cross-subsidies

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An Economist Gets Lunch: New Rules for Everyday Foodies by Tyler Cowen

agricultural Revolution, behavioural economics, big-box store, business climate, carbon footprint, carbon tax, cognitive bias, creative destruction, cross-subsidies, East Village, en.wikipedia.org, food miles, gentrification, guest worker program, haute cuisine, illegal immigration, informal economy, iterative process, mass immigration, oil shale / tar sands, out of africa, pattern recognition, Peter Singer: altruism, price discrimination, refrigerator car, tacit knowledge, The Wealth of Nations by Adam Smith, Tyler Cowen, Tyler Cowen: Great Stagnation, Upton Sinclair, winner-take-all economy, women in the workforce

They have to be refrigerated or frozen and they arrive battered and somewhat tasteless, unless you pay to have them flown in and handled by specialists; then we’re back to the expensive restaurants with fine raw ingredients. Raw materials are the most obvious form of capital to an everyday foodie, but the relevance of capital does not stop there. Hospital Food Bad—Casino Food Good? Another way to judge restaurants, or dining locales more generally, is to think about the cross-subsidies they enjoy or, as the case may be, fail to enjoy. “Cross-subsidy” is a technical term in economics, but it is straight- forward enough. Does a commercial establishment receive a positive or negative boost from the surrounding circumstances of its production? Some Las Vegas casinos offer good restaurants and good food to get you to gamble in their establishment; you could say that the gambling is subsidizing the food.

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In essence the overall business plan is subsidizing the chicken with rice. The idea of the cross-subsidy applies in a broad variety of settings. In the old days, Parisian restaurants located themselves near butchers so as to receive choice cuts, entrails, and innards quickly and easily. Mexican food stalls (comedores) draw upon the cooking expertise of grandmas, honed over decades of family cooking, and they do not have to train their chefs or pay them very much. Those are all examples of cross-subsidies—the food provider is getting something important on the cheap and subsequent competition forces them to share some of those gains with happy customers.

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By paying the markup on the drinks, certain customers make quality food cheaper and more available than it otherwise would be. They are, without really knowing it, helping out the other customers, including yours truly. Looking back in history, formerly you could take advantage of this cross-subsidy far more than is possible today. For instance nineteenth century saloons took the drinks cross-subsidy to an extreme by offering, literally, a free lunch to their customers. Once food supply became liberated from local farmers and hunters, such free lunches became common. The hope, of course, was that they would make the money back on the drinks.

The Deal of the Century: The Breakup of AT&T by Steve Coll

Alvin Toffler, Ayatollah Khomeini, cross-subsidies, George Santayana, Marshall McLuhan, Ralph Nader, Ronald Reagan, union organizing, vertical integration

AT&T argued then, and deButts continued to argue afterwards, that this ruling would have grave consequences for the phone system. Unlike the phone company’s response to long-distance competition, AT&T did not object to Carterfone on economic grounds. That is, it was impossible to argue seriously that ownership of phone equipment was a natural monopoly or that competition would jeopardize the system of cross-subsidies, which kept the price of basic, local phone service artificially low. Telephones were readily interchangeable. True, if Western Electric was forced to compete (for the first time in its history) with other telephone manufacturers, it would inevitably lose its monopolistic control over the equipment industry.

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Rather, Baxter was enamored of the government’s relief theory in the case—which sought complete separation of the regulated local operating companies from relatively unregulated Western, Bell Labs, the Long Lines—because it was a flawless example of the free-market economic model Baxter believed in. Baxter argued that no one company should be able to integrate regulated and unregulated divisions of its business, because then it could use the “safe” profits from its regulated side to subsidize the prices of its unregulated products. Such “cross subsidies,” Baxter wrote, skewed the otherwise pristine mechanisms of a free-market economy. Of course, the role of subsidies in the telephone industry was so complex as to be inscrutable, and in some cases the subsidies were designed to achieve social goals such as low-cost local phone service. But Baxter believed that unfettered competition was the only efficient way to achieve such social ends.

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*This section of the government’s case was especially complicated and confusing. The government did not try to prove that AT&T priced its competitive products below cost, as would be common in an antitrust case. Rather, Connell tried to show that ineffective FCC regulation and a historically haphazard system of internal cross subsidies allowed AT&T to set whatever prices it liked, depending on how much competition the phone company faced. The attempt to prove this required reams and reams of paper containing AT&T cost studies, FCC cost studies, government cost studies, and so on. When the pricing witnesses—mostly academic economists—were on the stand, the hallways outside Judge Greene’s courtroom were filled with dozens of boxes containing cost studies that might be referred to in testimony.

Tyler Cowen-Discover Your Inner Economist Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist-Plume (2008) by Unknown

"World Economic Forum" Davos, airport security, Andrei Shleifer, big-box store, British Empire, business cycle, cognitive dissonance, cross-subsidies, fundamental attribution error, gentrification, George Santayana, haute cuisine, low interest rates, market clearing, microcredit, money market fund, pattern recognition, Ralph Nader, retail therapy, Stephen Hawking, The Wealth of Nations by Adam Smith, trade route, Tragedy of the Commons, transaction costs, Tyler Cowen

The earlier Las Vegas 158 I DIS C0 V E R YOU R INN ERE CON 0 MIS T was the classic example of what economists call a cross-subsidy. One service-in this case gambling-cross-subsidized the production of another service, namely good food. The presence of gambling made food cheaper. Of course non-gamblers-such as myself-were the real winners. We could eat well for very little, without giving back the gains at the slot machine. We enjoyed free parking and cheap hotel rooms for similar reasons. Alas, this earlier system did not prove stable, and the cross-subsidy is now largely gone. Too many people, including town locals, ate the food, or stayed in the rooms, without gambling.

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The resulting prices are often equal to or even higher than those for comparable food in New York City. This might seem surprising, given that Manhattan rents far exceed those in Vegas, but these high prices follow from the new relationship between food and gambling, or as the economist would say, from the new cross-subsidies. The casino compensates the restaurant every time a big gambler eats there for free. This payment boosts the demand for fine food. It is harder for everyone else to get a table, and thus prices rise. Furthermore, a "comped" gambler is more impressed by a free $150 meal than by a free $70 meal.

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Other People's Money: Masters of the Universe or Servants of the People? by John Kay

Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, buy and hold, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, Cornelius Vanderbilt, corporate governance, Credit Default Swap, cross-subsidies, currency risk, dematerialisation, disinformation, disruptive innovation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jim Simons, John Meriwether, junk bonds, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost airline, M-Pesa, market design, Mary Meeker, megaproject, Michael Milken, millennium bug, mittelstand, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, NetJets, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, reality distortion field, regulatory arbitrage, Renaissance Technologies, rent control, risk free rate, risk tolerance, road to serfdom, Robert Shiller, Ronald Reagan, Schrödinger's Cat, seminal paper, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, vertical integration, Washington Consensus, We are the 99%, Yom Kippur War

Can it really be the case that the industry is not, in fact, exceptionally profitable? Conglomerate banks take the view that their retail operations are relatively unrewarding. But conglomeration permits – even encourages – cross-subsidy between activities. When competing groups are jostling for overall control of the enterprise, such cross-subsidy will tend to favour the group that is, for the moment, in charge. There have been substantial cross-subsidies from the retail division to the trading operations of financial conglomerates – of such magnitude, in fact, that it is difficult for these trading operations to compete effectively without the support of retail banking.

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This is the thoroughly unsatisfactory experience of Stamp Duty, the established tax on equity transactions in the UK, which in practice bears only on long-term investors. A preferable strategy is to ‘starve the beast’: to adopt measures of structural reform of the finance industry that will reduce the amount of capital available to support trading activities and eliminate cross-subsidy to these activities. What is proposed here is a radically changed regulatory approach. It is trite but true to say that what we need is not more regulation but better regulation. But this demands a different regulatory philosophy rather than better regulators. It is pointless to suggest that the solution is to appoint regulators with the foresight of Nostradamus, the detective skills of Sherlock Holmes and the political insight of Machiavelli, as well as the patience of Job and the hide of a rhinoceros.

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The overriding objectives of structural reform of the finance industry are to reduce complexity, lower costs, enhance stability and facilitate the flow of information between savers and borrowers. These outcomes should be achieved through a mixture of regulatory action and market forces. Regulation should be focused on structural remedies whose implementation requires only limited use of judgement – rules that can be monitored by box-tickers. The elimination of cross-subsidies across activities and of government subsidies and guarantees would allow the market to drive further reform. The financial conglomerates that dominate finance today are, to households and businesses in the real economy, largely indistinguishable from each other. A saver who is looking to place deposits or find a home for long-term investments, a company establishing a corporate banking relationship, a personal or corporate borrower seeking funds, would be hard pressed to identify any differences between J.P.

Were You Born on the Wrong Continent? by Thomas Geoghegan

Alan Greenspan, Albert Einstein, American Society of Civil Engineers: Report Card, An Inconvenient Truth, banking crisis, Bear Stearns, Berlin Wall, Bob Geldof, business logic, collective bargaining, corporate governance, cross-subsidies, dark matter, David Brooks, declining real wages, deindustrialization, disinformation, Easter island, ending welfare as we know it, facts on the ground, Gini coefficient, Glass-Steagall Act, haute cuisine, high-speed rail, income inequality, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, laissez-faire capitalism, low skilled workers, Martin Wolf, McJob, military-industrial complex, minimum wage unemployment, mittelstand, offshore financial centre, Paul Samuelson, payday loans, pensions crisis, plutocrats, Prenzlauer Berg, purchasing power parity, Ralph Waldo Emerson, Robert Gordon, Ronald Reagan: Tear down this wall, Saturday Night Live, Silicon Valley, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Wolfgang Streeck, women in the workforce

But on the whole, everybody gets the kind of social justice they want. Some, like Niall Ferguson, the economic historian, say: Why don’t they just spend their own money, each on what he or she wants, instead of cross-subsidizing each other? In theory, to a Scottish economist, it makes no sense. But all these cross-subsidies ally people to each other in a kind of defense pact. At any rate, over in the U.S., by paying so little in taxes, we starve ourselves of the most creative and rewarding jobs. Yes, we get a lot of support from private money, but at least in Chicago, it’s often a one-shot thing, a new wing for an art museum, but nothing that ever turns into a steady paycheck.

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Communism, collapse of author’s planned 1993 trip to Moscow to study post-Wall Berlin commuting and suburban sprawl The Competitive Advantage of Nations (Porter) consumption and consumer choice “hedonistic” ethic and hours worked and leisure “producer” wants and “consumer” wants public goods/private goods public spending/consumer spending levels U.S. Corneo, Giacomo The Corrosion of Character: The Personal Consequences of Work in the New Capitalism (Sennett) Craig, Gordon cross-subsidies currency and the euro Dark Continent: Europe’s Twentieth Century (Mazower) Darwin, John Davies, Norman The Decline and Fall of the Roman Empire (Gibbon) Democrats, U.S. Denmark children in poverty elderly poor GDP per capita hours worked jobs/employment percent of adults holding an associate degree percent of adults self-employed purchasing power ratios/disparities unemployment rates for college graduates Despres, Leon Dewey, John Diamond, Jared Disney The Disposable American (Uchitelle) Le Divorce (Johnson) DIY (Berlin think tank) Dutschke, Rudi Earned Income Tax Credit (EITC) East Asia Economic Policy Institute’s State of Working America[Shouldn’t there be more here?

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Army strikes union resorts/ex-spas unionization rates in the manufacturing sector wage-setting and works councils youth membership The Germans (Craig) Gerschenkron, Alexander Ghilarducci, Teresa Gibbon, Edward Gibbons, James Gini coefficient Giscard d’Estaing, Valery Glass-Steagall Act globalization and German capitalism and labor market flexibility “Globalization and Income Inequality” (Harjes) “Glühwein Festival” (Hamburg) Goethe-Institute Goldman Sachs Gordon, Robert Gramm, Phil Grass, Günter Green Party and European social democracies German coalition government and Agenda 2010 German coalition government and wages/unemployment German coalition government and welfare German coalition government and works councils Germany green technology Greenspan, Alan Guardian (UK) gun ownership Guns, Germs, and Steel: The Fates of Human Societies (Diamond) Gutteres, António Habermas, Jürgen Halliburton Hamburg, Germany Harjes, Thomas health care spending Heine, Heinrich Heinz (retired German labor leader) Hemingway, Ernest Herodotus Hesbaugh, Ted Hitler, Adolf Hitler’s Willing Executioners (Goldhagen) Hobsbawm, Eric Holocaust hours worked and GDP leisure time and standard-of-living How to Lie with Statistics (Huff) Huff, Darrell human capital Humboldt University (Berlin) IBZ Guest House (Berlin) IG Metall (German union) and CDU’s 2009 victory over SDP foreign-born members Frankfurt May Day parade (2001) works councils youth membership “Incentive for Working Hard” (Conference Board, May 2001) income equality/inequality An Inconvenient Truth (film) International Labor Organization (ILO) International Monetary Fund Iraq war Jesuits and papal social democracy jobs/employment artists big business employees cross-subsidies European social democracies and German unemployment Germany high-skill jobs and high-end precision goods manufacturing workforce and percent of adults holding an associate degree public employees (public-sector civil service jobs) self-employment skilled-labor shortage small business employees types of jobs available unemployment rates for college graduates U.S.

Numbers Rule Your World: The Hidden Influence of Probability and Statistics on Everything You Do by Kaiser Fung

Alan Greenspan, American Society of Civil Engineers: Report Card, Andrew Wiles, behavioural economics, Bernie Madoff, Black Swan, business cycle, call centre, correlation does not imply causation, cross-subsidies, Daniel Kahneman / Amos Tversky, edge city, Emanuel Derman, facts on the ground, financial engineering, fixed income, Gary Taubes, John Snow's cholera map, low interest rates, moral hazard, p-value, pattern recognition, profit motive, Report Card for America’s Infrastructure, statistical model, the scientific method, traveling salesman

. ~###~ The harrowing hurricane seasons of 2004–2005 awakened the disaster insurance industry to an essential reality: under existing risk pools, customers with low-risk inland properties were sure losers, and those with high-risk coastal properties sure winners. This group difference threatened the viability of the insurance arrangements because the cross-subsidies no longer appeared fair. The big insurers reacted by imposing stunning rate hikes, especially on the high-risk group, in effect shutting them out. When the state regulator objected, they relinquished the entire market. Inevitably, the state of Florida assumed the role of insurer of last resort, which did nothing to relieve the low-risk group from subsidizing the coastal property owners.

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Inevitably, the state of Florida assumed the role of insurer of last resort, which did nothing to relieve the low-risk group from subsidizing the coastal property owners. If the state must play such a role, then it must provide incentives to slow the migration of people and wealth to the vulnerable coastline. If the state cannot or will not stop the unfair cross-subsidies, it must at least respect the low-risk residents by working to ease their burden. When past lessons are not learned, the next disaster is only a matter of time. On the surface, the insurer and the test developer have nothing in common: one assembles a profitable roster of customers, while the other constructs a fair set of test questions.

The Handbook of Personal Wealth Management by Reuvid, Jonathan.

asset allocation, banking crisis, BRICs, business cycle, buy and hold, carbon credits, collapse of Lehman Brothers, correlation coefficient, credit crunch, cross-subsidies, currency risk, diversification, diversified portfolio, estate planning, financial deregulation, fixed income, global macro, high net worth, income per capita, index fund, interest rate swap, laissez-faire capitalism, land tenure, low interest rates, managed futures, market bubble, merger arbitrage, negative equity, new economy, Northern Rock, pattern recognition, Ponzi scheme, prediction markets, proprietary trading, Right to Buy, risk tolerance, risk-adjusted returns, risk/return, short selling, side project, sovereign wealth fund, statistical arbitrage, systematic trading, transaction costs, yield curve

The life expectancy will be an ‘average’ term of years based on the individual’s age at the start of the annuity. Some individuals will live longer than anticipated but this potential ‘downside’ is usually offset by those annuitants who die earlier than anticipated. This pooling of mortality risk provides a valuable cross-subsidy to those annuitants who live longer than expected, and the risk of outliving capital is effectively transferred from the individual to the provider of the annuity. The purchase of a standard annuity is therefore still the best way to provide certainty of income. However, those individuals with a substantial accumulated pension fund at retirement are often reluctant to write out the necessary cheque to secure the benefits.

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Investment choice will be critical to the success or otherwise of income drawdown in all its forms, and there are conflicting requirements between the need for growth and security. Balancing these requirements is not easy but is essential to the success of the plan. You are on your own in income drawdown. The mortality cross-subsidy available under an annuity does not exist and investment performance must therefore be higher merely to achieve an equivalent income. If this enhanced investment return (sometimes called the ‘critical yield’) is not achieved, the pension pot will be depleted to the point where it can no longer support the required level of income.

The People's Platform: Taking Back Power and Culture in the Digital Age by Astra Taylor

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Aaron Swartz, Alan Greenspan, American Legislative Exchange Council, Andrew Keen, AOL-Time Warner, barriers to entry, Berlin Wall, big-box store, Brewster Kahle, business logic, Californian Ideology, citizen journalism, cloud computing, collateralized debt obligation, Community Supported Agriculture, conceptual framework, content marketing, corporate social responsibility, creative destruction, cross-subsidies, crowdsourcing, David Brooks, digital capitalism, digital divide, digital Maoism, disinformation, disintermediation, don't be evil, Donald Trump, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, future of journalism, Gabriella Coleman, gentrification, George Gilder, Google Chrome, Google Glasses, hive mind, income inequality, informal economy, Internet Archive, Internet of things, invisible hand, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Julian Assange, Kevin Kelly, Kickstarter, knowledge worker, Laura Poitras, lolcat, Mark Zuckerberg, means of production, Metcalfe’s law, Naomi Klein, Narrative Science, Network effects, new economy, New Journalism, New Urbanism, Nicholas Carr, oil rush, peer-to-peer, Peter Thiel, planned obsolescence, plutocrats, post-work, power law, pre–internet, profit motive, recommendation engine, Richard Florida, Richard Stallman, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, slashdot, Slavoj Žižek, Snapchat, social graph, Steve Jobs, Stewart Brand, technological solutionism, technoutopianism, TED Talk, the long tail, trade route, Tragedy of the Commons, vertical integration, Whole Earth Catalog, WikiLeaks, winner-take-all economy, Works Progress Administration, Yochai Benkler, young professional

The Internet, by unbundling the different functions of the newspaper and allowing readers to go direct, has certainly made things more efficient—we can now download as many crossword puzzles as we desire, go to Craigslist to find an apartment, and visit the local blog or the foreign news aggregator to read about what’s happening in the world. But it has eliminated the cross-subsidies that kept journalism afloat and, by doing so, exposed a form of market failure. Stephen Janis, a reporter who has made the move from print to the Web, was one of the victims of the newspaper industry’s collapse, losing his job at the Baltimore Examiner when it folded in 2009. While the layoffs have been painful, Janis believes the shakedown of the newspaper industry will be a healthy thing overall, challenging journalists to become more relevant.

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This kind of corporate saturation has long been the dream of free market acolytes, including tech commenter George Gilder, whose 1994 book Life After Television featured full-color ads from FedEx every few pages. At the time Gilder’s book seemed like a crass gimmick by a highly ideological eccentric; today it looks prophetic. The challenge of supporting uncompromising work is growing greater, for the unbundling of digital media means the era of cross-subsidies, whereby profits from popular wares are used to support more daring endeavors, is coming to an end. The classic example is newspapers, which people bought for the classifieds or comics—these readers translated into higher advertising revenue, which helped finance foreign desks. The days for those kinds of arrangements are numbered, as Yahoo!’

Social Life of Information by John Seely Brown, Paul Duguid

Alvin Toffler, business process, Charles Babbage, Claude Shannon: information theory, computer age, Computing Machinery and Intelligence, cross-subsidies, disintermediation, double entry bookkeeping, Frank Gehry, frictionless, frictionless market, future of work, George Gilder, George Santayana, global village, Goodhart's law, Howard Rheingold, informal economy, information retrieval, invisible hand, Isaac Newton, John Markoff, John Perry Barlow, junk bonds, Just-in-time delivery, Kenneth Arrow, Kevin Kelly, knowledge economy, knowledge worker, lateral thinking, loose coupling, Marshall McLuhan, medical malpractice, Michael Milken, moral hazard, Network effects, new economy, Productivity paradox, Robert Metcalfe, rolodex, Ronald Coase, scientific management, shareholder value, Shoshana Zuboff, Silicon Valley, Steve Jobs, Superbowl ad, tacit knowledge, Ted Nelson, telepresence, the medium is the message, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, Turing test, Vannevar Bush, Y2K

The risk of taking an oddball but possibly insightful course as part of a degree is small if the value of the overall degree itself is well supported. The risk is far higher if the value of that course has to stand on its own, and not hide itself in the broader omnibus package. There is, in effect, a warranting cross-subsidy as well as a financial cross-subsidy between courses. For information technology to lead to such micromanaging would be a paradoxical and unfortunate result. An extraordinary amount of the creative outburst that has generated this technology has come from people who used the slack in a university to explore new avenues.

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

"World Economic Forum" Davos, Alan Greenspan, An Inconvenient Truth, Andrei Shleifer, availability heuristic, bank run, behavioural economics, Black Swan, business cycle, Cass Sunstein, classic study, 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, Oklahoma City bombing, Pareto efficiency, Paul Samuelson, placebo effect, precautionary principle, price discrimination, price stability, RAND corporation, Richard Thaler, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, social discount rate, source of truth, statistical model, stochastic process, subprime mortgage crisis, 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

., implicit insurance), explicit federal disaster insurance or reinsurance could foster appropriate incentives for loss prevention through the assessment of risk-based premiums. The collection of premiums would also provide an important source of funds for compensating victims in the aftermath of disasters, and truly risk-based and actuarially appropriate premiums would reduce or eliminate existing cross-subsidies. President Franklin Roosevelt introduced federal crop insurance in the late 1930s, and federal lawmakers enacted the National Flood Insurance Program in 1968. For a long time, however, both of these programs remained limited in scope and highly subsidized. Even today, as subsidies for federal flood insurance have been reduced, both programs continue to be dwarfed in magnitude by general disaster relief.

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CONCLUSION: REFRAMING THE DISCUSSION AS A PREREQUISITE FOR REFORM It is no secret that the current (and long-standing) federal approach to financing disaster losses is far from perfect. Since disaster risk is spread unevenly across the country, financing federal relief out of general revenues involves large cross-subsidies, from low-risk to high-risk areas. Many critics claim, moreover, that generous federal relief creates a large “moral hazard” problem, ensuring greater losses over the long term by encouraging building in hazard-prone areas and generally reducing incentives for investment in preventive measures.

Zucked: Waking Up to the Facebook Catastrophe by Roger McNamee

"Susan Fowler" uber, "World Economic Forum" Davos, 4chan, Albert Einstein, algorithmic trading, AltaVista, Amazon Web Services, Andy Rubin, barriers to entry, Bernie Sanders, Big Tech, Bill Atkinson, Black Lives Matter, Boycotts of Israel, Brexit referendum, Cambridge Analytica, carbon credits, Cass Sunstein, cloud computing, computer age, cross-subsidies, dark pattern, data is the new oil, data science, disinformation, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Electric Kool-Aid Acid Test, Elon Musk, fake news, false flag, Filter Bubble, game design, growth hacking, Ian Bogost, income inequality, information security, Internet of things, It's morning again in America, Jaron Lanier, Jeff Bezos, John Markoff, laissez-faire capitalism, Lean Startup, light touch regulation, Lyft, machine readable, Marc Andreessen, Marc Benioff, Mark Zuckerberg, market bubble, Max Levchin, Menlo Park, messenger bag, Metcalfe’s law, minimum viable product, Mother of all demos, move fast and break things, Network effects, One Laptop per Child (OLPC), PalmPilot, paypal mafia, Peter Thiel, pets.com, post-work, profit maximization, profit motive, race to the bottom, recommendation engine, Robert Mercer, Ronald Reagan, Russian election interference, Sand Hill Road, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, subscription business, TED Talk, The Chicago School, The future is already here, Tim Cook: Apple, two-sided market, Uber and Lyft, Uber for X, uber lyft, Upton Sinclair, vertical integration, WikiLeaks, Yom Kippur War

The use of proprietary consumer data to identify, develop, and sell products in direct competition with bestsellers on the site represents an abuse of power that would have appalled regulators prior to 1981. Amazon’s ever-expanding distribution business might have run afoul of the same concerns. The horizontal integration into perishables like food would have been problematic due to cross subsidies. Amazon can use its cloud services business to monitor the growth of potential competitors, though there is little evidence that Amazon has acted on this intelligence the way it has leveraged data about bestselling products in its marketplace. Google’s business strategy is a perfect example of how the Chicago School differs from the traditional approach to antitrust.

…

I would also require platforms to be transparent to users, advertisers, and regulators. In terms of economic policy, I want to set limits on the markets in which monopoly-class players like Facebook, Google, and Amazon can operate. The economy would benefit from breaking them up. A first step would be to prevent acquisitions, as well as cross subsidies and data sharing among products within each platform. I favor regulation and believe it can address a portion of the threat posed by Google and Amazon. Unfortunately, relative to Facebook, there is no preexisting model of regulation to address the heart of the problem, which relates to the platform’s design and business model.

The Great Railroad Revolution by Christian Wolmar

"Hurricane Katrina" Superdome, 1919 Motor Transport Corps convoy, accounting loophole / creative accounting, banking crisis, Bay Area Rapid Transit, big-box store, California high-speed rail, Charles Lindbergh, collective bargaining, company town, Cornelius Vanderbilt, cross-subsidies, Ford Model T, high-speed rail, intermodal, James Watt: steam engine, junk bonds, Kickstarter, Ponzi scheme, quantitative easing, railway mania, Ralph Waldo Emerson, refrigerator car, Silicon Valley, streetcar suburb, strikebreaker, Suez canal 1869, too big to fail, trade route, transcontinental railway, traveling salesman, union organizing, urban sprawl, vertical integration

Any excess earnings from the most profitable railroads would go into a pool that would be shared between those lines that were not managing to reach the 6 percent threshold. The idea was classic railroad economics: the weak would be supported by the strong, this cross-subsidy ensuring the retention of a much larger network than would be the case if market forces alone were allowed to prevail. Given the near impossibility of trying to allocate costs of running a railroad system accurately in such a complex industry and the desire of railroad managers to retain as large a network as possible, cross-subsidy has become established practice on most railroad networks across the world. The commission, too, set minimum rates in an effort to prevent uncompetitive price reductions, and this would prove to be greatly troublesome to the rail companies, particularly after the Second World War.

Makeshift Metropolis: Ideas About Cities by Witold Rybczynski

benefit corporation, big-box store, carbon footprint, Celebration, Florida, City Beautiful movement, classic study, company town, cross-subsidies, David Brooks, death of newspapers, deindustrialization, edge city, Edward Glaeser, fixed income, Frank Gehry, garden city movement, General Motors Futurama, gentrification, global village, Guggenheim Bilbao, Jane Jacobs, Lewis Mumford, megaproject, megastructure, New Urbanism, Peter Eisenman, Seaside, Florida, The Death and Life of Great American Cities, upwardly mobile, urban planning, urban renewal, urban sprawl, Victor Gruen, working poor, Works Progress Administration, young professional

To further remove the stigma traditionally associated with “the projects,” the social and market-rate units are indistinguishable.* Combining social and market-rate housing allowed the housing agency to leverage a $35 million federal grant into $200 million of new public housing, as well as half a billion dollars of private development. The financial cross-subsidy is the result of building commercial and retail buildings as well as housing on the same site. The lesson of Capper/Carrollsburg is an implicit critique of earlier public housing policies. No more superblocks, no more high-rise apartment buildings (most of the social housing will be in town houses or low-rise walk-ups), no more islands of concentrated poverty.

One Billion Americans: The Case for Thinking Bigger by Matthew Yglesias

Affordable Care Act / Obamacare, airport security, assortative mating, Big Tech, Boeing 737 MAX, Boris Johnson, British Empire, business logic, carbon footprint, carbon tax, classic study, collective bargaining, Colonization of Mars, congestion charging, congestion pricing, coronavirus, COVID-19, cross-subsidies, deindustrialization, demographic transition, Diane Coyle, Donald Trump, drive until you qualify, Edward Glaeser, Elon Musk, gentrification, global pandemic, Greta Thunberg, high-speed rail, housing crisis, illegal immigration, immigration reform, income inequality, Induced demand, industrial cluster, Kowloon Walled City, low interest rates, mandatory minimum, mass immigration, Mercator projection, minimum wage unemployment, moral panic, New Urbanism, open borders, open immigration, plutocrats, purchasing power parity, race to the bottom, secular stagnation, selective serotonin reuptake inhibitor (SSRI), self-driving car, Silicon Valley, social distancing, superstar cities, tech worker, the built environment, Thomas Malthus, transit-oriented development, white flight, working-age population, Yogi Berra

The point is that when we think a service is important, we provide it on equal terms for all. You adjust for the fact that rich people have more money by charging them higher taxes. Precisely because the federal government has a progressive tax structure, the right way to think about providing child benefits to affluent families is that it involves childless rich people paying a cross subsidy to affluent families with two or three children. That’s not the most pressing social obligation in the world by any means, but it’s a perfectly reasonable idea and a good statement of values that raising families is an important form of participating in society. The low-end version of this is considerably more urgent, because the consequence of refusing to give benefits to the neediest families is that millions of children are subject to intense material deprivation despite living in one of the richest societies in all of human history.

The End of Money: Counterfeiters, Preachers, Techies, Dreamers--And the Coming Cashless Society by David Wolman

addicted to oil, Bay Area Rapid Transit, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, bitcoin, Bretton Woods, carbon footprint, cashless society, central bank independence, collateralized debt obligation, corporate social responsibility, credit crunch, cross-subsidies, Diane Coyle, fiat currency, financial innovation, floating exchange rates, German hyperinflation, greed is good, Isaac Newton, Kickstarter, M-Pesa, Mahatma Gandhi, mental accounting, mobile money, Money creation, money: store of value / unit of account / medium of exchange, offshore financial centre, P = NP, Peter Thiel, place-making, placebo effect, Ponzi scheme, Ronald Reagan, seigniorage, Silicon Valley, special drawing rights, Steven Levy, the payments system, transaction costs, WikiLeaks

While cotton-industry lobbyists wield trite nationalism-tinged defenses for banknotes, and thieves and tax evaders rob the rest of us blind, they do so, says Birch, with cash provided to them by us. “We make their business possible, or at least much, much easier. Cash lets criminals maintain anonymity, store value, make payments—everything,” which means we provide them with “a cross subsidy,” he says. “When you kick down a Mexican drug dealers’ door to find $205 million in cash, which happened a few years ago, you have to wonder whose side the Treasury is on.”62 This is not a fringe opinion. The Wall Street Journal reported in July 2010: “Gangsters, drug dealers and money launderers appear to be playing their part in helping shore up the financial stability of the euro zone.

The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit by Marina Krakovsky

Affordable Care Act / Obamacare, Airbnb, Al Roth, Ben Horowitz, Benchmark Capital, Black Swan, buy low sell high, Chuck Templeton: OpenTable:, Credit Default Swap, cross-subsidies, crowdsourcing, deal flow, disintermediation, diversified portfolio, experimental economics, George Akerlof, Goldman Sachs: Vampire Squid, income inequality, index fund, information asymmetry, Jean Tirole, Joan Didion, John Zimmer (Lyft cofounder), Kenneth Arrow, Lean Startup, Lyft, Marc Andreessen, Mark Zuckerberg, market microstructure, Martin Wolf, McMansion, Menlo Park, Metcalfe’s law, moral hazard, multi-sided market, Network effects, patent troll, Paul Graham, Peter Thiel, pez dispenser, power law, real-name policy, ride hailing / ride sharing, Robert Metcalfe, Sand Hill Road, search costs, seminal paper, sharing economy, Silicon Valley, social graph, supply-chain management, TaskRabbit, the long tail, The Market for Lemons, the strength of weak ties, too big to fail, trade route, transaction costs, two-sided market, Uber for X, uber lyft, ultimatum game, Y Combinator

The typical way out of this chicken-and-egg problem is for the middleman to subsidize one side, thus getting these initial users to sign up before there’s anything on the other side. Even after a two-sided market takes off, with plenty of users on both sides and therefore the potential to charge both sets of users, middlemen usually continue to offer the service for free to one side while making all their money from charging the other side for access, relying on these cross-subsidies for continued growth and profit. As Chris Anderson put it in Free, “People are making lots of money charging nothing.”38 Some middleman businesses go so far as to pay one set of users to join the network, hoping that a large user base will attract enough paying users on the other side to more than justify the subsidy.

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

"World Economic Forum" Davos, agricultural Revolution, Airbnb, Alan Greenspan, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, business cycle, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-border payments, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, disruptive innovation, distributed ledger, Dogecoin, double entry bookkeeping, Ethereum, ethereum blockchain, facts on the ground, fake news, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, land bank, large denomination, low interest rates, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, Money creation, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, Suez canal 1869, technoutopianism, The future is already here, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

Countries that struggle with tax collection could go a long way towards solving their problems by restricting the use of cash. Greece, in particular, could make lemonade out of lemons, using its current capital controls to push the country’s cash culture into new habits (Financial Times 2015). Not only would electronic money cut my tax bill, it would stop the ridiculous cross-subsidy from the lawful to the lawless that plagues our moral fibre. But my point is that if the black economy were turned white, UK GDP would grow by 20 per cent or so. And if you think I’m joking, let me mention that there is work already underway to look at estimating the illegal drugs trade and prostitution as components of GDP, in compliance with EU rules.

The Greed Merchants: How the Investment Banks Exploited the System by Philip Augar

Alan Greenspan, Andy Kessler, AOL-Time Warner, barriers to entry, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, business cycle, buttonwood tree, buy and hold, capital asset pricing model, Carl Icahn, commoditize, corporate governance, corporate raider, crony capitalism, cross-subsidies, deal flow, equity risk premium, financial deregulation, financial engineering, financial innovation, fixed income, Glass-Steagall Act, Gordon Gekko, high net worth, information retrieval, interest rate derivative, invisible hand, John Meriwether, junk bonds, Long Term Capital Management, low interest rates, Martin Wolf, Michael Milken, new economy, Nick Leeson, offshore financial centre, pensions crisis, proprietary trading, regulatory arbitrage, risk free rate, Sand Hill Road, shareholder value, short selling, Silicon Valley, South Sea Bubble, statistical model, systematic bias, Telecommunications Act of 1996, The Chicago School, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, tulip mania, value at risk, yield curve

They would be in the deal because they liked it, because they thought it would be good for their clients, and everything would be open and above board. The investment bank’s in-house broker would not be involved in distribution of the deal. The Segregated Model Separating the functions in this way would minimize the cross-subsidies that exist at present and increase the transparency of prices and profits. Brokers would have to make their money from commission. They would need to sharpen up their services to investors, pay their staff less and accept lower profits. More money would stick with the end investor and portfolio performance might improve if everyone had an equal opportunity to exploit market inefficiencies.

The End of Big: How the Internet Makes David the New Goliath by Nicco Mele

4chan, A Declaration of the Independence of Cyberspace, Airbnb, Amazon Web Services, Andy Carvin, Any sufficiently advanced technology is indistinguishable from magic, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, bitcoin, bread and circuses, business climate, call centre, Cass Sunstein, centralized clearinghouse, Chelsea Manning, citizen journalism, cloud computing, collaborative consumption, collaborative editing, commoditize, Computer Lib, creative destruction, crony capitalism, cross-subsidies, crowdsourcing, David Brooks, death of newspapers, disruptive innovation, Donald Trump, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, Evgeny Morozov, Exxon Valdez, Fall of the Berlin Wall, Filter Bubble, Firefox, global supply chain, Google Chrome, Gordon Gekko, Hacker Ethic, Ian Bogost, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, John Perry Barlow, Julian Assange, Kevin Kelly, Khan Academy, Kickstarter, Lean Startup, lolcat, machine readable, Mark Zuckerberg, military-industrial complex, minimum viable product, Mitch Kapor, Mohammed Bouazizi, Mother of all demos, Narrative Science, new economy, Occupy movement, off-the-grid, old-boy network, One Laptop per Child (OLPC), peer-to-peer, period drama, Peter Thiel, pirate software, public intellectual, publication bias, Robert Metcalfe, Ronald Reagan, Ronald Reagan: Tear down this wall, satellite internet, Seymour Hersh, sharing economy, Silicon Valley, Skype, social web, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, Ted Nelson, Ted Sorensen, Telecommunications Act of 1996, telemarketer, the Cathedral and the Bazaar, the long tail, The Wisdom of Crowds, transaction costs, uranium enrichment, Whole Earth Catalog, WikiLeaks, Zipcar

In June 2011, an FCC report on the condition of local news described the phenomen this way: During the news media’s most profitable days, in many towns, there was only one newspaper, leaving consumers with limited choice. And, though we may not have thought of it this way, purchasing a paper meant having to buy a bundle of goods, even if readers only wanted certain parts. A cross-subsidy system had developed, in which a consumer who bought the paper for the box scores was helping to pay the salary of the city hall reporter.18 Similarly, William S. Paley (who built CBS) used to tell his reporters that the entertainment division paid for the news. These days, if all you want are the sports scores or the classifieds or the stock prices or even just the horoscope—well, you can get any one of those online without paying for the rest of the newspaper.

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It) by Salim Ismail, Yuri van Geest

23andMe, 3D printing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, anti-fragile, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, behavioural economics, Ben Horowitz, bike sharing, bioinformatics, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, book value, Burning Man, business intelligence, business process, call centre, chief data officer, Chris Wanstrath, circular economy, Clayton Christensen, clean water, cloud computing, cognitive bias, collaborative consumption, collaborative economy, commoditize, corporate social responsibility, cross-subsidies, crowdsourcing, cryptocurrency, dark matter, data science, Dean Kamen, deep learning, DeepMind, dematerialisation, discounted cash flows, disruptive innovation, distributed ledger, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fail fast, game design, gamification, Google Glasses, Google Hangouts, Google X / Alphabet X, gravity well, hiring and firing, holacracy, Hyperloop, industrial robot, Innovator's Dilemma, intangible asset, Internet of things, Iridium satellite, Isaac Newton, Jeff Bezos, Joi Ito, Kevin Kelly, Kickstarter, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, Lean Startup, life extension, lifelogging, loose coupling, loss aversion, low earth orbit, Lyft, Marc Andreessen, Mark Zuckerberg, market design, Max Levchin, means of production, Michael Milken, minimum viable product, natural language processing, Netflix Prize, NetJets, Network effects, new economy, Oculus Rift, offshore financial centre, PageRank, pattern recognition, Paul Graham, paypal mafia, peer-to-peer, peer-to-peer model, Peter H. Diamandis: Planetary Resources, Peter Thiel, Planet Labs, prediction markets, profit motive, publish or perish, radical decentralization, Ray Kurzweil, recommendation engine, RFID, ride hailing / ride sharing, risk tolerance, Ronald Coase, Rutger Bregman, Salesforce, Second Machine Age, self-driving car, sharing economy, Silicon Valley, skunkworks, Skype, smart contracts, Snapchat, social software, software is eating the world, SpaceShipOne, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, Steve Jurvetson, subscription business, supply-chain management, synthetic biology, TaskRabbit, TED Talk, telepresence, telepresence robot, the long tail, Tony Hsieh, transaction costs, Travis Kalanick, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, urban planning, Virgin Galactic, WikiLeaks, winner-take-all economy, X Prize, Y Combinator, zero-sum game

In his 2005 book, Free: The Future of a Radical Price, Chris Anderson built on the lower cost positioning of the disruptor, noting that pretty much all business models, and certainly those that are information-based, will soon be offered to consumers for free. The popular “freemium” model is just such a case: many websites offer a basic level of service at no cost, while also enabling users to pay a fee to upgrade to more storage, statistics or extra features. Advertising, cross-subsidies and subscription business models are other ways of layering profit-generating operations on top of what is essentially free baseline information. Kevin Kelly expanded further on this idea in a seminal post entitled “Better than Free,” which appeared on his Technium blog in 2008. In digital networks anything can be copied and is thus “abundant.”

The Weightless World: Strategies for Managing the Digital Economy by Diane Coyle

Alan Greenspan, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, business cycle, clean water, company town, computer age, Corn Laws, creative destruction, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, flying shuttle, full employment, George Santayana, global village, Great Leap Forward, hiring and firing, Howard Rheingold, income inequality, informal economy, invention of the sewing machine, invisible hand, Jane Jacobs, Joseph Schumpeter, Kickstarter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Mahbub ul Haq, Marshall McLuhan, mass immigration, McJob, Meghnad Desai, microcredit, moral panic, Neal Stephenson, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pension time bomb, pensions crisis, Robert Solow, Ronald Reagan, Silicon Valley, Snow Crash, spinning jenny, The Death and Life of Great American Cities, the market place, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, Tragedy of the Commons, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population

It is the regions in longest receipt of subsidies that trail furthest behind the national average. Italy’s mezzogiorno, despite decades of funding from both the EU and the national government, still has GDP per capita less than three-fifths of the north’s. Extremadura in Spain does little better despite subsidies almost as extensive. The US federal structure involves some cross-subsidy of poor states by rich ones, but not as much. With 3 per cent of the US population willing to move state each year, economic disparities between states persist but are smaller than between European regions. Switch to a pattern of city government rather than regional, and the fruitless subsidies would become a thing of the past.

The Making of a World City: London 1991 to 2021 by Greg Clark

Basel III, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, British Empire, business climate, business cycle, capital controls, carbon footprint, congestion charging, corporate governance, cross-subsidies, Crossrail, deindustrialization, Dissolution of the Soviet Union, East Village, Fall of the Berlin Wall, financial innovation, financial intermediation, gentrification, global value chain, haute cuisine, high-speed rail, housing crisis, industrial cluster, intangible asset, job polarisation, Kickstarter, knowledge economy, knowledge worker, labour market flexibility, low skilled workers, manufacturing employment, Masdar, mass immigration, megacity, megaproject, New Urbanism, offshore financial centre, open immigration, Pearl River Delta, place-making, rent control, Robert Gordon, Silicon Valley, smart cities, sovereign wealth fund, trickle-down economics, urban planning, urban renewal, working poor

Middle-income workers are also prominent in shared ownership schemes, where the customer profile continues to shift towards more affluent purchasers. Although the lowcost home ownership (LCHO) programmes initiated in the 1980s have produced only modest results in London, they remain capable of generating cross-subsidy in the capital. Over the last decade, new London LCHO supply, mainly via housing associations, has averaged around 5000 per year, with the majority of applicants from the private rented sector (ibid.). Such schemes are now rarely accessed by lower-income residents who, while supported by housing associations, are encountering significantly greater rental burdens.

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

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

Riskier ventures, meanwhile, had the support of banks' legions of savers who, for the most part, hoped to earn decent returns safe in the ‘knowledge’ that bank failures were a thing of the past. After all, given that policy-makers had mastered the economic cycle, what could possibly go wrong? Banks were thus faced with a series of inconsistent objectives and, in the attempt to meet them all, ended up creating a web of cross-subsidies that hid the true cost of banking services in some areas thanks to excessive risk-taking in other areas. Untangling this labyrinth won't be easy. Nor will it be necessarily be popular. But it may be the only way to restore confidence in the financial system. The first step is to prevent banks from pursuing short-run profit at the expense of long-run stability.

Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy by George Gilder

23andMe, Airbnb, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, AlphaGo, AltaVista, Amazon Web Services, AOL-Time Warner, Asilomar, augmented reality, Ben Horowitz, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bob Noyce, British Empire, Brownian motion, Burning Man, business process, butterfly effect, carbon footprint, cellular automata, Claude Shannon: information theory, Clayton Christensen, cloud computing, computer age, computer vision, crony capitalism, cross-subsidies, cryptocurrency, Danny Hillis, decentralized internet, deep learning, DeepMind, Demis Hassabis, disintermediation, distributed ledger, don't be evil, Donald Knuth, Donald Trump, double entry bookkeeping, driverless car, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fake news, fault tolerance, fiat currency, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, floating exchange rates, Fractional reserve banking, game design, Geoffrey Hinton, George Gilder, Google Earth, Google Glasses, Google Hangouts, index fund, inflation targeting, informal economy, initial coin offering, Internet of things, Isaac Newton, iterative process, Jaron Lanier, Jeff Bezos, Jim Simons, Joan Didion, John Markoff, John von Neumann, Julian Assange, Kevin Kelly, Law of Accelerating Returns, machine translation, Marc Andreessen, Mark Zuckerberg, Mary Meeker, means of production, Menlo Park, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, move fast and break things, Neal Stephenson, Network effects, new economy, Nick Bostrom, Norbert Wiener, Oculus Rift, OSI model, PageRank, pattern recognition, Paul Graham, peer-to-peer, Peter Thiel, Ponzi scheme, prediction markets, quantitative easing, random walk, ransomware, Ray Kurzweil, reality distortion field, Recombinant DNA, Renaissance Technologies, Robert Mercer, Robert Metcalfe, Ronald Coase, Ross Ulbricht, Ruby on Rails, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Singularitarianism, Skype, smart contracts, Snapchat, Snow Crash, software is eating the world, sorting algorithm, South Sea Bubble, speech recognition, Stephen Hawking, Steve Jobs, Steven Levy, Stewart Brand, stochastic process, Susan Wojcicki, TED Talk, telepresence, Tesla Model S, The Soul of a New Machine, theory of mind, Tim Cook: Apple, transaction costs, tulip mania, Turing complete, Turing machine, Vernor Vinge, Vitalik Buterin, Von Neumann architecture, Watson beat the top human players on Jeopardy!, WikiLeaks, Y Combinator, zero-sum game

Focusing on stopping progress, barring new power plants, dismantling chemical facilities, mobilizing against Israel, and other reactionary pursuits, Ivy institutions are pursuing the fancies of a declining intellectual and business elite, full of chemophobic nags and luddite lame-ducks quacking away on their miasmic pools of old money as the world whirls past them. In the autumn of 2013, just as the chief environmental ministers of Germany and Spain confessed the near-total failure of their once-pioneering programs of cross subsidies, feed-in tariffs, and punitive taxes to promote “alternative energy,” Harvard’s privileged student body jumped on board. They voted by an 80 percent majority for a resolution to cleanse the university’s $500 billion endowment of all investments in companies involved with extraction of carbon-based fossil fuels.

The Railways: Nation, Network and People by Simon Bradley

Alfred Russel Wallace, back-to-the-land, Beeching cuts, book value, British Empire, classic study, clean water, Corn Laws, cross-subsidies, Crossrail, David Brooks, Etonian, high-speed rail, intermodal, joint-stock company, loose coupling, low cost airline, oil shale / tar sands, period drama, pneumatic tube, railway mania, Ralph Waldo Emerson, work culture

Local trains and commuter services were now acknowledged to show wider social and economic benefits and underwritten accordingly. In the same spirit, the 1968 Act also introduced the concept of subsidies for rail freight in the form of grants to companies wanting to invest in sidings and handling equipment, although these have not endured. In those sectors of the passenger business that are meant to show a profit, cross-subsidies remain inevitable, as a little thought will show. The journey of the passenger on a nine-tenths-empty Sunday evening train is effectively underwritten by the dozens who will cram into the same carriage the following Monday morning. Even at their simplest, railway economics remain quite complicated.

…

L. 114, 180 On Liberty (Mill) 109 On Railway and Other Injuries of the Nervous System (Erichsen) 160 Ongar branch 549 open carriages 56, 57, 59–60, 61, 64, 65 Operation London Bridge 287 Orley Farm (Trollope) 77 Ottley, George 538 Ouida 127 Our Iron Roads (Williams) 38, 196, 514 Our Mutual Friend (Dickens) 15, 151 Oxenhope 472 Oxford 19, 95–6, 379, 413, 468, 469, 508 Oxford Ragwort 379 Oxford, Worcester & Wolverhampton Railway 44, 463 P Pacers 232–6, 239, 259, 549 Paddington 17 1999 disaster 289 bookstall 127 destination board 493 goods depot 443 graffiti 327, 327 hotel 478 latrines 206 loudspeakers 493 mixed-gauge track 272 nameboards 492, 540 prizefight excursions 92 The Railway Station 31 sleeper trains 249 telegraph 294 train shed 486–7 trainspotting 520 waiting rooms 469 Padel, Ruth 327 Page, Herbert 160–1 Palin, Michael 539 Pall Mall Gazette 135, 476 Pandrol clips 277 Paragon Anti-Vandal Shelter 455, 456 Paris 488 Parliamentary Select Committee on Railway Accidents 194 Parliamentary trains 61–3, 64–6, 69, 74–5, 95, 165 Pasley, Sir Charles 63, 64, 84 passenger trains 239 Beeching 414 cross-subsidies 424 fares 290, 418, 419–20 Flying Scotsman 239–40 refreshment stops 473, 474–5 see also carriages; classes passengers access to platforms 464–6 conversation 253 footbridges 448–50, 452 footwarmers 41–2 luncheon baskets 48–9, 49 preserved railways 545, 547 reading 35, 118–20, 122–8, 137, 139 seat-marking 103–5, 104 servants 77, 78, 81, 242 subways 450–1 working on trains 131, 132–3 see also accidents; crime; luggage; tickets Peckham 379–80 Peel, Sir Robert 95 Pendleton, John 68 Pendolino trains 236–8, 237, 239 Pendon Parva 542 Penguin Books 130 Pennine Way 281 Penny Illustrated Paper 114, 142, 144, 153, 154, 176 Penrhyn Castle 380 Penzance 249 Perdonnet, Auguste 465 permanent way see railway lines permissive block working 299 Perryman, A.

The Weather Makers: How Man Is Changing the Climate and What It Means for Life on Earth by Tim Flannery

Alfred Russel Wallace, Anthropocene, biodiversity loss, carbon credits, carbon footprint, carbon tax, clean water, climate change refugee, cross-subsidies, decarbonisation, Doomsday Clock, Ford Model T, Future Shock, Gregor Mendel, hydrogen economy, Intergovernmental Panel on Climate Change (IPCC), James Watt: steam engine, junk bonds, Medieval Warm Period, South China Sea, Stephen Hawking, uranium enrichment, Y2K

That includes ever-stricter regulation on the efficiency of goods allowed into the marketplace, strong housing codes that mandate a limit to emissions at the household level, legislation that encourages the retrofitting of devices that reduce household emissions, and designing transport systems with overall energy efficiency in mind. It is also important that cross-subsidies be removed—big energy users like smelters will never feel the full impact of price signals (and thus will never get serious about efficiency) while we householders are footing the bill for much of their power use. Initiatives to encourage the use of renewable energy are equally important, and could include telling energy providers that they must source a percentage of their energy from renewables (called mandated renewable energy target schemes); rebates for the purchase of photovoltaic cells; assistance with the location of electricity inter-connectors that favour renewable sources; and legislation that facilitates the introduction of renewables such as wind.

Conscious Capitalism, With a New Preface by the Authors: Liberating the Heroic Spirit of Business by John Mackey, Rajendra Sisodia, Bill George

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Bear Stearns, benefit corporation, Berlin Wall, Buckminster Fuller, business process, carbon footprint, collective bargaining, corporate governance, corporate social responsibility, creative destruction, crony capitalism, cross-subsidies, do well by doing good, en.wikipedia.org, Everything should be made as simple as possible, Fall of the Berlin Wall, fear of failure, Flynn Effect, income per capita, invisible hand, Jeff Bezos, job satisfaction, John Elkington, lone genius, low interest rates, Mahatma Gandhi, microcredit, Nelson Mandela, Occupy movement, profit maximization, Ralph Waldo Emerson, shareholder value, six sigma, social intelligence, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steven Pinker, systems thinking, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, too big to fail, union organizing, wealth creators, women in the workforce, zero-sum game

Companies can use variable pricing to make such products affordable to poor people and still make a profit. Additionally, the companies benefit through public recognition and an enhanced reputation, which enables them to hire and retain additional talented team members. Rather than profit maximization, creative capitalism emphasizes impact maximization. It entails a high degree of cross-subsidy between more prosperous and less prosperous customers. The limitation of creative capitalism, like CSR, is that it is largely an add-on to the traditional business model. It simply suggests that companies develop better go-to-market strategies for low-income markets. The concept only applies to a relatively small subset of industries with cost structures that allow for radically variable pricing.

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

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

Price discrimination is efficient in the sense that it maximizes the total surplus of all transactions. When the firm has all the information, it can propose a price or a contract that is specific to each client and acceptable to each client. With efficient discrimination, as long as the transaction is economically viable, it will take place. Without discrimination, there are cross-subsidies, and some people can be priced out. The concern, however, is that a monopoly with full information can extract all the surplus. This is the fear expressed by Omarova. The key point here is that free entry becomes more important when firms increase price discrimination. Platforms use a variety of tools to limit competition, and sometimes that involves preventing price discrimination.

News and How to Use It: What to Believe in a Fake News World by Alan Rusbridger

airport security, basic income, Bellingcat, Big Tech, Black Lives Matter, Bletchley Park, Boris Johnson, Brexit referendum, call centre, Cambridge Analytica, Chelsea Manning, citizen journalism, Climategate, cognitive dissonance, coronavirus, correlation does not imply causation, COVID-19, Credit Default Swap, crisis actor, cross-subsidies, crowdsourcing, disinformation, Dominic Cummings, Donald Trump, Edward Snowden, end-to-end encryption, fake news, Filter Bubble, future of journalism, George Floyd, ghettoisation, global pandemic, Google Earth, green new deal, hive mind, housing crisis, Howard Rheingold, illegal immigration, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, Jeffrey Epstein, Jeremy Corbyn, Johann Wolfgang von Goethe, Julian Assange, Kickstarter, lockdown, Mark Zuckerberg, Murray Gell-Mann, Narrative Science, Neil Kinnock, Nelson Mandela, New Journalism, Nicholas Carr, ocean acidification, offshore financial centre, post-truth, profit motive, public intellectual, publication bias, Seymour Hersh, Snapchat, social distancing, Social Justice Warrior, Steve Bannon, tech baron, the scientific method, TikTok, universal basic income, WikiLeaks, yellow journalism

The Intercept could not have started – and may not survive – without Pierre Omidyar, the founder of eBay. Jeff Bezos, the richest person in the world after giving life to Amazon, came to the rescue of the Washington Post, as have assorted French businessmen to Le Monde (SEE: PROPRIETORS). There may be forms of cross-subsidy within organisations. The Guardian would have been a sickly animal at various points in its history without being supported by, first, the Manchester Evening News and then a secondhand car magazine/website, Auto Trader. The Times has occasionally relied on subventions from profitable parts of the Murdoch empire, including the red-top tabloid.

The City on the Thames by Simon Jenkins

Ascot racecourse, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Boris Johnson, bread and circuses, Brexit referendum, British Empire, clean water, computerized trading, congestion charging, Corn Laws, cross-subsidies, Crossrail, deindustrialization, estate planning, Frank Gehry, gentrification, housing crisis, informal economy, Isaac Newton, Jane Jacobs, John Snow's cholera map, light touch regulation, Louis Blériot, negative equity, new economy, New Urbanism, Northern Rock, Peace of Westphalia, place-making, railway mania, Richard Florida, Right to Buy, South Sea Bubble, sovereign wealth fund, strikebreaker, the built environment, The Death and Life of Great American Cities, the market place, Traffic in Towns by Colin Buchanan, upwardly mobile, urban renewal, Winter of Discontent, women in the workforce

A central weakness of London’s local government was that, unlike the provincial municipalities, it lacked any single authority with powers to redistribute taxes from rich to poor areas of the city. As a result, the vestry of St George’s-in-the-East had to levy a crippling property rate of 3/9d in the pound, while wealthy St George’s Hanover Square levied a mere 6d. Without cross-subsidy, serious efforts to relieve poverty were impossible. The liberal leader of Birmingham, Joseph Chamberlain, thundered that cities should accept ‘new conceptions of public duty, new developments of social enterprise, new estimates of the natural obligations of the community to one another’. Birmingham was pointing an accusing finger at London.

The Long Boom: A Vision for the Coming Age of Prosperity by Peter Schwartz, Peter Leyden, Joel Hyatt

"World Economic Forum" Davos, Alan Greenspan, Alvin Toffler, American ideology, Asian financial crisis, Berlin Wall, business cycle, centre right, classic study, clean water, complexity theory, computer age, crony capitalism, cross-subsidies, Danny Hillis, dark matter, dematerialisation, Deng Xiaoping, Dissolution of the Soviet Union, double helix, edge city, Electric Kool-Aid Acid Test, European colonialism, Fall of the Berlin Wall, financial innovation, George Gilder, glass ceiling, global village, Gregor Mendel, Herman Kahn, hydrogen economy, industrial cluster, informal economy, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, It's morning again in America, junk bonds, Just-in-time delivery, Kevin Kelly, knowledge economy, knowledge worker, life extension, market bubble, mass immigration, megacity, Mikhail Gorbachev, Neal Stephenson, Nelson Mandela, new economy, oil shock, open borders, out of africa, Productivity paradox, QR code, Richard Feynman, Ronald Reagan, Search for Extraterrestrial Intelligence, shareholder value, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, The Hackers Conference, the scientific method, Thomas L Friedman, upwardly mobile, Washington Consensus, We are as Gods, Whole Earth Catalog, women in the workforce, Y2K, zero-sum game

ThosE RElATioNships hfilpsd dEEpEN ThE SENSE of CONCERN ihAT ktpT ThE EUROPEANS MOTIVATEd. ThE fiRST STEP ThE EUROPEANS TOOk WAS TO INITIATE TEchNOfoqy ANd TtlECOMMU' NicATfoNs dEAb AAT WERE hiqhly AdvANTAqeous TO These dEvelopiNq REqions. As ThE NEW qbbAl TElECOMMUNICATIONS INFRASTRUCTURE WAS buill, The EUROPEANS bfiokeREd qENEROus CROSS-subsidiES, wiTh The AffluENT pAyiwq MORE so The POOR could pAy lirrlE TO NOThinq. This WAS A foswuk ihAT hAd woRkcd IN The PREVIOUS CCNTURy IN buildlNq TElcphoNE ANd elECTRiCITy INffiASTRUCTURES ThAT EVENTUAlly CONNECTEd EVERyONE. ThiS TWENTY'fiRST CENTURy EffORT MET Wllh ThE SAME SUCCESS, STARTINq WJTh T|« qiA^fT SATElliTE PROJECTS like TelEdesic.

Competition Demystified by Bruce C. Greenwald

additive manufacturing, airline deregulation, AltaVista, AOL-Time Warner, asset allocation, barriers to entry, book value, business cycle, creative destruction, cross-subsidies, deindustrialization, discounted cash flows, diversified portfolio, Do you want to sell sugared water for the rest of your life?, Everything should be made as simple as possible, fault tolerance, intangible asset, John Nash: game theory, Nash equilibrium, Network effects, new economy, oil shock, packet switching, PalmPilot, Pepsi Challenge, pets.com, price discrimination, price stability, revenue passenger mile, search costs, selective serotonin reuptake inhibitor (SSRI), shareholder value, Silicon Valley, six sigma, Steve Jobs, transaction costs, vertical integration, warehouse automation, yield management, zero-sum game

It established the Civil Aeronautics Board (CAB), with authority over route entry and exit, fares, mergers and acquisitions, interfirm agreements, and airmail rates. This regulatory regime established order in the industry, so much so that from 1938 through 1978, no new trunk line was created. The routes were distributed to provide cross-subsidies between dense, profitable long-haul flights and shorter, more lightly traveled and money-losing routes. The carriers could not compete on price, and they were allowed to raise fares when their own costs increased. For a while, the trunk carriers flourished. Even though the CAB encouraged local carriers to enter the market, the four largest trunk carriers retained 70 percent of the market into the 1960s.

Beyond the Random Walk: A Guide to Stock Market Anomalies and Low Risk Investing by Vijay Singal

3Com Palm IPO, Andrei Shleifer, AOL-Time Warner, asset allocation, book value, buy and hold, capital asset pricing model, correlation coefficient, cross-subsidies, currency risk, Daniel Kahneman / Amos Tversky, diversified portfolio, endowment effect, fixed income, index arbitrage, index fund, information asymmetry, information security, junk bonds, liberal capitalism, locking in a profit, Long Term Capital Management, loss aversion, low interest rates, margin call, market friction, market microstructure, mental accounting, merger arbitrage, Myron Scholes, new economy, prediction markets, price stability, profit motive, random walk, Richard Thaler, risk free rate, risk-adjusted returns, risk/return, selection bias, Sharpe ratio, short selling, short squeeze, survivorship bias, Tax Reform Act of 1986, transaction costs, uptick rule, Vanguard fund

Trading strategies designed to capture abnormal performance do not always perform satisfactorily. The primary explanation for the overperformance of companies engaged in a spin-off seems to be related to corporate focus. When unrelated businesses are spun off, the focus of the management is sharper and the incidence of cross subsidies to keep poorly performing divisions alive is much reduced. There is an improvement in operating performance, and the empirical evidence suggests that focus-increasing spin-offs are the only ones that outperform their peers. The non-focus-increasing spin-offs do not outperform their peers. Another explanation for the abnormal performance is a reduction in asymmetry of information between the management and investors.

Fire and Steam: A New History of the Railways in Britain by Christian Wolmar

accounting loophole / creative accounting, Beeching cuts, carbon footprint, collective bargaining, computer age, Corn Laws, creative destruction, cross-subsidies, Crossrail, financial independence, hiring and firing, James Watt: steam engine, joint-stock company, low cost airline, railway mania, rising living standards, Silicon Valley, South Sea Bubble, strikebreaker, Traffic in Towns by Colin Buchanan, union organizing, upwardly mobile, vertical integration, working poor, yield management

See, for example, Simon Garfield, The Last Journey of William Huskisson, Faber, 2002, p. 20. 6 Nicholas Faith, The World the Railways Made, Bodley Head, 1990, p. 15. 7 The three mainland Japanese railways are profitable, though they had huge debt write-offs at privatization in the 1980s, and US freight companies do very well thanks to the sheer distance involved in crossing the country. Freight in India and Russia is profitable too, but otherwise, while individual services may make a profit, the need for cross-subsidy means that throughout the world the vast majority of railway networks are loss-making. 8 Quoted in Ferneyhough, Liverpool & Manchester Railway, p. 93. 9 As the Bodmin & Wadebridge had been built to standard gauge, it was not directly connected to the rest of the network until 1892 when the Great Western’s broad gauge was finally abandoned (as explained in Chapter 9). 10 The Quarterly Review, 1833, quoted in Frank Ferneyhough, The History of Railways in Britain, Osprey Publishing, 1975, p. 73. 11 Many of the arches are now being converted into upmarket restaurants and fashionable nightclubs.

The New Enclosure: The Appropriation of Public Land in Neoliberal Britain by Brett Christophers

Alan Greenspan, book value, Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, Corn Laws, credit crunch, cross-subsidies, Diane Coyle, estate planning, Garrett Hardin, gentrification, ghettoisation, Hernando de Soto, housing crisis, income inequality, invisible hand, Jeremy Corbyn, land bank, land reform, land tenure, land value tax, late capitalism, market clearing, Martin Wolf, New Journalism, New Urbanism, off grid, offshore financial centre, performance metric, Philip Mirowski, price mechanism, price stability, profit motive, radical decentralization, Right to Buy, Skype, sovereign wealth fund, special economic zone, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tragedy of the Commons, Tyler Cowen, urban sprawl, wealth creators

They materialize because, in short, land and property prices have been rising, and in this bounteous context, developers – the main buyers of MoD land – have been willing to share some of their rich spoils in the form of relatively uncostly gestures of good will. ‘Attempts to resolve [the conflict between price and community benefits] within individual disposals have been tentative, muddled, or dependent on cross-subsidy from a buoyant private property market’, Dobson wrote; ‘most approaches to community benefit within the UK have depended on rising land and property values to generate sufficient surplus to underwrite activities such as the preservation of heritage or the provision of community facilities’. Rather than a policy success, then, community benefits have been incidental gains – scraps thrown from the table of outsized private-sector ‘profits available from residential or commercial sales’.

How Asia Works by Joe Studwell

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

They account for the bulk of China’s exports – private firms’ net exports (exports minus imports) went from zero in 2000 to USD200 billion in 201046 – but they are not rewarded by the state for this export performance. In most consumer goods businesses private firms are more open to multinational competition than were their Japanese and Korean cousins at a similar stage of development. They do not enjoy cross-subsidies from other protected non-consumer businesses, such as Hyundai Motor Company had from the chaebol’s cash-generative shipbuilding subsidiary; in China such non-consumer businesses are in state hands. Private firms enjoy fewer orders for state procurement than their public sector rivals, a big disadvantage in an era when the state is investing so heavily.

Be Your Own Financial Adviser: The Comprehensive Guide to Wealth and Financial Planning by Jonquil Lowe

AltaVista, asset allocation, banking crisis, BRICs, buy and hold, correlation coefficient, cross-subsidies, diversification, diversified portfolio, estate planning, fixed income, high net worth, money market fund, mortgage debt, mortgage tax deduction, negative equity, offshore financial centre, Own Your Own Home, passive investing, place-making, Right to Buy, risk/return, short selling, zero-coupon bond

Earlier (p. 232), this chapter explained how annuities are a combination of an investment and insurance against living too long. Income drawdown is purely about investment and there is no insurance element. This means M08_LOWE7798_01_SE_C08.indd 241 05/03/2010 09:50 242 Part 3 n Building and managing your wealth you get no cross-subsidy from people who die younger than you and you are reliant only on your own pension fund for your income. This means your investments have to work harder than they would have done within the framework of an annuity if they are to provide a comparable income. This extra return you need because you have not bought an annuity is called ‘mortality drag’.

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

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

Yet the cutbacks have hit the poorest councils hardest: for instance, Knowsley and Liverpool, two of the most deprived parts of the country, saw council spending cut by around £400 per inhabitant between 2000 and 2016, while Wokingham and Elmbridge, two of the wealthiest, had theirs cut by £2.19 and £8.14 respectively.13 Adam Leaver, professor of accounting and society at Sheffield University, sums up the geographical impact of the boom years and the crisis: ‘This quiet cross-subsidy from north and west to south-east has been running unnoticed for a long time,’ resulting in ‘a kind of regional moral hazard: the metropolitanisation of gains, and the nationalisation of losses.’ One major route for this flow is the stock market. Many people believe a stock market’s main function is to channel investors’ money to companies – to invest in productive things – but the shareholder value revolution that I described in the last chapter has turned this on its head, as companies increasingly prioritise channelling their profits not into investment but into buying back their own shares – thereby boosting the share price and with it shareholders’ wealth and company executives’ stock options – or buying other firms in monopolising mergers and acquisitions.

Breaking News: The Remaking of Journalism and Why It Matters Now by Alan Rusbridger

"World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Andy Carvin, banking crisis, Bellingcat, Bernie Sanders, Bletchley Park, Boris Johnson, Brexit referendum, Cambridge Analytica, centre right, Chelsea Manning, citizen journalism, country house hotel, cross-subsidies, crowdsourcing, data science, David Attenborough, David Brooks, death of newspapers, Donald Trump, Doomsday Book, Double Irish / Dutch Sandwich, Downton Abbey, Edward Snowden, Etonian, Evgeny Morozov, fake news, Filter Bubble, folksonomy, forensic accounting, Frank Gehry, future of journalism, G4S, high net worth, information security, invention of movable type, invention of the printing press, Jeff Bezos, jimmy wales, Julian Assange, Large Hadron Collider, Laura Poitras, Mark Zuckerberg, Mary Meeker, Menlo Park, natural language processing, New Journalism, offshore financial centre, oil shale / tar sands, open borders, packet switching, Panopticon Jeremy Bentham, post-truth, pre–internet, ransomware, recommendation engine, Ruby on Rails, sexual politics, Silicon Valley, Skype, Snapchat, social web, Socratic dialogue, sovereign wealth fund, speech recognition, Steve Bannon, Steve Jobs, the long tail, The Wisdom of Crowds, Tim Cook: Apple, traveling salesman, upwardly mobile, WikiLeaks, Yochai Benkler

What Money Can’t Buy; see Bibliography 40. The term ‘subsidariat’ was coined by Paul Dacre in a 2008 speech to the Society of Editors conference in Bristol: ‘those media outlets who cannot connect with enough readers to be commercially viable, and whose views and journalism are only sustained by huge cross-subsidy from profitable parts of their owners’ empires or by tax payers’ money . . . in most cases – [subsidy] ultimately perverts everything it touches. In the media, it produces a distorting prism, actually incentivising its recipients to operate in splendid isolationism, far removed from the real world that the great majority of readers and listeners have to live in.’ 41.

Order Without Design: How Markets Shape Cities by Alain Bertaud

autonomous vehicles, call centre, colonial rule, congestion charging, congestion pricing, creative destruction, cross-subsidies, Deng Xiaoping, discounted cash flows, Donald Trump, Edward Glaeser, en.wikipedia.org, extreme commuting, garden city movement, gentrification, Google Earth, Great Leap Forward, Jane Jacobs, job satisfaction, Joseph Schumpeter, land tenure, manufacturing employment, market design, market fragmentation, megacity, microapartment, new economy, New Urbanism, openstreetmap, Pearl River Delta, price mechanism, rent control, Right to Buy, Ronald Coase, self-driving car, Shenzhen special economic zone , Silicon Valley, special economic zone, the built environment, trade route, transaction costs, transit-oriented development, trickle-down economics, urban planning, urban sprawl, zero-sum game

Figure 6.21 Household income distribution in New York, 2012, showing income ranges that benefit from inclusionary zoning (red bars) and those that generate subsidies (blue bars). Source: Derived from US Census American Community Survey, Integrated Public Use Microdata Series, Furman Center, New York University. The above numbers demonstrate that a limited number of households can be a source of the cross-subsidy, one of the main flaws of inclusionary zoning policy. In New York, the annual flow of affordable housing intended to benefit 29 percent of the population depends on the number of housing units being built each year for the 9 percent of the wealthier households. Every eight newly built market units generate only two units of affordable housing.

The Social Life of Money by Nigel Dodd

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

Take, for example, the relationship between “surplus” and “deficit” nations within the Eurozone. Since the crisis began, this relationship has been framed overwhelmingly in terms of the failure of the latter nations to “live within their means.” Not only have these nations borrowed excessively, but also their continuing membership in the Eurozone presents a danger for surplus nations of cross-subsidy: a “transfer union” in which money flows from strong to weak states, lending moral validity to the deficit nations’ prolonged financial profligacy, their lack of fiscal self-control, and their poor work ethic. “Transfer union” became part of the Eurozone’s lexicon only in the teeth of its crisis.37 Jörg Krämer, chief economist at Commerzbank, claimed that the Eurozone “has moved away from a monetary union and towards a transfer union” (New York Times, May 11, 2010), and Columbia University economics professor Jagdish Bhagwati remarked in an interview that monetary union will turn into a transfer union “if the weak countries have problems.”38 The notion of a transfer union is generally used in such instances to describe redistributive functions that (so critics argue) were never intended for the euro.39 This is the language of restricted economy.

Hard Landing by Thomas Petzinger, Thomas Petzinger Jr.

airline deregulation, Boeing 747, buy and hold, Carl Icahn, centralized clearinghouse, Charles Lindbergh, collective bargaining, cross-subsidies, desegregation, Donald Trump, emotional labour, feminist movement, index card, junk bonds, low cost airline, low skilled workers, Marshall McLuhan, means of production, Michael Milken, mutually assured destruction, Neil Armstrong, Network effects, offshore financial centre, oil shock, Ponzi scheme, postindustrial economy, price stability, profit motive, Ralph Nader, revenue passenger mile, Ronald Reagan, scientific management, Silicon Valley, strikebreaker, technological determinism, the medium is the message, The Predators' Ball, Thomas L Friedman, union organizing, yield management, zero-sum game

The majors were not, as a matter of fact, using their transcontinental routes to subsidize their short-haul routes—at least not enough to account for their 70 percent discounts. The majors were offering low fares against People Express because they had computers that enabled them to offer rock-bottom prices to discretionary passengers and still keep as many seats as necessary in store for higher-paying passengers. That was the cross-subsidy that was killing People Express. After reaching Denver, Burr approached not only the management of Frontier but the unions as well. Although Burr practically had to hold his nose at the mere mention of the word “union,” he stifled his prejudice and earnestly told the union leaders that the employees of Frontier were much better off casting their lot with him than with his union-busting former partner Frank Lorenzo.

Basic Economics by Thomas Sowell

affirmative action, air freight, airline deregulation, Alan Greenspan, American Legislative Exchange Council, bank run, barriers to entry, big-box store, British Empire, business cycle, clean water, collective bargaining, colonial rule, corporate governance, correlation does not imply causation, cotton gin, cross-subsidies, David Brooks, David Ricardo: comparative advantage, declining real wages, Dissolution of the Soviet Union, diversified portfolio, European colonialism, fixed income, Ford Model T, Fractional reserve banking, full employment, global village, Gunnar Myrdal, Hernando de Soto, hiring and firing, housing crisis, income inequality, income per capita, index fund, informal economy, inventory management, invisible hand, John Maynard Keynes: technological unemployment, joint-stock company, junk bonds, Just-in-time delivery, Kenneth Arrow, knowledge economy, labor-force participation, land reform, late fees, low cost airline, low interest rates, low skilled workers, means of production, Mikhail Gorbachev, minimum wage unemployment, moral hazard, offshore financial centre, oil shale / tar sands, payday loans, Phillips curve, Post-Keynesian economics, price discrimination, price stability, profit motive, quantitative easing, Ralph Nader, rent control, rent stabilization, road to serfdom, Ronald Reagan, San Francisco homelessness, Silicon Valley, surplus humans, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, transcontinental railway, Tyler Cowen, Vanguard fund, War on Poverty, We are all Keynesians now

Putting aside for the moment the question whether most of “the poor” are a permanent class or simply people transiently in low income brackets (including young people living with middle-class or affluent parents), and even accepting for the sake of argument that it is somehow imperative that “the poor” use the particular goods and services in question, subsidizing everybody who uses those goods and services in order to help a fraction of the population seems less efficient than directly helping “the poor” with money or vouchers and letting the others pay their own way. The same principle applies when considering cross-subsidies provided, not by the taxpayers, but by excessive charges on some people (such as toll bridge users) to subsidize others (such as ferry boat riders). The weakness of the rationale based on subsidizing “the poor” is shown also by how often taxpayer subsidies are used to finance things seldom used by “the poor,” such as municipal golf courses or symphony orchestras.

Empire of Things: How We Became a World of Consumers, From the Fifteenth Century to the Twenty-First by Frank Trentmann

Abraham Maslow, Airbnb, Alan Greenspan, Anton Chekhov, Ayatollah Khomeini, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, bread and circuses, British Empire, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, Cass Sunstein, choice architecture, classic study, clean water, collaborative consumption, collective bargaining, colonial exploitation, colonial rule, Community Supported Agriculture, company town, critique of consumerism, cross-subsidies, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, equity premium, Fall of the Berlin Wall, Fellow of the Royal Society, financial exclusion, fixed income, food miles, Ford Model T, full employment, gentrification, germ theory of disease, global village, Great Leap Forward, haute cuisine, Herbert Marcuse, high net worth, income inequality, index card, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, it's over 9,000, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kitchen Debate, knowledge economy, labour mobility, Les Trente Glorieuses, libertarian paternalism, Livingstone, I presume, longitudinal study, mass immigration, McMansion, mega-rich, Michael Shellenberger, moral panic, mortgage debt, Murano, Venice glass, Naomi Klein, New Urbanism, Paradox of Choice, Pier Paolo Pasolini, planned obsolescence, pneumatic tube, post-industrial society, Post-Keynesian economics, post-materialism, postnationalism / post nation state, profit motive, prosperity theology / prosperity gospel / gospel of success, public intellectual, purchasing power parity, Ralph Nader, rent control, retail therapy, Richard Thaler, Right to Buy, Ronald Reagan, school vouchers, scientific management, Scientific racism, Scramble for Africa, seminal paper, sharing economy, Silicon Valley, Skype, stakhanovite, Ted Nordhaus, the built environment, the market place, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, urban planning, urban sprawl, Washington Consensus, women in the workforce, working poor, young professional, zero-sum game

The failure of British coffee offers a history lesson that is easily forgotten: some new tastes were acquired thanks to mercantilist empire; others were spoiled by it. The Chinese state might not have blocked trade, but it did not promote it either. Wealth created in the Yangzi Delta was siphoned off and transferred to the poorer north, a kind of cross-subsidy for the sake of political stability. The British state was no charity bazaar, but it squeezed its people’s wallets to build up trade and colonies as well as to subsidize the elite. And trade spurred demand, as contemporaries appreciated. ‘It is not because an English washerwoman cannot sit down to breakfast without tea and sugar, that the world has been circumnavigated,’ the champion of colonization Edward Gibbon Wakefield noted, ‘but it is because the world has been circumnavigated that an English washerwoman requires tea and sugar for breakfast.’41 The Atlantic empire gave the new textile industries, too, a much bigger outlet than they would have had otherwise.42 The promotion of trade intersected with a domestic culture receptive to experimentation, as was the case in the new cotton and pottery manufactories.

Principles of Corporate Finance by Richard A. Brealey, Stewart C. Myers, Franklin Allen

3Com Palm IPO, accelerated depreciation, accounting loophole / creative accounting, Airbus A320, Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, big-box store, Black Monday: stock market crash in 1987, Black-Scholes formula, Boeing 747, book value, break the buck, Brownian motion, business cycle, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, capital controls, Carl Icahn, Carmen Reinhart, carried interest, collateralized debt obligation, compound rate of return, computerized trading, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cross-subsidies, currency risk, discounted cash flows, disintermediation, diversified portfolio, Dutch auction, equity premium, equity risk premium, eurozone crisis, fear index, financial engineering, financial innovation, financial intermediation, fixed income, frictionless, fudge factor, German hyperinflation, implied volatility, index fund, information asymmetry, intangible asset, interest rate swap, inventory management, Iridium satellite, James Webb Space Telescope, junk bonds, Kenneth Rogoff, Larry Ellison, law of one price, linear programming, Livingstone, I presume, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, market bubble, market friction, money market fund, moral hazard, Myron Scholes, new economy, Nick Leeson, Northern Rock, offshore financial centre, PalmPilot, Ponzi scheme, prediction markets, price discrimination, principal–agent problem, profit maximization, purchasing power parity, QR code, quantitative trading / quantitative finance, random walk, Real Time Gross Settlement, risk free rate, risk tolerance, risk/return, Robert Shiller, Scaled Composites, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, Skype, SpaceShipOne, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, systematic bias, Tax Reform Act of 1986, The Nature of the Firm, the payments system, the rule of 72, time value of money, too big to fail, transaction costs, University of East Anglia, urban renewal, VA Linux, value at risk, Vanguard fund, vertical integration, yield curve, zero-coupon bond, zero-sum game, Zipcar

First, since the value of the parts can’t be observed separately, it is harder to set incentives for divisional managers. Second, conglomerates’ internal capital markets are inefficient. It is difficult for management to appreciate investment opportunities in many different industries, and internal capital markets are prone to overinvestment and cross-subsidies. Of course, companies shed assets as well as acquire them. Assets may be divested by spin-offs, carve-outs, or asset sales. In a spin-off the parent firm splits off part of its business into a separate public company and gives its shareholders stock in the company. In a carve-out the parent raises cash by separating off part of its business and selling shares in this business through an IPO.