positional goods

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The Darwin Economy: Liberty, Competition, and the Common Good by Robert H. Frank

carbon footprint, carried interest, Cass Sunstein, clean water, congestion charging, corporate governance, deliberate practice, full employment, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Paul Samuelson, plutocrats, Plutocrats, positional goods, profit motive, Ralph Nader, rent control, Richard Thaler, Ronald Coase, Ronald Reagan, sealed-bid auction, smart grid, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, trickle-down economics, ultimatum game, winner-take-all economy

.: on cap-andtrade system, 181; on climate change, 4; on IRS budget, 3 234 INDEX housing: context in evaluation of, 68–72; in economic downturn of 2008, 53; expenditure cascades in, 61–62, 77–78, 80; under progressive consumption tax, 77, 78–79 human motivation: culture in, 24; economic models of, 24–25; evolution of brain and, 24; relative position in, 25–26 Hurricane Katrina, 57 IBM, 144–45, 153 Iceland, lack of corruption in, 56 ideology, critical thinking impaired by, 35 ignoramitocracy, 3, 4 incentive to work, and income tax rates, 158–60 income: absolute versus relative, 23, 44; and happiness, 27; misconceptions in invisiblehand theory about, 23, 44; myth of ownership of, 120–21; per capita, and government corruption, 56–57; as positional good, 73–74; in winner-take-all labor markets, 148–55, 166 income growth: of CEOs, 1, 61, 149–55; fundamental shift in pattern of, 61–62; after World War II, 1, 61 income inequality: in cost-benefit analysis, 100–106; and economic growth, correlation between, 159–60; in efficient provision of public goods, 123–26; and expenditure cascades, 61–62; in public policy decisions, 102–4, 111–12; rise of, in U.S., 61; and willingness to pay, 101–11, 198 income tax, 119–39; consumption tax as alternative to, 76–77, 80; consumption tax as supplement to, 82; in efficient provision of public goods, 123–26; emotional reactions to, 141–42; and incentive to work, 158–60; libertarian objections to, 6, 119–21, 123, 157; marginal rates for, 77; morality of, 119–21; in myth of ownership, 120–21; perception of overtaxation, 141–42; versus progressive consumption tax, efficiency of, 81, 167–68 income tax, progressive: efficient provision of public goods through, 124–26; justifications for, 124–31; libertarian rationale for, 126–31, 137–38; mindless slogans opposing, 169; and rank, 126–31 income tax cuts: under Bush (George W.), 3, 119, 155, 170; as inhibitor of economic growth, 162–64; temporary, effectiveness of, 83; trickle-down theory of, 157–62 income transfers: in efficient public policies, 104, 111–18, 123–26; libertarian objections to, 104, 111, 117, 123–26 indirect harm, 11–12; in Coase framework, 98; libertarians on, 11–12, 44; measurement of, 12; taxes on activities causing, 187 individual rights.

See also specific types leisure time, versus income, 73 Leopold’s record store, 32, 34, 35 liability, for harmful activities, 91, 92 liberals: on cause of market failures, 11, 18–19, 30, 84, 138; hostility toward cost-benefit analysis among, 110–11; on progressive income tax, 126 235 libertarian(s): on acceptable reasons to constrain freedom, 10–11, 195; antitax slogans of, 168–71, 194–95; basic assumptions of, 11, 22–23, 211; on before- versus after-tax incomes, 154–55; Coase embraced by, 86, 94, 98–99, 178; as consequentialists versus deontologists, 94; Darwin’s view of competition and, 17, 22, 211–12; expectations regarding outcomes in free market, 22–23; flaws in framework of, 11, 23; on government as source of problems, 4–5; on indirect harm, 11–12, 44; influence on public discourse, 4–5; on Mill’s harm principle, 10, 98; on progressive income tax, 125–31, 137–38; rational, definition of, 195, 207; reasons for compromise by, 202–11; in society-formation example, 127–31, 199–207; on taxes as social engineering, 13–14, 122–23; on taxes as theft, 6, 119, 154, 202; type of government preferred by, 22, 23, 195; value of autonomy to, 194–95 libertarian objections: to helmet rules, 9, 189–92; to income taxes, 6, 119–21, 123, 157; to income transfers, 104, 111, 117, 123–26; to pollution tax, 177–79; to progressive consumption tax, 83; to regulation of harmful activities, 86; to relative position, role of, 29, 212–13; to workplace safety regulations, 41, 43, 206–7 Libertarian Party, 4 liberty. See freedom loans: cost-benefit test for, 161; to labor-managed firms, 32–34 Locke, John, The Second Treatise of Civil Government, 119 Lockheed, 58–59 London, congestion fees in, 182 luck, 140–56; in antitax slogans, 169–70; denial of role of, 142–44, 146–48; in environmental and genetic factors, 146–47; of Gates (Bill), 144–45; in sports, 145–46, 156; strengthening of relationship between success and, 154 luxuries: identification of goods as, 76–77; as positional goods, 76; progressive consumption tax on, 76–77 majority rights, versus minority rights, 207–11 Malthus, Thomas, 16 Mankiw, Greg, 193 236 INDEX mansions, in expenditure cascades, 61–62, 77–78.

Against the backdrop of this payoff structure, imagine two genetic variants —one that codes for a brain that cares strongly about relative position, and the other for a brain that doesn’t care at all about it. In general, caring more strongly about something inclines you to expend more mental and physical energy to acquire it. So individuals who care more about relative position would be more likely to muster the behaviors necessary to acquire and defend positions of high rank. That, in turn, would make them more likely to survive famines and marry successfully, thus increasing their genotype’s frequency in the next generation. The current environment is of course very different from the ones in which our ancestors evolved. But relative position still matters, often for purely instrumental reasons. When you go for a job interview, for example, you want to dress presentably, but the standards for looking good are almost purely relative.


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The Skeptical Economist: Revealing the Ethics Inside Economics by Jonathan Aldred

airport security, Berlin Wall, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, endogenous growth, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, greed is good, happiness index / gross national happiness, hedonic treadmill, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, longitudinal study, new economy, Pareto efficiency, pension reform, positional goods, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, spectrum auction, Thomas Bayes, trade liberalization, ultimatum game

A reduction in my relative income then implies a reduction in my opportunity to consume such goods. These are positional goods, since consumption is affected by relative position. Sir Roy Harrod, friend of Keynes and originator of the theory of economic growth, was the first to note the existence of positional goods. But Harrod did not attach much importance to his small contribution, a two-page article for a US conference, confessing later that he wrote it mainly because the conference organizers heavily subsidized his air fare to the US...30 So it was not until years later that the significance of positional goods was first appreciated, by Fred Hirsch. The essential feature of positional goods is some kind of inherent scarcity, so someone cannot ensure access to these goods simply by becoming wealthier.

The portrayal of rivalry as status-seeking or envy fits in well with the story of humanity as a crooked timber. Concern to maintain relative status or relative position shows the individual must be duped by advertising, or driven by envy or some other foolish or morally reprehensible motive. There are two distinct errors in this description: first, that concern with relative position implies the individual is ultimately motivated by envy; second, even if this is not the case, attempts to improve relative position are irrational — a futile waste of time and effort. The first error arises from interpreting rivalry as motivated by pure status-seeking alone. Other categories of positional good are ignored. Even when someone does appear to be driven by envy, the true picture may be more benign. Buying a grand and fashionable house may be less about statusseeking than a desire to live in the catchment area of a good local school.

The latest research confirms this: for almost all goods both relative and absolute levels of consumption matter, with relative consumption being the dominant influence for some goods, and absolute consumption for others.27 But what makes relative position more important for some goods than others? Since concerns with relative position are a major factor in preventing growth bringing extra happiness, explaining why relative position matters brings us to the heart of understanding why growth does not buy happiness. And it raises the possibility of switching consumption towards goods where relative position matters less, so that growth can bring increases in happiness after all. There are several interrelated explanations of why relative position matters more for some goods. One explanation is status-seeking and conspicuous consumption. This idea has become so prominent that many seem to think that ‘concern with relative position or relative consumption’ is just a long-winded version of ‘status-seeking’.


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

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

Spending on other goods, such as fine jewelry, foreign travel, and vacation real estate, goes up more than in proportion to the rise in income. Positional goods are in the latter category. Again, these are goods whose value depends in large measure on how they compare with 58 The \Vinner-Take-All Society goods consumed by others-in brief, goods that confer status. Status matters in both rich and poor societies, but people devote a larger share of their incomes to positional goods in rich societies. As we noted in the last chapter, demands for positional goods give rise to winner-take-all markets because only a limited number of producers can credibly claim to have the best offering in any category. So as in­ come grows and, with it, the demand for positional goods, the payoff to supplying these goods will also grow. Reinforcing this effect have been signjficant changes in the distribu­ tion of income.

Political pressure has been mounting to control these costs, but unless we understand the forces that give rise to them, we risk costly errors. Excellence in higher education is a critical source of economic advantage, and if costs are to be cut, it must be done in a way that does not compromise this advantage. The winner-take-all 14 The Winner-Take-All Society perspective suggests a number of practical policy changes that might serve this goal. Contests for Relative Position in Everyday Life The winner-take-all markets we have mentioned so far are high-visibil­ ity arenas in which people, many with celebrity status, compete for enormous financial rewards. These contests affect the lives of ordinary citizens to the extent that they mold our system of higher education, alter the distribution of income, increase the prices of what we buy, and so on. But there are also many other arenas in which ordinary citizens are themselves confronted directly with rewards that depend on relative, rather than absolute, performance.

Management's implicit tolerance of production quotas makes much more sense if we interpret such agreements as devices whereby workers attempt to curb positional arms races with one another. The difficulty is that if promotion depends in part on relative productivity, the conditions are ripe for a mutually offsetting effort pattern. Each worker attempts to produce more in the hope of gaining ground rela­ tive to the others, yet when all workers double their efforts, relative position remains largely the same. From a collective vantage point, the extra output summoned by unregulated piece rates is not suffi­ cient to compensate for the extra effort required to produce it. When workers care about relative income, social enforcement of informal production quotas may bring private incentives more in line with col­ lective interests. We also see social norms against excess effort in the world of edu­ cation.


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

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

Does the default assumption in the textbook of complete and perfect information divert attention away from these problems? If so, in whose interest? 86 2.3 Preferences and relative position Advertising and other actions by producers are not the only way in which people’s tastes are shaped within the economic system itself. We are, after all, social animals: we see what others have and that influences our own wants and the utility we get from the things we have. According to evolutionary psychology, the way we think about our place in society has been shaped, like all the other processes of our minds, by evolutionary forces (Pinker 2002). A concern for status and security is central to the individual’s ability to survive, to find mates and to reproduce. We have an innate concern about our relative position in our ‘reference group’, those people with whom we compare ourselves (Frank 1999; Marmot 2004).

If there is a significant trade-off, why haven’t the high-tax welfare states in Europe experienced low growth and low average living standards compared with lower-tax countries? 2.3 The pervasive costs of inequality ‘Social injustice is killing people on a grand scale.’ Commission on the Social Determinants of Health, World Health Organization (CSDH 2008: 26) We’ve seen earlier, particularly in Chapter 4, evidence of the importance of relative position for individuals’ feelings of well-being. But the focus of textbook economics is on the individual removed from social context. As a result, it largely ignores the question of individuals’ relative position in society except for admitting its existence briefly by defining poverty as a relative phenomenon. Yet a fundamental feature of human (and most other primate) societies is their social hierarchy and the acute awareness everyone has of their place in it.14 The social gradient of health Those at the top of the hierarchy experience not only feelings of greater well-being (as we saw in Chapter 4), but also significantly better health than those at the bottom.

The omission of community According to the standard account, expanding the realm of the market expands the possibilities for specialization and trade, expands freedom of choice, 251 11  |  Conclusion then directed to the theory of exchange and price. It concludes once the student has been successfully drilled in “the theory of the market”.’ © Andy Singer and necessarily makes people better off. We have noted repeatedly that it doesn’t necessarily make everyone better off, creating distributional problems that may be compounded when people care about relative position. But there is another issue. Even if everyone were absolutely better off, and even if no one cared about their relative position, there is still a potential problem: markets often undermine community. Marglin (2008) asks what limits should be placed on markets for the sake of community. The greater the role for markets, the more life is commercialized; personal relationships are replaced by anonymous market transactions. Sometimes this not only damages the community, it can even backfire on the economy.


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Elsewhere, U.S.A: How We Got From the Company Man, Family Dinners, and the Affluent Society to the Home Office, BlackBerry Moms,and Economic Anxiety by Dalton Conley

assortative mating, call centre, clean water, commoditize, dematerialisation, demographic transition, Edward Glaeser, extreme commuting, feminist movement, financial independence, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, Home mortgage interest deduction, income inequality, informal economy, Jane Jacobs, Joan Didion, John Maynard Keynes: Economic Possibilities for our Grandchildren, knowledge economy, knowledge worker, labor-force participation, late capitalism, low skilled workers, manufacturing employment, mass immigration, McMansion, mortgage tax deduction, new economy, off grid, oil shock, PageRank, Ponzi scheme, positional goods, post-industrial society, post-materialism, principal–agent problem, recommendation engine, Richard Florida, rolodex, Ronald Reagan, Silicon Valley, Skype, statistical model, The Death and Life of Great American Cities, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, women in the workforce, Yom Kippur War

As long as we have a constant flow of low-wage labor—legal or illegal—coming in from south of the border, then more native-born Americans can afford gardeners, nannies, or personal trainers. Third, we can live in a state of constant flux with respect to relative position, as long as we have a forum for its expression other than human-to-human services. In other words, we can—like an expansionary sports league—imbue more and more aspects of life with a positional element. So things—like meals—that once were produced and consumed in order to satisfy a basic individual human need can sometimes become positional goods, too. One consequence is the increasing role that material goods play as positional goods—something Hirsch didn’t consider. Mrs. and Mr. Elsewhere absolutely have to have the latest iPhone, McMansion, or SUV There’s nothing inherent about an iPhone that makes it a positional good. Some (but not all) of its features are material improvements on previous models.

However, to the extent that the pleasure from the iPhone or the Hummer or the $5,000 gas grill (a favorite example of the economist Robert Frank in his related book, Luxury Fever) stems from the fact that it is better—or at least more costly and thus rarer—than the grills of one’s neighbors, it has become a status or positional good. It is through this magical endowment of material objects with the powers of relative position that we think we have solved the problems inherent in mass consumption of positional goods—if only fleetingly Never mind the credit card bill that is to come: For now, the magical object has done its job, and we are satisfied (if not quite happy, since the actuality of the thing may be disappointing compared to the idea of owning it in the abstract). So, when people talk about the dematerialization of the economy, what they should be really calling it is a de-necessitation of the economy, as in a deemphasis on basic, physical necessities; or, alternatively, a luxurification or positionification.1∗ This view of the role of goods and services in the new economy stands in sharp contrast to that offered by folks like Chris Anderson, for example, in The Long Tail: Why the Future of Busi- ness Is Selling Less of More.

Ronald Inglehart called this “post-materialism,” in his 1997 book, The Silent Revolution.1 The critical issue is that an increasingly larger share of the goods or services we produce and consume in a post-material economy are what Hirsch termed positional goods. This type of good is distinct in that its value depends on the fact that others don’t consume it.2 Certain goods are inherently positional: A penthouse apartment is, by definition, a positional good since there can be only one top floor per building. So is a beachfront property, given the limited supply of coastline. Others depend on group social dynamics to attain positional status. Platform shoes at a crowded rally are a positional good, for example, to the extent that they serve the purpose of giving us a better view of the stage. But if everyone wore them, the initial purpose would be defeated. (They still might look cool, of course.) A gun, in a sense, is a positional good, too. That is, a firearm is most valuable when nobody else has one.


pages: 453 words: 111,010

Licence to be Bad by Jonathan Aldred

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

They spend much more on educational services (elite schools, elite postgraduate degrees) which confer advantage over others in the job market – because they are scarce. Economists call all these things positional goods, because buying them depends on outbidding other people for the limited supply: it depends not on your absolute income, but on your relative position in the income distribution. The upshot is that middle-class dissatisfaction about those with higher incomes need not be due to envy, as some commentators suggest, but to legitimate positional concerns, such as falling behind in the competition to get your child into a better school. Yes, there is a kind of irrationality here, but it is collective rather than individual (it’s the Prisoner’s Dilemma of Chapter 2). When you are at a sports match, standing up to get a better view – to improve your relative position – is individually rational, but soon everyone else stands up, too, and we are all worse off.

If everyone then pays more tax, the opposite happens. Post-tax incomes fall, who gets which house remains unchanged, we all sit down.47 Paying more tax, then, need not imply that your material living standards decline. If others face the same tax rise too, then your relative position will be unchanged, and so, too, your access to sought-after positional goods.48 Of course, there are caveats and exceptions to this argument. Clearly, it does not apply to tax rises on poorer members of society, who will be spending a large proportion of their income on necessities rather than positional goods. On the other hand, tax rises on the wealthy can do more than merely leave living standards unchanged, because my argument so far has ignored the benefits of increased government spending. Notably, many familiar economic arguments ignore these benefits too: when income taxes rise, textbook tax economics holds that the benefit from working falls, because post-tax income does.

., and Fazzari, Steven M. (2016), ‘Inequality, the Great Recession and Slow Recovery’, Cambridge Journal of Economics, 40/2, 373–99; Stockhammer, Engelbert (2015), ‘Rising Inequality as a Cause of the Present Crisis’, Cambridge Journal of Economics, 39/3, 935–58; Wisman, Jon D. (2013), ‘Wage Stagnation, Rising Inequality and the Financial Crisis of 2008’, Cambridge Journal of Economics, 37/4, 921–45. 46 Atkinson; Piketty, T. (2014), Capital in the Twenty-first Century (Cambridge: Harvard University Press); Stiglitz. 47 This is a simplified summary. People enter the market with different housing assets (some inherit a house) and some prices rise much faster than others, so there can be relative winners and losers from rising average house prices. But these complications do not undermine the main argument. 48 The price of some positional goods (such as desirable houses) will fall; in other cases, where prices reflect international demand (sports cars), the price may not fall but living standards are unlikely to be much affected from having to scale back from, say, a Ferrari Berlinetta to a Porsche 911 Turbo at half the price. See below. 49 Frank, 91. 50 For the UK, see Atkinson, Inequality, 237–9. For the US, see Stiglitz, 336–55. 51 Interview with Rupert Cornwell, Toronto Globe and Mail, 6 July 2002. 52 For more discussion and references see Mcquaig and Brooks, 121–3. 10.


pages: 309 words: 91,581

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

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

That’s typically why they come. Anecdotal evidence suggests, however, that immigrants’ relative position in the United States is often lower than their parents’ relative position in the country of origin. According to Julia B. Isaacs of Washington’s Brookings Institution, 67 percent of us have more income, after inflation, than our parents had (absolute mobility), and about a third of us end up more prosperous relative to our fellow Americans than our parents were (relative mobility).5 You more likely than not will outearn your parents. And you’ve got a one in three shot at making more money compared to your contemporaries than your parents made compared to theirs. But the greater likelihood is that your relative position will be merely as good as, or possibly worse than, your parents’. Intergenerational upward relative mobility from one generation to the next certainly occurs in the United States.

How many white children growing up in prosperous households can rationally aspire to the same fate? How many children, black or white, can match both Obama’s talents and Obama’s luck? (Luck is another notable factor that put Obama in the White House, to at least the same extent as it did for his forty-three predecessors.) Perhaps there is a benefit to lacking a realistic understanding about your odds of improving your relative position in society. Excessive optimism is, James Fallows argues in his 1989 book More Like Us: Making America Great Again, a major driver of the U.S. economy. Paraphrasing the Harvard psychologist David McClelland’s 1961 book The Achieving Society, Fallows writes that a society in which “people routinely overestimated their chances for success,” in which entrepreneurs “launched ventures that by rational standards were likely to fail,” was a society that, collectively and over the long term, would invent more, innovate more, and succeed more.

It found that about half of those in the bottom income quintile in 1996 moved to a higher quintile by 2005. But as explained in chapter 2, this isn’t a good way to measure income mobility, because people’s incomes follow a predictable pattern over time: The more work experience you acquire, the better you tend to get paid. That isn’t mobility. It’s life. A better measure—one closer to the way most of us actually think about upward mobility—is to compare one generation’s relative position in the income distribution with the next generation’s. Did the barber’s son become a dentist, or did he become a janitor? It’s here that the United States now falls behind most of western Europe. See “Income Mobility in the U.S. from 1996 to 2005,” U.S. Department of the Treasury, Nov. 13, 2007, at http://www.treasury.gov/resource-center/tax-policy/Documents/incomemobilitystudy03-08revise.pdf. 4.


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Dream Hoarders: How the American Upper Middle Class Is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It by Richard V. Reeves

affirmative action, Affordable Care Act / Obamacare, assortative mating, Bernie Sanders, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, circulation of elites, cognitive dissonance, desegregation, Donald Trump, Downton Abbey, full employment, ghettoisation, glass ceiling, helicopter parent, Home mortgage interest deduction, housing crisis, income inequality, knowledge economy, land value tax, longitudinal study, mortgage tax deduction, obamacare, Occupy movement, plutocrats, Plutocrats, positional goods, race to the bottom, randomized controlled trial, unpaid internship, upwardly mobile, War on Poverty, We are the 99%, working-age population, zero-sum game

Respondents were asked “If you were asked to use one of these commonly used names for the social classes, which would you say you belong in? The upper class, upper-middle class, middle class, lower-middle class, or lower class?” Before diving into some of the data, a big caveat: America’s growing class division does not mean that categorical inequalities on the basis of race, ethnicity, and gender have disappeared. If anything, the relative position of black Americans has worsened in recent years, as I have argued elsewhere.6 There are also race gaps in access to some of the mechanisms of class reproduction; class and race divisions amplify each other. The gender gap is far from being closed—although perhaps our biggest gender challenge now is the need for men to adapt.7 But while the barriers of race, sexuality, and gender remain in place, they have been lowered following successive victories on the identity politics front.

“It would be a little odd, perhaps even a little creepy, if the ultimate aim of her endeavors were that her child is better off than others.”7 I think this is too harsh. In a society with a largely open, competitive labor market, it is not “creepy” to want your children to end up higher on the earnings ladder than others. Not only will this bring them a higher income, and all the accompanying choice and security, it is also likely to bring them safer and more interesting work. Relative position matters; it is one reason, after all, that relative mobility is of such concern to policymakers. Although I think Brighouse and Swift go too far, they are onto something important with their distinction between the kind of parental behavior that merely helps your own children and the kind that is “detrimental” to others. That’s what I call opportunity hoarding. WHAT COUNTS AS OPPORTUNITY HOARDING?

So, a good degree from a good college, is that enough? Not anymore. As overall educational levels have risen the contest has moved further up the educational ladder to the postgraduate degree. A master’s or doctorate serves two purposes. It is useful in itself, as a further top-up of human capital. But it also signals a separation from the growing herd of college graduates. The second degree is a “positional good,” valued precisely because not everybody can have one. Entry to the upper middle class now requires not one framed certificate, but two. A postgraduate degree has in fact become the most important means for transmitting status to the next generation, according to NYU economist Florencia Torche. “Intergenerational reproduction declines among college graduates,” she reports, “but reemerges among advanced degree holders, questioning the meritocratic character of labor markets for skilled workers.”43 (Well, Professor Torche, that depends on how you define “merit.”


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The AI Economy: Work, Wealth and Welfare in the Robot Age by Roger Bootle

"Robert Solow", 3D printing, agricultural Revolution, AI winter, Albert Einstein, anti-work, autonomous vehicles, basic income, Ben Bernanke: helicopter money, Bernie Sanders, blockchain, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, computer age, conceptual framework, corporate governance, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, deindustrialization, deskilling, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, facts on the ground, financial intermediation, full employment, future of work, income inequality, income per capita, industrial robot, Internet of things, invention of the wheel, Isaac Newton, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, Kevin Kelly, license plate recognition, Marc Andreessen, Mark Zuckerberg, market bubble, mega-rich, natural language processing, Network effects, new economy, Nicholas Carr, Paul Samuelson, Peter Thiel, positional goods, quantitative easing, RAND corporation, Ray Kurzweil, Richard Florida, ride hailing / ride sharing, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, Skype, social intelligence, spinning jenny, Stanislav Petrov, Stephen Hawking, Steven Pinker, technological singularity, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, universal basic income, US Airways Flight 1549, Vernor Vinge, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, wealth creators, winner-take-all economy, Y2K, Yogi Berra

Indeed, since many of them currently work decidedly short hours, quite a few might want to work more rather than less – if only the economy can generate enough employment opportunities for them. But for people in the middle and upper reaches of the income distribution in advanced countries things are quite different. For them I envisage an intermediate outcome. The competitive urge, the pursuit of power and status, and the competition for positional goods will be powerful factors for maintaining something like the current “work/life balance.” And Keynes was wrong to see work so negatively, and he underestimated the forces, many of them to do with relative position, and the search for power and status, that drive people to go on working. Equally, he massively underestimated, or even ignored, the importance of distributional factors. The fact that increased leisure needs money to be able to enjoy it to the full will pull in the same direction. But for a large number of people in Europe and North America, as well as in the prosperous parts of Asia, very long hours of work have become the expression of a social pathology.

For instance, the structure of employment benefits makes employers keener to employ one person to work overtime than to employ two people working the same number of hours. The changing sources of status In the above discussion about why people in the West have continued to work long hours, despite being much better off, I made much of the influence of relativities and considerations of power and status. Yet the drive to work coming from the pursuit of relative position, power, and status isn’t bound to be so compelling in the future. If the pursuit of relative success is a game that you do not care to play, then you can opt out of it. And in our society some people do, consciously choosing to abandon “the rat race” and thereby accepting a lower material standard of living in pursuit of greater contentment. Similarly, power is currently connected with money because of the way our society and political systems are structured.

Complete equality of outcomes would therefore be unfair. It would also be resented by most of those people who would otherwise be toward the top of the income pile. Moreover, people respond to incentives. The ability to improve one’s lot is an incentive to effort. Accordingly, a society of enforced equal outcomes for all would be poorer than a society where people could enrich themselves. And people are also to some extent motivated by relative position. Those who are ahead are motivated to stay ahead and those who are behind are motivated to catch up. So again, an equal society would be a poorer one. In addition, people have a deep-seated instinct to pass on what they have earned to their children. Stopping them from doing so would lead to unhappiness. It may also undermine motivation. More fundamentally, sometimes different life outcomes are the result of good or bad fortune, such as winning the lottery or suffering from a car accident.


pages: 241 words: 75,516

The Paradox of Choice: Why More Is Less by Barry Schwartz

accounting loophole / creative accounting, attribution theory, Atul Gawande, availability heuristic, Cass Sunstein, Daniel Kahneman / Amos Tversky, endowment effect, framing effect, hedonic treadmill, income per capita, job satisfaction, loss aversion, medical residency, mental accounting, Own Your Own Home, Pareto efficiency, positional goods, price anchoring, psychological pricing, RAND corporation, Richard Thaler, science of happiness, The Wealth of Nations by Adam Smith

For example, not everyone will be able to own a secluded acre of land at the seashore. Not everyone will have the most interesting job. Not everyone can be the boss. Not everyone can go to the best college or belong to the best country club. Not everyone can be treated by the “best” doctor in the “best” hospital. Hirsch calls goods like these positional goods, because how likely anyone is to get them depends upon his position in society. No matter how many resources a person has, if everyone else has at least as much, his chances of enjoying these positional goods are slim. Sometimes these kinds of goods are positional simply because the supply can’t be increased. Not everyone can have a van Gogh hanging in his living room. At other times, the problem is that as more consumers gain access to these goods, their value decreases due to overcrowding. The New York City area has several lovely beaches, enough to accommodate thousands.

For example, people were asked to choose between earning $50,000 a year with others earning $25,000 and earning $100,000 a year with others earning $200,000. They were asked to choose between 12 years of education (high school) when others have 8, and 16 years of education (college) when others have 20. They were asked to choose between an IQ of 110 when the IQ of others is 90 and an IQ of 130 when the IQ of others is 150. In most cases, more than half of the respondents chose the options that gave them better relative position. Better to be a big fish, earning $50,000, in a small pond than a small fish, earning $100,000, in a big one. Status, Social Comparison, and Choice CONCERN FOR STATUS IS NOTHING NEW. NONETHELESS, I BELIEVE that the problem is more acute now than in the past, and once again it comes back to having a plethora of choices. Given Frank’s “choosing the right pond” idea, what is the right pond?

Van Yperen, “The Affective Consequences of Social Comparison: Either Direction Has Its Ups and Downs,” Journal of Personality and Social Psychology, 1992, 59, 1238–1249. big fish in our own ponds R. Frank, Choosing the Right Pond (New York: Oxford University Press, 1985). See also his more recent Luxury Fever (New York: Free Press, 1999), in which he argues that much of the modern American taste for excess is driven by social comparison. better relative position S.J. Solnick and D. Hemenway, “Is More Always Better? A Survey on Positional Concerns,” Journal of Economic Behavior and Organization, 1998, 37, 373–383. explosion of telecommunications For a discussion of how modern telecommunications as well as advertising has changed the relevant comparison group for most people, see M.L. Richins, “Social Comparison, Advertising, and Consumer Discontent,” American Behavioral Scientist, 1995, 38, 593–607; and S.J.


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Human Compatible: Artificial Intelligence and the Problem of Control by Stuart Russell

3D printing, Ada Lovelace, AI winter, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Alfred Russel Wallace, Andrew Wiles, artificial general intelligence, Asilomar, Asilomar Conference on Recombinant DNA, augmented reality, autonomous vehicles, basic income, blockchain, brain emulation, Cass Sunstein, Claude Shannon: information theory, complexity theory, computer vision, connected car, crowdsourcing, Daniel Kahneman / Amos Tversky, delayed gratification, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ernest Rutherford, Flash crash, full employment, future of work, Gerolamo Cardano, ImageNet competition, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invention of the wheel, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Nash: game theory, John von Neumann, Kenneth Arrow, Kevin Kelly, Law of Accelerating Returns, Mark Zuckerberg, Nash equilibrium, Norbert Wiener, NP-complete, openstreetmap, P = NP, Pareto efficiency, Paul Samuelson, Pierre-Simon Laplace, positional goods, probability theory / Blaise Pascal / Pierre de Fermat, profit maximization, RAND corporation, random walk, Ray Kurzweil, recommendation engine, RFID, Richard Thaler, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Rodney Brooks, Second Machine Age, self-driving car, Shoshana Zuboff, Silicon Valley, smart cities, smart contracts, social intelligence, speech recognition, Stephen Hawking, Steven Pinker, superintelligent machines, Thales of Miletus, The Future of Employment, Thomas Bayes, Thorstein Veblen, transport as a service, Turing machine, Turing test, universal basic income, uranium enrichment, Von Neumann architecture, Wall-E, Watson beat the top human players on Jeopardy!, web application, zero-sum game

The economic analysis of pride and envy—particularly in the context of social status and conspicuous consumption—came to the fore in the work of the American sociologist Thorstein Veblen, whose 1899 book, The Theory of the Leisure Class, explained the toxic consequences of these attitudes.32 In 1977, the British economist Fred Hirsch published The Social Limits to Growth,33 in which he introduced the idea of positional goods. A positional good is anything—it could be a car, a house, an Olympic medal, an education, an income, or an accent—that derives its perceived value not just from its intrinsic benefits but also from its relative properties, including the properties of scarcity and being superior to someone else’s. The pursuit of positional goods, driven by pride and envy, has the character of a zero-sum game, in the sense that Alice cannot improve her relative position without worsening the relative position of Bob, and vice versa. (This doesn’t seem to prevent vast sums being squandered in this pursuit.) Positional goods seem to be ubiquitous in modern life, so machines will need to understand their overall importance in the preferences of individuals.

See, for example, Paul Mozur, “Beijing wants A.I. to be made in China by 2030,” The New York Times, July 20, 2017. 58. See, for example, Rio Tinto’s Mine of the Future program at riotinto.com/australia/pilbara/mine-of-the-future-9603.aspx. 59. A retrospective analysis of economic growth: Jan Luiten van Zanden et al., eds., How Was Life? Global Well-Being since 1820 (OECD Publishing, 2014). 60. The desire for relative advantage over others, rather than an absolute quality of life, is a positional good; see Chapter 9. CHAPTER 4 1. Wikipedia’s article on the Stasi has several useful references on its workforce and its overall impact on East German life. 2. For details on Stasi files, see Cullen Murphy, God’s Jury: The Inquisition and the Making of the Modern World (Houghton Mifflin Harcourt, 2012). 3. For a thorough analysis of AI surveillance systems, see Jay Stanley, The Dawn of Robot Surveillance (American Civil Liberties Union, 2019). 4.

See also goals off-switch game, 196–200 onebillion (software system), 70 One Hundred Year Study on Artificial Intelligence (AI100), 149, 150 OpenAI, 56 operations research, 10, 54, 176 Oracle AI systems, 161–63 orthogonality thesis, 167–68 Ovadya, Aviv, 108 overhypothesis, 85 overly intelligent AI, 132–44 fear and greed, 140–42 gorilla problem, 132–36 intelligence explosions and, 142–44, 208–9 King Midas problem, 136–40 paperclip game, 194–96 Parfit, Derek, 225 Partnership on AI, 180, 250 Pascal, Blaise, 21–22, 40 Passage to India, A (Forster), 254 Pearl, Judea, 54, 275 Perdix (drone), 112 Pinker, Steven, 158, 165–66, 168 Planet (satellite corporation), 75 Politics (Aristotle), 114 Popper, Karl, 221–22 Popular Science, 152 positional goods, 230–31 practical reasoning, 20 pragmatics, 204 preference autonomy principle, 220, 241 preferences. See human preferences preference utilitarianism, 220 Price, Richard, 54 pride, 230–31 Primitive Expounder, 133 prisoner’s dilemma, 30–31 privacy, 70–71 probability theory, 21–22, 273–84 Bayesian networks and, 275–77 first-order probabilistic languages, 277–80 independence and, 274 keeping track of not directly observable phenomena, 280–84 probabilistic programming, 54–55, 84, 279–80 programming language, 34 programs, 33 prohibitions, 202–3 Project Aristo, 80 Prolog, 271 proofs for beneficial AI assistance games, 184–210, 192–203 learning preferences from behavior, 190–92 mathematical guarantees, 185–90 recursive self-improvement and, 208–10 requests and instructions, interpretation of, 203–5 wireheading problem and, 205–8 propositional logic, 51, 268–70 Putin, Vladimir, 182, 183 “put it in a box” argument, 161–63 puzzles, 45 quantum computation, 35–36 qubit devices, 35–36 randomized strategy, 29 rationality Aristotle’s formulation of, 20–21 Bayesian, 54 critiques of, 24–26 expected value rule and, 22–23 gambling and, 21–23 game theory and, 28–32 inconsistency in human preferences, and developing theory of beneficial AI, 26–27 logic and, 39–40 monotonicity and, 24 Nash equilibrium and, 30–31 preferences and, 23–27 probability and, 21–22 randomized strategy and, 29 for single agent, 20–27 transitivity and, 23–24 for two agents, 27–32 uncertainty and, 21 utility theory and, 22–26 rational metareasoning, 262 reading capabilities, 74–75 real-world decision problem complexity and, 39 Reasons and Persons (Parfit), 225 Recombinant DNA Advisory Committee, 155 recombinant DNA research, 155–56 recursive self-improvement, 208–10 redlining, 128 reflex agents, 57–59 reinforcement learning, 17, 47, 55–57, 105, 190–91 remembering self, and preferences, 238–40 Repugnant Conclusion, 225 reputation systems, 108–9 “research can’t be controlled” arguments, 154–56 retail cashiers, 117–18 reward function, 53–54, 55 reward system, 17 Rise of the Robots: Technology and the Threat of a Jobless Future (Ford), 113 risk posed by AI, 145–70 deflection arguments, 154–59 denial of problem, 146–54 Robinson, Alan, 5 Rochester, Nathaniel, 4–5 Rutherford, Ernest, 7, 77, 85–86, 150 Sachs, Jeffrey, 230 sadism, 228–29 Salomons, Anna, 116 Samuel, Arthur, 5, 10, 55, 261 Sargent, Tom, 191 scalable autonomous weapons, 112 Schwab, Klaus, 117 Second Machine Age, The (Brynjolfsson & McAfee), 117 Sedol, Lee, 6, 47, 90, 91, 261 seismic monitoring system (NET-VISA), 279–80 self-driving cars, 65–67, 181–82, 247 performance requirements for, 65–66 potential benefits of, 66–67 probabilistic programming and, 281–82 sensing on global scale, 75 sets, 33 Shakey project, 52 Shannon, Claude, 4–5, 62 Shiller, Robert, 117 side-channel attacks, 187, 188 Sidgwick, Henry, 224–25 silence regarding risks of AI, 158–59 Simon, Herbert, 76, 86, 265 simulated evolution of programs, 171 SLAM (simultaneous localization and mapping), 283 Slate Star Codex blog, 146, 169–70 Slaughterbot, 111 Small World (Lodge), 1 Smart, R.


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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

Neoliberal governments are also pursuing public–private partnerships—for example in secondary and tertiary education, in 23 PDF OUTPUT c: ALLEN & UNWIN r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 23 CREATING UNEQUAL FUTURES? infrastructure provision for cities—and altering taxation systems for individuals and firms to the greater benefit of business investors and the wealthy. (Even if it can be argued that the incomes of poorer groups are not actually reduced in such moves their relative position is worsened.) Of course, the underpinning by governments of commercial law continues to provide advantages like limited liability to corporations and businesses which have never been available to wage earners and other citizens. What is being developed in Australia is a change in style and substance of governance. The adoption in government of neoliberal economic philosophies directs our national and sub-national involvement in globalisation to take particular forms.

At the wider level, there is evidence of serious concern among editors and journalists that newspapers, in their quest to be entertaining, may have lost touch with the serious concerns of their communities. Newspapers are still a significant force in our society. A 1995 survey indicated that 87.9 per cent of males and 82.4 per cent of females aged eighteen years and over had read a newspaper in the previous week, while a 1996 survey found that 63.8 per cent of people read newspapers or magazines daily (McLennan 1999). However, over the years the relative position of newspapers in the media environment has declined markedly, with per capita circulation halving between 1950 and 1990 (Morris 1996). There is a strong line of argument, particularly in America, that in seeking to arrest this decline via ‘infotainment’, newspapers may have compromised their traditional civic role to their own ultimate cost by alienating the very communities who constitute their audience.

Some of this literature has suggested that these anti-social activities and values are transmitted from generation to generation, so that the children of lone parents and the long-term unemployed are more likely to be jobless themselves and become dependent on welfare. These concerns have a range of policy implications. In particular, if welfare provision is not the ‘solution’ to poverty, but is itself the ‘problem’, then it could be argued that reductions in social security payments and tightening of eligibility conditions are appropriate policy responses. In addition, it is widely held in the United States that employment is positively good for individuals. Contact with the workforce is often regarded as maintaining skills and contributing to the development of positive social attitudes. Ellwood (1999) has argued that welfare reform in the United States has been driven by the perception that almost anything is better than welfare. In some senses this harks back to Edmund Burke’s views quoted earlier, that poverty necessarily implies absence from the workforce. 53 PDF OUTPUT c: ALLEN & UNWIN r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 53 CREATING UNEQUAL FUTURES?


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The Metric Society: On the Quantification of the Social by Steffen Mau

Airbnb, cognitive bias, collaborative consumption, connected car, crowdsourcing, double entry bookkeeping, future of work, income inequality, informal economy, invisible hand, knowledge economy, labour market flexibility, lifelogging, Mark Zuckerberg, mittelstand, moral hazard, personalized medicine, positional goods, principal–agent problem, profit motive, QR code, reserve currency, school choice, selection bias, sharing economy, smart cities, the scientific method, Uber for X, web of trust, Wolfgang Streeck

The incorporation of disparate entities into a league table is initially based on a supposition of commonality, but once such a table is published, a pecking order is established. Thereafter, we can say where each entity stands in relation to the rest and how many ranks they are apart. In the case of periodic measurements, we can also observe movements up or down the table over time. Even though a ranking only describes relative positions, any change is generally assumed to signal an improvement or deterioration in performance. Who's up and who's down has news value. Rankings serve to impose a unifying framework on self- and third-party observation which constantly challenges us to define ourselves in relation to others and ourselves, both synchronously and diachronously. The disadvantage of rankings is that the actual distances between placings are accorded scant consideration – or rather, respect.

As we know, the real purpose of rankings is not ‘merely’ to indicate whether an individual has performed well or consistently with recognized standards: what matters are the ranking ratios. Whichever ladder we are on, the aim is always to be a rung higher than anyone else. Being good on its own is not enough; excellence is always relative, never absolute, as the example of the Berlin TV tower shows. From this point of view, rankings can be likened to so-called positional goods, in that they cannot be multiplied indefinitely. They are in a sense exclusive – i.e., the position I occupy cannot be occupied by anyone else. The trouble is, as soon as others improve, I risk falling behind. Since my own position only exists by virtue of its relation to others, any standstill or deterioration will necessarily entail a loss of status. If I am to avoid seeing my comparative advantage melt away, I need to be constantly on the ball and performing at my best.

Index ‘20-70-10’ rule 155 academics 139 and altmetrics 77–8 and h-index 75–6, 139, 144 self-documentation and self-presentation 76–7 status markers 74–8 accountability 3, 91, 115, 120, 134, 147, 159 accounting, rise of modern 17 activism alliance with statistics 127 Acxiom 164–5 ADM (automated decision-making) 63 Aenta 108 Airbnb 88 airlines and status miles 71–2 algorithms 7, 64, 127, 167 and nomination power 123–5, 126, 141–2 AlgorithmWatch 127 altmetrics 77–8 Amazon 96, 150, 156 American Consumers Union 167 apps 99, 105, 150 finance 66–7 fitness and health 68, 102–3, 104, 107 Moven 65–6 Asian crisis (1997) 57 audit society 24–5 automated decision-making (ADM) 63 averages, regime of 155–7 Barlösius, Eva 113 Baty, Phil 48 Bauman, Zygmunt 143 behavioural reactivity 131 benchmarks, regime of 155–7 Berlin, television tower 40 Better Life Index 20 Big Data 2, 79, 123 biopolitics 19 of the market 70 biopower 19 Boam, Eric 104 body images, regime of 156–7 Boltanzki, Luc 125–6 border controls 73–4 borders, smart 74 Bourdieu, Pierre 111, 114, 115, 162 BP 108 Bude, Heinz 37 bureaucracy 18 calculative practices 11, 124 expansion of 11, 115 and the market 15–17 Campbell, Donald T. 130–1 Campbell's Law 130–1 capitalism 15, 54, 55 digital 150 capitalists of the self 163 Carter, Allan 48 Chiapello, Ève 125–6 Chief Financial Officer (CFO) 17 China Sesame Credit 67 Social Credit System 1, 166 choice revolution 118–19 class and status 33 class conflict switch to individual competition 168–70 classification 60–80 see also scoring; screening collective body 104–6 collective of non-equals 166–8 commensurability 31–3, 44, 159 Committee of Inquiry on ‘Growth, Wealth and Quality of Life’ (Germany) 127 commodification 163, 164 Community (sitcom) 96 companies 16–17 comparison 7, 26–39, 159 and commensurability/incommensurability 31–3 and competition 28 dispositive(s) of 7, 28–31, 159, 169 new horizons of 33–5 part of everyday life 27 prerequisites for social 35–6 registers of 135–9 and self-esteem 30 shifts in class structure of 33 and status 29–30, 36–7 universalization of 27–8 COMPAS (Correctional Offender Management Profiling or Alternative Sanctions) 79 competition 6, 7, 115–19, 159–60 and comparison 28 increasing glorification of 159 and neoliberalism 23 and performance measurement 115–19 and quantification 116–17 and rankings 45 switch from class conflict to individual 168–70 competitive singularities 169 consumer generated content (CGC) 85–6 control datafication and increased 143, 147, 169 individualization of social 143 levers of social 144 relationship between quantification and 78 conventionalization 128 Cordray, Julia 97 Correctional Offender Management Profiling or Alternative Sanctions (COMPAS) 79 Corruption Perceptions Index 26 cosmetic indicators 135 Couchsurfing 88 credit risk colonialization 64 credit scoring 63–7 and social status 67 criminal recidivism, scoring and assessment of 62–3, 79 criteria reductionism 22 cumulative advantages, theory of 174 CureTogether 106 customer reviews 82–6, 87, 88 Dacadoo 68 Daily Telegraph 149 darknet 87 data behaviourism 171 data leaks 152 data literacy 21 data mining 4, 22, 163 data protection 72, 142 data repositories 62, 73–4 data storage 22, 73, 135 data voluntarism 4, 152, 153, 159 dating markets and health scores 70 de Botton, Alain 30 decoupling 133, 136, 174–5 democratization and digitalization 166 difference 2 visibilization and the creation of 40–3 ‘difference revolution’ digitalization giving rise to 166–7 digital capitalism 150 digital disenfranchisement of citizens 151 digital health plans 70 digital medical records 67 digitalization 2, 7, 21–2, 25, 63, 73, 80, 111, 123, 180 and democratization 166 giving rise to ‘difference revolution’ 166–7 as ‘great leveller’ 166 quantitative bias of 124 disembedding 13 distance, technology of 23–4 diversity versus monoculture 137–40 doctors, evaluation of by patients 92–3 Doganova, Liliana 5–6 double-entry bookkeeping 15, 163 e-recruitment 61 eBay 87 economic valuation theory 5 economization 22–4, 38, 115, 117 and rise of rankings 46 education and evaluation 89–91 evaluation of tutors by students 89–90 law schools 44, 138–9 output indicators and resource allocation in higher 132 and Pisa system 122, 145–6 Eggers, Dave The Circle 41, 82–3 employer review sites 83 entrepreneurial self 3, 154 epistemic communities 121 equivalence 16, 27 Espeland, Wendy 44, 139 esteem 29, 30 and estimation 15, 38 see also self-esteem Etzioni, Amitai The Active Society 20 European Union 122 evaluation 81–98 connection with recognition 38 cult and spread of 7, 97–8, 134 education sector 89–91 loss of time and energy 136 and medical sector 91–3 peer-to-peer ratings 87–8 portals as selectors 84–6 pressure exerted by reviews 147–8 and professions 89–93 qualitative 117 satisfaction surveys 82–4 and social media 93–8 of tutors by students 89–90 evidence-basing 3 exercise and self-tracking 101–4 expert systems 7 transnational 121–2 experts, nomination power of 119–23, 126 Facebook 94 FanSlave 95 Federal Foreign Office (Germany) 53 feedback power of 147–8 and social media 93–4 Fertik, Michael 66 Fitch 56 fitness apps 68, 102–3, 104, 107 Floridi, Luciano 105 Foucault, Michel 19 Fourcade, Marion 163–4 Franck, Georg 29 fraud 137 Frey, Bruno ‘Publishing as Prostitution’ 146 ‘gaming the system’ 132 GDP (gross domestic product) 14 dispute over alternatives to 127–8 General Electric 155 Germany Excellence Initiative 51 higher education institutes 52–3 Gerstner, Louis V. 130 Glassdoor.com 83 global governance 122 globalization 34, 73 governance 12 self- 19, 37, 105 state as data manager 17–20 ‘government at a distance’ 145 governmentality 112 GPS systems 150 Granovetter, Mark ‘The strength of weak ties’ 147 gross domestic product see GDP h-index 75–6, 139, 144 halo effect 90 Han, Byung-Chul 154 Hanoi, rat infestation of 130 happiness and comparison 30 Hawthorne effect 107 health and self-tracking 101–4 health apps 68, 102–3, 104, 107 health scores 67–71 health status, quantified 67–71 Healy, Kieran 163–4 Heintz, Bettina 14, 33, 34 hierarchization/hierarchies 1, 5, 6, 11, 33, 39, 40–59, 174 and rankings 41–2, 43, 44, 48 higher education, output indicators and resource allocation 132 Hirsch, Jorge E. 75 home nursing care 135–6 hospitals and performance indicators 131 Human Development Index 14 hyperindividualization 167–8 identity theory 29 incommensurability 31–3 indicators 2, 3, 5, 20, 23–4, 34, 114, 159 and competition 116–17 and concept of reactive measurements 129–33 cosmetic 135 economic 7 governance by 24 politics of 14 status 35, 75 see also performance indicators individualization of social control 143 industrial revolution 19 inequality 6, 8, 158–76 collectives of non-equals 166–8 establishment of worth 160–2 inescapability and status fluidity 170–4 reputation management 162–6 switch from class conflict to individual competition 168–70 inescapability of status 170–4 information economy 2 information transmission interfaces, between social subsystems 165–6 institutional theory 113 insurance companies 72, 108, 151, 152, 167 International Labour Organization 122 investive status work 36–7 Italian Job, The (film) 138 justice 126 Kaube, Jürgen 2 Kula, Witold 16 Latour, Bruno 34 law schools 44, 138–9 league tables 35, 43, 46, 47, 51, 52, 53, 91, 138, 139, 146, 162, 175 legitimate test, concept of 125–6 Lenin, Vladimir 116 lifelogging 99, 109, 153 Luhmann, Niklas 166 Lyon, David 142 McClusky, Mark 101 McCullough, Nicole 97 Mann, Steve 153 market(s) calculative practices of 15–17 and neoliberalism 23 and rating agencies 55–6 Marron, Donncha 65 Matthew effect 174–5 measurement, meaning 10 media reporting 33 medical sector and evaluation 91–3 hospitals and performance indicators 131–2 MedXSafe 70 meritocracy 23, 161 Merton, Robert K. 161, 174 ‘metric revolution’ 16 Miller, Peter 112 mobility 71–4 border controls 73 digital monitoring of 72 and scoring 71–4 smart cars 72 and status miles 71–2 money as means of exchange 16 monoculture versus diversity 137–40 mood, self-tracking of 101–4 Moody's 56 motivation 106–10 and rankings 45 Moven 65–6 Münch, Richard 145 Nachtwey, Oliver 150 naturalization 113 neoliberalism 3, 12, 23, 25 basic tenets of 23 New Public Management 3, 117, 136, 155 NHS (National Health Service) 118 nomination power 111–28 and algorithms 123–5, 126, 141–2 critique of 125–8 and economization 115 of experts 119–23, 126 performance measurement and the framing of competition 115–19 and the state 112–15 non-equals, collectives of 166–8 normative pressure 144–6 North Korea 144 ‘number rush’ 2 numbers 13–14, 15 numerical medium 8, 14, 16, 18, 28, 33, 113, 160, 166 objectivization 35, 154, 160 OECD 122 Offe, Claus 175 Old Testament 17 omnimetrics 9 O’Neil, Cathy Weapons of Math Destruction 79 optimization 12, 25 Oral Roberts University (Oklahoma) 108 Peeple app 96–7 peer-to-peer ratings 87–8 Pentland, Alex 151 people analytics 150–1 performance enhancement 12 performance indicators 12, 38, 53, 74, 118, 119, 120, 129, 155 and hospitals 131–2 performance measurement 23, 38, 115–19 performance-oriented funding allocation 22 performance paradox 132 performance targets 4 Personicx 165 Pisa system 122, 145–6 politicians 14, 120 politics 114 portals 84–6, 88, 90–1 power of nomination see nomination power prestige 8, 29, 67, 144 principal–agent problem 147–8 private consultancy services 117 professional control, loss of 133–4 professionalization 19, 133 professions and evaluation 89–93 publicity 33 QS ranking 52 qualitative evaluation 117 quantification advantages of 8 engines of 21–5 history 11 impact and consequences of 5, 6 meaning 10, 12–15 risks and side-effects 7, 129–40 role of 35 quantified self 99–110 Quantified Self (network) 99–100 quantitative evaluation see evaluation quantitative mentality 11–12 quasi-markets 116, 118–19 race and assessment of criminal recidivism risk 79 rankings 47–53, 58–9, 60, 144 and competition 45 and compliance 44 differences between ratings and 42–3 disadvantage of 43–4 economization and rise of 46 and evaluation portals 84–6 and hierarchies 41–2, 43, 44, 48 and image fetishization 47 and motivation 45 as objectivity generators 41 performance-enhancing role 46 popularity of 41 as positional goods 45 purpose of 45 and reputation 48, 49, 50, 52 as social ushers 42 and status anxiety 46–7 university 6, 7, 43, 47–53, 144, 175 Welch's forced 155–6 rating agencies, market power of 53–9 ratings 41–3, 53–9, 60 definition 54 differences between rankings and 42–3 and evaluation portals 84–6 as objectivity generators 41 peer-to-peer 87–8 as social ushers 42 rationalization 5, 11, 12, 14, 15, 16, 19, 105, 110, 154, 163 Raz, Joseph 31–2 reactive measurements 129–33 recommendation marketing 85 recruitment, e- 61 reference group theory 29 reputation 29, 39, 66, 74, 121 academic 75–6 cultivating good 47 and rankings 48, 49, 50, 52 rating of 87–8 signal value of 87 social media and like-based 93–8 reputation management 4, 50, 162–6 reputation scoring 87–8 research community 146 and evaluation system 146 and review system 146–7 ResearchGate 77 reviews 136 customer 82–6, 87, 88 doctor 92 high demand for 136 lecturers/tutors 90 performance 25, 149 pressure exerted by popular 147 Riesman, David 37 risks of quantification 129–40 loss of professional control 133–5 loss of time and energy 135–7 monoculture versus diversity 137–40 reactive measurements 129–33 Rosa, Hartmut 94, 173 Rose, Nikolas 112 Rousseau, Jean-Jacques 28–9 running apps 107 Runtastic app 107 satisfaction surveys 82–4 Sauder, Michael 44, 139 Schimank, Uwe 134 Schirrmacher, Frank 152 Schmidt, Eric 147 schools and choice 118–19 evaluation of 90–1 league tables 46 and Pisa system 122, 145–6 scoring 7, 60, 61, 78–80 academic status markers 74–8 and assessment of criminal recidivism 62–3 credit 63–7 health 67–71 mobility value 71–4 pitfalls 79 screening 7, 60–1, 78–9 border controls 73–4 e-recruitment 61–2 function 60–1 smart cars 72 self-direction 105, 121, 143 self-documentation 153 and academic world 76–7 self-enhancement 3, 137 self-esteem 29, 37, 170 and comparison 29, 30 rankings and university staff 50–1 self-governance 19, 37, 105 self-image 37, 47, 50, 89 self-management 3, 20, 25 self-observation 25, 42 quantified 99–110 self-optimization 3, 19, 104, 109, 163 self-quantification/quantifiers 4, 13, 25, 101, 154–5, 156 self-reification 105 self-responsibility 25, 110 self-tracking 4, 7, 99, 100, 106, 109–10 collective body 104–6 as duty or social expectation 108 emotions provoked 109 health, exercise and mood 101–4 and motivation 106–10 problems with wearable technologies 103–4 running and fitness apps 68, 102–3, 104, 107 and sousveillance 153 as third-party tracking 154 self-worth 29, 36, 38, 47, 51, 170 and market value 67 Sesame Credit (China) 67 Shanghai ranking 47 ‘shared body’ 105 shared data 142, 152–3 Simmel, Georg 28 ‘small improvement argument’ 32 smart borders 74 smart cars 72 smart cities 21 smart homes 21 ‘social accounts’ 20 Social Credit System (China) 1, 166 social engineering 20 social management 20 social media 93–8, 153, 166 drivers of activity 93 and feedback 93–4 forms of connection 93 likes 93–5 and online disinhibition 153 and reputation building 95 resonance generated by 94 and running/fitness apps 107 social research 19–20 social security systems 19 social status see status social worth see worth socio-psychological rank theory 46 sociometrics/sociometers 2, 5, 36, 74, 141, 150–1 Sombart, Werner Modern Capitalism 15–16 sousveillance 153 sport 33 rise of world 35 Staab, Philipp 149–50 Stalder, Felix 124 Standard & Poor's 54, 56 statactivism 127 state as data manager 17–20 nomination power of the 112–15 statistics 14 origins of word 17 status and class 33 and comparison 29–30, 36–7 and credit scoring 67 inescapability from 170–4 and life satisfaction 30 seeking of 36 status anxiety 30 and rankings 46–7 status competition 26–39 status data 2, 80, 159, 161–2, 169, 174 functioning as symbolic data 8, 162 status fluidity 170–4 status insecurity 4 status miles 71–2 status sets 161–2 status symbols 158 status work 4, 36–7, 174 Stiglitz-Sen-Fitoussi Commission (France) 127 Streeck, Wolfgang 171–2 subprime crisis (2007) 57, 64 surveillance 8, 142, 152 interdependence of self- and external 153–5 and neoliberalism 23 workplace and technological 149–51 surveys, satisfaction 82–4 symbolic capital 174 status data as 8, 162 target setting 22 tariff models 152–3 technological surveillance, in the workplace 149–51 technologies of the self 25 tertium comparationis 32 Thomas theorem 59 Thompson, David C. 66 Times Higher Education ranking 47, 48, 53 tourism portals 85 tracking as double-edged sword 142 see also self-tracking trade relations 16 transnational expert systems 121–2 transparency 3, 91, 141–3, 144, 147 Transparency International 26 ‘transparent body’ 105 TripAdvisor 85 Trustpilot 86 Turkey 54 tutors evaluation of by students 89–90 Uber 156 űbercapital 163–4 UN Sustainable Development Goals 20 United Nations 122 university lecturers evaluation of 89–90 object of online reviews 90 university rankings 6, 7, 43, 47–53, 144, 175 valorization 5, 58, 124, 161 valuation 5–6 value registration 161 Vietnam War 131 visibilization, and the creation of difference 40–3 Webb, Jarrett 104 Weber, Max 15, 16, 154 Weiß, Manfred 119 Welch, Jack 155 ‘winner-take-all society’ 136 Wolf, Gary 99–100 Woolgar, Steve 34 workplace technological surveillance in the 149–51 World Bank 122 worth 5–6, 7, 11, 78–80, 170 assessments of 27 establishment of 160–2 orders of 11, 15, 29 self- 29, 36, 38, 47, 51, 67, 170 Young, Michael 161 The Rise of Meritocracy 23, 161 Zillien, Nicole 105 Zuckerberg, Mark 158 POLITY END USER LICENSE AGREEMENT Go to www.politybooks.com/eula to access Polity's ebook EULA.


pages: 367 words: 108,689

Broke: How to Survive the Middle Class Crisis by David Boyle

anti-communist, banking crisis, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, bonus culture, call centre, collateralized debt obligation, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, delayed gratification, Desert Island Discs, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, financial deregulation, financial independence, financial innovation, financial intermediation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, housing crisis, income inequality, Jane Jacobs, job satisfaction, Kickstarter, knowledge economy, knowledge worker, market fundamentalism, Martin Wolf, mega-rich, mortgage debt, Neil Kinnock, Nelson Mandela, new economy, Nick Leeson, North Sea oil, Northern Rock, Occupy movement, off grid, offshore financial centre, pension reform, pensions crisis, Plutonomy: Buying Luxury, Explaining Global Imbalances, Ponzi scheme, positional goods, precariat, quantitative easing, school choice, Slavoj Žižek, social intelligence, too big to fail, trickle-down economics, Vanguard fund, Walter Mischel, wealth creators, Winter of Discontent, working poor

This is a growing problem in the education world as teachers increasingly write their own reports on the children using software like ReportAssist or Teachers Report Assistant, where they tick the boxes related to attainments and preset phrases pop up. ‘He has required support to understand that labels carry key pieces of information,’ said my son’s school report. It is like trying to suck meaning through pieces of straw. Then there are the league tables themselves, and one study shows that only half of all parents can understand them.[25] Just looking at the relative positions of my own local primary schools, it is quite clear that the schools that are higher in the tables are often less rounded, less friendly, less successful educators than the ones slightly lower down, because the higher school has often banished paints, poems, creativity and fun from the classroom in favour of an all-out, Gradgrindian dash for results. Since discovering that, I have been increasingly suspicious of schools that sit too high in the league tables.

The middle classes don’t like to mention it too openly, and they find it hard to articulate it even to themselves. But the truth is that they can no longer afford the life they always imagined having. It isn’t that they are greedy or want something for nothing. But they did assume, because that is what they were always told, that they would have a life like their parents and grandparents — a comfortable home, a respected professional position, good schools for their children. They now willingly submit to a quarter of a century of mortgage discipline — in jobs that frustrate them and force them to buy in expensive childcare — just to pay hugely inflated house prices. And no matter how much they earn, there is a banker’s bonus somewhere that makes their effort look ridiculous (even in these days of slimmed-down bonuses). Worse, they seem unlikely to be able to fund their own retirement, except by the very house-price inflation that will exclude their children from the housing market.


pages: 677 words: 121,255

Giving the Devil His Due: Reflections of a Scientific Humanist by Michael Shermer

Alfred Russel Wallace, anthropic principle, anti-communist, barriers to entry, Berlin Wall, Boycotts of Israel, Chelsea Manning, clean water, clockwork universe, cognitive dissonance, Colonization of Mars, Columbine, cosmological constant, cosmological principle, creative destruction, dark matter, Donald Trump, Edward Snowden, Elon Musk, Flynn Effect, germ theory of disease, gun show loophole, Hans Rosling, hedonic treadmill, helicopter parent, hindsight bias, illegal immigration, income inequality, invisible hand, Johannes Kepler, Joseph Schumpeter, laissez-faire capitalism, Laplace demon, luminiferous ether, McMansion, means of production, mega-rich, Menlo Park, moral hazard, moral panic, More Guns, Less Crime, Peter Singer: altruism, phenotype, positional goods, race to the bottom, Richard Feynman, Ronald Coase, Silicon Valley, Skype, social intelligence, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, WikiLeaks, working poor, Yogi Berra

This principle of individual success versus collective failure is so important to Frank that he goes so far as to predict that his fellow economists will, in time, come to see Charles Darwin as the most important economist in history. The human analogue of tails and antlers for Frank are McMansion homes, expensive business suits, high-heel shoes, and extravagant coming-of-age parties. Much of his thinking here is derived from research conducted by behavioral economists, who report that relative position on the economic ladder – “positional rank” – matters more than absolute value to most people. Once you have a roof over your head and three square meals a day, it doesn’t matter how much more money you make above basic needs as long as it is equal to or exceeds that of your neighbors. As H. L. Mencken quipped, “A wealthy man is one who earns $100 a year more than his wife’s sister’s husband.”

Darwin, Charles. 1871. The Descent of Man, and Selection in Relation to Sex. London: John Murray. 3. Solnick, Sara and David Hemenway. 1998. “Is More Always Better? A Survey on Positional Concerns.” Journal of Economic Behavior and Organization, 37, 373–383. 4. Carlsson, Fredrik, Olof Johansson-Stenman, and Peter Martinsson. 2007. “Do You Enjoy Having More than Others? Survey Evidence of Positional Goods.” Economica (Online Early Articles). 5. Frank, Robert. 2011. The Darwin Economy. Princeton, MA: Princeton University Press, 193. 6. Frank, 2011, The Darwin Economy, 6. 7. Shermer, Michael. 2008. The Mind of the Market: Sharing Apes, Trading Humans, & Other Tales of Evolutionary Economics. New York: Henry Holt/Times Books. 8. Frank, 2011. The Darwin Economy, 16. 9. I outline some of these connections and illuminate why conservatives should embrace a Darwinian view of human nature as parallel to their own here: Shermer, Michael. 2006.


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 envy could be represented easily in individualistic, Max U form as “Duryodhana’s utility is a function of the worldly consumption of Duryodhana minus that of Yudhishthira.”11 Some economists, from Thorstein Veblen through Fred Hirsch (1977) down to Robert Frank (2005), have argued that “positional goods” are prevalent, making for an arms race in consumption that we must suppress by government action. But it seems dubious that social position bulks so large as a motive for consumption as to justify such use of violence-backed regulation. The professor claiming its large bulk would probably not apply it to much of his own consumption, such as to the lovely pied-à-terre he has in Manhattan. And the theorists of positional goods have not on the whole done the empirical science to show that envy matters for the economy as a whole. Frank asserts that “models that incorporate concerns about relative position predict an equilibrium with too much expenditure on positional goods, too little on non-positional goods.”12 Note the word “predict” and the promise, not fulfilled, of measurement in the phrase “too much.”

Anthony Waterman, the historian of economic thought, notes that as soon as the advocates for French-style equality stray from their sailing plan that inequality is simply evil, they founder on a consequentialist rock (on which John Rawls had in 1971 placed a lighthouse): “From the standpoint of economic efficiency, is inequality [by a French definition] always a bad thing? May it not sometimes confer social benefits against which the evils they report must be set as an offset? [Thus Rawls.] If so we should have what rejoices the heart of every [Samuelsonian] economist: an optimization problem.”39 Waterman points out that competition for “positional goods,” such as a top standing at Harvard, a competition necessarily inegalitarian in its result, can, as Smith and other eighteenth-century liberals claimed, benefit the whole society. To quote Smith, it “rouses and keeps in continual motion the industry of mankind.”40 In historical fact the introduction of the Scottish plan of equality of liberty and dignity, beginning with the economic liberty of the bourgeoisie, has regularly led, as in the histories of Hong Kong and Sweden and France itself, to an astounding betterment and to an equality of genuine comfort.

Berry, 543; braking laws and, 621; Christian, 402; as eighth pessimism, 627, 628; and Malthus, 36; Mishra on, 55; pastoral and, 158; and political left, 7, 8, 635; in poor countries, 68; reasonable and unreasonable, 66–68, 418; as religion, 29; religion of, 28–29, 216 envy: Czech folktale, 638; dangers of, 637, 638; of Dutch by English, 291; economic effect, 638; H. Clark on, 638; B. Friedman on, 76; in Mahabharata, 186, 187, 634; Mandeville on, 421; Piketty, 582; populism, 637; and positional goods, 187; relative poverty, 52; socialism, 644; traditional, 633 envy of the Dutch, 291, 677n24 Episcopalians: thanked, xli Epley, Nicholas, 651n10 Epstein, Richard: job protection, 206; legal positivism, 137 equal dignity: bourgeois, 585; English and classical Hindu, 636–637; LaVaque-Manty on, 401; and positional honor, 401; productivity of, 637; and traditionalism, 485 equality: creativity, 40, 104; dangers of, xxxi; Frankfurt on, 47; French, xxxi; liberal and Scottish definition of, xxix, xxxi–xxxiii, 39, 409; liberalism, 47; radical, 404; in a small group, 636; Smith, 133, 178, 204; theorized as liberalism, xxxi; in trade, 558; women, 365.


pages: 399 words: 155,913

The Right to Earn a Living: Economic Freedom and the Law by Timothy Sandefur

American ideology, barriers to entry, big-box store, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Edward Glaeser, housing crisis, joint-stock company, Joseph Schumpeter, minimum wage unemployment, positional goods, price stability, profit motive, race to the bottom, Ralph Nader, RAND corporation, rent control, Robert Bork, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, The Wealth of Nations by Adam Smith, trade route, transaction costs, Upton Sinclair, urban renewal, wealth creators

Whether it be the pest control technician who wants to try a new method for preventing pigeons from landing on buildings, or the hair braider who wants to open a new shop to do hairstyles that consumers had never seen before, it is the newcomer who seeks economic freedom. And it is often the old, established businesses that want to be protected against new competition. Picturing the revival of economic liberty as a return to the past means getting the truth entirely backward. It is the future that needs freedom. Implementing constitutional protections for economic freedom will require a reevaluation of the relative positions of democracy and 286 The Future of Economic Liberty liberty in the American constitutional order. This will be difficult for some, but it is already starting. Prominent liberal lawyers like Professor Laurence Tribe,41 former Clinton administration solicitor general Walter Dellinger,42 and former American Civil Liberties Union president Nadine Strossen43 have joined libertarian writers like Richard A.

Holmes and his Progressive allies, however, believed the judiciary should abet these efforts in the service of social improvement and “the right of a majority to embody their opinions in law.”109 109 The Right to Earn a Living Progressivism transformed government from an institution for protecting rights into a tool for improving the living conditions of citizens; from a “necessary evil,” as the Founders saw it,110 into a positive good. And it shifted the focus of American constitutional law from liberty to democracy. From then to the present day, the primary concern of political leaders would be ensuring that legislative majorities could enforce their preferences rather than protecting the freedom and safety of individuals. For many people, this actually became the very definition of freedom: majority power, rather than the right to pursue happiness, came to be seen as the meaning of liberty.111 This explains Holmes’s otherwise perplexing statement in his Lochner dissent that protecting the rights of individuals was a “perversion” of the word “liberty.”112 Modern criticism of Lochner is based on the same appeal to majoritarianism that animated Holmes’s dissent.


pages: 1,799 words: 532,462

The Codebreakers: The Comprehensive History of Secret Communication From Ancient Times to the Internet by David Kahn

anti-communist, British Empire, Claude Shannon: information theory, computer age, cuban missile crisis, Fellow of the Royal Society, Honoré de Balzac, index card, interchangeable parts, invention of the telegraph, Isaac Newton, Johannes Kepler, John von Neumann, Louis Daguerre, Maui Hawaii, Norbert Wiener, out of africa, pattern recognition, place-making, popular electronics, positional goods, Republic of Letters, Searching for Interstellar Communications, stochastic process, the scientific method, trade route, Turing machine, union organizing, yellow journalism, zero-sum game

This is the key.” Holden’s description makes explicit one requirement of successful operation of multiple anagramming (that the two messages be the same length) but presupposes the other (that their keys be the same). The technique rests on the fact that, if two messages of the same length are transposed in the same system with identical keys, their individual words will wind up in the same relative positions. To put it differently, if the first word of the plaintext becomes the 15th word of the cryptogram in the first message, the first word of the plaintext of the second message will equally wind up in the 15th position of the second cryptogram. This is transposition’s version of like causes producing like effects, and the principle holds for all transposition systems, letter as well as word, irrespective of their mixing process.

The two patterns will be virtually identical, differing only by the usual and slight variations in plaintext. Now if one letter precedes another on the ciphertext slide by, say, three places, its pattern, as seen cutting through the 26 frequency counts, will obviously be shifted three places forward of the pattern of the other letter. So if the cryptanalyst can determine the displacements of the patterns with respect to one another, he can find the relative positions of those two ciphertext letters in the ciphertext alphabet. By determining the relative displacement of all the ciphertext letters in this fashion, the cryptanalyst can reconstruct the entire ciphertext alphabet! And he can do it without guessing at a single plaintext letter! Friedman developed the ancestor of the chi test to compare the frequency patterns to determine the displacements.

But until the 1950s it had never been possible to transmit a picture along such a path. Then Dr. Narinder Singh Kapany, then in his late 20s and at the University of Rochester, bunched many glass fibers, each about a thousandth of an inch thick, into a bundle. Each of these hair-thin “light pipes” picked up a point of light from an illuminated image and transmitted it faithfully to the opposite end of the bundle. Here the fibers, which occupied the same relative position at both ends, reproduced the image in the form of hundreds of thousands of microscopic points of light and dark. Kapany realized that if the two ends of the bundle were not alike, if the fibers occupying, say, the edges of the input face occupied the center of the output face, then the emerging image would be scrambled. To decode, the image need only be sent backward through the same or an identical bundle.


pages: 798 words: 240,182

The Transhumanist Reader by Max More, Natasha Vita-More

23andMe, Any sufficiently advanced technology is indistinguishable from magic, artificial general intelligence, augmented reality, Bill Joy: nanobots, bioinformatics, brain emulation, Buckminster Fuller, cellular automata, clean water, cloud computing, cognitive bias, cognitive dissonance, combinatorial explosion, conceptual framework, Conway's Game of Life, cosmological principle, data acquisition, discovery of DNA, Douglas Engelbart, Drosophila, en.wikipedia.org, endogenous growth, experimental subject, Extropian, fault tolerance, Flynn Effect, Francis Fukuyama: the end of history, Frank Gehry, friendly AI, game design, germ theory of disease, hypertext link, impulse control, index fund, John von Neumann, joint-stock company, Kevin Kelly, Law of Accelerating Returns, life extension, lifelogging, Louis Pasteur, Menlo Park, meta analysis, meta-analysis, moral hazard, Network effects, Norbert Wiener, pattern recognition, Pepto Bismol, phenotype, positional goods, prediction markets, presumed consent, Ray Kurzweil, reversible computing, RFID, Ronald Reagan, scientific worldview, silicon-based life, Singularitarianism, social intelligence, stem cell, stochastic process, superintelligent machines, supply-chain management, supply-chain management software, technological singularity, Ted Nelson, telepresence, telepresence robot, telerobotics, the built environment, The Coming Technological Singularity, the scientific method, The Wisdom of Crowds, transaction costs, Turing machine, Turing test, Upton Sinclair, Vernor Vinge, Von Neumann architecture, Whole Earth Review, women in the workforce, zero-sum game

This is a major point, rarely made by anyone, never mind sports writers. The nature of the contest might change, of course, with significantly enhanced performance across the board. Some might, in response, want to change the rules of the game (e.g., a larger playing field). In any case, widespread performance enhancement might even make people more diligent and move them to try harder – generally considered a good thing – if only to avoid loss of relative position. And it’s hard to see, if the same people keep on winning and losing, how you’re getting an inappropriate reinforcement of something for nothing. True, absolute performance would seem to be heightened, suggested disproportionate returns. But the idea that you can get more bang for the buck might be far more reinforced if people were cheating and you knew they were cheating but you didn’t know who.

Allen Buchanan posits “that some enhancements will increase human productivity very broadly conceived and thereby create the potential for large-scale increases in human ­well-being, and that the enhancements that are most likely to attract sufficient resources to become widespread will be those that promise increased productivity and will often exhibit what economists call network effects; the benefit to the individual of being enhanced will depend upon, or at least be greatly augmented by others having the enhancement as well” (Buchanan 2008: 2). Buchanan points out that much of the ethical debate (cited above) about enhancements focuses on them as positional goods that primarily help an individual to outcompete his rivals. This characterization of enhancements leads quickly and ineluctably to pervasive zero sum thinking in which for every winner there is assumed to be a loser. Instead enhancements could produce substantial positive externalities. “Large numbers of individuals with increased cognitive capabilities will be able to accomplish what a single individual could not, just as one can do much more with a personal computer in world of many computer users,” writes Buchanan (Buchanan 2008: 11).