rent-seeking

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The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality by Brink Lindsey

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Labor unions have often been able to increase the wages and job security of their members above what a competitive market would provide, with costs passed on to consumers. But most union members are, at best, middle class. Our cases feature dynamics that are very distinct from the rent-seeking of taxi drivers and union members. Bluntly put, class matters in the politics of rent-seeking. Class influences rent-seeking through the absence of organizational interest in counteracting its effects. The wealthy have invested in fighting some forms of rent-seeking, as evidenced by the environmental and school reform movements. Given the enormous philanthropic investment in nonprofit policy activity, by contrast, it is quite striking how little money has gone into the areas under investigation in this book.

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Around the globe, bigger governments actually seem to do better in controlling corruption and clientelism than smaller ones.15 Beating back rent-seeking here in the United States will sometimes require increasing the size of government; in particular, we will need to increase its analytical capacity and develop forms of government activity that cost taxpayers more up front but that are less susceptible to rent-seeking than those we have today. Yes, rent-seeking is endemic to government, as all human institutions are flawed and subject to principal-agent problems. But some nations—and some states and localities within this country—control those problems much better than others, and their example demonstrates that real improvement is possible.

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It is not necessary that America’s large foundations become convinced of the problem of rent-seeking overall. They must only recognize it in their chosen domain of action. The sheer heterogeneity of America’s wealthy is one of the reasons the idea of greater philanthropic attacks on rent-seeking is not a pipe dream. The large fortunes reaped in finance, for instance, do not need to be targeted at the source of philanthropists’ own wealth, so long as they are turned against the rents of record companies, pharmaceutical firms, doctors, and lawyers. Philanthropists need to be willing to invest patiently in anti-rent-seeking efforts in precisely the way their counterparts in the environmental and school reform movements did.

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

affirmative action, Affordable Care Act / Obamacare, airline deregulation, Alan Greenspan, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, electricity market, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, Great Leap Forward, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Bogle, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low interest rates, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, Paul Volcker talking about ATMs, payday loans, Phillips curve, price stability, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, search costs, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, Tragedy of the Commons, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

But instead of these market forces and politics balancing each other out, with the political process dampening the increase in inequality in periods when market forces might have led to growing disparities, instead of government tempering the excesses of the market, in America today the two have been working together to increase income and wealth disparities. RENT SEEKING Earlier, we labeled as rent seeking many of the ways by which our current political process helps the rich at the expense of the rest of us. Rent seeking takes many forms: hidden and open transfers and subsidies from the government, laws that make the marketplace less competitive, lax enforcement of existing competition laws, and statutes that allow corporations to take advantage of others or to pass costs on to the rest of society.

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It’s not hard to become wealthy if the government sells you for $500 million a mine that’s worth $1 billion. Another form of rent seeking is the flip side: selling to government products at above market prices (noncompetitive procurement). The drug companies and military contractors excel in this form of rent seeking. Open government subsidies (as in agriculture) or hidden subsidies (trade restrictions that reduce competition or subsidies hidden in the tax system) are other ways of getting rents from the public. Not all rent seeking uses government to extract money from ordinary citizens. The private sector can excel on its own, extracting rents from the public, for instance, through monopolistic practices and exploiting those who are less informed and educated, exemplified by the banks’ predatory lending.

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All told, more than $3.2 billion was spent on lobbying in 2011 alone.25 The main distortion is to our political system; the main loser, our democracy. But often rent seeking involves a real waste of resources that lowers the country’s productivity and well-being. It distorts resource allocations and makes the economy weaker. A byproduct of efforts directed toward getting a larger share of the pie is shrinkage of the pie. Monopoly power and preferential tax treatment for special interests have exactly this effect.26 The magnitude of “rent seeking” and the associated distortions in our economy, while hard to quantify precisely, are clearly enormous. Individuals and corporations that excel at rent seeking are amply rewarded. They may garner immense profits for their firms.

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

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Finally, the age of globalization has brought one more twist to the story of rent-seeking and how it has helped to create the super-elite: like so much else, rent-seeking has now gone global. That’s not entirely a new story—multinationals have long paid bribes to secure contracts abroad, and some of the most lucrative examples of historic rent-seeking have involved overseas concessions, like the East India Company’s right to trade in India granted by the British Crown, or the Hudson’s Bay Company’s rights to the Canadian fur trade. But the international ripple effect of rent-seeking is today even more extensive. A fortune created by rent-seeking in one country can have a powerful effect thousands of miles away.

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One of the key recommendations was that the United States shift to the British “light touch” regulatory philosophy. As rent-seeking wealth spills across borders from the country where it was granted to other parts of the world, as rent-seeking plutocrats do deals with one another, and as economic rules go global, the question Professor Rajan asked of the Bombay Chamber of Commerce may need to be adjusted. He asked his Indian audience if their country was at risk of political capture by rent-seeking national oligarchs. An equal, and probably greater, danger is the rise of an international rent-seeking global oligarchy. SIX PLUTOCRATS AND THE REST OF US If you really wanted to examine percentage-wise who was hurt the most on their income, it was Wall Street brokers.

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It is quite another for multimillion-dollar compensation to be paid to bankers whose institutions were bailed out by taxpayer trillions, or private equity fund managers who pay 15 percent tax on most of their earnings, or for the CEOs of multinational companies to take home higher paychecks than their billion-dollar firms pay in tax in the United States. — That’s why today rent-seeking is a favorite theme for the left. But as a field of formal study, rent-seeking was most energetically elaborated by economists on the right: it is, after all, the product of state control and distribution of wealth, something the right has been in the business of trying to decrease. And as inequality rises in twenty-first-century America, some on the right have returned to the idea that the central economic ill is rent-seeking. Speaking about “The American Idea” at the Heritage Foundation in the fall of 2011, Paul Ryan, the wonkish Wisconsin congressman, argued that, rather than raise taxes on individuals, we should “lower the amount of government spending the wealthy now receive.”

The Great Divide: Unequal Societies and What We Can Do About Them by Joseph E. Stiglitz

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The crisis showed how it could wreak havoc on the economy. In a rent-seeking economy such as ours has become, private returns and social returns are badly out of whack. In their simplest form, rents are nothing more than redistributions from one part of society to the rent seekers. Much of the inequality in our economy has been the result of rent seeking, because, to a significant degree, rent seeking redistributes money from those at the bottom to those at the top. But there is a broader economic consequence: the fight to acquire rents is at best a zero-sum activity. Rent seeking makes nothing grow. Efforts are directed toward getting a larger share of the pie rather than increasing the size of the pie.

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The magnitude of rent seeking in our economy, while hard to quantify, is clearly enormous. Individuals and corporations that excel at rent seeking are handsomely rewarded. The financial industry, which now largely functions as a market in speculation rather than a tool for promoting true economic productivity, is the rent-seeking sector par excellence. Rent seeking goes beyond speculation. The financial sector also gets rents out of its domination of the means of payment—the exorbitant credit and debit card fees and also the less well-known fees charged to merchants and passed on, eventually, to consumers. The money it siphons from poor and middle-class Americans through predatory lending practices can be thought of as rents.

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Efforts are directed toward getting a larger share of the pie rather than increasing the size of the pie. But it’s worse than that: rent seeking distorts resource allocations and makes the economy weaker. It is a centripetal force: the rewards of rent seeking become so outsize that more and more energy is directed toward it, at the expense of everything else. Countries rich in natural resources are infamous for rent-seeking activities. It’s far easier to get rich in these places by getting access to resources at favorable terms than by producing goods or services that benefit people and increase productivity. That’s why these economies have done so badly, in spite of their seeming wealth.

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

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The Economist has constructed an index of crony capitalism based on the wealth of billionaires in sectors such as casinos, oil and construction where, in its view, there is ample scope for rent seeking through cosy relations with government.2 It claims that rent seeking is worse in emerging-market economies, which account for two-thirds of ‘crony wealth’, with Russia heading the 2016 rankings of twenty-two countries. Britain, at fourteenth, comes top among industrialised economies, followed by the USA at sixteenth. However, the index does not include technology industries or much of finance as rent-seeking sectors, despite their lobbying power. In 2014 The Economist suggested that crony capitalism had peaked, but in 2016 it acknowledged that there was still reason to worry.

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Including hedge-fund billionaires and other financiers would double the crony wealth share of total US billionaire wealth from 14 per cent to 28 per cent. Including the youthful billionaires of Silicon Valley would push it up even more. As The Economist admitted, ‘If technology were to be classified as a crony industry, rent-seeking wealth would be higher and rising steadily in the Western world.’ Moreover, The Economist’s narrow definition substantially understates crony capitalism. Its examples of rent seeking were ‘forming cartels’ and ‘lobbying for rules that benefit a firm at the expense of competitors and customers’. It thus omitted the most insidious way in which crony capitalism is extending its grip: political manipulation by the plutocracy and elite, who are funding politicians and political parties to favour the interest of rentiers (see Chapter 7).

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Given the spread of intellectual property rules, development of the global capital-risk insurance system and the rent-seeking abilities of the plutocracy in crony capitalism, the existing situation is probably the most unfree market system in history. There has been a commodification of ideas, knowledge and information. While Paul Mason has interpreted the abundance of information as indicative of ‘postcapitalism’,52 the reality is actually a deepening penetration of capitalist logic and rules, in which rent seeking has been legitimised and strengthened by new global institutions and structures. Use of the word post-capitalism is revealing, as any word beginning with that prefix suggests a lack of direction.

Deaths of Despair and the Future of Capitalism by Anne Case, Angus Deaton

Affordable Care Act / Obamacare, basic income, Bertrand Russell: In Praise of Idleness, Boeing 737 MAX, business cycle, call centre, collapse of Lehman Brothers, collective bargaining, company town, Corn Laws, corporate governance, correlation coefficient, crack epidemic, creative destruction, crony capitalism, declining real wages, deindustrialization, demographic transition, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Elon Musk, falling living standards, Fellow of the Royal Society, financial engineering, fulfillment center, germ theory of disease, income inequality, Jeff Bezos, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, labor-force participation, Les Trente Glorieuses, low skilled workers, Martin Wolf, meritocracy, Mikhail Gorbachev, obamacare, opioid epidemic / opioid crisis, pensions crisis, pill mill, randomized controlled trial, refrigerator car, rent-seeking, risk tolerance, shareholder value, Silicon Valley, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Tyler Cowen, universal basic income, working-age population, zero-sum game

After 1815, the notorious Corn Laws kept out imports of wheat until the local price was so high that people were at risk of starving; high prices of wheat, even if they hurt ordinary people, were very much in the interests of the land-owning aristocracy, who lived off the rents supported by the restriction on imports—rent-seeking of the classic and here literal kind, and rent-seeking that did not stop at killing people; laws that were “written in blood.” The Industrial Revolution had begun, there was a ferment of innovation and invention, and national income was rising. Yet working people were not benefiting. Mortality rates rose as people moved from the relatively healthy countryside to stinking, unsanitary cities.

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But as we saw in chapter 14, it is not only globalization and the technology-infused labor market that are working against less educated workers. The exorbitant price of health insurance has caused firms to shed workers; this is not a natural disaster but rather one based on rent-seeking, politically protected profiteering, and weak enforcement of antitrust in the healthcare sector. Anticompetitive and rent-seeking behavior is not confined to healthcare. Mergers of firms can give employers power to set wages and working conditions in local markets. Large corporations can potentially use market power to raise prices. Such anticompetitive behavior hurts consumers, who face higher prices, and workers, who get hurt twice over, through lower wages and higher prices when they spend those wages.

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That is why we are not disturbed by inequality in and of itself, but very concerned with the inequality that comes about through theft and rent-seeking, or through the involuntary upward redistribution that we have described throughout this book. To be clear, we are not denying that inequality can sometimes have consequences that undermine other important social goals—for example, if the rich use their wealth to corrupt democracy, or to agitate against public goods on which most people depend. But we are against the high marginal rates on top incomes that result from prioritarian calculations. Instead, we prefer to fight rent-seeking directly, which, if successful, will do much to reduce inequality.

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

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

Indeed, even after their patent expired, Boulton and Watt were able to maintain a substantial premium over the market by virtue of having been first, despite the fact that their competitors had had thirty years to learn how to make steam engines. The wasteful effort to suppress competition and obtain special privileges is referred to by economists as rent-seeking behavior. History and common sense show it to be a poisoned fruit of legal monopoly. Watt’s attempt to P1: KNP head margin: 1/2 gutter margin: 7/8 CUUS245-01 cuus245 978 0 521 87928 6 April 29, 2008 17:24 4 Against Intellectual Monopoly extend the duration of his 1769 patent is an especially egregious example of rent seeking: the patent extension was clearly unnecessary to provide incentive for the original invention, which had already taken place. On top of this, we see Watt using patents as a tool to suppress innovation by his competitors, such as Hornblower, Wasborough, and others.

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By way of contrast, 51 percent argue that trade secrecy is effective.23 Although in the simplest case patent law does not have an impact on trade secrecy, in cases where it is possible to expend real resources to make secrets less accessible, the innovator faces a real trade-off between private rent seeking through secrecy and public rent seeking through patents. This is true also in the case of copyright, as publicly enforced copyright is potentially an alternative to socially undesirable methods such as encryption and digital rights management that are designed to limit reproduction. There is a small literature in economics on this trade-off.24 One issue is how information that changes rival firm beliefs may work to the advantage of the firm releasing the information.

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Monopolies innovate as little as possible and only when forced to; in general, they would rather spend time seeking rents via political protection while trying to sell at a high price their old refurbished products to the powerless consumers, via massive doses of advertising: “[Pharmaceutical] Companies today have found that the return on investment for legal tactics is a lot higher than the return on investment for R&D,” says Sharon Levine, the associate executive director of the HMO Kaiser Permanente. “Consumers today are paying an inordinate premium under the guise of the creating the stream of innovation in the future. But it’s actually funding lawyers.”37 Economists call this socially inefficient rent seeking. It is ugly, but the polite academic jargon rent seeking means “corruption” and all that comes with it. We have already mentioned the music industry, where corruption has become the standard marketing practice, as exemplified by the sorry story of payola. In industries that are highly monopolized and in which the returns from capturing the main distribution and information channels are enormous, the temptation to bend and then break the rules is too strong to resist, as public choice theory and economic common sense suggest.

The Future of Capitalism: Facing the New Anxieties by Paul Collier

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Airbnb, An Inconvenient Truth, assortative mating, bank run, Bear Stearns, behavioural economics, Berlin Wall, Bernie Sanders, bitcoin, Bob Geldof, bonus culture, business cycle, call centre, central bank independence, centre right, commodity super cycle, computerized trading, corporate governance, creative destruction, cuban missile crisis, David Brooks, delayed gratification, deskilling, Donald Trump, eurozone crisis, fake news, financial deregulation, full employment, George Akerlof, Goldman Sachs: Vampire Squid, greed is good, income inequality, industrial cluster, information asymmetry, intangible asset, Jean Tirole, Jeremy Corbyn, job satisfaction, John Perry Barlow, Joseph Schumpeter, knowledge economy, late capitalism, loss aversion, Mark Zuckerberg, minimum wage unemployment, moral hazard, negative equity, New Urbanism, Northern Rock, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, race to the bottom, rent control, rent-seeking, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, shareholder value, Silicon Valley, Silicon Valley ideology, sovereign wealth fund, The Wealth of Nations by Adam Smith, theory of mind, too big to fail, trade liberalization, urban planning, web of trust, zero-sum game

For this we need another handy economic concept – rent-seeking. Rent-seeking is a menace; here is an example. Suppose that a legislature passes a law that grants a monopoly to a group of producers. Why did the legislature do such a thing? Because the legislators were lobbied and coaxed with rewards. The regulation generated rents; the lobbying was rent-seeking. The distinguished economist Anne Krueger showed that lobbying, and other rent-seeking, will increase up to the point at which one extra dollar spent on it yields one extra dollar of rent. The resources devoted to rent-seeking are a total waste. The gains from agglomeration are rents: so, do they attract rent-seeking?

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Or they squeeze their need for housing by delaying marriage, or delaying children. Each of these is a form of rent-seeking. Behaviour gets distorted in the competition to capture the lucrative rents of agglomeration. The rent-seeking does not increase the overall size of the pie, it just inflicts a collective loss of well-being upon mid-career people scrambling against each other. Potentially, these losses from rent-seeking are massive. By taxing the gains of agglomeration, we reduce the pressure for rent-seeking. Getting that job in the metropolis would still be worth doing, but since it would be less lucrative, people are less likely to be driven to extreme measures.

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The gains from agglomeration are rents: so, do they attract rent-seeking? Economists have never posed that question and there is a simple reason for their neglect. If the Henry George Theorem is right and the gains accrue only to landowners, then there is no scope for rent-seeking. Land is in fixed supply and so not amenable to lobbying or any other action. But the Henry George Theorem is wrong. In a metropolis, most of the gains of agglomeration accrue to those people with high skills and little need for housing. Suddenly, many opportunities for rent-seeking open up. People elbow their way into jobs by lobbying well-connected relatives; they pay tutors for the extra study that gets them more credentials; they go to hundreds of interviews.

Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

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Obvious ways to increase rental payments include the development of economies of scale, the creation of barriers to entry which keep competitors out, becoming a Hollywood superstar, friendly government regulation (otherwise known as protectionism), military action, bribery, racism in its many forms and slavery. Apart from Hollywood, these examples suggest that nation states have strong incentives to collude with commercial interests. Rent-seeking is not confined to the private sector alone. In modern-day parlance, we might call linkages between governments and commercial interests ‘state capitalism’. Western governments have used the methods of state capitalism for hundreds of years in their bid to shape the world around them. Indeed, rent-seeking behaviour was, over the centuries, closely linked to colonization. The discovery and exploitation of lands and peoples offered an abundance of raw materials and cheap labour designed to furnish Western economic tastes.

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(i) healthcare (i), (ii), (iii), (iv), (v), (vi), (vii) hedge funds (i), (ii), (iii) Hertz, Noreena (i) Hitler, Adolf (i) Hobbes, Thomas (i) Home Office (i) Hong Kong (i) ‘hot money’ inflows (i) housing market anarchy in capital markets (i), (ii) capital controls (i) population ageing (i) price stability (i), (ii), (iii), (iv) savings (i) trade (i) human capital theory (i) human ingenuity argument (i), (ii) Hume, David (i), (ii) Hungary (i) hunt for yield (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Huntingdon, Samuel (i) Hutton, Will (i), (ii) hyperinflation (i), (ii) IFS see Institute for Fiscal Studies IMF see International Monetary Fund immigration economic integration, political proliferation (i) nationalism (i) number of migrants to US (i) political economy and inequalities (i), (ii), (iii) population demographics (i) Spain and silver (i) Immigration Act (i), (ii) Immigration and Naturalization Act (1965) (i), (ii), (iii), (iv) imperialism (i), (ii), (iii), (iv), (v) imports (i), (ii), (iii), (iv), (v), (vi) income inequality globalization (i), (ii) political economy and inequalities (i) education (i) the emerging gap (i) emerging nations and income inequality in the developed world (i) food shortages (i) globalization (i) living with inequality (i) new modes of redistribution (i) not getting just rewards (i) a three-country model (i) too much domesticity (i) United Kingdom (i) winners and losers (i) price stability and economic instability (i) resource scarcity (i) state capitalism (i), (ii) Western progress (i), (ii), (iii) the West’s diminished status (i) income per capita argument (i) incomes China (i), (ii), (iii), (iv) political economy and inequalities (i), (ii) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi) rent-seeking behaviour (i) scarcity (i), (ii), (iii), (iv) trade (i), (ii), (iii), (iv) India anarchy in capital markets (i), (ii) Islam (i) political economy and inequalities (i), (ii), (iii), (iv), (v), (vi), (vii) population demographics (i), (ii), (iii) price stability and economic instability (i) rent-seeking behaviour (i) scarcity (i), (ii), (iii), (iv) state capitalism (i), (ii), (iii) trade (i), (ii), (iii), (iv), (v) the West’s diminished status (i), (ii), (iii), (iv), (v) Indonesia (i), (ii), (iii) Industrial and Commercial Bank of China Ltd (ICBC) (i) Industrial Revolution (i), (ii), (iii), (iv), (v), (vi) infant mortality rate (i), (ii), (iii) inflation anarchy in capital markets (i) economic integration, political proliferation (i) indulging the US no more (i), (ii) political economy and inequalities (i), (ii) population demographics (i), (ii), (iii) price stability and economic instability (i) back to the 1970s (i) defining and controlling inflation (i) emerging economies (i), (ii) inflation as an instrument of income and wealth distribution (i) inflation as a result of currency linkages (i) overview (i), (ii), (iii) from stability to instability (i) we are not alone (i) resource scarcity (i) state capitalism (i), (ii) trade (i), (ii) the West’s diminished status (i), (ii), (iii) information technology (i), (ii) Institute for Fiscal Studies (IFS) (i), (ii) interest rates anarchy in capital markets (i), (ii), (iii), (iv), (v), (vi) globalization (i) indulging the US no more (i), (ii) price stability and economic instability (i), (ii), (iii), (iv), (v), (vi), (vii) savings (i) state capitalism (i), (ii), (iii) trade (i) the West’s diminished status (i), (ii) International Monetary Fund (IMF) (i), (ii), (iii), (iv), (v), (vi) International Olympic Committee (i), (ii) Internet (i) investment anarchy in capital markets (i), (ii), (iii), (iv), (v), (vi) capital flows and nation states (i), (ii) economic integration, political proliferation (i) nineteenth century (i) political economy and inequalities (i) population demographics (i), (ii), (iii) price stability and economic instability (i) protectionism (i) resource scarcity (i) state capitalism (i) trade (i), (ii), (iii) investment banks (i), (ii) ‘invisible hand’ (i), (ii), (iii), (iv), (v), (vi) Iran (i), (ii), (iii), (iv), (v) Iraq (i), (ii), (iii) Ireland (i), (ii) Islam (i), (ii), (iii) Isutani, Minoru (i) Italy (i), (ii), (iii), (iv), (v), (vi), (vii), (viii) Izvolsky, Count Alexander (i) Japan anarchy in capital markets (i), (ii), (iii), (iv) political economy and inequalities (i), (ii), (iii), (iv), (v) population demographics (i), (ii), (iii), (iv), (v), (vi), (vii) price stability and economic instability (i), (ii) scarcity (i), (ii) secrets of Western success (i), (ii) state capitalism (i), (ii), (iii), (iv) trade (i), (ii), (iii) US trade deficit (i) the West’s diminished status (i), (ii), (iii), (iv), (v) Jay, Peter (i) Jefferson, Thomas (i) jet airline industry (i) Jewish populations (i), (ii), (iii) Jin Mao Tower (i) Jones, Francis (i) Judt, Tony (i) junk bonds (i), (ii) juntas (i) Kamin, Steven B.

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CHAPTER TWO THE SECRETS OF WESTERN SUCCESS The Western world’s economic development over the last five hundred years was not the result of productivity gains or market forces alone. Western nations became wealthier because they were increasingly able to rig the global economy to suit their own aims, using a combination of economic, political and military power. Specifically, they were able to engage in what economists call ‘rent-seeking behaviour’. In very simple terms, those who successfully seek rents are paid above the free market price. Most of us are rent seekers. We like to be paid more even if there has been no rise in demand for our services or increase in our efforts. For the successful rent seeker, the Malthusian constraint can be removed even while others are still suffering.

State-Building: Governance and World Order in the 21st Century by Francis Fukuyama

Asian financial crisis, behavioural economics, Berlin Wall, Bretton Woods, centre right, corporate governance, demand response, Doha Development Round, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, George Akerlof, Hernando de Soto, information asymmetry, liberal world order, Live Aid, Nick Leeson, Pareto efficiency, Potemkin village, precautionary principle, price stability, principal–agent problem, rent-seeking, road to serfdom, Ronald Coase, structural adjustment programs, Suez crisis 1956, tacit knowledge, technology bubble, The Market for Lemons, The Nature of the Firm, transaction costs, vertical integration, Washington Consensus, Westphalian system

It is common to characterize regimes in sub-Saharan Africa as “neopatrimonial”— that is, with political power used to service a clientelistic network of supporters of the country’s leaders (Joseph 1987; Fatton 1992). In some cases, as with Mobutu Sese Seko of Zaire, neopatrimonial regimes result in what Evans (1989) characterizes as “predatory” behavior, where a large part of society’s resources are stolen by a single individual. In others, it merely amounts to rent-seeking—that is, use of the public sector to reallocate property rights to the benefit of a particular interest—that is directed toward a single family, tribe, region, or ethnic group. As van de Walle (2001) points out, the neopatrimonial regime, usually embodied in the office of the president, exists side-by-side with a Weberian rational bureaucracy, often created in colonial times, that seeks to perform routine public administration tasks.

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Other observers pointed out that it was not presidentialism per se but rather the type of electoral system used in the legislative branch that frequently led to major problems like political gridlock (e.g., the combination of a presidential system with legislative proportional representation that is typical in much of Latin America—see Horowitz 1990; Lijphart 1996; Lardeyret 1996; Cowhey and Haggard 2001). Tendencies toward rent-seeking and pork-barrel politics are encouraged under a number of conditions, such as multimember electoral districts, geographically small constituencies, and open-list proportional representation, though the embedding of patronage in the party system depends heavily on the historical sequencing of franchise expansion and bureaucratic reform (Shefter 1993).

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In the end, the empirical relationship between democracy and development remains complex and ambiguous: It does not support either authoritarian transitions as a general approach to economic reform or democratization as a growth strategy. Barro’s (1997) cross-country survey shows that democracy is positively correlated with growth at low levels of development but then becomes negatively correlated at medium levels of per capita GDP. Patronage and rent-seeking (Turkey, Argentina, Brazil), populism (Venezuela), and corruption (Pakistan under Bhutto and Sharif) all remain democratic vices. It the missing dimensions of stateness 29 is hard to see a clear causal relationship between the wave of democratization that hit sub-Saharan Africa during the 1990s and the continent’s slightly improved economic performance in this period.

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

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

A common critique of contemporary capitalism is that it rewards ‘rent seekers' over true ‘wealth creators'. ‘Rent-seeking' here refers to the attempt to generate income, not by producing anything new but by overcharging above the ‘competitive price', and undercutting competition by exploiting particular advantages (including labour), or, in the case of an industry with large firms, their ability to block other companies from entering that industry, thereby retaining a monopoly advantage. Rent-seeking activity is often described in other ways: the ‘takers' winning out over the ‘makers', and ‘predatory' capitalism winning over ‘productive' capitalism.

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This has essentially created a boundary - the fence in Figure 1 below - thereby establishing a conceptual boundary -sometimes referred to as a ‘production boundary' - between these activities.16 Inside the boundary are the wealth creators. Outside are the beneficiaries of that wealth, who benefit either because they can extract it through rent-seeking activities, as in the case of a monopoly, or because wealth created in the productive area is redistributed to them, for example through modern welfare policies. Rents, as understood by the classical economists, were unearned income and fell squarely outside the production boundary. Profits were instead the returns earned for productive activity inside the boundary.

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The definition of value is always as much about politics, and about particular views on how society ought to be constructed, as it is about narrowly defined economics. Measurements are not neutral: they affect behaviour and vice versa (this is the concept of performativity which we encountered in the Preface). So the point is not to create a stark divide, labelling some activities as productive and categorizing others as unproductive rent-seeking. I believe we must instead be more forthright in linking our understanding of value creation to the way in which activities (whether in the financial sector or the real economy) should be structured, and how this is connected to the distribution of the rewards generated. Only in this way will the current narrative about value creation be subject to greater scrutiny, and statements such as ‘I am a wealth creator' measured against credible ideas about where that wealth comes from.

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

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

Some tangible investment may also generate limited social returns: consider the fiber-optic cables installed by high-frequency trading firms for the sole purpose of shaving fractions of microseconds off trading times (described vividly by John Kay 2016). And not all money spent on rent-seeking generates an intangible investment, at least not in the main methodologies used to measure intangibles. But it does seem that rent-seeking or zero-sum investments are more common among intangible investments than among tangibles. This could have a bearing on investment and productivity figures. It is possible that the increase in intangible investment is concealing a rise in rent-seeking investments that do not increase GDP. This would not explain the fall-off in investment that has been observed in the economy, but it would help explain the fall-off in productivity and in TFP.

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So for any given level of intangible investment, output would be lower, and TFP would fall. This risk provides a good reason for policymakers to guard against rent-seeking in an increasingly intangible economy. There is also the possibility that the rise of intangible investment may be encouraging more rent-seeking, which may be increasing the gap between leaders and laggards that we discussed earlier. A paper by James Bessen specifically asks whether the gap between leaders and laggards among US nonfinancial businesses has been caused by increasing intangible investment or by greater rent-seeking by leading firms. Bessen looks at the relationship between regulation in industries (measured by an index of regulation and by political lobbying expenditures) and the valuations of public companies.

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An optimistic interpretation of this is that the legal and institutional structures behind a transformation to an intangible-intensive economy are being worked out and that until they are, there will be a disproportionate incentive for firms to spend more on rent-seeking relating to intangible investment. For example, as spillovers and scale effects become more important, existing tax and competition and IP rules get tested to destruction, requiring lobbying, legal arguments, and institutional reboots. This adjustment to a new type of economy will need a lot of spending by firms and governments that is not immediately productive. Thus a given dollar of business intangible spending has less productivity-raising effect. A more troubling interpretation is that these types of rent-seeking are linked to the inherent characteristics of intangibles, in particular their contestedness: this would imply that TFP growth will continue to be low until governments learn to do a much better job of preventing rent-seeking and designing the institutions an intangible economy needs.

Rentier Capitalism: Who Owns the Economy, and Who Pays for It? by Brett Christophers

"World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Amazon Web Services, barriers to entry, Big bang: deregulation of the City of London, Big Tech, book value, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, business process, business process outsourcing, Buy land – they’re not making it any more, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cloud computing, collective bargaining, congestion charging, corporate governance, data is not the new oil, David Graeber, DeepMind, deindustrialization, Diane Coyle, digital capitalism, disintermediation, diversification, diversified portfolio, Donald Trump, Downton Abbey, electricity market, Etonian, European colonialism, financial deregulation, financial innovation, financial intermediation, G4S, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, greed is good, green new deal, haute couture, high net worth, housing crisis, income inequality, independent contractor, intangible asset, Internet of things, Jeff Bezos, Jeremy Corbyn, Joseph Schumpeter, Kickstarter, land bank, land reform, land value tax, light touch regulation, low interest rates, Lyft, manufacturing employment, market clearing, Martin Wolf, means of production, moral hazard, mortgage debt, Network effects, new economy, North Sea oil, offshore financial centre, oil shale / tar sands, oil shock, patent troll, pattern recognition, peak oil, Piper Alpha, post-Fordism, post-war consensus, precariat, price discrimination, price mechanism, profit maximization, proprietary trading, quantitative easing, race to the bottom, remunicipalization, rent control, rent gap, rent-seeking, ride hailing / ride sharing, Right to Buy, risk free rate, Ronald Coase, Rutger Bregman, sharing economy, short selling, Silicon Valley, software patent, subscription business, surveillance capitalism, TaskRabbit, tech bro, The Nature of the Firm, transaction costs, Uber for X, uber lyft, vertical integration, very high income, wage slave, We are all Keynesians now, wealth creators, winner-take-all economy, working-age population, yield curve, you are the product

What Marx did not anticipate, writes David Harvey, was that new forms of capitalist rent might also evolve within the evolutionary structures of capitalism and that rent-seeking might go well beyond that which he found both necessary and functional as well as politically tolerable for a mature form of capitalist development. Rent-seeking through speculation in land markets and resource endowments (like oil wells) is bad enough. But what are we to make of rent-seeking through ownership of intellectual property rights? These are the types of questions that contemporary analysts of rent are asking, as the rentier’s terrain has widened to incorporate, in Harvey’s words, ‘asset markets of all sorts’.7 In fact, there is one important type of asset that Harvey – who defines rent in this broadened sense as ‘a return to the monopoly power of private ownership of some crucial asset’ – excludes from his treatment of rentierism: financial assets.8 Like Marx, Harvey regards rent (earned by rentiers) and interest (earned by finance capital) as categorically different from one another.

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Precisely because rights are now so strong and so well enforced, they encourage instead what is often referred to as ‘rent-seeking’. Rent-seeking is a tricky concept to operationalize in a book all about rent. Are not all rentiers rent-seekers, by definition? That is certainly one possible interpretation. Nonetheless, if ‘rent’ as defined in this book encompasses all types of income derived from the control of scarce assets under conditions of limited competition, then rent-seeking, as I understand it, entails a particular mode of rentierism: investing time and money more in sweating existing rent-generating assets than in carrying out the research and development necessary to create new ones.

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But some display it much more emphatically than others, not least, in recent times, IP rentiers. The current, expansionist system of IP rights is clearly partly responsible. That that system promotes rent-seeking is the crux of Stiglitz’s argument against it: ‘Research is often directed not at producing new products but at extending, broadening and leveraging the monopoly power granted through the [existing] patent’.84 Indeed, Stiglitz believes that the current IP system is configured precisely with the purpose of generating rent-seeking opportunities. In his view, the utilitarian justification invariably given for robust IP protection is nothing more than a sham: ‘The IP standards advanced countries favour typically are designed not to maximise innovation and scientific progress, but to maximise the profits of big pharmaceutical companies and others.’85 Whether or not this conspiratorial reading is correct, what is clear is that, with the monopoly powers conferred by IP rights now being so robust, rent-seeking is incentivized and widely pursued.

The Plundered Planet: Why We Must--And How We Can--Manage Nature for Global Prosperity by Paul Collier

agricultural Revolution, Berlin Wall, business climate, carbon tax, Doha Development Round, energy security, food miles, G4S, Global Witness, information asymmetry, Kenneth Arrow, megacity, new economy, offshore financial centre, oil shock, price elasticity of demand, profit maximization, rent-seeking, Ronald Coase, Scramble for Africa, search costs, sovereign wealth fund, stem cell, Stewart Brand, Tragedy of the Commons

In this society physical control of the asset is all that matters. This gives rise to three problems: mal-distribution, rent-seeking, and uncertainty. Mal-distribution comes about partly because the strong are advantaged over the weak, but it is compounded by chance: some territories are better endowed than others. If we imagine the population distinguished in the two dimensions of strength and luck, the natural assets are acquired disproportionately by those who are lucky and strong. “Rent-seeking” is the technical term for ways, including violence, to acquire ownership. Basic economics predicts that the value of natural assets, which technically are unearned “rents,” will be matched by the efforts to “seek” those rents, so that the potential social value of natural assets will be dissipated by the costs incurred.

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If the government publicly decides to make a quantum leap in investment the outcome could be even worse than that. The political special-interest lobby groups that try to capture public spending are alerted that there is more money on the table and so exert themselves, through legitimate and illegitimate means. The resources burned up in such lobbying contests are called “rent-seeking.” If rent-seeking is frustrated by checks and balances such as veto points, the lobbies may try to dismantle them. Nuhu’s departure for Oxford was induced by effective lobbying, and dismantled one important check. Michael Ross, a political scientist from UCLA, aptly terms this higher-order destructiveness “rent-seizing.”

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For example, a country might argue that it should have rights to emit carbon based on the carbon it was emitting when the cap was imposed. Or the right to emit as much carbon as some other country. Or because it is poor. Or because it did not emit any of the carbon that caused the problem. Rent-seeking over carbon rights can occur both nationally and internationally. At the national level it is already apparent in the U.S. Congress. Potentially, the assignment of carbon rights could make the huge rent-seeking machine that is the American agricultural lobby look like a side-show. Internationally, the scope for scams may well be even larger. Firms that want to continue emitting carbon simply need to purchase a piece of paper certifying that some firm somewhere elsewhere is emitting correspondingly less carbon than it otherwise would have done.

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis by Tim Lee, Jamie Lee, Kevin Coldiron

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, backtesting, bank run, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, currency risk, debt deflation, disinformation, distributed ledger, diversification, financial engineering, financial intermediation, Flash crash, global reserve currency, implied volatility, income inequality, inflation targeting, junk bonds, labor-force participation, Long Term Capital Management, low interest rates, Lyft, margin call, market bubble, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, negative equity, Network effects, Ponzi scheme, proprietary trading, public intellectual, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, rising living standards, risk free rate, risk/return, sharing economy, short selling, short squeeze, sovereign wealth fund, stock buybacks, tail risk, TikTok, Uber and Lyft, uber lyft, yield curve

Fundamentally, therefore, in some sense carry is its own antithesis. Carry as Rent-Seeking The notion of carry as fundamentally being about power and control of resources calls to mind the economic concept of rent-seeking. Wikipedia defines rent-seeking as extracting an income “by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity.” Rent-seeking is usually thought about in terms of an industry group or interest group lobbying politicians in order to secure monopoly power.

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It can be understood at an even more fundamental level, beyond merely financial markets, which we will touch on later in this book. In its more limited form, carry can be a motor, or at least a lubricant, for progress. The problem occurs when carry comes to dominate over other market behaviors or forces, in which case it can begin to manifest in forms that could be considered rent-seeking or even corruption or infringement of liberties. In financial carry trades, on the one side are those who could ultimately be desperate for liquidity, and on the other side are those—the carry traders—who are the suppliers of that liquidity. This can be perceived as an economic relationship, but in a broader context it could also be understood as a power relationship.

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If the central bank succeeds in resurrecting the carry bubble, and hence broadening the carry regime further—as central banks finally did in 2009—then the illusion of central bank power can be restored, probably to an even greater extent than before. But really, more than being in control of it, the central bank is merely a captive of the carry regime; it is the vehicle for the broadening and extension of the carry regime and the rent-seeking opportunities that the regime ultimately permits. What this chapter has explained is that the carry regime is fundamentally deflationary in nature, but it has the effect of broadening the scope of money to encompass financial instruments that are not normally considered to be money, at least during the carry bubble phases.

People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, AlphaGo, antiwork, barriers to entry, basic income, battle of ideas, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Big Tech, business cycle, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carried interest, central bank independence, clean water, collective bargaining, company town, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, DeepMind, deglobalization, deindustrialization, disinformation, disintermediation, diversified portfolio, Donald Trump, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, fake news, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, Glass-Steagall Act, global macro, global supply chain, greed is good, green new deal, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low interest rates, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, opioid epidemic / opioid crisis, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, search costs, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Bannon, Steve Jobs, surveillance capitalism, TED Talk, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population, Yochai Benkler

This is nothing more than a redistribution of income; it does not increase the nation’s overall wealth. The technical term in economics is “rent”—rent-seeking is associated with attempting to get a large share of the nation’s economic pie, in contrast with wealth creation, which strives to increase the size of the pie. Policymakers should zero in on any market in which there are excessive rents because they are a sign that the economy could perform more efficiently: the exploitation inherent in excessive rents actually weakens the economy. A successful fight against rent-seeking results in redirecting resources into wealth creation. Fourth, a less divided society, an economy with more equality, performs better.

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Thus, at best, rents are unhelpful to growth and efficiency, at worst harmful. They can be harmful because they distort the economy, because they “crowd out” the kinds of “good” economic activity that is the basis of true wealth creation. We naturally describe the pursuit of higher incomes through acquiring more rents as rent-seeking. If talented individuals in society are attracted to rent-seeking—whether making more money through the exertion of monopoly power or scamming others in the financial sector or enticing them into gambling or other nefarious activities—then fewer talented individuals will be engaged in basic research, providing goods and services that individuals really want and need, and other activities that increase the real wealth of the nation.

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It combines taking down impediments to growth and equality, such as those posed by corporations with excessive market power, and restoring balance, for instance, giving more bargaining power to workers. It entails providing more support for basic research and more encouragement to the private sector to engage in wealth creation rather than rent-seeking. The economy, of course, is a means to an end, not an end in itself. And the middle-class life that seemed a birthright of Americans in the years after World War II seems to be slipping out of the reach of a large swath of the country. We are a far richer country now than we were then. We can afford to ensure that this life is attainable for the vast majority of our citizens.

Why We Can't Afford the Rich by Andrew Sayer

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, Anthropocene, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, biodiversity loss, bond market vigilante , Boris Johnson, Bretton Woods, British Empire, Bullingdon Club, business cycle, call centre, capital controls, carbon footprint, carbon tax, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, degrowth, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, green new deal, high net worth, high-speed rail, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Dyson, job automation, Julian Assange, junk bonds, Kickstarter, labour market flexibility, laissez-faire capitalism, land bank, land value tax, long term incentive plan, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, plutocrats, popular capitalism, predatory finance, price stability, proprietary trading, pushing on a string, quantitative easing, race to the bottom, rent-seeking, retail therapy, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, tacit knowledge, TED Talk, The Nature of the Firm, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, WikiLeaks, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

There are intermediate cases too of ‘soft power’ where goods are provided, but as a means of getting rent: social networking sites provide users with ways of keeping in contact with people but their income is mainly economic rent from letting out advertising space. Businesses can compete not only by providing better products more cheaply but by ‘rent-seeking’, that is, seeking control of assets and resources that can be used to extract rent from users. Joseph Stiglitz, former Chief Economist at the World Bank, claims that the return of the rich is largely the result of a massive growth in rent-seeking, particularly in the financial sector. He argues that this not only transfers income from one group to another, but has a negative effect on the economy because it diverts resources from productive uses that create wealth, to mere wealth extraction.22 Instead of being reinvested in production, the money is merely siphoned off to the unproductive rentier.

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116 Actually, some of them would also have been active rentiers when they were awake, working to find more sources of rent, interest and capital gains. But the question remains: how can income in the form of salary for work be ‘unearned’? It can if the work involves extracting unearned income through rent-seeking, interest-charging or any of the other methods covered in this book. ‘Even today’s rent-seeking plutocrats work for a living – Carlos Slim or the Russian oligarchs owe their fortunes to rents they’ve captured themselves, not to estates conquered by distant ancestors,’ writes Chrystia Freeland.117 Remembering the definitions in Chapter Three of earned income as conditional on producing goods and services (‘use-values’), and unearned income as derived from control of existing assets that others lack but need, then the salary earned – or rather received – by someone whose work consists of extracting rent or interest and getting control of new sources belongs to the second category.

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But once they were privatised – and this first happened during a period in which top rates of tax fell to 40% in the UK – the rich could pay what to them were trifling sums for their services, while the rest had to pay dearly.26 Politicians may wring their hands when privatised suppliers push their prices up far above inflation, but it’s also out of their hands. But there’s another new area in which rent-seeking is advancing. ‘Intellectual property’ may sound dull, but it’s opened up huge new possibilities for companies to extract rent from others, with major consequences. Intellectual property is the ownership of ideas and the representation of those ideas, covering trademarks, patents (allowing ownership of inventions – tangible or virtual – for specific periods of time) or copyright, protecting authorship of books, music, art, images and films, again for specific periods of time.

Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb

anti-fragile, availability heuristic, behavioural economics, Benoit Mandelbrot, Bernie Madoff, Black Swan, Brownian motion, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cellular automata, Claude Shannon: information theory, cognitive dissonance, complexity theory, data science, David Graeber, disintermediation, Donald Trump, Edward Thorp, equity premium, fake news, financial independence, information asymmetry, invisible hand, knowledge economy, loss aversion, mandelbrot fractal, Mark Spitznagel, mental accounting, microbiome, mirror neurons, moral hazard, Murray Gell-Mann, offshore financial centre, p-value, Paradox of Choice, Paul Samuelson, Ponzi scheme, power law, precautionary principle, price mechanism, principal–agent problem, public intellectual, Ralph Nader, random walk, rent-seeking, Richard Feynman, Richard Thaler, Ronald Coase, Ronald Reagan, Rory Sutherland, Rupert Read, Silicon Valley, Social Justice Warrior, Steven Pinker, stochastic process, survivorship bias, systematic bias, tail risk, TED Talk, The Nature of the Firm, Tragedy of the Commons, transaction costs, urban planning, Yogi Berra

For instance, the economist and psycholophaster Richard Thaler, partner of the dangerous GMO advocate übernudger Cass Sunstein, interpreted this piece as saying that “there are not many non-idiots not called Taleb,” not realizing that people like him are less than 1 percent or even less than one-tenth of 1 percent of the population. CHAPTER 7: INEQUALITY AND SKIN IN THE GAME fn1 It came to my notice that in countries with high rent-seeking, wealth is seen as something zero-sum: you take from Peter to give to Paul. On the other hand, in places with low rent-seeking (say the United States before the Obama administration), wealth is seen as a positive-sum game, benefiting everybody. fn2 Complex regulations allow former government employees to find jobs helping firms navigate the regulations they themselves created.

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But the worst casualty has been free markets, as the public, already prone to hating financiers, started conflating free markets and higher order forms of corruption and cronyism, when in fact it is the exact opposite: it is government, not markets, that makes these things possible by the mechanisms of bailouts. It is not just bailouts: government interference in general tends to remove skin in the game. The good news is that in spite of the efforts of a complicit Obama administration that wanted to protect the game and the rent-seeking bankers,fn3 the risk-taking business started moving toward small independent structures known as hedge funds. The move took place mostly because of the overbureaucratization of the system as paper shufflers (who think work is mostly about paper shuffling) overburdened the banks with rules—but somehow, in the thousands of pages of additional regulations, they avoided considering skin in the game.

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So it may suffice to have a tiny percentage—say, no more than 5 percent—of an evenly spatially distributed population of non-genetically modified eaters for the entire population to have to eat non-GMO food. How? Say you have a corporate event, a wedding, or a lavish party to celebrate the fall of the Saudi Arabian regime, the bankruptcy of the rent-seeking investment bank Goldman Sachs, or the public reviling of Ray Kotcher, chairman of Ketchum the public relations firm, which is the enemy of scientists and scientific whistleblowers. Do you need to send a questionnaire asking people if they eat or don’t eat transgenic GMOs and reserve special meals accordingly?

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

Alan Greenspan, Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, Bletchley Park, business cycle, California gold rush, Charles Babbage, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Dr. Strangelove, Dutch auction, Edward Lloyd's coffeehouse, electricity market, equity premium, equity risk premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, Fairchild Semiconductor, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, George Akerlof, George Gilder, Goodhart's law, Great Leap Forward, greed is good, Gunnar Myrdal, haute couture, Helicobacter pylori, illegal immigration, income inequality, industrial cluster, information asymmetry, intangible asset, invention of the telephone, invention of the wheel, invisible hand, John Meriwether, John Nash: game theory, John von Neumann, junk bonds, Kenneth Arrow, Kevin Kelly, knowledge economy, Larry Ellison, light touch regulation, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Michael Milken, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, Pareto efficiency, Paul Samuelson, pets.com, Phillips curve, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, proprietary trading, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, Right to Buy, risk tolerance, road to serfdom, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, Stuart Kauffman, telemarketer, The Chicago School, The Market for Lemons, The Nature of the Firm, the new new thing, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Vilfredo Pareto, Washington Consensus, women in the workforce, work culture , yield curve, yield management

These restrictions often create large rents, and firms will spend correspondingly large sums to get them. A government that creates or assigns these resources can impose heavy taxes, or large up-front fees, for their use-as with specific taxes on oil and mineral deposits, or the allocation of spectrum for mobile phone companies. These fees and taxes yield revenue and discourage rent seeking. Rent seeking impedes the functioning of a market economy-the pursuit of gains from trade through specialization and differences in capabilities. It limits innovation though disciplined pluralism. It corrodes the integrity of politics. These adverse political and economic effects often reinforce each other.

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This is an intriguing result, but it probably does not reveal much of the truth about markets. In modern economies, many factors are scarce and there are many sources of rents. The acquisition and defense of rents, and bargaining and dispute over their distribution, are the main influences on income distribution. Rent Seeking ••••••••••••••••••••••••••••••••••••• Economic rents are returns to scarcities-the exceptional talents of individuals, the distinctive capabilities of corporations. But not all individuals have scarce talents, not all corporations have distinctive capabilities. If scarcity does not naturally exist, perhaps it can be invented, and rents garnered anyway.

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Monopoly closes down disciplined pluralism and stifles innovation in products and technology. The monopoly often goes to the best lobbyist, not the best competitor. So gains from trade due to specialization and differences in capabilities are likely to be lost. Under disinterested government, it is difficult to earn rents by buying monopolies or tax concessions. Rent seeking is most common in rich states in areas of genuine public interest in restricting entrysuch as protection from untrained doctors, unsafe aircraft, and dishonest financial advisers. But all entry restrictions, whatever their rationale, can create rents, and those who have entered lobby for tightening entry restrictions still further.

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato

Alan Greenspan, balance sheet recession, banking crisis, basic income, Bear Stearns, Bernie Sanders, Bretton Woods, business climate, business cycle, carbon tax, Carmen Reinhart, central bank independence, circular economy, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, degrowth, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, endogenous growth, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, Ford Model T, forward guidance, full employment, G4S, general purpose technology, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, low interest rates, low skilled workers, Martin Wolf, mass incarceration, military-industrial complex, Modern Monetary Theory, Money creation, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, ocean acidification, paradox of thrift, Paul Samuelson, planned obsolescence, Post-Keynesian economics, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Solyndra, Steve Jobs, stock buybacks, systems thinking, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, Tragedy of the Commons, transaction costs, trickle-down economics, universal basic income, vertical integration, very high income

The question then is: what is the relative role and importance of these alternative hypotheses? There is no easy way of providing a neat quantitative answer, but recent events and studies have lent persuasive weight to theories putting greater focus on rent-seeking and exploitation. We shall discuss this evidence in the next section, before turning to the institutional and political factors which are at the root of the recent structural changes in income distribution. Rent-seeking and top incomes The term ‘rent’ was originally used to describe the returns to land, since the owner of the land receives these payments by virtue of his or his ownership and not because of anything he or she does.

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The chapters by Joseph Stiglitz and Colin Crouch look at two of the major gaps between orthodox economic theory and the reality of modern capitalism. Stiglitz addresses the growth of inequality over the past thirty years. He takes on the neoclassical view that wages and salaries reflect the marginal productivity of workers, showing that the very high incomes of corporate executives in fact reveal a form of ‘rent-seeking’, in which rewards are extracted without relation to productivity or economic desert. Moreover he points out—again contrary to the orthodox view—that such inequality is not the price that has to be paid for greater economic prosperity, but actually retards growth. Stiglitz offers a range of policy measures which would reverse recent trends, including changes to executive compensation schemes, macroeconomic policies to reduce unemployment, greater investment in education and the reform of capital taxation.

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Within the orthodox framework, the existence of some market failure is a necessary but not sufficient condition for state intervention.26 If government is to step in, it is claimed that gains from the intervention must outweigh the associated costs due to ‘governmental failures’27 such as capture by private interests (cronyism, corruption, rent-seeking),28 misallocation of resources (for example, ‘picking losers’)29 or undue competition with private initiatives (‘crowding out’).30 There is thus a presumed trade-off between two inefficient outcomes, one of which is generated by free markets (market failure) and the other by public intervention (government failure).

The Origins of Political Order: From Prehuman Times to the French Revolution by Francis Fukuyama

Admiral Zheng, agricultural Revolution, Andrei Shleifer, Asian financial crisis, Ayatollah Khomeini, barriers to entry, Berlin Wall, blood diamond, California gold rush, cognitive dissonance, colonial rule, conceptual framework, correlation does not imply causation, currency manipulation / currency intervention, Day of the Dead, demographic transition, Deng Xiaoping, double entry bookkeeping, endogenous growth, equal pay for equal work, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Francisco Pizarro, Garrett Hardin, Hernando de Soto, hiring and firing, invention of agriculture, invention of the printing press, John Perry Barlow, Khyber Pass, land reform, land tenure, means of production, offshore financial centre, out of africa, Peace of Westphalia, principal–agent problem, RAND corporation, rent-seeking, Right to Buy, Scramble for Africa, selective serotonin reuptake inhibitor (SSRI), spice trade, Stephen Hawking, Steven Pinker, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, Tragedy of the Commons, transaction costs, Washington Consensus, zero-sum game

It is possible that patrimonial officeholding itself rests on a set of prior social conditions even as it is fostered by deliberate government policy. RENT-SEEKING SOCIETIES Ancien régime France was an early prototype of what is today called a rent-seeking society. In such a society, the elites spend all of their time trying to capture public office in order to secure a rent for themselves—in the French case, a legal claim to a specific revenue stream that could be appropriated for private use. Was this rent-seeking coalition a stable one? It lasted for almost two centuries and provided a political basis for France’s emergence as the dominant continental power.

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Mancur Olson has made the general argument that entrenched interest groups tend to accumulate in any society over time, which aggregate into rent-seeking coalitions in order to defend their narrow privileges.19 They are much better organized than the broad mass of people in a society, whose interests often fail to be represented in the political system. The problem of a dysfunctional political equilibrium can be mitigated by democracy, which at least theoretically allows nonelites to have a greater share in political power. But even then there is usually a large disparity in the organizational capacity of elites and nonelites that prevents the latter from acting decisively. We have seen numerous examples of rent-seeking coalitions that have prevented necessary institutional change and therefore provoked political decay.

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THE VICTORY OF SOCIETY OVER POLITICS NATION BUILDING BY FOREIGNERS CHINA VERSUS INDIA 13 - SLAVERY AND THE MUSLIM EXIT FROM TRIBALISM CREATION OF A MUSLIM STATE THE ORIGINS OF MILITARY SLAVERY 14 - THE MAMLUKS SAVE ISLAM MAMLUK DECAY STATES AS ORGANIZED CRIMINALS 15 - THE FUNCTIONING AND DECLINE OF THE OTTOMAN STATE A ONE-GENERATION ARISTOCRACY MILITARY SLAVERY PERFECTED THE OTTOMAN STATE AS A GOVERNING INSTITUTION REPATRIMONIALIZATION AND DECAY THE OTTOMAN LEGACY 16 - CHRISTIANITY UNDERMINES THE FAMILY EUROPEAN EXCEPTIONALISM MARX’S MISTAKE FROM STATUS TO CONTRACT THE SOCIAL BACKGROUND TO STATE BUILDING IN EUROPE PART THREE - The Rule of Law 17 - THE ORIGINS OF THE RULE OF LAW CONTEMPORARY CONFUSIONS CONCERNING THE RULE OF LAW HAYEK’S THEORY THAT LAW IS PRIOR TO LEGISLATION FROM CUSTOMARY TO COMMON LAW 18 - THE CHURCH BECOMES A STATE THE CATHOLIC CHURCH DECLARES INDEPENDENCE THE REAPPEARANCE OF ROMAN LAW LAW AND THE RISE OF THE MODERN STATE HOW THE MEDIEVAL CHURCH SET PRECEDENTS FOR CONTEMPORARY RULE OF LAW 19 - THE STATE BECOMES A CHURCH RULE OF LAW IN THE MIDDLE EAST SEPARATION OF MOSQUE AND STATE HOW THE RULE OF LAW FAILED TO SURVIVE CONTACT WITH THE WEST IN BOTH INDIA AND ISLAM WHY THE RULE OF LAW WAS STRONGER IN WESTERN EUROPE 20 - ORIENTAL DESPOTISM CHINA’S MODERNITY AFTER THE TANG-SONG TRANSITION THE EVIL EMPRESS WU THE MANDATE OF HEAVEN 21 - STATIONARY BANDITS GOOD GOVERNMENT, BAD GOVERNMENT THE “BAD EMPEROR” PROBLEM INSTITUTIONS AREN’T ENOUGH PART FOUR - Accountable Government 22 - THE RISE OF POLITICAL ACCOUNTABILITY EUROPE’S LATE STATE BUILDING THE MARCH OF EQUALITY HE WHO KNOWS ONLY ONE COUNTRY KNOWS NO COUNTRIES EUROPE’S EASTERN ZHOU PERIOD THE ROLE OF LAW IN EUROPEAN DEVELOPMENT A FRAMEWORK FOR STATE BUILDING 23 - RENTE SEEKERS THE BEGINNINGS OF PATRIMONIAL ABSOLUTISM THE INTENDANTS AND CENTRALIZATION THE LIMITS OF CENTRALIZED POWER AND THE IMPOSSIBILITY OF REFORM THE FAILURE OF RESISTANCE TO ABSOLUTISM IN FRANCE RENT-SEEKING SOCIETIES 24 - PATRIMONIALISM CROSSES THE ATLANTIC THE BANKRUPT SPANISH STATE TAXATION AND NO REPRESENTATION TRANSFER OF INSTITUTIONS TO THE NEW WORLD THE IRON LAW OF LATIFUNDIA 25 - EAST OF THE ELBE LORDSHIP AND BONDAGE CONSTITUTIONALISM AND DECLINE IN HUNGARY FREEDOM AND OLIGARCHY 26 - TOWARD A MORE PERFECT ABSOLUTISM SOURCES OF RUSSIAN ABSOLUTISM FREE ALTERNATIVES THE PEASANT-OWNING CARTEL AFTER PETER ABSOLUTISM ACHIEVED 27 - TAXATION AND REPRESENTATION THE ROOTS OF ENGLISH POLITICAL SOLIDARITY FREE CITIES AND THE BOURGEOISIE THE STRUGGLE OVER TAXATION THE GLORIOUS REVOLUTION TO THE AMERICAN AND FRENCH REVOLUTIONS 28 - WHY ACCOUNTABILITY?

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

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

Most of the campaign money does not come from interest group PACs, but rather from individual donors … It doesn’t seem accurate to view campaign contributions as a way of investing in political outcomes … Because politicians can readily raise campaign funds from individuals, rent-seeking donors lack the leverage to extract large private benefits from legislation. It is tempting to compare this statement to the “permanently high plateau” prediction for US stocks that Irving Fisher made in October 1929. To be fair, however, they did not claim to make a prediction about the future, as Fisher did. They were instead reflecting on the common wisdom at the time and, based on their reading of the evidence, they suggested a reorientation of research away from its focus on rent-seeking donors. Much has changed since then, and Luigi Zingales, an economist at the University of Chicago, worries in a 2017 article about a diabolic loop between economic power and political power.

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For instance, if a good that can be produced for $10 is sold for $15 because it is protected by a patent, then the rent to the patent holder is $5. Some rents are protected by artificial restrictions. For example, draconian occupational licensing laws that restrict entry into certain professions protect those who already hold licenses from competition, allowing them to charge higher prices. When economists talk about “rent-seeking,” they refer to the attempt by individuals or by groups to tilt public policy in a way that establishes or increases those artificial advantages in their favor. This term does not necessarily have a moral connotation. It is rational for people to protect their rents. That does not make them bad people.

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Put another way, if we hold the view that firms spend money on lobbying but it is useless, then we must recognize that this view is inconsistent with most of what we know about economics and human nature. It’s not strictly impossible, but I am not going to take this idea very seriously. Second, rent seeking is a zero-sum game, and zero-sum games are difficult to identify in the data. For instance, suppose firm A spends $100 to lobby for a regulatory change that would give it an advantage over firm B. Firm B then spends $200 to fight this change. Firm B prevails. What do we see? We see that they collectively spent $300 and that nothing has changed: the relative market shares, growth rates, and productivity of the two firms are the same as before.

Restarting the Future: How to Fix the Intangible Economy by Jonathan Haskel, Stian Westlake

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Andrei Shleifer, Big Tech, Black Lives Matter, book value, Boris Johnson, Brexit referendum, business cycle, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, Charles Lindbergh, charter city, cloud computing, cognitive bias, cognitive load, congestion charging, coronavirus, corporate governance, COVID-19, creative destruction, cryptocurrency, David Graeber, decarbonisation, Diane Coyle, Dominic Cummings, Donald Shoup, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, equity risk premium, Erik Brynjolfsson, Estimating the Reproducibility of Psychological Science, facts on the ground, financial innovation, Francis Fukuyama: the end of history, future of work, general purpose technology, gentrification, Goodhart's law, green new deal, housing crisis, income inequality, index fund, indoor plumbing, industrial cluster, inflation targeting, intangible asset, interchangeable parts, invisible hand, job-hopping, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, knowledge worker, lockdown, low interest rates, low skilled workers, Marc Andreessen, market design, Martin Wolf, megacity, mittelstand, new economy, Occupy movement, oil shock, patent troll, Peter Thiel, Phillips curve, postindustrial economy, pre–internet, price discrimination, quantitative easing, QWERTY keyboard, remote working, rent-seeking, replication crisis, risk/return, Robert Gordon, Robert Metcalfe, Robert Shiller, Ronald Coase, Sam Peltzman, Second Machine Age, secular stagnation, shareholder value, Silicon Valley, six sigma, skeuomorphism, social distancing, superstar cities, the built environment, The Rise and Fall of American Growth, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber for X, urban planning, We wanted flying cars, instead we got 140 characters, work culture , X Prize, Y2K

But achieving institutional change requires more than just policy wonkery. It also requires that we build state capacity, design systems that strike the right balance between quantity and quality of investment, resist influence activities (or rent seeking), and bring about cultural change. A Framework: Trade-Offs and Institutional Design Two key graphs can help us understand the impact of improving state capacity, the importance of resisting rent seeking, and how the quantity versus quality of intangibles matters. The Trade-Off between Collective Goods and Influence and Information Costs Figure C.1 sets out the key constraint trade-off faced by economies.5 As you go up the vertical axis, the economy is able to provide more centralised collective goods per spend.

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One example is intellectual property rules, which we discuss in chapter 4. Intellectual property rules help mitigate the problem of spillovers with intangible assets, but as intangibles become more important, the costs of patent thickets increase and the incentives for rights holders to lobby governments to change the rules in rent-seeking ways increase. Summary Institutions, the humanly devised rules of interaction, help with particular dimensions of exchange, such as commitment, collective action, and information. But those dimensions change in importance over time, and so institutions have to change too. Thus, with the rise in intangibles, the various components of exchange have had to change, along with the institutions that help those particular components.

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What we need instead, according to the critique, is less but better education: more hard science degrees and more high-quality apprenticeships and technical training programmes (in which there is a high degree of synergy between the skills that students learn and the assets of businesses seeking to employ them). This type of education is of course the quality theory in action. Many common proposals for reform are responses to the three problems that beset IP regimes or public funding: the problem of imperfect rules, the risk of rent seeking, and the difficulty of making sure the systems adapt to technological change. Proposals for more discretionary funding agencies, along the lines of the blue-sky US Defense Advanced Research Projects Agency (DARPA), abound. The United Kingdom announced its own version in 2019, while in the United States something similar but larger was proposed in the Endless Frontiers Act, which was introduced into Congress in 2020.27 These plans, which give the funding staff greater discretion to pick radical projects, can be considered attempts to escape the tyranny of increasingly metricised and bureaucratic research funding systems, which are sometimes accused of being captured by academic interests.

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, Garrett Hardin, Gini coefficient, illegal immigration, impulse control, Isaac Newton, Julian Assange, laissez-faire capitalism, land bank, 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, systematic bias, The Wealth of Nations by Adam Smith, Tyler Cowen, unbiased observer, uranium enrichment, WikiLeaks

As these examples illustrate, legal paternalism is quite widespread in modern Western society. All of these are unjustified laws. 7.1.3 Rent seeking Rent seeking is behavior designed to extract wealth from others, especially through the vehicle of the state, without providing compensatory benefits in return.6 The most straightforward example is a company lobbying the government for subsidies. But many of the policies that exemplify legal paternalism are also motivated partly by rent seeking. Consider the following. – Prescription drug laws. These laws transfer money from consumers to doctors and pharmacists.

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Belief in authority is socially harmful. 7 What if There Is No Authority? 7.1 Some policy implications 7.1.1 Prostitution and legal moralism If there is no authority, legal moralism, as in the case of laws against prostitution, is unjustified. 7.1.2 Drugs and paternalism Legal paternalism, as in the case of drug laws, is unjustified. 7.1.3 Rent-seeking Laws motivated by rent-seeking are obviously unjustified. 7.1.4 Immigration Immigration restrictions are unjustified. 7.1.5 The Protection of individual rights Laws that protect individual rights are justified. 7.1.6 Taxation and government finance Taxation is justified if and only if voluntary methods of government finance prove unworkable. 7.2 The case of aid to the poor 7.2.1 Welfare and drowning children It is sometimes permissible to force someone to help a third party in an emergency.

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These motives are analogous to those displayed in policies of types (3)–(9) listed above.23 The specific examples I have given of policy types (3)–(9) are not important, so long as one agrees that there are (a nontrivial number of) policies of each of these types. It does not greatly matter, for instance, whether one agrees that licensing laws are motivated by rent seeking as long as one agrees that a significant number of laws are motivated by rent seeking. The point is that the state has many policies and laws whose motivations do not justify the coercion required to implement them. This is a problem because the state’s authority is generally held to be comprehensive and content-independent. On a very strict reading of the comprehensiveness and content-independence conditions, the existence of just a few laws that the state is not entitled to make would preclude the state’s having genuine authority.

Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa by Dambisa Moyo

affirmative action, Asian financial crisis, belling the cat, Bob Geldof, Bretton Woods, business cycle, buy and hold, colonial rule, correlation does not imply causation, credit crunch, diversification, diversified portfolio, en.wikipedia.org, European colonialism, failed state, financial engineering, financial innovation, financial intermediation, Hernando de Soto, income inequality, information asymmetry, invisible hand, Live Aid, low interest rates, M-Pesa, market fundamentalism, Mexican peso crisis / tequila crisis, microcredit, moral hazard, Multics, Ponzi scheme, rent-seeking, risk free rate, Ronald Reagan, seminal paper, sovereign wealth fund, The Chicago School, trade liberalization, transaction costs, trickle-down economics, Washington Consensus, Yom Kippur War

Others estimate that of the US$525 billion that the World Bank has lent to developing countries since 1946, at least 25 per cent (US$130 billion) has been misused. Vast sums of aid not only foster corruption – they breed it. Aid supports rent-seeking – that is, the use of governmental authority to take and make money without trade or production of wealth. At a very basic level, an example of this is where a government official with access to aid money set aside for public welfare takes the money for his own personal use. Obviously, there cannot be rent-seeking without a rent. And because foreign aid (the rent) is fungible – easily stolen, redirected or extracted – it facilitates corruption. Were donor conditionalities remotely effective, this would not be the case.

…

In The Wealth and Poverty of Nations, David Landes argues that the ideal growth and development model is one guaranteed by political institutions. Secure personal liberty, private property and contractual rights, enforced rule of law (not necessarily through democracy), an ombudsman-type of government, intolerance towards private rent-seeking and optimally sized government are mandatory. In Empire: How Britain Made the Modern World, Niall Ferguson points to the common-law system and the British-type civil administration as two institutions that promoted development. Ferguson also notes that it is a country’s underlying legal and political institutions that make it conducive to investment (and counter-disinvestment through less capital flight) and innovation.

…

But these things are meaningless in the absence of trust. And while trust is difficult to define or measure, when it is not there the networks upon which development depends break down or never even form. Foreign aid does not strengthen the social capital – it weakens it. By thwarting accountability mechanisms, encouraging rent-seeking behaviour, siphoning off scarce talent from the employment pool, and removing pressures to reform inefficient policies and institutions, aid guarantees that in the most aid-dependent regimes social capital remains weak and the countries themselves poor. In a world of aid, there is no need or incentive to trust your neighbour, and no need for your neighbour to trust you.

The Devil's Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street . . . And Are Ready to Do It Again by Nicholas Dunbar

Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Black Swan, Black-Scholes formula, bonus culture, book value, break the buck, buy and hold, capital asset pricing model, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, delayed gratification, diversification, Edmond Halley, facts on the ground, fear index, financial innovation, fixed income, George Akerlof, Glass-Steagall Act, Greenspan put, implied volatility, index fund, interest rate derivative, interest rate swap, Isaac Newton, John Meriwether, junk bonds, Kenneth Rogoff, Kickstarter, Long Term Capital Management, margin call, market bubble, money market fund, Myron Scholes, Nick Leeson, Northern Rock, offshore financial centre, Paul Samuelson, price mechanism, proprietary trading, regulatory arbitrage, rent-seeking, Richard Thaler, risk free rate, risk tolerance, risk/return, Ronald Reagan, Salesforce, Savings and loan crisis, seminal paper, shareholder value, short selling, statistical model, subprime mortgage crisis, The Chicago School, Thomas Bayes, time value of money, too big to fail, transaction costs, value at risk, Vanguard fund, yield curve, zero-sum game

Such dangers are well understood in consumer financial markets.13 Where customers are confused about their buying decisions, they can fall prey to “rent seeking” by sophisticated vendors, who extract outsized profits without delivering real value for their customers. With bespoke over-the-counter derivatives and structured products, opaque pricing allows dealers to build hefty margins into the transaction. This means that the difference between the true manufacturing cost and what the customer actually pays can be earned as “rent” by the dealer over the life of the trade. So long as the customer feels that they are getting a good deal, such rent seeking can be extremely profitable for large financial institutions.

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Since the late 1990s, financial institutions have earned billions annually in rent by selling these structured products to price-indifferent consumers and hedging their exposure over time.14 At first glance, institutional derivative customers would seem to offer fewer opportunities for rent seeking by banks. Shareholders require and reward managers to avoid the fog of confusion that makes consumers easy victims of rent seeking. The managers, in turn, expect the bankers that compete for their business to genuinely act in their best interest and not try to pull the wool over their eyes. “Our best relationship banks think intensively about our capital structure and hedging strategy,” is how the head of corporate finance at Lufthansa expresses it.

…

On a single transaction that reached $250 million in size, that meant J.P. Morgan could book a profit of over $10 million. One might say that there was no value being created here for Poste Italiane, just rent seeking by J.P. Morgan. If this wasn’t sufficient evidence of his lack of competence, Catasta made things worse by adjusting his derivatives, exposing himself to more trading costs and even more rent seeking. According to sources at the company, Catasta would periodically dismantle older deals and replace them with new ones, until July 2003. This last tweak—possibly a result of an earlier bet’s losing money—alone cost Poste Italiane €50 million.

Adam Smith: Father of Economics by Jesse Norman

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

On the relation between famines and democracy, see Amartya Sen, Poverty and Famines, Oxford University Press 1981; and more recently, Cormac Ó Gráda, Famine: A Short History, Princeton University Press 2009 Rent-seeking: this idea was first specifically developed by Gordon Tullock in ‘The Welfare Costs of Tariffs, Monopolies and Theft’, Western Economic Journal, 5.3, 1967. It was further developed, and the term ‘rent-seeking’ coined, by Anne Krueger in ‘The Political Economy of the Rent-Seeking Society’, American Economic Review, 64.3, 1974. See also Roger D. Congleton and Arye L. Hillman (eds.), Companion to the Political Economy of Rent-Seeking, Edward Elgar 2015 James Anderson on rent: see An Enquiry into the Nature of the Corn Laws, 1777.

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Indeed, Smith appears to have been the first person to present a comprehensive analysis of what crony capitalism amounts to, and why it is damaging to business and government alike. In doing so he opened up and made prominent three sets of ideas which, further refined and developed, have become analytic tools of lasting significance. The first of these is the idea of rent-seeking. ‘Rent’ in this sense, or ‘economic rent’, is not quite the same thing as the rent received on land or property, though the ideas are related. We can refine the description given earlier—as unearned income received, over and above the returns generated in competitive markets—by thinking of it as the difference between the market price and the lowest price a seller would accept.

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Smith does not have a theory of economic rent as such—the first steps towards one were taken in 1777, a year after publication of The Wealth of Nations, in a work by his contemporary and critic James Anderson of Hermiston—and as a result he appears to underestimate the possibility that companies can build up ‘good’ rents and thus sustainable competitive advantage by entirely legitimate means. But, as we have seen, Smith is acute in identifying and characterizing the special interests of his time, and the interrelated issues of rent-seeking, collusion, lobbying and their effects; and the wider links he draws between mercantilism and colonization are bold and illuminating. The second important idea in analysing crony capitalism is that there can be asymmetries of information and power between players in a market. Merchants can readily hoodwink politicians, as we have seen; and in commerce, far from believing that an invisible hand inevitably works to create conditions of equal competition in markets, Smith is alive to the possibilities for some market players to exploit and derive unfair advantage over others.

The Unknowers: How Strategic Ignorance Rules the World by Linsey McGoey

Alan Greenspan, An Inconvenient Truth, anti-globalists, antiwork, battle of ideas, behavioural economics, Big Tech, Black Lives Matter, Branko Milanovic, British Empire, Cambridge Analytica, carbon tax, Cass Sunstein, Clive Stafford Smith, conceptual framework, Corn Laws, corporate governance, corporate raider, Credit Default Swap, David Ricardo: comparative advantage, Donald Trump, drone strike, en.wikipedia.org, European colonialism, fake news, Frances Oldham Kelsey, hiring and firing, Howard Zinn, income inequality, it is difficult to get a man to understand something, when his salary depends on his not understanding it, joint-stock company, junk bonds, knowledge economy, market fundamentalism, mass incarceration, Michael Milken, minimum wage unemployment, Naomi Klein, new economy, Nick Leeson, p-value, Paul Samuelson, Peter Thiel, plutocrats, post-truth, public intellectual, race to the bottom, randomized controlled trial, rent-seeking, road to serfdom, Robert Mercer, Ronald Reagan, Scientific racism, selective serotonin reuptake inhibitor (SSRI), Social Justice Warrior, Steven Pinker, Suez crisis 1956, The Chicago School, The Wealth of Nations by Adam Smith, union organizing, Upton Sinclair, W. E. B. Du Bois, Washington Consensus, wealth creators

Ever since it was introduced, marginal productivity theory has been widely derided by scholars working inside and outside the economics mainstream, but it is still taught as orthodoxy at most US universities.11 One of the leading proponents today of marginal productivity theories is Gregory Mankiw, an economist at Harvard who argues that increased global wealth concentration – the fact the richest 1 percent of the global population control nearly two-thirds of the world’s resources – stems naturally from wealthy people making more valuable contributions to society than other people. He acknowledges that what classical economists like Smith saw as ‘rentier’ activities still do exist in theory, but he insists that rent-seeking plays little or no role in producing current wealth inequalities in countries such as the US. In his words (quotes taken from his article ‘Defending the One Percent’): if ‘a person’s high income results from political rent-seeking rather than producing a valuable product, the outcome is likely to be both inefficient and widely viewed as inequitable.’ But to his mind, this problem is exceedingly rare: ‘My own reading of the evidence is that most of the very wealthy got that way by making substantial economic contributions, not by gaming the system or taking advantage of some market failure or the political process.’12 His critics see this as nonsense.

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First, government gifts to the rich were doled out too arbitrarily: he wanted the science of subsidies to improve. And second, he thought the revenue generated from government subsidies wasn’t shared fairly among the wider polity. Smith’s criticism of monopoly protections introduced a notion later described as ‘rent-seeking’ – the gaining of private benefits through disproportionate influence over government decision making. Smith also introduced a second aspect of rentier privileges, one that relates to the economic concept of ‘rent.’ By this, economists don’t mean the common meaning of rent; the eye-watering £2000 or so per month a two-bed flat in London costs to rent monthly (more in higher-end areas).

…

Marginal productivity theories deflected and obscured the criticism that Adam Smith and his peers directed at rentier profiteering and corporate abuses of power. My argument is that paying more attention to marginal productivity theories helps to create a plausible ‘ignorance pathway’ for understanding why 18th-century economic concerns about corporate rent-seeking were largely dropped as a major focus of mainstream economists over much of the 20th century.10 The new, marginal productivity theory of income distribution suggests that, under perfectly competitive markets, the remuneration that people receive from different economic activities tends to align naturally with the economic value that they have generated to society.

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

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

The history of developing countries in Latin America, Africa, and the Middle East is littered with cases of industrial policy gone bad and collapsing in a flurry of corruption and rent seeking, like the Argentine effort to create a domestic car industry noted in chapter 18. For government intervention to work, the state must have what Peter Evans labels “embedded autonomy”: bureaucracies have to respond to social needs, but also must be free of pressures to satisfy rent-seeking political constituencies, allowing them to promote longer-term goals that serve a broad public interest. This kind of policy worked in Japan, South Korea, Taiwan, and China but failed elsewhere.

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Public good may be invoked during election campaigns, but the state is not impersonal: favors are doled out to networks of political supporters in exchange for votes or attendance at rallies. This pattern of behavior is visible in countries from Nigeria to Mexico to Indonesia.2 Douglass North, John Wallis, and Barry Weingast have an alternative label for neopatrimonialism, what they call a “limited access order,” in which a coalition of rent-seeking elites use their political power to prevent free competition in both the economy and the political system.3 Daron Acemoglu and James Robinson use the term “extractive” to describe the same phenomenon.4 At one stage in human history, all governments could be described as patrimonial, limited access, or extractive.

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Second, corruption acts as a highly regressive tax: while petty corruption on the part of minor, poorly paid officials exists in many countries, the vast bulk of misappropriated funds goes to elites who can use their positions of power to extract wealth from the population. Further, seeking such payoffs is often a time-consuming occupation that diverts the energies of the smartest and most ambitious people who could be creating wealth-generating private firms. Gaming the political system for private gain is what economists label “rent seeking.”2 It has been argued that bribery might increase efficiency by lubricating the process of getting business registrations, export licenses, or appointments with high officials. But this represents a very poor way of doing business: it would be much better if registration processes were quick, if export licenses didn’t exist at all, or if all individuals had easy and equal access to the government.

Republic, Lost: How Money Corrupts Congress--And a Plan to Stop It by Lawrence Lessig

air traffic controllers' union, Alan Greenspan, asset-backed security, banking crisis, carbon tax, carried interest, circulation of elites, cognitive dissonance, corporate personhood, correlation does not imply causation, crony capitalism, David Brooks, Edward Glaeser, Filter Bubble, financial deregulation, financial innovation, financial intermediation, Glass-Steagall Act, Greenspan put, invisible hand, jimmy wales, low interest rates, Martin Wolf, meta-analysis, Mikhail Gorbachev, moral hazard, Pareto efficiency, place-making, profit maximization, public intellectual, Ralph Nader, regulatory arbitrage, rent-seeking, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, single-payer health, The Wealth of Nations by Adam Smith, too big to fail, TSMC, Tyler Cowen, upwardly mobile, WikiLeaks, Yochai Benkler, Zipcar

And these interests could leverage their power to achieve this rapaciousness because—in part at least—of the “self-reinforcing cycle of mutual financial dependency” between members of Congress and the lobbyists, as the American Bar Association’s Lobbying Task Force put it.8 Reagan couldn’t see this in the early 1970s when his philosophy was finally set. The dynamic hadn’t quite taken hold. No doubt there was “rent seeking”—efforts by special interests to secure favors through the government that they couldn’t get through the free market. But then, the level of this rent seeking was nothing close to the level that is now the new normal. It’s not the game that has changed. It is the scale. Reagan can be forgiven for missing this scale. Likewise with the alleged rapaciousness of bureaucrats.

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This was Teddy Roosevelt’s view: “Corporate expenditures for political purposes… have supplied one of the principal sources of corruption in our political affairs.”51 But however clever political antitrust might be, a more fundamental response would be to weaken the ability of wealth to leverage political power. Never completely. That would not be possible. But at least enough to weaken the return from rent seeking, perhaps enough to make ordinary innovation seem more profitable. Any reform that would seek to weaken the ability of wealth to rent-seek would itself be resisted by wealth. So long as private money drives public elections, public officials will work hard to protect that private money. And if you doubt this, look to Wall Street: never has an industry been filled with more rabid libertarians; but never has an industry more successfully engineered government handouts when the gambling of those libertarians went south.

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The theory of regulatory capture raises questions about whether cartel-like industries will use their power to extract rents in the market or through government. And indeed, as Posner writes, the strongest examples of successful rent seeking come from relatively competitive industries. See Posner, “Theories of Economic Regulation,” 335, 343–45. The success of the “deregulation” movement may have now shifted the rent-seeking game toward the focus that now concerns Rajan and Zingales. 15. Rajan and Zingales, Saving Capitalism from the Capitalists, 296. 16. Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v.

India's Long Road by Vijay Joshi

Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, book value, Bretton Woods, business climate, capital controls, carbon tax, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, Cornelius Vanderbilt, 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, foreign exchange controls, 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, low interest rates, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price elasticity of demand, 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, Tragedy of the Commons, transaction costs, universal basic income, urban sprawl, vertical integration, working-age population

But history all over the world shows that entrepreneurship can be directed to productive or unproductive uses depending on the context.20 If the rewards are greater in unproductive rent-​ seeking than in productive activities, then that is where business energy will go.21 There is no doubt that liberalization in India has very been successful in channelling the energy of firms into innovative and productive uses.22 However, there is also evidence, especially in the recent past, that India’s corporate sector is vulnerable to rent-​seeking and unproductive entrepreneurship, a disease that could arrest the growth of productivity in the long run. The lesson is that while the state must redouble its efforts to liberalize, it must at the same time safeguard competition and restrain corruption and crony capitalism (see Chapter 11).

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Super-​fast growth for a couple of decades or more is like running the distance of a marathon at the speed of a sprint. Most countries cannot make it. Many countries have brief high-​growth spurts that fizzle out due to lack of stamina. Fast-​growing countries slow down because they have fiscal explosions or fall prey to rent-​seeking oligarchies and crony capitalists or simply fail to sustain the pace of productivity improvement.11 In recent years, India has looked vulnerable to falling at each of these hurdles. I emphasize again that India’s aim is not just fast growth but high-​quality, fast growth. That sets the bar higher than fast growth pure and simple.

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In India, a further twist was given to this kind of thinking by a ‘heavy industry’ strategy (based loosely on Soviet planning models), which was adopted in the Second Five Year Plan and used to justify the physical allocation of investment.5 It was taken for granted that extensive government intervention and controls were necessary to subdue or supplant the market, and make the private sector’s activities consonant with the planned trajectory of output.6 Once the controls were established, the dynamic of rent-​seeking took over and they proliferated to the point where no economic activity, unless of very small scale, could be legally pursued without obtaining dozens of permits and licences from different departments of government. Controls permeated every facet of business decision-​making including investment, output-​mix, pricing, credit, employment, entry, and exit.

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

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

The contemporary concept of rent also includes income from privileges granted by government—import quotas, mining rights, subsidies, tax loopholes, and so on. Many economists use the term rent seeking to describe the multiple ways in which special interests manipulate government to enrich themselves at the expense of others. If you’re wondering why Washington, DC, and its environs have grown so prosperous in recent decades, it’s not because government itself has become gargantuan, it’s because rent seeking has. In short, rent is income received not because of anything a person or business produces but because of rights or power a person or business possesses.

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Further, it not only adds no value to the economy but “distorts resource allocation and makes the economy weaker.”14 And finally: “There’s no begrudging the wealth accrued by those who have transformed our economy—the inventors of the computer, the pioneers of biotechnology. But, for the most part, these are not the people at the top of our economic pyramid. Rather, to a too large extent, it’s people who have excelled at rent seeking in one form or another.” EIGHTY YEARS AGO, JOHN MAYNARD KEYNES looked forward to what he called “the euthanasia of the rentier.” That day would come when the supply of capital was so large, relative to the demand for it, that the return to capital “would have to cover little more than [its] exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment.”

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The revenue for this fund would have come from selling rights to dump carbon dioxide into our co-owned air. The story of these failures is both political and intellectual. In this chapter, I trace the transformation of a good idea—a market-based limit on carbon pollution—into a compromised and beaten one. This transformation was driven by the familiar Washington process of rent seeking, and its story yields a number of lessons. THE IDEA OF CAPPING FLOWS of harmful substances, and then letting markets allocate them, goes back to 1968, when a Canadian economist, the late John Dales, floated the idea in a book called Pollution, Property & Prices1 At the time, Dales wasn’t thinking about climate change; he was thinking about farmers who polluted streams with chemical runoffs.

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

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, deal flow, Deng Xiaoping, diversification, diversified portfolio, Dr. Strangelove, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, Great Leap Forward, guns versus butter model, high net worth, income inequality, interest rate derivative, it's over 9,000, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, power law, price mechanism, price stability, private sector deleveraging, proprietary trading, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, short squeeze, sovereign wealth fund, special drawing rights, special economic zone, subprime mortgage crisis, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, vertical integration, War on Poverty, Washington Consensus, zero-sum game

Elites who manage the institutions of society slowly become more concerned with their own share of a shrinking pie than with the welfare of society as a whole. The elite echelons of society go from leading to leeching. Elites behave like parasites on the host body of society and engage in what economists call “rent seeking,” or the accumulation of wealth through nonproductive means—postmodern finance being one example. By 2011, evidence had accumulated to show that the United States was well down the return curve to the point where greater exertions by more people produced less for society while elites captured most of the growth in income and profits.

…

CEO pay increased 27 percent in 2010 versus 2009 while over twenty million Americans either were unemployed or had dropped out of the labor force but wanted a job. Of Americans with jobs, more worked for the government than in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. One of the best measures of the rent seeking relationship between elites and citizens in a stagnant economy is the Gini coefficient, a measure of income inequality; a higher coefficient means greater income inequality. In 2006, shortly before the recent recession began, the coefficient for the United States reached an all-time high of 47, which contrasts sharply with the all-time low of 38.6, recorded in 1968 after two decades of stable gold-backed money.

…

The Gini coefficient trended lower in 2007 but was near the all-time high again by 2009 and trending higher. The Gini coefficient for the United States is now approaching that of Mexico, which is a classic oligarchic society characterized by gross income inequality and concentration of wealth in elite hands. Another measure of elite rent seeking is the ratio of amounts earned by the top 20 percent of Americans compared to amounts earned by those living below the poverty line. This ratio went from a low of 7.7 to 1 in 1968 to a high of 14.5 to 1 in 2010. These trends in both the Gini coefficient and the wealth-to-poverty income ratio in the United States are consistent with Tainter’s findings on civilizations nearing collapse.

Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by Jonathan Taplin

"Friedman doctrine" OR "shareholder theory", "there is no alternative" (TINA), 1960s counterculture, affirmative action, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Amazon Mechanical Turk, American Legislative Exchange Council, AOL-Time Warner, Apple's 1984 Super Bowl advert, back-to-the-land, barriers to entry, basic income, battle of ideas, big data - Walmart - Pop Tarts, Big Tech, bitcoin, Brewster Kahle, Buckminster Fuller, Burning Man, Clayton Christensen, Cody Wilson, commoditize, content marketing, creative destruction, crony capitalism, crowdsourcing, data is the new oil, data science, David Brooks, David Graeber, decentralized internet, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dynabook, Edward Snowden, Elon Musk, equal pay for equal work, Erik Brynjolfsson, Fairchild Semiconductor, fake news, future of journalism, future of work, George Akerlof, George Gilder, Golden age of television, Google bus, Hacker Ethic, Herbert Marcuse, Howard Rheingold, income inequality, informal economy, information asymmetry, information retrieval, Internet Archive, Internet of things, invisible hand, Jacob Silverman, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, John Perry Barlow, John von Neumann, Joseph Schumpeter, Kevin Kelly, Kickstarter, labor-force participation, Larry Ellison, life extension, Marc Andreessen, Mark Zuckerberg, Max Levchin, Menlo Park, Metcalfe’s law, military-industrial complex, Mother of all demos, move fast and break things, natural language processing, Network effects, new economy, Norbert Wiener, offshore financial centre, packet switching, PalmPilot, Paul Graham, paypal mafia, Peter Thiel, plutocrats, pre–internet, Ray Kurzweil, reality distortion field, recommendation engine, rent-seeking, revision control, Robert Bork, Robert Gordon, Robert Metcalfe, Ronald Reagan, Ross Ulbricht, Sam Altman, Sand Hill Road, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Skinner box, smart grid, Snapchat, Social Justice Warrior, software is eating the world, Steve Bannon, Steve Jobs, Stewart Brand, tech billionaire, techno-determinism, technoutopianism, TED Talk, The Chicago School, the long tail, The Market for Lemons, The Rise and Fall of American Growth, Tim Cook: Apple, trade route, Tragedy of the Commons, transfer pricing, Travis Kalanick, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, vertical integration, We are as Gods, We wanted flying cars, instead we got 140 characters, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, you are the product

He noted, “The right has colonized the digital space around these subjects—Muslims, women, Jews, the Holocaust, black people—far more effectively than the liberal left.” Google, Amazon, and Facebook are classic “rent-seeking” enterprises. The New York Times columnist Adam Davidson explains the concept: In economics, a “rent” is money you make because you control something scarce and desirable, whether it’s an oil field or a monopolistic position in a market.… The left, right and center of the economics profession all agree that reducing rent-seeking behavior, and improving overall growth, is essential if we want to “make America great again.” Google and Facebook each have more than one billion customers while Amazon has 350 million.

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Two senior Obama economic advisers, Peter Orszag and Jason Furman, published a paper entitled “A Firm-Level Perspective on the Role of Rents in the Rise in Inequality,” which makes the argument that the rise in “super-normal returns on capital” at firms with limited competition is leading to a rise in economic inequality. They describe these firms as “rent seeking.” Economic rents are the return to a factor of production in excess of what would be needed to keep it in the market.… For example, capital can extract rents by engaging in anti-competitive behavior to earn revenues well in excess of opportunity cost.… Moreover, labor market structure can lead to some elements of monopsony in certain industries, slanting the division of this labor contract rent towards the firm. The classic example of rent seeking we all deal with is our cable service, which costs more than it should and is less responsive than it should be because its local monopoly allows the company to make a better “deal” for itself.

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The classic example of rent seeking we all deal with is our cable service, which costs more than it should and is less responsive than it should be because its local monopoly allows the company to make a better “deal” for itself. It is probably fair to ask whether Google, Facebook, and Amazon are rent-seeking firms—i.e., whether they monopolize the resources they use. Does the fact that Amazon can deny a publisher access to its vast customer base allow it to extract rents from publishers in excess of what it would be able to extract if there were multiple large sellers in the ebook market? Yes. Can Facebook and Google extract monopoly rents in excess of normal market prices from advertisers in return for the targeted access to their billions of users?

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

"World Economic Forum" Davos, accounting loophole / creative accounting, Asian financial crisis, behavioural economics, Big bang: deregulation of the City of London, Branko Milanovic, business climate, call centre, Capital in the Twenty-First Century by Thomas Piketty, centre right, colonial rule, commodity super cycle, Cornelius Vanderbilt, corporate raider, creative destruction, crony capitalism, Daniel Kahneman / Amos Tversky, Deng Xiaoping, Donald Trump, facts on the ground, failed state, fake news, Francis Fukuyama: the end of history, global supply chain, Gunnar Myrdal, income inequality, informal economy, Joseph Schumpeter, land bank, liberal capitalism, Mahatma Gandhi, McMansion, megacity, Meghnad Desai, middle-income trap, New Urbanism, offshore financial centre, open economy, Parag Khanna, Pearl River Delta, plutocrats, Ponzi scheme, post-truth, public intellectual, quantitative easing, rent-seeking, Rubik’s Cube, Shenzhen special economic zone , Silicon Valley, Simon Kuznets, smart cities, special economic zone, spectrum auction, tech billionaire, The Great Moderation, Thomas L Friedman, transaction costs, trickle-down economics, vertical integration, Washington Consensus, WikiLeaks, yellow journalism, young professional

The first included companies in sectors that were mostly untouched by government, in which business success was assumed to come mostly from efficiency and innovation. The second featured businesses in what Walton called “rent-thick” sectors, meaning those where firms made money—or “rents”—via access to favors. Economists worry about what they call “rent seeking,” meaning the way some businesses earn profits beyond what they could make in a competitive market, for instance by owning the rights to land or resources or intellectual property. Some companies earned rents by lobbying or bribing, others from operating in cartels or as monopolies. The term “rentier” was sometimes used by left-wing thinkers to describe the same thing, meaning those who grabbed valuable resources, such as licenses to drill oil fields or develop real estate.

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The term “rentier” was sometimes used by left-wing thinkers to describe the same thing, meaning those who grabbed valuable resources, such as licenses to drill oil fields or develop real estate. Digging into the data, Walton found a clear pattern. In the early years after its 1991 reforms India’s new billionaires operated mostly in areas like IT services, which had little in the way of rent-seeking. But as the economy took off and globalization jacked up demand for things like commodities and land, so the wealth of billionaires shot up most of all in rent-thick sectors, from mining and property to cement, infrastructure, and telecoms. Over the years since, the various billionaires’ fortunes had ebbed and flowed.

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But most merely operated in sectors that were tied closely to the government, where they could put their connections to good use. There was even a special local word for the tycoons themselves: “promoters,” a term that referred to the individual or family who owned most of the equity in the business and who in turn tightly controlled its operations. The business of rent-seeking in India led many tycoons to build up sophisticated influence machines. Some, like Vijay Mallya, became politicians themselves. Others created modern versions of the old Reliance Industries “intelligence agency” in New Delhi, the sophisticated lobbying operation built up over the decades by Mukesh Ambani’s father.

Seventeen Contradictions and the End of Capitalism by David Harvey

accounting loophole / creative accounting, Alvin Toffler, bitcoin, Branko Milanovic, Bretton Woods, BRICs, British Empire, business climate, California gold rush, call centre, central bank independence, Charles Babbage, classic study, clean water, cloud computing, collapse of Lehman Brothers, colonial rule, company town, cotton gin, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, death from overwork, deindustrialization, demographic dividend, Deng Xiaoping, deskilling, drone strike, end world poverty, falling living standards, fiat currency, first square of the chessboard, first square of the chessboard / second half of the chessboard, Food sovereignty, Frank Gehry, future of work, gentrification, global reserve currency, Great Leap Forward, Guggenheim Bilbao, Gunnar Myrdal, Herbert Marcuse, income inequality, informal economy, invention of the steam engine, invisible hand, Isaac Newton, Jane Jacobs, Jarndyce and Jarndyce, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Just-in-time delivery, knowledge worker, low skilled workers, Mahatma Gandhi, market clearing, Martin Wolf, means of production, microcredit, military-industrial complex, Money creation, Murray Bookchin, new economy, New Urbanism, Occupy movement, peak oil, phenotype, planned obsolescence, plutocrats, Ponzi scheme, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Gordon, Ronald Reagan, Savings and loan crisis, scientific management, short selling, Silicon Valley, special economic zone, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, wages for housework, Wall-E, women in the workforce, working poor, working-age population

This has now led to an admission that monopoly power is more than an aberration but a systemic problem that arises out of what economists refer to as ‘rent seeking’. ‘To put it baldly,’ says the economist Joseph Stiglitz, ‘there are two ways to become wealthy: to create wealth or to take wealth away from others. The former adds to society. The latter typically subtracts from it, for in the process of taking it away, wealth gets destroyed.’1 Rent seeking is nothing more than a polite and rather neutral-sounding way of referring to what I call ‘accumulation by dispossession’. The virtue of Stiglitz’s somewhat truncated account of rent seeking or accumulation by dispossession is that it recognises the seamless way in which monopoly power in economic transactions is paralleled by monopoly power in the political process.

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Regressive taxes and write-offs; regulatory capture (in which the foxes are put in charge of the henhouse); acquiring or leasing state or private assets at discount prices; inflated cost-plus contracts with state agencies; writing legislation to protect or subsidise particular interests (energy and agribusiness); buying political influence through campaign contributions – these are all political practices that give a free hand to big moneyed and monopolistic interests while permitting them to plunder the public treasury at the expense of the taxpayer. These political practices supplement conventional rent seeking in land and property markets; rents on resources and on patents, licences and intellectual property rights; plus excess returns due to monopoly pricing. Then there are all the quasi-legal ways of gaining excess profits. The creation of financial markets that lack any transparency or in which adequate information is lacking creates a fog of misunderstanding in which sharp practices are impossible to curb.

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As Stiglitz remarks, ‘Some of the most important innovations in business in the last three decades have centered not on making the economy more efficient but on how better to ensure monopoly power or how better to circumvent government regulations intended to align social returns and private rewards.’2 What is missing from Stiglitz’s account of rent seeking as a strategy (though not from his account of the social outcomes) is the demolition of a wide range of democratic rights, including economic rights to pensions and health care, and free access to vital services such as education, police and fire protection, and state-funded programmes (like nutritional supplements and food stamps in the case of the USA) that have hitherto helped to support low-income populations at an adequate standard of living.

The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite by Daniel Markovits

8-hour work day, activist fund / activist shareholder / activist investor, affirmative action, algorithmic management, Amazon Robotics, Anton Chekhov, asset-backed security, assortative mating, basic income, Bernie Sanders, big-box store, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, carried interest, collateralized debt obligation, collective bargaining, compensation consultant, computer age, corporate governance, corporate raider, crony capitalism, David Brooks, deskilling, Detroit bankruptcy, disruptive innovation, Donald Trump, Edward Glaeser, Emanuel Derman, equity premium, European colonialism, everywhere but in the productivity statistics, fear of failure, financial engineering, financial innovation, financial intermediation, fixed income, Ford paid five dollars a day, Frederick Winslow Taylor, fulfillment center, full employment, future of work, gender pay gap, gentrification, George Akerlof, Gini coefficient, glass ceiling, Glass-Steagall Act, Greenspan put, helicopter parent, Herbert Marcuse, high net worth, hiring and firing, income inequality, industrial robot, interchangeable parts, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kevin Roose, Kiva Systems, knowledge economy, knowledge worker, Kodak vs Instagram, labor-force participation, Larry Ellison, longitudinal study, low interest rates, low skilled workers, machine readable, manufacturing employment, Mark Zuckerberg, Martin Wolf, mass incarceration, medical residency, meritocracy, minimum wage unemployment, Myron Scholes, Nate Silver, New Economic Geography, new economy, offshore financial centre, opioid epidemic / opioid crisis, Paul Samuelson, payday loans, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, purchasing power parity, rent-seeking, Richard Florida, Robert Gordon, Robert Shiller, Robert Solow, Ronald Reagan, Rutger Bregman, savings glut, school choice, shareholder value, Silicon Valley, Simon Kuznets, six sigma, Skype, stakhanovite, stem cell, Stephen Fry, Steve Jobs, stock buybacks, supply-chain management, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Theory of the Leisure Class by Thorstein Veblen, Thomas Davenport, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, traveling salesman, universal basic income, unpaid internship, Vanguard fund, War on Poverty, warehouse robotics, Winter of Discontent, women in the workforce, work culture , working poor, Yochai Benkler, young professional, zero-sum game

But it is a mistake to leap from these uncontested facts to the conclusion that deregulated elite finance workers’ immense incomes arise from exploitation or rent seeking. If the techniques employed by deregulated finance make super-skilled finance workers especially productive, then no increase in rent seeking is required to explain the increase in finance-sector wages. The figures, which show that relatively fewer, relatively more-skilled workers are taking the same cut from a relatively rising share of GDP explain rising finance-sector wages in this way, without needing to resort to rising rent seeking. None of this demonstrates, nor does it even assert, that finance workers extract no rents.

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Critics of inequality commonly attribute rising top incomes to personal vices rather than to economic structures, and to too little meritocracy rather than too much, arguing that superordinate workers get their extravagant incomes through nepotism and class snobbery, rent seeking that exploits economic power, or even outright fraud. These arguments resemble suggestions, discussed earlier, that top incomes must come from capital rather than labor. Like those suggestions, these charges have a point. Meritocrats retain all the familiar vices, and class snobbery, rent seeking, and fraud contribute—including outrageously—to the advantages that superordinate workers enjoy. But once again, the scale of the moral vices does not match (or even approach) the scale of the rise in elite incomes.

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According to this view, elite schools and universities admit students based on cultural capital, class background, or legacy status rather than intelligence or academic ability, elite employers hire based on social networks and pedigree rather than skill or talent, and superordinate workers command their immense incomes through rent seeking or outright fraud. A second familiar criticism, developed in great detail by Thomas Piketty, attributes increasing economic inequality to a shift of income away from labor and in favor of capital and, in the extreme, to a rising oligarchy. According to this view, economic and political forces are reconcentrating wealth, redistributing income to become both more capital-intensive and more concentrated at the top, and by these means rebuilding an old-fashioned rentier elite as the economically and politically dominant caste in a twenty-first-century version of patrimonial capitalism.

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

"World Economic Forum" Davos, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, commodity super cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, driverless car, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, financial engineering, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, global macro, Goodhart's law, guns versus butter model, hiring and firing, hype cycle, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Japanese asset price bubble, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, Larry Ellison, lateral thinking, liberal capitalism, low interest rates, Malacca Straits, Mark Zuckerberg, market bubble, Mary Meeker, mass immigration, megacity, megaproject, Mexican peso crisis / tequila crisis, middle-income trap, military-industrial complex, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, open immigration, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, tacit knowledge, tech billionaire, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, work culture , working-age population

Rising Japanese billionaires like Hiroshi Mikitani, an e-commerce magnate known for adopting ideas from American corporate culture and criticizing his countrymen for their lack of English proficiency, get a lot of media attention precisely because they are so unusual. It’s not a good sign when dynamism is seen as offbeat. Quality: The Good versus Bad Billionaires Though new faces on the billionaire list can be a favorable sign for the economy, this holds true only if they are good billionaires, emerging outside what economists call “rent-seeking industries.” These industries include construction, real estate, gambling, mining, steel, aluminum and other metals, oil, gas, and other commodity industries that mainly involve digging natural resources out of the ground. The competition in these sectors is often focused on securing access to a greater share of the national wealth in natural resources, not on growing the wealth in fresh, innovative ways.

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These trends may have taken the edge off the anticorporate, antigrowth sentiment that had been building in Delhi over the prior decade. An Indian brokerage firm called Ambit started tracking the fate of crony capitalists through its “connected companies index,” which monitors seventy-five firms that operate in rent-seeking industries and are believed to have benefited significantly from close ties to government officials. The stock prices for these companies have collapsed with the growing backlash against political influence peddling and the public’s intense focus on corrupt deals. Between mid-2010 and mid-2015, India’s stock market rose 50 percent, while the connected companies’ index lost half its value, a sign that crony capitalism was in decline, along with the luster of making money on rising commodity prices.

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Few new or good billionaires are to be found in nations where an aging regime has turned away from reform and cultivated a class of politically connected tycoons. Two of these regimes are in Putin’s Russia and Erdoan’s Turkey. The billionaire class in Turkey controls a rising share of the economy, and the share of wealth that comes from rent-seeking industries has spiked. Nine out of every ten Turkish billionaires live in Istanbul, long the commercial center of the country. Even billionaires who hail from the heartland of Anatolia tend to relocate to Istanbul, to be closer to the action. But no city rivals the concentration of wealth and power in Moscow.

Mending the Net: Toward Universal Basic Incomes by Chris Oestereich

Abraham Maslow, basic income, en.wikipedia.org, future of work, Future Shock, Overton Window, 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

And plenty of other potential pitfalls may lie waiting in the road ahead. Thinking about what problems might lurk, and designing experiments with those possibilities in mind, should help us arrive at a workable starting point. A few potential obstacles I see are (1) the likelihood of rent seeking, (2) the curtailment of welfare programs, and (3) the financialization of basic incomes. The economy is already rife with rent seeking; the pursuit of economic gain without reciprocation. Imagine what those who already pursue such “opportunities” might try when they learn that everyone will start receiving regularly scheduled checks. What would cartoonishly rapacious capitalists like Turing Pharmaceuticals,[19] the EpiPen’s maker Mylan,[20] and all the garden-variety profiteers who keep their inequitable dealings under the radar do in those circumstances?

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

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

Three leading theorists from Harvard and MIT – Kevin Murphy, Robert Vishny and Andrei Shleifer – argue in an important paper that countries in which talent pursues such rent-seeking activity rather than genuine entrepreneurship grow at a slower rate: ‘Pure entrepreneurial activities raise current income because resources are used more efficiently, contribute to growth because technology is improved, and take profits away from competitors.’19 Rent-seeking does the opposite. Moreover, as Schumpeter pointed out, the innovating entrepreneur who had to overcome the resistance of the conservative to change probably expended more energy and effort.

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It might even indirectly contribute to growth if more efficient financial markets reduce the cost of capital. But the main gains from trading come from the transfer of wealth to the smart traders from the less astute who trade with them out of institutional needs or outright stupidity.’ Finance – along with the law and piracy – has always been a route to great wealth, a classic rent-seeking occupation. Today, it is even more so. In their defence, bankers and financiers usually point to ‘financial innovation’ as an attribute that society should desire and value, but their arguments are hamstrung by their own astonishing inability to distinguish between innovation that is economically and socially useful and that which is not.

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The cases for inheritance tax – a tax on good luck – and social insurance – a means to counter bad luck – are both deeply rooted in human motivation. Moreover, fairness suggests that the operation of markets should be limited when they create economic ‘bads’. Fairness undermines the spurious justification for the explosion in executive pay and demands activism to ensure that entrepreneurship maximises genuine wealth-creation rather than rent-seeking. Obstacles to social mobility and self-improvement by the disadvantaged are similarly unfair. However, fairness poses a challenge to the political left in respect to need. The left has largely adopted a Rawlsian position on poverty: put simply, it believes that inequality is not driven by personal capacities, choices and values.

Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane

agricultural Revolution, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, basic income, book value, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, debt deflation, deindustrialization, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, foreign exchange controls, full employment, garden city movement, George Akerlof, ghettoisation, Gini coefficient, Hernando de Soto, housing crisis, Hyman Minsky, income inequality, information asymmetry, knowledge worker, labour market flexibility, labour mobility, land bank, land reform, land tenure, land value tax, Landlord’s Game, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, means of production, Minsky moment, Money creation, money market fund, mortgage debt, negative equity, Network effects, new economy, New Urbanism, Northern Rock, offshore financial centre, Pareto efficiency, place-making, Post-Keynesian economics, price stability, profit maximization, quantitative easing, rent control, rent-seeking, Richard Florida, Right to Buy, rising living standards, risk tolerance, Robert Solow, Second Machine Age, secular stagnation, shareholder value, subprime mortgage crisis, the built environment, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, universal basic income, urban planning, urban sprawl, working poor, working-age population

As David Ricardo (and later Henry George) identified, the ability to extract economic rent is so powerful it can effectively monopolise much of the growth created in an economy, the vast bulk of which will not have been created by the landowners themselves. In its simplest conception, as the economy grows, landowners can increase the rent they charge non-owners to absorb all the additional value that their tenants (such as workers, shopkeepers and industrialists) generate. Rent-seeking seems intuitively unfair to many, but it is also inefficient. If the worker, the shopkeeper or the industrialist cannot benefit from their own efforts, but must watch it being extracted in the form of rent, why would they exert themselves or innovate? As is often noted by studies of the divergent economic health of different cities, successful urban centres around the world experience soaring land and housing costs, which ultimately threaten the very economic success of those cities, as valuable workers choose to move to less dynamic places where lower wages are more than compensated by much lower housing costs (Hsieh and Moretti, 2015).

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Historical evidence suggests that markets in private property tend towards concentration, and to absorb a disproportionate share of growth (George, [1879] 1979; Ricardo, 1817). The result is growing wealth inequality, acute poverty for some, and inefficient capital allocation which dampens economic growth (which we explore in Chapter 6). As Joseph Stiglitz has put it, rent-seeking involves directing effort ‘toward getting a larger share of the pie rather than increasing the size of the pie’ (Stiglitz and Bilmes, 2012). 1.4 Summary of chapters The remainder of this book is laid out as follows. Chapter 2 describes the emergence of tradeable, privately owned landed property and the enclosure of previously common or feudal lands into private ownership.

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Despite the stated policy goal of extending the opportunities of homeownership to more people, when trade-offs between different interest groups have to be made, government policy has invariably entrenched the growing divide between those who own homes and those who do not (see Chapter 5), with the result that homeownership has been in absolute decline in the UK since 2003 (DCLG, 2016). Ultimately, in its policies towards land and property, the state has legitimised what would be described in economic terms as ‘rent-seeking’ behaviour. 2.5 Hypothesis: property is liberty, property is theft It would seem that the transformation of land into private property brings both economic advantages and disadvantages. Thinkers have wrestled with this problem since the birth of political economy (the forerunner to economics) as a subject of study.

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

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

But it is more accurate to think of mercantilism as a different way to organize the relationship between the state and the economy—a vision that holds no less relevance today than it did in the eighteenth century. Mercantilist theorists such as Thomas Mun were in fact strong proponents of capitalism; they just propounded a different model than liberalism. The liberal model views the state as necessarily predatory and the private sector as inherently rent-seeking. So, it advocates a strict separation between the state and private business. Mercantilism, by contrast, offers a corporatist vision in which the state and private business are allies and cooperate in pursuit of common objectives, such as domestic economic growth or national power. The mercantilist model can be derided as state capitalism or cronyism.

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we turned our analytical toolkit on the behavior of politicians and bureaucrats themselves. We began to examine political behavior using the same frameworks that we use for consumer and producer decisions in a market economy. Politicians became income-maximizing suppliers of policy favors; citizens became rent-seeking lobbies and special interests; and political systems became marketplaces in which votes and political influence are traded for economic benefits. Thus was born the field of rational-choice political economy and a style of theorizing that many political scientists readily emulated. The apparent payoff was that we could now explain why politicians did so many things that apparently violated economic rationality.

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It may be used to provide aid donors with cover in case of failure, as a signal for new governments that they are the “good guys,” and by domestic lobbies to legitimize their own self-interested agenda.24 Paul DiMaggio and Walter Powell have coined the term “isomorphic mimicry” to denote the pressures that organizations face to become similar, even as they struggle to change.25 My colleague Matt Andrews documents how reform in poor countries through “isomorphic mimicry” results in the semblance of change, with little real progress achieved: a bureaucracy gets reorganized to look like those from advanced countries, but bureaucratic efficiency hardly improves.26 In a paper with Sharun Mukand, we develop a formal model of the incentives for governments to mimic other countries’ policies: implementing policies with a poor fit is costly, but so is experimentation—and an imperfectly informed electorate may be more likely to interpret domestic experimentation as an attempt at rent seeking, while being willing to accept emulation.27 What Do We Gain by Considering the Role of Ideas? I have tried to show that, for all the emphasis placed on them in political economy, vested interests play a considerably less significant role than appears at first sight. Indeed, because of their neglect of ideas, political-economy frameworks often do a poor job of accounting for policy change.

Escape From Rome: The Failure of Empire and the Road to Prosperity by Walter Scheidel

agricultural Revolution, barriers to entry, British Empire, classic study, colonial rule, conceptual framework, creative destruction, currency manipulation / currency intervention, dark matter, disruptive innovation, Easter island, Eratosthenes, European colonialism, financial innovation, financial intermediation, flying shuttle, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, Joseph Schumpeter, knowledge economy, low interest rates, mandelbrot fractal, means of production, Multics, Network effects, out of africa, Peace of Westphalia, peer-to-peer lending, plutocrats, principal–agent problem, purchasing power parity, rent-seeking, Republic of Letters, secular stagnation, South China Sea, spinning jenny, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transaction costs, vertical integration, zero-sum game

The mature Roman empire sustained a standing army deployed in and increasingly replenished from frontier regions and augmented by provincial auxiliaries, whereas the Han empire (the much longer-lived successor to the Qin regime) gradually came to rely on a mixture of convicts, colonists, mercenaries, and “barbarian” contingents. In both cases, territorial expansion slowed and then ceased altogether. At the same time, rent-seeking local elites increasingly constrained central authority and state control (figure 7.1).5 FIGURE 7.1   Empires of the Old World, c. 200 CE. The two empires even failed in a similar fashion. The third century CE witnessed temporary splits into three subimperial states: however, Rome experienced a more robust recovery (from the 270s to the 390s CE) than Jin China (where unity was chiefly limited to a quarter century after 265 CE).

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It was revived when state power recovered in the north during the later stages of the Period of Disunion. And it greatly gathered strength under the Song dynasty, which had established the strongest state in China thus far. This belief system did best when the state was strongest and the empire was intact—and thus able to provide sponsorship and material and status benefits to rent-seeking elites. It was at its most stable during the second millennium CE, when China was essentially either united or, at worst, split in two. All this speaks strongly in favor of explaining the success of this particular brand of elite Confucianism’s success with reference to the fortunes of empire, rather than the other way around.

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The large volume of legislation betrays its incremental and piecemeal character, often enacted to grant special favors to proponents. By current standards, Parliament was corrupt, often favoring legislation that targeted specific constituencies in exchange for inducements. Even so, over the course of the eighteenth century, rent-seeking gave way to considerations of national interest: instead of pleasing the highest bidder, Parliament sought to arbitrate among competing interest groups. Moreover, the sheer volume of acts underlined their relevance and Parliament’s responsiveness to interest groups from across the country. These interactions strengthened the ties between center and regions, promoting integration.96 In Julian Hoppit’s words, parliamentary intervention in the aggregate represented “a commercialization of political power leading to an intensification of market relations within society.”

Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life by Alan B. Krueger

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, autonomous vehicles, bank run, behavioural economics, Berlin Wall, bitcoin, Bob Geldof, butterfly effect, buy and hold, congestion pricing, creative destruction, crowdsourcing, digital rights, disintermediation, diversified portfolio, Donald Trump, endogenous growth, Gary Kildall, George Akerlof, gig economy, income inequality, independent contractor, index fund, invisible hand, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kickstarter, Larry Ellison, Live Aid, Mark Zuckerberg, Moneyball by Michael Lewis explains big data, moral hazard, Multics, Network effects, obamacare, offshore financial centre, opioid epidemic / opioid crisis, Paul Samuelson, personalized medicine, power law, pre–internet, price discrimination, profit maximization, random walk, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, Saturday Night Live, Skype, Steve Jobs, the long tail, The Wealth of Nations by Adam Smith, TikTok, too big to fail, transaction costs, traumatic brain injury, Tyler Cowen, ultimatum game, winner-take-all economy, women in the workforce, Y Combinator, zero-sum game

As the team of economists wrote, “Term extension in existing works provides no additional incentive to create new works and imposes several kinds of additional costs.” The costs are higher prices for books, cartoons, T-shirts, costumes, and other products related to Mickey Mouse or Winnie the Pooh. Not surprisingly, owners of valuable copyrights have lobbied strongly for term extensions around the world, an activity that economists refer to as “rent-seeking.” Rent-seeking is an attempt to extract greater compensation without creating additional value for society. In other words, rent-seekers expend resources to obtain a larger slice of the pie, while doing nothing to increase the size of the pie. There is little evidence that copyright term extensions produce beneficial effects.

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Figure 9.1 shows that music radio stations pay out a much smaller share of their revenues to music rights holders than do satellite music stations or streaming services.30 This creates a profitable business model for radio stations: music radio stations pay out only 4.6 percent of their operating budget for music, although music makes up two-thirds of their on-air content. And radio station owners, who are located in nearly every congressional district, and their trade group, the National Association of Broadcasters, have successfully lobbied to avoid paying performance royalties for decades, in a successful exercise of rent-seeking. Non-interactive streaming services, such as Sirius XM and Pandora, where users cannot select a specific song to play, qualify for a compulsory license with royalty rates set by the Copyright Royalty Board (CRB). But the neutrality principle is further muddied because the two services pay different royalty rates, as they are subject to different legal standards and different CRB rulings.

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The Clinton administration did not anticipate that Google, which would later acquire YouTube, and other Internet service providers would become so large and powerful that it would be a Herculean task to unwind the temporary protection that DMCA afforded and legislate a more reasonable balance between content creators and Internet platforms. This is another example of the power of rent-seeking. Modernizing Copyright for a Digital World Early in this chapter I warned that music copyright rules can make your head spin. The lines that divide legitimate copyright protection from excessive copyright exploitation are blurred, the laws that dictate copyright fees and licensing requirements across different platforms are uneven, and the restrictions that govern the organizations that collect and distribute music royalties are antiquated.

99%: Mass Impoverishment and How We Can End It by Mark Thomas

"there is no alternative" (TINA), "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, additive manufacturing, Alan Greenspan, Albert Einstein, anti-communist, autonomous vehicles, bank run, banks create money, behavioural economics, bitcoin, business cycle, call centre, Cambridge Analytica, central bank independence, circular economy, complexity theory, conceptual framework, creative destruction, credit crunch, CRISPR, declining real wages, distributed ledger, Donald Trump, driverless car, Erik Brynjolfsson, eurozone crisis, fake news, fiat currency, Filter Bubble, full employment, future of work, Gini coefficient, gravity well, income inequality, inflation targeting, Internet of things, invisible hand, ITER tokamak, Jeff Bezos, jimmy wales, job automation, Kickstarter, labour market flexibility, laissez-faire capitalism, Larry Ellison, light touch regulation, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, Modern Monetary Theory, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Nick Bostrom, North Sea oil, Occupy movement, offshore financial centre, Own Your Own Home, Peter Thiel, Piper Alpha, plutocrats, post-truth, profit maximization, quantitative easing, rent-seeking, Robert Solow, Ronald Reagan, Second Machine Age, self-driving car, Silicon Valley, smart cities, Steve Jobs, The Great Moderation, The Wealth of Nations by Adam Smith, Tyler Cowen, warehouse automation, wealth creators, working-age population

Over time, this constant rewriting of the rules results in an ever-greater concentration of wealth and power – it can be seen as the fundamental cause of the emergence of mass impoverishment. The process of manipulating public policy or economic conditions as a strategy for increasing profits is sometimes called ‘rent-seeking’ by economists because it enables one to appropriate the benefits of someone else’s work in the same way that a landlord can raise farm rents if farmers become more successful. There are so many different forms of rent-seeking – from exploiting tax loopholes to ensuring favourable privatizations; from creating monopolies to weakening the bargaining power of employees; from externalizing the costs of one’s business to society to capturing control of regulators; and, of course, literal rent on land or property – that it would be difficult to produce a comprehensive list.

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There are so many different forms of rent-seeking – from exploiting tax loopholes to ensuring favourable privatizations; from creating monopolies to weakening the bargaining power of employees; from externalizing the costs of one’s business to society to capturing control of regulators; and, of course, literal rent on land or property – that it would be difficult to produce a comprehensive list. But if rent-seeking continues unchecked, so will mass impoverishment. Individuals with extreme wealth are able, if they choose, to have an impact on the dominant narrative in society disproportionate to their numbers but perhaps proportionate to their wealth, shaping public perceptions of reality in line with their own wishes and influencing the votes of thousands or even millions of their compatriots. They do not literally have more than one vote at the ballot box but they are able to influence the votes of millions.

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The fourth proposal seems more contentious but even if enacted, it would still mean that ten firms or individuals between them could maintain absolute dominance over the principal media – and, to a large extent, over public discourse. Nevertheless, in many countries this would be a much better situation than currently exists. As Chapter Five pointed out, there are many ways of rent-seeking for those with their hands on the levers of power. Without the kind of democratic reform set out above, even if one government manages to pass effective legislation that reduces or even halts mass impoverishment, it will only be a matter of time until another government comes to power and undoes the good work.

Cogs and Monsters: What Economics Is, and What It Should Be by Diane Coyle

3D printing, additive manufacturing, Airbnb, Al Roth, Alan Greenspan, algorithmic management, Amazon Web Services, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Big bang: deregulation of the City of London, biodiversity loss, bitcoin, Black Lives Matter, Boston Dynamics, Bretton Woods, Brexit referendum, business cycle, call centre, Carmen Reinhart, central bank independence, choice architecture, Chuck Templeton: OpenTable:, cloud computing, complexity theory, computer age, conceptual framework, congestion charging, constrained optimization, coronavirus, COVID-19, creative destruction, credit crunch, data science, DeepMind, deglobalization, deindustrialization, Diane Coyle, discounted cash flows, disintermediation, Donald Trump, Edward Glaeser, en.wikipedia.org, endogenous growth, endowment effect, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, Evgeny Morozov, experimental subject, financial deregulation, financial innovation, financial intermediation, Flash crash, framing effect, general purpose technology, George Akerlof, global supply chain, Goodhart's law, Google bus, haute cuisine, High speed trading, hockey-stick growth, Ida Tarbell, information asymmetry, intangible asset, Internet of things, invisible hand, Jaron Lanier, Jean Tirole, job automation, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, knowledge worker, Les Trente Glorieuses, libertarian paternalism, linear programming, lockdown, Long Term Capital Management, loss aversion, low earth orbit, lump of labour, machine readable, market bubble, market design, Menlo Park, millennium bug, Modern Monetary Theory, Mont Pelerin Society, multi-sided market, Myron Scholes, Nash equilibrium, Nate Silver, Network effects, Occupy movement, Pareto efficiency, payday loans, payment for order flow, Phillips curve, post-industrial society, price mechanism, Productivity paradox, quantitative easing, randomized controlled trial, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Robinhood: mobile stock trading app, Ronald Coase, Ronald Reagan, San Francisco homelessness, savings glut, school vouchers, sharing economy, Silicon Valley, software is eating the world, spectrum auction, statistical model, Steven Pinker, tacit knowledge, The Chicago School, The Future of Employment, The Great Moderation, the map is not the territory, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Uber for X, urban planning, winner-take-all economy, Winter of Discontent, women in the workforce, Y2K

Recently in development economics there has been great emphasis on the need for sound political institutions, including the rule of law but also inclusive institutions enabling successful entrepreneurship and new entry to the economic elite (Besley and Persson 2012; Acemoglu and Robinson 2012). The more recent institutional economics is also descended from the public choice school, which emphasises the role of incentives in politics and government as well as in purely ‘economic’ decisions. Mancur Olson argued that a successful economy depends on government overcoming rent-seeking behaviour by interest groups. Special interest groups with restricted or delineated membership, such as cartels, trade bodies, unions, or professions, will seek to persuade politicians to deliver policies that favour their members. These policies will rarely be the best outcome for other parts of society, but they have no incentive to organise or lobby against the policies (Olson 1982).

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Amartya Sen forcefully demonstrated the importance of good politics for a sound economy in his work linking the presence of famine to the absence of democratic voice (Sen 1982). His account of the capabilities necessary for economic development includes political participation (Sen 2009). So economists are familiar with the importance of understanding institutions and indeed see their own participation in policy institutions as a contribution to overcoming rent-seeking behaviour. There are quite a few examples of the use of economist-centred institutions in government. In addition to independent agencies like central banks and competition authorities, another type is the expert report. Governments frequently commission an independent economist to take an impartial view of the evidence and make policy recommendations.

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A few hundred pages of careful analysis lack political weight compared to the lobbying efforts of the special interests affected. This can equally derail economic analysis inside government, of course. Powerful lobby groups are—well, powerful. If interest group pressures make the independent report too weak a political instrument, other institutional embodiments of economic analysis as a counter to rent-seeking have been more effective. In the UK, Royal Commissions in the past typically had enough stature to enable governments to legislate against special interest groups. They are no longer used, though. In contrast, economic regulators have grown in number and are empowered to take decisions more or less independently of the political process, in the general public or consumer interest as set out in statute.

Licence to be Bad by Jonathan Aldred

"Friedman doctrine" OR "shareholder theory", Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, availability heuristic, Ayatollah Khomeini, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Monday: stock market crash in 1987, Black Swan, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, Charles Babbage, clean water, cognitive dissonance, corporate governance, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, Edward Snowden, fake news, Fall of the Berlin Wall, falling living standards, feminist movement, framing effect, Frederick Winslow Taylor, From Mathematics to the Technologies of Life and Death, full employment, Gary Kildall, George Akerlof, glass ceiling, Glass-Steagall Act, Herman Kahn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jeff Bezos, John Nash: game theory, John von Neumann, Linda problem, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, meta-analysis, Mont Pelerin Society, mutually assured destruction, Myron Scholes, Nash equilibrium, Norbert Wiener, nudge unit, obamacare, offshore financial centre, Pareto efficiency, Paul Samuelson, plutocrats, positional goods, power law, precautionary principle, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, scientific management, Skinner box, Skype, Social Responsibility of Business Is to Increase Its Profits, spectrum auction, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, trickle-down economics, Vilfredo Pareto, wealth creators, zero-sum game

Another problem with excessive remuneration packages in finance is that they lure too many talented people into the sector – people who would make a greater economic contribution elsewhere. On top of this waste of human resources, there are the resources wasted solely on getting excessive remuneration – merely redistributing the pie, rather than enlarging it. More rent-seeking, in other words. A rough estimate of the scale of the waste comes from the classic rent-seeking activity, lobbying. In the US in 2011 alone over $3 billion was spent on lobbying.44 Turning to the other end of the income distribution, poverty is not just a tragedy for the poor. It is an appalling waste of productive capacity in the rest of the economy.

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Holmström concluded that ‘bringing the market inside the firm is such a misguided idea, something I failed to understand [earlier] and advocates of market-like incentives in firms seem to miss today’.26 Better late than never, although the more inventive self-enrichment efforts of the top 1 per cent have now moved elsewhere. Most of these efforts involve changing the rules underpinning economic activity in their favour. Economists call it rent-seeking: any action undertaken with the principal purpose of redistributing income, wealth or resources in your favour – in contrast to most economic activity, which in some sense creates wealth or adds value to economy or society. The only objective of rent-seekers is grabbing a bigger slice of the pie; they do nothing to enlarge the pie for everyone.

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air travel, commercial, 63–4 Akerlof, George, 223, 237, 248 altruism, 150–51, 159, 162–4 game theory’s denial of, 31–2, 41, 42–3 misunderstanding of, 13–14, 25, 31–2, 41–3, 112, 178–9 as not depleted through use, 14 seen as disguised selfishness, 11–12, 25, 112, 178–9 Amazon, 155, 178, 208 American Economic Association, 257, 258 Angrist, Joshua, 249 antitrust regulation, 56–8 Apple, 222–3 Aristotle, 14 Arrow, Ken awarded Nobel Prize, 71 and blood donations, 14, 163 at City College, New York, 74–5, 91 collective preference, 73–4, 75–7, 78–82 and democracy, 72–4, 75–7, 78–83, 95, 97 framework presented as scientific, 81–2, 124–5 and free marketeers, 78–9, 82 Impossibility Theorem, 72, 73–4, 75–7, 78–83, 89, 97 and mathematics, 71, 72, 73–5, 76–7, 82–3, 97 and Mont Pèlerin Society, 9 preference satisfaction’, 80–82, 97, 124–5, 129 and Ramsey, 189 at RAND, 70–71, 72–3, 74, 75–6, 77, 78 top-secret-level security clearance, 71–2 ‘A Cautious Case for Socialism’ (1978), 83 ‘On the Optimal Use of Winds for Flight Planning’, 71 Social Choice and Individual Values (1951), 71, 72, 75–7, 78–80, 97 artificial intelligence, 214, 242 Atlas Economic Research Foundation, 7–8 Austen, Jane, 134 austerity policies, recent, 258 Axelrod, Robert, 41 Babbage, Charles, 222 baby-market idea, 61, 138, 145, 146 Bachelier, Louis, 193 Baird, Douglas, 58–9 bandwagon effect, 110 Bank of England, 96, 120, 185, 211–12, 258 bankers excuse/permission to be greedy, 1–2, 204, 238 and Keynesian economics, 5 performance as wholly relative, 204 quantification and recklessness, 213 rigged pay-for-performance contracts, 229–30, 238 role in 2007 crisis, 1–2, 57, 182, 192 as serial offenders over uncertainty, 201 see also financial markets Barro, Josh, 63, 64 Bateson, Gregory, 28 battery-chicken farming, 7 Baumol, William, 90–92, 93, 94 BBC, 48, 98 Beaverbrook, Lord, 157 Becker, Gary amoral understanding of crime, 137, 152 and citizenship rights, 146 and Coase, 69 Freakonomics followers of, 130, 134, 148–9, 156 and Friedman, 126, 131 hidden assumptions of, 130–31, 133–4 human capital idea, 149 and individualism, 134, 135–8 and maximization, 129–31, 133–4, 147 as outsider, 50 and Posner, 56 rejects need for realistic assumptions, 132, 133–4, 148 and sale of body parts, 147–8 sees poor health as just a preference, 135, 136, 140 sees values as mere tastes, 136–8, 140 theories as deeply controversial, 127–9, 130 theories as slippery, 129, 133–4 and ‘universality’ of economics, 125, 126–31, 133–4, 135–8, 147–8 version of ‘rational’ behaviour, 128–9, 135, 140, 151 De Gustibus Non Est Disputandum (with Stigler, 1977), 135–6 The Economic Approach to Human Behavior (1976), 130 The Economics of Discrimination (1957), 126–7 A Treatise on the Family (1981), 127–8, 130–31, 133 behaviourism, 154–8, 237 behavioural economics context and culture, 175–6 framing effects, 170–71, 259 and incentives, 160, 171, 175, 176–7 methods from psychology, 170–71 and Nudge, 171–2 and orthodox economics, 173, 174–5, 247, 255 and physics envy, 175–6 problems with, 173–5, 250–51 ‘self-command’ strategies, 140 theory of irrationality, 12, 171, 250–51 and welfare maximization, 149 Bell, Alexander Graham, 222 bell curve distribution, 191–4, 195, 196, 201, 203–4, 218–19, 257 Bentham, Jeremy, 102 Berlin, Isiah, 166, 167–8 Beveridge Report (1942), 4 Bezos, Jeff, 208 Black, Duncan, 77–8, 95 Blackstone (private equity firm), 235 black swans, 192, 194, 201, 203–4 Blinder, Alan, The Economics of Brushing Teeth (1974), 136 blood donors, 14, 112, 162–3, 164, 169, 176 Borel, Émile, 185* Brennan, William, 56 broadcasting, 48–50, 98 spectrum auctions, 39–40, 47, 49–50 Buchanan, James McGill, 8, 83–5, 87–8, 89, 95, 115 Buffett, Warren, 229, 230, 236 Calcraft, John, 120, 121 Cameron, David, 172 Caplan, Brian, The Myth of the Rational Voter, 245–6 carbon markets, 47, 65–7 Carlson, Jack, 141–2 Carroll, Lewis (Charles Lutwidge Dodgson), 72, 77 cartels and monopolies, 101, 102, 103–4 Cheney, Dick, 232–3 Chicago, University of, 2, 4, 34, 40, 49–51 antitrust ideas, 56–8 Buchanan at, 84 and Coase, 49–52, 53–4, 55, 56–7, 61, 68–9, 132 Friedman’s dominance, 50, 132 law and economics movement, 40, 55, 56–63, 64–7 revolution of 1968 at, 56, 58–9 zero-transaction-costs assumption, 51–2, 68–9 Chicago law school, 55, 56, 58–9 child labour, 124, 146 China, 65 City College, New York, 74–5, 91 climate change average temperature rises, 205–6, 207 and carbon markets, 47, 65–6 ‘cashing in’ on carbon markets, 67 Coasean worldview on pollution, 65–7, 68 denialists, 8 ‘discount rate’ on future costs, 208–9, 212 discrimination against future generations, 208–9 and free-riding theory, 2, 99, 113–17, 120 Intergovernmental Panel on, 207 measurement in numerical terms, 206–11, 213 and precautionary principle, 211–12 premature deaths due to, 207–9 and Prisoner’s Dilemma, 27 Stern Review, 206, 209–10 threat to economic growth, 209 Coase, Ronald argument given status of theorem, 51–2, 67 awarded Nobel Prize, 52 background of, 47–8 and Chicago School, 49–52, 53–4, 56–7, 61, 68–9, 132 and created markets, 47, 65–7 dismissal of ‘blackboard economics’, 48, 54, 64, 67–9 on Duncan Black, 77 evening at Director’s house (early 1960), 49–51, 132 fundamental misunderstanding of work of, 51, 52–3, 67–9 hypothetical world invoked by, 50–51, 52, 54–5, 62, 68 as Illinois resident, 46–7 and Mont Pèlerin Society, 8 and public-sector monopolies, 48–51 and transaction costs, 51–3, 54–5, 61, 62, 63–4, 68 ‘The Nature of the Firm’ (1932 paper), 48 The Problem of Social Cost’ (1960 paper), 47, 48, 50–51, 52, 54–5, 59 cognitive dissonance, 113–14 Cold War, 18–19, 20, 21–2, 24, 27, 181 Cuban Missile Crisis (1962), 33–4, 140 and Ellsberg, 184, 197, 198, 200 and game theory, 18, 20, 21–2, 24, 27, 33–4, 35, 70, 73, 198 and Impossibility Theorem, 75–6 RAND and military strategy, 18, 20, 21–2, 24, 27, 33–4, 70, 73, 75–6, 141, 200, 213 and Russell’s Chicken, 33 and Schelling, 138, 139–40 Washington–Moscow hotline installed, 139–40 collective preference and Ken Arrow, 73–4, 75–7, 78–82 Black’s median voter theorem, 77, 95–6 Sen’s mathematical framework, 80–81 communism, 82, 84, 101, 104, 237 Compass Lexecon, 58, 68 Condorcet Paradox, 76, 77 conspiracy theories, 3, 8, 9 cooperation cartels, monopolies, price-fixing, 101, 102, 103–4 and decision-making processes, 108–10 and free-riding theory, 2, 101, 102, 103–10 office teamwork, 109–10, 112 older perspective on, 100–102, 108, 111, 122 and Scandinavian countries, 103 view of in game theory, 21–2, 23, 25–32, 36–8, 41–3 corporate culture and antitrust regulation, 57–8 changes due to Friedman, 2, 152 Chicago approach to regulation, 40 and climate change, 113, 114, 115 executive pay, 215–16, 219, 224, 228–30, 234, 238 Jensen and Murphy’s article, 229 ‘optimal contracting’/pay-for-performance, 228–30, 238 predatory pricing, 57 and tax evasion/avoidance, 105–6 cost disease, 90–92, 93, 94 Cowles Commission in Chicago, 78 CP/M (Control Program for Microcomputers), 222 criminal responsibility, 111, 137, 152 Cuban Missile Crisis (1962), 33–4, 140 Damasio, Antonio, 14 data geeks, 248–50 ‘dead peasants insurance’, 124 decision-making processes, 108–10, 122, 170–71 ‘anchoring effect’, 212 authority figure–autonomy contradiction, 180 avoidance of pure uncertainty, 198–9 axioms (abstract mathematical assumptions), 198 Ellsberg Paradox, 184, 199–200 Ellsberg’s experiment (1961), 182–4, 187, 197, 198–200, 205 Linda Problem, 202–3 orthodox decision theory, 183–4, 185–6, 189–91, 193–4, 198–200, 201–2, 203–5, 211, 212–14 and the Savage orthodoxy, 190–91, 197, 198–200, 203 scenario planning as crucial, 251 Von Neumann’s theory of decision-making, 189, 190, 203 see also probability; risk and uncertainty democracy and Ken Arrow, 72–4, 75–7, 78–83, 95, 97 Black’s median voter theorem, 77, 95–6 and crises of the 1970s, 85–6 and economic imperialism, 145–7 equal citizenship principle at heart of, 145–6, 151 free-riding view of voting, 99, 110, 112, 115–16, 120–21 marketing by political parties, 95–6 modern cynicism about politics, 94–7 paradox of voter turnout, 88–9, 95–6, 115–16 paradox of voting, 75–7 politicians’ support for depoliticization, 96–7 post-war scepticism about, 78–9 and public choice theory, 85–6, 95–7 replacing of with markets, 79 Sen’s mathematical framework, 80–81 voter turnout, 88–9, 95–6, 115–16, 120–21 see also voting systems Dennison, Stanley, 13 dentistry, 258–9, 261 Depression (1930s), 3 digital technology, 68, 214, 222–3 data revolution, 247–50 and rising inequality, 215, 220, 242 Director, Aaron, 4–5, 49–51, 132 Disney World, 123 Dodd–Frank Act, 256 Dodgson, Charles Lutwidge (Lewis Carroll), 72, 77 dot.com bubble, 192, 201 Douglas Aircraft Corporation, 18 Downs, Anthony, An Economic Theory of Democracy (1957), 86, 89, 95 Dr Strangelove (Kubrick film, 1964), 19, 35, 139 DreamTours Florida, 123 Drucker, Peter, 153 Dulles, John Foster, 20 Dundee School of Economics, 48, 77–8 Dürrenmatt, Friedrich, The Visit of the Old Lady, 166 earthquakes, 194–5 Econometrica (journal), 77–8 economic imperialism arrogance of, 246–7 auctioning of university places, 124, 149–50 continuing damage wrought by, 151–2 and democracy, 145–7 emerges into the limelight, 130 Freakonomics, followers of, 130, 134, 148–9, 156 and inequality, 145–7, 148, 151, 207 markets in citizenship duties, 146 origins of term, 125 price as measure of value, 149, 150, 151 purchase of immigration rights, 125, 146 and sale of body parts, 123, 124, 145, 147–8 sidelining of moral questions, 125–9, 135–8, 141–5, 146–7, 148–9, 151–2, 207 value of human life (‘statistical lives’), 141–5, 207 welfare maximization, 124–5, 129–31, 133–4, 146–7, 148–9 see also Becker, Gary economic theory Arrow establishes benchmark for, 71 Baumol’s cost disease, 90–92, 93, 94 Coase Theorem, 45–7, 48–55, 56–7, 61, 63–6 and data revolution, 247–50 exclusion of by data geeks, 248–50 and financial markets, 9, 12–13, 182, 253 as focus of economics courses, 260 Kahneman and Tversky’s theory of irrationality, 12, 171, 250–51 of labour, 237 marginal productivity theory, 223–4, 228 Pareto efficiency, 217–18, 256* perfect competition, 103, 193–4 profit-maximizing firms, 228–9 rent-seeking, 230, 238 theory of motivation, 157–8, 164, 166–7, 168–70, 178–9 see also game theory; homo economicus; public choice theory; social choice theory economics accidental economists, 47–8 and Arrow’s framework, 78–9, 82 causes of growth, 223, 239 created markets, 47, 65–7 crises of the 1970s, 85–6 digital technology, 68, 214 efficiency as fundamental, 63, 64–5, 141, 153, 155, 193–4, 201, 211, 217–18, 255 empirical research as still rare, 247–8 extension into non-economic aspects of life, 40, 54–60, 65, 123–31, 132–4, 135–6, 145–50 gulf between reality and theory, 10–13, 31–2, 41–3, 51–3, 64–9, 86–9, 133, 136, 144–5, 228–30, 250–53, 260–61 history of, 260 lack of objective ‘facts’, 253 modern debate on, 9 and Olson’s analysis, 104 our love–hate relationship with, 3, 245 as partially self-fulfilling, 12–13, 14, 159, 253 percentage of GDP impact of climate change, 206–11, 213 positional goods, 239–41 Posner’s wealth-maximization principle, 57–63, 64–7, 137 predatory pricing, 57 principles for new relationship with, 251–61 privatization, 50, 54, 88, 93–4 rise of game theory, 40–41 Smith’s enlightened self-interest, 11 value of human life (‘statistical lives’), 141–5, 207 vocational role of, 260 see also behavioural economics; free-market economics economics, aims/pretensions to be science arrogance of, 205, 245–7, 258 Arrow’s framework presented as scientific, 72, 81–2, 124–5 attitude to value judgements, 10, 60–61, 64–9, 112, 136–8, 173–4, 204–5, 218, 247 claims of game theory, 21, 24–6, 28–9, 32, 34, 35, 38, 41 and data revolution, 247–50 desire for neutral science akin to physics, 9–10, 20–21, 34–5, 41, 116, 125, 132–3, 151, 175–6, 187–90, 212, 217–18, 246–56 desire for science of social control, 153, 154, 155, 164, 167 Friedman’s ‘The Methodology of Positive Economics’, 132–3 hidden political/ethical agendas, 10, 213, 253, 255–8 measurement of risk in numerical terms, 181–4, 187, 189, 190–94, 196–7, 201–2, 203–5, 212–13 natural experiments, 248–50 Pareto improvements, 217–18 and physics envy, 9, 20–21, 41, 116, 175–6, 212, 247 and public choice theorists, 88 quantification of all risks and values, 201–2, 203, 212–13 real world as problem for, 10–13, 31–2, 42–3, 51–3, 64–9, 86–9, 133, 136, 144–5, 228–30, 250–53, 260–61 ‘some number is better than no number’ mantra, 212–13 uncertainty as obstacle to, 190–91, 212–13 and use of mathematics, 9–10, 26, 72, 247, 248, 255, 259 use of term ‘rational’, 12 Von Neumann and Morgenstern’s grand project, 20–21, 24–5, 26, 35, 125, 151, 189 and wealth-maximization approach, 58, 60 economists advice to former Soviet Bloc nations, 257 conflicts of interest, 256–7, 258 data geeks, 248–50 economics curriculum reform needed, 259–60 errors and misjudgements, 13–14, 16, 132–3, 144–5, 256*, 257–8, 260–61 failure to explain ideas, 254–5 insularity of, 246–7 Keynes’ dentistry comparison, 258–9, 261 lack of ethics codes, 257–8 misunderstanding of altruism, 13–14, 25, 31–2, 41–3, 112, 178–9 need to show more humility, 258–9, 260–61 as not separate from economy, 251–3 and ordinary people, 245–6, 254–5, 258, 261 self-image as unsentimental and honest, 10 sneering descriptions of virtuous behaviour, 112 stating of the obvious by, 134, 259 education auctioning of university places, 124, 149–50 Baumol’s cost disease, 91, 92, 93, 94 incentivization as pervasive, 156, 169 value of, 150, 169, 170 ‘efficient market hypothesis’, 193–4, 201, 255 Einstein, Albert, 17, 22, 33, 213 Eisenhower, Dwight D., 19, 20, 231 Ellsberg, Daniel, 182–4, 187, 197–8 Ellsberg Paradox, 184, 199–200 and the ‘Pentagon Papers’, 200 probability experiment (1961), 182–4, 187, 197, 198–200 ‘Risk, Ambiguity and the Savage Axioms’ (paper, 1961), 198–9, 200 Engelbart, Douglas, 222–3 Engels, Friedrich, 223 English, Bill, 222–3 Enlightenment thinking, 11, 185 Epstein, Richard, 127 ethics and morality and autonomy, 164, 165–6, 168, 169–70, 180 bad behaviour redefined as rational, 12 and blame for accidents, 55, 60–61 and Coase Theorem, 46–7, 54–5, 56–7, 61, 63–6 Coasean worldview on pollution, 66–7, 68 as conditioned and limited by economics, 3, 10, 15, 43, 55, 60–61, 64–5, 179, 204–5, 218, 247 cooperative behaviour in game theory, 29, 30–32 core principles of current economic orthodoxy, 253 distinction between values and tastes, 136–8 economists’ language on virtuous behaviour, 112 inequality as moral issue, 242–3 influence of recent economic ideas, 1–3, 15–16 Keynes on economics as moral science, 252–3 law and economics movement, 40, 55, 56–63, 64–7 moral disengagement, 162, 163, 164, 166 morally wrong/corrupting incentives, 168–9 and Nash program, 25 Nudge economists, 173–4, 251 Posner’s wealth-maximization principle, 57–63, 64–7, 137 Puzzle of the Harmless Torturers, 118–19 Ramsey Rule on discounting, 208–9, 212 sale of body parts, 123, 124, 145, 147–8 sidelined by economic imperialism, 125–9, 135–8, 141–5, 146–7, 148–9, 151–2, 207 small contributions as important, 110, 114–15, 122 Smith’s enlightened self-interest, 11 value of human life (‘statistical lives’), 141–5, 207 see also altruism; free-riding behaviour European Commission, 96 Facebook UK, 99 fairness, 1, 149, 218, 228, 253 and Coase, 54, 55 and free-riding behaviour, 107 and game theory, 43 and incentives, 177, 179 and lucky geniuses, 221–3 and Posner’s wealth-maximization principle, 60, 61, 62 see also inequality family life, 127–8, 130–31, 133, 156 famine relief, 99, 114–15 Farmer, Roger, 259 Federal Communications Commission (FCC), 48–9 Ferdinand, Archduke Franz, 185 financial crisis, global (2007–10) Becker on, 128–9 and bell curve thinking, 192, 193–4, 196, 257 ‘blame the regulators’ argument, 1–2 and financial economists, 9, 88, 260–61 persuasive power of extreme numbers, 181–2 and Posner’s wealth-maximization principle, 57 underlying maths of, 194, 195–6 financial markets Bachelier’s theory of speculation, 193 bell curve thinking, 192, 193–4, 195, 196–7, 201, 203–4, 257 benchmarking against the market, 204 Black Monday (1987), 192 deregulation of US banks, 194 derivatives, 253 dot.com bubble, 192, 201 East Asian crisis (1997), 192 and economic theory, 9, 12–13, 182, 253 economists’ ignorance of, 260–61 and First World War, 185 and fractals (scale-invariance), 194, 195–6, 201 orthodox decision theory, 190–91, 193–4, 201 persuasive power of extreme numbers, 181–2, 191, 192 and rent-seekers, 230, 238 rigged pay-for-performance contracts, 229–30, 238 First World War, 185, 210, 211–12 Fisher, Antony, 6–8 Forster, E.

The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century by Rodrigo Aguilera

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, availability heuristic, barriers to entry, basic income, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, bitcoin, Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, carbon footprint, Carmen Reinhart, centre right, clean water, cognitive bias, collapse of Lehman Brothers, Colonization of Mars, computer age, Corn Laws, corporate governance, corporate raider, creative destruction, cryptocurrency, cuban missile crisis, David Graeber, David Ricardo: comparative advantage, death from overwork, decarbonisation, deindustrialization, Deng Xiaoping, Doha Development Round, don't be evil, Donald Trump, Doomsday Clock, Dunning–Kruger effect, Elon Musk, European colonialism, fake news, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, fundamental attribution error, gig economy, Gini coefficient, Glass-Steagall Act, Great Leap Forward, green new deal, Hans Rosling, housing crisis, income inequality, income per capita, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, Jeff Bezos, Jeremy Corbyn, Jevons paradox, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, karōshi / gwarosa / guolaosi, Kenneth Rogoff, Kickstarter, lake wobegon effect, land value tax, Landlord’s Game, late capitalism, liberal capitalism, long peace, loss aversion, low interest rates, Mark Zuckerberg, market fundamentalism, means of production, meta-analysis, military-industrial complex, Mont Pelerin Society, moral hazard, moral panic, neoliberal agenda, Network effects, North Sea oil, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, Overton Window, Pareto efficiency, passive investing, Peter Thiel, plutocrats, principal–agent problem, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, savings glut, Scientific racism, secular stagnation, Silicon Valley, Silicon Valley ideology, Slavoj Žižek, Social Justice Warrior, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Stanislav Petrov, Steven Pinker, structural adjustment programs, surveillance capitalism, tail risk, tech bro, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transatlantic slave trade, trolley problem, unbiased observer, universal basic income, Vilfredo Pareto, Washington Consensus, Winter of Discontent, Y2K, young professional, zero-sum game

But many critics of Olsen noted that while The Rise and Decline of Nations was being published, the US and UK were undergoing profound political and economic transformations under Reagan and Thatcher that would lift them from their 1970s stupor, even if the gains would not be distributed evenly across society. On the one hand, this would appear to confirm one of Olson’s original beliefs: that only a pure laissez-faire state, or an autocracy, could prevent rent-seeking, and this was as close to laissez-faire as any countries have come. But on the other hand, the rise in economic inequality that began with the Reagan and Thatcher revolutions also suggests that rent-seeking behavior by distributional coalitions simply got worse once one group of these coalitions, the unions, were neutered. This meant that there was little challenge to the deregulatory and liberalizing efforts of industry lobbies.

…

And in others like Russia, kleptocracy is self-sustaining when you a mutually reinforcing interest between economic elites and rulers in keeping it going.19 But in liberal democracies, oligarchy is much more insidious. The facade of democracy and rule of law, after all, must be preserved. Even so, it is not enough to consider a society captured to a greater or lesser degree by rent-seeking interest groups to be fully oligarchic insofar as political parties offer reasonable alternatives to each other; one of these alternatives being at the very least the promise of finding counterweights to these interest groups’ political influence. This would typically be the duty of left-of-center political parties, most of which notionally exist to represent the interests of the “have-nots”.

…

Olson’s thesis (largely adapted and expanded from an earlier book, The Logic of Collective Action) was that democracies had heterogenous interests which in turn lead to the formation of collective action groups to protect those interests.22 Many of these groups, which he called encompassing coalitions, would be broad and potentially lead to improved economic outcomes for the whole but would suffer from being too large and difficult to organize. Their size would also make the marginal benefits to each member quite small. In contrast, rent-seeking distributional coalitions would be smaller and better organized, but would lobby entirely on their own behalf to the detriment of society; for example, by convincing governments to tolerate uncompetitive economic practices like cartelization and protectionism. This would provide disproportionate marginal benefits to their smaller number of members.

A Little History of Economics by Niall Kishtainy

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

For example, if the government puts a tax on foreign cars then domestic car producers, protected from overseas competition, make big profits. By giving privileges to special groups of people, politicians hope to gain political support, perhaps even money. The prospect of earning extra profits for doing very little encourages ‘rent-seeking’. Businesses spend money trying to persuade the government to give them privileges. They might take government officials out for expensive lunches to try to get them to do what they want. They might set up an organisation to help their case, the American Association of Umbrella Manufacturers, perhaps.

…

They might set up an organisation to help their case, the American Association of Umbrella Manufacturers, perhaps. Organisations like this are often defended on the grounds that in a healthy democracy they help to air the views of varied groups of people. In public choice theory, they’re rent-seekers whose activities use up resources that could have been employed more usefully in a different way. Rent-seeking hurts consumers because if the markets for cars and umbrellas are protected from foreign competition then people have fewer cars and umbrellas to choose from. The problem is that consumers, being so many scattered people, would never find it individually worth their while to spend time organising their own group to prevent protection.

…

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

Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen

"Friedman doctrine" OR "shareholder theory", 23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, Big Tech, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, company town, compensation consultant, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, driverless car, Elon Musk, employer provided health coverage, experimental economics, Fairchild Semiconductor, fake news, Filter Bubble, financial innovation, financial intermediation, gentrification, Glass-Steagall Act, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, junk bonds, 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, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator

Or are many of America’s top CEOs somehow ripping off their own companies? What we’ll see is actually a pretty positive picture about America’s corporate leaders. In particular, CEO pay mostly—not entirely—reflects the productive contributions of talented individuals to very important companies, rather than corruption, rent-seeking, and personal enrichment. The best model for understanding the growth of CEO pay is that of limited CEO talent in a world where business opportunities for the top firms are growing rapidly. The scarcity of top-rate candidates sometimes causes corporate boards to make or stick with hiring mistakes, but overall the process has worked pretty well in allocating talent to important jobs and keeping that talent motivated.

…

By 2006, however, that premium rose to about 50 percent, and for top management it was about 250 percent. About half of that can be attributed to risk bearing, and another fifth follows from the greater size of financial firms. The rest is a mix of special talents for which educational degrees do not serve as a good proxy (ambition and drive?) and unproductive rent-seeking—in what proportions, we do not know.23 One likely possibility is that the highest-earning firms enjoy some economies of scale, due to the network effects of bringing together so many smart people. Those firms earn much more, and in turn they share some of those earnings by paying their employees more, most of all top management.

…

That could become a wasteful drain of resources from the rest of the economy, as too much talent would pursue monopoly profits rather than useful production for consumers. But such clusters of financial talent are difficult to build, just as few local banks try to take on Goldman Sachs and few global cities try to rival New York and London as financial centers. And so the rent-seeking costs and the talent drain costs of the financial sector are much less than the size of the large rewards at the top might indicate. Furthermore, the best direct evidence we have suggests that, as things stand right now, finance is not draining away America’s best talent from science and engineering.

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

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

In the opinion of some observers, one of the reasons why the current growing gap between the rich and the poor is especially dangerous is that it is being accompanied by a growth in “rent seeking” behavior. A typical feature of such behavior is the attempt to take a bigger piece of the existing pie, rather than to make the pie bigger. A useful definition of rent seeking was given by Matthew Taylor of the RSA: “using market position to make money without adding value.” When the rich lobby for tax breaks at a time of no economic growth, they are indulging in rent seeking. All corruption is a form of rent seeking. repo A repurchase agreement, in which A sells B something, while simultaneously promising to buy it back at a specified future date.

Green Philosophy: How to Think Seriously About the Planet by Roger Scruton

An Inconvenient Truth, barriers to entry, carbon credits, carbon footprint, carbon tax, Cass Sunstein, Climategate, Climatic Research Unit, corporate social responsibility, demand response, Easter island, edge city, endowment effect, energy security, Exxon Valdez, failed state, food miles, garden city movement, Garrett Hardin, ghettoisation, happiness index / gross national happiness, Herbert Marcuse, hobby farmer, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, joint-stock company, joint-stock limited liability company, Kenneth Arrow, knowledge economy, Lewis Mumford, market friction, Martin Wolf, moral hazard, Naomi Klein, New Urbanism, Peter Singer: altruism, phenotype, precautionary principle, rent-seeking, Robert Solow, Ronald Coase, Sam Peltzman, Silicon Valley, Simon Kuznets, tacit knowledge, the built environment, The Death and Life of Great American Cities, the market place, Thomas Malthus, Tragedy of the Commons, transaction costs, University of East Anglia, urban planning, urban sprawl, Vilfredo Pareto, women in the workforce, zero-sum game

But it does mean that, in negotiating such a treaty, we are not dealing with a normal corporate agent, nor are we aiming at a change in the law that governs it. We are dealing with a massively powerful cartel of wealthy people, who control the law that purports to control them, and who cannot tolerate any erosion of their privileged status. Power is no longer centralized as it was under Mao Zedong; but the government must buy support from the rent-seeking elites in industry and local administration, and can do nothing that will undermine their privileges.290 Even if something of the Confucian spirit has returned, therefore, it is impossible to assume that the elites will respond to it. The point is developed in different terms by Douglass C. North, John Joseph Wallis and Barry R.

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Such economies are often caught in a vicious circle of population growth, environmental degradation and natural resource depletion that ultimately can destabilize the social and political order.’ Arab Human Development Report 2009: Challenges to Human Security in the Arab Countries, UNDP Regional Bureau for Arab States, p. 118, www.arab-hdr.org/publications/other/ahdr/ahdr2009e.pdf. 16 On the theory of ‘rent seeking’, see Chapters 3 and 4. 17 Garrett Hardin, ‘The Tragedy of the Commons’, Science, 162.1, 1968, pp. 243 –8. 18 Thomas Hobbes, Leviathan, 1651; John Rawls, A Theory of Justice, 1971, 2005. 19 Edmund Burke, Reflections on the French Revolution, 1790; G. W. F. Hegel, Outlines of the Philosophy of Right, 1820; Joseph de Maistre, Le Principe Générateur des Constitutions, 1809. 20 I return to them in Chapters 7 and 8. 21 And whose antics are thoroughly discredited by Adam Zamoyski in Holy Madness: Compatriots, Patriots and Revolutionaries, 1776–1871, London and New York, 2001. 22 George Monbiot, The Age of Consent, London, 2003. 23 For an eloquent assessment of the adverse effects of globalization on the identity, and therefore the environment, of the English nation, see Paul Kingsnorth, Real England, London, 2008. 24 See Roger Scruton, The Need for Nations, London, 2004. 25 Criticisms of these institutions from the left are assembled on the websites of the Global Justice Center and the Global Justice Ecology Center.

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Rilke’s ‘Archaischer Torso Apollos’ occurs in Neue Gedichte, 1907. 108 James Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, Ann Arbor, 1962. See also Gordon Tullock, ‘The Welfare Costs of Tariffs, Monopolies, and Theft’, Western Economic Journal, 5.3, June 1967; James Buchanan, ‘Rent-seeking, Non-compensated Transfers, and Laws of Succession’, Journal of Law and Economics, 26, April 1983, pp. 71–85; Cost and Choice: An Inquiry in Economic Theory, Indianapolis, 1999. 109 Ted Malloch, Spiritual Enterprise, New York, 2009. 110 See the Library of Congress summary of the Polish situation at www.countrystudies.us/poland/25.htm.

Chokepoint Capitalism by Rebecca Giblin, Cory Doctorow

Aaron Swartz, AltaVista, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Black Lives Matter, book value, collective bargaining, commoditize, coronavirus, corporate personhood, corporate raider, COVID-19, disintermediation, distributed generation, Fairchild Semiconductor, fake news, Filter Bubble, financial engineering, Firefox, forensic accounting, full employment, gender pay gap, George Akerlof, George Floyd, gig economy, Golden age of television, Google bus, greed is good, green new deal, high-speed rail, Hush-A-Phone, independent contractor, index fund, information asymmetry, Jeff Bezos, John Gruber, Kickstarter, laissez-faire capitalism, low interest rates, Lyft, Mark Zuckerberg, means of production, microplastics / micro fibres, Modern Monetary Theory, moral hazard, multi-sided market, Naomi Klein, Network effects, New Journalism, passive income, peak TV, Peter Thiel, precision agriculture, regulatory arbitrage, remote working, rent-seeking, ride hailing / ride sharing, Robert Bork, Saturday Night Live, shareholder value, sharing economy, Silicon Valley, SoftBank, sovereign wealth fund, Steve Jobs, Steven Levy, stock buybacks, surveillance capitalism, Susan Wojcicki, tech bro, tech worker, The Chicago School, The Wealth of Nations by Adam Smith, TikTok, time value of money, transaction costs, trickle-down economics, Turing complete, Uber and Lyft, uber lyft, union organizing, Vanguard fund, vertical integration, WeWork

This new theory unleashed a powerful, slow-moving glacier of monopolization upon the world in the Reagan years, and it has now scraped away nearly all the beautiful and lively things in its path. Capitalism is supposed to be based on free markets, but markets have a natural tendency “toward monopoly, destructive extraction, and rent-seeking,” and so “require vigilant stewardship precisely to ensure they remain sufficiently marketlike.”6 That vigilance has been AWOL during the fifty-odd years of the Chicago School’s hands-off approach, and, as a result, competition in the US was virtually eliminated in an astonishing variety of industries.

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The ferryman might also spend some of his excess profits on lobbying lawmakers to pass rules mandating a minimum number of boats be operating at any one time—making it hard for any new operator to start up. Where a person or corporation seeks to increase their profits through more favorable regulation, it’s called rent-seeking. We saw how regulatory capture can harm creative producers in the context of radio: changes to ownership laws allowed Clear Channel to buy its way to a dominant position, use that position to crush rivals, and use some of the resulting profits to maintain its outrageous advantage in not having to pay recording artists or labels for their music.

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If rights reverted to creators every twenty-five years, the artists who were signed to those 4 percent royalties in the 1950s would have been able to secure 10 percent rates by the 1980s, and then 20 or 25 percent rates in the 2000s. That would mean the biggest labels would get less of a profit edge from their backlists than they do today, meaning less to spend on rent-seeking. It would also give newer competitors an opportunity to compete for that older catalog. Artists could choose companies offering fresh marketing investments, new exploitation opportunities, or higher royalties instead of just being stuck with the company that happened to sign them decades earlier (or more likely—a giant who swallowed up their original label).

The Production of Money: How to Break the Power of Banks by Ann Pettifor

Alan Greenspan, Ben Bernanke: helicopter money, Bernie Madoff, Bernie Sanders, bitcoin, blockchain, bond market vigilante , borderless world, Bretton Woods, capital controls, Carmen Reinhart, central bank independence, clean water, credit crunch, Credit Default Swap, cryptocurrency, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, distributed ledger, Donald Trump, eurozone crisis, fiat currency, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, green new deal, Hyman Minsky, inflation targeting, interest rate derivative, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land bank, Leo Hollis, light touch regulation, London Interbank Offered Rate, low interest rates, market fundamentalism, Martin Wolf, mobile money, Money creation, Naomi Klein, neoliberal agenda, offshore financial centre, Paul Samuelson, Ponzi scheme, Post-Keynesian economics, pushing on a string, quantitative easing, rent-seeking, Satyajit Das, savings glut, secular stagnation, The Chicago School, the market place, Thomas Malthus, Tobin tax, too big to fail

This, I will argue, is the worst possible combination for society and the ecosystem as high and rising real rates of interest require high and rising rates of return from investment, from labour and from the earth’s finite assets. Most orthodox economists also have an unhealthy dislike of the state, which they accuse of ‘rent-seeking’ while simultaneously ignoring the rent-seeking of the private sector. As recently as October 2008 former governor of the US Federal Reserve Alan Greenspan made the orthodoxy explicit under cross-examination by a Congressional committee, chaired by Henry Waxman.7 The chairman reminded Mr Greenspan that he had once said, ‘I do have an ideology.

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Gillian Tett, one of the few journalists bold enough to explore and challenge the world of international financiers and creditors, blames a ‘pattern of “social silence” … which ensured that the operations of complex credit were deemed too dull, irrelevant or technical to attract interest from outsiders, such as journalists and politicians.’8 Finance was indeed too dull and arcane to attract the interest of mainstream feminism and environmentalism. As a result of this ‘social silence’ citizens were unprepared for the crisis, and they remain on the whole ignorant of the workings of the financial system and its operations. The experience of financial deregulation has shown that capitalism insulated from popular democracy degenerates into rent-seeking, criminality and grand corruption. As Karl Polanyi predicted in his famous book The Great Transformation, societies are building resistance to the ‘self-regulating market comprising labour, land and money’ – or market fundamentalism, even when blind resistance appears irrational.9 In the US, as I write, the voters of the United States have sought protection from a demagogic president-elect who promised to defend them by erecting a wall between the United States and Mexico.

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

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

It also needed sustained public sector policies to reduce asset inequality through carefully planned investments in health, education, and public housing. As Campos and Root note, “Wealth sharing insured broad social support, thereby reducing the threat that the regime would fall to destructive rent seeking or insurgency. It encouraged the belief that the government was acting on behalf of citizens’ interests.”44 All too often, it is the “destructive rent seeking” among Latin America’s economic and political elites that preclude confidencebuilding strategies and set citizens against political authority. Creating a consensus about growth and development requires mutual trust and shared goals.

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From this perspective, and as we explained in the previous section, even though there has been dramatic institutional change in Latin America since 1982, characterized by transitions from authoritarian to democratic rule and from relatively closed, state-led economies to open, market-driven economies, weak states whose jurisdiction and enforcement capacities have remained weak and open to traditional capacity-draining activities, such as rent seeking and moral hazard, have helped to reproduce the conditions that allow the survival and growth of high-stakes politics. To this element, we have to add others, namely, the persistence of dramatic socioeconomic inequality and widespread poverty, which have nurtured the zero-sum conditions that allow high-stakes politics to thrive and dominate in Latin America at the beginning of the twenty-first century.

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Uncompetitive protected industries were made even more uncompetitive by overvalued exchange rates; this, combined with unconstrained fiscal spending, led to currency crises, devaluation, rising real interest rates, and a reversal of economic growth in a seemingly endless cycle. The package of liberal economic policies recommended by the International Monetary Fund and other multilateral lenders sought to break several links in this cycle by encouraging competition and openness, improving fiscal discipline, reducing opportunities for rent seeking, and eliminating the discretionary use of monetary policy to resolve fiscal problems via inflation. 272 Conclusion This medicine by and large worked: the runaway inflation that characterized Bolivia, Peru, Argentina, Brazil, and other countries during the 1980s was tamed by the 1990s.6 Elimination of the regressive tax represented by inflation then encouraged the return of flight capital and, indeed, increasing levels of foreign investment.

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

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

Merchant guilds and associations were so widespread and so tenacious not because they efficiently solved economic problems, making everyone better off, but because they efficiently distributed resources to a powerful urban elite, with side benefits for rulers.11 People in the poorest countries nowadays, who assume not unreasonably that their economies are zero-sum, reckon that they can best advance by theft, graft, influence, corruption, rent-seeking. People in rich countries reckon, on the contrary, that the best way to advance is invention and betterment, which is why such countries became wealthy, at any rate until government expenditures got large enough to encourage rent-seeking to take over again.12 But anyway the “major growth phases” were periods in which income per person rose by factors of 2 or at most 3, not factors of 10 or 30 or 100. Economic history needs, in other words, to deemphasize, as Jones sometimes does not, in deference to the Continuists, the manufacturing-cum-regional-specialization that we call loosely “industrialization.”

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Albert Hirschman quotes, and applies to the antibourgeois Spaniards of Castile, the backward-looking opinion of the Marquis de Vauvenargues (1715–1747) that “a man of quality, by fighting, acquires wealth more honorably and quickly than a meaner man by work.”1 It was the antique sentiment of the nobility. According to Tacitus the ancient German warrior thought it “tame and spiritless to accumulate slowly by the sweat of his brow what can be got quickly by the loss of a little blood.”2 In such a society the incentives to zero-sum rent seeking, as the economists put it nowadays, are plain enough. By contrast the Portuguese merchant and the “merchant knight” (cavaleiro-mercador, an impossible juxtaposition in most of Europe at the time) encouraged by Prince Henry the Navigator (1396–1460) and others in its vigorous royal family gave little Portugal the third European empire of trade, after those three centuries earlier of Venice and Genoa.

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(Yet putting Amsterdam in the category of failure is a scientific mistake: I have noted that the place merely changed, as London did, from being chiefly manufacturing and merchanting to being chiefly banking and merchanting; and Florence is to this day a substantial industrial city; and Genoa is still the port of northern Italian industrialization.) Jones opines that “what kept growth episodes so few was mainly excessive rent-seeking on the part of the holders of political power.”10 Probably. The economic historian Sheilagh Ogilvie, for instance, presents evidence that medieval guilds of merchants were growth-killers—not the growth-makers that some recent theorists and historians of the neo-institutionalist school have posited.

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

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

"Changes in the Structure of Wages in the 1980s: An Evaluation of Alternative Explanations," American Econom­ ic Review 82 (June 1992): 371-92. Brimelow, Peter, and Leslie Spencer. "The Plaintiff's Attorney's Great Honey Rush," Forbes, October 16, 1989, pp. 197 ff. Buchanan, James, Robert Tollison, and Gordon Tullock, eds. Toward a Theo­ ry o/the Rent-Seeking Society, College Station: Texas A&M Press, 1 980. Burrough, Bryan, and John Hellyar. Barbarians at the Gate. New York: Harper & Row, 1990. Bibliography 249 Byrne, John A. "The Craze for Consultants." Business Week, July 25, 1994, pp. 60-66. . "That's Some Pay Cap, Bill." Business �ek, April 25, 1994, p. 57.

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"The Big Stars on Campus Are Now Research Labs." New York Times, December 4, 1994, pp. 1 , 38. Chass, Murray. "Motivation Upon Arrival for Henderson." New York Times, March 3 , 1 993, p. B lO. Chi, Victor. "Football Abolished at Santa Clara." San Jose Mercury News. Feb­ ruary 4, 1993 , pp. 1 G, 9G. Chung, Tai-Yeong. "Rent-Seeking Contest When the Prize Increases with Ag­ gregate Efforts." University of Western Ontario Department of Econom­ ics Research Report 9407, 1994. Clotfelter, Charles T. "Demand for Undergraduate Education." In Charles T. Clotfelter, Ronald G. Ehrenberg, Malcolm Getz, and John J. Siegfried, Economic Challenges in Higher Education.

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.: Education­ al Testing Service, 1976-77. Comstock, G., and H. Paik. Television and the Amen'can Child. San Diego, CA: Academic Press, 1 99 1 . Congleton, Roger. "Competitive Process, Competitive Waste, and Institu­ tions." In J. Buchanan, R. Tollison, and G. Tullock, eds. Toward a Theory 0/ the Rent-Seeking Society. College Station: Texas A&M Press, 1 980, pp. 153-79. Conover, Carole. Conover Cover Girls. Englewood Cliffs, NJ: Prentice-Hall, 1 978. Cook, Philip J., and Robert H. Frank, "The Growing Concentration of Top Students at Elite Schools." In Charles Clotfelter and Michael Rothschild, eds.

The Clash of the Cultures by John C. Bogle

Alan Greenspan, asset allocation, buy and hold, collateralized debt obligation, commoditize, compensation consultant, corporate governance, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, estate planning, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, Hyman Minsky, income inequality, index fund, interest rate swap, invention of the wheel, John Bogle, junk bonds, low interest rates, market bubble, market clearing, military-industrial complex, money market fund, mortgage debt, new economy, Occupy movement, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, Ponzi scheme, post-work, principal–agent problem, profit motive, proprietary trading, prudent man rule, random walk, rent-seeking, risk tolerance, risk-adjusted returns, Robert Shiller, seminal paper, shareholder value, short selling, South Sea Bubble, statistical arbitrage, stock buybacks, survivorship bias, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, Vanguard fund, William of Occam, zero-sum game

After all, innovation, information, instant communications, and competition have brought great benefits to our society. But I see our financial system as somehow separate and distinct from the other business and commercial systems that permeate our world. “Value-Creating” and “Rent-Seeking” There is a difference—a difference in kind—between what economists describe as “value-creating” activities that add value to society and “rent-seeking” activities that subtract value from society on balance. One provides new and improved products and services, delivered through ever more efficient channels and at prices that are more competitive, and the other simply shifts economic claims from one set of participants to another.

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Creating Value versus Subtracting Value In yet another distortion aided and abetted by our financial system, too many of the best and brightest young people in our land, instead of becoming scientists, physicians, educators, or public servants, are attracted by the staggering financial incentives offered in the investment industry. These massive rewards serve to divert vital human resources from other, often more productive and socially useful, pursuits. Even in the field of engineering, “financial” engineering, which is essentially rent-seeking in nature, holds sway over “real” engineering—civil, electrical, mechanical, aeronautical, and so on—which is essentially value-creating. The long-term consequences of these trends simply cannot be favorable to our nation’s wealth, growth, productivity, and global competitiveness. Finally, the dominance of speculation in our financial affairs shifts our society’s focus from the enduring reality of corporate value creation, on which our nation ultimately depends, to the momentary illusion of stock prices.

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Develop Limits on Leverage, Transparency for Derivatives, and Stricter Punishments for Financial Crimes We need stronger, smarter, and wiser regulation that is principles-based where possible, and rules-based in all other cases. No, I do not believe that our government should run our financial sector. But I would be willing to accept the cost of its inevitable bureaucratic drag on the system since, after all, most government activity itself is also rent-seeking rather than value-adding. Regulation is needed in order to: Establish and enforce sterner limits, as appropriate, on leverage and portfolio quality. Bring the opacity of today’s derivatives trading into the bright sunlight of transparency and openness, with public reporting of all transactions.

The Rational Optimist: How Prosperity Evolves by Matt Ridley

"World Economic Forum" Davos, 23andMe, Abraham Maslow, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon credits, carbon footprint, carbon tax, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, Cornelius Vanderbilt, cotton gin, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Easter island, Edward Glaeser, Edward Jenner, electricity market, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, flying shuttle, Flynn Effect, food miles, Ford Model T, Garrett Hardin, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Herbert Marcuse, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, Jevons paradox, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Large Hadron Collider, Mark Zuckerberg, Medieval Warm Period, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, ocean acidification, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Ponzi scheme, precautionary principle, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Robert Solow, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, Thales and the olive presses, Thales of Miletus, the long tail, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, world market for maybe five computers, Y2K, Yogi Berra, zero-sum game

Had I only known it, experiments in laboratories by the economist Vernon Smith and his colleagues have long confirmed that markets in goods and services for immediate consumption – haircuts and hamburgers – work so well that it is hard to design them so they fail to deliver efficiency and innovation; while markets in assets are so automatically prone to bubbles and crashes that it is hard to design them so they work at all. Speculation, herd exuberance, irrational optimism, rent-seeking and the temptation of fraud drive asset markets to overshoot and plunge – which is why they need careful regulation, something I always supported. (Markets in goods and services need less regulation.) But what made the bubble of the 2000s so much worse than most was government housing and monetary policy, especially in the United States, which sluiced artificially cheap money towards bad risks as a matter of policy and thus also towards the middlemen of the capital markets.

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Most past bursts of human prosperity have come to naught because they allocated too little money to innovation and too much to asset price inflation or to war, corruption, luxury and theft. In the Spain of Charles V and Philip II, the gigantic wealth of the Peruvian silver mines was wasted. The same ‘curse of resources’ has afflicted countries with windfalls ever since, especially those with oil (Russia, Venezuela, Iraq, Nigeria) that end up run by rent-seeking autocrats. Despite their windfalls, such countries experience lower economic growth than countries that entirely lack resources but get busy trading and selling – Holland, Japan, Hong Kong, Singapore, Taiwan, South Korea. Even the Dutch, those epitomes of seventeenth-century enterprise, fell under the curse of resources in the late twentieth century when they found too much natural gas: the Dutch disease, they called it, as their inflated currency hurt their exporters.

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And it was they who began to trade with the ports of Italy. Italian peasants started to discover that instead of dividing their land among impoverished heirs they could send sons to town to trade with Maghribi Jews. Northern Italy, because of a stand-off between the Holy Roman emperor and the pope, was temporarily favoured by an absence of greedy rent-seeking kings. When Arab piracy and papal plunder paused under the influence of the first Otto, the towns of Lombardy and Tuscany found themselves free to set up their own governments, and since towns were there because of trade, these governments became dominated by the interests of merchants. Amalfi, Pisa, and above all Genoa began to flourish on the back of the Maghribi trade.

The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It by Paul Collier

air freight, Asian financial crisis, blood diamond, Bob Geldof, British Empire, business cycle, Doha Development Round, export processing zone, failed state, falling living standards, Global Witness, income inequality, mass immigration, out of africa, rent-seeking, Ronald Reagan, structural adjustment programs, trade liberalization, zero-sum game

When Charles Soludo became governor of the Central Bank of Nigeria, his priority was to reform the banking sector, a notorious epicenter of rent seeking. Unsurprisingly, this was not popular with the rent seekers among the banks. They organized a fighting fund of around $2 million to campaign against him. Among other tactics, this enabled them to buy allies in the media. Charles did not have $2 million to oppose them; he just had guts and intelligence and the right arguments. As I write, he seems to have won, closing and merging sixty-four banks. Reform is tough, but it can triumph. The day after President Mwai Kibaki replaced the rent-seeking Daniel arap Moi in Kenya in 2002, ordinary Kenyan citizens frog-marched police officers who demanded the usual bribes to their own police stations to be arrested.

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There is now a huge amount of money being directed by the Nigerian federal government to the delta region, and the oil companies are desperately spreading protection money—paying ransoms to free kidnapped workers is pretty well a daily occurrence. Within the region local politicians are fighting it out for control of all this money, and violent protest has become an orchestrated part of this political rent seeking. Grievance has evolved, over the course of a decade, into greed. Let us get back to the costs of conflict. Many of the costs are borne by neighboring countries. Diseases don’t respect frontiers, and the economic collapse also spreads. Since most countries are bordered by several others, the overall cost to neighbors can easily exceed the cost to the country itself.

What's Wrong With Economics: A Primer for the Perplexed by Robert Skidelsky

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

Nobel Laureate Amartya Sen (b.1933) has pointed out that famines in poor countries are as much the consequence of a politically determined distribution of food as of natural shortage.16 Eradicable diseases like malaria and leprosy fail to be eradicated not because nature is niggardly but because some rulers prefer to spend the money buying arms and enriching themselves and their families. Economists may reasonably point out that such artificial scarcity is produced by bad politics, not by bad economics; and indeed they have been persistent critics of ‘rent-seeking’ by governments. However, they have been relatively blind to the ability of big private corporations to extract rent. Today the biggest rent-extractor is the cartel of big banks, which controls the means of financing production. The method of mainstream economists has blunted criticism of actual market distributions by setting out to ‘prove’ that in fully competitive markets consumers are sovereign and all the factors of production are paid what they produce.

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The attempt in the 1970s to control inflation by wage and price controls led directly to a ‘crisis of governability’, as trade unions, particularly in Britain, refused to accept them. Large state subsidies to producer groups, both public and private, fed the typical corruptions of behaviour identified by the new right: rent-seeking, moral hazard, free-riding. Palpable evidence of government failure obliterated memories of market failure. The new generation of economists abandoned Keynes and, with the help of sophisticated mathematics, reinvented the classical economics of the self-regulating market. Battered by the inflationary crises of the 1970s, governments caved in to the ‘inevitability’ of free market forces.

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The Strategy of Economic Development, New Haven: Yale University Press. Johnson, Harry (1977). ‘Keynes and the Developing World’, in Robert Skidelsky (ed.), The End of the Keynesian Era: Essays on the Disintegration of the Keynesian Political Economy, London: Macmillan. Krueger, Anne (1974). ‘The Political Economy of the Rent-Seeking Society’, American Economic Review, Vol. 64 (3): 291–303. Krugman, Paul (1987). ‘Is Free Trade Passé?’, Journal of Economic Perspectives, Vol. 1 (2): 131–44. Lewis, W. Arthur (1954). ‘Economic Development with Unlimited Supplies of Labour’, The Manchester School, Vol. 22 (2): 129–91. List, Friedrich (1909 [1841]).

The Metaverse: And How It Will Revolutionize Everything by Matthew Ball

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", 3D printing, Airbnb, Albert Einstein, Amazon Web Services, Apple Newton, augmented reality, Big Tech, bitcoin, blockchain, business process, call centre, cloud computing, commoditize, computer vision, COVID-19, cryptocurrency, deepfake, digital divide, digital twin, disintermediation, don't be evil, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, game design, gig economy, Google Chrome, Google Earth, Google Glasses, hype cycle, intermodal, Internet Archive, Internet of things, iterative process, Jeff Bezos, John Gruber, Kevin Roose, Kickstarter, lockdown, Mark Zuckerberg, Metcalfe’s law, Minecraft, minimum viable product, Neal Stephenson, Network effects, new economy, non-fungible token, open economy, openstreetmap, pattern recognition, peer-to-peer, peer-to-peer model, Planet Labs, pre–internet, QR code, recommendation engine, rent control, rent-seeking, ride hailing / ride sharing, Robinhood: mobile stock trading app, satellite internet, self-driving car, SETI@home, Silicon Valley, skeuomorphism, Skype, smart contracts, Snapchat, Snow Crash, social graph, social web, SpaceX Starlink, Steve Ballmer, Steve Jobs, thinkpad, TikTok, Tim Cook: Apple, TSMC, undersea cable, Vannevar Bush, vertical integration, Vitalik Buterin, Wayback Machine, Y2K

The use of common standards also meant that it was easier and cheaper to hire and work with outside vendors, integrate third-party software and apps, and repurpose code. The fact that so many of these standards were free and open-source meant that individual innovations often benefited the entire ecosystem, while placing competitive pressures on paid, proprietary standards, and helping to check the rent-seeking tendencies of platforms sitting between the web and its users (e.g., device manufacturers, operating systems, browsers, and ISPs). Importantly, none of this prevented businesses from making a profit on the internet, deploying a paywall, or building proprietary technology. Rather, the “openness” of the internet enabled more companies to be built, in more areas, reaching more users, and achieving greater profits, while also preventing pre-internet giants (and, crucially, telecom companies) from controlling it.

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The more a developer invests in a given IVWP, the harder it becomes for them to ever leave—not only will they need to reacquire their customers, they’ll have to rebuild from scratch. Thus, developers will be less likely to support new IVWPs that might offer superior functionality, economics, or growth potential—and existing IVWPs will face less pressure to improve. Over time, dominant IVWPs might even “rent-seek.” Over the past decade, most of the major platforms have been criticized for such behaviors. For example, many brands argue that changes made to Facebook’s Newsfeed algorithm effectively forced them to buy ads in order to reach the very Facebook users who had voluntarily “liked” their Facebook pages.

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See augmented reality (AR); virtual reality (VR) “mobile internet era,” 12, 35, 63, 64, 240, 242–44, 269, 291 Mojang, 114 Monsters University, 36, 89–90 Moore’s Law, 100, 161 “most favored nations” (MFN) clauses, 180–81, 183 Motorola, 158, 212, 213 multiplayer games battle royale games, 32–33, 91–93, 98, 114–15, 117n, 146–47, 268, 275 computing and, 75 “massively multiplayer” online games, 55 matchmaking, 81, 176, 178 the problem of concurrent users (CCUs), 54–55, 90–92, 122, 146, 234, 245, 261, 268, 283 see also specific games and gaming platforms Multi-User Dungeons (MUDs) and related topics, 7–8, 12, 13–14, 30 Musk, Elon Neuralink, 154 SpaceX, xi, 4, 87 Starlink, 87 Tesla, 101, 166, 271 X.com, 61 MySpace, 34, 274 Nadella, Satya, xii, 18, 141, 239, 279–80 Naked Sun, The, 5 Namco, 173 NASA, ix NASDAQ, 309 National Advisory Committee for Aeronautics, ix National Basketball Association (NBA), 218, 259 National Football League (NFL), 139 National Science Foundation, x native apps, 26, 194–95 near-field communication (NFC), 142, 189, 199–200, 203 Nest Labs, 158 “netcode” solutions, 81–82 NetEase, 19–20 Netflix, 19, 49–53, 96, 100, 111, 187, 194, 196–98, 244, 270, 276n Netherlands, 203 Network Attached Storage (NAS) drive, 74 networking, 71–88, 85 acceptability thresholds in, 80–81 bandwidth and, 27, 41, 48–51, 64, 72–79, 80, 96, 100, 305 broadband operators, 15–16, 38, 49, 271 fiber optic networks, 27, 84, 87, 128 4G networks, 81, 87, 244, 245, 249 5G networks, 87, 243 the internet as a “network of networks,” 16, 23–24, 62 latency and, 27, 48–53, 64, 79–88, 95–96, 99–100, 230, 243, 248, 271, 305 network gateways, 130 rent-seeking and, 15, 299 3G networks, 243 undersea cables, 84–85, 85 Neuralink, 154 Neuromancer, 5–6, 8 Newsweek, 308 New World, 277 New York Times, xv, 4–5, 73, 224, 256 as an app, 149, 185, 194, 196, 202 Live Election feed, 49 Nexon, 105 NextVR, 144 Niantic, 115, 144, 275 Nike, 121, 139, 189–90, 208, 248, 264 Nintendo, 11, 104, 151–52, 173, 303 Nintendo Entertainment System (NES), 32, 173 Nintendo Switch, 30–32, 75, 97, 134, 174–76 Nintendo Wii, 132 Nokia, 136–37 non-fungible tokens (NFTs), 140, 216–22 avatars and identity, 218, 229, 293–94 fractionalization into fungible tokens/shares, 202 marketplaces, 202, 301 “minting” in, 217 speculation, 128, 220, 231 as useless, 220 nonprofit organizations, 227, 231 Nouns DAO, 229 Nuance Communication, 212 Nvidia, xii, 66, 97–98, 282 Android and, 213 GeForce Now, 131, 282, 286 market capitalization of, 166 NVM software development kit, 175 Omniverse, 136–37, 282 see also graphics processing units (GPUs); Huang, Jensen Nye, David, 242 “Oasis, The,” 22, 289 OBJ file format, 299 occlusion, 97 Oculus VR, xi, 21, 57, 143, 153, 160, 274, 276 Horizon Worlds, 115, 204, 277 Oculus Quest 2, 143, 145–47, 161–62 Population: One, 146–47, 268 Office of Scientific Research and Development (OSRD), ix–x OKCupid, 19, 261 Omniverse from Nvidia, 136–37, 282 OnLive!

The Social Life of Money by Nigel Dodd

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

Meanwhile, the Fed faces an interest rate quandary: if it keeps rates low, the financial sector will be forced to gamble to achieve the growth in asset values it needs; if rates rise, real estate values will fall and the banks and pension funds will be forced even further into negative equity. If Hudson is right, we ought to be witnessing the end of two myths. The first is about free markets. We cannot continue to believe that they are free when they support rent seeking rather than real GDP, reward banks for pushing junk mortgages, and use credit rating agencies to make predatory finance look like sound wealth creation. Free markets need to be protected from fraud and rent seeking. The second myth is that central banks cause inflation by monetizing public spending. They do not cause inflation if the spending in question goes toward new production and employment. Instead, such spending is being diverted to support inflated asset prices and continued financial speculation.

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Moreover, the state played a crucial role in that history—just as it continues doing so today.27 Third, Marx’s analysis of the role of the “modern bankocracy” opens up an analytical space in which finance can be understood in relation to a particular kind of accumulation, more akin to mercantilism and rent seeking than more conventional forms of capitalist production.28 Financial derivatives did not exist in Marx’s day. Nor did hedge funds or sovereign wealth funds. Nonetheless, his analysis of primitive accumulation provides a powerfully suggestive means of framing these forms of financial capitalism (McNally 2009; Ekman 2012).

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Of greatest interest to us here is Harvey’s attempt to produce a full-fledged Marxist theory of money and credit that can be applied to the present day, taking account of developing connections between finance and the state, the near-disappearance of gold from the world’s monetary system, and the recent huge expansion of financial services as a major force in the dynamics of contemporary capitalism. In light of our discussion so far, Harvey’s approach is particularly interesting because he draws out the theme of primitive accumulation in Marx and applies it to key aspects of financial capitalism, such as rent seeking and debt. Harvey’s analysis is underpinned by the crucial assumption that capitalism needs to sustain an average compound growth rate of around 3 percent in order for most capitalists to make a reasonable profit (Harvey 2010b: 27). Anything less is problematic, and zero or negative growth defines a depression.

A Pelican Introduction: Basic Income by Guy Standing

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

Sixth, they encourage the provision of low-quality goods and services and disdain on the part of those delegated to administer or provide them. In the US, housing vouchers have been associated with increased concentration of impoverished people in poor neighbourhoods where the vouchers are more widely accepted by landlords.19 Seventh, they are prone to corruption and/or rent seeking by special interests. In the US, food stamps have been vigorously promoted by farm-state Republicans. In India, less than 10 per cent of the food the government buys for its Public Distribution System reaches the poor; almost half mysteriously disappears between warehouse and ration shop, and most of the rest is left to rot in government storage.20 Moving to a basic income scheme, based on direct provision of cash to the intended beneficiaries, would remove layers of intermediaries and their lobbying potential at a stroke.

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Although food and other subsidies may seem to satisfy the Security Difference Principle by reaching out to the most insecure groups in society, some of the most vulnerable are locked out of such schemes. They surely fail the Paternalism Test Principle and the Rights-not-Charity Principle. They are also costly to administer, inefficient and prone to corruption and rent seeking. An experiment in Ecuador that ran simultaneous trials of cash assistance, food vouchers and in-kind food aid found that less than 10 per cent of those receiving cash would have preferred another form of assistance, whereas a quarter to a third of the others wanted to change.21 Those who received cash valued being able to use some of the money for other essentials, including savings.

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In the Indian case, and probably elsewhere as well, there would be no need to introduce a basic income as an alternative to existing social programmes. A third method of funding is through the sovereign wealth fund, social dividend route mentioned in Chapter 7. This is eminently suited to developing countries rich in oil and other minerals, or valuable commodities such as timber, the revenues from which go mainly to rent-seeking elites. Many have already set up sovereign wealth funds, but these have been used mainly as investment vehicles to help stabilize future government finances. In Goa, India, the Goenchi Mati Movement is pressing for the proceeds of iron ore mining to go into a permanent fund, similar to Alaska’s Permanent Fund, which would be used to finance a citizen’s dividend.

Less Is More: How Degrowth Will Save the World by Jason Hickel

air freight, Airbnb, Anthropocene, basic income, Bernie Sanders, Big bang: deregulation of the City of London, biodiversity loss, Boris Johnson, Bretton Woods, British Empire, capital controls, circular economy, cognitive dissonance, coronavirus, corporate governance, corporate personhood, cotton gin, COVID-19, David Graeber, decarbonisation, declining real wages, degrowth, deindustrialization, dematerialisation, disinformation, Elon Musk, energy transition, Extinction Rebellion, extractivism, Fairphone, Fellow of the Royal Society, flying shuttle, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, gender pay gap, green new deal, Greta Thunberg, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, Jeff Bezos, Jevons paradox, John Maynard Keynes: Economic Possibilities for our Grandchildren, land reform, liberal capitalism, lockdown, longitudinal study, low interest rates, Mahatma Gandhi, Mark Zuckerberg, McMansion, means of production, meta-analysis, microbiome, Money creation, moral hazard, mortgage debt, Murray Bookchin, Naomi Klein, negative emissions, new economy, ocean acidification, offshore financial centre, oil shale / tar sands, opioid epidemic / opioid crisis, out of africa, passive income, planetary scale, planned obsolescence, plutocrats, Post-Keynesian economics, quantitative easing, rent control, rent-seeking, retail therapy, Ronald Reagan, Rupert Read, Scramble for Africa, secular stagnation, shareholder value, sharing economy, Simon Kuznets, structural adjustment programs, the scientific method, The Spirit Level, transatlantic slave trade, trickle-down economics, universal basic income

When capital has bumped up against limits to profit-growth in the past, it has found fixes in things like colonisation, structural adjustment programmes, wars, restrictive patent laws, nefarious debt instruments, land grabs, privatisation, and enclosing commons like water and seeds. Why would it be any different this time? Indeed, a study by the ecological economist Beth Stratford finds that when capital faces resource constraints, this is exactly what happens: it turns to aggressive rent-seeking behaviour. It seeks to grab existing value wherever it can, with clever mechanisms to suck income and wealth from the public domain into private hands, and from the poor to the rich, exacerbating inequality. Now, some might argue that capitalism could theoretically find growth opportunities in completely immaterial goods.

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This would push the richest to sell some of their assets, thus distributing wealth more fairly. But in an era of ecological crisis, we must be more ambitious than this. After all, nobody ‘deserves’ this kind of wealth. It’s not earned, it’s extracted: from underpaid workers, from cheap nature, from rent-seeking, from political capture and so on. Extreme wealth has a corrosive effect on our society, on our political system, and on the living world. We should have a democratic conversation about this: at what point does hoarding become destructive and unacceptable? $100 million? $10 million? $5 million?

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As we saw in the previous chapter, reducing inequality is a powerful way to reduce ecological pressure. It cuts high-impact luxury consumption by the rich, and reduces competitive consumption across the rest of society. But it also removes pressures for unnecessary growth. The policies I’ve proposed here would lead to a disaccumulation of capital. This would cut rent-seeking behaviour, and the rich would lose their power to force us to extract and produce more than we need. The economy would shift away from unnecessary exchange-value and more towards use-value. It would also reduce political capture and improve the quality of democracy; and democracy, as we will see later, has intrinsic ecological value.

The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

Airbnb, Alan Greenspan, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, classic study, Clayton Christensen, Colonization of Mars, commoditize, commodity super cycle, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Dr. Strangelove, driverless car, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fear of failure, financial engineering, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, general purpose technology, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, Greenspan put, Herman Kahn, high net worth, hiring and firing, hockey-stick growth, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, low interest rates, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, middle-income trap, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, precautionary principle, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, subprime mortgage crisis, technological determinism, technological singularity, TED Talk, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, vertical integration, Yogi Berra

While such an investment profile can occasionally be explained by firms making long-term bets on future value – many investments perform weakly before they start to pay off – the general view is rather that agency problems inside a firm spawn inefficient use of capital and investment spending.34 The exact nature of these agency problems varies, but the usual suspect is a misalignment of interests between owners, board executives, and management. Misalignment permeates most large organizations and helps to explain many of the unproductive habits of a firm. Rent-seeking behavior – for example, the desire to maximize the budget for a division even if it would be better to allocate resources to other parts of the firm to create value – preoccupies management. Sometimes executives can correct misallocation. However, quite often they, and perhaps even the owners, conform to rent-seeking bids and behavior because – to continue with the example – they need to “bribe” division heads or other key managers in the firm. In this way, misalignment of interests makes organizations succumb to the process of internal politics.

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At https://www.stlouisfed.org/Publications/Regional-Economist/January-2013/Why-Are-Corporations-Holding-So-Much-Cash. Santos, Filipe M., and Kathleen M. Eisenhardt, “Organizational Boundaries and Theories of Organization.” Organization Science, 16.5 (2005): 491–508. Scharfstein, David S., and Jeremy C. Stein, “The Dark Side of Internal Capital Markets: Divisional Rent-seeking and Inefficient Investment.” NBER Working Paper No. 5969. National Bureau of Economic Research, Mar. 1997. Schmitz, Robert, “Why Can’t China Make a Good Ballpoint Pen?” Marketplace, Dec. 14, 2015. At http://www.marketplace.org/2015/12/10/world/why-cant-china-make-good-ballpoint-pen. Schoen, John W., “$2 Trillion Deficit for Public Pension Funds.”

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Chance (Being There character) (i), (ii) multinational (global) companies characteristics of (i), (ii) and competition (i) and corporate cash savings (i) and dispersed ownership (i) and firm boundaries (i), (ii) and foreign direct investment (FDI) (i), (ii) and global trade (i), (ii) vs. home-market firms (i) and innovation (i) as logistics hubs (i) and market concentration (i), (ii) and market contestability (i) and private standards (i) and productivity (i), (ii) and R&D (i) and regionalization of Asia’s trade growth (i) and regulation (i) reputation of (i) and “slicing up” of value chains (i) and specialization (i), (ii) and supply chains (i) and transaction costs (i) see also big firms; globalization; globalization (overview) Musk, Elon (i), (ii), (iii) mutual funds (i), (ii) nanotechnology (i), (ii), (iii) NASA (i) Nasdaq, and sovereign wealth funds (i) national accounts (recorded data), vs. real value of improvements (i), (ii) National Science Foundation (US) (i) neoconservatism (i) neoliberalism (i) nepotism (i) net lending see corporate net lending Netherlands exports to China (i) taxi services and regulation (i) “new economy” (i) New England Journal of Medicine, medical devices study (i) New Machine Age thesis background: economic realities vs. technological blitz vision (i), (ii), (iii), (iv), (v), (vi), (vii); historical perspective (i) criticism of thesis: cyclical effects on productivity argument (i); jobs and technology issue (i); productivity/income decoupling issue (i), (ii); recorded data vs. real improvements argument (i), (ii); summary (i) and fear of artificial intelligence (i) and planning machine economic philosophy (i) and Robert Gordon on US labor productivity growth (i) see also The Second Machine Age (Brynjolfsson and McAfee) New York City dockers and containerization (i) taxi services and regulation (i), (ii) New York Stock Exchange (i), (ii), (iii), (iv), (v) see also Wall Street New York Times, on Bell’s telephone invention (i) NICs (newly industrialized countries) (i) Nietzsche, Friedrich (i), (ii) nimby (not-in-my-backyard) attitude (i) NM Electronics (Intel) (i), (ii), (iii) Nobel Peace Prize, and Twitter (i) “noise” (at work) (i) Nokia and corporate managerialism (i), (ii), (iii), (iv), (v), (vi) and Foxconn (i) and specialization (i) and tablet market (i) non-entrepreneurial planning (i) North American Free Trade Agreement (i) Norway, sovereign wealth fund (i), (ii), (iii) not-in-my-backyard (nimby) attitude (i) Obama, Barack (i), (ii) obsolescence see knowledge obsolescence occupational licenses (i), (ii), (iii), (iv) OECD (Organisation for Economic Co-operation and Development) on aging firms and innovation (i) on corporate savings (i) on “diffusion machine” and productivity (i) GDP forecasts (i) on intermediaries and shareholders’ income (i) on pension funds and PPRFs (i) on R&D skill deficiencies (i) on regulatory administration costs (i) on sovereign wealth funds (i) on taxi services (i) OECD countries product market regulation (PMR) indicators (i), (ii) R&D spending (i) start-ups (i) total assets by types of institutional investors (2001–13) (i), (ii) “off-license” sectors (i) “offshore” pattern of innovation (i) oligopolistic (or monopolistic) competition (i) Ollila, Jorma (i), (ii) Olson, Mancur (i) “one percent” (wealthiest group) (i) online services and diffusion of innovations (i), (ii) and recorded economic data (i) and regulation (i) see also internet open source technology, and socialism (i) organic cognition (i) Organisation for Economic Co-operation and Development see OECD; OECD countries organization industrial organization (i), (ii) vs. managerialism/technostructure (i) and multinationals (i) and specialization (i) Organization Man (i), (ii) organizational diversification (i), (ii) Osborne, Michael (i) outsourcing (i) ownership see capitalist ownership; institutional owners Palo Alto Research Center (PARC, Xerox) (i) “Panama Papers” story (i) Parisian taxis, and regulation (i) patents, and knowledge obsolescence (i) pay see incomes payment cycles (i) payment technologies (i) pensions and asset management industry (i) and gray capitalism (i), (ii), (iii), (iv) need for reform (i) pension crisis (i) pensioners vs. working-age households incomes (i) and principal–agent debate (i) private pensions (i), (ii) public/state pensions (i), (ii), (iii), (iv), (v); public pension funds and reserve funds (OECD, 2001–13) (i), (ii); public pension return funds (PPRFs) (i) see also retirement Pepsi (i) performance imperatives (i) performance measurements (i) performance tools (i), (ii) permission-based regulatory culture (i), (ii) permissionless innovation (i) pessimism, and capitalist decline (i) Pessoa, João Paolo (i) Pfleiderer, Paul (i) pharmaceutical sector and price regulations (i)n28 R&D investment (i), (ii) and regulation (i), (ii) Phelps, Edmund (i)n41 Mass Flourishing (i), (ii) Piketty, Thomas (i), (ii) PillCam digestive tract sensor (i) Pippi Longstocking (i) planning and corporate managerialism: planning machines (i), (ii), (iii); strategy (i); uncertainty and risk (i) Cybersyn project (i) and failing companies (i) and globalization (i) non-entrepreneurial planning (i) and regulation (i) and “scientific civilization” thinking (i) and spirit of bureaucracy (i) and Swedish economy (i) plastic cards (i) Pliny the Elder, Naturalis Historia (i) Plouffe, David (i) PMR (product market regulation) indicators (i), (ii) policy uncertainty, and investment (i), (ii) political romanticism (i) political world and capitalism as borderless space (i) cronyism , (i), (ii), (iii), (iv) dirigisme (France) (i) government intervention vs. liberalism (i) governments and globalization (i) governments and mobile technology (i) gray-haired voters (i) lobbying (i), (ii), (iii), (iv), (v) and regulation: 1980s–1990s policy changes (i); case of taxi services and Uber (i); political romanticism (i); social regulation (i); trend on the rise (i) and sovereign wealth funds (i), (ii), (iii) see also policy uncertainty; politics politics corporate politics (i), (ii), (iii), (iv) end of and digital age (i) populism (i), (ii), (iii), (iv), (v) see also political world populations aging (i), (ii), (iii) decline (i) populism (i), (ii), (iii), (iv) Porter, Michael (i), (ii) portfolio theory (i) Portugal, lesser dependence on larger enterprises (i) positioning (i), (ii), (iii), (iv) poverty, and globalization (i) PPRFs (public pension return funds) (i) see also pensions precautionary regulations (i), (ii), (iii), (iv) predictability (i), (ii), (iii), (iv), (v), (vi), (vii) see also uncertainty; volatility premature scaling (i), (ii) price index bias (i) Pricewaterhouse Coopers (PwC) on asset management industry (i) on compliance officers in US (i) productivity growth survey (i) on sovereign wealth funds (i) principal–agent problem (i) principal–agent theory (i) prioritizing, and strategy (i) private standards (i) probabilistic decision-making (i), (ii) product market regulation (PMR) indicators (i), (ii) production and computer technology (i) geography of production (i) lean production (i), (ii) and multinationals (i) production costs (i), (ii), (iii) unbundling of: first (i); second (i), (ii), (iii), (iv) see also specialization; supply chains; value chains productivity and containerization (of global trade) (i) and cyclical effects (i) and data economy (i) downward trend (i), (ii) and employment (i) and financial sector growth (i) and foreign operations (i)n46 and globalization (i), (ii), (iii) and ICT intensity (i), (ii) and incomes (decoupling thesis) (i), (ii) key to prosperity (i) low productivity and innovation diffusion problems (i) and market contestability (i), (ii) and multinationals (i), (ii) and regulation (i) and robots (i) total factor productivity (TFP) growth (i), (ii), (iii) and transaction costs (i) UK productivity puzzle (i) professional investment/investors (i), (ii), (iii) see also asset managers professions regulation of (i), (ii) see also occupational licenses profit margins and decoupling (productivity/incomes) thesis (i) and globalization (i), (ii) protectionism (i), (ii), (iii), (iv), (v) public markets and financialization of the economy (i) and mergers and acquisitions (i) public pension return funds (PPRFs) (i) see also pensions public relations campaigns (i), (ii) “put option” (i) PwC see Pricewaterhouse Coopers (PwC) quantitative valuation methods (i) quantum dots (QD) technology (i) R&D (research and development) and corporate net lending (i) and firm boundaries (i), (ii) and multinationals (i) and pharmaceutical products (i), (ii) and policy uncertainty (i) and productivity (i) R&D scoreboards (European Commission) (i), (ii) and regulation (i), (ii), (iii) vs. share buybacks at IBM (i) spending issues (i), (ii), (iii) and sunk costs (i) US R&D investment (i), (ii), (iii) and vertical specialization (i) see also incremental development Rajan, Raghuram (i) rating agencies (i), (ii), (iii) rationalism and globalist worldview (i), (ii) and societal change (i) Reagan, Ronald (i), (ii) real economy, vs. financial economy (i), (ii), (iii), (iv) reallocation of business, and deregulation (i) recorded data (national accounts) vs. real value of improvements (i), (ii) regulation after 1980s–1990s deregulation wave (i), (ii) and bureaucracy brake (Germany) (i) and compliance officers (i) and costs and time lags (i) and decline of capitalism (i), (ii) economic regulation (i), (ii) financial regulations (i), (ii), (iii), (iv) and globalization (i) and gray capitalism (i) and healthcare sector (i), (ii), (iii), (iv) index of regulatory freedom (i), (ii) and industrial policy (i), (ii) and innovation (i), (ii), (iii), (iv), (v), (vi) and labor (i), (ii), (iii), (iv), (v) and lobbying (i) and managerialism (i), (ii) and market contestability (i), (ii) moving-target regulations (i) and multinationals (i) and pensions (i) permission-based regulatory culture (i), (ii) and permissionless innovation (i) and planning (i) and political romanticism (i) and political world (i), (ii) prescriptive vs. proscriptive (i), (ii) private standards (i) and R&D (i), (ii), (iii) and size of companies (i) social regulation (i), (ii) and trade (i), (ii), (iii) see also deregulation; legislation; regulatory complexity/uncertainty regulatory accumulation (i) regulatory bodies (i) regulatory complexity/uncertainty cadmium example (i), (ii) energy sector case (i), (ii) impact on economic growth (i) impact on innovation (i), (ii), (iii), (iv), (v) precautionary regulations (i), (ii), (iii), (iv) regulatory conflicts (i) regulatory/policy uncertainty and investment allocation (i), (ii) rise of regulatory uncertainty (i) see also deregulation; regulation renewable energy see green/renewable energy rent-seeking (i), (ii), (iii) rentier capitalism (i), (ii), (iii), (iv), (v), (vi) rentier formula, resource allocation according to (i) rentiers (i), (ii) reputation management (i) research concept of in corporate world (i), (ii) scientific research (i) see also cancer research; incremental development; R&D Research in Motion (RiM) (i), (ii) retail, and globalization (i) retirement age of (i) savings (i), (ii), (iii), (iv), (v), (vi), (vii) see also pensions Ricardo, David, wine-for-cloth thesis (i) rich people vs. capitalists (i), (ii) high-net-worth individuals (i) mass affluent (i) “one percent” (wealthiest group) (i) risk banks’ proneness to (i) and globalist worldview (i), (ii) and uncertainty (i), (ii) Robertson, Dennis (i) Robinson, James (i) robotics/robots and Asimov/science fiction (i) impact of on society (i) and labor (i), (ii), (iii), (iv), (v); Foxconn example (i) and technology-frustrated generation (i) see also artificial intelligence; automation; driverless vehicles; New Machine Age thesis; technology Rodman, Dennis (i) Rolling Stone (magazine), “Why Isn’t Wall Street in Jail?”

The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention by William Rosen

Albert Einstein, All science is either physics or stamp collecting, barriers to entry, Charles Babbage, collective bargaining, computer age, Copley Medal, creative destruction, David Ricardo: comparative advantage, decarbonisation, delayed gratification, Fellow of the Royal Society, flying shuttle, Flynn Effect, fudge factor, full employment, Higgs boson, independent contractor, invisible hand, Isaac Newton, Islamic Golden Age, iterative process, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, Joseph Schumpeter, Joseph-Marie Jacquard, knowledge economy, language acquisition, Lewis Mumford, moral hazard, Network effects, Panopticon Jeremy Bentham, Paul Samuelson, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, Ralph Waldo Emerson, rent-seeking, Robert Solow, Ronald Coase, Simon Kuznets, spinning jenny, tacit knowledge, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, three-masted sailing ship, transaction costs, transcontinental railway, zero-sum game, éminence grise

Economists have studied the human predilection for shutting out competitors once they have achieved a position of prosperity, and they refer to the behavior that follows as “rent seeking.” Rent-seeking behavior is simply the practice of earning income from an asset without currently working at it. Landlords are rent seekers, particularly to the degree that the land in question is unimproved, and inherited. So are monopolists. And so, indeed, are owners of copyrights and patents, so much so that one of the head-spinning challenges faced by Enlightenment thinkers like Adam Smith was to reconcile their antipathy to all forms of rent seeking, particularly in the form of state-chartered monopolies, with their enthusiasm for inventors and technological innovation.

…

In the first spinning machines, the operator had to simultaneously shape the winding and turn the spindles at precisely the same rate, so as to wind up the yarn—the term of art is “winding the cop”—without either stretching the yarn or allowing it to go slack. The craft was difficult enough that spinners became not only indispensable to the process, but highly protective of their place in it, exhibiting all the rent-seeking mania of a medieval guild. Along the way they transformed themselves from independent contractors into the nation’s most powerful and highly organized craft union. At one union meeting, a spinner argued violently against allowing “piecers” (the subordinates on the spinning line, who tie together threads when they break) to actually put up a cop of cotton yarn unless he was “a son, brother, or orphan nephew.”51 In the industry’s Lancashire heartland,52 mule spinners developed work rules in 1780 that remained in force until the 1960s, and partly in consequence, the new and improved ring-spinning machines, invented by the American John Thorp in 1828, which operated continuously and twisted fibers into yarn by attaching them to a rotating ring, didn’t catch on in Britain53 until the end of the nineteenth century.

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

"World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, business cycle, buy and hold, Carmen Reinhart, classic study, cognitive dissonance, collapse of Lehman Brothers, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, eat what you kill, Edward Glaeser, electricity market, 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, foreign exchange controls, full employment, geopolitical risk, George Akerlof, global rebalancing, Goodhart's law, Great Leap Forward, Hyman Minsky, income inequality, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, laissez-faire capitalism, long and variable lags, Long Term Capital Management, low interest rates, mandelbrot fractal, market design, market fundamentalism, Martin Wolf, military-industrial complex, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, Nelson Mandela, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, oil shock, paradox of thrift, Pareto efficiency, Paul Samuelson, Paul Volcker talking about ATMs, 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 Solow, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, statistical model, systems thinking, 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

The response will be to try to overcome these problems with better institutions. Rather than abandoning hope in regulation and simply giving free rein to markets, Capitalism 4.0 will seek more intelligent policies that take account of known dysfunctions of government such as regulatory capture, rent-seeking,6 the political influence of special interests, and single-issue lobbies. It would be overoptimistic to imagine that such effort will be entirely successful. No one is likely to discover perfect answers to some of the deepest questions of social organization that have troubled political theorists since Plato and Aristotle,7 but an important part of any new approach will be to increase the flexibility of public policy and try to weaken the hold of the special interests that regulations create, some of which are found in the government itself.

…

No one is likely to discover perfect answers to some of the deepest questions of social organization that have troubled political theorists since Plato and Aristotle,7 but an important part of any new approach will be to increase the flexibility of public policy and try to weaken the hold of the special interests that regulations create, some of which are found in the government itself. One small way to soften the rigidities of regulation and limit the unproductive rent-seeking that tends to be created by government is to use sunset clauses on government rules of all kinds.8 Suppose, for example, that bank solvency regulations, employment laws, and even health and safety rules lapsed automatically and had to be redrawn every ten years. Far more thought and lobbying power would be devoted to serious debate about improving regulation and debating whether it was still needed, rather than exploiting and gaming a fixed set of rules.

…

Third, for Europe, an intellectual convergence with America will require policymakers and electorates to acknowledge some of the dysfunctional features of the European socio-economic system that have allowed special interests, such as agricultural lobbies and trade unions, to disguise what is essentially exploitative rent-seeking economic behavior, as culturally unique characteristics of the European model. The aftermath of the financial crisis will force Europe to adopt more market-oriented policies for trade, labor, and agriculture, and these policies will make its economic interactions with emerging economies more mutually beneficial and economically constructive.

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, Alan Greenspan, altcoin, Apple Newton, bank run, banking crisis, bitcoin, Bitcoin Ponzi scheme, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, Cody Wilson, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, decentralized internet, disinformation, disintermediation, Dogecoin, driverless car, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, Firefox, Flash crash, Ford Model T, Fractional reserve banking, Glass-Steagall Act, hacker house, Hacker News, 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 creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, off-the-grid, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, printed gun, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, 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, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, Vitalik Buterin, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

The ledgers they kept inside their institutions became the vital means through which societies kept track of the debts and payments that arose among their citizens. Thus the banks created the ultimate rent-seeking business, positioning themselves as fee-charging gatekeepers, managers of the financial traffic that made economies tick. Anyone sitting at the sending or receiving end of that traffic had no choice but to deal with a bank—much as Parisa Ahmadi did before the Film Annex changed its payment policy. As this new finance business grew and became more complex, other rent-seeking middlemen installed themselves as specialized providers of intermediated trust—from early bond and securities brokers, to insurance agents, to financial lawyers, to the payment processors and credit-card companies of our modern day.

…

But it also reflected a philosophical difference between believers in innovative projects who seek to profit by being first to market with new, cost-cutting business models, and believers in the prevailing ethos of Wall Street that Sandy Weill embodied. Wall Street banking is, if nothing else, a rent-seeking exercise. It would be inclined to preserve and strengthen centralized revenue streams such as credit-card transaction fees rather than expunge them. With the repeal of Glass-Steagall, and the waves of commercial-and-investment-bank mergers that followed Citigroup’s lead—Chase Manhattan with JP Morgan, Bank Boston with Fleet Bank and later with Bank of America—this ethos was now seizing control of the American financial system.

…

She should go to an ATM and withdraw as much money as she could. She didn’t understand why. Because, he told her, there was a chance U.S. banks wouldn’t open the next day. That frightening prospect—complete paralysis of the most important financial system in the world—was the price we paid for letting Wall Street deepen its model of centralized, rent-seeking power. The final social tab is still being tallied, but its costs go beyond what any bookkeeper can put into dollars and cents. One place it is felt is in the bitter taste that’s left in the mouths of citizens forced to prop up these banks. That has translated into a loss of trust in institutions generally, those of both Wall Street and Washington.

Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth by Stuart Ritchie

Albert Einstein, anesthesia awareness, autism spectrum disorder, Bayesian statistics, Black Lives Matter, Carmen Reinhart, Cass Sunstein, Charles Babbage, citation needed, Climatic Research Unit, cognitive dissonance, complexity theory, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, data science, deindustrialization, Donald Trump, double helix, en.wikipedia.org, epigenetics, Estimating the Reproducibility of Psychological Science, fake news, Goodhart's law, Growth in a Time of Debt, Helicobacter pylori, Higgs boson, hype cycle, Kenneth Rogoff, l'esprit de l'escalier, Large Hadron Collider, meta-analysis, microbiome, Milgram experiment, mouse model, New Journalism, ocean acidification, p-value, phenotype, placebo effect, profit motive, publication bias, publish or perish, quantum entanglement, race to the bottom, randomized controlled trial, recommendation engine, rent-seeking, replication crisis, Richard Thaler, risk tolerance, Ronald Reagan, Scientific racism, selection bias, Silicon Valley, Silicon Valley startup, social distancing, Stanford prison experiment, statistical model, stem cell, Steven Pinker, TED Talk, Thomas Bayes, twin studies, Tyler Cowen, University of East Anglia, Wayback Machine

The time and expertise of peer reviewers is the crux of the whole scientific system, providing the critical analysis that’s required for science to progress. Yet those reviewers are volunteers and aren’t employed by the journals. They are free labour, so they clearly can’t be what justifies the cost. Rather, Elsevier and other for-profit publishers are engaging in what economists call rent-seeking: gaining more profits without providing more value.68 One highly critical investigation of the scientific publication system noted its absurdities: It is as if the New Yorker or the Economist demanded that journalists write and edit each other’s work for free, and asked the government to foot the bill.

…

Outside observers tend to fall into a sort of stunned disbelief when describing this setup … A 2005 Deutsche Bank report referred to it as a ‘bizarre’ ‘triplepay’ system, in which ‘the state funds most research, pays the salaries of most of those checking the quality of research, and then buys most of the published product’.69 Once you remember that the fees universities pay to rent-seeking companies such as Elsevier are largely public funds, the whole thing begins to seem immoral: shouldn’t universities be making more efficient use of taxpayer money? It’s not even that we should be opposed to the profit motive, or to commercial publishers getting involved in science. But the irrational system of prestige that’s built up around the journal publishing system represents a market failure, impeding the necessary competition that could drive down its costs.

…

ABC News abortion Abu Ghraib prison abuse (2003) accidental discoveries Acta Crystallographica Section E acupuncture Afghan hounds Agence France-Presse AIDS (acquired immune deficiency syndrome) Alchemist, The (Bega) Alexander, Benita Alexander, Scott algorithms allergies Alzheimer, Aloysius Alzheimer’s Disease Amazon American Journal of Potato Research Amgen amygdala amyloid cascade hypothesis anaesthesia awareness Fujii affair (2012) outcome switching Anaesthesia & Analgesia animal studies antidepressants antipsychotics archaeology Arnold, Frances arsenic artificial tracheas asthma austerity Australia Austria autism aviation Babbage, Charles Bacon, Francis bacteria Bargh, John Bayer Bayes, Thomas Bayesian statistics BDNF gene Before You Know It (Bargh) Bega, Cornelis Begley, Sharon Belgium Bell Labs Bem, Daryl benzodiazepines bias blinding and conflict of interest De Vries’ study (2018) funding and groupthink and meaning well bias Morton’s skull studies p-hacking politics and publication bias randomisation and sexism and Bik, Elisabeth Bill & Melinda Gates Foundation Biomaterials biology amyloid cascade hypothesis Bik’s fake images study (2016) Boldt affair (2010) cell lines China, misconduct in Hwang affair (2005–6) Macchiarini affair (2015–16) meta-scientific research microbiome studies Morton’s skull studies Obokata affair (2014) outcome switching preprints publication bias replication crisis Reuben affair (2009) spin and statistical power and Summerlin affair (1974) Wakefield affair (1998–2010) biomedical papers bird flu bispectral index monitor black holes Black Lives Matter blinding blotting BMJ, The Boldt, Joachim books Borges, Jorge Luis Boulez, Pierre Boyle, Robert brain imaging Brass Eye vii British Medical Journal Brock, Jon bronchoscopy Broockman, David Brown, Nick Bush, George Walker business studies BuzzFeed News California Walnut Commission California wildfires (2017) Canada cancer cell lines collaborative projects faecal transplants food and publication bias and replication crisis and sleep and spin and candidate genes carbon-based transistors Cardiff University cardiovascular disease Carlisle, John Carlsmith, James Carney, Dana cash-for-publication schemes cataracts Cell cell lines Cell Transplantation Center for Open Science CERN (Conseil Européen pour la Recherche Nucléaire) chi-squared tests childbirth China cash-for-publication schemes cell line mix-ups in Great Famine (1959–1961) misconduct cases in randomisation fraud in chrysalis effect Churchill, Winston churnalism Cifu, Adam citations clickbait climate change cloning Clostridium difficile cochlear implants Cochrane Collaboration coercive citation coffee cognitive dissonance cognitive psychology cognitive tests coin flipping Colbert Report, The Cold War collaborative projects colonic irrigation communality COMPare Trials COMT gene confidence interval conflict of interest Conservative Party conspicuous consumption Cooperative Campaign Analysis Project (CCAP) ‘Coping with Chaos’ (Stapel) Cornell University coronavirus (COVID-19) Corps of Engineers correlation versus causation corticosteroids Cotton, Charles Caleb creationism Crowe, Russell Csiszar, Alex Cuddy, Amy CV (curriculum vitae) cyber-bullying cystic fibrosis Daily Mail Daily Telegraph Darwin Memorial, The’ (Huxley) Darwin, Charles Das, Dipak datasets fraudulent Observational publication bias Davies, Phil Dawkins, Richard De Niro, Robert De Vries, Ymkje Anna debt-to-GDP ratio Deer, Brian democratic peace theory Denmark Department of Agriculture, US depression desk rejections Deutsche Bank disabilities discontinuous mind disinterestedness DNA (deoxyribonucleic acid) domestication syndrome doveryai, no proveryai Duarte, José Duke University duloxetine Dutch Golden Age Dutch Organisation for Scientific Research Dweck, Carol economics austerity preprints statistical power and effect size Einstein, Albert Elmo Elsevier engineering epigenetics euthanasia evolutionary biology exaggeration exercise Experiment, The exploratory analyses extrasensory perception faecal transplants false-positive errors Fanelli, Daniele Festinger, Leon file-drawer problem financial crisis (2007–8) Fine, Cordelia Fisher, Ronald 5 sigma evidence 5-HT2a gene 5-HTTLPR gene fixed mindset Food and Drug Administration (FDA) Food Frequency Questionnaires food psychology Formosus, Pope foxes France Francis, Pope Franco, Annie fraud images investigation of motives for numbers Open Science and peer review randomisation Freedom of Information Acts French, Chris Fryer, Roland Fujii, Yoshitaka funding bias and fraud and hype and long-term funding perverse incentive and replication crisis and statistical power and taxpayer money funnel plots Future of Science, The (Nielsen) gay marriage Gelman, Andrew genetically modified crops genetics autocorrect errors candidate genes collaborative projects gene therapy genome-wide association studies (GWASs) hype in salami-slicing in Geneva, Switzerland geoscience Germany Getty Center GFAJ-1 Giner-Sorolla, Roger Glasgow Effect Goldacre, Ben Goldsmiths, University of London Golgi Apparatus good bacteria Good Morning America good scientific citizenship Goodhart’s Law Goodstein, David Google Scholar Górecki, Henryk Gould, Stephen Jay Gran Sasso, Italy grants, see funding Granularity-Related Inconsistency of Means (GRIM) grapes Great Recession (2007–9) Great Red Spot of Jupiter Green, Donald Gross Domestic Product (GDP) Gross, Charles ground-breaking results groupthink ‘Growth in a Time of Debt’ (Reinhart and Rogoff) growth mindset Guzey, Alexey gynaecology h-index H5N1 Haldane, John Burdon Sanderson Hankins, Matthew HARKing Harris, Sidney Harvard University headache pills heart attacks heart disease Heathers, James height Heilongjiang University Heino, Matti Henry IV (Shakespeare) Higgs Boson Hirsch, Jorge HIV (human immunodeficiency viruses) homosexuality Hong Kong Hooke, Robert Hossenfelder, Sabine Houston, Texas Hume, David Huxley, Thomas Henry Hwang, Woo-Suk hydroxyethyl starch hype arsenic life affair (2010) books correlation versus causation cross-species leap language and microbiome studies news stories nutrition and press releases spin unwarranted advice hypotheses Ig Nobel Prize images, fraudulent impact factor India insomnia International Journal of Advanced Computer Technology Ioannidis, John IQ tests Iraq War (2003–11) Italy Japan John, Elton Journal of Cognitive Education and Psychology Journal of Environmental Quality Journal of Negative Results in Biomedicine Journal of Personality and Social Psychology journals conflict of interest disclosure fraud and hype and impact factor language in mega-journals negligence and Open Science and peer review, see peer review predatory journals preprints publication bias rent-seeking replication studies retraction salami slicing subscription fees Jupiter Kahneman, Daniel Kalla, Joshua Karolinska Institute Krasnodar, Russia Krugman, Paul Lacon, or Many Things in Few Words (Cotton) LaCour, Michael Lancet Fine’s ‘feminist science’ article (2018) Macchiarini affair (2015–16) Wakefield affair (1998–2010) language Large Hadron Collider Le Texier, Thibault Lewis, Jason Lexington Herald-Leader Leyser, Ottoline Lilienfeld, Scott Loken, Eric Lost in Math (Hossenfelder) low-fat diet low-powered studies Lumley, Thomas Lysenko, Trofim Macbeth (Shakespeare) Macbeth effect Macchiarini, Paolo MacDonald, Norman machine learning Macleod, Malcolm Macroeconomics major depressive disorder Malaysia Mao Zedong MARCH1 Marcus, Adam marine biology Markowetz, Florian Matthew Effect Maxims and Moral Reflections (MacDonald) McCartney, Gerry McCloskey, Deirdre McElreath, Richard meaning well bias Measles, Mumps & Rubella (MMR) measurement errors Medawar, Peter medical research amyloid cascade hypothesis Boldt affair (2010) cell lines China, misconduct in collaborative projects Fujii affair (2012) Hwang affair (2005–6) Macchiarini affair (2015–16) meta-scientific research Obokata affair (2014) outcome switching pharmaceutical companies preprints pre-registration publication bias replication crisis Reuben affair (2009) spin and statistical power and Summerlin affair (1974) Wakefield affair (1998–2010) medical reversal Medical Science Monitor Mediterranean Diet Merton, Robert Mertonian Norms communality disinterestedness organised scepticism universalism meta-science Boldt affair (2010) chrysalis effect De Vries’ study (2018) Fanelli’s study (2010) Ioannidis’ article (2005) Macleod’s studies mindset studies (2018) saturated fats studies spin and stereotype threat studies mice microbiome Microsoft Excel Milgram, Stanley Mill, John Stuart Mindset (Dweck) mindset concept Mismeasure of Man, The (Gould) Modi, Narendra money priming Mono Lake, California Moon, Hyung-In Morton, Samuel Motyl, Matt multiverse analysis nanotechnology National Academy of Sciences National Aeronautics and Space Administration (NASA) National Institutes of Health National Science Foundation Nature cash-for-publication and cell line editorial (1981) impact factor language in Obokata affair (2014) Open Access and open letter on statistical significance (2019) replication research Schön affair (2002) Stapel affair (2011) Nature Neuroscience Nature Reviews Cancer NBC negligence cell line mix-ups numerical errors statistical power typos Netflix Netherlands replication studies in Stapel’s racism studies statcheck research neuroscience amyloid cascade hypothesis collaborative projects Macleod’s animal research studies replication crisis sexism and statistical significance and Walker’s sleep studies neutrinos New England Journal of Medicine New York Times New Zealand news media Newton, Isaac Nielsen, Michael Nimoy, Leonard No Country for Old Men Nobel Prize northern blots Nosek, Brian Novella, Steven novelty Novum Organum (Bacon) Nuijten, Michèle nullius in verba, numerical errors nutrition Obama, Barack obesity Obokata, Haruko observational datasets obstetrics ocean acidification oesophagus ‘Of Essay-Writing’ (Hume) Office for Research Integrity, US Oldenburg, Henry Open Access Open Science OPERA experiment (2011) Oransky, Ivan Orben, Amy Organic Syntheses organised scepticism Osborne, George outcome-switching overfitting Oxford University p-value/hacking alternatives to Fine and low-powered studies and microbiome studies and nutritional studies and Open Science and outcome-switching perverse incentive and pre-registration and screen time studies and spin and statcheck and papers abstracts citations growth rates h-index introductions method sections results sections salami slicing self-plagiarism university ranks and Parkinson’s disease particle-accelerator experiments peanut allergies peer review coercive citation fraudulent groupthink and LaCour affair (2014–15) Preprints productivity incentives and randomisation and toxoplasma gondii scandal (1961) volunteer Wakefield affair (1998–2010) penicillin Peoria, Illinois Perspectives in Psychological Science perverse incentive cash for publications competition CVs and evolutionary analogy funding impact factor predatory journals salami slicing self-plagiarism Pett, Joel pharmaceutical companies PhDs Philosophical Transactions phlogiston phosphorus Photoshop Physical Review physics placebos plagiarism Plan S Planck, Max plane crashes PLOS ONE pluripotency Poehlman, Eric politics polygenes polyunsaturated fatty acids Popper, Karl populism pornography positive feedback loops positive versus null results, see publication bias post-traumatic stress disorder (PTSD) power posing Prasad, Vinay pre-registration preclinical studies predatory journals preprints Presence (Cuddy) press releases Prevención con Dieta Mediterránea (PREDIMED) priming Princeton University Private Eye probiotics Proceedings of the National Academy of Sciences prosthetic limbs Przybylski, Andrew psychic precognition Psychological Medicine psychology Bargh’s priming study (1996) Bem’s precognition studies books Carney and Cuddy’s power posing studies collaborative projects data sharing study (2006) Dweck’s mindset concept Festinger and Carlsmith’s cognitive dissonance studies Kahneman’s priming studies LaCour’s gay marriage experiment politics and preprints publication bias in Shanks’ priming studies Stanford Prison Experiment Stapel’s racism studies statistical power and Wansink’s food studies publication bias publish or perish Pubpeer Pythagoras’s theorem Qatar quantum entanglement racism Bargh’s priming studies Morton’s skull studies Stapel’s environmental studies randomisation Randy Schekman Reagan, Ronald recommendation algorithms red grapes Redfield, Rosemary Reflections on the Decline of Science in England (Babbage) Reinhart, Carmen Rennie, Drummond rent-seeking replication; replication crisis Bargh’s priming study Bem’s precognition studies biology and Carney and Cuddy’s power posing studies chemistry and economics and engineering and geoscience and journals and Kahneman’s priming studies marine biology and medical research and neuroscience and physics and Schön’s carbon-based transistor Stanford Prison Experiment Stapel’s racism studies Wolfe-Simon’s arsenic life study reproducibility Republican Party research grants research parasites resveratrol retraction Arnold Boldt Fujii LaCour Macchiarini Moon Obokata Reuben Schön Stapel Wakefield Wansink Retraction Watch Reuben, Scott Reuters RIKEN Rogoff, Kenneth romantic priming Royal Society Rundgren, Todd Russia doveryai, no proveryai foxes, domestication of Macchiarini affair (2015–16) plagiarism in salami slicing same-sex marriage sample size sampling errors Sanna, Lawrence Sasai, Yoshiki saturated fats Saturn Saudi Arabia schizophrenia Schoenfeld, Jonathan Schön, Jan Hendrik School Psychology International Schopenhauer, Arthur Science acceptance rate Arnold affair (2020) arsenic life affair (2010) cash-for-publication and Hwang affair (2005) impact factor LaCour affair (2014–15) language in Macbeth effect study (2006) Open Access and pre-registration investigation (2020) replication research Schön affair (2002) Stapel affair (2011) toxoplasma gondii scandal (1961) Science Europe Science Media Centre scientific journals, see journals scientific papers, see papers Scientific World Journal, The Scotland Scottish Socialist Party screen time self-citation self-correction self-plagiarism self-sustaining systems Seoul National University SEPT2 Sesame Street sexism sexual selection Shakespeare, William Shanks, David Shansky, Rebecca Simmons, Joseph Simonsohn, Uri Simpsons, The skin grafts Slate Star Codex Sloan-Kettering Cancer Institute Smaldino, Paul Smeesters, Dirk Smith, Richard Snuppy social media South Korea Southern blot Southern, Edwin Soviet Union space science special relativity specification-curve analysis speed-accuracy trade-off Spies, Jeffrey spin Springer Srivastava, Sanjay Stalin, Joseph Stanford University Dweck’s mindset concept file-drawer project (2014) Prison Experiment (1971) Schön affair (2002) STAP (Stimulus-Triggered Acquisition of Pluripotency) Stapel, Diederik statcheck statistical flukes statistical power statistical significance statistical tests Status Quo stem cells Stephen VI, Pope stereotype threat Sternberg, Robert strokes subscription fees Summerlin, William Sweden Swift, Jonathan Swiss Federal Institute of Technology Sydney Morning Herald Symphony of Sorrowful Songs (Górecki) t-tests Taiwan taps-aff.co.uk tax policies team science TED (Technology, Entertainment, and Design) Texas sharpshooter analogy Thatcher, Margaret theory of special relativity Thinking, Fast and Slow (Kahneman) Thomson Reuters Tilburg University Titan totalitarianism toxoplasma gondii trachea translational research transparency Tribeca Film Festival triplepay system Trump, Donald trust in science ‘trust, but verify’ Tumor Biology Turkey Tuulik, Julia Twitter typos UK Reproducibility Network Ulysses pact United Kingdom austerity cash-for-publication schemes image duplication in multiverse analysis study (2019) National Institute for Health Research pre-registration in Royal Society submarines trust in science university ranks in Wakefield affair (1998–2010) United States Arnold affair (2020) arsenic life affair (2010) austerity Bargh’s priming study (1996) Bem’s precognition studies California wildfires (2017) Carney and Cuddy’s power posing studies Center for Nutrition Policy and Promotion climate science in creationism in Das affair (2012) De Vries’ drug study (2018) Department of Agriculture Dweck’s mindset concept Fryer’s police brutality study (2016) image duplication in Kahneman’s priming studies LaCour affair (2014–15) Morton’s skull studies Office for Research Integrity Poehlman affair (2006) pre-registration in public domain laws Reuben affair (2009) Stanford Prison Experiment Summerlin affair (1974) tenure Walker’s sleep studies Wansink affair (2016) universalism universities cash-for-publication schemes fraud and subscription fees and team science University College London University of British Columbia University of California Berkeley Los Angeles University of Connecticut University of East Anglia University of Edinburgh University of Hertfordshire University of London University of Pennsylvania unsaturated fats unwarranted advice vaccines Vamplew, Peter Vanity Fair Vatican Vaxxed Viagra vibration-of-effects analysis virology Wakefield, Andrew Walker, Matthew Wansink, Brian Washington Post weasel wording Weisberg, Michael Wellcome Trust western blots Westfall, Jake ‘Why Most Published Research Findings Are False’ (Ioannidis) Why We Sleep (Walker) Wiley Wiseman, Richard Wolfe-Simon, Felisa World as Will and Presentation, The (Schopenhauer) World Health Organisation (WHO) Yale University Yarkoni, Tal Yes Men Yezhov, Nikolai Z-tests Ziliak, Stephen Zimbardo, Philip Zola, Émile About the Author Stuart Ritchie is a lecturer in the Social, Genetic and Developmental Psychiatry Centre at King’s College London.

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

"World Economic Forum" Davos, Admiral Zheng, affirmative action, Affordable Care Act / Obamacare, Asian financial crisis, assortative mating, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bernie Madoff, bike sharing, Boris Johnson, Bretton Woods, British Empire, cashless society, central bank independence, Chelsea Manning, circulation of elites, classic study, Clayton Christensen, Corn Laws, corporate governance, credit crunch, crony capitalism, Deng Xiaoping, Detroit bankruptcy, disintermediation, Disneyland with the Death Penalty, driverless car, Edward Snowden, Etonian, failed state, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, income inequality, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, Khan Academy, Kickstarter, knowledge economy, Kodak vs Instagram, labor-force participation, laissez-faire capitalism, land reform, Les Trente Glorieuses, liberal capitalism, Martin Wolf, means of production, Michael Milken, minimum wage unemployment, mittelstand, mobile money, Mont Pelerin Society, Nelson Mandela, night-watchman state, Norman Macrae, obamacare, oil shale / tar sands, old age dependency ratio, open economy, Parag Khanna, Peace of Westphalia, pension reform, pensions crisis, personalized medicine, Peter Thiel, plutocrats, popular capitalism, profit maximization, public intellectual, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, Shenzhen special economic zone , Silicon Valley, Skype, special economic zone, TED Talk, the long tail, three-martini lunch, too big to fail, total factor productivity, vertical integration, War on Poverty, Washington Consensus, Winter of Discontent, working-age population, zero-sum game

Some of the most far-seeing Chinese bureaucrats argue that SOEs will die a natural death as the Chinese economy matures: They should be understood as staging points on the road to full-blooded capitalism rather than ends in their own right.41 The reckoning in the rest of the world is even worse. Authoritarian modernization may have a successful record in Singapore and South Korea. But look at the Arab world: Egypt’s state capitalism was an excuse for rent seeking and incompetence (not least on the part of the dozens of companies, accounting for 10 percent of the economy, run by the military). Or look at sub-Saharan Africa: Crony capitalism is lowering growth and increasing inequality. For the state to direct capitalism, you need a strong and competent state—and sadly, most countries that are attracted to it have weak and incompetent ones.

…

Luigi Zingales of the University of Chicago’s Booth School of Business (who left Italy in 1988 because he felt his country was being destroyed by cronyism) calculates that the implicit subsidy that comes from banks being too big to fail is worth $34 billion a year.9 Two other economists, Thomas Philippon and Ariell Reshef, argue that between a third and a half of the huge increase in Wall Street pay has come from rents rather than productivity improvements.10 The fact that private-equity people can treat their income as capital gains is particularly disgraceful. And like agriculture, all this special treatment for finance creates red tape (witness Dodd-Frank) and distorts capitalism: Ever more finance is now being constructed in “dark pools” beyond the reach of regulators. There are innumerable other examples of rent-seeking special interests. If the government stopped subsidizing the production of fossil fuels, it could save $40 billion over the next decade.11 Spending on lobbying in Washington has more than doubled in the past fifteen years. The Supreme Court’s 2010 Citizens United decision has given companies carte blanche to spend freely on influencing elections.

…

., 1906), 72 Putin, Vladimir, 144, 153, 253 Pythagorean theorem, 31 Qianlong, Emperor of China, 41 racism, 88 Rauch, Jonathan, 231 Reagan, Ronald, 8, 28, 88, 91–92, 97, 198 Friedman and, 86 small-government ideology of, 95 see also Thatcher-Reagan revolution reason, religion as opponent of, 48 Reform, 203 Reformation, 48–49 Reinfeldt, Fredrik, 184 religion: freedom of, 224 reason as opponent of, 48 rent control, 82 rent seeking, 239 “Report on Manufacturers” (Hamilton), 150 Republic, The (Plato), 250 Republican Party, U.S., 123, 236–37 increased taxes opposed by, 100, 255 tax rises approved by, 12 Reshef, Ariell, 239 retirement age, 184–85, 242 Reykjavik City Council, 261 Ricardo, David, 49 Richelieu, Cardinal, 37 Right, 82, 93 government bloat and, 10–11, 98 government efficiency and, 187 and growth of big government, 10, 95, 98, 228, 230–31 privatization and, 234, 236–37 welfare services opposed by, 88, 185 rights: Fourth Revolution and, 270 liberal state’s expansion of, 7, 48, 49, 51 in nation-state, 30, 43–44 of property, 40, 43, 224 protection of, as primary role of liberal state, 45 see also freedom Rights of Man, The (Paine), 44 Ripley, Amanda, 206–7 road pricing, 217 Road to Serfdom, The (Hayek), 10, 83, 86 Rodrik, Dani, 262 Romney, Mitt, 217 “Roofs or Ceilings” (Friedman), 82 Roosevelt, Franklin Delano, 72–73, 252 Roosevelt, Theodore, 71–72, 258 rotten boroughs, 51, 125, 227, 251, 257, 269 see also gerrymandering Rousseau, Jean-Jacques, 44, 45 Rousseff, Dilma, 153 Royal Society, 42 Rumsfeld, Donald, 77, 253 Russia, 71 China and, 152 corruption in, 186 failure of democracy in, 253, 262 privatization in, 96 Singapore model admired by, 144 state capitalism in, 153, 154 Russian Revolution, 45 Rwanda, 144 Sacramento, Calif., 105, 106, 127 Sahni, Nikhil, 200 St.

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, assortative mating, bank run, barriers to entry, Bear Stearns, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, digital divide, diversification, Dunbar number, East Village, eat what you kill, Elon Musk, eurozone crisis, fake it until you make it, family office, financial engineering, financial repression, Gini coefficient, glass ceiling, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, Jim Simons, John Meriwether, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Roose, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, Money creation, money market fund, Myron Scholes, NetJets, Network effects, no-fly zone, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Ponzi scheme, power law, public intellectual, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, rolodex, Satyajit Das, search costs, shareholder value, Sheryl Sandberg, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, subprime mortgage crisis, systems thinking, tech billionaire, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, Tyler Cowen, women in the workforce, young professional

It is now at an all-time high and set to increase further: Today eighty people hold the same amount of wealth as the world’s 3.6 billion poorest, and the combined wealth of the richest 1 percent will soon overtake that of the other 99 percent.7 Many in this group of super-elites are financiers. This development has been exacerbated by the fact that the wealthy can capitalize on returns on ownership rather than solely on labor, a practice known as “rent-seeking.” In other words, they can let their money work for them, and over time these investments yield a higher rate of return than the economy’s rate of growth. In contrast, salaries derived from labor don’t rise as quickly as the returns on capital.8 The opportunity gap has also increased. Rather than perfect competition, our system creates superstars—or superhubs—and amplifies their rewards in a reinforcing feedback loop where the winners of the competition receive the means to win further competitions, so that all but a few competitors are eliminated.9 Tight interpersonal networks contribute to the unequal access to opportunities, and—as a consequence—people lose trust in the system.

…

During the course of the debt-fueled global growth over the last thirty years, the status resulting from jobs that carry a social value—such as the medical or educational professions—has been overtaken by the status money provides. People in finance have made increasingly more money and seen their status rise as a result. Salaries in the financial industry are typically significantly higher than salaries in other sectors. Executives can capitalize on those salaries through rent-seeking—returns on ownership rather than from labor or production—as they have access to investment opportunities to put that money to work for them. Location: Reputation Matters Reputation is an important facet of status, reflecting integrity and competence. We automatically assess other people based on their reputations and consider good character a precondition for doing business.

…

See Network power undue concentration of, 164 Power lunches, 124–125 Power of Alumni Networks, The, 42 “Power-law distribution,” 20 “Predators’ Ball,” 192 Predictions, 50 Preferential attachment, xxvi “Pricelings,” 103 Prince, Chuck, 56, 139–140, 203 Princeton University, 36, 50, 157, 199 Principles, 63, 71 Printing money, 178, 211 Private banks, 37 Private equity firms, 61, 144 Private parties, 126–128 Private sector, 164–165 Prostitution, 194 Protectionism, 212 Psychological detachment, 223–224 Psychopaths, 66 Public sector, 164–165, 168 Purcell, Philip, 139 Putin, Vladimir, 114–116, 219 Q Qatari ruling family, 171 R Racial discrimination, 198, 200, 201, 203 “Radical truth,” 71 Rainbow Room, 109–110 Rama, Edi, 27 Rand, Ayn, 71 Rania, Queen, 114 Reddit, 203 Reflexivity theory, 63 Regular banks, 37 Regulatory capture, 164, 217–218 Reinhart, Carmen, 107 Relational capital, 97 Relational capture, 163, 217 Renaissance Technologies, 87–88 Renova Group, 144 “Rent-seeking,” 12, 22 Renumeration, 87 Reputation integrity as source of, 59 methods of bolstering, 40 status and, 22–23 Research firms, 43 Reset, 203 Residences, 89–92 Residential mortgages, 12 Resilience gap, 156–158 “Revolving door” phenomenon description of, 10–11, 163, 218 Robert Rubin as example of, 163–170 Tony Blair as example of, 170–172 Rhodes, Bill, 131 Rice, Condoleezza, 172 “Rich-get-richer phenomenon,” xxvii, 19, 77, 92 Rikers Island, 39, 193 “Rise of the Overclass, The,” 80 Risk, 30 Risk management systems, 30, 64 Risk taking, 66, 225 Ritz Hotel, 132 Robbins, Tony, 23 Robertson, Julian, 27 Robin Hood charity gala, 75–76 Robin Hood Foundation, 75–76, 103 Robinson, James D.

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Jeremy Corbyn, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, women in the workforce, Zipcar