Pareto

Did economists really need to know what was going on inside people’s heads? For the economists who came immediately after Jevons, the answer was a firm ‘no’. Following Jevons’s death in 1888, economists began to distance themselves from his psychological theories or methods.23 In place of Jevons’s theory stating that each pleasure and pain has its own discernible quantity, a theory of preferences was introduced in its place. As economists such as Marshall and Vilfredo Pareto saw it, economists have no need to know how much pleasure a pizza gives me, but only whether I would prefer to have a pizza or a salad. The way I spend my money is determined by my preferences, and not by my actual subjective sensations. Gradually economists discovered that they could say less and less about what goes on in the minds of consumers, to the point where it’s enough to simply observe their use of money and assume the rest.

., 119 McNamara, Robert, 235 measurement apparatus of as continually growing, 242 bodily-tracking devices, 240 of experienced utility, 64 happiness measurement, 6, 11, 36–7, 38, 251, 260 of human optimality, 274 as indicating quantity not quality, 146 mass psychological measurement, 217 no single measure of happiness and well-being, 241 objective psychological measurement, 268 of ourselves, 232 of pain, 33, 249 of pleasure, 22, 33, 249 of politics, 145 of positivity, 165 psychic measurement, 59, 60 of punishment, 22 quality of life measures, 126 of speed of mental processes, 77 measurement tools, eighteenth century inventions in, 22–3 Mechanics’ Institutes/Institutions, 47, 48 meditation, 32, 38, 68, 112, 260 Menger, Carl, 54 mental health/mental illness, 107, 108, 126, 127, 252, 254 mental optimization, 242 mental processes, measuring speed of, 77 mental resilience, 135 Merck, 164 metaphysics, 31, 37, 78, 86, 89, 92 Meyer, Adolf, 93, 169 Meyerian psychiatry, 169, 290–291n30 Microsoft, 159 ‘Middletown in Transition’, 99 ‘Middletown Studies’, 98, 100, 101 Miliband, Ed, 191 Mill, John Stuart, 49, 53 mind, 7, 56, 57, 62, 68, 96 mind–body problem, 28 mindfulness, 32, 35, 259, 260, 265, 273 mind-reading technology, 33, 75–6 Minerva Research Initiative (Pentagon), 257 misery, 108, 115, 271 MIT Affective Computing research centre, 221 money, 25–6, 27, 37, 39, 46, 51, 52, 57, 59, 61, 65, 66, 67, 69 monism, 21, 29, 33, 34, 129, 131, 136, 176, 241, 274 monopolies, 155, 158, 159 mood, use of term, 231 mood tracking, 5, 6, 228 Moodscope (app), 228 Moreno, Jacob, 197–205, 207, 208, 210, 214, 264 motivation, 37, 112, 183 Munsterberg, Hugo, 84 Muntaner, Carles, 250, 254 Murdoch, Rupert, 213 Myspace, 213 mysticism, 259, 261 narcissism, 197, 204, 207, 220, 222 National Charity Company, 35, 109 National Health Service (NHS), 111, 247 National Institute of Mental Health, 169 national well-being, 4, 146, 245 Natural Elements of Political Economy (Jennings), 50 natural environment, 247 neo-classical economists/economics, 113, 123, 181 neo-Kraepelinians, 169 neoliberal socialism, 212, 214 neoliberalism, 10, 34, 141, 144, 148, 149, 153, 154, 160, 161, 177, 179, 210, 211, 213, 223, 246, 258, 274 neurasthenia, 116 neurochemicals, 67, 68 neurological monitoring, 38 neurological reward system, 66 neuromarketing, 73, 76, 97, 102, 104, 188, 256, 262 neuropsychology, 68 neuroscience, 4–5, 20–1, 73, 103, 176, 205, 255, 257, 259 new age mysticism, 260 new age religions, 38 new age thinker, Fechner as, 28 New York Training School for Girls, 202 NHS (National Health Service), 111, 247 Nietzsche, Friedrich, 5, 84 Nike, 221 nucleus accumbens, 67 Nudge (Sunstein and Thaler), 88 Nudge Unit (UK), 235, 237 nudging/nudges, 90, 183 Obama, Barack, 255 Obama BRAIN Initiative, 255 occupational health, 132, 134, 254 O’Leary, Michael, 185 online advertising, 96 opinion-polling, 9, 101, 223 optimization definition, 243 human optimality/optimization, 5, 129, 274 managerial cult of, 137 mental optimization, 242 psychic optimization, 177 self-optimization, 213 social optimization, 181–214 well-being optimization, science of, 136 Osheroff, Raphael, 291n32 Osheroff Case, 291n32 outdoors, 245 oxytocin, 195, 256 pain, 19–20, 33, 50, 55, 66, 74, 249, 262, 263 Paine, Thomas, 17 PANAS (Positive and Negative Affect Scale), 228 Pareto, Vilfredo, 61 passivity, 249 paternalism, 90 pay-it-forward, 181–2, 184, 188, 191 Penn Resilience Project, 277n5 Pentagon, 255, 257 performance-related pay, 182 pharmaceutical industry/big pharma, 170, 171, 177, 178, 256, 271 physical activity, 247 physiological monitoring, 38 physiology, 195 Pinkser, Henry, 174 placebos, 290n22 pleasure, 21, 22, 33, 55, 65, 66, 249 pleasure principle, 29 political authority, 34, 63 political economy, 50, 56 politics, 18, 23–6, 32, 37, 76–7, 88, 145, 155, 259 polls, 9, 101, 146–7, 223 polymaths, 33, 121 pop behaviourism, 257 pop-economics, 152 positive affect, 175 positive psychology, 4, 6, 9, 11, 38, 74, 114, 165, 175, 194, 196, 208, 209, 210, 247, 250, 254, 259, 260 positivity, 11, 112, 165 Predictably Irrational (Ariely), 238 predictive shopping, 239 preferences, theory of, 61 price theory, 151, 152, 154 Priestley, Joseph, 13, 14, 47 The Principles of Scientific Management (Taylor), 118 ‘The Problem of Social Cost’ (Coase), 156 Prozac, 163 psychiatric scales, 165 psychic energizers, 164 psychic maximization, 177 psychic measurement, 59, 60 psychic optimization, 177 psychological knowledge, 266 psychological management, 38, 141 psychological surveillance, 219, 223, 228 The Psychological Corporation, 86 psychology in America as having no philosophical heritage, 85, 86 application of American psychology to business problems, 85 association with philosophy, 80, 81 behavioural psychology, 97, 234 as being modelled on physiology or biology, 264 clinical psychology, 250, 254 community psychology, 250, 254 consumer psychology, 74, 85 economics divorce from, 61, 69 experimental psychology, 81 Fechner as key figure in development of, 28 first laboratory for, 77–9 first labs in American universities, 84 group psychology, 124, 125 neuropsychology, 68 positive psychology.


pages: 272 words: 83,798

A Little History of Economics by Niall Kishtainy

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

Imagine that we know that the economy is at an equilibrium. As well as describing the situation, economists wonder how well it serves the needs of society as a whole. Let’s suppose that after a morning’s shopping at the local market we each return home with a bag of fruit. Is it a good thing that I have this many pears, you that many bananas? At the beginning of the twentieth century an Italian economist, Vilfredo Pareto (1848–1923), came up with a method for judging. An economic outcome is undesirable or ‘inefficient’ if it’s possible to make at least one person better off without hurting anyone else, he said. Suppose that I have four pears and you have four bananas. You like pears and bananas equally, but I like bananas twice as much as pears. If we swapped your bananas for my pears, then I’d be twice as well off and you’d be as well off as before.

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


pages: 287 words: 82,576

The Complacent Class: The Self-Defeating Quest for the American Dream by Tyler Cowen

affirmative action, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, assortative mating, Bernie Sanders, Black Swan, business climate, business cycle, circulation of elites, clean water, David Graeber, declining real wages, deindustrialization, desegregation, Donald Trump, drone strike, East Village, Elon Musk, Ferguson, Missouri, Francis Fukuyama: the end of history, gig economy, Google Glasses, Hyman Minsky, Hyperloop, income inequality, intangible asset, Internet of things, inventory management, knowledge worker, labor-force participation, low skilled workers, Marc Andreessen, Mark Zuckerberg, medical residency, meta analysis, meta-analysis, obamacare, offshore financial centre, Paul Samuelson, Peter Thiel, purchasing power parity, Richard Florida, security theater, sharing economy, Silicon Valley, Silicon Valley ideology, Skype, South China Sea, Steven Pinker, Stuxnet, The Great Moderation, The Rise and Fall of American Growth, total factor productivity, Tyler Cowen: Great Stagnation, upwardly mobile, Vilfredo Pareto, working-age population, World Values Survey

Short of having another war or major catastrophe, there is just no way that, in this kind of setting, the third or fourth generation of wealthy people will all come directly from poor backgrounds. Matching and assortative mating—connecting one well-off family to another—may make this all the less likely. And thus we can see some very natural reasons why income mobility, across the generations, is often either stagnant or declining over time. To use the language of early twentieth-century Italian economist Vilfredo Pareto, over time, the “circulation of elites” will naturally decline, at least compared to earlier situations of poverty and chaos. And indeed in China today, the special privileges held by children of prominent Communist Party members have become a major social issue and source of complaint. In other words, the richer, more stable, and happier your society is, the harder it is to generate high or rising levels of income mobility over time.

See also internet dating matching assortative mating and book sellers and choice and class and crime and dating and eBay effects of influence of and jobs and living standards and marketing and music industry and pets and segregation and strivers Medicaid Medicare Mellander, Charlotta Melville, Herman Merkel, Angela Mexico and migration and outsourcing middle class and the Complacent Class and democracy income and wages and mobility Middle East migration African American and education history of interstate as investment and matching and Mexico and Millennial Generation and regional specialization and Texas See also immigration; mobility Millennial Generation and car culture and entrepreneurialism and grand projects and matching Million Man March Minsky, Hyman mobility and African Americans and American South and childrenn cross-generational cross-state and dynamic society and education effects of mobility decline history of American mobility income and innovation labor in media and the arts and politics reasons for migration reasons for mobility decline and segregation symbolism of Tocqueville on See also migration Moby-Dick (Melville) monopolies Moretti, Enrico Morrison, Van Mortensen, Dale multiculturalism Murray, Charles A. music industry Musk, Elon neo-Nazi movement Newton, Huey P. Nigeria NIMBY (Not In My Backyard) mentality North Africa Obama, Barack Obamacare. See Affordable Care Act Occupy Wall Street movement oil industry oil price shock (1973) On the Road (Kerouac) outsourcing pantheism Pareto, Vilfredo patents Patriot Act pets philanthropy Pinker, Steven Pissarides, Christopher play, outdoor polarization policing political science poverty and mobility and segregation Princeton University prison riots productivity and cities diffusion problem firm-specific productivity and innovation and the internet and matching and mobility productivity per worker hour total factor productivity (TFP) worker productivity profiling progress and the Complacent Class and democracy and innovation and mobility model of history and segregation progressivism protests.


pages: 340 words: 91,387

Stealth of Nations by Robert Neuwirth

accounting loophole / creative accounting, big-box store, British Empire, call centre, collective bargaining, corporate governance, full employment, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Jane Jacobs, jitney, Johannes Kepler, joint-stock company, Joseph Schumpeter, megacity, microcredit, New Urbanism, Pepto Bismol, pirate software, profit motive, Shenzhen was a fishing village, Simon Kuznets, special economic zone, The Wealth of Nations by Adam Smith, thinkpad, upwardly mobile, Vilfredo Pareto, yellow journalism

Twenty percent of the customers, Ethan said, produce 80 percent of the profits, yet most Chinese businesses were honed in on the 80 percent of the customers who produce only 20 percent of the profits. This, Ethan continued, had exposed most Chinese businesses to an endless course of rising costs and falling profits. (Having never studied economics in school, Ethan probably didn’t know that the 80/20 conundrum was one of the famous observations of Vilfredo Pareto, an influential conservative economist from the early twentieth century.) “Our way out is to focus on the other twenty percent”—the people who produce the real profits, Ethan said. “The problem is making enterprises change their strategies from low price to high service. I think this is a very important development stage for Chinese companies.” Ethan argued that Chinese manufacturers will ultimately have to tilt away from piracy and toward starting their own high-end brands.

., 10.1, 10.2, 12.1 Olusosun, Lagos, Nigeria, 3.1, 3.2, 3.3 Onyeyirim, Prince Chidi, 3.1 Onyibo, Remi, 3.1 Organisation for Economic Co-operation and Development (OECD), 2.1, 2.2, 9.1 organ trafficking, 2.1 organized crime accusations of System D’s connections to, 2.1, 5.1, 12.1 excluded from System D statistics, 2.1 state as an entity of, 9.1 Oshodi destruction of, 10.1 policing of, 3.1–3.2 products sold at, 3.1 Other Path, The (de Soto), 11.1–11.2 outsourcing, 9.1 Owonifari Electronics Market, 3.1–3.2 Paraguay bribery in, 6.1, 11.1 business tax breaks in, 11.1–11.2 economic activity in, 6.1, 6.2, 11.1 Lebanese population in, 12.1, 12.2 population of, 6.1 smuggling from, 1.1, 2.1, 6.1–6.2, 6.3–6.4, 11.1, 11.2, 11.3, 11.4 System D’s importance to, 2.1–2.2 see also Ciudad del Este, Paraguay Paraguayan American Chamber of Commerce, 12.1 Paraguay Vende, 11.1, 11.2 Pareto, Vilfredo, 5.1 Paris, France, street economy in, 8.1 parks and green space, 10.1 patent medicines, 12.1 Paulo Roberto, 1.1–1.2, 1.3, 1.4, 2.1 Payless, 10.1 PC Tronic, 6.1–6.2 peddlers as early globalizers, 4.1–4.2 in London, 8.1–8.2 in New York, 8.1–8.2 in U.S. Revolutionary War, 12.1 morality of, 8.1–8.2, 12.1 war profiteering of, 6.1–6.2, 12.1–12.2 Pedro I, Emperor of Brazil, 1.1 Pemex, 6.1 Penner, Reinaldo, 11.1, 11.2, 11.3, 11.4, 12.1 Pepto-Bismol, 12.1 Peru book piracy in, 5.1–5.2 formalization of firms and squatter communities in, 11.1–11.2 Peters, Segun “Satin,” 3.1 PharmAccess Foundation, 12.1 pharmaceutical industry, 6.1–6.2 see also herbal medicines Philippines, System D in, 12.1 Photoshop, 5.1 Piepowder, 12.1–12.2 piracy, 5.1–5.2, 12.1–12.2 benefits of, 5.1–5.2, 9.1 child labor and, 12.1 in American business, 5.1–5.2 in Brazil, 1.1–1.2, 6.1 piracy (cont.)


pages: 313 words: 95,077

Here Comes Everybody: The Power of Organizing Without Organizations by Clay Shirky

Andrew Keen, Berlin Wall, bioinformatics, Brewster Kahle, c2.com, Charles Lindbergh, crowdsourcing, en.wikipedia.org, hiring and firing, hive mind, Howard Rheingold, Internet Archive, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, jimmy wales, Joi Ito, Kuiper Belt, liberation theology, Mahatma Gandhi, means of production, Merlin Mann, Metcalfe’s law, Nash equilibrium, Network effects, Nicholas Carr, Picturephone, place-making, Pluto: dwarf planet, prediction markets, price mechanism, prisoner's dilemma, profit motive, Richard Stallman, Robert Metcalfe, Ronald Coase, Silicon Valley, slashdot, social software, Stewart Brand, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transaction costs, ultimatum game, Vilfredo Pareto, Yogi Berra

In Wikipedia article edits, for example, you would expect the second most active user to have committed only half as many edits as the most active user, and the tenth most active to have committed one-tenth as many. This is the shape behind the so-called 80/20 rule, where, for example, 20 percent of a store’s inventory accounts for 80 percent of its revenues, and it has been part of social science literature since Vilfredo Pareto, an Italian economist working in the early 1900s, found a power law distribution of wealth in every country he studied; the pattern was so common that he called it “a predictable imbalance.” This is also the shape behind Chris Anderson’s discussion in The Long Tail; most items offered at online retailers like iTunes and Amazon don’t sell well, but in aggregate they generate considerable income.

See New York City Police Department O’Keefe, William Omidyat, Pierre one-to-many communications tools one-to-one communications tools open source software O’Reilly, Tim organizations. See also institutional dilemma Catholic Church collapse of barriers to group action diagramming hierarchies hierarchies and transaction costs railroads running vs. self-assembly symmetrical participation transaction costs in Paquet, Seb Pareto, Vilfredo Partido Popular Perl programming language phones. See mobile phones; telephones photographers. See also Flickr photos, high dynamic range (HDR) political expression Belarus protest Dean presidential campaign flash mobs and in Leipzig in Philippines protest against Putin Porter, Rev. James R. Posner, Richard power law distributions printing press. See also movable type Prisoners’ Dilemma Pro-Ana movement professionals in advertising agencies journalists as medieval scribes as photographers as publishing and scarcity concept self-definition in stolen Sidekick story promise, role in groups publishing vs. filtering globally accessible now vs. then stolen Sidekick and Putin, Vladimir Putnam, Robert railroad management Rainert, Alex Raymond, Eric Reynolds, Glenn Rheingold, Howard Ripley, Andy Robb, John Robinson, Gene Rose, Kevin Ruiz, Victor Sanger, Larry Santa Cruz Organization (SCO) SARS (Sudden Acute Respiratory Syndrome) scarcity, impact of social tools on concept Schachter, Joshua scribes, medieval Sebesta, Ed self-help movement self-publishing shadow of the future sharing, as type of group action Shinawara, Thaksin Sicko (movie) Sidekick phone story Siegenthaler, John, Sr.


pages: 828 words: 232,188

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

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

This view was first articulated by Gaetano Mosca, who stated that the different regime types—monarchy, aristocracy, democracy—made little difference to actual life because all were in the end controlled by elites. The “political class” maintains itself in power under a wide variety of institutions and will simply use democratic ones to do the same. Even “Communist and collectivist societies would beyond any doubt be managed by officials.” The economist Vilfredo Pareto (familiar to economics students as the inventor of the Pareto optimum) made a similar case for continuing elite domination regardless of the type of regime. Based on his statistical studies of income distribution, he formulated a “Pareto’s law,” which argued that 80 percent of wealth was held by 20 percent of the population across time and space. Since this was akin to a natural law, efforts to remedy it through political measures like expansion of the franchise or income redistribution were pointless.13 These conservative Italian thinkers were making a variant of the argument put forward by Marx himself, namely, that the advent of formal democracy and an expanded franchise would not improve the lives of the mass of the population but would simply preserve elite dominance in a different form.

Edmund Burke, On Empire, Liberty, and Reform: Speeches and Letters (New Haven: Yale University Press, 2000), p. 277. 10. From Reflections on the Revolution in France, quoted in Albert O. Hirschman, The Rhetoric of Reaction: Perversity, Futility, Jeopardy (Cambridge, MA: Belknap Press, 1991), p. 20. 11. Walter Bagehot, The English Constitution (New York: Oxford University Press, 2001), p. 186. 12. Ibid., pp. 4–5, 32. 13. Gaetano Mosca, The Ruling Class (New York: McGraw-Hill, 1939); Vilfredo Pareto, Sociological Writings (New York: Praeger, 1966). See the discussion of Mosca and Pareto in Hirschman, Rhetoric of Reaction, pp. 50–57. 14. On scientific racism, see Stephen Jay Gould, The Mismeasure of Man (New York: Norton, 1981). 15. Bruce E. Cain, Regulating Politics? The Democratic Imperative and American Political Reform (New York: Cambridge University Press, 2014). 16. The contemporary rational choice version of this Marxist tale can be found in Carles Boix, Democracy and Redistribution (New York: Cambridge University Press, 2003), and Daron Acemoglu and James A.

“‘Circle of Iron’: African Colonial Employees and the Interpretation of Colonial Rule in French West Africa.” Journal of African History 44:29–50. O’Toole, Randal. 1988. Reforming the Forest Service. Washington, D.C.: Island Press. Paige, Jeffery M. 1997. Coffee and Power: Revolution and the Rise of Democracy in Central America. Cambridge, MA: Harvard University Press. Pappas, Takis S. 1999. Making Party Democracy in Greece. New York: St. Martin’s Press. Pareto, Vilfredo. 1966. Sociological Writings. New York: Praeger. Parris, Henry. 1969. Constitutional Bureaucracy: The Development of British Central Administration Since the Eighteenth Century. New York: Augustus M. Kelley. Pasquino, Gianfranco, James L. Newell, and Paolo Mancini, eds. 2013. The Future of the Liberal Western Order: The Case of Italy. Washington, D.C.: Transatlantic Academy. Pedler, Robin, ed. 2002.


pages: 370 words: 99,312

Can Democracy Work?: A Short History of a Radical Idea, From Ancient Athens to Our World by James Miller

Berlin Wall, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, colonial rule, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, Donald Trump, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, income inequality, Joseph Schumpeter, mass incarceration, means of production, Occupy movement, Ralph Waldo Emerson, Republic of Letters, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transatlantic slave trade, union organizing, upwardly mobile, Vilfredo Pareto

His career was international: he studied not only in Germany (in Berlin, Munich, Leipzig, and Halle, where he received a doctorate in history) but also in Paris. In Turin, Italy, he joined the Partito Socialista Italiano and became active in its syndicalist faction (he later wrote articles for the Italian syndicalist journal Il Divenire Social). Unable to get a teaching job in Germany because he was a socialist, he moved to Italy in 1907 and joined the faculty at the University of Turin. There he came into contact with Gaetano Mosca and Vilfredo Pareto, Italian scholars both renowned for their studies of elites, and their conclusion that a tiny minority of business and political leaders wield power regardless of a state’s ostensibly democratic political practices. At the same time, Michels had become friends with Max Weber, the era’s greatest social scientist. As a result of their correspondence from 1906 to 1915, we have a priceless record of how two astute observers viewed the modern struggle for political and social equality, and the divergent ways they evaluated its prospects.

.: January 2017 anti-Trump protests in; Zuccotti Park in New York Democratic Society: Fourth of July celebration of; popular sovereignty espoused by New York Police Department New York Times, The Nicholas II, tsar of Russia, abdication of Niebuhr, Reinhold Nineteenth Amendment Nixon, Richard North Carolina, voting rights in Northern Star North Korea nuclear weapons Obama, Barack Ober, Josiah O’Brien, Bronterre Occupy Oakland Occupy Wall Street movement; as direct democracy Orbán, Viktor Ossining, N.Y. ostracism Ostrogorski, Moisey Y. Ottoman Empire Page, Benjamin Paine, Thomas; background of; commerce promoted by; Common Sense by; representative democracy praised by; on representative democracy Pakistan Pannekoek, Anton Pareto, Vilfredo Paris, Prussian advance on (1792) Paris Commune of 1792; sectional assemblies’ insurrection in Paris Commune of 1871; establishment and violent end of; leftist veneration of; Lenin on; political reforms as response to Parisian sectional assemblies; arming of citizens by; as laboratories of direct democracy; as open to even poorest critics; in Paris Commune insurrection; participation in; Rousseau as inspiration to; Section Roi-de-Sicile of Parliament, British: Chartist demands for reform of; Chartist petition rejected by participatory democracy; see also direct democracy Partito Socialista Italiano Paul, Ron Peisistratus Peloponnesian War; Athenian defeat in; Mytilene revolt in Pennsylvania: 1776 constitution of; voting rights in Pennsylvania Magazine, The: or, American Monthly Museum People’s Party (Rhode Island) perfect individualism Pericles; Athenian imperialism defended by; background of; death of; funeral oration of; as military leader; military reforms of; as orator; public works projects of; Thucydides’ admiration of Persians, The (Aeschylus) Persian Wars, Greek victories in Petrograd: 1917 uprising in; see also St.


pages: 346 words: 97,330

Ghost Work: How to Stop Silicon Valley From Building a New Global Underclass by Mary L. Gray, Siddharth Suri

Affordable Care Act / Obamacare, Amazon Mechanical Turk, augmented reality, autonomous vehicles, barriers to entry, basic income, big-box store, bitcoin, blue-collar work, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative consumption, collective bargaining, computer vision, corporate social responsibility, crowdsourcing, data is the new oil, deindustrialization, deskilling, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, en.wikipedia.org, equal pay for equal work, Erik Brynjolfsson, financial independence, Frank Levy and Richard Murnane: The New Division of Labor, future of work, gig economy, glass ceiling, global supply chain, hiring and firing, ImageNet competition, industrial robot, informal economy, information asymmetry, Jeff Bezos, job automation, knowledge economy, low skilled workers, low-wage service sector, market friction, Mars Rover, natural language processing, new economy, passive income, pattern recognition, post-materialism, post-work, race to the bottom, Rana Plaza, recommendation engine, ride hailing / ride sharing, Ronald Coase, Second Machine Age, sentiment analysis, sharing economy, Shoshana Zuboff, side project, Silicon Valley, Silicon Valley startup, Skype, software as a service, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Nature of the Firm, transaction costs, two-sided market, union organizing, universal basic income, Vilfredo Pareto, women in the workforce, Works Progress Administration, Y Combinator

Workers offered no single, dominating factor for turning to on-demand work. To the contrary, they valued on-demand work for a range of reasons, including the fact that they could pick and choose tasks and that they could stop working once they’d made the money they needed that week. It turns out it’s unprecedented for large companies to organize employment this way. When Work Looks More Like a Book Club Vilfredo Pareto was a famed 20th-century Italian scholar and a pioneer in the field of microeconomics. In measuring the concentrations and unequal distributions of income and housing access in social settings, Pareto observed that 20 percent of Italy’s population owned 80 percent of the land.17 Pareto’s principle is a special case of the more general “power law” distribution used to describe the natural and social phenomenon by which a resource is concentrated in the hands of a few.

See collaboration Newcomen, Thomas, 227 n5 nondisclosure agreements, 16, 20, 224 n21 NursesCan Cooperative, 158–59 O Occupational Safety and Health Administration (OSHA), 190 on-demand coaching, 167 on-demand employment definition, xiv, xvii demographics, 3–4, 10, 11, 18, 23–24, 29, 169 drawbacks to, 117–18 future of, 166–72, 243 n5 hypervigilance vs flexibility, 76–80 improvements to, 177–78 inequality of power in, 91–93 isolation vs autonomy, 80–84 learning from, 172–77 rise of, xxiv–xxv workers as customers, 144–47 workers as priority, 147–55 See also transaction costs O’Neil, Cathy, 91–92 Open Translation Project (TED), 113, 152, 226 n30 “Oscar Smith,” 107, 236 n25 Otey, Christopher, 35 outsourcing, history of, 38–63 background, 38–40 computer technology and, 54–56 contract vs salaried work, 45–50 employment classification, 57–63 human computers, 51–53 labor arbitrage, 160 learning from, 172–77 permatemps, 56–57 slavery, 40–41 wartime England, 231 n45 women and children, 41–45 overtime pay, 46, 51, 229 n23 P Page, Larry, xviii Paine, Thomas, 191 Painter, Nell Irvin, 226 n3 paradox of automation, xxii, 36, 170, 173, 175 Pareto, Vilfredo, 101–5 Parikh, Tapan S., 148, 240 n9 Participatory Culture Foundation (PCF), 27 payment. See wages peer-to-peer sharing company, 155–56 Perez, Tom, 230 n26 permanent account number (PAN), 15 permatemps, 56–57 Pew Research Center, x, xxiv, 100–101, 145–46, 169 piecework, xix, 41–45, 46, 54, 227 n8, 228 n9 platforms choices made by, xvii cooperatives, 158–59 design flaws in, 19–20, 91–93, 170–71, 174 double bottom line, 140–41 head count of, 103–4 improvements to, 138–39 profit from workers, 144–47 Poonam, 128–29 Popexpert, xxv “power law” of distribution, 101–5, 163, 171 Pritzker, Penny, 230 n26 profit double bottom line, 141, 147–49 employee liability model, 54, 69 as goal, 39, 141 outsourcing, 55–56 in service industry, xix–xx, 4, 61 single bottom line, 32, 144–47 from workers, 144–47, 164, 224 n20 R Raja, 129 Rajee, 108–9 ratings or reputation score, 14, 70–71, 81–82, 89, 130, 179, 183–84 recession.


pages: 827 words: 239,762

The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Albert Einstein, barriers to entry, Bayesian statistics, Bernie Madoff, Bob Noyce, Bonfire of the Vanities, business cycle, business process, butterfly effect, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, corporate raider, corporate social responsibility, creative destruction, deskilling, discounted cash flows, disintermediation, disruptive innovation, Donald Trump, family office, financial innovation, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, global pandemic, Gordon Gekko, hiring and firing, income inequality, invisible hand, Jeff Bezos, job-hopping, John von Neumann, Joseph Schumpeter, Kenneth Arrow, Kickstarter, London Whale, Long Term Capital Management, market fundamentalism, Menlo Park, new economy, obamacare, oil shock, pattern recognition, performance metric, Peter Thiel, plutocrats, Plutocrats, profit maximization, profit motive, pushing on a string, Ralph Nader, Ralph Waldo Emerson, RAND corporation, random walk, rent-seeking, Ronald Coase, Ronald Reagan, Sam Altman, Sand Hill Road, Saturday Night Live, shareholder value, Silicon Valley, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, survivorship bias, The Nature of the Firm, the scientific method, Thorstein Veblen, union organizing, urban renewal, Vilfredo Pareto, War on Poverty, William Shockley: the traitorous eight, women in the workforce, Y Combinator

His alarm about the “anomie” resulting from workers’ struggle to find meaning in the repetitive tasks of the modern industrial enterprise was lifted directly from French sociologist Émile Durkheim’s groundbreaking 1897 treatise, Suicide, in which he’d defined “anomic suicide” as the result of the moral confusion brought about by dramatic economic upheaval. Mayo’s description of the unconscious mind echoed Freud, his ideas about “reveries” and “passive obsessions” came straight from the French psychoanalyst Pierre Janet, and his celebration of spontaneous collaboration echoed the idealist British philosophers of the time. Finally, he co-opted Italian sociologist Vilfredo Pareto’s view that responsibility for preserving social order lay with the elite. Adding it together, though, Mayo had arrived at an idea all his own. The solution to workplace strife, he argued, was a kind of therapeutic human relations, a soft alternative to the “bossism” of Frederick Taylor’s scientific management. Mayo considered himself a scientist, too, but his wasn’t a science of the stopwatch; rather, it was one conducted in the laboratory of the mind.

Lowell’s financial concerns proved unwarranted. Over the next twenty years, a river of Rockefeller money—$1.5 million—flowed into Mayo’s program at the School. (It still stands as one of the most generously funded programs in the history of the social sciences. For Donham, who called fundraising an “almost intolerable burden,” it must have seemed like manna from heaven.) Once there, Mayo found another devotee of Vilfredo Pareto, Dr. Lawrence J. Henderson, a member of the Harvard Medical School faculty and a biochemist of international repute. An actual doctor in the company of self-appointed medics to the human soul, Henderson had pretensions in the other direction, and thought he could build a bridge between Pareto’s theories of societal equilibrium and the homeostasis of the human body itself. The two men combined forces, an early product of which was the construction of a “Fatigue Laboratory” in the basement of Morgan Hall.

Recalled Barnard: “In this case, and in countless others, men talk and fight about what they do not want, because they must talk about something, and they even convince themselves that they believe what they say.”3 The making of those enlightened gestures, along with a few other psychological manipulations thrown in for good measure, was pretty much all it took. The strike was over, and everyone went home peacefully. In one sense, Chester Barnard was Vilfredo Pareto dressed in a Brooks Brothers suit. Like Pareto, Barnard saw organizations as “systems” analogous to the human bodies seeking equilibrium. To get there, an organization needed both effectiveness (the ability to meet goals) and efficiency (the ability to satisfy the individuals who worked for it). And the task fell to management—the corporate incarnation of Pareto’s elite—to formulate those goals and decide how to meet them.4 In another sense, he was Mayo all over again: Barnard had eschewed the use of top-down power in favor of moral leadership.


pages: 836 words: 158,284

The 4-Hour Body: An Uncommon Guide to Rapid Fat-Loss, Incredible Sex, and Becoming Superhuman by Timothy Ferriss

23andMe, airport security, Albert Einstein, Black Swan, Buckminster Fuller, carbon footprint, cognitive dissonance, Columbine, correlation does not imply causation, Dean Kamen, game design, Gary Taubes, index card, Kevin Kelly, knowledge economy, life extension, lifelogging, Mahatma Gandhi, microbiome, p-value, Parkinson's law, Paul Buchheit, placebo effect, Productivity paradox, publish or perish, Ralph Waldo Emerson, Ray Kurzweil, Richard Feynman, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Silicon Valley startup, Skype, stem cell, Steve Jobs, survivorship bias, Thorstein Veblen, Vilfredo Pareto, wage slave, William of Occam

Nutrition Data nuts: Brazil nuts, 22.1, 46.1, 46.2 and cholesterol overeating and testosterone as travel snack O Obama, Michelle obesity, 9.1, 9.2 observer effect Occam’s Protocol adapting the program cardio frequency objective of, 18.1, 18.2 Occam’s feeding, 17.1, 18.1 Occam’s frequency Occam’s prescriptions questions and criticisms slower gains starting weights Occam’s Razor ofuro oil, rancid oligosaccharides OneTaste, 20.1, 20.2, 20.3, 20.4 oral contraceptives orange juice orgasm: and bad science clitoral glans and clitoris, 20.1, 20.2 definition of Doing Method, 20.1, 20.2, 20.3 facilitation of female focused repetition for and grounding and g-spot, 19.1, 20.1 guidelines for beginners and masturbation, 19.1, 20.1 positions practice and how-to precondition the quest questions about vibrator for O’Rourke, Dara Ottey, Merlene Joyce oversimplification Owen (monkey) oxygen-assisted static apnea Ozolin, Nikolay P Pagan, Eben PAGG warnings about Paleolithic “paleo” diet palmitoleic acid Palumbo, Dave “Jumbo,” 150, 13.1, 17.1 Parazynski, Scott Pareto, Vilfredo Pareto’s Law Parisi, Bill Parkinson’s Law partial completeness Paul (testosterone) Pavlina, Steve PC (phosphocreatine) PC (pubococcygeus) muscle Pearl, Bill pear shape peer pressure Penn, B. J. periodization Perls, Tom Phelps, Michael pheromones Phillips, Bill phlebotomy phosphocreatine (PC) phosphoric acid photos, before/after, 6.1, 6.2, 6.3 Picasso, Pablo placebo effect, 29.1, 42.1, 44.1 platelet-rich plasma (PRP) Plato, Peggy, 3.1, 16.1 Plese, Elliott plyometrics Polanyi, John policosanol, 10.1, 10.2 Poliquin, Charles, 16.1, 17.1, 22.1, 25.1, 46.1 Pollan, Michael, 43.1, 48.1 polysomnograms poo, weighing pork belly Portland Marathon Pose Method, 30.1, 30.2, 31.1 potassium Pottenger, Francis M.

This is not science fiction. It’s being done today. As William Gibson, who coined the term “cyberspace,” has said: “The future is already here—it is just unevenly distributed.” The 80/20 Principle: From Wall Street to the Human Machine This book is designed to give you the most important 2.5% of the tools you need for body recomposition and increased performance. Some short history can explain this odd 2.5%. Vilfredo Pareto was a controversial economist-cum-sociologist who lived from 1848 to 1923. His seminal work, Cours d’économie politique, included a then little explored “law” of income distribution that would later bear his name: “Pareto’s Law,” or “the Pareto Distribution.” It is more popularly known as “the 80/20 Principle.” Pareto demonstrated a grossly uneven but predictable distribution of wealth in society—80 percent of the wealth and income is produced and possessed by 20 percent of the population.


pages: 411 words: 108,119

The Irrational Economist: Making Decisions in a Dangerous World by Erwann Michel-Kerjan, Paul Slovic

"Robert Solow", Andrei Shleifer, availability heuristic, bank run, Black Swan, business cycle, Cass Sunstein, clean water, cognitive dissonance, collateralized debt obligation, complexity theory, conceptual framework, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-subsidies, Daniel Kahneman / Amos Tversky, endowment effect, experimental economics, financial innovation, Fractional reserve banking, George Akerlof, hindsight bias, incomplete markets, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, iterative process, Kenneth Arrow, Loma Prieta earthquake, London Interbank Offered Rate, market bubble, market clearing, money market fund, moral hazard, mortgage debt, Pareto efficiency, Paul Samuelson, placebo effect, price discrimination, price stability, RAND corporation, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, source of truth, statistical model, stochastic process, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transaction costs, ultimatum game, University of East Anglia, urban planning, Vilfredo Pareto

A third is David Ricardo, tutored by Mill; after writing his Principles of Political Economy and Taxation in 1817 he entered Parliament as well. And influential laissez-faire economist Michel Chevalier negotiated the free-trade agreement between the U.K. and France in 1860—the same year he became a senator in the French Congress. This long history of prominent economists influencing policy has continued. For instance, the Italian economist Vilfredo Pareto made important contributions to the study of income distribution and the analysis of individuals’ choices; but he was also a militant laissez-faire liberal who battled for free trade. And of course John Maynard Keynes, the very influential British economist, served in several key government posts during the twentieth century. Keynes would spearhead a revolution in economic thinking that was essentially pragmatic, rather than theoretical.

Newton, Isaac Nixon, Richard: environmental issues and Normative approach Northridge earthquake Nuclear waste Nudge (Thaler and Sunstein) Nurius, Paula Objectives short-term/long-term Oklahoma City bombing Olson, Mancur Onay, Selcuk Öncüler, Ayse Organization theory Outcomes achieving actions and ambiguous desirability of policy severity of surprise bad underestimation of Overseas Highway Pan Am 103 catastrophe. See also Lockerbie disaster Pandemics Pareto, Vilfredo Patt, Anthony Pauly, Mark Peace of mind Plague, The (Camus) Plato Policy changes decisions understanding structure of Policy makers decision sciences concepts and research and social scientists and Pollution Poor insurance for weather extremes and Possible selves, theory of Poverty Power, Samantha Prayer Precautionary principle Predictions Preferences choices and social stable-over-time, orderly Premiums, insurance changes in climate change and Prescriptive solutions Prevention.


pages: 416 words: 106,582

This Will Make You Smarter: 150 New Scientific Concepts to Improve Your Thinking by John Brockman

23andMe, Albert Einstein, Alfred Russel Wallace, banking crisis, Barry Marshall: ulcers, Benoit Mandelbrot, Berlin Wall, biofilm, Black Swan, butterfly effect, Cass Sunstein, cloud computing, congestion charging, correlation does not imply causation, Daniel Kahneman / Amos Tversky, dark matter, data acquisition, David Brooks, delayed gratification, Emanuel Derman, epigenetics, Exxon Valdez, Flash crash, Flynn Effect, hive mind, impulse control, information retrieval, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Jaron Lanier, Johannes Kepler, John von Neumann, Kevin Kelly, lifelogging, mandelbrot fractal, market design, Mars Rover, Marshall McLuhan, microbiome, Murray Gell-Mann, Nicholas Carr, open economy, Pierre-Simon Laplace, place-making, placebo effect, pre–internet, QWERTY keyboard, random walk, randomized controlled trial, rent control, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Satyajit Das, Schrödinger's Cat, security theater, selection bias, Silicon Valley, Stanford marshmallow experiment, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, the scientific method, Thorstein Veblen, Turing complete, Turing machine, twin studies, Vilfredo Pareto, Walter Mischel, Whole Earth Catalog, WikiLeaks, zero-sum game

In the health-care system, the treatment of the most expensive fifth of patients creates four-fifths of the overall cost. These figures are always reported as shocking, as if the normal order of things had been disrupted, as if the appearance of anything other than a completely linear distribution of money or messages or effort were a surprise of the highest order. It’s not. Or rather, it shouldn’t be. The Italian economist Vilfredo Pareto undertook a study of market economies a century ago and discovered that no matter what the country, the richest quintile of the population controlled most of the wealth. The effects of this Pareto distribution go by many names—the 80/20 rule, Zipf’s law, the power-law distribution, winner-take-all—but the basic shape of the underlying distribution is always the same: The richest or busiest or most connected participants in a system will account for much, much more wealth or activity or connectedness than average.

., 6–8 naming and labeling, 62–64, 190–91 natural selection, 2, 7, 16, 25, 34, 44, 84, 99, 109, 136, 137–38, 172, 196, 243 sexual, 228, 353–54 nature vs. nurture, 154, 156 negative capability, 225 nervous system, 130, 346, 373 cycles in, 171–72 networks: collective intelligence and, 257–58 neural, 188–90, 258 social, 82, 262, 266 neural networks, 188–90, 258 neuroeconomics, 208 neurons, 82, 129, 130, 149, 172, 395 entanglement of, 330 synapses and, 164 neuroplasticity, 250–51 neuroscience, 208, 250 neurotransmitters, 229–30, 279, 346 Newton, Isaac, 9, 34, 64, 72, 109, 192–93 nexus causality, 34–35 Niesta, Daniela, 150 Nisbett, Richard, 120–23 nominal fallacy, 62, 64 nonlinearity, 184–85 Nonzero (Wright), 97 Nørretranders, Tor, 226–28 Novum Organum (Bacon), 395 Nowak, Martin, 99 nuclear bomb, 185–86 nuclear transfer, 56 numbers, rounded, 182 Obama, Barack, 204 Obrist, Hans Ulrich, 118–19 Ockham’s razor, 324–27 O’Donnell, James, 127–28 Oedipus, 33 oil industry, 209 Olber’s paradox, 301 Olson, Randy, 269 On the Origin of Species (Darwin), 359 openness, 232–33 open systems, 86–87 opinions, 267, 268, 270 ordinariness, in dual view of ourselves, 32 Origgi, Gloria, xxviii, 318–20 Ortega y Gasset, José, 229 Orwell, George, 33 Osler, William, 109 otherness, 292–93 Otto, Nikolaus, 170 oxytocin, 230 Pagel, Mark, 340–42 Paine, Robert, 174 Pakistan, 20 Panofsky, Erwin, 247–48 Papuans, 361–62 paradigms, 242–45 paradoxes, 301–2 parallelism in art and commerce, 307–9 Pareto, Vilfredo, 198–99 Pareto Principle, xxvii, 198–200 Parkinson’s disease, 63 particles: entangled, 330–31 wave duality, 28, 296–98 path dependence, 285–88 pattern finding, 105, 107, 394 Paul, Gregory, 268–70 Pauling, Linus, 269 Pauly, Daniel, 90 PDFs (partially diminished fractions), 206 Peirce, Charles Sanders, 112, 113, 114, 222 Pepperberg, Irene, 160–61 perception, 43, 133 cognition and, 133–34 see also senses PERMA, 92–93 personality, 229, 230–31 character traits in, 229 insanity and, 232–34 temperament dimensions in, 229–31 pessimistic meta-induction from the history of science, 30–31 Pettenkofer, Max, 338, 339 phase transitions, 371–72 philosophy, 271, 275 phlogiston, 360 physicians, 36 physics, 221, 222–23, 234, 277, 322 supervenience and, 364 see also quantum mechanics Pickover, Clifford, 109–11 Pinker, Steven, xxv, xxx, 94–97 Pizarro, David, 394 placebo and placebo effects, 379, 381–85 Plato, 9, 34, 221–22 Platonism, 222 Poe, Edgar Allan, 301 political systems, 157–58, 159 politicians, 50 polywater, 243 Pondicherry, 389–90 Pöppel, Ernst, 395–97 positive-sum games, 94–97 powers of 10, 162–64 pragmamorphism, 115 predictability, 103–4 randomness and, 105–8 predictions, 261 predictive coding, 132–34 prions, 240 priors, 219 privacy, 262 probability, 52, 65–67, 147, 149, 356, 378, 379 risks and, 68–71 problems, wicked, 203–5 procrastination, 209–10 projective thinking, 240–41 prokaryotic cells, 157 proof, 355–57 Provine, Robert R., 84 Prusiner, Stanley, 240 psychiatry, 232, 233–34, 235, 279 psychotherapy, 41–42 public policy, 93 experiments in, 26, 273–74 uncertainty and, 54, 56 QED moments, 355–57 quantum gravity, 297–98 quantum mechanics, 25, 114, 192–93, 234, 322, 356 entanglement in, 330–32 “many worlds” interpretation of, 69–70 thought experiments in, 28 wave-particle duality in, 28, 296–98 quantum tunneling, 297 quarks, 190–91, 297 Quaternary mass extinction, 362 QWERTY keyboards, 285–86 Ramachandran, V.


pages: 410 words: 106,931

Age of Anger: A History of the Present by Pankaj Mishra

anti-communist, Asian financial crisis, Ayatollah Khomeini, Berlin Wall, British Empire, colonial rule, continuation of politics by other means, creative destruction, Donald Trump, Edward Snowden, Fall of the Berlin Wall, Fellow of the Royal Society, Francis Fukuyama: the end of history, George Santayana, global village, Gunnar Myrdal, informal economy, invisible hand, liberal capitalism, Mahatma Gandhi, Marshall McLuhan, Martin Wolf, mass immigration, Nelson Mandela, Peter Thiel, Philip Mirowski, planetary scale, plutocrats, Plutocrats, precariat, Republic of Letters, Scientific racism, Silicon Valley, smart cities, Snapchat, stem cell, the scientific method, The Wealth of Nations by Adam Smith, trade route, traveling salesman, urban planning, Vilfredo Pareto, wage slave, women in the workforce, zero-sum game

The demagogues were helped by the repeated failure of liberal-bourgeois democracy to respond to the masses of people struggling with the fear and uncertainty provoked by the vast and opaque processes of modernization. From the 1870s onwards, as Italy and Germany became unified states, a suspicion intensified across Europe that parliamentary democracy, easily manipulated by elites with sectarian interests, was deceitful, or at least incapable of achieving general well-being. The trio of Gaetano Mosca, Vilfredo Pareto and Robert Michels, three pioneering sociologists, simultaneously sought to expose the hypocrisy, cynicism and egotism of self-serving elites behind the rhetoric of democracy. They were not ‘neo-Machiavellian’ for the sake of it. The old liberal model, which evidently worked to protect the rights and freedoms of privileged individuals, had failed to confer democratic citizenship on ordinary people, let alone bring them economic rewards or restore their sense of community.

Napoleon imperialism invasion/occupation of Germany nostalgia for era of secular universalist project ‘narcissism of small difference’ nation states implosions of in Africa/Middle East legacy of imperialism nineteenth-century rise of postcolonial nation-building ideologies rise of in Africa and Asia social democracy in post-WW2 era nationalism Arab Chinese cult of sacrifice and martyrdom cultural economic and emphasis on duties English fin de siècle fin de siècle celebration of violence/virility French German invention of concept Italian Khomeinism Mazzini’s non-European disciples messianic fantasy of redemption and glory nineteenth-century adaptations worldwide poet-prophets post-9/11 toxic nationalists post-Cold War resurgence of in post-colonial states present-day as product of men of letters religiosity of sentiment ‘rise again’ rhetoric and Rousseau and twentieth-century world wars us-versus-them/demonization of ‘other’ white nationalists in USA see also Hindu nationalism Nazism Hindu nationalist admiration for Nechaev, Sergei negative solidarity concept Nehru, Jawaharlal neo-liberalism axioms of autonomy and interest-seeking conflation of free enterprise with freedom crony-capitalist regimes New York Review of Books Newsweek Newton, Isaac Niebuhr, Reinhold Nietzsche, Friedrich death of God on development on French Revolution the last men and Napoleon nihilism rejection of German nationalism and ressentiment superman idea and Voltaire-Rousseau battle and Wagner will to power concept nihilism see also anarchism Nordau, Max, Degeneration (1892) North Korea Northern Ireland Norway, Breivik massacre in (2011) Novalis Obama, Barack oil industry Oklahoma City bombing (1995) Oriani, Alfredo Orlando massacre (2016) Ortega y Gasset, José, The Revolt of the Masses (1930) Orwell, George, Nienteen Eighty-Four (1949) Ottoman Empire Polish émigrés in revival of Ottomanism Paine, Thomas Pakistan Pal, Bipin Chandra Palestinian militant groups Papini, Giovanni Pareto, Vilfredo Pascal, Blaise Patel, Vallabhbhai Paul, Saint Paxton, Joseph Paz, Octavio, The Labyrinth of Solitude (1950) Pea, Enrico Perovskaya, Sofia Peter the Great Petöfi, Sándor Philippines philosophes material comfort and hedonism as not democratic notion of self-expansion patronage of autocrats and religion as shapers of society trahison des clercs philosophy German phrenology Pol Pot’s Year Zero Poland partition in late eighteenth century present-day nationalism in uprising (1831) Polanyi, Karl, The Great Transformation (1944) Pope, Alexander popular culture Posivitism post-colonial states autocratic modernizers in see also individual countries brutal police/intelligence states growth of ressentiment in insurgencies since mid twentieth century and Islam and Naipaul’s ‘mimic men’ nation-building ideologies post-Cold War period Western inspired national emulation and ‘Western Model’ progress, Enlightenment/modern notions of assumed spread eastwards era of US hegemony and fin de siècle thinkers and First World War as fundamentalist creed in West as globalized fantasy post-Cold War and Marxist universal utopia and nineteenth-century French literature notion of self-expansion and the philosophes present-day constraints/doubts and reason religion of secular progress Rousseau rejects and Russian literature and Social Darwinism ‘propaganda by the deed’ Proudhon, Pierre-Joseph Prussia defeat at Jena-Auerstädt Franco-Prussian war (1871) Frederick II pseudo-science public sphere Pushkin, Alexander The Bronze Horseman (1836) Eugene Onegin Imitations of the Quran (1824) Putin, Vladimir al-Qaeda Qutb, Sayyid racism after Brexit vote Californian Chinese Exclusion Act (1882) institutionalization of by colonialism Islamophobia in late nineteenth century scapegoats and invented enemies scientific on social media white supremacists worldwide upsurge of see also anti-Semitism radicalism and militancy, historical as conjoined with globalization ‘decade of regicide’ (1890s) emergence in nineteenth century influence of Nietzsche local defences of autonomy martyrdom, sacrifice and death and mass migration in nineteenth-century Russia politics of flamboyant gestures pre-1848 conspirators and insurgents and quests for transcendence revolts in Spanish American colonies revolts of 1820s revolutionary period (1830) revolutionary period (1848–9) and rise of mass air travel shared aspirations across movements in space between elites and masses spread of socialism see also anarchism; ressentiment; terrorism radicalism and militancy, present-day Bakunin as forebear of craving for unlimited despotism eruption of ‘global civil war’ identity as neither stable nor coherent nineteenth/early twentieth-century antecedents and paradox of individual freedom social backgrounds and urbanization violence as end in itself volatile desire for creative destruction see also ISIS (Islamic State of Iraq and Syria); Islamism, Radical; ressentiment; terrorism Rai, Lala Lajpat Ramdev, Baba Reagan, Ronald reason and cult of progress fantasy of a rationally organized world and French Revolution and philosophes’ support of despots and principle of equality theoretical rationalism and triumphs of capitalist imperialism see also individual, liberal universalist ideal of Reclus, Élisée Red Brigade in Italy refugees religious faith and French Revolution ideal of transcendence and nationalist sentiment in nineteenth-century Germany pseudo-religions in 1815–48 period see also individual faiths and religions Renan, Ernest Republican Party, US ressentiment alienated young man of promise in Austria-Hungary characteristics of in colonial India and conflicted/contradictory identity as default metaphysics of modern world disaffected educated classes and Dostoyevsky German Romantics growth of in post-colonial states and jingoism and Kierkegaard and mimetic desire and ‘narcissism of small difference’ and Nazism and Nietzsche and political spectrum present-day and Rousseau in Russian literature Max Scheler’s theory ‘superfluous’ groups/people ‘superfluous’ men in Russian fiction in unified Germany in unified Italy unsatisfied fantasies of consumerism white male Rhodes, Cecil Rice, Condoleezza Rida, Rashid right-wing extremism Rimbaud, Arthur Robespierre, Maximilien Roca, Mateo Morral Roman Empire Romantics see also German Romantics Roof, Dylann Roosevelt, Theodore Rostow, W.


pages: 453 words: 111,010

Licence to be Bad by Jonathan Aldred

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

As Margaret Thatcher put it, ‘It is our job to glory in inequality and see that talents and abilities are given vent and expression for the benefit of all.’3 However, the Reagan/Thatcher turn in economic ideas, already dissected at length by some brilliant historians, is far from complete as an explanation of rising inequality.4 To see why, we must look elsewhere, beginning with an economist whose impact on thinking about inequality remains enormous. REASONS NOT TO TALK ABOUT INEQUALITY Vilfredo Pareto is one of the most influential economists most people have never heard of. He is an enigmatic figure in the history of economics, an abrasive, volatile, argumentative, aristocratic cynic whose life and ideas are hard to categorize. His working life began quietly: after a degree in engineering, he worked as a railway engineer in Florence. But by his death in 1923, ten months after the fascist leader Benito Mussolini became Italian Prime Minister, his ideas were hailed by the fascists as their main intellectual inspiration.

objection, 107, 119–20 Friedman, Milton, 4–5, 56, 69, 84, 88, 126, 189 awarded Nobel Prize, 132 and business responsibility, 2, 152 debate with Coase at Director’s house, 50, 132 as dominant Chicago thinker, 50, 132 on fairness and justice, 60 flawed arguments of, 132–3 influence on modern economics, 131–2 and monetarism, 87, 132, 232 at Mont Pèlerin, 5, 132 rejects need for realistic assumptions, 132–3 Sheraton Hall address (December 1967), 132 ‘The Methodology of Positive Economics’ (essay, 1953), 132–3 ‘The Social Responsibility of Business is to Increase Its Profits’ (article, 1970), 2, 152 Frost, Gerald, Antony Fisher: Champion of Liberty (2002), 7* Galbraith, John Kenneth, 242–3 game theory assumptions of ‘rational behaviour’, 18, 28, 29–32, 35–8, 41–3, 70, 124 Axelrod’s law of the instrument, 41 backward induction procedure, 36–7, 38 and Cold War nuclear strategy, 18, 20, 21–2, 24, 27, 33–4, 35, 70, 73, 198 focus on consequences alone, 43 as form of zombie science, 41 and human awareness, 21–3, 24–32 and interdependence, 23 limitations of, 32, 33–4, 37–40, 41–3 minimax solution, 22 multiplicity problem, 33–4, 35–7, 38 Nash equilibrium, 22–3, 24, 25, 27–8, 33–4, 41–2 the Nash program, 25 and nature of trust, 28–31, 41 the Prisoner’s Dilemma, 26–8, 29–32, 42–3 real world as problem for, 21–2, 24–5, 29, 31–2, 37–8, 39–40, 41–3 rise of in economics, 40–41 and Russell’s Chicken, 33–4 and Schelling, 138–9 and spectrum auctions, 39–40 theory of repeated games, 29–30, 35 tit-for-tat, 30–31 and trust, 29, 30–31, 32, 41 uses of, 23–4, 34, 38–9 view of humanity as non-cooperative/distrustful, 18, 21–2, 25–32, 36–8, 41–3 Von Neumann as father of, 18, 19, 20–22, 25, 26, 28, 30, 34, 41 zero-sum games, 21–2 Gates, Bill, 221–2 Geithner, Tim, 105 gender, 127–8, 130–31, 133, 156 General Electric, 159 General Motors (GM), 215–16 George, Prince of Cambridge, 98 Glass–Steagall Act, repeal of, 194 globalization, 215, 220 Goldman Sachs, 182, 184, 192 Google, 105 Gore, Al, 39 Great Reform Act (1832), 120 greed, 1–2, 196, 197, 204, 229, 238 Greenspan, Alan, 57, 203 Gruber, Jonathan, 245 Haifa, Israel, 158, 161 Harper, ‘Baldy’, 7 Harsanyi, John, 34–5, 40 Harvard Business Review, 153 Hayek, Friedrich and Arrow’s framework, 78–9 economics as all of life, 8 and Antony Fisher, 6–7 influence on Thatcher, 6, 7 and Keynesian economics, 5–6 and legal frameworks, 7* at LSE, 4 at Mont Pèlerin, 4, 5, 6, 15 and Olson’s analysis, 104 and public choice theory, 89 rejection of incentive schemes, 156 ‘spontaneous order’ idea, 30 The Road to Serfdom (1944), 4, 5, 6, 78–9, 94 healthcare, 91–2, 93, 178, 230, 236 hedge funds, 201, 219, 243–4 Heilbroner, Robert, The Worldly Philosophers, 252 Heller, Joseph, Catch-22, 98, 107, 243–4 Helmsley, Leona, 105 hero myths, 221–3, 224 Hewlett-Packard, 159 hippie countercultural, 100 Hoffman, Abbie, Steal This Book, 100 Holmström, Bengt, 229–30 homo economicus, 9, 10, 12, 140, 156–7 and Gary Becker, 126, 129, 133, 136 and behaviour of real people, 15, 136, 144–5, 171, 172, 173, 250–51 and behavioural economics, 170, 171, 172, 255 long shadow cast by, 248 and Nudge economists, 13, 172, 173, 174–5, 177 Hooke, Robert, 223 housing market, 128–9, 196, 240–41 separate doors for poor people, 243 Hume, David, 111 Huxley, Thomas, 114 IBM, 181, 222 identity, 32, 165–6, 168, 180 Illinois, state of, 46–7 immigration, 125, 146 Impossibility Theorem, 72, 73–4, 75, 89, 97 Arrow’s assumptions, 80, 81, 82 and Duncan Black, 77–8 and free marketeers, 78–9, 82 as misunderstood and misrepresented, 76–7, 79–82 ‘paradox of voting’, 75–7 as readily solved, 76–7, 79–80 Sen’s mathematical framework, 80–81 incentives adverse effect on autonomy, 164, 165–6, 168, 169–70, 180 authority figure–autonomy contradiction, 180 and behavioural economics, 171, 175, 176–7 cash and non-cash gifts, 161–2 context and culture, 175–6 contrast with rewards and punishments, 176–7 ‘crowding in’, 176 crowding out of prior motives, 160–61, 162–3, 164, 165–6, 171, 176 impact of economists’ ideas, 156–7, 178–80 and intrinsic motivations, 158–60, 161–3, 164, 165–6, 176 and moral disengagement, 162, 163, 164, 166 morally wrong/corrupting, 168–9 origins in behaviourism, 154 and orthodox theory of motivation, 157–8, 164, 166–7, 168–70, 178–9 payments to blood donors, 162–3, 164, 169, 176 as pervasive in modern era, 155–6 respectful use of, 175, 177–8 successful, 159–60 as tools of control/power, 155–7, 158–60, 161, 164, 167, 178 Indecent Proposal (film, 1993), 168 India, 123, 175 individualism, 82, 117 and Becker, 134, 135–8 see also freedom, individual Industrial Revolution, 223 inequality and access to lifeboats, 150–51 and climate change, 207–9 correlation with low social mobility, 227–8, 243 and demand for positional goods, 239–41 and economic imperialism, 145–7, 148, 151, 207 and efficiency wages, 237–8 entrenched self-deluding justifications for, 242–3 and executive pay, 215–16, 219, 224, 228–30, 234, 238 as falling in 1940–80 period, 215, 216 Great Gatsby Curve, 227–8, 243 hero myths, 221–3, 224 increases in as self-perpetuating, 227–8, 230–31, 243 as increasing since 1970s, 2–3, 215–16, 220–21 and lower growth levels, 239 mainstream political consensus on, 216, 217, 218, 219–21 marginal productivity theory, 223–4, 228 new doctrine on taxation since 1970s, 232–5 and Pareto, 217, 218–19, 220 poverty as waste of productive capacity, 238–9 public attitudes to, 221, 226–8 rises in as not inevitable, 220, 221, 242 role of luck downplayed, 222, 224–6, 243 scale-invariant nature of, 219, 220 ‘socialism for the rich’, 230 Thatcher’s praise of, 216 and top-rate tax cuts, 231, 233–5, 239 trickle-down economics, 232–3 US and European attitudes to, 226–7 ‘you deserve what you get’ belief, 223–6, 227–8, 236, 243 innovation, 222–3, 242 Inside Job (documentary, 2010), 88 Institute of Economic Affairs, 7–8, 15, 162–3 intellectual property law, 57, 68, 236 Ishiguro, Kazuo, Never Let Me Go, 148 Jensen, Michael, 229 Journal of Law and Economics, 49 justice, 1, 55, 57–62, 125, 137 Kahn, Herman, 18, 33 Kahneman, Daniel, 170–72, 173, 179, 202–3, 212, 226 Kennedy, President John, 139–40 Keynes, John Maynard, 11, 21, 162, 186, 204 and Buchanan’s ideology, 87 dentistry comparison, 258–9, 261 on economics as moral science, 252–3 Friedman’s challenge to orthodoxy of, 132 Hayek’s view of, 5–6 massive influence of, 3–4, 5–6 on power of economic ideas, 15 and probability, 185, 186–7, 188–9, 190, 210 vision of the ideal economist, 20 General Theory (1936), 15, 188–9 Khomeini, Ayatollah, 128 Khrushchev, Nikita, 139–40, 181 Kilburn Grammar School, 48 Kildall, Gary, 222 Kissinger, Henry, 184 Knight, Frank, 185–6, 212 Krugman, Paul, 248 Kubrick, Stanley, 35*, 139 labour child labour, 124, 146 and efficiency wages, 237–8 labour-intensive services, 90, 92–3 lumpenproletariat, 237 Olson’s hostility to unions, 104 Adam Smith’s ‘division of labour’ concept, 128 Laffer, Arthur, 232–3, 234 Lancet (medical journal), 257 Larkin, Philip, 67 law and economics movement, 40, 55, 56–63, 64–7 Lazear, Edward, ‘Economic Imperialism’, 246 legal system, 7* and blame for accidents, 55, 60–61 and Chicago School, 49, 50–52, 55 and Coase Theorem, 47, 49, 50–55, 63–6 criminal responsibility, 111, 137, 152 economic imperialist view of, 137 law and economics movement, 40, 55, 56–63, 64–7 ‘mimic the market’ approach, 61–3, 65 Posner’s wealth-maximization principle, 57–63, 64–7, 137 precautionary principle, 211–12, 214 transaction costs, 51–3, 54–5, 61, 62, 63–4, 68 Lehmann Brothers, 194 Lexecon, 58, 68 Linda Problem, 202–3 LineStanding.com, 123 Little Zheng, 123, 124 Lloyd Webber, Andrew, 234–5, 236 lobbying, 7, 8, 88, 115, 123, 125, 146, 230, 231, 238 loft-insulation schemes, 172–3 logic, mathematical, 74–5 The Logic of Life (Tim Harford, 2008), 130 London School of Economics (LSE), 4, 48 Long-Term Capital Management (LTCM), 201, 257 Machiavelli, Niccoló, 89, 94 Mafia, 30 malaria treatments, 125, 149 management science, 153–4, 155 Mandelbrot, Benoît, 195, 196, 201 Mankiw, Greg, 11 marginal productivity theory, 223–4 Markowitz, Harry, 196–7, 201, 213 Marx, Karl, 11, 101, 102, 104, 111, 223 lumpenproletariat, 237 mathematics, 9–10, 17–18, 19, 21–4, 26, 247, 248, 255, 259 of 2007 financial crash, 194, 195–6 and Ken Arrow, 71, 72, 73–5, 76–7, 82–3, 97 axioms (abstract assumptions), 198 fractals (scale-invariance), 194, 195–6, 201, 219 and orthodox decision theory, 190–91, 214 Ramsey Rule on discounting, 208–9, 212 and Savage, 189–90, 193, 197, 198, 199, 205 and Schelling, 139 Sen’s framework on voting systems, 80–81 standard deviation, 182, 192, 194 and stock market statistics, 190–91, 195–6 use of for military ends, 71–2 maximizing behaviour and Becker, 129–31, 133–4, 147 and catastrophe, 211 and Coase, 47, 55, 59, 61, 63–9 economic imperialism, 124–5, 129–31, 133–4, 147, 148–9 Posner’s wealth-maximization principle, 57–63, 64–7, 137 profit-maximizing firms, 228 see also wealth-maximization principle; welfare maximization McCluskey, Kirsty, 194 McNamara, Robert, 138 median voter theorem, 77, 95–6 Merton, Robert, 201 Meucci, Antonio, 222 microeconomics, 9, 232, 259 Microsoft, 222 Miles, David, 258 Mill, John Stuart, 102, 111, 243 minimum wage, national, 96 mobility, economic and social correlation with inequality, 226–8, 243 as low in UK, 227 as low in USA, 226–7 US–Europe comparisons, 226–7 Modern Times (Chaplin film, 1936), 154 modernism, 67 Moivre, Abraham de, 193 monetarism, 87, 89, 132, 232 monopolies and cartels, 101, 102, 103–4 public sector, 48–9, 50–51, 93–4 Mont Pèlerin Society, 3–9, 13, 15, 132 Morgenstern, Oskar, 20–22, 24–5, 28, 35, 124, 129, 189, 190 Mozart, Wolfgang Amadeus, 91, 92–3 Murphy, Kevin, 229 Mussolini, Benito, 216, 219 Nash equilibrium, 22–3, 24, 25, 27–8, 33–4, 41–2 Nash, John, 17–18, 22–3, 24, 25–6, 27–8, 33–4, 41–2 awarded Nobel Prize, 34–5, 38, 39, 40 mental health problems, 25, 26, 34 National Health Service, 106, 162 ‘neoliberalism’, avoidance of term, 3* Neumann, John von ambition to make economics a science, 20–21, 24–5, 26, 35, 125, 151, 189 as Cold War warrior, 20, 26, 138 and expansion of scope of economics, 124–5 as father of game theory, 18, 19, 20–22, 25, 26, 28, 30, 34, 41 final illness and death of, 19, 34, 35, 43–4 genius of, 19–20 as inspiration for Dr Strangelove, 19 and Nash’s equilibrium, 22–3, 25, 38* simplistic view of humanity, 28 theory of decision-making, 189, 190, 203 neuroscience, 14 New Deal, US, 4, 194, 231 Newton, Isaac, 223 Newtonian mechanics, 21, 24–5 Nixon, Richard, 56, 184, 200 NORAD, Colorado Springs, 181 nuclear weapons, 18–19, 20, 22, 27, 181 and Ellsberg, 200 and game theory, 18, 20, 21–2, 24, 27, 33–4, 35, 70, 73, 198 MAD (Mutually Assured Destruction), 35, 138 and Russell’s Chicken, 33–4 and Schelling, 138, 139 Nudge economists, 13, 171–5, 177–8, 179, 180, 251 Oaten, Mark, 121 Obama, Barack, 110, 121, 157, 172, 180 Olson, Mancur, 103, 108, 109, 119–20, 122 The Logic of Collective Action (1965), 103–4 On the Waterfront (Kazan film, 1954), 165 online invisibility, 100* organs, human, trade in, 65, 123, 124, 145, 147–8 Orwell, George, Nineteen Eighty-Four, 42–3 Osborne, George, 233–4 Packard, David, 159 Paine, Tom, 243 Pareto, Vilfredo 80/20 rule’ 218 and inequality, 217, 218–19, 220 life and background of, 216–17 Pareto efficiency, 217–18, 256* Paul the octopus (World Cup predictor, 2010), 133 pensions, workplace, 172, 174 physics envy, 9, 20–21, 41, 116, 175–6, 212, 247 Piketty, Thomas, 234, 235 plastic shopping bag tax, 159–60 Plato’s Republic, 100–101, 122 political scientists and Duncan Black, 78, 95–6 Black’s median voter theorem, 95–6 Buchanan’s ideology, 84–5 crises of the 1970s, 85–6 influence of Arrow, 72, 81–2, 83 see also public choice theory; social choice theory Posner, Richard, 54, 56–63, 137 ‘mimic the market’ approach, 61–3, 65 ‘The Economics of the Baby Shortage’ (1978), 61 precautionary principle, 211–12, 214 price-fixing, 101, 102, 103–4 Princeton University, 17, 19–20 Prisoner’s Dilemma, 26–8, 29–32, 42–3 prisons, cell upgrades in, 123 privatization, 50, 54, 88, 93–4 probability, 182–4 and Keynes, 185, 186–7, 188–9, 210 Linda Problem, 202–3 modern ideas of, 184–5 Ramsey’s personal probabilities (beliefs as probabilities), 187–8, 190, 197, 198, 199, 204–5 and Savage, 190, 193, 197, 198, 199, 203, 205 ‘Truth and Probability’ (Ramsey paper), 186–8, 189, 190 see also risk and uncertainty Proceedings of the National Academy of Sciences, 22 productivity Baumol’s cost disease, 90–92, 93, 94 and efficiency wages, 237–8 improvement in labour-intensive services, 92–3 labour input, 92 protectionism, 246, 255 psychology availability heuristic, 226 behaviourism, 154–8, 237 and behavioural economics, 12, 170–71 cognitive dissonance, 113–14 and financial incentives, 156–7, 158–60, 163–4, 171 framing effects, 170–71, 259 of free-riding, 113–14, 115 intrinsic motivations, 158–60, 161–3, 164, 165–6, 176 irrational behaviour, 12, 15, 171 learning of social behaviour, 163–4 moral disengagement, 162, 163, 164, 166 motivated beliefs, 227 ‘self-command’ strategies, 140 view of in game theory, 26–31 view of in public choice theory, 85–6 and welfare maximization, 149 ‘you deserve what you get’ belief, 223–6, 227–8, 236, 243 public choice theory as consensus view, 84–5 and crises of the 1970s, 85–6 foolish voter assumption, 86–8 ‘paradox of voter turnout’, 88–9, 95–6, 115–16 partial/self-contradictory application of, 86, 87–9 ‘political overload’ argument, 85, 86–7 ‘public bad, private good’ mantra, 93–4, 97 and resistance to tax rises, 94, 241 self-fulfilling prophecies, 95–7 and selfishness, 85–6, 87–8, 89, 94, 95–7 as time-bomb waiting to explode, 85 public expenditure in 1970s and ’80s, 89 Baumol’s cost disease, 90–92, 93, 94 and Keynesian economics, 4 and public choice theory, 85–8, 89, 241 and tax rises, 241–2 public-sector monopolies, 48–9, 50–51, 93–4 Puzzle of the Harmless Torturers, 118–19 queue-jumping, 123, 124 QWERTY layout, 42 racial discrimination, 126–7, 133, 136, 140 Ramsey, Frank, 186–8, 189, 190, 205, 208 Ramsey Rule, 208–9, 212 RAND Corporation, 17, 41, 103, 138, 139 and Ken Arrow, 70–71, 72–3, 74, 75–6, 77, 78 and behaviourism, 154 and Cold War military strategy, 18, 20, 21–2, 24, 27, 33–4, 70, 73, 75–6, 141, 200, 213 and Ellsberg, 182–4, 187, 197–8, 200 and Russell’s Chicken, 33 Santa Monica offices of, 18 self-image as defender of freedom, 78 rational behaviour assumptions in game theory, 18, 28, 29–32, 35–8, 41–3, 70, 124 axioms (abstract mathematical assumptions), 198 Becker’s version of, 128–9, 135, 140, 151 behavioural economics/Nudge view of, 173, 174–5 distinction between values and tastes, 136–8 economic imperialist view of, 135, 136–8, 140, 151 and free-riding theory, 100–101, 102, 103–4, 107–8, 109–10, 115–16 and orthodox decision theory, 198, 199 public choice theory relates selfishness to, 86 term as scientific-sounding cover, 12 see also homo economicus Reader’s Digest, 5, 6 Reagan, Ronald, 2, 87–8, 89, 104, 132 election of as turning point, 6, 216, 220–21 and top-rate tax cuts, 231, 233 regulators, 1–2 Chicago view of, 40 Reinhart, Carmen, 258 religion, decline of in modern societies, 15, 185 renewable energy, 116 rent-seeking, 230, 238 ‘right to recline’, 63–4 risk and uncertainty bell curve distribution, 191–4, 195, 196–7, 201, 203–4, 257 catastrophes, 181–2, 191, 192, 201, 203–4, 211–12 delusions of quantitative ‘risk management’, 196, 213 Ellsberg’s experiment (1961), 182–4, 187, 197, 198–200 errors in conventional thinking about, 191–2, 193–4, 195–7, 204–5, 213 financial orthodoxy on risk, 196–7, 201–2 and First World War, 185 and fractals (scale-invariance), 194, 195–6, 201 hasard and fortuit, 185* ‘making sense’ of through stories, 202–3 ‘measurable’ and ‘unmeasurable’ distinction, 185–6, 187–9, 190, 210–11, 212–13 measurement in numerical terms, 181–4, 187, 189, 190–94, 196–7, 201–2, 203–5, 212–13 orthodox decision theory, 183–4, 185–6, 189–91, 193–4, 201–2, 203–5, 211, 212–14 our contemporary orthodoxy, 189–91 personal probabilities (beliefs as probabilities), 187–8, 190, 197, 198, 199, 204–5 precautionary principle, 211–12, 214 pure uncertainty, 182–3, 185–6, 187–9, 190, 197, 198–9, 210, 211, 212, 214, 251 redefined as ‘volatility’, 197, 213 the Savage orthodoxy, 190–91, 197, 198–200, 203, 205 scenario planning as crucial, 251 Taleb’s black swans, 192, 194, 201, 203–4 ‘Truth and Probability’ (Ramsey paper), 186–8, 189, 190 urge to actuarial alchemy, 190–91, 197, 201 value of human life (‘statistical lives’), 141–5, 207 see also probability Robertson, Dennis, 13–14 Robinson, Joan, 260 Rodrik, Dani, 255, 260–61 Rogoff, Ken, 258 Rothko, Mark, 4–5 Rumsfeld, Donald, 232–3 Russell, Bertrand, 33–4, 74, 97, 186, 188 Ryanair, 106 Sachs, Jeffrey, 257 Santa Monica, California, 18 Sargent, Tom, 257–8 Savage, Leonard ‘Jimmie’, 189–90, 193, 203, 205scale-invariance, 194, 195–6, 201, 219 Scandinavian countries, 103, 149 Schelling, Thomas, 35* on access to lifeboats, 150–51 awarded Nobel Prize, 138–9 and Cold War nuclear strategy, 138, 139–40 and economic imperialism, 141–5 and game theory, 138–9 and Washington–Moscow hotline, 139–40 work on value of human life, 141–5, 207 ‘The Intimate Contest for Self-command’ (essay, 1980), 140, 145 ‘The Life You Save May be Your Own’ (essay, 1968), 142–5, 207 Schiphol Airport, Amsterdam, 172 Schmidt, Eric, 105 Scholes, Myron, 201 Schwarzman, Stephen, 235 Second World War, 3, 189, 210 selfishness, 41–3, 178–9 and Becker, 129–30 and defence of inequality, 242–3 as free marketeers’ starting point, 10–12, 13–14, 41, 86, 178–9 and game theory, 18 and public choice theory, 85–6, 87–8, 89, 94, 95–7 Selten, Reinhard, 34–5, 36, 38, 40 Sen, Amartya, 29, 80–81 service sector, 90–93, 94 Shakespeare, William, Measure for Measure, 169 Shaw, George Bernard, 101 Shiller, Robert, 247 Simon, Herbert, 223 Skinner, Burrhus, 154–5, 158 Smith, Adam, 101, 111, 122 The Wealth of Nations (1776), 10–11, 188–9 snowflakes, 195 social choice theory, 72 and Ken Arrow, 71–83, 89, 95, 97, 124–5, 129 and Duncan Black, 78, 95 and free marketeers, 79, 82 Sen’s mathematical framework, 80–81 social media, 100* solar panels, 116 Solow, Bob, 163, 223 Sorites paradox, 117–18, 119 sovereign fantasy, 116–17 Soviet Union, 20, 22, 70, 73, 82, 101, 104, 167, 237 spectrum auctions, 39–40, 47, 49 Stalin, Joseph, 70, 73, 101 the state anti-government attitudes in USA, 83–5 antitrust regulation, 56–8 dismissal of almost any role for, 94, 135, 235–6, 241 duty over full employment, 5 economic imperialist arguments for ‘small government’, 135 increased economic role from 1940s, 3–4, 5 interventions over ‘inefficient’ outcomes, 53 and monetarism, 87, 89 and Mont Pèlerin Society, 3, 4, 5 and privatization, 50, 54, 88, 93–4 public-sector monopolies, 48–50, 93–4 replacing of with markets, 79 vital role of, 236 statistical lives, 141–5, 207 Stern, Nick, 206, 209–10 Stigler, George, 50, 51, 56, 69, 88 De Gustibus Non Est Disputandum (with Becker, 1977), 135–6 Stiglitz, Joseph, 237 stock markets ‘Black Monday’ (1987), 192 and fractals (scale-invariance), 194, 195–6, 201 orthodox decision theory, 190–91, 193–4, 201 Strittmatter, Father, 43–4 Summers, Larry, 10, 14 Sunstein, Cass, 173 Nudge (with Richard Thaler, 2008), 171–2, 175 Taleb, Nassim, 192 Tarski, Alfred, 74–5 taxation and Baumol’s cost disease, 94 and demand for positional goods, 239–41 as good thing, 231, 241–2, 243 Laffer curve, 232–3, 234 new doctrine of since 1970s, 232–4 property rights as interdependent with, 235–6 public resistance to tax rises, 94, 239, 241–2 and public spending, 241–2 revenue-maximizing top tax rate, 233–4, 235 tax avoidance and evasion, 99, 105–6, 112–13, 175, 215 ‘tax revolt’ campaigns (1970s USA), 87 ‘tax as theft’ culture, 235–6 top-rate cuts and inequality, 231, 233–5, 239 whines from the super-rich, 234–5, 243 Taylor, Frederick Winslow, 153–4, 155, 167, 178, 237 Thaler, Richard, 13 Nudge (with Cass Sunstein, 2008), 171–2, 175 Thatcher, Margaret, 2, 88, 89, 104, 132 election of as turning point, 6, 216, 220–21 and Hayek, 6, 7 and inequality, 216, 227 privatization programme, 93–4 and top-rate tax cuts, 231 Theory of Games and Economic Behavior (Von Neumann and Morgenstern, 1944), 20, 21, 25, 189 Titanic, sinking of (1912), 150 Titmuss, Richard, The Gift Relationship, 162–3 tobacco-industry lobbyists, 8 totalitarian regimes, 4, 82, 167–8, 216, 219 see also Soviet Union trade union movement, 104 Tragedy of the Commons, 27 Truman, Harry, 20, 237 Trump, Donald, 233 Tucker, Albert, 26–7 Tversky, Amos, 170–72, 173, 202–3, 212, 226 Twitter, 100* Uber, 257 uncertainty see risk and uncertainty The Undercover Economist (Tim Harford, 2005), 130 unemployment and Coase Theorem, 45–7, 64 during Great Depression, 3–4 and Keynesian economics, 4, 5 United Nations, 96 universities auctioning of places, 124, 149–50 incentivization as pervasive, 156 Vietnam War, 56, 198, 200, 249 Villari, Pasquale, 30 Vinci, Leonardo da, 186 Viniar, David, 182, 192 Volkswagen scandal (2016), 2, 151–2 Vonnegut, Kurt, 243–4 voting systems, 72–4, 77, 80, 97 Arrow’s ‘Independence of Irrelevant Alternatives’, 81, 82 Arrow’s ‘Universal Domain’, 81, 82 and free marketeers, 79 ‘hanging chads’ in Florida (2000), 121 recount process in UK, 121 Sen’s mathematical framework, 80–81 Waldfogel, Joel, 161* Wanniski, Jude, 232 Watertown Arsenal, Massachusetts, 153–4 Watson Jr, Thomas J., 181 wealth-maximization principle, 57–63 and Coase, 47, 55, 59, 63–9 as core principle of current economics, 253 created markets, 65–7 extension of scope of, 124–5 and justice, 55, 57–62, 137 and knee space on planes, 63–4 practical problems with negotiations, 62–3 and values more important than efficiency, 64–5, 66–7 welfare maximization, 124–5, 129–31, 133–4, 148–9, 176 behavioural economics/Nudge view of, 173 and vulnerable/powerless people, 146–7, 150 welfare state, 4, 162 Wilson, Charlie, 215 Wittgenstein, Ludwig, 186, 188 Wolfenschiessen (Swiss village), 158, 166–7 Woolf, Virginia, 67 World Bank, 96 World Cup football tournament (2010), 133 World Health Organization, 207 Yale Saturday Evening Pest, 4–5 Yellen, Janet, 237 THE BEGINNING Let the conversation begin … Follow the Penguin twitter.com/penguinukbooks Keep up-to-date with all our stories youtube.com/penguinbooks Pin ‘Penguin Books’ to your pinterest.com/penguinukbooks Like ‘Penguin Books’ on facebook.com/penguinbooks Listen to Penguin at soundcloud.com/penguin-books Find out more about the author and discover more stories like this at penguin.co.uk ALLEN LANE UK | USA | Canada | Ireland | Australia India | New Zealand | South Africa Allen Lane is part of the Penguin Random House group of companies whose addresses can be found at global.penguinrandomhouse.com First published 2019 Copyright © Jonathan Aldred, 2019 The moral right of the author has been asserted Jacket photograph © Getty Images ISBN: 978-0-241-32544-5 This ebook is copyright material and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased or as strictly permitted by applicable copyright law.


pages: 416 words: 108,370

Hit Makers: The Science of Popularity in an Age of Distraction by Derek Thompson

Airbnb, Albert Einstein, Alexey Pajitnov wrote Tetris, always be closing, augmented reality, Clayton Christensen, Donald Trump, Downton Abbey, full employment, game design, Gordon Gekko, hindsight bias, indoor plumbing, industrial cluster, information trail, invention of the printing press, invention of the telegraph, Jeff Bezos, John Snow's cholera map, Kodak vs Instagram, linear programming, Lyft, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Metcalfe’s law, Minecraft, Nate Silver, Network effects, Nicholas Carr, out of africa, randomized controlled trial, recommendation engine, Robert Gordon, Ronald Reagan, Silicon Valley, Skype, Snapchat, statistical model, Steve Ballmer, Steve Jobs, Steven Levy, Steven Pinker, subscription business, telemarketer, the medium is the message, The Rise and Fall of American Growth, Uber and Lyft, Uber for X, uber lyft, Vilfredo Pareto, Vincenzo Peruggia: Mona Lisa, women in the workforce

Consider it a metaphor for pop culture, with consumers playing the role of gas molecules. At some point in time, they will cluster around an unforeseeable cultural product by buying the same book or attending the same movie. Recall Duncan Watts’s big idea: Like a massive earthquake, some “global cascades” are mathematically inevitable, but they are also impossible to predict too far ahead of time. “Pareto’s power law characteristics”: Vilfredo Pareto, an Italian economist, is credited with discovering that income within a country follows a “power law,” such that 80 percent of wealth is held by 20 percent of the population. This Pareto principle has been extended to mean that 80 percent of sales often comes from 20 percent of products. In the movie sample De Vany studied, one fifth of the movies took four fifths of the box office. In book publishing, more like 90 percent of revenues come from about 10 percent of books.

., 110 marketing and fashion, 49, 134 of Fifty Shades of Grey, 202–3 importance of, 8 information as, 82 necessity of, 62 in politics, 40 resistance to, 57 marriage equality, 128–29 The Martian (2015), 238 Martin, Max, 75, 76 mass production, 48, 49 A Matter of Taste (Lieberson), 136–37, 322n135, 323n135 MAYA (Most Advanced Yet Acceptable), 47–48, 56, 59, 70–71, 286–87 McGraw, Peter, 146 Mean Girls (2004), 170n meaning, desire for, 15, 57 Meeker, Mary, 12 memory, 86, 99–100 Mendelsohn, Nicola, 273 Mendelsund, Peter, 98 Messitte, Anne, 197–99, 200, 202–3, 205 metacognition, 42 Metcalfe’s law, 220 Miller, Dave, 164 Millet, Jean-François, 312n22 Minecraft, 58–59 mobile technology, 11–12, 67 Model T cars, 48, 133 Mona Lisa (Leonardo da Vinci), 168–69 Monet, Claude and art dealer, 251–52 and Caillebotte’s bequest, 22, 23, 24, 312n22 Caillebotte’s friendship with, 21 fame of, 19–20, 27 selling works of, 26 Moonies, 217, 217n Moore’s law, 290, 333n289 Morisot, Berthe, 312n22 Morse, Samuel, 151 Morton, Mary, 26 Mosseri, Adam, 268, 270 movies and Hollywood, 103–6 and Academy Awards, 126–27 animated films, 110–11 apocalypse genre of, 112–13 and audiences, 107, 113–14, 127–28, 291 and best seller lists, 237 and chaos, 177 as complex products, 177, 178–180 distribution of success in, 177–78 double standards in, 127–28 and emergence of television, 297 and familiarity, 181–82 franchise strategy in, 7, 181–82 gender bias in, 123–28, 321n126 globalization of, 182 and high-concept pitches, 61 international consumption of, 291 lack of diversity in, 123–28, 129–130, 321n126 and merchandising, 294 predicting successes in, 237–38 and promotional expenses, 181 rules for storytelling in, 111, 113–14 studio system of, 181 suspense genre of, 112 and television, 10–11, 290, 297 and ticket sales, 10, 11, 181, 182 multiplier effects of hits, 240–41, 245 Munoz, Joe, 222 Murdoch, Rupert, 115n, 233, 235 museums, 32–33, 41 music and Billboard, 80–82, 134, 166, 175, 176–77, 238 and chaos mitigation, 180–81 collaborative filtering in, 69–70 digital revolution in, 289–290 distribution of, 33–34 and earworms, 79–80 elemental role of, in civilization, 85–86 finding new, 68–70 habituation/dishabituation in, 82–85 hip-hop/rap music, 81–82 and hooks, 3–4, 76, 79, 80, 82 and Kotecha, 73–76 and language, 85–86 and Leslie, 301–5 and memory, 85–86 and music labels, 175n, 304–5 and neophobia, 68 and Pandora, 67–68 and phonographs, 289 pop music, 33, 59–60, 73–77, 80–85, 90–91, 176–77 preference for familiar in, 79 quality/catchiness of, 34–37, 76–77, 80, 142 and radio stations, 180–81 rankings in, 205–6 repetition in, 77–80, 82, 83–85, 283 and rhyme-as-reason effect, 92–94 “Rock Around the Clock” (Bill Haley and His Comets), 163–67 rock ’n’ roll, 175–77 rules in, 85 and song-testing operations, 35–36, 37, 142 and speech-to-song illusion, 77–79 and Spotify, 68–70 structure in, 3–4, 76, 84–85 and Swedish music industry, 75–76 and technology, 13–14 and vinyl records, 13, 292 Muth, Claudia, 57 MySpace, 151, 152 myths and myth-busting, 130–31 name choices, 135–37, 139–142, 152–53, 322–23n135 Nast, Condé, 46 neophilia/neophobia, 7, 48–49, 56, 68, 138–39, 160 Netflix, 130 networks, importance of understanding, 8, 305 newness, optimal, 60–61, 61 news and journalism, 253–275 and aggregators, 265–66 and aspiration-behavior gap, 271–72, 272n and Facebook, 267–275 and familiarity/surprise in, 65 and Gallup, 258–261, 267, 275 and golden age of reading, 255 and Internet, 265–66, 291, 292 and measuring readership, 257–58, 259–261 myths and falsehoods in, 130–31 new economic model in, 292 news alerts, 65 objective of, 253 and power of press, 130–31 and reader preferences, 253–54, 257–58, 264, 267–273 repetition in, 64–65 and smaller papers, 256–57 and social media, 266 and syndication of news, 257 and tabloids, 255–56 and television, 262, 264–65, 273, 290 Newton, Nigel, 233 New York City, 47 New Yorker magazine, 272 New York Times, 157, 196 Nielsen, 33, 81 Nineteenth Amendment, 92 Ninth Symphony (Beethoven), 4 Nixon, Richard, 38 nostalgia, 100 novelty, 60–61, 61 Obama, Barack, 86–91 Obergefell v. Hodges, 128–29 The Office (television series), 240 Ogle, Matt, 68–70 On Exactitude in Science (Borges), 1 OODA (Observation, Orientation, Decision, and Action), 278, 280 Page, Jimmy, 233 Pajitnov, Alexey, 58 Pandora, 37, 67–68, 130 “The Paradox of Publicity” (Kovacs and Sharkey), 143 Pareto, Vilfredo, 179–180 Pareto principle (80-20 rule), 179–180 Parker, Sean, 34 Peale, Charles Willson, 32, 32n Peretti, Jonah, 301 Phaedrus (Plato), 150 philosophers, 60 Philosophical Dictionary (Voltaire), 119–120 phonographs, 289 photo-sharing applications, 8–9 Picasso, Pablo, 57 Pietroluongo, Silvio, 81, 82 Pissarro, Camille, 22, 23, 24, 312n22 Planck, Max, 60, 71 planned obsolescence, 49, 81n Plato, 27, 146, 150 poetry, 27 politics and elections development of opinions about, 125 and ideological “burn-in,” 130 and ignorance of voters, 40–41 political parties, 38–40, 41 political rhetoric, 86–92, 283 and public relations, 37–38 Polo, Marco, 1, 14–15 pop culture, 57 Porter, Michael, 75 predictability, 116–17.


pages: 298 words: 43,745

Understanding Sponsored Search: Core Elements of Keyword Advertising by Jim Jansen

AltaVista, barriers to entry, Black Swan, bounce rate, business intelligence, butterfly effect, call centre, Claude Shannon: information theory, complexity theory, correlation does not imply causation, en.wikipedia.org, first-price auction, information asymmetry, information retrieval, intangible asset, inventory management, life extension, linear programming, longitudinal study, megacity, Nash equilibrium, Network effects, PageRank, place-making, price mechanism, psychological pricing, random walk, Schrödinger's Cat, sealed-bid auction, search engine result page, second-price auction, second-price sealed-bid, sentiment analysis, social web, software as a service, stochastic process, telemarketer, the market place, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Vickrey auction, Vilfredo Pareto, yield management

Regardless of who is at the party, the average wealth of the room will skyrocket. Weight follows a normal distribution, whereas wealth follows a power law distribution. With distribution of weight, average has meaning. With distribution of wealth, average has little meaning. Potpourri: This distribution of wealth was one of the first observations of the power law distribution, known now as the Pareto principle. The Italian economist Vilfredo Pareto observed in 1906 that 80 percent of the land in Italy was owned by 20 percent of the population. This was the basis for the 80–20 rule, which has cropped up in a variety of disciplines, including real estate (80 percent of the houses are sold by 20 percent of the realtors), quality control (80 percent of the problems are a result of 20 percent of the causes), sales (80 percent of the revenue is generated by 20 percent of the employees), and information retrieval (80 percent precision means 20 percent recall).

., 116 motives, 92–93 Murphy, Jamie, 19 Mustang, Ford, 124 Nash equilibrium, 196–198, 211, 213 navigational, 2, 44–45, 89, 96, 213, 223–224 Nelson, Paul, 39 Nielsen, Arthur, 152 Nielsen BuzzMetrics, 152 Nielsen Company, 152 Nielsen//NetRatings, 152 Nielsen ratings, 152 the normal distribution, 50 Norman, Don, 74 north, 22, 24, 190 nurture, 124 observer bias, 161 observer effect, 161 Ogilvy, David, 85 Onsale, 179 OpenText, 9, 11–12, 15 outcomes, 20, 47, 92–93, 100, 113, 115–116, 128, 150 Overture, 13–15, 179 P&G, 126 Page, Larry, 206 Palmer, Volney B., 122 papyrus, xii Pareto, Vilfredo, 51 Parisian Love, 186 Park, Daehee, 19 pay-for-impression, 19 pay-per-action, 19 pay-per-call, 19 pay-per-click, x, 3–4, 14, 19 Pedersen, Jan, 44 Pemberton, J. M., 70 Penniman, D., 151 Perception, 66, 117 perceptual process, 65 perfect information, 179–180, 184, 189, 197 personalization, 184, 226 Persuasive communication, 122 Pirolli, Pete, 44 Popper, Karl, 203 position impact, 74 positioning advertising, 126 power law, 49–55, 91, 104, 136, 211 prestige pricing, 133 primacy effect, 74–75 principle of least effort, 42–43, 49, 53–55, 58, 66–67, 70–72, 91, 96, 100, 114, 211, 213–214 privacy concerns, 223 Procter and Gamble, 11 prominence, 125 psychohistory, 47 Psychological needs, 125 quality score, 14, 184, 190–193, 196, 198, 200, 221 Quantum mechanics, 204 query length, 23, 41, 48–49 rational actor, 96, 100, 106 Real time content, 224 recency effect, 72, 74–75, 212–213 relevance, 10, 14, 20–21, 37, 64, 74, 76–77, 112–113, 118, 163, 184, 191, 211, 213 reliability, 141, 150, 164, 166, 171 Renaudot, Théophraste, 122 Resnick, Marc, 20, 118 RFM analysis, 104 right rail, 22 Rose, Dan, 44 Saracevic, Tefko, 44 satisficing, 42, 70, 92, 96 Schmidt, Eric, 177 Schrödinger’s cat paradox, 204 Schultz, C., 113, 116 Schwab, Victor O., 68, 100, 120, 165 screen real estate, 3–4, 21, 64, 120, 178, 199 search determinants, 92 Search Engine Marketing Professional Organization.


pages: 403 words: 111,119

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

"Robert Solow", 3D printing, Asian financial crisis, bank run, basic income, battle of ideas, Berlin Wall, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, dematerialisation, disruptive innovation, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, land reform, land value tax, Landlord’s Game, loss aversion, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, mobile money, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, Richard Thaler, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, Steve Ballmer, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

Inequality was a topic of great interest to many of the founding fathers of economics, but their views differed widely over how income would be distributed between labour, landlords and capitalists as market economies grew. While Karl Marx argued that incomes would tend to diverge, with the rich getting richer while workers were kept poor, Alfred Marshall claimed the opposite: that incomes across society would tend to converge as the economy expanded. In the 1890s, however, the Italian engineer-turned-economist Vilfredo Pareto stepped back from theoretical debate and searched for a pattern in the data. Having gathered income and tax records from England and from German states, from Paris and Italian towns, he plotted them on a graph and saw a curiously striking pattern emerge. In each case, he found, around 80% of national income was in the hands of just 20% of people, while the remaining 20% of income was spread among 80% of people.

., 6 micro-businesses, 9, 173, 178 microeconomics, 132–4 microgrids, 187–8 Micronesia, 153 Microsoft, 231 middle class, 6, 46, 58 middle-income countries, 90, 164, 168, 173, 180, 226, 254 migration, 82, 89–90, 166, 195, 199, 236, 266, 286 Milanovic, Branko, 171 Mill, John Stuart, 33–4, 73, 97, 250, 251, 283, 284, 288 Millo, Yuval, 101 minimum wage, 82, 88, 176 Minsky, Hyman, 87, 146 Mises, Ludwig von, 66 mission zero, 217 mobile banking, 199–200 mobile phones, 222 Model T revolution, 277–8 Moldova, 199 Mombasa, Kenya, 185–6 Mona Lisa (da Vinci), 94 money creation, 87, 164, 177, 182–8, 205 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 Monoculture (Michaels), 6 Monopoly, 149 Mont Pelerin Society, 67, 93 Moral Consequences of Economic Growth, The (Friedman), 258 moral vacancy, 41 Morgan, Mary, 99 Morogoro, Tanzania, 121 Moyo, Dambisa, 258 Muirhead, Sam, 230, 231 MultiCapital Scorecard, 241 Murphy, David, 264 Murphy, Richard, 185 musical tastes, 110 Myriad Genetics, 196 N national basic income, 177 Native Americans, 115, 116, 282 natural capital, 7, 116, 269 Natural Economic Order, The (Gessel), 274 Nedbank, 216 negative externalities, 213 negative interest rates, 275–6 neoclassical economics, 134, 135 neoliberalism, 7, 62–3, 67–70, 81, 83, 84, 88, 93, 143, 170, 176 Nepal, 181, 199 Nestlé, 217 Netherlands, 211, 235, 224, 226, 238, 277 networks, 110–11, 117, 118, 123, 124–6, 174–6 neuroscience, 12–13 New Deal, 37 New Economics Foundation, 278, 283 New Year’s Day, 124 New York, United States, 9, 41, 55 Newlight Technologies, 224, 226, 293 Newton, Isaac, 13, 15–17, 32–3, 95, 97, 129, 131, 135–7, 142, 145, 162 Nicaragua, 196 Nigeria, 164 nitrogen, 49, 52, 212–13, 216, 218, 221, 226, 298 ‘no pain, no gain’, 163, 167, 173, 204, 209 Nobel Prize, 6–7, 43, 83, 101, 167 Norway, 281 nudging, 112, 113, 114, 123–6 O Obama, Barack, 41, 92 Oberlin, Ohio, 239, 240–41 Occupy movement, 40, 91 ocean acidification, 45, 46, 52, 155, 242, 298 Ohio, United States, 190, 239 Okun, Arthur, 37 onwards and upwards, 53 Open Building Institute, 196 Open Source Circular Economy (OSCE), 229–32 open systems, 74 open-source design, 158, 196–8, 265 open-source licensing, 204 Organisation for Economic Co-operation and Development (OECD), 38, 210, 255–6, 258 Origin of Species, The (Darwin), 14 Ormerod, Paul, 110, 111 Orr, David, 239 Ostrom, Elinor, 83, 84, 158, 160, 181–2 Ostry, Jonathan, 173 OSVehicle, 231 overseas development assistance (ODA), 198–200 ownership of wealth, 177–82 Oxfam, 9, 44 Oxford University, 1, 36 ozone layer, 9, 50, 115 P Pachamama, 54, 55 Pakistan, 124 Pareto, Vilfredo, 165–6, 175 Paris, France, 290 Park 20|20, Netherlands, 224, 226 Parker Brothers, 149 Patagonia, 56 patents, 195–6, 197, 204 patient capital, 235 Paypal, 192 Pearce, Joshua, 197, 203–4 peer-to-peer networks, 187, 192, 198, 203, 292 People’s QE, 184–5 Perseus, 244 Persia, 13 Peru, 2, 105–6 Phillips, Adam, 283 Phillips, William ‘Bill’, 64–6, 75, 142, 262 phosphorus, 49, 52, 212–13, 218, 298 Physiocrats, 73 Pickett, Kate, 171 pictures, 12–25 Piketty, Thomas, 169 Playfair, William, 16 Poincaré, Henri, 109, 127–8 Polanyi, Karl, 82, 272 political economy, 33–4, 42 political funding, 91–2, 171–2 political voice, 43, 45, 51–2, 77, 117 pollution, 29, 45, 52, 85, 143, 155, 206–17, 226, 238, 242, 254, 298 population, 5, 46, 57, 155, 199, 250, 252, 254 Portugal, 211 post-growth society, 250 poverty, 5, 9, 37, 41, 50, 88, 118, 148, 151 emotional, 283 and inequality, 164–5, 168–9, 178 and overseas development assistance (ODA), 198–200 and taxation, 277 power, 91–92 pre-analytic vision, 21–2 prescription medicines, 123 price-takers, 132 prices, 81, 118–23, 131, 160 Principles of Economics (Mankiw), 34 Principles of Economics (Marshall), 17, 98 Principles of Political Economy (Mill), 288 ProComposto, 226 Propaganda (Bernays), 107 public relations, 107, 281 public spending v. investment, 276 public–private patents, 195 Putnam, Robert, 76–7 Q quantitative easing (QE), 184–5 Quebec, 281 Quesnay, François, 16, 73 R Rabot, Ghent, 236 Rancière, Romain, 172 rating and review systems, 105 rational economic man, 94–103, 109, 111, 112, 126, 282 Reagan, Ronald, 67 reciprocity, 103–6, 117, 118, 123 reflexivity of markets, 144 reinforcing feedback loops, 138–41, 148, 250, 271 relative decoupling, 259 renewable energy biomass energy, 118, 221 and circular economy, 221, 224, 226, 235, 238–9, 274 and commons, 83, 85, 185, 187–8, 192, 203, 264 geothermal energy, 221 and green growth, 257, 260, 263, 264, 267 hydropower, 118, 260, 263 pricing, 118 solar energy, see solar energy wave energy, 221 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 rentier sector, 180, 183, 184 reregulation, 82, 87, 269 resource flows, 175 resource-intensive lifestyles, 46 Rethinking Economics, 289 Reynebeau, Guy, 237 Ricardo, David, 67, 68, 73, 89, 250 Richardson, Katherine, 53 Rifkin, Jeremy, 83, 264–5 Rise and Fall of the Great Powers, The (Kennedy), 279 risk, 112, 113–14 Robbins, Lionel, 34 Robinson, James, 86 Robinson, Joan, 142 robots, 191–5, 237, 258, 278 Rockefeller Foundation, 135 Rockford, Illinois, 179–80 Rockström, Johan, 48, 55 Roddick, Anita, 232–4 Rogoff, Kenneth, 271, 280 Roman Catholic Church, 15, 19 Rombo, Tanzania, 190 Rome, Ancient, 13, 48, 154 Romney, Mitt, 92 Roosevelt, Franklin Delano, 37 rooted membership, 190 Rostow, Walt, 248–50, 254, 257, 267–70, 284 Ruddick, Will, 185 rule of thumb, 113–14 Ruskin, John, 42, 223 Russia, 200 rust belt, 90, 239 S S curve, 251–6 Sainsbury’s, 56 Samuelson, Paul, 17–21, 24–5, 38, 62–7, 70, 74, 84, 91, 92, 93, 262, 290–91 Sandel, Michael, 41, 120–21 Sanergy, 226 sanitation, 5, 51, 59 Santa Fe, California, 213 Santinagar, West Bengal, 178 São Paolo, Brazil, 281 Sarkozy, Nicolas, 43 Saumweder, Philipp, 226 Scharmer, Otto, 115 Scholes, Myron, 100–101 Schumacher, Ernst Friedrich, 42, 142 Schumpeter, Joseph, 21 Schwartz, Shalom, 107–9 Schwarzenegger, Arnold, 163, 167, 204 ‘Science and Complexity’ (Weaver), 136 Scotland, 57 Seaman, David, 187 Seattle, Washington, 217 second machine age, 258 Second World War (1939–45), 18, 37, 70, 170 secular stagnation, 256 self-interest, 28, 68, 96–7, 99–100, 102–3 Selfish Society, The (Gerhardt), 283 Sen, Amartya, 43 Shakespeare, William, 61–3, 67, 93 shale gas, 264, 269 Shang Dynasty, 48 shareholders, 82, 88, 189, 191, 227, 234, 273, 292 sharing economy, 264 Sheraton Hotel, Boston, 3 Siegen, Germany, 290 Silicon Valley, 231 Simon, Julian, 70 Sinclair, Upton, 255 Sismondi, Jean, 42 slavery, 33, 77, 161 Slovenia, 177 Small Is Beautiful (Schumacher), 42 smart phones, 85 Smith, Adam, 33, 57, 67, 68, 73, 78–9, 81, 96–7, 103–4, 128, 133, 160, 181, 250 social capital, 76–7, 122, 125, 172 social contract, 120, 125 social foundation, 10, 11, 44, 45, 49, 51, 58, 77, 174, 200, 254, 295–6 social media, 83, 281 Social Progress Index, 280 social pyramid, 166 society, 76–7 solar energy, 59, 75, 111, 118, 187–8, 190 circular economy, 221, 222, 223, 224, 226–7, 239 commons, 203 zero-energy buildings, 217 zero-marginal-cost revolution, 84 Solow, Robert, 135, 150, 262–3 Soros, George, 144 South Africa, 56, 177, 214, 216 South Korea, 90, 168 South Sea Bubble (1720), 145 Soviet Union (1922–91), 37, 67, 161, 279 Spain, 211, 238, 256 Spirit Level, The (Wilkinson & Pickett), 171 Sraffa, Piero, 148 St Gallen, Switzerland, 186 Stages of Economic Growth, The (Rostow), 248–50, 254 stakeholder finance, 190 Standish, Russell, 147 state, 28, 33, 69–70, 78, 82, 160, 176, 180, 182–4, 188 and commons, 85, 93, 197, 237 and market, 84–6, 200, 281 partner state, 197, 237–9 and robots, 195 stationary state, 250 Steffen, Will, 46, 48 Sterman, John, 66, 143, 152–4 Steuart, James, 33 Stiglitz, Joseph, 43, 111, 196 stocks and flows, 138–41, 143, 144, 152 sub-prime mortgages, 141 Success to the Successful, 148, 149, 151, 166 Sugarscape, 150–51 Summers, Larry, 256 Sumner, Andy, 165 Sundrop Farms, 224–6 Sunstein, Cass, 112 supply and demand, 28, 132–6, 143, 253 supply chains, 10 Sweden, 6, 255, 275, 281 swishing, 264 Switzerland, 42, 66, 80, 131, 186–7, 275 T Tableau économique (Quesnay), 16 tabula rasa, 20, 25, 63, 291 takarangi, 54 Tanzania, 121, 190, 202 tar sands, 264, 269 taxation, 78, 111, 165, 170, 176, 177, 237–8, 276–9 annual wealth tax, 200 environment, 213–14, 215 global carbon tax, 201 global financial transactions tax, 201, 235 land-value tax, 73, 149, 180 non-renewable resources, 193, 237–8, 278–9 People’s QE, 185 tax relief v. tax justice, 23, 276–7 TED (Technology, Entertainment, Design), 202, 258 Tempest, The (Shakespeare), 61, 63, 93 Texas, United States, 120 Thailand, 90, 200 Thaler, Richard, 112 Thatcher, Margaret, 67, 69, 76 Theory of Moral Sentiments (Smith), 96 Thompson, Edward Palmer, 180 3D printing, 83–4, 192, 198, 231, 264 thriving-in-balance, 54–7, 62 tiered pricing, 213–14 Tigray, Ethiopia, 226 time banking, 186 Titmuss, Richard, 118–19 Toffler, Alvin, 12, 80 Togo, 231, 292 Torekes, 236–7 Torras, Mariano, 209 Torvalds, Linus, 231 trade, 62, 68–9, 70, 89–90 trade unions, 82, 176, 189 trademarks, 195, 204 Transatlantic Trade and Investment Partnership (TTIP), 92 transport, 59 trickle-down economics, 111, 170 Triodos, 235 Turkey, 200 Tversky, Amos, 111 Twain, Mark, 178–9 U Uganda, 118, 125 Ulanowicz, Robert, 175 Ultimatum Game, 105, 117 unemployment, 36, 37, 276, 277–9 United Kingdom Big Bang (1986), 87 blood donation, 118 carbon dioxide emissions, 260 free trade, 90 global material footprints, 211 money creation, 182 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 New Economics Foundation, 278, 283 poverty, 165, 166 prescription medicines, 123 wages, 188 United Nations, 55, 198, 204, 255, 258, 279 G77 bloc, 55 Human Development Index, 9, 279 Sustainable Development Goals, 24, 45 United States American Economic Association meeting (2015), 3 blood donation, 118 carbon dioxide emissions, 260 Congress, 36 Council of Economic Advisers, 6, 37 Earning by Learning, 120 Econ 101 course, 8, 77 Exxon Valdez oil spill (1989), 9 Federal Reserve, 87, 145, 146, 271, 282 free trade, 90 Glass–Steagall Act (1933), 87 greenhouse gas emissions, 153 global material footprint, 211 gross national product (GNP), 36–40 inequality, 170, 171 land-value tax, 73, 149, 180 political funding, 91–2, 171 poverty, 165, 166 productivity and employment, 193 rust belt, 90, 239 Transatlantic Trade and Investment Partnership (TTIP), 92 wages, 188 universal basic income, 200 University of Berkeley, 116 University of Denver, 160 urbanisation, 58–9 utility, 35, 98, 133 V values, 6, 23, 34, 35, 42, 117, 118, 121, 123–6 altruism, 100, 104 anthropocentric, 115 extrinsic, 115 fluid, 28, 102, 106–9 and networks, 110–11, 117, 118, 123, 124–6 and nudging, 112, 113, 114, 123–6 and pricing, 81, 120–23 Veblen, Thorstein, 82, 109, 111, 142 Venice, 195 verbal framing, 23 Verhulst, Pierre, 252 Victor, Peter, 270 Viner, Jacob, 34 virtuous cycles, 138, 148 visual framing, 23 Vitruvian Man, 13–14 Volkswagen, 215–16 W Wacharia, John, 186 Wall Street, 149, 234, 273 Wallich, Henry, 282 Walras, Léon, 131, 132, 133–4, 137 Ward, Barbara, 53 Warr, Benjamin, 263 water, 5, 9, 45, 46, 51, 54, 59, 79, 213–14 wave energy, 221 Ways of Seeing (Berger), 12, 281 Wealth of Nations, The (Smith), 74, 78, 96, 104 wealth ownership, 177–82 Weaver, Warren, 135–6 weightless economy, 261–2 WEIRD (Western, educated, industrialised, rich, democratic), 103–5, 110, 112, 115, 117, 282 West Bengal, India, 124, 178 West, Darrell, 171–2 wetlands, 7 whale hunting, 106 Wiedmann, Tommy, 210 Wikipedia, 82, 223 Wilkinson, Richard, 171 win–win trade, 62, 68, 89 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 Wizard of Oz, The, 241 Woelab, 231, 293 Wolf, Martin, 183, 266 women’s rights, 33, 57, 107, 160, 201 and core economy, 69, 79–81 education, 57, 124, 178, 198 and land ownership, 178 see also gender equality workers’ rights, 88, 91, 269 World 3 model, 154–5 World Bank, 6, 41, 119, 164, 168, 171, 206, 255, 258 World No Tobacco Day, 124 World Trade Organization, 6, 89 worldview, 22, 54, 115 X xenophobia, 266, 277, 286 Xenophon, 4, 32, 56–7, 160 Y Yandle, Bruce, 208 Yang, Yuan, 1–3, 289–90 yin yang, 54 Yousafzai, Malala, 124 YouTube, 192 Yunnan, China, 56 Z Zambia, 10 Zanzibar, 9 Zara, 276 Zeitvorsoge, 186–7 zero environmental impact, 217–18, 238, 241 zero-hour contracts, 88 zero-humans-required production, 192 zero-interest loans, 183 zero-marginal-cost revolution, 84, 191, 264 zero-waste manufacturing, 227 Zinn, Howard, 77 PICTURE ACKNOWLEDGEMENTS Illustrations are reproduced by kind permission of: archive.org


Super Thinking: The Big Book of Mental Models by Gabriel Weinberg, Lauren McCann

affirmative action, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, anti-pattern, Anton Chekhov, autonomous vehicles, bank run, barriers to entry, Bayesian statistics, Bernie Madoff, Bernie Sanders, Black Swan, Broken windows theory, business process, butterfly effect, Cal Newport, Clayton Christensen, cognitive dissonance, commoditize, correlation does not imply causation, crowdsourcing, Daniel Kahneman / Amos Tversky, David Attenborough, delayed gratification, deliberate practice, discounted cash flows, disruptive innovation, Donald Trump, Douglas Hofstadter, Edward Lorenz: Chaos theory, Edward Snowden, effective altruism, Elon Musk, en.wikipedia.org, experimental subject, fear of failure, feminist movement, Filter Bubble, framing effect, friendly fire, fundamental attribution error, Gödel, Escher, Bach, hindsight bias, housing crisis, Ignaz Semmelweis: hand washing, illegal immigration, income inequality, information asymmetry, Isaac Newton, Jeff Bezos, John Nash: game theory, lateral thinking, loss aversion, Louis Pasteur, Lyft, mail merge, Mark Zuckerberg, meta analysis, meta-analysis, Metcalfe’s law, Milgram experiment, minimum viable product, moral hazard, mutually assured destruction, Nash equilibrium, Network effects, nuclear winter, offshore financial centre, p-value, Parkinson's law, Paul Graham, peak oil, Peter Thiel, phenotype, Pierre-Simon Laplace, placebo effect, Potemkin village, prediction markets, premature optimization, price anchoring, principal–agent problem, publication bias, recommendation engine, remote working, replication crisis, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Ronald Reagan, school choice, Schrödinger's Cat, selection bias, Shai Danziger, side project, Silicon Valley, Silicon Valley startup, speech recognition, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, survivorship bias, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, transaction costs, uber lyft, ultimatum game, uranium enrichment, urban planning, Vilfredo Pareto, wikimedia commons

As a rule, the highest leverage activities have the lowest opportunity cost. The Pareto principle can help you find high-leverage activities. It states that in many situations, 80 percent of the results come from approximately 20 percent of the effort. Addressing this 20 percent is therefore a high-leverage activity. This principle originated from observations in the late 1800s by economist Vilfredo Pareto detailed in his book Manuel d’economie politique: that 80 percent of the peas harvested in his garden came from only 20 percent of the pods, 80 percent of the land in Italy at the time was owned by 20 percent of the people, and so on. Modern-day examples of this principle are easy to find. In the United States, about 80 percent of healthcare spending comes from 20 percent of the patients (see the figure below).

., 38 oil, 105–6 Olympics, 209, 246–48, 285 O’Neal, Shaquille, 246 one-hundred-year floods, 192 Onion, 211–12 On the Origin of Species by Means of Natural Selection (Darwin), 100 OODA loop, 294–95 openness to experience, 250 Operation Ceasefire, 232 opinion, diversity of, 205, 206 opioids, 36 opportunity cost, 76–77, 80, 83, 179, 182, 188, 305 of capital, 77, 179, 182 optimistic probability bias, 33 optimization, premature, 7 optimums, local and global, 195–96 optionality, preserving, 58–59 Oracle, 231, 291, 299 order, 124 balance between chaos and, 128 organizations: culture in, 107–8, 113, 273–80, 293 size and growth of, 278–79 teams in, see teams ostrich with its head in the sand, 55 out-group bias, 127 outliers, 148 Outliers (Gladwell), 261 overfitting, 10–11 overwork, 82 Paine, Thomas, 221–22 pain relievers, 36, 137 Pampered Chef, 217 Pangea, 24–25 paradigm shift, 24, 289 paradox of choice, 62–63 parallel processing, 96 paranoia, 308, 309, 311 Pareto, Vilfredo, 80 Pareto principle, 80–81 Pariser, Eli, 17 Parkinson, Cyril, 74–75, 89 Parkinson’s law, 89 Parkinson’s Law (Parkinson), 74–75 Parkinson’s law of triviality, 74, 89 passwords, 94, 97 past, 201, 271–72, 309–10 Pasteur, Louis, 26 path dependence, 57–59, 194 path of least resistance, 88 Patton, Bruce, 19 Pauling, Linus, 220 payoff matrix, 212–15, 238 PayPal, 72, 291, 296 peak, 105, 106, 112 peak oil, 105 Penny, Jonathon, 52 pent-up energy, 112 perfect, 89–90 as enemy of the good, 61, 89–90 personality traits, 249–50 person-month, 279 perspective, 11 persuasion, see influence models perverse incentives, 50–51, 54 Peter, Laurence, 256 Peter principle, 256, 257 Peterson, Tom, 108–9 Petrified Forest National Park, 217–18 Pew Research, 53 p-hacking, 169, 172 phishing, 97 phones, 116–17, 290 photography, 302–3, 308–10 physics, x, 114, 194, 293 quantum, 200–201 pick your battles, 238 Pinker, Steven, 144 Pirahã, x Pitbull, 36 pivoting, 295–96, 298–301, 308, 311, 312 placebo, 137 placebo effect, 137 Planck, Max, 24 Playskool, 111 Podesta, John, 97 point of no return, 244 Polaris, 67–68 polarity, 125–26 police, in organizations and projects, 253–54 politics, 70, 104 ads and statements in, 225–26 elections, 206, 218, 233, 241, 271, 293, 299 failure and, 47 influence in, 216 predictions in, 206 polls and surveys, 142–43, 152–54, 160 approval ratings, 152–54, 158 employee engagement, 140, 142 postmortems, 32, 92 Potemkin village, 228–29 potential energy, 112 power, 162 power drills, 296 power law distribution, 80–81 power vacuum, 259–60 practice, deliberate, 260–62, 264, 266 precautionary principle, 59–60 Predictably Irrational (Ariely), 14, 222–23 predictions and forecasts, 132, 173 market for, 205–7 superforecasters and, 206–7 PredictIt, 206 premature optimization, 7 premises, see principles pre-mortems, 92 present bias, 85, 87, 93, 113 preserving optionality, 58–59 pressure point, 112 prices, 188, 231, 299 arbitrage and, 282–83 bait and switch and, 228, 229 inflation in, 179–80, 182–83 loss leader strategy and, 236–37 manufacturer’s suggested retail, 15 monopolies and, 283 principal, 44–45 principal-agent problem, 44–45 principles (premises), 207 first, 4–7, 31, 207 prior, 159 prioritizing, 68 prisoners, 63, 232 prisoner’s dilemma, 212–14, 226, 234–35, 244 privacy, 55 probability, 132, 173, 194 bias, optimistic, 33 conditional, 156 probability distributions, 150, 151 bell curve (normal), 150–52, 153, 163–66, 191 Bernoulli, 152 central limit theorem and, 152–53, 163 fat-tailed, 191 power law, 80–81 sample, 152–53 pro-con lists, 175–78, 185, 189 procrastination, 83–85, 87, 89 product development, 294 product/market fit, 292–96, 302 promotions, 256, 275 proximate cause, 31, 117 proxy endpoint, 137 proxy metric, 139 psychology, 168 Psychology of Science, The (Maslow), 177 Ptolemy, Claudius, 8 publication bias, 170, 173 public goods, 39 punching above your weight, 242 p-values, 164, 165, 167–69, 172 Pygmalion effect, 267–68 Pyrrhus, King, 239 Qualcomm, 231 quantum physics, 200–201 quarantine, 234 questions: now what, 291 what if, 122, 201 why, 32, 33 why now, 291 quick and dirty, 234 quid pro quo, 215 Rabois, Keith, 72, 265 Rachleff, Andy, 285–86, 292–93 radical candor, 263–64 Radical Candor (Scott), 263 radiology, 291 randomized controlled experiment, 136 randomness, 201 rats, 51 Rawls, John, 21 Regan, Ronald, 183 real estate agents, 44–45 recessions, 121–22 reciprocity, 215–16, 220, 222, 229, 289 recommendations, 217 red line, 238 referrals, 217 reframe the problem, 96–97 refugee asylum cases, 144 regression to the mean, 146, 286 regret, 87 regulations, 183–84, 231–32 regulatory capture, 305–7 reinventing the wheel, 92 relationships, 53, 55, 63, 91, 111, 124, 159, 271, 296, 298 being locked into, 305 dating, 8–10, 95 replication crisis, 168–72 Republican Party, 104 reputation, 215 research: meta-analysis of, 172–73 publication bias and, 170, 173 systematic reviews of, 172, 173 see also experiments resonance, 293–94 response bias, 142, 143 responsibility, diffusion of, 259 restaurants, 297 menus at, 14, 62 RetailMeNot, 281 retaliation, 238 returns: diminishing, 81–83 negative, 82–83, 93 reversible decisions, 61–62 revolving door, 306 rewards, 275 Riccio, Jim, 306 rise to the occasion, 268 risk, 43, 46, 90, 288 cost-benefit analysis and, 180 de-risking, 6–7, 10, 294 moral hazard and, 43–45, 47 Road Ahead, The (Gates), 69 Roberts, Jason, 122 Roberts, John, 27 Rogers, Everett, 116 Rogers, William, 31 Rogers Commission Report, 31–33 roles, 256–58, 260, 271, 293 roly-poly toy, 111–12 root cause, 31–33, 234 roulette, 144 Rubicon River, 244 ruinous empathy, 264 Rumsfeld, Donald, 196–97, 247 Rumsfeld’s Rule, 247 Russia, 218, 241 Germany and, 70, 238–39 see also Soviet Union Sacred Heart University (SHU), 217, 218 sacrifice play, 239 Sagan, Carl, 220 sales, 81, 216–17 Salesforce, 299 same-sex marriage, 117, 118 Sample, Steven, 28 sample distribution, 152–53 sample size, 143, 160, 162, 163, 165–68, 172 Sánchez, Ricardo, 234 sanctions and fines, 232 Sanders, Bernie, 70, 182, 293 Sayre, Wallace, 74 Sayre’s law, 74 scarcity, 219, 220 scatter plot, 126 scenario analysis (scenario planning), 198–99, 201–3, 207 schools, see education and schools Schrödinger, Erwin, 200 Schrödinger’s cat, 200 Schultz, Howard, 296 Schwartz, Barry, 62–63 science, 133, 220 cargo cult, 315–16 Scientific Autobiography and other Papers (Planck), 24 scientific evidence, 139 scientific experiments, see experiments scientific method, 101–2, 294 scorched-earth tactics, 243 Scott, Kim, 263 S curves, 117, 120 secondary markets, 281–82 second law of thermodynamics, 124 secrets, 288–90, 292 Securities and Exchange Commission, U.S., 228 security, false sense of, 44 security services, 229 selection, adverse, 46–47 selection bias, 139–40, 143, 170 self-control, 87 self-fulfilling prophecies, 267 self-serving bias, 21, 272 Seligman, Martin, 22 Semmelweis, Ignaz, 25–26 Semmelweis reflex, 26 Seneca, Marcus, 60 sensitivity analysis, 181–82, 185, 188 dynamic, 195 Sequoia Capital, 291 Sessions, Roger, 8 sexual predators, 113 Shakespeare, William, 105 Sheets Energy Strips, 36 Shermer, Michael, 133 Shirky, Clay, 104 Shirky principle, 104, 112 Short History of Nearly Everything, A (Bryson), 50 short-termism, 55–56, 58, 60, 68, 85 side effects, 137 signal and noise, 311 significance, 167 statistical, 164–67, 170 Silicon Valley, 288, 289 simulations, 193–95 simultaneous invention, 291–92 Singapore math, 23–24 Sir David Attenborough, RSS, 35 Skeptics Society, 133 sleep meditation app, 162–68 slippery slope argument, 235 slow (high-concentration) thinking, 30, 33, 70–71 small numbers, law of, 143, 144 smartphones, 117, 290, 309, 310 smoking, 41, 42, 133–34, 139, 173 Snap, 299 Snowden, Edward, 52, 53 social engineering, 97 social equality, 117 social media, 81, 94, 113, 217–19, 241 Facebook, 18, 36, 94, 119, 219, 233, 247, 305, 308 Instagram, 220, 247, 291, 310 YouTube, 220, 291 social networks, 117 Dunbar’s number and, 278 social norms versus market norms, 222–24 social proof, 217–20, 229 societal change, 100–101 software, 56, 57 simulations, 192–94 solitaire, 195 solution space, 97 Somalia, 243 sophomore slump, 145–46 South Korea, 229, 231, 238 Soviet Union: Germany and, 70, 238–39 Gosplan in, 49 in Cold War, 209, 235 space exploration, 209 spacing effect, 262 Spain, 243–44 spam, 37, 161, 192–93, 234 specialists, 252–53 species, 120 spending, 38, 74–75 federal, 75–76 spillover effects, 41, 43 sports, 82–83 baseball, 83, 145–46, 289 football, 226, 243 Olympics, 209, 246–48, 285 Spotify, 299 spreadsheets, 179, 180, 182, 299 Srinivasan, Balaji, 301 standard deviation, 149, 150–51, 154 standard error, 154 standards, 93 Stanford Law School, x Starbucks, 296 startup business idea, 6–7 statistics, 130–32, 146, 173, 289, 297 base rate in, 157, 159, 160 base rate fallacy in, 157, 158, 170 Bayesian, 157–60 confidence intervals in, 154–56, 159 confidence level in, 154, 155, 161 frequentist, 158–60 p-hacking in, 169, 172 p-values in, 164, 165, 167–69, 172 standard deviation in, 149, 150–51, 154 standard error in, 154 statistical significance, 164–67, 170 summary, 146, 147 see also data; experiments; probability distributions Staubach, Roger, 243 Sternberg, Robert, 290 stock and flow diagrams, 192 Stone, Douglas, 19 stop the bleeding, 234 strategy, 107–8 exit, 242–43 loss leader, 236–37 pivoting and, 295–96, 298–301, 308, 311, 312 tactics versus, 256–57 strategy tax, 103–4, 112 Stiglitz, Joseph, 306 straw man, 225–26 Streisand, Barbra, 51 Streisand effect, 51, 52 Stroll, Cliff, 290 Structure of Scientific Revolutions, The (Kuhn), 24 subjective versus objective, in organizational culture, 274 suicide, 218 summary statistics, 146, 147 sunk-cost fallacy, 91 superforecasters, 206–7 Superforecasting (Tetlock), 206–7 super models, viii–xii super thinking, viii–ix, 3, 316, 318 surface area, 122 luck, 122, 124, 128 surgery, 136–37 Surowiecki, James, 203–5 surrogate endpoint, 137 surveys, see polls and surveys survivorship bias, 140–43, 170, 272 sustainable competitive advantage, 283, 285 switching costs, 305 systematic review, 172, 173 systems thinking, 192, 195, 198 tactics, 256–57 Tajfel, Henri, 127 take a step back, 298 Taleb, Nassim Nicholas, 2, 105 talk past each other, 225 Target, 236, 252 target, measurable, 49–50 taxes, 39, 40, 56, 104, 193–94 T cells, 194 teams, 246–48, 275 roles in, 256–58, 260 size of, 278 10x, 248, 249, 255, 260, 273, 280, 294 Tech, 83 technical debt, 56, 57 technologies, 289–90, 295 adoption curves of, 115 adoption life cycles of, 116–17, 129, 289, 290, 311–12 disruptive, 308, 310–11 telephone, 118–19 temperature: body, 146–50 thermostats and, 194 tennis, 2 10,000-Hour Rule, 261 10x individuals, 247–48 10x teams, 248, 249, 255, 260, 273, 280, 294 terrorism, 52, 234 Tesla, Inc., 300–301 testing culture, 50 Tetlock, Philip E., 206–7 Texas sharpshooter fallacy, 136 textbooks, 262 Thaler, Richard, 87 Theranos, 228 thermodynamics, 124 thermostats, 194 Thiel, Peter, 72, 288, 289 thinking: black-and-white, 126–28, 168, 272 convergent, 203 counterfactual, 201, 272, 309–10 critical, 201 divergent, 203 fast (low-concentration), 30, 70–71 gray, 28 inverse, 1–2, 291 lateral, 201 outside the box, 201 slow (high-concentration), 30, 33, 70–71 super, viii–ix, 3, 316, 318 systems, 192, 195, 198 writing and, 316 Thinking, Fast and Slow (Kahneman), 30 third story, 19, 92 thought experiment, 199–201 throwing good money after bad, 91 throwing more money at the problem, 94 tight versus loose, in organizational culture, 274 timeboxing, 75 time: management of, 38 as money, 77 work and, 89 tipping point, 115, 117, 119, 120 tit-for-tat, 214–15 Tōgō Heihachirō, 241 tolerance, 117 tools, 95 too much of a good thing, 60 top idea in your mind, 71, 72 toxic culture, 275 Toys “R” Us, 281 trade-offs, 77–78 traditions, 275 tragedy of the commons, 37–40, 43, 47, 49 transparency, 307 tribalism, 28 Trojan horse, 228 Truman Show, The, 229 Trump, Donald, 15, 206, 293 Trump: The Art of the Deal (Trump and Schwartz), 15 trust, 20, 124, 215, 217 trying too hard, 82 Tsushima, Battle of, 241 Tupperware, 217 TurboTax, 104 Turner, John, 127 turn lemons into lemonade, 121 Tversky, Amos, 9, 90 Twain, Mark, 106 Twitter, 233, 234, 296 two-front wars, 70 type I error, 161 type II error, 161 tyranny of small decisions, 38, 55 Tyson, Mike, 7 Uber, 231, 275, 288, 290 Ulam, Stanislaw, 195 ultimatum game, 224, 244 uncertainty, 2, 132, 173, 180, 182, 185 unforced error, 2, 10, 33 unicorn candidate, 257–58 unintended consequences, 35–36, 53–55, 57, 64–65, 192, 232 Union of Concerned Scientists (UCS), 306 unique value proposition, 211 University of Chicago, 144 unknown knowns, 198, 203 unknowns: known, 197–98 unknown, 196–98, 203 urgency, false, 74 used car market, 46–47 U.S.


Adam Smith: Father of Economics by Jesse Norman

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

Indeed, not only did the operation of self-interest cause chaos to yield to order, it did so in a way that created both the greatest efficiency and, in a certain sense, the greatest public welfare, for it was later shown that such an economy maximizes the utility or benefit of the people in it. In particular, no one can be made better off without someone else being made worse off—a phenomenon known as Pareto optimality, after the Italian economist Vilfredo Pareto. On this view, Adam Smith’s invisible hand thus creates not merely the greatest aggregate efficiency, but the greatest overall utility as well. This discovery gave heart to those of a laissez-faire bent, who argued that it made the case for non-intervention in markets, at least—a crucial caveat—under ideal conditions. But paradoxically Arrow and Debreu’s proof also inspired potential interventionists, because it was discovered that Pareto optimality was compatible in principle with widely varying distributional outcomes, and that the relevant equilibria could be reached by making lump-sum transfers between individuals and then allowing them to trade freely.

., on, 43 Principia Mathematica by, 28, 46, 165, 167 scientific worldview of, 45–46 Newtonianism, 43 No Free Lunch, 225, 251 the noble savage, 65 norm-formation, 309–311 norms anti-social, 308 ethical, 298 in justice, 222–223, 236 of markets, 223, 237 moral, 147, 170, 308 social, 146–147 in social contract, 296 theory of, 295–300 values and, 230 North (Lord), 138–139 Oakeshott, Michael, 26 “Of Rhetoric” (Hume), 41 “Of the Protestant Succession” (Hume), 90–91 Offer, Avner, 305–306 On the Definition of Political Economy (Mill), 200 On the Duty of Man and Citizen (Pufendorf), 74–75 On the Spirit of Laws (Montesquieu), 74, 292 Ostrom, Elinor, 215 Oswald, James, 6–7, 9–10, 81 Oxford, 22–26, 30, 98–99 Oyster Club, 136–137 Pareto, Vilfredo, 194 Pareto optimality, 194 Peel, Robert, 122 personal morality, 318 Phaedo (Plato), 131 philosopher, Smith, A., as, 190 philosophy. See Bacon, Francis; Hume, David; moral philosophy; natural philosophy Physiocrats, 85–86, 151, 178, 187, 229 Piketty, Thomas, 259 Pitt, William, 70, 121–122, 135, 139, 141–142 Plato, 131 Playfair, John, 137 Polanyi, Karl, 320–321, 325 polarization, 330 political economics, mainstream economics and, 215 political economy, 112, 149, 174–176, 190–191, 325 British, 200 on markets, 243 mathematics in, 201, 204 Mill on, 208 rationality in, 203 Stewart on, 162 The Wealth of Nations on, 104, 119, 192 See also Illustrations of Political Economy (Martineau); On the Definition of Political Economy (Mill); Principles of Political Economy (Ricardo) political leadership, 147–148 political renewal, 332 the poor, 117, 172–173, 185–186, 272 poverty, 274 power, asymmetries of, 282–283, 285 Pownall, Thomas, 137–138, 161 Presbyterians, 12–14, 47 price bubble, 226 The Price is Right, 225, 251 prices, 226–227 principal-agent problem, 270–271 Principia Mathematica (Newton), 28, 46, 165, 167 principle of diminishing marginal utility, 201–202 Principles of Economics (Marshall), 201, 215 Principles of Political Economy (Ricardo), 199 Principles of Political Economy (Steuart), 176 Pringle, John, 126–127 private property, 77, 231, 293 private value, of markets, 242–243 producers, consumers and, 109–110 product markets, 248 productivity, 105 profits, 109, 250, 272 property, 325 in financial crash, of 2008, 251 government and, 78, 80–81 identity, language and, 301–304 private, 77, 231, 293 propriety and, 77 rights, 78, 80–81, 238–239 proprietors, 112 propriety, 41, 77 pro-rich, Smith, A., as, 184–186 protectionism, 279 Protestantism, 19 Protestants, of Scotland, 12–13, 47 public choice theory, 271 public finance, 117 public policy, 109–112 public value, of markets, 242–243 Pufendorf, Samuel von, 20, 74–75 Pulteney, William, 93, 176 Quesnay, François, 85–87, 178, 187, 229 Rae, John, 3–4, 26, 50, 134, 142 Ramsay, Allan, 159–160 rational economic man, 196–201, 203–206, 213–214, 217 rationality, in political economy, 203 Rawls, John, 299 recession, of 2008, 251 reciprocity, 64 Reformation, English, 164 regard.


pages: 470 words: 130,269

The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas by Janek Wasserman

Albert Einstein, American Legislative Exchange Council, anti-communist, battle of ideas, Berlin Wall, Bretton Woods, business cycle, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, different worldview, Donald Trump, experimental economics, Fall of the Berlin Wall, floating exchange rates, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, housing crisis, Internet Archive, invisible hand, John von Neumann, Joseph Schumpeter, laissez-faire capitalism, liberal capitalism, market fundamentalism, mass immigration, means of production, Menlo Park, Mont Pelerin Society, New Journalism, New Urbanism, old-boy network, Paul Samuelson, Philip Mirowski, price mechanism, price stability, RAND corporation, random walk, rent control, road to serfdom, Robert Bork, rolodex, Ronald Coase, Ronald Reagan, Silicon Valley, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, union organizing, urban planning, Vilfredo Pareto, Washington Consensus, zero-sum game, éminence grise

In Untersu-chungen, Auspitz and Lieben showed their allegiance to international science and Viennese intellectual life.76 Despite Auspitz and Lieben’s indebtedness to other economists, their work little resembled anything that came before it. Relying on graph, curve, and set theories, Auspitz and Lieben plotted intricate interactions between use and demand, cost and supply, supply and demand, and other core economic concepts. As a result, they are viewed as independent co-originators of indifference curves. They also anticipated several of Vilfredo Pareto’s contributions on imperfect competition and monopoly prices. Their work on stocks, banking, and finance inspired scholars like Irving Fisher. Even today their work stands out for its precocity. While most economists were still struggling with algebra and only the most advanced had begun to tackle calculus, Lieben and Auspitz anticipated the formalist turn of post–World War II economics by decades.

Right Out of California: The 1930s and the Big Business Roots of Modern Conservatism. New York: New Press, 2015. Ortolano, Guy. “The Typicalities of the English? Walt Rostow, The Stages of Economic Growth, and Modern British History.” MIH 12, no. 3 (2015): 657–84. Palacia, Pilar, and Elisabetta Rurali. Bellagio Center—Villa Serbelloni: A Brief History. New York: Rockefeller Foundation, 2009. Pareto, Vilfredo. “La Teoria dei Prezzi dei Signori Auspitz e Lieben e le Osservazioni del Professore Walras.” Giornale degli economisti 4 (1892): 201–39. Parmar, Inderjeet. Foundations of the American Century: The Ford, Carnegie, and Rockefeller Foundations in the Rise of American Power. New York: Columbia University Press, 2012. Paul, Ron. Mises and Austrian Economics: A Personal View. Auburn, AL: LvMI, 2004.


pages: 543 words: 147,357

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

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

In social life we understand this as the rich getting richer and the poor getting poorer. If you are powerful and well connected, that provides a platform for becoming even better connected and more powerful – and this virtuous circle becomes a vicious circle in the other direction for the poor. In airport networks Heathrow and JFK in New York are growing hubs; in banking networks the big banks grew ever bigger. The Italian economist Vilfredo Pareto calls this a ‘power curve’.50 He concludes that throughout history and across all societies, human organisation has been less of a social pyramid in which the gradation from one class to the next is gradual, and more of a ‘social arrow’. There has always been an enormous base at the bottom, occupied by the majority, and a very thin top. For instance, 80 per cent of Italy’s land that he observed in the nineteenth century was owned by 20 per cent of its population.

., 311 mergers and takeovers, 8, 21, 33, 92, 245, 251, 258, 259, 388 Merkel, Angela, 381–2 Merrill Lynch, 150, 170, 175, 192 Merton, Robert, 169, 191 Meucci, Antonnio, 221 Mexico, 30, 385 Meyer, Christopher, 332 Michalek, Richard, 175 Microsoft, 71, 114, 136, 253, 254, 258–9 Milburn, Alan, 273 Miles, David, 186–7 Milgram, Stanley, 200 millennium bug, 319 Miller, David, 70, 76, 77 minimum wage, 142, 278 Minsky, Hyman, 183, 185 Mirror newspapers, 319, 329 Mlodinow, Leonard, 72–3 MMR vaccine, 327 mobile phones, 30, 134, 143, 229, 349 modernity, 54–5, 104 Mokyr, Joel, 112 monarchy, 15, 312, 336 Mondragon, 94 monetary policy, 154, 182, 184, 185, 208, 362, 367 monopolies, 74, 102, 103, 160, 314; history of, 104, 113, 124, 125–6, 130–4; in the media, 30, 317, 318, 331, 350; modern new wave of, 35, 135–6, 137–8, 201–2, 258–9; ‘oligarchs’, 30, 65, 104 Monopolies and Mergers Commission, 258, 318 Moody’s (credit-ratings agency), 151, 175 morality, 16–27, 37, 44–54, 70, 73; see also desert, due, concept of; fairness; proportionality; debt and, 351–4, 357, 360–1 Morgan, JP, 67 Morgan, Piers, 329 Morgan Stanley, 150 Mulas-Granados, Carlos, 367 Murdoch, James, 389 Murdoch, Rupert, 317–18, 320, 327 Murphy, Kevin, 62, 63 Murray, Jim ‘Mad Dog’, 321 Myners, Paul, 340 Nash bargaining solution, 60 National Audit Office, 340 National Child Development Study, 289–90 national ecosystem of innovation, 33–4, 65, 103, 206, 218, 221, 239–44, 255–9, 374; state facilitation of, 102, 219–22, 229–30, 233, 251–2, 258–66, 269–70, 392 National Health Service (NHS), 21, 27, 34, 92, 265, 277, 336, 371–2; popular support for, 75, 77, 283 national insurance system, 81, 277, 302 national strategy for neighbourhood renewal, 278 Navigation Acts, abolition of, 126 Neiman, Susan, 18–19 neo-conservatism, 17–18, 144–9, 387–90 network theory, 199–201, 202–4, 206; Pareto curve and, 201–2 New Economics Foundation, 62 New Industry New Jobs strategy, 21 New Labour: budget deficit and, 224, 335, 360, 368, 369; business friendly/promarket policies, x–xi, 139–40, 142, 145, 146–7, 162, 198–9, 382; City of London and, x–xi, 5, 19, 22, 142–3, 144–5, 355; decline of class-based politics, 341; failure to challenge elites, x–xi, 14, 22, 388, 389–90; general election (1992) and, 138, 140–1, 144, 148, 277; general election (2005) and, 97; general election (2010) and, 20, 271, 334, 374, 378; light-touch regulation and, 138, 145, 146–7, 162, 198–9; New Industry New Jobs strategy, 21; one-off tax on bank bonuses, 26, 179, 249; record in government, 10–11, 19, 20–2, 220, 276–80, 302, 306, 334–6, 366–7, 389–90; reforms to by ‘modernisers’, 141; responses to newspaper campaigns, 11 New York markets, 140, 152, 162; Asian and/or OPEC capital surpluses and, 169, 171, 354; London/New York axis, 149, 150–1, 157–8, 160, 188, 202 Newsweek, 174 Newton, Isaac, 31, 127, 190 NHS Direct, 372 Nicoli, Eric, 13 non-executive directors (NEDs), 249–50 Nordhaus, William, 260 Nordic countries, 262; Iceland, 7, 138; Norway, 281; Sweden, 264, 281 North, Douglas, 113, 116, 129–30 Northern Rock, 9, 156, 157, 158, 186, 187–8, 202, 204, 251, 340–1 Norton Publishing, 93 Nozick, Robert, 234, 235 nuclear non-proliferation, 226, 384, 394 Nussbaum, Martha, 79 Obama, Barack, 18, 183, 380, 382–3, 394–5 the Observer, 141, 294, 327 Office for Budget Responsibility, 360 Office of Fair Trading (OFT), 257, 258 OFSTED, 276 oil production, 322; BP Gulf of Mexico disaster (2010), 216–17, 392; finite stocks and, 230, 384; OPEC, 149, 161, 171; price increase (early 1970s), 161; in USA, 130, 131, 132 Olsen, Ken, 29 Olympics (2012), 114 open markets, 29, 30, 31, 40, 89, 92, 100–1, 366, 377, 379, 382, 384; see also ‘open-access societies’; as determinants of value, 51–2, 62; fairness and, 60–1, 89–91, 94–6; ‘reference prices’ and, 94–6 ‘open-access societies’, 134, 135, 258, 272, 273, 275, 276, 280–1, 394; Britain as ‘open-access society’ (to 1850), 124, 126–7; democracy and, 136, 314; Enlightenment and, 30–1, 314–15, 394; innovation and invention in, 109–13, 114, 116–17, 122–3, 126–7, 131, 136, 315; partial political opening in, 129–30; US New Freedom programme, 132–3 opium production, 102 options, 166, 188, 191 Orange County derivatives losses, 167 Organisation for Economic Co-operation and Development (OECD), 180, 337, 373 Orwell, George, 37 Osborne, George, 147, 208, 224, 245, 302, 338 Overend, Gurney and Co., 156–7 Oxbridge/top university entry, 293–4, 306 Oxford University, 261 Page, Scott, 204 Paine, Tom, 347 Pareto, Vilfredo, 201–2 Paribas, 152, 187 Parkinson, Lance-Bombardier Ben, 13 participation, political, 35, 86, 96, 99 Paulson, Henry, 177 Paulson, John, 103, 167–8 pay of executives and bankers, 3–4, 5, 6–7, 22, 66–7, 138, 387; bonuses, 6, 25–6, 41, 174–5, 176, 179, 208, 242, 249, 388; high levels/rises of, 6–7, 13, 25, 82–3, 94, 172–6, 216, 296, 387, 393; Peter Mandelson on, 24; post-crash/bail-outs, 176, 216; in private equity houses, 248; remuneration committees, 6, 82, 83, 176; shared capitalism and, 66, 93; spurious justifications for, 42, 78, 82–3, 94, 176, 216 pension, state, 81, 372, 373 pension funds, 240, 242 Pettis, Michael, 379–80 pharmaceutical industry, 219, 255, 263, 265, 267–8 Phelps, Edmund, 275 philanthropy and charitable giving, 13, 25, 280 Philippines, 168 Philippon, Thomas, 172–3 Philips Electronics, Royal, 256 Pimco, 177 piracy, 101–2 Plato, 39, 44 Player, Gary, 76 pluralist state/society, x, 35, 99, 113, 233, 331, 350, 394 Poland, 67, 254 political parties, 13–14, 340, 341, 345, 390; see also under entries for individual parties political system, British: see also democracy; centralised constitution, 14–15, 35, 217, 334; coalitions as a good thing, 345–6; decline of class-based politics, 341; devolving of power to Cardiff and Edinburgh, 15, 334; expenses scandal, 3, 14, 217, 313, 341; history of (to late nineteenth-century), 124–30; lack of departmental coordination, 335, 336, 337; long-term policy making and, 217; monarchy and, 15, 312, 336; politicians’ lack of experience outside politics, 338; required reforms of, 344–8; select committee system, 339–40; settlement (of 1689), 125; sovereignty and, 223, 346, 347, 378; urgent need for reform, 35, 36–7, 218, 344; voter-politician disengagement, 217–18, 310, 311, 313–14, 340 Pommerehne, Werner, 60 population levels, world, 36 Portsmouth Football Club, 352 Portugal, 108, 109, 121, 377 poverty, 278–9; child development and, 288–90; circumstantial causes of, 26, 283–4; Conservative Party and, 279; ‘deserving’/’undeserving’ poor, 276, 277–8, 280, 284, 297, 301; Enlightenment views on, 53, 55–6; need for asset ownership, 301–3, 304; political left and, 78–83; the poor viewed as a race apart, 285–7; as relative not absolute, 55, 84; Adam Smith on, 55, 84; structure of market economy and, 78–9, 83; view that the poor deserve to be poor, 25, 52–3, 80, 83, 281, 285–8, 297, 301, 387; worldwide, 383, 384 Power2010 website, 340–1 PR companies and media, 322, 323 Press Complaints Commission (PCC), 325, 327, 331–2, 348 preventative medicine, 371 Price, Lance, 328, 340 Price, Mark, 93 Prince, Chuck, 184 printing press, 109, 110–11 prisoners, early release of, 11 private-equity firms, 6, 28–9, 158, 172, 177, 179, 205, 244–9, 374 Procter & Gamble, 167, 255 productive entrepreneurship, 6, 22–3, 28, 29–30, 33, 61–2, 63, 78, 84, 136, 298; in British history (to 1850), 28, 124, 126–7, 129; due desert/fairness and, 102–3, 105–6, 112, 223, 272, 393; general-purpose technologies (GPTs) and, 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384 property market: baby boomer generation and, 372–3; Barker Review, 185; boom in, 5, 143, 161, 183–4, 185–7, 221; bust (1989-91), 161, 163; buy-to-let market, 186; commercial property, 7, 356, 359, 363; demutualisation of building societies, 156, 186; deregulation (1971) and, 161; Japanese crunch (1989-92) and, 361–2; need for tax on profits from home ownership, 308–9, 373–4; property as national obsession, 187; residential mortgages, 7, 183–4, 186, 356, 359, 363; securitised loans based mortgages, 171, 186, 188; shadow banking system and, 171, 172; ‘subprime’ mortgages, 64, 152, 161, 186, 203 proportionality, 4, 24, 26, 35, 38, 39–40, 44–6, 51, 84, 218; see also desert, due, concept of; contributory/discretionary benefits and, 63; diplomacy/ international relations and, 385–6; job seeker’s allowance as transgression of, 81; left wing politics and, 80; luck and, 73–7, 273; policy responses to crash and, 215–16; poverty relief systems and, 80–1; profit and, 40, 388; types of entrepreneurship and, 61–2, 63 protectionism, 36, 358, 376–7, 378, 379, 382, 386 Prussia, 128 Public Accounts Committee, 340 Purnell, James, 338 quantitative easing, 176 Quayle, Dan, 177 race, disadvantage and, 290 railways, 9, 28, 105, 109–10, 126 Rand, Ayn, 145, 234 Rawls, John, 57, 58, 63, 73, 78 Reagan, Ronald, 135, 163 recession, xi, 3, 8, 9, 138, 153, 210, 223, 335; of 1979-81 period, 161; efficacy of fiscal policy, 367–8; VAT decrease (2009) and, 366–7 reciprocity, 43, 45, 82, 86, 90, 143, 271, 304, 382; see also desert, due, concept of; proportionality Reckitt Benckiser, 82–3 Regional Development Agencies, 21 regulation: see also Bank of England; Financial Services Authority (FSA); Bank of International Settlements (BIS), 169, 182; Basel system, 158, 160, 163, 169, 170–1, 196, 385; big as beautiful in global banking, 201–2; Big Bang (1986), 90, 162; by-passing of, 137, 187; capital requirements/ratios, 162–3, 170–1, 208; dismantling of post-war system, 149, 158, 159–63; economists’ doubts over deregulation, 163; example of China, 160; failure to prevent crash, 154, 197, 198–9; Glass-Steagall abolition (1999), 170, 202–3; light-touch, 5, 32, 138, 151, 162, 198–9; New Deal rules (1930s), 159, 162; in pharmaceutical industry, 267–8; as pro-business tool, 268–70; proposed Financial Policy Committee, 208; required reforms of, 267, 269–70, 376, 377, 384, 392; reserve requirements scrapped (1979), 208; task of banking authorities, 157; Top Runner programme in Japan, 269 Reinhart, Carmen, 214, 356 Repo 105 technique, 181 Reshef, Ariell, 172–3 Reuters, 322, 331 riches and wealth, 11–13, 272–3, 283–4, 387–8; see also pay of executives and bankers; the rich as deserving of their wealth, 25–6, 52, 278, 296–7 Rickards, James, 194 risk, 149, 158, 165, 298–302, 352–3; credit default swaps and, 151, 152, 166–8, 170, 171, 175, 176, 191, 203, 207; derivatives and see derivatives; distinction between uncertainty and, 189–90, 191, 192–3, 196–7; employment insurance concept, 298–9, 301, 374; management, 165, 170, 171, 189, 191–2, 193–4, 195–6, 202, 203, 210, 354; securitisation and, 32, 147, 165, 169, 171, 186, 188, 196; structured investment vehicles and, 151, 165, 169, 171, 188; value at risk (VaR), 171, 192, 195, 196 Risley, Todd, 289 Ritchie, Andrew, 103 Ritter, Scott, 329 Robinson, Sir Gerry, 295 Rogoff, Ken, 214, 356 rogue states, 36 Rolling Stones, 247 Rolls-Royce, 219, 231 Rome, classical, 45, 74, 108, 116 Roosevelt, Franklin D., 133, 300 Rothermere, Viscount, 327 Rousseau, Jean-Jacques, 56, 58, 112 Rousseau, Peter, 256 Rowling, J.K., 64, 65 Rowthorn, Robert, 292, 363 Royal Bank of Scotland (RBS), 25, 150, 152, 157, 173, 181, 199, 251, 259; collapse of, 7, 137, 150, 158, 175–6, 202, 203, 204; Sir Fred Goodwin and, 7, 150, 176, 340 Rubin, Robert, 174, 177, 183 rule of law, x, 4, 220, 235 Russell, Bertrand, 189 Russia, 127, 134–5, 169, 201, 354–5, 385; fall of communism, 135, 140; oligarchs, 30, 65, 135 Rwandan genocide, 71 Ryanair, 233 sailing ships, three-masted, 108 Sandbrook, Dominic, 22 Sands, Peter (CEO of Standard Chartered Bank), 26 Sarkozy, Nicolas, 51, 377 Sassoon, Sir James, 178 Scholes, Myron, 169, 191, 193 Schumpeter, Joseph, 62, 67, 111 science and technology: capitalist dynamism and, 27–8, 31, 112–13; digitalisation, 34, 231, 320, 349, 350; the Enlightenment and, 31, 108–9, 112–13, 116–17, 121, 126–7; general-purpose technologies (GPTs), 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384; increased pace of advance, 228–9, 253, 297; nanotechnology, 232; New Labour improvements, 21; new opportunities and, 33–4, 228–9, 231–3; new technologies, 232, 233, 240; universities and, 261–5 Scotland, devolving of power to, 15, 334 Scott, James, 114–15 Scott Bader, 93 Scott Trust, 327 Second World War, 134, 313 Securities and Exchanges Commission, 151, 167–8 securitisation, 32, 147, 165, 169, 171, 186, 187, 196 self-determination, 85–6 self-employment, 86 self-interest, 59, 60, 78 Sen, Amartya, 51, 232, 275 service sector, 8, 291, 341, 355 shadow banking system, 148, 153, 157–8, 170, 171, 172, 187 Shakespeare, William, 39, 274, 351 shareholders, 156, 197, 216–17, 240–4, 250 Sher, George, 46, 50, 51 Sherman Act (USA, 1890), 133 Sherraden, Michael, 301 Shiller, Robert, 43, 298, 299 Shimer, Robert, 299 Shleifer, Andrei, 62, 63, 92 short selling, 103 Sicilian mafia, 101, 105 Simon, Herbert, 222 Simpson, George, 142–3 single mothers, 17, 53, 287 sixth form education, 306 Sky (broadcasting company), 30, 318, 330, 389 Skype, 253 Slim, Carlos, 30 Sloan School of Management, 195 Slumdog Millionaire, 283 Smith, Adam, 55, 84, 104, 112, 121, 122, 126, 145–6 Smith, John, 148 Snoddy, Ray, 322 Snow, John, 177 social capital, 88–9, 92 social class, 78, 130, 230, 304, 343, 388; childcare and, 278, 288–90; continued importance of, 271, 283–96; decline of class-based politics, 341; education and, 13, 17, 223, 264–5, 272–3, 274, 276, 292–5, 304, 308; historical development of, 56–8, 109, 115–16, 122, 123–5, 127–8, 199; New Labour and, 271, 277–9; working-class opinion, 16, 143 social investment, 10, 19, 20–1, 279, 280–1 social polarisation, 9–16, 34–5, 223, 271–4, 282–5, 286–97, 342; Conservative reforms (1979-97) and, 275–6; New Labour and, 277–9; private education and, 13, 223, 264–5, 272–3, 276, 283–4, 293–5, 304; required reforms for reduction of, 297–309 social security benefits, 277, 278, 299–301, 328; contributory, 63, 81, 283; flexicurity social system, 299–301, 304, 374; to immigrants, 81–2, 282, 283, 284; job seeker’s allowance, 81, 281, 298, 301; New Labour and ‘undeserving’ claimants, 143, 277–8; non-contributory, 63, 79, 81, 82; targeting of/two-tier system, 277, 281 socialism, 22, 32, 38, 75, 138, 144, 145, 394 Soham murder case, 10, 339 Solomon Brothers, 173 Sony, 254–5 Soros, George, 166 Sorrell, Martin, 349 Soskice, David, 342–3 South Korea, 168, 358–9 South Sea Bubble, 125–6 Spain, 123–4, 207, 358–9, 371, 377 Spamann, Holger, 198 special purpose vehicles, 181 Spitzer, Matthew, 60 sport, cheating in, 23 stakeholder capitalism, x, 148–9 Standard Oil, 130–1, 132 state, British: anti-statism, 20, 22, 233–4, 235, 311; big finance’s penetration of, 176, 178–80; ‘choice architecture’ and, 238, 252; desired level of involvement, 234–5; domination of by media, 14, 16, 221, 338, 339, 343; facilitation of fairness, ix–x, 391–2, 394–5; investment in knowledge, 28, 31, 40, 220, 235, 261, 265; need for government as employer of last resort, 300; need for hybrid financial system, 244, 249–52; need for intervention in markets, 219–22, 229–30, 235–9, 252, 392; need for reshaping of, 34; pluralism, x, 35, 99, 113, 233, 331, 350, 394; public ownership, 32, 240; target-setting in, 91–2; threats to civil liberty and, 340 steam engine, 110, 126 Steinmueller, W.


pages: 1,073 words: 314,528

Strategy: A History by Lawrence Freedman

Albert Einstein, anti-communist, Anton Chekhov, Ayatollah Khomeini, barriers to entry, battle of ideas, Black Swan, British Empire, business process, butterfly effect, centre right, Charles Lindbergh, circulation of elites, cognitive dissonance, coherent worldview, collective bargaining, complexity theory, conceptual framework, corporate raider, correlation does not imply causation, creative destruction, cuban missile crisis, Daniel Kahneman / Amos Tversky, defense in depth, desegregation, Edward Lorenz: Chaos theory, en.wikipedia.org, endogenous growth, endowment effect, Ford paid five dollars a day, framing effect, Frederick Winslow Taylor, Gordon Gekko, greed is good, information retrieval, interchangeable parts, invisible hand, John Nash: game theory, John von Neumann, Kenneth Arrow, lateral thinking, linear programming, loose coupling, loss aversion, Mahatma Gandhi, means of production, mental accounting, Murray Gell-Mann, mutually assured destruction, Nash equilibrium, Nelson Mandela, Norbert Wiener, Norman Mailer, oil shock, Pareto efficiency, performance metric, Philip Mirowski, prisoner's dilemma, profit maximization, race to the bottom, Ralph Nader, RAND corporation, Richard Thaler, road to serfdom, Ronald Reagan, Rosa Parks, shareholder value, social intelligence, Steven Pinker, strikebreaker, The Chicago School, The Myth of the Rational Market, the scientific method, theory of mind, Thomas Davenport, Thomas Kuhn: the structure of scientific revolutions, Torches of Freedom, Toyota Production System, transaction costs, ultimatum game, unemployed young men, Upton Sinclair, urban sprawl, Vilfredo Pareto, War on Poverty, women in the workforce, Yogi Berra, zero-sum game

—Goethe, Faust WHEREAS WEBER AND Dewey represented distinctive strands of the liberal critique of Marxism, there was a more conservative critique developed by the so-called Italian school of neo-Machiavellians. Notable among them were the Sicilian Gaetano Mosca, who held a number of academic and political positions within Italy during a long life; the German sociologist Robert Michels, who spent most of his career in Italy; and the Italian Vilfredo Pareto, who began his career in Italy but then decamped to Geneva. Their ideas developed as an explicit correction to expectations of a progressively more equal and democratic society, and were marked less by strategic considerations than by a keen sense of the limits of what strategy might achieve. They were part of a movement away from political economy and into sociology, as explanations were sought for the less rational aspects of social behavior.

By 1938 he was giving lectures at Harvard. With some rewriting, these were turned into what is now considered to be a seminal text on management thought, The Functions of the Executive. Barnard forged an extraordinary bond with the physiologist Lawrence Henderson, a leading figure in the university and a colleague of Mayo’s. This was based on their shared interest in the Italian sociologist and notable elitist Vilfredo Pareto. Having discovered Pareto in the mid-1920s, Henderson became something of an evangelist in the 1930s, establishing what became known as the “Pareto Circle” at Harvard. To Henderson’s scientific mind, Pareto’s notions of social equilibrium struck a chord as well as matched his own conservative inclinations. Although he dominated the circle, with a seminar technique that was said to be “only feebly imitated by a pile-driver,” the group did include people such as Talcott Parsons and George Homans among the most influential of their generation of sociologists.22 It was also a refuge for conservative academics seeking an alternative to Marx and attracted by the underlying treatment of society as an interdependent and largely self-correcting system.

Wolfgang Mommsen, “Robert Michels and Max Weber: Moral Conviction versus the Politics of Responsibility,” in Wolfgang and Jurgen Osterhammel, 126. 4. Michels, Political Parties, 338. 5. Gaetano Mosca, The Ruling Class (New York: McGraw Hill, 1939), 50. First published in 1900. 6. Ibid., 451. 7. David Beetham, “Mosca, Pareto, and Weber: A Historical Comparison,” in Wolfgang Mommsen and Jurgen Osterhammel, eds., Max Weber and His Contemporaries (London: Allen & Unwin, 1987), 139–158. 8. Vilfredo Pareto, The Mind and Society, edited by Arthur Livingston, 4 volumes (New York: Harcourt Brace, 1935). 9. Geraint Parry, Political Elites (London: George Allen & Unwin, 1969). 10. Gustave Le Bon, The Crowd: A Study of the Popular Mind (New York: The Macmillan Co., 1896), 13, available at http://etext.virginia.edu/toc/modeng/public/BonCrow.html. 11. Hughes, Consciousness and Society, 161. 12. Irving Louis Horowitz, Radicalism and the Revolt Against Reason: The Social Theories of George Sorel (Abingdon: Routledge & Kegan Paul, 2009).


The Art of Scalability: Scalable Web Architecture, Processes, and Organizations for the Modern Enterprise by Martin L. Abbott, Michael T. Fisher

always be closing, anti-pattern, barriers to entry, Bernie Madoff, business climate, business continuity plan, business intelligence, business process, call centre, cloud computing, combinatorial explosion, commoditize, Computer Numeric Control, conceptual framework, database schema, discounted cash flows, en.wikipedia.org, fault tolerance, finite state, friendly fire, hiring and firing, Infrastructure as a Service, inventory management, new economy, packet switching, performance metric, platform as a service, Ponzi scheme, RFC: Request For Comment, risk tolerance, Rubik’s Cube, Search for Extraterrestrial Intelligence, SETI@home, shareholder value, Silicon Valley, six sigma, software as a service, the scientific method, transaction costs, Vilfredo Pareto, web application, Y2K

Find the 20% of the tests that will provide you with 80% of the information. System’s tests almost always follow some similar distribution when it comes to the amount or value of information provided. This is because the features are not all used equally, and some are more critical than others. A feature handling user payments is more important than one handling a user’s search for friends, and thus can be tested more vigorously. Vilfredo Pareto Vilfredo Federico Damaso Pareto was an Italian economist who lived from 1848 to 1923 and was responsible for contributing several important advances to economics. One of the most notable insights that almost everyone has heard of today is the Pareto Distribution. Fascinated by power and wealth distribution in societies, he studied the property ownership in Italy and observed in his 1909 publication that 20% of the population owned 80% of the land, thus giving rise to his Pareto Distribution.

See also Leadership; Management; Staffing for scalability; Teams. adding/removing people, 12, 13 aligning with stakeholder interests, 13 boundary conflicts, 15 cost centers, 109 drawbacks, 17 efficient work flow, 15–17 helpful questions, 12 metrics, 12–13 potential conflicts, 17 profit centers, 109 support services business, 109–110 team growth vs. individual productivity, 13–15 technology-as-product business, 109–110 understanding, from the outside, 13 Organizational design, influences on scalability communications, 44 efficiency, 44 ownership, 46 quality, 45 standards, 44–45 Organizational roles and responsibilities. See Roles and responsibilities, organizational. Overall risk, 253–254 Overlapping roles and responsibilities, 40 Overwork, team warning sign, 52 PaaS (Platform as a Service), 427–428 Pareto, Vilfredo, 260 Pareto Distribution, performance testing, 260 Pay by usage, clouds, 431, 434 Peak utilization time, data cost, 413 People. See Roles and responsibilities; Staffing; specific roles. People Always leadership style, 72 People management. See Management, of teams. People vs. mission, 72 Perception by others, leadership, 66–67, 73 Performance (product) calculating, 527–533 cloud computing drawback, 445–446 Performance (product), testing analyzing data, 261–262 as barrier conditions, 275 benchmarks, 258–259 checklist of testing steps, 263.


pages: 578 words: 168,350

Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies by Geoffrey West

Alfred Russel Wallace, Anton Chekhov, Benoit Mandelbrot, Black Swan, British Empire, butterfly effect, carbon footprint, Cesare Marchetti: Marchetti’s constant, clean water, complexity theory, computer age, conceptual framework, continuous integration, corporate social responsibility, correlation does not imply causation, creative destruction, dark matter, Deng Xiaoping, double helix, Edward Glaeser, endogenous growth, Ernest Rutherford, first square of the chessboard, first square of the chessboard / second half of the chessboard, Frank Gehry, Geoffrey West, Santa Fe Institute, Guggenheim Bilbao, housing crisis, Index librorum prohibitorum, invention of agriculture, invention of the telephone, Isaac Newton, Jane Jacobs, Jeff Bezos, Johann Wolfgang von Goethe, John von Neumann, Kenneth Arrow, laissez-faire capitalism, life extension, Mahatma Gandhi, mandelbrot fractal, Marchetti’s constant, Masdar, megacity, Murano, Venice glass, Murray Gell-Mann, New Urbanism, Peter Thiel, profit motive, publish or perish, Ray Kurzweil, Richard Feynman, Richard Florida, Silicon Valley, smart cities, Stephen Hawking, Steve Jobs, Stewart Brand, technological singularity, The Coming Technological Singularity, The Death and Life of Great American Cities, the scientific method, too big to fail, transaction costs, urban planning, urban renewal, Vernor Vinge, Vilfredo Pareto, Von Neumann architecture, Whole Earth Catalog, Whole Earth Review, wikimedia commons, working poor

Notice that in both these cases there are large deviations for the most frequent entities (“the” for words and New York for cities). (40) Zipf’s law of rank-size distributions of words in the English language: the frequency of occurrence of words is plotted on the vertical axis and their rank plotted on the horizontal. (41) Rank-size distributions of companies in the United States: as in (39), their rank is plotted on the vertical axis and their size (the number of employees) plotted on the horizontal. In economics, Zipf’s law actually predates Zipf. Much earlier it had been discovered by the influential Italian economist Vilfredo Pareto, who expressed it as a frequency distribution of incomes in a population rather than in terms of their ranking. This distribution, which is valid for many other economic metrics like income, wealth, and the size of companies, follows a simple power law with an exponent of approximately -2. When expressed in terms of rankings, this exponent corresponds to Zipf’s law. It quantifies the obvious economic fact that there are very few very wealthy people or large institutions but an enormous number of very poor or small ones.

See exponentially expanding socioeconomic urbanized world myth of companies and, 391–93 resource limitation and, 415–24, 417, 421 open systems, 236 optimization, 115–17, 381 Oracle, 183–84 orders of magnitude, 45–47 organ functionality, and age, 195, 197 organizational structure, 381 origins of war, 132–35 Ouroussoff, Nicolai, 258 Oxford University, 71, 364, 382 Big Data Institute (BDI), 442–43 oxidative stress, 200–201 oxygen, 113, 118–19 pace of life, 7, 28, 326–32, 412–13, 425 in cities, 30–31, 326–32 heartbeats and, 204–5 pacifism, 132–33 Page, Larry, 184 Palo Alto, 303, 361 Palo Alto Institute, 184 panspermia, 177–78 Paraceratherium, 156, 158–59 paradigm shifts, 417, 419–20, 421, 424–25, 443, 446–47 parallel mirrors, 128 Pareto, Vilfredo, 312–13 Pareto principle, 312–13 Park Street (Boston), 348–49 “Particle Creation by Black Holes” (Hawking), 403 particle model, 338–39 particle physics, 83–84, 107, 405 patents, scaling curve, 2, 2n, 4, 29, 276, 357, 386 PayPal, 184 percentage growth rate, 217 perpetual motion machines, 14 Perutz, Max, 437–39, 443 petioles, 121 pharmaceutical research, 52–55 phase transitions, 16, 415 philanthropy, 287 Phoenix, 360, 366, 367 phone call data, as detector of human behavior, 337–45, 351–52, 439 physical infrastructure, 29, 251–52, 274–75, 372–73 christalls vs. fractals, 288–95 integrating social networks with, 315–24 road and transport networks, 284, 285, 291, 292–94, 293 physics, 81–84 biology and, 83–84, 105–11 “physics-inspired” theory of cities, 269 Pierce, Chester, 52–53 Pines, David, 436 plant vascular system, 147, 150, 150–51 Pollock, Jackson, 144 pollution, 215, 275, 278 Ponderal index, 59 Popular Mechanics (magazine), 36 population bomb, 231, 232–33, 239–40 Population Bomb, The (Ehrlich), 231 population doubling time, 210, 211, 217–18 population growth, 13, 18, 209–13, 216–22 cities, urbanization, and global sustainability, 213–15 innovation optimists and, 231–33, 234–35 Malthus and neo-Malthusians, 227–30, 414–15 world, 210, 218 population size city rankings and, 356 Zipf’s law, 310–14, 311–12 pornography and free speech, 20 positive feedback mechanism, 299, 415–16 cities and, 323, 327, 329, 344, 368, 378 poverty rate, 231, 355 power laws, 25–26, 91–92, 131, 308 exponent of, 272–73 scaling of conflicts, 134–35 Zipf’s law, 310–14, 311–12 powers of ten, 25–26, 45, 48 “Predators and Prey: A New Ecology of Competition” (Moore), 249 preferential attachment, 368–71 Principia (Newton), 181 principle of least action, 115–16 principle of similitude, 75–78 Pritzker Prize, 248, 258 “Problem of Contiguity, The” (Richardson), 139 protons, 82–83, 445 Pumain, Denise, 250 quality of life, 212, 355–56, 411, 425 quantitative theory of aging and death, 199–203 quantum mechanics, 107–8 quarks, 16, 85 quarter-power scaling law, 26–27, 153–54 circulatory system, 27, 113, 147, 148, 150–51 Kleiber’s law, 26–27, 90–93, 117, 145 network principles and origins of, 103–5, 111–18 optimization, 115–17, 284, 381 respiratory system, 147, 149, 150–51, 204 space filling, 27, 112–13, 129, 201, 284 terminal units, 113–14, 151, 201–2, 284 Quetelet, Adolphe, 55–57 Quetelet index, 55–56 race, 98 Raffles Place (Singapore), 354 railways, 64–66 rankings, 352–53, 355–59 rats, 25–26, 93 Ratti, Carlo, 340–42, 352 Rayleigh, John William Strutt, 3rd Baron, 75–78 reductionism, 429–30 research and development (R&D), 409 Research Experience for Undergraduates (REU), 402 resilience, 19–20, 355 resonance, 299–300 resource limitation, 227, 228–29, 416 open-ended growth and, 415–24, 417, 421 respiratory complexes, 99–102, 101, 204 respiratory system, 99–102, 118–22, 327 diseases, 193, 193 quarter-power scaling, 147, 149, 150–51, 204 returns to scale, 18, 19, 275–76, 378 revenue with inflation deflator, 393, 394 major U.S. companies, 393, 394 Richardson, Lewis Fry, 131–42, 152, 291, 364 Richardson scale, 133–35 rich get richer, 368–69 Richter scale, 45–47 “Rime of the Ancient Mariner, The” (Coleridge), 361–62 risk management, 315 River Avon Gorge Bridge, 61, 64, 65 Road, The (McCarthy), 425 road and transport networks, 284, 285, 291, 292–94, 293 Robert H.


pages: 338 words: 106,936

The Physics of Wall Street: A Brief History of Predicting the Unpredictable by James Owen Weatherall

Albert Einstein, algorithmic trading, Antoine Gombaud: Chevalier de Méré, Asian financial crisis, bank run, beat the dealer, Benoit Mandelbrot, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, Brownian motion, business cycle, butterfly effect, buy and hold, capital asset pricing model, Carmen Reinhart, Claude Shannon: information theory, collateralized debt obligation, collective bargaining, dark matter, Edward Lorenz: Chaos theory, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial innovation, fixed income, George Akerlof, Gerolamo Cardano, Henri Poincaré, invisible hand, Isaac Newton, iterative process, John Nash: game theory, Kenneth Rogoff, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, martingale, Myron Scholes, new economy, Paul Lévy, Paul Samuelson, prediction markets, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, statistical arbitrage, statistical model, stochastic process, The Chicago School, The Myth of the Rational Market, tulip mania, Vilfredo Pareto, volatility smile

In particular, he was looking at data describing income distributions throughout society. (Banks weren’t necessarily interested in this specific question; rather, the idea was to use Mandelbrot’s research as proof of concept, to demonstrate how efficient a computer could be at number-crunching financial data.) Income distribution had been studied before, most famously by a nineteenth-century Italian engineer, industrialist, and economist named Vilfredo Pareto. A strong believer in laissez-faire economics, Pareto was obsessed with the workings of the free market and the accumulation of capital. He wanted to understand how people got rich, who controlled wealth, and how resources were doled out by market forces. To this end, he gathered an immense amount of data on wealth and income, drawing on such diverse sources as real estate transactions, personal income data from across Europe, and historical tax records.

That certain features of fractals exhibit fat tails is one such connection; another is that (some) fat-tailed distributions themselves exhibit self-similarity, in the form of power-law scaling in their tails. Mandelbrot was a central figure in identifying and exploring these relationships. See Mandelbrot (1997). “Known as the Butcher of Lyon . . .”: For more on Barbie, see Bower (1984) and McKale (2012). “. . . ‘there was no great distinction . . .’ ”: This quote is from Mandelbrot (1998). “. . . and economist named Vilfredo Pareto”: The definitive collection on Pareto and his influence is the three-volume Wood and McClure (1999); see also Cirillo (1979). “. . . it appeared that there was no ‘average’ rate of return”: In other words, it seemed that neither mean nor variance was defined for the distributions of cotton prices. As described below, Mandelbrot would later argue that the distributions of rates of return for financial markets do have finite means, but not variances.

The Scientist’s Atom and the Philosopher’s Stone: How Science Succeeded and Philosophy Failed to Gain Knowledge of Atoms. New York: Springer-Verlag. — — — . 2011. “Drawing Philosophical Lessons From Perrin’s Experiments on Brownian Motion: A Response to van Fraassen.” British Journal of the Philosophy of Science 62 (4): 711–32. Chapman, Toby. 1998. “Speculative Trading: Physicists’ Forays Into Finance.” Europhysics Notes, January/February, 4. Cirillo, Renato. 1979. The Economics of Vilfredo Pareto. New York: Frank Cass and Company. Coase, Ronald H. 1960. “The Problem of Social Cost.” Journal of Law and Economics III, October, 1–44. Cole, K. C. 2009. Something Incredibly Wonderful Happens: Frank Oppenheimer and the World He Made Up. Boston: Houghton Mifflin Harcourt. Collins, Martin. 1999. Space Race: The U.S.-U.S.S.R. Competition to Reach the Moon. Rohnert Park, CA: Pomegranate Communications.


pages: 662 words: 180,546

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

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

How this encouraged students to become acquainted with the economy was a bit of a mystery—or maybe it telegraphed the neoclassical lesson that you didn’t need to attend to the specifics of actual existing economies.19 It was brainwashing, pure and simple, carried out under the banner of rigor. Then, by the 1990s, by construction there was no longer any call for offering courses in philosophy or history of doctrine, since there were no economists left with sufficient training (not to mention interest) in order to staff the courses.20 Economists would periodically be sounding off in the most illiterate registers concerning Karl Marx, Vilfredo Pareto, Hyman Minsky, Adam Smith, or even John Maynard Keynes, because they were confident no one would ever call them to task on their shallow pretenses. Consequently, once the Great Mortification followed in the wake of the collapse of the Great Moderation, those occupying the commanding heights of the profession were bereft of any sophisticated resources to understand their predicament. In a pinch, many fell back on the most superficial of personal recollections, or else the last refuge of scoundrels, the proposition that “we” already knew how to handle the seemingly anomalous phenomena, but had unaccountably neglected to incorporate these crucial ideas into pedagogy and cutting-edge research.

See Neoliberal Thought Collective (NTC) Nugent, Ted NYU (New York University) O Obama, Barack Occam’s Razor Occupiers Occupy Handbook Occupy London Occupy Movement Occupy Wall Street (OWS) Odyssey (Homer) Old Thinking Oldham, Taki, Turf Wars Open questions Open Society The Open Society and Its Enemies (Popper) Oracle at Delphi Ordoliberalism Oreskes, Naomi Original Sin O’Rourke, Kevin Orszag, Peter Orwell, George Osborne, George Outsourced Self (Hochschild) OWS (Occupy Wall Street) P Page, Scott Palin, Sarah Pareto, Vilfredo Patterson, Scott, Dark Pools Paul, Ron Paulson, Hank Payday loans Payne, Christopher PBS Peck, Jamie Pecora, Ferdinand Perry, Rick Pesaran, Hashem Pew Economic Policy Group Financial Reform Project Philip Morris Phillips Curve Philosopher’s Stone Pimco Pinochet, Augusto Pinto, Edward Pissarides, Christopher Pity the Billionaire (Frank) Plant, Raymond Plato Plehwe, Dieter Ponzi scheme Poon, Martha Popper, Karl Portes, Richard Posner, Richard Power Auctions Predator Nation (Ferguson) Prediction as red herring Prescott, Edward C.


pages: 168 words: 56,211

The Pleasures and Sorrows of Work by Alain de Botton

Donald Trump, Isaac Newton, Johannes Kepler, Malacca Straits, mass immigration, Ralph Waldo Emerson, spice trade, supply-chain management, Vilfredo Pareto

Careers ploughed along deep and dedicated furrows: a start at Hula Hoops might be followed by promotion to Ridged Tortillas, a sideways shift to Baked Mini Cheddars, a management role at McVitie’s Fruitsters and a swan-song post at Ginger Nuts. The unremitting division of labour resulted in admirable levels of productivity. The company’s success appeared to bear out the principles of efficiency laid down at the turn of the twentieth century by the Italian economist Vilfredo Pareto, who theorised that a society would grow wealthy to the extent that its members forfeited general knowledge in favour of fostering individual ability in narrowly constricted fields. In an ideal Paretan economy, jobs would be ever more finely subdivided to allow for the accumulation of complex skills, which would then be traded among workers. It would be in everyone’s best interest that doctors not waste time learning how to fix boilers, that train drivers not sew clothes for their children and that Biscuit Packaging Technologists leave questions of warehousing to graduates in supply-chain management, the better to concentrate their own energies on the improvement of roll-wrap mechanisms.

It is surely significant that the adults who feature in children’s books are rarely, if ever, Regional Sales Managers or Building Services Engineers. They are shopkeepers, builders, cooks or farmers – people whose labour can easily be linked to the visible betterment of human life. As creatures innately aware of balance and proportion, we cannot help but sense that something is awry in a job title like ‘Brand Supervision Coordinator, Sweet Biscuits’ and that whatever the logic and perspicacity of Vilfredo Pareto’s arguments, another principle to which no one has yet given a convincing name has here been ignored and subtler human laws violated. 6. Matters were compounded because, whatever the modesty of the ends at United Biscuits, the means to produce the Moments and their siblings nevertheless required the dedication and self-discipline that might otherwise have been called upon to run a hospital or become a ballerina.


Saving America's Cities: Ed Logue and the Struggle to Renew Urban America in the Suburban Age by Lizabeth Cohen

activist lawyer, affirmative action, Albert Einstein, anti-communist, British Empire, Buckminster Fuller, car-free, charter city, deindustrialization, desegregation, Edward Glaeser, garden city movement, ghettoisation, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, hiring and firing, housing crisis, income inequality, indoor plumbing, Jane Jacobs, land reform, megastructure, new economy, New Urbanism, Peter Eisenman, postindustrial economy, race to the bottom, rent control, Robert Gordon, rolodex, Ronald Reagan, the built environment, The Death and Life of Great American Cities, union organizing, upwardly mobile, urban decay, urban planning, urban renewal, Victor Gruen, Vilfredo Pareto, walkable city, War on Poverty, white flight, white picket fence, young professional

Democracy and Power in an American City, published in 1961, based on extensive interviews and other field study from 1957 to 1959. Two related works by Dahl’s graduate students, who helped him with the research, appeared subsequently: Nelson Polsby’s Community Power and Political Theory (1963) and Raymond Wolfinger’s The Politics of Progress (1974).9 Dahl and his students were engaged in a research project to test ideas about political elitism formulated by the Italian political theorists Gaetano Mosca and Vilfredo Pareto as well as the claims of the American sociologists C. Wright Mills and Floyd Hunter. Mills and Hunter had published books a few years earlier provocatively arguing that a small, cohesive, interlocking group of social, economic, and political elites had come to dominate American society and to exercise disproportionate and self-interested influence in decision-making.10 They concluded that American democracy was not alive and well.

.; CAC; cars; Chapel Square Mall; Church Street Project; citizen input; City Plan Commission; Columbus Mall; CPI; Crawford Manor elderly housing; deterioration of; Dixwell; Elm Haven Housing; Fair Haven; federal funding for redevelopment; Florence Virtue Homes; Green; highways; human renewal; immigrants; industrialization; Jews; labor; Long Wharf; Louis’ Lunch; map of; marginalization of small local retailers; median income; modernism; National Commission on Urban Problems hearings; “Negro removal”; network of urban renewal experts in; new administrative structure; in 1950s; Oak Street project; parking; planning department; politics; population decline; pro-growth coalition; public housing; race relations; real estate developers; redeveloper role; redevelopment plan; relocated households; riots; schools; separation of functions; shopping districts; suburbs; taxes; Temple Street Parking Garage; total plan; University Towers project; urban renewal; Wooster Square; see also specific neighborhoods, buildings, agencies, and projects New Haven Central Labor Council New Haven Civic Improvement Association New Haven Human Relations Council New Haven Redevelopment Agency; citizen input and; masculine culture of; National Commission on Urban Problems hearings; network of experts in; new administrative structure; Progress Pavilion; race and; role of; urban renewal as liberal project; wives New Left Newman, Oscar, Defensible Space New Republic, The New Schools for New Haven Initiative Newsweek New Towns; diverse community concept; history of; New York; Roosevelt Island; UDC New York City; architects; architecture; Bedford-Stuyvesant plan; deterioration of; diverse community concept; Harlem State Office Building controversy; high-rise public housing; historic preservation; immigrants; industrialization; low-income housing; map of; mid-1970s recession; modernism; New Town strategy; of 1970s–80s; Penn Station; politics; public housing; race and; real estate developers; Roosevelt Island plan; schools; South Bronx redevelopment; Stuyvesant Town; subsidized housing; suburbs; transportation; urban renewal; West Village; see also specific neighborhoods, buildings, boroughs, and agencies New York City Department of Housing Preservation and Development New York City Housing Partnership New York City Planning Department New York Project Finance Agency New York State; bonds; diverse community concept; Fair Share Housing program; federal funding for redevelopment; highways; industrialization; map of; mid-1970s recession; New Town strategy; of 1970s–80s; politics; public-private funding for redevelopment; race relations; relocation efforts; school; suburbs; taxes; transportation; UDC agenda; urban renewal; see also specific cities, projects, and agencies New York State Urban Development Corporation (UDC); achievements of; affirmative action policy; architects; bonding strategy; creation of; diverse community concept; downfall of; Fair Share Housing; fast-tracking strategy; federal funding and; fiscal mismanagement and crisis; Harlem State Office Building controversy; high-rise public housing; HUDC and; live-ins; Logue dismissed from; Logue as head of; Moreland Commission investigation; New Towns; Nine Towns controversy; Nixon funding cutbacks; Operation Breakthrough; prototype strategy; public-private funding approach; racial initiatives; Roosevelt Island plan; structure and staff of; technological innovation New York Times, The New York Times Magazine, The New York World’s Fair (1939) Niemeyer, Oscar Nighthawk gang Nilokheri NIMBYism Nine Towns controversy Nixon, Richard; resignation of; urban agenda and cutbacks Nolan, Martin nonprofit organizations Nyman, R. Carter O’Brion, Frank O’Connell, Cardinal William Olmsted, Frederick Law, Jr. OPEC oil embargo overcrowding Pakistan Pangaro, Anthony Paolillo, Anthony Papa, Stephen J. Pareto, Vilfredo Paris parking; Boston; New Haven parks and recreation Pasanella, Giovanni Paul VI, Pope pedestrians Pei, I. M.; Boston Government Center Philadelphia; “Better Philadelphia Exhibition” (1947); Logue as labor lawyer in; politics; urban redevelopment philanthropy Pierce, Samuel Pilot, The pilot houses Pittsburgh; urban renewal planners, see city planners “planning with people” slogan pluralism, and urban renewal Point Four Program polio Polsby, Nelson; Community Power and Political Theory Polshek, James Stewart Poorvu, William Port Authority of New York and New Jersey poverty; Boston; National Commission on Urban Problems hearings; New Haven; New York Powers, John Powledge, Fred prefabrication Prentice & Chan, Ohlhausen presidential elections: of 1948; of 1960; of 1972; of 1976; of 1984 press; African American; Boston; Catholic; Logue and; New Haven; New York; on Nine Towns controversy; on UDC crisis; urban renewal and; see also specific publications private-market funding approach; Boston; Charlotte Gardens; Logue’s legacy and; New York; UDAG program Progressive, The Progressive Architecture Progressivism Protestants prototype strategy Prouvé, Jean Prudential Insurance Company public housing; Boston; demolition of; federal funding; high-rise; National Commission on Urban Problems hearings; New Haven; New York; poor maintenance; Nixon cutbacks; prototype strategy; relocation; see also specific cities, agencies, projects, and funding public-private funding model; South Bronx Public Works Administration Puerto Ricans Queens, New York Raab, Jennifer race; Boston and; diverse community concept; Fair Share Housing; National Commission on Urban Problems hearings; “Negro removal”; New Haven and; New York and; quotas; riots; school desegregation; UDC policies; urban renewal and; at Yale Radisson, New Town of Rae, Douglas railroads Rappaport, Jerome Lyle Ravitch, Richard Raymond, George Reagan, Ronald; urban agenda real estate developers; Boston; New Haven; New York; role in urban renewal Reconstruction Finance Corporation Record American Reilly, Arthur Rein, Martin relocation; Boston; New Haven; New York; 221(d)(3) program “rent certificate” Republican Party Reuther, Walter revenue sharing Ribicoff, Abraham Richardson, Henry Riemer, Peter Rivera, David Robinson, Jackie Roche, Kevin Rochester, New York Rockefeller, David Rockefeller, Nelson; as governor; Lindsay rivalry; Logue and; Pocantico estate; resigns as governor; urban policy; use of authorities Rockefeller Center Rockefeller Foundation Rodell, Fred Rohatyn, Felix Rome Romney, George Roosevelt, Franklin D.


pages: 535 words: 158,863

Superclass: The Global Power Elite and the World They Are Making by David Rothkopf

airport security, anti-communist, asset allocation, Ayatollah Khomeini, bank run, barriers to entry, Berlin Wall, Bob Geldof, Branko Milanovic, Bretton Woods, BRICs, business cycle, carried interest, clean water, corporate governance, creative destruction, crony capitalism, David Brooks, Doha Development Round, Donald Trump, financial innovation, fixed income, Francis Fukuyama: the end of history, Gini coefficient, global village, high net worth, income inequality, industrial cluster, informal economy, Internet Archive, Jeff Bezos, jimmy wales, joint-stock company, knowledge economy, liberal capitalism, Live Aid, Long Term Capital Management, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, mass immigration, means of production, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, Nelson Mandela, old-boy network, open borders, plutocrats, Plutocrats, Ponzi scheme, price mechanism, shareholder value, Skype, special economic zone, Steve Jobs, Thorstein Veblen, too big to fail, trade liberalization, trickle-down economics, upwardly mobile, Vilfredo Pareto, Washington Consensus, William Langewiesche

So a picture begins to emerge that suggests that power on the planet is not only concentrated, it is extraordinarily concentrated. There are people who are on top and people who are not—and, among those who are on top, the few at the very top have hugely disproportionate influence. VILFREDO PARETO’S ENDURING INSIGHT: THE 80/20 RULE AND THE SUPERCLASS Another way to think about the allocation of power and resources in the world is to explore the stratification of global society along the lines of the Pareto principle of distribution (also known as the “80/20” rule). Inspired by an observation made by French-Italian economist and sociologist Vilfredo Pareto with reference to unequal income distribution in Italy, what later became known as the Pareto principle more or less observes that for many phenomena, 20 percent of the causes are responsible for 80 percent of the consequences.

Or at least that’s what they keep telling me. Nearly all men can stand adversity, but if you want to test a man’s character, give him power. —ABRAHAM LINCOLN CONTENTS PREFACE TO THE PAPERBACK EDITION PREFACE INTRODUCTION THE POWER ELITE ON THE PROMENADE CHAPTER 1 EACH ONE IS ONE IN A MILLION: MEET THE SUPERCLASS Each One Is One in a Million • The Corporate Side of the Superclass • Vilfredo Pareto’s Enduring Insight: The 80/20 Rule and the Superclass • A Snapshot of the Superclass • What Does Disproportionate Power Look Like? • What the People Who Have Everything Really Want • Six Central Issues Associated with the Superclass CHAPTER 2 CETERIS NON PARIBUS: INEQUALITY, BACKLASH, AND THE NEW ORDER Not All Boats Are Lifted • Not a Country But a Country Club • Not Just a Chilean Paradox • And After the Easy Part… • Ceteris Non Paribus: Inequality of Power, Inequality of Wealth • War of the Rich and the Superrich?


pages: 406 words: 88,820

Television disrupted: the transition from network to networked TV by Shelly Palmer

barriers to entry, call centre, commoditize, disintermediation, en.wikipedia.org, hypertext link, interchangeable parts, invention of movable type, Irwin Jacobs: Qualcomm, James Watt: steam engine, Leonard Kleinrock, linear programming, Marc Andreessen, market design, Metcalfe’s law, pattern recognition, peer-to-peer, recommendation engine, Saturday Night Live, shareholder value, Skype, spectrum auction, Steve Jobs, subscription business, Telecommunications Act of 1996, There's no reason for any individual to have a computer in his home - Ken Olsen, Vickrey auction, Vilfredo Pareto, yield management

In it, Anderson argues that products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers if sales and distribution costs are low enough. Because the article was well-written and the premise seems to make sense, people started adding the phrase “long tail content” to their PowerPoint decks and using the term to ascribe all kinds of magical attributes to previously unsalable content. Not a disaster, just kind of fun to watch — in a schadenfreude kind of way. In 1906, long before the long tail, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country. He observed that 20 percent of the people in Italy owned 80 percent of the wealth. In the 1940s, Dr. Joseph M. Juran attributed his own observation of “vital few and trivial many” to the 80/20 rule, which he called “Pareto’s Law” or the “Pareto Principle.” As a practical reality, the 80/20 rule applies in almost the entire observable universe.

Open was originally owned by several companies, but it is now primarily owned by Sky. To use Open, the viewer must click the Interactive button on the remote control, which brings up the Open home page offering various categorized selections. Video clips and audio often accompanies most screens alongside clickable data. Paramount A media company owned by Viacom. Pareto’s Law Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country. He observed that 20 percent of the people in Italy owned 80 percent of the wealth. In the 1940s, Dr. Joseph M. Juran attributed his own observation of “vital few and trivial many” to the 80/20 rule, which he called “Pareto’s Law” or the “Pareto Principle.” Pay TV Television programming that requires payment upfront usually on a monthly basis as a subscription fee.


pages: 309 words: 91,581

The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It by Timothy Noah

assortative mating, autonomous vehicles, blue-collar work, Bonfire of the Vanities, Branko Milanovic, business cycle, call centre, collective bargaining, computer age, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, Deng Xiaoping, easy for humans, difficult for computers, Erik Brynjolfsson, Everybody Ought to Be Rich, feminist movement, Frank Levy and Richard Murnane: The New Division of Labor, Gini coefficient, Gunnar Myrdal, income inequality, industrial robot, invisible hand, job automation, Joseph Schumpeter, longitudinal study, low skilled workers, lump of labour, manufacturing employment, moral hazard, oil shock, pattern recognition, Paul Samuelson, performance metric, positional goods, post-industrial society, postindustrial economy, purchasing power parity, refrigerator car, rent control, Richard Feynman, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, Stephen Hawking, Steve Jobs, The Spirit Level, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, union organizing, upwardly mobile, very high income, Vilfredo Pareto, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, Yom Kippur War

But as a modern economy evolved beyond industrialization’s initial disruptive phase, the trend reversed itself and incomes became more equal. The eventual result would be a mature economy that was egalitarian and prosperous. Although he never put it so loftily, Kuznets in effect posited that growing equality of incomes was the mark of an advanced civilization. This conceit was elegant, stirring, and at odds with the existing paradigm, developed by the nineteenth-century French-Italian economist Vilfredo Pareto, that the shape of income distribution did not change over time. Kuznets believed that income distribution did change shape, and he was right.15 But he was wrong in believing that after the initial inegalitarian phase of industrialization incomes would only grow more equal. Or rather, that conclusion is wrong today. It fit the data perfectly in 1954, when Kuznets formulated it in a speech he gave at a Detroit meeting of the American Economic Association, of which he was president.

Income Distribution and Poverty in OECD Countries (Paris: Organisation for Economic Co-operation and Development, 2008), 27. 3. I would be remiss if I failed to note here the awkward debt that the science of income and wealth distribution owes to Italian fascism. Gini was president of Italy’s Central Institute of Statistics under Benito Mussolini. Another pioneer in the field was the French-Italian Vilfredo Pareto (1848–1923), inventor of an alternative measure called the Pareto distribution. Pareto was a dedicated Fascist who harbored truly repellant beliefs, but Gini appears to have been much less interested in politics than in statistics. Il Duce was an enthusiastic student of statistical science, presumably in the service of measuring whether the trains were in fact running on time (and other less praiseworthy efficiencies).


Growth: From Microorganisms to Megacities by Vaclav Smil

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, agricultural Revolution, air freight, American Society of Civil Engineers: Report Card, autonomous vehicles, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Bretton Woods, British Empire, business cycle, colonial rule, complexity theory, coronavirus, decarbonisation, deindustrialization, dematerialisation, demographic dividend, demographic transition, Deng Xiaoping, disruptive innovation, Dissolution of the Soviet Union, endogenous growth, energy transition, epigenetics, happiness index / gross national happiness, hydraulic fracturing, hydrogen economy, Hyperloop, illegal immigration, income inequality, income per capita, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of movable type, Isaac Newton, James Watt: steam engine, knowledge economy, labor-force participation, Law of Accelerating Returns, longitudinal study, mandelbrot fractal, market bubble, mass immigration, McMansion, megacity, megastructure, meta analysis, meta-analysis, microbiome, moral hazard, Network effects, new economy, New Urbanism, old age dependency ratio, optical character recognition, out of africa, peak oil, Pearl River Delta, phenotype, Pierre-Simon Laplace, planetary scale, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, random walk, Ray Kurzweil, Report Card for America’s Infrastructure, Republic of Letters, rolodex, Silicon Valley, Simon Kuznets, South China Sea, technoutopianism, the market place, The Rise and Fall of American Growth, total factor productivity, trade liberalization, trade route, urban sprawl, Vilfredo Pareto, yield curve

Only in 1938 did Frank Benford, an American physicist working for General Electric (GE), provide the quantitative backup for the (now eponymous) law of anomalous numbers by analyzing the percentage of times the natural numbers one to nine are used as first digits in numbers compiled from more than 20,000 observations of various physical and social phenomena (Benford 1938). The first digit came up 30.6% of the time, the second one 18.5%, and the last one just 4.7% (figure 1.26). Figure 1.26 Benford’s frequency distribution. Plotted from data in Benford (1938). What has become perhaps the most famous power-law distribution (thanks to the influence of economics in public affairs) was described by Vilfredo Pareto, an Italian economist (Pareto 1896). He noted that much like 20% of pea pods in his garden yielded 80% of all harvested peas, just 20% of rich Italians owned 80% of all land, and this principle turned out to be applicable to many natural, economic, and social phenomena. The second most cited power law was formulated by George Kingsley Zipf, an American linguist, and it is based on his observations of rank-frequency of words in natural languages (Zipf 1935).

King, 450 Humans brain, 20, 152–154, 156, 456, 459 embryos, 153 evolution, 309–312 growth of, 151–171 (see also Children; Obesity) height, 6–7, 154–167, 443 lifespan, 85, 325, 459–460 load carrying, 270–271 physical performance, 270, 443–444, 446, 459 running, 267–270 weight, 2, 15, 37–38, 152, 154–162, 168–171, 459 Hydroelectricity, 50, 54, 378, 384, 398 Immigration, 248, 252, 308, 330, 347, 451, 471–474 Income, 3, 10–11, 63, 162, 332, 402, 425, 429, 430, 445, 466, 471, 496 global, 413–414 high, 165, 167, 247, 261, 263, 319, 381, 391, 394 inequality, 351, 407, 413–414, 417, 426, 432–434, 442 low, 11, 125, 129, 161, 267, 329, 338, 347, 350, 385, 391, 401, 405, 413 national, 399, 403–404 Index body mass, 156, 160–161, 169–171, 268 corruption, 436 Dow Jones Industrial (DJI), 23–24, 419 Gross National Happiness (GNH), 10–11, 405–406 harvest, 117–118 Human Development (HDI), 10, 307, 417, 422, 441 Inclusive Development (IDI), 10 Morris, 440–441, 445 NASDAQ Composite, 23–24 Nikkei, 23, 485–486, 489 penetration, 298 price, 293 site, 108 of Social Progress (ISP), 441–442 of sustainable economic welfare (ISEW), 404 wealth, 405 India, 88, 167, 246, 411, 413, 415, 459, 462, 474, 480, 504 crops, 118–122, 125–126, 128 history, 360, 365, 370–371 energy, 181, 205, 213, 217, 283, 343, 346, 381–384, 386 population, 91, 94, 163, 303, 321, 333, 347, 351, 354–355, 503 Influenza, 88–94 avian, 94 epidemics, 88–90 pandemics, 90–94 Innovation, 24, 116, 187, 298, 332, 341, 427, 432, 466, 484, 491 technical, xix, xxi, 22, 43, 51–52, 54, 198, 293, 399, 421–424 Internet, xiii–xiv, 64, 296–300, 401, 446–447 hosts, 298–299 Ishihara, Shintaro, 484, 489 Japan, 56, 85, 91, 206, 289–290, 352, 440, 444 after 1989, 484–490 economy, 248, 251, 297, 378, 384, 400, 405, 407–408, 418, 466, 468 energy, 208, 213, 222, 266, 428 food, 117–118, 120–121, 170 GDP, 23, 304–306, 348, 350, 411–412, 415, 422, 485–486, 489–490 history, 117, 165, 247, 360, 363, 374, 445, 480–481, 483, 484–490 income, 417–418 population, 166, 308, 318–319, 324, 331, 334, 340, 348, 458–460, 474–475, 487–489 transportation, 255, 257–258, 263–264, 266, 276–278, 353, 488 WW II, 363, 480–481 Kerosene, 265, 283 Keynes, Maynard, 399, 425 Kleiber, Max, 64, 68, 133 Korčák, Jaromír, 65–66 Kurzweil, Ray, xvi–xvii, 27, 497, 502 Kuznets, Simon, 298, 399, 403–404, 427, 432–433 Labor, 340–341, 401, 420–421, 426, 429, 439, 487 force, 323, 332, 406, 471, 489 massed, 271 Lactobacillus, 77, 80–81 Laplace, Pierre-Simon, 55 Law ¾, 64, 65, 69, 74–76, 133–134, 139 of accelerating returns, xvii, 27 Boyle’s, 39 of diminishing returns, 39 Gibrat’s, 59, 355–356 Gutenberg-Richter, 65 Kepler’s, 39 Korčák’s, 65–66 Malthus, 316–317 Marshall’s, 340 Moore’s, xii–xiii, xix, xxiv, 25, 287, 289–292, 298, 392, 423, 470 Ohm’s, 14 power, 54, 58, 60, 62–63, 65–68, 340, 353–357 surface, 64, 133 Tobler’s, 342 van Thünen’s, 342 Zipf’s, 60, 63–65, 68, 340, 353–356 Lianas, 104 Lifespan, 85, 97, 100–101, 258, 325, 449, 456, 458 Lights electric, 217–219 Lignin, 82, 455 Litterfall, 81–82 Locomotives, 15, 192–193, 205–206, 276–277, 462, 465, 467–469 London, 95, 194, 241, 246, 254, 280, 285, 352, 355, 360, 377 population, 335–336, 341, 451, 453 Madoff, Bernard, 21 Malnutrition, 73, 152, 161–162, 171, 391, 444, 499 Malthus, Thomas Robert, 11, 19, 307, 316–317, 498–499 Mandelbrot, Benoit, 65, 68 Manhattan, 179, 242–244, 344, 347 Manufacturing, 204, 221–222, 306–307, 400, 421, 439, 460, 483, 485, 488–489 and electricity, 221–222 Marathon, 267–269, 459 Marchetti, Cesare, 46–48 Maya, 450, 470, 479 Meat, 73, 77, 113, 149–151, 154, 168, 343, 376, 413, 458 consumption of, 113, 118, 120, 391 production of, 4, 145–148, 151, 391 Megacities, 246, 254, 339–340, 343–344, 347–353, 393, 403 Mesopotamia, 28, 304, 332–333, 357, 361, 370–372, 440 Microbiome, 72, 168, 226 Milk, 73, 79, 81, 151, 161, 167–168 Modis, Theodore, 44–46, 298, 427, 497 Mokyr, Joel, 409–410, 424, 491, 502 Moore, Gordon, 287, 289–290 Moore’s curse, 392 Moore’s law, xii–xiii, xix, xxiv, 25, 287, 289–292, 298, 392, 423, 470 Morita, Akio, 484, 489 Morris, Ian, 439–441 Mortality animal, 134, 138, 148, 457–458 human, 39–40, 84–94, 308, 310, 317, 319, 326, 417, 447, 457–458, 471 premature, 14, 37, 44, 346, 419, 444 trajectories of, 457–458 tree, 103, 107 Motors electric, 5, 31, 174–175, 184, 217, 219–224, 227, 232, 277, 426, 445 Mozart, Wolfgang Amadeus compositions, 46–47 Mumbai, 344 Mycobacterium tuberculosis, 14, 78, 81, 85 Netherlands, 10, 167, 182, 324, 354, 372, 380, 407, 462–463 history, 108, 165, 319, 410 Newcomb, Simon, 62 New York, 185, 227, 237, 242–243, 246, 249, 254, 257, 272, 274, 341, 344 population, 92, 95, 336, 347–348, 350–351 skyscrapers, 242–244, 246 Nigeria, 13, 128, 167, 308, 321, 347, 354, 401, 413, 432–433, 474 Nitrogen, 4, 79, 81–82, 84, 102, 110, 116, 125 fertilizers, 118, 120–121, 124, 377, 389–390, 403 Obesity, 73, 169–171 Ostwald, Wilhelm, 37 Pandemics, 2, 84, 86, 88, 90–95, 308, 318, 352 Pareto, Vilfredo, 63 Paris, xii, 151, 277, 280, 335, 344, 346, 351, 480, 506, 512 Parsons, Charles Algernon, 24, 190, 194 Passengers airline, 21–22, 31, 44, 95, 280–283 railroad, 277–278 Pathogens, 72, 78, 84–95 Pearl, Raymond, 38–40, 43, 330 Phloem, 96, 455 Phones, xiii–xiv, 31, 242, 249, 225–226, 293–297, 421, 461, 500 embodied energy, 500–501 mobile, xiv, xvi, 225–226, 293–297, 301, 423, 446, 460–461, 491–492, 500–501 smartphones, 294, 296–297, 301, 402, 461, 500 Phonograph, xiv–xv Photosynthesis, 32, 41, 97–98, 104, 113–115, 127, 173, 377, 388, 455, 509 Photovoltaic cells, 196, 215–217, 222, 226, 381, 397, 501 Phytomass, 97–104, 106–107, 110, 113–114, 117, 151, 173, 455 forest, viii, 75, 99–107, 110, 455 oceanic, 4, 84, 97 Phytoplankton, 84, 455, 509 Pigs, 4, 28, 73, 93, 139, 145–149, 156, 458 Pipelines, 44, 197, 213, 224, 252, 264–266 Plague, 86–88, 91 Ponzi schemes, 18–21 Populations, 303–304, 307–336, 470–475 aging, 252, 304, 323, 401, 424, 430, 470–472, 475, 488, 503 decline, 108, 313, 318, 321–322, 340, 466, 474, 477, 487–488 demographic transitions, 308, 310, 317–323, 399, 420, 430 fertility, 308, 319–322, 324, 326, 329, 430, 471–472 forecasting, 303, 314–317, 329–332, 472 future of, 322–332 growth of, 26–27, 33–34, 36, 38, , 303–332, 410, 420, 436, 495, 498 history of, 307–317 life expectancy, 163, 308, 310, 318–319, 322–326, 417, 429, 458–459, 474, 499 limits, 328–330 totals, 312–314, 322–333, 362, 477 Prime movers, vii, xi, 69, 197, 206, 267, 271, 304, 393, 426–427, 462 history of, 54, 175–177, 188, 191, 204, 234, 277 power of, 29, 177, 188, 206 Productivity, 46, 97–98, 386 economic, 5, 161, 234, 329, 340, 404, 409–410, 420–425, 429–430, 488 gross primary (GPP), 97–98, 102, 111 labor, 10, 222, 340, 406, 471, 489 net primary (NPP), 98–100, 102, 114 photosynthetic (primary), 7, 72, 74, 97–102, 106–111, 113, 119, 121–127, 448, 455, 509 Prokaryotes, 454–455 Protein, 11, 53, 76–77, 80, 87, 138, 147, 164, 317, 325–326, 386 food, 112–113, 149–151, 161, 167–168 Pulleys, 174, 229–230 Purchasing power parity (PPP), 412–413, 428, 433, 445, 486, 489, 491 Pyramids, xi, 239–240 Qomolangma, 60–61 Quetelet, Adolphe, 33–34, 37, 55, 57, 156–157 Radio, xiii, 285, 287, 295 Railroads, 252, 259, 262–264, 276–278, 284, 394, 423, 426, 488 tunnels, 254–256 Rates birth, 308, 313, 317–320, 330, 429 metabolic, 42, 64, 69, 74, 132–134, 141, 153 total fertility, 308, 319–322, 324, 326, 329 Ratio bypass, 15, 208–211 compression, 199 dependency, 471–472, 474–475 encephalization, 153 feeding, 147, 149 grain-to-straw, 117 length/beam, 171, 236–237 mass/power, 393 memory/mass, 8 power/mass, 31, 194, 196–197, 199, 202–203, 393 sex (at birth), 474 surface/volume, 130–131, 138 thrust-to-weight, 207–211 Reactors nuclear, 174–176, 194, 196, 213–215, 276, 384–385, 487 Recordings music, xiv–xv, 293, 447, 462, 466, 468 Respiration, 75, 97–100, 110–111, 114, 139 autotrophic, 97–98, 110–111, 114 heterotrophic, 99–100, 111, 139 Rice, 15, 17, 72, 110–113, 117–118, 120–122, 127, 277, 445 yields, 122, 128, 444 Roads, 258–262 Robertson, T.


pages: 137 words: 36,231

Information: A Very Short Introduction by Luciano Floridi

agricultural Revolution, Albert Einstein, bioinformatics, carbon footprint, Claude Shannon: information theory, conceptual framework, double helix, Douglas Engelbart, Douglas Engelbart, George Akerlof, Gordon Gekko, industrial robot, information asymmetry, intangible asset, Internet of things, invention of writing, John Nash: game theory, John von Neumann, Laplace demon, moral hazard, Nash equilibrium, Nelson Mandela, Norbert Wiener, Pareto efficiency, phenotype, Pierre-Simon Laplace, prisoner's dilemma, RAND corporation, RFID, Thomas Bayes, Turing machine, Vilfredo Pareto

This may seem strange but, no matter what the other prisoner decides to do, each of them always gains a greater payoff by defecting. Since cooperating is strictly dominated by defecting, that is, since in any situation defecting is more beneficial than cooperating, defecting is the rational decision to take (Table 7). This sort of equilibrium qualifies as a Pareto-suboptimal solution (named after the economist Vilfredo Pareto, 1848-1923) because there could be a feasible change (known as Pareto improvement) to a situation in which no player would be worse off and at least one player would be better off. Unlike the other three outcomes, the case in which both prisoners defect can also be described as a Nash equilibrium: it is the only outcome in which each player is doing the best he can, given the available information about the other player's actions.


pages: 457 words: 125,329

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

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

Once market exchange at equilibrium prices has taken place, no one can be made better off, or, in economic parlance, have their ‘welfare' increased (for example, by accepting more work) without making someone else worse off. Today, competitive markets where no one can be made better off without someone being made worse off are known as ‘Pareto-optimal' -named after Walras's successor in Lausanne, Vilfredo Pareto (1848-1923), who was the first to introduce the term ‘welfare maximization'. In his Manual of Political Economy (1906), Pareto studied economic equilibrium in terms of solutions to individual problems of ‘objectives and constraints', and was the first economist to argue that utility maximization did not need to be cardinal (i.e., the exact amount that someone wanted something) just the ordinal amount (how much they wanted it more than something else -X versus Y).

Behavioural economics, which deploys psychology, sociology, neuroscience and other disciplines to look at how individuals really make choices, casts doubt on the simple assumptions of marginalism. See A. Tversky and D. Kahneman, ‘Advances in prospect theory: Cumulative representation of uncertainty', Journal of Risk and Uncertainty, 5 (4) (1992), pp. 297-323; doi:10.1007/BF00122574 12. Robbins, Essay on the Nature and Significance of Economic Science, pp.73-4. 13. A term that Lerner actually picked up from Vilfredo Pareto, who first set the proposition in 1894. V. Pareto, ‘Il massimo di utilita data dalla libera concorrenza', Giornale degli Economisti 9(2) (1894), pp. 48-66. This proposition was further refined by other economists, among whom we find Lerner, whilst nowadays the accepted proof is the one elaborated by Kenneth Arrow in 1951: ‘An extension of the basic theorem of classical welfare economics', in Proceedings of the Second Berkeley Symposium on Mathematical Statistics and Probability (Berkeley and Los Angeles: University of California Press, 1951), pp. 507-32. 14.


pages: 1,351 words: 385,579

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

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

Nobel, Alfred Noble Savage myth nonstate societies: cooperation in data sources of deaths from warfare in emergence of fighting in violence rates in norepinephrine normal distribution norms: of civilized society and crime rates of etiquette evaluation of informal internalized and morality in 1960s counterculture of nonviolence of purity social tacit territorial integrity of war as immoral see also etiquette; moral sense; taboos North Korea noses: blowing cutting off Nuclear Nonproliferation Treaty nuclear peace theory nuclear taboo nuclear terrorism nuclear threat nuclear weapons Nunberg, Geoffrey Nunn, Sam Nuremberg Trials nursery rhymes Nurture Assumption Nussbaum, Martha Oatley, Keith Obama, Barack obedience; see also Milgram, Stanley Odysseus Oklahoma City bombing Olds, James Oneal, John One Flew Over the Cuckoo’s Nest (film) openness to experience Operation Ceasefire Opium Wars Oppenheimer, Robert opponent-process theory of emotion optimal foraging orientation, long- vs. short-term Orwell, George Otterbein, Keith Ottoman Empire Ötzi the Iceman overconfidence Owen, Wilfred oxytocin Oz, Amos Pacification Process civilization human societies introduction of concept logic of violence use of term violence in human ancestors violence in state and nonstate societies Pacific Northwest pacifism Pacifist’s Dilemma and empathy and feminization and gentle commerce and Leviathan and reason Pakistan Al Qaeda in and India and terrorism Pale of Settlement Palestine Panksepp, Jaak Papua New Guinea; see also New Guinea Parachini, John paramilitaries Pareto, Vilfredo Pareto Principle Parker, Theodore Parks, Rosa Pascal, Blaise pastoralism Pate, Amy Patrick, Saint patrilocal societies Patterson, Orlando Patz, Etan Pauling, Linus Paul IV, Pope Payne, James L. peacekeepers, international peace negotiations peace theories capitalist democratic Kantian liberal nuclear pedomorphy Peel, Sir Robert Peloponnesian War Pepys, Samuel Perry, William personality; see also antisocial personality disorder; attention deficit hyperactivity disorder; borderline personality disorder; empathy; narcissistic personality disorder; openness to experience; psychopaths perspective-sympathy hypothesis perspective-taking; see also empathy; mentalizing; theory of mind Peru Peter, Saint Pforspundt, Heinrich von Philadelphia Philippines Piaget, Jean Pillay, Navanethem Pinker, Steven: The Blank Slate How the Mind Works The Stuff of Thought Pipes, Richard piracy pituitary gland Pizarro, David Plato plausible deniability pluralistic ignorance Plutarch Podhoretz, Norman pogroms; see also ethnic riots, deadly Poincaré, Henri poison, repugnance about poison gas; see also chemical weapons Poisson, Siméon-Denis Poisson process Poland polarization police states, use of term political correctness political discourse, sophistication of Political Instability Task Force (PITF) political murder; see also assassinations; despotism; regicide politicide; see also genocide politics, psychology of; see also liberalism, and conservatism; norms; taboos Polity Project Pol Pot polygamy polygyny Pope, Alexander population growth populism pornography Portugal positive illusions; see also overconfidence positive-sum games; see also gentle commerce postmodernism Potts, Malcolm poverty Powell, Colin power-law distributions and coalitions 80:20 rule of genocides scale-free nature of of terrorism thick tails of of wars practical violence, see predatory violence praetorian regimes; see also anocracy Pran, Dith Pratto, Felicia predatory violence cause of war against groups introduction of concept means-end reasoning and overconfidence predictions of science statistical predictions, erroneous: abolishing capital punishment as increasing violence abolishing debt bondage as doom of capitalism abortions as leading to infanticide and child abuse African American terrorism crime boom in 1990s democracy as obsolescent 9/11-style attacks weekly nuclear arms race in East Asia nuclear attacks during Cold War nuclear nations by the dozen nuclear terrorism by 2005 victories in war wars with assorted countries war with Iran World War III as inevitable World War IV as inevitable preferential attachment; see also Matthew Effect Price, Richard Princip, Gavrilo printing press PRIO Battle Deaths Dataset Prisoner’s Dilemma Iterated Pacifist’s Dilemma and Public Goods game sequential Tit for Tat and Ultimatum game violence as probability Profumo, John proletarianization Promise Keepers proportionality prosperity prostitution Prudentius Prunier, Gérard psychological hedonism psychology: age of awareness of cognitive evolutionary folk; see also mentalizing; theory of mind philosophy vs.

Tens of thousands occur once every million words, including embitter, memorialize, and titular. And hundreds of thousands have frequencies far less than one in a million, like kankedort, apotropaic, and deliquesce. FIGURE 5–8. Probabilities of wars of different magnitudes, 1820–1997 Source: Graph from Cederman, 2003, p. 136. Another example of a power-law distribution was discovered in 1906 by the economist Vilfredo Pareto when he looked at the distribution of incomes in Italy: a handful of people were filthy rich, while a much larger number were dirt-poor. Since these discoveries, power-law distributions have also turned up, among other places, in the populations of cities, the commonness of names, the popularity of Web sites, the number of citations of scientific papers, the sales figures of books and musical recordings, the number of species in biological taxa, and the sizes of moon craters.57 The second remarkable thing about power-law distributions is that they look the same over a vast range of values.


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Capital in the Twenty-First Century by Thomas Piketty

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

Pareto and the Illusion of Stable Inequality It is worth pausing a moment to discuss some methodological and historical issues concerning the statistical measurement of inequality. In Chapter 7, I discussed the Italian statistician Corrado Gini and his famous coefficient. Although the Gini coefficient was intended to sum up inequality in a single number, it actually gives a simplistic, overly optimistic, and difficult-to-interpret picture of what is really going on. A more interesting case is that of Gini’s compatriot Vilfredo Pareto, whose major works, including a discussion of the famous “Pareto law,” were published between 1890 and 1910. In the interwar years, the Italian Fascists adopted Pareto as one of their own and promoted his theory of elites. Although they were no doubt seeking to capitalize on his prestige, it is nevertheless true that Pareto, shortly before his death in 1923, hailed Mussolini’s accession to power.

See also Canada; United States North Iowa Community College, 447 Norwegian sovereign wealth fund, 455, 626–­627n39 Obama, Barack, 310, 313, 473 Obiang, Teodorin, 446 Occupy Wall Street movement, 254 OECD (Or­ga­ni­za­tion for Economic Cooperation and Development) reports and statistics, 220, 267–­268 Ohlsson, Henry, 614n27, 645n37 Oil prices, 6–­7, 459. See also Petroleum Oligarchic divergence, 463–­465, 514, 627n49 Output. See Income and output; Per capita output growth Paine, Thomas, 197, 644n34 Palan, Ronen, 628n56 Pamuk, Orhan, 109 Pareto, Vilfredo, theory of, 364–­368, 610n19, 614nn25,30,32 Parsons, Talcott, 384, 621n55 Partnerships, 203 Pasinetti, Luigi, 231 Passeron, Jean-­Claude, 486 Patrimonial capitalism, 173, 237, 473 Patrimonial society: middle class and, 260–­262, 346–­347, 373; metamorphoses of, 339–­343; classic, 411–­414 “Pay for luck,” 335 PAYGO systems, 487–­490, 633n45, 648n13, 652n42, 653n50 Pension funds, 391–­392, 478, 487–­490, 627n47, 630n15 Per capita income, 106, 122, 590n31, 590–­591n8,9 Per capita output growth, 72–­74, 97, 510; stages of, 86–­87; purchasing power and, 87–­90; diversification of lifestyles and, 90–­93; end of, 93–­95; social change implications of 1 percent, 95–­96; in postwar period, 96–­99; bell curve of global, 99–­102; inflation and, 102–­103; monetary systems and, 103–­109 Père Goriot (Balzac), 104, 106, 113–­115, 238–­240, 343, 412, 440 Perfect capital market, 214 Persuasion (Austen), 362 Petroleum: investments and, 455–­460, 462, 627n49; rents, redistribution of, 537–­538 Petty, William, 56, 590n1 Phelps, Edmund, 651n40 Philip, André, 615n35 Pierson, Paul, 640n52 P90/P10 ratio, 267–­269 Po­liti­cal economy, 3–­5, 574 Poll tax, 495, 634n3 Pop­u­lar Front, 286, 649n25 Population.


pages: 166 words: 49,639

Start It Up: Why Running Your Own Business Is Easier Than You Think by Luke Johnson

Albert Einstein, barriers to entry, Bernie Madoff, business cycle, collapse of Lehman Brothers, corporate governance, corporate social responsibility, creative destruction, credit crunch, Grace Hopper, happiness index / gross national happiness, high net worth, James Dyson, Jarndyce and Jarndyce, Jarndyce and Jarndyce, Kickstarter, mass immigration, mittelstand, Network effects, North Sea oil, Northern Rock, patent troll, plutocrats, Plutocrats, Ponzi scheme, profit motive, Ralph Waldo Emerson, Silicon Valley, software patent, stealth mode startup, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, traveling salesman, tulip mania, Vilfredo Pareto, wealth creators

Richard Branson tells the story of how in the early days his Virgin Atlantic airline got into problems, and he arrived home one Saturday morning to find the Coutts Bank manager on his doorstep demanding that Virgin’s entire overdraft be immediately repaid – which could have forced his business to cease trading. Branson worked the phones for the next twenty-four hours and repaid the bank on Monday morning. ‘Give me the fruitful error any time, full of seeds, bursting with its own corrections. You can keep your sterile truth for yourself’ Vilfredo Pareto Similarly, early in his career as a manufacturer of drugs in France, one Thursday Jimmy Goldsmith faced the certainty of receivership for his fledgling commercial empire the following day. But luckily for him – remember, this was Paris – there was a bank strike the next day, so no one called in his loans, and he was able to use the time to scrape together enough money to survive and eventually become a billionaire, like Branson.


Speaking Code: Coding as Aesthetic and Political Expression by Geoff Cox, Alex McLean

4chan, Amazon Mechanical Turk, augmented reality, bash_history, bitcoin, cloud computing, computer age, computer vision, crowdsourcing, dematerialisation, Donald Knuth, Douglas Hofstadter, en.wikipedia.org, Everything should be made as simple as possible, finite state, Gödel, Escher, Bach, Jacques de Vaucanson, Larry Wall, late capitalism, means of production, natural language processing, new economy, Norbert Wiener, Occupy movement, packet switching, peer-to-peer, Richard Stallman, Ronald Coase, Slavoj Žižek, social software, social web, software studies, speech recognition, stem cell, Stewart Brand, The Nature of the Firm, Turing machine, Turing test, Vilfredo Pareto, We are Anonymous. We are Legion, We are the 99%, WikiLeaks

Networks are often viewed as inherently random, simply because their operations appear too complex to comprehend; but randomness remains a misleading description, as “relative connectedness” is articulated through the density of connections in scale-free networks. Albert-László Barabási uses the mathematical concept of the “power law” to explain how complex networks demonstrate “directedness,” in other words how they are organized preferentially.69 The Italian economist Vilfredo Pareto observed that 80 percent of peas were produced by 20 percent of pea pods;70 and many other phenomena seem to fall into similar inverse relationships (as in the popular adage that 80 percent of wealth is owned by 20 percent of the population). Although this 80/20 rule (an example of a power law) seems rather imprecise, it does offer some scientific insight into the politics of self-organization.


pages: 202 words: 62,199

Essentialism: The Disciplined Pursuit of Less by Greg McKeown

Albert Einstein, Clayton Christensen, Daniel Kahneman / Amos Tversky, deliberate practice, double helix, en.wikipedia.org, endowment effect, Isaac Newton, iterative process, Jeff Bezos, Lao Tzu, lateral thinking, loss aversion, low cost airline, Mahatma Gandhi, microcredit, minimum viable product, Nelson Mandela, North Sea oil, Peter Thiel, Ralph Waldo Emerson, Richard Thaler, Rosa Parks, Shai Danziger, side project, Silicon Valley, Silicon Valley startup, sovereign wealth fund, Stanford prison experiment, Steve Jobs, Vilfredo Pareto

In fact, at the time of writing, Ferran had stopped serving food altogether and had instead turned El Bulli into a full-time food laboratory of sorts where he was continuing to pursue nothing but the essence of his craft.1 Getting used to the idea of “less but better” may prove harder than it sounds, especially when we have been rewarded in the past for doing more … and more and more. Yet at a certain point, more effort causes our progress to plateau and even stall. It’s true that the idea of a direct correlation between results and effort is appealing. It seems fair. Yet research across many fields paints a very different picture. Most people have heard of the “Pareto Principle,” the idea, introduced as far back as the 1790s by Vilfredo Pareto, that 20 percent of our efforts produce 80 percent of results. Much later, in 1951, in his Quality-Control Handbook, Joseph Moses Juran, one of the fathers of the quality movement, expanded on this idea and called it “the Law of the Vital Few.”2 His observation was that you could massively improve the quality of a product by resolving a tiny fraction of the problems. He found a willing test audience for this idea in Japan, which at the time had developed a rather poor reputation for producing low-cost, low-quality goods.


pages: 212 words: 68,754

Thinking in Numbers by Daniel Tammet

Albert Einstein, Alfred Russel Wallace, Anton Chekhov, computer age, dematerialisation, Edmond Halley, Georg Cantor, index card, Isaac Newton, Johannes Kepler, Paul Erdős, Searching for Interstellar Communications, Vilfredo Pareto

Economists have found that x in most developed countries equates to a number in the region of 80, meaning that eighty per cent of the society’s fortune pads the pockets of only twenty per cent of its members. Naturally,the share will vary from person to person. Money is fickle, always changing owners. That different people have dissimilar wealth is not surprising. What surprises is the scale and constancy of the divide. The economist and mathematician Vilfredo Pareto, who first observed (at the end of the nineteenth century) that twenty per cent of Italians owned eighty per cent of the nation’s wealth, found nearly identical results when he studied the historical data from many other parts of Europe. The distribution of wealth in Paris since 1292, he discovered, had hardly moved at all. Later researchers confirmed these findings. Because most men and women, for want of resources, remain at the bottom, the elite, for want of competition, remain at the top.


pages: 229 words: 72,431

Shadow Work: The Unpaid, Unseen Jobs That Fill Your Day by Craig Lambert

airline deregulation, Asperger Syndrome, banking crisis, Barry Marshall: ulcers, big-box store, business cycle, carbon footprint, cashless society, Clayton Christensen, cognitive dissonance, collective bargaining, Community Supported Agriculture, corporate governance, crowdsourcing, disintermediation, disruptive innovation, financial independence, Galaxy Zoo, ghettoisation, gig economy, global village, helicopter parent, IKEA effect, industrial robot, informal economy, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Mark Zuckerberg, new economy, pattern recognition, plutocrats, Plutocrats, recommendation engine, Schrödinger's Cat, Silicon Valley, single-payer health, statistical model, Thorstein Veblen, Turing test, unpaid internship, Vanguard fund, Vilfredo Pareto, zero-sum game, Zipcar

The algorithm predicted 75 percent of the Court’s verdicts correctly; the legal experts, as a group, had them right 59.1 percent of the time. YET THE WIZARDRY of statistics does not need Big Data or high-powered algorithms. Consider the leverage of a very simple observation known as the Pareto principle. This is statistics at its most basic: a simple percentage. But the power of this percentage is staggering. In 1941, Romanian management consultant Joseph Juran stumbled on the work of Italian sociologist and economist Vilfredo Pareto (1848–1923) and extracted an insight now known as the 80–20 rule. The basic idea is that in a wide variety of circumstances, 20 percent of the causes produce 80 percent of the effects. Juran named it the Pareto principle. In his own garden, Pareto had noticed that 20 percent of the peapods produced 80 percent of the peas. As an economist, he found this surprising ratio showing up in much larger contexts.


pages: 207 words: 86,639

The New Economics: A Bigger Picture by David Boyle, Andrew Simms

Asian financial crisis, back-to-the-land, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, carbon footprint, clean water, collateralized debt obligation, colonial rule, Community Supported Agriculture, congestion charging, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, delayed gratification, deskilling, en.wikipedia.org, energy transition, financial deregulation, financial exclusion, financial innovation, full employment, garden city movement, happiness index / gross national happiness, if you build it, they will come, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Kickstarter, land reform, light touch regulation, loss aversion, mega-rich, microcredit, Mikhail Gorbachev, mortgage debt, neoliberal agenda, new economy, North Sea oil, Northern Rock, offshore financial centre, oil shock, peak oil, pensions crisis, profit motive, purchasing power parity, quantitative easing, Ronald Reagan, seigniorage, Simon Kuznets, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trickle-down economics, Vilfredo Pareto, Washington Consensus, wealth creators, working-age population

Those advisors who, as we write, are struggling to force the world financial system back to some disastrous business as usual. Even so, the development of the new economics has reacted against that background of narrow globalization. It has been underpinned by a range of new disciplines and ideas that were emerging from economics itself, realizing that the classical economics of William Stanley Jevons, Leon Walras and Vilfredo Pareto were based on A BRIEF HISTORY OF THE NEW ECONOMICS 29 the assumptions of Victorian physics, borrowing from Newtonian physics long after it had been superseded by Einstein, using economic variables in their equations as if they were equations in physics. They simply replaced energy with economic concepts, when there was little evidence that energy and money or the economic concept of ‘utility’ behaved in the same way at all, as if people’s economic behaviour bore any relation to the behaviour of atoms.


The Fractalist by Benoit Mandelbrot

Albert Einstein, Benoit Mandelbrot, Brownian motion, business cycle, Claude Shannon: information theory, discrete time, double helix, Georg Cantor, Henri Poincaré, Honoré de Balzac, illegal immigration, Isaac Newton, iterative process, Johannes Kepler, John von Neumann, linear programming, Louis Bachelier, Louis Blériot, Louis Pasteur, mandelbrot fractal, New Journalism, Norbert Wiener, Olbers’ paradox, Paul Lévy, Richard Feynman, statistical model, urban renewal, Vilfredo Pareto

The sequence that followed, of sociological low points and intellectual highs, could not have been predicted. How I Came to Study Price Variation Let me stop to tell how I became fascinated with price variation, a completely new topic for me. The background resides in some work I had done earlier on an ancient topic—the law of distribution of personal income, which had been discovered in the 1890s by Vilfredo Pareto (1848–1923). That law—and my work—intrigued a few economists, and I was invited to speak at a Harvard seminar directed by Hendrik S. Houthakker (1924–2008). Upon entering “Hank’s” office, I got a surprise that made that day one of the most memorable of my life. A peculiar diagram on his blackboard seemed to me nearly identical to one I was about to draw in my lecture! How was it, I soon asked, that something I had just discovered about personal incomes was already on display?


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Starstruck: The Business of Celebrity by Currid

"Robert Solow", barriers to entry, Bernie Madoff, Donald Trump, income inequality, index card, industrial cluster, Mark Zuckerberg, Metcalfe’s law, natural language processing, place-making, Ponzi scheme, post-industrial society, prediction markets, Renaissance Technologies, Richard Florida, Robert Metcalfe, rolodex, shareholder value, Silicon Valley, slashdot, transaction costs, upwardly mobile, urban decay, Vilfredo Pareto, winner-take-all economy

“Celebrity Endorsements in Japan and the United States: Is Negative Information All That Harmful?” Journal of Advertising Research 46, no. 1 (2006): 113–23. Nüesch, Stephan. “The Economics of Superstars and Celebrities.” PhD diss., University of Zurich, 2007. Oppenheimer, Jerry. Front Row: Anna Wintour: The Cool Life and Hot Times of Vogue’s Editor-in-Chief. New York: St. Martin’s Press, 2005. Pareto, Vilfredo. “Manual of Political Economy.” Bulletin of the American Mathematical Society 18 (1912): 462–74. Perl, Jed. New Art City. New York: Knopf, 2005. Pinksy, Drew, and S. Mark Young. The Mirror Effect: How Celebrity Narcissism Is Seducing America. New York: Harper, 2009. Porter, Michael E. “Clusters and the Economics of Competition.” Harvard Business Review (November–December 1998): 77–90. Preston, Peter.


The Art of Computer Programming: Sorting and Searching by Donald Ervin Knuth

card file, Claude Shannon: information theory, complexity theory, correlation coefficient, Donald Knuth, double entry bookkeeping, Eratosthenes, Fermat's Last Theorem, G4S, information retrieval, iterative process, John von Neumann, linked data, locality of reference, Menlo Park, Norbert Wiener, NP-complete, p-value, Paul Erdős, RAND corporation, refrigerator car, sorting algorithm, Vilfredo Pareto, Yogi Berra, Zipf's Law

e)/H$-0) = j^ + OiN1-') « 0.122AT A4) as the mean number of comparisons for the 80-20 law (see exercise 8). A study of word frequencies carried out by E. S. Schwartz [see the interesting graph on page 422 of JACM 10 A963)] suggests that distribution A3) with a slightly negative value of 9 gives a better fit to the data than Zipf's law (8). In this case the mean value is substantially smaller than (9) as N —>¦ 00. Distributions like A1) and A3) were first studied by Vilfredo Pareto in connection with disparities of personal income and wealth [Cours d'Economie Politique 2 (Lausanne: Rouge, 1897), 304-312]. If pk is proportional to the wealth of the kth richest individual, the probability that a person's wealth exceeds or equals x times the wealth of the poorest individual is k/N when x = pk/pN- Thus, when pk = ck9^1 and x = (k/N)9^1, the stated probability is x~1^1~9">\ this is now called a Pareto distribution with parameter 1/A — 0).

Palermo, Frank Pantaleone, 729. Pallo, Jean Marcel, 718. Panny, Wolfgang Christian, 629, 630, 648. Papernov, Abram Alexandrovich (IlanepHOB, A6paM AjieKcaH,n;poBHxi), 91. Pappus of Alexandria (n<x7r;7TOC 6 sAXe$av5piv6c), 593. Parallel processing, 267, 370, 390, 693. merging, 231, 241. searching, 425. sorting, 113, 222-223, 228-229, 235, 390, 671. Parberry, Ian, 666. Pardo, see Trabb Pardo. Pareto, Vilfredo, 401. Pareto distribution, 401, 405, 710. Parker, Ernest Tilden, 8. Parkin, Thomas Randall, 8. Parking problem, 552, 553, 742. Parsimonious algorithms, 391. Partial match retrieval, 559-582. Partial ordering, 31-32, 68-69, 183-184, 187, 216, 217. of permutations, 19, 22, 105, 670. Partition-exchange sort, 114. Partitioning a file, 113-115, 123-124, 128, 136. into three blocks, 137. Partitions of a set, 653.


pages: 296 words: 98,018

Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas

"side hustle", activist lawyer, affirmative action, Airbnb, Bernie Sanders, bitcoin, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, carried interest, cognitive dissonance, collective bargaining, corporate raider, corporate social responsibility, crowdsourcing, David Brooks, David Heinemeier Hansson, deindustrialization, disintermediation, Donald Trump, Edward Snowden, Elon Musk, friendly fire, global pandemic, high net worth, hiring and firing, housing crisis, Hyperloop, income inequality, invisible hand, Jeff Bezos, Kibera, Kickstarter, land reform, Lyft, Marc Andreessen, Mark Zuckerberg, new economy, Occupy movement, offshore financial centre, Panopticon Jeremy Bentham, Parag Khanna, Paul Graham, Peter Thiel, plutocrats, Plutocrats, profit maximization, risk tolerance, rolodex, Ronald Reagan, shareholder value, sharing economy, side project, Silicon Valley, Silicon Valley startup, Skype, Social Responsibility of Business Is to Increase Its Profits, Steven Pinker, technoutopianism, The Chicago School, The Fortune at the Bottom of the Pyramid, the High Line, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Travis Kalanick, trickle-down economics, Uber and Lyft, uber lyft, Upton Sinclair, Vilfredo Pareto, working poor, zero-sum game

Do not “boil the ocean,” one versed in the protocols might tell another. The protocols tell you to reduce the scope of what is considered, limit the amount of data you drink in, to avoid becoming overwhelmed by the volume of reality you confront. And lest you worry that this shrinking of your purview will harm your ability to solve the problem, the protocols offer the eighty-twenty rule. In the early 1900s, the Italian economist Vilfredo Pareto is said to have noticed that 80 percent of Italy’s land was owned by just 20 percent of its people, and that 80 percent of the peas yielded by his garden came from just 20 percent of his peapods. These observations had given rise to the business maxim that 20 percent of many systems generates 80 percent of the results—one-fifth of one’s customers providing most of one’s revenue, to cite the most common example.


pages: 344 words: 104,077

Superminds: The Surprising Power of People and Computers Thinking Together by Thomas W. Malone

agricultural Revolution, Airbnb, Albert Einstein, Amazon Mechanical Turk, Apple's 1984 Super Bowl advert, Asperger Syndrome, Baxter: Rethink Robotics, bitcoin, blockchain, business process, call centre, clean water, creative destruction, crowdsourcing, Donald Trump, Douglas Engelbart, Douglas Engelbart, drone strike, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, experimental economics, Exxon Valdez, future of work, Galaxy Zoo, gig economy, happiness index / gross national happiness, industrial robot, Internet of things, invention of the telegraph, inventory management, invisible hand, Jeff Rulifson, jimmy wales, job automation, John Markoff, Joi Ito, Joseph Schumpeter, Kenneth Arrow, knowledge worker, longitudinal study, Lyft, Marshall McLuhan, Occupy movement, Pareto efficiency, pattern recognition, prediction markets, price mechanism, Ray Kurzweil, Rodney Brooks, Ronald Coase, Second Machine Age, self-driving car, Silicon Valley, slashdot, social intelligence, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, technological singularity, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tim Cook: Apple, transaction costs, Travis Kalanick, Uber for X, uber lyft, Vernor Vinge, Vilfredo Pareto, Watson beat the top human players on Jeopardy!

Also imagine that Mary hasn’t eaten anything for a week and that John has just had a meal but is still hungry. If you hold the viewpoint that individual preferences can’t be compared, you couldn’t say which way of distributing the food was better, because both John and Mary want the meat. Economists say that a distribution in which no one can be made better off without making someone else worse off is Pareto optimal, after the late 19th and early 20th century Italian economist Vilfredo Pareto. So if John and Mary are both hungry, giving the meat to either one of them is Pareto optimal. But in the real world, we often assume that preferences are, at least to some extent, comparable across individuals. For instance, we would almost certainly agree that it would be better for Mary to get the deer meat instead of John. In modern times, we believe that—at least up to a point—taking $100 from Bill Gates and using it to pay Medicare expenses for someone who has no money at all is better for society as a whole, even if that means Bill ends up with a little less money.


pages: 426 words: 105,423

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss

Albert Einstein, Amazon Mechanical Turk, call centre, clean water, Donald Trump, en.wikipedia.org, Firefox, fixed income, follow your passion, game design, global village, Iridium satellite, knowledge worker, late fees, lateral thinking, Maui Hawaii, oil shock, paper trading, Parkinson's law, passive income, peer-to-peer, pre–internet, Ralph Waldo Emerson, remote working, risk tolerance, Ronald Reagan, side project, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, Vilfredo Pareto, wage slave, William of Occam

To find the right things, we’ll need to go to the garden. Pareto and His Garden: 80/20 and Freedom from Futility What gets measured gets managed. —PETER DRUCKER, management theorist, author of 31 books, recipient of Presidential Medal of Freedom Four years ago, an economist changed my life forever. It’s a shame I never had a chance to buy him a drink. My dear Vilfredo died almost 100 years ago. Vilfredo Pareto was a wily and controversial economist-cum-sociologist who lived from 1848 to 1923. An engineer by training, he started his varied career managing coal mines and later succeeded Léon Walras as the chair of political economy at the University of Lausanne in Switzerland. His seminal work, Cours d’economie politique, included a then little-explored “law” of income distribution that would later bear his name: “Pareto’s Law” or the “Pareto Distribution,” in the last decade also popularly called the “80/20 Principle.”


pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

The conclusion is, as in Classical economics, that capitalism – or, rather, the market economy, as the school prefers to call it – is a system that is best left alone, as it has a tendency to revert to the equilibrium. This laissez-faire conclusion of the Neoclassical school was further intensified by a critical theoretical development in the early twentieth century, intended to allow us to judge social improvements in an objective way. Vilfredo Pareto (1848–1923) argued that, if we respect the rights of every sovereign individual, we should consider a social change an improvement only when it makes some people better off without making anyone worse off. There should be no more individual sacrifices in the name of the ‘greater good’. This is known as the Pareto criterion and forms the basis for all judgements on social improvements in Neoclassical economics today.6 In real life, unfortunately, there are few changes that hurt no one; thus the Pareto criterion effectively becomes a recipe to stick to the status quo and let things be – laissez faire.


pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future by Paul Mason

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

THE CALCULATION DEBATE It’s strange but true: the possibility of socialism was once a central tenet of mainstream economics. Because the marginalists thought the market was the perfect expression of human rationality, they had no problem – as long as it was only a thought experiment – with the idea that an all-knowing state could achieve the same results as a perfect market. ‘Both systems are not different in form and they lead to the same point,’ wrote the Italian economist Vilfredo Pareto in a celebrated textbook, ‘the result is extremely remarkable.’13 In 1908, his colleague Enrico Barone wrote a detailed account of how a socialist state could calculate the exact same outcomes that the market achieves blindly. Barone showed how it would be possible to discover, using linear equations, the most efficient forms of production, consumption and exchange. ‘It would be a tremendous – a gigantic – work … but it is not an impossibility,’ he wrote.14 This was an article of faith for marginalists: in theory, a perfect plan – made by a state with perfect knowledge and the ability to calculate in realtime – was as good as a perfect market.


pages: 401 words: 109,892

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

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

The simplest example is that of a fixed cost: when output increases, the fixed cost is spread among more units and the average unit cost falls. See also network externalities. economies of scope: Economies of scale applied to the diversity of goods and services. A simple example is a retail location offering more than one product, such as a gas station that also sells coffee. efficiency (Pareto): A situation is Pareto-efficient (named for the Italian economist Vilfredo Pareto) when no single person or business can be made better off without decreasing the welfare of another. When an equilibrium is not Pareto-efficient, economists typically get agitated and try to fix it. elasticity: The change in one variable in response to a unit increase in another variable. For instance, the elasticity of tax revenues is the percent increase in tax collections for a one percent increase in GDP.


pages: 370 words: 107,983

Rage Inside the Machine: The Prejudice of Algorithms, and How to Stop the Internet Making Bigots of Us All by Robert Elliott Smith

Ada Lovelace, affirmative action, AI winter, Alfred Russel Wallace, Amazon Mechanical Turk, animal electricity, autonomous vehicles, Black Swan, British Empire, cellular automata, citizen journalism, Claude Shannon: information theory, combinatorial explosion, corporate personhood, correlation coefficient, crowdsourcing, Daniel Kahneman / Amos Tversky, desegregation, discovery of DNA, Douglas Hofstadter, Elon Musk, Fellow of the Royal Society, feminist movement, Filter Bubble, Flash crash, Gerolamo Cardano, gig economy, Gödel, Escher, Bach, invention of the wheel, invisible hand, Jacquard loom, Jacques de Vaucanson, John Harrison: Longitude, John von Neumann, Kenneth Arrow, low skilled workers, Mark Zuckerberg, mass immigration, meta analysis, meta-analysis, mutually assured destruction, natural language processing, new economy, On the Economy of Machinery and Manufactures, p-value, pattern recognition, Paul Samuelson, performance metric, Pierre-Simon Laplace, precariat, profit maximization, profit motive, Silicon Valley, social intelligence, statistical model, Stephen Hawking, stochastic process, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Malthus, traveling salesman, Turing machine, Turing test, twin studies, Vilfredo Pareto, Von Neumann architecture, women in the workforce

See NLP natural selection, here, here, here, here, here, here, here, here Nautical Almanac, here, here neural networks, here, here, here, here, here, here Newell, Allen, here Newton, Sir Issac, here, here Nietzsche, Friedrich, here NLP (natural language processing), here, here, here, here Normal Distribution, here, here Ovadya, Aviv, here Oxford Martin jobs study, here Page, Larry, here Papert, Seymour, here, here Pareto, Vilfredo, here Pascal, Blaise, here, here Pascaline, here, here, here, here Pasteur, Louis, here PCA (principle component analysis), here, here, here, here, here, here Pearson, Egon, here Pearson, Joel, here Pearson, Karl, here, here, here, here Peirce, Charles Sanders, here, here, here perceptron, here, here, here, here, here Perceptron Learning Algorithm. See PLA Perelson, Alan, here Petrie, Flinders, here Pew Research Centre, here, here Phillips, Bill, here physical symbol system hypothesis, here, here Piazzi, Giuseppe, here Pinker, Stephen, here Pioneer Fund, here PLA (Perceptron Learning Algorithm), here Polidori, John, here Pond, John, here Popper, Karl, here PredPol, here principle component analysis.


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

accounting loophole / creative accounting, Airbnb, basic income, Ben Bernanke: helicopter money, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, Clayton Christensen, collective bargaining, conceptual framework, corporate governance, creative destruction, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, disruptive innovation, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, fixed income, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, information asymmetry, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, liberal capitalism, market bubble, means of production, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, plutocrats, Plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, post-industrial society, private sector deleveraging, profit maximization, profit motive, quantitative easing, reserve currency, rising living standards, Robert Gordon, savings glut, secular stagnation, shareholder value, sharing economy, sovereign wealth fund, The Future of Employment, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, Vilfredo Pareto, winner-take-all economy, Wolfgang Streeck

Wright), 38, 94 Mitterrand, François, 175 mixed economy, 56, 227 modern capitalism, 4, 16, 56, 119, 203 monetary systems, 172–83 monetary weapons, 167–8 money commodification of, 15, 24, 35, 61–5, 72, 209, 248 concept of, 165–7 as fictitious commodity, 61, 64, 248 Monnet, Jean, 146 Monsen, Joseph, 95, 96, 98, 99, 106, 107 Monti, Mario, 144 moral economy, 76, 174, 204, 213, 214, 215, 246 Morgan Stanley, 31 multi-morbidity, diagnosis of, 13 N National Socialism, 153 National Union of Mineworkers (United Kingdom), 81 nature advancing exhaustion of, 62 commodification of, 15, 72, 208, 248 as fictitious commodity, 61, 208–9, 248 necessary impurities, 61 necessity, empire of, 46 neocapitalist and neoliberal lifestyle, 9 neo-feudalism, 28, 30, 35 neo-functionalist integration, 146, 175 neoliberal capitalism, 13, 14, 16, 22, 36, 42 neoliberalism, 5, 21, 22, 26, 37–8, 81 neo-Malthusian discourses, 62 neo-Protestant work ethic, 45 networks of users, behaviours required of, 41–4 new world system equilibrium, 13 niche markets, 100, 241 non-economic social relations, 203 non-owners, motivating of, 2 nuclear war, as possible crisis in which capitalism would go under, 8 O Obama, Barack, 32, 40f, 66 Obama administration, 32, 33, 40f, 66f, 88, 231f O’Connor, James, 115, 245 oligarchic inequality, 28–30 oligarchic redistribution, 28, 65, 68, 69, 186 oligarchic rule, 15 oligarchs, 30 Olympic Games, 101 ordoliberalism, 153, 154, 155, 159 P Packard, Vance, 210 Papademos, Lukas, 144 Papandreou, George, 143 Pareto, Vilfredo, 201 Parsons, Talcott, 166, 167, 169, 201, 251 party membership, 21. See also political parties Paulsen, Henry, 31 Phase IV, 18, 20 Piketty, Thomas, 30 plutonomy memorandum, 68 Polanyi, Karl, 3, 24, 61, 74, 76, 134, 180, 208, 223, 224, 229, 230, 231, 248 Polanyian, 62, 229, 231, 232, 248 political communities, 24, 91, 108 political-economic theory, 201, 202 political economy capitalist political economy.


pages: 379 words: 113,656

Six Degrees: The Science of a Connected Age by Duncan J. Watts

Berlin Wall, Bretton Woods, business process, corporate governance, Drosophila, Erdős number, experimental subject, fixed income, Frank Gehry, Geoffrey West, Santa Fe Institute, industrial cluster, invisible hand, Long Term Capital Management, market bubble, Milgram experiment, MITM: man-in-the-middle, Murray Gell-Mann, Network effects, new economy, Norbert Wiener, Paul Erdős, peer-to-peer, rolodex, Ronald Coase, scientific worldview, Silicon Valley, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith, Toyota Production System, transaction costs, transcontinental railway, Vilfredo Pareto, Y2K

Extreme differences like this would be inconceivable in a normal distribution but are entirely routine for power laws. Figure 4.2. A power-law distribution. Although it decreases rapidly with k, it does so much slower than the normal distribution in figure 4.1, implying than large values of k are more likely. The distribution of wealth in the United States, for instance, resembles a power law. The nineteenth-century Parisian engineer Vilfredo Pareto was the first person to note this phenomenon, subsequently called Pareto’s law, and demonstrated that it held true in every European country for which the relevant statistics existed. The law’s main consequence is that very many people possess relatively little wealth while a very small minority are extremely wealthy. Because they are so highly skewed, the average properties of power-law distributions can be quite misleading.


pages: 389 words: 112,319

Think Like a Rocket Scientist by Ozan Varol

Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, Amazon Web Services, Andrew Wiles, Apple's 1984 Super Bowl advert, Arthur Eddington, autonomous vehicles, Ben Horowitz, Cal Newport, Clayton Christensen, cloud computing, Colonization of Mars, dark matter, delayed gratification, different worldview, discovery of DNA, double helix, Elon Musk, fear of failure, functional fixedness, Gary Taubes, George Santayana, Google Glasses, Google X / Alphabet X, Inbox Zero, index fund, Isaac Newton, James Dyson, Jeff Bezos, job satisfaction, Johannes Kepler, Kickstarter, knowledge worker, late fees, lateral thinking, lone genius, longitudinal study, Louis Pasteur, low earth orbit, Marc Andreessen, Mars Rover, meta analysis, meta-analysis, move fast and break things, move fast and break things, multiplanetary species, obamacare, Occam's razor, out of africa, Peter Thiel, Pluto: dwarf planet, Ralph Waldo Emerson, Richard Feynman, Richard Feynman: Challenger O-ring, Ronald Reagan, Sam Altman, Schrödinger's Cat, Search for Extraterrestrial Intelligence, self-driving car, Silicon Valley, Simon Singh, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Upton Sinclair, Vilfredo Pareto, We wanted flying cars, instead we got 140 characters, Whole Earth Catalog, women in the workforce, Yogi Berra

Failure is data—and it’s often data you can’t find in a self-help book. Intelligent failures, if you pay them proper attention, can be the best teachers. These errors can have staying power that lessons from success often lack. Intelligent failures can produce a sense of urgency for change and produce the shock necessary to unlearn what we know. “Give me a fruitful error any time, full of seeds, bursting with its own corrections,” Vilfredo Pareto wrote, “You can keep your sterile truth for yourself.”29 Thomas Edison recounted the story of a conversation with an associate who lamented that after thousands of experiments, he and Edison had failed to discover anything. “I cheerily assured him that we had learned something,” Edison recalled. “For we had learned for a certainty that the thing couldn’t be done that way, and that we would have to try some other way.”30 Learning can also take the stigma out of failure.


pages: 453 words: 132,400

Flow by Mihaly Csikszentmihalyi

Albert Einstein, Bonfire of the Vanities, centralized clearinghouse, Charles Lindbergh, conceptual framework, correlation does not imply causation, double helix, fear of failure, Ignaz Semmelweis: hand washing, invisible hand, Isaac Newton, job satisfaction, longitudinal study, Mahatma Gandhi, meta analysis, meta-analysis, Necker cube, pattern recognition, place-making, Ralph Waldo Emerson, the scientific method, Thomas Kuhn: the structure of scientific revolutions, Vilfredo Pareto

An excellent (but not impartial) review of the concept is given by the anthropologist Melford Spiro (1987), who in a recent autobiographical account describes why he changed his mind from an uncritical acceptance of the equal value of cultural practices to a much more qualified recognition of the pathological forms that cultures can occasionally assume. Philosophers and other humanists have often accused social scientists, sometimes with justification, of “debunking” absolute values that are important for the survival of culture (e.g., Arendt 1958, Bloom 1987). The early Italian-Swiss sociologist Vilfredo Pareto (1917, 1919) has been one of the scholars most keenly aware of the dangers of relativity inherent in his discipline. English workers. The classic story of how the free English workers were transformed into highly regimented industrial laborers is told by the historian E. P. Thompson (1963). The suspicious Dobuans were studied by the anthropologist Reo Fortune (1932 [1963]). For the tragic plight of the Ik of Uganda see Turnbull (1972).


pages: 436 words: 76

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

"Robert Solow", Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, business cycle, 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, Gunnar Myrdal, haute couture, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, Kenneth Arrow, Kevin Kelly, knowledge economy, light touch regulation, 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, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson, 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, Right to Buy, 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 Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, yield curve, yield management

Edgeworth, who measured the welfare of society by aggregating the welfare-the utility-of its individual members and who looked forward to a felicific calculus that would measure progress toward their objective, the greatest happiness of the greatest number, in an objective manner. The felicific calculus was designed to solve the knotty problem of commensurability-how to weight my utility against yours, how to decide whether greater aggregate happiness had been achieved. Sadly, progress toward the felicific calculus remains elusive, and utilitarianism fell out of fashion amongst philosophers many years ago. Pareto Efficiency ••••••••••••••••••••••••••••••••••••• Vilfredo Pareto, Walras's successor at Lausanne, believed, like the utilitarians, that the welfare of society could be defined in terms of the individual utilities of individual citizens or households. He was content simply to list the utilities they achieved as a vector. So instead of a vector that described picture quality, sound quality, etc., a vector would list the welfare of the Smiths, the welfare of the J oneses, and so on for all the households in the economy.


pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, bank run, beat the dealer, Benoit Mandelbrot, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, card file, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discovery of the americas, diversification, diversified portfolio, Edward Glaeser, Edward Thorp, endowment effect, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market design, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, prediction markets, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, stocks for the long run, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

Mandelbrot tells the story of encountering Zipf’s work in Benoit Mandelbrot and Richard L. Hudson, The (Mis)behavior of Markets: A Fractal View of Risk, Ruin, and Reward (New York: Basic Books, 2004), 150–59. The Zipf book mentioned is Human Behavior and the Principle of Least Effort: An Introduction to Human Ecology (Cambridge, Mass.: Addison-Wesley, 1949). 2. This field had been pioneered by Italian mathematical economist Vilfredo Pareto. Pareto made important contributions to equilibrium economics and Irving Fisher visited him during his European grand tour in 1894. He was appalled that Pareto’s wife smoked, but the two corresponded regularly afterward and Mrs. Pareto translated Fisher’s doctoral dissertation into Italian. Irving Norton Fisher, My Father Irving Fisher (New York: Comet Press Books, 1956), 65. Pareto observed around the turn of the century that in the various European countries he studied, 80 percent of the wealth was in the hands of 20 percent of the people.


pages: 505 words: 142,118

A Man for All Markets by Edward O. Thorp

3Com Palm IPO, Albert Einstein, asset allocation, beat the dealer, Bernie Madoff, Black Swan, Black-Scholes formula, Brownian motion, buy and hold, buy low sell high, carried interest, Chuck Templeton: OpenTable:, Claude Shannon: information theory, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Edward Thorp, Erdős number, Eugene Fama: efficient market hypothesis, financial innovation, George Santayana, German hyperinflation, Henri Poincaré, high net worth, High speed trading, index arbitrage, index fund, interest rate swap, invisible hand, Jarndyce and Jarndyce, Jeff Bezos, John Meriwether, John Nash: game theory, Kenneth Arrow, Livingstone, I presume, Long Term Capital Management, Louis Bachelier, margin call, Mason jar, merger arbitrage, Murray Gell-Mann, Myron Scholes, NetJets, Norbert Wiener, passive investing, Paul Erdős, Paul Samuelson, Pluto: dwarf planet, Ponzi scheme, price anchoring, publish or perish, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, RFID, Richard Feynman, risk-adjusted returns, Robert Shiller, Robert Shiller, rolodex, Sharpe ratio, short selling, Silicon Valley, Stanford marshmallow experiment, statistical arbitrage, stem cell, stocks for the long run, survivorship bias, The Myth of the Rational Market, The Predators' Ball, the rule of 72, The Wisdom of Crowds, too big to fail, Upton Sinclair, value at risk, Vanguard fund, Vilfredo Pareto, Works Progress Administration

Invested at a hypothetical after-tax annual return of 8 percent just like the cigarette money, the $10,000 difference grows to over $100,000 in thirty years. To those who balk at changing their ways we can only ask, along with Regis Philbin, “Who wants to be a millionaire?” Investors I dealt with typically were not just millionaires but multimillionaires with fortunes of $5 million and up. How many households have reached these rarefied heights? The great Italian economist Vilfredo Pareto studied the distribution of income and in 1897 came up with a “power law” formula that seems then and now to describe fairly well how many top wealth holders in a modern society have reached various levels. To calibrate the formula we need just these two facts: The Forbes 400 cutoff for the United States, which was $1.55 billion in 2014, and the total wealth of those four hundred, an amazing $2.3 trillion.


pages: 624 words: 127,987

The Personal MBA: A World-Class Business Education in a Single Volume by Josh Kaufman

Albert Einstein, Atul Gawande, Black Swan, business cycle, business process, buy low sell high, capital asset pricing model, Checklist Manifesto, cognitive bias, correlation does not imply causation, Credit Default Swap, Daniel Kahneman / Amos Tversky, David Heinemeier Hansson, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, discounted cash flows, Donald Knuth, double entry bookkeeping, Douglas Hofstadter, en.wikipedia.org, Frederick Winslow Taylor, George Santayana, Gödel, Escher, Bach, high net worth, hindsight bias, index card, inventory management, iterative process, job satisfaction, Johann Wolfgang von Goethe, Kevin Kelly, Kickstarter, Lao Tzu, lateral thinking, loose coupling, loss aversion, Marc Andreessen, market bubble, Network effects, Parkinson's law, Paul Buchheit, Paul Graham, place-making, premature optimization, Ralph Waldo Emerson, rent control, side project, statistical model, stealth mode startup, Steve Jobs, Steve Wozniak, subscription business, telemarketer, the scientific method, time value of money, Toyota Production System, tulip mania, Upton Sinclair, Vilfredo Pareto, Walter Mischel, Y Combinator, Yogi Berra

If your Goal is to make the system faster or more efficient, Refactoring is critically important. SHARE THIS CONCEPT: http://book.personalmba.com/refactoring/ The Critical Few Typically, causes, inputs, or effort divide into two categories: (1) the majority, that have little impact, and (2) a small minority, that have a major, dominant impact. —RICHARD KOCH, AUTHOR OF THE 80/20 PRINCIPLE Vilfredo Pareto was a nineteenth-century economist and sociologist who was very interested in the topic of land ownership and the social distribution of wealth. After collecting and analyzing a great deal of data, Pareto found a curious Pattern: over 80 percent of the land in Italy was owned by less than 20 percent of the population. The Italian economy wasn’t distributed evenly, or in the bell-curve-shaped distribution many people assumed: wealth was highly concentrated among a relatively small group of individuals.


pages: 621 words: 157,263

How to Change the World: Reflections on Marx and Marxism by Eric Hobsbawm

anti-communist, banking crisis, battle of ideas, Berlin Wall, British Empire, continuation of politics by other means, creative destruction, currency manipulation / currency intervention, deindustrialization, discovery of the americas, experimental subject, Fall of the Berlin Wall, full employment, Gunnar Myrdal, labour market flexibility, liberal capitalism, market fundamentalism, mass immigration, means of production, new economy, Simon Kuznets, Thorstein Veblen, Upton Sinclair, upwardly mobile, Vilfredo Pareto, zero-sum game

Robert, 301–2 Mussolini, Benito, 269, 275, 317 oriental history, 138, 148, 172 Myrdal, Gunnar, 389 Origin of the Family, 32, 52, 54, 70, 140, 158, 163–4, 171, 179 Naples, 232, 279 Orwell, George, 297–8 Napoleon Bonaparte, 33, 55 Ostrogorski, Moisey, 243 Napoleon III, 52, 57, 71, 79, 326 Ottoman Empire, 405 465 How to Change the World Outline of a Critique of Political Economy, 33 ‘Prague Spring’, 350, 387 Owen, Robert, 21, 24, 26–7, 33, 35, pre-capitalist formations, 127–75 45–6 pre-Columbian civilisations, 141–2 Owenites, 25–7, 33, 35 Pre-Raphaelites, 250 Prescott, William Hickling, 141 pacifism, 274 prices, sixteenth-century, 141 Pakistan, 412 Private Property and the State, 179 Palestine, 234 proletariat Palmerston, Lord, 78 and Communist Manifesto, 113–17, Pannekoek, A., 227 119 Pareto, Vilfredo, 232, 240, 243, 318 dictatorship of, 52, 56–7, 62, 65, 86, Paris, 40, 102, 117, 235, 254 304–5, 310 Paris Commune, 52, 56–8, 62, 65, 103 and early socialism, 41–2, 45 ‘Parvus’, 225 and industrialisation, 23–4, 90–5 Pearson, Karl, 238 and pauperisation, 96, 115 Peasant War, 65, 180 and revolution, 48, 52, 55–8, 61–6, Pecqueur, Constantin, 36 117 Perrin, Jean, 295 Prothero, M., 204 Peru, 344 Proudhon, Pierre-Joseph, 21, 23, 26, Petrograd soviet, 407 34, 36, 45–7, 208 Philby, Kim, 279 Proust, Marcel, 266 Picard, Edmond, 226 Prussia, 51 Picasso, Pablo, 265 psychoanalysis, 236, 372 Pillot, J.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

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

Kung people 44, 135, 136–7 Kuznets curve 106 Kwakiutl people 92 Lagos 322 Lagrange Point 346 lakes, acidification of 305–6 Lamalera people 87 Lancashire 214, 217, 232, 263 Landes, David 223, 406 Lang, Tim 392 language: and exchange 58; genes for 55; Indo-European 129; and isolationism 73; Neanderthals 4, 55; numbers of languages 73; as unique human development 4 Laos 209 lapis lazuli 162, 164 Lascaux caves, France 6 lasers 272 Lassa fever 307 Laurion, Attica 171 Law, John 29, 259 Lawson, Nigel, Baron 331 Lay, Ken 29, 385 Layard, Richard 25 lead 167, 174, 177, 213 Leadbetter, Charles 290 Leahy, Michael 92 leather 70, 122, 167, 176 Lebanon 167 LeBlanc, Steven 137 LEDs (light-emitting diodes) 21–2 lentils 129 Leonardo da Vinci 196, 251 Levy, Stephen 355 Liang Ying (farm worker) 220 liberalism 108, 109–110, 290 Liberia 14, 316 libertarianism 106 Libya 171 lice 68 lichen 75 life expectancy: in Africa 14, 316, 422; in Britain 13, 15, 284; improvements in 12, 14, 15, 17–18, 205, 284, 287, 298, 316; in United States 298; world averages 47 Life (magazine) 304 light, artificial 13, 16, 17, 20–22, 37, 233, 234, 240, 245, 272, 368 light-emitting diodes (LEDs) 21–2 Limits to Growth (report) 303–4, 420 Lindsey, Brink 102, 109 linen 216, 218 lions 43, 87 literacy 106, 201, 290, 353, 396 Liverpool 62, 283 local sourcing (of goods) 35, 41–2, 149, 392; see also food miles Locke, John 96 Lodygin, Alexander 272 Lombardy 178, 196 Lomborg, Björn 280 London 12, 116, 186, 199, 218, 222, 282; as financial centre 259 longitude, measurement of 261 Longshan culture 397 Los Angeles 17, 142 Lothal, Indus valley 162, 164 Louis XI, King of France 184 Louis XIV, King of France 36, 37, 38, 184, 259 Lowell, Francis Cabot 263 Lübeck 180 Lucca 178, 179 Lunar Society 256 Luther, Martin 102 Luxembourg 331 Lyon 184 Macao 183 MacArthur, General Douglas 141 Macaulay, Thomas Babington, 1st Baron 11, 285–7, 359 McCloskey, Deirdre 109, 366–7 Mace, Ruth 73 McEwan, Ian 47 Machiguenga people 87 MacKay, David 342 McKendrick, Neil 224 McKibben, Bill 293 Macmillan, Harold, 1st Earl of Stockton 16 McNamara, Robert 203 mad-cow disease (vCJD) 280, 308 Madagascar 70, 299 Maddison, Angus 180 Maddox, John 207 Madoff, Bernard 28–9 Maghribis 178, 180 magnesium 213 maize 126, 146–7, 153, 155, 156, 163; for biofuel 240, 241 malaria 135, 157, 275, 299, 310, 318, 319, 331, 336, 353, 428, 429 Malawi 40–41, 132, 316, 318 Malawi, Lake 54 Malay Peninsula 66 Malaysia 35, 89, 242, 332 Mali 316, 326 Malinowski, Bronislaw 134 malnutrition 154, 156, 337 Maltese Falcon, The (film) 86 Malthus, Robert 139, 140, 146, 191, 249, 303 Malthusianism 141, 193, 196, 200, 202, 401 mammoths 68, 69, 71, 73, 302 Manchester 214, 218, 283 Mandell, Lewis 254 manganese 150, 213 mangoes 156, 327, 392 Manhattan 83 manure 147, 150, 198, 200, 282 Mao Zedong 16, 187, 262, 296, 311 Marchetti, Cesare 345–6 Marcuse, Herbert 291 Marie-Antoinette, Queen of France 199 markets (in capital and assets) 9, 258–60 markets (in goods and services): and collective betterment 9–10, 36–9, 103–110, 115–16, 281; disdain for 102–3, 104, 291–2, 358; etiquette and ritual of 133–4; and generosity 86–7; global interdependence 42–3; market failure 182, 250; ‘perfect markets’ 249–50; and population control 210–211; and preindustrial economies 133–4; and trust 98–100, 103; and virtue 100–104, 105; see also bartering; exchange; trade Marne, River 234 Martu aborigines 62 Marx, Karl 102, 104, 107–8, 291, 406 Marxism 101, 217–18, 319, 356 Maskelyne, Nevil 221 Maudslay, Henry 221 Mauritius 187, 316 Mauryan empire 172–3, 201, 357 Maxwell, James Clerk 412 measles 14, 135, 310 meat eating 51, 60, 62, 68–9, 126, 147, 156, 241, 376 Mecca 177 Mediterranean Sea: prehistoric settlements 56, 68–9, 159; trade 89, 164, 167–8, 169, 171, 176, 178 meerkats 87 Mehrgarh, Baluchistan 162 Mehta, Suketa 189 Meissen 185 memes 5 Menes, Pharaoh of Egypt 161 mercury 183, 213, 237 Mersey, River 62 Merzbach valley, Germany 138 Mesopotamia 38, 115, 158–61, 163, 177, 193, 251, 357; see also Assyrian empire; Iraq metal prices, reductions in 213 Metaxas, Ioannis 186 methane 140, 329, 345 Mexico: agriculture 14, 123, 126, 142, 387; emigration to United States 117; hurricanes 335; life expectancy 15; nature conservation 324; swine flu 309 Mexico City 190 Meyer, Warren 281 Mezherich, Ukraine 71 mice 55, 125 Michelangelo 115 Microsoft (corporation) 24, 260, 268, 273 migrations: early human 66–70, 82; rural to urban 158, 188–9, 210, 219–20, 226–7, 231, 406; see also emigration Milan 178, 184 Miletus 170–71 milk 22, 55, 97, 135 Mill, John Stuart 34, 103–4, 108, 249, 274, 276, 279 Millennium Development goals 316 Miller, Geoffrey 44, 274 millet 126 Mills, Mark 244 Ming empire 117, 181–4, 260, 311 Minoan civilisation 166 Mississippi Company 29 Mittal, Lakshmi 268 mobile phones 37, 252, 257, 261, 265, 267, 297, 326–7 Mohamed (prophet) 176 Mohawk Indians 138–9 Mohenjo-Daro, Indus valley 161–2 Mojave Desert 69 Mokyr, Joel 197, 252, 257, 411, 412 monarchies 118, 162, 172, 222 monasteries 176, 194, 215, 252 Monbiot, George 291, 311, 426 money: development of 71, 132, 392; ‘trust inscribed’ 85 Mongolia 230 Mongols 161, 181, 182 monkeys 3, 57, 59, 88; capuchins 96–7, 375 monopolies 107, 111, 166, 172, 182 monsoon 174 Montesquieu, Charles, Baron de 103 moon landing 268–9, 275 Moore, Gordon 221, 405 Moore, Michael 291 Morgan, J.P. 100 Mormonism 205 Morocco 53, 209 Morse, Samuel 272 mortgages 25, 29, 30, 323; sub-prime 296 Moses 138 mosquito nets 318 ‘most favoured nation’ principle 186 Moyo, Dambisa 318 Mozambique 132, 316 Mozart, Wolfgang Amadeus 267 Mugabe, Robert 262 Mumbai 189, 190 murder 14, 20, 85, 88, 106, 118, 201 Murrays’ Mills, Manchester 214 music 70, 115, 266–7, 326 Myceneans 166 Nairobi 322 Namibia 209, 324 Napoleon I 184 NASA 269 Nashville 326 Nassarius shells 53, 56, 65 National Food Service 268 National Health Service 111, 261 nationalisation (of industry) 166, 182 nationalism 357 native Americans 62, 92–3, 138–9 Natufians 125 natural selection 5–6, 27, 49–50, 350 nature conservation 324, 339; see also wilderness land, expansion of Neanderthals 3, 4, 53, 55, 64, 65, 68, 71, 79, 373, 378 Nebuchadnezzar 169 needles 43, 70 Nehru, Jawaharlal 187 Nelson, Richard 5 Nepal 15, 209 Netscape (corporation) 259 New Deal 109 New Guinea: agriculture 123, 126, 387; languages 73; malaria 336; prehistoric 66, 123, 126; tribes 87, 92, 138 New York 12, 16, 83, 169, 190 New York Times 23, 295, 305 New Zealand 17, 35, 42, 70 Newcomen, Thomas 244, 256 newspapers 270, 295; licensing copyrights 267 Newsweek (magazine) 329 Newton, Sir Isaac 116, 256 nickel 34, 213 Niger 208–9, 210, 324 Nigeria 15, 31, 99, 117, 210, 236, 316 Nike (corporation) 115, 188 Nile, River 161, 164, 167, 171 nitrogen fertlisers 140, 146, 147, 149–50, 155, 305 nitrous oxide 155 Nobel Peace Prize 143, 280 ‘noble savage’ 43–4, 135–8 Norberg, Johann 187 Nordau, Max 288 Nordhaus, William 331 Norte Chico civilisation 162–3 North, Douglass 324, 397 North Carolina 219–20 North Korea 15, 116–17, 187, 333 North Sea 180, 185 North Sentinel islanders 67 Northern Rock (bank) 9 Northumberland 407 Norton, Seth 211 Norway 97–8, 332, 344 Norwich 225 nostalgia 12–13, 44, 135, 189, 284–5, 292 Novgorod 180 Noyce, Robert 221, 405 nuclear accidents 283, 293–4, 308, 345, 421 nuclear power 37, 236, 238, 239, 245, 246, 343, 344, 345 nuclear war, threat of 280, 290, 299–300, 333 Obama, Barack 203 obesity 8, 156, 296, 337 obsidian 53, 92, 127 occupational safety 106–7 ocean acidification 280, 340–41 ochre 52, 53, 54, 92 octopi 3 Oersted, Hans Christian 272 Oetzi (mummified ‘iceman’) 122–3, 132–3, 137 Ofek, Haim 131 Ohalo II (archaeological site) 124 oil: and ‘curse of resources’ 31, 320; drilling and refining 242, 343; and generation of electricity 239; manufacture of plastics and synthetics 237, 240; pollution 293–4, 385; prices 23, 238; supplies 149, 237–8, 280, 281, 282, 296, 302–3 old age, quality of life in 18 olive oil 167, 169, 171 Olson, Ken 282 Omidyar, Pierre 99 onchoceriasis 310 open-source software 99, 272–3, 356 Orang Asli people 66 orang-utans 60, 239, 339 organic farming 147, 149–52, 393 Orinoco tar shales, Venezuela 238 Orma people 87 ornament, personal 43, 52, 53, 54, 70, 71, 73 O’Rourke, P.J. 157 Orwell, George 253, 290, 354 Ostia 174 otters 297, 299 Otto I, Holy Roman emperor 178 Ottoman empire 161 Oued Djebanna, Algeria 53 oxen 130, 136, 195, 197, 214–15 oxytocin (hormone) 94–5, 97–8 ozone layer 280, 296 Paarlberg, Robert 154 Pacific islanders 134 Pacific Ocean 184 Paddock, William and Paul 301 Padgett, John 103 Page, Larry 114 Pagel, Mark 73 Pakistan 142–3, 204, 300 palm oil 57–8, 239, 240, 242, 339 Pan Am (airline) 24 paper 282, 304 Papin, Denis 256 papyrus 171, 175 Paraguay 61 Pareto, Vilfredo 249 Paris 215, 358; electric lighting 233; restaurants 264 parrots 3 Parsons, Sir Charles 234 Parthian empire 161 Pasadena 17 Pataliputra 173 patents 223, 263, 264–6, 269, 271, 413–14 patriarchy 136 Paul, St 102 PayPal (e-commerce business) 262 peacocks 174 peanuts 126 peat 215–16 Peel, Sir Robert 185 Pemberton, John 263 pencils 38 penicillin 258 Pennington, Hugh 308 pensions 29, 40, 106 Periplus of the Erythrean Sea, The 174 Persia 89, 161, 171, 177 Persian Gulf 66, 164, 340, 429 Peru 97–8, 126, 162–3, 320, 387; silver 31, 132, 183–4 pessimism: and belief in turning points in history 287–9, 301, 311; natural pessimism of human nature 294–5; in nineteenth century 283–8; in twentieth century 281, 282, 288–91, 292–4, 296–308, 328–9; in twenty-first century 8–9, 17, 28, 281–2, 291–2, 308–311, 314–15; ubiquity of 280–85, 291–2, 294–7, 341, 352 pesticides 151–2, 154, 155, 336; DDT 297–8, 299; natural 298–9 Peto, Richard 298 Petty, Sir William 185, 199, 254, 256 pharmaceutical industry 260, 266 philanthropy 92, 105, 106, 295, 318–19, 356 Philip II, King of Spain 30–31 Philip II of Macedon 171 Philippines 61–2, 89, 234 Philistines 166, 170, 396 Phillips, Adam 103, 292 Phoenicians 166–70, 177 photography 114, 283, 386 physiocrats 42 pi, calculation of 173 pig farming 135, 145, 148, 197 Pinnacle Point, South Africa 52, 83 Pisa 115, 178 plagues 135, 176, 195–6, 197; forecasts of 280, 284, 307–310; see also Black Death plastics 237, 240, 270 Plate, River 186 platinum 213 Plato 292 Plautus 44 ploughing 129–30, 136, 145, 150, 195, 197, 198, 215 pneumonia 13, 353 Polanyi, Karl 164–5 polar bears 338–9 polio 261, 275, 310 political fragmentation 170–73, 180–81, 184, 185 pollution: effects on wildlife 17, 297, 299, 339; and industrialisation 218; pessimism about 293–4, 304–6; reduction in 17, 106, 148, 279, 293–4, 297, 299 polygamy 136 Pomeranz, Kenneth 201–2 Ponzi, Charles 29 Ponzi schemes 28–9 population control policies 202–4, 210–211 population growth: and food supply 139, 141, 143–4, 146–7, 192, 206, 208–9; global population totals 3, 12, 14, 191, 206, 332; and industrialisation 201–2; and innovation 252; pessimism about 190, 193, 202–3, 281, 290, 293, 300–302, 314; population explosions 8, 139, 141, 202, 206, 281; and specialisation 192–3, 351; see also birth rates; demographic transition; infant mortality; life expectancy porcelain 181, 183, 184–5, 225, 251 Porritt, Jonathan 314 Portugal 75, 183, 184, 317, 331 Post-it notes 261 Postrel, Virginia 290–91 potatoes 199 Potrykus, Ingo 154 pottery 77, 158, 159, 163, 168, 177, 225, 251 Pound, Ezra 289 poverty: and charitable giving 106; current levels 12, 15, 16–17, 41, 316, 353–4; and industrialisation 217–20; pessimism about 280, 290, 314–15; reduction in 12, 15, 16–17, 290; and self-sufficiency 42, 132, 200, 202, 226–7; solutions to 8, 187–8, 316–17, 322, 326–8, 353–4 Prebisch, Raul 187 preservatives (in food) 145 Presley, Elvis 110 Priestley, Joseph 256 printing: on paper 181, 251, 252, 253, 272; on textiles 225, 232 prisoner’s dilemma game 96 property rights 130, 223, 226, 320, 321, 323–5 protectionism 186–7, 226 Ptolemy III 171 Pusu-Ken (Assyrian merchant) 165–6 putting out system 226, 227, 230 pygmy people 54, 67 Pythagoras 171 Quarterly Review 284 quasars 275 Quesnay, François 42 racial segregation 108 racism 104, 415 radioactivity 293–4, 345 radios 264–5, 271 railways 252; and agriculture 139, 140–41; opposition to 283–4; speed of 283, 286; travel costs 23 rainforests 144, 149, 150, 240, 243, 250–51, 338 Rajan, Raghuram 317 Rajasthan 162, 164 Ramsay, Gordon 392 rape seed 240 Ratnagar, Shereen 162 ravens 69 Rawls, John 96 Read, Leonard 38 recession, economic 10, 28, 113, 311 reciprocity 57–9, 87, 95, 133 Red Sea 66, 82, 127, 170, 174, 177 Rees, Martin 294 Reformation 253 refrigeration 139 regress, technological 78–84, 125, 181–2, 197–200, 351, 380 Reiter, Paul 336, 428 religion 4, 104, 106, 170, 357, 358, 396; and population control 205, 207–8, 211; see also Buddhism; Christianity; Islam Rembrandt 116 Renaissance 196 research and development budgets, corporate 260, 262, 269 Research in Motion (company) 265 respiratory disease 18, 307, 310 restaurants 17, 37, 61, 254, 264 Rhine, River 265–6 rhinoceroses 2, 43, 51, 68, 73 Rhodes, Cecil 322 Ricardo, David 75, 169, 187, 193, 196, 249, 274 rice 32, 126, 143, 146–7, 153, 154, 156, 198 Rifkin, Jeremy 306 Riis, Jacob 16 Rio de Janeiro, UN conference (1992) 290 risk aversion 294–5 Rivers, W.H.R. 81 Rivoli, Pietra 220, 228 ‘robber-barons’ 23–4, 100, 265–6 Rockefeller, John D. 23, 281 Rocky Mountains 238 Rogers, Alex 340 Roman empire 161, 166, 172, 173–5, 184, 214, 215, 259–60, 357 Rome 158, 175 Romer, Paul 269, 276–7, 328, 354 Roosevelt, Franklin D. 109 Roosevelt, Theodore 288 Rosling, Hans 368 Rothschild, Nathan 89 Rousseau, Jean-Jacques 43, 96, 104, 137 Royal Institution 221 rubber 220 rule of law 116–18, 325 Rumford, Benjamin Thompson, Count 221 rural to urban migration 158, 188–9, 210, 219–20, 226–7, 231, 406 Ruskin, John 104 Russia, post-Soviet 14; oil and gas production 31, 37; population decline 205 Russia, prehistoric 71, 73 Russia, Tsarist 216, 229, 324 Rwanda 14, 316 rye 124, 125, 199, 224, 286 Sachs, Jeffrey 208 Saddam Hussein 161 Sahel region 123, 334 Sahlins, Marshall 133, 135 Sahul (landmass) 66, 67 Salisbury, Wiltshire 194 Salk, Jonas 38, 261 salmon 297 Salmon, Cecil 142 saltpetre 140 Sanger, Frederick 412 Sanskrit 129 São Paulo 190, 315 Sargon of Akkad 164 SARS virus 307, 310 satellites 252, 253 satnav (satellite navigation systems) 268 Saudi Arabia 238 Saunders, Peter 102 Schumpeter, Joseph 113–14, 227, 260, 276, 302 science, and innovation 255–8, 412 Scientific American 280 Scotland 103, 199–200, 227, 263, 315 scrub jays 87 scurvy 14, 258 sea level, changes in 128, 314, 333–4 Seabright, Paul 93, 138 seals (for denoting property) 130 search engines 245, 256, 267 Second World War 289 segregation, racial 108 Seine, River 215 self-sufficiency 8, 33–5, 39, 82, 90, 133, 192, 193, 351; and poverty 41–2, 132, 200, 202, 226–7 selfishness 86, 87, 93–4, 96, 102, 103, 104, 106, 292 Sematech (non-profit consortium) 267–8 Sentinelese people 67 serendipity 257, 346 serfs 181–2, 222 serotonin 156, 294 sexism 104, 136 sexual division of labour 61–5, 136, 376 sexual reproduction 2, 6, 7, 45, 56, 271; of ideas 6–7, 270–72 Sforza, house of 184 Shady, Ruth 162 Shakespeare, William 2; The Merchant of Venice 101, 102 Shang dynasty 166 Shapiro, Carl 265 sheep 97, 176, 194, 197 Shell (corporation) 111 shellfish 52, 53, 62, 64, 79, 92, 93, 127, 163, 167 Shennan, Stephen 83, 133 Shermer, Michael 101, 106, 118 ship-building 185, 229; see also boat-building shipping, container 113, 253, 386 Shirky, Clay 356 Shiva, Vandana 156 Siberia 145 Sicily 171, 173, 178 Sidon 167, 170 Siemens, William 234 Sierra Leone 14, 316 Silesia 222 silicon chips 245, 263, 267–8 Silicon Valley 221–2, 224, 257, 258, 259, 268 silk 37, 46, 172, 175, 178, 179, 184, 187, 225 Silk Road 182 silver 31, 132, 164, 165, 167, 168, 169, 171, 177, 183–4, 213 Silver, Lee 122–3 Simon, Julian 83, 280, 303 Singapore 31, 160, 187 Skhul, Israel 53 slash-and-burn farming 87, 130 slave trade 167, 170, 177, 229, 319, 380; abolition 214, 221 slavery 34, 214–15, 216, 407; ancient Greece 171; hunter-gatherer societies 45, 92; Mesopotamia 160; Roman empire 174, 176, 214; United States 216, 228–9, 415; see also anti-slavery sleeping sickness 310, 319 Slovakia 136 smallpox 13, 14, 135, 310; vaccine 221 smelting 131–2, 160, 230 smiling 2, 94 Smith, Adam 8, 80, 96, 101, 104, 199, 249, 272, 350; Das Adam Smith Problem 93–4; Theory of Moral Sentiments 93; The Wealth of Nations vii, 37–8, 39, 56, 57, 93, 123, 236, 283 Smith, Vernon 9, 90, 192 smoke, indoor 13, 338, 342, 353, 429 smoking 297, 298 Smoot-Hawley Tariff Act 186 soap 176, 215 social networking websites 262, 268, 356 socialism 106, 115, 357, 406 software, computer 99, 257, 272–3, 304, 356 solar energy 216, 243, 244 solar power 234–5, 238, 239, 245–6, 343, 344–5, 408 solar wind 346 solid-state electronics 257 Solomon, Robert 94 Solow, Robert 276 Somalia 14, 316, 337, 353 songbirds 55 Sony (corporation) 261 sorghum 126, 156 South Africa: agriculture 154; economy 316, 322; life expectancy 316; pre-historic 52, 53, 54, 83 South Korea 15, 31, 116–17, 187, 212, 322 South Sea Company 29 Southey, Robert 284–5 Soviet Union 16, 107, 109, 289, 299, 318, 324 soybeans 147, 148, 155, 156, 242 space travel 268–9, 275, 282 Spain: agriculture 129; climate 334; Franco regime 186, 289; Peruvian silver 30–31, 183–4; tariffs 222 spears 6, 43, 48, 50, 52, 70, 80, 81, 91 specialisation: by sex 61–5, 136, 376; and division of labour 7, 33, 38, 46, 61–5, 175; and exchange 7, 10, 33, 35, 37–8, 46, 56, 58, 75, 90, 132–3, 350–52, 355, 358–9; and innovation 56, 71–2, 73–4, 76–7, 119, 251; and population growth 192–3, 351; and rule of law 116, 117–18 speech 2, 55; see also language Spencer, Herbert 108 Spengler, Oswald 289 sperm counts 280, 293, 329 spice trade 167, 175, 176, 177, 179, 185 Spinoza, Baruch de 116 Sputnik 282 squashes (vegetables) 126, 163 Sri Lanka 35, 38, 66, 205, 208, 299 Stalin, Joseph 16, 262 stamp seals 130 Stangler, Dane 294 steam engines 126, 214, 221, 228, 231–2, 244, 256, 258, 270, 271, 413–14 steamships 139, 253, 283 Stein, Gil 159 Stein, Herb 281 stem-cell research 358 Stephenson, George 256, 412 Steptoe, Patrick 306 sterilisation, coerced 203–4 Stern (magazine) 304 Stern, Nicholas, Baron 330–31, 332, 425 Stiner, Mary 64, 69 storms 314, 333, 335 Strabo 174 string 70 strokes (cerebral accidents) 18 Strong, Maurice 311 Subramanian, Arvind 317 subsidies: farming 188, 328; renewable energy supplies 344 subsistence farming 87, 138, 175–6, 189, 192, 199–200 substantivism 164–5 suburbia 108, 110, 190 Sudan 316 suffrage, universal 107 sugar 179, 202, 215 sugar beet 243 sugar cane 240, 241, 242 Sun Microsystems (corporation) 259 Sunda (landmass) 66 sunflowers 126 Sungir, Russia 71, 73 superconductivity, high-temperature 257 Superior, Lake 131 supermarkets 36, 112, 148, 268, 292, 297 surfboards 273 Sussex 285 Swan, Sir Joseph 234, 272 Swaziland 14 Sweden 17, 184, 229, 305, 340, 344 Swift, Jonathan 121, 240 Switzerland 264 swords, Japanese 198–9 Sybaris 170–71 symbiosis 75, 351 synergy 6, 101 Syria 124, 130, 164, 174 Szilard, Leo 412 Tahiti 169 Taiwan 31, 187, 219, 322 Talheim, Germany 138 Tanzania 316, 325, 327–8; Hadza people 61, 63, 87 Tapscott, Don 262 Tarde, Gabriel 5 tariffs 185–7, 188, 222–3 taro (vegetable plant) 126 Tartessians 169 Tasman, Abel 80 Tasmania 78–81, 83–4 Tattersall, Ian 73 Taverne, Dick, Baron 103 taxation: carbon taxes 346; and charitable giving 319; and consumption 27; and declining birth rates 211; early development of 160; and housing 25; and innovation 255; and intergenerational transfer 30; Mauryan empire 172; Roman empire 184; United States 25 Taylor, Barbara 103 tea 181, 182, 183, 202, 327, 392 telegraph 252–3, 257, 272, 412 telephones 252, 261; charges 22–3, 253; mobile 37, 252, 257, 261, 265, 267, 297, 326–7 television 38, 234, 252, 268 Telford, Thomas 221 Tennessee Valley Authority 326 termites 75–6 terrorism 8, 28, 296, 358 Tesco (retail corporation) 112 Tesla, Nikola 234 text messaging 292, 356 Thailand 320, 322 Thales of Miletus 171 Thames, River 17 thermodynamics 3, 244, 256 Thiel, Peter 262 Thiele, Bob 349 Thoreau, Henry David 33, 190 3M (corporation) 261, 263 threshing 124, 125, 130, 153, 198; machines 139, 283 thumbs, opposable 4, 51–2 Thwaites, Thomas 34–5 Tiberius, Roman emperor 174, 259 tidal and wave power 246, 343, 344 Tierra del Fuego 45, 62, 81–2, 91–2, 137 tigers 146, 240 timber 167, 216, 229; trade 158, 159, 180, 202 time saving 7, 22–4, 34–5, 123 Timurid empire 161 tin 132, 165, 167, 168, 213, 223, 303 ‘tipping points’ 287–9, 290, 291, 293, 301–2, 311, 329 Tiwi people 81 Tokyo 190, 198 Tol, Richard 331 Tooby, John 57 tool making: early Homo sapiens 53, 70, 71; machine tools 211, 221; Mesopotamian 159, 160; Neanderthals 55, 71, 378; Palaeolithic hominids 2, 4, 7, 48–51; technological regress 80 Torres Strait islanders 63–4, 81 tortoises 64, 68, 69, 376 totalitarianism 104, 109, 181–2, 290 toucans 146 Toulouse 222 Townes, Charles 272 ‘toy trade’ 223 Toynbee, Arnold 102–3 tractors 140, 153, 242 trade: and agriculture 123, 126, 127–33, 159, 163–4; early human development of 70–75, 89–93, 133–4, 159–60, 165; female-centred 88–9; and industrialisation 224–6; and innovation 168, 171; and property rights 324–5; and trust 98–100, 103; and urbanisation 158–61, 163–4, 167; see also bartering; exchange; markets trade unions and guilds 113, 115, 223, 226 trademarks 264 traffic congestion 296 tragedy of the commons 203, 324 Trajan, Roman Emperor 161 transistors 271 transport costs 22, 23, 24, 37, 229, 230, 253, 297, 408 transport speeds 22, 252, 253, 270, 283–4, 286, 287, 296 trebuchets 275 Tressell, Robert 288 Trevithick, Richard 221, 256 Trippe, Juan 24 Trobriand islands 58 trust: between strangers 88–9, 93, 94–8, 104; and trade 98–100, 103, 104; within families 87–8, 89, 91 Tswana people 321, 322 tungsten 213 Turchin, Peter 182 Turkey 69, 130, 137 Turnbull, William (farm worker) 219 Turner, Adair, Baron 411 turning points in history, belief in 287–9, 290, 291, 293, 301–2, 311, 329 Tuscany 178 Tyneside 231 typhoid 14, 157, 310 typhus 14, 299, 310 Tyre 167, 168–9, 170, 328 Ubaid period 158–9, 160 Uganda 154, 187, 316 Ukraine 71, 129 Ulrich, Bernd 304 Ultimatum Game 86–7 unemployment 8, 28, 114, 186, 289, 296 United Nations (UN) 15, 40, 205, 206, 290, 402, 429 United States: affluence 12, 16–17, 113, 117; agriculture 139, 140–41, 142, 219–20; biofuel production 240, 241, 242; birth rates 211, 212; civil rights movement 108, 109; copyright and patent systems 265, 266; credit crunch (2008) 9, 28–9; energy use 239, 245; GDP, per capita 23, 31; Great Depression (1930s) 31, 109, 192; happiness 26–7; immigration 108, 199–200, 202, 259; income equality 18–19; industrialisation 219; life expectancy 298; New Deal 109; oil supplies 237–8; pollution levels 17, 279, 304–5; poverty 16–17, 315, 326; productivity 112–13, 117; property rights 323; rural to urban migration 219; slavery 216, 228–9, 415; tax system 25, 111, 241; trade 186, 201, 228 Upper Palaeolithic Revolution 73, 83, 235 urbanisation: and development of agriculture 128, 158–9, 163–4; global urban population totals 158, 189, 190; and population growth 209–210; and trade 158–61, 163–4, 167, 189–90; see also rural to urban migration Uruguay 186 Uruk, Mesopotamia 159–61, 216 vaccines 17, 287, 310; polio 261, 275; smallpox 221 Vandals 175 Vanderbilt, Cornelius 17, 23, 24 vCJD (mad-cow disease) 280, 308 Veblen, Thorstein 102 Veenhoven, Ruut 28 vegetarianism 83, 126, 147, 376 Venezuela 31, 61, 238 Venice 115, 178–9 venture capitalists 223, 258, 259 Veron, Charlie 339–40 Victoria, Lake 250 Victoria, Queen 322 Vienna exhibition (1873) 233–4 Vietnam 15, 183, 188 Vikings 176 violence: decline in 14, 106, 201; homicide 14, 20, 85, 88, 106, 118, 201; in pre-industrial societies 44–5, 136, 137–9; random 104 Visby, Gotland 180 vitamin A 353 vitamin C 258 vitamin D 129 Vivaldi, Antonio 115 Vladimir, Russia 71 Vogel, Orville 142 Vogelherd, Germany 70 voles 97 Voltaire 96, 103, 104, 256 Wagner, Charles 288 Wal-Mart (retail corporation) 21, 112–14, 263 Wales 132 Wall Street (film) 101 Walton, Sam 112–13, 263 Wambugu, Florence 154 war: in Africa 316; in hunter-gatherer societies 44–5; threat of nuclear war 280, 290, 299–300; twentieth-century world wars 289, 309; unilateral declarations of 104 water: contaminated 338, 353, 429; pricing of 148; supplies 147, 280, 281, 324, 334–5; see also droughts; irrigation water snakes 17 watermills 176, 194, 198, 215, 216–17, 234 Watson, Thomas 282 Watt, James 221, 244, 256, 271, 411, 413–14 wave and tidal power 246, 343, 344 weather forecasting 3, 4, 335 weather-related death rates 335–6 Wedgwood, Josiah 105, 114, 225, 256 Wedgwood, Sarah 105 weed control 145, 152 Weiss, George David 349 Weitzman, Martin 332–3 Welch, Jack 261 welfare benefits 16, 106 Wellington, Arthur Wellesley, 1st Duke of 89 Wells, H.G. 65, 313, 352, 354 West Germany 289–90 West Indies 202, 216, 310 Western Union (company) 261 Westinghouse, George 234 whales 6, 281, 302 whaling 87, 185, 281 wheat 42, 71, 124, 125, 129, 139, 140, 146–7, 149, 153, 156, 158, 161, 167, 300–301; new varieties 141–3 Wheeler, Sir Mortimer 162 wheels, invention of 176, 274 Whitehead, Alfred North 255 Wikipedia (online encyclopedia) 99, 115, 273, 356 Wilberforce, William 105, 214 Wilder, Thornton 359 wilderness land, expansion of 144, 147, 148, 239, 337–8, 347, 359 wildlife conservation 324, 329 William III, King 223 Williams, Anthony 262 Williams, Joseph 254 Williams, Rowan, Archbishop of Canterbury 102 Wilson, Bart 90, 324 Wilson, E.O. 243, 293 Wiltshire 194 wind power 239, 246, 343–4, 346, 408 wolves 87, 137 women’s liberation 108–9 wool 37, 149, 158, 167, 178, 179, 194, 224 working conditions, improvements in 106–7, 114, 115, 188, 219–20, 227, 285 World Bank 117, 203, 317 World Health Organisation 336–7, 421 World Wide Web 273, 356 World3 (computer model) 302–3 Wrangham, Richard 59, 60 Wright brothers 261, 264 Wright, Robert 101, 175 Wrigley, Tony 231 Y2K computer bug 280, 290, 341 Yahgan Indians 62 Yahoo (corporation) 268 Yangtze river 181, 199, 230 Yeats, W.B. 289 yellow fever 310 Yellow river 161, 167 Yemen 207, 209 Yir Yoront aborigines 90–91 Yong-Le, Chinese emperor 183, 184, 185 Yorkshire 285 Young, Allyn 276 young people, pessimism about 292 Young, Thomas 221 Younger Dryas (climatic period) 125 Yucatan 335 Zak, Paul 94–5, 97 Zambia 28, 154, 316, 317, 318, 331 zero, invention of 173, 251 zero-sum thinking 101 Zimbabwe 14, 28, 117, 302, 316 zinc 213, 303 Zuckerberg, Mark 262 Acknowledgements It is one of the central arguments of this book that the special feature of human intelligence is that it is collective, not individual – thanks to the invention of exchange and specialisation.


pages: 331 words: 60,536

The Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State by James Dale Davidson, Rees Mogg

affirmative action, agricultural Revolution, bank run, barriers to entry, Berlin Wall, borderless world, British Empire, California gold rush, clean water, colonial rule, Columbine, compound rate of return, creative destruction, Danny Hillis, debt deflation, ending welfare as we know it, epigenetics, Fall of the Berlin Wall, falling living standards, feminist movement, financial independence, Francis Fukuyama: the end of history, full employment, George Gilder, Hernando de Soto, illegal immigration, income inequality, informal economy, information retrieval, Isaac Newton, Kevin Kelly, market clearing, Martin Wolf, Menlo Park, money: store of value / unit of account / medium of exchange, new economy, New Urbanism, Norman Macrae, offshore financial centre, Parkinson's law, pattern recognition, phenotype, price mechanism, profit maximization, rent-seeking, reserve currency, road to serfdom, Ronald Coase, Sam Peltzman, school vouchers, seigniorage, Silicon Valley, spice trade, statistical model, telepresence, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, transaction costs, Turing machine, union organizing, very high income, Vilfredo Pareto

A MAGNITUDE BEYOND PARETO'S LAW Pareto's law says that 80 percent of the benefit will depend on or go to 20 percent of those engaged. This may be approximately true, though, more strikingly, 1 percent of the population of the United States pays 28.7 percent of the income tax, suggesting that as societies advance into the Information Age they will experience an even more skewed distribution of incomes and abilities than Vilfredo Pareto observed at the end of the last century. People are quite accustomed to substantial inequalities of wealth. In 1828, 4 percent of New Yorkers were thought to have owned 62 percent of all the city's wealth. 169 By 1845, the top 4 percent owned about 81 percent of all corporate and noncorporate wealth in New York City. More broadly, the top 10 percent of the population owned about 40 percent of the wealth across the whole United States in 1860.


pages: 523 words: 143,139

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

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

Mathematics of Operations Research 24 (1999): 293–305. Papadimitriou, Christos H., and Mihalis Yannakakis. “On Complexity as Bounded Rationality.” In Proceedings of the Twenty-Sixth Annual ACM Symposium on Theory of Computing, 1994, 726–733. Pardalos, Panos M., and Georg Schnitger. “Checking Local Optimality in Constrained Quadratic Programming is NP-hard.” Operations Research Letters 7 (1988): 33–35. Pareto, Vilfredo. Cours d’économie politique. Lausanne: F. Rouge, 1896. Parfit, Derek. Reasons and Persons. Oxford, UK: Oxford University Press, 1984. Partnoy, Frank. Wait: The Art and Science of Delay. New York: PublicAffairs, 2012. Pascal, Blaise. Pensées sur la religion et sur quelques autres sujets. Paris: Guillaume Desprez, 1670. Peter, Laurence J., and Raymond Hull. The Peter Principle: Why Things Always Go Wrong.


pages: 568 words: 174,089

The Power Elite by C. Wright Mills, Alan Wolfe

affirmative action, Albert Einstein, American ideology, anti-communist, Asilomar, collective bargaining, creative destruction, cuban missile crisis, desegregation, full employment, Joseph Schumpeter, long peace, means of production, Monroe Doctrine, one-China policy, plutocrats, Plutocrats, profit motive, Ralph Waldo Emerson, Ronald Reagan, Simon Kuznets, Thorstein Veblen, Vilfredo Pareto

The man who does not get a client will be given 1—reserving zero for the man who is an out-and-out idiot. To the man who has made his millions—honestly or dishonestly as the case may be—we will give 10. To the man who has earned his thousands we will give 6; to such as just manage to keep out of the poor-house, 1, keeping zero for those who get in … So let us make a class of people who have the highest indices in their branch of activity, and to that class give the name of elite.’ Vilfredo Pareto, The Mind and Society (New York: Harcourt, Brace, 1935), par. 2027 and 2031. Those who follow this approach end up not with one elite, but with a number corresponding to the number of values they select. Like many rather abstract ways of reasoning, this one is useful because it forces us to think in a clear-cut way. For a skillful use of this approach, see the work of Harold D. Lasswell, in particular, Politics: Who Gets What, When, How (New York: McGraw-Hill, 1936); and for a more systematic use, H.


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

Air France Flight 447, Andrei Shleifer, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, business cycle, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, financial independence, Flash crash, Gary Taubes, George Santayana, Gini coefficient, Henri Poincaré, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, meta analysis, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, principal–agent problem, purchasing power parity, quantitative trading / quantitative finance, Ralph Nader, random walk, Ray Kurzweil, rent control, Republic of Letters, Ronald Reagan, Rory Sutherland, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, Thales and the olive presses, Thales of Miletus, The Great Moderation, the new new thing, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Malthus, too big to fail, transaction costs, urban planning, Vilfredo Pareto, Yogi Berra, Zipf's Law

There may not be an easily identifiable cause for a large share of the problems, but often there is an easy solution (not to all problems, but good enough; I mean really good enough), and such a solution is immediately identifiable, sometimes with the naked eye rather than the use of complicated analyses and highly fragile, error-prone, cause-ferreting nerdiness. Some people are aware of the eighty/twenty idea, based on the discovery by Vilfredo Pareto more than a century ago that 20 percent of the people in Italy owned 80 percent of the land, and vice versa. Of these 20 percent, 20 percent (that is, 4 percent) would have owned around 80 percent of the 80 percent (that is, 64 percent). We end up with less than 1 percent representing about 50 percent of the total. These describe winner-take-all Extremistan effects. These effects are very general, from the distribution of wealth to book sales per author.


Ellul, Jacques-The Technological Society-Vintage Books (1964) by Unknown

Bretton Woods, conceptual framework, do-ocracy, double entry bookkeeping, Frederick Winslow Taylor, full employment, James Hargreaves, James Watt: steam engine, John Maynard Keynes: technological unemployment, liberal capitalism, means of production, Norbert Wiener, price mechanism, profit motive, rising living standards, road to serfdom, spinning jenny, Thorstein Veblen, urban planning, Vilfredo Pareto

.: Technology and International Relations. Chicago: University of Chicago Press; 1949. --------- : “Technology and sociology." Social Forces, Vol. 17, No. 1, p. 1-8. Oppenheimer, J. Robert: The Open Mind. N ew York: Simon and Schuster; o .e .c .e . 1955 - Ortega y Gasset, Jos6: T h e Revolt o f the Masses. N ew York: W . W. Norton; 1957 - Paknade, Guy: La Psychotechnique. Paris: Presses Universitaires de France; 1955 * Pareto, Vilfredo: T h e M ind and Society; a Treatise on General Sociology. New York: Harcourt, Brace & Co.; 1935. Park, R. E.: “Culture and Cultural Trends." American Sociological Society Publications, Vol. 19 (19 2 5 ), pp. 24-36. Pasermadjian, Hrant: L e Gouvernement des grandes organisations. Paris: Presses Universitaires de France; 1955. Passet, Rene: ProbUmes iconomiques d e Xautomation. Domat-MontrhrpstiVrv 1957 Paton, Herbert James: The Modem Predicament; a Study in the Philosophy of Religion.


pages: 678 words: 216,204

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

affirmative action, barriers to entry, bioinformatics, Brownian motion, call centre, Cass Sunstein, centre right, clean water, commoditize, dark matter, desegregation, East Village, fear of failure, Firefox, game design, George Gilder, hiring and firing, Howard Rheingold, informal economy, information asymmetry, invention of radio, Isaac Newton, iterative process, Jean Tirole, jimmy wales, John Markoff, Kenneth Arrow, longitudinal study, market bubble, market clearing, Marshall McLuhan, Mitch Kapor, New Journalism, optical character recognition, pattern recognition, peer-to-peer, pre–internet, price discrimination, profit maximization, profit motive, random walk, recommendation engine, regulatory arbitrage, rent-seeking, RFID, Richard Stallman, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, shareholder value, Silicon Valley, Skype, slashdot, social software, software patent, spectrum auction, technoutopianism, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, transaction costs, Vilfredo Pareto

See policy networked information economy, 42 methodological choices, 42-56 Networked public sphere, 27, 31-34, 324, 327, 331, 340, 356, 376-484, 385, 403, 416, 425, 429, 437, 467, 469, 473, 481, 515, 631, 642, 649, 666, 686, 816-818 Diebold Election Systems case study, 403-415, 469, 686-689 Internet as concentrated vs. chaotic, 429-436 authoritarian control, working around, 473-480 basic communication tools, 385-393 critiques that Internet democratizes, 416-428 defined, 324-328 future of, 481-484 liberal, design characteristics of, 331-339 loose affiliations, 27-28, 631, 642, 649-653 mass-media platform for, 327-330, 340-341, 356-358 see also social relations and norms networked society, 666-667, 816 topology and connectivity of, 437-466 transparency of Internet culture, 515-527 watchdog functionality, 425, 467-472 Networks sharing, 174 News (as data), 561 Newspapers, 85, 341-343, 363 market concentration, 363 Newton, Isaac, 81 Niche markets, 112 Nissenbaum, Helen, 466 No Electrical Theft (NET) Act, 775 Noam, Eli, 363, 430-431 Nonexclusion-market production strategies, 83-87, 94-99 Nonmarket information producers, 15-19, 48, 83-87, 91, 98, 194, 225, 244, 522, 613 conditions for production, 194-207 cultural change, transparency of, 522-526 emergence of social production, 225-243 relationship with nonmarket information producers (cont.) market-based businesses, 244-250 role of, 48 strategies for information production, 91-92, 98-99 universities as, 613-616 Nonmarket production, economics of, 120, 182-250, 194, 208, 225 emergence in digital networks, 225-243 feasibility conditions, 194-207 transaction costs, 120, 208-224 Nonmarket strategies, effectiveness of, 111-113 Nonprofit medical research, 619 Nonrival goods, 79-83 Norms (social), 27, 41, 67, 120, 145-148, 157, 183, 208, 273, 421, 430, 459, 629-667, 631, 642, 649, 654, 659, 664, 818 Internet and human coexistence, 664-666 Internet as platform for, 654-658 Slashdot mechanisms for, 157-160 enforced norms with software, 659-663 fragmentation of communication, 421, 430-431, 459-460, 818-819 fragments of communication, 41 loose affiliations, 27-28, 631, 642, 649-653 motivation within, 183-187 property, commons, and autonomy, 273-278 software for, emergence of, 659-663 technology-defined structure, 67-76 thickening of preexisting relations, 631 transaction costs, 120, 208-224 working with social expectations, 649-653 Nozick, Robert, 544 Number of behavioral options, 286-288, 316 O OAIster protocol, 581 ODP (Open Directory Project), 154 OSTG (Open Source Technology Group), 156 Obscurity of some Web sites, 446, 451-452 Older Web sites, obscurity of, 446 On the shoulders of giants, 81-83 One World Health, 619 Open Archives Initiative, 581 Open Courseware Initiative (MIT), 562, 582 Open Directory Project (ODP), 154 Open commons, 122 Open wireless networks, 709-714, 715, 805 municipal broadband initiatives, 715-717 security, 805-806 Open-source software, 19-20, 37, 96, 125-132, 202, 247, 573, 762, 803 as competition to market-based business, 247 commons-based welfare development, 573-576 human development and justice, 37 policy on, 762-763 project modularity and granularity, 202 security considerations, 803-807 Opinion, public, 337, 338, 358, 367, 373 iconic representations of, 367, 373 synthesis of, 337, 338, 358 Opportunities created by social production, 246-250 Options, behavioral, 286-288, 316 Organization structure, 200-207, 221 granularity, 200-203, 221-222 modularity, 200-203 Organizational clustering, 446-453 Organizational structure, 543 justice and, 543-545 Ostrom, Elinor, 276 Owners of mass media, power of, 355, 359-365, 397 corrective effects of network environment, 397-402 P P2p networks, 171-175, 737-752, 805 security considerations, 805 PIPRA (Public Intellectual Property for Agriculture), 598-604 PLoS (Public Library of Science), 579 Pantic, Drazen, 393 Pareto, Vilfredo, 441 Participatory culture, 249, 262, 531-536 See also culture passive vs. active consumers, 249-250, 262 Patents, 682 see proprietary rights path dependency, 682 Peer production, 19, 27, 73, 118-181, 194, 204, 208, 244, 403, 425, 467, 620, 631, 642, 649, 662, 813-815 as platform for human connection, 662-663 drug research and development, 620 electronic voting machines (case study), 403-415 feasibility conditions for social production, 194-207 loose affiliations, 27, 631, 642, 649-653 maintenance of cooperation, 204-205 relationship with market-based business, 244-250 sustainability of, 208-224 watchdog functionality, 425, 467-472 Peer review of scientific publications, 578-580 Peer-to-peer networks, 171-175, 737-752, 805 security considerations, 805 Pennock, David, 451 Perceptions of others, shaping, 281-288, 285, 295, 298, 315-316, 397, 531 influence exaction, 295-296, 298-300 with propaganda, 285, 397-402, 531-536 Perfect information, 364 Performance as means of communication, 367 Permission to communicate, 294-295 Personal computers, 206, 220, 294, 718 as shareable, lumpy goods, 220-222 infrastructure ownership, 294-295 policy on physical devises, 718-725 Pew studies, 647, 745 Pharmaceuticals, commons-based research on, 609-623 Philadelphia, wireless initiatives in, 716-717 Physical capital for production, 21-23, 73, 89, 120, 195, 216, 309, 676-677, 699-725 control of, 195-196 cost minimization and benefit maximization, 89 fixed and initial costs, 216 production costs as limiting, 309 see also commons and social capital, 699 transaction costs, 120 Physical constraints on information production, 15-17, 60-62 Physical contact, diminishment of, 638-639 Physical layer of institutional ecology, 691, 696, 823-825 recent changes, 696 Physical machinery and computers, 206, 220, 294, 718 as shareable, lumpy goods, 220-222 infrastructure ownership, 294-295 policy on physical devices, 718-725 Piore, Michael, 266 Planned modularization, 200-203 Plasticity of Internet culture, 528-530, 535 Polarization, 422, 461 Policy, 63-65, 146, 299, 339, 355, 403, 469, 473, 531, 539, 545, 568, 611, 671, 674-807, 679, 685, 686, 695, 698, 796, 803, 808 Diebold Election Systems case study, 403-415, 469, 686-689 authoritarian control, 473-480 commons-based research, 568 enclosure movement, 671-672 global Internet and, 698 independence from government control, 339, 355-356 international harmonization, 796-801 liberal theories of justice and, 545-548 mapping institutional ecology, 685-698 participatory culture, 531-536 path dependency, 679-684 pharmaceutical innovation, 611 property-based, 299-302 proprietary rights vs. justice, 539-541 security-related, 695, 803-807 security-related policy, 146-148 stakes of, 808-829 Policy layers, 676-677, 685-698, 691, 696, 767, 823-825 content layer, 691, 696, 767-802, 823-825 physical layer, 691, 823-825 Policy routers, 281-284, 296, 298, 355-358, 702 influence exaction, 296, 298-300 Political concern, undermined by commercialism, 355, 365-375 Political freedom, mass media and, 323-376, 327, 331, 340, 353 commercial platform for public sphere, 327-330, 340-341 criticisms, 353-375 design characteristics of liberal public sphere, 331-339 Political freedom, media and, 356 commercial platform for public sphere, 356-358 Political freedom, public sphere and, 376-484, 385, 416, 425, 429, 437, 467, 473, 481 Internet as concentrated vs. chaotic, 429-436 authoritarian control, working around, 473-480 basic communication tools, 385-393 critiques that Internet democratizes, 416-428 future of, 481-484 topology and connectivity of, 437-466 watchdog functionality, 425, 467-472 Pool, Ithiel de Sola, 682 Popular culture, commercial production of, 529-530 Post, Robert, 269 Postel, Jon, 754 Postman, Neil, 341 Powell, Walter, 218 Power law distribution of Web connections, 437-466, 448, 451 strongly connected Web sites, 448-450 uniform component of moderate connectivity, 451 Power of mass media owners, 355, 359-365, 397 corrective effects of network environment, 397-402 Preexisting relations, thickening of, 631 Press, commercial, 341-343, 363 Price compensation, as demotivator, 187-190 Pricing, 214-219 Pringle, Peter, 594 Print media, commercial, 341-343 Private communications, 326 Privatization, 289, 299, 594, 779 ProCD v.


pages: 920 words: 233,102

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State by Paul Tucker

Andrei Shleifer, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, conceptual framework, corporate governance, diversified portfolio, Fall of the Berlin Wall, financial innovation, financial intermediation, financial repression, first-past-the-post, floating exchange rates, forensic accounting, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, incomplete markets, inflation targeting, information asymmetry, invisible hand, iterative process, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, liberal capitalism, light touch regulation, Long Term Capital Management, means of production, money market fund, Mont Pelerin Society, moral hazard, Northern Rock, Pareto efficiency, Paul Samuelson, price mechanism, price stability, principal–agent problem, profit maximization, quantitative easing, regulatory arbitrage, reserve currency, risk tolerance, risk-adjusted returns, road to serfdom, Robert Bork, Ronald Coase, seigniorage, short selling, Social Responsibility of Business Is to Increase Its Profits, stochastic process, The Chicago School, The Great Moderation, The Market for Lemons, the payments system, too big to fail, transaction costs, Vilfredo Pareto, Washington Consensus, yield curve, zero-coupon bond, zero-sum game

In a market transaction, they would pay more for A than for B if they preferred A to B, which meant they derived more welfare from A. Efficiency Within this setup, the task of economics was to identify the conditions of production, exchange, and consumption under which welfare was generated efficiently in a resource-constrained world. The core concept of efficiency is associated with the name of the late-nineteenth-/early-twentieth-century Italian conservative social scientist Vilfredo Pareto. If a change (say, a regulatory intervention) would improve the well-being of at least one person without leaving anyone worse off, it is said to bring about a Pareto improvement. If, by contrast, any change would leave at least one person worse off (impaired well-being or welfare), the starting point is said to be Pareto efficient. This conception of efficiency is not especially rich and does not mean that a Pareto-efficient state of affairs is admirable in other senses.


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Networks, Crowds, and Markets: Reasoning About a Highly Connected World by David Easley, Jon Kleinberg

Albert Einstein, AltaVista, clean water, conceptual framework, Daniel Kahneman / Amos Tversky, Douglas Hofstadter, Erdős number, experimental subject, first-price auction, fudge factor, George Akerlof, Gerard Salton, Gerard Salton, Gödel, Escher, Bach, incomplete markets, information asymmetry, information retrieval, John Nash: game theory, Kenneth Arrow, longitudinal study, market clearing, market microstructure, moral hazard, Nash equilibrium, Network effects, Pareto efficiency, Paul Erdős, planetary scale, prediction markets, price anchoring, price mechanism, prisoner's dilemma, random walk, recommendation engine, Richard Thaler, Ronald Coase, sealed-bid auction, search engine result page, second-price auction, second-price sealed-bid, Simon Singh, slashdot, social web, Steve Jobs, stochastic process, Ted Nelson, The Market for Lemons, The Wisdom of Crowds, trade route, transaction costs, ultimatum game, Vannevar Bush, Vickrey auction, Vilfredo Pareto, Yogi Berra, zero-sum game

It is interesting to classify outcomes in a game not just by their strategic or equilibrium properties, but also by whether they are “good for society.” In order to reason about this latter issue, we first need a way of making it precise. There are two useful candidates for such a definition, as we now discuss. Pareto-Optimality. The first definition is Pareto-optimality, named after the Italian economist Vilfredo Pareto who worked in the late 1800’s and early 1900’s. A choice of strategies — one by each player — is Pareto-optimal if there is no other choice of strategies in which all players receive payoffs at least as high, and at least one player receives a strictly higher payoff. 6.9. PARETO-OPTIMALITY AND SOCIAL OPTIMALITY 195 To see the intuitive appeal of Pareto-optimality, let’s consider a choice of strategies that is not Pareto-optimal.


Wealth and Poverty of Nations by David S. Landes

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

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