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Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris
active measures, Andrei Shleifer, asset allocation, automated trading system, barriers to entry, Bernie Madoff, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, fault tolerance, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, interest rate swap, invention of the telegraph, job automation, law of one price, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market clearing, market design, market fragmentation, market friction, market microstructure, money market fund, Myron Scholes, Nick Leeson, open economy, passive investing, pattern recognition, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, race to the bottom, random walk, rent-seeking, risk tolerance, risk-adjusted returns, selection bias, shareholder value, short selling, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game
By considering stylized traders, we simplify our discussions and ultimately make it easier for you to identify the different reasons why people trade. Our stylized traders are profit-motivated traders, utilitarian traders, or futile traders. Profit-motivated traders trade only because they rationally expect to profit from their trades. Speculators and dealers are profit-motivated traders. Utilitarian traders trade because they expect to obtain some benefit from trading besides trading profits. Investors, borrowers, asset exchangers, hedgers, and gamblers are utilitarian traders. Futile traders believe that they are profit-motivated traders. Although they expect to trade profitably, their expectations are not rational. They have no advantages that would allow them to be profitable traders. Utilitarian traders and futile traders lose on average to profit-motivated traders because trading is a zero-sum game. Traders are either informed or uninformed.
Asset exchangers trade only for assets that they need. Hedgers trade instruments that are closely correlated to the risks they face. Gamblers trade instruments that excite them. 8.2 PROFIT-MOTIVATED TRADERS Profit-motivated traders trade only because they expect to profit. Like all traders, they profit if they buy low and sell high. The key to trading profitably is to trade only when you have reason to believe that you will profit. Profit-motivated traders therefore must understand why they profit in order to predict when they will profit. This section introduces the various types of profit-motivated traders. We discuss them in detail in later chapters. The two main classes of profit-motivated traders are speculators and dealers. Speculators attempt to profit by predicting how prices will change in the future. Dealers attempt to profit by selling liquidity to other traders. 8.2.1 Speculators Speculators predict future price changes from information that they collect, analyze, and, in some cases, produce.
Block facilitators provide liquidity to large traders. They may take days or weeks to trade out of their positions. Block facilitators generally provide liquidity only to clients whom they choose. 8.2.3 Profit-motivated Trader Summary Profit-motivated traders trade because they expect to profit from their trading. Successful profit-motivated traders must have some advantage that allows them to trade profitably. Their various advantages usually involve information they have that others do not have. Table 8-4 presents a summary of the various profit-motivated trading strategies. TABLE 8-4. Summary of Profit-motivated Trading Strategies and the Proprietary Information upon Which They Are Based Informed traders understand fundamental instrument values better than other traders do. They have better access to fundamental data than do other traders, and they can better analyze the implications of their data than other traders can.
The New Prophets of Capital by Nicole Aschoff
3D printing, affirmative action, Affordable Care Act / Obamacare, Airbnb, American Legislative Exchange Council, basic income, Bretton Woods, clean water, collective bargaining, commoditize, crony capitalism, feminist movement, follow your passion, Food sovereignty, glass ceiling, global supply chain, global value chain, helicopter parent, hiring and firing, income inequality, Khan Academy, late capitalism, Lyft, Mark Zuckerberg, mass incarceration, means of production, performance metric, post-work, profit motive, rent-seeking, Ronald Reagan, Rosa Parks, school vouchers, shareholder value, sharing economy, Silicon Valley, Slavoj Žižek, structural adjustment programs, Tim Cook: Apple, urban renewal, women in the workforce, working poor, zero-sum game
Chapter 2 examines eco-capitalism and the growing trend of “sustainable” production and consumption by looking at Whole Foods CEO John Mackey’s model of conscious capitalism. Mackey’s narrative highlights key problems with the rapid spread of global capitalism and its devastating impact on the environment, but his model fails to challenge the underlying contradictions and imperatives of for-profit production. Human needs can be satiated, but the profit motive cannot—even “sustainable” production in a capitalist system cannot protect the environment from overuse and potentially irreversible damage. Chapter 3 peels back the layers of media mogul Oprah Winfrey’s model of self-help, spiritual capitalism. At a time when the American Dream seems more out of reach than ever, Oprah’s message resonates and replicates through all avenues of life. Her helping, healing, self-empowerment message turns up on college campuses, has been adopted by legions of internet entrepreneurs, and is echoed in the vision of organizations like the Freelancers Union.
When women’s ambitions and desires are silenced or undervalued, they are easier to take advantage of. Sexism and racism are part of the company toolkit, enabling firms to pay women less—particularly women of color—discriminate against them, steal their wages, and treat them badly. But even if we root out sexism and racism, the inherent contradictions of capitalism will persist. Putting women in charge will not change the power of the profit motive and the compulsion of companies to give workers as little as economic, social, and cultural norms will allow. The goal of feminism is justice and equality for all women, not simply equal opportunity for women or equal participation by women. By aligning the goals of feminism with the goals of capitalism, Sandberg’s model of emancipation functions as ideology, accepting and undergirding the dominant structures of power in society.
They were the work of institutions: CERN and the Department of Defense created the internet, while Bell Labs—a subdivision of AT&T, freed from market competition by federally granted monopoly rights—generated transistors, radar, information theory, “quality control,” and dozens of other innovations central to our epoch.25 Nearly every advance in science, technology, and mathematics emerged from people working together at universities supported by government funding. Creativity and innovation come from many places. Companies produce influential innovations, but so do other institutions that operate outside the confines of the profit motive, competitive markets, and the bottom line. As Cambridge professor of economics Ha-Joon Chang argues, this is neither theoretical quibbling nor simply a quest for historical “truth.” Instead, getting the historical narrative right is important because the stories we tell “deeply affect the very way in which we understand the nature and the development of the market, as well as its interrelationship with the state and other institutions.”26 In the neoliberal narrative states are interlopers, under the thumb of rent-seeking politicians and bureaucrats, whose field of action should be restricted.
Mending the Net: Toward Universal Basic Incomes by Chris Oestereich
basic income, en.wikipedia.org, future of work, profit motive, rent-seeking, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, universal basic income
Given that, it’s time to consider what we might do to change the system, and to start, we need to question our fundamental assumptions about how to organize the economy and society in general. The belief that the profit motive is the optimal incentive for driving progress is often treated as a given. But a preponderance of belief is a poor substitute for proof. We know there are people who are driven by the profit motive (evidence of that is in no short supply), and maybe we all are to some degree, but there are plenty of other factors driving human behavior. Why should we believe that one takes complete precedence over the rest when we know that some of us are also pulled by things like the need to foster a sense of community, the desire to support family and friends, or even a compulsion to work on the wicked problems faced by humanity? Each of us has a mix of forces pulling us in different directions. At best, the profit motive is an oversimplification. At worst, it’s a destructive force without equal.
At worst, it’s a destructive force without equal. Regardless of the reality of our motivations, our economic system remains centered on the profit motive. If I want a roof over my head, and something to eat, I better do something that affords me the necessary income. If I want to spend all my time helping others, but no one is willing to pay me enough to cover my needs, I’d better have deep enough pockets to live off of. But what if we had a different system, one in which our primary needs were taken care of? What might that system look like? A universal basic income program, that would help everyone take care of their needs, is one possible answer to that question. Can it help? Given a monthly payment that set a moderate income floor, but didn’t remove the support provided by other safety net programs (things like Medicare, SNAP, and WIC), the question about universal basic incomes is not whether they would help those who are struggling to make ends meet (they would), but whether they might create any undesirable macroeconomic effects like runaway inflation, so that’s something I think we should take great care in thinking through.
Corporate Warriors: The Rise of the Privatized Military Industry by Peter Warren Singer
barriers to entry, Berlin Wall, blood diamonds, borderless world, British Empire, colonial rule, conceptual framework, failed state, Fall of the Berlin Wall, financial independence, full employment, Jean Tirole, joint-stock company, Machinery of Freedom by David Friedman, market friction, moral hazard, Nelson Mandela, new economy, offshore financial centre, Peace of Westphalia, principal–agent problem, prisoner's dilemma, private military company, profit maximization, profit motive, RAND corporation, risk/return, rolodex, Ronald Coase, Ronald Reagan, Scramble for Africa, South China Sea, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith
Except for their short-term successes in the Congo in the 1960s, however, their impact on these conflicts was marginal, and no established state military forces relied on their support. Even today, mercenaries are present in contemporary warfare even though they have met with limited success. The simple reason for the persistence of mercenary activity is that in many areas governance and legal systems have broken down, giving enterprising ex-soldiers both room to maneuver and demand opportunities for their skills. The profit motive predominates for most, and the rewards are quite lucrative. In the Kosovo war, for example, the going rate for professional soldiers to help the rebel KIA group was a reported $4,000 per month, while private fighters on the Serb side were given a free license to pillage and loot the countryside; many left with truck- loads of stolen consumer goods. Latin American drug cartels are also rumored to pay highly for military specialists willing to work for them.11 44 THE RISE In fact the present pattern of mercenary involvement in conflict is as high as any other time in the last century, rivaled in scope and pervasiveness only by the decolonization period in the 1960s.12 Mercenaries today operate around the globe, based in numerous countries. .Vs an illustration, Ukrainian mercenaries alone are rumored to have been active in fighting in Abkhazia, Algeria, Angola, Bosnia, Chechnya, Croatia, Dniester, Guinea, Kosovo, Liberia, Nagorno-Karabakh, Sierra Leone, Tajikistan, and Zaire.
The digitized battlefield and the new "surrogate warriors" places this immunity at risk.98 The Criminalization of Conflict The changing reality of the warrior ethos is another aspect of the transformation of contemporary warfare, termed by some as a breakdown in the "Warrior's Honor/'99 In "high-intensity warfare," that is, the large-scale military operations carried out by western powers, combat has become more technological and more civilianized. At the same time, in the majority' of conflicts carried out in the developing world, it has become messier and criminalized. What is interesting is that both involve the monopoly of war being taken away from public professionals. In many of the ongoing wars around the globe, the traditional rationales behind the initiation, maintenance, and continuation of war are under siege. The profit motive has become a central motivator, equal or greater to that of political, ideological, or religious inspirations.100 Or, as one military analyst puts it, "With enough monev anyone can equip a powerful military force. With a willingness to use crime, nearlv anvone can generate enough *» 1 () 1 money. IU1 While economics has always played a role in conflict, the end of the twentieth century saw a new type of warfare develop, centered on profit-seeking enterprise.
For example, rebel forces in such wars tend not to attack military installations or strategic chokepoints, such as airports and harbors, but rather hit targets that they can loot.im The combination of these criminal goals and increasingly less professional, "soldier- less" forces also leads to a variation in strategies toward civilians. Unlike Mao's traditional insurgency strategy, these new or reconstructed groups THE RISK aim at terrorizing and pillaging the population, rather than winning hearts and minds. All of these factors make criminalized war messier and more intractable. They are also more amenable for other profit-motivated entities, such as PMFs, to become involved. As these wars have become more and more prevalent, the role of a private firm in warfare is also harder to dispute, particularly when their professionalism stands in sharp contrast to local irregular forces, who are motivated by profit just the same. THE POWER OF PRIVATIZATION AND THE PRIVATIZATION OF POWER The openings created for private actors in the wake of the post-Cold War market shift and transformations in the nature of warfare were underscored by the third critical trend: the new power of privatization.
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
We pursue these themes further in the postscript to this book. Question for your professor: If externalities are really pervasive and important, why doesn’t the textbook integrate them throughout the book, rather than leaving them to a chapter towards the end? 2.2 Externalities and the profit motive ‘We have always known that heedless self-interest was bad morals; we know now that it is bad economics.’ Franklin Delano Roosevelt, second inaugural address, 1937 166 [Marx’s] perception that the profit motive was ruinous for the human race remains, I think, a great insight. We see that the drive of corporations for profit is done at the expense of human beings all over the world … the pursuit of money has led chemical companies to pollute the air and water, has led arms manufacturers to create monstrous weapons of destruction without regard to how they will be used or against whom they will be used. (2002: 97–8) If we take the ubiquity of important externalities seriously, and if we recognize the realities of power and information that hinder effective responses to them, we can see how the profit motive can work in practice.
The modern market economy has indeed produced a high material standard of living for many people in the developed world. But this is not the same thing as ‘efficiency’. As we’ve tried to show, it’s perfectly compatible with very serious problems of pollution (of which we have given only a few examples), misuse of resources, and even with long-term catastrophe. 167 7 | Externalities Many critics of the current economic system deplore the profit motive, seeing it as destructive. From the viewpoint of the textbooks, where the profit motive guides resources to their most valued uses and produces material abundance, it appears that these critics are economic illiterates. Consider this comment by the American historian Howard Zinn: In fact, this does not contradict what is in the texts themselves, if they are read carefully and completely by those willing to draw their own conclusions.
We see that the drive of corporations for profit is done at the expense of human beings all over the world … the pursuit of money has led chemical companies to pollute the air and water, has led arms manufacturers to create monstrous weapons of destruction without regard to how they will be used or against whom they will be used. (2002: 97–8) If we take the ubiquity of important externalities seriously, and if we recognize the realities of power and information that hinder effective responses to them, we can see how the profit motive can work in practice. The texts put the externality problem in the background, while assuming away the problems of asymmetric information, corporate power and citizen disorganization that so often tend to give disproportionate power to the kind of narrow interests that Zinn identifies. Many critics, including Zinn, would argue that only a deep democratization of society can overcome the concentrations of power that inhibit effective collective action to deal with the external costs that the existing economic system generates.
Unconventional Success: A Fundamental Approach to Personal Investment by David F. Swensen
asset allocation, asset-backed security, buy and hold, capital controls, cognitive dissonance, corporate governance, diversification, diversified portfolio, fixed income, index fund, law of one price, Long Term Capital Management, market bubble, market clearing, market fundamentalism, money market fund, passive investing, Paul Samuelson, pez dispenser, price mechanism, profit maximization, profit motive, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, shareholder value, Silicon Valley, Steve Ballmer, stocks for the long run, survivorship bias, technology bubble, the market place, transaction costs, Vanguard fund, yield curve, zero-sum game
When the fiduciary responsibility to produce high risk-adjusted returns for investors inevitably comes into conflict with the profit motivation to provide substantial revenues for funds management companies, investor returns lose and company profits win. Mutual-fund investors consistently fail to achieve investment objectives, because the balance of power in the investment management world skews dramatically in favor of the profit-seeking investment manager. When a sophisticated provider of financial services stands toe to toe with a naïve consumer, the all-too-predictable conclusion resembles the results of a fight between a heavyweight champion and a ninety-eight-pound weakling. The individual investor loses in a first-round knockout. Investors increase the odds for success by avoiding purely profit-motivated firms and engaging organizations that reduce or eliminate the conflict between seekers of profit and seekers of return.
The case for government intervention rests on the clear inability of market mechanisms to produce satisfactory outcomes for the vast majority of individual investors. Mutual-Fund Industry Failure Unconventional Success concludes that the mutual-fund industry fails America’s individual investors. Compelling data show that nearly certain disappointment awaits the mutual-fund shareholder who hopes to generate market-beating returns. The root of the problem lies in the competition between a mutual-fund management company’s fiduciary responsibility and its profit motive. The contest almost inevitably resolves in favor of the bottom line. Individual investors lose. Mutual-fund managers win. Evidence points overwhelmingly to the conclusion that active management of assets fails to produce satisfactory results for individual investors. Two factors explain the individual’s predicament. The first problem stems from the investment choices available to individuals.
By 1995, the ratio declined to 1.06 percent as a result of efficiencies associated with managing a larger pool of assets. As part of the rationale for closing the fund, the portfolio managers observed that further increases in assets under management will produce “proportionately much less benefit” to the expense ratio, once again illustrating Southeastern’s focus on shareholder interests. The reduction in the expense ratio represents another example of Southeastern placing investor interests above the profit motive. Instead of allowing economies of scale to drive down expenses, the managers could have quietly maintained the percentage-of-assets charges, generated greater cash flow, and garnered greater profits for themselves. Instead, Southeastern transferred a significant portion of the benefits of increasing scale to its customers. Slightly more than three years after closing Longleaf Partners Fund, in October 1998, Southeastern reopened its flagship offering, noting that “investment opportunities exceeded the Fund’s cash levels and new inflows could enhance all shareholders’ returns.”
Philanthrocapitalism by Matthew Bishop, Michael Green, Bill Clinton
Albert Einstein, anti-communist, barriers to entry, battle of ideas, Bernie Madoff, Bob Geldof, Bonfire of the Vanities, business process, business process outsourcing, Charles Lindbergh, clean water, cleantech, corporate governance, corporate social responsibility, Dava Sobel, David Ricardo: comparative advantage, don't be evil, family office, financial innovation, full employment, global pandemic, global village, God and Mammon, Hernando de Soto, high net worth, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Dyson, John Harrison: Longitude, joint-stock company, knowledge economy, knowledge worker, Live Aid, lone genius, Marc Andreessen, market bubble, mass affluent, microcredit, Mikhail Gorbachev, Nelson Mandela, new economy, offshore financial centre, old-boy network, peer-to-peer lending, performance metric, Peter Singer: altruism, plutocrats, Plutocrats, profit maximization, profit motive, Richard Feynman, risk tolerance, risk-adjusted returns, Ronald Coase, Ronald Reagan, shareholder value, Silicon Valley, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade liberalization, transaction costs, trickle-down economics, wealth creators, winner-take-all economy, working poor, World Values Survey, X Prize
As well as seeking better ways to work with charitable nonprofit, nongovernmental organizations (NGOs), philanthrocapitalists are increasingly trying to find ways of harnessing the profit motive to achieve social good. This is controversial, to say the least: isn’t philanthropy supposed to be about giving away money, not making more of it? But as the philanthrocapitalists see it, if they can use their donations to create a profitable solution to a social problem, it will attract far more capital, far faster, and thus achieve a far bigger impact, far sooner, than would a solution based entirely on giving money away. Thus, their money can lever, in a good cause, some of the trillions of dollars in the for-profit business world. At the same time as individual philanthropists are embracing the profit motive, a growing number of big for-profit businesses are catching the philanthrocapitalism bug and getting into giving—or at least trying to do good.
Relying on nonprofit capital, not self-sustaining business models, is a big mistake,” he says. Omidyar’s interest in profit is not a mark of a lack of generosity—he has pledged to give away most of his fortune. Instead, it reflects his view that the entrepreneurship of the business world needs to be applied to social problems and that often, but not always, this should involve harnessing the profit motive. This belief is shared by the other man behind the success of eBay, fellow billionaire Jeff Skoll, who is now probably the leading philanthropist promoter of the social entrepreneurship movement. The fact that Yunus is admired by many as the world’s leading social entrepreneur shows how controversial it is to apply entrepreneurial approaches from business to the social sectors. Figuring out the appropriate roles of for-profit and nonprofit activities in social entrepreneurship will be crucial to the success of philanthrocapitalism.
OMIDYAR AND SKOLL have been guided in their thinking about social entrepreneurship by Bill Drayton, who in 1978 founded Ashoka, an organization devoted to finding and fostering social entrepreneurs worldwide that has become a favorite investment vehicle of some of the leading philanthrocapitalists, including the eBay billionaires. “Like many of the world’s greatest givers, Bill Drayton is not well known outside the global NGO community. But to those who believe in the power of private citizens to improve society, Drayton is a hero,” writes Bill Clinton in Giving. Like the social entrepreneurship movement as a whole Ashoka began by trying to apply entrepreneurship in the nonprofit sector, only embracing the profit motive more recently. Ashoka started with an annual budget of $50,000 and named one Indian social entrepreneur as a “fellow.” Now it has built a network of eighteen hundred fellows in sixty countries, with a budget of $30 million a year. Drayton, who still thinks like the McKinsey management consultant he once was, reckons there are four stages in the life cycle of a social entrepreneur; apprenticeship; launch; takeoff—“an extended period in which entrepreneurs consolidate their organizations and continue to refine and spread their ideas until they become widely adopted”; and maturity, when “entrepreneurs have had demonstrable impact on their fields.”
Brazillionaires: The Godfathers of Modern Brazil by Alex Cuadros
affirmative action, Asian financial crisis, big-box store, BRICs, cognitive dissonance, creative destruction, crony capitalism, Deng Xiaoping, Donald Trump, Elon Musk, facts on the ground, family office, high net worth, index fund, invisible hand, Jeff Bezos, Mark Zuckerberg, NetJets, offshore financial centre, profit motive, rent-seeking, risk/return, Rubik’s Cube, savings glut, short selling, Silicon Valley, sovereign wealth fund, stem cell, The Wealth of Nations by Adam Smith, too big to fail, transatlantic slave trade, We are the 99%, William Langewiesche
Or rather, let us say, love of glory. —MACHADO DE ASSIS, Memórias Póstumas de Brás Cubas (trans. William Grossman) Contents PROLOGUE: THE CRASH PART ONE: ROOTS OF WEALTH CHAPTER 1: GOD IS BRAZILIAN CHAPTER 2: THE PRICE OF PROGRESS CHAPTER 3: MANIFEST DESTINY CHAPTER 4: NATION BUILDING CHAPTER 5: PROSPERITY GOSPEL PART TWO: THE BRAZILIAN DREAM CHAPTER 6: VISIONARY CHAPTER 7: HELPING HANDS CHAPTER 8: THE PROFIT MOTIVE CHAPTER 9: THE BACKLASH CHAPTER 10: TOO BIG TO FAIL EPILOGUE: AFTER THE CRASH ACKNOWLEDGMENTS NOTES GLOSSARY INDEX PROLOGUE THE CRASH ON A STRETCH OF HIGHWAY NOT FAR FROM RIO DE JANEIRO, a silver SLR McLaren idled on the shoulder, its futuristic door hinged open at the top like a wing extended toward the evening sky. The warning lights blinked yellow. In the driver’s seat, a twenty-year-old kid named Thor sat spattered with blood.
In November, the government would announce a partnership between Eike, the BNDES, and IBM to build a microchip factory. In typical fashion, Eike called it a future Brazilian Intel. He had another important ally. Lula, even as ex-president, remained a power broker. And lately he’d been visiting Eike at the Serrador building. I started hearing whispers that, if things got bad enough, the government would bail Eike out. CHAPTER 8 THE PROFIT MOTIVE A NEW RICHEST MAN, MERITOCRACY, AND THE VALUE OF MONEY “Money in and of itself isn’t what fascinates me.” —JORGE PAULO LEMANN ($20 BILLION) “Jorge created a whole management culture in Brazil that is extraordinary.” —EIKE BATISTA ($13 BILLION) DESPITE HIS EFFORTS TO STANCH THE BLEEDING, EIKE’S WEALTH continued to shrink. In November 2012, his net worth slipped below nineteen billion dollars, and suddenly, for the first time in three years, he was not the richest person in Brazil.
But when a journalist asked him why he didn’t bet bigger on renewable energy, he replied that it just wasn’t financially viable yet. Despite his love of risk, this was a risk he wasn’t willing to take. Eike belonged to the Lemann camp. Like most of his fellows in the business world, he saw profit as a simple force of nature. It was immutable, something to be harnessed: galvanizer of wills. Even on its own terms, though, the profit motive can backfire. Eike’s story is proof of this. “Jorge Paulo created a whole management culture in Brazil that is extraordinary,” Eike said once, praising Lemann. And he followed a similar model of remuneration. To lure the best people in oil and mining, he offered stock incentives that dwarfed the salaries they earned at Petrobras or Vale. The system worked like this: After a few years at one of his companies, management could buy shares from him for just pennies each.
The People's Republic of Walmart: How the World's Biggest Corporations Are Laying the Foundation for Socialism by Leigh Phillips, Michal Rozworski
Berlin Wall, Bernie Sanders, call centre, carbon footprint, central bank independence, Colonization of Mars, combinatorial explosion, complexity theory, computer age, corporate raider, decarbonisation, discovery of penicillin, Elon Musk, G4S, Georg Cantor, germ theory of disease, Gordon Gekko, greed is good, hiring and firing, index fund, Intergovernmental Panel on Climate Change (IPCC), Internet of things, inventory management, invisible hand, Jeff Bezos, Joseph Schumpeter, linear programming, liquidity trap, mass immigration, Mont Pelerin Society, new economy, Norbert Wiener, oil shock, passive investing, Paul Samuelson, post scarcity, profit maximization, profit motive, purchasing power parity, recommendation engine, Ronald Coase, Ronald Reagan, sharing economy, Silicon Valley, Skype, sovereign wealth fund, strikebreaker, supply-chain management, technoutopianism, The Nature of the Firm, The Wealth of Nations by Adam Smith, theory of mind, transaction costs, Turing machine, union organizing
Just as capitalist markets run on profit—the difference between how much it costs to produce something, including wages paid to workers, and how much the product can then be sold for—under market socialism, use of the price signal would also generate excess revenues for the more efficient firms (even if transformed into worker cooperatives) and losses for the unlucky ones. Market socialists, then, have to explain how this system would redistribute “profits” equitably among the population. More importantly, how would their solution ensure that the profit motive—one that squeezes more work out of workers and creates incentives to overproduce—does not reemerge? Scaled up, the market and the profit motive create economy-wide cycles of boom and bust that hurt people and waste resources. By their very nature, markets produce inequalities—inequalities that, so long as a market exists, are only ameliorable, not eradicable. And it has consistently been inequality that has driven extra-economic conflict throughout history. This is no abstract discussion.
Such constant reforms themselves began to disrupt planning. The Khrushchev Thaw, however, also permitted a sudden freedom of discussion and critique, and thus a revival of economic debate. Many planners and economists were aware of the problem: fundamentally insufficient, poor-quality data, and the inability to process what they had. There emerged two main responses. The first sought to increase the role of the profit motive and freedom of different enterprises to contract with each other; in other words, a restoration, to greater or lesser degree, of market relations, even if firms would still be owned by the state. The second is personified by mathematician Leonid Kantorovich, the sole Soviet citizen to ever win the Swedish National Bank’s Prize in Economic Sciences in Memory of Alfred Nobel. Along with his comrades at Moscow’s Mathematical Economics Institute, Kantorovich believed a solution would be found by using newly emerging electronic computers to improve optimization.
This, one of the principal themes of this book, applies on scales both granular and grand. As we have seen, no matter how beneficial new classes of antibiotic may be, they are insufficiently profitable, so they will not be produced. Meanwhile, many other commodities, such as fossil fuels, that undermine human flourishing or even threaten our existence, remain profitable, and so without regulatory intervention, companies will continue to be produce them. The market’s profit motive—not growth or industrial civilization, as some environmentalists have argued—caused our climate calamity and the larger bio-crisis. The market is amoral, not immoral. It is directionless, with its own internal logic that is independent of human command. It would be very useful to wind down our species’ combustion of fossil fuels, responsible as it is for roughly two-thirds of global greenhouse gas emissions.
Small Change: Why Business Won't Save the World by Michael Edwards
Bernie Madoff, clean water, corporate governance, corporate social responsibility, different worldview, high net worth, invisible hand, knowledge economy, light touch regulation, Mahatma Gandhi, Mark Shuttleworth, market bubble, microcredit, Nelson Mandela, New Journalism, Ponzi scheme, profit motive, Robert Shiller, Robert Shiller, shareholder value, Silicon Valley, Silicon Valley startup, Social Responsibility of Business Is to Increase Its Profits, The Fortune at the Bottom of the Pyramid, The Spirit Level, The Wealth of Nations by Adam Smith, transaction costs
The problem comes when businesses and markets undertake tasks for which they are not well designed — like rebuilding the cohesion of communities, strengthening the ways in which people care for each other, and pushing for fundamental changes in the economic system itself. Remember the old joke about the European Union that puts the British in charge of the food instead of the French, the Germans in charge of the entertainment instead of the Italians, and the Italians in charge of the administration instead of the Germans? It’s politically incorrect, I know, but (speaking as a Brit) still pretty accurate. Expecting price competition, the proﬁt motive, short-term deliverables, and supply-chain control to bring about a world of compassion and solidarity is, to say the least, a little strange. You wouldn’t preface xi use a typewriter to plow a ﬁeld or a tractor to write a book, so why use markets where different principles apply? Business can certainly help to extend access to useful goods and services, and for that we should be grateful, but claims that business will save the world are a dangerous case of hubris.
It has been nicknamed philanthrocapitalism by Matthew Bishop and Michael Green1, and its followers believe that business thinking and market methods will save the world — and make some of us a fortune along the way. Bobby Shriver, Bono’s partner in the Red brand of products, hopes that sales will help “buy a house in the Hamptons” while simultaneously swelling the coffers of the Global Fund to Fight AIDS, Tuberculosis and Malaria.2 Larry Ellison, who founded Oracle, thinks that “the proﬁt motive could be the best tool for solving the world’s problems, more effective than any government”3 — until government has to bail you out, of course, as it did for large swaths of American ﬁnance and industry in the aftermath of the ﬁnancial crash in September 2008. “If you put a gun to my head and asked which one has done more good for the world, the Ford Foundation or Exxon,” says Charles Munger, vice chair of Berkshire Hathaway, “I’d have no hesitation in saying Exxon,”4 though I can’t think of any oil spills that my old employers have dumped into the Paciﬁc.
Economic efficiency is not the same as human fulﬁllment, and market norms do not properly express the valuations of a democratic society for all sorts of well-known reasons: They don’t price real assets such as the environment and social cohesion, they can’t represent the needs of the future in the present, and they are full of imperfections that lead to problems like monopoly. That is why we need alternative allocation mechanisms through government and civil society for things like public spaces or access to the Internet, which markets would distribute unequally, if at all. The proﬁt motive is not a dirty word, but it is a different word from solidarity and caring with no expectation of return. These differences cannot be wished away. They are rooted, often unconsciously, in different worldviews and cultures. But market values and human values are not just different; they pull in opposite directions in many important ways, and the risks involved in mixing them together are apparent in the evidence reviewed in chapter 3.
Prosperity Without Growth: Foundations for the Economy of Tomorrow by Tim Jackson
"Robert Solow", bank run, banking crisis, banks create money, Basel III, basic income, bonus culture, Boris Johnson, business cycle, carbon footprint, Carmen Reinhart, Cass Sunstein, choice architecture, collapse of Lehman Brothers, creative destruction, credit crunch, Credit Default Swap, David Graeber, decarbonisation, dematerialisation, en.wikipedia.org, energy security, financial deregulation, Financial Instability Hypothesis, financial intermediation, full employment, Growth in a Time of Debt, Hans Rosling, Hyman Minsky, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, liberal capitalism, Mahatma Gandhi, mass immigration, means of production, meta analysis, meta-analysis, moral hazard, mortgage debt, Naomi Klein, new economy, offshore financial centre, oil shale / tar sands, open economy, paradox of thrift, peak oil, peer-to-peer lending, Philip Mirowski, profit motive, purchasing power parity, quantitative easing, Richard Thaler, road to serfdom, Robert Gordon, Ronald Reagan, science of happiness, secular stagnation, short selling, Simon Kuznets, Skype, smart grid, sovereign wealth fund, Steve Jobs, The Chicago School, The Great Moderation, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, universal basic income, Works Progress Administration, World Values Survey, zero-sum game
At heart, it’s about doing things more efficiently. And since efficiency is one of the things that modern economies are supposed to be good at, decoupling has a familiar logic and a clear appeal as a solution to the dilemma of growth. Resource inputs represent a cost to producers. So the profit motive should stimulate a continuing search for efficiency improvement in industry to reduce input costs. This seems clear enough at the level of the individual enterprise, particularly in a capitalist economy. But from a global perspective the critical question is whether or not this profit motive translates into an overall decline in resource intensity. There is some evidence that it might do. The amount of primary energy needed to produce each unit of the world’s economic output has fallen more or less continuously over most of the last half-century.
And yet, the idea of running faster and faster to escape the damage we’re already causing is itself a strategy that smacks of panic. So, before we settle for it, a little reflection may be in order. Accordingly, this chapter confronts the structure of modern capitalist economies head on. In particular, it explores two interrelated features of economic life that are central to the growth dynamic. On the one hand, the profit motive stimulates newer, better or cheaper products and services through a continual process of innovation and ‘creative destruction’. At the same time, the market for these goods relies on an expanding consumer demand, driven by a complex social logic. These two factors combine to drive ‘the engine of growth’ on which modern economies depend and lock us in to an ‘iron cage’ of consumerism.3 It’s essential to get a better handle on this twin dynamic, not least so that we can identify the potential to escape from it.
The starting point is to unravel some of the workings of modern capitalism. Varieties of capitalism Capitalism is an elusive concept. It isn’t a simple, homogeneous entity. And it certainly thrives or survives in numerous varieties. The most widely used formulation defines capitalism in terms of the private ownership of the ‘means of production’. Common definitions also stress the importance of a ‘profit motive’ as a defining motive within the economic system.4 What does this mean in practice? Broadly, it means that private individuals (capitalists) invest their money (their ‘capital’) in the factories, the farms, the mines, the supply chains and the distribution networks (also the ‘capital’) that allow society to produce goods and services. Typically, ownership is motivated by the desire to make a profit or to ‘earn a return’ on the money invested.
Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Pérez
agricultural Revolution, Big bang: deregulation of the City of London, Bob Noyce, Bretton Woods, business cycle, capital controls, commoditize, Corn Laws, creative destruction, David Ricardo: comparative advantage, deindustrialization, distributed generation, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, Hyman Minsky, informal economy, joint-stock company, Joseph Schumpeter, knowledge economy, late capitalism, market fundamentalism, new economy, nuclear winter, offshore financial centre, post-industrial society, profit motive, railway mania, Robert Shiller, Robert Shiller, Sand Hill Road, Silicon Valley, Simon Kuznets, South Sea Bubble, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, trade route, tulip mania, Upton Sinclair, Washington Consensus
This means that a painful and difficult process of learning and adaptation must take place, involving creative destruction across all spheres. It also explains why the fruits of that new growth potential cannot be fully reaped in the The Propagation of Paradigms: Times of Installation, Times of Deployment 43 first decades, when the accommodation and mutual shaping of society and the new economy occur, pushed by the profit motive in spite of institutional inertia and human resistance. Hence, increasing polarization and decoupling both inside the economy and between the new economy and the old social framework characterize the initial diffusion of a technological revolution. So, the installation period is one of tense coexistence of two paradigms, one declining and the other occupying more and more space on the ground, in the market and in the minds of people.
That is why, when the potential of one revolution is spent, there is a pool of radical innovations capable of coming together to form the Technological Revolutions and Financial Capital 156 Figure14.2 The dynamics of the system: three spheres of change in constant reciprocal action INSTITUTIONAL CHANGE ECONOMIC CHANGE Production capital Financial capital Socio-political ideas and behavior TECHNOLOGICAL CHANGE Socio-institutional frameworks Technological revolutions Techno-economic paradigms next. Hence, a certain degree of scientific and academic freedom is an essential component of the dynamics of the system. The economic sphere is the scene of the growth process, where production and financial capital interact. More than merely interdependent, these two functional forms of the profit motive are indispensable to each other: real production supports paper wealth; borrowed money supports innovation and real investment. But it is not a simple, tranquil relationship, but rather a very turbulent one. The tensions and distensions of financial and production capital, their couplings and recouplings, will determine the rhythm and the direction of economic growth in each phase. And, at the two hinges of the surge, from Installation to Deployment and vice versa, when power struggles between them come to a head, the two other spheres will intervene.
So, as in most processes of advance, development in the capitalist system occurs through combining the forces of conservation with the forces of transformation. C. The Difficult Balance Between Private and Social Interest The model proposed takes into account the fundamental structure of the capitalist system, which is in constant tension, managing the balance between private and social interests. The profit motive acts as the basic engine of private interest, moving both finance and production capital. The social interests, incarnate in government and the various organizations of civil society, are constantly trying to shape the conditions of growth and the distribution of its toils and of its fruits. The actual social benefits, in each particular phase, will depend on the extent to which there is a positive or negative sum game between individual and collective interests and on whether the social and political forces leaning to one or the other side are capable of recognizing these – rationally or intuitively – and act effectively to attain their aims.
The Sport and Prey of Capitalists by Linda McQuaig
anti-communist, Bernie Sanders, carbon footprint, clean water, diversification, Donald Trump, energy transition, financial innovation, Kickstarter, Menlo Park, Naomi Klein, neoliberal agenda, new economy, offshore financial centre, oil shale / tar sands, payday loans, profit motive, risk/return, Ronald Reagan, Steve Jobs, strikebreaker, union organizing
But there’s another serious consequence of this massive anti-government campaign: it blocks us from seeing the enormous benefits that can be achieved through government ownership and stewardship, and therefore prevents us from taking advantage of significant opportunities. We’ll return to these missed opportunities later in the book. For now, it’s worth noting that the anti-government dogma that infects our politics prevents us from appreciating — or even being aware of — what has been accomplished in Canada over our history through what can best be described as public enterprise. Unlike the profit motive that has stirred the loins of capitalist entrepreneurs, those who built our public enterprises responded to a different set of motivations. It seems fair to say that they were driven, at least in part, by the goal of advancing the collective interests of Canadians, and that this served as a potent incentive. This meant that our public enterprise entrepreneurs often ended up aligned with popular movements of ordinary citizens, facing off against private interests who were keen to block these public enterprises from moving in on their lucrative turf.
It apparently didn’t occur to him that Canadian taxpayers are not simply business owners but also, for the most part, citizens with an interest in their own health and that of others. Surely, Connaught’s tax-free status could be easily justified, given its enormous contribution to treating deadly diseases and promoting initiatives that improved the public’s overall health. For that matter, Connaught’s lack of a profit motive made it a highly unusual — and useful — player in the health business, focused on health benefits, not on gaining market advantage or pushing up its stock price. While private firms manoeuvred to corner the market on a lucrative drug, Connaught shared its advances with other producers in order to make needed treatments more widely available. Connaught scientists had, for instance, developed methods for the purification and mass production of penicillin.
(Ontario also had a public bank, the Province of Ontario Savings Office, established in 1922, but it was privatized by the Conservative provincial government in 2003.) Bob Ascah and Mark Anielski, two Alberta-based public policy researchers, note that public banks weathered the 2008 financial crisis better than private banks. “Public banks have an inherent competitive advantage over private banks in that they can operate with a no-profit motive,” they write in Alberta’s Public Bank, a report they prepared for the Parkland Institute at the University of Alberta.15 (Ascah formerly worked for the ATB as a strategic planner.) The authors argue that, in addition to providing basic financial services to Albertans, the ATB can perform key functions advancing the public interest. They note, for instance, that a public bank typically has the advantage of being able to borrow at lower rates, which means that it can make long-term public investments at lower cost.
Take the Money and Run: Sovereign Wealth Funds and the Demise of American Prosperity by Eric C. Anderson
asset allocation, banking crisis, Bretton Woods, business continuity plan, business process, buy and hold, collective bargaining, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, diversified portfolio, fixed income, floating exchange rates, housing crisis, index fund, Kenneth Rogoff, open economy, passive investing, profit maximization, profit motive, random walk, reserve currency, risk tolerance, risk-adjusted returns, risk/return, Ronald Reagan, sovereign wealth fund, the market place, The Wealth of Nations by Adam Smith, too big to fail, Vanguard fund
While we can bemoan the mean-spirited nature of this investment, the properties clearly cannot be removed from the United States and are, therefore, likely to eventually once again land in American hands. My vote is that it is proﬁt-motivated behavior.48 Now, what about the commodities speculation? This story is a more difﬁcult read. I can understand how some readers would argue this is a case of strategic investment—governments using sovereign wealth funds to purchase future rights to scarce resources. On the ﬂip side of the coin, I also have empathy for readers who conclude the sovereign wealth funds were simply engaging in proﬁt-motivated commodities speculation. In either case, this second story should cause policy makers to consider the viability of our existing foreign investment laws and regulations. Is Washington really unable to monitor the activities of swap dealers?
At the end of 2006, the Chinese “big four” ﬁnancial institutions reported the following nonperforming loan ratios: Bank of China: 4.04% Construction Bank of China: 3.39% Industrial and Commercial Bank of China: 3.79% Agricultural Bank of China: 26.17%68 The Agricultural Bank of China’s problem—an estimated $114 billion in bad loans—has not gone unnoticed, both in and outside China.69 In fact, there are rumors that the Agricultural Bank of China is preparing to join the other “big four” with a public stock listing in 2010,70 and the CIC is reportedly slated to participate in the ofﬁcial effort to address the Bank’s nonperforming loan problem.71 Given this background on China’s nonperforming loan problem, and speciﬁcally how that issue was addressed within the “big four” ﬁnancial institutions, we are now ready for a return to an evaluation of CIC’s initial purchases. As stated above, the CIC executive board was apparently caught between those who argued the sovereign wealth fund be strictly used for proﬁt motives and those who felt the money should be used to assist Chinese ﬁrms as they venture into the global market. The Chinese Investment Corporation, as any good Chinese bureaucracy will do, sought a middle ground, a decision that probably earned a unanimous vote from the board members. 54 Take the Money and Run The ﬁrst evidence of this effort to ﬁnd a middle ground came in the form of CIC’s acquisition of Central Huijin for an estimated $67 billion.72 A key participant in Beijing’s efforts to prepare China’s ﬁnancial institutions for foreign competition, Central Huijin had become a clearing house for funds headed to the country’s ailing banks.
Speaking as the CIC chief investment offer, Gao declared “we have done a few [other private equity deals]. We are looking at a lot more.” The ultimate goal: “We would like to build up a much more balanced portfolio.”128 As the comments above should indicate, we—and apparently the Chinese— don’t really know what investment strategy will guide CIC’s future acquisitions. Although there are certainly signs Chinese ofﬁcials are seeking to follow a strict “proﬁt motive,” the push to employ CIC assets in a blocking strategy suggest political dictates will occasionally rule the day. For the moment, it seems likely the China Investment Corporation will seek to avoid the limelight and the associated international examination and criticism. This translates into an investment strategy heavy on indexed funds and stakes below common automatic foreign government investigation levels—typically 5–10% of a corporation.
More From Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources – and What Happens Next by Andrew McAfee
back-to-the-land, Bartolomé de las Casas, Berlin Wall, bitcoin, Branko Milanovic, British Empire, Buckminster Fuller, call centre, carbon footprint, clean water, cleantech, cloud computing, Corn Laws, creative destruction, crony capitalism, David Ricardo: comparative advantage, decarbonisation, dematerialisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, energy transition, Erik Brynjolfsson, failed state, Fall of the Berlin Wall, Haber-Bosch Process, Hans Rosling, humanitarian revolution, hydraulic fracturing, income inequality, indoor plumbing, intangible asset, James Watt: steam engine, Jeff Bezos, job automation, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Khan Academy, Landlord’s Game, Louis Pasteur, Lyft, Marc Andreessen, market fundamentalism, means of production, Mikhail Gorbachev, oil shale / tar sands, Paul Samuelson, peak oil, precision agriculture, profit maximization, profit motive, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, Scramble for Africa, Second Machine Age, Silicon Valley, Steve Jobs, Steven Pinker, Stewart Brand, telepresence, The Wealth of Nations by Adam Smith, Thomas Davenport, Thomas Malthus, Thorstein Veblen, total factor productivity, Uber and Lyft, uber lyft, Veblen good, War on Poverty, Whole Earth Catalog, World Values Survey
One of the most quoted passages from his 1776 masterpiece, The Wealth of Nations,I is “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” The profit motive is an extremely powerful incentive for people and companies to create goods and services others will want to buy. Self-interest is not a flaw in capitalism, it’s a central feature. In most societies and religious traditions selfishness is held to be a vice, so the notion that the profit motive is beneficial fights against long traditions and deeply ingrained assumptions. The New Testament, for example, holds that “the love of money is the root of all evil.”II This view is persistent. For example, after conducting seven studies of Americans’ views of the profit motive, researchers Amit Bhattacharjee, Jason Dana, and Jonathan Baron concluded in 2017, “Even in one of the most market-oriented societies in history, people doubt the contributions of profit-seeking industry to societal progress.”
Eventually every country in the United Nations agreed to the “Montreal Protocol,” which initially specified global CFC reductions of 50 percent within twelve years. That goal proved far too modest, not least because chemical companies soon saw that a phaseout of existing chemicals gave them a great chance to profit from patents on new ones. At post-Montreal meetings signatories agreed to reduce use of the chemicals by 75 percent, then 100 percent, and to reduce the time to do so to ten years. In addition to the profit motive, the fact that CFCs were produced by a relatively small group of companies and industries helped in accomplishing these milestones. While the chemicals themselves spread around the world, their sources were easy to pinpoint and ultimately amenable to persuasion. UN secretary-general Kofi Annan said, “Perhaps the single most successful international agreement to date has been the Montreal Protocol.”
This Changes Everything: Capitalism vs. The Climate by Naomi Klein
1960s counterculture, activist fund / activist shareholder / activist investor, battle of ideas, Berlin Wall, big-box store, bilateral investment treaty, British Empire, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, Climategate, cognitive dissonance, coherent worldview, colonial rule, Community Supported Agriculture, complexity theory, crony capitalism, decarbonisation, deindustrialization, dematerialisation, different worldview, Donald Trump, Downton Abbey, energy security, energy transition, equal pay for equal work, Exxon Valdez, failed state, Fall of the Berlin Wall, feminist movement, financial deregulation, food miles, Food sovereignty, global supply chain, hydraulic fracturing, ice-free Arctic, immigration reform, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, Jones Act, Kickstarter, light touch regulation, market fundamentalism, moral hazard, Naomi Klein, new economy, Nixon shock, Occupy movement, offshore financial centre, oil shale / tar sands, open borders, patent troll, Pearl River Delta, planetary scale, post-oil, profit motive, quantitative easing, race to the bottom, Ralph Waldo Emerson, Rana Plaza, renewable energy transition, Ronald Reagan, smart grid, special economic zone, Stephen Hawking, Stewart Brand, structural adjustment programs, Ted Kaczynski, the scientific method, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, trickle-down economics, Upton Sinclair, uranium enrichment, urban planning, urban sprawl, wages for housework, walkable city, Washington Consensus, Whole Earth Catalog, WikiLeaks
Their vision—that greed should guide us, that, to quote the late economist Milton Friedman, “the major error” was “to believe that it is possible to do good with other people’s money”—has dramatically remade our world over the last four decades, decimating virtually every countervailing power.67 Extreme free-market ideology was locked in through the harsh policy conditions attached to much-needed loans issued by the World Bank and the International Monetary Fund. It shaped the model of export-led development that dotted the developing world with free trade zones. It was written into countless trade agreements. Not everyone was convinced by these arguments, not by a long shot. But too many tacitly accepted Thatcher’s dictum that there is no alternative. Meanwhile, denigration of collective action and veneration of the profit motive have infiltrated virtually every government on the planet, every major media organization, every university, our very souls. As that American Geophysical Union survey indicated, somewhere inside each of us dwells a belief in their central lie—that we are nothing but selfish, greedy, self-gratification machines. And if we are that, then what hope do we have of taking on the grand, often difficult, collective work that will be required to save ourselves in time?
And it means coming up with new, nonprofit disaster insurance programs so that people who have lost everything to a hurricane or a forest fire are not left at the mercy of a private insurance industry that is already adapting to climate change by avoiding payouts and slapping victims with massive rate increases. According to Amy Bach, cofounder of the San Francisco–based advocacy group United Policyholders, disaster insurance is becoming “very much like health insurance. We’re going to have to increasingly take the profit motive out of the system so that it operates efficiently and effectively, but without generating obscene executive salaries and bonuses and shareholder returns. Because it’s not going to be a sustainable model. A publicly traded insurance company in the face of climate change is not a sustainable business model for the end user, the consumer.”38 It’s that or a disaster capitalism free-for-all; those are the choices.
As recently as the early 1970s, a Republican president—Richard Nixon—was willing to impose wage and price controls to rescue the U.S. economy from crisis, popularizing the notion that “We are all Keynesians now.”8 But by the 1980s, the battle of ideas waged out of the same Washington think tanks that now deny climate change had successfully managed to equate the very idea of industrial planning with Stalin’s five-year plans. Real capitalists don’t plan, these ideological warriors insisted—they unleash the power of the profit motive and let the market, in its infinite wisdom, create the best possible society for all. Obama, obviously, does not share this extreme vision: as his health care and other social policies suggest, he believes government should nudge business in the right direction. And yet he is still sufficiently a product of his anti-planning era that when he had the banks, the auto companies, and the stimulus in his hands, he saw them as burdens to be rid of as soon as possible, rather than as a rare chance to build an exciting new future.
The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey
Airbnb, altcoin, bank run, banking crisis, bitcoin, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cryptocurrency, David Graeber, disintermediation, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, hacker house, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP
For one, power consumption must be measured against the value of validating transactions in a payment system, a social service that gold mining has never provided. Second, the costs must be weighed against the high energy costs of the alternative, traditional payment system, with its bank branches, armored cars, and security systems. And finally, there’s the overriding incentive for efficiency that the profit motive delivers to innovators, which is why we’ve seen such giant reductions in power consumption for the new mining machines. If power costs make mining unprofitable, it will stop. Bitcoin’s environmental doomsday is not, therefore, just around the corner. Even so, it would be irresponsible to ignore energy usage as a concern. As BitCarbon’s Lane points out, the improved energy efficiency of mining rigs simply increases profitability, which, when combined with a rising price, draws more miners into the race for bitcoins and increases total power consumption.
There’s a genesis problem here, though: Who will put up the initial capital to create this not-for-profit entity if its founder can’t earn a return from investing in it? Clearly, the assets of these autonomous agents need to be thought of as public goods. The societal profit we all share from having more services abundantly available at low prices should be self-evident, but what incentive is there for profit-motivated individuals to invest in providing them? One option is to have governments direct this effort, applying taxpayer money. Another is to hope that philanthropists pick up the challenge. Ideally, though, the investment would come as a community effort. Perhaps residents of a particular neighborhood could invest in a driverless car and be rewarded with free or discounted rides for a prescribed period, and to achieve that kind of broad-based funding objective, Hearn offers up another solution: cryptocurrency assurance contracts, a blockchain-based version of the popular crowdfunding model in which organizers pledge a certain amount when others’ donations reach target levels.
In part because the Ripple network is run by a private, for-profit company, rather than taking on an ownerless and decentralized structure like bitcoin’s, it draws suspicion from cryptocurrency purists, who often wrongly define it as a centralized system. Despite the company’s elaborate efforts to create transparent, arm’s-length rules for issuing and disseminating its XRP currency, it inevitably comes in for flak on Reddit and other forums favored by the crypto mob. The issue of Ripple’s profit motives came to a head in May 2014, when McCaleb made the stunning announcement that he would sell all of his XRP holdings. In a short message posted on Reddit, the cofounder said that after giving away some of his 9 billion XRP to charity, he now planned to sell the remainder over two weeks. That represented about 9 percent of the initial 100 billion XRP money supply, which unlike the drawn-out, 130-year issuance of bitcoins, was created in one batch in 2012.
Reinventing the Bazaar: A Natural History of Markets by John McMillan
"Robert Solow", accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, Deng Xiaoping, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Ronald Coase, Ronald Reagan, sealed-bid auction, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, Xiaogang Anhui farmers, yield management
Research has brought a host of other medical marvels, as pointed out by the Pharmaceutical Research and Manufacturers of America (PhRMA), an alliance of U.S. drug manufacturers.12 Antibiotics and vaccines have almost eliminated diphtheria, syphilis, whooping cough, measles, and polio from the developed world. Deaths from influenza and pneumonia have been greatly reduced, as have deaths from heart disease, strokes, and ulcers. Millions live longer, more productively, and more comfortably. Market incentives are what prompted the invention of these miracle drugs. Were it not for the profit motive, many of them would not exist. Adam Smith said self-interest can lead to beneficent outcomes: there is no more striking instance of this than the aggressive pursuit of profit giving rise to life-preserving medicines. No economic system that has ever been implemented, other than the market, has succeeded in consistently spawning major pharmaceutical innovations. The alternatives to the market—such as provision by international agencies or the state—have been far less successful than the drug companies in developing new pharmaceuticals.
Some programs are written with no expectation of a patent. The Linux open-source software is an example; Linux developed as it did because users, unhindered by patents, shared their ideas and built on each others’. Writing code is not the same, though, as writing poetry. Some programmers want to change the world; many just want to make a living. The writing of much of the software we use every day was driven by the profit motive. If software were free, less of it would be produced. The evidence on the effects of the patenting of software is inconclusive. There are examples of patented software that probably would not have been written were it not for the prospect of patents. Following the various court rulings in the early 1980s allowing the patenting (rather than just copyrighting) of software, research-and-development spending by software-related firms increased steadily but unspectacularly.
And most of the time you do get it back. If you tried to describe this process to a Rip van Winkle, awakened after sleeping through the last hundred years of history, you would be hard-pressed to convince him you weren’t just making it up. “Give me your money and I’ll multiply it for you” is the spiel of every con man. Why are we able to trust corporations presenting the same pitch? Whereas markets are driven by the profit motive, corporations are based on the presumption that managers are not seeking profits for themselves: instead, they follow their fiduciary duty and seek profits for the shareholders. Managers are no more altruistic than the rest of us. To ensure they will act in their shareholders’ interests, they must be given incentives to do so. Creating such incentives is not easy. Many countries have not yet succeeded.
Defending the Free Market: The Moral Case for a Free Economy by Robert A. Sirico
Affordable Care Act / Obamacare, barriers to entry, Berlin Wall, corporate governance, creative destruction, delayed gratification, Fall of the Berlin Wall, George Gilder, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, informal economy, Internet Archive, liberation theology, means of production, moral hazard, obamacare, On the Revolutions of the Heavenly Spheres, profit motive, road to serfdom, zero-sum game
Where a socialist organization of economic life has held sway, the result has not been the rise of social cooperation but its opposite—the decline of civil society and an increase in alienation. This phenomenon was on display in the Soviet Union and its East European bloc, where fascinating and disturbing information concerning life under the totalitarian state has gradually come to light over the two decades since communism fell. The elimination of the profit motive did not diminish selfishness; it removed the brakes on selfishness that a capitalist system provides. Without incentives to care about whether their customers were satisfied, store clerks and managers of state-run enterprises were notoriously indifferent to the needs of consumers. In a free economy, greed isn’t necessary to the functioning of the market but, at the same time, a greedy person has all manner of socially beneficial ways to try to sate his avarice.
Experience shows us that the denial of this right, or its limitation in the name of an alleged ‘equality’ of everyone in society, diminishes, or in practice absolutely destroys the spirit of initiative, that is to say the creative subjectivity of the citizen.”4 Unfortunately, many contemporary proponents of social justice miss the importance of economic freedom and are quick to denounce the profit motive and commercialism. They then compound their error with incoherence, since they seem to think the key to happiness is giving people more stuff—by enlisting the coercive power of government. Their exclusive focus on income and wealth as the sources and markers of equality is, ironically, merely another variety of the greed and consumerism that they are quick to excoriate. This is not really social justice; it’s materialism.
We can see this in the example of America’s national forests. Although the general public assumes that the US Forest Service acts with the best interests of the environment in mind, the reality is far different. The incentive for forestry personnel is to maximize their budget, not to protect forests or even to maximize general revenue. Thus there is a greater emphasis on lumber harvests than would be expected under either an environmental ethic or a profit motive, because lumber harvesting means road building, and road building means big budgets for the Forest Service and lots of work for its employees—even though the service usually loses money on its timber harvest operations. In essence, timber companies’ cutting of trees in our national forests is subsidized by taxpayers.8 No private owner would tolerate such waste. An additional and significant environmental advantage of preserving the freedom of the market economy is its capacity to generate wealth, which in turn gives society the latitude to take care of the commons such as rivers and lakes in ways that are not possible in more desperate circumstances.
J.K. Lasser's Your Income Tax by J K Lasser Institute
Affordable Care Act / Obamacare, airline deregulation, asset allocation, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, intangible asset, medical malpractice, medical residency, money market fund, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, telemarketer, transaction costs, urban renewal, zero-coupon bond
- - - - - - - - - - Court Decision Allocation of Taxes and Interest The IRS position on allocating mortgage interest and real estate taxes to rental income is not as favorable as the position adopted by the Tax Court and several appeals courts. - - - - - - - - - - 9.10 Rentals Lacking Profit Motive If you rent a residential unit for 15 days or more and a loss is not barred under the personal-use limitation (9.7), the IRS may attempt to disallow a loss by claiming that you had no profit motive in placing the unit up for rent. If the IRS makes such an argument, you must try to prove a profit motive (40.10). Any loss disallowed on these grounds may not be carried over to a later year. - - - - - - - - - - Planning Reminder Profit Motive A profit motive is presumed if you can show a profit for at least three of the last five years you engaged in rental activities. The IRS, however, may rebut this presumption, but there are ways to fight this rebuttal (40.10)
This way you may be able to deduct maintenance expenses and depreciation on the unit even if it remains vacant. However, the IRS has disallowed loss deductions for rentals preceding a sale on the ground that there was no “profit motive” for the rental (40.10). Courts have allowed loss deductions in certain cases. EXAMPLES 1. The IRS and Tax Court disallowed a loss deduction for rental expenses under the “profit-motive rules” (40.10) where a principal residence was rented for 10 months until it could be sold. According to the Tax Court, the temporary rental did not convert the residence to rental property. Since the sales effort was primary, there was no profit motive for the rental. Thus, no loss could be claimed; rental expenses were deductible only to the extent of rental income. The favorable side of the Tax Court position: Since the residence was not converted to rental property, the owners could under prior law rules defer tax on the gain from the sale by buying a new home.
8.18 SIMPLE IRA Contributions and Distributions 8.19 Roth IRA Advantages 8.20 Annual Contributions to a Roth IRA 8.21 Converting a Traditional IRA to a Roth IRA 8.22 Recharacterizations and Reconversions 8.23 Distributions From a Roth IRA 8.24 Distributions to Roth IRA Beneficiaries Chapter 9: Income From Real Estate Rentals and Royalties 9.1 Reporting Rental Real Estate Income and Expenses 9.2 Checklist of Rental Deductions 9.3 Distinguishing Between a Repair and an Improvement 9.4 Reporting Rents From a Multi-Unit Residence 9.5 Depreciation on Converting a Home to Rental Property 9.6 Renting a Residence to a Relative 9.7 Personal Use and Rental of a Residence During the Year 9.8 Counting Personal-Use Days and Rental Days for a Residence 9.9 Allocating Expenses of a Residence to Rental Days 9.10 Rentals Lacking Profit Motive 9.11 Reporting Royalty Income 9.12 Production Costs of Books and Creative Properties 9.13 Deducting the Cost of Patents or Copyrights 9.14 Intangible Drilling Costs 9.15 Depletion Deduction 9.16 Oil and Gas Percentage Depletion Chapter 10: Loss Restrictions: Passive Activities and At-Risk Limits 10.1 Rental Activities 10.2 Rental Real Estate Loss Allowance of up to $25,000 10.3 Real Estate Professionals 10.4 Participation May Avoid Passive Loss Restrictions 10.5 Classifying Business Activities as One or Several 10.6 Material Participation Tests for Business 10.7 Tax Credits of Passive Activities Limited 10.8 Determining Passive or Nonpassive Income and Loss 10.9 Passive Income Recharacterized as Nonpassive Income 10.10 Working Interests in Oil and Gas Wells 10.11 Partners and Members of LLCs and LLPs 10.12 Form 8582 10.13 Suspended Losses Allowed on Disposition of Your Interest 10.14 Suspended Tax Credits 10.15 Personal Service and Closely Held Corporations 10.16 Sales of Property and of Passive Activity Interests 10.17 At-Risk Limits 10.18 What Is At Risk?
J.K. Lasser's Your Income Tax 2014 by J. K. Lasser
Affordable Care Act / Obamacare, airline deregulation, asset allocation, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, intangible asset, medical malpractice, medical residency, mortgage debt, mortgage tax deduction, obamacare, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, telemarketer, transaction costs, urban renewal, zero-coupon bond
- - - - - - - - - - Court Decision Allocation of Taxes and Interest The IRS position on allocating mortgage interest and real estate taxes to rental income is not as favorable as the position adopted by the Tax Court and several appeals courts. - - - - - - - - - - 9.10 Rentals Lacking Profit Motive If you rent a residential unit for 15 days or more and a loss is not barred under the personal-use limitation (9.7), the IRS may attempt to disallow a loss by claiming that you had no profit motive in placing the unit up for rent. If the IRS makes such an argument, you must try to prove a profit motive (40.10). Any loss disallowed on these grounds may not be carried over to a later year. - - - - - - - - - - Planning Reminder Profit Motive A profit motive is presumed if you can show a profit for at least three of the last five years you engaged in rental activities. The IRS, however, may rebut this presumption, but there are ways to fight this rebuttal (40.10)
This way you may be able to deduct maintenance expenses and depreciation on the unit even if it remains vacant. However, the IRS has disallowed loss deductions for rentals preceding a sale on the ground that there was no “profit motive” for the rental (40.10). Courts have allowed loss deductions in certain cases. EXAMPLES 1. The IRS and Tax Court disallowed a loss deduction for rental expenses under the “profit-motive rules” (40.10) where a principal residence was rented for 10 months until it could be sold. According to the Tax Court, the temporary rental did not convert the residence to rental property. Since the sales effort was primary, there was no profit motive for the rental. Thus, no loss could be claimed; rental expenses were deductible only to the extent of rental income. The favorable side of the Tax Court position: Since the residence was not converted to rental property, the owners could under prior law rules defer tax on the gain from the sale by buying a new home.
8.18 SIMPLE IRA Contributions and Distributions 8.19 Roth IRA Advantages 8.20 Annual Contributions to a Roth IRA 8.21 Converting a Traditional IRA to a Roth IRA 8.22 Recharacterizations and Reconversions 8.23 Distributions From a Roth IRA 8.24 Distributions to Roth IRA Beneficiaries Chapter 9: Income From Real Estate Rentals and Royalties 9.1 Reporting Rental Real Estate Income and Expenses 9.2 Checklist of Rental Deductions 9.3 Distinguishing Between a Repair and an Improvement 9.4 Reporting Rents From a Multi-Unit Residence 9.5 Depreciation on Converting a Home to Rental Property 9.6 Renting a Residence to a Relative 9.7 Personal Use and Rental of a Residence During the Year 9.8 Counting Personal-Use Days and Rental Days for a Residence 9.9 Allocating Expenses of a Residence to Rental Days 9.10 Rentals Lacking Profit Motive 9.11 Reporting Royalty Income 9.12 Production Costs of Books and Creative Properties 9.13 Deducting the Cost of Patents or Copyrights 9.14 Intangible Drilling Costs 9.15 Depletion Deduction 9.16 Oil and Gas Percentage Depletion Chapter 10: Loss Restrictions: Passive Activities and At-Risk Limits 10.1 Rental Activities 10.2 Rental Real Estate Loss Allowance of up to $25,000 10.3 Real Estate Professionals 10.4 Participation May Avoid Passive Loss Restrictions 10.5 Classifying Business Activities as One or Several 10.6 Material Participation Tests for Business 10.7 Tax Credits of Passive Activities Limited 10.8 Determining Passive or Nonpassive Income and Loss 10.9 Passive Income Recharacterized as Nonpassive Income 10.10 Working Interests in Oil and Gas Wells 10.11 Partners and Members of LLCs and LLPs 10.12 Form 8582 10.13 Suspended Losses Allowed on Disposition of Your Interest 10.14 Suspended Tax Credits 10.15 Personal Service and Closely Held Corporations 10.16 Sales of Property and of Passive Activity Interests 10.17 At-Risk Limits 10.18 What Is At Risk?
Virus of the Mind by Richard Brodie
cognitive dissonance, Douglas Hofstadter, Gödel, Escher, Bach, joint-stock company, New Journalism, phenotype, Ponzi scheme, profit motive, publish or perish, Ralph Waldo Emerson, Richard Feynman, Stephen Hawking, Steven Levy
Those ways of thinking won’t be wiped out completely, but more and more people infected with old cultural viruses will be restricted to self-contained, incommunicado enclaves like the Amish. 196 Designer Viruses (How to Start a Cult) After that battle, designer viruses will have to start competing with each other, and increasingly sophisticated technology will be needed to create a winner in the mind war. We will see computer programs doing sophisticated memetic modeling to fine-tune the memes before launching. What kinds of designer mind viruses will we see in the future? It depends upon the intentions and the skill of their creators—and on the memes those creators are infected with! I would expect to see many profit-motivated viruses, many power-motivated ones, and perhaps a few motivated by someone’s vision of a better future for humanity. Profit Viruses Profit-motivated designer viruses, many of which are completely legal and aboveboard today, have their shady origins in the crooked Ponzi scheme.* Charles Ponzi was an Italian immigrant who opened a business in Boston in 1919 called the Securities Exchange Company. He offered to repay people’s investments in 90 days with 50 percent interest: an investment of $10 would bring $15 in three months.
., 51 Heisenberg, Werner, 13–14 241 virus of the mind Henry Weinhard’s beer, 155 Hofstadter, Douglas: Gödel, Escher, Bach, 35 Hugo, Victor, 65 Hunger Project, 208–9 initiation ordeals, 122–23, 143, 203–4 instincts, 18 journalism, 159–61, 164–67 bias and, 160–61 King, Larry, 162 Kusnick, Greg, 1–4, 121–22 learning pyramid, 220–22 Limbaugh, Rush, 159 making sense of senseless things, 81, 162, 188 Manchurian Candidate movie, 125 marriage, programming and, 139 Maslow, Abraham, 216 MCI telephone company, 200–201 memes, 71–72 biological definition of, 5–6 bundling of, 132–33 classes of, 19–25, 70–71 cognitive definition of, 8–11 cognitive dissonance and, 126–27, 130–31 concept of, xvi conditioning and, 126, 127–30 danger and, 111–12, 117 embedding of, 133–35 evangelism and, 80 evolution of, 65–66, 212–13 fitness and, 71–74 language and, 71 242 Index laws and customs and, 26–27 metamemes and, 12–14 origins of, 4–5, 72–74 peer pressure and, 27–28 primary drives and, 71–74, 79 programming and, 18–19 psychological definition of, 6–8 replication and, 68–69 secondary drives and, 79 self-fulfilling prophesy and, 28–29 selfish-gene theory and, 66–68 sexual evolution and, 96–98 spoked wheels as, 9–10 success and, 14–15 television and, 70 tradition and, 80 Trojan horses and, 127, 132–34 truth and, 12–14, 16 vehicles and, 9, 11 working definition of, 11–12 See also button-pushing memes; memes, spreading of; specific meme types memes, spreading of, 80–82, 222–23 evangelism and, 80 faith and, 81 familiarity and, 81 making sense and, 81 skepticism and, 81 tradition and, 80 memetics, xiii–xv concepts and, xv–xvii definition of, 5 instinct and programming and, 34 paradigm shifts and, xv–xvii quality of life and, xix–xxi Truth and, 16 243 virus of the mind Mensa, 67 Microsoft, 1, 28, 205–6 mind viruses, 15–16 cognitive dissonance and, 143 concept of, xvi cultural institutions and, 34 cultural viruses and, 45–46 definition of, 16 designer viruses and, 45–46, 195–96 evangelism and, 146 faithful reproduction and, 144–45 the future and, 196–97 penetration and, 142–44 profit motive and, 197 quality of life and, xix–xxi, 207–9 repetition and, 143 spreading of, 145–46 as threat to humanity, xvii–xix Trojan horses and, 143–44 mirroring, rapport and, 139–40 mission meme, 73 mission statements, 203 Morris, Robert, Jr., 36 multilevel marketing (MLM), 199, 206 mutation, 39 natural selection, xiii, xvii, 48–49, 58, 71–72, 79 sex drives and, 100, 109 Nazism, 15 Neuro-Linguistic Programming (NLP), 133–34 New York Times Magazine, xxi NFL instant replay, 214–15 niche strategies, 101–2 obeying authority drive, 78 operant conditioning, 129–30 244 Index opportunity meme, 73 Oprah, 156 O’Rourke, P.
Infotopia: How Many Minds Produce Knowledge by Cass R. Sunstein
affirmative action, Andrei Shleifer, availability heuristic, Build a better mousetrap, c2.com, Cass Sunstein, cognitive bias, cuban missile crisis, Daniel Kahneman / Amos Tversky, Edward Glaeser, en.wikipedia.org, feminist movement, framing effect, hindsight bias, information asymmetry, Isaac Newton, Jean Tirole, jimmy wales, market bubble, market design, minimum wage unemployment, prediction markets, profit motive, rent control, Richard Stallman, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, slashdot, stem cell, The Wisdom of Crowds, winner-take-all economy
It is one thing to emphasize the price system, which creates material incentives for disclosure of information. It is quite another thing to emphasize the use of bazaars to create computer code. From the standpoint of conventional economists, the success of open source software remains a bit of a puzzle. The problem is that some contributors appear to have no incentive to make improvements. In most markets, those who create or improve a product are likely to make money; the profit motive is the great impetus for innovation. Or so it is 172 / Infotopia thought. But for open source software, some of those who make changes receive no economic reward. Tens of thousands of people, from all over the world, have been willing to contribute to open source software, and they have done so without gaining a dollar. There are interesting complications here. Much work performed on open source projects, especially major ones, is carried out by programmers who work at big firms, such as Hewlett Packard and IBM.
On the contrary, they are compensated for their labor by employers who want to ensure that high-quality open source software is available, with the company selling support services and hardware.37 But it remains true that many programmers do not receive direct compensation at all. Is this a truly Hayekian process, to be explained directly in Hayek’s terms? The answer is both yes and no. Yes, in the sense that open source software benefits from the inclusion of countless bits of information from widely dispersed people with diverse knowledge and tastes. No, in the sense that financial incentives are not always responsible for people’s behavior. But when the profit motive is absent, why do people contribute? Some people act out of a simple commitment to the enterprise of innovation. Others are devoted to the idea of open source as such, connecting it with freedom and democracy; they participate for that very reason. Some contributors greatly enjoy spending their time writing code. Others are genuine altruists, hoping to benefit others. Raymond himself contends that the world of hackers is a “gift culture” as distinguished from an “exchange culture”; in this gift culture, “social status is determined not by what you control but by what you give away.”
Open source projects typically combine deliberation with access to widely dispersed information and creativity. For this Many Working Minds / 195 reason, they provide an exciting model, one that might well be adapted to many domains. It is true that one cannot say, in the abstract, whether open source methods will work better than proprietary ones. For many commodities, internal labor and deliberation, with a direct profit motive, will be best. The success of open source software does, however, give reason to explore the use of the same approach in many other arenas, through a system that includes significant deliberation and numerous contributors. With respect to the blogosphere, the picture is mixed, notwithstanding Posner’s enthuasiastic invocation of Hayek. The immense range of voices unquestionably adds to the stock of perspectives and information in a way that can and does correct social errors.
Bookkeeping the Easy Way by Wallace W. Kravitz
Rhodes, MD. b) Paid $65, the amount owed, to Ace Electricians. c) Bought $75 worth of supplies, paying cash. d) Invested $500 cash in the business. e) Received $25 on account from Mary Turner, MD. (3) Prove that Assets = Liabilities + Owner's Equity. Think It Over Select any service-type business and consider the many different kinds of transactions that are carried on in any typical day. Think about the reason(s) why the owner is in business. What is his/her goal? What is the ''profit motive" that keeps the owner going? < previous page page_29 next page > < previous page page_31 next page > Page 31 Chapter 5 Owner's Equity Accounts WORDS TO REMEMBER Drawing Account the owner's special account for recording any withdrawals for personal use Expenses payments made in connection with earning income or operating one's business Net Income amount by which revenue exceeds expenses, when income earned is greater than expenses; a profit Net Loss amount by which expenses exceed revenue, when expenses are greater than income earned Revenue money or money equivalent earned during the fiscal period.
No Assets Example Decrease (1) No change (2) Increase (3) Increase (4) Increase 4-5 (1) and (2) Cash 437.50 (a) 50.00 (d) 500.00 (e) 25.00 (b) 65.00 (c) 75.00 Liabilities Owner's Equity Decrease Increase Increase Increase T.W.Vine DDS 35.00 State Telephone Co. 215.00 H.L.Rhodes MD 50.00 (a) 50.00 Equipment 2,650.00 Ace Electricians (b) 65.00 65.00 Mary Turner MD 50.00 (e) 25.00 Supplies 25.00 (c) 75.00 Lori Luing, Capital 2,967.50 (d) 500.00 < previous page page_236 next page > < previous page page_237 next page > Page 237 4-5 (3) Total Assets $3,247.50 Total Liabilities, $ 280.00 2,967.50 Capital $3,247.50 Total Liab. + OE Think It Over Reasons for being in business: 1) to be successful 2) to make a profit 3) to serve a useful purpose The profit motive combines 1) and 2) above. Chapter 5 Questions 1. (a) shorten trousers, waist adjustments (b) hair setting, manicure (c) plans for new or rebuilding homes (d) drawing up legal documents, defending a client (e) tooth extraction, cleaning teeth (f) preparing financial statements, tax returns 2. (a) heat, light, supplies (b) equipment, salaries (c) architect's tables and tools (d) salaries, legal forms (e) salaries, supplies (f) supplies, auto expense < previous page page_237 next page > < previous page page_238 next page > Page 238 Problems 5-1 (1) and (2) Cash 562 (b) 100 (a) 250 (c) 200 (e) 325 (d) 300 (f) 45 (g) 75 (h) 40 Supplies 150 Wilson Garage (g) 75 Frank Puccio, Drawing (d) 300 75 Gas & Oil Expense (f) 45 Salary Expense (c) 200 Taxis 28000 Landia National Bank (b) 100 6400 Frank Puccio, Cap. 22237 Fare Income (a) (e) 250 325 Repairs Expense (h) 40 < previous page page_238 next page > < previous page page_239 next page > Page 239 5-1(3) Cash 377.00 Taxis 28,000.00 Supplies 150.00 Salary Expense 200.00 Gas and Oil Expense Puccio, Drawing 300.00 Repair Expense 40.00 Total Debits Landia Puccio, Capital Fare Income Total Credits 5-2(1) 45.00 29,112.00 6,300.00 22,237.00 575.00 29,112.00 Cash 902.00 Accounts Receivable 425.00 Delivery Equipment 12,000.00 Supplies 160.00 Tucker, Drawing 600.00 Advertising Expense 95.00 Telephone Expense 140.00 Trucking Expense 150.00 14,472.00 Total Accounts payable 1075.00 Tucker, Capital 12,297.00 Delivery Income 1,100.00 14,472.00 Total 5-2 (2) Total Assets, $13,487 $ 1,075 Total Liabilities, Capital Total Liab. + OE 12,412 $13,487 Think It Over Separate each store's bookkeeping records to determine how profitable each one is.
The Fugitive Game: Online With Kevin Mitnick by Jonathan Littman
Apple's 1984 Super Bowl advert, centre right, computer age, game design, Hacker Ethic, Howard Rheingold, John Markoff, Kevin Kelly, Menlo Park, Mitch Kapor, profit motive, Silicon Valley, Steven Levy, telemarketer
If true that would mean Qualcomm's proprietary cellular software ended up publicly available on the Internet. "What's the software good for?" I ask. "You can clone a phone with it." In other words, the source code, or base software, would enable a hacker to hijack the serial number and other identifying information of other people's cellular phones, thereby sticking them with the bills. "Why do you think Mitnick's doing it?" Markoff doesn't seem to know, and admits he's "never found a profit motive" behind Mitnick's hacking. Markoff has a copy of the Janet Reno letter claiming FBI misconduct and tells me he's heard Agent Steal pursued Mitnick and "he [Eric] was dirty." He plans to fly down to visit De Payne's attorney in Los Angeles soon, but he isn't impressed by the government's wayward undercover operative. Markoff thinks Kevin Mitnick is by far the superior hacker. ■ ■ ■ "Have you talked to Kevin?"
I slowly notice items missing from the fifteen-hundred-word article. Like the word "hacker," the term chosen by the Times's headline writers. Markoff never calls Mitnick a hacker. He uses phrases like "computer programmer run amok" and derogatory terms like "grifter," and "criminal." He's right in a sense. Mitnick definitely has the skills of a grifter. But Markoff himself acknowleges in his article that Mitnick doesn't appear to have a profit motive. Why then does he call him a grifter? Grifting is about conning people out of money. And what about Justin Petersen (aka Eric Heinz)? The government's informant isn't even mentioned. Why is Markoff ignoring Petersen's role in entrapping Mitnick and sending him on the run? Several paragraphs recount decade-old Mitnick myths, yet Petersen's involvement is timely and newsworthy. Why is there no reference to the Janet Reno letter alleging FBI misconduct?
His 'modem operandi': breaking and entering codes at will and escaping through the Internet — that is, until now." The CBS Evening News segment provides a snapshot of the increasingly notorious Mitnick reputation — billions of dollars of stolen trade secrets, thousands of swiped credit card numbers, the biggest, baddest hacker of all time. But the network adds its own spin. CBS neatly sidesteps Mitnick's lack of a profit motive by quoting a Justice Department spokesman who, without ever mentioning Mitnick, insists hackers are more profit-oriented and malicious than ever before. And CBS flatly states, "Mitnick was working the phones even as agents pounded on the door." Does the network really know Mitnick's last phone calls were malicious or criminal? The facts of Mitnick's case seem less and less important. It's the message that counts, a message that seems to play right into popular sentiment.
The Enlightened Capitalists by James O'Toole
activist fund / activist shareholder / activist investor, anti-communist, Ayatollah Khomeini, Bernie Madoff, British Empire, business cycle, business process, California gold rush, carbon footprint, City Beautiful movement, collective bargaining, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, desegregation, Donald Trump, double entry bookkeeping, end world poverty, equal pay for equal work, Frederick Winslow Taylor, full employment, garden city movement, germ theory of disease, glass ceiling, God and Mammon, greed is good, hiring and firing, income inequality, indoor plumbing, inventory management, invisible hand, James Hargreaves, job satisfaction, joint-stock company, Kickstarter, knowledge worker, Lao Tzu, longitudinal study, Louis Pasteur, Lyft, means of production, Menlo Park, North Sea oil, passive investing, Ponzi scheme, profit maximization, profit motive, Ralph Waldo Emerson, rolodex, Ronald Reagan, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, Socratic dialogue, sovereign wealth fund, spinning jenny, Steve Jobs, Steve Wozniak, stocks for the long run, stocks for the long term, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, Tim Cook: Apple, traveling salesman, Uber and Lyft, uber lyft, union organizing, Vanguard fund, white flight, women in the workforce, young professional
For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight. Hence, until universal prosperity is achieved, Keynes argued, greed is good and the road to heaven is paved with bad intentions, because the profit motive creates the wealth of nations and civilizations. That is a major reason why leaders of companies who have sought to engage in social activities not directly intended to produce profit have been viewed, at best, as overly idealistic or misguided. The accepted wisdom has been that business leaders who take their eyes off the singular goal of profit will ultimately fail at the hands of competitors who stay focused on serving their customers.
The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes.”24 James Lincoln was outraged by the Michigan court’s decision. Although an out-and-out capitalist, a staunch political conservative, and a firm believer in the profit motive, Lincoln couldn’t accept the conclusion that the sole and higher purpose of a corporation was to maximize shareholder profits. Even while he railed against Franklin Roosevelt’s New Deal and warned of threats to the American system from creeping socialism, he was equally a vocal critic of Wall Street and the short-term dictates of the stock market. Echoing almost verbatim the question William Lever had once raised with regard to the wealth his company created, Lincoln asked, “Where should such profits go?”
In the eyes of most American corporate managers and investors, worker-owned companies don’t fit into their perception of capitalist enterprises and, thus, are viewed as irrelevant. Among other things, that means worker-owned firms have problems raising start-up capital and obtaining operating loans. Worse, they are widely perceived as inefficient, resistant to change, and insufficiently imbued with the profit motive to be truly successful financially. Yet, to the extent that is true, it is due primarily to mismanagement and poor governance. The sad end to the SAIC employee-ownership story is a case in point. The Governance Challenge In 1969 physicist Robert Beyster and a handful of his colleagues founded Science Applications International, a technology-based consulting and research firm headquartered in San Diego, California.
Where Good Ideas Come from: The Natural History of Innovation by Steven Johnson
Ada Lovelace, Albert Einstein, Alfred Russel Wallace, carbon-based life, Cass Sunstein, cleantech, complexity theory, conceptual framework, cosmic microwave background, creative destruction, crowdsourcing, data acquisition, digital Maoism, digital map, discovery of DNA, Dmitri Mendeleev, double entry bookkeeping, double helix, Douglas Engelbart, Douglas Engelbart, Drosophila, Edmond Halley, Edward Lloyd's coffeehouse, Ernest Rutherford, Geoffrey West, Santa Fe Institute, greed is good, Hans Lippershey, Henri Poincaré, hive mind, Howard Rheingold, hypertext link, invention of air conditioning, invention of movable type, invention of the printing press, invention of the telephone, Isaac Newton, Islamic Golden Age, James Hargreaves, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Johannes Kepler, John Snow's cholera map, Joseph Schumpeter, Joseph-Marie Jacquard, Kevin Kelly, lone genius, Louis Daguerre, Louis Pasteur, Mason jar, mass immigration, Mercator projection, On the Revolutions of the Heavenly Spheres, online collectivism, packet switching, PageRank, patent troll, pattern recognition, price mechanism, profit motive, Ray Oldenburg, Richard Florida, Richard Thaler, Ronald Reagan, side project, Silicon Valley, silicon-based life, six sigma, Solar eclipse in 1919, spinning jenny, Steve Jobs, Steve Wozniak, Stewart Brand, The Death and Life of Great American Cities, The Great Good Place, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, transaction costs, urban planning
To be sure, capitalism accelerated the growth of the Italian cities, and created surplus wealth that was then deployed to support artists and architects like Michelangelo and Brunelleschi. But the connection between capitalism and innovation is more subtle than we often make it out to be. Yes, free markets introduce new forms of competition and capital accumulation that can drive the creation and adoption of new ideas. But markets should not be exclusively defined in terms of the profit motive. Consider the invention of one of capitalism’s key conceptual tools: double-entry accounting, which Goethe called one of the “finest inventions of the human mind.” Now the cornerstone of all financial bookkeeping, double-entry’s innovation of recording every financial event in two ledgers (one reflecting a debit, the other a credit) allowed merchants to track the financial health of their businesses with unparalleled accuracy.
Against all odds, the first quadrant turns out to be the least populated on the grid. Willis Carrier is an outlier after all. In the private sector, the proprietary breakthrough achieved in a closed lab turns out to be a rarity. For every Alfred Nobel, inventing dynamite in secret in the suburbs of Stockholm, there are a half dozen collective inventions like the vacuum tube or the television, whose existence depended upon multiple firms driven by the profit motive who managed to create a significant new product via decentralized networking. Folklore calls Edison the inventor of the lightbulb, but in truth the lightbulb came into being through a complex network of interaction between Edison and his rivals, each contributing key pieces to the puzzle along the way. Collective invention is not some socialist fantasy; entrepreneurs like Edison and de Forest were very much motivated by the possibility of financial rewards, and they tried to patent as much as they could.
Yet so many of the insights his theory made possible have revealed the collaborative and connective forces at work in the natural world. We have been living with a comparable caricature in our assumptions about cultural innovation. Look at the past five centuries from the long view, and one fact confronts the eye immediately: market-based competition has no monopoly on innovation. Competition and the profit motive do indeed motivate us to turn good ideas into shipping products, but more often than not, the ideas themselves come from somewhere else. Whatever its politics, the fourth quadrant has been an extraordinary space of human creativity and insight. Even without the economic rewards of artificial scarcity, fourth-quadrant environments have played an immensely important role in the nurturing and circulation of good ideas—now more than ever.
Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen
23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, experimental economics, Filter Bubble, financial innovation, financial intermediation, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, late fees, Mark Zuckerberg, mobile money, money market fund, mortgage debt, Network effects, new economy, Nicholas Carr, obamacare, offshore financial centre, passive investing, payday loans, peer-to-peer lending, Peter Thiel, pre–internet, price discrimination, profit maximization, profit motive, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Ronald Coase, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Nature of the Firm, Tim Cook: Apple, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator
There are also plenty of recent headline cases of fraud, including Volkswagen’s blatant circumvention of emissions controls, Theranos lying about its blood-testing products, and Wells Fargo employees creating phony accounts for millions of unaware and presumably unwilling customers. The conclusion often drawn from these appalling examples is that there is something inherently dishonest about corporations. It is widely understood that the profit motive can lead people to take bad actions, including within corporations. It is less commonly recognized that the incentives for honest dealing within business also can be strong, and indeed very often dominant. In this chapter, I’m going to consider what the evidence tells us about the net result of these two very different effects. We must first acknowledge the bad news—namely, that entire sectors of our corporate economy are based primarily on ripping off consumers.
For instance, after one set of hospitals switched to for-profit status, their mortality rates did not change, nor did their proportion of Medicaid patients or black or Hispanic patients. An older study, from 2000, shows that if anything, the for-profit hospitals provide better care. A study from 2007 found that the for-profits neither have worse health outcomes nor make less effort to treat sicker patients.19 Again, this is all suggesting that the profit motive just doesn’t corrupt behavior very much. There is one area where the for-profits appear to be considerably more fraudulent than the nonprofits, and that is higher education. It has become increasingly clear that a lot of educational for-profits charge high fees and encourage students to run up debt without improving the job prospects of those students at all, or perhaps only by a small amount.
Goldacre did, by the way, respond to me numerous times on my blog after I wrote up some of these points. He offered various arguments, perhaps correct ones, as to why drug companies should never keep trial results secret. He didn’t have any defense as to why he called the book Bad Pharma; that was likely because his Bad Publishing Company wanted to sell more copies of it and thus needed a catchy title. Might Goldacre, like the pharmaceutical companies he criticizes, be a do-gooder but have a profit motive too? The media, too, can share this lack of balance when reporting on business. A recent study indicates that CEOs and other senior executives are more likely to exhibit psychopathic traits than the population at large. According to an article published by researchers Nathan Brooks and Katarina Fritzon, rates of psychopathy among business leaders may range from 4 to 20 percent compared with a possible estimate of about 1 percent for the population as a whole.
The New Rules of War: Victory in the Age of Durable Disorder by Sean McFate
active measures, anti-communist, barriers to entry, Berlin Wall, blood diamonds, cognitive dissonance, commoditize, computer vision, corporate governance, corporate raider, cuban missile crisis, Donald Trump, double helix, drone strike, European colonialism, failed state, hive mind, index fund, invisible hand, John Markoff, joint-stock company, moral hazard, mutually assured destruction, Nash equilibrium, offshore financial centre, pattern recognition, Peace of Westphalia, plutocrats, Plutocrats, private military company, profit motive, RAND corporation, ransomware, Ronald Reagan, Silicon Valley, South China Sea, Stuxnet, technoutopianism, Washington Consensus, Westphalian system, yellow journalism, Yom Kippur War, zero day, zero-sum game
Hailing from Latin American countries like Colombia, Panama, El Salvador, and Chile, these men were all tough veterans of the drug wars who brought new tactics and toughness to the Middle East conflict. They were a bargain, too, costing a fraction of what an American or British mercenary would charge, so the Emirates hired 1,800 of them, paying each of them two to four times his old salary. Turning the profit motive into a war strategy, Syria rewards mercenaries who seize territory from terrorists with oil and mining rights. At least two Russian companies have received contracts under this policy: Evro Polis and Stroytransgaz. These oil and mining firms then hired mercenaries to do the dirty work. For example, Evro Polis employed the Wagner Group to capture oil fields from ISIS in central Syria, which it did.
Third, when cartels wage war, they fight like empires. They battle each other for control of land, the resources on that land, and the people who can harvest those resources. It’s pure exploitation, just as was done in the age of European colonial empires. Material wealth and martial conquest have long been a theme of war, from the Spanish conquistadors to the British East India Company. Merging the profit motive and war is nothing new, and cartels are one more example. In the case of Acapulco, the cartels fight for a strategic transit point. To defeat a cartel, we must use strategies of empire denial, such as containment, deterrence, coercive diplomacy, and military punishment. The Nazi empire was not defeated with a law enforcement mentality. Lastly, why do we think of cartel muscle as thugs? Cartels operate through decentralized paramilitaries, which contain their own rank structure and internal discipline.
The World Bank’s World Development Report 2011 found that never-ending violence is on the rise, despite all the peace efforts around the world. Social science research confirms this, showing that half of all negotiated peace settlements fail within five years. “War termination” is already an oxymoron. Expect this trend to grow. Mercenaries will once again roam battlefields, breeding war as their profit motive dictates. International law cannot stop them, while the demand for their services rises each year. Things once thought to be inherently governmental are now available in the marketplace, from special forces teams to attack helicopters. This is one of the most dangerous trends of our time, yet it’s invisible to most observers. That’s by design. Private warfare is the norm in military history, and the last few centuries have been anomalous.
Green Economics: An Introduction to Theory, Policy and Practice by Molly Scott Cato
Albert Einstein, back-to-the-land, banking crisis, banks create money, basic income, Bretton Woods, Buy land – they’re not making it any more, carbon footprint, central bank independence, clean water, Community Supported Agriculture, congestion charging, corporate social responsibility, David Ricardo: comparative advantage, deskilling, energy security, food miles, Food sovereignty, Fractional reserve banking, full employment, gender pay gap, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), job satisfaction, land reform, land value tax, Mahatma Gandhi, market fundamentalism, mortgage debt, passive income, peak oil, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, reserve currency, the built environment, The Spirit Level, Tobin tax, University of East Anglia, wikimedia commons
Bearing this in mind, a green economist might argue for a form of community business, 68 GREEN ECONOMICS recognizing that every business is in reality a collective endeavour and that profits made by businesses with the support of the community do not belong to the business alone but rather to the whole community. In such a business system risks could be shared along with profits; there would be a much stronger commitment to the locality; and a vocation to serve would predominate over the profit motive, leading to a different, more rounded, type of satisfaction. Considerations about standards of service and quality of goods would re-enter economic life. We might see evidence for the emergence of such business forms in some green sectors, such as renewable energy and organic foods, where there is a preponderance of community-owned and cooperatively organized businesses. Green approaches to business have yet to apply the idea about limits to growth to individual businesses, where it is likely to conflict with the conventional idea about the importance of economies of scale.
Trade in the era of climate change and peak oil As explained in the first section of this chapter, conventional economic support for trade has been based on arguments about productive efficiency – closely related to profitability – and has been set in an unreal world of impossible assumptions and limitless resources. It is important to put this understanding of trade as a natural way to exchange virtually identical goods across the globe in its historical context, which is contemporaneous with a particular economic system and the massive abundance of fossil fuels over the past 200 years: A fashionable defence of economic globalisation is to point out that markets, the profit motive and international trade are as old as human civilisation. The claim could not be more misleading. 130 GREEN ECONOMICS For much of human history, the long distance exchange of fancy goods and luxuries was a relatively marginal activity compared to the routine, and more local, day-to-day meeting of human needs. It was something that is quite different from organising the entire global economy as a market system.10 A common joke in green circles is that we used to make the cake and import the icing, whereas now we make the icing and import the cake!
Velcro Contraction and Convergence: a proposed system of reducing global greenhouse gas emissions on the basis of an equal share for every global citizen a scheme for allocating the right to produce CO2 between citizens of a nation state a system allowing countries or organizations to exchange the right to produce CO2 so that those who can more efficiently reduce emissions reduce more and are paid money in compensation 216 GREEN ECONOMICS carrying capacity CI CLT community currencies CSA CSR Defra ecological footprint ecological rucksack ecological modernization ecotaxes embodied energy ETS Gaia hypothesis GAST GDP Green Industrial Revolution greenwash IMF intermediate technology ISEW Kyoto Protocol LDCs LVT NEF Passivhaus peak oil the size of population of species that an ecosystem can support within its natural resource limits and without degrading natural capital for future generations Citizens’ Income: a payment made to every citizen of a state as a right and without reciprocal demands or duties Community Land Trust: a system of mutual land ownership by the community alternative forms of money issued by local communities to help strengthen their local economies community-supported agriculture corporate social responsibility Department for Environment, Food and Rural Affairs (UK) a way of measuring human demand on the planet in terms of productive land the total weight of material flow carried by an item of consumption in the course of its life cycle academic and policy discourse which suggests that sustainability is possible without systemic social and environmental changes taxes designed to achieve environmental benefits the amount of fossil-fuel energy required to make a product that is directly related to the climate change impact of that product Emissions Trading System: EU system of carbon trading the perception of planet Earth as a single, self-regulating living organism General Agreement on Sustainable Trade: a proposed sustainable alternative to the present world trading system Gross Domestic Product: a key measure of a country’s economic activity within the conventional economic paradigm the idea that moving to a sustainable economy will require an upsurge of ingenuity and activity analogous that which occurred at the dawn of industrialism attempt by a company, generally a large corporation with a significant PR budget, to paint its activities as greener than they are International Monetary Fund a means of transferring sophisticated technologies to poorer countries using resources available there Index of Sustainable Economic Welfare: a proposed alternative to GDP as a measure of economic activity an international agreement adopted in 1997 with the aim of reducing the signatories’ greenhouse gas emissions less-developed countries Land Value Taxation New Economics Foundation home designed so that it can be naturally warmed and ventilated without the need for energy inputs the idea that oil production will reach a peak and then decline, with a severe impact on global economic activity FURTHER RESOURCES permaculture 217 a system for designing human settlements so that they mimic the interrelated structure of natural systems reskilling the idea that to make possible the sustainable self-reliant communities of the future we will need to learn more practical skills Right Livelihood Award the alternative green version of the Nobel Prize, awarded annually by the Swedish Parliament self-provisioning providing for more individual or community needs oneself and without resorting to the market social economy the part of the economy that is outside the market and the state and responds to human needs rather than the profit motive – a new way of describing ‘mutual aid’ solidarity economy an approach to the global economy that foregrounds social justice in economic relationships TEQs a system for rationing the right to produce CO2 on an individual basis TNCs transnational corporations triple-bottom-line a way of measuring a company or organization that includes accounting consideration of social and environmental consequences rather than focusing exclusively on the economic UNCTAD United Nations Conference on Trade and Development UNFPA United Nations Population Fund UNSNA United Nations System of National Accounts: the international standard for measuring economic activity within the conventional economic paradigm WTO World Trade Organization zero-carbon house a home that is neutral in terms of its CO2 emissions because its fossil-fuel use is offset by the energy it generates via renewable technologies Index absolute poverty 173 advertising 174 agriculture 197–202 alienation 59, 183–184 alternative currencies see local currencies alternative food economy 95 anarchism 179 Anderson, V. 117 Aquinas, St Thomas 65 Argentina 65, 84–85 Aristotle 18 Association of Heterodox Economists 31 Australia 192 balanced economy see steady-state economy Barnier, M. 143 Barry, J. 174, 179 BAU (business-as-usual) 90, 91, 107 Bhumibol Adulyadej 149 Bhutan 119 biofuels 48 bioregionalism 5, 20, 150–153 borrowing 182–183 Boulding, K.
The Glass Cage: Automation and Us by Nicholas Carr
Airbnb, Airbus A320, Andy Kessler, Atul Gawande, autonomous vehicles, Bernard Ziegler, business process, call centre, Captain Sullenberger Hudson, Charles Lindbergh, Checklist Manifesto, cloud computing, computerized trading, David Brooks, deliberate practice, deskilling, digital map, Douglas Engelbart, drone strike, Elon Musk, Erik Brynjolfsson, Flash crash, Frank Gehry, Frank Levy and Richard Murnane: The New Division of Labor, Frederick Winslow Taylor, future of work, global supply chain, Google Glasses, Google Hangouts, High speed trading, indoor plumbing, industrial robot, Internet of things, Jacquard loom, James Watt: steam engine, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, knowledge worker, Lyft, Marc Andreessen, Mark Zuckerberg, means of production, natural language processing, new economy, Nicholas Carr, Norbert Wiener, Oculus Rift, pattern recognition, Peter Thiel, place-making, plutocrats, Plutocrats, profit motive, Ralph Waldo Emerson, RAND corporation, randomized controlled trial, Ray Kurzweil, recommendation engine, robot derives from the Czech word robota Czech, meaning slave, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley ideology, software is eating the world, Stephen Hawking, Steve Jobs, TaskRabbit, technoutopianism, The Wealth of Nations by Adam Smith, turn-by-turn navigation, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, William Langewiesche
IS IT any wonder we’re enamored of automation? By offering to reduce the amount of work we have to do, by promising to imbue our lives with greater ease, comfort, and convenience, computers and other labor-saving technologies appeal to our eager but misguided desire for release from what we perceive as toil. In the workplace, automation’s focus on enhancing speed and efficiency—a focus determined by the profit motive rather than by any particular concern for people’s well-being—often has the effect of removing complexity from jobs, diminishing the challenge they present and hence the engagement they promote. Automation can narrow people’s responsibilities to the point that their jobs consist largely of monitoring a computer screen or entering data into prescribed fields. Even highly trained analysts and other so-called knowledge workers are seeing their work circumscribed by decision-support systems that turn the making of judgments into a data-processing routine.
It doesn’t help that engineers and computer scientists, with their strict focus on math and logic, have a natural antipathy toward the “softer” concerns of their counterparts in the human-factors field. A few years before his death in 2006, the ergonomics pioneer David Meister, recalling his own career, wrote that he and his colleagues “always worked against the odds so that anything that was accomplished was almost unexpected.” The course of technological progress, he wistfully concluded, “is tied to the profit motive; consequently, it has little appreciation of the human.”14 It wasn’t always so. People first began thinking about technological progress as a force in history in the latter half of the eighteenth century, when the scientific discoveries of the Enlightenment began to be translated into the practical machinery of the Industrial Revolution. That was also, and not coincidentally, a time of political upheaval.
., 60–61, 154 death of, 53 erosion of expertise of, 54–58, 62–63 human- vs. technology-centered automation and, 168–70, 172–73 income of, 59–60 see also autopilot place, 131–34, 137, 251n place cells, 133–34, 136, 219 Plato, 148 Player Piano (Vonnegut), 39 poetry, 211–16, 218, 221–22 Poirier, Richard, 214, 215 Politics (Aristotle), 224 Popular Science, 48 Post, Wiley, 48, 50, 53, 57, 62, 82, 169 power, 21, 37, 65, 151, 175, 204, 217 practice, 82–83 Predator drone, 188 premature fixation, 145 presence, power of, 200 Priestley, Joseph, 160 Prius, 6, 13, 154–55 privacy, 206 probability, 113–24 procedural (tacit) knowledge, 9–11, 83, 105, 113, 144 productivity, 18, 22, 29, 30, 37, 106, 160, 173, 175, 181, 218 professional work, incursion of computers into, 115 profit motive, 17 profits, 18, 22, 28, 30, 33, 95, 159, 171, 172–73, 175 progress, 21, 26, 29, 37, 40, 65, 196, 214 acceleration of, 26 scientific, 31, 123 social, 159–60, 228 progress (continued) technological, 29, 31, 34, 35, 48–49, 108–9, 159, 160, 161, 173, 174, 222, 223–24, 226, 228, 230 utopian vision of, 25, 26 prosperity, 20, 21, 107 proximal cues, 219–20 psychologists, psychology, 9, 11, 15, 54, 103, 119, 149, 158–59 animal studies, 87–92 cognitive, 72–76, 81, 129–30 psychomotor skills, 56, 57–58, 81, 120 quality of experience, 14–15 Race against the Machine (Brynjolfsson and McAfee), 28–29 RAND Corporation, 93–98 “Rationalism in Politics” (Oakeshott), 124 Rattner, Justin, 203 reading, learning of, 82 Reaper drone, 188 reasoning, reason, 120, 121, 124, 151 recession, 27, 28, 30, 32 Red Dead Redemption, 177–78 “Relation of Strength of Stimulus to Rapidity of Habit-Formation, The” (Yerkes and Dodson), 89 Renslow, Marvin, 43–44 Revit, 146, 147 Rifkin, Jeremy, 28 Robert, David, 45, 169–70 Robert Frost (Poirier), 214 Roberts, J.
How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran
access to a mobile phone, affirmative action, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, disruptive innovation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, Kickstarter, M-Pesa, McMansion, microcredit, mobile money, moral hazard, mortgage debt, new economy, Own Your Own Home, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, white flight, working poor
—GEORGE BAILEY, IN DIRECTOR FRANK CAPRA’S 1946 FILM, IT’S A WONDERFUL LIFE Until the 1900s, most commercial banks serviced the wealthy. The poor and middle class (before such terms even existed) put their savings under their mattresses and, should they need credit, were left to the mercy of loan sharks. Eventually, alternative movements began to fill the void, and in time, the state blessed each. Banks with specific missions to help the poor overcame economic obstacles to challenge and ultimately reject the profit-motivated culture of mainstream banks.1 They were movements aimed at wage-workers, small farmers, and the unbanked—and their innovative structures would revolutionize the banking sector. But over time, and largely because of deregulation, these missions changed. Today, those banks once established for the purpose of helping the lower classes are practically indistinguishable from mainstream banks. It is one of the biggest losses of deregulation, and one that is universally ignored—the United States has lost its banks with souls.
(The relationship did solidify over time, leading to legislation that allowed federal post office buildings to house credit unions.)27 The second round of federal support came in 1932 when President Hoover signed a house bill, referred to as “the poor man’s bill,” to authorize credit unions in the District of Columbia. Filene and Bergengren sold the bill to President Hoover as a remedy to the problem of loan sharks. The suffering endured during the Great Depression had contributed to a Populist fervor that made cooperative banking a preferred alternative to profit-motivated commercial banks.28 But the major animating force legitimizing the credit union came when President Franklin D. Roosevelt, already familiar with the movement, included credit unions in his expansive New Deal reforms. Roosevelt said of the credit union: “I have sort of a hunch that we owe a duty to our fellow citizens not to violate the biblical injunction against usury.”29 He urged Congress to pass the Federal Credit Union Act (FCUA) in 1934 to address the “great national problem” of addressing the credit needs of the “poorer and working classes.”30 The FCUA facilitated the establishment of credit unions in all states to “make more available to people of small means credit for provident purposes through a national system of cooperative credit, thereby helping to stabilize the credit structure of the United States.”
Du Bois said of the bank failure that “not even ten additional years of slavery could have done so much to throttle the thrift of the freedmen as the mismanagement and bankruptcy of the series of savings banks chartered by the Nation for their special aid.”112 If the government and the philanthropists purported to teach the freed slaves thrift and responsibility, the lesson they actually learned was to distrust the government and philanthropists. The Freedman’s Savings Bank serves as a cautionary tale for government support of banking for the poor when that support is just a façade. Draping a flag over a building and then installing private profit-motivated management inside is the most dangerous sort of government support. It induces trust in a vulnerable customer base that not only suffers from financial loss, but also loses all faith in public institutions. It poisons true government efforts to help. A similar phenomenon was at the heart of the failure of the government-sponsored enterprises Fannie Mae and Freddie Mac during the recent financial crisis.
The End of Work: Why Your Passion Can Become Your Job by John Tamny
Albert Einstein, Andy Kessler, asset allocation, barriers to entry, basic income, Bernie Sanders, cloud computing, commoditize, David Ricardo: comparative advantage, Downton Abbey, future of work, George Gilder, haute cuisine, income inequality, Jeff Bezos, knowledge economy, Mark Zuckerberg, Peter Thiel, profit motive, Saturday Night Live, Silicon Valley, Stephen Hawking, Steve Ballmer, Steve Jobs, There's no reason for any individual to have a computer in his home - Ken Olsen, trickle-down economics, universal basic income, upwardly mobile, Yogi Berra
As Arthur Brooks explains, “Without prosperity, large-scale charity is impossible.”33 And without prosperity, those who wanted to do that compassionate work wouldn’t have a chance. The 2016 Paralympics, held in financially distressed Brazil, suffered serious cutbacks because the host country couldn’t afford the necessary workers and facilities.34 This is what slow growth gets us. But when the profit motive is encouraged, what used to be costly and obscure becomes cheap and common. Profits and prosperity allow us to be compassionate. CHAPTER SIX The Millennial Generation Will Be the Richest Yet—Until the Next One “Do you ever get tired of making love?”1 —Tony Bennett, when asked if he ever gets tired of singing “I Left My Heart in San Francisco” The 1994 cult hit Reality Bites follows Lelaina (Winona Ryder), Troy (Ethan Hawke), and Vickie (Janeane Garofalo) as they navigate post-collegiate life in Houston.
The federal government made use of private-sector technological advances to craft a primitive version of the Internet, but the Internet’s commercial potential went undetected by its creators. The military developed GPS with combat in mind, but without private-sector risk-takers, no one would have heard of Uber.19 Politicians talk about running the government like a business, but the government isn’t a business and can’t act like one. Unlimited funds and the absence of a profit-motive make it difficult to kill what’s not working. The money keeps flowing in no matter what. The situation of a private business is quite different. As Ludwig von Mises explains, “the wealth of successful business men is always the result of a consumers’ plebiscite, and, once acquired, this wealth can be retained only if it is employed in the way regarded by consumers as most beneficial to them.”20 Consumers and businesses make mistakes all the time, but they correct those mistakes or find themselves corrected.
Capitalism: the unknown ideal by Ayn Rand
Albert Einstein, anti-communist, Berlin Wall, British Empire, business cycle, East Village, Ford paid five dollars a day, full employment, Isaac Newton, laissez-faire capitalism, means of production, minimum wage unemployment, profit motive, the market place, trade route, transcontinental railway, urban renewal, War on Poverty, yellow journalism
In a free economy, when an individual businessman makes an error of economic judgment, he (and perhaps those who immediately deal with him) suffers the consequences; in a controlled economy, when a central planner makes an error of economic judgment, the whole country suffers the consequences. But it was not the Federal Reserve, it was not government intervention that took the blame for the 1929 depression—it was capitalism. Freedom—cried statists of every breed and sect—had had its chance and had failed. The voices of the few thinkers who pointed to the real cause of the evil were drowned out in the denunciations of businessmen, of the profit motive, of capitalism. Had men chosen to understand the cause of the crash, the country would have been spared much of the agony that followed. The depression was prolonged for tragically unnecessary years by the same evil that had caused it: government controls and regulations. Contrary to popular misconception, controls and regulations began long before the New Deal; in the 1920’s, the mixed economy was already an established fact of American life.
That the underlying motive is the desire to be taken care of, the desire to be spared the responsibility of independence, is revealed explicitly in Fromm’s socio-political “solution” to the problem of alienation. In order that man may be enabled to conquer his feeling of aloneness and alienation, to practice love and to achieve a full sense of personal identity, a new social system must be established, Fromm declares. Private ownership of the means of production must be abolished. The profit motive must be forbidden. Industry must be decentralized. Society should be divided into self-governing industrial guilds; factories should be owned and run by all those who work in them. Why—according to Fromm’s social philosophy—should a janitor in an industrial plant not have the same right to determine its management as the man who happened to create the plant? Does not the janitor’s personality require as much self-expression as anyone else’s?
Since the encyclical is concerned with history and with fundamental political principles, yet does not discuss or condemn any social system other than capitalism, one must conclude that all other systems are compatible with the encyclical’s political philosophy. This is supported by the fact that capitalism is condemned, not for some lesser characteristics, but for its essentials, which are not the base of any other system: the profit motive, competition, and private ownership of the means of production. By what moral standard does the encyclical judge a social system? Its most specific accusation directed at capitalism reads as follows: “The desire for necessities is legitimate, and work undertaken to obtain them is a duty: ‘If any man will not work, neither let him eat.’ But the acquiring of temporal goods can lead to greed, to the insatiable desire for more, and can make increased power a tempting objective.
Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis by Anatole Kaletsky
"Robert Solow", bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, Carmen Reinhart, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, F. W. de Klerk, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, global rebalancing, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, Long Term Capital Management, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, money market fund, moral hazard, mortgage debt, Nelson Mandela, new economy, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, peak oil, pets.com, Ponzi scheme, post-industrial society, price stability, profit maximization, profit motive, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, Vilfredo Pareto, Washington Consensus, zero-sum game
Part of the reason is simply the size of deficits created by the crisis and the political resistance to taxes, which appear to be approaching the limits of public acceptability in many countries. A deeper cause of the shrinkage of the public sector in Capitalism 4.0 will be the inability of bureaucratically inflexible big government to meet society’s ever-changing demands. These complex demands, ranging from universal health care and energy independence to stable mortgage financing and rising wages, can be satisfied only by the profit motive acting through competitive capitalist markets. What will change, however, is the role played by government in managing these markets and creating incentives for profit-seeking businesses to achieve politically favored objectives. Clearly financial regulations will be tightened, but Capitalism 4.0 will mean a host of other reforms and shifts in the boundaries between the market and the state.
Nevertheless, serious historians will justifiably point out that the 150 years from 1776 to 1929 saw more radical political and economic changes than any previous period in human history and thus it is ludicrous to lump them together into a single epoch—and if this were a work of history they would be right. But economics relies on simplifications and stylized facts. And one consistent theme ran through all the politico-economic variations of the nineteenth century and justifies, at least for this discussion, the single label of Capitalism 1. This entire epoch had in common a clear and unquestionable ideology: a belief that the capitalist system based on private property and the profit motive was an elemental force of nature, governed by iron laws of economics that were as immune to human manipulation as a hurricane or a tidal wave. The general philosophy of laissez-faire6—a belief that economics and politics are two distinct spheres of human activity and emotion that must remain as distinct as possible in the interests of both economic and political progress—was dominant throughout this 150-year period.
Even more important than the physical break-up of the Soviet bloc was the ideological collapse of Marxism as a political doctrine and of central planning as an idea for organizing economic activity without markets. From 1989 onward, all nations, regardless of their political institutions, their stage of development, or their local traditions, were forced to acknowledge private property, the profit motive, and the voluntary exchange of goods and services through competitive markets as the only plausible basis for economic life. As revealed by the epigraphs to this chapter, the aftershocks from this sudden and unexpected implosion spread far beyond the Soviet bloc—to India, China, South Africa, and every country and political movement that had been beguiled by the deceptive logic of socialist delusions.
Sacred Economics: Money, Gift, and Society in the Age of Transition by Charles Eisenstein
Albert Einstein, back-to-the-land, bank run, Bernie Madoff, big-box store, Bretton Woods, capital controls, clean water, collateralized debt obligation, commoditize, corporate raider, credit crunch, David Ricardo: comparative advantage, debt deflation, deindustrialization, delayed gratification, disintermediation, diversification, fiat currency, financial independence, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, full employment, global supply chain, God and Mammon, happiness index / gross national happiness, hydraulic fracturing, informal economy, invisible hand, Jane Jacobs, land tenure, land value tax, Lao Tzu, liquidity trap, McMansion, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, new economy, off grid, oil shale / tar sands, Own Your Own Home, Paul Samuelson, peak oil, phenotype, Ponzi scheme, profit motive, quantitative easing, race to the bottom, Scramble for Africa, special drawing rights, spinning jenny, technoutopianism, the built environment, Thomas Malthus, too big to fail
Wisely, perhaps, many people refuse on principle to mix business with friendship, wary of the essential conflict between money and personal relationship. Money depersonalizes a relationship, turning two people into mere “parties to an exchange” driven by the universal goal of maximizing self-interest. If I seek to maximize self-interest, perhaps at your expense, how can we be friends? And when in our highly monetized society we meet nearly all our needs with money, what personal gifts remain from which to build friendship? That the profit motive is antithetical to any benignant personal motive is nearly axiomatic—hence the phrase, “Don’t take it personally; it’s just business.” Today, an ethical business movement and ethical investment movement seek to heal the opposition between love and profit, but however sincere the motives, such efforts often mutate into public relations, “green-washing,” or self-righteousness. This is no accident.
We are quick to descry financial motives in everything people do, and we are deeply moved when someone does something so magnanimous or so naively generous that such motive is obviously absent. It seems irrational, even miraculous, that someone would actually give without contrivance of return. As Lewis Hyde puts it, “In the empires of usury the sentimentality of the man with the soft heart calls to us because it speaks of what has been lost.”11 The near-universality of the suspicion of an ulterior profit motive reflects money as a universal aim. Imagine yourself back in school, speaking to the career counselor, discussing what your gifts are and how you might use them to make a living (i.e., to convert them into money). This habit of thought runs deep: when my teenage son Jimi shows me the computer games he makes, I sometimes find myself thinking about how he might commercialize them and about which programming skills he could develop next to be more marketable.
Nothing I have written disqualifies backed currencies. But if we are to choose a backed currency, let us be clear about the reasons. It is not to make the money “real” in a way that unbacked currencies are not. It is to imbue money with the story of value that we want to create. The story of backing can be used to limit and guide the creation of money. Today, we limit that right to banks and guide it by the profit motive—money goes to those who will make more of it. Properly and historically speaking, though, the issue of money is a special, sacred function, not to be relinquished lightly. Money bears the magical power of the sign and embodies the agreement of an entire society. Part of a society’s soul lives within it, and the power to create it should be guarded as jealously as a shaman guards his medicine pouch.
Empire: How Britain Made the Modern World by Niall Ferguson
British Empire, Cape to Cairo, colonial rule, Corn Laws, European colonialism, imperial preference, income per capita, John Harrison: Longitude, joint-stock company, Khartoum Gordon, Khyber Pass, land reform, land tenure, liberal capitalism, Livingstone, I presume, Mahatma Gandhi, mass immigration, night-watchman state, Panopticon Jeremy Bentham, profit motive, Scramble for Africa, spice trade, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the new new thing, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transatlantic slave trade, undersea cable, union organizing, zero-sum game
The monopoly trading companies of Asia would never have tolerated such a slump. But in America, where attracting settlers was the objective, there could be no such monopolies. In short, the economics of British America were precarious; and by economics alone British America could not have been built. Something more was needed – an additional inducement to cross the Atlantic over and above the profit motive. That something turned out to be religious fundamentalism. After breaking with Rome under her father, wholeheartedly embracing the Reformation under her half-brother, then repudiating it under her half-sister, England finally settled on a moderately Protestant ‘middle way’ at the accession of Queen Elizabeth I. For the people who came to be known as Puritans, however, the Anglican Establishment was a fudge.
But the town had no church and no preacher until 1684, over sixty years after the Pilgrims founded Plymouth. By this time the fishing industry was well established, exporting hundreds of thousands of barrels of cod every year. The Pilgrims might have come to the New World to escape from Popery. But the ‘main end’ of the men of Marblehead ‘was to catch fish’. This, then, was the combination that made New England flourish: Puritanism plus the profit motive. It was a combination institutionalized by the Massachusetts Bay Company, founded in 1629, whose Governor John Winthrop cheerfully united in his person Congregationalism and capitalism. By 1640 Massachusetts was booming, thanks not just to fish but also to fur and farming. Already some 20,000 people had settled there, far more than were living by that time around the Chesapeake Bay. The population of Boston trebled in just thirty years.
In much the same way, it was to settle a debt of £16,000 to one of his supporters – William Penn, the admiral who had captured Jamaica – that Charles II granted Penn’s son ownership of what became Pennsylvania. Overnight, this made William Penn junior the largest individual landowner in British history, with an estate well over the size of Ireland. It also gave him the opportunity to show what the combination of religious fervour and the profit motive could achieve. Like the Pilgrim Fathers, Penn was a member of a radical religious sect: since 1667 he had been a Quaker, and had even been imprisoned in the Tower of London on account of his faith. But unlike the Plymouth colonists, Penn’s ‘Holy Experiment’ was to create a ‘tolerance settlement’ not just for Quakers but for any religious sect (provided it was monotheistic). In October 1682 his ship, the Welcome, sailed up the Delaware River and, clutching his royal charter, he stepped ashore to found the city of Philadelphia, the Ancient Greek word for ‘brotherly love’.
The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan
additive manufacturing, Airbnb, AltaVista, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, basic income, bitcoin, blockchain, Burning Man, call centre, collaborative consumption, collaborative economy, collective bargaining, commoditize, corporate social responsibility, cryptocurrency, David Graeber, distributed ledger, employer provided health coverage, Erik Brynjolfsson, Ethereum, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, George Akerlof, gig economy, housing crisis, Howard Rheingold, information asymmetry, Internet of things, inventory management, invisible hand, job automation, job-hopping, Kickstarter, knowledge worker, Kula ring, Lyft, Marc Andreessen, megacity, minimum wage unemployment, moral hazard, moral panic, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, peer-to-peer rental, profit motive, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Ross Ulbricht, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, uber lyft, universal basic income, Zipcar
OuiShare tries to embody the phenomenon of the dialog it facilitates, making a genuine attempt to create a collaborative organization with a cooperative decision-making process that values consensus over speed.4 As OuiShare Fest co-chair Francesca Pick explains in a 2015 blog post, “That’s why rather than calling it a think tank, a non-profit or anything else, I like to think of OuiShare as an incubator of people: a shared platform for experimentation that gives Connectors and members access to a commons of knowledge, tools and an international network of people they can learn and draw inspiration from.”5 I’m chatting with Léonard and Tincq about the tension I sense at the Fest between the profit-motivated and purpose-driven sides of the sharing economy, between people who see the sharing economy as a market economy and those who envision it more as a “gift economy.” “I think the confusion comes from all the hope people had in those platforms, to really change the world. And because there was so much hope, the ones that were once so hopeful are now so disappointed, in a way,” says Léonard. “But maybe the problem is not so much how much money was invested, but why did we have this hope?”
You might feel safer drinking a Coke in a country whose food safety laws you aren’t clear about because you trust the brand. Similarly, you might be comfortable letting your kids ride the roller coasters at Six Flags, but you might hesitate to let them enjoy the same ride at an unbranded theme park on the side of the highway, even though the government regulations are the same in both situations. This combination of government regulatory agencies and the brands that, pursuing a long-run profit motive, comply with these regulations and also invest in providing a consistently high quality and safe experience, are the foundation of trust in most Western economies today. And the importance of brand cannot be underestimated in today’s sharing economy. We are still a population that places its faith in brand names: platforms like Airbnb, Lyft, and Uber understand this; eBay understood this when they created Power Sellers; and BlaBlaCar understands this when they place an explicit certification of trust derived from platform activity on a driver.
Because the reputation of a platform is directly related to the quality of the transactions it helps mediate—much like the reputation and profitability of the brands we trust are tied to their commitment to high quality and sufficient safety—the self-interest of the platform is often aligned with that of society, and the platform is thus often invested in ensuring that the exchanges it facilitates do not succumb to market failure. The trick is to identify those dimensions of risk where the incentives of the platform and the incentives of society (or of consumer protection) don’t diverge, and those where the risk of divergence exists. For example, ensuring that hosts advertise their quality accurately seems well aligned with Airbnb’s profit motive, while ensuring that guests do not make too much noise when staying in an Airbnb might be less aligned. Moving to the next point, peer-to-peer platforms often offer a greater variety of transactions than traditional industrial-economy providers. This stems from the blurring of personal and professional practices and, as I discuss in chapter 7 on the future of work, the rise of the new generalists.
Capitalism: Money, Morals and Markets by John Plender
activist fund / activist shareholder / activist investor, Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, bonus culture, Bretton Woods, business climate, business cycle, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, Fractional reserve banking, full employment, God and Mammon, Gordon Gekko, greed is good, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, labour market flexibility, liberal capitalism, light touch regulation, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, mass immigration, means of production, Menlo Park, money market fund, moral hazard, moveable type in China, Myron Scholes, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Paul Samuelson, plutocrats, Plutocrats, price stability, principal–agent problem, profit motive, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, Veblen good, We are the 99%, Wolfgang Streeck, zero-sum game
By degrees, we shall again have a Society with something of Heroism in it; something of Heaven’s Blessing on it; we shall have again, as my German friend asserts, ‘instead of Mammon-Feudalism with unsold cotton shirts and Preservation of the Game, noble just Industrialism and Government by the Wisest’.15 Some of that vision, outlined in Carlyle’s Past and Present, finds its way into the Victorian novel, most notably in the shape of Mrs Gaskell’s northern textile manufacturer John Thornton in North and South, a self-made man who is persuaded by the heroine of the novel to adopt a more humane attitude to his workers after a violent strike at his factory. Impressive though the economic and industrial achievements of the Victorians were, it has to be acknowledged that those of the Americans were even greater. In the twentieth century, the United States emerged as the ultimate capitalist economy, combining strong religious roots with a greater commitment to the profit motive than any other country. The intensity of this potent combination no doubt explains what the historian Simon Schama has called ‘a pulsing vein of American insecurity about the moral character of money’. Yet the country also had the lowest quotient of anti-business snobbery. This found expression most famously, or notoriously, in President Calvin Coolidge’s declaration in 1925 that ‘the chief business of the American people is business’.
Because of his belief in minimal regulation in the period of corporate and securities market abuses before the 1929 Wall Street Crash, Coolidge has been roughly treated by many historians. And there is, I feel, a delightful irony in a President named Calvin presiding over an era of licence known as the Roaring Twenties.16 That said, the verdicts on Coolidge often overlook his more reflective side. In his Memorial Day address shortly before becoming President in 1923, he gave a notably more measured view of the conflict between Christian values and the profit motive: There are two fundamental motives that inspire human action. The first and most important, to which all else is subordinate, is that of righteousness. There is that in mankind, stronger than all else, which requires them to do right. When that requirement is satisfied, the next motive is that of gain. These are the moral motive and the material motive. While in some particular instance they might seem to be antagonistic, yet always, when broadly considered or applied to society as a whole, they are in harmony.
This is an important lesson of 1929–32, when a collapse of trade acted as a spur to German and Japanese imperialism, which was directed, among other things, at improved access to food and raw materials. The verdict on the kind of thinking exemplified by Montesquieu and other liberal-minded intellectuals must nonetheless be that while it was an interesting attempt to legitimise what we now call market capitalism and to make the profit motive respectable, its claims to be able to restrain human passions were overstated. The astonishing thing is that this essentially romantic idea has such enduring appeal despite its manifest failure to prevent a world war at a time in the early twentieth century when international trade links had never been more intense. CHAPTER SEVEN SPECULATION – THE MISSING SHAME GENE ‘You have brought this country to the greatest financial panic in history.’
Start It Up: Why Running Your Own Business Is Easier Than You Think by Luke Johnson
Albert Einstein, barriers to entry, Bernie Madoff, business cycle, collapse of Lehman Brothers, corporate governance, corporate social responsibility, creative destruction, credit crunch, Grace Hopper, happiness index / gross national happiness, high net worth, James Dyson, Jarndyce and Jarndyce, Jarndyce and Jarndyce, Kickstarter, mass immigration, mittelstand, Network effects, North Sea oil, Northern Rock, patent troll, plutocrats, Plutocrats, Ponzi scheme, profit motive, Ralph Waldo Emerson, Silicon Valley, software patent, stealth mode startup, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, traveling salesman, tulip mania, Vilfredo Pareto, wealth creators
Surveys show most citizens are suspicious of big business. Yet the private sector pays all the taxes, provides all the wealth-generating jobs, and keeps the entire system going. Industry needs to invest more in its public image. Without business everything we rely on would collapse. Too many opinion formers have a naive view that the public sector is somehow morally superior to the private sector – that the profit motive is a grubby urge. After all, companies have to justify themselves every day in the marketplace. They rely on repeat purchases. If customers feel ripped off or lied to, they stop buying – and the company goes bust. If private equity houses, drugs companies, television stations and food manufacturers were so terrible, then eventually the public would shun them all, because in a free market there is always a choice.
Entrepreneurs often have few qualifications and would have been unable to enter more ‘noble’ professions such as politics, law or academia. Perhaps that is why so many of the intellectual elite have always looked down on those in trade and industry. They resent the fact that in the capitalist system, uneducated but energetic individuals can reach positions of power and wealth through sheer effort. Perhaps it is the profit motive that offends the spiritual. But profit is the essential lubricant that enables mankind to advance. Inefficient and loss-making firms die, and can cause havoc for owners, staff and customers. But productive firms tend to create a virtuous circle: they do well, attract talent, pay more, make investors good returns, and can afford to launch better products. This is called progress. Presently there are all too many sceptics who think capitalism and consumerism are destroying the planet, thanks to global warming and so forth.
People of the Lie: The Hope for Healing Human Evil by M Scott Peck
But I think the antiwar activists, the Berrigan brothers, are correct when they say that the task before us is nothing less than to metaphorically exorcise our institutions. There is no word adequate to describe the urgency of this task. The military-industrial complex that played such a large role in Vietnam, and continues to be a primary creator of the grotesqueness of the arms race, is submitted to nothing but the profit motive. This is no submission at all. It is pure self-interest. I am not an enemy of capitalism per se. I believe it is possible for the profit motive to be operative and at the same time submitted to higher values of truth and love. Difficult, but possible. If we cannot somehow engineer this submission and “Christianize” our capitalism, we are doomed as a capitalist society. The total failure of submission is always evil—for a group, for an institution, for a society as for an individual.
I began this discussion by noting how responsibility becomes diffused within groups—so much so that in larger groups it may become nonexistent. Consider the large corporation. Even the president or chairman of the board will say, “My actions may not seem entirely ethical, but after all, they’re not really a matter of my prerogative. I must be responsive to the stockholders, you know. On their account I cannot help but be directed by the profit motive.” Who is it, then, that determines the corporation’s behavior? The small investor who does not even begin to understand the operations involved? The mutual fund on the other side of the nation? Which mutual fund? Which brokerage house? Which banker? So, as they become larger and larger, our institutions become absolutely faceless. Soulless. What happens when there is no soul? Is there just a vacuum?
Free Money for All: A Basic Income Guarantee Solution for the Twenty-First Century by Mark Walker
3D printing, 8-hour work day, additive manufacturing, Affordable Care Act / Obamacare, basic income, Baxter: Rethink Robotics, Capital in the Twenty-First Century by Thomas Piketty, commoditize, financial independence, full employment, happiness index / gross national happiness, industrial robot, intangible asset, invisible hand, Jeff Bezos, job automation, job satisfaction, John Markoff, Kevin Kelly, laissez-faire capitalism, longitudinal study, market clearing, means of production, new economy, obamacare, off grid, plutocrats, Plutocrats, precariat, profit motive, Ray Kurzweil, rent control, RFID, Rodney Brooks, Rosa Parks, science of happiness, Silicon Valley, surplus humans, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, universal basic income, working poor
And with less produced, there will be a decline in economic output, which will mean the tax base will shrink. In other words, the freedom argument faces the same “failed socialism” objection. Revolutionaries in the twentieth century thought that socialism would make places like the USSR and China better for the masses, but they only made things worse (at least according to this line of objection). Without the profit motive to get people to work, and without the profit motive to allocate effort in an economy, everyone suffers. Despite the rhetoric of the socialists, workers in the United States were much better off than their counterparts in the USSR. They were not better off because they had a chance to become rich capitalists, but simply because the working conditions and material rewards for US workers in the twentieth century were, on average, much better than the conditions in the former Soviet Union.
The most prominent welfare liberal is John Rawls. In his magisterial A Theory of Justice and other works, Rawls provides a defense of many aspects of the current welfare state.15 Like Marx, Rawls sees that capitalism has helped increase the material prosperity of society as a whole. However, according to Rawls, a laissez-faire capitalism is not justified. Rather, a conditional form of capitalism is justified. Private ownership and the profit motive are justified to the extent that they improve the material well-being of the most economically disadvantaged. This is Rawls’s famous “difference principle”: “social and economic inequalities are to be arranged so that they are both to the greatest benefit of the least advantaged.”16 We will postpone examining whether Rawls is justified on this point. For the moment, we just need to understand it.
Drive: The Surprising Truth About What Motivates Us by Daniel H. Pink
affirmative action, call centre, Daniel Kahneman / Amos Tversky, Dean Kamen, deliberate practice, Firefox, Frederick Winslow Taylor, functional fixedness, game design, George Akerlof, Isaac Newton, Jean Tirole, job satisfaction, knowledge worker, longitudinal study, performance metric, profit maximization, profit motive, Results Only Work Environment, side project, the built environment, Tony Hsieh, transaction costs, zero-sum game
Those staggering levels of worker disengagement I described in the previous chapter have a companion trend that companies are only starting to recognize: an equally sharp rise in volunteerism, especially in the United States. These diverging lines compensated engagement going down, uncompensated effort going up suggest that volunteer work is nourishing people in ways that paid work simply is not. We're learning that the profit motive, potent though it is, can be an insufficient impetus for both individuals and organizations. An equally powerful source of energy, one we've often neglected or dismissed as unrealistic, is what we might call the purpose motive. This is the final big distinction between the two operating systems. Motivation 2.0 centered on profit maximization. Motivation 3.0 doesn't reject profits, but it places equal emphasis on purpose maximization.
They're busy making money and attending to themselves and that means that there's less room in their lives for love and attention and caring and empathy and the things that truly count, Ryan added. And if the broad contours of these findings are true for individuals, why shouldn't they also be true for organizations which, of course, are collections of individuals? I don't mean to say that profit doesn't matter. It does. The profit motive has been an important fuel for achievement. But it's not the only motive. And it's not the most important one. Indeed, if we were to look at history's greatest achievements from the printing press to constitutional democracy to cures for deadly diseases the spark that kept the creators working deep into the night was purpose at least as much as profit. A healthy society and healthy business organizations begins with purpose and considers profit a way to move toward that end or a happy by-product of its attainment.
The Managed Heart: Commercialization of Human Feeling by Arlie Russell Hochschild
affirmative action, airline deregulation, call centre, cognitive dissonance, deskilling, Frederick Winslow Taylor, job satisfaction, late capitalism, longitudinal study, new economy, post-industrial society, profit motive, randomized controlled trial, telemarketer
I mean to expose the relation between the private act of trying to dampen liking for a person-which overcommitted lovers sometimes attempt-and the public act of a bill collector who suppresses empathy for a debtor. By the grand phrase "transmutation of an emotional system" I mean to convey what it is that we do privately, often unconsciously, to feelings that nowadays often fall under the sway of large organizations, social engineering, and the profit motive. Trying to feel what one wants, expects, or thinks one 20 Private Life ought to feel is probably no newer than emotion itself. Conforming to or deviating from feeling rules is also hardly new. In organized society, rules have probably never been applied only to observable behavior. "Crimes of the heart" have long been recognized because proscriptions have long guarded the "preactions" of the heart; the Bible says not to covet your neighbor'S wife, not simply to avoid acting on that feeling.
Second, feeling rules are no longer simply matters of personal discretion, negotiated with another person in private but are spelled out publicly-in the Airline Guide to Stewardess and Steward Careers, in the World Airways Flight Manual, in training programs, and in the discourse of supervisors at all levels. Third, social exchange is forced into narrow channels; there may be hiding places along shore, but there is much less room for individual navigation of the emotional waters. The whole system of emotional exchange in private life has as its ostensible purpose the welfare and pleasure of the people involved. When this emotional system is thrust into a commercial setting, it is transmuted. A profit motive "is slipped in under acts of emotion management, under the rules that govern them, under the gift exchange. Who benefits now, and who pays? The transmutation is a delicate achievement and potentially an important and beneficial one. But even when it works-when "service ratings" are high and customers are writing "orchid" letters-there is a cost to be paid: the worker must give up control over how the work is to be done.
Thus the relation between private emotion work and public emotional labor is a link between non* Similarly, the social guardians of the positional control system are found not only in working-class families but in the traditional churches to which they go, and to some extent in the schools, where they learn to manage their behavior in ways that will be useful on the job. 161 commercial and commercial spheres. The home is no longer a sanctuary from abuses of the profit motive. Yet the marketplace is not without images of the home. The atmosphere of the private living room, which a young flight attendant is asked to recall as she works in the airplane cabin, has already borrowed some of the elements of that cabin. The principles of commerce that govern exchanges in the cabin are supposed to be softened by the analogy to a private home, a home remote from commerce.
Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller
"Robert Solow", Andrei Shleifer, asset-backed security, Bernie Madoff, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, desegregation, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, market bubble, Menlo Park, mental accounting, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, short selling, Silicon Valley, the new new thing, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, Vilfredo Pareto, wage slave
In the video, as a squad from the casino defibrillates the heart arrest of a fellow player, the surrounding players play on, their trance unperturbed, even though the victim is literally at their feet.9 What Markets Do for Us The history of the slot-machine-good/slot-machine-bad from the 1890s to the present illustrates our dual view of our market economy. Most fundamentally, we applaud markets. Free markets are products of peace and freedom, flourishing in stable times when people do not live in fear. But the same profit motive that produced those boxes that opened and gave us something we wanted has also produced slot machines with an addictive turn of the wheel that takes your money for the privilege. Almost all of this book will be figuratively about slot-machines-bad, rather than about slot-machines-good: because as reformers both of economic thought and of the economy we seek to change not what is right with the world, but rather what is wrong.
We believe this huge lacuna tells us that economists (including those in finance) systematically ignore or downplay the role of trickery and deception in the working of markets. We have already put our finger on a simple reason why they were so ignored: economists’ understanding of markets systematically excludes them. The pathology, as our friend made clear, is viewed as mainly due to “externalities.” But that fails to see that competitive markets by their very nature spawn deception and trickery, as a result of the same profit motives that give us our prosperity. Had we economists appropriately seen free markets as a two-edged sword, we would all but surely have delved into the ways in which financial derivatives and mortgage-backed securities, and also sovereign debt, would turn out badly. More than a handful of us would have sounded the alarm. Failure of the War on Cancer In The Emperor of All Maladies, cancer-researcher/physician Siddhartha Mukherjee describes a similar error in the analysis and treatment of cancer.4 Using economists’ language, in this analogy there are diseases that we might view as due to “externalities.”
In their modeling DellaVigna and Malmendier described the health-club strategy as taking advantage of their customers’ present bias.7 The high weight put by the customers on the present causes them to put off what they could do today until “just tomorrow”; but then when that “just tomorrow” comes, it has become the present, and so they put it off, yet again. Xavier Gabaix and David Laibson have produced another way in which sellers take advantage of buyers, in this case because some attributes of the product are hard to see.8 In their terminology those attributes are “shrouded.” Implicitly they ask: what rice would restaurants serve if their customers could not tell the difference between Basmati and Uncle Ben’s? The profit motive says the restaurants will choose the cheaper. Gabaix and Laibson’s leading example of shrouded attributes concerns inkjet printers. The buyers focus on the price of the printers. But the subsequent cost of the ink cartridges is significant relative to the initial cost of the printer (on average something like two-thirds).9 The relevant cost does not just come then from the initial layout for the printer: it is the total cost of printing a page.
The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead by David Callahan
1960s counterculture, affirmative action, business cycle, corporate governance, corporate raider, creative destruction, David Brooks, deindustrialization, East Village, fixed income, forensic accounting, full employment, game design, greed is good, high batting average, housing crisis, illegal immigration, income inequality, job satisfaction, mandatory minimum, market fundamentalism, McMansion, microcredit, moral hazard, new economy, New Urbanism, offshore financial centre, oil shock, old-boy network, plutocrats, Plutocrats, postindustrial economy, profit maximization, profit motive, RAND corporation, Ray Oldenburg, Robert Bork, rolodex, Ronald Reagan, shareholder value, Shoshana Zuboff, Silicon Valley, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, Thorstein Veblen, War on Poverty, winner-take-all economy, World Values Survey, young professional, zero-sum game
Braunstein pushed supplements to Cummiskey in which he had a clear financial stake, and while the AMAs guidelines do not explicitly prohibit in-office sales of health products, they clearly prohibit such conflicts of interest in other areas, such as the sale of medical equipment. These rules arose after the medical profession agreed that too many conflicts of interest occurred when doctors tried to both objectively advise patients and act as salesmen. For obvious reasons caregiving responsibilities and the profit motive don't mix well together. "Having a financial interest in a product, however indirect, sets up an inherent bias," commented one eminent doctor, Wallace Simpson. "It's just human nature; you want the product or approach to work out, and that affects your judgment."19 Many in the AMA have pushed for an outright ban on in-office sales of health products, but the doctors who benefit from such sales have blocked this move during ferocious battles at AMA meetings.
In so many professions, ethical problems have escalated in tandem with growing bottom-line pressures. Neither outside regulation nor internal ethics programs can force the private sector to abandon the extreme bottom-line thinking that it has embraced over the past two decades. However, both types of reform can curb the worst abuses associated with this shift and push companies to not measure performance by earnings alone. Despite the laissez-faire revolution of the '80s and '90s, the profit motive has never achieved total dominance in the business world and midcentury notions of responsibility to multiple stakeholders have not been extinguished entirely. Many of the reform challenges that face the private sector boil down to the task of reinventing these notions for a new era—and, here again, putting market values back in their proper place. Teaching Integrity There is nothing fantastical about the society I am sketching out—a place where people believe that the rules are fair and that if they play by the rules, they will get ahead; where people feel more connected to each other and less obsessed with piling up posses-sions;where business is serious about following both the letter and the spirit of the law.
"Americans Express Little Trust in CEOs of Large Corporations or Stockbrokers," The Gallup Organization, 17 July 2002. [back] 17. Cummiskey's story is related in Patrick Kiger, "What's Your Doctor Selling?" Good Housekeeping, 1 January 2001, 53. Cummiskey's husband also wrote a detailed complaint to AMA president Thomas Reardon in October 1999. [back] 18. Benedict Carey, "A Supplemental Pitch," Los Angeles Times, 26 August 2002, A1. [back] 19. Bradford H. Gray, The Profit Motive and Patient Care (Cambridge, Mass.: Harvard University Press, 1991). See also Marc A. Rodwin, Medicine, Money, and Morals: Physicians Conflict of Interest (New York: Oxford University Press, 1993). Wallace Simpson quoted in Carey, "A Supplemental Pitch," A1. [back] 20. "Sale of Health-Related Products from Physicians' Offices," Code of Ethics, American Medical Association. [back] 21. Diane M.
Greed and Glory on Wall Street: The Fall of the House of Lehman by Ken Auletta
business climate, corporate governance, financial independence, fixed income, floating exchange rates, interest rate swap, New Journalism, profit motive, Ronald Reagan, Saturday Night Live, traveling salesman, zero-coupon bond
Among Americans in general it has always been respectable to be a millionaire, certainly to strive to become a millionaire. What may be different today is the preoccupation even many on the left have with money. Wall Street is in; the Great Society is out. The New York Review of Books now publishes the economic wisdom of Peter G. Peterson and Felix Rohatyn. Around the globe, from China’s Communist rulers to Socialist President François Mitterand of France, the profit motive is in the ascendancy. The grim economic experience of most centralized Communist regimes has helped convince intellectuals that social freedom is not possible without economic freedom. Of course, moods—and election results—change. But today, says Jeffrey Lane, forty-two, the force of history imperils most private investment banks. Size will permit powerful financial service empires to provide the cheapest and most varied services to consumers.
., 4, 9 at American Express, 229 Board and, 81, 100, 115–120, 171–176 as CEO, 59, 70, 73, 75, 116, 118, 171 Cohen’s meetings with, 198–201 commercial paper and, 14 contract of, 200 cost-cutting by, 66, 123 divorce of, 124 emotional nature of, 13, 16, 51–52, 125, 161 five-point program, 134 Fortune leak and, 185 Glanville and, 55–56, 58 Gordon and, 71 life-style of, 51, 123–124 management strategy, 26, 60, 78–79, 117–120, 125–126, 132, 164 partners and, 105–106, 133, 198 personal characteristics, 15, 69 personal history, 10–13, 33, 45–46, 82 Peterson and, 5, 7, 12, 16, 21–22, 40, 48–49, 68–69, 85–86, 90–91, 95, 100 promotion of, 59–60, 75–76 recruitments by, 126 Rubin and, 20, 64 sale of company and, 171, 182, 210, 220, 236 Shearson and, 198–199, 229 Solomon and, 199 trading and, 11–13, 17, 46 Glynn, Lenny, 86, 126 Goldman, Marcus, 28, 44 Goldman, Sachs & Company, 28–29, 46–47, 70, 74, 108, 120, 124, 230 possible sale of, 233 Goldsmith, Sir James, 237 Goodman, Jerome, 99 Goodman, Sally, 99 Gordon, Sheldon, 9, 23, 65, 71, 106, 113, 117, 127, 146 Board’s respect for, 166, 173 Lewis and, 206 resignation of, 222 sellout and, 172, 187, 203–204, 206 Solomon and, 174 Graham, Katharine, 38, 50 “Gray books”, 137, 165, 178 recall of, 216 Greed accusations of, 138–139 bonuses and, 132–133 Boshart on, 175 Glucksman on, 138 profit motive and, 234 sellout and, 167 Greenmail, 233, 237 Gutfreund, John H., 40, 114, 137, 236 merger and, 203, 205 salary of, 127 Gutman, Monroe, 33 Hajim, Edmund A., 25, 65, 77, 101, 120 departure of, 78–79, 122 Peterson and, 105 Harper, Charles M., 154, 157, 177 Harriman, Averell, 83 Hellman, Warren, 30, 34, 39–42, 49, 84, 125 Hendrickson, Robert M., 9 Herbert, Hilary A., 28 Hertz, John, 32–33 Hill, J.
See also by name Peterson, Jacobs & Company, 107 Peterson, Sally Hornbogen (Mrs. Peter G. Peterson), 37, 58, 85 Petropoulos, George, 35 Petropoulos, Peter See Peterson, Peter G. Philadelphia Life Insurance Company, 71 Phibro/Salomon, 114, 137–138, 178, 233 Phillips, Michael, 204 Pickens, T. Boone, 184, 238 Political action committee (PAC), 119 Pope, Generoso, 36 Press coverage, 183–186 Lehman sale, 210 Peterson ouster, 115–116, 121–122 Pritzker, Jay, 179 Profit motive, 234 Proops, William S., 224 Prout, Parker, 223 Prudential/Bache, 232–233 Prudential Insurance Corporation, 179, 182 Rattner, Steven, 122–123, 146, 212, 225 resignation of, 225 Reagan Administration, 73, 233 Reich, Cary, 125 Reich, Robert B., 241 Reiss, Rick, 191 Rifkind, Simon, 58 Robert, Steve, 191 Robinson, James D., III, 190, 192–194, 198, 200, 229 Rockefeller, David, 17 Rohatyn, Felix, 22, 31, 234, 239 on banking, 239–240 Roosevelt, Franklin Delano, 148 Rose, Billy, 34 Rosenthal, Mitchell, 59 Rubin, Robert S., 19, 20, 23, 26–27, 43, 49, 52, 55, 64, 68, 78, 101, 113, 127 on capital adequacy, 145 as chief operating officer, 118 ConAgra offer and, 153–154 enemies of, 203 Glucksman and, 90–91 on mergers, 151, 209, 230 promotion of, 116, 147–152 resignation of, 226 Solomon and, 106 Sacks, David G., 57 Sage, Andrew G.C., II, 32–33, 39 Salary, structures, 127 Salinger, Inez.
The Relentless Revolution: A History of Capitalism by Joyce Appleby
1919 Motor Transport Corps convoy, agricultural Revolution, anti-communist, Asian financial crisis, asset-backed security, Bartolomé de las Casas, Bernie Madoff, Bretton Woods, BRICs, British Empire, call centre, Charles Lindbergh, collateralized debt obligation, collective bargaining, Columbian Exchange, commoditize, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, Doha Development Round, double entry bookkeeping, epigenetics, equal pay for equal work, European colonialism, facts on the ground, failed state, Firefox, fixed income, Ford paid five dollars a day, Francisco Pizarro, Frederick Winslow Taylor, full employment, Gordon Gekko, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, hiring and firing, illegal immigration, informal economy, interchangeable parts, interest rate swap, invention of movable type, invention of the printing press, invention of the steam engine, invisible hand, Isaac Newton, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, knowledge economy, land reform, Livingstone, I presume, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, moral hazard, Parag Khanna, Ponzi scheme, profit maximization, profit motive, race to the bottom, Ralph Nader, refrigerator car, Ronald Reagan, Scramble for Africa, Silicon Valley, Silicon Valley startup, South China Sea, South Sea Bubble, special economic zone, spice trade, spinning jenny, strikebreaker, the built environment, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thorstein Veblen, total factor productivity, trade route, transatlantic slave trade, transcontinental railway, union organizing, Unsafe at Any Speed, Upton Sinclair, urban renewal, War on Poverty, working poor, Works Progress Administration, Yogi Berra, Yom Kippur War
Their oversupply brought about a spectacular crash, and the Mississippi Company became the Mississippi Bubble, a new term to describe the sudden inflation and equally sudden deflation of an object of value, be it a certain kind of investment, tulips, or real estate. Law knew how to dazzle people with the prospect of future riches. Successes like his in the 1720s appear repeatedly in the history of capitalism, pointing up the psychological component of the profit motive. In France what might have been a cautionary tale became a hypercautionary one. The government wouldn’t tolerate paper money for another seventy years. Even in England it soured people on paper money and its use as an economic stimulant. A new orthodoxy congealed. The supply of money, the philosopher David Hume maintained, had nothing to do with prosperity, which depended upon real things in the economy, like shops, stores, and factories.
A total of 11 million men and women came from Africa to the New World colonies in comparison with the 2.6 million Europeans who crossed the Atlantic in the same period. Over one hundred thousand separate voyages brought this human cargo, 70 percent of them owned by either British or Portuguese traders.2 Sugar was one of capitalism’s first great bonanzas; its successes also revealed the power of the profit motive to override any cultural inhibitions to gross exploitation. Slavery was old. Egyptian slaves had built pyramids; Roman ones, bridges and aqueducts. What capitalism introduced was sustained and systematic brutality in the making of goods on a scale never seen before. It’s not size alone that distinguishes modern slavery from its ancient lineage in Greece and biblical times; it’s also race. Slavery then often had an ethnic component because slaves were taken as the captives of war, but never a consistently racial one.
The inventions that culminated in industrialization had hardly begun when Smith wrote, but there had been enough improvements for him to divine the future. Integral to Smith’s theorizing was the law of unintended consequences, an arresting insight of the Scottish philosophers that explained how acts could be willed by self-interested individuals but still turn out to be beneficial to a larger group. The most famous example of course was the invisible hand of the market that used competition to convert the profit motive into a force for good. As Smith explained, it is “not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regards to their own interest.”51 Here was a concept that contributed to the strong impression that reality was often obscured by appearances. Smith was responding to the developments of his lifetime, 1723–1790, when it was still relatively easy for an ambitious young baker to get the money to set himself up to compete effectively with established competitors.
Debtor Nation: The History of America in Red Ink (Politics and Society in Modern America) by Louis Hyman
asset-backed security, bank run, barriers to entry, Bretton Woods, business cycle, card file, central bank independence, computer age, corporate governance, credit crunch, declining real wages, deindustrialization, diversified portfolio, financial independence, financial innovation, fixed income, Gini coefficient, Home mortgage interest deduction, housing crisis, income inequality, invisible hand, late fees, London Interbank Offered Rate, market fundamentalism, means of production, mortgage debt, mortgage tax deduction, p-value, pattern recognition, profit maximization, profit motive, risk/return, Ronald Reagan, Silicon Valley, statistical model, technology bubble, the built environment, transaction costs, union organizing, white flight, women in the workforce, working poor, zero-sum game
In the United States, we see the first example of an economy based upon debt that can be resold at a profit, with all its associated possibilities and dangers. This history of the infrastructure and practices of American debt will both help us to understand the financial history of the postwar period and, more generally, to come to grips with the choices that have created our contemporary indebted society. No single cause can explain the entire history of borrowing and lending: profit motive, government policy, INTRODUCTION 9 technological progress, and even chance all played necessary but not sufficiently all-encompassing roles. Though to be sure there were hucksters who gamed the system, the choices responsible for today’s economic crisis were not hidden, but done in the open, and often with the best of intentions. More terrifying than individual malfeasance or trickery is the idea that the structure of our economy itself is fundamentally out of alignment.
In his words: “the future financial stability of many of our urban centers depends upon the prompt reclamation of their slum areas.”35 In Ickes’s view, slums were a sort of cancer. Without checking their growth, slums and blight would spread into the industrial and commercial areas, choking off any possibility of economic recovery. Moreover, slums consumed more taxes every year than they paid, inhibiting other uses of local tax dollars.36 In the absence of private profit motive, Ickes believed the federal government had a need and a right to intercede in the housing sector. By November of 1933, 14.7 percent, or $485,100,000 of the total PWA project budget had been designated for “low-cost housing and slum clearance.”37 Creating a subsidiary, “Public Works Emergency Housing Corporation,” Ickes planned “to build low-cost apartment houses as slum clearance projects throughout the country.”38 PWA’s creators viewed the housing division as a way to solve both the problem of slums and the larger economic problem at the same time.
Title I loans, like their Title II counterparts, were meant to be affordable so as to stimulate as much demand as possible in the hard-hit economy of the Depression.26 For home owners needing repairs and modernizations, these loans presented an affordable and easy way to improve their standard of living. BA N K E R S D I S C OV E R C R E D I T 79 For bankers, the loans guaranteed profits. As discussed in chapter 2, the FHA did not lend any money directly to consumers, but relied on the profit motive of private capital to supply the financing. The government created an insurance program for lenders, so that in case of default bankers would always get back the principal of the loan, allowing them to take on more risk than they ordinarily would. The interest rates would be low, but through the government insurance program the profits would be risk free. Crucially, the Title I loan program connected a demand by consumers with a supply of capital that, in its absence, the market could not.
Seasteading: How Floating Nations Will Restore the Environment, Enrich the Poor, Cure the Sick, and Liberate Humanity From Politicians by Joe Quirk, Patri Friedman
3D printing, access to a mobile phone, addicted to oil, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, barriers to entry, Branko Milanovic, British Empire, Buckminster Fuller, Burning Man, business climate, business cycle, business process, California gold rush, Celtic Tiger, Charles Lindbergh, clean water, Colonization of Mars, Dean Kamen, Deng Xiaoping, drone strike, Elon Musk, en.wikipedia.org, failed state, financial intermediation, Gini coefficient, happiness index / gross national happiness, income inequality, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, joint-stock limited liability company, Kickstarter, low skilled workers, Machinery of Freedom by David Friedman, Mark Zuckerberg, megacity, minimum wage unemployment, Network effects, new economy, obamacare, offshore financial centre, open borders, paypal mafia, peak oil, Peter H. Diamandis: Planetary Resources, Peter Thiel, price stability, profit motive, Ronald Coase, Ronald Reagan, Shenzhen was a fishing village, Silicon Valley, special economic zone, standardized shipping container, stem cell, trade route, UNCLOS, UNCLOS, undersea cable, young professional
PART II * * * ENVIRONMENT Chapter 3 FOOD Feed the World with Greenhouse Gas We Have Problems You know the litany. We’re destroying the environment. We’re running out of fresh water. We’re fighting over dwindling fossil fuels. We can’t figure out how we’re going to feed growing populations. We’ve eroded most of the topsoil, chopped down much of the forests, and devoured 90 percent of the large fish stock since 1950. The profit motive overpowers the stewardship motive. Everybody blames the oil companies, but we really enjoy our cars, bottled drinks, and computers, which require oil to produce, so we might as well point the finger at everybody except the Amish and Jain monks. The human race is faced with eight of what futurist Peter Diamandis, founder of the XPRIZE Foundation and Singularity University, calls “humanity’s grand challenges.”
Only with agriculture could civilization begin, and wealth beyond mere subsistence could be imagined. With regard to the oceans, we are still hunters and gatherers. The wild ocean is treated as a giant commons, where each fisher-gatherer is incentivized to get as much out as he can. What abundance could be unleashed if fisher-farmers developed floating fish farms? The economic incentive to cultivate and care for the surrounding ocean would be overpowering. The profit motive and the stewardship motive would align. Neil says that people have to stop romanticizing the practice of fish hunting. The story of human migration is a story of extermination. “We can’t rely on hunting wild stocks anymore. We proved that with mastodons. We proved it with bison. We proved it with deer and ducks. There was commercial hunting of ducks on the Chesapeake Bay up until the 1920s, and now if you went out and you suggested that you wanted to go commercial duck hunting?
He says the only way to confront the three Is while simultaneously creating the four Fs—“food, feed, fuel, and fertilizer”—is to move beyond the four types of fish that are commonly cultured, which Sims calls the four Ms: “mahimahi, milkfish, mullet, and moi.” But these fish have been shown to be the most profitable! Why do we have to stop farming them? “We need to bring together the environmental motive, the humanitarian motive, and the profit motive, so they are not at odds with each other, but aligned with each other,” says Neil. “It’s an economic incentive plus an ecological imperative.” Only by culturing a very unlikely fish can you feed the world while reducing the amount of carbonic acid in the ocean. Wait, increasing our fish consumption while reducing carbonic acid in the ocean? How? Neil echoes Ricardo Radulovich: “So the only way to sustainably take carbon out of the ocean that I can conceive of—and that anybody else can conceive of—is photosynthesis.
Pity the Billionaire: The Unexpected Resurgence of the American Right by Thomas Frank
Affordable Care Act / Obamacare, bank run, big-box store, bonus culture, business cycle, collateralized debt obligation, collective bargaining, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Deng Xiaoping, financial innovation, housing crisis, invisible hand, Kickstarter, money market fund, Naomi Klein, obamacare, payday loans, profit maximization, profit motive, road to serfdom, Robert Bork, Ronald Reagan, shareholder value, strikebreaker, The Chicago School, The Myth of the Rational Market, Thorstein Veblen, too big to fail, union organizing, Washington Consensus, white flight, Works Progress Administration
Nor is there anything contrary to conservative principle in regarding grassroots movements as ready-made roundups of suckers. On the contrary; opportunism is one of the factors that has made conservatism so fantastically successful. Still, the appearances can be off-putting, and the resurgent Right often struggles to reconcile such naked enthusiasm for gain with its self-image as the simon-pure voice of the common people. Yes, the movement loves capitalism, but even prophets of the profit motive do not like to think of themselves as exploiters or corruptionists. Markets must triumph everywhere, they tell us, but spondulics must never mix with statesmanship. This is why a Tea Party coffee-table book that includes dozens of pictures of protest signs praising capitalism also begins with a foreword (written by the action star Chuck Norris) complaining that “the Constitution has been ousted by cash” and that “the Bill of Rights has been bartered for corporate bonuses.”7 It is another undecidable muddle, and the movement resolves it by simply having it both ways.
The lessons Beck took from Cloward and Piven’s 1966 article on the subject, however, were that leftists yearn to “collapse the system,” that leftists have an occult power actually to collapse systems, and that therefore leftists can be blamed whenever any system does, in fact, go astray. * “Window of opportunity,” “seize power,” and “fundamentally transform” are trademark Beck characterizations of liberal thinking. * In truth, however, NASA circa 1969 was far more directly run by government than were Fannie Mae and Freddie Mac circa 2007. (It was also unionized.) While there was no profitable reason to send men to the moon, there were all sorts of profit motives at work at Fannie and Freddie. In fact, economists who have studied the two mortgage companies believe their failures arose not from their government-ness but from their leaders’ desire to emulate the profits and bonuses of the private sector. “Fannie and Freddie caused such horrific losses because they were private institutions run by officers who obtained a ‘sure thing,’” writes Bill Black, a professor at the University of Missouri, Kansas City, in his Benzinga column for January 10, 2011—“great wealth through booking high yield in the near term without establishing meaningful loss reserves
The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street by Robert Scheer
banking crisis, Bernie Madoff, Bernie Sanders, business cycle, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, facts on the ground, financial deregulation, fixed income, housing crisis, invisible hand, Long Term Capital Management, mega-rich, mortgage debt, new economy, old-boy network, Ponzi scheme, profit motive, Ralph Nader, Ronald Reagan, too big to fail, trickle-down economics
The guardians of capitalism’s survival are thus not the self-proclaimed free-marketers, who, in defiance of the pragmatic Adam Smith himself, want to chop away at all government restraints on corporate actions, but rather liberals, at least those in the mode of FDR, who seek to harness its awesome power while keeping its workings palatable to a civilized and progressive society. Government regulation of the market economy arose during the New Deal out of a desire to save capitalism rather than destroy it. Whether it was child labor in dark coal mines, the exploitation of racially segregated human beings to pick cotton, or the unfathomable devastation of the Great Depression, the brutal creativity of the pure profit motive has always posed a stark challenge to our belief that we are moral creatures. The modern bureaucratic governments of the developed world were built, unconsciously, as a bulwark, something big enough to occasionally stand up to the power of uncontrolled market forces, much as a referee must show the yellow card to a young headstrong athlete. So what kind of ref would Obama prove to be? While it is far too early to establish his legacy, so far he seems to be the kind who talks a better game than he calls.
As he assured Black Enterprise reporter Aisha Jefferson, “The Wall Street Journal finds problems where no other paper seems to find problems. They don’t believe in intervening in the market to help housing and homeownership. And so, I think this is an effort to make the case that Fannie Mae shouldn’t exist.” Unfortunately, this was just a smokescreen. Fannie Mae actually was receiving pressure not from liberal politicians to become more heavily involved in riskier mortgages but from—what else?—the profit motive. With giants like Citi moving heavily into mortgage-based securities—a sector pioneered by Fannie itself—and increasingly betting on riskier and riskier loans, the GSEs were actually playing catch-up. And when they decided to push their chips deep into the hottest, yet most unpredictable, Alt-A and subprime mortgages, it was not at the behest of the Barney Franks of this world but rather in pursuit of Wall Street profits.
What's Yours Is Mine: Against the Sharing Economy by Tom Slee
4chan, Airbnb, Amazon Mechanical Turk, asset-backed security, barriers to entry, Berlin Wall, big-box store, bitcoin, blockchain, citizen journalism, collaborative consumption, congestion charging, Credit Default Swap, crowdsourcing, data acquisition, David Brooks, don't be evil, gig economy, Hacker Ethic, income inequality, informal economy, invisible hand, Jacob Appelbaum, Jane Jacobs, Jeff Bezos, Khan Academy, Kibera, Kickstarter, license plate recognition, Lyft, Marc Andreessen, Mark Zuckerberg, move fast and break things, move fast and break things, natural language processing, Netflix Prize, Network effects, new economy, Occupy movement, openstreetmap, Paul Graham, peer-to-peer, peer-to-peer lending, Peter Thiel, pre–internet, principal–agent problem, profit motive, race to the bottom, Ray Kurzweil, recommendation engine, rent control, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, software is eating the world, South of Market, San Francisco, TaskRabbit, The Nature of the Firm, Thomas L Friedman, transportation-network company, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, ultimatum game, urban planning, WikiLeaks, winner-take-all economy, Y Combinator, Zipcar
Commercial use was forbidden on early government-funded precursors to the Internet, but the 1992 Scientific and Advanced-Technology Act allowed the US National Science Foundation to interconnect with commercial networks, and the mixture of commerce and non-commercial activity started. There was vociferous argument over the ethics of pursuing profit over the Internet, but digital commerce exploded. Digital openness, which was initially a norm of the non-commercial world of researchers and enthusiasts cut off from the world of private property, was exposed to the profit motive. Inevitably, things would change. The Internet is often seen as a natural place for openness because files and documents can be copied: I can give you a copy of a song, and still keep a copy for myself, I can upload a video to YouTube and everyone can watch it. If software or songs are made “open” they are no longer commodities that can be privately owned: they are made free for others to use as they wish, and so are taken out of the normal commercial realm of buying and of selling.
What was once an initiative focused on the release of data for civic use—a contribution to government transparency—becomes instead a handover of civic resources to the data brokers and insurance companies who can use it to optimize their business models. In 2012 Change.org, a web site that hosts petitions and that made its name thanks to the actions of many progressive organizations that ran campaigns on the site, joined Couchsurfing as a “.org” site with a for-profit motive—a misleading presentation of the organization’s nature. In May 2013 it took venture capital from the Omidyar Network and started allowing “corporate advertising, Republican Party solicitations, astroturf campaigns, anti-abortion or anti-union ads and other controversial sponsorships.” 48 The change in mission was described by Lindsay Beyerstein in In These Times and Ryan Grim of the Huffington Post.49,50 The Omidyar/Change.org press release uses the standard language of social entrepreneurs: blandly inspirational and content-free.
The Ethical Algorithm: The Science of Socially Aware Algorithm Design by Michael Kearns, Aaron Roth
23andMe, affirmative action, algorithmic trading, Alvin Roth, Bayesian statistics, bitcoin, cloud computing, computer vision, crowdsourcing, Edward Snowden, Elon Musk, Filter Bubble, general-purpose programming language, Google Chrome, ImageNet competition, Lyft, medical residency, Nash equilibrium, Netflix Prize, p-value, Pareto efficiency, performance metric, personalized medicine, pre–internet, profit motive, quantitative trading / quantitative ﬁnance, RAND corporation, recommendation engine, replication crisis, ride hailing / ride sharing, Robert Bork, Ronald Coase, self-driving car, short selling, sorting algorithm, speech recognition, statistical model, Stephen Hawking, superintelligent machines, telemarketer, Turing machine, two-sided market, Vilfredo Pareto
Strangelove (film), 100 drug use data, 51–52 Dwork, Cynthia, 26, 36 dynamic effects, 194 echo chamber equilibrium, 123–26 economics applied to dating apps, 94–96 economic scarcity and dating apps, 94 and scope of topics covered, 19–20 The Economist, 145–46 email scams, 137–41, 154 embarrassing polls, 40–45 emergent phenomena, 10 empirical machine learning, 76 employment decisions, 15 encryption, 31–34, 37 Equifax, 32 equilibrium states and dating apps, 95–96 echo chamber equilibrium, 123–25 and game theory, 97–101 and navigation problems, 103 and two-route navigation problems, 107 and user preferences, 97 error rates in algorithms and differential privacy, 42–43 error-minimization, 70, 75, 78–79 and facial recognition, 15–16 and fairness vs. accuracy, 78–84 and image recognition competition, 165–66 and scientific research, 136 ethical principles and accuracy vs. fairness balance, 82–84, 192–93 and adaptive data analysis, 159–60 and algorithmic morality, 176–78 and algorithms as regulatory measure, 16–17 and concerns about algorithm use, 3–4 current state of ethics research, 169–70 design of ethical algorithms, 189–90, 193–95 ethics boards, 179 infancy of ethical algorithm field, 21 and machine vs. human learning, 6–7 and scope of topics covered, 19–21 and threat of optimization gone awry, 179 and unique challenges of algorithms, 7 European Union, 15 existential threat of machine learning, 179–82, 189–90 exploitation, 71–72 exploration period, 70–72, 93 exponential intelligence explosion, 185–88 Facebook advertising, 14–15 and design of algorithms, 4–5 and differential privacy, 51–52 and echo chamber equilibrium, 124–25 and image recognition algorithms, 145–46 News Feed, 8, 19–20 profit motive, 191–92 and promotion of diversity, 125 facial recognition, 15–16 fairness accuracy/fairness trade-off, 63, 69, 74–84, 87, 192–93 and algorithmic morality, 175–76 and algorithms as regulatory measure, 16–18 and biases, 57–63 and concerns about algorithm use, 3 and current state of ethics research, 169–70 and data collection bias, 90–93 and dating apps, 96–97 definitions of, 69–72 design of ethical algorithms, 190 differing notions of, 84–86 and dynamic effects of algorithms, 193–94 “fairness gerrymandering,” 86–90, 134–35 and forbidden inputs, 66–69 and goals of ethics research, 171 and “merit,” 72–74 and scope of topics covered, 18–21 and statistical parity, 69–72 and supervised machine learning, 63–64 and theoretical computer science field, 13 and threat of optimization gone awry, 184–85 and vectors, 65–66 “fake news,” 124–25 false negatives, 73–74, 84–85 false positives, 84–85, 189–90, 193 false rejections, 73, 91, 171 family data, 54–56 “fast takeoff” scenario, 185–88 FATE—fairness, accuracy, transparency, and ethics, 16–17 Federal Bureau of Investigation (FBI), 49–50 feedback loops, 19–20, 92, 95–96, 184–85 Felten, Ed, 187–88 filter bubble, 124 financial status data, 65–66 Fitbits, 50–51 fitness tracking data, 50–51 food science, 143–45, 158–59 forbidden inputs, 66–69 foreign policy, 15 forensic evidence, 54–56 formalization of goals, 194.
See also genetics data General Data Protection Regulation, 15 generative adversarial network (GAN), 133–35 Generator/Discriminator game, 135 genetics data, 12, 30–31, 54–56, 86–87 genome wide association study (GWAS), 30–31 gerrymandering, 86–90 Go (game), 132, 180 Gödel Prize, 36 Golden State Killer case, 54–56 Good, I. J., 180, 187–88 Google bias in search results, 14–15 and commercial deployment of differential privacy, 47–50 Google Brain, 185 Google Maps, 104–6, 109, 123–24, 179 Google search, 8, 14–15 and image recognition algorithms, 145–46, 148–51 and navigation problems, 111–13 profit motive, 191–92 and supervised machine learning, 64 word embedding model, 57–58, 61 GPA scores, 8, 65 GPS data and correlated equilibrium solutions, 114 and limitations of differential privacy, 50 and navigation problems, 104 and scope of topics covered, 19–20 gradient descent problems, 110 Gravity’s Rainbow (Pynchon), 117–18, 120 greed, 177 Group Insurance Commission (GIC), 22–23 harms causes by algorithms, 14–15 Hawking, Stephen, 179 health records, 36 health risk assessment, 8 hedge funds, 140–41 Hellman, Deborah, 193–94 Helmand Province, Afghanistan, 50–51 heuristics, 122 high-dimensional problems, 110 Hill, Austin Bradford, 34 Hinton, Geoffrey, 133 hiring practices, 61–62 historical data, 91, 173–74 Hospital of the University of Pennsylvania (HUP), 27 human judgment and oversight, 82–84, 190–92.
Disaster Capitalism: Making a Killing Out of Catastrophe by Antony Loewenstein
activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-communist, Asian financial crisis, British Empire, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, clean water, collective bargaining, colonial rule, corporate social responsibility, Corrections Corporation of America, Edward Snowden, facts on the ground, failed state, falling living standards, Ferguson, Missouri, financial independence, full employment, G4S, Goldman Sachs: Vampire Squid, housing crisis, illegal immigration, immigration reform, income inequality, Julian Assange, Kickstarter, mandatory minimum, market fundamentalism, mass incarceration, Naomi Klein, neoliberal agenda, obamacare, Occupy movement, offshore financial centre, open borders, private military company, profit motive, Ralph Nader, Ronald Reagan, Satyajit Das, Scramble for Africa, Slavoj Žižek, stem cell, the medium is the message, trade liberalization, WikiLeaks
Since the attacks of 9/11, the geographical heart of the West’s “war on terror” has been in Pakistan and Afghanistan. The role in those countries of privatized militaries and intelligence gatherers, both foreign and domestic, prompted me to visit them. This is a murky world, far away from the slick rhetoric deployed in London, Washington, and Canberra, where I met muscled contractors making a packet in the pursuit of a profit motive that has nothing to do with democracy or freedom. These forces partly explain the successful insurgencies against Westerners in these states and Iraq. Greece has suffered under harsh economic policies more than most Western countries. The rise of the neo-Nazi party Golden Dawn is a logical outcome of this failed economic model. The poor and refugees are especially suffering, and I report here on their plight.
He had few bad words to say about Karzai and his rule, dismissing the persistent corruption allegations. (He told me after we finished the interview that it was his “responsibility to not talk down Afghanistan when it’s in need of much help.”) Moradian was more forthcoming when I asked him about the presence of PMCs and intelligence-gathering companies in the country. He said that when the “profit motive is supreme,” there would inevitably be negative outcomes. He blamed people in Washington for allowing this system to thrive after 9/11, and said the companies that benefited from it should not be operating in Afghanistan. Again, he steadfastly refused to blame Karzai or his relatives for this trend. I asked Moradian if he could see a future for himself in Afghanistan if the Taliban once again took over.
The self-perpetuating business model—with increased political lobbying leading to growing demand—ignored the wider social cost of warehousing millions of Americans. On the last day of the conference, I took an ACA-organized tour of Utah’s oldest prison, the Wasatch County Jail. It housed murderers, rapists, and fraudsters. The setting of the center was spectacular, with soaring mountains on the horizon, though the facility’s buildings were mostly old and forbidding. Wasatch was a public prison but was nevertheless governed by the profit motive. Utah Correctional Industries (UCI) was based here—a business employing prisoners at low wages to produce furniture, printing services, and license plates for the people of Utah. Its stated aim was to teach prisoners the vital skills they would need upon release, but the labor overseen in the prison had more to do with profit than rehabilitation. I asked whether labor costs had to be so low but was told that detainees were pleased to be kept busy.
Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy by Robert W. McChesney
2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, access to a mobile phone, Albert Einstein, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, Automated Insights, barriers to entry, Berlin Wall, business cycle, Cass Sunstein, citizen journalism, cloud computing, collaborative consumption, collective bargaining, creative destruction, crony capitalism, David Brooks, death of newspapers, declining real wages, Double Irish / Dutch Sandwich, Erik Brynjolfsson, failed state, Filter Bubble, full employment, future of journalism, George Gilder, Gini coefficient, Google Earth, income inequality, informal economy, intangible asset, invention of agriculture, invisible hand, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Julian Assange, Kickstarter, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, mutually assured destruction, national security letter, Nelson Mandela, Network effects, new economy, New Journalism, Nicholas Carr, Occupy movement, offshore financial centre, patent troll, Peter Thiel, plutocrats, Plutocrats, post scarcity, price mechanism, profit maximization, profit motive, QWERTY keyboard, Ralph Nader, Richard Stallman, road to serfdom, Robert Metcalfe, Saturday Night Live, sentiment analysis, Silicon Valley, single-payer health, Skype, spectrum auction, Steve Jobs, Steve Wozniak, Steven Levy, Steven Pinker, Stewart Brand, Telecommunications Act of 1996, the medium is the message, The Spirit Level, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, Upton Sinclair, WikiLeaks, winner-take-all economy, yellow journalism
Political economy—an understanding of capitalism and its relationship to democracy—can provide a rudder as we make sense of the Internet. To the extent that both celebrants and skeptics consider capitalism, they often do so in almost mythical form. It is high time to recognize the elephant in the room. Political economy should be the organizing principle for evaluating the digital revolution for numerous reasons. The ways capitalism works and does not work determine the role the Internet might play in society. The profit motive, commercialism, public relations, marketing, and advertising—all defining features of contemporary corporate capitalism—are foundational to any assessment of how the Internet has developed and is likely to develop. Any attempt to make sense of democracy divorced from its relationship to capitalism is dubious. Despite all of the routine assumptions equating capitalism—or its euphemism, free markets—with democracy, they remain distinct undertakings with very strong tensions that can boil over into direct conflict.
“Information about users is what really matters.”186 Turow concludes, “The emerging trajectory suggests that apart from a relatively few elite-oriented publishers (New York Times, Atlantic, and the like), the pressure to bring personalization synced to marketing goals will be difficult for companies to avoid if they want to survive.”187 This should not really be a surprise; advertisers always supported media for opportunistic reasons, because they had no better options. Now they have better options, and consequently much of the media can get thrown overboard. The profit motive pushes this process into new and dangerous frontiers quickly. Increasingly, research—“persuasion profiling”—determines what types of sales pitches are most effective with each individual, and ads are tailored accordingly. Moreover, researchers are now working on “sentiment analysis,” to see what mood a person is in at a particular moment and what products and sales pitches would be most effective.188 Advertisers are at work developing emotional analysis software so webcams can monitor how one’s face responds to what is on the screen.
Two matters are beyond debate: First, journalism in the manner I described it in chapter 3 is mandatory, not only so people can participate in the central political and communication policy issues outlined in this book, but also so there can be a democratic society wherein individual liberties are meaningful. Second, current journalism is in decline and disarray. If there are any doubts about the second point, the evidence presented below should eliminate them. We are in a political crisis of existential dimensions. Two outstanding questions arise. First, will the Internet, the profit motive, citizens, and assorted nonprofit groups combine in some manner to generate a higher grade of journalism sufficient to empower self-government? I argue herein, drawing from the foundation I provided in chapter 3, that the celebrants have either greatly undervalued the importance of having independent competing institutions and resources to do journalism—especially living wages for reporters—or they have overestimated the capacity of the market to produce such a system, or both.
Billions & Billions: Thoughts on Life and Death at the Brink of the Millennium by Carl Sagan
addicted to oil, Albert Einstein, anti-communist, clean water, cosmic abundance, dark matter, demographic transition, Exxon Valdez, F. W. de Klerk, germ theory of disease, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invention of radio, invention of the telegraph, invention of the telephone, Isaac Newton, Mikhail Gorbachev, Nelson Mandela, pattern recognition, planetary scale, prisoner's dilemma, profit motive, Ralph Waldo Emerson, Ronald Reagan, stem cell, the scientific method, Thomas Malthus, zero-sum game
Models of global warming show different effects—on temperature, drought, weather, and rising sea level, for example— becoming noticeable on different timescales, from decades to a century or two. These consequences seem so unpleasant and so expensive to fix that naturally there has been a serious effort to find something wrong with the story. Some of the efforts are motivated by nothing more than the standard scientific skepti- 136 • Billions and Billions cism about all new ideas; others are motivated by the profit motive in the affected industries. One key issue is feedback. There are both positive and negative feedbacks possible in the global climate system. Positive feedbacks are the dangerous kind. Here's an example of a positive feedback: The temperature increases a little bit because of the greenhouse effect and so some polar ice melts. But polar ice is bright compared to the open sea. As a result of that melting, then, the Earth is now very slightly darker; and because the Earth is darker, it now absorbs slightly more sunlight, so it heats some more, so it melts some more polar ice, and the process continues—perhaps to run away.
And even if the price of paperback books is soaring today, there are still great bargains, such as the dollar-a-volume classics from Dover Books. Along with progress in literacy such trends are the allies of JefFersonian democracy. On the other hand what passes for literacy in America in the late twentieth century is a very rudimentary knowledge of the English language, and television in particular tends to seduce the mass population away from reading. In pursuit of the profit motive, it has dumbed itself down to lowest-common-denominator programming—instead of rising up to teach and inspire. From paper clips, rubber bands, hair dryers, ballpoint pens, computers, dictating and copying machines, electric mixers, microwave ovens, vacuum cleaners, dish and clothes washers and driers, widespread interior and street lights, to automobiles, aviation, machine tools, hydroelectric power plants, assembly line manufacturing, and enormous construction equipment, the technology of our century has eliminated drudgery, created more leisure time, and enhanced the lives of many.
Algorithms of Oppression: How Search Engines Reinforce Racism by Safiya Umoja Noble
A Declaration of the Independence of Cyberspace, affirmative action, Airbnb, borderless world, cloud computing, conceptual framework, crowdsourcing, desegregation, Donald Trump, Edward Snowden, Filter Bubble, Firefox, Google Earth, Google Glasses, housing crisis, illegal immigration, immigration reform, information retrieval, Internet Archive, Jaron Lanier, Mitch Kapor, Naomi Klein, new economy, PageRank, performance metric, phenotype, profit motive, Silicon Valley, Silicon Valley ideology, Snapchat, Tim Cook: Apple, union organizing, women in the workforce, yellow journalism
The MegaTech example is an illustration of the fact that social media companies and platforms make active decisions about what kinds of racist, sexist, and hateful imagery and content they will host and to what extent they will host it. These decisions may revolve around issues of “free speech” and “free expression” for the user base, but on commercial social media sites and platforms, these principles are always counterbalanced by a profit motive; if a platform were to become notorious for being too restrictive in the eyes of the majority of its users, it would run the risk of losing participants to offer to its advertisers. So MegaTech erred on the side of allowing more, rather than less, racist content, in spite of the fact that one of its own CCM team members argued vociferously against it and, by his own description, experienced emotional distress (“meltdowns”) around it.80 This research by Roberts, particularly in the wake of leaked reports from Facebook workers who perform content moderation, suggests that people and policies are put in place to navigate and moderate content on the web.
Localized Google Search Result Exclusions: Statement of Issues and Call for Data. Retrieved from http://cyber.harvard.edu/filtering/google/. INDEX Figures are indicated by italics. Adelsohn Liljeroth, Lena, 95, 97 advertising: impact on society, 105–6; before the internet, 173–75; role in search results, 11, 16, 24, 36, 38, 54. See also commercial interests; search engine optimization advertising companies, 5, 50, 123; bias, 89, 105–6, 116; profit motive, 36, 124; role in search results, 24, 38, 40–41, 56. See also Google Search affirmative action, 12, 174 African-American community, hair salon, 173–74 African sexuality, 94–95 Airbnb rental discrimination, 163 algorithmic oppression, 1–2, 4, 10, 80, 84, 173 algorithms: big data bias, 29, 31, 36; conceptualizations, 24; democratic practices online debunked, 49; discriminatory effect, 6, 13, 28, 85, 173, 175–76; perception of neutrality, 37, 44, 56, 171; “racist algorithms,” 9; reflection of programmers, 1, 26.
Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs by Ken Kocienda
1960s counterculture, anti-pattern, Apple's 1984 Super Bowl advert, bash_history, Charles Lindbergh, conceptual framework, Donald Knuth, en.wikipedia.org, HyperCard, Kickstarter, Lao Tzu, premature optimization, profit motive, QWERTY keyboard, Richard Feynman, Richard Stallman, Robert X Cringely, Silicon Valley, Steve Ballmer, Steve Jobs, Steven Levy, zero-sum game
This seemingly paradoxical corporate strategy had its roots with Richard Stallman, a renowned programmer and technology activist, a man who believed all software should be free. Stallman railed against companies like Microsoft and Apple, which sold software for money, but kept the source code, the software instructions written by programmers, as a proprietary trade secret. In Stallman’s idiosyncratic belief system, mixing computer code and the profit motive formed a toxic brew whose ill effects compelled companies to hoard the intellectual effort required to write programs and turned software development into a zero-sum game that impeded the advance of technology to the detriment of the human race. If you’re not a programmer, free software might echo with sixties-style hippie idealism. Yet I am a programmer, and for me, free software is more like the best candy store ever.
Chief among our missteps was failing to conceive of our software as a single product instead of as a set of separate projects. We never figured out how to integrate the pieces. Nothing worked smoothly. Our software update feature was riddled with bugs that often broke programs while trying to update them. Our code to connect Nautilus to our cloud services didn’t work at all. The Nautilus team had persistent problems coordinating with GNOME—the loose structure and lack of profit motive of the free software community meant that they did not share our money-making goals or care to coordinate with us so we could meet our delivery schedules. All these setbacks caused delay after delay. Several months into my stint at the company, these problems were becoming unavoidable, and our management went looking for help to whip our software into shape. One Friday afternoon, I sat in my office cubicle waiting to meet the man who might provide it.
Who Needs the Fed?: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank by John Tamny
Airbnb, bank run, Bernie Madoff, bitcoin, Bretton Woods, buy and hold, Carmen Reinhart, corporate raider, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, Donald Trump, Downton Abbey, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, Home mortgage interest deduction, Jeff Bezos, job automation, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, liquidity trap, Mark Zuckerberg, market bubble, money market fund, moral hazard, mortgage tax deduction, NetJets, offshore financial centre, oil shock, peak oil, Peter Thiel, price stability, profit motive, quantitative easing, race to the bottom, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Steve Jobs, The Wealth of Nations by Adam Smith, too big to fail, Travis Kalanick, Uber for X, War on Poverty, yield curve
Logic dictates that the traffic gridlock we despise would soon enough disappear as entrepreneurs set about experimenting with ways to design roads and road usage to erase the scourge that is traffic. Oh, well, one can dream. Until then, readers will see that credit is not money but actual resources. Those resources are created in the private sector exclusively, and that’s why economically free societies almost as a rule have credit in abundance. They are rich in credit because private actors, disciplined by the profit motive, are actively producing what the markets desire. Those businesses that don’t satisfy market demands are starved of the resources they’re attempting to deploy so that someone more skilled can replace them. Government cannot create credit, but it can destroy it, as the descriptions of government spending reveal. Since governments aren’t disciplined by profit and loss, the bigger they are the less credit there is in the economy, because governments can’t possibly utilize resources effectively.
As this chapter has hopefully made rather plain, savings vehicles and innovative sources of credit continue to appear well outside of a banking system that is no longer allowed to innovate. If the bank branches some of us still rely on vanish, entrepreneurs will eagerly fill the void. We don’t spend evenings worried about where the shoes, computers, and cars we rely on will come from. In a profit-motivated capitalist society, they simply reach us in varying brands, sizes, and price points in return for our own production. Savings and borrowing vehicles are no different from shoes, and they’ll always be there. They will be because in a largely free society we’ll continue to create credit. That’s why we get up in the morning. We produce for dollars, but what we’re really producing for is what those dollars can command in the marketplace.
The Grid: The Fraying Wires Between Americans and Our Energy Future by Gretchen Bakke
addicted to oil, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, back-to-the-land, big-box store, Buckminster Fuller, demand response, dematerialisation, distributed generation, energy security, energy transition, full employment, illegal immigration, indoor plumbing, Internet of things, Kickstarter, laissez-faire capitalism, Menlo Park, Negawatt, new economy, off grid, post-oil, profit motive, Ronald Reagan, self-driving car, Silicon Valley, smart grid, smart meter, the built environment, too big to fail, washing machines reduced drudgery, Whole Earth Catalog
We also have to pay for this system, something that renewables have complicated as they mix up producers with consumers in entirely new ways. And, because it’s America, the whole shebang needs to convey a profit into somebody’s pocket. Almost all the big utilities are investor-owned, which means they have shareholders who have been promised at least the occasional dividend. Corners get cut in order to ensure that this flow of cash continues apace, and decisions get made with profit motives in mind that brook little concern for the particular capacities, and incapacities, of the grid. We may imagine the grid as primarily a machine to make and move electricity, but integral from the very start was that it also make and move vast quantities of money. A lot of people are still happy with this way of doing things. The grid’s current shape has a lot to do with the specifics of its technological and business history.
The grid’s entanglements with culture and law and natural systems were always there. Renewables have just made these entanglements impossible to ignore; they stress the existing system just enough that all the delicate balances reached over the passage of a century are thrown off-kilter. As all of these diverse bits of what make our grid work interlock and entangle, there just isn’t a lot of room for quick action. Once people with politics and profit motives get their fingers into the briar patch, it seems at times like there is no room to act at all. This was the situation into which the equivalent output of two nuclear power plants was suddenly poured that mid-May day back in 2010. The only real option was to shut down the wind turbines. Switch the beasts off. Still their spinning. Clear the lines. Let the storm blow itself out. Leave all those electrons unreaped.
The problem with the Swiss cheese model, which is otherwise remarkably robust (we have it to thank for the past thirty years in which flying has been consistently safer than driving; even frequent fliers are more likely to be killed in a lawn mower accident than an airplane crash), is that the grid, like any complex mechanical system, is not just a machine but also the regulatory, business, cultural, and natural environments within which this machine functions. The grid is the physics, mechanics, engineering, construction, management, upkeep, and use internal to itself. It is also the storms, earthquakes, laws, hatreds (and other personal opinions), and profit motives that surround the mechanism, that change over time, and that can differ drastically between one state, one city, one climactic zone and the next. In the case of the grid these “external to the cheese” circumstances are not necessarily conducive to the machine’s capacity to function well and strongly. If the 2003 blackout was traced back to particular failings on the system—the holes in the cheese of our grid—and if a number of these failings have been since corrected, this tracing out of proximate causes to a single, massive systems failure doesn’t necessarily direct our gaze in the right direction, or set our minds to the right problems.
Money Changes Everything: How Finance Made Civilization Possible by William N. Goetzmann
Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, banking crisis, Benoit Mandelbrot, Black Swan, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, capital asset pricing model, Cass Sunstein, collective bargaining, colonial exploitation, compound rate of return, conceptual framework, corporate governance, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, delayed gratification, Detroit bankruptcy, disintermediation, diversified portfolio, double entry bookkeeping, Edmond Halley, en.wikipedia.org, equity premium, financial independence, financial innovation, financial intermediation, fixed income, frictionless, frictionless market, full employment, high net worth, income inequality, index fund, invention of the steam engine, invention of writing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, laissez-faire capitalism, Louis Bachelier, mandelbrot fractal, market bubble, means of production, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, new economy, passive investing, Paul Lévy, Ponzi scheme, price stability, principal–agent problem, profit maximization, profit motive, quantitative trading / quantitative ﬁnance, random walk, Richard Thaler, Robert Shiller, Robert Shiller, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, spice trade, stochastic process, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, time value of money, too big to fail, trade liberalization, trade route, transatlantic slave trade, tulip mania, wage slave
The text reflects a level of extraordinary abstraction in the realization of the role of money in the economy. Guanzi identified money as the fundamental medium of the equilibration between supply and demand for goods. It recognized it as a tool to achieve the goals of the state. It proposed—and perhaps even implemented—monetarist policies. More subtly, Guanzi highlighted the role that profit-seeking incentives play in society. The invisible hand of the market functions because of the profit motive. Most of Guanzi’s “subtle” devices make use of this natural human desire. 9 UNITY AND BUREAUCRACY Paper banknote from the Ming dynasty, ca. 1375–1425 CE. Printed on mulberry bark paper with a copper plate, the note depicts the equivalent value in strings of coins. Fiat money that has value by government decree was invented in China. The Warring States era came to an abrupt end in 221 BCE, when Qin emerged as the winner of a centuries-long rivalry.
This means that financial technology is not only robust, but also that certain parallel solutions to basic problems are discovered and rediscovered by clever entrepreneurs or officials time and again, and that certain institutions and techniques can be thought of as stable equilibria, even when they derive from different traditions: coins, loans, accounting systems, contracts, securities—even paper money. The tools and financial concepts important to the development of Chinese civilization are different from those that were most useful in the West. The scale and scope of China led, early on, to theories about management based on an understanding of economic incentives and oversight. Among these are, on the one hand, the profit motive and on the other hand the control of corruption by oversight, annual accounting, and reporting. The early Chinese mathematical text discussed in Chapter 8 considered many problems of how to measure and account for labor production, as well as problems of how to calculate wastage that occurs in construction and manufacturing. These problems are critical in a bureaucratic system in which each administrator is responsible for reporting accounts to a superior.
See also bonds; equity investments; interest; return on investment; stock markets Investment: An Exact Science (Lowenfeld), 414–16 investment bankers: eighteenth-century Dutch, 399; financial crisis of 2008 and, 285; world’s first, 399 Investment Company Act of 1940, 501, 502 investment trusts, 473–74, 482, 499–502; Fisher’s recommendation for, 506; overvalued in 1920s, 484. See also mutual funds Investors Management Company, 501–2 invisible hand: Athenian grain trade and, 102; failures of World Bank and, 460; financial mathematics and, 283, 288; Guanzi’s use of profit motive and, 166, 171. See also market system iron industry, in eighteenth-century France, 381 iron mining: Chinese, 196; near Frobisher Bay, 314, 315 iron money, of Sichuan, 183–84 iron monopoly of Chinese state, 174 Irrational Exuberance (Shiller), 331–32 Ismail Pasha, 419–21 James II of England, 322 James River Company, 394 Jefferson, Peter, 389 Jiang Shang, 153, 154 Jiangsu Dasheng Group Company, 434 jiaozi, 184–85, 186 Jixia Academy, 155–57, 160–61 joint-stock companies: Age of Discovery and, 307; Bubble Act and, 380; in eighteenth-century England, 328, 338, 366, 380; Honor del Bazacle as, 300, 307; Muscovy company as, 309; in nineteenth-century China, 431–32, 437; Rotterdam insurance company as, 366.
Protocol: how control exists after decentralization by Alexander R. Galloway
Ada Lovelace, airport security, Berlin Wall, bioinformatics, Bretton Woods, computer age, Craig Reynolds: boids flock, discovery of DNA, Donald Davies, double helix, Douglas Engelbart, Douglas Engelbart, easy for humans, difficult for computers, Fall of the Berlin Wall, Grace Hopper, Hacker Ethic, informal economy, John Conway, John Markoff, Kevin Kelly, Kickstarter, late capitalism, linear programming, Marshall McLuhan, means of production, Menlo Park, moral panic, mutually assured destruction, Norbert Wiener, old-boy network, packet switching, Panopticon Jeremy Bentham, phenotype, post-industrial society, profit motive, QWERTY keyboard, RAND corporation, Ray Kurzweil, RFC: Request For Comment, Richard Stallman, semantic web, SETI@home, stem cell, Steve Crocker, Steven Levy, Stewart Brand, Ted Nelson, telerobotics, the market place, theory of mind, urban planning, Vannevar Bush, Whole Earth Review, working poor
“When computers become available to everybody,” wrote Stewart Brand in 1972, “the hackers take over: We are all Computer Bums, all more empowered as individuals and as cooperators.”53 Or as McKenzie Wark writes, “Whatever code we hack, be it programming language, poetic language, math or music, curves or colourings, we create the possibility of new things entering the world.”54 Thus, I suggest that the hacker’s unique connection to the realm of the possible, via protocol that structures itself on precisely that threshold of possibility, gives the hacker special insight into the nature of utopia—what he or she wants out of computers. Once of the most important signs of this utopian instinct is the hacking community’s anti-commercial bent. Software products have long been developed and released into the public domain, with seemingly no proﬁt motive on the side of the authors, simply for the higher glory of the code itself. “Spacewar was not sold,” Steven Levy writes, referring to the early video game developed by several early computer enthusiasts at MIT. “Like any other 51. Another is the delightfully schizophrenic Ted Nelson, inventor of hypertext. See Computer Lib/Dream Machines (Redmond, WA: Tempus/Microsoft, 1987). 52. Pierre Lévy, L’intelligence collective: Pour une anthropologie du cyberspace (Paris: Éditions la Découverte, 1994), p. 120. 53.
The hacker feels obligated to remove all impediments, all inefﬁciencies that might stunt this quasi-aesthetic growth. “In its basic assembly structure,” writes Andrew Ross, “information technology involves processing, copying, replication, and simulation, and therefore does not recognize the concept of private information property.”57 Commercial ownership of software is the primary impediment hated by all hackers because it means that code is limited—limited by intellectual property laws, limited by the proﬁt motive, limited by corporate “lamers.” Even Kevin Mitnick, a hacker maligned by some for his often unsavory motivations, admits that the code itself has a higher priority than any commercial motivation: You get a better understanding of the cyberspace, the computer systems, the operating systems, how the computer systems interact with one another, that basically, was my motivation behind my hacking activity in the past, it was just from the gain of knowledge and the thrill of adventure, nothing that was well and truly sinister such as trying to get any type of monetary gain or anything.58 55.
The Spirit Level: Why Greater Equality Makes Societies Stronger by Richard Wilkinson, Kate Pickett
basic income, Berlin Wall, clean water, Diane Coyle, epigenetics, experimental economics, experimental subject, Fall of the Berlin Wall, full employment, germ theory of disease, Gini coefficient, God and Mammon, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, labor-force participation, land reform, longitudinal study, Louis Pasteur, meta analysis, meta-analysis, Milgram experiment, moral panic, offshore financial centre, phenotype, plutocrats, Plutocrats, profit maximization, profit motive, Ralph Waldo Emerson, statistical model, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, upwardly mobile, World Values Survey, zero-sum game
Greater equality can help us develop the public ethos and commitment to working together which we need if we are going to solve the problems which threaten us all. As wartime leaders knew, if a society has to pull together, policies must be seen to be fair and income differences have to be reduced. Figure 15.4 More equal countries recycle a higher proportion of their waste. 16 Building the future Turning corporations loose and letting the profit motive run amok is not a prescription for a more liveable world. Tom Scholz, Interview with the Sierra Club Before discussing what should be done to make our societies more equal, it is worth pointing out that focusing attention on the inequalities within them does not mean ignoring the international inequalities between rich and poor countries. The evidence strongly suggests that narrowing income differences within rich countries will make them more responsive to the needs of poorer countries.
There are others which continue to destroy ecosystems, land and water supplies, to exploit mineral resources where governments are too weak or corrupt to stand up to them, and still others use their patents to prevent life-saving drugs being sold at affordable prices in poorer countries. There are reasons to think that employee-owned companies might maintain higher standards of morality even with the profit motive. In conventional employment people are specifically hired to work for purposes which are not their own. They are paid to use their expertise to whatever purpose their employer chooses. You might disagree with the purpose to which your work is being put, you might not even know what the purpose is, but you are not employed to have opinions about such things and certainly not to express them. Such issues are not your concern.
Suburban Nation by Andres Duany, Elizabeth Plater-Zyberk, Jeff Speck
A Pattern Language, American ideology, big-box store, car-free, Celebration, Florida, City Beautiful movement, desegregation, edge city, Frank Gehry, housing crisis, if you build it, they will come, income inequality, intermodal, Jane Jacobs, jitney, McMansion, New Urbanism, Peter Calthorpe, place-making, price mechanism, profit motive, Ralph Nader, Seaside, Florida, Silicon Valley, skinny streets, the built environment, The Death and Life of Great American Cities, The Great Good Place, transit-oriented development, urban planning, urban renewal, urban sprawl, white flight, working poor, Works Progress Administration
The primary goal of the industry remains to build and sell individual houses as quickly and profitably as possible, to “blow and go,” as they put it. A pro-community panelist at the NAHB convention can’t help but feel like a flower child at boot camp. Homebuilders, land developers, and marketing advisers are all constituencies that must be won over if the campaign against suburban sprawl is to succeed. Their participation will be meaningful in the long run only if it is driven by the profit motive, because in America at the millennium, ideas live or die based upon their performance in the marketplace. While there are ways in which government intervention is necessary—most obviously in rolling back the federal, state, and municipal policies that continue to promote sprawl—sprawl will not become obsolete by changing laws alone. A higher standard of development will become commonplace only if it offers greater profits to those who practice it.
Now that citizens have earned a position in the planning process, it is their duty to become experts in good design, and to demand the same from those in charge. In this regard, it is worth repeating the five truths most often misconstrued by citizens and government alike: • Growth cannot be stopped; it never has been. The only hope is to shape it into a more benevolent form, the neighborhood. • The profit motive is not the problem with development. The best neighborhoods in America were built for profit. • Most issues are interrelated. Traffic, housing, schools, crime, and the environment can be successfully addressed only if taken together, within the context of the neighborhood. • Planners and other professionals are specialists who, when left to themselves, distort the issues. Only generalists can be trusted to offer reasonable advice
Mastering the Market Cycle: Getting the Odds on Your Side by Howard Marks
activist fund / activist shareholder / activist investor, Albert Einstein, business cycle, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, financial innovation, fixed income, if you build it, they will come, income inequality, Isaac Newton, job automation, Long Term Capital Management, margin call, money market fund, moral hazard, new economy, profit motive, quantitative easing, race to the bottom, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, secular stagnation, short selling, South Sea Bubble, stocks for the long run, superstar cities, The Chicago School, The Great Moderation, transaction costs, VA Linux, Y2K, yield curve
The number of hours worked by each person with a job likewise varies with economic conditions—businesses shorten work weeks when demand for goods is low, and they authorize overtime when demand is high (until demand is strong enough to call for more hiring or another shift). Aspiration—The profit motive and the desire to live better are among the forces that drive workers (and thus societies) to work harder and to produce more. It might be tempting to think of these things as universal, but they aren’t. For example, the profit motive was pretty much excluded from the economic system under the Soviets, and the willingness to work more is constrained in other economies (to wit, I’ve watched workers clock out at European banks—not to prove that they had worked until 5:00 as in the U.S., but rather that they had left by 5:00 and thus hadn’t exceeded the 35-hour work week).
How to Kill a City: The Real Story of Gentrification by Peter Moskowitz
affirmative action, Airbnb, Bay Area Rapid Transit, British Empire, clean water, collective bargaining, David Brooks, deindustrialization, Detroit bankruptcy, drive until you qualify, East Village, Edward Glaeser, Golden Gate Park, housing crisis, income inequality, Jane Jacobs, Kickstarter, Kitchen Debate, late capitalism, mortgage tax deduction, Naomi Klein, new economy, New Urbanism, private military company, profit motive, RAND corporation, rent control, Richard Florida, Ronald Reagan, school choice, Silicon Valley, starchitect, The Death and Life of Great American Cities, the High Line, trickle-down economics, urban planning, urban renewal, white flight, working poor, Works Progress Administration, young professional
They don’t pressure cities to rezone entire neighborhoods because they believe in inner-city liberation. So to answer the question of why gentrification happens, we have to answer the question of how the city became profitable to gentrify. Cities do not gentrify unless the process is profitable for real estate developers. Yes, hipsters and yuppies can move into a neighborhood and inflate local real estate values, but it is developers’ profit motive that causes massive, citywide change. The city wasn’t always profitable. Up until the 1960s, developers could make much more money in the suburbs—buying land cheaply, constructing single-family houses, and taking advantage of a burgeoning mortgage industry to sell to the (mostly white) middle and upper classes. But at a certain point, profit potential in many suburbs was more or less maxed out.
Phil Cooley isn’t just a profiteer, he’s participating in the burgeoning democracy of Detroit. Dan Gilbert’s favorite business phrase—“Do well by doing good”—seems to be the official slogan of the new Detroit, embraced by hundreds of young white entrepreneurs who believe they’re not only making money but helping rescue an entire city. That’s why speaking with Midtown Inc.’s Sue Mosey was refreshing. She can talk about the profit motive of the new Detroit without resorting to euphemisms for trickle-down economics. The biggest problem, Mosey told me, is that there is practically no city government left in Detroit. Midtown Inc., which has no accountability to anyone except those who fund it (developers and nonprofits such as the Kresge Foundation), has become the de facto department of planning for its section of the city. The real city government, which went through bankruptcy in 2013—the largest bankruptcy in municipal history—does not have enough money, expertise, or manpower to plan its own streetscape.
The Globotics Upheaval: Globalisation, Robotics and the Future of Work by Richard Baldwin
agricultural Revolution, Airbnb, AltaVista, Amazon Web Services, augmented reality, autonomous vehicles, basic income, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, commoditize, computer vision, Corn Laws, correlation does not imply causation, Credit Default Swap, David Ricardo: comparative advantage, declining real wages, deindustrialization, deskilling, Donald Trump, Douglas Hofstadter, Downton Abbey, Elon Musk, Erik Brynjolfsson, facts on the ground, future of journalism, future of work, George Gilder, Google Glasses, Google Hangouts, hiring and firing, impulse control, income inequality, industrial robot, intangible asset, Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, knowledge worker, laissez-faire capitalism, low skilled workers, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, Metcalfe’s law, new economy, optical character recognition, pattern recognition, Ponzi scheme, post-industrial society, post-work, profit motive, remote working, reshoring, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, social intelligence, sovereign wealth fund, standardized shipping container, statistical model, Stephen Hawking, Steve Jobs, supply-chain management, TaskRabbit, telepresence, telepresence robot, telerobotics, Thomas Malthus, trade liberalization, universal basic income
Babson College professor Tom Davenport says, “The pay of the average managing director at Goldman will probably get even bigger, as there are fewer lower-level people to share the profits with.”34 The examples are endless and growing since many jobs in finance involve doing things that white-collar robots are really good at, namely—making fast decisions based on tons of data. And this job displacement could go much further. Marty Chavez, Goldman’s deputy chief financial officer notes that investment banking is in for the globot treatment. Investment bankers involved in mergers and acquisitions earn, on average, $700,000 a year, so the profit motive for slimming the numbers is clear. While many of the skills—like selling ideas and building relationships—will stay with humans, the company has identified over a hundred specific tasks that could be automated. In 2018, former Deutsche Bank chief executive John Cryan guessed that that up to half of the German bank’s workforce could be replaced by technology. As Barclays investment bank CEO Tim Throsby said, “If your job involves a lot of keyboard hitting then you’re less likely to have a happy future.”
The main point to keep in mind here is that the geniuses at Google, Amazon, Microsoft, Infosys, IBM, and so on are not working to create new jobs. They are working to displace them. When it comes to the other type of globot—telemigrants—the mistmatched speed point is less clear as yet. Freelancing is booming but so far it mostly involves domestic workers, not telemigrants. The intentionality is also less clear. Profit motives are surely behind employers’ ramping up their use of freelancers, but to date much of this has been creating jobs for domestic workers. For example, the online payment company, Paychex, studied over 400,000 freelancers’ resumes that were posted on Indeed.com (a job matching website). What they found was that “for the majority of the 1970s, ’80s, and even ’90s, working generally meant heading off to a typical 9-to-5 job.
The New Economics: A Bigger Picture by David Boyle, Andrew Simms
Asian financial crisis, back-to-the-land, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, carbon footprint, clean water, collateralized debt obligation, colonial rule, Community Supported Agriculture, congestion charging, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, delayed gratification, deskilling, en.wikipedia.org, energy transition, financial deregulation, financial exclusion, financial innovation, full employment, garden city movement, happiness index / gross national happiness, if you build it, they will come, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Kickstarter, land reform, light touch regulation, loss aversion, mega-rich, microcredit, Mikhail Gorbachev, mortgage debt, neoliberal agenda, new economy, North Sea oil, Northern Rock, offshore financial centre, oil shock, peak oil, pensions crisis, profit motive, purchasing power parity, quantitative easing, Ronald Reagan, seigniorage, Simon Kuznets, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trickle-down economics, Vilfredo Pareto, Washington Consensus, wealth creators, working-age population
Policy regards people simply as passive consumers of goods or services, which are ‘delivered’ to them by service providers. Energy consumption is profitable under this narrow interpretation of economics, but energy conservation is more problematic, so we consume. Health care consumption is profitable in the short term for providers, preventative health is not, so we become consumers of health ‘solutions’. The pre-eminent profit motive also makes companies grow to increase their profits and grow yet more. This is facilitated by financial institutions, which have themselves grown to an enormous scale, but which also profit from arranging mergers and acquisitions in the business world. In the public sector, cost considerations, and the desire to centralize control, fosters a culture where bigger is better, and narrow economic efficiency considerations preclude holistic approaches and local participation in the delivery of public services.
Other books to read David Boyle (1999) Funny Money, HarperCollins, London David Boyle, Sherry Clark and Sarah Burns (2006) Hidden Work, Joseph Rowntree Foundation, London Colin Hines (2000) Localization: A Global Manifesto, Earthscan, London Alison Ravetz (2008) ‘Is the government trying to abolish illness?’, New Statesman, 5 May James Robertson and Joseph Huber (2000) Creating New Money, New Economics Foundation, London Shann Turnbull (1975) New Money Sources and Profit Motives for Democratising the Wealth of Nations, Company Directors Association, Sydney Notes 1 2 3 4 5 6 7 8 9 Tim Jackson, Nic Marks, Jon Ralls and S. Strymne (1997) An Index of Sustainable Economic Welfare for the UK 1950–1996, Centre for Environmental Strategy, University of Surrey, Guildford. Robert Lacey and Dabby Danziger (1999) The Year 1000: What Life was Like at the Turn of the Last Millennium, Little, Brown, London.
Stolen: How to Save the World From Financialisation by Grace Blakeley
"Robert Solow", activist fund / activist shareholder / activist investor, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, basic income, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Bretton Woods, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, cryptocurrency, currency peg, David Graeber, debt deflation, decarbonisation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, full employment, G4S, gender pay gap, gig economy, Gini coefficient, global reserve currency, global supply chain, housing crisis, Hyman Minsky, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), Kenneth Rogoff, Kickstarter, land value tax, light touch regulation, low skilled workers, market clearing, means of production, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, Northern Rock, offshore financial centre, paradox of thrift, payday loans, pensions crisis, Ponzi scheme, price mechanism, principal–agent problem, profit motive, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Right to Buy, rising living standards, risk-adjusted returns, road to serfdom, savings glut, secular stagnation, shareholder value, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, the built environment, The Great Moderation, too big to fail, transfer pricing, universal basic income, Winter of Discontent, working-age population, yield curve, zero-sum game
Just as feudalism paved the way for capitalism, the development of capitalism is paving the way for socialism. Socialising ownership would ensure that economic growth and development benefit everyone — if everyone has a stake in the economy, then when the economy grows, we all get better off. But it is the democratic aspect of democratic socialism that is truly revolutionary. Rather than organising production based on the profit motive, working people would come together to determine their collective goals and how best to achieve them. Rather than working purely to maximise profits, we would be working to maximise our collective prosperity, which includes the health and happiness of people and planet. Building the Future Visions of the future abound. Democratic socialism, cybernetic socialism, fully automated luxury communism — all these utopian dreams are slowly seeping into our collective consciousness and allowing us to imagine a future not governed by the logic of private ownership and the market.
Instead, capitalism engenders complexity, meaning that even the best organised capitalist economies inevitably tend towards chaos. Capitalist political and economic institutions attempt to contain complexity by subjecting capitalist societies to rigid hierarchies, in which owners have all the wealth and power. But, as Marx has shown us, such institutional configurations — whatever their nature, from socially democratic to free-market libertarian — cannot contain the chaos unleashed by the profit motive. When these institutions can no longer control the contradictions they were designed to accommodate, they strain, and even break. Such periods are marked by political, legal, and social upheaval, frequent transitions of power, and even revolutions. The decade since the financial crisis has been one such period. Finance-led growth is a system premised upon wage suppression and rent extraction by elites — a process that creates little of value even as it transfers resources from the bottom to the top.
The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey by Michael Huemer
Cass Sunstein, Chelsea Manning, cognitive dissonance, cuban missile crisis, Daniel Kahneman / Amos Tversky, en.wikipedia.org, Eratosthenes, experimental subject, framing effect, Gini coefficient, illegal immigration, impulse control, Isaac Newton, Julian Assange, laissez-faire capitalism, Machinery of Freedom by David Friedman, Milgram experiment, moral hazard, Phillip Zimbardo, profit maximization, profit motive, Ralph Nader, RAND corporation, rent-seeking, Ronald Coase, Stanford prison experiment, The Wealth of Nations by Adam Smith, unbiased observer, uranium enrichment, WikiLeaks
Just as none of Milgram’s subjects would have decided on their own to go out and electrocute anyone, very few Germans would have decided, on their own, to go out murdering Jews. Respect for authority was Hitler’s key weapon. The same is true of all of the greatest man-made evils. No one has ever managed, working alone, to kill over a million people. Nor has anyone ever arranged such an evil by appealing to the profit motive, pure self-interest, or moral suasion to secure the cooperation of others – except by relying on institutions of political authority. With the help of such institutions, many such crimes have been carried out, accounting for tens of millions of deaths, along with many more ruined lives. It is possible that such institutions also serve crucial social functions and forestall other enormous evils.
The large costs of moving from one country to another, including the barriers that governments themselves often place in the way, enable a government to extract monopoly profits from its populace with little fear of losing ‘customers’ to a rival government. Therefore, a government has less cause to wish to eliminate rival governments than a protection agency has to wish to eliminate rival agencies. These are valid considerations. On the other hand, there seem to be several reasons for expecting the problem of intergovernmental warfare to be more serious than that of interagency warfare: i) Business leaders tend to be driven chiefly by the profit motive. Government leaders are more likely to be driven by ideology or the desire for power. Because of the enormous costs of armed conflict, the latter motivations are much more likely motives for armed conflict than the desire for financial gain. ii) Due to their monopolistic positions, governments can afford to make extremely large and costly errors without fear of being supplanted. For example, the estimated combined cost of the U.S. wars in Iraq and Afghanistan is $2.4 trillion,10 and yet the U.S. government need fear no loss of market share as a result of this dubious investment.
Just as citizens of a democratic state believe that public officials should promote justice, the members of an anarchy may hold that protection agencies and arbitration firms should promote justice. However much efficacy that kind of social norm has in policing human behavior, the anarchist may harness it just as well as the statist. 10.6 Security for the poor Another concern is that security agencies, driven by the profit motive, will cater solely to the rich, leaving the poor defenseless against criminals. 10.6.1 Do businesses serve the poor? Unfortunately, there are no actual societies with a free market in security. We can, however, examine societies with relatively free markets in a variety of other goods and services. In such societies, for how many of these other goods and services is it true that suppliers cater solely to the rich, providing no products suitable for middle- and lower-income customers?
Oil Panic and the Global Crisis: Predictions and Myths by Steven M. Gorelick
California gold rush, carbon footprint, energy security, energy transition, flex fuel, income per capita, invention of the telephone, meta analysis, meta-analysis, North Sea oil, oil shale / tar sands, oil shock, peak oil, price stability, profit motive, purchasing power parity, RAND corporation, statistical model, Thomas Malthus
The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”8 The Energy Information Administration (EIA), which is part of the US Department of Energy, says that only 4–7 percent of the world’s original in-place liquid petroleum has been recovered.9 Individuals ranging from oil company executives to energy consultants to academic economists firmly believe that any concerns about global depletion in the foreseeable future are premature for several reasons – oil is abundant, we have only consumed a fraction of the global oil endowment, technology to discover and extract new oil has consistently proven out, and the profit motive combined with the law of supply and demand will prevail.10–13 Why is our oil future so uncertain? What are the underlying data, analyses, and philosophies that lead to predictions of global oil depletion by some End of the Oil Era 3 versus the conviction by others that the current state of alarm is unjustified and just crying wolf? Why is there any controversy at all? We can begin to answer these questions by considering the arguments supporting our intuition that the end of the Oil Era is near.
As one study of California gasoline prices put it, “After crude oil and wholesale gasoline prices peak and start to decline, retail prices may still be “digesting” the effects of the previous increase, even while starting to reflect the decrease as well.”77 However, there is another and perhaps more fundamental reason for the higher price of gasoline even after the oil price has declined: the profit motive of the outlet. An outlet owner can continue to sell gasoline at the higher price, since consumers have become used to paying it. What stops the outlet owner? The Global Oil Landscape 49 At some point, competing stations lower their prices, forcing other stations to lower theirs. From a market standpoint, such pricing behavior is not gouging because the station owner is not trying to extract a price and profit higher than the market will bear.
There Is No Planet B: A Handbook for the Make or Break Years by Mike Berners-Lee
air freight, autonomous vehicles, call centre, carbon footprint, cloud computing, dematerialisation, Elon Musk, energy security, energy transition, food miles, Gini coefficient, global supply chain, global village, Hans Rosling, income inequality, Intergovernmental Panel on Climate Change (IPCC), land reform, neoliberal agenda, off grid, performance metric, profit motive, shareholder value, Silicon Valley, smart cities, Stephen Hawking, The Spirit Level, The Wealth of Nations by Adam Smith, trickle-down economics, urban planning
They need a systemic understanding of the full range of both their direct and their indirect impacts. By now, the next sentence may be too obvious to be worth writing, but just to be clear: In the twenty-ﬁrst century it is totally unhelpful to have organisations that exist primarily in order to make proﬁt. That is different from saying that they mustn’t under any circumstance do so, but as a reason for existence, it is simply unﬁt for today’s world. The proﬁt motive has to be yesterday’s thinking. If you work for an organisation like this, please challenge it and/or leave. If you feel you can’t do either then you are a bonded labourer. 160 7 BUSINESS AND TECHNOLOGY How can a business think systemically? There are lots of ways of doing this. There are also many thousands of consultants eager to help if you don’t want to do it all in-house. Some of them are very good, but I advise checking their worldview carefully before engaging.
(Berners-Lee) 32, 147–48, 227 hydrocarbons/hydrogen 72 hydroelectric power 75 hydro storage 72 ice 228 ICT (information and communication technology), impacts 84–85, 113–14 imperial units 242–44 income tax see tax system India, global distribution of fossil fuel reserves 89–90 individual actions see personal actions and effects individualism 119, 225–26, 228 indoor farming 45–46, 67–68 inequality 228 and citizen’s wage 154 energy use 60, 90–91, 131 food distribution 15–16 global deals 210 population growth 150–51 prisons/prisoners 156 tax system 142–45, 144 trickledown of wealth 130–31, 130 and values 169–71 wealth distribution 130–35, 131–40, 132, 134 insecurity 172–73 interdependencies, global/societal 189–90 Intergovernmental Panel on Climate Change 229 interstellar travel, impracticality of 117–18, 195, 237 interventionist economies 127–30 intrinsic motivation and values 143–44, 170–73 investment 140–42, 228–29 renewable energy sources 73, 87 sustainable farming 48–50 Index iodine, malnutrition 15 IPCC see Intergovernmental Panel on Climate Change Iraq, global distribution of fossil fuel reserves 89–90 Ireland, tax system 145 iron animal sources of food 19–20 malnutrition and inequalities of distribution 15 irrigation technology 45–46 Italy, wealth distribution 130–35, 133 Japan nuclear energy 76 sunlight/radiant energy 70, 70–71 Jevons paradox, energy efﬁciency 82–83 jobs see work/employment joined up perspectives 189–92, 221 journalists see media roles Kennedy, Bobby: speech on GNP 124 Keys to Performance (O’Connor) 180 kids 6–8, 187, 191, 229 kilocalories 12, 242–43 kinetic energy in a gas analogy 136–39 laboratory grown meat 45–46, 67–68 lag times, climate change 204–5 land requirements, sustainable travel 101–3, 102–3, 103–4 leadership 229–30 life expectancy, beneﬁts of growth 123 life-minutes per person lost, diesel vehicles 109 lifestyles 4–5; see also personal actions and effects 283 limits to growth 221 big picture perspective 195 energy use 67–69, 68, 94–95, 208 21st century thinking skills 187–88 and values 170 local activities, appreciation of 123, 187–88, 191 local food, pros and cons 30–32, 230 luxury cruises 115–16 Maldives 210, 230 malnutrition 15–16 Marine Stewardship Council 33 market economies 127–30 materialistic values 174; see also consumption/consumerism maturity, need for 93, 121 Maxwell–Boltzmann distribution 136–38, 230, 265 measurement see metrics meat eating see animal sources of food media roles 231 promoting culture of truth 179–80 trust 182 messages, societal 172–74; see also values methane 79–81, 208–9, 231 metric units 242–44 metrics healthy economic growth 124–27 prisons/prisoners 156 and values 174 work/employment 151 micro-nutrients animal sources of food 19–20 malnutrition 15 Microsoft, carbon pricing scheme 147 mindfulness 174–75, 191, 193 284 misinformation 222 and trust 182, 184 and truth 175 and values 170 mitigation strategies, businesses 163–64 models, climate change 200–1, 204–5 molecular analogy of wealth distribution 136–39 Monbiot, George 236 motivation extrinsic/intrinsic 143–44, 172–73 and trust 181, 184 Musk, Elon 167 natural gas 224; see also fracking; methane neoliberalism 45, 129, 131, 172, 228, 232; see also free market Netherlands 70, 70–71, 149–50 neuroscience 232 nitrogen dioxide 108, 208–9 Norway 130–35, 138, 155–56 nuclear fusion 77, 232 nuclear power (fusion) 75–77, 231–32 obesity 16 ocean acidiﬁcation 54–55, 232 O’Connor, Tim: Keys to Performance 180 oil 233; see also fossil fuels One Planet principles 160–62, 162 open-mindedness neuroscience 232 respect for 180 spirituality/belief systems 192 and trust 181–82, 184 optimism bias 233 over-simpliﬁcation 182; see also complexity overeating 16 INDEX parental responsibility 233 Paris climate agreement 165–66 particulate air pollution 107–9 Patagonian Toothﬁsh 33–34 pay rates 173; see also wealth distribution personal actions and effects 198–99, 233–34 air travel 112–13 antibiotics resistance 21 climate change 55 energy 97 feelings of insigniﬁcance in global systems 5–6 food/agricultural issues 30, 34–35, 40, 43, 50 population growth 150–51 promoting culture of truth 178–79 technological changes 168 values 174–75 wealth distribution 139 work/employment 153 ‘personal truths’ 176–77 perspectives big picture 186, 191, 195–97 businesses 159 joined up 189–92, 221 photocopying metaphor 219 photovoltaic technology 63–64, 66–67; see also solar energy physical growth mind-set 120 Planet B, lack of 117–18, 195, 237 planned economies 127–30 planning ahead, future scenarios 204–5 planning, urban 104 plastics 55–58, 56–57, 234 politicians see governmental roles; voting pollution, chicken farming 25–26; see also air pollution Index population growth 149–50, 234 feeding growing populations 46–47 investment in control measures 141, 150–51 personal actions and effects 150–51 risks of further growth 122 positive feedback mechanisms, climate change 200–1, 239 power, units of 242–43 prisons/prisoners 154–57, 157, 174, 234 problem-solving methods 5 proﬁt-motive 159, 174 protein animal sources 17–18, 18 carbon footprints 23–25, 24 psychology 227–28 public service 174 questions and answers, reader contributions 194 reader contributions 9–10, 194 ready meals 238 rebalancing, evolutionary 6, 221 rebound effects 213, 235, 272 business strategies 163 climate change 52, 128, 165–66, 206–7, 206 energy efﬁciency 84, 207 virtual meetings 113–14 reductionism 189–90, 193 refugees 234–35 relatedness/belonging 266 religion 192–93 renewable energy sources 64, 208, 235 hydroelectric power 75 investment 141 limitations relative to fossil fuels 73–86, 85–87 285 using instead of/as well as fossil fuels 81–82 wind energy 73–74 see also biofuels; carbon capture and storage; solar energy respect 171, 180, 197 responsibility corporate 219 parents 233 super-rich 134–35 restaurants role food wastage 40 vegetarianism/veganism 28 retailing, food see food retailers revenge, prisoners 155–56 rice farming 29–30, 45–46, 235 rock weathering, carbon capture and storage 92 Rogers, Carl 172 Russia 210, 235 global distribution of fossil fuel reserves 89–90 sunlight/radiant energy 69–70, 70 Rwanda 70, 70–71, 172 salaries 173; see also wealth distribution Science Based Targets Initiative (SBTi) 164–66 scientiﬁc facts see facts scientiﬁc fundamentalism 176 scientiﬁc reductionism 189–90, 193 seabass, rebadging Patagonian toothﬁsh as 33–34 sea travel 114–16, 235–36 self-awareness of simple/small/local 123, 187–88, 191 and trust 181, 184 self-reﬂection, 21st century thinking skills 188 286 sentient animals, treating decently 11, 17 shared-use vehicles 105–6 shareholder proﬁts 159, 174 sharing 146 shifting baseline syndrome 236 shipping 114–16, 235–36 shock 236 simple things, appreciation of 123, 187–88, 191 simplistic thinking 182; see also complexity slavery and citizen’s wage 154 and employment 151 ﬁshing industry 32, 34–35 slowing down 187–88, 196 small scale, appreciation of 123, 187–88, 191 Smith, Adam: The Wealth of Nations 129 social support structures, and values 173–74 solar energy 236 amount falling on earth 66 coping with intermittent sunlight 71–73 countries with highest radiant energy 69–71 countries with least radiant energy 70–71 relative to fossil fuel reserves 89 global distribution of radiant energy 69–71, 70 harnessing 66–67 South Korea, sunlight/radiant energy 70, 70–71 soya beans 21, 22, 236–37 space tourism 94, 100 spaceﬂight, impracticality of interstellar travel 117–18, 195, 237 INDEX Spain, wealth distribution 130–35, 133 spending practices, ethical consumerism 147–48, 168 spirituality/belief systems 192–93, 237 status symbols 173 sticking plasters (band aids) 237–38 storage of renewable energy 71–73 sunlight see solar energy supermarkets see food retailers super-rich responsibilities 134–35 taxation 145 wealth distribution 137 supply chains ethical consumerism 147–48 food and agriculture 48 science-based targets 165–66 systems approaches big picture perspective 196 businesses 159–62, 161 One Planet Living principles 160–62, 162 Taiwan, tax system 145 takeaways 238 tax system 238 carbon taxes 142–43 wealth distribution 138, 142–45 technological changes 239 agricultural 45–46 big picture perspective 195–96 business strategies 166–68 and economic growth 122–23 thinking skills big picture perspective 197 twenty-ﬁrst century 185–92, 190–91 tipping points see trigger points town planning 104 transmission of renewable energy 73 Index travel and transport 99 air travel 110–14 autonomous cars 109–10 commuting 217 current rates 99–100, 100 cycling 116 diesel vehicles 107–9, 109 e-cars 106 food miles 30–32 future demands 100–1, 109–10 land needed for sustainable 101–3, 102–3, 103–4 sea travel 114–16 shared-use vehicles 105–6 spaceﬂight 117–18 urban 104–6 trickledown of wealth 130–31, 130, 239 trigger points, step changes in climate 2, 200–2 trust 180–84 truth 175–76, 239 big picture perspective 197 importance of seeking 177 media roles 179–80 ‘personal truths’ 176–77 promoting culture of 177–79 respect for 171 and trust 180–84 tsunami, December 2004 2 twenty-ﬁrst century thinking skills 185–92, 190–91, 197 2-degree ‘safe limit’ for temperature rise 52, 200–1, 204–5, 239 unconditional positive regard 172 United Kingdom energy by end use 62, 62 gambling industry 139–40 nuclear energy 76 population growth 149–50 prisons/prisoners 155 287 sunlight/radiant energy 70, 70–71 wealth distribution 136–37 United States global distribution of fossil fuel reserves 89–90 prisons/prisoners 155–56 sunlight/radiant energy 69–70, 70 tax system 145 wealth distribution 130–35, 132–35 units, metric/imperial 242–44 urban planning 104 urban transport 104–6 value of human life 240 values 6–8, 169 big picture perspective 197 businesses 159, 174 changing for the better 172–75 and economics 119 evidence base for values choices 169–71 extrinsic/intrinsic 170–73 global cultural norms 171–72, 197 prisons/prisoners 156 technological changes 168 wealth distribution 132–33 work/employment 152–53 see also ethical consumerism vegetarianism/veganism 26–29 Venezuela, global distribution of fossil fuels 89–90 violent deaths 240 virtual travel 113–14 visions of future 8–9 businesses 159 vitamin A 15, 19–20, 247 voting, power of 240–41 climate change policies 51–53, 200–11 288 voting, power of (cont.) energy policies 59, 97 promoting culture of truth 178–80 see also democracy waking up 241 Wallis, Stewart 145 waste food 36–43, 241 mitigation 42–44, 43, 43 as proportion of food grown 12–15, 14 by region/type/processing stage 37, 38–39, 39 water use technology, in agriculture 45–46 watts 12, 242–43 wealth distribution economics 130–35, 131–40, 132, 134 tax system 138, 142–45, 144 see also inequality The Wealth of Nations (Smith) 129 INDEX weapons industry 152 weight, units of 244 wellbeing 241 beneﬁts of growth 123 businesses, role of 158–59 and citizen’s wage 154 metrics of healthy growth 126 work/employment 151–52 Wellbeing Economy 267 wind energy 73–74 wisdom, need for 93, 121 work/employment 229 agricultural work 44–45, 222 and citizen’s wage 153–54 investment in sustainability 49–50 personal actions and effects 153 useful/beneﬁcial 151–52 values 152–53 zinc 15, 19–20
The Fourth Age: Smart Robots, Conscious Computers, and the Future of Humanity by Byron Reese
agricultural Revolution, AI winter, artificial general intelligence, basic income, Buckminster Fuller, business cycle, business process, Claude Shannon: information theory, clean water, cognitive bias, computer age, crowdsourcing, dark matter, Elon Musk, Eratosthenes, estate planning, financial independence, first square of the chessboard, first square of the chessboard / second half of the chessboard, full employment, Hans Rosling, income inequality, invention of agriculture, invention of movable type, invention of the printing press, invention of writing, Isaac Newton, Islamic Golden Age, James Hargreaves, job automation, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, lateral thinking, life extension, Louis Pasteur, low skilled workers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Mary Lou Jepsen, Moravec's paradox, On the Revolutions of the Heavenly Spheres, pattern recognition, profit motive, Ray Kurzweil, recommendation engine, Rodney Brooks, Sam Altman, self-driving car, Silicon Valley, Skype, spinning jenny, Stephen Hawking, Steve Wozniak, Steven Pinker, strong AI, technological singularity, telepresence, telepresence robot, The Future of Employment, the scientific method, Turing machine, Turing test, universal basic income, Von Neumann architecture, Wall-E, Watson beat the top human players on Jeopardy!, women in the workforce, working poor, Works Progress Administration, Y Combinator
To bring every person on the planet up to twice the amount of power used by the average American would require 5,000 exajoules year, or ten times the current US energy production. This is a daunting amount, to be sure, but a possible one when compared with the potential of some of the sources we just discussed. We can expect major breakthroughs because the financial incentives are all there. We have seen the price of solar and other clean energies fall so dramatically because of the profit motive and the wealth that even small improvements in energy production bring about. There is no reason to believe that will change. No More War What about war in the Fourth Age? Are we going to enter an era in which AI weapons, such as those we discussed in chapter 12, cause a proliferation of war? I don’t think so. Instead, I believe humanity is nearing the end of organized warfare between nations.
Is that not a powder keg of a world? We are building the opposite of that, so how is that not a force for peace? We are still a long way from ending war. The armament industry is still one of the three largest businesses on the planet. Ironically, the other two are food and medicine. In the United States, we got exactly what President Eisenhower warned us about, a permanent arms industry driven by the profit motive. Henry Ford once said, “Show me who makes a profit from war, and I’ll show you how to stop the war.” So it is likely that in the Fourth Age, spending on armaments won’t decline, and we will continue to make new and better weapons, including killer robots with AI. For a long time to come, nations will continue to expend vast storehouses of wealth to have lethal arsenals. What will change is the calculus around when to use them.
Inventing the Future: Postcapitalism and a World Without Work by Nick Srnicek, Alex Williams
3D printing, additive manufacturing, air freight, algorithmic trading, anti-work, back-to-the-land, banking crisis, basic income, battle of ideas, blockchain, Boris Johnson, Bretton Woods, business cycle, call centre, capital controls, carbon footprint, Cass Sunstein, centre right, collective bargaining, crowdsourcing, cryptocurrency, David Graeber, decarbonisation, deindustrialization, deskilling, Doha Development Round, Elon Musk, Erik Brynjolfsson, Ferguson, Missouri, financial independence, food miles, Francis Fukuyama: the end of history, full employment, future of work, gender pay gap, housing crisis, income inequality, industrial robot, informal economy, intermodal, Internet Archive, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, late capitalism, liberation theology, Live Aid, low skilled workers, manufacturing employment, market design, Martin Wolf, mass immigration, mass incarceration, means of production, minimum wage unemployment, Mont Pelerin Society, neoliberal agenda, New Urbanism, Occupy movement, oil shale / tar sands, oil shock, patent troll, pattern recognition, Paul Samuelson, Philip Mirowski, post scarcity, post-work, postnationalism / post nation state, precariat, price stability, profit motive, quantitative easing, reshoring, Richard Florida, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Slavoj Žižek, social web, stakhanovite, Steve Jobs, surplus humans, the built environment, The Chicago School, The Future of Employment, Tyler Cowen: Great Stagnation, universal basic income, wages for housework, We are the 99%, women in the workforce, working poor, working-age population
In this repression, what has been lost is that ambition to produce ‘a world that exceeds – existentially, aesthetically, as well as politically – the miserable confines of bourgeois culture’.54 But as an apparently universal and irrepressible characteristic of human cultures, utopian thinking can surge forth under even the most repressive conditions.55 Utopian inclinations play out across the human spectrum of feelings and affects – embodied in popular culture, high culture, fashion, city planning, and even quotidian daydreaming.56 The popular desire for space exploration, for instance, points to a curiosity and ambition that lies beyond the profit motive.57 The like-minded trend of afro-futurism offers not only a highly stylised image of a better future, but also ties it to a radical critique of existing structures of oppression and a remembrance of past struggles. The post-work imaginary also contains numerous historical precedents in utopian writing, pointing to a constant striving to move beyond the constraints of wage labour. Cultural movements and aesthetic production have essential roles to play in reigniting the desire for utopia and inspiring visions of a different world.
See Weeks, Problem with Work, pp. 213–18. 50.Manuel Castells, Networks of Outrage and Hope: Social Movements in the Internet Age (Cambridge: Polity, 2012), p. 15. 51.Patricia Reed, ‘Seven Prescriptions for Accelerationism’, in Robin Mackay and Armen Avanessian, eds, #Accelerate: The Accelerationist Reader (Falmouth: Urbanomic, 2014), pp. 528–31. 52.Wendy Brown, ‘Resisting Left Melancholy’, Boundary 2 26: 3 (1999). 53.Paul Mason, Why It’s Kicking Off Everywhere: The New Global Revolutions (London: Verso, 2012), pp. 66–73. 54.Mark Fisher, ‘Going Overground’, K-Punk, 5 January 2014, at k-punk.org. 55.Bloch, Principle of Hope. 56.Paul Gilroy, The Black Atlantic: Modernity and Double Consciousness (London: Verso, 1993), p. 37; Weeks, Problem with Work, pp. 190–3; Geoghegan, Utopianism and Marxism, p. 20. 57.Curiously, this lack of a profit motive has led some on the left to see space exploration perversely as a ‘capitalist utopia’. George Caffentzis and Silvia Federici, ‘Mormons in Space’, in George Caffentzis, In Letters of Blood and Fire (Oakland: PM Press, 2012), p. 65. 58.Louis Althusser, ‘Ideology and Ideological State Apparatus (Notes Towards an Investigation)’, in Lenin and Philosophy and Other Essays (New York: Monthly Review, 2001), pp. 88–9. 59.Gramsci, Selections from the Prison Notebooks, p. 10. 60.Mary Morgan and Malcolm Rutherford, ‘American Economics: The Character of the Transformation’, History of Political Economy 30 (1998). 61.G.
Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook
3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, corporate governance, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, wealth creators, women in the workforce, working poor, zero-sum game
Even in countries whose educational systems are comparatively successful (when judged by test scores, anyway), such as Finland or Japan, turning schools into state monopolies has rendered the entire field of education disturbingly stagnant. Nowhere do we see the diversity, choice, and innovation that define the high-tech industry. In the U.S., however, things are much worse. By almost every measure we are falling behind the rest of the world, yet because there is no competition or profit motive to punish poor performers and reward great achievers, there is no reason to expect things will get better any time soon. There are few innovators devoting their efforts to creating the educational equivalent of an Apple or a Google, and the innovators who do try to change the field are highly constrained by the government. Even a private school isn’t fully free to set its own rules and standards—it has to answer to the state.
–Peter Boettke, University Professor of Economics and Philosophy, George Mason University “Arguing the unarguable, Watkins and Brook blow the top off established wisdom on the evil of income inequality and the culpability of the 1%. Today’s one-sided debate on income inequality amounts to envy politics, not logic or fact, as these authors demonstrate in their explosive and entertaining book, Equal Is Unfair: America’s Misguided Fight Against Income Inequality. This book shows why the profit motive is noble and shows that government intervention in all areas of our lives—not income inequality—is what’s really threatening the American Dream. A must read for those who desire prosperity for more of the world’s people.” –Mallory Factor, New York Times bestselling author of Shadowbosses and Big Tent, FoxNews contributor and professor at The Citadel, Oxford University and Buckingham University Thank you for buying this St.
Here Comes Everybody: The Power of Organizing Without Organizations by Clay Shirky
Andrew Keen, Berlin Wall, bioinformatics, Brewster Kahle, c2.com, Charles Lindbergh, crowdsourcing, en.wikipedia.org, hiring and firing, hive mind, Howard Rheingold, Internet Archive, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, jimmy wales, Joi Ito, Kuiper Belt, liberation theology, Mahatma Gandhi, means of production, Merlin Mann, Metcalfe’s law, Nash equilibrium, Network effects, Nicholas Carr, Picturephone, place-making, Pluto: dwarf planet, prediction markets, price mechanism, prisoner's dilemma, profit motive, Richard Stallman, Robert Metcalfe, Ronald Coase, Silicon Valley, slashdot, social software, Stewart Brand, supply-chain management, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, transaction costs, ultimatum game, Vilfredo Pareto, Yogi Berra
Instead, they would have to send messages out to many more people than would actually attend, in hopes of reaching the right audience, advertising to photographers, hipsters, New Yorkers, and so on, in hope of getting the tiny fraction of those groups who would actually go. Most such ads would be seen by people who weren’t going to the parade, while most of the people who were going wouldn’t see (or pay attention to) the ads. Given those obstacles, no business in the world would take on the job. The profit motive is little help; no one could sell enough pictures, even the skull-bikini ones, to be able to pay the photographers, much less leave any profit afterward. Likewise, no nonprofit or government agency would touch the problem; even the porkiest of pork-barrel projects isn’t going to cover publicity for hula-hooping mermaids. The gap between effort and payoff is too large for any institution to span.
The cost of all kinds of group activity—sharing, cooperation, and collective action—have fallen so far so fast that activities previously hidden beneath that floor are now coming to light. We didn’t notice how many things were under that floor because, prior to the current era, the alternative to institutional action was usually no action. Social tools provide a third alternative: action by loosely structured groups, operating without managerial direction and outside the profit motive. From Sharing to Cooperation to Collective Action For the last hundred years the big organizational question has been whether any given task was best taken on by the state, directing the effort in a planned way, or by businesses competing in a market. This debate was based on the universal and unspoken supposition that people couldn’t simply self-assemble; the choice between markets and managed effort assumed that there was no third alternative.
No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy by Linsey McGoey
activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, agricultural Revolution, American Legislative Exchange Council, bitcoin, Bob Geldof, cashless society, clean water, cognitive dissonance, collapse of Lehman Brothers, colonial rule, corporate governance, corporate social responsibility, crony capitalism, effective altruism, Etonian, financial innovation, Food sovereignty, Ford paid five dollars a day, germ theory of disease, hiring and firing, Howard Zinn, income inequality, income per capita, invisible hand, Jane Jacobs, Joseph Schumpeter, liquidationism / Banker’s doctrine / the Treasury view, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, meta analysis, meta-analysis, microcredit, Mitch Kapor, Mont Pelerin Society, Naomi Klein, obamacare, Peter Singer: altruism, Peter Thiel, plutocrats, Plutocrats, price mechanism, profit motive, Ralph Waldo Emerson, rent-seeking, road to serfdom, Ronald Reagan, school choice, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, Slavoj Žižek, Steve Jobs, strikebreaker, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, urban planning, wealth creators
, Proceedings of the American Philosophical Society, vol. 149, no. 2 (2005), 126; see also Paul Schervish, ‘The Spiritual Horizons of Philanthropy: New Directions for Money and Motives,’ New Directions for Philanthropic Fundraising, vol. 29 (2000), 17–32. 26Edwards is one of the rare few who have pointed out the relevance of Smith to Bishop and Green’s notion. See Edwards, Small Change. 27Adam Smith, The Wealth of Nations, Books 1–3 (Harmondsworth: Penguin, 1982 ), 292. 28Felix Salmon, ‘Philanthropy Can’t be Outsourced to the Profit Motive’, Reuters, 16 June 2011, at blogs.reuters.com. 29Slavoj Žižek, ‘The Liberal Communists of Porto Davos’, In These Times, 11 April 2006. 30Ray Madoff, ‘5 Myths About Payout Rules for Donor-Advised Funds,’ The Chronicle of Philanthropy, 13 January 2014. 31David Moore and Douglas Rutzen, ‘Legal Framework for Global Philanthropy: Barriers and Opportunities’, The International Journal of Not-for-Profit Law, vol. 13, no. 1–2 (2011), icnl.org. 32Emmanuel Saez, ‘Striking it Richer: The Evolution of Top Incomes in the United States’ (2012), at eml.berkeley.edu.
US Department of Education Institute of Education Sciences, National Center for Education Evaluation and Regional Assistance, ‘Identifying and Implementing Educational Practices Supported by Rigorous Evidence: A User-Friendly Guide’ (December 2003). 26Michael Powell, ‘A Mayor Sure of Himself, if Nothing Else’, New York Times, 5 December 2011. 27Paul Tough, ‘Teachers Aren’t the Problem’, Slate, 5 September 2011. 28Michael Winerup, ‘Teachers Get Little Say in a Book About Them’, New York Times, 28 August 2011. 29Stephanie Saul, ‘Profits and Questions at Online Charter Schools’, New York Times, 12 December 2011. 30Ibid. 31On the prison industry, see in particular Cindy Chang, ‘Louisiana Incarcerated: How We Built the World’s Prison Capital: An Eight-Ppart Series’, Times-Picayune (May 2012). 32Stephanie Mencimer, ‘Jeb Bush’s Cyber Attack on Public Schools’, Mother Jones (November/December 2011). 33Mike McIntire, ‘Conservative Nonprofit Acts as a Stealth Business Lobbyist’, New York Times, 21 April 2012. 34Colin Woodward, ‘The Profit Motive Behind Virtual Schools in Maine’, Portland Press Herald, 2 September 2012. 35Stephanie Simon, ‘Private Firms Eyeing Profits From US Public Schools’, Reuters, 2 August 2012. 36See Valerie Strauss, ‘Privacy Concerns Grow Over Gates-funded Student Database’, Washington Post, 9 June 2013. 37Joanne Barkan, ‘Got Dough?: How Billionaires Rule Our Schools’, Dissent (Winter 2011). 38Jason Riley, ‘Was the $5 Billion Worth it?’
Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu, James Robinson
"Robert Solow", Admiral Zheng, agricultural Revolution, Albert Einstein, Andrei Shleifer, Atahualpa, banking crisis, Bartolomé de las Casas, Berlin Wall, blood diamonds, BRICs, British Empire, central bank independence, clean water, collective bargaining, colonial rule, conceptual framework, Corn Laws, creative destruction, crony capitalism, Deng Xiaoping, desegregation, discovery of the americas, en.wikipedia.org, European colonialism, failed state, Fall of the Berlin Wall, falling living standards, financial independence, financial innovation, financial intermediation, Francis Fukuyama: the end of history, Francisco Pizarro, full employment, income inequality, income per capita, indoor plumbing, invention of movable type, invisible hand, James Hargreaves, James Watt: steam engine, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kickstarter, land reform, mass immigration, Mikhail Gorbachev, minimum wage unemployment, Mohammed Bouazizi, Paul Samuelson, price stability, profit motive, Rosa Parks, Scramble for Africa, Simon Kuznets, spice trade, spinning jenny, Steve Ballmer, Steve Jobs, trade liberalization, trade route, transatlantic slave trade, union organizing, upwardly mobile, Washington Consensus, working poor
There was nothing new about this behavior. This is exactly what Spanish conquistadors had done, and what Santa Ana did in their footsteps. The reason that the United States had a banking industry that was radically better for the economic prosperity of the country had nothing to do with differences in the motivation of those who owned the banks. Indeed, the profit motive, which underpinned the monopolistic nature of the banking industry in Mexico, was present in the United States, too. But this profit motive was channeled differently because of the radically different U.S. institutions. The bankers faced different economic institutions, institutions that subjected them to much greater competition. And this was largely because the politicians who wrote the rules for the bankers faced very different incentives themselves, forged by different political institutions.
When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings. By the 1940s, the leaders of the Soviet Union, even if not their admirers in the West, were well aware of these perverse incentives. The Soviet leaders acted as if they were due to technical problems, which could be fixed. For example, they moved away from paying bonuses based on output targets to allowing firms to set aside portions of profits to pay bonuses. But a “profit motive” was no more encouraging to innovation than one based on output targets. The system of prices used to calculate profits was almost completely unconnected to the value of new innovations or technology. Unlike in a market economy, prices in the Soviet Union were set by the government, and thus bore little relation to value. To more specifically create incentives for innovation, the Soviet Union introduced explicit innovation bonuses in 1946.
We the Corporations: How American Businesses Won Their Civil Rights by Adam Winkler
1960s counterculture, affirmative action, Affordable Care Act / Obamacare, anti-communist, Bernie Sanders, British Empire, Cass Sunstein, clean water, collective bargaining, corporate governance, corporate personhood, corporate social responsibility, desegregation, Donald Trump, financial innovation, glass ceiling, income inequality, invisible hand, joint-stock company, laissez-faire capitalism, land reform, obamacare, offshore financial centre, plutocrats, Plutocrats, Powell Memorandum, profit maximization, profit motive, race to the bottom, Ralph Nader, Ralph Waldo Emerson, refrigerator car, Robert Bork, Ronald Reagan, Rosa Parks, shareholder value, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, the scientific method, too big to fail, trade route, transcontinental railway, Unsafe at Any Speed, Upton Sinclair, yellow journalism
Political scientists have shown that large companies tend to be more politically active and show greater sophistication in their political activity than smaller firms, and the pursuit of corporate constitutional rights may be understood as another illustration of the phenomenon.8 Although the focus of this book is on business corporations, we will see that several of the Supreme Court’s most important corporate rights cases involved other types of organizations that nonetheless took the corporate form: Dartmouth College, the National Association for the Advancement of Colored People, and even Citizens United, a nonprofit advocacy group, were all “corporations” that fought to establish their own rights. Yet because the Supreme Court has rarely differentiated among the various types of corporations, even these cases resulted in greater constitutional protections for business.* Corporations have a straightforward motivation to seek constitutional rights: to fight laws and regulations that restrict business autonomy and interfere with the pursuit of profit. The profit motive has long made corporations formidable political actors who exert a strong influence on lawmaking, and indeed the vast majority of lobbyists in Washington work for companies and business-oriented trade associations. Yet as the story of corporate constitutional rights reminds us, business influence is not restricted to the elected branches. Corporate interests have also exerted themselves aggressively in the courts of law, using the Constitution to expand their power.
The government would receive one-fifth of the bounty.6 Privateering, as a result, became an integral part of the English economy, accounting for 10 percent of imports in the 1590s. In 1603, however, the flow of money abruptly stopped. That was the year James ascended to the throne and, in an effort to reconcile with Spain, he put an end to the practice. Nonetheless, the experience provided a model for how England could compete with the other colonial powers, especially Spain, without significant government spending: have private citizens, driven by the profit motive, do it instead. That lesson would help inspire the formation of the Virginia Company, which was also funded by private citizens and promised to generate revenue for the Crown. To raise the funds necessary to organize an expedition, the Virginia Company did exactly what corporations do today: turn to the capital markets. The company sold shares of stock to investors, who were lured by the promise of dividends expected to come from exploitation of New World resources and trade.
On the ties between regulated industry and business political activity, see Kevin Grier et al., “The Determinants of Industrial Political Activity, 1978–1986,” 88 American Political Science Review 911 (1994); Amy J. Hillman and Michael A. Hitt, “Corporate Political Strategy Formation: A Model of Approach, Participation, and Strategy Decisions,” 24 Academy of Management Review 825 (1999). On the profit motive in motivating corporate political activity, see Neil J. Mitchell et al., “The Determinants of Domestic and Foreign Corporate Political Activity,” 59 Journal of Politics 1096 (1997). See also Amy J. Hillman et al., “Corporate Political Activity: A Review and Research Agenda,” 30 Journal of Management 837 (2004). 10. On the shareholder wealth maximization norm, see Stephen M. Bainbridge, “In Defense of the Shareholder Wealth Maximization Norm,” 50 Washington & Lee Law Review 1423 (1993).
The Truth Machine: The Blockchain and the Future of Everything by Paul Vigna, Michael J. Casey
3D printing, additive manufacturing, Airbnb, altcoin, Amazon Web Services, barriers to entry, basic income, Berlin Wall, Bernie Madoff, bitcoin, blockchain, blood diamonds, Blythe Masters, business process, buy and hold, carbon footprint, cashless society, cloud computing, computer age, computerized trading, conceptual framework, Credit Default Swap, crowdsourcing, cryptocurrency, cyber-physical system, dematerialisation, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, failed state, fault tolerance, fiat currency, financial innovation, financial intermediation, global supply chain, Hernando de Soto, hive mind, informal economy, intangible asset, Internet of things, Joi Ito, Kickstarter, linked data, litecoin, longitudinal study, Lyft, M-Pesa, Marc Andreessen, market clearing, mobile money, money: store of value / unit of account / medium of exchange, Network effects, off grid, pets.com, prediction markets, pre–internet, price mechanism, profit maximization, profit motive, ransomware, rent-seeking, RFID, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, smart contracts, smart meter, Snapchat, social web, software is eating the world, supply-chain management, Ted Nelson, the market place, too big to fail, trade route, transaction costs, Travis Kalanick, Turing complete, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, universal basic income, web of trust, zero-sum game
There’s a risk that the majority could game the system against the truth sellers, but there are other checks and balances in place to incentivize honesty on both sides. In a Wired article about where this idea could go, Cade Metz speculated that it could incentivize verifiers with rep-denominated skin in the game to either stand up or shoot down the statements of politicians, providing a service that news organizations could pay for. If it can actually be built, a system that aligns profit motives with truth-telling would be pretty helpful. Toward a Token Economy While we’re thinking of all these ways in which tokens might get people and communities to act honestly and preserve public goods, it would be amiss not to consider whether tokens might address the greatest tragedy facing the biggest commons of them all. Climate change is the biggest threat facing the world. And Erick Miller has a big idea to tackle it.
In essence, the car would be programmed via smart contracts and interactions with all sorts of other devices, online marketplaces, and systems to run at the most optimal value for all, filling itself up on gas at the best price and deciding when, based on the market, to make itself available and when not. The reason why a community would put such a thing into existence is that, as with The DAO–like cooperatives we discussed in chapter eight, there would be no profit motive to distract it from maximizing benefits for all. This is the kind of contemporary vision of public infrastructure that could be possible when the efficiencies of IoT connectivity are combined with the automated governance of distributed trust systems like blockchains. It paints a much more benign notion of technology as being designed to free human beings from work while improving the experience of life for all with the lowest drain on resources.
J.K. Lasser's Your Income Tax 2016: For Preparing Your 2015 Tax Return by J. K. Lasser Institute
Affordable Care Act / Obamacare, airline deregulation, asset allocation, business cycle, collective bargaining, distributed generation, employer provided health coverage, estate planning, Home mortgage interest deduction, intangible asset, medical malpractice, medical residency, mortgage debt, mortgage tax deduction, passive income, Ponzi scheme, profit motive, rent control, Right to Buy, transaction costs, urban renewal, zero-coupon bond
Court Decision Allocation of Taxes and Interest The IRS position on allocating mortgage interest and real estate taxes to rental income is not as favorable as the position adopted by the Tax Court and several appeals courts. 9.10IRS May Challenge Loss Claimed on Temporary Rental Before Sale If you are unable to sell your home and must move, it may be advisable to put it up for rent. This way you may be able to deduct maintenance expenses and depreciation on the unit even if it remains vacant. However, the IRS has disallowed loss deductions for some rentals preceding a sale on the ground that there was no “profit motive” for the rental (40.10). For example, where minimal efforts are made to rent out a vacation home in anticipation of an eventual sale, the IRS may claim, as in Example 1 below, that the home was not converted to rental property held for the production of income. Where the IRS determines that you lacked a profit motive for renting the property, it will limit your deduction for rental expenses to the amount of the rental income, and the expenses in excess of rental income cannot be carried forward to a later year. Courts have allowed loss deductions in certain cases.
Although the couple clearly abandoned personal use of the condo in 2008, they did not convert it to a profit-motivated rental property. The realty company’s efforts were limited to featuring the condo in an office portfolio and telling prospective buyers that it was available for rent. The taxpayers did change realtors, but beyond putting it on a multiple listing service, there is no evidence that the second agent did anything to rent out the condo. Nor is there evidence that they took any other steps to rent it. The minimal efforts taken did not constitute a bona fide attempt to rent out the condo and therefore did not convert it to property held for the production of income. Thus, “rental” expenses are not allowed, and the loss on the sale was a nondeductible personal loss. The IRS and Tax Court disallowed a loss deduction for rental expenses under the “profit-motive rules” (40.10) where a principal residence was rented for 10 months until it could be sold.
The IRS and Tax Court disallowed a loss deduction for rental expenses under the “profit-motive rules” (40.10) where a principal residence was rented for 10 months until it could be sold. According to the Tax Court, the temporary rental did not convert the residence to rental property. Since the sales effort was primary, there was no profit motive for the rental. Thus, no loss could be claimed; rental expenses were deductible only to the extent of rental income. The favorable side of the Tax Court position: Since the residence was not converted to rental property, the owners could under prior law rules defer tax on the gain from the sale by buying a new home. An appeals court reversed the Tax Court and allowed both tax deferral and a loss deduction. The rental loss was allowed since the old home was actually rented almost continuously until sold for a fair rental price. In 1976, a couple bought a condo apartment in Pompano Beach, Florida.
The Lessons of History by Will Durant, Ariel Durant
From the Medici of Florence and the Fuggers of Augsburg to the Rothschilds of Paris and London and the Morgans of New York, bankers have sat in the councils of governments, financing wars and popes, and occasionally sparking a revolution. Perhaps it is one secret of their power that, having studied the fluctuations of prices, they know that history is inflationary, and that money is the last thing a wise man will hoard. The experience of the past leaves little doubt that every economic system must sooner or later rely upon some form of the profit motive to stir individuals and groups to productivity. Substitutes like slavery, police supervision, or ideological enthusiasm prove too unproductive, too expensive, or too transient. Normally and generally men are judged by their ability to produce—except in war, when they are ranked according to their ability to destroy. Since practical ability differs from person to person, the majority of such abilities, in nearly all societies, is gathered in a minority of men.
Adapt: Why Success Always Starts With Failure by Tim Harford
Andrew Wiles, banking crisis, Basel III, Berlin Wall, Bernie Madoff, Black Swan, car-free, carbon footprint, Cass Sunstein, charter city, Clayton Christensen, clean water, cloud computing, cognitive dissonance, complexity theory, corporate governance, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dava Sobel, Deep Water Horizon, Deng Xiaoping, disruptive innovation, double entry bookkeeping, Edmond Halley, en.wikipedia.org, Erik Brynjolfsson, experimental subject, Fall of the Berlin Wall, Fermat's Last Theorem, Firefox, food miles, Gerolamo Cardano, global supply chain, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, Jarndyce and Jarndyce, John Harrison: Longitude, knowledge worker, loose coupling, Martin Wolf, mass immigration, Menlo Park, Mikhail Gorbachev, mutually assured destruction, Netflix Prize, New Urbanism, Nick Leeson, PageRank, Piper Alpha, profit motive, Richard Florida, Richard Thaler, rolodex, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, South China Sea, special economic zone, spectrum auction, Steve Jobs, supply-chain management, the market place, The Wisdom of Crowds, too big to fail, trade route, Tyler Cowen: Great Stagnation, web application, X Prize, zero-sum game
It boasted a superior nickel-chrome alloy for the heating element but was still flawed. Most notably, that heating element was exposed, making it a potential source of household fires, burns and electrocutions. It took several decades for the practical and familiar pop-up toaster design to emerge, by which time many manufacturers had quit the business or gone bankrupt. The market has solved the problem of generating material wealth, but its secret has little to do with the profit motive or the superior savvy of the boardroom over the cabinet office. Few company bosses would care to admit it, but the market fumbles its way to success, as successful ideas take off and less successful ones die out. When we see the survivors of this process – such as Exxon, General Electric and Procter & Gamble – we shouldn’t merely see success. We should also see the long, tangled history of failure, of all of the companies and all of the ideas that didn’t make it. 5 A shifting landscape Biologists have a word for the way in which solutions emerge from failure: evolution.
He warned against prestige projects: why drill oil wells just for the spectacular ‘gush’ when cheap coal and gas were widely available? He defended small projects that, according to his own painstaking research, were often more efficient than gigantic ones. He defended workers’ rights throughout. It is easy to forget just how successful the Soviet economy was … for a time. We tend to assume that the planned economy fell apart because it lacked the galvanising force of the profit motive and the creativity of private-sector entrepreneurs. But this does not really make sense: there were many creative people in the Soviet Union, including Palchinsky. It is not immediately obvious why they would lose their creativity merely because they worked for state-owned enterprises. Nor did the Soviet Union lackational techniques: in fact, it possessed as great a range of incentives, positive and horrifyingly negative, as any civilisation in history, and deployed them ruthlessly.
Free Market Missionaries: The Corporate Manipulation of Community Values by Sharon Beder
anti-communist, battle of ideas, business climate, corporate governance, en.wikipedia.org, full employment, income inequality, invisible hand, liquidationism / Banker’s doctrine / the Treasury view, minimum wage unemployment, Mont Pelerin Society, new economy, old-boy network, popular capitalism, Powell Memorandum, price mechanism, profit motive, Ralph Nader, rent control, risk/return, road to serfdom, Ronald Reagan, school vouchers, shareholder value, spread of share-ownership, structural adjustment programs, The Chicago School, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, Torches of Freedom, trade liberalization, traveling salesman, trickle-down economics, Upton Sinclair, Washington Consensus, wealth creators, young professional
Keavney repeatedly toured the US, giving progress reports to the N.A.M. and the US Chamber of Commerce, among others.’44 In 1979, EA brought Barton Cummins, a key architect of the Advertising Council’s free enterprise campaign, to Australia to describe that campaign so it could serve as a model in Australia. Cummins told a business audience: In Australia – as in America – there are people who want to destroy the free enterprise system. They believe in government control of the lives of all of us, particularly the business community. They do not believe in competition. They do not believe in the proﬁt motive. They do not believe in freedom for businessmen like you and me . . . More regulation by government is their answer . . . It is important to remember that economic freedom and personal freedom go hand in hand . . . In short, you’ve got to educate the Australian people about your economic system. When they really understand it, they’ll appreciate it more . . .45 EA’s schools and colleges programmes were ‘developed within school systems in official association with Departments of Education’ in each state.
They would be less bolshie and more understanding of what management and owners are trying to achieve, as they would all be rewarded along similar lines.52 In its submission, BHP told the same inquiry that employees owned shares or options worth 7.6 per cent of the company’s capital and that its motivation in providing this opportunity was to help wage earners to understand and experience private enterprise; to justify ‘the proﬁt motive in terms of risk return for investors’; and to encourage ‘employees to take a more active interest as co-owners of the company and for them to look beyond their local domain’. 53 Rob Donkersley, Employee Relations Director for Coca-Cola Amatil, told the inquiry about his company’s employee share ownership plan: We feel we have captured the minds of our employees through this plan. We have provided a good vehicle for them to link themselves with the fortunes of the company and take a wider perspective than their individual role in their individual operation could allow . . .
Black Fire: The True Story of the Original Tom Sawyer--And of the Mysterious Fires That Baptized Gold Rush-Era San Francisco by Robert Graysmith
“The city shouldn’t be this way,” he thought. “Somebody should do something to clean this wickedness up.” Why, there were more saloons than boardinghouses in town; more gambling dens than hotels. He stalked across to Delmonico’s for a steak and sliced tomatoes. As he ate, he jotted down ideas for an editorial: “Systematic pillaging by organized gangs during the confusion of each fire suggests the presence of profit-motivated arsonists such as merchants.” “Yes,” he vowed, “someone should do something.” He heard the crackle of flames in the distance—“My God!” he thought. “The Ducks are quacking!” In the heat and tumult, the cry “Quack! Quack! Quack!” went up everywhere. It was not a complete city-destroying conflagration this time, but the volunteers, Sawyer, and the torch boys ran as if it were. Sweat dampened Sawyer’s new red shirt.
The people had lost their last bit of faith in a fireproof house or that anyone could stop the Lightkeeper, who set his blazes with impunity, greater frequency, and obvious relish. It was no coincidence that the fifth all-encompassing fire had broken out on May 4, 1851, the anniversary of the second city-destroying fire and the same day as the Firemen’s Parade. Systematic pillaging by organized gangs of army deserters and ex-convicts during the confusion and in every one of the devastating fires so far suggested the presence of a profit-motivated Lightkeeper. The gangs had been waiting. “The conflagration had to be the work of an incendiary,” citizens said. There is no doubt now. Their fury mounted against the arsonist’s “brazen chaos.” An investigation pinpointed the genesis of the blaze to the Clay Street upholstery shop. The space above Bryant’s Hotel was occupied by Baker & Meserve’s shop and should have been fireproof. According to the owners, residents had taken the lanterns out of their rooms at 10:00 P.M., no fires had been used about the house “for any purpose whatever,” and the fireplace had not yet been damped down to ash and coals to restart for the morning fire.
The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous
Airbnb, altcoin, bank run, banks create money, bitcoin, Black Swan, blockchain, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, conceptual framework, creative destruction, cryptocurrency, currency manipulation / currency intervention, currency peg, delayed gratification, disintermediation, distributed ledger, Ethereum, ethereum blockchain, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, George Gilder, global reserve currency, high net worth, invention of the telegraph, Isaac Newton, iterative process, jimmy wales, Joseph Schumpeter, market bubble, market clearing, means of production, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Paul Samuelson, peer-to-peer, Peter Thiel, price mechanism, price stability, profit motive, QR code, ransomware, reserve currency, Richard Feynman, risk tolerance, Satoshi Nakamoto, secular stagnation, smart contracts, special drawing rights, Stanford marshmallow experiment, The Nature of the Firm, the payments system, too big to fail, transaction costs, Walter Mischel, zero-sum game
In conclusion, a 51% attack is theoretically possible to execute if the recipients of the payment are not waiting for a few blocks to confirm the validity of the transaction. In practice, however, the economic incentives are heavily against owners of hashpower utilizing their investments in this avenue, and as a result, there have been no successful 51% attacks on node members that have waited for at least one confirmation. A 51% attack would likely not be successful if done for a profit motive, but such an attack could also be carried out with no profit motive, but with the intention of destroying Bitcoin. A government or private entity could decide to acquire Bitcoin mining capacity to commandeer a majority of the Bitcoin network and then proceed to use that hashrate to launch continuous double‐spend attacks, defrauding many users and destroying confidence in the safety of the network. Yet the economic nature of mining is heavily stacked against this scenario materializing.
The Idealist: Aaron Swartz and the Rise of Free Culture on the Internet by Justin Peters
4chan, activist lawyer, Any sufficiently advanced technology is indistinguishable from magic, Bayesian statistics, Brewster Kahle, buy low sell high, crowdsourcing, disintermediation, don't be evil, global village, Hacker Ethic, hypertext link, index card, informal economy, information retrieval, Internet Archive, invention of movable type, invention of writing, Isaac Newton, John Markoff, Joi Ito, Lean Startup, moral panic, Paul Buchheit, Paul Graham, profit motive, RAND corporation, Republic of Letters, Richard Stallman, selection bias, semantic web, Silicon Valley, social web, Steve Jobs, Steven Levy, Stewart Brand, strikebreaker, Vannevar Bush, Whole Earth Catalog, Y Combinator
We keep hearing about information-retrieval networks,” former senator Kenneth B. Keating told Congress in 1965. “The inexorable question arises—what will happen in the long run if authors’ income is cut down and down by increasing free uses by photocopy and information storage and retrieval? Will the authors continue writing? Will the publishers continue publishing if their markets are diluted, eroded, and eventually, the profit motive and incentive completely destroyed? To pose this question is to answer it.”60 * * * IN her interesting book, Who Owns Academic Work?, Corynne McSherry made a distinction between a fact and an artifact.61 A fact is one of “nature’s creations,” an ownerless piece of knowledge or data that belongs to the public. The periodic table, for example, is a fact: the tabular relationship between the chemical elements belongs to no one person, but instead is common knowledge on which all are free to draw and build.
Not only did the DMCA prohibit the circumvention of copy-protection technology—for example, the mechanisms that require you to activate an expensive computer program before using it—the law also forbade people from using the Internet to explain how to evade copy-protection, or even linking to those explanations.11 The year before, in December 1997, President Clinton had signed a kindred bill, the No Electronic Theft Act (NET Act), which stipulated felony criminal penalties for people charged with the unauthorized online distribution of copyrighted material, even in cases where the distributor had no profit motive. The NET Act was intended to close the so-called LaMacchia loophole.12 In 1994, federal prosecutors indicted an MIT undergraduate named David LaMacchia for allegedly operating an online bulletin board that people used to freely trade copyrighted computer software. While it appeared to prosecutors that LaMacchia had helped facilitate software piracy, his actions were not considered criminal under the terms of the Copyright Act, since he had not acted for any clear commercial purpose.
Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed by Andrew Jackson (economist), Ben Dyson (economist)
bank run, banking crisis, banks create money, Basel III, Bretton Woods, business cycle, call centre, capital controls, cashless society, central bank independence, credit crunch, David Graeber, debt deflation, double entry bookkeeping, eurozone crisis, financial exclusion, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, Hyman Minsky, inflation targeting, informal economy, information asymmetry, intangible asset, land reform, London Interbank Offered Rate, market bubble, market clearing, Martin Wolf, means of production, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, negative equity, Northern Rock, price stability, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, risk-adjusted returns, seigniorage, shareholder value, short selling, South Sea Bubble, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, unorthodox policies
We begin by looking at what determines the demand for bank loans, concluding that as a result of the distribution of wealth, the desire to speculate, and the effect of various laws, the demand for credit will almost always be very high. The demand for money is also discussed, as is the effect on the economy of any attempt to pay down debts in aggregate. Second, we will look at the incentives facing banks: given the high demand for credit, why do banks not simply lend to every individual or business that applies for a loan? We will see that due to the profit motive, financial innovations and some other institutional quirks, banks will attempt to lend as much as they can as long as it is profitable for them to do so. Third, we will look at the reaction of the regulators. Faced with a banking sector that has a huge number of willing borrowers and an incentive to lend to them, in the current institutional structure, is it possible to temper banks’ natural desire to create credit?
This point has been made quite clearly by Adair Turner: “banks can create credit and private money, and unless controlled, will tend to create sub-optimally large or sub-optimally unstable quantities of both credit and private money.” (2012) However, if a bank plans to securitise the loans it makes then it doesn’t have to worry about repayment – it can make the loan safe in the knowledge that it can sell it off to someone else. Likewise, when a loan is collateralised with an asset that is not expected to fall in value (such as a house), the bank can make the loan safe in the knowledge that if a default does occur it may take control of the asset, sell it, and so still make a profit.13 Freed from the downside of default, the profit motive causes banks to maximise their lending, increasing the money supply and debt in the process. fig. 3.4 - UK resident monetary financial institutions’ lending Source: Bank of England Statistical Database So how much money has been created by banks? The chart of “Cash vs Bank-Issued Money” from the Introduction shows the effect on the money supply of a high demand for credit combined with a lack of regulation.
Sandworm: A New Era of Cyberwar and the Hunt for the Kremlin's Most Dangerous Hackers by Andy Greenberg
air freight, Airbnb, Bernie Sanders, bitcoin, blockchain, call centre, clean water, data acquisition, Donald Trump, Edward Snowden, global supply chain, hive mind, Julian Assange, Just-in-time delivery, Kickstarter, Mikhail Gorbachev, open borders, pirate software, pre–internet, profit motive, ransomware, RFID, speech recognition, Steven Levy, Stuxnet, undersea cable, uranium enrichment, Valery Gerasimov, WikiLeaks, zero day
* * * ■ In the early days after the Shadow Brokers’ post, it appeared that the group’s operation might be a bust. They did not get their one-million-bitcoin jackpot. Instead, in the first twenty-four hours of their auction, they received a grand total of $937.15, according to the Bitcoin blockchain’s public record of transactions. But the auction nonetheless served to create buzz around the NSA’s security breach. Experts largely agreed the profit motive was likely a cover story, that the Shadow Brokers were probably state-sponsored hackers, not cybercriminals, and they were seeking above all to embarrass the NSA. Jake Williams, for his part, immediately suspected Russia. “There’s only one government capable of doing this,” he said flatly. Another, less expected former NSA figure offered a similar suggestion. Edward Snowden, the NSA whistle-blower who’d leaked a top secret trove of the agency’s documents three years earlier, posted a series of messages on Twitter outlining a larger theory.
,” New York Times, Aug. 16, 2016, www.nytimes.com. Cisco, for instance: “Cisco Adaptive Security Appliance SNMP Remote Code Execution Vulnerability,” Cisco Security Advisories and Alerts, Aug. 17, 2018, www.tools.cisco.com, archived at bit.ly/2CnkJAv. Instead, in the first twenty-four hours: Andy Greenberg, “No One Wants to Buy Those Stolen NSA-Linked Cyberweapons,” Wired, Aug. 16, 2016, www.wired.com. Experts largely agreed the profit motive: Ibid. “Circumstantial evidence and conventional wisdom”: Edward Snowden, Twitter post, Aug. 16, 2016, twitter.com, archived at bit.ly/2RdZGwc. This time they offered up: Shadow Brokers, “Message#5—Trick or Treat?” Medium, Oct. 30, 2016, Medium.com, archived at bit.ly/2MvthQW. “We’re sending a message”: William M. Arkin, Ken Dilanian, and Robert Windrem, “CIA Prepping for Possible Cyber Strike Against Russia,” NBC News, Oct. 14, 2016, www.nbcnews.com.
Heaven's Command (Pax Britannica) by Jan Morris
British Empire, Cape to Cairo, centralized clearinghouse, Corn Laws, European colonialism, Fellow of the Royal Society, Khartoum Gordon, Khyber Pass, land reform, land tenure, Livingstone, I presume, Magellanic Cloud, mass immigration, means of production, Monroe Doctrine, plutocrats, Plutocrats, profit motive, Ralph Waldo Emerson, sceptred isle, Scramble for Africa, trade route
When, eight days later, the company dispersed, back to the Athabaska and the Mackenzie, English River and Lac la Pluie, north to the Bay or over the Rockies to the Pacific slopes, when the Governor’s bugle sounded for the last time across the lake, and Norway House returned to its ledgers and routine, no doubt it seemed that these Arrangements would survive more or less for ever. And in a way they would: the merchant venturers might disappear from the conduct of empire, but the profit motive never did.1 1 She bore him two sons and three daughters, all the same, before dying aged 41 in 1853. Other ladies gave him at least three sons and three daughters. 1 Which was supplemented by illicit whiskey from across the American frontier, commonly made of one part of raw alcohol to three parts of water, coloured with tea or plug tobacco, and flavoured with ginger, red pepper and black molasses. 1 Who are said to inhabit the Canadian north in an incidence of 5 million to the acre: a naked man would be sucked dry of all his blood in 3½ hours, and even the caribou, some theorists believe, are driven to their migrations by the insect bites. 1 The alphabet is still used, but poor Mr Evans was wrongly accused of living immorally among his Crees, and disappeared ignominiously from the imperial annals, failing even to find a place among the 167 Evanses listed in the Dictionary of Welsh Biography. 1 Such firm friends of the Honourable Company that their trading agreement operated without problems throughout the Crimean War. 2 Besides being a landowner over the frontier in the United States.
It enumerated law and order, schools, canals, roads and bridges, railways, telegraphs and public health, but made no reference to the ending of evil custom, the reform of society, or the benefits of Christian example. The British had no doubts about the merits of their own civilization, or qualms about their mission to distribute it across the world: but they had come to suppose that not all aspects of it were transplantable. The profit motive, too, had subtly shifted its emphasis. It was still potent, of course, perhaps preeminent among the imperial urges, but now it had undertones of disquiet. Great Britain was still the supreme industrial, financial and commercial Power of the world, but only just. Rivals were catching up. Economically the 1870s were difficult years for the British, and the financiers of the City of London, the industrialists of the north, began to feel that their preeminence might not last for ever.
Surreptitiously backed by Rhodes at Cape Town, conspiratorially awaited by the Reformers in Johannesburg, confident of the tacit approval of the imperial Government in London, he proposed to invade the Transvaal from across the Bechuana frontier: with a hard-riding, straight-shooting, reckless handful of true-blue Britons, he would storm into Johannesburg in the best Elizabethan style, subvert Kruger and his dour government of predikants, and make the whole of southern Africa British at last. This was something new to Victoria’s Empire. The aim was brasher. The means were more dishonest. There were hints of falsehood in high places which would have repelled Disraeli as much as they would have horrified Gladstone. Big business of a distasteful kind was concerned with the adventure. The evangelical instinct of Empire played no part in it, and the profit motive was blatant. They were not even imperial forces which were camped at Pitsani that December, but were a scratch company of colonial policemen, supplemented by miscellaneous freebooters and led by not very intelligent English gentry. There was no dignity to this gamble. If it succeeded, it would be a triumph of a vulgar kind: if it failed it would be ignominy. In all this Jameson’s Raid would prove a figure of its time.
Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo
"Robert Solow", Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Berlin Wall, Bernie Madoff, bitcoin, Bonfire of the Vanities, bonus culture, break the buck, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, Diane Coyle, diversification, diversified portfolio, double helix, easy for humans, difficult for computers, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, interest rate derivative, invention of the telegraph, Isaac Newton, James Watt: steam engine, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, merger arbitrage, meta analysis, meta-analysis, Milgram experiment, money market fund, moral hazard, Myron Scholes, Nick Leeson, old-boy network, out of africa, p-value, paper trading, passive investing, Paul Lévy, Paul Samuelson, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, quantitative hedge fund, quantitative trading / quantitative ﬁnance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Shiller, Sam Peltzman, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, survivorship bias, Thales and the olive presses, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game
But if it’s impossible for all but a very few chess grandmasters to hold such a chain of intentions as a single thought—impossible in the same way that a three-yearold child can’t understand that his mother doesn’t know where his blanket is—how can investors in these deals always act rationally to maximize their profit? The short answer is: they can’t. If you were a true believer in the Efficient Markets Hypothesis, you might argue that other investors would take advantage of this investor’s suboptimal behavior. But how can these other investors rationally know whether they’re taking successful advantage of the failure when this might involve a sixth-order theory of mind? While arbitrage and the profit motive can exploit a misjudgment, they still rely on the ability of investors to recognize when a mistake has taken place. In many cases, this expectation is simply unrealistic. The history of markets is fi lled with “rational” investors going wrong with utter confidence in the soundness of their judgment—until brought down by information just beyond their range of consideration or understanding. The Power of Narrative • 113 To put it another way, our rationality is biologically too limited for the Efficient Markets Hypothesis to hold at all times and in every possible context.
Did Wall Street CEOs let their nucleus accumbens override their amygdala, and let their greed overwhelm their fear? For this narrative to be more than a compelling story, we need to know more about how top-level executives are compensated. 304 • Chapter 9 Executive compensation in the United States has been on the rise for decades. Wall Street has taken this now common business practice and made it even more sensitive to the profit motive. Professional employees of a typical Wall Street firm are given a low base salary (“pity pay”) and additional bonuses according to their profitability to the firm. It’s the broker-dealers—financial firms which function as brokers, trading on behalf of customers, and as dealers, trading for themselves—that are notorious for extremely high bonuses. For example, in 2006, Bear Stearns’s legendary CEO Jimmy Cayne received a base salary of $250,000: substantial, but not much higher than the average salary of a family doctor in the United States.
The other challenge is ethical. Cancer bonds are inherently complex. To reduce the possibility of a financial meltdown, the risks and rewards of these securities will have to be made clear to potential investors. (Would the subprime crisis still have occurred had every party in the chain been aware of the true risks?) Managers with the social objective of curing cancer will find themselves at odds with the profit motive of investors, while managers with the financial objective of making a profit will find themselves at odds with the ultimate medical goal of the project. The potential for abuse will increase as more money pours into the fund, from fraudulent research at the level of the individual drug program, to malfeasance in governing the fund at the very top. These challenges can be overcome, but that won’t happen through economic incentives alone.
Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff by Christine S. Richard
activist fund / activist shareholder / activist investor, Asian financial crisis, asset-backed security, banking crisis, Bernie Madoff, Blythe Masters, buy and hold, cognitive dissonance, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, family office, financial innovation, fixed income, forensic accounting, glass ceiling, Long Term Capital Management, market bubble, money market fund, moral hazard, old-boy network, Ponzi scheme, profit motive, short selling, statistical model, white flight, zero-sum game
Ackman had said it was one reason he decided to short Farmer Mac. “I prefer investments where I’m not fighting against the country. You know, where there’s public policy on my side instead of against me,” Ackman had told the investigators. But the SEC attorneys had been skeptical. Wasn’t he really interested in Farmer Mac because he was seeking to profit from the company’s collapse? “I’m a bit idealistic so it isn’t only a profit motive, but there was a profit motive, absolutely,” Ackman had responded. Now Ackman asked the packed auditorium of investors to believe that he had devised a plan that would both hasten the collapse of a company he was betting against and do some public good in the process. Not many people would try to pull that off, but Ackman had his unrepentant idealism. Ackman’s 146-page presentation was titled “How to Save the Bond Insurers,” and it laid out his plan for conserving capital within the insurance subsidiaries of MBIA and Ambac.
The Evolution of Everything: How New Ideas Emerge by Matt Ridley
"Robert Solow", affirmative action, Affordable Care Act / Obamacare, Albert Einstein, Alfred Russel Wallace, AltaVista, altcoin, anthropic principle, anti-communist, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Boris Johnson, British Empire, Broken windows theory, Columbian Exchange, computer age, Corn Laws, cosmological constant, creative destruction, Credit Default Swap, crony capitalism, crowdsourcing, cryptocurrency, David Ricardo: comparative advantage, demographic transition, Deng Xiaoping, discovery of DNA, Donald Davies, double helix, Downton Abbey, Edward Glaeser, Edward Lorenz: Chaos theory, Edward Snowden, endogenous growth, epigenetics, Ethereum, ethereum blockchain, facts on the ground, falling living standards, Ferguson, Missouri, financial deregulation, financial innovation, Frederick Winslow Taylor, Geoffrey West, Santa Fe Institute, George Gilder, George Santayana, Gunnar Myrdal, Henri Poincaré, hydraulic fracturing, imperial preference, income per capita, indoor plumbing, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Khan Academy, knowledge economy, land reform, Lao Tzu, long peace, Lyft, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, meta analysis, meta-analysis, mobile money, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, Necker cube, obamacare, out of africa, packet switching, peer-to-peer, phenotype, Pierre-Simon Laplace, price mechanism, profit motive, RAND corporation, random walk, Ray Kurzweil, rent-seeking, reserve currency, Richard Feynman, rising living standards, road to serfdom, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, sharing economy, smart contracts, South Sea Bubble, Steve Jobs, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, twin studies, uber lyft, women in the workforce
Surprisingly quickly and surprisingly blatantly, the very same arguments resurfaced in the movement to control world population. The son of the prominent pre-war eugenicist Henry Fairfield Osborn, also named Henry Fairfield Osborn, published a book in 1948 entitled Our Plundered Planet, which revived Malthusian concerns about the rapid growth of the human population, the depletion of resources, the exhaustion of soil, the overuse of DDT, an excessive reliance on technology and a rush to consumerism. ‘The profit motive, if carried to the extreme,’ wrote the wealthy Osborn, ‘has one certain result – the ultimate death of the land.’ Osborn’s book was reprinted eight times in the year it was published, and translated into thirteen languages. At almost the same time William Vogt, a biologist driven by a passion for wildlife conservation, published a very similar book, Road to Survival, in which the ideas of the ‘clear-sighted clergyman’ Malthus were even more explicitly endorsed.
Other sources: Frisby, D. 2013. Life After the State. Unbound. Stephen Davies, Institute of Economic Affairs lectures. Einstein quote from Einstein, A. 1991. Autobiographical Notes. Open Court. Albert Shanker quote from Kahlenberg, R.D. 2007. Tough Liberal: Albert Shanker and the Battles Over Schools, Unions, Race and Democracy. Columbia University Press. On Swedish schools, Stanfield, James B. 2012. The Profit Motive in Education: Continuing the Revolution. Institute of Economic Affairs. On MOOCs, Brynjolfsson, E. and McAfee, A. 2014. The Second Machine Age. Norton. On Minerva College, Wood, Graeme. The future of college?. The Atlantic September 2014. Sugata Mitra’s TED talks are available at TED.com. His short book is Beyond the Hole in the Wall: Discover the Power of Self-Organized Learning. TED Books 2012.
Financial Statement Analysis: A Practitioner's Guide by Martin S. Fridson, Fernando Alvarez
business cycle, corporate governance, credit crunch, discounted cash flows, diversification, Donald Trump, double entry bookkeeping, Elon Musk, fixed income, information trail, intangible asset, interest rate derivative, interest rate swap, negative equity, new economy, offshore financial centre, postindustrial economy, profit maximization, profit motive, Richard Thaler, shareholder value, speech recognition, statistical model, time value of money, transaction costs, Y2K, zero-coupon bond
In the hands of aggressive but prudent management, a cash flow cushion can enable a company to sustain essential long-term investment spending when competitors are forced to cut back. Part Three A Closer Look at Profits Chapter 5 What Is Profit? Profits hold an exalted place in the business world and in economic theory. The necessity of producing profits imposes order and discipline on business organizations. It fosters cost-reducing innovations, which in turn promote the efficient use of scarce resources. The profit motive also encourages savings and risk taking, two indispensable elements of economic development. Finally, profitability is a yardstick by which businesspeople can measure their achievements and justify their claims to compensation. In view of all these essential economic functions, one might suppose that users of financial statements would have long since devised a universally agreed-upon definition of profit.
They have incentives to portray their financial positions in as favorable a light as possible, when trying to borrow or to demonstrate their financial viability to providers of grants. On the other hand, nonprofits sometimes strive to make themselves appear less flush than they really are, to impress on donors the urgency of their appeal for funds. Governmental units sometimes resort to disingenuous reporting to avoid political fallout from the consequences of unsound fiscal policies. Anticapitalist ideologues cannot truthfully contend that the profit motive alone leads to devious financial reporting. 3. Stuart Elliott, “Advertising,” New York Times, November 11, 2002, C10. 4. Vanessa O’Connell and Suzanne Vranica, “Interpublic Says SEC Seeks Data Related to Its Bookkeeping Errors,” Wall Street Journal, November 20, 2002, A3. 5. Nick Wingfield and Paul Beckett, “MicroStrategy, Results Restated, Is MacroLoser,” Wall Street Journal, March 21, 2000, B1, B4. 6.
The Hacker and the State: Cyber Attacks and the New Normal of Geopolitics by Ben Buchanan
active measures, Bernie Sanders, bitcoin, blockchain, borderless world, Brian Krebs, British Empire, Cass Sunstein, citizen journalism, credit crunch, cryptocurrency, cuban missile crisis, data acquisition, Donald Trump, drone strike, Edward Snowden, family office, hive mind, Internet Archive, Jacob Appelbaum, John Markoff, John von Neumann, Julian Assange, Kickstarter, kremlinology, MITM: man-in-the-middle, Nate Silver, profit motive, RAND corporation, ransomware, risk tolerance, Robert Hanssen: Double agent, rolodex, Ronald Reagan, Silicon Valley, South China Sea, Steve Jobs, Stuxnet, technoutopianism, undersea cable, uranium enrichment, Vladimir Vetrov: Farewell Dossier, WikiLeaks, zero day
Using a Five Eyes tool for detecting anomalies on hacked computers, they noticed the presence of another hacking group on the Iranian systems. The unknown group’s other targets included the Ministry of Foreign Affairs, the University of Science and Technology, and the Atomic Energy Organization of Iran. The hacking did not fit the profile of any threat actor the Canadians had seen before. Based on its behavior, the analysts concluded the people involved were likely another state’s signals intelligence agency, not profit-motivated criminals. The Canadians wanted to learn more about these unknown spies. Analysts began to develop signatures for the hackers and to track their activities across the internet. To do this, they married the indicators of the group’s activity with the broad net of the Five Eyes’ passive collection apparatus. They were able to see the hop points from which the hackers operated, and, due to the hackers’ poor operational security, log into those systems themselves.
Additional sanctions, such as those levied by the Obama administration after the Sony hack, seemed to do little to slow its hacking campaigns.20 The North Koreans then raised the stakes. For their next trick, they took another old-fashioned crime online: taking hostages for ransom. The hostages were not people, though, but pieces of data. While traditionally spies would have sought to copy the data stored within big organizations, like many modern profit-motivated criminals, the North Koreans were not after secrets. They instead deployed a technique known as ransomware, in which hackers encrypt the hard drive of their target computer and delete any backups. The decryption key remains unknown to the target. If the target does not have a surviving backup of the data, the only way to recover the information is to pay the hackers a ransom in return for the decryption key.
Free Speech: Ten Principles for a Connected World by Timothy Garton Ash
A Declaration of the Independence of Cyberspace, activist lawyer, Affordable Care Act / Obamacare, Andrew Keen, Apple II, Ayatollah Khomeini, battle of ideas, Berlin Wall, bitcoin, British Empire, Cass Sunstein, Chelsea Manning, citizen journalism, Clapham omnibus, colonial rule, crowdsourcing, David Attenborough, don't be evil, Donald Davies, Douglas Engelbart, Edward Snowden, Etonian, European colonialism, eurozone crisis, failed state, Fall of the Berlin Wall, Ferguson, Missouri, Filter Bubble, financial independence, Firefox, Galaxy Zoo, George Santayana, global village, index card, Internet Archive, invention of movable type, invention of writing, Jaron Lanier, jimmy wales, John Markoff, Julian Assange, Mark Zuckerberg, Marshall McLuhan, mass immigration, megacity, mutually assured destruction, national security letter, Nelson Mandela, Netflix Prize, Nicholas Carr, obamacare, Peace of Westphalia, Peter Thiel, pre–internet, profit motive, RAND corporation, Ray Kurzweil, Ronald Reagan, semantic web, Silicon Valley, Simon Singh, Snapchat, social graph, Stephen Hawking, Steve Jobs, Steve Wozniak, The Death and Life of Great American Cities, The Wisdom of Crowds, Turing test, We are Anonymous. We are Legion, WikiLeaks, World Values Survey, Yom Kippur War
Doesn’t a shop have the right to determine what it sells, and on what terms? But when a few companies have such a dominant market position, their policies—their private censorship, if you will—can be almost as limiting as state censorship. Tim Wu argues persuasively in his book The Master Switch that the structure of our information industries is a key determinant of our effective freedom of expression.152 These corporations’ choices are shaped by the profit motive but also by the character of their founders. The influence of a Steve Jobs or a Mark Zuckerberg on their respective empires has been more like that of an idiosyncratic absolute ruler in some mediaeval principate than that of the head of government in a modern liberal democracy. Apple’s tethered perfectionism has everything to do with Jobs’s personality. If the other Apple-founding Steve—Wozniak—had become Apple’s dominant figure, it might have remained the open, generative platform it was at the time of the 1982 Apple II desktop computer.
It is an interesting question who was responsible for more damaging invasions of privacy in Britain in the 2000s: GCHQ’s mass data-gulping spooks or Rupert Murdoch’s phone-hacking hacks. The former certainly collected far more data, but they did not publish it. The latter collected less, but ravaged lives by publishing it. If politicians and security chiefs have a motive for keeping more information secret than is truly in the public interest, commercial media also have a motive for publishing more than is truly in the public interest: the profit motive. With both newspapers and online media searching for a business model, there is a powerful temptation to confuse the public interest with what interests the public, thus selling more copies and bringing advertisement-ready eyeballs to your site or app. If it is naïve to think that security officials will all be Platonic guardians armed with invincible virtue, why should we believe that of journalists?
61 Again and again, through successive chapters of this book, we have bumped up against this power of money: from corporate lobbyists in Washington and Brussels, media ownership almost everywhere, only the rich being able to afford the lawyers to defend their reputations in court, wealthy individuals and corporations using that disparity of financial-legal power to deter critical comment that is in the public interest, all the way to the profit motive of information giants determining algorithmically what we see online. The problem is by no means confined to the United States, but it is especially salient there, not least because other constraints still painfully apparent in much of the world play a lesser role in the United States. While the American constitutional and legal tradition has been superb when it comes to restraining public power, it has been much less good at restraining private power.
Ellul, Jacques-The Technological Society-Vintage Books (1964) by Unknown
Bretton Woods, conceptual framework, do-ocracy, double entry bookkeeping, Frederick Winslow Taylor, full employment, James Hargreaves, James Watt: steam engine, John Maynard Keynes: technological unemployment, liberal capitalism, means of production, Norbert Wiener, price mechanism, profit motive, rising living standards, road to serfdom, spinning jenny, Thorstein Veblen, urban planning, Vilfredo Pareto
With this method the well-known and hackneyed formula— that everything is reciprocally dependent— becomes a rigorous reality. But it is the technical elements which are reciprocally dependent, welded together by a common neces sity and expressed in certain new techniques. What holds for the private accountant is even more true for the public accountant who works on a nationwide scale. There are certain differences between the two insofar as enterprise has pri vate profit as its end. As a consequence of the profit motive, the pri vate accountant must comply with the rules of capitalist manage ment. The public accountant (who becomes an accountant of initiative) draws up balance sheets and future revenue potentials for a complex organism whose reactions are slow and of great am- The TechnobgicalSociety (167 plitude when referred to the impulses at their origin. If public en terprise behaves in any way like capitalist enterprise, its internal dynamism complies with certain laws.
This is the case when mechanization increases the yield of the productive unit of which the office forms the administrative sec tion” (Mas). But even taking into consideration such partial ex ceptions, it remains true that conflict between technique and the liberal economy is inevitable because the liberal economy is essen tially based on profit. It does not exist without profit. To a planned economy, however, profit is not the highest value. Certainly, the planned economy does not neglect the profit motive completely, but profit represents only one element in its calculations. The prin cipal criterion of the planned economy is rationality (or effi ciency): in a word, technique. In the conflict between technique and the liberal economy, tech nique, then, is victorious over the liberal economy and bends it to its laws. The process is furthered, as I have shown, by the fact that the liberal economy, insofar as it is thought out, itself becomes technique.
In any case, the private persons who had developed these techniques gradually ceased to be able to utilize them because they came to exceed the possibilities of any individual. When ap peal was not made to the state, it was necessary, for their exploita tion, to set up organisms as vast and powerful as the state itself. Thus, trusts and corporations were rendered necessary by the technical apparatus. This occurred even in the absence of the profit motive, after wealth had become incommensurable with the individual and therefore abstract. The prime purpose of state or corporation might even be to rob and despoil the individual by the exploitation of these techniques. I repeat that it could not have been otherwise. From a certain degree of development onward, every technique concerns the collectivity of men. It would be unthinkable for us today to leave in private hands really efficient instruments such as atomic energy.
Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel, Blake Masters
Airbnb, Albert Einstein, Andrew Wiles, Andy Kessler, Berlin Wall, cleantech, cloud computing, crony capitalism, discounted cash flows, diversified portfolio, don't be evil, Elon Musk, eurozone crisis, income inequality, Jeff Bezos, Lean Startup, life extension, lone genius, Long Term Capital Management, Lyft, Marc Andreessen, Mark Zuckerberg, minimum viable product, Nate Silver, Network effects, new economy, paypal mafia, Peter Thiel, pets.com, profit motive, Ralph Waldo Emerson, Ray Kurzweil, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Singularitarianism, software is eating the world, Steve Jobs, strong AI, Ted Kaczynski, Tesla Model S, uber lyft, Vilfredo Pareto, working poor
THE MYTH OF SOCIAL ENTREPRENEURSHIP Cleantech entrepreneurs aimed for more than just success as most businesses define it. The cleantech bubble was the biggest phenomenon—and the biggest flop—in the history of “social entrepreneurship.” This philanthropic approach to business starts with the idea that corporations and nonprofits have until now been polar opposites: corporations have great power, but they’re shackled to the profit motive; nonprofits pursue the public interest, but they’re weak players in the wider economy. Social entrepreneurs aim to combine the best of both worlds and “do well by doing good.” Usually they end up doing neither. The ambiguity between social and financial goals doesn’t help. But the ambiguity in the word “social” is even more of a problem: if something is “socially good,” is it good for society, or merely seen as good by society?
The End of Wall Street by Roger Lowenstein
Asian financial crisis, asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Black Swan, break the buck, Brownian motion, Carmen Reinhart, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fear of failure, financial deregulation, fixed income, high net worth, Hyman Minsky, interest rate derivative, invisible hand, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, Martin Wolf, money market fund, moral hazard, mortgage debt, negative equity, Northern Rock, Ponzi scheme, profit motive, race to the bottom, risk tolerance, Ronald Reagan, Rubik’s Cube, savings glut, short selling, sovereign wealth fund, statistical model, the payments system, too big to fail, tulip mania, Y2K
Fannie and Freddie were close to insolvent; to use them as agents for curing the market’s illness risked infecting the twins even more. Rodriguez, the investor, considered it a desperate measure that could lead to a taxpayer bailout. “They were not in a position to address this mortgage crisis, for which they had originally been created, because their balance sheets had become impaired by unsound profit motivated activities,” he noted. If the latest plan failed, Washington would be forced to socialize Fannie’s and Freddie’s losses.19 The regulators were widely criticized for their two interventions, especially in the case of Bear. To critics, the Bear rescue seemed to promise a helping hand to the next financial firm, no matter how reckless, that came running for help. Bernanke insisted that Bear was a special case, not a blueprint for subsequent crises.20 Yet the Fed had broken new ground, and the landscape would not be easily restored.
This was something new—a soggy blanket draped over the uninhibited revelry of Wall Street. Minutes after the Bear rescue, the Fed announced another precedent-shattering step. It would open the discount window—where, since 1913, only banks had been welcome—to overnight borrowings by investment banks and other Wall Street firms. Just as stunningly, the central bank said it would accept less-than-triple-A securities—even mortgage securities—as collateral. Since profit-motivated bankers were unwilling to lend against deflating collateral, the Fed was doing so itself. 21 Not only had the Fed become the bank to Wall Street, it was willing to take the Street’s paper. To further buoy markets, the Fed cut interest rates. These actions did not, as some argued, entice firms to fail, but they did sustain their ability to take the sort of risks that might lead to failure.
Cybersecurity: What Everyone Needs to Know by P. W. Singer, Allan Friedman
4chan, A Declaration of the Independence of Cyberspace, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, bitcoin, blood diamonds, borderless world, Brian Krebs, business continuity plan, Chelsea Manning, cloud computing, crowdsourcing, cuban missile crisis, data acquisition, do-ocracy, drone strike, Edward Snowden, energy security, failed state, Fall of the Berlin Wall, fault tolerance, global supply chain, Google Earth, Internet of things, invention of the telegraph, John Markoff, Julian Assange, Khan Academy, M-Pesa, MITM: man-in-the-middle, mutually assured destruction, Network effects, packet switching, Peace of Westphalia, pre–internet, profit motive, RAND corporation, ransomware, RFC: Request For Comment, risk tolerance, rolodex, Silicon Valley, Skype, smart grid, Steve Jobs, Stuxnet, uranium enrichment, We are Anonymous. We are Legion, web application, WikiLeaks, zero day, zero-sum game
The US National Science Foundation then connected the existing supercomputering centers around the country into the NSFnet, which grew so rapidly that the expansion required commercial management. Each upgrade brought greater demand, the need for more capacity, and independently organized infrastructure. The architecture of a “backbone” that managed traffic between the different regional networks emerged as the efficient solution. This period also saw the introduction of the profit motive in Internet expansion. For instance, by this point Vint Cerf had joined the telecommunications firm MCI. In 1983, he led efforts to start MCI mail, the first commercial e-mail service on the Internet. By the late 1980s, it became obvious that managing the nascent Internet was not the business of the research community. Commercial actors could provide the necessary network services supporting the Internet and become avid consumers as well.
Ultimately, while attacks against Russia’s foes occurred in cyberspace and a parliamentary leader spoke of his office’s own role in it, a Russian ambassador could retort, “If you are implying [the attacks] came from Russia or the Russian government, it’s a serious allegation that has to be substantiated. Cyber-space is everywhere.” Patriotic hackers, though, aren’t limited to youth groups. An interesting nexus actually exists with criminal organizations. They usually operate for their own profit motives but can also be mobilized by a state for political purposes. Many of the very same tools, platforms, and tactics used in the 2008 Georgia attacks, for instance, were also utilized by the Russian Business Network, one of the larger cybercriminal organizations. This leads many to believe that agreements have occasionally been struck in the patriotic hacker world. Criminal groups are given some freedom to operate in exchange for demonstrating their patriotism when governments ask for aid.
The Limits of the Market: The Pendulum Between Government and Market by Paul de Grauwe, Anna Asbury
"Robert Solow", banking crisis, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, conceptual framework, crony capitalism, Erik Brynjolfsson, eurozone crisis, Honoré de Balzac, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kitchen Debate, means of production, moral hazard, Paul Samuelson, price discrimination, price mechanism, profit motive, Robert Gordon, Ronald Coase, Simon Kuznets, The Nature of the Firm, The Rise and Fall of American Growth, too big to fail, transaction costs, trickle-down economics, ultimatum game, very high income
They prefer to receive zero pounds rather than a sum they perceive to be unjust. They choose nothing in preference to one pound because this is the only way they can punish the other player, satisfying their sense of fairness. The many experiments with the ultimatum game suggest that the acceptable distribution is around /. There is some variation, but the results indicate that a sense of fairness wins out over pure proﬁt motive. System I dominates System II. THE L IMI TS OF TH E MAR KET So people like to punish unfairness, even if they pay a ﬁnancial price for it. Our sense of fairness is deep-rooted. It is often affronted by the free market, which is indifferent to the question of whether the distribution of income is fair. People, however, are not indifferent. They therefore turn to governments when they consider a particular distribution unfair.
Utopia or Bust: A Guide to the Present Crisis by Benjamin Kunkel
anti-communist, Bretton Woods, business cycle, capital controls, Carmen Reinhart, creative destruction, David Graeber, declining real wages, full employment, Hyman Minsky, income inequality, late capitalism, liberal capitalism, liquidity trap, means of production, money: store of value / unit of account / medium of exchange, mortgage debt, Occupy movement, peak oil, price stability, profit motive, savings glut, Slavoj Žižek, The Wealth of Nations by Adam Smith, transatlantic slave trade, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, zero-sum game
Expanded to its proper dimensions, the concept of the avant-garde includes Stalinist “total art” as its next and, so far, final embodiment. The Soviet Union, as a new kind of society chartered not only to “provide greater economic security” but also “in perhaps even greater measure meant to be beautiful,” could answer to aesthetic criteria in a way that chaotic capitalist societies in thrall to the profit motive could not. Groys summarizes, apparently with approval, a critic writing in 1949 in the “ultraofficious” journal Iskusstvo (Art): “In different forms adequate to the age, Soviet socialist realism preserved the vital modernist life-building impulses that [Western] modernism itself lost long ago, when it entered the academies and prostituted itself to its arch-enemy, the philistine consumer.” Groys presents the formal staidness of socialist realism—the forced retreat from abstraction in painting, for example—as a paradoxical sign of its true vanguardism.
The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink by Michael Blanding
carbon footprint, clean water, collective bargaining, corporate social responsibility, Exxon Valdez, Gordon Gekko, Internet Archive, laissez-faire capitalism, market design, MITM: man-in-the-middle, Naomi Klein, Nelson Mandela, New Journalism, Ponzi scheme, profit motive, Ralph Nader, rolodex, Ronald Reagan, shareholder value, The Wealth of Nations by Adam Smith, Thorstein Veblen, union organizing, Upton Sinclair
It’s that prin ciple that has caused Joel Bakan to argue that corporations are essentially “pathological” entities—maximizing profit at the expense of any other good—whether workers’ rights, environmental improvements, or even its own customers’ pocketbooks. “The corporation’s legally defined mandate is to pursue, relentlessly and without exception, its own self-interest re gardless of the often harmful consequences it might cause to others,” he writes. That’s not to say that corporations can’t do good, however, so long as their efforts align with their profit motive. The second wave of corporate social responsibility began in the 1970s, when, faced with challenges from consumer advocates like Ralph Nader (and CSPI’s Michael Jacobson), corporations realized that investing in social causes could serve as a kind of insurance against criticism. It was in this era that Coke’s Paul Austin pursued his “halo effect” with hydroponic shrimp farms, desalinization plants, and soybean beverages that he argued could help earn goodwill in the developing world at the same time they helped make Coke’s vision of global harmony a reality.
Despite its victory in France, a 1953 poll there found that only 17 percent of respondents liked Coke “well enough” or “a lot,” while 61 percent liked it “not at all.” Com pany officials justified their forceful entry into Europe in the name of the free market, in contrast to the totalitarian control by communists. “My guess is that the commies don’t dislike us so intensely just because we’re American,” mused one Coke executive. “It’s because Coke is a cham pion of the profit motive. . . . Everyone who has anything to do with the drink makes money.” Coke had good reason to resent communists, who had nationalized bottling plants in Cuba and China after World War II. 1 50 THE COKE MACHINE For years, Coke steered clear of the communist world, even as Pepsi broke into the Soviet Union with the help of former Pepsi counsel Richard Nixon in the 1960s. With the exception of its stand against “the commies,” however, the company was as flexible in its politics internationally as it had been at home.
The Master Switch: The Rise and Fall of Information Empires by Tim Wu
accounting loophole / creative accounting, Alfred Russel Wallace, Apple II, barriers to entry, British Empire, Burning Man, business cycle, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, disruptive innovation, don't be evil, Douglas Engelbart, Douglas Engelbart, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, zero-sum game
Perhaps it is for this reason that the advent of every new technology of communication always brings with it a hope for ameliorating all the ills of society. The arrival of mass broadcasting inspired, in the United States and around the world, an extraordinary faith in its potential as the benefactor, perhaps even a savior, of mankind. And while the reason may not be readily apparent, such belief is crucial to understanding the long cycles in the development of information media. For it is not just the profit motive that drives the opening up of a medium—there is typically a potent mix of both entrepreneurial and humanitarian motives. Those who grew up in the late twentieth century have known the latter sort of idealism mainly as it manifests itself on the Internet in grand collaborative projects such as the blogosphere or Wikipedia and also in such controversial undertakings as Google’s digitization of great libraries.
It is, frankly, just the kind of phenomenon that makes one side with Theodore Vail about the blessings of a monopoly. For while AT&T was never formally required to run Bell Labs as a research laboratory, it did so out of exactly the sort of noblesse oblige that Vail espoused. AT&T ran Bell Labs not just for its corporate good but for the greater good as well. This is not to be naïve about the corporate profit motive: Bell Labs contributed to AT&T’s bottom line far more than plastic wire insulation. Nevertheless, it’s hard to see how funding theoretical quantum physics research would be of any immediate benefit to shareholder value. More to the point, it is hard to imagine a phone company today hiring someone to be their quantum physicist, with no rules and no boss. For, in part, the privileges AT&T enjoyed as a government-sanctioned monopoly with government-set prices were understood as being offset by this contribution to basic scientific research, an activity with proportionately more direct government funding in most other countries.
Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff
addicted to oil, affirmative action, Amazon Mechanical Turk, anti-globalists, banks create money, big-box store, Bretton Woods, car-free, Charles Lindbergh, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, Kickstarter, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, moral hazard, mutually assured destruction, Naomi Klein, negative equity, new economy, New Urbanism, Norbert Wiener, peak oil, peer-to-peer, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional, zero-sum game
When it takes upwards of $200 million and one hundred thousand pages of reports to get approval for a single medication, only the largest corporations can afford to engage in the process. The immense cost then helps justify long patent terms and high prices. But it also maintains the Big Pharma monopoly. When a known substance without a patent shows promise—such as the Alzheimer’s treatment vasopressin or the antiaging red-wine ingredient resveratrol—no one has the funds or the profit motive to test it for FDA approval. Instead, pharmaceutical companies attempt to create and patent analogs—molecules close to the promising substances—and then test them in their place. While we’re waiting for something similar but more expensive to be developed and patented, the substances that actually work remain unprescribed by doctors afraid to take liability for “off-label” or unconventional therapies.
This allows governments to outsource illegal activities and torture to contractors, with little liability. It’s a striking return to the outsourced war practices of the early colonial empires, which has more to do with promoting the profits of the chartered corporations than the long-term success or influence of the nations in their thrall. In today’s version of outsourced war, the blind obedience to the profit motive makes for an incompetent military force. Early chartered corporations actually wanted to win the territories they were fighting for in order to exploit their resources. Most of today’s chartered military operatives have a bigger stake in keeping the war going; they simply want to make money through their no-bid contracts. Halliburton has arrangements with the government that are structured so that the more it spends, the more it earns.
Pedigree: How Elite Students Get Elite Jobs by Lauren A. Rivera
affirmative action, availability heuristic, barriers to entry, Donald Trump, fundamental attribution error, glass ceiling, income inequality, job satisfaction, knowledge economy, meta analysis, meta-analysis, new economy, performance metric, profit maximization, profit motive, school choice, Silicon Valley, Silicon Valley startup, The Wisdom of Crowds, unpaid internship, women in the workforce, young professional
See management consulting firms contest system of social mobility, 29–30 core and target schools, 31–41, 271–74, 322n14; allocation of EPS firm recruitment resources to, 33–34, 36, 40, 56; attitudes toward EPS jobs at, 26, 41, 327n25; the best and brightest at, 36–37, 63, 87–90, 186, 271, 277; career-services offices of, 76–78, 280, 322n13; coaching in interviewing skills at, 201–3, 202–3, 337n10; costs of education at, 57; diversity at, 43, 248–49; domination of EPS firm recruitment at, 76–78, 272; educational prestige of, 87–92, 271–74, 329n11; EPS firm marketing pitches at, 54–88, 280–81; extravagant lifestyles at, 61–62; hiring quotas at, 31, 87, 221, 232, 244, 275; homogeneous student bodies of, 273–74; job pressures at, 63–65; nontraditional hires from, 254–66, 276, 341nn3–4; prestige brought by new hires from, 37–40, 44, 47, 78, 87–92, 110, 271–72, 279, 323n19, 329n11; profit motive of, 271–72; selectivity rankings of, 62–63, 78, 254, 323n19; student debt for, 57–58. See also higher education courtesy interviews, 111 cover letters, 84, 108, 328n6 cultural capital, 6–12, 268–69, 342nn4–5; definition of, 316n31; embodied forms of, 7, 172, 316–17n31; extracurricular activities and, 92–101, 269; fit and, 135–45, 332nn4–5; insider coaching in, 259–61; institutionalized forms of, 39–40, 53–54, 109–10, 330n29, 330n32; merit and, 8–10, 86–87, 148, 181–82, 275–76, 318nn44–46; nontraditional acquisition of, 259–66; objectified forms of, 316–17n31; parenting strategies and, 10–12, 318n55; in personalities of firms, 94, 136–37, 329nn14–15, 330n17; polish and, 172, 335n21; resonance with interviewers and, 148–49, 155–56, 165–66, 182, 257–58, 335n11, 342nn8–9; screening of résumés and, 109–10, 332n4; subjective impressions of, 8, 136, 317n40.
See also class; cultural capital; elite reproduction; social capital education, 2–14, 24, 268, 271–74, 294; changing definitions of merit in, 8–10, 318nn44–46; choosing resource-rich schools for, 4–5, 316n23; college admissions advantages and, 5–6, 12–13, 277, 318n56, 318–19nn60–63; concerted cultivation approach to, 10–11, 109–10, 143; cultural capital and, 6–12, 26; economic capital and, 4–6, 316nn22–23; economic inquality and, 3–4, 13–14; extracurricular enrichment and, 10, 12; informal tracking systems in, 29–30; natural growth approach to, 10–11; parental levels of, 294, 316n15; parenting strategies for, 10–12, 318n55; SAT prep courses and, 12–13, 318–19nn60–61. See also core and target schools; listed schools; unlisted schools educational elites, 290 educational prestige, 87–92, 271–74, 329n11; association with the best and brightest and, 36–37, 63, 87–90, 186, 271, 277; evaluators’ backgrounds and, 90–92; polish and, 90; profit motive and, 271–72; résumé exclusion and, 92, 112, 329n9. See also core and target schools; higher education efficacy of the interview process, 278–85 eligibility criteria for jobs, 26 elite (as term), 287–90, 345nn17–18 elite professional service (EPS) firms, 2–3, 15–19, 267–68, 278–85, 320n86; applicant pool for, 16–17, 319n83; brand-building and creation of goodwill by, 114, 121, 279, 285; diversity programs at, 41–42, 70, 139, 281, 324n36; domination of core institution recruitment by, 76–78, 272; elite-institution graduates’ attitudes toward, 26, 41, 327n25; full-time hiring of interns in, 320–21nn86–88, 326n17; hiring ratios at, 36, 323n18; hiring responsibilities at, 25, 126, 131–33, 280, 284–85, 338n2, 338nn4–6; impact on future careers of employment by, 243n20; individual sponsorship and connections at, 35, 47–53, 325nn39–41; internships at, 104, 106–7; low status of HR professionals in, 25, 114, 122, 131–32, 219–20; online résumé submission at, 35–36, 48; on-the-job performance at, 40, 192, 278, 284, 323n23, 343nn31–32, 344n47; opinions on hiring process in, 283–84; organizational cultures of, 122, 136, 176, 336n25; prestige brought by new hires to, 37–40, 44, 47, 78, 87–92, 110, 279, 323n19, 329n11; proposed changes in hiring practices for, 282–85; rates of Harvard graduates in, 55–56; school ambassadors of, 34; shared characteristics of, 17; sponsored hiring selection in, 30–41; starting salaries at, 16, 57–58, 163–65, 326n15, 335n17; status and high living offered by, 58–62; stepping-stone-role of jobs at, 62–65, 162, 340n21; training of new hires at, 40, 138, 246, 280, 323n24, 344n36; turnover rates at, 40–41, 139, 280–81, 333n13.
Howard Rheingold by The Virtual Community Homesteading on the Electronic Frontier-Perseus Books (1993)
Apple II, Brewster Kahle, Buckminster Fuller, commoditize, conceptual framework, Douglas Engelbart, Douglas Engelbart, Electric Kool-Aid Acid Test, experimental subject, George Gilder, global village, Hacker Ethic, Haight Ashbury, Howard Rheingold, HyperCard, John Markoff, Kevin Kelly, knowledge worker, license plate recognition, loose coupling, Marshall McLuhan, Menlo Park, meta analysis, meta-analysis, Mitch Kapor, packet switching, Panopticon Jeremy Bentham, profit motive, RAND corporation, Ray Oldenburg, rent control, RFC: Request For Comment, Ronald Reagan, Saturday Night Live, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, technoutopianism, Ted Nelson, telepresence, The Great Good Place, The Hackers Conference, urban decay, Whole Earth Catalog, Whole Earth Review, young professional
Again, changes in the way computers were designed and used led to the expansion of the computer-using population from a priesthood in the 1950s, to an elite in the 1960s, to a subculture in the 1970s, and to a significant, stillgrowing part of the population in the 1990s. Again, it wasn't the mainstream of the existing computer industry that created affordable personal computing, but teenagers in garages. And it was neither national defense nor the profit motive but the desire to make a tool for changing the world that motivated the young entrepreneurs who built the PC industry. When enough people brought sufficiently powerful computers into their homes, it was inevitable that somebody would figure out a way to plug PCs into telephones. All the off-the-shelf devices that you could plug together to make that work, the "enabling technologies" for personal telecommunications, were available and the price was dropping.
In the early 1980s, some of the people who had been finding each other through computer conferencing began to embrace the idea of networking as a social movement as well as a way of using computers to communicate. Although the late 1980s turned the idea of networking into a new name for an old form of using social relationships to advance one's professional ambitions, the early promoters were driven far more by revolutionary zeal than profit motive. Izumi Aizu was influenced by CMC evangelists, Jessica Lipnack and Jeffrey Stamps, who were known in the online world as "J. and J." Lipnack and Stamps published a book about their ideas, Networking, People Connecting with People, Linking Ideas and Resources , in 1982. "They could have been writing it about me," Izumi Aizu exclaimed when he recalled their early influence. As a self-selected outsider from the mainstream of Japan Inc., and a grassroots organizer, Aizu had the respect of the alternative culture.
The New Enclosure: The Appropriation of Public Land in Neoliberal Britain by Brett Christophers
Boris Johnson, Capital in the Twenty-First Century by Thomas Piketty, Corn Laws, credit crunch, cross-subsidies, Diane Coyle, estate planning, ghettoisation, Hernando de Soto, housing crisis, income inequality, invisible hand, land reform, land tenure, land value tax, late capitalism, market clearing, Martin Wolf, New Journalism, New Urbanism, off grid, offshore financial centre, performance metric, Philip Mirowski, price mechanism, price stability, profit motive, Right to Buy, Skype, sovereign wealth fund, special economic zone, the built environment, The Wealth of Nations by Adam Smith, Thorstein Veblen, urban sprawl, wealth creators
Figure 5.3 Capacity of disposed land vs. unimplemented permissions Source: Local Government Association; National Audit Office Market efficiency In Chapter 3 I showed that arguments relating to efficiency in the allocation and use of land have been central to the government’s case for privatizing British land. The state, simply stated, is assumed to be inefficient; private-sector actors, disciplined at once by the profit motive, competition, and market forces, are assumed to be efficient. As John Krutilla and colleagues have noted of the parallel case for land privatization in the United States, ‘The proposal to transfer federal lands to private ownership rests on the fundamental premise that private property and free markets assure an efficient allocation of society’s resources.’1 Hence, the question to be asked is: Has the large-scale privatization of land in post-1970s Britain in fact improved efficiency of allocation and use, both in relation to the particular parcels of land that have been sold and, therefore, British land more generally?
Social dislocation Alongside Adam Smith, another influential figure whose understanding of land commodification and its implications I discussed in Chapter 1 was Karl Polanyi. And although Polanyi was keenly aware of the economic implications of making land a commodity and subjecting it to market forces, he was more interested in the social implications. Dis-embed land from its social integument by making a market in it, Polanyi claimed, and trouble is never far away. Because private owners tend to exploit land according to profit motives rather than with a view to sustaining the communities that depend upon it, all manner of social ills arise. In the case of the privatization of public land in modern Britain, Polanyian social dystopia is as plain to see as Smithian economic rentierism. There are countless examples of society suffering explicitly as a result of the state selling land to the private sector – thus making a commodity of something that is not, in Polanyian terms, a commodity – and of the private sector following its true nature, by trying to maximize profit from commercialization of that commodity.
The Profiteers by Sally Denton
Albert Einstein, anti-communist, Ayatollah Khomeini, Bay Area Rapid Transit, Berlin Wall, Boycotts of Israel, clean water, corporate governance, crony capitalism, Donald Trump, Edward Snowden, energy security, Fall of the Berlin Wall, G4S, invisible hand, James Watt: steam engine, Joan Didion, Kitchen Debate, laissez-faire capitalism, Mikhail Gorbachev, mutually assured destruction, Naomi Klein, new economy, nuclear winter, profit motive, Robert Hanssen: Double agent, Ronald Reagan, Silicon Valley, trickle-down economics, uranium enrichment, urban planning, WikiLeaks, wikimedia commons, William Langewiesche
Hundreds of career employees were fired in the labs’ transition from public to private—“massive layoffs executed with the finesse of Donald Trump,” as one account described them. Bechtel’s elimination of the jobs—and high salaries—of older physicists generated more income for the LLCs, while also resulting in what industry observers described as a “brain drain” of the country’s best nuclear scientists. Union members and scientists argued that the profit motive driving the brain drain was not only bad public policy but also set a dangerous precedent that endangered the safety of the American public. A National Academy of Sciences investigation of the impact of privatizing the labs found that peer-reviewed articles—articles written by experts and reviewed by other experts in the same field as an indicator of accurate scholarship—dropped almost by half.
It’s become a tapestry of lies and irresponsibility.” Immediately after what one of Bechtel’s own executives described as the corporate takeover of the labs, Mello saw the manifestation of the quintessential Bechtel culture. “Los Alamos lost all of its public character and became a classic private corporation,” he observed. Many of the longtime scientists were uncomfortable with the new corporate management and dominant profit motive, and quit or retired early. “A new mentality took hold,” Mello said, “with the corporate idea that ‘we work for our company, not for the taxpayer,’ ” as he described the pervasive attitude. “There were now private incentives all based around how well corporate goals could be met.” Still, Mello remained optimistic about an emergence of “an antinuclear complex that could challenge the nuclear complex,” the Santa Fe New Mexican reported.
The Voice of Reason: Essays in Objectivist Thought by Ayn Rand, Leonard Peikoff, Peter Schwartz
affirmative action, Berlin Wall, British Empire, business process, cuban missile crisis, haute cuisine, invisible hand, Isaac Newton, laissez-faire capitalism, means of production, medical malpractice, profit motive, Ralph Nader, Ronald Reagan, source of truth, The Wealth of Nations by Adam Smith, trade route, transcontinental railway, urban renewal, War on Poverty
They ask for it on a single basic ground: consistency with the teachings of Christianity. Some of you may wonder here: “But if the bishops are concerned with the poor, why don’t they praise and recommend capitalism, the great historical engine of productivity, which makes everyone richer?” If you think about it, however, you will see that, valid as this point may be, the bishops cannot accept it. Can they praise the profit motive—while extolling selflessness? Can they commend the passion to own material property—while declaring that worldly possessions are not important? Can they urge men to practice the virtues of productiveness and long-range planning—while upholding as the human model the lilies of the field? Can they celebrate the self-assertive risk taking of the entrepreneur—while teaching that the meek shall inherit the earth?
“Small as the incident may later seem in history, a polluting stain is being erased from the previous American image of lassitude, uncertainty, and pessimism. This is a matter of world ideological concern as well as strategic balances because too many democracies are sick.... Now a new vibrancy creeps into the picture.” Mr. Sulzberger explains: The internationally renowned ‘American tempo’ and productivity still lag and the work ethic with its emphasis on speed and efficiency—whether prompted by puritanism or by the capitalistic profit motive—has certainly undergone visible and withering change. In this uncertain age American flabbiness is ... harmful to the United States. In the absence of American leadership, Mr. Sulzberger concludes, many Western countries were left adrift. “Now Gerald Ford seems to have put an end to that sad phase. Abruptly he has shown Americans and the world that he knows how to get where he wishes to go.
Virtual Competition by Ariel Ezrachi, Maurice E. Stucke
Airbnb, Albert Einstein, algorithmic trading, barriers to entry, cloud computing, collaborative economy, commoditize, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, demand response, disintermediation, disruptive innovation, double helix, Downton Abbey, Erik Brynjolfsson, experimental economics, Firefox, framing effect, Google Chrome, index arbitrage, information asymmetry, interest rate derivative, Internet of things, invisible hand, Jean Tirole, John Markoff, Joseph Schumpeter, Kenneth Arrow, light touch regulation, linked data, loss aversion, Lyft, Mark Zuckerberg, market clearing, market friction, Milgram experiment, multi-sided market, natural language processing, Network effects, new economy, offshore financial centre, pattern recognition, prediction markets, price discrimination, price stability, profit maximization, profit motive, race to the bottom, rent-seeking, Richard Thaler, ride hailing / ride sharing, road to serfdom, Robert Bork, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, supply-chain management, telemarketer, The Chicago School, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, Travis Kalanick, turn-by-turn navigation, two-sided market, Uber and Lyft, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, women in the workforce, yield management
The belief is that, apart from issues of merit or athletic scholarships, families with similar financial situations whose children attend the same school will contribute roughly the same amount. If these factors no longer applied, and universities simply price discriminated to maximize revenues and increase compensation for the university administrators, coaches, and perhaps even professors, then trust would break down and parents would likely rebel. The introduction of a profit motive changes the framework of assessment and leads many people to perceive price discrimination as unfair. This attitude intensifies where behavioral discrimination is exposed and people perceive themselves as victims of manipulation. Economic and Social Perspectives 123 (Lack of) Fairness and Equality In contrast to the above, other markets dominated by for-profit firms have less exceptional characteristics.
Perhaps not surprisingly, online platforms, as profit making entities, share incentives similar to other market players and may also benefit from personalization and behavioral discrimination. In fact, some of them use similar tactics to gather information about users. They may amend their offering based on one’s location or shopping history and engage in a range of tactics, from the use of decoys and price steering to drip pricing. So the promise of transparency and undistorted information may give way to profit motive, once the comparison intermediates gain relative power. In addition, some comparison platforms or meta-search engines, which also provide related ser vices downstream, may favor their own ser vices over those of competitors and display them more prominently in their The Comparison Intermediaries 139 search results. Notable here is the European Commission’s investigation into Google’s alleged favoring of its own comparison shopping product “Google Shopping” and its preferential positioning on Google general search results pages.
The Market for Force: The Consequences of Privatizing Security by Deborah D. Avant
barriers to entry, continuation of politics by other means, corporate social responsibility, failed state, hiring and firing, information asymmetry, interchangeable parts, Mikhail Gorbachev, Nelson Mandela, Peace of Westphalia, principal–agent problem, private military company, profit motive, RAND corporation, rent-seeking, rolodex, The Nature of the Firm, trade route, transaction costs
Pessimists claim that the turn to private security threatens to undermine state control and democratic processes.10 Ken Silverstein characterizes this process as one “by which the responsibilities of government are transferred to corporate hands.”11 In the US this allows for foreign policy by proxy – where corporate entities do what the government cannot. The implication of Silverstein’s argument is that the institutions that contain violence in the US are undermined by privatization. Violence becomes a private commodity rather than a public good – and the result, Silverstein argues, is a defense policy that ignores the real issues and threats only to be shaped by “the profit motives and egos of a small group of hardliners.”12 In Africa, according to Musah and Fayemi, the consequences are even more severe. Though contemporary mercenaries attempt to distinguish themselves from the lawless “guns for hire” that ran riot over Africa during the Cold War, their consortium with arms manufacturers, mineral exploiters, and Africa’s authoritarian governments and warlords sustains the militarization of Africa.13 This poses “a mortal danger to 7 8 9 10 11 12 13 Oliver Williamson, “Public and Private Bureaucracies: a Transaction Cost Economic Perspective,” Journal of Law, Economics, and Organization Vol. 15, No. 1 (1999), p. 320.
Thus party leaders from the dominant HDZ occupied prominent military positions to insure that the force would be under their control.100 Given the party’s ultra-nationalist perspective, its 96 97 98 99 100 Ibid. Included among those fighting were sympathetic foreigners – whether there for profit or ideology – whom, some have argued, had an easier time committing atrocities given their lack of connection to the local population. Ibid. The breakdown of order in the Croatian territory as it seceded also opened opportunities for purely profit-motivated violence. Operation Group “Rashic” would fire on the Serbs from a Croatian village, provoking a harsh Serb reaction that would cause the villagers to flee in panic. Profiteers would then loot and plunder the empty village. They operated in the Kupa River region. Ibid., p. 15. Mary Kaldor’s analysis of Bosnia points to similar profiteering. See Kaldor, New and Old Wars, pp. 53–55. See also Peter Andreas, “The Clandestine Political Economy of War and Peace in Bosnia,” International Studies Quarterly Vol. 48, No. 1 (March 2004): 29–52.
The Little Book of Hedge Funds by Anthony Scaramucci
Andrei Shleifer, asset allocation, Bernie Madoff, business process, carried interest, corporate raider, Credit Default Swap, diversification, diversified portfolio, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, fixed income, follow your passion, Gordon Gekko, high net worth, index fund, John Meriwether, Long Term Capital Management, mail merge, margin call, mass immigration, merger arbitrage, money market fund, Myron Scholes, NetJets, Ponzi scheme, profit motive, quantitative trading / quantitative ﬁnance, random walk, Renaissance Technologies, risk-adjusted returns, risk/return, Ronald Reagan, Saturday Night Live, Sharpe ratio, short selling, Silicon Valley, Thales and the olive presses, Thales of Miletus, the new new thing, too big to fail, transaction costs, Vanguard fund, Y2K, Yogi Berra, zero-sum game
Pioneering Portfolio Management: An Uncon-ventional Approach to Institutional Investment (Free Press, 2000). Chapter Two The Parlor Cars of the Gravy Train The Long and the Short of It Hedge funds were the parlor cars of the new gravy train. It was fitting that their key figure was a man who had taken up stock investing as a sideline, an elegant amateur of the market who liked to think of himself as an intellectual, above and beyond the profit motive. —John Brooks, The Go-Go Years Think about it: If it didn’t exist somebody would have invented it. A system of money management that allows the manager and the capital to have an efficient, symbiotic, and symmetrical relationship. Here’s the deal. There are boring ways to run money, the blunt instruments of asset management—long-only mutual funds and their arch nemeses, the exchange-traded fund (ETF) and the index fund.
The Rich and the Rest of Us by Tavis Smiley
affirmative action, Affordable Care Act / Obamacare, back-to-the-land, Bernie Madoff, Bernie Sanders, Buckminster Fuller, Corrections Corporation of America, Credit Default Swap, death of newspapers, deindustrialization, ending welfare as we know it, F. W. de Klerk, fixed income, full employment, housing crisis, Howard Zinn, income inequality, job automation, liberation theology, Mahatma Gandhi, mass incarceration, mega-rich, Nelson Mandela, new economy, obamacare, Occupy movement, plutocrats, Plutocrats, profit motive, Ralph Waldo Emerson, Ronald Reagan, shareholder value, Silicon Valley, Steve Jobs, traffic fines, trickle-down economics, War on Poverty, We are the 99%, white flight, women in the workforce, working poor
According to the letter, Corrections Corporation of America’s management offer came with an interesting caveat; a 20-year contract and an assurance that the prisons would remain “at least 90 percent full.”101 This proposed prison deal speaks to a larger, more pervasive trend of our times—rich corporations’ desire to privatize public institutions for profit. With cities and states suffering budget woes, privatization of public schools—via the charter school movement—hospitals, and mental health institutions is a welcomed option. We’re not saying that private ownership or privatizing services to public institutions are across-the-board evil, we’re saying that the profit motive of privatization can lead to dangerous outcomes. These institutions serve or house the poor; and, as the recession has taught us, profits outweigh the concerns of the people. We must reverse the trend. Public financing of public services must remain a priority. FUNDAMENTAL FAIRNESS LOBBY “The unemployed are politically invisible. They don’t make major campaign donations. They don’t lobby Congress.
Ayn Rand and the World She Made by Anne C. Heller
affirmative action, Albert Einstein, American ideology, anti-communist, Bolshevik threat, Charles Lindbergh, conceptual framework, greed is good, laissez-faire capitalism, Milgram experiment, money market fund, Mont Pelerin Society, New Journalism, open borders, price stability, profit motive, rent control, rolodex, Ronald Reagan, Silicon Valley, the scientific method, theory of mind, Thorstein Veblen, transcontinental railway, upwardly mobile, wage slave, War on Poverty, Works Progress Administration, young professional
A clue may be found in the dazzling speech she would later write for Francisco d’Anconia, one of three capitalist heroes in Atlas Shrugged. “Money is the root of all good,” Francisco famously announces to a group of hypocritical politicians and professional humanitarians assembled at a wedding party. “Money is the barometer of a society’s virtue.” Francisco goes on to deliver a virtuoso defense of the profit motive; in all of history, he tells his listeners, the free exchange of money has been the only nonviolent, orderly, and socially transparent means of calibrating the value men place upon one another’s work. Without money, and particularly money backed by gold, force decides, Rand argued.* Perhaps it was natural, then, that after many disappointing encounters with politicians, businessmen, theatrical producers, and literary rainmakers, money pleased her more resoundingly than praise.
The MPA went into action. That winter, Rand and the executive board met as often as three times a week, selecting emissaries and discussing tactics for the spring preliminary hearings. As Rand’s special contribution, she composed the “Screen Guide for Americans,” addressed to movie producers and executives who wanted to avoid the appearance of left-wing influence. She warned them not to “smear” success, the profit motive, or wealth, and not to “glorify” the common man. “Don’t spit into your own face,” she added, “or, worse, pay miserable little [Communist screenwriter] rats to do it.” As for Communists’ right to free speech, she argued, rather persuasively, that the principle of free speech requires “that we do not [pass laws or] use a police force to forbid the Communists the expression of their ideas.” It did not require privately owned and operated movie studios to offer jobs to Communist writers or give them the means to “advocate our own destruction at our own expense.”
Still angry at BobbsMerrill for its failures to support The Fountainhead, she was drawing up a list of terms she thought it would refuse to meet when the company’s sales director Ross Baker phoned and invited her and Collins to meet him over dinner. “What is it you want to discuss?” she asked on the phone. The book she had submitted was far too long, he replied. He wanted to mention sections that might be trimmed or cut, including, she later learned, to her horror, Francisco d’Anconia’s masterful fivepage speech about the benefits of a money economy and the profit motive, ending with a paean to America: “To the glory of mankind,” he tells the guests at James Taggart’s wedding reception, “there was for the first and only time a country of money, and I have no higher or more reverent tribute to pay to America, for this means a country of reason, justice, freedom, production, achievement. … Americans were the first to understand that wealth has to be created,” and thus they invented the felicitous phrase “to make money.”
Bit Literacy: Productivity in the Age of Information and E-mail Overload by Mark Hurst
It hasn’t gotten a lot of press, and no one got rich from inventing it, yet the ASCII format has become one of the most useful and widespread digital technologies ever created. The two text formats are near-opposites, in fact: ASCII is small, elegant, and compatible with everything; Word is heavy, slow, and proprietary. Much like the DRM-enabled AAC audio format, the Word format is designed with the profit motive in mind. Microsoft is the sole owner of the Word format, so no software application is supposed to read or write the Word format unless Microsoft authorizes it. (Other tools like Google Docs can do so only because their engineers have “reverse-engineered” the format to make their software compatible.) This is in contrast to ASCII, which is a publicly owned, freely available standard that has been in use for decades.
Meghnad Desai Marxian economic theory by Unknown
In Marx, the role of the falling rate of profit is different. The tendency of the rate of profit to fall illustrated the second contradiction of capitalism. The first contradiction is the emergence of free labour and the class 103 monopoly of means of production. The second contradicition is the growing disparity between the productive capacity of the system - the productive potential and the actual output as dictated by the profit motive. Reproduction in a capitalist system for Marx is not the production of use values - not production for the sake of eventual consumption. Production is the production of capital in such a way that expansion of capital occurs - production for profit and for increased accumulation. The falling rate of profit comes about because of the tendency of the system to concentrate on surplus value and to replace variable capital by constant capital.
On Anarchism by Noam Chomsky
Still, developments are under way that contribute to anarchism’s legacy. Anarchists in this country now insist on grappling with challenges of sexual identity and ingrained oppression that mainstream society gingerly prefers not to recognize. They are at the forefront of movements to protect animal rights and the environment that future generations will be grateful for. As industrial agriculture becomes more and more poisoned by profit motives, anarchists are growing their own food. Anarchist hackers understand better than most of us the power of information and the lengths that those in power will go to control it; proof is in the years- and decades-long prison sentences now being doled out for online civil disobedience. These mighty insights, along with so much else, risk being lost to amnesia if they’re not passed on in memory and habit, if they’re not treated as part of a legacy rather than as just passing reactions against the latest brand of crisis.
Britannia Unchained: Global Lessons for Growth and Prosperity by Kwasi Kwarteng, Priti Patel, Dominic Raab, Chris Skidmore, Elizabeth Truss
Airbnb, banking crisis, Carmen Reinhart, central bank independence, clockwatching, creative destruction, Credit Default Swap, demographic dividend, Edward Glaeser, eurozone crisis, fear of failure, glass ceiling, informal economy, James Dyson, Kenneth Rogoff, knowledge economy, long peace, margin call, Mark Zuckerberg, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, Neil Kinnock, new economy, North Sea oil, oil shock, open economy, paypal mafia, pension reform, price stability, profit motive, Ronald Reagan, Sand Hill Road, Silicon Valley, Stanford marshmallow experiment, Steve Jobs, Walter Mischel, wealth creators, Winter of Discontent, working-age population, Yom Kippur War
Yet, in the emerging economies of Asia, South America and Africa, economic progress continued unabated. In these countries individual initiative and free enterprise continued to drive progress. Millions of people are 4 Britannia Unchained being pulled out of poverty across the world by the simple processes of capitalism. Britannia Unchained is unembarrassed about its support for business, the proﬁt motive and the individual drive of the wealth creator. The term ‘globalisation’ is a cliché. However, it is certain that, for the ﬁrst time in centuries, the world economy is being driven by what happens outside Europe and North America. At the same time, many parts of the old world are ﬁghting back. Germany has embarked on a programme of welfare reform. Countries in Scandinavia are pursuing labour market reform.
India's Long Road by Vijay Joshi
Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, Bretton Woods, business climate, capital controls, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, corporate governance, creative destruction, crony capitalism, decarbonisation, deindustrialization, demographic dividend, demographic transition, Doha Development Round, eurozone crisis, facts on the ground, failed state, financial intermediation, financial repression, first-past-the-post, floating exchange rates, full employment, germ theory of disease, Gini coefficient, global supply chain, global value chain, hiring and firing, income inequality, Indoor air pollution, Induced demand, inflation targeting, invisible hand, land reform, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price mechanism, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, race to the bottom, randomized controlled trial, rent-seeking, reserve currency, rising living standards, school choice, school vouchers, secular stagnation, Silicon Valley, smart cities, South China Sea, special drawing rights, The Future of Employment, The Market for Lemons, too big to fail, total factor productivity, trade liberalization, transaction costs, universal basic income, urban sprawl, working-age population
Since it will own all the profits that remain after fulfilling the requirements imposed by its contract with the state, it will have an incentive to innovate and to cut costs. In contrast, in the public sector, managerial incentives are blunted because all profits belong to the state. This is the rationale behind regulated privatization and the whole range of arrangements that go by the name of ‘public-private partnerships’. They are all ways of harnessing the private profit motive for public purposes. Of course, it does not follow that private production is always superior to public production. In a public-private contract, there is a danger that in the pursuit of profit the private partner will cut costs by reducing quality (particularly if competition is absent or weak and there is no fear of losing customers). To prevent that, the public-private contract would have to specify quality requirements, monitor producer performance, and penalize violations by producers of contract terms.
But it should pay for and produce public goods, in either of the above categories, only when it is likely to be more efficient than the private sector in production.27 This could be so when it is impossible or very complicated to contract production out to the private sector, or when contracting would involve the private sector in a very severe conflict between profit maximization and fulfilling the terms of the contract (in which case the profit motive is likely to win). Are there then goods and services that the public sector, and only the public sector, should finance as well as produce, through civil servants and government employees? Yes, certainly. The list would surely include the following items among others: law and order; administration of justice; protection of contracts and property rights; external defence;28 macroeconomic stability, including financial and banking stability; indicative planning and coordination, where justified; maintenance of competition and other ‘rules of the road’ for market functioning; administration of taxes and subsidies; income redistribution, including identification of the poor; environmental regulation; and the vast area of regulation of private sector activities, more generally.29 Note that the above list does not include public goods and services, conventionally so called, such as health care, education, transport, and electricity.
Goddess of the Market: Ayn Rand and the American Right by Jennifer Burns
anti-communist, bank run, barriers to entry, centralized clearinghouse, collective bargaining, creative destruction, desegregation, feminist movement, financial independence, George Gilder, invisible hand, jimmy wales, Joan Didion, John Markoff, Joseph Schumpeter, knowledge worker, laissez-faire capitalism, lone genius, Menlo Park, minimum wage unemployment, Mont Pelerin Society, new economy, Norman Mailer, offshore financial centre, Ponzi scheme, profit motive, RAND corporation, rent control, road to serfdom, Robert Bork, rolodex, Ronald Reagan, side project, Stewart Brand, The Chicago School, The Wisdom of Crowds, union organizing, urban renewal, white flight, Whole Earth Catalog
The rock they are trying to split is Americanism.”62 To resist, movie producers and writers must understand that politics flowed from moral premises, Rand wrote. After this assertion, however, she backed away from sweeping statements, keeping most of her suggestions specific and practical. She opposed any formal movie code but listed thirteen ways to keep movies free of Communist undertones. Rand told moviemakers to avoid smearing the free enterprise system, industrialists, wealth, or the profit motive. They should celebrate success and avoid glorifying failure or the common man. Movies should also be careful about using current events or criticizing American political institutions. Rand’s “Screen Guide” caught the eye of a congressional committee, the House Un-American Activities Commission (HUAC), which was investigating Communist penetration of the movie industry. The committee had begun sniffing out Communists in 1938, and its activities picked up steam in the postwar years, eventually resulting in the celebrated confrontation between the former Communist Whittaker Chambers and the accused spy Alger Hiss that riveted the nation.
Evans, an activist since his student days and then an editor at the Indianapolis News, was to draw the line.40 But the message had shifted, and Evans’s prominent cover story revealed how many of Rand’s beliefs had become conventional conservative wisdom even as she remained, officially, persona non grata. Unlike Chambers, Evans was untroubled by her defense of capitalism and her attack on government regulation. She had, Evans wrote, “an excellent grasp of the way capitalism is supposed to work, the efficiencies of free enterprise, the central role of private property and the profit motive, the social and political costs of welfare schemes which seek to compel a false benevolence.”41 He also admired her polemical fire and consistency, and defended her against Chambers’s accusation that she was an unconscious Nazi. Evans went on to argue that despite these features, Rand remained a dangerous figure for conservatives because she mixed her good qualities with the bad, namely, atheism.
Game Over Press Start to Continue by David Sheff, Andy Eddy
affirmative action, air freight, Alexey Pajitnov wrote Tetris, Apple II, Apple's 1984 Super Bowl advert, Buckminster Fuller, game design, HyperCard, inventory management, James Watt: steam engine, Jaron Lanier, Marshall McLuhan, Mikhail Gorbachev, pattern recognition, profit motive, revision control, Ronald Reagan, Silicon Valley, Steve Jobs, Steve Wozniak
They found that the security chips in the hardware and software were identical chips that, basically, communicated with each other. As long as they were communicating, the system operated; if they weren’t, the system froze up. The engineers then tried but failed in their efforts to replicate the technology. Atari engineer Pat McCarthey concluded, “Unless there is a specific profit motivation … I recommend that the investigation end here.” There was, the court would later find, a profit motivation, and Atari did not discontinue the project. Atari had outside engineers try to reverse-engineer the chip—that is, “deprocess” it. Engineer Donald Paauw was assigned the task of analyzing “peeled” or dissected chips in an effort to understand the program embedded within, but he did not succeed. Finally, after the engineers failed to figure out the chip by reverse engineering, they were given some help.
On the Wrong Line: How Ideology and Incompetence Wrecked Britain's Railways by Christian Wolmar
Moreover, it gave one commercial company, Railtrack, a role over others in the industry, something that neither party would be happy about. Railtrack felt it was being burdened with a role for which it was not suited; the other companies feared that Railtrack could exercise control over them by masking commercial considerations under the guise of safety considerations. Nevertheless, the government adopted the HSE’s suggestion, partly allaying fears over the profit motive by ensuring that part of Railtrack’s licence condition was to fund SSD adequately and that it was to be independent of Railtrack’s commercial business. It was an arrangement that failed to recognise that perceptions about the management of safety were almost as important as the reality itself. Inevitably, therefore, the status of SSD as part of Railtrack was highlighted in the aftermath of the Ladbroke Grove disaster and it was quickly hived off into a separate subsidiary, Railway Safety (see Chapter 7).³² Railtrack was thus given the role of monitoring the safety cases of all the other companies working in the industry, while its own safety case was vetted by the HSE.
Grayling argued that ‘a not-for-profit company or trust would have advantages over a traditional state owned industry in terms of access to private finance and the accountability of its board to stakeholders, including passengers and the industry’.² As there were to be no shareholders, there would be no potential conflict between profit and safety. Any profits would be reinvested to improve the network and instead of the profit motive, the new company’s objectives ‘could include maximising the use of the railways by passengers and freight and high standards of safety’.³ It was a solution that had been used for another capital-intensive industry, water, with the creation in Wales of Glas Cymru, also a company limited by guarantee. The Grayling plan had become the government’s preferred option before Byers moved in on Railtrack, but ministers had to pretend that they were considering other possibilities.
If Then: How Simulmatics Corporation Invented the Future by Jill Lepore
A Declaration of the Independence of Cyberspace, anti-communist, Buckminster Fuller, computer age, coronavirus, cuban missile crisis, desegregation, don't be evil, Donald Trump, Elon Musk, game design, George Gilder, Grace Hopper, Hacker Ethic, Howard Zinn, index card, information retrieval, Jaron Lanier, Jeff Bezos, Jeffrey Epstein, job automation, land reform, linear programming, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, mass incarceration, Maui Hawaii, Menlo Park, New Journalism, New Urbanism, Norbert Wiener, Norman Mailer, packet switching, Peter Thiel, profit motive, RAND corporation, Robert Bork, Ronald Reagan, Rosa Parks, self-driving car, Silicon Valley, smart cities, South China Sea, Stewart Brand, technoutopianism, Telecommunications Act of 1996, urban renewal, War on Poverty, white flight, Whole Earth Catalog
In medical research, pharmacology, and public health, it helps researchers find cures for diseases, avert epidemics, and defeat pandemics. Nothing could be more vital. But the study of the human condition is not the same as the study of the spread of viruses and the density of clouds and the movement of the stars.4 Human nature does not follow laws like the law of gravity, and to believe that it does is to take an oath to a new religion.5 Predestination can be a dangerous gospel. The profit-motivated collection and use of data about human behavior, unregulated by any governmental body, has wreaked havoc on human societies, especially on the spheres in which Simulmatics engaged: politics, advertising, journalism, counterinsurgency, and race relations. Its rise also marked the near abandonment of humanistic knowledge. Ithiel de Sola Pool declared the social sciences—the predictive, computational behavioral sciences—to be “the New Humanities of the Twentieth Century.”
., 155, 164 Arendt, Hannah, 78 Armies of the Night, The (Mailer), 233, 252 Arnold, William, 243–44 ARPA (Advanced Research Projects Agency) — ARPANET, 284, 296, 310–11, 312, 313–15, 316, 318 — complaints about Simulmatics, 221, 224, 236–37, 240–41, 244, 245–48, 254, 265, 290 — counterinsurgency, 200, 213, 216 — dynamic modeling, 200, 213–14, 216–17 — Eisenhower creation of, 77–78 — Licklider and, 284, 296, 310, 370n ARPA (Advanced Research Projects Agency) (continued) — network building, 152 — offices in Saigon, 207 — Pool’s presentation to, 169–70, 363n — Project Agile, 213 — Project Cambridge, 283, 284–85, 296 — reaction to Hoc’s projects, 251, 267 — Simulmatics contracts, 221, 231, 240, 243, 254, 267, 284 — “TV Hamlets” study, 246–47, 248 — Vietnamese spoken by Americans, investigation, 220 artificial intelligence — Alex Bernstein playing chess with an IBM 704, 67, 68, 70, 73, 74–75 — Artificial Intelligence Lab at Stanford, 312 — Artificial Intelligence Project at MIT, 76, 170, 311 — automation and simulation related to, 71–72 — Dartmouth conference in 1956, 73, 74–75, 87, 89 — defined, 5 — history of man vs. machine chess match, 72–73 — origin of term, 71 — see also computer revolution Aspin, Les, 303 Atlas Shrugged (Rand), 127 atomized society, 277, 312, 316, 322 Attwood, William, 103 automation and unemployment fears, 69–70, 99, 129–30 Bagdikian, Ben, 191 Ballantine Ale, 27, 173 Ball, George — on precision of McNamara’s predictions, 208 — Stevenson 1952 campaign, 20, 22, 23, 62–63 — Stevenson’s death and, 370n — warnings about Vietnam escalation, 163–64, 194, 213 Baran, Paul, 282, 284, 337n Barlow, John Perry, 319 Baudrillard, Jean, 4 Baxter, Leone, 16, 17, 273 Bay of Pigs invasion, 141, 156 BBDO (Batten, Barton, Durstine & Osborn), 20, 152, 153, 321, 359nn behavioral sciences — “Behavioral Science and National Security” congressional hearings, 211 — conservative opposition to, 57 — data science and, 324–25, 326–27, 389n — defined, 36–37 — laws of nature compared to, 324, 389n — predictive analytics, 5, 327 — profit motive and money for universities, 324–25, 326 — proper public role of, 172–73 — psychoanalysis and, 58 Belknap, George, 117 Bellevue Hospital, 90–91 Bellow, Saul, 56, 58–59, 186, 344n Berelson, Bernard, 34 Berkeley protests in 1964, 196–98 Bernstein, Alex — counterinsurgency research proposal, 216, 370n — Dartmouth artificial intelligence conference, 73, 74–75, 87 — early life and career, 68 — election simulation, 78–79 — Greenfield and, 79 — marketing for Simulmatics, 136, 152 — marriage, 74 — Media-Mix simulation, 138, 359–60n — Moynihan and, 260 — playing chess with an IBM 704, 67, 68, 70, 73, 74–75, 100 — preparation for 1962 Times election coverage, 154–55, 166, 362n — Project Macroscope, 92 — as psychoanalyst, 303 — Simulmatics stock offering and, 139 — on Turing’s machine, 73 — in Venezuela, 209, 210 Bernstein, Carl, 309, 310 Bernstein, June Atlas, 74 Best Man, The (Vidal), 11, 63–64 big data, 279, 282, 325 Billion-Dollar Brain, The (Deighton), 125 Bork, Robert, 308 Boulding, Kenneth, 36–37, 38 Bowles, Chester, 112 brainwashing, 20–21, 93 Brain-Washing in Red China (Hunter), 20 Brando, Marlon, 27, 40, 101, 173 Brand, Stewart, 310, 311–12, 314, 317–18 Brinkley, David, 192 Brin, Sergey, 6, 55 Brown, Claude, 256–57, 258, 287 Brown v.
How to Be a Liberal by Ian Dunt
4chan, Alfred Russel Wallace, bank run, battle of ideas, Big bang: deregulation of the City of London, Boris Johnson, bounce rate, British Empire, Brixton riot, Carmen Reinhart, centre right, David Ricardo: comparative advantage, Dominic Cummings, Donald Trump, eurozone crisis, experimental subject, feminist movement, Francis Fukuyama: the end of history, full employment, Growth in a Time of Debt, illegal immigration, invisible hand, John Bercow, Kenneth Rogoff, liberal world order, Mark Zuckerberg, mass immigration, means of production, Mohammed Bouazizi, Northern Rock, old-boy network, Paul Samuelson, Peter Thiel, price mechanism, profit motive, quantitative easing, recommendation engine, road to serfdom, Ronald Reagan, Saturday Night Live, Scientific racism, Silicon Valley, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Winter of Discontent, working poor, zero-sum game
Eventually there would be more supply and the price would fall. But if few customers wanted a product, the price would fall. People would stop producing it, because it didn’t make much profit, until there was a reduction in supply and the price would eventually rise. This price mechanism gave people all sorts of vital data about scarcity and desire. And it meant that production suddenly became efficient. The profit motive encouraged cheaper production, driving down costs and maximising national output. Importantly, this was not achieved by planning. It flowed naturally from people’s self-interest. Each individual, Smith said, in the single most famous metaphor in all of economics, was ‘led by an invisible hand to promote an end which was no part of his intention.’ This system operated at peak efficiency when it was the natural product of people’s instinctive economic behaviour.
He argued against state restrictions on the market, both because of the impact on individual property rights and also because property increased the material benefits of society at large. He was followed by Friedrich von Hayek, who considered any state interference to be the start of a slippery slope that led to tyranny. Mill took a different approach. He emphasised areas where the market did not succeed, where the profit motive failed, or private monopolies developed. He resisted the idea that there would ever be a solution to the question of state versus market. Instead, cases should be dealt with individually, with an assessment of whether they were improving conditions for most people. The state and the market were both a potential source of progress and a potential threat to freedom. Each should be admired for what it could do and prevented from what it could not.
The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald
activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Albert Einstein, barriers to entry, Bayesian statistics, Bernie Madoff, Bob Noyce, Bonfire of the Vanities, business cycle, business process, butterfly effect, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, corporate raider, corporate social responsibility, creative destruction, deskilling, discounted cash flows, disintermediation, disruptive innovation, Donald Trump, family office, financial innovation, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, global pandemic, Gordon Gekko, hiring and firing, income inequality, invisible hand, Jeff Bezos, job-hopping, John von Neumann, Joseph Schumpeter, Kenneth Arrow, Kickstarter, London Whale, Long Term Capital Management, market fundamentalism, Menlo Park, new economy, obamacare, oil shock, pattern recognition, performance metric, Peter Thiel, plutocrats, Plutocrats, profit maximization, profit motive, pushing on a string, Ralph Nader, Ralph Waldo Emerson, RAND corporation, random walk, rent-seeking, Ronald Coase, Ronald Reagan, Sam Altman, Sand Hill Road, Saturday Night Live, shareholder value, Silicon Valley, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, survivorship bias, The Nature of the Firm, the scientific method, Thorstein Veblen, union organizing, urban renewal, Vilfredo Pareto, War on Poverty, William Shockley: the traitorous eight, women in the workforce, Y Combinator
By 1980, the starting salary for an elite MBA student was almost double the U.S. median pay level. 43 Managerialism Was Already Dead Lawrence Fouraker was prone to philosophical flights of fancy in his annual reports to the president of Harvard when he was dean of HBS, and his 1973–74 report was a prime example of such. In it, he compared what he called the three primary economic systems of the United States: capitalism, managerialism, and socialism. Capitalism was the profit motive, its primary mechanism the market, and its sovereign the consumer. Managerialism was the response to capitalism’s success, which had resulted in two kinds of markets—external (that is, consumers) and internal (the “economy” within a firm itself). The manager was supposed to have some sort of exclusive technical ability required to mediate between the two. Socialism was the nonprofit part of the economy—government, education, and health care.
(Piper et al), 403, 437 Capital Cities/ABC, 163, 169, 171 Capital in the Twenty-First Century (Piketty), 281, 540 capitalism, 2, 4, 5, 6, 10, 17, 184, 384; belief system, 59; communist threat, 143, 184; creative destruction, 243, 348; efficient-market hypothesis, 411; ethics and, 261, 432; free market and, 43, 57; HBS as the West Point of Capitalism, 135–39; investor capitalism, 366–67, 387; laissez-faire, 131; managerial capitalism, 132, 144, 247, 250; morality of, 566; power equals money in, 369; profit motive, 432; Research Center in Entrepreneurial History and, 243; shareholder capitalism, 6, 298, 315, 360–64, 366, 576; trade-offs, 281; trans-national capitalist class, 8 Capitalism, Socialism, and Democracy (Schumpeter), 348 Carnegie, Andrew, 23, 28 Carnegie, Rod, 209 Carnegie’s Graduate School of Industrial Administration (GSIA), 214, 215, 220, 221, 225, 226, 228, 260, 297, 343, 451; Kaplan at, 443 Caro, Robert, 480–81 Carr, Nick, 303, 304, 305–6 Carroll, Thomas, 106, 220, 231, 289 Carter, Edward, 96 Carter, Graydon, 472 Carter, Jimmy, 354 Carter, John, 468 Case, Everett Needham, 234 case method, 3, 5, 6, 11, 27, 45, 46–53, 91, 92, 211, 212, 221–22, 225, 226, 277–84, 455; Associates funding, 104, 195; Bales and, 6; benefits, 52–53, 202–3, 277–78, 394, 470; bias for action, 51–52, 291; Bok’s criticism, 336, 338, 339; Bower’s defense, 206, 338–39; businesses asking to be studied, 58; Butcher Polish case, 333; casebooks, 99; casebooks, revenues from, 278, 279, 283; cases for SCMP, 326; case study hero, 107, 171, 280, 312, 436, 527; choices for study, Associates and, 106; Christensen and, 279; class section system and, 394; computerizing of cases, 155–56; Copeland-Cherington experiment and, 48–49; corporate sponsors and, 284, 520–21, 522; costs, 58, 63, 278; departure from (2010), 565–66; Dimon and Murphy on, 51; Elberse’s bestselling studies, 556; Enron cases, 281, 519, 522; ethics cases, 436; faculty development and, 46; failure to link actions to societal concerns, 51; Ford Foundation and, 278; Gay and, 27, 30, 47–48, 52; HBS vs. other schools, 397; international companies, 255; invention of, 47–53; JetBlue Airways study, 284; Johnson & Johnson cases, 527; judgment-based theory and, 5; Krasnow case, 333; Marine Basic School compared to, 50; Marriott case, 402; National Cranberry Cooperative case, 283; McNair on, 48–49; Merck, Vioxx scandal, and, 106–7; Mintzberg as critic, 483–89; negatives, 195, 280–82, 286–87; number of cases taught, 53; other schools using, 228–29, 279, 283; Raiffa and, 215–17; rationale for vs. reality of, 396–99; research and, 355, 455; SASB study, 562; skills taught by, 176–77; social aspect of, 394–98; Socratic method and, 49, 64, 394; Staples cases, 333; teaching ethics and, 429; teaching strategy and, 260; translations, 231, 255; weakness of, 51; World War II and, 137 Case Method at the Harvard Business School, The (McNair and Hersum, eds.), 279 Case Method of Teaching Human Relations and Administration, The (Andrews), 279 Cash, James, 409–10 Castle, John, 322, 468 Catchings, Waddill, 122 Caufield, Frank, 120, 127, 322 Caust, Len, 344 Caves, Richard, 412 Celler-Kefauver Act of 1950, 193 Central and Eastern European Teachers Program, 232 Central Intelligence Agency (CIA), 162, 187, 230, 231, 254 “CEO Incentives” (Jensen and Murphy), 371 C.
See also specific people “Corporate Malfeasance and the Myth of Shareholder Value” (Dobbin and Zorn), 462–63 “Corporate Power in the 21st Century” (Davis), 369 Corporate Strategy (Ansoff), 257–58 Corporation, The (Bakan), 362, 505 corporations, 8, 10, 14, 31, 95, 131, 182–87, 422; anthropomorphic fallacy and, 418; Balanced Scorecard and, 442–52; boards, constitution of, 388; cash hoarding, 349, 367; Citizens United decision and, 492; corporate elite, 313, 387–88; DCF adopted by, 118–19; disturbing trends, 285; diversification, 193; downsizing, 212, 301, 368, 371, 387, 431; Drucker and, 243; environmental issues, 7; federal regulation, 184, 200, 357, 358, 367; HBS and, 8, 9, 62, 105–7, 142, 153–55, 190, 336, 460, 530; HBS’s executive education and, 147–49, 151–52, 197–98; Hollywood portrayals, 183–84, 186; hostile takeovers and leveraged buyouts, 362, 367, 369, 370–71, 380, 430, 463; income inequality and, 56, 165–66, 463, 539, 544; inversions and tax avoidance, 529; investors as custodians, 366–67, 387, 388 (see also shareholder value); job turnover, 291, 383; under Kennedy, 28; labor unions and, 161; layoffs, 387, 492–93; Levitt’s redefining of identity, 261–62; MBAs in, 289, 290–92, 345, 383; megacorporations, 14, 31, 182–83, 193, 358; mergers and acquisitions, 349, 371; M-form structure, 245, 250, 251–52, 266; morality and, 114, 566; need for managers, 14–15, 132; network of interlocking directorships, 189, 191, 211, 289; Organization Man and, 183–87; as people, 509; percentage of Americans employed by, 144; power elite and, 188–93; power of, 249, 288, 342, 385; price fixing, 285; profit motive and, 10, 367; Progressive containment of, 62; recruiters for, 151, 178, 186–87, 199, 207–8, 209, 460; shareholder value and, 10, 36, 360–64, 369, 418, 442, 462, 469, 491, 550, 567; shares in, 363, 375; short-term thinking, 247, 345, 443, 469, 551; social problems and, 385; social responsibility, 145, 314–15, 360–64, 366, 382, 384–91, 427, 434, 436, 472, 525–29, 560–62; stakeholder model, 6, 367; strategy, 258–61; systems approach, 89, 112–13, 114, 217; theory of the firm and, 366; top-down power, 32; workers’ benefits lost, 462.
Private Government: How Employers Rule Our Lives (And Why We Don't Talk About It) by Elizabeth S. Anderson
Affordable Care Act / Obamacare, barriers to entry, call centre, collective bargaining, corporate governance, correlation does not imply causation, declining real wages, deskilling, feminist movement, Frederick Winslow Taylor, full employment, invisible hand, manufacturing employment, means of production, Panopticon Jeremy Bentham, principal–agent problem, profit motive, Ronald Coase, shareholder value, Socratic dialogue, spinning jenny, The Nature of the Firm, The Wealth of Nations by Adam Smith, trickle-down economics
They still retain an interest in having a say over their working conditions.33 Here I stress a different point: I doubt whether Cowen’s model applies across the entire spectrum of wage labor. For the most part, lower-paid workers suffer from higher levels of disrespect, harassment, terrible working conditions, and offensive restraints on autonomy than higher-paid workers. Moreover, heightening the profit motive makes things worse all-around for these workers. For example, when prisons are converted from public to private, for-profit enterprises, guards simultaneously suffer huge wage cuts and large increases in violent assaults by prisoners, because their employers also cut staffing levels so low that not enough guards are available to control the prisoners.34 Inmate attacks on staff in federal prisons increase by 260 percent.35 Cowen’s confidence that workers are somehow compensated with higher wages for putting up with gross insults to their dignity, standing, and autonomy is belied by the staggering scale of wage theft in America.
The New Division of Labor: How Computers Are Creating the Next Job Market by Frank Levy, Richard J. Murnane
Atul Gawande, business cycle, call centre, computer age, Computer Numeric Control, correlation does not imply causation, David Ricardo: comparative advantage, deskilling, Frank Levy and Richard Murnane: The New Division of Labor, Gunnar Myrdal, hypertext link, index card, information asymmetry, job automation, knowledge economy, knowledge worker, low skilled workers, low-wage service sector, pattern recognition, profit motive, Robert Shiller, Robert Shiller, Ronald Reagan, speech recognition, talking drums, telemarketer, The Wealth of Nations by Adam Smith, working poor
Growing proportions of the nation’s labor force are engaged in jobs that emphasize expert thinking or complex communication—tasks that computers cannot do. If the set of products and services produced in the economy did not change, there would be less and less good work for humans to do as advances in computerization increased the possibilities for substitution. Such a trend, however, would run directly counter to the proﬁt motive. A task, once computerized, is potentially easy to replicate and so invites intense competition. The response to the competition is a constant drive to use advances in computer technology to develop new products and services—cell phones, DVDs, broad-band Internet, computer-assisted surgery, ﬁnancial derivatives, sensors in cars—the list is endless. This drive to develop, produce, and market new products relies on the human ability to manage and solve analytical problems and communicate new information, and so it keeps expert thinking and complex communication in strong demand.
Willful: How We Choose What We Do by Richard Robb
activist fund / activist shareholder / activist investor, Alvin Roth, Asian financial crisis, asset-backed security, Bernie Madoff, capital asset pricing model, cognitive bias, collapse of Lehman Brothers, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, delayed gratification, diversification, diversified portfolio, effective altruism, endowment effect, Eratosthenes, experimental subject, family office, George Akerlof, index fund, information asymmetry, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, lake wobegon effect, loss aversion, market bubble, market clearing, money market fund, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, principal–agent problem, profit maximization, profit motive, Richard Thaler, Silicon Valley, sovereign wealth fund, survivorship bias, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, ultimatum game
Eating out can be a minefield of choice. A survey of 830 American menus posted online found an average of 114 items offered at each restaurant. Although voluminous menus aren’t new (an 1899 Delmonico’s menu listed thirty-five dishes in the vegetable category alone), it is sometimes criticized as a curse of modern life, a pathology of free markets.11 But if the average consumer dislikes excessive variety, why does it exist? The profit motive should drive it out, since the market has every incentive to meet our needs subject to cost. Consumers who find lengthy menus overwhelming should be willing to pay for a simpler experience, allowing restaurateurs to earn an above-market profit by limiting options. A half-dozen items on a menu should satisfy customers’ appetites and food tolerances, and shrinking the menu would allow a restaurant to increase turnover and hence freshness while holding down costs.
Numbers Rule Your World: The Hidden Influence of Probability and Statistics on Everything You Do by Kaiser Fung
American Society of Civil Engineers: Report Card, Andrew Wiles, Bernie Madoff, Black Swan, business cycle, call centre, correlation does not imply causation, cross-subsidies, Daniel Kahneman / Amos Tversky, edge city, Emanuel Derman, facts on the ground, fixed income, Gary Taubes, John Snow's cholera map, moral hazard, p-value, pattern recognition, profit motive, Report Card for America’s Infrastructure, statistical model, the scientific method, traveling salesman
The “100-year” hurricane is a misnomer, granting us a false sense of security. From the industry’s perspective, the 2004–2005 disasters exposed the inadequacy of the prevailing insurance rates, which relied on wayward projections of the frequency of storms and the intensity of losses. The insurers also discovered that their customers could not bear the full cost of the insurance, so they could see no profit motive, and thus the insurance market failed. ~###~ Statisticians have something else to add to this story: Natural-disaster insurers, unlike automotive insurers, have no choice but to accept risks that are concentrated in vulnerable geographies. This agglomeration of risk became more and more severe as the existing risk pools disintegrated after the 2004–2005 seasons. That Poe Financial shuttered in Wilma’s wake had much to do with its ill-advised concentration of risks in South Florida.
Everything Bad Is Good for You: How Popular Culture Is Making Us Smarter by Steven Johnson
Columbine, complexity theory, corporate governance, delayed gratification, edge city, Flynn Effect, game design, Marshall McLuhan, pattern recognition, profit motive, race to the bottom, sexual politics, social intelligence, Steve Jobs, the market place
PoP C U LT U R E 's race to the top ove r the past decades forces us to rethi nk our assumpti ons about the base ten dencies of mass society: the Brave New Wo rld scenario, where we' re fed a series of stupefying narcotics by media conglomerates interested solely in their lavish profits with no concern for the mental improvement of their consumers. As we've seen, the Sleeper Curve isn't the result of media ti tans doing charitable work ; there 's an economic incentive in producing more challenging cultu re , thanks to the tech nologies of repetition and meta-commentary. But the end re sult is the same: left to its own devices, following its own profit motives, the media eco system has been churning out popular culture that has grown steadily more complex over time. Imagi ne a version of Brave New World where soma and the feelies make you smarter, and you get the idea. If the Sleeper Curve turns the conventional wisdom about 180 STEVEN JOHNSON mass culture o n its head, i t does something comparable to our own heads-and the truisms we like to spread about them.
Slouching Towards Bethlehem by Joan Didion
The instinct is socially suicidal, and because we recognize that this is so we have developed workable ways of saying one thing and believing quite another. A long time ago, Lionel Trilling pointed out what he called “the fatal separation” between “the ideas of our educated liberal class and the deep places of the imagination.” “I mean only,” he wrote, “that our educated class has a ready if mild suspiciousness of the profit motive, a belief in progress, science, social legislation, planning and international cooperation....Those beliefs do great credit to those who hold them. Yet it is a comment, if not on our beliefs then on our way of holding them, that not a single first-rate writer has emerged to deal with these ideas, and the emotions that are consonant with them, in a great literary way.” Officially we admire men who exemplify those ideas.
American Made: Why Making Things Will Return Us to Greatness by Dan Dimicco
2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, American energy revolution, American Society of Civil Engineers: Report Card, Bakken shale, barriers to entry, Bernie Madoff, carbon footprint, clean water, crony capitalism, currency manipulation / currency intervention, David Ricardo: comparative advantage, decarbonisation, fear of failure, full employment, Google Glasses, hydraulic fracturing, invisible hand, job automation, knowledge economy, laissez-faire capitalism, Loma Prieta earthquake, low earth orbit, manufacturing employment, oil shale / tar sands, Ponzi scheme, profit motive, Report Card for America’s Infrastructure, Ronald Reagan, Silicon Valley, smart grid, smart meter, sovereign wealth fund, The Wealth of Nations by Adam Smith, too big to fail, uranium enrichment, Washington Consensus, Works Progress Administration
If you don’t believe me, ask Lakshmi Mittal, the chairman, CEO, and principal owner of ArcelorMittal, the world’s biggest steel company. He wanted to buy a controlling stake in Hunan Valin Steel, one of the major Chinese steel manufacturers. He couldn’t do it. Beijing will not allow foreign ownership of key industries. China’s economic practices seem strange to us because we believe so strongly in the free market. We believe in fair play. Most of us still believe in a good, old-fashioned profit motive. Yet we see China rising fast, on the brink of replacing the United States as the world’s largest economy and profiting in almost every business it touches, even though they’re not free and don’t play fair. Let’s face it, most of the world doesn’t really believe in an open-market philosophy like we do. When China cheats, they deny Americans economic opportunity. We really shouldn’t sit still for that.
The Next Factory of the World: How Chinese Investment Is Reshaping Africa by Irene Yuan Sun
barriers to entry, Bretton Woods, capital controls, clean water, Computer Numeric Control, deindustrialization, demographic dividend, Deng Xiaoping, Donald Trump, European colonialism, floating exchange rates, full employment, global supply chain, invisible hand, job automation, low skilled workers, M-Pesa, manufacturing employment, means of production, mobile money, post-industrial society, profit motive, purchasing power parity, race to the bottom, RAND corporation, Ronald Reagan, Shenzhen was a fishing village, Silicon Valley, Skype, special economic zone, structural adjustment programs, Triangle Shirtwaist Factory, union organizing, Washington Consensus, working-age population
But although Chinese manufacturing investments tend to be smaller than the large-scale infrastructure projects that dominate the news about China’s presence in Africa, those factories are not puny. We surveyed nearly 200 manufacturing firms, and their average annual revenues was $21 million—far exceeding the cutoff defining small and medium enterprises in most African countries. And nearly all those firms are privately owned as opposed to being Chinese state-owned enterprises (SOEs), suggesting that these investments are driven by profit motives rather than by government directives. This may surprise readers familiar with reports that emphasize links between the Chinese government and Chinese business in Africa. But China is a vast place, and large sections of the economy are privately run. After all, most factory bosses in China work for themselves. As Yang Wenyi, a Chinese investor in multiple manufacturing plants in Nigeria, told me, “I have no use for the government.
Addiction by Design: Machine Gambling in Las Vegas by Natasha Dow Schüll
airport security, Albert Einstein, Build a better mousetrap, business intelligence, capital controls, cashless society, commoditize, corporate social responsibility, deindustrialization, dematerialisation, deskilling, game design, impulse control, information asymmetry, inventory management, iterative process, jitney, large denomination, late capitalism, late fees, longitudinal study, means of production, meta analysis, meta-analysis, Nash equilibrium, Panopticon Jeremy Bentham, post-industrial society, postindustrial economy, profit motive, RFID, Silicon Valley, Slavoj Žižek, statistical model, the built environment, yield curve, zero-sum game
Otherwise, you’re busy waving a shotgun around the room thinking, How am I going to get this guy?”34 To convince patrons that it is better to be known than anonymous, casinos present player tracking as a convenient service and a means for acquiring the rewards to which they are entitled. “Loyalty programs are about giving your customers a reason to give you data, so that data can be used to earn you money,” said an industry member in 2008, laying bare the profit motives behind the language of “relationship.”35 “Interactivity,” notes Andrejevic, “is not necessarily a two-way street; more often than not, it amounts to the offer of convenience in exchange for willing or unwitting submission to increasingly detailed forms of information gathering.”36 A striking example of “unwitting submission” is found in Bally’s method for tracking players regardless of their participation in a loyalty club.
Previous chapters have paid close attention to how the material and computational design features of machine gambling format and modulate its flow so as to facilitate “continuous gaming productivity.” Although Csikszentmihalyi allows that certain activities “may provide a reward structure” more likely to produce flow, and that “an understanding of flow is relevant to the design of leisure products and services,” he neither elaborates on the profit motives behind the design of user flow nor reflects on how these motives might lead to products and services whose configuration risks drawing users’ escape motivations in a “backward” direction, such that they lose themselves without self-actualizing gain.8 This chapter—the sixth stop on the circuit of this book and the last before we turn to the person who sits in front of the machine—builds on the foregoing analysis by focusing in on one particular aspect of flow and its role in the addictive experience of machine gambling: the element of player control.
Everyware: The Dawning Age of Ubiquitous Computing by Adam Greenfield
augmented reality, business process, defense in depth, demand response, demographic transition, facts on the ground, game design, Howard Rheingold, Internet of things, James Dyson, knowledge worker, late capitalism, Marshall McLuhan, new economy, Norbert Wiener, packet switching, pattern recognition, profit motive, QR code, recommendation engine, RFID, Steve Jobs, technoutopianism, the built environment, the scientific method
There are difficulties with such a laissez-faire approach, though. For one thing, it leaves entirely too much unspoken as to what constitutes harm, as to who is at risk, as to what the likely consequences of failure would be. It assumes that everyone developing everyware will do so in complete good faith and will always esteem the abstract-seeming needs of users more highly than market share, the profit motive, or the prerogatives of total information awareness. And, even where developers can be relied upon to act in good faith, it's simply not specific enough to constitute practically useful guidance. The next best thing, then, is to develop a strategy for ethical development that does take these factors into account—something that spells out the issues in sufficient detail to be of use to developers, that strikes a balance between their needs and those of users, and that incentivizes compliance rather than punish noncompliance.
The Oil Factor: Protect Yourself-and Profit-from the Coming Energy Crisis by Stephen Leeb, Donna Leeb
Buckminster Fuller, buy and hold, diversified portfolio, fixed income, hydrogen economy, income per capita, index fund, mortgage debt, North Sea oil, oil shale / tar sands, oil shock, peak oil, profit motive, reserve currency, rising living standards, Ronald Reagan, shareholder value, Silicon Valley, Vanguard fund, Yom Kippur War, zero-coupon bond
If that seems too extreme a statement, it’s not. Our system can’t survive without affordable energy, and once oil doesn’t fit that bill, we’ll need to find something else that does. We’ll all have to come together on this. Rising oil prices will force the issue. But even then we can’t take for granted that we will get on the right path. We can’t rely on good old-fashioned capitalism and the profit motive to produce solutions, to generate the best technology or create the necessary infrastructure. Private enterprise will play a big role, but it can’t do it all on its own. America’s signal accomplishments during the twentieth century—whether winning wars, building the interstate highway system, or landing a man on the moon—required efforts well beyond the reach of private enterprise. They required intense and massive cooperation between the private and public sectors.
How We Got Here: A Slightly Irreverent History of Technology and Markets by Andy Kessler
Albert Einstein, Andy Kessler, animal electricity, automated trading system, bank run, Big bang: deregulation of the City of London, Bob Noyce, Bretton Woods, British Empire, buttonwood tree, Claude Shannon: information theory, Corn Laws, Douglas Engelbart, Edward Lloyd's coffeehouse, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, Grace Hopper, invention of the steam engine, invention of the telephone, invisible hand, Isaac Newton, Jacquard loom, James Hargreaves, James Watt: steam engine, John von Neumann, joint-stock company, joint-stock limited liability company, Joseph-Marie Jacquard, Kickstarter, Leonard Kleinrock, Marc Andreessen, Maui Hawaii, Menlo Park, Metcalfe's law, Metcalfe’s law, Mitch Kapor, packet switching, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, railway mania, RAND corporation, Robert Metcalfe, Silicon Valley, Small Order Execution System, South Sea Bubble, spice trade, spinning jenny, Steve Jobs, supply-chain management, supply-chain management software, trade route, transatlantic slave trade, tulip mania, Turing machine, Turing test, undersea cable, William Shockley: the traitorous eight
A director named John Blunt, who had written the company’s original charter, took over. By 1719, Blunt noted that Parliament was struggling under about 30 million pounds of debt. Blunt offered to exchange debt for shares again. But this time, it would not be at par or its original value or true net worth, but at the value that South Sea shares were trading. This made it ripe for manipulation. In fact, the only true profit motive for the South Sea Company would soon become CAPTIAL MARKETS AND BUBBLES 69 driving its stock price up over par and then exchanging it for debt, the profit being the difference between the stock’s value and par. These profits would then be “reported” to investors, which would drive the stock higher. Circular and dangerously wrong reasoning. Enron would pull this scam almost 300 years later.
Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler
23andMe, Andy Kessler, bank run, barriers to entry, Berlin Wall, Bob Noyce, British Empire, business cycle, business process, California gold rush, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, commoditize, computer age, creative destruction, disintermediation