open economy

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pages: 356 words: 103,944

The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

affirmative action, Asian financial crisis, bank run, banking crisis, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, collective bargaining, colonial rule, Corn Laws, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, Doha Development Round, en.wikipedia.org, endogenous growth, eurozone crisis, financial deregulation, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, George Akerlof, guest worker program, Hernando de Soto, immigration reform, income inequality, income per capita, industrial cluster, information asymmetry, joint-stock company, Kenneth Rogoff, land reform, liberal capitalism, light touch regulation, Long Term Capital Management, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, microcredit, Monroe Doctrine, moral hazard, night-watchman state, non-tariff barriers, offshore financial centre, oil shock, open borders, open economy, Paul Samuelson, price stability, profit maximization, race to the bottom, regulatory arbitrage, savings glut, Silicon Valley, special drawing rights, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tobin tax, too big to fail, trade liberalization, trade route, transaction costs, tulip mania, Washington Consensus, World Values Survey

Why didn’t the world economy fall off the same protectionist cliff that it did in the Great Depression of the 1930s? In the decades since, modern industrial societies have erected a wide array of social protections—unemployment compensation, adjustment assistance and other labor market interventions, health insurance, family support—that mitigate demand for cruder forms of protection such as sheltering the economy behind high tariff walls. The welfare state is the flip side of the open economy. Markets and states are complements in more ways than one. Globalization’s Love-and-Hate Relationship with the State Now we can begin to appreciate how greatly international commerce differs from domestic economic transactions. If you and I are citizens of the same country, we operate under an identical set of legal rules and benefit from the public goods that our government provides. If we are citizens of different countries, none of this is necessarily true.

Even at the height of economic liberalism during the nineteenth century, political insulation of trade policy remained limited and protection made a quick reappearance when agricultural prices fell. The politicization of trade policy increased further during the interwar period. The inability of governments to respond to the grievances of domestic businesses, workers, and farmers in the context of an open economy contributed to the Great Depression. As World War II drew to a close, John Maynard Keynes and Harry Dexter White were looking for ways to square the circle. How could an open global economy be restored in a world where domestic politics reigned supreme? Keynes, the English don, had already made his mark as the preeminent economist of his generation and as an acute commentator on contemporary politics and politicians.

The Asian financial crisis followed in 1997–98, which would then spill over to Russia (1998), Brazil (1999), Argentina (2000), and eventually Turkey (2001). These are only the better-known cases. One review identified 124 banking crises, 208 currency crises, and 63 sovereign debt crises between 1970 and 2008.28 After a lull in the early years of the new millennium, the subprime mortgage crisis centered in the United States triggered another powerful set of tremors, confronting financially open economies with a sudden dearth of foreign finance and bankrupting a few among them (Iceland, Latvia). Most of these cases follow the same boom-and-bust pattern. First, there is a phase of relative euphoria during which a country receives significant amounts of foreign lending. This stage is fueled by stories in financial markets that emphasize the bright prospects ahead. The country has reformed its policies and stands at the cusp of a productivity explosion.


Economic Origins of Dictatorship and Democracy by Daron Acemoğlu, James A. Robinson

Andrei Shleifer, British Empire, business cycle, colonial rule, conceptual framework, constrained optimization, Corn Laws, declining real wages, Edward Glaeser, European colonialism, Gunnar Myrdal, income inequality, income per capita, invisible hand, Jean Tirole, John Markoff, Kenneth Rogoff, land reform, minimum wage unemployment, Nash equilibrium, Nelson Mandela, oil shock, open economy, Pareto efficiency, rent-seeking, strikebreaker, total factor productivity, transaction costs, Washington Consensus, William of Occam, women in the workforce

More explicitly, κ ∗ is given by V r (D) = V r (O |κ ∗ ), or by: ∗ κ =1− 1 (θ + τ p (δ − θ) − δC (τ p )) θ 1 θ (10.24) Political Conflict – Transition to Democracy 337 Similarly, after trade, we need to check that for the open economy: V r (D) ≥ V r (O |κ ) so that we have a new threshold defined by V r (D) = V r (O κ ∗ ): κ ∗ = δC (τ p ) (1 − θ)(1 − δ) + 1 − δτ p θ(K + σ L ) (1 − θ)(1 − δ) (1 − δ) − θ(K + σ L ) δ (10.25) which, of course, is almost identical to the formula in (10.19). For all κ ≥ κ ∗ , the elites prefer democratization rather than using repression in an open economy. The same argument as before immediately establishes that: κ∗ < κ∗ and for the same reasons. After trade opening, democracy is less costly because the poor now prefer lower taxes, τ p , as given by (10.12) rather than τ p . In addition, repression is more costly to the elites in an open economy because the costs that stem from the loss in their productive capital and land from a coup are borne only by them.

If world prices of capital-, land-, and labor-intensive goods are denoted, respectively, by p N , p K , and p L (underlined variables always refer to the open economy), then the budget constraint of this country is: p K YK + p L YL + p N Y N = p K K + p L L + p N (1 − δ) The left-hand side of the equation is the total expenditure of this country on intermediate goods at world prices; the right-hand side is the total revenue that this country raises by selling its production of intermediate goods at world prices (considering the production functions given by (10.2)). How are these world prices determined? The answer is not essential for this discussion. We simply assume that the prices are determined in some worldmarket equilibrium, and we take it such that: pK = pL σ = θ θ −1 and p N = (1 − θ) θ (10.7) A Model of an Open Economy 329 where we can think of as the ratio of the sum of capital and land relative to labor in the world economy.

Costs of Coup on Capital and Land 6. Capital, Land, and the Burden of Democracy 7. Conflict between Landowners and Industrialists 8. Industrialists, Landowners, and Democracy in Practice 9. Economic Institutions 10. Human Capital 11. Conjectures about Political Development 12. Conclusion 287 287 290 292 293 296 300 307 312 313 316 317 319 10. Globalization and Democracy 1. Introduction 2. A Model of an Open Economy 3. Political Conflict – Democratic Consolidation 4. Political Conflict – Transition to Democracy 5. Financial Integration 6. Increased Political Integration 7. Alternative Assumptions about the Nature of International Trade 8. Conclusion 321 321 325 331 334 338 344 345 348 part five. conclusions and the future of democracy 11. Conclusions and the Future of Democracy 1. Paths of Political Development Revisited 2.


pages: 145 words: 43,599

Hawai'I Becalmed: Economic Lessons of the 1990s by Christopher Grandy

Bretton Woods, business climate, business cycle, dark matter, endogenous growth, inventory management, Jones Act, Long Term Capital Management, market bubble, Maui Hawaii, minimum wage unemployment, open economy, purchasing power parity, Silicon Valley, Telecommunications Act of 1996

At virtually the same time, the U.S. economy slipped into recession, which ushered in a break in westbound visitor demand. Finally, the Japanese economy followed the U.S. downturn, thereby threatening the heart of the 1980s economic boom. Together, these three pinpricks burst Hawai‘i’s economic bubble. As if to add insult to injury, Mother Nature contributed to Hawai‘i’s woes as Hurricane Iniki flattened a large part of Kaua‘i’s economy. Such shocks reflect the downside of open economies that, like Hawai‘i’s, provide high standards of living. It may be impossible to reduce these risks through diversification because they are systemwide. Even so, as argued in later chapters, the pace of recovery from such shocks can be increased through economic policies that preserve openness to new ideas and capital and that allow businesses both to succeed and fail. The Gulf War Iraq’s invasion of Kuwait is a good example of how events on the opposite side of the globe can directly affect Hawai‘i.

This became clearer in 1997 and 1998 when the Asian crisis plunged Japan into recession anew and many of its banks came close to toppling. Conclusion Open economic engagement with the outside world carries risks as well as rewards. This chapter has discussed three events that shocked Hawai‘i’s economy in the early 1990s and marked the beginning of what would turn out to be a long period of little or no growth. Such risks are always a possibility for open economies. Whether and how fast an economy recovers depends on the economic structure prior to the shocks and the willingness to respond in appropriate ways. As we will see in the next chapter, Hawai‘i went through a period of blame and denial in the early 1990s. It was also a period of crisis, soul-searching, and reform. Ultimately, Hawai‘i took steps to redress some of the problems at home. These could not guarantee economic recovery, but they were important because they showed that Hawai‘i can take necessary, if not sufficient, steps toward long-term economic health.

Elections in which pocketbook issues dominate are often turning points: Cayetano was surely doomed to be a one-term governor. Hawai‘i’s economic fortunes may lie outside its control, but political incumbents no doubt find this little comfort. Voters want to hold someone accountable, and the person who runs for executive office effectively offers to make himself or herself a scapegoat. It hardly mattered that Hawai‘i has a very open economy—that is, sensitive to outside economic influences. It hardly mattered that, as a result, an incumbent can do relatively little to affect the state’s economic fortunes for the good—though an incumbent may do much that can devastate the economy. What presumably mattered was that many people were not better off in 1998 than in 1994. Cayetano had a long history with the Democratic Party. The Democrats had controlled the governor’s office and the legislature since 1963.


pages: 322 words: 87,181

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

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

Are observers being similarly alarmist about today’s globalization backlash? The International Monetary Fund, among others, has recently warned that slow growth and populism might lead to an outbreak of protectionism. “It is vitally important to defend the prospects for increasing trade integration,’’ according to the IMF’s chief economist, Maurice Obstfeld.13 So far, however, there are few signs that governments are moving decidedly away from an open economy. President Trump may yet cause trade havoc, but his bark has proved worse than his bite. The website globaltradealert.org maintains a database of protectionist measures and is a frequent source for claims of creeping protectionism. Click on its interactive map of protectionist measures, and you will see an explosion of fireworks—red circles all over the globe. It looks alarming until you click on liberalizing measures and discover a comparable number of green circles.

(Aptly, the third laureate, Lars Peter Hansen, was given his prize for devising statistical techniques to test whether markets behave in a fully rational fashion.) What is true of finance is true also of other fields within economics. Labor economists focus not only on how trade unions can distort markets but also how, under certain conditions, they can enhance productivity. Trade economists study how globalization can reduce or increase, as the case may be, inequality within and across countries. Open-economy macroeconomists examine conditions under which global finance stabilizes or destabilizes national economies. Development economists study conditions under which foreign aid does and does not reduce poverty. Training in economics requires learning not only about how markets work but also about market failures and the myriad ways in which governments can help markets work better. When Economists Misbehave The flexible, contextual nature of economics is both its strength and its weakness.

Today the advanced countries that are the most exposed to the international economy are also those where safety nets and social insurance programs—welfare states—are the most extensive.3 Research in Europe has shown that losers from globalization within countries tend to favor more active social programs and labor-market interventions.4 If opposition to trade has not become politically salient in Europe today, it is in some part because such social protections remain strong there, despite having weakened in recent years. Even in Britain, where the reassertion of national autonomy has gone farthest, open trade policies are not controversial. In fact, pro-Brexit groups often buttressed their position by arguing the country would be in a position to adopt freer trade policies outside the EU. It is not much of an exaggeration to say that the welfare state and the open economy have been flip sides of the same coin during much of the twentieth century. Compared to most European countries, the United States was a latecomer to globalization. Its large domestic market and relative geographical insulation provided considerable protection from imports until recently, especially from low-wage countries. It also traditionally had a weak welfare state. When the United States opened itself up to imports from Mexico, China, and other developing nations more extensively after the 1980s, one might have expected the country to go the European route.


pages: 524 words: 143,993

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis by Martin Wolf

air freight, anti-communist, Asian financial crisis, asset allocation, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Black Swan, bonus culture, break the buck, Bretton Woods, business cycle, call centre, capital asset pricing model, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, debt deflation, deglobalization, Deng Xiaoping, diversification, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, floating exchange rates, forward guidance, Fractional reserve banking, full employment, global rebalancing, global reserve currency, Growth in a Time of Debt, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandatory minimum, margin call, market bubble, market clearing, market fragmentation, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, negative equity, new economy, North Sea oil, Northern Rock, open economy, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, purchasing power parity, pushing on a string, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Richard Feynman, risk-adjusted returns, risk/return, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, shareholder value, short selling, sovereign wealth fund, special drawing rights, The Chicago School, 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, too big to fail, Tyler Cowen: Great Stagnation, very high income, winner-take-all economy, zero-sum game

If the financial and monetary authorities managed to sustain the pegged exchange rate, despite the depression, adjustment would then occur via falling nominal wages and prices (what the Eurozone calls ‘internal devaluation’), emigration and a write-down of the bad debt of insolvent banks, non-financial companies, households and possibly even the government. In time, with competitiveness restored and debt restructured, the economy would recover. This used to happen in the nineteenth century. It has happened, more recently, in small open economies, such as Hong Kong after the Asian financial crisis and the Baltic states after the crises that began in in 2007. This is, in effect, the old gold-standard mechanism. If, however, the authorities let the peg go, the adjustment would be accompanied by a depreciation of the nominal exchange rate. That would obviate debt deflation and the need to cut nominal wages and prices. It is likely, though not certain, that the result would be a swifter and less painful adjustment, without a tidal wave of defaults.

As professors O’Rourke and Taylor remark, based on interwar experience, ‘large public debts are difficult or impossible to stabilize when deflation is increasing the real value of the debt and slowing economic growth’.10 The Baltic Example11 At this stage, some bright spark, seeking to counsel the desperate, will point to tiny Latvia, deemed a great success of the ‘internal devaluation’ and ‘austerity’ strategy. But this is largely an illusion. What is possible for tiny open economies, without their own banking systems (and so no need to bail out the banks) and next to no government debt before the crisis, is impossible for others. All three small Baltic states – Estonia (population 1.3 million), Latvia (population 2 million) and Lithuania (population 3 million) – enjoyed credit-driven booms prior to the financial crisis. In 2007, Latvia’s current-account deficit was 22 per cent of GDP, Estonia’s was 16 per cent and Lithuania’s 14 per cent.

First, according to Eurostat, Latvian labour costs per hour, in 2012, were a quarter of those of the Eurozone as whole, 30 per cent of those in Spain and 50 per cent of those of Portugal. Given the potential for further rapid rises in productivity and its integration into the Scandinavian economic system, Latvia did not need a big real depreciation to become competitive. Second, these are very small open economies. The more open the economy the larger is the portion of output not dependent on recession-hit domestic spending. This makes external adjustment a more potent alternative to domestic stimulus than in larger economies. Between 2007 and 2012, Latvia’s current-account deficit shrank by 21 per cent of GDP. The same absolute adjustment would amount to just 0.3 per cent of Italian GDP. External markets will hardly notice Latvia’s adjustment.


pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

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

That would almost have tripled the population’s incomes. Of course, any such estimate has to be taken with a grain of salt, but even with a generous margin of error, the figure remains shockingly high compared with Africa’s actual growth during the years in question—a mere 0.8 percent per year.29 If we examine the track record of the African countries that have opted for free trade and more open economies, it seems entirely plausible that a liberal policy could have been so successful. The cattle farmers of Botswana were quick to realize that it was in their interest to campaign for more open markets, and that meant that large parts of the economy were already exposed to competition by the end of the 1970s. Botswana has protected rights of ownership and has never nationalized businesses. Through its association with the EU, the country’s exports to Europe are exempt from duties and quotas.

Open developing countries had on average an annual growth rate of 4.49 percent those two decades, while closed developing countries had only 0.69 percent. Open industrialized countries had an annual growth of 2.29 percent, while closed ones experienced only 0.74 percent growth. It must be emphasized that this is not a matter of how much countries earn because others are open to their exports, but of how much they earn by keeping their own markets open. The results show that the open economies had a faster growth rate than the closed ones every year between 1970 and 1989. No free trade country in the study had an average growth rate of less than 1.2 percent annually, and no open developing country had a growth rate of less than 2.3 percent! In all regions, free trade policies led to an acceleration of growth after a short time, even in Africa. The positive results of free trade were even apparent when liberalization was only temporary.

Most important of all, the bloodstained dictatorship has been peacefully superseded by a stable democratic regime—just as the liberal advisers advocated and prophesied.11 On the trade route The possibility of breaking free of dependence on raw materials lies in free trade rather than protectionism. Instead of a shield behind which industry could grow strong, the tariff walls became a shield from competition that made them less efficient and innovative. The developing countries that have switched fastest from exporting raw materials to exporting upgraded products are those that have themselves had the most open economies, above all the Asian countries. Sachs and Warner’s major survey of the effects of trade shows that protectionist countries have transformed their economic structure very slowly, whereas free trade countries have moved more in the direction of industrial production.12 This is directly contrary to what the advocates of the dependency theory contended. Some of them have learned from their mistakes.


pages: 270 words: 73,485

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One by Meghnad Desai

"Robert Solow", 3D printing, bank run, banking crisis, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, correlation coefficient, correlation does not imply causation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, German hyperinflation, Gunnar Myrdal, Home mortgage interest deduction, imperial preference, income inequality, inflation targeting, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, market bubble, market clearing, means of production, Mexican peso crisis / tequila crisis, mortgage debt, Myron Scholes, negative equity, Northern Rock, oil shale / tar sands, oil shock, open economy, Paul Samuelson, price stability, purchasing power parity, pushing on a string, quantitative easing, reserve currency, rising living standards, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, seigniorage, Silicon Valley, Simon Kuznets, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, women in the workforce

But as a subject, macroeconomics was taught and debated in terms of a closed economy, with only a small walk-on part for trade. Finance was discussed only in relation to public finance and government bonds. The private equity and bond markets and the commercial credit created by banks were ignored. Walrasian economics visualized barter as the principal way of allocation, and money played just an epiphenomenal part in general equilibrium. The reality, however, was one of open economies, multiple currencies, international trade and finance, and forex markets. There was no theory to cope with these new facts. Neither Keynesian theory nor monetarism looked beyond the closed economy. Stagflation and the Return of Unorthodox Economics Economics aims to be a science. Yet political events constantly change its agenda. The collapse of the Bretton Woods settlement as a consequence of American overspending and inflation exposed all the economies to the risks of inflation, which they struggled to control.

The bubble burst, and so what they were getting out was lower than the recent market price. But more important, the Central Bank of Thailand did not have the dollar reserves to be able to convert baht investments into dollars for the sellers. The baht went off the peg and crashed on the forex market. The contagion of this shock spread to otherwise healthy economies such as Malaysia, South Korea and Indonesia. They were open economies relying on exports and receiving large capital inflows. They had been hailed just a decade previously as Asian Tigers. Now they were caught in a global storm. They had insufficient reserves to facilitate withdrawals of large amounts of foreign capital. There was drastic depreciation in the currencies of all the major Asian countries that had opened up their capital markets. The Asian crisis was a deeply humiliating experience for these countries, which had to rush to the IMF for emergency help.

Deficits high during the upswing rose during the recession, as would be expected. The cumulative burden of deficits incurred in good times added to those required in bad times means that the debt burden is rising, not falling. More borrowing would need to be shown to be a cure rather than a worsening of the problem. In a closed economy, as Keynes argued, any increase in the savings rate may lead to a drop in income. But in an open economy within a global capital market, repayment of debts may attract capital from abroad as the credit rating of the country improves. The recession was caused by overspending by governments and households thanks to cheap credit fueled by the global imbalances. It is the sort of recession predicted by Hayek in his work during the 1930s. It is widely agreed by governments across OECD countries that the path of fiscal expansion is closed off.


pages: 230 words: 62,294

The Coffee Book: Anatomy of an Industry From Crop to the Last Drop by Gregory Dicum, Nina Luttinger

California gold rush, clean water, corporate social responsibility, cuban missile crisis, Edward Lloyd's coffeehouse, European colonialism, Honoré de Balzac, illegal immigration, land reform, land tenure, open economy, price stability, Ray Oldenburg, The Great Good Place

Uribe, Brown Gold: The Amazing Story of Coffee (New York: Random House, 1954), 92–94. CHAPTER 3: THE RISE OF THE INTERNATIONAL COFFEE TRADE 1 Stavitsky, as quoted in Robert H. Bates, Open-Economy Politics: The Political Economy of the World Coffee Trade (Princeton: Princeton University Press, 1997), 126. 2 Congressional Record, May 20, 1963, 8552. 3 North London Haslemere Group, Coffee: The Rules of Neocolonialism (London: Third World First, 1972), 5. 4 Pan-American Coffee Bureau, U.S. and the International Coffee Agreement, 1964. 5 Joseph Short, American Business and Foreign Policy: Cases in Coffee and Cocoa Trade Regulation 1961–1974 (New York: Garland Publishing Inc., 1987), 151–52. 6 Interviewed by Joseph Short, as quoted in ibid., 153–54. 7 Bates, Open-Economy Politics, 153. 8 Begun as a consortium of smaller roasters to compete with the instant coffees of the conglomerates, Tenco was bought by Minute Maid, which was in turn acquired by Coca-Cola in 1960. 9 Charles Meono, ed., Coffee & Tea Industries, February 1962, 28. 10 International Coffee Agreement, 1968. 11 North London Haslemere Group, Coffee, 16. 12 Another standout was OPEC, which is more like the earlier coffee agreements in that consumers do not participate.

A Brief History of Coffee Production and Consumption with an Appendix containing letters written during a trip to the coffee plantations of the East, and through the coffee consuming countries of Europe. New York: American Grocer Publishing Association, 1884. Uribe, Andrés C. Brown Gold: The Amazing Story of Coffee. New York: Random House, 1954. Wallengren, Maja. “Costa Rica’s Coffee Heading for Change.” Tea & Coffee Trade Journal 170, no. 2 (February 1998): 45–46. CHAPTER 3: THE RISE OF THE INTERNATIONAL COFFEE TRADE Bates, Robert H. Open-Economy Politics: The Political Economy of the World Coffee Trade. Princeton: Princeton University Press, 1997. de Graaf, J. The Economics of Coffee. Wageningen, Netherlands: Center for Agricultural Publishing and Documentation (Pudoc), 1986. Food and Agriculture Organization. Commodity Review and Outlook / FAOSTAT Database. Rome, 1986–2005. Furtado, Celso. The Economic Growth of Brazil: A Survey from Colonial to Modern Times.


pages: 497 words: 150,205

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right by Philippe Legrain

3D printing, Airbnb, Asian financial crisis, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, BRICs, British Empire, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, cleantech, collaborative consumption, collapse of Lehman Brothers, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, debt deflation, Diane Coyle, disruptive innovation, Downton Abbey, Edward Glaeser, Elon Musk, en.wikipedia.org, energy transition, eurozone crisis, fear of failure, financial deregulation, first-past-the-post, forward guidance, full employment, Gini coefficient, global supply chain, Growth in a Time of Debt, hiring and firing, hydraulic fracturing, Hyman Minsky, Hyperloop, immigration reform, income inequality, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), Irish property bubble, James Dyson, Jane Jacobs, job satisfaction, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, liquidity trap, margin call, Martin Wolf, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, North Sea oil, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, open economy, peer-to-peer rental, price stability, private sector deleveraging, pushing on a string, quantitative easing, Richard Florida, rising living standards, risk-adjusted returns, Robert Gordon, savings glut, school vouchers, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, smart meter, software patent, sovereign wealth fund, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, working-age population, Zipcar

It is an open economy that does not discriminate against foreigners, newcomers or anyone else in society. It is an adaptable economy that takes change in its stride and adjusts to evolving tastes, technologies and circumstances rather than trying to cling to the past. It is a dynamic economy that always strives to do better: encouraging and embracing new and different ways of doing things and seeking to surpass the limits imposed by current technologies and institutions. And it is a decent economy: one where there is a rough correspondence between rewards and merit, where inequalities of wealth and power are not so great that they become entrenched and where suffering is minimised. A good economy generates sustained rises in living standards that are widely shared. It’s an open economy that adds up.

He bolstered his theoretical arguments by pointing to evidence from several European countries documented in a paper he co-wrote.197 So influential was Alesina’s presentation that it was quoted in EU finance ministers’ conclusions. Alesina’s methodology and findings were quickly debunked by an IMF paper in September 2010.198 Yet even at the time the argument was preposterous. It is one thing to show that a few small, open economies that cut government borrowing by spending less recorded positive growth – when interest rates also fell, the currency depreciated and their export markets were buoyant. It is quite another to posit that if the entire eurozone slashes government spending at a time when the private sector is trying to pay down debt, banks won’t lend and its main trading partners, notably Britain and the US, are in a similar situation, the economy will grow.

And Portugal eased off on austerity: the fiscal squeeze in 2013 halved and the deficit target was set at 5.8 per cent of GDP, the same as in 2012.225 When the economy then perked up, eurozone officials had the gall to claim this as evidence that austerity worked. Austerity has also destabilised Italy’s public finances, plunging the economy into a recession from which it had not escaped by the end of 2013, as the footnotes detail.226 What about Latvia, which is often held up as a model of successful austerity for the rest of the eurozone? It may be feasible for a tiny open economy to turn itself around in 2009–10 by slashing government spending and raising taxes because it could fill the gap through higher exports to its much larger trading partners whose economies happened to be buoyant at the time.227 But such a strategy can scarcely succeed for a continent-sized economy, especially when demand is weak in most of its major trading partners. To suggest otherwise is merely a version of the Alesina fallacy.


Battling Eight Giants: Basic Income Now by Guy Standing

basic income, Bernie Sanders, centre right, collective bargaining, decarbonisation, diversified portfolio, Donald Trump, Elon Musk, full employment, future of work, Gini coefficient, income inequality, Intergovernmental Panel on Climate Change (IPCC), job automation, labour market flexibility, Lao Tzu, longitudinal study, low skilled workers, Martin Wolf, Mont Pelerin Society, moral hazard, North Sea oil, offshore financial centre, open economy, pension reform, precariat, quantitative easing, rent control, Ronald Reagan, selection bias, universal basic income, Y Combinator

It might even be a factor leading to shifts of investment and population to lower-income areas, giving a further boost to their local economies. Serious advocates of moving in the direction of a basic income do not see it as a panacea.1 It will not ‘abolish poverty’ or ‘abolish Battling Eight Giants 84 unemployment’. It will not provide perfect freedom or perfect basic security. But it will enhance freedom and strengthen security. It must be seen as part of a new income distribution system suited to a globalizing open economy, and as part of a transformative policy package, along with new forms of collective representation and ownership. The socially and economically vulnerable will always remain that way in the absence of collective Voice. A basic income should help in strengthening such Voice, or agency. But nobody should think it could do that optimally without measures to build and strengthen modern forms of unionism.

See also individual entries definition 1, 4–8 reasons for need 8–9 security 98, 113, 114 system 1, 20, 23, 26, 32, 37, 52, 70, 84, 90–1, 122 n.7 Basic Income Earth Network (BIEN) 94 behavioural conditionality 70, 73, 77, 114 behaviour-testing 4, 39, 70, 84 benefits 5, 7, 27 conditional schemes 41 social assistance 23 BET365 11 Beveridge, William 8–9, 38 Beveridge model 21 Big Bang liberalization 18 BJP 92 black economy 40, 60 B-Mincome 99–100 Booker, Cory 101 brain development 98–9 132 Branson, Richard 54 Brexit 53 Britain 6, 8–10, 12–18, 20, 23–4, 26–7, 30–1, 33–4, 37–8, 40–2, 55, 57, 59, 90, 101, 104, 112 British Columbia 95 British Constitution 1 Buck, Karen 57 bureaucracy 40, 49, 100, 102 Bureau of Economic Analysis 16 Business Property Relief 58 California 69, 96–7 Canada 35 capacity-to-work tests 6, 104 cap-and-trade approach 34 Capita 50 capital dividend 59 capital fund 89–90 capital grants 59, 75, 76, 92 carbon dividends 37 carbon emissions 33–4 carbon tax 34–5, 37 care deficit 53 care work 36, 53, 67, 74, 84 cash payments 111 cash transfers 99 ‘casino dividend’ schemes 88 charities 48 The Charter of the Forest (1217) 1 Chicago 99 Child Benefit 57, 58, 72, 123 n.4 childcare 99, 110–11 child development 88 Child Tax Credits 81 chronic psychological stress 26 Citizens Advice 46–8 Citizen’s Basic Income Trust 7, 122 n.7, 123 n.4 citizenship rights 1, 29 civil society organizations 79 Index climate change 34 Clinton, Hillary 126 n.4 Clinton, Bill 105 Coalition government 41, 50 cognitive performance 33 collateral damage 53 common dividends 7, 20, 21, 59–60, 69, 73, 75, 83, 84, 85 Commons Fund 8, 35, 57, 59, 89 community cohesion 3 resilience 23 work 84 ‘community payback’ schemes 102 Compass 59 compensation 2, 7, 16, 104 ‘concealed debt’ 24–5 conditional cash transfer schemes 90 Conservative government 9, 85 Conservatives 23 consumer credit 24 consumption 23 contractual obligations 46 Coote, Anna 113 cost of living 25, 49, 52, 83 council house sales 76 council tax 25 Crocker, Geoff 122 n.15 cross-party plans 80 crowd-funded schemes 100 deadweight effects 102 ‘deaths of despair’ 27 Deaton, Angus 10 debt 23–6, 67, 85 debt collection practices 24–5 decarbonization 34 dementia 33 democratic values 69 Democrats 37 demographic changes 15 Index 133 Department for Work and Pensions (DWP) 11–12, 42–8, 50–2, 73, 81, 92, 129 n.6 depression 28, 94 direct taxes 56, 58 disability benefits 6, 49–52, 83 Disability Living Allowance (DLA) 49–51 Disabled People Against Cuts 52 Dividend Allowance 58 ‘dividend capitalism’ 8 domestic violence 29, 87 Dragonfly 92 due process 46, 49 ecological crisis 33, 37, 39, 114 ecological developments 21 ecological disaster 35 ecological taxes and levies 37 economy benefits 20, 60 crisis 106 damage 34 growth 20, 36, 106 industrialized 20 insecurity 21, 35, 39, 89 security 75, 80, 84, 88 system 15, 27, 38 tax-paying 60 uncertainty 8, 22–3, 31 ‘eco-socialism’ 8 ecosystems 33 Edinburgh 80 education 88, 108 Elliott, Larry 122 n.15 employment 16, 22, 39, 60–1, 81, 89, 93–4, 102, 106, 107, 110, 114 Employment Support Allowance (ESA) 27, 41, 49–51 England 28, 63, 110–11 Enlightenment 85 Entrepreneurs’ Relief 18 equality 31, 85 Europe 37 European Foundation for the Improvement of Living and Working Conditions (Eurofound) 120 n.1 European Heart Journal 33 European Union 6, 17, 41 euthanasia 113 extinction 33–7 ‘Extinction Rebellion’ 33 Fabian Society 57–8 Facebook 97 family allowances 56 family benefits 56 family insecurity 23 federal welfare programs 106 Fife 24, 80 financial crash (2007–8) 23, 26, 34 financialization 116 n.22 financial markets 18 Financial Services Authority 123 n.15 Financial Times 19, 123 n.15 financial wealth 18 Finland 28, 61, 93–5 food banks 10, 29–30, 43, 109 food donations 29 food insecurity 108–9 fossil fuels 33–4 France 12, 17, 18, 32, 38, 57 free bus services 112 freedom 8, 30, 84, 85, 101, 114 ‘free food’ 108–9, 129 n.6 ‘free’ labour market 106 free trade 13 Friends Provident Foundation 75 fuel tax 35 fund and dividend model 89 funding 29, 59, 62, 69, 71–2, 112 134 G20 (Group of 20 large economies) 15 Gaffney, Declan 57 Gallup 105 GDP 14, 17–18, 23–4, 34, 36, 59, 89, 108 General Election 91–2, 94 ‘genuine progress indicator’ 36 Germany 17–18, 38, 100 Gillibrand, Kirsten 101 Gini coefficient 9, 12 GiveDirectly 91 Glasgow City 80 globalization 14 Global Wage Report 2016/17 14 global warming 33, 37 Good Society 75, 106 The Great British Benefits Handout (TV series) 92 Great Depression 9 Great Recession 23 greenhouse gas emissions 34, 36 gross cost 110 The Guardian 101, 103, 122–3 n.15 Hansard Society 37 Harris, Kamala 101 Harrop, Andrew 57 Hartz IV 100 HartzPlus 100 health 67, 87, 100 human 33 insurance premiums 35 services 60 healthcare costs 28 hegemony 14 help-to-buy loan scheme 76 Her Majesty’s Revenue and Customs (HMRC) 64, 73, 81 Hirschmann, Albert 56 household debt 24 Index household earnings 16 household survey 12 House of Commons 110–11 housing allowance 95 Housing Benefit 24, 41, 53, 71 housing policy 53 hub-and-spoke model 112 Hughes, Chris 97 humanity 33 human relations 3 ‘immoral’ hazard 109 ‘impact’ effects 78 incentive 62 income 81 assistance 88 average 83 components 11 distribution system 4, 13–14, 38, 67, 84, 107, 114 gap 9 growth 16 insecurity 27 men vs. women 15–16 national 14, 36 pensioners’ 16 rental 13–15, 20 social 14, 16–17 support payments 110 tax 1, 7, 57, 89, 111 transfer 85 volatility 22 India 68, 80, 90–2 Indian Congress Party 91 inequality 2, 4, 9–13, 21, 29, 31, 33, 35, 37, 38, 39, 54, 80, 85, 114 growth 17 income 9–10, 15–17, 19 living standard 20 wealth 18–19, 76 informal care 111 Index 135 inheritance tax 58 in-kind services 111 insecurity 21–3, 29, 38, 39, 47, 67, 85, 106 Institute for Fiscal Studies (IFS) 10 Institute for Public Policy Research 125 n.17 Institute for Public Policy Research (IPPR) 75, 111 Institute of New Economic Thinking 123 n.15 Institute of Public Policy Research 59 insurance schemes 8 intellectual property 14–15 Intergovernmental Panel on Climate Change (IPCC) 34 International Labour Organization (ILO) 14, 122 n.4 International Monetary Fund (IMF) 31, 34 international tax evasion 18 interpersonal income inequality 83 inter-regional income inequalities 83 intra-family relationships 3 involuntary debt 26 in-work benefits 22 Ireland 35 Italy 18 labour 31, 107 inefficiency 106 law 101 markets 8, 14, 32, 39, 40, 60, 62–3, 96, 100, 106 regulations 13 supply 67, 95 Labour governments 85 labourism 106 Lansley, Stewart 59 Latin America 90 Left Alliance 94 Lenin, Vladimir Ilyich 113 Liberal government 35 life-changing errors 51 life-threatening illness 33 Liverpool 80 living standards 20, 23, 33, 36, 53, 59, 92 Local Housing Allowances 24 London Homelessness Project 92–3 low-income communities 33 low-income families 21 low-income households 17 low-income individuals 86 Low Pay Commission 63 low-wage jobs 60, 107 Luddite reaction 32 lump-sum payments 35, 59, 76 Jackson, Mississippi 99 JobCentrePlus 47 job guarantee policy 101–7 job-matching programs 106 Jobseeker’s Allowance (JSA) 41, 46 Joseph Rowntree Foundation 21 McDonnell, John 129 n.13 McKinsey Global Institute 31 Macron, Emmanuel 35 Magna Carta 1 ‘Making Ends Meet’ 97 ‘mandatory reconsideration’ stage 51 Manitoba 87–8 Manitoba Basic Annual Income Experiment (Mincome) 87 market economy 105, 114 master-servant model 101 Kaletsky, Anatole 123 n.15 Kenya 90–2 Khanna, Ro 103 Kibasi, Tom 113 136 Index Maximus 50 means-testing 4, 39, 42, 48, 58, 61–2, 70, 84, 88, 90, 109–10, 114 benefits 5, 7, 27, 40, 46, 56, 71–3, 81, 129 n.6 social assistance 23, 41, 95, 122 n.7 system 6 medical services 28 Mein Grundeinkommen (‘My Basic Income’) 100 mental health 26, 28, 94 disorders 88 trusts 28 mental illness 33, 68 migrants 7, 113 ‘minimum income floor’ 45 Ministry of Justice 51 modern insecurity 22 modern life 31 monetary policy 59 Mont Pelerin Society 13 moral commitment 75 moral hazard 109 mortality 27, 76 multinational investment funds 34 Musk, Elon 31, 54 Namibia 90–2 National Audit Office (NAO) 24, 43–4, 46, 76 National Health Service (NHS) 8, 24, 27–8, 44, 68, 80, 108, 111 National Insurance 18, 22, 124 n.4 nationalism 37 National Living Wage 63 National Minimum Wage 63–4 national solidarity 3 Native American community 88 negative income tax (NIT) 23, 87, 95, 100 neo-fascism 37–8 neoliberalism 13, 84 Netherlands 96 New Economics Foundation (NEF) 57, 113, 122 n.15 non-resident citizens 113 non-wage benefits 16 non-wage work 74 North America 67 North Ayrshire 80 North Carolina 88 North Sea oil 89–90 Nyman, Rickard 23 Oakland 96–7 Office for National Statistics (ONS) 14–15, 17, 36 Ontario, Canada 95–6 open economy 84 open ‘free’ markets 13, 15 opportunity dividend 59 Organization for Economic Co-operation and Development (OECD) 18, 23, 27, 31 Ormerod, Paul 23 Osborne, George 19 Paine, Thomas 2, 75 Painian Principle 2 panopticon state 55 Paris Agreement (2015) 34 participation income 74–5 paternalism 42, 55 pauperization 63 Pawar, Alderman Ameya 99 pay contributions 21 pension contributions 18, 58 Pension Credit 41 Pericles Condition 75 permanent capital fund 71 personal care services 110–11 Index 137 personal income tax 35 Personal Independence Payment (PIP) 49–51 personal insecurity 23 Personal Savings Allowance 58 personal tax allowances 17, 58, 59 perverse incentives 50 physical health 26, 94 piloting in Britain 67–81 applying 80–1 rules in designing 70–80 policy development 3, 69 political decision 78 political discourse 92 political instability 35 political system 38 populism 37–8, 75 populist parties 37 populist politics 39 Populus survey 55 post-war system 8 poverty 2, 4, 10–12, 22, 27, 29, 36, 38, 40, 60–1, 89, 100, 108–9, 114, 125 n.17, 129 n.6 precarity 29–30, 38, 39, 60–1, 85, 103, 129 n.6 Primary Earnings Threshold 124 n.4 private debt 23–4, 39 private inheritance 2 private insurance 85 private property rights 13 private wealth 18 privatization 13, 17, 112 property prices 76 prostitution 43 Public Accounts Committee (PAC) 51 public costs 28 public debt 23 public inheritance 61 public libraries 47 public policy 97 public sector managers 103 public services 4, 17, 62, 108, 112, 114 public spending 89 public wealth 18 ‘quantitative easing’ policy 59 quasi-basic income 89, 98 quasi-universal basic services 30 quasi-universal dividends 35 quasi-universal system 61, 70, 90 Randomised Control Trial (RCT) 124–5 n.14 rape 44 Ratcliffe, Jim 12 Reagan, Ronald 13 Reed, Howard 59 refugees 7 regressive universalism 57 regular cash payment 7 rent arrears 24 controls 53 rentier capitalism 13–21, 107, 116 n.22 republican freedom 2–3, 30, 84 Republicans 37 Resolution Foundation 10, 15, 19, 25, 76 ‘revenue neutral’ constraint 7 right-wing populism 37–8 robot advance 31–3 Royal College of Physicians 33 Royal Society of Arts 55, 59, 124 n.12 RSA Scotland 125 n.17 Rudd, Amber 9 Russia 113 138 Sanders, Bernie 101 scepticism 31 schooling 67, 89 Scotland 69, 80, 111 Second World War 19, 21 security 8, 38, 55, 68, 84 economic 3, 4, 49, 56 income 73–4 social 8, 22, 49 Self-Employed Women’s Association (SEWA) 68 self-employment 45 Shadow Chancellor of the Exchequer 3, 115 n.3 Smith, Iain Duncan 42 ‘snake oil’ 113 social assistance 3, 28 social benefit 20 social care 102, 104, 110–11 social crisis 106 social dividend scheme 92 Social Fund 29 social inheritance 2 social insecurity 21 social insurance 22, 85 social integration 44 social justice 2, 8, 20, 69, 84, 101, 114 social policy 8, 23, 26, 30, 42, 53, 84–5, 96 social protection system 32 social relation 100 social security 10, 70–1, 95 social solidarity 3, 8, 39, 61, 84–5, 91 social spending 17 social status 104 social strife 35 social value 29 ‘something-for-nothing’ economy 19–20, 61 Index Speenhamland system 63 State of the Global Workplace surveys 105 statutory minimum wages 106 stigma 47, 55 stigmatization 41, 109 Stockton 97–9 Stockton Economic Empowerment Demonstration (SEED) 97 stress 26–9, 39, 51, 67, 68, 85, 93 student loans 24 substitution effects 102–3 suicides 26–7 Summers, Larry 105–6 Sweden 113 Swiss bank Credit Suisse 12 Switzerland 35 tax advantages 49 and benefit systems 17, 18, 69, 110 credits 3, 17, 24, 63, 105, 106 policies 16 rates 72 reliefs 17–18, 57–8, 61 tax-free inheritance 19 technological change 105 technological revolution 14, 31, 114 ‘teething problems’ 42 Thatcher, Margaret 13 Thatcher government 9, 18 The Times 92 Torry, Malcolm 122 n.7 Trades Union Congress 24 tribal casino schemes 76 ‘triple-lock’ policy 16 Trump, Donald 37 Trussell Trust 29, 43 Tubbs, Michael 97–8 Index 139 Turner, Adair 123 n.15 two-child limit 44 UK.


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Buying Time: The Delayed Crisis of Democratic Capitalism by Wolfgang Streeck

activist fund / activist shareholder / activist investor, banking crisis, basic income, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collective bargaining, corporate governance, creative destruction, David Graeber, deindustrialization, Deng Xiaoping, Eugene Fama: efficient market hypothesis, financial deregulation, financial repression, fixed income, full employment, Gini coefficient, Growth in a Time of Debt, income inequality, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, labour mobility, late capitalism, liberal capitalism, means of production, moral hazard, Myron Scholes, Occupy movement, open borders, open economy, Plutonomy: Buying Luxury, Explaining Global Imbalances, profit maximization, risk tolerance, shareholder value, too big to fail, union organizing, winner-take-all economy, Wolfgang Streeck

‘Mit dem Euro geht die Rechnung nicht auf’, MaxPlanckForschung, vol. 11/3, 2011, pp. 12–17. ———. ‘Monetary Union, Fiscal Crisis and the Pre-Emption of Democracy’, Zeitschrift für Staats- und Europawissenschaaften, vol. 9/2, 2011, pp. 163–98. ———. ‘Rettet Europa vor dem Euro’, Berliner Republik, vol. 14/2, 2012, pp. 52–61. ———. and Vivien A. Schmidt (eds), Welfare and Work in the Open Economy, Vol. 1, From Vulnerability to Competitiveness, Oxford: Oxford University Press, 2000. ———. and Vivien A. Schmidt (eds), Welfare and Work in the Open Economy, Vol. 2, Diverse Responses to Common Challenges, Oxford: Oxford University Press, 2000. Schlieben, Michael, ‘Die wählen sowieso nicht’, Zeit online, 13 May 2012. Schmitter, Philippe C. and Gerhard Lehmbruch (eds), Trends Towards Corporatist Intermediation, London: Sage, 1979. ———. and Wolfgang Streeck, The Organization of Business Interests: Studying the Associative Action of Business in Advanced Industrial Societies, MPIfG Discussion Paper No. 99/1, Cologne: MaxPlanck-Institut für Gesellschaftsforschung, 1999.

Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, Boston: Beacon Press, p. 251). 51 For a selection from the abundant literature on the subject, see H. Katz and O. Darbishire, Converging Divergences: Worldwide Changes in Employment Systems, Ithaca, NY: Cornell University Press, 2000. 52 For a survey of the evolution of the welfare state since the 1980s, see F. Scharpf and V. Schmidt (eds), Welfare and Work in the Open Economy, vol. 1, From Vulnerability to Competitiveness, Oxford: Oxford University Press, 2000; F. Scharpf and V. Schmidt, Welfare and Work, vol. 1, Diverse Responses to Common Challenges, Oxford: Oxford University Press, 2000; as well as the editors’ introduction to Francis G. Castles et al. (eds), The Oxford Handbook of the Welfare State, Oxford: Oxford University Press, 2010, pp. 1–15, and the articles in the same volume by M.


pages: 756 words: 120,818

The Levelling: What’s Next After Globalization by Michael O’sullivan

"Robert Solow", 3D printing, Airbnb, algorithmic trading, bank run, banking crisis, barriers to entry, Bernie Sanders, bitcoin, Black Swan, blockchain, Boris Johnson, Branko Milanovic, Bretton Woods, British Empire, business cycle, business process, capital controls, Celtic Tiger, central bank independence, cloud computing, continuation of politics by other means, corporate governance, credit crunch, cryptocurrency, deglobalization, deindustrialization, disruptive innovation, distributed ledger, Donald Trump, eurozone crisis, financial innovation, first-past-the-post, fixed income, Geoffrey West, Santa Fe Institute, Gini coefficient, global value chain, housing crisis, income inequality, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, liberal world order, Long Term Capital Management, longitudinal study, market bubble, minimum wage unemployment, new economy, Northern Rock, offshore financial centre, open economy, pattern recognition, Peace of Westphalia, performance metric, private military company, quantitative easing, race to the bottom, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Scramble for Africa, secular stagnation, Silicon Valley, Sinatra Doctrine, South China Sea, South Sea Bubble, special drawing rights, supply-chain management, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, tulip mania, Valery Gerasimov, Washington Consensus

However, from 2016 to today and in the context of an upturn in broad economic activity, the openness of the world economy (ratio of trade to GDP) has fallen sharply, and this measure is back down to the level seen in 2011. Indeed, in late 2018 the OECD reported that the level of trade between G20 nations had dipped sharply.6 Another way to consider the pace of globalization is to look at the aggregate activity in the world’s most open, globalized economies. If we add together the GDP for the likes of Ireland, Switzerland, Belgium, Singapore, and the Netherlands—small, open economies that in many respects are the canaries in the coal mine of the world economy, in the sense that they are the first to pick up a new trend—we see that their trend growth is slowing and is below the average level of growth enjoyed over the past twenty years. Trade Wilting There are several reasons why trade openness has diminished. For example, a shift in economic structure in China means fewer capital-expenditure-driven goods are traded.

As she digests this, Katherine Chidley will begin to formulate a sense of how greatness, policy scorecards, and public goods intersect and will set about her aim of creating a workable plan for national development. This notion came to me while writing two previous books on Ireland. In 2006, before the onset of the collapse of Ireland’s economy, I wrote a book entitled Ireland and the Global Question. It dealt with Ireland’s position as a small, open economy that had benefited enormously from globalization and, at the time, from its membership in the eurozone. My aim was to outline how a country like Ireland might construct buffers against the negative effects of globalization, buffers such as strong institutions run by skilled people, decent public goods, and a sense of strategic thinking. At the time Ireland was enjoying its first (ever) economic boom and was unprepared for the suddenness and severity of the collapse that followed.

From the Quad to the Hanseatic League 2.0 to the SCO At the same time, this changing world has the potential to liberate other countries. One such group consists of small, advanced countries (i.e., Austria, Belgium, Singapore, Sweden, Switzerland, Ireland, Hong Kong, Norway, Denmark, Finland, New Zealand, Israel, and the Netherlands) with a number of distinctive features. Small, advanced economies also have very open economies and are effectively the canaries in the coal mine of the world economy in the sense that they pick up new developments, such as fluctuations in world trade, before these issues are experienced in larger economies. They also all tend to suffer the same problems. For example, in the wake of the quantitative easing programs of the Bank of Japan and the European Central Bank, the currencies of countries like Norway and New Zealand became more volatile.


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Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown by Detlev S. Schlichter

bank run, banks create money, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, currency peg, fixed income, Fractional reserve banking, German hyperinflation, global reserve currency, inflation targeting, Kenneth Rogoff, Kickstarter, Long Term Capital Management, market clearing, Martin Wolf, means of production, money market fund, moral hazard, mortgage debt, open economy, Ponzi scheme, price discovery process, price mechanism, price stability, pushing on a string, quantitative easing, reserve currency, rising living standards, risk tolerance, savings glut, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Y2K

As we have shown in detail, a monetary system that constantly injects money via the loan market will systematically distort interest rates in a specific direction. This must lead to economic dislocations and ultimately to recessions. A rising propensity to save is by itself insufficient to cause economic disruptions, but money injections must always lead to economic dislocations. The international aspect of the savings glut theory is equally insufficient to help explain a crisis. In an open economy it simply doesn’t matter whether the savings are raised locally or abroad. To take the obvious example, if the Chinese lowered their present consumption demand and thus freed up resources for investment and then decided that there were not enough promising investment opportunities in China, and that it was preferable to entrust these resources for some time to the Americans, this would result in capital flowing to the United States (or the control over physical resources shifting to U.S. persons and corporations), it would lower interest rates in the United States and thus lower the return threshold for potential investment projects there.

This is likely to receive the full backing of the fractional-reserve banks as it allows a further extension of the credit boom. One of the key constraining factors for money- and credit-expansion, for as long as money is still essentially a commodity, such as gold, is the potential outflow of that commodity. The money-induced economic boom will increase the demand for goods and services, and in an open economy this means also the demand for foreign goods and services. But the domestically created fiduciary media will not be accepted in foreign countries. Foreign suppliers of goods will have to be paid in gold. Increasing gold outflows will soon restrain the domestic banks’ ability to create fiduciary media. An additional factor leading to gold outflows is that under domestic legal arrangements the monetary units created by the fractional-reserve banks out of nothing continue to carry the same purchasing power as the gold money to which they represent claims and which remains strictly limited in its supply.

However, domestic inflationism, all else being equal, should lead to a decline of the currency’s exchange value on the foreign exchange market and a drop in its international purchasing power. While this, in itself, will not have to cause domestic monetary authorities to tighten policy, it will certainly be another factor that makes the inflationary consequences of the present policy visible to the public. It is clear that the hard-to-conceal decline of a currency’s foreign exchange value can be a further and important early warning signal, in particular for an open economy. Not unlike the competition between otherwise unconnected and independent fractional-reserve banks, which at the earlier stage of monetary history, before the introduction of central banks, constrained the banking sector’s ability to create money, can the independence of a number of territorial money monopolists potentially provide an at least tentative check on overly aggressive domestic money creation.


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

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

The economic emergence of Japan and newly industrialising countries such as South Korea led to low-cost competition for manufacturing in the developed world that produced repeated balance of payments crises, most notably in the UK. The tripling of oil prices in 1973 by the Organization of Petroleum Exporting Countries (OPEC) added to the inflationary pressure inherent to Keynesianism, which relied on stimulating aggregate demand to maintain ‘full’ [sic] employment. In an open economy system, Keynesianism in one country could not work, as was demonstrated by President François Mitterrand’s illfated attempt in 1981 to boost the French economy. It was the end of the road for that approach. The social democratic model – entailing modest redistribution via high marginal tax rates, labour-based social security, and government as the employer of last resort – had run its course.

‘Ultra-loose monetary policy’ has instead provided a subsidy to the finance industry to acquire and drive up asset prices, on its own account or as loans for others to do so.26 The IMF estimated that in 2012 the subsidy to banks from cheap money was worth up to $70 billion in the USA, $110 billion in the UK and Japan and $300 billion in the Eurozone. The total was bigger than Sweden’s GDP and more than the net profit of the 1,000 biggest banks. In an open economy system with capital flows in all directions and ample opportunities for rent seeking, any increase in the money supply will be directed to where it can earn the highest return. So money has poured into property and other assets that offer the prospect of higher returns or capital gains. This has pushed up prices and created destabilising asset bubbles. The printing of money has been a wonderful source of unearned rental income for bankers, shadow bankers and other financiers.

But, to have a chance of success, it must have three features: a sense of unity around commonly held beliefs; a sustainable understanding of the flaws, inequities and unsustainability of existing arrangements; and a reasonably clear vision of feasible goals. Although there are other matters on which to revolt, here we will concentrate on what is required to achieve Keynes’s ‘euthanasia of the rentier’, in the context of an irretrievable breakdown in the twentieth-century income distribution system. Politicians should be more honest. If they believe in free markets and an open economy, as they claim, they should recognise that the Great Convergence traced in Chapter 1 will continue, that average real wages will continue to stagnate and that wages for the precariat in the industrialised world will continue to fall. Of course, efforts should be made to raise productivity and skills. But no individual country can presume to do better than others pursuing the same ends. It is disingenuous if not dishonest to urge everyone to do the same thing and imagine that all will gain.


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Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

"Robert Solow", Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low skilled workers, M-Pesa, market bubble, means of production, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Shiller, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

From a political economy perspective, see Costas Lapavitsas, ‘The Political Economy of Central Banks: Agents of Stability or Source of Instability?’, International Papers in Political Economy 4:3, 1997, pp. 1–52. 34 John B. Taylor, ‘Discretion Versus Policy Rules in Practice’, Carnegie-Rochester Conference Series on Public Policy 39:1, 1993; see also Dale Henderson and Warwick McKibbin, ‘A Comparison of Some Basic Monetary Policy Regimes for Open Economies’, Carnegie-Rochester Conference Series on Public Policy 39:1, 1993. 35 The empirical literature on the Taylor rule is extensive although, after the crisis of 2007, it has become hopelessly dated. For work broadly supporting the rule see Ben Bernanke et al., Inflation Targeting: Lessons from the International Experience, Princeton University Press, 1999; Manfred J.M. Neumann and Jürgen von Hagen, ‘Does Inflation Targeting Matter?’

Reserve accumulation is a practice foisted upon developing countries by the logic of international markets, not by some outdated doctrine. In any case, Aizenman and Lee find that the ‘precautionary’ motive dominates the ‘mercantilist’ motive in holding international reserves. See Joshua Aizenman and Jaewoo Lee, ‘International Reserves: Precautionary Versus Mercantilist Views: Hypothesis and Evidence’, Open Economies Review 18, 2007; Joshua Aizenman and Jaewoo Lee, ‘International Reserves: Precautionary Versus Mercantilist Views: Theory and Evidence’, IMF Working Paper WP/05/198, October 2005. 32 Juan Pablo Painceira, ‘Developing Countries in the Era of Financialisation: From Deficit Accumulation to Reserve Accumulation’, RMF Discussion Papers 4, February 2009. 33 Ibid. 34 Japan has also been providing a vast subsidy to the US on a similar basis and for far longer, but the relationship between the two mature countries has little bearing on subordinate financialization. 35 Even without counting the risk of capital losses, if the dollar were to depreciate significantly in the future. 36 Dani Rodrik, ‘The Social Cost of Foreign Exchange Reserves’, NBER Working Paper No. 11952, January 2006.

Aglietta, Michel, ‘Shareholder Value and Corporate Governance: Some Tricky Questions’, Economy and Society 29:1, 2000, pp. 146–59. Aglietta, Michel, and Antoine Rebérioux, Dérives du capitalisme financier, Paris: Albin Michel, 2004. Aglietta, Michel, and Régis Breton, ‘Financial Systems, Corporate Control and Capital Accumulation’, Economy and Society 30:4, 2001, pp. 433–66. Aizenman, Joshua, and Jaewoo Lee, ‘International Reserves: Precautionary Versus Mercantilist Views: Hypothesis and Evidence’, Open Economies Review 18, 2007, pp. 191–214. Aizenman, Joshua, and Jaewoo Lee, ‘International Reserves: Precautionary Versus Mercantilist Views: Theory and Evidence’, IMF Working Paper WP/05/198, International Monetary Fund, October 2005. Aizenman, Joshua, and Kenta Inoue, ‘Central Banks and Gold Puzzles’, NBER Working Paper No. 17894, National Bureau of Economic Research, 2012. Aizenman, Joshua, and Reuven Glick, ‘Pegged Exchange Rate Regimes: A Trap?’


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Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Steven Pinker

3D printing, access to a mobile phone, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, anti-communist, Anton Chekhov, Arthur Eddington, artificial general intelligence, availability heuristic, Ayatollah Khomeini, basic income, Berlin Wall, Bernie Sanders, Black Swan, Bonfire of the Vanities, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, clockwork universe, cognitive bias, cognitive dissonance, Columbine, conceptual framework, correlation does not imply causation, creative destruction, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, decarbonisation, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, distributed generation, diversified portfolio, Donald Trump, Doomsday Clock, double helix, effective altruism, Elon Musk, en.wikipedia.org, end world poverty, endogenous growth, energy transition, European colonialism, experimental subject, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, frictionless, frictionless market, germ theory of disease, Gini coefficient, Hans Rosling, hedonic treadmill, helicopter parent, Hobbesian trap, humanitarian revolution, Ignaz Semmelweis: hand washing, income inequality, income per capita, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), invention of writing, Jaron Lanier, Joan Didion, job automation, Johannes Kepler, John Snow's cholera map, Kevin Kelly, Khan Academy, knowledge economy, l'esprit de l'escalier, Laplace demon, life extension, long peace, longitudinal study, Louis Pasteur, Martin Wolf, mass incarceration, meta analysis, meta-analysis, Mikhail Gorbachev, minimum wage unemployment, moral hazard, mutually assured destruction, Naomi Klein, Nate Silver, Nathan Meyer Rothschild: antibiotics, Nelson Mandela, New Journalism, Norman Mailer, nuclear winter, obamacare, open economy, Paul Graham, peak oil, Peter Singer: altruism, Peter Thiel, precision agriculture, prediction markets, purchasing power parity, Ralph Nader, randomized controlled trial, Ray Kurzweil, rent control, Republic of Letters, Richard Feynman, road to serfdom, Robert Gordon, Rodney Brooks, rolodex, Ronald Reagan, Rory Sutherland, Saturday Night Live, science of happiness, Scientific racism, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Kuznets, Skype, smart grid, sovereign wealth fund, stem cell, Stephen Hawking, Steven Pinker, Stewart Brand, Stuxnet, supervolcano, technological singularity, Ted Kaczynski, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, total factor productivity, union organizing, universal basic income, University of East Anglia, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, urban renewal, War on Poverty, We wanted flying cars, instead we got 140 characters, women in the workforce, working poor, World Values Survey, Y2K

The economists Douglass North, John Wallis, and Barry Weingast argue that the most natural way for states to function, both in history and in many parts of the world today, is for elites to agree not to plunder and kill each other, in exchange for which they are awarded a fief, franchise, charter, monopoly, turf, or patronage network that allows them to control some sector of the economy and live off the rents (in the economist’s sense of income extracted from exclusive access to a resource).11 In 18th-century England this cronyism gave way to open economies in which anyone could sell anything to anyone, and their transactions were protected by the rule of law, property rights, enforceable contracts, and institutions like banks, corporations, and government agencies that run by fiduciary duties rather than personal connections. Now an enterprising person could introduce a new kind of product to the market, or undersell other merchants if he could provide a product at lower cost, or accept money now for something he would not deliver until later, or invest in equipment or land that might not return a profit for years.

Market economies, in addition to reaping the benefits of specialization and providing incentives for people to produce things that other people want, solve the problem of coordinating the efforts of hundreds of millions of people by using prices to propagate information about need and availability far and wide, a computational problem that no planner is brilliant enough to solve from a central bureau.33 A shift from collectivization, centralized control, government monopolies, and suffocating permit bureaucracies (what in India was called “the license raj”) to open economies took place on a number of fronts beginning in the 1980s. They included Deng Xiaoping’s embrace of capitalism in China, the collapse of the Soviet Union and its domination of Eastern Europe, and the liberalization of the economies of India, Brazil, Vietnam, and other countries. Though intellectuals are apt to do a spit take when they read a defense of capitalism, its economic benefits are so obvious that they don’t need to be shown with numbers.

Yet the single best predictor of emancipative values is the World Bank’s Knowledge Index, which combines per capita measures of education (adult literacy and enrollment in high schools and colleges), information access (telephones, computers, and Internet users), scientific and technological productivity (researchers, patents, and journal articles), and institutional integrity (rule of law, regulatory quality, and open economies).44 Welzel found that the Knowledge Index accounts for seventy percent of the variation in emancipative values across countries, making it a far better predictor than GDP.45 The statistical result vindicates a key insight of the Enlightenment: knowledge and sound institutions lead to moral progress. * * * Any tour of progress in rights must look at the most vulnerable sector of humanity, children, who cannot agitate for their own interests but depend upon the compassion of others.


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

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

These last have very little to do with the discipline of economics, but everything to do with reality. * I heard this joke on a BBC radio program when I was a college student, and it was told, characteristically, by an economist, E. F. Schumacher. Economists are their own harshest critics. † Jagdish Bhagwati has been a tireless advocate of free trade since the 1980s. In his early academic work, he showed that an open economy may lose something from growth, because of attendant changes in the world prices of its imports and exports. He also analyzed at length the presence of market distortions and the needed policy responses, showing that laissez-faire was suboptimal under a wide range of conditions. Jagdish Bhagwati, “Immiserizing Growth: A Geometrical Note,” Review of Economic Studies 25, no. 3 (June 1958): 201–5; Bhagwati and V.

Angrist, “Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records,” American Economic Review 80, no. 3 (June 1990): 313–36. 16. Donald R. Davis and David E. Weinstein, “Bones, Bombs, and Break Points: The Geography of Economic Activity,” American Economic Review 92, no. 5 (2002): 1269–89. 17. David R. Cameron, “The Expansion of the Public Economy: A Comparative Analysis,” American Political Science Review 72, no. 4 (December 1978): 1243–61. 18. Dani Rodrik, “Why Do More Open Economies Have Bigger Governments?” Journal of Political Economy 106, no. 5 (October 1998): 997–1032. 19. Robert Sugden, “Credible Worlds, Capacities and Mechanisms” (unpublished paper, School of Economics, University of East Anglia, August 2008). CHAPTER 4: Models and Theories 1. Andrew Gelman, “Causality and Statistical Learning,” American Journal of Sociology 117 (2011): 955–66; Andrew Gelman and Guido Imbens, Why Ask Why?


pages: 453 words: 117,893

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

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

In the world’s most populous nation, with 1.3 billion people or one-fifth of humanity, the World Bank estimates that the country is on its way to ending extreme poverty, in which individuals live on less than $1.90 per day. China is unusual in that, while it is transitioning from a planned economy that has dismantled many of its state-owned enterprises and banks, it is simultaneously a developing country in which half the population still live in rural areas. China is also an ‘open economy’ integrated with world markets. China remains a communist state governed by the Chinese Communist Party. It’s therefore unsurprising that the rule of law and other market-supporting institutions, such as private property protection, are weak, as there is no independent judiciary. This gives rise to the so-called ‘China paradox’, because the country has grown strongly despite not having a well-developed set of institutions.

By the late 2000s China was contributing to the ‘global macroeconomic imbalances’, where the countries with significant trade surpluses (China, Asia and the Middle East oil exporters) saw their surpluses grow while the United States experienced larger trade deficits. The global imbalances and other aspects of the ‘China effect’ (or ‘China price’ whereby cheap Chinese labour has pushed down global prices for manufactured goods) point to the need to examine China as a large, open economy. In other words, it is similar to the United States in that what China does affects the world economy in a way that most countries do not. So openness has undoubtedly contributed to China’s economic growth but in a nuanced manner. The other part of technological progress needed for economic growth derives from domestic innovation, and not just reliance on foreign technology. Coming up with innovative technologies requires researchers and R&D investment.

But the burst of foreign direct investment that accompanied the rapid growth of international trade since the early 1990s was one of the reasons developing countries grew so well that a billion people were lifted out of extreme poverty and reduced the gap between them and rich nations. What would our Great Economists make of all of this? Would they say globalization is in trouble? Great Economists on the backlash against globalization For Adam Smith and David Ricardo, pursuing free trade would be at the top of their priorities. During the era of the classical economists, which included the repeal of the Corn Laws, being an open economy helped the UK punch above its weight in the world. They would undoubtedly urge countries to focus on the benefits of globalization. For Karl Marx, the election of Trump may be read as a populist revolt against the capitalists who have gained from globalization while the working classes have lost out. Joan Robinson, who latterly supported communist regimes in China and North Korea, may well share that sentiment.


pages: 374 words: 113,126

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

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

In the world’s most populous nation, with 1.3 billion people or one-fifth of humanity, the World Bank estimates that the country is on its way to ending extreme poverty, in which individuals live on less than $1.90 per day. China is unusual in that, while it is transitioning from a planned economy that has dismantled many of its state-owned enterprises and banks, it is simultaneously a developing country in which half the population still live in rural areas. China is also an ‘open economy’ integrated with world markets. China remains a communist state governed by the Chinese Communist Party. It’s therefore unsurprising that the rule of law and other market-supporting institutions, such as private property protection, are weak, as there is no independent judiciary. This gives rise to the so-called ‘China paradox’, because the country has grown strongly despite not having a well-developed set of institutions.

By the late 2000s China was contributing to the ‘global macroeconomic imbalances’, where the countries with significant trade surpluses (China, Asia and the Middle East oil exporters) saw their surpluses grow while the United States experienced larger trade deficits. The global imbalances and other aspects of the ‘China effect’ (or ‘China price’ whereby cheap Chinese labour has pushed down global prices for manufactured goods) point to the need to examine China as a large, open economy. In other words, it is similar to the United States in that what China does affects the world economy in a way that most countries do not. So openness has undoubtedly contributed to China’s economic growth but in a nuanced manner. The other part of technological progress needed for economic growth derives from domestic innovation, and not just reliance on foreign technology. Coming up with innovative technologies requires researchers and R&D investment.

But the burst of foreign direct investment that accompanied the rapid growth of international trade since the early 1990s was one of the reasons developing countries grew so well that a billion people were lifted out of extreme poverty and reduced the gap between them and rich nations. What would our Great Economists make of all of this? Would they say globalization is in trouble? Great Economists on the backlash against globalization For Adam Smith and David Ricardo, pursuing free trade would be at the top of their priorities. During the era of the classical economists, which included the repeal of the Corn Laws, being an open economy helped the UK punch above its weight in the world. They would undoubtedly urge countries to focus on the benefits of globalization. For Karl Marx, the election of Trump may be read as a populist revolt against the capitalists who have gained from globalization while the working classes have lost out. Joan Robinson, who latterly supported communist regimes in China and North Korea, may well share that sentiment.


pages: 481 words: 120,693

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

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

If the sedentary partner paid for the entire mission, he received 75 percent of the profits; if he financed two-thirds of the voyage, he got half. The commenda was a powerful engine of both economic growth and social mobility—historians studying government documents from AD 960, 971, and 982 found that new names accounted for respectively 69 percent, 81 percent, and 65 percent of all the elite citizens cited. Venice’s elite were the chief beneficiaries of the rise of La Serenissima. But like all open economies, theirs was turbulent. We think of social mobility as an entirely good thing, but if you are already on top, mobility can also mean competition from outsider entrepreneurs. Even though this cycle of creative destruction had created the Venetian upper class, in 1315, when their city was at the height of its economic powers, they acted to lock in their privilege. Venice had prospered under a relatively open political system in which a wide swath of the people had a voice in the selection of the republic’s ruler, the doge, and successful outsiders could join the ruling class.

There are a lot of reasons to be worried about the rise of the plutocrats—the impact soaring inequality has on civic values, on crime rates, on morality, or even, according to some studies, on health. The big danger, though, is the one represented by La Serrata. As the people at the very top become ever richer, they have an ever greater ability to tilt the rules of the game in their favor. That power can be hard to resist. One reason La Serrata is such a useful example is that the Venetian oligarchs who closed off their society were the products of a robust, open economy. They didn’t start out as oligarchs—they’d made themselves into oligarchs. That’s important because as soaring income inequality has become an undeniable political fact, even in societies, such as the United States, that have been squeamish about open discussions of class, a dominant response has been to try to sort the plutocrats into the white hats and the black hats. Steve Jobs is a hero; Lloyd Blankfein is a villain.

“A truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital,” Buffett explained. “Though capitalism’s ‘creative destruction’ is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.” Like the Venetians who put themselves in the Book of Gold, Buffett understands that the creative destruction of an open economy is good for the country as a whole; but smart capitalists like him prefer to be defended by uncrossable moats. Buffett goes on to explain that his preferred moats are being a low-cost producer or possessing a well-known worldwide brand. But favorable government regulation can create a powerful moat, too. And taking advantage of that government moat is a business decision, not a question of ideology or morality, as we saw in hedge funder and antigovernment crusader Ken Griffin’s telling comment that CEOs’ “duties to their shareholders” justify business leaders’ opening their hands to a state “willing to hand out gifts.”


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

"Robert Solow", affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, business cycle, buy and hold, capital controls, Cass Sunstein, central bank independence, clean water, collapse of Lehman Brothers, congestion charging, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, fixed income, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, libertarian paternalism, low skilled workers, Malacca Straits, market bubble, microcredit, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, Sam Peltzman, school vouchers, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, The Market for Lemons, the rule of 72, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional, zero-sum game

The result, in the words of one economist, has been a “largely self-imposed economic exile.”19 At great cost, it turns out. The preponderance of evidence suggests that open economies grow faster than closed economies. In one of the most influential studies, Jeffrey Sachs, now director of The Earth Institute at Columbia University, and Andrew Warner, a researcher at the Harvard Center for International Development, compared the economic performance of closed economies, as defined by high tariffs and other restrictions on trade, to the performance of open economies. Among poor countries, the closed economies grew at 0.7 percent per capita annually during the 1970s and 1980s while the open economies grew at 4.5 percent annually. Most interesting, when a previously closed economy opened up, growth increased by more than a percentage point a year.


The Empire Project: The Rise and Fall of the British World-System, 1830–1970 by John Darwin

anti-communist, banking crisis, Bretton Woods, British Empire, capital controls, cognitive bias, colonial rule, Corn Laws, European colonialism, floating exchange rates, full employment, imperial preference, Joseph Schumpeter, Khartoum Gordon, Kickstarter, labour mobility, land tenure, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, Mahatma Gandhi, Monroe Doctrine, new economy, New Urbanism, open economy, railway mania, reserve currency, Right to Buy, rising living standards, Scientific racism, South China Sea, the market place, The Wealth of Nations by Adam Smith, trade route, transaction costs, transcontinental railway, undersea cable

The idea ‘which has been…my fellow and my guide…is a conception, however imperfect, of the grandeur of the race, already girdling the earth.’122 It was the most positive proof that the migrant societies growing up in the settlement colonies had a viable future as non-dependent communities. And America, as much as Britain's own settler states, encouraged the British ‘at home’ to see themselves as an ‘old’ community recreating itself in new lands overseas – a vital part of their colonising ideology. Secondly, Britain had become an open economy with the adoption of free trade in the 1840s and 1850s (the repeal of the Navigation laws in 1850–1 almost completed the process). The motives behind this have been fiercely debated. They may have owed more to the political need to rebalance commercial and agrarian interests than to commercial calculation.123 But, once enacted, free trade reinforced Britain's role as the world's principal entrepot, the market-place to which the world's goods could be carried without commercial restriction.

By the 1870s, an extensive rail network and a streamlined market (including a huge ‘futures’ market in Chicago103) brought the output of the American Midwest straight to the consumers of Europe. With their vast Atlantic traffic, accessible ports, dense communications and large population, the British Isles were the obvious market for American food. Here, politics were as critical as economics. It was the decision, unique among Europe's larger states, to preserve free trade and the open economy which threw open the British market to unlimited competition from foreign foodstuffs. The results were dramatic. As farm prices fell so did rents and wages. As agricultural depression set in through the 1880s, rural communities (especially in the ‘wheat countries’104) shrivelled. The distinctiveness and diversity of rural life began to atrophy. A tide of migration flowed towards the towns and cities.

‘Empire’ was acceptable to a broad swathe of opinion because it appealed both to those alarmed by the stresses in late-Victorian Britain and to those exhilarated by its new possibilities. The stresses were real. Rather than surrender free trade, the ark of their social covenant110 as well as the talisman of national wealth, the late Victorians tolerated the external pressures transmitted inwards by their open economy. They accepted the rising mobility of capital and labour. But there were deep misgivings. Social commentators warned against a ‘rootless’ and ‘volatile’ urban proletariat,111 and sighed with regret for a more stable and ‘rooted’ agrarian age.112 The evidence of urban poverty recorded by observers like Booth and Rowntree suggested that the uneven distribution of wealth was a serious threat to the social fabric.


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10% Less Democracy: Why You Should Trust Elites a Little More and the Masses a Little Less by Garett Jones

"Robert Solow", Andrei Shleifer, Asian financial crisis, business cycle, central bank independence, clean water, corporate governance, correlation does not imply causation, creative destruction, Edward Glaeser, financial independence, game design, German hyperinflation, hive mind, invisible hand, Jean Tirole, Kenneth Rogoff, Mark Zuckerberg, mass incarceration, minimum wage unemployment, Mohammed Bouazizi, open economy, Pareto efficiency, Paul Samuelson, price stability, rent control, The Wealth of Nations by Adam Smith, trade liberalization

Weingast, “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England,” Journal of Economic History 49, no. 4 (1989): 803–832. 11. Hilton L. Root, “Tying the King’s Hands: Credible Commitments and Royal Fiscal Policy During the Old Regime,” Rationality and Society 1, no. 2 (1989): 240–258. 12. Sebastian Edwards, “Sovereign Default, Debt Restructuring, and Recovery Rates: Was the Argentinean ‘Haircut’ Excessive?” Open Economies Review 26, no. 5 (2015): 839–867. 13. Thomas Friedman, “Don’t Mess with Moody’s,” New York Times, February 22, 1995. Chapter 7 1. William L. Riordan, Plunkitt of Tammany Hall: A Series of Very Plain Talks on Very Practical Politics (New York: Penguin, 1995), 3. 2. Riordan, Tammany Hall, 6. 3. Riordan, Tammany Hall, 24. 4. Carol Hanisch, “The Personal Is Political,” in Notes from the Second Year: Women’s Liberation, ed.

Political Participation, Protest and Democracy. London: Economist, 2018. Edwards, Geoff, and Leonard Waverman. “The Effects of Public Ownership and Regulatory Independence on Regulatory Outcomes.” Journal of Regulatory Economics 29, no. 1 (2006): 23–67. Edwards, Sebastian, and Andrea F. Presbitero. “Sovereign Default, Debt Restructuring, and Recovery Rates: Was the Argentinean ‘Haircut’ Excessive?” Open Economies Review 26, no. 5 (2015): 839–867. Egeberg, Morten, Åse Gornitzka, and Jarle Trondal. “A Not So Technocratic Executive? Everyday Interaction Between the European Parliament and the Commission.” West European Politics 37, no. 1 (2014): 1–18. Eisenhower, Dwight D. “Farewell Address.” 1961. https://www.eisenhower.archives.gov/all_about_ike/speeches/farewell_address.pdf. European Union Agency for Fundamental Rights.


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Open: The Progressive Case for Free Trade, Immigration, and Global Capital by Kimberly Clausing

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, active measures, Affordable Care Act / Obamacare, agricultural Revolution, battle of ideas, Bernie Sanders, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, corporate social responsibility, creative destruction, currency manipulation / currency intervention, David Ricardo: comparative advantage, Donald Trump, floating exchange rates, full employment, gig economy, global supply chain, global value chain, guest worker program, illegal immigration, immigration reform, income inequality, index fund, investor state dispute settlement, knowledge worker, labor-force participation, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, meta analysis, meta-analysis, offshore financial centre, open economy, Paul Samuelson, profit motive, purchasing power parity, race to the bottom, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transfer pricing, uber lyft, winner-take-all economy, working-age population, zero-sum game

These suggestions preserve what is working about the global economy while also making necessary changes to modernize economic policy in order to meet the challenges of today’s technologically sophisticated global economy. The suggestions in Chapters 9 through 11 are about meeting the needs of the middle class directly and effectively. They tackle the challenging problems of middle-class stagnation and income inequality described in Chapter 2. These suggestions preserve the many benefits of open economies; I do not suggest closing borders or erecting walls. Instead, the policies go straight to the problems of American workers. Chapter 9, 10, and 11 deal with three aspects of this policy response. Chapter 9 focuses on strategies to help workers meet the demands of the global economy. Chapter 10 describes how a grand bargain for true tax reform can both help American workers and modernize the tax system, making it more suited to a global economy.

The United States ranked sixth for ease of doing business, and the World Economic Forum determined that the United States is the world’s second most competitive economy.2 The US rank is buttressed by highly sophisticated businesses, a huge market, innovation, and strong institutions of higher education, overcoming the negative effects of relatively poor infrastructure and primary education. ________________________ 1.  The full set of rankings can be found at its website: http://www.doingbusiness.org/rankings. 2.  World Economic Forum, The Global Competitiveness Report 2017–2018, September 26, 2017. To create the conditions necessary for a more equitable globalization, we need a better partnership with the business community. To create a strong, prosperous, open economy where a rising tide lifts all boats, the government and the business community need to come together in support of large, smart policy changes. Five key pillars support this partnership: An embrace of the global economy Simple, fair regulations A simple, fair tax code and more transparency on taxes More transparency on pay structure and labor inclusion More robust antitrust laws Several of these agenda items will be embraced by the business community, whereas some may meet with resistance.


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The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All by Martin Sandbu

"Robert Solow", Airbnb, autonomous vehicles, balance sheet recession, bank run, banking crisis, basic income, Berlin Wall, Bernie Sanders, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, centre right, collective bargaining, debt deflation, deindustrialization, deskilling, Diane Coyle, Donald Trump, Edward Glaeser, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, future of work, gig economy, Gini coefficient, hiring and firing, income inequality, income per capita, industrial robot, intangible asset, job automation, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, liquidity trap, longitudinal study, low skilled workers, manufacturing employment, Martin Wolf, meta analysis, meta-analysis, mini-job, mortgage debt, new economy, offshore financial centre, oil shock, open economy, pattern recognition, pink-collar, precariat, quantitative easing, race to the bottom, Richard Florida, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, social intelligence, TaskRabbit, total factor productivity, universal basic income, very high income, winner-take-all economy, working poor

With the right domestic policies in place, we can confidently pursue more—but better—globalisation. Historically, it is a mistake to think of a trade-off between international openness and domestic economic cohesion. Instead, the two tend to go together. The Nordic countries, widely seen as doing the best job of bringing along those left behind by economic change, have also long been among the most open economies in the West. In fact, it is arguably because they are so open that their social contracts underpinned economies of belonging and still sustain them more than many other countries. Public understanding that trade brings prosperity, but that global fluctuations can hit hard and unpredictably, has increased support for large welfare states.1 My point in this chapter is that this relationship also works the other way around.

See Andrés Rodríguez-Pose and Callum Wilkie, “Innovating in Less Developed Regions of Europe and North America,” VoxEU, 1 October 2018, https://voxeu.org/article/innovating-less-developed-regions-europe-and-north-america. Other reasons include North America’s better ability to employ high-skilled youths. 36. See “The Wrong Tail: Why Britain’s ‘Long Tail’ Is Not the Cause of Its Productivity Problems,” Centre for Cities, briefing, 24 May 2018, https://www.centreforcities.org/publication/the-wrong-tail/. Chapter 12. Globalisation with a Human Face 1. See Dani Rodrik, “Why Do More Open Economies Have Bigger Governments?,” Journal of Political Economy 106, no. 5 (October 1998): 997–1032, https://doi.org/10.1086/250038. 2. “05476: Innvandring, utvandring og nettoinnvandring, etter statsborgerskap 2003–2018,” Statistics Norway, accessed 18 December 2019, https://www.ssb.no/statbank/table/05476/. 3. “Holdninger til innvandrere og innvandring,” Statistics Norway, accessed 18 December 2019, https://www.ssb.no/innvhold. 4.


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The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent by Vivek Wadhwa

card file, corporate governance, crowdsourcing, Elon Musk, immigration reform, Marc Andreessen, open economy, pattern recognition, Ray Kurzweil, Sand Hill Road, Silicon Valley, Silicon Valley startup, software as a service, the new new thing, Y2K

Detractors of the H-1B program feel it promotes wage arbitrage and a modern version of indentured servitude that depresses the wages of US workers in STEM fields. I agree with aspects of both arguments, but I believe that allowing for a more liberal H-1B policy will end any semblance of wage depression, as talented immigrants would quickly achieve market wages for their skills. Most important, the history of the world shows that open economies grow faster than closed ones. Labor represents one of the most critical economic inputs. Yet US policy still views the average H-1B immigrant as a number rather than as a contributor. First-Class Minds, Second-Class Citizens Puneet Arora arrived in the United States in 1996 for a residency in internal medicine at Southern Illinois University. He entered on a J-1 visa, designed for work-study exchange programs.


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

Admiral Zheng, affirmative action, Affordable Care Act / Obamacare, Asian financial crisis, assortative mating, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bernie Madoff, Boris Johnson, Bretton Woods, British Empire, cashless society, central bank independence, Chelsea Manning, circulation of elites, Clayton Christensen, Corn Laws, corporate governance, credit crunch, crony capitalism, Deng Xiaoping, Detroit bankruptcy, disintermediation, Edward Snowden, Etonian, failed state, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, income inequality, Khan Academy, Kickstarter, knowledge economy, Kodak vs Instagram, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, Martin Wolf, means of production, minimum wage unemployment, mittelstand, mobile money, Mont Pelerin Society, Nelson Mandela, night-watchman state, Norman Macrae, obamacare, oil shale / tar sands, old age dependency ratio, open economy, Parag Khanna, Peace of Westphalia, pension reform, pensions crisis, personalized medicine, Peter Thiel, plutocrats, Plutocrats, popular capitalism, profit maximization, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, Silicon Valley, Skype, special economic zone, too big to fail, total factor productivity, War on Poverty, Washington Consensus, Winter of Discontent, working-age population, zero-sum game

With the rest of Europe sunk in debt it shines as a beacon of fiscal rectitude: Its government has bound itself in a financial straitjacket where it must produce a fiscal surplus over the economic cycle. Its public debt fell from 70 percent of GDP in 1993 to 37 percent in 2010, and its budget moved from an 11 percent deficit to a surplus of 0.3 percent over the same period. This allowed a country with a small, open economy to recover quickly from the financial storm of 2007–8. Its budget deficit has climbed to 2 percent of GDP, but its public debt is still below 40 percent. The change in thinking is even greater. The streets of Stockholm are awash with the blood of sacred cows. The local think tanks are overflowing with fresh ideas about “welfare entrepreneurs” and “lean management.” Indeed, Sweden has done most of the things that politicians know they ought to do but seldom have the courage to attempt.

The Nordics dominate indices of social inclusion as well as competitiveness and well-being. They have exceptionally high rates of female labor-force participation and the world’s highest rates of social mobility.1 They continue to pride themselves on the generosity of their welfare states. About 30 percent of their labor force works in the public sector, twice the average in the OECD. They continue to believe in combining open economies with public investment in human capital. But the new Nordic model begins with serving the individual rather than ­expanding the state. It begins with fiscal responsibility rather than pump priming. It begins with choice and competition rather than paternalism and planning: Both Denmark and Finland are now ahead of the United States in the economic-freedom index run by the Fraser Institute, a Canadian think tank, and Sweden has been catching up.


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Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace by Matthew C. Klein

Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, Berlin Wall, Bernie Sanders, Branko Milanovic, Bretton Woods, British Empire, business climate, business cycle, capital controls, centre right, collective bargaining, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, deglobalization, deindustrialization, Deng Xiaoping, Donald Trump, Double Irish / Dutch Sandwich, Fall of the Berlin Wall, falling living standards, financial innovation, financial repression, fixed income, full employment, George Akerlof, global supply chain, global value chain, illegal immigration, income inequality, intangible asset, invention of the telegraph, joint-stock company, land reform, Long Term Capital Management, Malcom McLean invented shipping containers, manufacturing employment, Martin Wolf, mass immigration, Mikhail Gorbachev, money market fund, mortgage debt, New Urbanism, offshore financial centre, oil shock, open economy, paradox of thrift, passive income, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, Scramble for Africa, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Wolfgang Streeck

The rest of the euro area, which either suffered as victims of the euro crisis or watched nervously from the sidelines, has determined to avoid repeating the experience by pushing fiscal policy even tighter than required. Governments would rather keep domestic demand permanently suppressed than risk ending up like Greece.66 Fig. 5.7 The birth of the euroglut (contributions to the current account balance of the euro area excluding Ireland). Sources: Eurostat; Matthew Klein’s calculations While this might make sense for small open economies, such as Portugal, it cannot be a sustainable strategy for the euro area as a whole. The world’s second-largest economy is simply too big to attempt to foist the consequences of its internal distortions on others without creating even larger global imbalances. Once again, the United States will have to reprise its role as the ultimate source of global demand. S•I•X The American Exception The Exorbitant Burden and the Persistent Deficit For decades, the United States has been the world’s indispensable spender.

All the peoples of the world suffer from this arrangement, because the U.S. financial system and consumer market function as a safety valve for exploitation elsewhere. America’s openness to international trade and finance means that the rich in Europe, China, and the other major surplus economies can squeeze their workers and retirees in the confidence that they can always sell their wares, earn their profits, and park their savings in safe assets. If the United States were not such an open economy, surplus countries would be forced either to divert their excess production to other countries, none of which have ever been as willing as the United States to absorb it, or to watch unwanted inventory pile up until factories were closed and workers were fired. The costs of rising income inequality in one country would be internalized, and there would be limited impact on others. Instead, by preventing political and industrial elites in the surplus countries from facing the consequences of their actions, the open system has enabled destructive behavior in the rest of the world.


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Vanishing Frontiers: The Forces Driving Mexico and the United States Together by Andrew Selee

Berlin Wall, call centre, Capital in the Twenty-First Century by Thomas Piketty, Donald Trump, energy security, Gini coefficient, guest worker program, illegal immigration, immigration reform, income inequality, income per capita, informal economy, job automation, low skilled workers, manufacturing employment, oil shale / tar sands, open economy, payday loans, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Silicon Valley startup, Steve Wozniak, Y Combinator

Over the same period life expectancy has also risen from seventy-three to seventy-seven, only two years less than in the United States, as health care has improved. Mexico’s dual-speed economy is hardly the perfect recipe for the future, but there’s no question that the country has moved ahead economically and now has a large and increasingly confident middle class. Mexico’s transition to an open economy undoubtedly played a major role in this shift. As discussed elsewhere in this book, there are also other reasons for these improvements, including investments by expatriate Mexicans in their home communities and Mexico’s still relatively new insertion into the innovation economy. But greater integration with the two larger economies to the north played a crucial role, and the most dynamic sectors of the economy remain linked to North American trade.

See film industry nail industry, 5, 73, 74, 75, 89, 117–118 Naranjo, Gerardo, 242 Narcos (TV show), 234 NASCAR, 227, 248–249, 250 National Association of Latino Elected Officials, 266 National Basketball Association (NBA), 250, 272 National Council of Science and Technology (Conacyt), 108 National Development Bank (Nafinsa), 108 National Entrepreneurship Institute (INADEM), 108–109 National Football League (NFL), 246–248, 252, 272 national identity, building, 210, 211, 235 National Park Service, 280–281 National Security Council, 146 natural gas industry and energy reform, 116–117, 121 exports, 6, 117, 271 oil and, 113–114, 114–115, 119, 271 pipelines for, 117, 119–120, 122 prices in, 114, 118, 119, 120, 124 ties in, 6 trade in, 120 naturalized status, issue of, 210–211 Navarro, Adela, 135–136, 139, 140 Navarro, Guillermo, 232 nearshoring, benefit of, in IT sector, 94, 95 Negrete, Layda, 161–162, 243 Nelson, Jonathan, 105–106 Nemak, 57 Netflix, 234, 241 Network for Oral Trials, 161, 163 Nevada Hispanic Legislative Caucus, 265 9/11, 144, 145 Nissan, 56 Nochistlán, Mexico, 188–189, 201, 202 Nortec, 90 North American Aerospace Defense Command (NORAD), 170 North American Development Bank, 52 North American Free Trade Agreement (NAFTA) controversy over, 52 elements of, 52 expanded relationship under, 59 impact of, 50, 55, 72, 76, 77, 78 López Obrador’s position on, 279 modernizing textbooks and, 212 negotiations leading to, 51–52 renegotiating, 53–54, 60, 270, 271, 272 root of opposition to, 21 Trump’s position on, 3, 21, 53, 269 withdrawal from, complexities and effects of, 53, 60–61, 282 North Korea, 269 Nuño, José Luis, 102 Obama, Barack, 21, 149–150, 166, 195–196, 199, 200 Odell, Ben, 223, 224, 226, 227–228, 249 Office of Management and Budget, 148 offshoring, impact of, 60 O’Grady, Frank, 203–204, 205 O’Grady, Katie, 203–205, 207 oil industry decline in, 115, 129 and energy reform, 114, 115–116, 121 exploration in, 115, 116, 129, 130–131 nationalization of, 115, 130 natural gas and, 113–114, 114–115, 119, 271 organized crime and, 129, 171 prices in, 117, 130 production in, 113, 114, 128–129 supply in, 115, 118, 124, 128, 129 ties in, 6 trade in, 120, 131 Oldenski, Lindsay, 90 Olvera, Enrique, 256, 257, 258, 259, 263–264 Olympics, 47–48 omnibus bill, 148 online services, 101, 102–103 Ooyala, 97, 99 open economy, 18, 63, 66, 77, 78, 196–197 opiates, 178, 179 opinion polls, 3, 21–22, 44, 186, 274, 275–276 opioid crisis, 178 Oracle, 99 organized crime breaking up of, 176–177, 179 citizens responding to, 165–166, 167–169 and corruption, 136, 139, 144, 145, 155–156, 178, 180 documentary film involving, 241 exposing, to the public, 163 growth of, 136–137, 142 homicides attributed to, 19, 31, 136, 138, 139, 142, 150, 165, 166, 168, 172, 177, 180 intelligence on, information lacking in, 175–176 journalists investigating, security issues facing, 135, 136 law enforcement coordination in tackling, 19, 23, 153–154, 155, 156–158 mapping, 170, 172 oil industry and, 129, 171 security cooperation on, 143–147, 149, 150–151, 157–158 strategic operations against, 170, 171, 172–174 Ortiz Mena, Tania, 124 Oxxo, 86, 102–103 Pablos, David, 242 Pantelion, 226, 227 Paris Accords on Climate Change, 123, 125 Pascual, Carlos, 166–167, 168–169, 215 passports, 221, 281 Pastor, Robert, 211–212 Pati’s Mexican Table (TV show), 260 Pemex, 115, 128, 129 PEN International, 213, 214 Peña Nieto, Enrique, 115–116, 174, 177 Pence, Mike, 200 PepsiCo, 95 Pérez, Ashley, 217–219, 221–222 Pérez, Hanna, 217–219, 221–222 Perry, Rick, 131 Pew Center, 194, 207 philanthropy, 14, 21, 80 Pilcher, Jeffrey, 259, 261 Pinzón, Alejandra, 192–194, 194–195, 196, 198, 207 Pioneer Natural Resources, 114–115 pipelines, 119–120, 122, 129, 171 Pittsburgh, Pennsylvania, 7, 76, 89 Pittsburgh Glass Works, 76 Plan Colombia, 145 Plantronics, 37–38 Plascencia, Javier, 31, 32, 33, 34, 39–40, 41, 43 Plastics Institute, 96 poetic bridge, 217 polarization, 22, 275–276 political prospects, 276–280 politics, involvement in, 264–268 pop culture, biculturalism and, 218–219 Poplar Bluff, Missouri, 7, 73–75, 77, 89, 90, 118 population shifts/figures, 8, 9, 12–13, 24, 185, 187, 190, 191, 196, 206, 207, 210, 266, 267 portfolio investments, 76 ports, 5 poverty as a driver of immigration, 2, 15, 189, 198 factors leading back to, 64 López Obrador’s position on, 277 persistent, 65, 274 reduction in, 191 Prayers for the Stolen (Clement), 214 Premier Oil, 130 Presumed Guilty (documentary film), 162, 243 Prieto, Rodrigo, 232 procurement rules, 148, 149 production key players in, industries with, 5 offshoring of, 60 rise in, 5, 57–58, 75 shared, 5–6, 18, 23, 29, 51, 52–53, 54–59, 61–62, 72, 74, 75, 89, 90, 270, 282 productivity disparity in, among business size, 65–66 efficiencies impacting, 59 programming, 98, 99 Prosecutor’s Office for Corruption, 164 Puebla, Mexico, 58, 95 Puerto Rico, emigration from, 4, 9 Puig, Claudia, 226, 231 Pujol restaurant, 256–257, 258, 263 Purdue, Sonny, 53 racial tensions, 10, 11 racism, 210 radio, 206, 247 Ramírez, Alejandro, 225, 240–241 Rassini, 55–56, 71 Reagan, Ronald, 51, 265 recession, 79, 187, 195 refugees, 184, 209 regulations, 84 Reid, Harry, 265 religious-based immigration, 208 relocation business, 205 remittances, 16, 188–190, 191–192, 202 renewable resources, 6, 117, 122, 123 See also solar power; wind power repatriating Mexicans.


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The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It by Ian Goldin, Mike Mariathasan

"Robert Solow", air freight, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, barriers to entry, Basel III, Berlin Wall, Bretton Woods, BRICs, business cycle, butterfly effect, clean water, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, connected car, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, discovery of penicillin, diversification, diversified portfolio, Douglas Engelbart, Douglas Engelbart, Edward Lorenz: Chaos theory, energy security, eurozone crisis, failed state, Fellow of the Royal Society, financial deregulation, financial innovation, financial intermediation, fixed income, Gini coefficient, global pandemic, global supply chain, global value chain, global village, income inequality, information asymmetry, Jean Tirole, John Snow's cholera map, Kenneth Rogoff, light touch regulation, Long Term Capital Management, market bubble, mass immigration, megacity, moral hazard, Occupy movement, offshore financial centre, open economy, profit maximization, purchasing power parity, race to the bottom, RAND corporation, regulatory arbitrage, reshoring, Silicon Valley, six sigma, Stuxnet, supply-chain management, The Great Moderation, too big to fail, Toyota Production System, trade liberalization, transaction costs, uranium enrichment

Divided Nations: Why Global Governance Is Failing, and What We Can Do about It Globalization for Development: Meeting New Challenges Exceptional People: How Migration Shaped Our World and Will Define Our Future The Case for Aid The Economics of Sustainable Development Economic Reform, Trade and Agricultural Development Modelling Economy-wide Reforms Trade Liberalization: Global Economic Implications Open Economies The Future of Agriculture Economic Crisis: Lessons from Brazil Making Race THE BUTTERFLY DEFECT How Globalization Creates Systemic Risks, and What to Do about It IAN GOLDIN AND MIKE MARIATHASAN PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD Copyright © 2014 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 6 Oxford Street, Woodstock, Oxfordshire OX20 1TW press.princeton.edu All Rights Reserved Library of Congress Cataloging-in-Publication Data Goldin, Ian, 1955– The butterfly defect : how globalization creates systemic risks, and what to do about it / Ian Goldin, Mike Mariathasan.

Authoritarian regimes collapsed in more than 65 countries in Latin America, Asia, Africa, and Eastern Europe and were replaced with democratic systems that were more open to global trade, finance, and ideas.7 In many but clearly not all countries, along with open borders came democratic institutions, intellectual property rights, and an economic paradigm shift toward market capitalism and more open economies.8 The Uruguay Round of trade negotiations and reforms of macroeconomic policy brought more countries and people than had any previous wave of globalization into the global exchange of goods, services, and ideas. Cross-border capital flows have increased dramatically since the 1990s (from $1.5 trillion in 1995 to $6 trillion in 2007) and have recovered strongly in the wake of the financial crisis of 2007/2008 (reaching $4.4 trillion in 2010 following two years of volatility and decline).9 Since the turn of this century, China (2001), Taiwan (2002), Saudi Arabia (2005), Vietnam (2007), Ukraine (2008), and Russia (2012) have joined the World Trade Organization (WTO).


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The Curse of Cash by Kenneth S Rogoff

Andrei Shleifer, Asian financial crisis, bank run, Ben Bernanke: helicopter money, Berlin Wall, bitcoin, blockchain, Boris Johnson, Bretton Woods, business cycle, capital controls, Carmen Reinhart, cashless society, central bank independence, cryptocurrency, debt deflation, disruptive innovation, distributed ledger, Edward Snowden, Ethereum, ethereum blockchain, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial exclusion, financial intermediation, financial repression, forward guidance, frictionless, full employment, George Akerlof, German hyperinflation, illegal immigration, inflation targeting, informal economy, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, moveable type in China, New Economic Geography, offshore financial centre, oil shock, open economy, payday loans, price stability, purchasing power parity, quantitative easing, RAND corporation, RFID, savings glut, secular stagnation, seigniorage, The Great Moderation, the payments system, The Rise and Fall of American Growth, transaction costs, unbanked and underbanked, unconventional monetary instruments, underbanked, unorthodox policies, Y2K, yield curve

First, the canonical Keynesian model of fiscal stimulus at the zero bound assumes a closed economy and ignores the fact that a part of the fiscal stimulus is likely to dissipate abroad. One of John Maynard Keynes’s brilliant simplifying assumptions was to assume a closed economy and ignore the rest of the world. The closed economy assumption is analytically elegant but not very realistic, even for the United States. Open economy spillovers imply that for fiscal stimulus policies to be fully effective, coordinated action across nations may be needed. Experience suggests, however, that this is easier said than done, especially when some countries have less faith in the Keynesian model than others. Second, the impact effect of fiscal policy can be sensitive to expectations about whether the fiscal impulse is temporary or permanent; a permanent shift implies higher future taxes and is more likely to crowd out private consumption.

Hamilton, James, and Jing Cynthia Wu. 2011. “The Effectiveness of Alternative Zero Bound Tools in a Zero Lower Bound Environment.” Journal of Money, Credit and Banking 44, suppl. (1): 3–46. Hellerstein, Rebecca, and William Ryan. 2011. “Cash Dollars Abroad.” Federal Reserve Bank of New York, Staff Report 400. Henderson, Dale, and Warwick McKibbin. 1993. “A Comparison of Some Basic Monetary Policy Regimes for Open Economies: Implications of Different Degrees of Instrument Adjustment and Wage Persistence.” Carnegie-Rochester Conference Series on Public Policy 39: 221–318. Henry, James S. 1980. “How to Make the Mob Miserable: The Cash Connection.” Washington Monthly 12(4): 54–61. Hicks, John R. 1969. A Theory of Economic History. Oxford: Clarendon Press. HM Revenue and Customs. 2015. Measuring Tax Gaps, 2015 Edition: Tax Gap Estimates for 2013–14.


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Zero-Sum Future: American Power in an Age of Anxiety by Gideon Rachman

Asian financial crisis, bank run, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Bretton Woods, BRICs, capital controls, centre right, clean water, collapse of Lehman Brothers, colonial rule, currency manipulation / currency intervention, deindustrialization, Deng Xiaoping, Doha Development Round, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, global reserve currency, greed is good, Hernando de Soto, illegal immigration, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, Live Aid, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, mutually assured destruction, Naomi Klein, Nelson Mandela, offshore financial centre, open borders, open economy, Peace of Westphalia, peak oil, pension reform, plutocrats, Plutocrats, popular capitalism, price stability, RAND corporation, reserve currency, rising living standards, road to serfdom, Ronald Reagan, shareholder value, Sinatra Doctrine, sovereign wealth fund, special economic zone, Steve Jobs, Stewart Brand, The Chicago School, The Great Moderation, The Myth of the Rational Market, Thomas Malthus, trickle-down economics, Washington Consensus, Winter of Discontent, zero-sum game

In 2005, France’s referendum on the proposed European Union constitution was won by a “No” campaign that based its arguments on fear of the “Polish plumber”—shorthand for the low-wage competition that French workers had been exposed to after the enlargement of the European Union in 2004. Almost all French politicians paid lip service to the need to protect the European social model from “unfair competition,” but the big story was that mainstream European politicians remained committed to an open economy and to globalization. The enlargement of the European Union went ahead. And despite rejection in referenda in France and the Netherlands, the EU constitution was repackaged as the Lisbon Treaty and pushed through by parliamentary vote. It was not until the late 1990s that the argument that globalization was also bad for the developing world began to be made with real force. The trigger for this was the Asian economic crisis of 1997–98.

Early in his bestselling book Globalization and Its Discontents, he acknowledges that “because of globalization many people in the world now live longer than before and their standard of living is far better.”7 His anger and condemnation are focused on specific aspects of the process, in particular that policies advocated by the International Monetary Fund in response to the crises in Asia and Russia were, in his view, wrongheaded, biased toward the interests of Western banks, and caused unnecessary misery. Stiglitz’s work was an attack on what he regarded as “market fundamentalism” leading to premature liberalization of trade and foreign exchange regimes. Yet while the globalization consensus wobbled after the Asian, Russian, and Latin American crises, it fundamentally stayed in place. Open economies in a globalized world were clearly vulnerable to sudden financial crises, but turning your back on the world was not an attractive or practical remedy. South Korea and Thailand were two of the biggest victims of the Asian economic crisis, but the South Koreans only had to look across the border to North Korea to be reminded that economic isolation offered far worse and more devastating prospects.


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Irrational Exuberance: With a New Preface by the Author by Robert J. Shiller

Andrei Shleifer, asset allocation, banking crisis, Benoit Mandelbrot, business cycle, buy and hold, computer age, correlation does not imply causation, Daniel Kahneman / Amos Tversky, demographic transition, diversification, diversified portfolio, equity premium, Everybody Ought to Be Rich, experimental subject, hindsight bias, income per capita, index fund, Intergovernmental Panel on Climate Change (IPCC), Joseph Schumpeter, Long Term Capital Management, loss aversion, mandelbrot fractal, market bubble, market design, market fundamentalism, Mexican peso crisis / tequila crisis, Milgram experiment, money market fund, moral hazard, new economy, open economy, pattern recognition, Ponzi scheme, price anchoring, random walk, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Small Order Execution System, spice trade, statistical model, stocks for the long run, survivorship bias, the market place, Tobin tax, transaction costs, tulip mania, urban decay, Y2K

(New Orleans) Times-Picayune, October 29, 1929, p. 1, col. 8; New York Times, October 29, 1929, p. 1; Wall Street Journal, October 29, 1929, p. 1, col. 2. 12. Jude Wanniski, The Way the World Works, 2nd ed. (New York: Simon and Schuster, 1983), Chapter 7. 13. Allan H. Meltzer, “Monetary and Other Explanations of the Start of the Great Depression,” Journal of Monetary Economics, 2 (1976): 460. 14. Rudiger Dornbusch and Stanley Fischer, “The Open Economy: Implications for Monetary and Fiscal Policy,” in Robert J. Gordon (ed.), The American Business Cycle: Continuity and Change (Chicago: National Bureau of Economic Research and University of Chicago Press, 1986), pp. 459–501. 15. New York Times, October 28, 1929, p. 1. 16. Wall Street Journal, October 28, 1929, p. 1. 17. O. A. Mather, Chicago Tribune, October 27, 1929, p. A1; New York Times, October 25, 1929, p. 1, col. 8; Guaranty survey quoted in New York Times, October 28, 1929, p. 37, col. 3. 18.

“A Study of Normative and Informational Social Influences upon Individual Judgment.” Journal of Abnormal and Social Psychology, 51 (1955): 629–36. Dice, Charles Amos. New Levels in the Stock Market. New York: McGraw-Hill, 1929. Diggins, John Patrick. The Proud Decades: America in War and in Peace 1941–1960. New York: W. W. Norton, 1988. RE F E RE N CE S 273 Dornbusch, Rudiger, and Stanley Fischer. “The Open Economy: Implications for Monetary and Fiscal Policy,” in Robert J. Gordon (ed.), The American Business Cycle: Continuity and Change. Chicago: National Bureau of Economic Research and University of Chicago Press, 1986, pp. 459–501. Eichengreen, Barry. Golden Fetters: The Gold Standard and the Great Depression: 1919–1939. New York: Oxford University Press, 1992. Eichengreen, Barry, James Tobin, and Charles Wyplosz.


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Creating Unequal Futures?: Rethinking Poverty, Inequality and Disadvantage by Ruth Fincher, Peter Saunders

barriers to entry, ending welfare as we know it, financial independence, full employment, Gini coefficient, income inequality, income per capita, labour market flexibility, labour mobility, longitudinal study, low skilled workers, low-wage service sector, marginal employment, minimum wage unemployment, New Urbanism, open economy, pink-collar, positional goods, purchasing power parity, shareholder value, spread of share-ownership, The Bell Curve by Richard Herrnstein and Charles Murray, urban planning, urban renewal, very high income, women in the workforce, working poor, working-age population

Accepting this argument would certainly reduce the size of the low-wage sector described in Table 7.6, but it would make the characteristics outlined in Table 7.7 even more sharply pronounced. In other words, while we might debate the size of the low-wage sector, its distinctiveness is beyond dispute. Note that considerable practical work along these lines was undertaken by Gosta Rehn in Sweden in the 1970s as part of the development of that country’s distinctive approach to blending wages and social policy as a basis for promoting the competitiveness of a small open economy. His ideas underpinned the push for universal child care rights, a year’s paid parental leave and rights to part-time retirement. These ideas, of course, built on the established rights to comprehensive retraining consequent upon dislocation from the labour market as part of economic restructuring. 228 PDF OUTPUT c: ALLEN & UNWIN r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 228 References REFERENCES Aaron, H. 1992 ‘The economics and politics of pensions: evaluating the choices’ Private Pensions and Public Policy, OECD, Paris ABC Audits 1998 ‘Weekend papers win in state market’ Ad News 14 August, p. 35 Abowd, J.M., Kramarz, F., and Margolis D.N. 1999 Minimum Wages and Employment in France and the United States, NBER Working Paper 6996, National Bureau of Economic Research, Cambridge, Mass.

M. and Chan, J.B.L. 1987 Visualising Deviance: A Study of News Organisation, Open University Press, Milton Keynes Erikson, R. and Uusitalo, H. 1987 ‘The Scandinavian approach to welfare research’ The Scandinavian Model: Welfare States and Welfare Research eds R. Erikson, E. Hansen, S. Ringen and H. Uusitalo, M.E. Sharpe, New York Erikson, R. and Goldthorpe, J.H. 1992 The Constant Flux. A Study of Class Mobility in Industrial Societies, Clarendon Press, Oxford Esping-Andersen, G. 1990 The Three Worlds of Welfare Capitalism, Polity Press, Cambridge ——1994 After the Golden Age: welfare and employment in open economies, Synthesis paper for UN Social Summit, UNRISD Ettema, J.S. and Glasser, T.L. 1988 ‘Narrative form and moral force: the realization of innocence and guilt through investigative journalism’ Journal of Communication vol. 38, no. 3, pp. 8–26 European Academy of the Urban Environment 1998 New Industrial Arrangements in the Labour Market: Transitional Labour Markets as a New Full Employment Concept, The Academy, Berlin 234 PDF OUTPUT c: ALLEN & UNWIN r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 234 REFERENCES European Commission 1997 ‘Modernising and improving social protection in the European Union’ http://europa.eu.int/en/comm/dg05/ soc-prot/com97102/commuen.htm Eurostat 1990 Poverty in Figures, Europe in the Early 1980s, Statistical Office of the European Communities, Luxembourg Fagan, R.H. and Webber, M. 1994 Global Restructuring: The Australian Experience Oxford University Press, Melbourne Farley, R. 1996 ‘The age of extremes: a revisionist perspective’ Demography vol. 33, no. 4, pp. 417–20 Feldstein, M. 1998 Income Inequality and Poverty NBER Working Paper 6770, National Bureau of Economic Research, Cambridge, Mass http://www.nber.org/papers/w6770 Ferrante, A. and Loh, N. 1996 Crime and Justice Statistics for Western Australia: 1994, mimeo, Crime Research Centre, University of Western Australia, Perth Fincher, R. and Nieuwenhuysen, J. eds 1998 Australian Poverty: Then and Now, Melbourne University Press, Melbourne Fincher, R. and Wulff, M. 1998 ‘The locations of poverty and disadvantage’ Australian Poverty: Then and Now eds R.


pages: 128 words: 38,847

The Curse of Bigness: Antitrust in the New Gilded Age by Tim Wu

AltaVista, barriers to entry, collective bargaining, corporate personhood, corporate raider, creative destruction, Donald Trump, income inequality, Johann Wolfgang von Goethe, Joseph Schumpeter, Kickstarter, move fast and break things, move fast and break things, new economy, open economy, Peter Thiel, price discrimination, road to serfdom, Robert Bork, Silicon Valley, Snapchat, The Chicago School

.…” How did Brandeis’s principles manifest themselves more broadly, as economic policy? Brandeis took the view that government’s highest role lay in the protection of human liberty and the provision of securities consistent with human thriving. That meant a commitment to civil liberties, like rights of free speech and privacy, protected by the courts. But it also meant a commitment to the protection of workers, and an open economy composed of smaller firms—along with measures to break or limit the power of monopolies. Hence, if the antitrust laws might decentralize the economy, so much the better. If other laws might do the same, that was good, too. Beyond that, Brandeis thought there should be no business exception for ethics, but that government should punish those who used abusive, oppressive, or unconscionable business methods to succeed.


pages: 397 words: 112,034

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

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

The only country that is currently taking advantage of it is Peru, where nominal GDP, with a fairly stable exchange rate, has grown from approximately $55 billion in 2001 to $127 billion in 2009 and approximately $140 billion in 2010. The reasons for this strong growth include the metals boom (especially in gold mining), the rapid rise of consumer and mortgage credit that is leading to the emergence of a middle class, gradual fiscal reform (especially in public pensions), and a progressively more open economy (the average import tariff in 2010 was about 2 percent). The big economies are going to have to push major reforms through if they want to realize their potential. Energy reform is long overdue in Mexico, even after the tough government decision in October 2009 to fire all 42,000 unionized staff members of Luz y Fuerza del Centro (the state utility for Mexico City that was well known for its inefficiency and theft of electricity).

In part, this sharp turnaround is technical: it was driven by the poor performance of the economy in the first quarter of 2009. As is the case the world over, the prospects for sustained economic performance remain tentative. South Africa’s major trading partners are bedeviled by a blend of substantial pan-European public debt, Anglo-Saxon capital and financial market problems, and tectonic shifts in the structure of the global economy. As a small open economy, South Africa is affected by these global economic-financial forces. For much of the early 2000s, South Africa’s macro-financial and fiscal indicators compared favorably with those of many of its peer countries. This was, to a large extent, the outcome of a consistent and ambitious fiscal reform program over the 1994–2007 period. The Aparthied regime had left the country’s macroeconomic and fiscal configuration saddled with high public debt, excessive budgetary deficits, double-digit inflation, and a vulnerable currency.


pages: 650 words: 203,191

After Tamerlane: The Global History of Empire Since 1405 by John Darwin

agricultural Revolution, Atahualpa, Berlin Wall, Bretton Woods, British Empire, Cape to Cairo, colonial rule, Columbian Exchange, cuban missile crisis, deglobalization, deindustrialization, European colonialism, failed state, Francisco Pizarro, invisible hand, Isaac Newton, joint-stock company, Khartoum Gordon, laissez-faire capitalism, land reform, Mahatma Gandhi, Malacca Straits, mutually assured destruction, new economy, New Urbanism, oil shock, open economy, price mechanism, reserve currency, Ronald Reagan, Scramble for Africa, South China Sea, South Sea Bubble, spice trade, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade

The high costs of long-distance trade, as well as large armed ships (the ‘East Indiamen’), shore establishments (with their garrisons to guard against attack by other Europeans or disorderly locals) and the diplomatic apparatus required for dealings with regional rulers and the Mughal court, had long made it necessary for European traders to be organized as joint-stock companies. These were forerunners of the modern corporation (with shareholders, a board and a management structure), and enjoyed a monopoly in the direct trade between their country and India. But their superficial modernity did not, of course, mean that European merchants were heralds of the open economy or the rule of the market. Indeed, they had little to sell, and they were forced to import bullion on a massive scale to pay for the Indian goods that they wanted to buy. Their commercial policy was to drive down the price and increase the quantity of the Indian textiles for which an insatiable demand existed in Europe. Hence the rival European companies (mainly after 1720 the English and French East India companies) were engaged in a constant effort to entice Indian weavers into their trading towns (like Madras or Pondicherry), where they had been allowed to build their ‘factories’ and exert their control over weavers and merchants in order to regulate the price, type and quality of the cloth produced.159 This led them into close but often quarrelsome relations with local rulers, whose wealth and power also depended upon the profits of trade and the shuffling of tax revenues between commerce and credit.

Resentment at this had made the Bombay Parsis among the earliest champions of Indian rights against the British Raj. On the other hand, even non-European merchants had nothing to gain if the world that commerce had made was divided into a patchwork quilt of fractious nation states whose rulers’ aims were unlikely to chime with those of the chambers of commerce in the great port cities. The merchants’ interests could be briefly summed up as the ‘open economy’, with no barriers to trade, the flows of credit and capital, or the movement of people (especially labour). This was the ‘empire of free trade’ that the British had pursued since the 1840s, when they had tried to enforce it (with some degree of success) on Latin America and the Middle East as well as India and China. It had required the newtransport technology to drawthe rest of the world towards the high-pressure zone of Euro-American commerce.

It helped to speed up the remarkable process by which more and more states adopted the ‘gold standard’: fixing their currency’s value in gold to expand their trade and encourage inward investment.74 London’s size and wealth thus grew in sympathy with the surging growth of international trade.75 Among its merchants and bankers, it was an article of faith that what was good for London was good for the world. The idea of free trade and the open economy was adopted in Britain in the 1840s and ’ 50s not just as a policy but as a total world-view, an ideology promoted with crusading passion. It imagined a world in which peoples would be freed from their bondage to rulers by the flood tide of commerce. Individual freedom and international trade would move forward together. Free trade was regarded as the key to British economic success, and to the economic progress of the rest of the world.


pages: 550 words: 124,073

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

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

But in our reading of the evidence, governments in ACDs do the opposite: they tend to pursue far-sighted macroeconomic policies (Iversen and Soskice 2006). The shift to low-inflation targeting is an example of this, and so is the Stability and Growth Pact in the Eurozone and the general shift toward strong ministries of finance that we discussed above. 10. This is an issue in interpreting results that suggests that economic voting in small open economies is less prevalent (Hellwig 2001). This could be because governments have less effect on the economy (and therefore more constrained), but it could also be that they have a stronger incentive to behave in a responsible manner, since loss of competitiveness and trade deficits will quickly signal problems. 11. This is broadly consistent with the argument and evidence in Mau (2015) that the middle class endorsed neoliberal reforms and bought into the key institutions of the new economy, including higher education, a more credit-based financial system, and opportunities for home ownership (although we disagree that this was caused by a cultural shift towards individualization, or that the middle class ultimately lost out from these changes—to the contrary). 12.

“Income Inequality in OECD Countries: Data and Explanations.” CESifo Economic Studies 49 (4): 479–513. Atkinson, Anthony B., Thomas Piketty, and Emmanuel Saez. 2011. “Top Incomes in the Long Run of History.” Journal of Economic Literature 49 (1): 3 –71. Audretsch, David. 1998. “Agglomeration and the Location of Innovative Activity.” Oxford Review of Economic Policy 14 (2): 18–29. Aukrust, Odd. 1977. “Inflation in the Open Economy: A Norwegian Model.” In Worldwide Inflation: Theory and Recent Experience, eds. Lawrence B. Krause and Walter S. Salant, 107–53. Washington, DC: Brookings Institute. Autor, David H. 2015. “Why Are There Still So Many Jobs? The History and Future of Workplace Automation.” Journal of Economic Perspectives 29 (3): 3–30. Autor, David H., and David Dorn. 2009. “Inequality and Specialization: The Growth of Low-Skill Service Jobs in the United States.”


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Open Standards and the Digital Age: History, Ideology, and Networks (Cambridge Studies in the Emergence of Global Enterprise) by Andrew L. Russell

American ideology, animal electricity, barriers to entry, borderless world, Chelsea Manning, computer age, creative destruction, disruptive innovation, Donald Davies, Edward Snowden, Frederick Winslow Taylor, Hacker Ethic, Howard Rheingold, Hush-A-Phone, interchangeable parts, invisible hand, John Markoff, Joseph Schumpeter, Leonard Kleinrock, means of production, Menlo Park, Network effects, new economy, Norbert Wiener, open economy, packet switching, pre–internet, RAND corporation, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ronald Reagan, Silicon Valley, Steve Crocker, Steven Levy, Stewart Brand, technoutopianism, Ted Nelson, The Nature of the Firm, Thomas L Friedman, Thorstein Veblen, transaction costs, web of trust

By insisting on a “world open to American ideas and influence,” Open Door ideology created the conditions where Americans could pursue “informal empire” in the Pacific while proclaiming the high-minded and progressive principles of national self-determination and international peace.24 In the middle decades of the twentieth century, prominent philosophers, scientists, and theorists in the United States and Europe embraced “open” metaphors in their work. Unlike the Open Door policy’s explicit confrontation with international diplomacy in the early twentieth century, the mid-century experts who wrote about open societies, open economies, and open systems retreated from geopolitical realities and instead applied the discourses of openness to their theoretical, structural, and systematic investigations. For example, the philosophers Henri Bergson and Karl Popper posed stark dichotomies between social customs that they called “open” and “closed.” Bergson drew a distinction in The Two Sources of Morality and Religion (1932) between “closed morality” and “open morality,” where the former concept described an exclusionary and static society that promoted social cohesion and carried a deep preoccupation with strict internal obedience and war against all enemies.

Together they built a philosophical case that led to an inevitable (if understated) conclusion: open morality and open societies were superior alternatives to fascist and communist oppression.25 Experts in economics, sociology, and mathematics also adopted open metaphors in the 1930s and 1940s and, even more than the philosophers, took refuge from political and military conflict in the specialized language of their own disciplines. In 1939, the British Keynesian economist George Shackle published an article titled “The Multiplier in Closed and Open Systems,” a commentary on the theoretical uncertainties inherent in export and import values in an “open economy.”26 The language of open systems also appeared in the work of the sociologist Talcott Parsons, who in 1943 described the “Kinship System of the Contemporary United States” as an “open, multilineal, conjugal system,” one in which individuals choose their marriage partners rather than having marriages arranged on their behalf. In 1945, the term “open systems” appeared again in a different context – this time in the journal Philosophy of Science.


pages: 496 words: 131,938

The Future Is Asian by Parag Khanna

3D printing, Admiral Zheng, affirmative action, Airbnb, Amazon Web Services, anti-communist, Asian financial crisis, asset-backed security, augmented reality, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Basel III, blockchain, Boycotts of Israel, Branko Milanovic, British Empire, call centre, capital controls, carbon footprint, cashless society, clean water, cloud computing, colonial rule, computer vision, connected car, corporate governance, crony capitalism, currency peg, deindustrialization, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, energy security, European colonialism, factory automation, failed state, falling living standards, family office, fixed income, flex fuel, gig economy, global reserve currency, global supply chain, haute couture, haute cuisine, illegal immigration, income inequality, industrial robot, informal economy, Internet of things, Kevin Kelly, Kickstarter, knowledge worker, light touch regulation, low cost airline, low cost carrier, low skilled workers, Lyft, Malacca Straits, Mark Zuckerberg, megacity, Mikhail Gorbachev, money market fund, Monroe Doctrine, mortgage debt, natural language processing, Netflix Prize, new economy, off grid, oil shale / tar sands, open economy, Parag Khanna, payday loans, Pearl River Delta, prediction markets, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, Ronald Reagan, Scramble for Africa, self-driving car, Silicon Valley, smart cities, South China Sea, sovereign wealth fund, special economic zone, stem cell, Steve Jobs, Steven Pinker, supply-chain management, sustainable-tourism, trade liberalization, trade route, transaction costs, Travis Kalanick, uber lyft, upwardly mobile, urban planning, Washington Consensus, working-age population, Yom Kippur War

Southeast Asia’s export-led growth surge suffered a significant setback with the financial contagion of 1997, in which insufficient foreign currency reserves forced major devaluations and skyrocketing debt in Thailand, Malaysia, the Philippines, and even mature economies such as South Korea. The collapse of local currencies laid bare the crony capitalism governing countries such as Indonesia. After three decades of rule, Suharto lost the backing of the army and resigned in 1998 amid waves of demonstrations. The Soviet collapse was also a major precipitating factor in India’s 1990s shift toward an open economy. As the once significant trade volumes with the Soviet Union plummented and the Persian Gulf War caused a doubling of oil prices, India’s prime minister, P V. Narasimha Rao, and his finance minister, Manmohan Singh, set about reversing Nehru-era central planning, dismantling the notorious “license Raj” of regulations, and welcoming foreign investment, all of which contributed to lifting India above what had come to be known as the “Hindu rate of growth.”

China has slowly begun to license foreign credit card companies to operate in the country, but only after UnionPay achieved 80 percent market share and WeChat Pay and Alipay gained acceptance in landmark tourist sites and other locations all over the world. Recent Western business surveys of hot markets have thus revealed a shift in focus to India, Pakistan, Indonesia, and the Philippines—their combined population being just over 2 billion. Unlike in China, where foreign companies have no chance of achieving a dominant market share, these more open economies and democratic societies present Western firms with an opportunity to capitalize on Asia’s next growth wave. From Vietnam to Myanmar, these fast-growing economies allow as much as 100 percent foreign ownership in lucrative sectors such as construction, real estate, finance, and retail. In other words, they are practically the anti-China. Almost every sector of the US economy has benefited from Asia’s rise.


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The End of Alchemy: Money, Banking and the Future of the Global Economy by Mervyn King

"Robert Solow", Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Hyman Minsky, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, lateral thinking, liquidity trap, Long Term Capital Management, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, The Rise and Fall of American Growth, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

An alternative history of the pre-crisis period Could and should policy-makers have reacted sooner to the disequilibrium that was building up prior to the crisis? What strategies might have been deployed by the G7 countries before the crisis? With the benefit of hindsight, should interest rates have been higher during the period of the so-called Great Stability? We can explore these questions by going back to the pre-crisis period and asking whether there was an alternative policy that might have produced a different result. As a medium-sized, open economy, the United Kingdom offers a good example of how to think about an alternative monetary policy prior to the crisis. In the build-up to the crisis of 2007–9, the average growth rate of GDP was only a fraction above the previous fifty-year annual average of 2.75 per cent. There was no ‘boom’ in output growth that heralded an inevitable ‘bust’. Inflation was steady and close to the 2 per cent target; unemployment was close to estimates of its natural rate.

Kahneman, Daniel (2011), Thinking, Fast and Slow, Farrar, Straus and Giroux, New York. Kahneman, Daniel and Amos Tversky (1979), ‘Prospect Theory: An Analysis of Decision under Risk’, Econometrica, Vol. 47, pp. 263–91. Kalemli-Ozcan, Sebnem, Bent E. Sorensen and Sevcan Yesiltas (2012), ‘Leverage Across Firms, Banks and Countries’, Federal Reserve Bank of Dallas Conference on Financial Frictions and Monetary Policy in an Open Economy, mimeo. Kareken, John (1986), ‘Federal Bank Regulatory Policy: A Description and Some Observations’, Journal of Business, 59, pp. 3–48. Kay, John (2009), ‘Narrow Banking: The Reform of Banking Regulation’, Center for the Study of Financial Innovation Report, 15 September 2009. —— (2015), Other People’s Money: The Real Business of Finance, PublicAffairs, New York. Keating, Paul (2014), ‘Avoiding the Thucydides Trap in Asia’, mimeo, Sydney.


Britannia Unchained: Global Lessons for Growth and Prosperity by Kwasi Kwarteng, Priti Patel, Dominic Raab, Chris Skidmore, Elizabeth Truss

Airbnb, banking crisis, Carmen Reinhart, central bank independence, clockwatching, creative destruction, Credit Default Swap, demographic dividend, Edward Glaeser, eurozone crisis, fear of failure, glass ceiling, informal economy, James Dyson, Kenneth Rogoff, knowledge economy, long peace, margin call, Mark Zuckerberg, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, Neil Kinnock, new economy, North Sea oil, oil shock, open economy, paypal mafia, pension reform, price stability, profit motive, Ronald Reagan, Sand Hill Road, Silicon Valley, Stanford marshmallow experiment, Steve Jobs, Walter Mischel, wealth creators, Winter of Discontent, working-age population, Yom Kippur War

The UK is just under 100,000 square miles in size, whereas Canada is over 38 times larger, the second largest country in the world.1 Whereas the UK has a gentle physical environment, Canada contains vast forests, volcanoes, much of the world’s fresh water and the immense Arctic wastes. Canadians are richer than Britons. In 2010, GDP per capita was $46,200 in Canada, around a quarter higher than the UK’s $36,400. Compared to their similarities however, these differences are trivial. Both are small, first world, open economies. Both have their own currencies, but depend for their prosperity on trade with larger neighbours. Both countries share much of a common heritage: the same language, the same monarch and similar political institutions. Both like to think of themselves as the best friend of the United States. Life expectancy in both is around 80 years, with the average age half that. The fundamentals of the UK and Canada, then, are largely similar.


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Seapower States: Maritime Culture, Continental Empires and the Conflict That Made the Modern World by Andrew Lambert

British Empire, different worldview, Donald Trump, joint-stock company, Malacca Straits, megacity, Mikhail Gorbachev, open economy, rising living standards, South China Sea, spice trade, trade route, transatlantic slave trade, UNCLOS

Kings excluded Portuguese merchants from political power and economic opportunity, while clerics aided them to advance their own agendas. The Portuguese Empire Without politically powerful merchants Portuguese overseas commerce depended on Genoese bankers, merchants and shipping to fund and move imports from Lisbon to Antwerp, another market dominated by Genoese banking.33 It was no accident that the Portuguese century in Asia was ended by a true seapower, a republic shaped by the relatively inclusive politics and open economy needed to sustain maritime imperialism. The mental world of Portuguese kings and princes, from Prince Henry to Dom Sebastian, was dominated by the chivalric quest for battlefield glory. The Aviz dynasty was obsessed with honour, crusading against the infidel and the expansion of Portuguese power. Recognising the financial rewards King John II had pushed maritime expansion. After his death in 1496, Manuel I, ‘the fortunate’, spent the proceeds on domestic prestige projects to enhance his status in Europe.

Peter’s city, like his navy, was a monumental vanity project: both fundamentally changed the public face of Russia, but had little impact on the population beyond the city for another century and more. Peter began moving Russia to the West: the project was far from complete in 1725, 1825 or 1925. Russia rejected critical elements of Western progress associated with becoming a seapower, such as inclusive politics and an open economy, as well as a seafaring identity and the curiosity to see a world beyond national frontiers. Peter brought many Western technologies to his country – modern fortresses, warships, navigational equipment, printing presses, globes and telescopes – but he imposed them on an older reality. Seapower culture did not find a home in Petrine Russia, because the roots of that identity had not been laid in the preceding centuries.


pages: 261 words: 57,595

China's Future by David Shambaugh

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

Should China pursue this pathway it would, in all likelihood, bear a strong resemblance to the Singaporean model. In Singapore, to be sure, some rights are restricted and the ruling party remains in power. But Singapore has many aspects of democracy: multiple political parties, regular elections, a parliament and judiciary independent of the executive, a very open media (with restrictions), real rule of law, an exemplary professional civil service, no corruption, active NGOs, a full market-driven and open economy, a multiethnic society without discrimination, a high-quality and globalized educational system, and protection of many basic freedoms and human rights. China remains a very long way from having these progressive features, and it is highly doubtful that the Chinese Communist Party would tolerate them. Nonetheless, it is not inconceivable that China could move in this alternative direction—particularly growing out of Soft Authoritarianism, if it too reached its reform limits and China remained in a “trapped transition.”


pages: 221 words: 55,901

The Globalization of Inequality by François Bourguignon

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

The infant industry argument, according to which temporary protections are necessary in order to encourage the development of certain activities, because they allow domestic producers to develop a market large enough to build up experience and be competitive at the international level, is certainly valid in the case of these economies, especially the poorest among them. Africa is a good example of this. As we saw before, it is unlikely that this continent could, over the long term, develop and absorb a rapidly growing labor force solely through the exportation of raw materials. The necessary diversification of African economies requires a period of industrialization that is currently incompatible with a fully open economy. On the other hand, this diversification might be feasible within the framework of regional customs unions that allow for expanded markets, while also temporarily protecting local businesses from Asian competition or, possibly, attracting foreign investment into the service of these expanded markets. Of course, a time frame would need to be set up for such a protectionist 180 Chapter 5 strategy, so as to avoid the development of inefficient rents in protected sectors and to ensure the credibility of such an undertaking.


Unfinished Empire: The Global Expansion of Britain by John Darwin

Alfred Russel Wallace, British Empire, colonial rule, Corn Laws, David Ricardo: comparative advantage, European colonialism, financial independence, friendly fire, full employment, imperial preference, Khartoum Gordon, Khyber Pass, Kowloon Walled City, land tenure, mass immigration, Nelson Mandela, open economy, plutocrats, Plutocrats, principal–agent problem, quantitative easing, reserve currency, Right to Buy, Scientific racism, South China Sea, special economic zone, spice trade, The Wealth of Nations by Adam Smith, too big to fail, trade route, transcontinental railway, union organizing

Some of them might be seen as the booty of wars fought for quite different reasons. With their advantage at sea, British governments were tempted to punish their enemies by seizing their colonies and disrupting their trade. The ‘mercantilist’ logic that we have noticed already implied that this would increase the national wealth. Even after ‘free trade’ had supplanted mercantilism as the ruling commercial ideology, a well-placed port such as Hong Kong helped to enforce an open economy on troublesome foreigners and their recalcitrant rulers. But as often as not, the prevailing concern was chiefly strategic. London decided that it must have Canada (and not sugar-rich Guadeloupe) because French control of Quebec and its riverine hinterland was too great a threat to British America. The same argument applied at the Cape, which guarded the sea-route to India and the East. Here it was fear that the Dutch would give it away to the colossus Napoleon (or a no less dangerous successor) that decided the British not to return it when peace finally came in 1815.

In Argentina and Uruguay, British merchant houses in Buenos Aires and Montevideo controlled much of the export trade in hides and salt meat.54 When the regional economy took off in the 1870s and 1880s (on the back of frozen meat and grain), the British were perfectly placed to provide the banks, insurance companies and railway investments that trade growth required. British sea power – the main arm of empire – was not entirely irrelevant. It had helped to make sure that European schemes for reviving Spain’s empire remained just that.55 By and large, however, the South American states had the legal institutions (from their colonial past) and the political will to promote market capitalism and support an open economy. What gave British merchants their special position was the shortage of credit and capital in local economies and the lack of commercial intelligence – the information about prices, markets and credit ratings so vital to merchant success. It was access to overseas funds and networks of knowledge that made them much more robust than their local competitors, better placed to ride out the crashes and crises of the commodity trades.


pages: 446 words: 578

The end of history and the last man by Francis Fukuyama

affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bonfire of the Vanities, business cycle, centre right, cuban missile crisis, deindustrialization, Deng Xiaoping, Donald Trump, European colonialism, Exxon Valdez, F. W. de Klerk, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Gunnar Myrdal, Hernando de Soto, income inequality, Isaac Newton, Joan Didion, joint-stock company, Joseph Schumpeter, kremlinology, land reform, liberal world order, liberation theology, life extension, linear programming, long peace, means of production, Mikhail Gorbachev, Nelson Mandela, New Journalism, nuclear winter, old-boy network, open economy, post-industrial society, RAND corporation, Ronald Reagan, Socratic dialogue, strikebreaker, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, zero-sum game

., p. 5. 13 Ibid. 14 Figures taken from “Taiwan and Korea: Two Paths to Prosperity,” Economist 316, no. 7663 (July 14, 1990): 19-22. 15 One measure of the growth of a broad, educated middle class is regular newspaper readership, the act which according to Hegel would replace the daily prayer for those middle-class societies at the end of history. Newspaper readership is now as high in Taiwan and South Korea as in the United States. Pye (1990a), p. 9. 16 Ibid. Taiwan by the early 1980s had the lowest “Gini coefficient” (a measure of even income distribution) of any developing country. See Gary S. Fields, “Employment, Income Distribution and Economic Growth in Seven Small Open Economies,” Economic Journal 94 (March 1984): 74-83. 17 On other attempts to defend dependencia theory from Asian evidence, see Peter Evans, “Class, State, and Dependence in East Asia: Lessons for Latin Americanists,” and Bruce Cumings, “The Origins and Development of the Northeast Asian Political Economy: Industrial Sectors, Product Cycles, and Political Consequences,” both in Frederic C. Deyo, ed., The Political Economy of the New Asian Industrialism (Ithaca, N.Y.: Cornell University Press, 1989), pp. 45-83, 203-226. 18 On the competitive nature of successful Japanese industrial sectors, see Michael Porter, The Competitive Advantage of Nations (New York: Free Press, 1990), pp. 117-122. 19 This argument is made by Lawrence Harrison in Underdevelopment Is a State of Mind: The Latin American Case (New York: Madison Books, 1985). 20 Werner Baer, The Brazilian Economy: Growth and Development, third edition (New York: Praeger, 1989), pp. 238-239. 21 Figure quoted from a study by Baranson in Werner Baer, “Import Substitution and Industrialization in Latin America: Experiences and Interpretations,” Latin American Research Review 7, no. 1 (Spring 1972): 95-122.

Princeton University Press, Princeton, N.J. Fackenheim, Emile. 1970. God’s Presence in History: Jewish Affirmations and Philosophical Reflections. New York University Press, New York. Field, Mark G., ed. 1976. Social Consequences of Modernization in Communist Societies. Johns Hopkins University Press, Baltimore. Fields, Gary S. 1984. “Employment, Income Distribution and Economic Growth in Seven Small Open Economies.” Economic Journal 94 (March): 74-83. Finifter, Ada. 1983. Political Science: The State of the Discipline. American Political Science Association, Washington, D.C. Fishman, Robert M. 1990. “Rethinking State and Regime: Southern Europe’s Transition to Democracy.” World Politics 42, no. 3 (April): 422-440. Frank, André Gunder. 1969. Latin America: Underdevelopment or Revolution? Monthly Review Press, New York.


pages: 262 words: 66,800

Progress: Ten Reasons to Look Forward to the Future by Johan Norberg

agricultural Revolution, anti-communist, availability heuristic, Bartolomé de las Casas, Berlin Wall, British Empire, business climate, clean water, continuation of politics by other means, Daniel Kahneman / Amos Tversky, demographic transition, desegregation, Donald Trump, Flynn Effect, germ theory of disease, Gini coefficient, Gunnar Myrdal, Haber-Bosch Process, Hans Island, Hans Rosling, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, Isaac Newton, Jane Jacobs, John Snow's cholera map, Kibera, Louis Pasteur, Mahatma Gandhi, meta analysis, meta-analysis, Mikhail Gorbachev, more computing power than Apollo, moveable type in China, Naomi Klein, Nelson Mandela, open economy, place-making, Rosa Parks, sexual politics, special economic zone, Steven Pinker, telerobotics, The Wealth of Nations by Adam Smith, transatlantic slave trade, very high income, working poor, Xiaogang Anhui farmers, zero-sum game

So we constantly accumulate more scientific and other knowledge and every individual can contribute and achieve on the shoulders of hundreds of millions who have come before in a virtuous cycle. This book is about humanity’s triumphs. But it is not a message of complacency. It is written partly as a warning. It would be a terrible mistake to take this progress for granted. We have lived with these problems for most of history. There are forces at work in the world that would destroy the pillars of this development – the individual freedoms, open economy and technological progress. Terrorists and dictators do what they can to undermine open societies, but there are also threats from within our societies. There is widespread resentment against globalization and the modern economy from populists on both the left and the right. We can see the familiar hostility to the cosmopolitan, urban and fluid society that there has always been from those who are socially conservative, but today it is combined with the sense that the world outside is dangerous, and that we must build literal and figurative walls.


pages: 247 words: 68,918

The End of the Free Market: Who Wins the War Between States and Corporations? by Ian Bremmer

affirmative action, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, centre right, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, cuban missile crisis, Deng Xiaoping, diversified portfolio, Doha Development Round, Exxon Valdez, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, invisible hand, joint-stock company, Joseph Schumpeter, Kickstarter, laissez-faire capitalism, low skilled workers, mass immigration, means of production, megacity, Mikhail Gorbachev, mutually assured destruction, Naomi Klein, Nelson Mandela, new economy, offshore financial centre, open economy, race to the bottom, reserve currency, risk tolerance, shareholder value, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, trade route, tulip mania, uranium enrichment, Washington Consensus, Yom Kippur War, zero-sum game

Central to this plan is continuation of a state-led infrastructure investment program. The financial crisis and global recession pushed the government further in this direction, encouraging efforts to prop up failing industries and to prevent the loss of huge numbers of jobs—particularly among black citizens, who still suffer an unemployment rate of about 30 percent. South Africa remains a relatively open economy and receptive to foreign investment. The legal system is independent, and foreign investors can expect a fair hearing in the country’s courts. But though radical policy changes are unlikely, President Jacob Zuma and the ANC leadership have emphasized industrial policy as a cornerstone of the new administration. Zuma’s political allies within South Africa’s Communist Party and the Congress of South African Trade Unions insist that it’s time to put workers first if the country’s wounds are to finally heal.


pages: 1,351 words: 385,579

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

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

Average scores on intelligence tests, though they started from lower levels, have been steeply rising in the countries in which the trends have been measured, such as Kenya and Dominica.280 Can we attribute any part of the New Peace to rising levels of reasoning in those countries? Here the evidence is circumstantial but suggestive. Earlier we saw that the New Peace has been led, in part, by a greater acceptance of democracy and open economies, which, as we have just seen, smarter people tend to favor. Put the two together, and we can entertain the possibility that more education can lead to smarter citizens (in the sense of “smart” we care about here), which can prepare the way for democracy and open economies, which can favor peace. It’s difficult to verify every link in that chain, but the first and last links have been correlated in a recent paper whose title is self-explanatory: “ABC’s, 123’s, and the Golden Rule: The Pacifying Effect of Education on Civil War, 1980–1999.” 281 The political scientist Clayton Thyne analyzed 160 countries and 49 civil wars taken from the dataset of James Fearon and David Laitin, which we visited in chapter 6.

Other than the end of the Cold War and the decline of ideology, what led to the mild reduction in the number of civil wars during the past two decades, and the steep reduction in battle deaths of the last one? And why do conflicts persist in the developing world (thirty-six in 2008, all but one of them civil wars) when they have essentially disappeared in the developed world? A good place to start is the Kantian triangle of democracy, open economies, and engagement with the international community. Russett and Oneal’s statistical analyses, described in the preceding chapter, embrace the entire world, but they include only disputes between states. How well does the triad of pacifying factors apply to civil wars within developing countries, where most of today’s conflicts take place? Each variable, it turns out, has an important twist. One might think that if a lot of democracy is a good thing in inhibiting war, then a little democracy is still better than none.

A mental model in which the world has a constant allotment of violence, so that every cease-fire is reincarnated somewhere else as a new war, and every interlude of peace is just a time-out in which martial tensions build up and seek release, is factually mistaken. Millions of people are alive today because of the civil wars and genocides that did not take place but that would have taken place if the world had remained as it was in the 1960s, 1970s, and 1980s. The conditions that favored this happy outcome—democracy, prosperity, decent government, peacekeeping, open economies, and the decline of antihuman ideologies—are not, of course, guaranteed to last forever. But nor are they likely to vanish overnight. Of course we live in a dangerous world. As I have emphasized, a statistical appreciation of history tells us that violent catastrophes may be improbable, but they are not astronomically improbable. Yet that can also be stated in a more hopeful way. Violent catastrophes may not be astronomically improbable, but they are improbable. 7 THE RIGHTS REVOLUTIONS I have a dream that one day this nation will rise up and live out the true meaning of its creed: “We hold these truths to be self-evident: that all men are created equal.”


pages: 777 words: 186,993

Imagining India by Nandan Nilekani

addicted to oil, affirmative action, Airbus A320, BRICs, British Empire, business process, business process outsourcing, call centre, clean water, colonial rule, corporate governance, cuban missile crisis, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, digital map, distributed generation, farmers can use mobile phones to check market prices, full employment, ghettoisation, glass ceiling, global supply chain, Hernando de Soto, income inequality, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, knowledge economy, land reform, light touch regulation, LNG terminal, load shedding, low cost airline, Mahatma Gandhi, market fragmentation, mass immigration, Mikhail Gorbachev, Network effects, new economy, New Urbanism, open economy, Parag Khanna, pension reform, Potemkin village, price mechanism, race to the bottom, rent control, rolodex, Ronald Reagan, school vouchers, Silicon Valley, smart grid, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, trickle-down economics, unemployed young men, upwardly mobile, urban planning, urban renewal, women in the workforce, working poor, working-age population

Radhakrishnan, noted, through “merchants who came to trade but stayed to rule.”4 Independent India, as a consequence, viewed trade as nothing more than Imperialism Lite, a system that would force us to remain under the British thumb; many believed that it would only mean continued colonial repression and economic exploitation for the country. India’s economic policy thus became “anti-colonialism without colonialism”—a former world power and remarkably open economy now viewed global markets with deep suspicion, and the government, with the support of Indian businesses, walled up the country’s markets with enormous trade restrictions. This equating of trade with imperialism has meant that as a free nation our views on globalization have been intertwined with our insecurities. Successive governments saw globalization as a threat, something that would force the country to become both deeply dependent on and vulnerable to the outside world.

We also need to clear the decks for more FDI to drive growth in sectors such as insurance and retail. Markets can only lift people out of poverty if these reforms are allowed to create the means for them to escape their circumstances. But the problem now may be a lack of pressure. “India has become adept at finding our way around our remaining obstacles in policies,” Omkar Goswami tells me. This strategy of taking detours around a country still not fully comfortable as an open economy has seeped into our everyday life. In cities we take routes through back roads—sometimes through neighborhoods where the houses hug so close to the median that the “road” may be a mere meter and a half across—to avoid potholes and traffic. We use generators to work through our power failures and pick private and foreign colleges in favor of our dismal, government-funded universities. Even the poor avoid public schools in favor of private ones.


pages: 251 words: 76,868

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

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

The Beijing government controls its currency value to keep exports cheap, maintains strong oversight of the financial sector to avoid external control and overexposure to toxic assets, restricts procurement policies to benefit national suppliers, guides research and development to benefit national innovation, and selectively curbs imports of goods to maintain high domestic employment. In this way, semi-open economies from Brazil to India fared best in the financial crisis. Eventually, America wound up pursuing much the same course. Even George Soros has remarked that he is impressed by the China model, or what some are already calling the “Beijing Consensus.” There is something to be said for a system that peacefully transitions more than one billion people from revolutionary communism to Confucian capitalism.


pages: 267 words: 74,296

Unhappy Union: How the Euro Crisis - and Europe - Can Be Fixed by John Peet, Anton La Guardia, The Economist

bank run, banking crisis, Berlin Wall, Bretton Woods, business cycle, capital controls, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, debt deflation, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, fixed income, Flash crash, illegal immigration, labour market flexibility, labour mobility, light touch regulation, market fundamentalism, moral hazard, Northern Rock, oil shock, open economy, pension reform, price stability, quantitative easing, special drawing rights, supply-chain management, The Great Moderation, too big to fail, transaction costs, éminence grise

Internal devaluation is difficult at the best of times. The IMF’s deputy managing director, Nemat Shafik, once memorably compared the process of recovering competitiveness to painting a house: If you have an exchange rate, you can move your brush back and forth. If you don’t have an exchange rate, you have to move the whole house. Successful adjustment requires flexible labour markets and an open economy that can export its way back to growth, as well as a population willing to put up with the pain. Greece had none of these: it was a closed, rigid economy and its politics was polarised by a history of occupation, civil war and military rule. As such, Greece was the most recalcitrant of the euro-zone countries to be rescued. Greek leaders, even as they slashed the budget, did not understand how extensive structural reforms needed to be, and made no progress on privatisation.


pages: 192

Kicking Awaythe Ladder by Ha-Joon Chang

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

During this time, especially until the late 1960s, the French state used indicative planning, state-owned enterprises and what is these days — somewhat misleadingly - termed 'East-Asian-style' industrial policy in order to catch up with the more advanced countries. As a result, France witnessed a very successful structural transformation of its economy, and finally overtook Britain in terms of both output and (in most areas) technology.139 2.2.5. Sweden Sweden, despite its reputation as the 'small open economy' during the post-war period, did not enter its modern age with a free trade regime. After the end of the Napoleonic wars, its government enacted a strongly protective tariff law (1816), banning the import and export of some items. As a result of the high tariffs, an outright ban on imported finished cotton goods, and the deliberately low tariffs on raw cotton, cotton cloth production was greatly increased.140 Once again, it is interesting to note the similarity between this tariff regime and that used by Britain in the eighteenth century (see section 2.2.1), as well as those used by countries like Korea and Taiwan in the postwar period (see section 2.2.7).


pages: 330 words: 77,729

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

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

To truly liberate Latin America, he and other disciples of Adam Smith advocate open markets, foreign investment, low taxes, opportunities for business creation and ownership of property by all citizens, and political stability under the rule of law—a "liberal, pluralistic, communitarian, public-spirited, dynamic, inventive" nation not unlike the Asian tigers adopted in the recent past (Novak 1991, 32).9 Since the fall of Soviet communism and the socialist central-planning model, liberation theology has lost its steam and most Latin American countries have adopted a more open economy. Consequently, Latin nations have grown rapidly and the percentage of poor has declined. Orbis Books and the Maryknoll Fathers and Sisters ministry no longer publish books on liberation theology. The Next Revolution Only a few years after Marx's masterpiece, Capital, was published, a new breed of European economists came on the scene. These economists corrected the errors of Marx and the classical economists, and brought about a permanent revolution.


pages: 193 words: 63,618

The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla

British Empire, carbon footprint, corporate social responsibility, David Ricardo: comparative advantage, deglobalization, Doha Development Round, Food sovereignty, global value chain, illegal immigration, income inequality, income per capita, invisible hand, Joseph Schumpeter, labour mobility, land reform, market fundamentalism, mass immigration, means of production, Mont Pelerin Society, Naomi Klein, non-tariff barriers, offshore financial centre, open economy, Philip Mirowski, plutocrats, Plutocrats, price mechanism, purchasing power parity, Ronald Reagan, Scientific racism, selection bias, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, transatlantic slave trade, trickle-down economics, Washington Consensus, zero-sum game

Renard, Marie-Christine (2003) ‘Fair Trade: Quality, Market and Conventions’, Journal of Rural Studies 19: 87–96. Rist, Gilbert (2006 [1996]) The History of Development: From Western Origins to Global Faith, 2nd edn (London: Zed Books). Rodriguez, Francisco and Rodrik, Dani (2000) ‘Trade Policy and Economic Growth: A Skeptic’s Guide to the Cross-national Evidence’, NBER Macroeconomics Annual 2000, 15: 261–338. Rodrik, Dani (1998) ‘Why do More Open Economies Have Bigger Governments?’, Journal of Political Economy, 106 (5): 997–1032. Rodrik, Dani (2006) ‘What’s So Special about China’s Exports?’ China and World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences 14(5): 1–19. Rodrik, Dani (2007a) One Economics, Many Recipes: Globalization, Institutions and Economic Growth (Princeton, NJ: Princeton University Press).


Global Governance and Financial Crises by Meghnad Desai, Yahia Said

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

Developing countries are understandably incapable of maintaining exchange rate stability while the major currencies experience big fluctuations.12 Hence, currency co-ordination among the USA, Europe and Japan is desperately needed for the stability of their own currencies as well as other currencies in the world today. Despite frequent G7 meetings, existing arrangements leave much to be desired. Consequently, there are fluctuations of up to 20 per cent within a week. The effects of such huge swings on smaller open economies are not well understood, though they are expected to simply adjust to such changes. Since the East Asian crisis, the discussion on international financial reform to prevent future crises has emphasised questions of transparency and greater supply of information. However, there is no evidence that having more information 100 Jomo Kwame Sundaram will be enough to prevent crises. Also, efforts seem to be directed mainly to getting more information from governments, especially from the developing countries, with little done to get information on the various financial markets, especially the most volatile and vulnerable ones, such as those involving highly leveraged institutions and offshore markets.


pages: 333 words: 76,990

The Long Good Buy: Analysing Cycles in Markets by Peter Oppenheimer

"Robert Solow", asset allocation, banking crisis, banks create money, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, business cycle, buy and hold, Cass Sunstein, central bank independence, collective bargaining, computer age, credit crunch, debt deflation, decarbonisation, diversification, dividend-yielding stocks, equity premium, Fall of the Berlin Wall, financial innovation, fixed income, Flash crash, forward guidance, Francis Fukuyama: the end of history, George Akerlof, housing crisis, index fund, invention of the printing press, Isaac Newton, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kickstarter, liberal capitalism, light touch regulation, liquidity trap, Live Aid, market bubble, Mikhail Gorbachev, mortgage debt, negative equity, Network effects, new economy, Nikolai Kondratiev, Nixon shock, oil shock, open economy, price stability, private sector deleveraging, Productivity paradox, quantitative easing, railway mania, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Simon Kuznets, South Sea Bubble, special economic zone, stocks for the long run, technology bubble, The Great Moderation, too big to fail, total factor productivity, trade route, tulip mania, yield curve

Very often the only way the process is speeded up is via some kind of sharp economic adjustment that reverses the imbalances faster than would otherwise be the case. For example, the UK had many of the ingredients of a structural bear market in the early 1990s, when the economy had serious imbalances, a deep recession, and there had been a sharp fall in property prices and equities. In this case, the process was speeded up via a collapse in the exchange rate when sterling crashed out of the ERM.1 This is a more likely option in a relatively small open economy such as the UK (or Sweden, which had a similar experience at the time), but it is harder for a large and relatively closed economy such as the US, where the benefits of devaluation are less clear. Taken together, then, structural bear markets show the following characteristics: They are more savage in terms of magnitude and duration. Recovery takes much longer. They are associated with ongoing structural economic problems rather than cyclical ones.


pages: 301 words: 77,626

Home: Why Public Housing Is the Answer by Eoin Ó Broin

Airbnb, carbon footprint, Celtic Tiger, financial deregulation, housing crisis, Kickstarter, land reform, mortgage debt, negative equity, open economy, passive investing, quantitative easing, Right to Buy, Ronald Reagan, the built environment

The short statement acknowledged that the ‘over stimulation of the housing market is accepted as a key causal factor in the scale of the economic downturn.’66 With the painful benefit of hindsight the document’s authors were siding with the critical voices informing the 2004 NESC report by concluding that In a climate of low interest rates and rising incomes, a series of disastrous pro-cyclical policies led to a model that provided unprecedented growth, but it was a growth based not on foreign demand for our goods and services – as should be the case in a small open economy – or the productive use of investment capital to create sustainable employment. It was based on a mirage and a false assumption that the normal rules of supply and demand somehow did not apply in Ireland.67 The statement lamented ‘the consequences of encouraging people to choose their housing options on the basis of investment and yield rather than hearth and home’ and called for a ‘a new vision for the sector’ as fundamental to any economic recovery.


pages: 859 words: 204,092

When China Rules the World: The End of the Western World and the Rise of the Middle Kingdom by Martin Jacques

Admiral Zheng, Asian financial crisis, Berlin Wall, Bob Geldof, Bretton Woods, BRICs, British Empire, credit crunch, Dava Sobel, deindustrialization, Deng Xiaoping, deskilling, discovery of the americas, Doha Development Round, energy security, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, illegal immigration, income per capita, invention of gunpowder, James Watt: steam engine, joint-stock company, Kenneth Rogoff, land reform, land tenure, lateral thinking, Malacca Straits, Martin Wolf, Naomi Klein, Nelson Mandela, new economy, New Urbanism, one-China policy, open economy, Pearl River Delta, pension reform, price stability, purchasing power parity, reserve currency, rising living standards, Ronald Reagan, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, spinning jenny, Spread Networks laid a new fibre optics cable between New York and Chicago, the scientific method, Thomas L Friedman, trade liberalization, urban planning, Washington Consensus, Westphalian system, Xiaogang Anhui farmers, zero-sum game

In 1970 its export trade made up only 0.7 per cent of the world’s total: at the end of the seventies, China’s imports and exports together represented 12 per cent of its GDP, the lowest in the world. China’s economic impact on the rest of the world was minimal for two reasons: firstly, the country was very poor, and secondly, it was very closed. But since 1978 China has rapidly become one of the world’s most open economies. Its average import tariff rate will decline from 23.7 per cent in 2001 to 5.7 per cent in 2011, with most of that fall having already taken place.139 Although its trade dependency (the proportion of GDP accounted for by exports and imports) was less than 10 per cent in 1978, by 2004 it had risen to 70 per cent, much higher than that of other large countries. China has now overtaken the United States to become the second largest exporter in the world, while in 2004 it ranked as the world’s third largest importer, accounting for 5.9 per cent of the global total.

Between 1980 and 2002, while China’s share of East Asian exports increased from 6 per cent to 25 per cent, Japan’s fell from 50 per cent to below 30 per cent; similarly, while China’s share of East Asian imports over the same period increased from 8 per cent to 21 per cent, Japan’s fell from 48 per cent to 27 per cent.45 Even at the peak of its economic power, Japan’s role was always limited by the fact that it steadfastly refused to open up its economy to exports from its neighbours (other than those from its own foreign subsidiaries) - or, indeed, to the rest of the world - so its influence was largely exercised by a combination of its own foreign direct investment in Japanese overseas subsidiaries, imports from those Japanese subsidiaries and Japanese exports to the region. In contrast China’s influence, because it has chosen to have an extremely open economy, is far more multifarious - as a market for the products of the region, as an exporter and as a multifaceted investor. Figure 24. Growing importance of Chinese market. Zhang Yunling, one of the architects of China’s new strategy, and Tang Shiping have described the aim as: ‘to make China a locomotive for regional growth by serving as a market for regional states and a provider of investment and technology’.46 The most obvious expression of this has been the way in which, in less than a decade, China has become one of - if not the - most important market for many countries in the region: in a few years’ time, it seems likely that it will be the single largest market for every country in the region.


pages: 276 words: 82,603

Birth of the Euro by Otmar Issing

"Robert Solow", accounting loophole / creative accounting, Bretton Woods, business climate, business cycle, capital controls, central bank independence, currency peg, financial innovation, floating exchange rates, full employment, inflation targeting, information asymmetry, labour market flexibility, labour mobility, market fundamentalism, money market fund, moral hazard, oil shock, open economy, price anchoring, price stability, purchasing power parity, reserve currency, Y2K, yield curve

Basic figures are expressed in PPS, i.e. a common currency that eliminates the differences in price levels between countries, allowing meaningful volume comparisons of GDP between countries. Source: Eurostat. GDP in PPS terms of 175.05 against the average of 100, lay far ahead of the tail-ender Portugal, with per capita GDP in PPS terms of 61.57. The main features of this new currency area can be outlined as follows. While previously the member countries could be described as predominantly small, open economies, the euro area as a whole, with export and import shares (as a percentage of GDP) of 13.6 per cent and 12.0 per cent respectively, represents a large, relatively closed economic area (the comparable figures for the USA are 8.5 per cent und 11.1 per cent). In terms of the structure of the economy, the differences compared with the USA were relatively small. What is striking, in contrast, is the significantly higher share of the public sector in the euro area, including state transfer payments to private households.


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

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

Processed. 126 CRISIS AND DOLLARIZATION IN ECUADOR Jaramillo, Fidel. 1994. “Ecuador: Estabilización, ingreso de capitales externos y conflictos de política macroeconomica.” Multiplica Working Paper. Quito, Ecuador. Kopits, George, E. Haindl, E. Ley, and J. Toro. 1999. “Ecuador: Modernización del Sistema Tributario. International Monetary Fund. Washington, D.C. Lane, P. 2002. “Exchange Rate Regimes and Monetary Policy in Small Open Economies.” In The Choice of Exchange Regime and Monetary Policy Rules. European Union. Forthcoming. Mancheno, Diego, J. Oleas, and P. Samaniego. 1999. “Aspectos teóricos y prácticos de la adopción de un sistema de convertibilidad en el Ecuador.” Notas Técnicas. Banco Central del Ecuador, Quito, Ecuador. Marx Carrasco V., Carlos. 2000. Dolarización: Un camino de espinas y espejismos. Cuenca, Ecuador.


pages: 307 words: 82,680

A Pelican Introduction: Basic Income by Guy Standing

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

Boosting spending power has become a concern throughout the industrialized world because incomes for the majority are no longer keeping pace with production capacity. It used to be the case that as productivity rose, real (inflation-adjusted) wages rose, increasing aggregate demand (consumption). This no longer applies. Rising productivity is not being matched by rising average wages, slowing growth.1 Governments could try old-style incomes policies, through productivity bargaining. But this would be far harder in an open economy than it was in the 1960s, when it was tried extensively, with mixed results. Instead, households struggling with stagnant or falling wages will have greater resort to credit and debt, increasing the vulnerability of the economy to the bursting of debt bubbles. That is what triggered the 2007–8 crash and threatens to happen again. A basic income system would be a way of maintaining high aggregate demand while making the economy less fragile.


pages: 286 words: 82,970

A World in Disarray: American Foreign Policy and the Crisis of the Old Order by Richard Haass

access to a mobile phone, anti-communist, Berlin Wall, Bretton Woods, carbon footprint, central bank independence, colonial rule, cuban missile crisis, currency manipulation / currency intervention, deindustrialization, Doha Development Round, Donald Trump, Edward Snowden, energy security, European colonialism, failed state, Fall of the Berlin Wall, floating exchange rates, global pandemic, global reserve currency, hiring and firing, immigration reform, invisible hand, Mikhail Gorbachev, Monroe Doctrine, moral hazard, mutually assured destruction, open economy, quantitative easing, RAND corporation, reserve currency, Ronald Reagan, South China Sea, special drawing rights, Steven Pinker, UNCLOS, UNCLOS, uranium enrichment, Yom Kippur War

The IMF assessed (“surveilled”) economies and gave them public report cards but had no power to insist on reforms other than when it was involved in extending loans to governments in financial difficulty. In the banking arena, the so-called Basel Committee established standards (for example, for the amount of capital required to be kept on hand) that banks were encouraged to follow. Its work was reinforced and complemented by the Financial Stability Forum, a group created in 1999 by a dozen or so governments representing many of the world’s largest open economies. A decade later, in the wake of the 2008 financial crisis, the forum became the Financial Stability Board, involving finance ministries and central banks of the G-20 countries and a few others. Again, the purpose was to develop and promote policies and “best practices” that would, if adopted by governments, help them prevent and mange risks to their economies and to the world financial system.28 The idea was to set in motion a race to the top that would encourage responsible behaviors, allowing a country to compete successfully in a world in which capital and investment would find their way not just to countries and institutions of high return but also to those of safety.


pages: 261 words: 86,905

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

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

The move away from neoliberalism is likely to involve higher rates of tax at the top end, dramatically increased education spending, and perhaps a rethinking of some of the ways in which capitalism can be inflected away from shareholder value towards models that include owners, managers, workers, and the surrounding community—a model that has been successful in, for instance, Germany. The provision of employment and training for apprentices is an explicit part of this. There will need to be a sharp increase in levels of social housing. The role model here is Singapore, which as well as consistently being voted the most open economy in the world—a beacon to free marketers everywhere—has the highest level of state and social housing in the world. The world capital of the free market is also the world capital of council houses. Not all the lessons of Singapore are about free markets. More generally, there will need to be a focus on material well-being in the round, and broader measures of quality of life than the mere narrow focus on GDP.


The Transformation Of Ireland 1900-2000 by Diarmaid Ferriter

anti-communist, Bob Geldof, British Empire, Celtic Tiger, collective bargaining, deliberate practice, edge city, falling living standards, financial independence, ghettoisation, greed is good, hiring and firing, housing crisis, immigration reform, income per capita, land reform, manufacturing employment, moral panic, New Journalism, New Urbanism, offshore financial centre, open economy, postnationalism / post nation state, sensible shoes, the market place, upwardly mobile, urban renewal, wage slave, women in the workforce

For all the steps taken forward, there was still much stagnation and class snobbery. For all the reforms in education, for example, an area utterly neglected until the 1960s, access to third-level education for the majority of the working class remained elusive. Joe Lee has rightly made much of the intellectual capacity to respond to new economic thinking and planning in the minds of politicians and public servants, but in a small open economy much of the wealth generated served to widen the gulf between rich and poor. Outside of the inevitable embracing of the free-trade philosophy, the political imagination was not particularly adventurous. Fine Gael had made significant gains in the general election of 1954 and had formed another coalition government, this time with the Labour Party and Clann na Talmhan, but struggled to counteract economic stagnation.

Unilateral tariff reductions in the years 1963 and 1964 set the tone for the Anglo-Irish Free Trade Agreement of 1965, which Lemass had initiated in a letter to the British prime minister Harold Macmillan, by suggesting it would be useful in maintaining ‘a pace of reorganisation and development which will bring us, as soon as possible, to a sufficiently high degree of economic strength and competitiveness to keep our place in a world of freer trade and to assume, when the time comes, the obligations of membership of the [European] community’.10 The agreement was that all tariffs between the two countries would be phased out by 1970. Whatever about the technicalities of Anglo-Irish trade, it was the slowing down of human traffic that seemed to highlight the success and potential of a more open economy. The average annual emigration rate (per 1,000 of the population), which had been about 14 between 1951 and 1961, dropped to less than 5 between 1961 and 1971. While 44,427 emigrated in 1961, only 12,226 did so in 1963. By 1966 the population had risen by 66,000 above the 1961 level of 2.8 million, and by the early 1970s ‘the numbers immigrating remained over a sustained period higher than the numbers leaving’, as some of those who had emigrated in the 1950s returned with their families.

In the late 1980s, the top 10 per cent of households held one half of the total wealth of the country, and the top 5 per cent about 20–25 per cent.159 There was also a failure to tackle Ireland’s appalling transport, infrastructure and housing problems. A critic noted in 1998 that ‘if the recession of the 1980s brought too little criticism of Ireland’s dependent industrialisation strategy, the economic expansion of the 1990s brought even less critical thought’.160 External factors and the vulnerability of a small open economy also meant that predicting continuing spectacular growth rates was a risky business. Neither was there any attempt to tackle the monopoly privileges enjoyed by the elite in the legal and medical professions. ‘the atmosphere of a noisy real estate agency or pork belly futures market’ With regard to housing, it was ironic that a hundred years after the end of the Irish Land War, a native class of landowners and speculators aped many of the traits of the worst landlords of the nineteenth century.


pages: 346 words: 89,180

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

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

Even faced with the example of other countries whose governments invest and whose economies seem to be thriving, no one has been convinced that more public investment would help the Kingdom, partly because most voters still see investment in research as a narrow, technocratic concern and partly because the regular corruption scandals that plague the government give no one the confidence that public investment would be allocated sensibly or impartially. Box 10.1. An Opportunity for Small Nations: or, What Should Ruritania Do? Most economic changes bring opportunities to those countries quick enough to respond to them. The shift to intangibles is no exception. There may well be a first-mover advantage to countries able to adapt quickly to the needs of an intangible economy. The policies required are most easily implemented in small, open economies with sufficient political cohesion and administrative competence to agree on goals quickly and execute them effectively—we have called our exemplar of this sort of country Ruritania. Unlike most of the recommendations in this chapter, the ideas that Ruritania adopt tend to be zero-sum games: they are based on the principle of attracting economic activity from other countries, and, to the extent that Ruritania gains, other countries lose out.


pages: 327 words: 90,542

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

"Robert Solow", 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Albert Einstein, Alfred Russel Wallace, Anton Chekhov, Asian financial crisis, banking crisis, Berlin Wall, bitcoin, Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, happiness index / gross national happiness, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, light touch regulation, liquidity trap, Long Term Capital Management, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, Mikhail Gorbachev, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, passive income, peak oil, peer-to-peer lending, pension reform, plutocrats, Plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Ronald Reagan, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

It plays well to America's desire to stand apart, its instinctive exceptionalism. As William G. Hyland, Deputy National Security Advisor to President Gerald Ford, noted, “protectionism is the ally of isolationism.”8 Europe too has many of the requirements of a closed economy. While individual European economies are modest in size, the EU constitutes over 25 percent of global GDP, making it the world's largest economic unit. The EU is a more open economy than the US, being the world's largest exporter and importer of goods and services. But around 75 percent of its trade is among member nations, aided by the absence of trade barriers and a common currency. Germany, the EU's largest economy and one of the world's largest exporters, sells over 60 percent of its products within the Eurozone. The EU is largely self-sufficient in food. Like the US, this is based in part on subsidies, minimum price schemes, and trade restrictions that favor European farmers.


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The Post-American World: Release 2.0 by Fareed Zakaria

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

For this among many reasons, it is not the new Japan. Beijing has not adopted the Japanese (or South Korean) path of development, which was an export-led strategy that kept the domestic market and society closed. Instead, China opened itself up to the world. (It did this partly because it had no choice, since it lacked the domestic savings of Japan or South Korea.) Now China’s trade-to-GDP ratio is 70 percent, which makes it one of the most open economies in the world. Procter & Gamble sells $5 billion worth of products a year in China, and familiar products like Head & Shoulders shampoo and Pampers diapers are extraordinarily popular with consumers there. Starbucks is opening thousands of stores in Greater China and expects the country to soon displace Japan as its biggest market outside the United States. China is also very open to international brand names, whether of goods or people.


The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

"Robert Solow", addicted to oil, air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, new economy, North Sea oil, oil shock, open economy, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, Right to Buy, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, stocks for the long run, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K, zero-sum game

Fabian socialism was still reflected in Britain's social safety net but, from my perspective, in its most diluted form. Britain's success with the free-market thrust of Thatcher and "New Labour" suggests that their GDP-enhancing reforms are likely to persevere through the next generation. Britain's evolution from the ossified economy of the years immediately following World War II to one of the most open economies in the world is reflected in the intellectual journey of Gordon Brown, who described his 283 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. THE M O D E S OF C A P I T A L I S M industrywide unions and wage negotiation at a national level. In Germany labor representation on supervisory boards became mandatory.

Reality has not always matched this ideal, and discrimination against African Americans in particular forces us periodically to revisit the early constitutional debates about slavery and its violent resolution in the Civil War; we've come a long way, but we have a distance yet to travel. America's unrivaled protection of property rights has long attracted foreign investment to our shores. Some investors come in order to participate in a vibrant, open economy; others simply view the United States as a safe haven for their savings that is not available in their home country. As I shall explain, the ability of the American legal system to extend those cherished property rights to an economy predominantly driven by intellectual property will be a major challenge. And, of course, most detrimental of all to our standard of living would be a reemergence of protectionism and other policies that seek stability by preventing the change that is necessary for growth.


pages: 381 words: 101,559

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

Asian financial crisis, bank run, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, high net worth, income inequality, interest rate derivative, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, private sector deleveraging, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, sovereign wealth fund, special drawing rights, special economic zone, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, War on Poverty, Washington Consensus, zero-sum game

“A Modest Proposal for the G-20.” Project Syndicate, April 1, 2011. Subbotin, Alexander. “A Multi-Horizon Scale for Volatility.” Working paper prepared for Centre d’Économie de la Sorbonne, March 3, 2008. Svensson, Lars E. O. “Escaping a Liquidity Trap and Deflation: The Foolproof Way and Others.” Working Paper No. 10195, National Bureau of Economic Research, December 2003. ———. “The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap.” Working Paper No. 7957, National Bureau of Economic Research, October 2000. “Systematic Risk and the Redesign of Financial Regulation.” A Global Financial Stability Report, prepared for the International Monetary Fund, April 2010. Taylor, John B. “Discretion Versus Policy Rules in Practice.” Carnegie-Rochester Conference Series on Public Policy (1993): 195–214. ———.


pages: 261 words: 103,244

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

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

This means that low-wage workers in the secondary market are supposed to cut their wages even more in order to create enough demand for their own labor and for the labor of those descending from the primary labor market. Most modern neoclassical theorists will admit that the wage cuts needed to achieve this can be steep. There is no guarantee at all that you can live on the market-clearing wage (Kaufman 2009). In an open economy with exports, external demand might eventually solve the problem at low enough wages, but there is certainly no guarantee. With flexible exchange rates, the exchange rate often appreciates if wages and prices go down. This can cancel out the improvement in competitiveness brought about by lower wages. However, the most important problem is that low-wage workers in the non-export sector have to take the brunt of wage cuts to put the labor market back into equilibrium.


pages: 308 words: 99,298

Brexit, No Exit: Why in the End Britain Won't Leave Europe by Denis MacShane

3D printing, banking crisis, battle of ideas, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, British Empire, centre right, Corn Laws, deindustrialization, Doha Development Round, Donald Trump, Etonian, European colonialism, first-past-the-post, fixed income, Gini coefficient, greed is good, illegal immigration, James Dyson, labour mobility, liberal capitalism, low cost airline, low cost carrier, Martin Wolf, mass immigration, Mont Pelerin Society, negative equity, Neil Kinnock, new economy, non-tariff barriers, offshore financial centre, open borders, open economy, price stability, purchasing power parity, quantitative easing, reshoring, road to serfdom, secular stagnation, Silicon Valley, Thales and the olive presses, trade liberalization, transaction costs, women in the workforce

Instead she celebrated what she called ‘The quiet revolution that took place in our country just three months ago – a revolution in which millions of our fellow citizens stood up and said they were not prepared to be ignored anymore.’ But what of the half of Britain that voted against Brexit? Were they now to be ignored? The answer was not only ‘Yes’, but those British citizens who were proud of and indeed accepted the concept of European citizenship, of open borders and open economy and open society, in short a post-nationalist view of the world, were crudely insulted. Speaking to her party conference Mrs May told British people who had a wider view: ‘If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word “citizenship” means.’ In fact, it was Socrates who said ‘I am neither Athenian, nor Greek but a citizen of the world.’


pages: 371 words: 98,534

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

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

If its deficit fell, it might have a mathematically positive impact on GDP, but the US would also pay a heavy price in terms of lost economic growth, higher costs and prices, and unemployment. Yet China has more to lose. Looked at another way, US exports and imports together amount to about 28 per cent of GDP, whereas in China, they account for over 40 per cent of GDP. China is, therefore, a more open economy and more sensitive to world trade and what its major trade partners are doing. The bottom line is that US exports to China amount to barely 1 per cent of US GDP and 8 per cent of total exports, while China’s to the US amount to 4 per cent of Chinese GDP and a fifth of total exports. Most of what America sells to China is made up of aircraft and parts, soya beans and other agricultural products, cars, semiconductors, industrial and electrical machinery, and oil and plastics, whereas China ships the other way mainly mobile phones and household goods, computers and accessories, telecommunications equipment, toys and games, furniture and bedding, toys and sports equipment and footwear and clothing.


Data and the City by Rob Kitchin,Tracey P. Lauriault,Gavin McArdle

A Declaration of the Independence of Cyberspace, bike sharing scheme, bitcoin, blockchain, Bretton Woods, Chelsea Manning, citizen journalism, Claude Shannon: information theory, clean water, cloud computing, complexity theory, conceptual framework, corporate governance, correlation does not imply causation, create, read, update, delete, crowdsourcing, cryptocurrency, dematerialisation, digital map, distributed ledger, fault tolerance, fiat currency, Filter Bubble, floating exchange rates, global value chain, Google Earth, hive mind, Internet of things, Kickstarter, knowledge economy, lifelogging, linked data, loose coupling, new economy, New Urbanism, Nicholas Carr, open economy, openstreetmap, packet switching, pattern recognition, performance metric, place-making, RAND corporation, RFID, Richard Florida, ride hailing / ride sharing, semantic web, sentiment analysis, sharing economy, Silicon Valley, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart contracts, smart grid, smart meter, social graph, software studies, statistical model, TaskRabbit, text mining, The Chicago School, The Death and Life of Great American Cities, the market place, the medium is the message, the scientific method, Toyota Production System, urban planning, urban sprawl, web application

Networking, knowledge and regional policies Edited by Nicola Bellini, Mike Danson and Henrik Halkier 58 Community-based Entrepreneurship and Rural Development Creating favourable conditions for small businesses in Central Europe Matthias Fink, Stephan Loidl and Richard Lang 57 Creative Industries and Innovation in Europe Concepts, measures and comparative case studies Edited by Luciana Lazzeretti 56 Innovation Governance in an Open Economy Shaping regional nodes in a globalized world Edited by Annika Rickne, Staffan Laestadius and Henry Etzkowitz 55 Complex Adaptive Innovation Systems Relatedness and transversality in the evolving region Philip Cooke 54 Creating Knowledge Locations in Cities Innovation and integration challenges Willem van Winden, Luis de Carvalho, Erwin van Tujil, Jeroen van Haaren and Leo van den Berg 53 Regional Development in Northern Europe Peripherality, marginality and border issues Edited by Mike Danson and Peter De Souza 52 Promoting Silicon Valleys in Latin America Luciano Ciravegna 51 Industrial Policy Beyond the Crisis Regional, national and international perspectives Edited by David Bailey, Helena Lenihan and Josep-Maria Arauzo-Carod 50 Just Growth Inclusion and prosperity in America’s metropolitan regions Chris Benner and Manuel Pastor 49 Cultural Political Economy of Small Cities Edited by Anne Lorentzen and Bas van Heur 48 The Recession and Beyond Local and regional responses to the downturn Edited by David Bailey and Caroline Chapain 47 Beyond Territory Edited by Harald Bathelt, Maryann Feldman and Dieter F.


The Basque History of the World by Mark Kurlansky

anti-communist, borderless world, Frank Gehry, Guggenheim Bilbao, joint-stock company, open economy, spice trade, the market place, The Wealth of Nations by Adam Smith

In 1975-80, Altos Hornos de Vizcaya was employing 12,000 workers. But for twenty years it had been losing money and the government had been making up the difference. At its height, the steel mill was losing more than $1 billion each year. Europe made the abandoning of government protection to industry a precondition for Spain’s entry into the European Economic Community. In any event, it would have been impossible to have preserved the system in an open economy. The Spanish market would have been overrun with European goods. While most so-called rust belt areas have turned to service industries, when the PNV-dominated Basque government took over the management of the Basque economy, it wanted to preserve industry. “The Basque government did not want to lose the industrial spirit of Vizcaya,” said Jon Zabalía, a Vizcayan PNV legislator. The policy was to identify the industries that could be saved, many of which were owned by PNV families, and to look for new industries.


pages: 267 words: 106,340

Europe old and new: transnationalism, belonging, xenophobia by Ray Taras

affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, British Empire, carbon footprint, centre right, collective bargaining, energy security, full employment, Gunnar Myrdal, illegal immigration, immigration reform, Kickstarter, low skilled workers, mass immigration, Mikhail Gorbachev, Naomi Klein, North Sea oil, open economy, postnationalism / post nation state, Potemkin village, Ronald Reagan, World Values Survey

What makes a people and a nation is a unique history and heritage, language and literature, songs and stories, traditions and customs, blood, soil and the mystic chords of memory. The EU is a thing of paper, an intellectual construct. Unlike a nation, it has no heart and no soul.” Box 3.4. Europe’s Mission in the World “The world needs the European method of putting together different national practices. The world needs the European principles of open societies and open economies. The world needs the European way of linking the imperative of freedom to the idea of solidarity and justice. The world needs the European priority in tackling climate change and promoting sustainable development with respect for our planet. By promoting its values and its interests, the Union not only delivers to its citizens but also helps the world to be a better place.” Source: José Manuel Durão Barroso, “The European Union after the Lisbon Treaty” (speech given at the 4th Joint Parliamentary Meeting on the Future of Europe, Brussels, December 4, 2007), http://europa.eu/rapid/pressReleasesAction.do?


pages: 358 words: 106,729

Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan

accounting loophole / creative accounting, Andrei Shleifer, Asian financial crisis, asset-backed security, assortative mating, bank run, barriers to entry, Bernie Madoff, Bretton Woods, business climate, business cycle, Clayton Christensen, clean water, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, diversification, Edward Glaeser, financial innovation, fixed income, floating exchange rates, full employment, global supply chain, Goldman Sachs: Vampire Squid, illegal immigration, implied volatility, income inequality, index fund, interest rate swap, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, Long Term Capital Management, longitudinal study, market bubble, Martin Wolf, medical malpractice, microcredit, money market fund, moral hazard, new economy, Northern Rock, offshore financial centre, open economy, price stability, profit motive, Real Time Gross Settlement, Richard Florida, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, school vouchers, short selling, sovereign wealth fund, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Vanguard fund, women in the workforce, World Values Survey

Over nearly four decades, only five different models of the Ambassador car were produced, and the sole differences between them seemed to be the headlights and the shape of the grill. After growing rapidly just after independence, the Indian economy got stuck at a per capita real growth rate of about 1 percent—dubbed the “Hindu” rate of growth. Like Korea or Taiwan, India should have made the switch toward exports and a more open economy in the early 1960s. But because the protected Indian domestic market was large, at least relative to that of the typical late developer, firms were perfectly happy exploiting their home base despite government attempts to encourage exports. This is not to say that government efforts to change were particularly strenuous, especially given that protected firms were an important source of revenue to the ruling party for fighting elections.


pages: 364 words: 99,897

The Industries of the Future by Alec Ross

23andMe, 3D printing, Airbnb, algorithmic trading, AltaVista, Anne Wojcicki, autonomous vehicles, banking crisis, barriers to entry, Bernie Madoff, bioinformatics, bitcoin, blockchain, Brian Krebs, British Empire, business intelligence, call centre, carbon footprint, cloud computing, collaborative consumption, connected car, corporate governance, Credit Default Swap, cryptocurrency, David Brooks, disintermediation, Dissolution of the Soviet Union, distributed ledger, Edward Glaeser, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, fiat currency, future of work, global supply chain, Google X / Alphabet X, industrial robot, Internet of things, invention of the printing press, Jaron Lanier, Jeff Bezos, job automation, John Markoff, Joi Ito, Kickstarter, knowledge economy, knowledge worker, lifelogging, litecoin, M-Pesa, Marc Andreessen, Mark Zuckerberg, Mikhail Gorbachev, mobile money, money: store of value / unit of account / medium of exchange, Nelson Mandela, new economy, offshore financial centre, open economy, Parag Khanna, paypal mafia, peer-to-peer, peer-to-peer lending, personalized medicine, Peter Thiel, precision agriculture, pre–internet, RAND corporation, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Rubik’s Cube, Satoshi Nakamoto, selective serotonin reuptake inhibitor (SSRI), self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, social graph, software as a service, special economic zone, supply-chain management, supply-chain management software, technoutopianism, The Future of Employment, Travis Kalanick, underbanked, Vernor Vinge, Watson beat the top human players on Jeopardy!, women in the workforce, Y Combinator, young professional

Economic reforms have lifted half a billion people out of poverty in China and cut poverty by more than half in India. They have transformed from countries where famines killed tens of millions of people during the 20th century to two of the largest and most vibrant economies in the world. Their futures will see transformative change every bit as exceptional as the past three decades have. For decades, China demonstrated that a somewhat open economy and a closed political system can achieve growth by being home to knowledge workers and manufacturing centers. But it is now seeking to prove that it can provide the conditions for innovation of its own. To this end, the core question for China’s future is whether its model of relative economic openness but tight political control can foster real innovation. Thus far, it seems that its knowledge economy has been hampered.


pages: 355 words: 63

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

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

Free trade allows economies to specialize in what they are best at doing, exporting those things andimportingthethingstheyarenot so good at producing. Interference with trade distorts prices so that inefficient producers will get subsidized. This distortion could affect growth because inefficient resource use lowers the rate of return to investing in thefuture.14 The free trade arguments are now supported by theexperience of the pastfew decades, whichhas found that more open economies are richer and grow faster. Openness to trade has many dimensions, and all of these dimensions are positively associated with growth. Jeffrey Sachs and Andrew Warner defined countries as closed if they had any of the following: nontariff barriers covering 40 percent or more of trade, average tariff rates of 40 percent or more, a black market premium of 20 percent or more, a socialist economic system, or a state monopoly on major exports.


pages: 416 words: 106,582

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

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

Populaces recognize that economic middlemen (particularly ethnic minorities who specialize in that niche, such as Jews, Armenians, overseas Chinese, and expatriate Indians) are not social parasites whose prosperity comes at the expense of their hosts but positive-sum-game creators who enrich everyone at once. Countries recognize that international trade doesn’t benefit their trading partner to their own detriment but benefits them both and turn away from beggar-thy-neighbor protectionism to open economies which (as classical economists noted) make everyone richer and (as political scientists have recently shown) discourage war and genocide. Warring countries lay down their arms and split the peace dividend rather than pursuing Pyrrhic victories. Granted, some human interactions really are zero-sum; competition for mates is a biologically salient example. And even in positive-sum games, a party may pursue an individual advantage at the expense of joint welfare.


Nation-Building: Beyond Afghanistan and Iraq by Francis Fukuyama

Berlin Wall, business climate, colonial rule, conceptual framework, en.wikipedia.org, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Gunnar Myrdal, informal economy, land reform, microcredit, open economy, unemployed young men

The Soviet occupation and the exhaustion brought on by the protracted war have eliminated the once-murderous left-right ideological struggle, even as ethnic cleavages intensified. Afghanistan’s political and social institutions, under greater international scrutiny, probably stand a better chance of reform than at any time previously. A liberal state is usually felt to be best suited to fostering a sustainable political system and economic growth in Afghanistan. Individual freedoms, a vibrant civil society, and an open economy are prescribed and several familiar benchmarks indicating progress have been laid out. The United States and other Western countries tend to put a high premium on holding elections to provide greater legitimacy for those in authority. Under the best of circumstances, elections can be a means of coalition-building and reconciliation. Great significance is also given to agreement on a constitution that parcels out powers and enshrines rights.


pages: 408 words: 108,985

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

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

Nationalist figures like Marine Le Pen in France, President Andrzej Duda in Poland, and Italian Deputy Prime Minister and Minister of the Interior Matteo Salvini have exploited the discontent with globalization by advocating nativist, anti-immigrant policies. Their economic premises are the opposite of those that define Europe. The EU was founded partially on the premise that closer integration—more movement of goods, services, and people—would strengthen the continent. Europe has had a decades-long, abiding faith that open economies grow better. The key messages of this chapter are different from what we might have written before the rise of Trump. But we should understand that the grievances to which he gave voice will not go away when he leaves office. These feelings are deep-seated and reflect a failure to manage globalization in a way that benefits most citizens. We must work to understand the reasons that nativist sentiments have gained such purchase, and work to address them.


pages: 338 words: 104,684

The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy by Stephanie Kelton

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, Asian financial crisis, bank run, Bernie Madoff, Bernie Sanders, blockchain, Bretton Woods, business cycle, capital controls, central bank independence, collective bargaining, COVID-19, Covid-19, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, decarbonisation, deindustrialization, discrete time, Donald Trump, eurozone crisis, fiat currency, floating exchange rates, Food sovereignty, full employment, Gini coefficient, global reserve currency, global supply chain, Hyman Minsky, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, Jeff Bezos, liquidity trap, Mahatma Gandhi, manufacturing employment, market bubble, Mason jar, mortgage debt, Naomi Klein, new economy, New Urbanism, Nixon shock, obamacare, open economy, Paul Samuelson, Ponzi scheme, price anchoring, price stability, pushing on a string, quantitative easing, race to the bottom, reserve currency, Richard Florida, Ronald Reagan, shareholder value, Silicon Valley, trade liberalization, urban planning, working-age population, Works Progress Administration, yield curve, zero-sum game

Noureddine Taboubi, “Strikes Overturn Wage Cuts, but IMF Blindness Risks Ruining Tunisia,” Bretton Woods Project, April 4, 2019, www.brettonwoodsproject.org/2019/04/strikes-overturn-wage-bill-but-imf-blindness-risks-ruining-tunisia/. 25. John T. Harvey, Currencies, Capital Flows and Crises: A Post Keynesian Analysis of Exchange Rate Determination (Abingdon, UK: Routledge, 2009). 26. Bill Mitchell, “Modern Monetary Theory in an Open Economy,” Modern Monetary Theory, October 13, 2009, bilbo.economicoutlook.net/blog/?p=5402. 27. Predictably, the Volcker shock also devastated US workers, shutting down factories in the Midwest and ending manufacturing competitiveness with countries like Japan. Had the US established a job guarantee employment policy to automatically stabilize the economy at full employment—as MMTers and our forebears would have recommended and as many US civil rights activists were recommending—perhaps people around the world could have avoided this catastrophe. 28.


pages: 1,066 words: 273,703

Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze

Affordable Care Act / Obamacare, Apple's 1984 Super Bowl advert, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, Boris Johnson, break the buck, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, dark matter, deindustrialization, desegregation, Detroit bankruptcy, Dissolution of the Soviet Union, diversification, Doha Development Round, Donald Trump, Edward Glaeser, Edward Snowden, en.wikipedia.org, energy security, eurozone crisis, Fall of the Berlin Wall, family office, financial intermediation, fixed income, Flash crash, forward guidance, friendly fire, full employment, global reserve currency, global supply chain, global value chain, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, housing crisis, Hyman Minsky, illegal immigration, immigration reform, income inequality, interest rate derivative, interest rate swap, Kenneth Rogoff, large denomination, light touch regulation, Long Term Capital Management, margin call, Martin Wolf, McMansion, Mexican peso crisis / tequila crisis, mittelstand, money market fund, moral hazard, mortgage debt, mutually assured destruction, negative equity, new economy, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, old-boy network, open economy, paradox of thrift, Peter Thiel, Ponzi scheme, predatory finance, price stability, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, reserve currency, risk tolerance, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, structural adjustment programs, The Great Moderation, Tim Cook: Apple, too big to fail, trade liberalization, upwardly mobile, Washington Consensus, We are the 99%, white flight, WikiLeaks, women in the workforce, Works Progress Administration, yield curve, éminence grise

For those Asian economies hit mainly by the export shock, the policy response was simple: fiscal and monetary stimulus. None of the reactions was on the scale of China, but they were impressive nevertheless. In Thailand, following the “judicial coup” of December 2008, a new government took office, closely associated with the Bangkok establishment, the royal family and the military. It was headed by Abhisit Vejjajiva, who was educated at Eton and Oxford. Given the impact of the crisis on Thailand’s highly open economy and his need to build legitimacy, Abhisit immediately embarked on a stimulus program. The first phase, announced in January 2009, amounted to 116.7 billion baht, or 1.3 percent of GDP, with priority given to popular consumption, including “saving the nation checks” distributed by way of the Social Security Administration, bonuses for senior citizens and subsidies for public education. At the same time, the Bank of Thailand slashed interest rates to 1.25 percent—compared with the 12.5 percent they had reached during the 1998 crisis—and directed six government-owned banks to rush loans, especially to small businesses.

“Brad Delong: The Democrats’ Line in the Sand,” Economist’s View, June 30, 2008, http://economistsview.typepad.com/economistsview/2008/06/brad-delong-the.html. 41. L R. Jacobs and D. King, Fed Power: How Finance Wins (Oxford: Oxford University Press, 2016). 42. Minutes of the Federal Open Market Committee (FOMC) meeting, June 29–30, 2004, https://www.federalreserve.gov/fomc/minutes/20040630.htm. 43. The so-called Mundell-Fleming model of open economy macroeconomics originated already in the 1960s, see J. M. Boughton, “On the Origins of the Fleming-Mundell Model” (IMF Staff Papers 50, 2003), 1–9. 44. B. Bernanke, “The Global Saving Glut and the US Current Account Deficit,” No. 77, Board of Governors of the Federal Reserve System (US), 2005. 45. B. Bernanke, “On Milton Friedman’s Ninetieth Birthday” (conference to honor Milton Friedman, November 8, 2002). 46.


pages: 264 words: 115,489

Take the Money and Run: Sovereign Wealth Funds and the Demise of American Prosperity by Eric C. Anderson

asset allocation, banking crisis, Bretton Woods, business continuity plan, business process, buy and hold, collective bargaining, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, diversified portfolio, fixed income, floating exchange rates, housing crisis, index fund, Kenneth Rogoff, open economy, passive investing, profit maximization, profit motive, random walk, reserve currency, risk tolerance, risk-adjusted returns, risk/return, Ronald Reagan, sovereign wealth fund, the market place, The Wealth of Nations by Adam Smith, too big to fail, Vanguard fund

The relatively immature Chinese legal system, and a growing awareness of the potential dangers associated with foreign investment, suggest that Beijing is still a long way from promulgating its own version of FINSA 2007. United Arab Emirates: As home to the world’s largest sovereign wealth fund—the Abu Dhabi Investment Authority—and the inadvertent progenitor of FINSA 2007, the UAE appeared a prime target for our examination of overseas foreign investment laws and policies. The GAO reports U.S. State Department officials consider the UAE to be one of the most open economies in the Middle East. When it comes to foreign investment, the UAE has attempted to establish a set of codes in the form of the “Companies Law” and “Agencies Law.” The Companies Law states a foreign entity is prohibited from owning more than 49% of a UAE business, while the Agencies Law stipulates foreign importers must operate through an agent to bring goods into the country.72 Although the Companies and Agencies Laws may appear unduly restrictive, the UAE has set about removing some of the string through establishment of 32 free trade zones.


pages: 484 words: 120,507

The Last Lingua Franca: English Until the Return of Babel by Nicholas Ostler

barriers to entry, BRICs, British Empire, call centre, en.wikipedia.org, European colonialism, Internet Archive, invention of writing, Isaac Newton, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, mass immigration, Nelson Mandela, open economy, Republic of Letters, Scramble for Africa, statistical model, trade route, upwardly mobile

This means that the sentences are not only ungrammatical and truncated, but often incomprehensible, especially to foreigners. Classic examples would be “You got money, sure can buy one” or “This is my one,” derived from zhe shi wo de. The ability to speak good English is a distinct advantage in terms of doing business and communicating with the world. This is especially important for a hub city and an open economy like ours. If we speak a corrupted form of English that is not understood by others, we will lose a key competitive advantage. My concern is that if we continue to speak Singlish, it will over time become Singapore’s common language. (Goh Chok Tong, at the launch of the “Speak Good English” Movement, April 29, 2000) In the Philippines, money is being spent to improve the quality of English on citizens’ lips: Education Secretary Fe Hidalgo said her department has allocated 581 million pesos to implement its English-proficiency program among teachers, saying the results of a recent English-proficiency test among them was not very encouraging.


pages: 474 words: 120,801

The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What It Used to Be by Moises Naim

additive manufacturing, barriers to entry, Berlin Wall, bilateral investment treaty, business cycle, business process, business process outsourcing, call centre, citizen journalism, Clayton Christensen, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, conceptual framework, corporate governance, creative destruction, crony capitalism, deskilling, disintermediation, disruptive innovation, don't be evil, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, illegal immigration, immigration reform, income inequality, income per capita, intangible asset, intermodal, invisible hand, job-hopping, Joseph Schumpeter, Julian Assange, Kickstarter, liberation theology, Martin Wolf, mega-rich, megacity, Naomi Klein, Nate Silver, new economy, Northern Rock, Occupy movement, open borders, open economy, Peace of Westphalia, plutocrats, Plutocrats, price mechanism, price stability, private military company, profit maximization, Ronald Coase, Ronald Reagan, Silicon Valley, Skype, Steve Jobs, The Nature of the Firm, Thomas Malthus, too big to fail, trade route, transaction costs, Washington Consensus, WikiLeaks, World Values Survey, zero-sum game

Even the economic crash of 2008 failed to reverse the trend.48 As advanced economies were crashing, it became fashionable to predict that the natural reaction of these governments was to protect jobs and companies behind higher barriers to imports. That did not happen. The same was true about the possibility that countries would impose limits to the entry of foreign investors. That, too, didn’t happen. The truly global movement toward relatively free, open economies with broad capital markets and limited state ownership is one of the well-told tales of the last generation. With it often comes the caution that at some point the pendulum might swing back—if not fully, then to a considerable extent. And indeed, it might appear at first glance that with the global recession of 2008–2009 came a swing back toward more government regulation and control in key industries.


pages: 411 words: 114,717

Breakout Nations: In Pursuit of the Next Economic Miracles by Ruchir Sharma

3D printing, affirmative action, Albert Einstein, American energy revolution, anti-communist, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, business climate, business cycle, business process, business process outsourcing, call centre, capital controls, Carmen Reinhart, central bank independence, centre right, cloud computing, collective bargaining, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, demographic dividend, Deng Xiaoping, eurozone crisis, Gini coefficient, global supply chain, housing crisis, income inequality, indoor plumbing, inflation targeting, informal economy, Kenneth Rogoff, knowledge economy, labor-force participation, land reform, M-Pesa, Mahatma Gandhi, Marc Andreessen, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, Nelson Mandela, new economy, oil shale / tar sands, oil shock, open economy, Peter Thiel, planetary scale, quantitative easing, reserve currency, Robert Gordon, Shenzhen was a fishing village, Silicon Valley, software is eating the world, sovereign wealth fund, The Great Moderation, Thomas L Friedman, trade liberalization, Watson beat the top human players on Jeopardy!, working-age population, zero-sum game

Indian socialist ideals heavily influenced the founders of independent Sri Lanka, and state spending came to be seen as a tool to deliver economic justice to Sinhalese. At its peak in the 1970s, state spending accounted for 59 percent of GDP, and four in ten Sri Lankans worked for the government, an extraordinarily high number. But by the late 1990s even the main left-leaning party, the SLFP, was moving toward a more modern development model built on an open economy and trade liberalization. State spending has fallen to about 30 percent of GDP today, and most parties agree this is movement in the right direction. Ultimately, the economic impact of Sri Lanka’s civil war was relatively mild despite the personal suffering of the people it swept up. According to USAID research, a typical civil war of fifteen-year duration reduces national GDP by around 30 percent, and it typically takes a decade just to recover the prewar levels of income.


pages: 380 words: 116,919

Britain's Europe: A Thousand Years of Conflict and Cooperation by Brendan Simms

anti-communist, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Corn Laws, credit crunch, eurozone crisis, Fall of the Berlin Wall, first-past-the-post, imperial preference, land reform, Monroe Doctrine, moral panic, oil shock, open economy, plutocrats, Plutocrats, race to the bottom, Ronald Reagan, sceptred isle, South Sea Bubble, trade route, éminence grise

In the sixteenth century, this was the fear of Philip II; in the seventeenth century, the threat of Louis XIV; in the late eighteenth and early nineteenth centuries, it was Revolutionary and Napoleonic France; in the twentieth century, it was Imperial and Nazi Germany, and then the Soviet Union. In each case, Britain provided what would now be called ‘public goods’: the maintenance of the balance of power and, later, an open economy and liberal international system. As the British diplomat Eyre Crowe wrote in 1907: Second only to the ideal of independence, nations have always cherished the right of free intercourse and trade in the world’s markets, and in proportion as England champions the principle of the largest measure of general freedom of commerce, she undoubtedly strengthens her hold on the interested friendship of other nations, at least to the extent of making them less apprehensive of naval supremacy in the hands of a free trade England than they would in the face of a predominant protectionist power.’41 It was ‘empire by invitation’.42 Third, there is the resilience of the British constitutional model, which has not been seriously challenged from within for hundreds of years.


pages: 437 words: 113,173

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

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

The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It Divided Nations: Why Global Governance Is Failing, and What We Can Do About It Exceptional People: How Migration Shaped Our World and Will Define Our Future Globalization for Development: Meeting New Challenges The Case for Aid The Economics of Sustainable Development Economic Reform, Trade and Agricultural Development Modelling Economy-wide Reforms Trade Liberalization: Global Economic Implications Open Economies The Future of Agriculture Economic Crisis: Lessons from Brazil Making Race About the Authors IAN GOLDIN is Professor of Globalization and Director of the Oxford Martin School at the University of Oxford. He was Vice President of the World Bank, Chief Executive of the Development Bank of Southern Africa and an adviser to President Nelson Mandela. You can sign up for email updates here.


pages: 573 words: 115,489

Prosperity Without Growth: Foundations for the Economy of Tomorrow by Tim Jackson

"Robert Solow", bank run, banking crisis, banks create money, Basel III, basic income, bonus culture, Boris Johnson, business cycle, carbon footprint, Carmen Reinhart, Cass Sunstein, choice architecture, collapse of Lehman Brothers, creative destruction, credit crunch, Credit Default Swap, David Graeber, decarbonisation, dematerialisation, en.wikipedia.org, energy security, financial deregulation, Financial Instability Hypothesis, financial intermediation, full employment, Growth in a Time of Debt, Hans Rosling, Hyman Minsky, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, liberal capitalism, Mahatma Gandhi, mass immigration, means of production, meta analysis, meta-analysis, moral hazard, mortgage debt, Naomi Klein, new economy, offshore financial centre, oil shale / tar sands, open economy, paradox of thrift, peak oil, peer-to-peer lending, Philip Mirowski, profit motive, purchasing power parity, quantitative easing, Richard Thaler, road to serfdom, Robert Gordon, Ronald Reagan, science of happiness, secular stagnation, short selling, Simon Kuznets, Skype, smart grid, sovereign wealth fund, Steve Jobs, The Chicago School, The Great Moderation, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, universal basic income, Works Progress Administration, World Values Survey, zero-sum game

In a closed economy – one without international trade – this would mean that the total outstanding national debt would always be equal to the net financial assets of the private sector. And it wouldn’t be possible to reduce public sector borrowing without simultaneously reducing the net lending of the private sector. At the global level, where the economy is of course closed, this must always remain the case. In open economies, which trade with each other constantly, reducing public sector borrowing can sometimes go hand in hand with increasing the net lending of the private sector, but only when there is a positive trade balance.21 This is one of the reasons why a country like Germany, with a strong trade balance, was able to reduce its public deficit in the aftermath of the crisis, even as private sector firms were seeking to shore up their balance sheets.


pages: 413 words: 119,379

The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa's Wealth by Tom Burgis

Airbus A320, Berlin Wall, blood diamonds, BRICs, British Empire, central bank independence, clean water, colonial rule, corporate social responsibility, crony capitalism, Deng Xiaoping, Donald Trump, F. W. de Klerk, Gini coefficient, Livingstone, I presume, McMansion, megacity, Nelson Mandela, offshore financial centre, oil shock, open economy, purchasing power parity, rolodex, Ronald Reagan, Silicon Valley, South China Sea, sovereign wealth fund, structural adjustment programs, trade route, transfer pricing, upwardly mobile, urban planning, Washington Consensus, WikiLeaks, zero-sum game

A November 2008 cable from the US embassy in Abuja, published in September 2011 by WikiLeaks, reported, ‘Ribadu also expressed concern for his former EFCC colleague and friend, Ibrahim Magu; he claims Magu is in danger because of his specific knowledge of the President’s relationship with Dahiru Mangal (an influential wealthy northern businessman who is currently under investigation and has ties to the Yar’Adua family and administration) and a money laundering operation which fronts as a legitimate company.’ ‘Nigeria: Further Harassment of Former Efcc Chair Ribadu’, 25 November 2008, WikiLeaks, www.wikileaks.org/plusd/cables/​08ABUJA2307_a.html. 12. Jan L. van Zanden, The Economic History of The Netherlands 1914–1995: A Small Open Economy in the ‘Long’ Twentieth Century (New York: Routledge, 1997), 165. 13. A Southern African Development Community study from 2000, cited in Economic Commission for Africa, ‘Minerals and Africa’s Development: The International Study Group Report on Africa’s Mineral Regimes’, November 2011, www.uneca.org/sites/default/files​/publications/mineral_africa​_development_report_eng.pdf. 14. UN Industrial Development Organisation (UNIDO) and UN Conference on Trade and Development (UNCTAD), ‘Fostering Industrial Development in Africa in the New Global Environment, Economic Development in Africa Report’, UNCTAD, July 2011, http://unctad.org/en/docs/​aldcafrica2011_en.pdf. 15.


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

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

The quality of democracy is severely limited by persistent and pervasive inequality.38 As we have argued, the high-stakes politics derived from the growing distance between the haves and the have-nots in Latin America are incompatible with the compromises and give-and-take accommodations that are necessary to establish firm foundations in young democracies. The possibilities for rapid growth and development are compromised because citizens do not have the skill sets to participate and compete in open economies. And for the region, competitiveness is key to improving living standards, attracting foreign investment, and escaping the natural resource curse of continued dependence on highly volatile commodity and mineral exports. According to Karl, the “commodity lottery” remains the fundamental basis for the vicious cycle of unequal development in the region, and mitigating inequality remains the central task that policymakers must address.39 She states that “this winner-loser setup is a self-reinforcing economic and political dynamic based on the concentration of both assets and power, the institutionalized bias this creates in political structures, and the permanent exclusion of large segments of the population.”40 Until this challenge is met, high-stakes politics will continue to dominate the scene.


World Cities and Nation States by Greg Clark, Tim Moonen

active transport: walking or cycling, Asian financial crisis, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, business climate, cleantech, congestion charging, corporate governance, deindustrialization, Deng Xiaoping, financial independence, financial intermediation, Francis Fukuyama: the end of history, full employment, global supply chain, global value chain, high net worth, housing crisis, immigration reform, income inequality, informal economy, Kickstarter, knowledge economy, low skilled workers, megacity, new economy, New Urbanism, Norman Mailer, open economy, Pearl River Delta, rent control, Richard Florida, Silicon Valley, smart cities, sovereign wealth fund, special economic zone, stem cell, supply-chain management, The Wealth of Nations by Adam Smith, trade route, transaction costs, transit-oriented development, upwardly mobile, urban planning, urban renewal, urban sprawl, War on Poverty, zero-sum game

In 2010 it gained approval for its plans to abolish capital gains tax, and for the creation of Russia’s first patent court. In 2011, the national apparatus approved the merger of Moscow’s two exchanges, the RTS and the Micex, to simplify the market structure. Plans also exist to standardise tax rates for foreign‐born non‐residents and to abolish VAT on margin payments, REPO and derivatives operations. In 2012, Russia finally joined the WTO, a gesture signalling that Russia (and therefore Moscow) is an open economy with a sound institutional framework. Individual investment accounts were introduced from 2015 to boost transparency of financial procedures (Goriaev, 2008; Moscow City Government, 2014a). While Moscow is an emerging global city with an advanced corporate sector, its status as a key centre for business is periodically undermined by federal foreign policy which heightens geopolitical tensions in the region.


pages: 1,205 words: 308,891

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

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

The philosopher Karl Popper called the trade-oriented novelty of the modern world the “open society,” and the politico-economic theorists Douglass North, John Wallis, and Barry Weingast call it the “open-access” society.8 The ORDO liberals of pre- and postwar Germany called it “a competitive order” or a “social market economy” (which, however, they believed required a strong government to keep it from descending into monopolies, as indeed it had in Germany).9 Whatever it is called, such a society, thronging with free conversations easily joined, made for a creativity that disturbed the rules of the game—rules designed, unsurprisingly, by the elite in favor of the old rich. The open economy created numerous nouveaux riches, such as James Watt and Robert Fulton. Both eventually failed to protect their monopolies. Fernand Braudel argued to the contrary that capitalism was inherently and permanently monopolistic. But les nouveaux hommes were themselves competed against by still newer rich, to the benefit, in the third act, of us all, à la Schumpeter and Nordhaus. A patent or copyright monopoly, to be sure, must be broken for the poor to benefit.

“The expansion of capitalism,” wrote Baechler in 1971, “owes its origins and raison d’être to political anarchy.”26 “The plurality of small states in Europe,” Macfarlane argues, “autonomous but linked by a common history, religion, and elite language, almost incessantly at war and, when not at war, in fierce cultural and social competition, was the ideal context for rapid productive and ideological evolution.”27 “In purely dialectical fashion,” wrote Mokyr in 2002, following a logic devised by Schumpeter, “technological progress creates [vested interests] that eventually destroy it. . . . For a set of fragmented and open economies . . . this result does not hold.”28 Think of the Reading of print, the Reformation, the glories of a Dutch Revolt beset on every side—three of the Four Rs. Open source. In the way that American cities and states compete for corporate headquarters—the Tiebout Effect I’ve mentioned—the Spanish crown in the 1490s competed with France, Portugal, England, and the Dukedom of Medina Celi for the services of Christoforo Columbo, admittedly in a competition less than fierce.


pages: 483 words: 141,836

Red-Blooded Risk: The Secret History of Wall Street by Aaron Brown, Eric Kim

activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, Asian financial crisis, Atul Gawande, backtesting, Basel III, Bayesian statistics, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Black Swan, business cycle, capital asset pricing model, central bank independence, Checklist Manifesto, corporate governance, creative destruction, credit crunch, Credit Default Swap, disintermediation, distributed generation, diversification, diversified portfolio, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, experimental subject, financial innovation, illegal immigration, implied volatility, index fund, Long Term Capital Management, loss aversion, margin call, market clearing, market fundamentalism, market microstructure, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, natural language processing, open economy, Pierre-Simon Laplace, pre–internet, quantitative trading / quantitative finance, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, shareholder value, Sharpe ratio, special drawing rights, statistical arbitrage, stochastic volatility, stocks for the long run, The Myth of the Rational Market, Thomas Bayes, too big to fail, transaction costs, value at risk, yield curve

Money, which meant silver coin in Holland at the time, was not very stable. Inflation was high; prices doubled in the 20 years from 1606 to 1626. Worse, debasement was a chronic problem. This is true everywhere precious metal money is used, but it was particularly severe in Holland at this time for several reasons. The Thirty Years War required enormous expenditures, which were often financed by debasement of coins. Holland had a small, open economy, meaning that coins flowed into it from all over Europe; when people send coins, they send the lightest ones, the most debased ones. Finally, central authorities were weak in Holland, so individual state banks and independent mints were able to get away with more debasement than was tolerated in other countries. This did not amount to a large problem for someone who wanted to sell goods and buy other goods immediately with the proceeds.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

"Robert Solow", 1960s counterculture, activist lawyer, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Gunnar Myrdal, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, liberal capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

The unstated corollary was that the trade surpluses accumulated by Germany and Japan would turn into deficits, like those in the United States. In other words, the two new economic powers would share the U.S. burden by opening their markets to the poor nations who needed to pay for their oil imports. The blueprint was a variant of Keynesian multiplier-analysis. Keynesian deficits increased a nation’s GDP by increasing the demand for goods. International Keynesianism worked slightly differently. In a world of open economies, import leakage reduced the domestic multiplier of additional government spending or tax cuts. Thus, some of a U.S. stimulus would be used by Americans to purchase foreign goods, thus boosting the exporter’s economy. If all of the richer countries raised government spending or cut taxes, no one nation would assume the burden, as the United States did in the postwar world. In the end, there would be more demand for the goods of poorer exporting nations that had accumulated large oil bills.


pages: 418 words: 128,965

The Master Switch: The Rise and Fall of Information Empires by Tim Wu

accounting loophole / creative accounting, Alfred Russel Wallace, Apple II, barriers to entry, British Empire, Burning Man, business cycle, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, disruptive innovation, don't be evil, Douglas Engelbart, Douglas Engelbart, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, zero-sum game

The open era of film was not, as that of radio was, launched by idealistic amateurs. But whatever the motive behind Laemmle and Fox’s instinct to fight the Trust, the effect was to blow open a new and incredibly powerful medium of expression and one with greater economic potential than had been allowed before. The film industry, once cracked, would be an extreme example of how an open industrial market and an open economy of ideas can overlap entirely. As the battle between the Independents and the Trust wore on, the Trust, perhaps increasingly desperate, began taking the law into their own hands. In came the private enforcers, on the theory that “though an injunction will not stop a man from making films, a broken camera will.”24 THE OUTCOME In 1912 it was by no means clear whether Hollywood or the East Coast Trust would dominate the future of American film (nor, for that matter, whether American film would be dominant in relation to European).


pages: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

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

Razin (2004), “Curb Your Innovation: Corporate Conservatism in the Presence of Imperfect Intellectual Property Rights,” mimeo, New York University. Baker, D. and N. Chatani (2002), “Promoting Good Ideas on Drugs: Are Patents the Best Way? The Relative Efficiency of Patent and Public Support for Bio-medical Research,” briefing paper, Center for Economic and Policy Research. Baldwin, J. M. and P. Hanel (2003), Innovation and Knowledge Creation in an Open Economy: Canadian Industry and International Implications. Cambridge: Cambridge University Press. Barragan Arce, J. (2005), “The Apples of Competition: A Study of Plants Innovation in Nineteenth and Twentieth Century USA,” Ph.D. dissertation, University of Minnesota, in progress. Barro, R. J. and X. Sala-i-Martin (1995), Economic Growth. Cambridge, MA: MIT Press. Battacharya, S. and J. R. Ritter (1983), “Innovation and Communication: Signalling with Partial Disclosure,” Review of Economic Studies 50, 331–46.


pages: 466 words: 127,728

The Death of Money: The Coming Collapse of the International Monetary System by James Rickards

Affordable Care Act / Obamacare, Asian financial crisis, asset allocation, Ayatollah Khomeini, bank run, banking crisis, Ben Bernanke: helicopter money, bitcoin, Black Swan, Bretton Woods, BRICs, business climate, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, centre right, collateralized debt obligation, collective bargaining, complexity theory, computer age, credit crunch, currency peg, David Graeber, debt deflation, Deng Xiaoping, diversification, Edward Snowden, eurozone crisis, fiat currency, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, G4S, George Akerlof, global reserve currency, global supply chain, Growth in a Time of Debt, income inequality, inflation targeting, information asymmetry, invisible hand, jitney, John Meriwether, Kenneth Rogoff, labor-force participation, Lao Tzu, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market design, money market fund, money: store of value / unit of account / medium of exchange, mutually assured destruction, obamacare, offshore financial centre, oil shale / tar sands, open economy, plutocrats, Plutocrats, Ponzi scheme, price stability, quantitative easing, RAND corporation, reserve currency, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, special drawing rights, Stuxnet, The Market for Lemons, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, trade route, undersea cable, uranium enrichment, Washington Consensus, working-age population, yield curve

Wall Street Journal, June 13, 2013, online.wsj.com/article/SB10001424127887323734304578542941134353614.html. Stewart, James B. “The Birthday Party.” New Yorker, February 11, 2008, http://www.newyorker.com/reporting/2008/02/11/080211fa_fact_stewart. Subbotin, Alexander. “A Multi-Horizon Scale for Volatility.” Centre d’Economie de la Sorbonne, working paper, March 3, 2008. Swensson, Lars E. O. “The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap.” National Bureau of Economic Research, Working Paper no. 7957, October 2000, http://www.nber.org/papers/w7957. ———. “Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others.” National Bureau of Economic Research, Working Paper no. 10195, December 2003, http://www.nber.org/papers/w10195. Taylor, Jason E., and Richard K.


pages: 537 words: 144,318

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money by Steven Drobny

Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, backtesting, banking crisis, Bernie Madoff, Black Swan, Bretton Woods, BRICs, British Empire, business cycle, business process, buy and hold, capital asset pricing model, capital controls, central bank independence, collateralized debt obligation, commoditize, Commodity Super-Cycle, commodity trading advisor, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, diversification, diversified portfolio, equity premium, family office, fiat currency, fixed income, follow your passion, full employment, George Santayana, Hyman Minsky, implied volatility, index fund, inflation targeting, interest rate swap, inventory management, invisible hand, Kickstarter, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, market microstructure, moral hazard, Myron Scholes, North Sea oil, open economy, peak oil, pension reform, Ponzi scheme, prediction markets, price discovery process, price stability, private sector deleveraging, profit motive, purchasing power parity, quantitative easing, random walk, reserve currency, risk tolerance, risk-adjusted returns, risk/return, savings glut, selection bias, Sharpe ratio, short selling, sovereign wealth fund, special drawing rights, statistical arbitrage, stochastic volatility, stocks for the long run, stocks for the long term, survivorship bias, The Great Moderation, Thomas Bayes, time value of money, too big to fail, transaction costs, unbiased observer, value at risk, Vanguard fund, yield curve, zero-sum game

Our process essentially commences with a detailed and thorough analysis of the data, an analysis that can be either quantitative or qualitative. Quantitative filtering takes guidance from theory and our own internal research. For example, there is a lengthy list of macroeconomic priors—which we call “Basic Principles”—and known patterns for the evolution of macroeconomic variables. Some examples are the behavior and persistence of inflation in convergence economies, the trend for exchange rates in small, open economies, the relationship between price/earnings (P/E) multiples and exchange rate valuation in economies with large net trade surpluses, and the behavior of the central bank credibility premium after an inflationary bust. Financial markets invariably lag structural developments in the real economy, which is itself another of my Basic Principles. Our proprietary tools extrapolate estimates of fair value from Basic Principles, where any significant divergence of forward market pricing from our estimates immediately highlights something worth exploring.


pages: 442 words: 130,526

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

accounting loophole / creative accounting, Asian financial crisis, Big bang: deregulation of the City of London, Branko Milanovic, business climate, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial rule, Commodity Super-Cycle, corporate raider, creative destruction, crony capitalism, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, facts on the ground, failed state, Francis Fukuyama: the end of history, global supply chain, Gunnar Myrdal, income inequality, informal economy, Joseph Schumpeter, liberal capitalism, Mahatma Gandhi, McMansion, megacity, New Urbanism, offshore financial centre, open economy, Parag Khanna, Pearl River Delta, plutocrats, Plutocrats, Ponzi scheme, quantitative easing, rent-seeking, Rubik’s Cube, Silicon Valley, Simon Kuznets, smart cities, special economic zone, spectrum auction, The Great Moderation, Thomas L Friedman, transaction costs, trickle-down economics, Washington Consensus, WikiLeaks, yellow journalism, young professional

It was only after Independence that Jawaharlal Nehru, a cerebral Cambridge-educated lawyer and the nation’s first prime minister, began to abandon a heritage as a trading power that stretched back two thousand years. The point is that these decades of self-imposed quarantine were the exception. India is now a remarkably globalized nation once more. Rather than struggling to scrape together foreign exchange, it holds hundreds of billions of dollars in reserves. It is on some measures a more open economy than China, which began to liberalize roughly a decade earlier. India now trades more goods and services as a proportion of GDP than its larger Asian neighbor, and far more than America. The value of that trade has rocketed from just seventeen percent of GDP when its economic reforms began 1991, to around sixty percent today.11 It attracts as much foreign direct investment as China did at the peak of its growth in the mid-2000s.12 Nearly half of all the freely traded shares on Indian stock markets are owned by foreigners.13 India’s leading companies have spread out around the world, too, buying up everything from African mines to British steelmakers.


Making Globalization Work by Joseph E. Stiglitz

affirmative action, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, Berlin Wall, business process, capital controls, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Gini coefficient, global reserve currency, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Jones Act, Kenneth Arrow, Kenneth Rogoff, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, new economy, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, trickle-down economics, union organizing, Washington Consensus, zero-sum game

Even if there was some glitch, workers could buy insurance against the risk of being temporarily unemployed, or against the risk that the new job paid less than the old. Even in the best-functioning market economies, this kind of insurance can’t be bought; while in developed countries the government provides some unemployment insurance, in most developing countries workers are left to fend for themselves. That is why trade liberalization requires more than just onetime assistance to move from the old industries to the new. More open economies may be subject to all manner of shocks—domestic firms, for instance, may find it hard to compete with an onslaught of imports that suddenly become cheaper when a foreign country devalues its currency, as in a crisis. When Korea’s currency was devalued, Korean steel exports to the United States increased, and American steelworkers complained. When Brazil has a good orange crop, Florida orange growers cry for help, and sometimes get it through one of the nontariff protectionist mechanisms described below.16 Everyone feels the insecurity.


pages: 515 words: 142,354

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

bank run, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bretton Woods, business cycle, buy and hold, capital controls, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

A good regulatory regime would ban such financial products. 21 That is debt undertaken by a particular country within the eurozone. 22 The result is more general: it applies to any mobile factor of production. 23 See the discussion in chapter 7 on how the ECB secretly forced Ireland to do so. 24 Interestingly, this problem has long been recognized in the theory of fiscal federalism/local public goods. See, for instance, J. E. Stiglitz, “Theory of Local Public Goods,” in The Economics of Public Services, ed. M. S. Feldstein and R. P. Inman, (London: Macmillan, 1977), pp. 274–333; J. E. Stiglitz, “Public Goods in Open Economies with Heterogeneous Individuals,” in Locational Analysis of Public Facilities, ed. J. F. Thisse and H. G. Zoller (Amsterdam: North-Holland, 1983), pp. 55–78; and J. E. Stiglitz, “The Theory of Local Public Goods Twenty-Five Years after Tiebout: A Perspective,” in Local Provision of Public Services: The Tiebout Model After Twenty-Five Years, ed. G. R. Zodrow (New York: Academic Press, 1983), pp. 17–53.


pages: 489 words: 132,734

A History of Future Cities by Daniel Brook

Berlin Wall, British Empire, business process, business process outsourcing, call centre, carbon footprint, Celtic Tiger, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, Deng Xiaoping, desegregation, Edward Glaeser, Fall of the Berlin Wall, financial innovation, glass ceiling, indoor plumbing, joint-stock company, land reform, Mikhail Gorbachev, New Urbanism, open economy, Parag Khanna, Pearl River Delta, Potemkin village, profit motive, rent control, sovereign wealth fund, special economic zone, starchitect, trade route, urban planning, urban renewal, working poor

In Dubai, it was Indians who became the importers for all the leading Japanese electronics companies, including Sony, NEC, and JVC, that were slapped with insurmountable import tariffs at home. A creek-dredging project to accommodate larger ships, launched by royal decree and completed in 1961, helped cement the deal with the regional traders as Dubai now provided both the economic environment and the physical facilities necessary for international commerce. While many Indian merchants used Dubai as a base to do business with the world’s open economies, others used it as a base to illegally do business with their homeland. When a Nehru-ordered tax on precious metals sent the price of gold in India to two times its price on the global market, gold smuggling became a major business in Dubai. With Bombay effectively knocked out of the world’s gold market, tiny Dubai became the second-largest destination for gold purchased on British exchanges, surpassed only by Britain’s wealthy, luxury-goods-producing neighbor, France.


pages: 495 words: 136,714

Money for Nothing by Thomas Levenson

Albert Einstein, asset-backed security, bank run, British Empire, carried interest, clockwork universe, credit crunch, Edmond Halley, Edward Lloyd's coffeehouse, experimental subject, failed state, Fellow of the Royal Society, fiat currency, financial innovation, Fractional reserve banking, income inequality, Isaac Newton, joint-stock company, market bubble, open economy, price mechanism, quantitative easing, Republic of Letters, risk/return, side project, South Sea Bubble, The Wealth of Nations by Adam Smith

“As they are all engaged in commerce,” he wrote of the inhabitants of the new country, “their commercial affairs are affected by such various and complex causes that it is impossible to foresee what difficulties may arise. As they are all more or less engaged in productive industry, at the least shock given to business all private fortunes are put in jeopardy at the same time, and the State is shaken.” This was, de Tocqueville reasoned, a necessary property of an open economy, one in which the financial health of any individual enterprise is deeply engaged with that of every other with which it does business. That led him to a warning. By the time of his travels in America, stock market crashes and other financial disruptions had occurred often enough for him to see them as inherent in the economic life of the United States and any imitators. “I believe that the return of these commercial panics is an endemic disease of the democratic nations of our age,” he concluded.


pages: 564 words: 153,720

Uncommon Grounds: The History of Coffee and How It Transformed Our World by Mark Pendergrast

business climate, business cycle, commoditize, Edward Lloyd's coffeehouse, Honoré de Balzac, land reform, microcredit, Mikhail Gorbachev, new economy, open economy, out of africa, profit motive, Ray Oldenburg, Ronald Reagan, The Great Good Place, trade route, transcontinental railway, traveling salesman, women in the workforce

Michelli; Tribal Knowledge: Business Wisdom Brewed from the Grounds of Starbucks Corporate Culture (2006), by John Moore; Pour Your Heart Into It (Starbucks history, 1997), by Howard Schultz and Dori Jones Yang; My Sister’s a Barista (2005), by John Simmons; Everything But the Coffee: Learning About America from Starbucks (2009), by Bryant Simon; The Gospel According to Starbucks (2007), by Leonard Sweet; W. R. Grace: Grace: W. R. Grace & Company (1985), by Lawrence A. Clayton. Books on coffee prices and international commodity schemes include: Open Economy Politics (1997), by Robert H. Bates; The Corner in Coffee (fiction, 1904), by Cyrus Townsend Brady; The Coffee Paradox (2005), by Benoit Daviron and Stefano Ponte; An Oligopoly: The World Coffee Economy and Stabilization (1971), by Thomas Geer; Trading Down (2005), by Peter Gibbon and Stefano Ponte; The Brazilian Coffee Valorization of 1906 (1975), by Thomas H. Holloway; The International Political Economy of Coffee (1988), by Richard L.


pages: 205 words: 18,208

The Transparent Society: Will Technology Force Us to Choose Between Privacy and Freedom? by David Brin

affirmative action, airport security, Ayatollah Khomeini, clean water, cognitive dissonance, corporate governance, data acquisition, death of newspapers, Extropian, Howard Rheingold, illegal immigration, informal economy, information asymmetry, Iridium satellite, Jaron Lanier, John Markoff, John von Neumann, Kevin Kelly, Marshall McLuhan, means of production, mutually assured destruction, offshore financial centre, open economy, packet switching, pattern recognition, pirate software, placebo effect, plutocrats, Plutocrats, prediction markets, Ralph Nader, RAND corporation, Robert Bork, Saturday Night Live, Search for Extraterrestrial Intelligence, Steve Jobs, Steven Levy, Stewart Brand, telepresence, trade route, Vannevar Bush, Vernor Vinge, Whole Earth Catalog, Whole Earth Review, Yogi Berra, zero-sum game, Zimmermann PGP

But consider how much better ecash will work if 95% of commercial transactions were openly announced, as just described. Insurance and liability problems would lessen. Authorities or commercial agents could concentrate on protecting the smaller number of cipher-secured trades, while the rest are safeguarded by openness. Villains who do succeed in stealing ecash would not be quite as seamlessly invisible as they might like when they try to spend it in a mostly open economy. Moreover, by reducing the total number of potential “prey” transactions in the marketplace, we will also decrease the overall number of predators. When there arenʼt many shadows, there will be fewer places for knaves to lurk, or to practice their skills by victimizing others. The second advantage to a transparency option would be that it is robust (a theme we will reiterate later). If only a small fraction of commercial deals are encrypted, no undiscovered flaw in the ciphering software can be used to steal the whole bank or to topple an entire economy.


pages: 543 words: 147,357

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

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

The upside, in terms of macro-economic policy, is that the new realisation that increasing wages will simply price goods and services out of the market helps reinvent fiscal policy’s traction on demand and employment. Globalisation and the aftermath of the credit crunch are also important factors. The latter has left most economies, including Britain’s, with a substantial gap between what the economy has the capacity to produce and what it is producing – the so-called output gap. Globalisation and open economies add to the sense that playing fast and loose with wage and pricing policy in these circumstances is self-defeating: firms would just lose business to competitors. Nor are firms, consumers and workers so economically rational as the free-market economists supposed. The supposition was that, when confronted by a tax reduction, consumers would know it was only temporary and so would rationally save to pay for the inevitable later tax rise.


pages: 537 words: 158,544

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

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

Particularly with regimes that have souring ties with the United States, China builds strategic alliances by deepening commercial relations. 16 With its voracious appetite for natural resources, it has taken a lead in oil and gas production from Angola to Algeria to Sudan, importing more oil from Africa than from Saudi Arabia. 17 As with the other superpowers, China’s engagement can mean the difference between peace and genocide: In Sudan, China has sent UN peacekeepers but also covert military personnel to protect its oil facilities and a (nearly) thousand-mile pipeline to the Red Sea, all the while sandbagging UN resolutions aimed at halting the civil war in the country’s south and the ethnic cleansing pogroms in the Darfur region, where Chinese machine guns are plentiful. Countries from Libya to China are fueling Khartoum’s real estate bonanza despite American sanctions. China portrays African states as its partners, not as mercy cases, and many Arab and African governments enthusiastically speak of a “China model” of closed regimes with open economies. To revive the mid–twentieth century Sino-African kinship, China’s comprehensive packages of assistance, investment, professional training, and doctors dispatched throughout Africa demonstrate a fraternal spirit of “doing what it can,” as opposed to the Western-style economic “shock therapy.” China has canceled most African nations’ debts, provided soft loans, and increased imports from Africa by a factor of ten, moves that compete with and undermine Western aid policies that are increasingly perceived as ineffective.


pages: 868 words: 147,152

How Asia Works by Joe Studwell

affirmative action, anti-communist, Asian financial crisis, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collective bargaining, crony capitalism, cross-subsidies, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, failed state, financial deregulation, financial repression, Gini coefficient, glass ceiling, income inequality, income per capita, industrial robot, Joseph Schumpeter, Kenneth Arrow, land reform, land tenure, large denomination, liberal capitalism, market fragmentation, 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, urban sprawl, Washington Consensus, working-age population

Indeed, the disciplinary challenge becomes more arduous as deregulation proceeds, especially in the financial sector. The real problem is not one of state discipline or no state discipline, but one of the timing of the transition from developmental infant industry policies to policies which stress instead the interests of small businesses, consumers and passive investors. It is clearly possible for states to wait too long before they begin to unpick industrial policy and move to a more open economy. Countries such as Japan in Asia, or Italy in Europe, are the developmental equivalent of adults who refuse to leave home, preferring to stay in their bedrooms rather than confront the next stage of life – or the next stretch of the river, if we switch to the Japanese metaphor. These ‘big babies’, however, are the less significant issue. Much more striking is that the world is teeming with what can be described as developmental children who have been cast out on to the street at a young age and told to get a job.


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

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

The constituent nations of the u ­ nion would bear all the outward marks of sovereignty, yet this sovereignty would be ornamental, undermined wholly by the authority of the central government. A visitor to the territory, though, would see only the surface and not the under­lying economic ­union. “He ­will not see the EDU,” Mises wrote, “he ­w ill not have the opportunity to meet the agents of the EDU.”100 Consistent with the idea of an invisible realm of the economic discussed in Chapter 2, the government of the open economy would remain hidden from the public eye. Only the colorful—­and powerless—­ representatives of national policy would be seen. A double government would serve as a model of supranational federation. That ­there would be f­ ree trade and f­ ree movement of l­abor overseen by a strong central state was primary, allowing for a shifting landscape of decentralized national and cultural institutions that would remain secondary.


pages: 475 words: 155,554

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

Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, British Empire, capital controls, carbon footprint, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, crony capitalism, dark matter, deindustrialization, Deng Xiaoping, disintermediation, energy security, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, financial repression, floating exchange rates, forensic accounting, forward guidance, full employment, G4S, ghettoisation, global rebalancing, global reserve currency, hiring and firing, inflation targeting, Irish property bubble, Just-in-time delivery, labour market flexibility, light touch regulation, London Whale, Long Term Capital Management, margin call, market clearing, megacity, Mikhail Gorbachev, mini-job, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, North Sea oil, Northern Rock, offshore financial centre, open economy, paradox of thrift, Pearl River Delta, pension reform, price mechanism, price stability, profit motive, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, reshoring, Right to Buy, rising living standards, Ronald Reagan, savings glut, shareholder value, sovereign wealth fund, The Chicago School, the payments system, too big to fail, trade route, transaction costs, two tier labour market, unorthodox policies, uranium enrichment, urban planning, value at risk, WikiLeaks, working-age population, zero-sum game

The amount of capital that will potentially leave Iceland will surge once the likes of Kaupthing are unwound. The controls will be slowly lifted for individuals, but Iceland will need tools to control the potential outflow. The ultimate tool for Júlíusdóttir was to join the European Union and the Eurozone, but after losing the April 2013 general election, this seemed off the agenda. In the absence of the EU option, other economic thinkers on the island think that the way forward for a small open economy like Iceland is to copy the Asian countries. Iceland should have a managed floating exchange rate, and a large build-up of foreign-exchange reserves. ‘It has served the Asians well,’ says Guðmundsson at the Central Bank. So that’s an end to inflation targeting, and for the banks an end to the European single market. A single market without a single safety net in banking was one of the causes of Iceland’s excess.


pages: 470 words: 148,730

Good Economics for Hard Times: Better Answers to Our Biggest Problems by Abhijit V. Banerjee, Esther Duflo

"Robert Solow", 3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, basic income, Bernie Sanders, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, charter city, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, endowment effect, energy transition, Erik Brynjolfsson, experimental economics, experimental subject, facts on the ground, fear of failure, financial innovation, George Akerlof, high net worth, immigration reform, income inequality, Indoor air pollution, industrial cluster, industrial robot, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jean Tirole, Jeff Bezos, job automation, Joseph Schumpeter, labor-force participation, land reform, loss aversion, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, Network effects, new economy, New Urbanism, non-tariff barriers, obamacare, offshore financial centre, open economy, Paul Samuelson, place-making, price stability, profit maximization, purchasing power parity, race to the bottom, RAND corporation, randomized controlled trial, Richard Thaler, ride hailing / ride sharing, Robert Gordon, Ronald Reagan, school choice, Second Machine Age, secular stagnation, self-driving car, shareholder value, short selling, Silicon Valley, smart meter, social graph, spinning jenny, Steve Jobs, technology bubble, The Chicago School, The Future of Employment, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, trickle-down economics, universal basic income, urban sprawl, very high income, War on Poverty, women in the workforce, working-age population, Y2K

The US economy grew 2.3 percent in 2017,61 so one year of decent growth could pay for sending the US economy into complete autarky, in perpetuity! Did they get something wrong in their calculations? One can argue with many of the details, but the order of magnitude has to be right. Simply put, despite its openness to trade, the US import share (8 percent) is one of the lowest in the world.62 So the gains from international trade to the United States cannot be that large. Belgium, a small open economy, has an import share of above 30 percent, so there trade matters much more. This is not so surprising. The US economy is very large and very diverse, and therefore capable of producing much of what is consumed there. Moreover, a lot of consumption is of services (everything from banking to house cleaning) not typically traded internationally (yet). Even the consumption of manufactured goods involves a significant share of locally produced services.


The New Map: Energy, Climate, and the Clash of Nations by Daniel Yergin

3D printing, 9 dash line, activist fund / activist shareholder / activist investor, addicted to oil, Admiral Zheng, Albert Einstein, American energy revolution, Asian financial crisis, autonomous vehicles, Ayatollah Khomeini, Bakken shale, Bernie Sanders, BRICs, British Empire, coronavirus, COVID-19, Covid-19, decarbonisation, Deng Xiaoping, disruptive innovation, distributed generation, Donald Trump, Edward Snowden, Elon Musk, energy security, energy transition, failed state, gig economy, global pandemic, global supply chain, hydraulic fracturing, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), inventory management, James Watt: steam engine, Kickstarter, LNG terminal, Lyft, Malacca Straits, Malcom McLean invented shipping containers, Masdar, mass incarceration, megacity, Mikhail Gorbachev, mutually assured destruction, new economy, off grid, oil rush, oil shale / tar sands, oil shock, open economy, paypal mafia, peak oil, pension reform, price mechanism, purchasing power parity, RAND corporation, rent-seeking, ride hailing / ride sharing, Ronald Reagan, self-driving car, Silicon Valley, smart cities, South China Sea, sovereign wealth fund, supply-chain management, trade route, Travis Kalanick, Uber and Lyft, uber lyft, ubercab, UNCLOS, UNCLOS, uranium enrichment, women in the workforce

Interview with Bilahari Kausikan. 3. Xi Jinping, “China-US Ties,” China Daily, September 24, 2015. Xi Jinping, The Governance of China (Beijing: Foreign Language Press, 2014), pp. 479–80. 4. Xi Jinping, “Achieving Rejuvenation Is the Dream of the Chinese People,” Governance of China, pp. 37–39; “Xi Pledges Great Renewal of Chinese Nation,” People’s Daily, November 30, 2012; Edward Wong, “Signals of a More Open Economy in China,” New York Times, December 9, 2012. 5. Elizabeth C. Economy, The Third Revolution: Xi Jinping and the New Chinese State (New York: Oxford University Press, 2018); Xi Jinping, Speech, at the National People’s Congress, China Daily, March 22, 2018; “Xi Jinping Promises More Assertive Chinese Foreign Policy,” Financial Times, March 20, 2018 (“east wind”). 6. “‘Leave Immediately’: US Navy Plane Warned over South China Sea,” CNN, August 24, 2018, https://www.stltoday.com/news/world/leave-immediately-us-navy-plane-warned-over-south-china-sea/article_fcb06c65-9775-5f07-b3d9-bfa4cea0a28d.html. 7.


pages: 780 words: 168,782

Strange Rebels: 1979 and the Birth of the 21st Century by Christian Caryl

anti-communist, Ayatollah Khomeini, Berlin Wall, Bretton Woods, British Empire, colonial rule, Deng Xiaoping, financial deregulation, financial independence, friendly fire, full employment, income inequality, industrial robot, Internet Archive, Kickstarter, land reform, land tenure, liberal capitalism, liberation theology, Mahatma Gandhi, means of production, Mikhail Gorbachev, Mohammed Bouazizi, Mont Pelerin Society, Neil Kinnock, new economy, New Urbanism, oil shock, open borders, open economy, Pearl River Delta, plutocrats, Plutocrats, price stability, rent control, road to serfdom, Ronald Reagan, single-payer health, special economic zone, The Chicago School, union organizing, upwardly mobile, Winter of Discontent, Xiaogang Anhui farmers, Yom Kippur War

All of these journeys had brought tangible benefits—including vital industrial investments from the Japanese as well as useful advice on the advantages of authoritarian capitalism from Singaporean prime minister Lee Kwan Yew. His visits to Singapore and Japan had also yielded plenty of favorable coverage in the media back home. But none of these trips had quite the impact of the one he took to America. It is one thing to hear about the advantages of an open economy; it is another to see them. Deng’s trip to the United States brought the potential benefits of modernization into the homes of ordinary Chinese. As for Deng himself, he later told his colleagues that his experiences in America had kept him awake for several nights after returning home. How could China possibly catch up?6 The triumph of Deng’s visit added to the growing political momentum in favor of change.


pages: 552 words: 168,518

MacroWikinomics: Rebooting Business and the World by Don Tapscott, Anthony D. Williams

accounting loophole / creative accounting, airport security, Andrew Keen, augmented reality, Ayatollah Khomeini, barriers to entry, Ben Horowitz, bioinformatics, Bretton Woods, business climate, business process, buy and hold, car-free, carbon footprint, Charles Lindbergh, citizen journalism, Clayton Christensen, clean water, Climategate, Climatic Research Unit, cloud computing, collaborative editing, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, commoditize, corporate governance, corporate social responsibility, creative destruction, crowdsourcing, death of newspapers, demographic transition, disruptive innovation, distributed generation, don't be evil, en.wikipedia.org, energy security, energy transition, Exxon Valdez, failed state, fault tolerance, financial innovation, Galaxy Zoo, game design, global village, Google Earth, Hans Rosling, hive mind, Home mortgage interest deduction, information asymmetry, interchangeable parts, Internet of things, invention of movable type, Isaac Newton, James Watt: steam engine, Jaron Lanier, jimmy wales, Joseph Schumpeter, Julian Assange, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Marc Andreessen, Marshall McLuhan, mass immigration, medical bankruptcy, megacity, mortgage tax deduction, Netflix Prize, new economy, Nicholas Carr, oil shock, old-boy network, online collectivism, open borders, open economy, pattern recognition, peer-to-peer lending, personalized medicine, Ray Kurzweil, RFID, ride hailing / ride sharing, Ronald Reagan, Rubik’s Cube, scientific mainstream, shareholder value, Silicon Valley, Skype, smart grid, smart meter, social graph, social web, software patent, Steve Jobs, text mining, the scientific method, The Wisdom of Crowds, transaction costs, transfer pricing, University of East Anglia, urban sprawl, value at risk, WikiLeaks, X Prize, young professional, Zipcar

Some companies will argue that it is not their responsibility or indeed their prerogative to meddle in the domestic affairs of sovereign nations. To be sure, bad things can happen when powerful companies have too much influence over the rules or rulers that govern their conduct. But if done transparently and in partnership with other legitimate bodies, a principled stand on the open Internet and an open economy is consistent with both Google’s mission and its business objectives. After all, one global open Internet is a much more fertile domain for Google’s services than one balkanized into regional subnets, where only some people get access to all of the world’s online information. If other companies were to join in the fight for freedom, perhaps this reality could materialize more quickly. The Global Network Initiative, for example, was founded by Google, Yahoo!


pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

Asian financial crisis, asset allocation, Berlin Wall, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, information asymmetry, intangible asset, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, Paul Samuelson, quantitative trading / quantitative finance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, selection bias, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, stocks for the long run, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve

As we have argued before in this chapter, the magnitude of such indirect effects can be very significant and actually drive the accelerated growth of the economy. This can thus overwhelm any direct effect that population structure may have on asset returns. Third, the possible dependence between asset returns and demographic structure may be weakened by the increasing integration of world capital markets. For open economies with significant foreign investments, it is the global demographic structure that should matter. Finally, empirical data suggests that assets are sold much more slowly during retirement years than they are accumulated during working years. While not leading to a systematic meltdown, the stability of the markets and their susceptibility to external shocks may be significantly modified by the retirement of Baby Boomers.


pages: 710 words: 164,527

The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steil

activist fund / activist shareholder / activist investor, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, business cycle, capital controls, Charles Lindbergh, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, lateral thinking, margin call, means of production, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, open economy, Paul Samuelson, Potemkin village, price mechanism, price stability, psychological pricing, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, The Great Moderation, the market place, trade liberalization, Works Progress Administration

Say, Jean-Baptiste (1767–1832). French economist. Best known for “Say’s Law,” an element of classical economic thinking that Keynes sought to demolish in his General Theory. Schacht, Hjalmar (1877–1970). German banker. President of the Reichsbank, 1926–30; Reich minister of economics, 1934–37. Famous for creating the “Schachtian” system of national economic management. Transformed Germany from an open economy integrated with the West to a closed, autarkic one, imposing strict import controls and conducting foreign trade bilaterally on a barter basis. Schumpeter, Joseph (1883–1950). Austrian-born American economist and political scientist. Famous for his focus on innovation and entrepreneurs as the critical drivers of the capitalist economic system. Was highly critical of Keynes’s methods and “stagnationism.”


pages: 592 words: 161,798

The Future of War by Lawrence Freedman

Albert Einstein, autonomous vehicles, Berlin Wall, Black Swan, British Empire, colonial rule, conceptual framework, crowdsourcing, cuban missile crisis, currency manipulation / currency intervention, Donald Trump, drone strike, en.wikipedia.org, energy security, Ernest Rutherford, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global village, Google Glasses, Intergovernmental Panel on Climate Change (IPCC), John Markoff, long peace, megacity, Mikhail Gorbachev, moral hazard, mutually assured destruction, New Journalism, Norbert Wiener, open economy, pattern recognition, Peace of Westphalia, RAND corporation, Ronald Reagan, South China Sea, speech recognition, Steven Pinker, Stuxnet, the scientific method, uranium enrichment, urban sprawl, Valery Gerasimov, WikiLeaks, zero day

At the heart of the issue was the interaction between social and economic developments with political choices, which could be egregious or quixotic, as well as perfectly rational. THE DEMOCRATIC PEACE THEORY WAS ESSENTIALLY A GENERALISATION from the post-1945 experience of North America and Western Europe. A mutually reinforcing set of relationships developed among countries embracing liberal democracy, and open economies. The most remarkable example of this determination to break away from the bad habits of the past came when France and Germany, along with Italy, Belgium, the Netherlands, and Luxembourg formed the original Coal and Steel Community, which grew into a full-fledged customs union and eventually acquired a wide range of competencies and many more members to become the European Union. Whatever else it achieved it gradually calmed one of the most destructive relationships in European history.


pages: 726 words: 172,988

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It by Anat Admati, Martin Hellwig

Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bonus culture, break the buck, business cycle, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversified portfolio, en.wikipedia.org, Exxon Valdez, financial deregulation, financial innovation, financial intermediation, fixed income, George Akerlof, Growth in a Time of Debt, income inequality, information asymmetry, invisible hand, Jean Tirole, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Larry Wall, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, margin call, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nick Leeson, Northern Rock, open economy, peer-to-peer lending, regulatory arbitrage, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Satyajit Das, shareholder value, sovereign wealth fund, technology bubble, The Market for Lemons, the payments system, too big to fail, Upton Sinclair, Yogi Berra

Hanson, Samuel, Anil K. Kashyap, and Jeremy C. Stein. 2011. “A Macroprudential Approach to Financial Regulation.” Journal of Economic Perspectives 25: (1): 3–28. Harding, John P., Eric Rosenblatt, and Vincent W. Yao. 2009. “The Contagion Effect of Foreclosed Properties.” Journal of Urban Economics 66 (3): 164–178. Harrison, Ian. 2004. “Banks, Capital and Regulation: Towards an Optimal Capital Regime for a Small Open Economy.” Working paper. Reserve Bank of New Zealand, Wellington. Hayes, Christopher. 2012. The Twilight of the Elites: America after Meritocracy. New York: Crown. Healy, Paul M., and Krishna G. Palepu. 2003. “The Fall of Enron.” Journal of Economic Perspectives 17 (2): 3–26. Hellwig, Martin F. 1991. “Banking, Financial Intermediation, and Corporate Finance.” In European Financial Integration, ed.


pages: 586 words: 160,321

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

Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, battle of ideas, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, currency peg, debt deflation, Deng Xiaoping, different worldview, diversification, Donald Trump, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, financial deregulation, financial repression, fixed income, Flash crash, floating exchange rates, full employment, German hyperinflation, global reserve currency, income inequality, inflation targeting, information asymmetry, Irish property bubble, Jean Tirole, Kenneth Rogoff, Martin Wolf, mittelstand, money market fund, Mont Pelerin Society, moral hazard, negative equity, Neil Kinnock, new economy, Northern Rock, obamacare, offshore financial centre, open economy, paradox of thrift, pension reform, price stability, principal–agent problem, quantitative easing, race to the bottom, random walk, regulatory arbitrage, rent-seeking, reserve currency, road to serfdom, secular stagnation, short selling, Silicon Valley, South China Sea, special drawing rights, the payments system, too big to fail, union organizing, unorthodox policies, Washington Consensus, WikiLeaks, yield curve

However, fiscal stimulus by a country that is very open to trade might spill over to other countries rather than help the country itself. In other words, the government fiscal spending multiplier with respect to its own domestic economy output falls as an economy’s propensity to import rises. This dimension is also important for understanding the debate surrounding German stimulus. Germany as a very open economy would benefit less from a domestic demand stimulus, not only because its output gap is close to zero but also because a fiscal stimulus would spill over to its neighbors. The German reluctance to start a stimulus program—and the periphery’s interest in such a demand boost—is thus immediately understandable from simple self-interest. This provides a revealing example of how deeper underlying philosophical motivations align with short-term self-interest.


The Man Behind the Microchip: Robert Noyce and the Invention of Silicon Valley by Leslie Berlin

Apple II, Bob Noyce, business cycle, collective bargaining, computer age, George Gilder, informal economy, John Markoff, Kickstarter, laissez-faire capitalism, low skilled workers, means of production, Menlo Park, Murray Gell-Mann, open economy, Richard Feynman, Ronald Reagan, Sand Hill Road, Silicon Valley, Silicon Valley startup, Steve Jobs, Steve Wozniak, union organizing, War on Poverty, women in the workforce, Yom Kippur War

Japanese beating the heck: Ann Bowers, interview by author, 16 Aug. 2004. 20. 7,200 jobs, annual losses: Noyce, “Testimony on National Technology Development and Utilization Provided to the Technology Policy Task Force Committee on Science, Space, and Technology, U.S. House of Representatives,” 25 Sept. 1987. How to shut down Intel: Ann Bowers, interview by author, 16 Aug. 2004. Japanese Buy Intel: Inteleads, 1 April 1987, IA. It’s hard for someone: Daryl Hatano to author, 2 Feb. 1998. 21. Decline of empire: Noyce, Competing in an Open Economy, Keynote Address UCB [University of California at Berkeley], 22 Jan. 1987, IA. Death spiral: Noyce quoted in Evelyn Richards. “How America Lost the Edge on the World Trade Battlefield,” San Jose Mercury News, 20 April 1986. What would you call Detroit: Noyce quoted in Evelyn Richards, “Two Valley Visionaries Don’t See Same Horizon,” San Jose Mercury News, 20 Jan. 1986. Job loss figure: David Sylvester, “2017, A Silicon Valley Odyssey,” West Magazine (Sunday supplement to the San Jose Mercury News), 7 June 1987, 18.


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

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

Basingstoke and London: Macmillan, pp. 81–114. Lenin, V. I. (1970 (1917)), Imperialism, the Highest Stage of Capitalism. In: V. I. Lenin, Selected Works (I). Moscow: Progress Publishers, pp. 667–768. Leontief, W. (1952), Machines and man. Scientific American, 187 (3), pp. 150–60. Leontief, W. (1979), Is technological unemployment inevitable? Challenge, 22 (4), pp. 48–50. Lindbeck, A. (1976), Stabilization Policy in Open Economies with Endogenous Politicians. Seminar Paper 54, Institute for International Economic Studies, University of Stockholm. List, F. (1909 (1841)), The National System of Political Economy. London: Longman, Green & Co. Lo, C. (2015). China’s Impossible Trinity: The Structural Challenges to the ‘Chinese Dream’. Basingstoke: Palgrave Macmillan. 445 Bi bl io g r a p h y Lo, C. (2018), Implications of Sino-US trade frictions.