Capital in the Twenty-First Century by Thomas Piketty

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pages: 345 words: 92,849

Equal Is Unfair: America's Misguided Fight Against Income Inequality by Don Watkins, Yaron Brook

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3D printing, Affordable Care Act / Obamacare, Apple II, barriers to entry, Berlin Wall, Bernie Madoff, blue-collar work, business process, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, colonial exploitation, corporate governance, correlation does not imply causation, creative destruction, Credit Default Swap, crony capitalism, David Brooks, deskilling, Edward Glaeser, Elon Musk, en.wikipedia.org, financial deregulation, immigration reform, income inequality, indoor plumbing, inventory management, invisible hand, Isaac Newton, Jeff Bezos, Jony Ive, laissez-faire capitalism, Louis Pasteur, low skilled workers, means of production, minimum wage unemployment, Naomi Klein, new economy, obamacare, Peter Singer: altruism, Peter Thiel, profit motive, rent control, Ronald Reagan, Silicon Valley, Skype, statistical model, Steve Jobs, Steve Wozniak, The Spirit Level, too big to fail, trickle-down economics, Uber for X, urban renewal, War on Poverty, wealth creators, women in the workforce, working poor, zero-sum game

Stiglitz, “Equal Opportunity, Our National Myth,” New York Times, February 2013, http://opinionator.blogs.nytimes.com/2013/02/16/equal-opportunity-our-national-myth/ (accessed April 12, 2015). 3. Thomas Piketty, “Capital in the Twenty-First Century,” March 2014, http://piketty.pse.ens.fr/en/capital21c2 (accessed April 12, 2015). 4. On some of the problems with Piketty’s data on wealth inequality, see Phillip W. Magness and Robert P. Murphy, “Challenging the Empirical Contribution of Thomas Piketty’s Capital in the Twenty-First Century,” Journal of Private Enterprise, Spring 2015, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2543012 (accessed April 12, 2015); Malin Sahlén and Salim Furth, “Piketty Is Misleading about the Swedish Case,” Timbro, November 7, 2014, http://timbro.se/en/samhallsekonomi/articles/piketty-is-misleading-about-the-swedish-case (accessed April 12, 2015); Phillip W. Magness, “5 Remaining Problems for Thomas Piketty in the Wake of the FT Controversy,” Atlas Network, June 16, 2014, http://www.atlasnetwork.org/news/article/5-remaining-problems-for-thomas-piketty-in-the-wake-of-the-ft-controversy (accessed April 12, 2015); and Alan J.

Timothy Noah, The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It (New York: Bloomsbury Press, 2013), chapter 1. 6. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap, 2014), pp. 1, 514. 7. Obama, “Remarks by the President on Economic Mobility.” 8. James Truslow Adams, The Epic of America (Garden City, NY: Garden City Books, 1933), p. 317. 9. Obama, “Remarks by the President on Economic Mobility.” 10. Joseph E. Stiglitz, “Conclusion: Slow Growth and Inequality Are Political Choices. We Can Choose Otherwise,” Washington Monthly, November/December 2014, http://www.washingtonmonthly.com/magazine/novemberdecember_2014/features/conclusion_slow_growth_and_ine052716.php (accessed April 12, 2015). 11. Obama, “Remarks by the President on Economic Mobility.” 12. Piketty, Capital in the Twenty-First Century, pp. 513, 517. 13.

See also Daniel J. Mitchell, “What Can the United States Learn from the Nordic Model?,” Policy Analysis, November 5, 2007, http://object.cato.org/sites/cato.org/files/pubs/pdf/pa-603.pdf (accessed May 28, 2015). 60. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap, 2014), pp. 247–49. 61. Johnny Munkhammar, “The Swedish Model: It’s the Free-Market Reforms, Stupid!” Wall Street Journal, January 26, 2011, http://www.wsj.com/articles/SB10001424052748704698004576104023432243468 (accessed April 13, 2015). 62. Piketty, Capital in the Twenty-First Century, p. 246. Chapter 5 1. Joseph Stiglitz, “America Is No Longer a Land of Opportunity,” Financial Times, June 25, 2012, http://www.ft.com/intl/cms/s/2/56c7e518-bc8f-11e1-a111-00144feabdc0.html (accessed April 28, 2015). 2.


pages: 221 words: 55,901

The Globalization of Inequality by François Bourguignon

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

During the last few years, rising inequality in certain countries, notably the United States, has been the subject of or inspiration for several major books—among which it would be difficult to overstate the importance of two recent books by Joseph Stiglitz and Thomas Piketty, the success of which is a clear sign of the mounting public interest in the issue of inequality.2 While few books address global income inequality directly, with the exception of Branko Milanovic’s Worlds Apart,3 many have analyzed inequalities in development between 2  Joseph Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York: Norton, 2012); Thomas Piketty, Capital in the Twenty-­First Century (Cambridge, MA: Harvard University Press, 2013). 3  Branko Milanovic, Worlds Apart, Measuring International and Global Inequality (Princeton, NJ: Princeton University Press, 2005).

Another way in which these very high salaries spread comes from the provision of specialized services to superstars or multinational corporations. For example, lawyers who take part in litigation involving large sums of money will often be compensated directly in proportion to 10  Carola Frydman and Raven Saks, “Executive Compensation: A New View from a Long-­Term Perspective, 1936–2005,” Review of Financial Studies 23, no. 5 (2010): 2099–2138. In Capital in the Twenty-­First Century, Thomas Piketty relates the explosion in top executives’ pay to the drop in top marginal income tax rates in the 1980s, the argument being that it was not worth negotiating a high level of compensation when 70% would go to the state. I’ll return to the tax issue later. 90 Chapter 3 the sums in question. Certain law firms have therefore seen their fees skyrocket just like those of the superstars they work for, and the net effect of this process of contagion has made a significant impact on income distribution.

But there are also non-­monetary forms of inequality—some of which can be measured and some of which cannot—that are also socially and economically significant from the point of view of both social justice and the perity in India and China prior to 2002 was estimated by Sanjay Ruparelia et al., Growth, Reforms and Inequality: India and China Since the 1980s, APSA 2010 Annual Meeting Paper, 2010. 11  Piketty, Capital in the Twenty-­First Century. Are Countries Becoming More Unequal?61 ception that the public may have of the equity of the economy. This is the case, in particular, of the inequality of opportunities. Two individuals or two families whose economic standards of living, measured by income or consumer spending are identical, will not necessarily feel “equal” or be considered equal in the eyes of an observer. One might have to work longer than the other or endure longer commutes and less pleasant surroundings.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

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accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, centre right, circulation of elites, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, German hyperinflation, Gini coefficient, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

Capital in the Twenty-First Century CAPITAL IN THE TWENTY-FIRST CENTURY Thomas Piketty Translated by Arthur Goldhammer The Belknap Press of Harvard University Press CAMBRIDGE, MASSACHUSETTS LONDON, ENGLAND 2014 Copyright © 2014 by the President and Fellows of Harvard College All rights reserved First published as Le capital au XXI siècle, copyright © 2013 Éditions du Seuil Design by Dean Bornstein Jacket design by Graciela Galup The Library of Congress has cataloged the printed edition as follows Piketty, Thomas, 1971– [Capital au XXIe siècle. English] Capital in the twenty-first century / Thomas Piketty ; translated by Arthur Goldhammer. pages cm Translation of the author’s Le capital au XXIe siècle. Includes bibliographical references and index.

The Capital/Income Ratio over the Long Run 6. The Capital-Labor Split in the Twenty-First Century Part Three: The Structure of Inequality 7. Inequality and Concentration: Preliminary Bearings 8. Two Worlds 9. Inequality of Labor Income 10. Inequality of Capital Ownership 11. Merit and Inheritance in the Long Run 12. Global Inequality of Wealth in the Twenty-First Century Part Four: Regulating Capital in the Twenty-First Century 13. A Social State for the Twenty-First Century 14. Rethinking the Progressive Income Tax 15. A Global Tax on Capital 16. The Question of the Public Debt Conclusion Notes Contents in Detail List of Tables and Illustrations Index Acknowledgments This book is based on fifteen years of research (1998–2013) devoted essentially to understanding the historical dynamics of wealth and income.

This first part of the book contains nothing really new, and the reader familiar with these ideas and with the history of global growth since the eighteenth century may wish to skip directly to Part Two. The purpose of Part Two, titled “The Dynamics of the Capital/Income Ratio,” which consists of four chapters, is to examine the prospects for the long-run evolution of the capital/income ratio and the global division of national income between labor and capital in the twenty-first century. Chapter 3 looks at the metamorphoses of capital since the eighteenth century, starting with the British and French cases, about which we possess the most data over the long run. Chapter 4 introduces the German and US cases. Chapters 5 and 6 extend the geographical range of the analysis to the entire planet, insofar as the sources allow, and seek to draw the lessons from all of these historical experiences that can enable us to anticipate the possible evolution of the capital/income ratio and the relative shares of capital and labor in the decades to come.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

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3D printing, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, algorithmic trading, Alvin Roth, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, commoditize, computerized trading, corporate governance, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, information asymmetry, interest rate derivative, interest rate swap, Internet of things, invisible hand, John Markoff, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, knowledge economy, labor-force participation, labour mobility, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, Paul Samuelson, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Satyajit Das, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund, zero-sum game

Financial sector wages—an easy way to track the two variables’ relationship—were high relative to everyone else’s in the run-up to the market crash of 1929, then fell precipitously after banking was reregulated in the 1930s, and then grew wildly from the 1980s onward as finance was once again unleashed.49 The share of financiers within the top 1 percent of the income distribution nearly doubled between 1979 and 2005.50 Rich bankers themselves aren’t so much the reason for inequality as the most striking illustration of just how important financial assets have become in widening America’s wealth gap. Financiers and the corporate supermanagers whom they enrich represent a growing percentage of the nation’s elite precisely because they control the most financial resources. These assets (stocks, bonds, and such) are the dominant form of wealth for the most privileged,51 which actually creates a snowball effect of inequality. As French economist Thomas Piketty explained so thoroughly in his 696-page tome, Capital in the Twenty-First Century, the returns on financial assets greatly outweigh those from income earned the old-fashioned way: by working for wages.52 Even when you consider the salaries of the modern economy’s supermanagers—the CEOs, bankers, accountants, agents, consultants, and lawyers that groups like Occupy Wall Street rail against—it’s important to remember that somewhere between 30 and 80 percent of their income is awarded not in cash but in incentive stock options and stock shares.

It’s telling that technology, which usually decreases industries’ operating costs, has failed to deflate the costs of financial intermediation. Indeed, finance has become more costly and less efficient as an industry as it deployed new and more advanced tools over time.16 It’s also telling that during the last few decades financiers have earned three times as much as their peers in other industries with similar education and skills.17 As Thomas Piketty put it in Capital in the Twenty-First Century, financiers are, in some ways, like the landowners of old. Instead of controlling labor, they regulate access to things even more important in the modern economy: capital and information. As a result, they represent the largest single group of the richest and most powerful people on earth. Even more so than Silicon Valley titans or petro-czars, financiers are truly masters of our capitalist universe.

That’s a big deal, because when Bertolini first posed the idea of his wage hike to a group of Harvard Business School professors whom he regularly consulted with, they responded negatively. The CEO, who grew up working class in Detroit and worked a welding line for years before going to college on scholarship, has continued to push forward his agenda within Aetna; in 2015 he gave all his top executives something that’s not yet on the typical MBA reading list—a copy of Thomas Piketty’s Capital in the Twenty-First Century. Companies, says Bertolini, shouldn’t just be moneymaking machines. They also have to invest in people, the real economy, and society as a whole if they want to succeed in the long term. “Capital is the resource that we often manage well, but in my opinion, the scarce resource is a talented and engaged workforce.” Creating that requires thinking bigger, looking at people as assets, not just costs on a balance sheet, and knowing how to think beyond the quarter.


pages: 363 words: 92,422

A Fine Mess by T. R. Reid

Affordable Care Act / Obamacare, Bernie Sanders, Capital in the Twenty-First Century by Thomas Piketty, carried interest, centre right, clean water, Donald Trump, Double Irish / Dutch Sandwich, game design, Gini coefficient, High speed trading, Home mortgage interest deduction, Honoré de Balzac, income inequality, industrial robot, land value tax, loss aversion, mortgage tax deduction, obamacare, Occupy movement, offshore financial centre, oil shock, Plutocrats, plutocrats, race to the bottom, Ronald Reagan, seigniorage, Silicon Valley, Skype, Snapchat, sovereign wealth fund, Tesla Model S, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, We are the 99%, WikiLeaks

This was not a frequent occurrence at the press, a prestigious academic publisher that churns out scores of learned volumes each year in fields like microbial ecology, medieval philosophy, and molecular physiology. But in those early months of 2014, there was enormous prepublication buzz about a forthcoming Harvard book. It was an unlikely blockbuster, to be sure: a 699-page treatise on economics written by a scholar who was hardly a household name even in his own neighborhood in Paris. But Professor Thomas Piketty’s tome Capital in the Twenty-First Century, thick as a brick and somewhat heavier, rocketed to the top of the bestseller lists as soon as it hit America’s bookstores. A New York Times story on the Frenchman’s U.S. book tour was headlined “Economist Receives Rock Star Treatment.” The reason that an unknown French economist suddenly achieved rock-star stature in the United States was that Piketty’s book focused squarely on an increasingly worrisome issue in the American zeitgeist: the inequality of wealth and income

Whatever changes we eventually make, almost every observer agrees that the current corporate income tax is not working. The corporate income tax, once a key source of funding for the U.S. government, has become just another minor revenue source. There are already many of those. 9. THE SINGLE TAX, THE FAT TAX, THE TINY TAX, THE CARBON TAX—AND NO TAX AT ALL Thomas Piketty’s surprising bestseller, Capital in the Twenty-First Century, sold nearly a million copies in the year after its publication, a stunning development for a heavyweight economics tome. But Piketty is a piker compared with an earlier author who wrote a similarly hefty volume on the same subject. The newspaperman Henry George’s economic magnum opus, Progress and Poverty, first published in 1879, sold more than three million copies in the late nineteenth and early twentieth centuries.

Widespread concern over this trend was the reason Piketty’s heavy economics tome became a number one bestseller in the United States. Still, it was not exactly beach reading. Because you, gentle reader, have been kind enough to read this book, I will repay the favor by providing a summary of the professor’s argument, thus saving you the $40 price of the book and the hours required to read it. Capital in the Twenty-First Century is actually more like three books than one. First, it’s a history of the rich/poor divide, based on three centuries of wealth and income data that Piketty and his colleagues gathered from the United States, the U.K., France, and Sweden. Piketty relies heavily on mathematical models and statistical tables, but he thoughtfully spares his readers all that stuff, sticking it in a “technical appendix” on the Internet.


pages: 332 words: 89,668

Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

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Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, basic income, Bernie Sanders, big-box store, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, low skilled workers, low-wage service sector, mandatory minimum, mass incarceration, minimum wage unemployment, moral hazard, moral panic, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, Plutocrats, plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Scientific racism, Simon Kuznets, single-payer health, strikebreaker, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

My New Mexico State University (NMSU) colleague Mark Walker, who was writing a book on the Basic Income Guarantee as I wrote this one, first encouraged me to consider inequality from a historical perspective. The NMSU conference that Mark organized on the Basic Income Guarantee in 2014 introduced me to scholars who have long worked on the philosophy of contemporary inequality. Simultaneously, participation in an ad hoc reading group facilitated by NMSU student Alan Dicker on Thomas Piketty’s Capital in the Twenty-First Century helped to get my thoughts flowing My NMSU colleagues Lori Keleher, Peter Kopp, and Julie Rice, and my former graduate student Ryan MacLennan, all provided helpful suggestions at crucial moments. In the later stages of the project’s completion, Tim Ketelaar of the psychology department at NMSU gave me the opportunity to present the ideas contained in this book to a wider general audience, allowing me to better focus my message.

The New York Times in 2005 ran a series of articles on class, pointing out for its readership that, contrary to popular belief, the United States is not the most upwardly mobile country in the world.9 A number of recent books question the notion that deregulation, budget cuts to safety nets, free trade promotion, and privatization have promoted growth to benefit all.10 Despite its length and serious subject matter, economist Thomas Piketty’s Capital in the Twenty-First Century (2014) was widely read and reviewed. Historian Steven Fraser’s Age of Acquiescence (2015) compared the modern American public unfavorably with Americans in the late nineteenth and early twentieth centuries, who were not afraid to call out class warfare against the working poor when they saw it.11 Former Secretary of Labor Robert Reich’s documentary Inequality for All (2013) reached a wide audience, with an accessible message: the prosperity of the United States hinges on the middle class having an income to spend.

Although some economists called for an economic stimulus package on par with the New Deal, Republicans and most economists opposed the idea. They called for austerity instead, and President Barack Obama lacked the political capital to press the issue.20 The Great Recession thus came and went with no significant steps taken to prevent inequality from causing another economic panic. Many structural features of the modern American economy promote inequality. In his well-received book Capital in the Twenty-First Century (2013), economist Thomas Piketty argued that out-of-control executive compensation has caused much of the growth in inequality across Europe and in the United States. Executives are granted enormous salaries by boards of directors whom the CEOs themselves control, in a direct conflict of interest.21 Executive compensation hides the real inequity in the share of compensation going to labor: “In 2002–2012 the bottom 90 percent of the population saw their average family income … drop by 11 percent, while those in the top .1 to .01 percent saw theirs rise by 30 percent.”


pages: 297 words: 89,206

Social Class in the 21st Century by Mike Savage

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call centre, Capital in the Twenty-First Century by Thomas Piketty, Clapham omnibus, Corn Laws, deindustrialization, deskilling, Downton Abbey, financial independence, gender pay gap, Gini coefficient, income inequality, liberal capitalism, Mark Zuckerberg, megacity, moral panic, New Urbanism, Occupy movement, old-boy network, precariat, psychological pricing, Sloane Ranger, The Spirit Level, unpaid internship, upwardly mobile, very high income, winner-take-all economy, young professional

In making this argument, there is a clear overlap with our findings in Chapter 7 regarding the power of elite universities, all of which are located close to London. London is now a vortex – a voracious and intense space, in which an elite class finds its home. In the early twenty-first century, the very wealthy are subject to increasing attention. The remarkable reception of Thomas Piketty’s Capital in the Twenty-first Century, allied to increasing concern about spiralling remuneration at the top, has made the sociological analysis of the elite essential. But we need to guard against the view that this new, wealth-elite marks a return to the aristocratic, landed and gentlemanly class which held sway in Britain until the later twentieth century. It is easy to be confused here by the prominence of old idioms and the relics of aristocracy which abound.

There is one important caveat to note, however, and this is that the GBCS only has information on household income, so the figures for Table 2.3 will be affected by whether there are two or more income-earners in the household. Subsequent analysis by Sam Friedman, David Laurison and Andrew Miles in ‘Breaking the “Class” Ceiling? Social Mobility into Elite Occupations’, Sociological Review, 63(2), 2015, 259–89 (which compares the GBCS findings with those from the Labour Force Survey on individual incomes), suggests that similar patterns can be found in both sources. 7. See Thomas Piketty, Capital in the Twenty-first Century (Cambridge, MA: 2014), p. 116, Figure 3.1. 8. Markus Jäntti, Eva Sierminska and Philippe Van Kerm, ‘The Joint Distribution of Income and Wealth’, in Janet C. Gornick and Markus Jäntti (editors), Income Inequality: Economic Disparities and the Middle Class in Affluent Countries (Redwood City, CA: 2013), pp. 312–33. 9. Eva Sierminska, Timothy M. Smeeding and Serge Allegrezza, ‘The Distribution of Assets and Debt’, in Gornick and Jäntti (editors), Income Inequality: Economic Disparities and the Middle Class, pp. 285–311, at p. 294.

Indeed, further research on the GBCS by the leading French mathematician Professor Brigitte Le Roux, using a different technique – multiple correspondence analysis – and somewhat different measures of social and cultural capital – also demonstrates that the most distinctive cluster continues to be at the top and that in the middle reaches of the social structure there is much more fuzziness. See Mike Savage, Brigitte Le Roux, Johannes Hjellbrekke and Daniel Laurison, ‘Espace culturel britannique et classes sociales’, in Frédérie Lebaron and Brigitte Le Roux (editors), La méthodologie de Pierre Bourdieu en action: espace culturel, espace social, et analyse des données (paris. 2015). 2. Danny Dorling, Inequality and the 1% (London: 2014), Thomas Piketty, Capital in the Twenty-first Century (Cambridge, MA: 2014). 3. The same general point also applies to gender: but because we asked about household income, gender differences are not well defined when using the GfK sample (since some badly paid women might be living with well-paid men, and vice versa). 4. We repeat our earlier comments about the problems of using the GBCS and the GfK survey to analyse ethnicity in detail.


pages: 366 words: 94,209

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff

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3D printing, activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, bitcoin, blockchain, Burning Man, business process, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, disintermediation, diversified portfolio, Elon Musk, Erik Brynjolfsson, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, loss aversion, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, TaskRabbit, The Future of Employment, trade route, transportation-network company, Turing test, Uber and Lyft, Uber for X, unpaid internship, Y Combinator, young professional, zero-sum game, Zipcar

Central currency is the transactional tool that has overwhelmed business itself; money is the tail wagging the economy’s dog. Financial services, slowly but inevitably, become the biggest players in the economy. Between the 1950s and 2006, the percentage of the economy (as measured by GDP) represented by the financial sector more than doubled, from 3 percent to 7.5 percent.13 This is why, as Thomas Piketty demonstrated in Capital in the Twenty-First Century, the rate of return on capital exceeds the growth rate of the economy.14 Money makes money faster than people or companies can create value. The richest people and companies should, therefore, position themselves as far away from working or creating things, and as close to the money spigot, as possible. Some companies, such as General Electric in the 1980s, understood this principle quite well and acted on it.

Andrew Keen, The Internet Is Not the Answer (New York: Atlantic Monthly Press, 2015). 43. Vivek Wadhwa, “The End of Chinese Manufacturing and Rebirth of U.S. Industry,” forbes.com, July 23, 2012. 44. Daniel Bell, The Coming of Post-Industrial Society: A Venture in Social Forecasting (New York: Basic Books, 1976). 45. David Rotman, “How Technology Is Destroying Jobs,” technologyreview.com, June, 12, 2013. 46. Ibid. 47. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press, 2014). 48. Bernard Lietaer, The Mystery of Money: Beyond Greed and Scarcity, 148 [PDF]. 49. Jeff Tyler, “Banks Demolish Foreclosed Homes, Raise Eyebrows,” Marketplace, American Public Media, October 13, 2011. Transcript available at www.marketplace.org/topics/business/banks-demolish-foreclosed-homes-raise-eyebrows/. 50.

Wilson, “Platform Monopolies.” 34. Betsy Corcoran, “Blackboard’s Jay Bhatt Strikes Up the Brass Band,” edsurge.com, July 23, 2014. 35. Justin Pope, “E-Learning Firm Sparks Controversy with Software Patent,” washingtonpost.com, October 15, 2006. 36. withknown.com. 37. Carlota Perez, Technological Revolutions and Financial Capital (Cheltenham, England: Edward Elgar Press, 2002). 38. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press, 2014). 39. Mario Preve, quoted in Ernst & Young and Family Business Network International, “Built to Last: Family Businesses Lead the Way to Sustainable Growth” (n.p.: Ernst & Young Global Limited, 2012), www.ey.com/Publication/vwLUAssets/EY-Built-to-last-family-businesses-lead-the-way-to-sustainable-growth/$FILE/EY-Built-to-last-family-businesses-lead-the-way-to-sustainable-growth.pdf. 40.


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The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It by Richard Florida

affirmative action, Airbnb, basic income, Bernie Sanders, blue-collar work, business climate, Capital in the Twenty-First Century by Thomas Piketty, clean water, Columbine, congestion charging, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, Donald Trump, East Village, edge city, Edward Glaeser, failed state, Ferguson, Missouri, Gini coefficient, Google bus, high net worth, income inequality, income per capita, industrial cluster, informal economy, Jane Jacobs, jitney, Kitchen Debate, knowledge economy, knowledge worker, land value tax, low skilled workers, Lyft, megacity, Menlo Park, mortgage tax deduction, Nate Silver, New Economic Geography, new economy, New Urbanism, occupational segregation, Paul Graham, Plutocrats, plutocrats, RAND corporation, rent control, rent-seeking, Richard Florida, rising living standards, Ronald Reagan, secular stagnation, self-driving car, Silicon Valley, sovereign wealth fund, superstar cities, the built environment, The Chicago School, The Death and Life of Great American Cities, the High Line, The Wealth of Nations by Adam Smith, Thorstein Veblen, trickle-down economics, Uber and Lyft, universal basic income, upwardly mobile, urban decay, urban planning, urban renewal, urban sprawl, white flight, young professional

In New York’s SoHo, the artistic and creative ferment I had observed as a student was giving way to a new kind of homogeneity of wealthy people, high-end restaurants, and luxury shops. Truth be told, the downsides of the urban revival had captured my attention fairly early on. Back in 2003, well before Occupy Wall Street drew attention to the rise of the “one percent,” or Thomas Piketty’s Capital in the Twenty-First Century opened our eyes to global inequality, I warned that America’s leading creative cities were also the epicenters of economic inequality. My research found that the metros with the highest levels of wage inequality were also those with the most dynamic and successful creative economies—San Francisco, Austin, Boston, Seattle, Washington, DC, and New York.3 But even as I was documenting these new divides, I had no idea how fast they would metastasize, or how deeply polarized these cities would become.

Report of the National Advisory Commission on Civil Disorders (Kerner Commission Report) (Washington, DC: US Government Printing Office, 1968); Max Herman, Summer of Rage: An Oral History of the 1967 Newark and Detroit Riots (Bern: Peter Lang, 2013); Kevin Mumford, Newark: A History of Race, Rights, and Riots in America (New York: New York University Press, 2008); Sidney Fine, Violence in the Model City: The Cavanagh Administration, Race Relations, and the Detroit Riot of 1967 (Ann Arbor: University of Michigan Press, 1989); Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton, NJ: Princeton University Press, 1996). 2. Richard Florida, The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community, and Everyday Life (New York: Basic Books, 2002); Florida, The Rise of the Creative Class Revisited (New York: Basic Books, 2012). 3. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2013); Richard Florida, “The New American Dream,” Washington Monthly, March 2003; Richard Florida, The Flight of the Creative Class (New York: HarperCollins, 2005). 4. Richard Florida, “More Losers Than Winners in America’s New Economic Geography,” CityLab, January 30, 2013, www.citylab.com/work/2013/01/more-losers-winners-americas-new-economic-geography/4465. 5.

Average wages are positively correlated with metropolitan populations (0.58), as are wages for the three classes of workers: knowledge, professional, and creative workers (0.69); service workers (0.46); and blue-collar workers (0.28). 30. The correlation between housing cost and creative-class wages left over after paying for housing is positive and significant (0.58). The correlations between housing costs and wages left over after paying for housing are negative and significant for the service class (–0.36) and the working class (–0.20). 31. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2013); Matthew Rognlie, “Deciphering the Fall and Rise in the Net Capital Share,” Brookings Papers on Economic Activity, Brookings Institution, March 2015, www.brookings.edu/~/media/projects/bpea/spring-2015/2015a_rognlie.pdf. While some have jumped on Rognlie’s work as somehow criticizing or upending Piketty’s arguments and conclusions, I prefer to see it as clarifying and focusing attention on the role that housing plays in mounting inequality.


pages: 323 words: 90,868

The Wealth of Humans: Work, Power, and Status in the Twenty-First Century by Ryan Avent

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3D printing, Airbnb, American energy revolution, assortative mating, autonomous vehicles, Bakken shale, barriers to entry, basic income, Bernie Sanders, BRICs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collective bargaining, computer age, creative destruction, dark matter, David Ricardo: comparative advantage, deindustrialization, dematerialisation, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, Donald Trump, Downton Abbey, Edward Glaeser, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, falling living standards, first square of the chessboard, first square of the chessboard / second half of the chessboard, Ford paid five dollars a day, Francis Fukuyama: the end of history, future of work, gig economy, global supply chain, global value chain, hydraulic fracturing, income inequality, indoor plumbing, industrial robot, intangible asset, interchangeable parts, Internet of things, inventory management, invisible hand, Jacquard loom, James Watt: steam engine, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph-Marie Jacquard, knowledge economy, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Andreessen, mass immigration, means of production, new economy, performance metric, pets.com, price mechanism, quantitative easing, Ray Kurzweil, rent-seeking, reshoring, rising living standards, Robert Gordon, Ronald Coase, savings glut, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, single-payer health, software is eating the world, supply-chain management, supply-chain management software, TaskRabbit, The Future of Employment, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, trade liberalization, transaction costs, Tyler Cowen: Great Stagnation, Uber and Lyft, Uber for X, very high income, working-age population

Much the same is true of the long-term unemployed, many of them older men without much education, who drift around, often drinking to pass the day, lacking much, if any, connection to society at large. For an awful lot of people, work has become a less certain and often less remunerative contributor to material security. It is a development that makes political forces of populist outsiders, such as Donald Trump and Marine Le Pen, and bestsellers of wonky economics books, such as Thomas Piketty’s Capital in the Twenty-First Century,10 an analysis of global inequality published in 2014 that flew off the shelves. Work is not just the means by which we obtain the resources needed to put food on the table. It is also a source of personal identity. It helps give structure to our days and our lives. It offers the possibility of personal fulfilment that comes from being of use to others, and it is a critical part of the glue that holds society together and smoothes its operation.

Worries and speculation have grown more intense and more common since 2011, when Erik Brynjolfsson and Andrew McAfee published Race Against the Machine,19 which laid out in compelling detail how quickly the capabilities of clever software and robots were improving. Authors like Martin Ford, whose 2015 book Rise of the Robots20 described a vision of a post-work world, argue that robots and machine intelligence will create a world wholly different from anything that has come before, and that a techno-socialism of sorts will need to be adopted to keep society functioning. Economist Thomas Piketty’s aforementioned masterpiece, Capital in the Twenty-First Century, set out a bold theory of inequality and predicted trouble ahead, as did Chris Hayes, whose book Twilight of the Elites21 was an incisive examination of the loss of faith in elite institutions and technocrats, who have struggled to manage recent economic change. Yet at the moment there is little agreement on how seriously to take automation concerns, how a transition to something like a jobless future might unfold and what ought to be done about it.

The rising tide didn’t wash away inequities, but it kept both capital and labour satisfied enough to hold the revolution at bay. From 1875 until the eve of the First World War, the world’s industrialized economies were extraordinarily unequal, but rising living standards for workers kept revolutionary fervour in check. Yet societies were not exactly living harmoniously, either. As Thomas Piketty notes, in Capital in the Twenty-First Century, it took the turmoil of the first half of the twentieth century to undo the inequality that developed in the nineteenth. War, taxation, inflation and economic depression destroyed many of the great fortunes of the industrial era. They ushered in an entirely new state structure, in which extensive taxation was used to fund massive welfare states. And that structure ensured that the rapid economic growth of the first few decades after the Second World War was highly egalitarian in nature.8 The taming of capitalism was not a smooth or easy or inevitable process, however.


pages: 198 words: 52,089

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

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

Charles Tilly, Durable Inequality (University of California Press, 1998), p. 34. CHAPTER 3 1. Adam Swift, “Justice, Luck, and the Family: The Intergenerational Transmission of Economic Advantage from a Normative Perspective,” in Unequal Chances: Family Background and Economic Success, edited by Samuel Bowles, Herbert Gintis, and Melissa Osborne Groves (Princeton University Press, 2005), p. 267. 2. Thomas Piketty, Capital in the Twenty-First Century (Harvard University Press, 2014), p. 419. 3. William Mosher, Jo Jones, and Joyce Abma, Intended and Unintended Births in the United States: 1982–2010, National Health Statistics Report 55 (Hyattsville, Md.: National Center for Health Statistics, July 24, 2012) (www.cdc.gov/nchs/data/nhsr/nhsr055.pdf). 4. Author’s calculations from the National Survey of Family Growth 2011–13 public use dataset, produced by the CDC. 5.

After all, the separation of an affluent, well-educated class has been the subject of more than one book. Producing another volume about class and inequality might then seem redundant. But I think some of the most popular efforts to date have diagnosed the class fracture incorrectly. Some analysts have let the upper middle class off the hook (yes, that would be you) by pointing at the “super-rich” or “top 1 percent.” Take the new rock star of economic history, Thomas Piketty. For him, inequality is pretty much all about the top 1 percent. Others have looked through a slightly wider lens. In Coming Apart, Charles Murray describes an isolated “New Upper Class,” comprised of the most successful adults (and their spouses), working in managerial positions, the professions, or with senior jobs in the media. This class, according to Murray, is defined as much by elitist culture—tastes and preferences—as by economic standing, and accounts for just 5 percent of the population.

“What one’s parents are like is entirely a matter of luck,” points out the philosopher Adam Swift. But he adds: “What one’s children are like is not.”1 Children raised in upper middle-class families do well in life. As a result, there is a lot of intergenerational “stickiness” at the top of the American income distribution—more, in fact, than at the bottom—with upper middle-class status passed down from one generation to the next, as I’ll show in the next chapter. As Thomas Piketty writes in Capital: “A society structured by the hierarchy of wealth has been replaced by a society whose structure relies almost entirely on the hierarchy of labor and human capital.”2 Piketty cites American TV shows (House, Bones, The West Wing) as evidence of a belief in the moral virtue of learning, brains, and hard work. The market acts as the arena where the rewards flow to those with the right skills.


pages: 270 words: 73,485

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

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

See also Alan Greenspan, The Age of Turbulence, with a new epilogue (Penguin, New York, 2008). 7.Financial Services Authority, The Turner Review: A Regulatory Response to the Global Banking Crisis (Financial Services Authority, London, 2009), p. 39. 8.The case for the Keynesians is argued by Robert Skidelsky, Keynes: The Return of the Master (Penguin, London, 2009). 9.Milton Friedman and Anna Schwartz, A Monetary History of the United States 1867–1960 (Princeton University Press, Princeton, NJ, 1963). 10.For the background to the euro, see David Marsh, The Euro: The Battle for the New Global Currency (Yale University Press, New Haven, CT, 2009). 7 The Search for an Answer 1.Thomas Piketty, Capital in the Twenty-First Century (Belknap Press, Cambridge, MA, 2014), see figure 6.1, p. 200; figure 6.2, p. 201; figure 8.5, p. 291. 2.Meghnad Desai, “An Econometric Model of the Share of Wages in National Income: UK 1855–1965” (1984), republished in The Selected Essays of Meghnad Desai, vol. 1: Macroeconomics and Monetary Theory (Edward Elgar, Cheltenham, 1995). 3.Andrew Glyn and Robert Sutcliffe, “The Collapse of UK Profits,” New Left Review, 66 (Mar.–Apr. 1971). 4.Gerard Duménil and Dominique Lévy, “The Crisis of the Early 21st Century: Marxian Perspectives,” in R. Bellofiore and G. Vertova, eds, The Great Recession and the Contradictions of Contemporary Capitalism (Edward Elgar, Cheltenham, 2014). 5.Piketty, Capital in the Twenty-First Century, ch. 5. 6.Carmen M.

But it would be nearly impossible to build a DSGE model – of the sort the new classical economics specializes in – on this global scale. Thus we might have a discussion about the cross-country linkages at an informal, journalistic level but no attempt to weave together a systematic theoretical account. But evidence of long cycles can still be seen in data even when we analyze single countries. Recently Thomas Piketty has analyzed the long-run trends in inequality in his book Capital in the Twenty-First Century. He finds evidence of long cycles of 40 to 50 years. Thus the share of labor income in Britain peaks in 1920 and again in 1970. In France the wage share exhibits a 40-year cycle with peaks in 1900, 1940 and 1980. In the US, Piketty’s data show a fall in income inequality from a peak in 1940 which is regained in the mid-1990s.1 Given the average length of 40 to 50 years, there can only have been about four or five cycles since the Industrial Revolution.

., Adam Smith: An Enlightened Life. Penguin, London, 2010. Phillips, A. W. H., “The Relationship between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957,” Economica, ns, 25.100 (1958): 283–99. Pigou, A. C., “The Classical Stationary State,” Economic Journal, 37.212 (1943): 343–51. Pigou, A. C., The Economics of Welfare. Macmillan, London, 1920. Piketty, T., Capital in the Twenty-First Century. Belknap Press, Cambridge, MA, 2014. Rajan, R., Fault Lines: How Hidden Fractures Still Threaten the World Economy. Princeton University Press, Princeton, NJ, 2010. Rajan, R., “Has Financial Development Made the World Riskier?” NBER Working Paper No. 11728. National Bureau of Economic Research, Cambridge MA, 2005. Reinhart, C. and K. Rogoff, This Time Is Different: Eight Centuries of Financial Folly.


pages: 121 words: 36,908

Four Futures: Life After Capitalism by Peter Frase

3D printing, Airbnb, basic income, bitcoin, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cryptocurrency, deindustrialization, Edward Snowden, Erik Brynjolfsson, Ferguson, Missouri, fixed income, full employment, future of work, high net worth, income inequality, industrial robot, informal economy, Intergovernmental Panel on Climate Change (IPCC), iterative process, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, litecoin, mass incarceration, means of production, Norbert Wiener, Occupy movement, pattern recognition, peak oil, Plutocrats, plutocrats, postindustrial economy, price mechanism, private military company, Ray Kurzweil, Robert Gordon, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart meter, TaskRabbit, technoutopianism, The Future of Employment, Thomas Malthus, Tyler Cowen: Great Stagnation, universal basic income, Wall-E, Watson beat the top human players on Jeopardy!, We are the 99%, Wolfgang Streeck

The growing inequality of wealth and income in the world has become an increasing focus of attention from activists, politicians, and pundits. Occupy Wall Street struck a chord with the slogan “we are the 99 percent,” drawing attention to the fact that almost all the gains from economic growth in recent decades have accrued to 1 percent or less of the population. Economist Thomas Piketty scored an improbable best seller with Capital in the Twenty-First Century, a massive treatise about the history of wealth and the prospect of an increasingly unequal world.22 The two crises I’ve described are fundamentally about inequality as well. They are about the distribution of scarcity and abundance, about who will pay the costs of ecological damage and who will enjoy the benefits of a highly productive, automated economy.

Lbo-News.com, 2015. 17Jeremy Rifkin, The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era, New York: Putnam, 1995; Stanley Aronowitz and William DiFazio, The Jobless Future: Sci-Tech and the Dogma of Work, Minneapolis: University of Minnesota Press, 1994. 18Norbert Wiener, Cybernetics: Or Control and Communication in the Animal and the Machine, Cambridge, MA: MIT Press, 1948, p. 28. 19Paul Krugman, “Sympathy for the Luddites,” New York Times, June 14, 2013. 20Ford, Rise of the Robots; Derek Thompson, “A World Without Work,” Atlantic, July/August 2015; Farhad Manjoo, “Will Robots Steal Your Job?,” Slate.com, September 26, 2011; Drum, “Welcome Robot Overlords.” 21Mike Konczal, “The Hard Work of Taking Apart Post-Work Fantasy,” NextNewDeal.net, 2015. 22Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer, Cambridge, MA: Harvard University Press, 2014. 23Thom Andersen, Los Angeles Plays Itself, Thom Andersen Productions, 2003. 24Ray Kurzweil, The Singularity Is Near: When Humans Transcend Biology, New York: Penguin, 2005. 25Rosa Luxemburg, The Junius Pamphlet: The Crisis in the German Social Democracy, Marxists.org, 1915. 26Robert Costanza, “Will It Be Star Trek, Ecotopia, Big Government, or Mad Max?


pages: 524 words: 143,993

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

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

See ‘Moore’s Law’, http://en.wikipedia.org/wiki/Moore’s_law. 58. On the forces driving inequality and their consequences, see Organisation for Economic Co-operation and Development, Divided We Stand: Why Inequality Keeps Rising (Paris: OECD, 2011), Joseph Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers our Future (New York and London: Norton, 2012), and Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA, and London, England, 2014). 59. See, in particular, a remarkable paper by Christoph Lakner and Branco Milanovic of the World Bank, ‘Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession’, World Bank Research Working Paper 6719, December 2013, http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2013/12/11/000158349_20131211100152/Rendered/PDF/WPS6719.pdf. 60.

Mervyn King, ‘Banking from Bagehot to Basel, and Back Again’, 25 October 2010, The Second Bagehot Lecture, Buttonwood Gathering, New York City, http://www.bankofengland.co.uk/publications/Documents/speeches/2010/speech455.pdf, p. 18. 4. Luc Laeven and Fabian Valencia, ‘Systemic Crises Database: An Update’, International Monetary Fund Working Paper, WP/12/163, June 2102, http://www.imf.org/external/pubs/ft/wp/2012/wp12163.pdf. 5. This proposition is supported by Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA, and London: Harvard University Press, 2014). 6. For a detailed discussion of the evolution of real interest rates, see International Monetary Fund, World Economic Outlook, April 2014, ch. 3, http://www.imf.org/external/Pubs/ft/weo/2014/01/. 7. See the speech by Lawrence H. Summers at the 14th IMF Annual Research Conference in Honor of Stanley Fischer, 18 November 2013, http://larrysummers.com/imf-fourteenth-annual-research-conference-in-honor-of-stanley-fischer/.

On the risks of low inflation or even deflation in the Eurozone, see Reza Moghadam, Ranjit Tela and Pelin Berkmen, ‘Euro Area – “Deflation” Versus “Lowflation” ’, 24 March 2014, IMFdirect, http://blog-imfdirect.imf.org/2014/03/04/euro-area-deflation-versus-lowflation. 16. A fully worked out plan for such a reform is in Andrew Jackson and Ben Dyson, Modernising Money: Why our Monetary System is Broken and How it Can be Fixed (London: Positive Money, 2013). 17. See Andrew Smithers, The Road to Recovery: How and Why Economic Policy Must Change (London: Wiley, 2013). 18. See Piketty, Capital in the Twenty-First Century, Part Four. 19. For elements of the new Eurozone policy system, see ‘Stability and Growth Pact’, http://ec.europa.eu/economy_finance/economic_governance/sgp/index_en.htm; ‘Macroeconomic Imbalance Procedure’, http://ec.europa.eu/economy_finance/economic_governance/macroeconomic_imbalance_procedure/index_en.htm; ‘Treaty on Stability, Co-ordination and Governance’ (also known as the Fiscal Compact), http://european-council.europa.eu/media/639235/st00tscg26_en12.pdf; ‘European Semester’, http://ec.europa.eu/europe2020/making-it-happen; ‘Euro Plus Pact’, http://ec.europa.eu/europe2020/pdf/euro_plus_pact_background_december_2011_en.pdf; and ‘European Stability Mechanism’, http://www.esm.europa.eu/index.htm; ‘European Financial Supervision’, http://ec.europa.eu/internal_market/finances/committees; and ‘Banking Union’, http://ec.europa.eu/internal_market/finances/banking-union. 20.


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

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accounting loophole / creative accounting, Airbnb, basic income, Ben Bernanke: helicopter money, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, Clayton Christensen, collective bargaining, conceptual framework, corporate governance, creative destruction, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, fixed income, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, information asymmetry, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, liberal capitalism, market bubble, means of production, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, post-industrial society, private sector deleveraging, profit maximization, profit motive, quantitative easing, reserve currency, rising living standards, Robert Gordon, savings glut, secular stagnation, shareholder value, sharing economy, sovereign wealth fund, The Future of Employment, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, Vilfredo Pareto, winner-take-all economy, Wolfgang Streeck

The content and goal of this new social and economic order can no longer be the capitalistic pursuit of power and profit; it must lie in the welfare of our people.’ 9Ironically, it was in the aftermath of the two great wars of the twentieth century, in 1918 and 1945, respectively, that the working classes under capitalism made their most effective advances in the capitalist political economy (Piketty, Capital in the Twenty-First Century). 10I have sketched out this dynamic in Buying Time. 11Merkel, ‘Is Capitalism Compatible with Democracy?’, p. 126. 12Mair, Representative versus Responsible Government. 13See ‘Jürgen Habermas im Gespräch: Europa wird direkt ins Herz getroffen’, Frankfurter Allgemeine Zeitung, 29 May 2014. One interesting irony is that Juncker ascended to the presidency shortly after the publication of Thomas Piketty’s now famous book in which he demands a general wealth tax to correct the long-term and inherent increase in inequality under capitalism (Piketty, Capital in the Twenty-First Century). On the farce of last year’s ‘European election’ see Susan Watkins, ‘The Political State of the Union’. 14Merkel, ‘Is Capitalism Compatible with Democracy?’

‘SAC Starts to Balk over Insider Trading Inquiry’, New York Times, 17 May 2013, dealbook.nytimes.com, last accessed 30 November 2015. 45A fascinating example is the Koch brothers’ nurturing, over several decades, of James Buchanan’s Center for Study of Public Choice at George Mason University. See Nancy MacLean, Forget Chicago, It’s Coming from Virginia: The 1970s Genesis of Today’s Attack on Democracy, Unpublished Manuscript 2015. 46Thomas Piketty, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press 2014. 47An exception is David A. Stockman, ‘State-Wrecked: The Corruption of Capitalism in America’, New York Times, 31 March 2013, who may be considered particularly knowledgeable on the subject. 48‘Vernunft durch Strafen in Milliardenhöhe’, Frankfurter Allgemeine Zeitung, 29 June 2015, faz.net, last accessed 2 December 2015. The estimate seems far too low, given that another source names the same sum for Bank of America alone: John Maxfield, ‘The Complete List’, The Motley Fool, 1 October 2014, fool.com, last accessed 2 December 2015. 49‘Banken zahlen 260 Milliarden Dollar Strafe’, Frankfurter Allgemeine Zeitung, 24 August 2015, www.faz.net, last accessed 2 December 2015.

As long as they succeed in this, there is no need for American-style oligarchic neo-feudalism to be replicated, for example, in Western Europe. Given the structure of the contemporary capitalist world system, what matters for global oligarchic wealth defence, both politically and ideologically, is control over American politics to ensure, for example, that the American Congress will never agree to a global wealth tax as proposed, among others, by Thomas Piketty.46 As long as this is certain, it does not really matter who governs with what ambitions in France or Germany. The second disorder of capitalism to be briefly touched upon here is corruption. I use this concept broadly, beyond its definition in criminal law, to mean the gross violation of legal rules and the systematic betrayal of trust and moral expectations in pursuit of competitive success and personal or institutional enrichment, as elicited by rapidly growing opportunities for huge material gain in and around today’s political economy.


pages: 273 words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, intangible asset, invisible hand, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, obamacare, offshore financial centre, oil shock, Plutocrats, plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Ronald Reagan, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor

The middle class, defined as households earning from two-thirds to double the median American household income, went from earning over three-fifths of total national income in 1970 to earning only just over two-fifths in 2014. The lines in figure 1 were horizontal before 1970, but they are continuing their movements after 2014. Figure 1 shows that the income share lost by the middle class went to people earning more than double the median income. In short, the rich got richer, the poor did not disappear, and the middle class shrank sharply. We know from the work of Thomas Piketty in Capital in the Twenty-First Century that inequality has been increasing since 1970.2 Now we see that the income distribution is hollowing out. We are on our way to become a nation of the rich and the poor with only a few people in the middle. Figure 1 Percent of aggregate U.S. household income. Note: The assignment to income tiers is based on size-adjusted household incomes in the year prior to the survey year.

John Edwards, a presidential candidate, observed in 2004, “We shouldn’t have two different economies in America: one for people who are set for life, they know their kids and their grand-kids are going to be just fine; and then one for most Americans, people who live paycheck to paycheck.”1 Where did the rest of the national product go? Not to the lower group shown in figure 1. It went instead to the upper group as shown in figure 3. This well-known graph comes from Thomas Piketty, author of Capitalism in the Twenty-First Century, and his colleagues who have developed data for the richest 1 percent of the population for many countries as far back as the data allow. The top group in figure 1 contains 20 percent of the population, and the path of what is called the “one percent” shows the pattern. Chrystia Freeland calls this group “the plutocrats.” A graph of the next 19 percent looks like figure 3, albeit not quite as steep.

Anderson 2016; Confessore 2016. 3. Wright 2013. 4. Page, Bartels, and Seawright 2013; Ferguson 1995; Hacker and Pierson 2010; Gilens and Page 2014. 5. Autor 2015; Feinstein 1998. 6. Dewey 1935, 62; Piketty 2014, 481. 7. Heckman, Pinto, and Savelyev 2013. 8. Kremer 1993. 9. Dewey 1935, 66; Rawls 1999. Appendix: Models of Inequality The big book about inequality around the world is Thomas Piketty’s classic, Capital in the Twenty-First Century. Piketty worked mainly with tax data from various countries, and his sample was restricted to those developed countries that had good records extending back into history. In terms of figure 7, he focused on the growth of the global elite. And to show that politics matter, he contrasted the experiences of France and the United States. None of the growth in inequality that happened in the United States since 1980 happened in France!


pages: 190 words: 53,409

Success and Luck: Good Fortune and the Myth of Meritocracy by Robert H. Frank

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Amazon Mechanical Turk, American Society of Civil Engineers: Report Card, attribution theory, availability heuristic, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, carried interest, Daniel Kahneman / Amos Tversky, David Brooks, deliberate practice, en.wikipedia.org, endowment effect, experimental subject, framing effect, full employment, hindsight bias, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, invisible hand, labor-force participation, labour mobility, lake wobegon effect, loss aversion, minimum wage unemployment, Network effects, Paul Samuelson, Report Card for America’s Infrastructure, Richard Thaler, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Rory Sutherland, selection bias, side project, sovereign wealth fund, Steve Jobs, The Wealth of Nations by Adam Smith, Tim Cook: Apple, ultimatum game, Vincenzo Peruggia: Mona Lisa, winner-take-all economy

By every measure, markets have grown more competitive, and the most productive players have gained additional leverage since The Winner-Take-All Society’s publication in 1995. What’s also clear is that the economic forces that have been causing the spread and intensification of winner-take-all markets have by no means run their course. We can expect continued growth in the intensity of competition on the buyers’ side for the best talent, and on the sellers’ side for the top positions. In his widely discussed 2013 book, Capital in the Twenty-First Century, Thomas Piketty suggested yet another reason for rising inequality, which is the historical tendency for the rate of return on invested capital to exceed the overall growth rate for the economy.10 When that happens, he argues, wealth continues to concentrate in the hands of those who own the most capital. All things considered, then, it appears prudent to envision a future characterized by continued growth in income and wealth inequality—which is to say, a future in which chance events will become still more important.

You can review some of The Nepotist’s music videos here: http://thenepotist.com/videos/. 7. Xavier Gabaix and Augustin Landier, “Why Has CEO Pay Increased So Much?” Quarterly Journal of Economics 123.1 (2008): 49–100. 8. Adam Smith, The Wealth of Nations, book 1, chap. 10. 9. The Conference Board, “Departing CEO Age and Tenure,” June 13, 2014, https://www.conference-board.org/retrievefile.cfm?filename=TCB-CW-019.pdf&type=subsite. 10. Thomas Piketty, Capital in the Twenty-First Century, Cambridge, MA: Harvard University Press, 2013. CHAPTER 4: WHY THE BIGGEST WINNERS ARE ALMOST ALWAYS LUCKY 1. High School Baseball Web, “Inside the Numbers,” http://www.hsbaseballweb.com/inside_the_numbers.htm. 2. See Wikipedia, List of World Records in Athletics, http://en.wikipedia.org/wiki/List_of_world_records_in_athletics#Men and http://en.wikipedia.org/wiki/Athletics_record_progressions. 3.

., 73 Alou brothers, 33 American Dream, the, 4, 145 American Economic Association, 25 American Economic Review, 28, 126, 133, 171 American Enterprise Institute, 127, 171 American Society of Civil Engineers, 87 Anderson, Chris, 47 antlers in bull elk, 116–18, 118 Apotheker, Léo, 53 Apple, 44, 49, 132 Arab Spring, 107 Archilla, Gustavo, 106 artificial intelligence, 70 attention scarcity, 48–49 attribution theory, 77 austerity policies, 134 availability heuristic, 79, 80 baby boomer retirements, 97, 127, 167 Baker Library, 36 Bartlett, Bruce, 90 Bartlett, Monica, 101 Baumeister, Roy, 75 Beatty, Warren, 23 behavioral economics, 69, 70, 96 Bernanke, Ben, 133–35 best seller, xiii, 45 Betamax, 44, 45 birth order effects, 32 birth-date effects: in hockey, 38; in the workplace, 38 Blackstone, 103 Blockbusters, 48 Bloomberg Business, 132 Bonaparte, Napoleon, 7 Boudreaux, Donald, 122 Breaking Bad, 24, 31, 68 British accent, 4 Broderick, Matthew, 24, 68 Brooklyn Dodgers, 142 Brooks, David, 83, 84 Buffett, Warren, 12, 39 Bush, George H. W., 90 Bush, George W., 90 Caan, James, 23 Cabrera, Miguel, 63 Calvino, Italo, 128 Campanella, Roy, 142 Canada, 20, 88, 106 Capital in the Twenty-First Century, 55 Carroll, Robert, 127 Casablanca, 87 Cayuga Lake, 6 CEO pay, 49–51 character assessment, 129–31 Clinton, Bill, 126 Clotfelter, Charles, 72 Congressional Budget Office, 90 conservatives, xi, 17, 83, 171 context and quality assessment, 122, 123; a formal model of, 123 Cook, Philip, 9, 41, 42, 72 Cook, Tim, 133 Coppola, Francis Ford, 23 Corleone, Michael, 23 Corleone, Vito, 23 Cornell University, 4, 25–29, 59, 67, 125, 143 CP/M (computer operating system), 35 Cranston, Bryan, 24, 68 Cusack, John, 24, 68 da Vinci, Leonardo, 22 Dalai Lama, 29 Darwin, Charles, 73, 115, 116, 121 Darwin Economy, The, 117 Davidai, Shai, 81 Delaplane, VA, 60 dentists, 51 Department of Motor Vehicles, 17–19 depressive realism, 73 DeSteno, David, 98–101 Detroit Tigers, 63 DeWall, Nathan, 103 Dickens, Charles, 102 Dickens, Mamie, 102 Digdon, Nancy, 102 Digital Research, 34, 35 divine intervention, 2 Domenici, Pete, 126 Econometrica, 28 economic pie, 16 Educational Longitudinal Survey, 144, 145 Edwards, Mike, 2 Elberse, Anita, 48 Electric Light Orchestra, 2 Emmons, Robert, 102 environment, xvi, 8, 13, 115, 119, 123, 143, 144 envy, 112, 122, 132 estate taxation, 166, 167 expenditure cascades, 112, 113, 121, 165, 169 expertise, 77 Federal Reserve Board of Governors, 134 Ferrari, 15, 16, 91, 119 52 Metro, 30 Fitzgerald, F.


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

agricultural Revolution, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, basic income, Bretton Woods, 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, 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 reform, land tenure, land value tax, Landlord’s Game, low skilled workers, market bubble, market clearing, Martin Wolf, means of production, money market fund, mortgage debt, negative equity, Network effects, new economy, New Urbanism, Northern Rock, offshore financial centre, Pareto efficiency, place-making, price stability, profit maximization, quantitative easing, rent control, rent-seeking, Richard Florida, Right to Buy, rising living standards, risk tolerance, Second Machine Age, secular stagnation, shareholder value, the built environment, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, universal basic income, urban planning, urban sprawl, working poor, working-age population

But since the birth of modern, capitalist economies other uses have become predominant: first as the site of industrial production, and later as the site of service provision and domestic housing. Today, it is in the housing market that the economic function of land is most visible, as the value of residential property has overtaken the value of land used for other purposes, as the economist Thomas Piketty (2014) makes clear in his recent book Capital in the Twenty-First Century. For this reason, much of the book focuses on housing as the main economic use of land. Land has several unique features that differentiate it from the other ‘factors of production’ that form the central focus of the economics discipline: capital and labour. Most obviously land is immobile: you can’t move land from one place to another, because land is the place itself.

Housing wealth has increased at a faster rate than financial wealth (e.g. pensions, shares, savings) and non-financial wealth (e.g. ownership of physical assets). It has also increased considerably faster than national income in the UK, in particular since the 1990s, as discussed in Chapter 5. Indeed, in advanced economies generally, it is the increase in housing wealth that has been driving the trends that have been observed in the recent work of French economist Thomas Piketty (2014). Piketty’s book Capital in the Twenty-first Century contains data on what he calls the ‘capital to income ratio’ for the UK since the year 1700. In the book Piketty uses the terms capital and wealth interchangeably, as if they were perfectly synonymous, and does not attempt to separate capital from land and natural resources. However, this ignores key differences between the characteristics of wealth, capital and land.

‘Breaking the Link between Housing Cycles, Banking Crises, and Recession’. CIYPERC Working Paper Series 2016/02, 23 March. Perugini, Cristiano, Jens Hölscher, and Simon Collie. 2015. ‘Inequality, Credit and Financial Crises’. Cambridge Journal of Economics. doi:10.1093/cje/beu075. Pierson, Christopher. 2013. Just Property: A History in the Latin West. Volume One: Wealth, Virtue, and the Law. Oxford: Oxford University Press. Piketty, Thomas. 2014. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. Piketty, Thomas, and Gabriel Zucman. 2013. ‘Capital Is Back: Wealth-Income Ratios in Rich Countries, 1700–2010’. http://www.piketty.pse.ens.fr/files/PikettyZucman2013BookRevQJE.pdf Pollock, Frederick, and Frederic William Maitland. 1899. The History of English Law before the Time of Edward I. Vol. 2. Cambridge: Cambridge University Press.


pages: 165 words: 45,129

The Economics of Inequality by Thomas Piketty, Arthur Goldhammer

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affirmative action, basic income, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, conceptual framework, deindustrialization, endogenous growth, Gini coefficient, income inequality, low skilled workers, means of production, moral hazard, Pareto efficiency, purchasing power parity, Simon Kuznets, The Bell Curve by Richard Herrnstein and Charles Murray, very high income, working-age population

That is, the macroeconomic or functional distribution of national income and national wealth is substantially less stable than what I was taught in graduate school and what I report in this book. The large historical variations in top income shares also receive insufficient treatment in the present book, because the corresponding research became fully available only recently. Readers interested in a detailed account of that more recent research and the lessons that can be drawn from it are advised to consult the World Top Incomes Database (available online) and my book Capital in the Twenty-First Century (Belknap Press, 2014). Introduction The question of inequality and redistribution is central to political conflict. Caricaturing only slightly, two positions have traditionally been opposed. The right-wing free-market position is that, in the long run, market forces, individual initiative, and productivity growth are the sole determinants of the distribution of income and standard of living, in particular of the least well-off members of society; hence government efforts to redistribute wealth should be limited and should rely on instruments that interfere as little as possible with the virtuous mechanisms of the market—instruments such as Milton Friedman’s negative income tax (1962).

THE ECONOMICS OF INEQUALITY Thomas Piketty Translated by Arthur Goldhammer The Belknap Press of Harvard University Press CAMBRIDGE, MASSACHUSETTS LONDON, ENGLAND 2015 Copyright © 2015 by the President and Fellows of Harvard College All rights reserved First published as L’économie des inégalités copyright © Éditions La Découverte, Paris, France, 1997, 2008, 2014 Jacket design by Graciela Galup 978-0-674-50480-6 (hardcover) 978-0-674-91558-9 (EPUB) 978-0-674-91557-2 (MOBI) 978-0-674-91556-5 (PDF) The Library of Congress has cataloged the printed edition as follows: Piketty, Thomas, 1971– [L’économie des inégalités. English] The economics of inequality / Thomas Piketty ; translated by Arthur Goldhammer. pages cm Includes bibliographical references and index. 1.


pages: 827 words: 239,762

The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite by Duff McDonald

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Albert Einstein, barriers to entry, Bayesian statistics, Bernie Madoff, Bob Noyce, Bonfire of the Vanities, business process, butterfly effect, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, cloud computing, collateralized debt obligation, collective bargaining, commoditize, corporate governance, corporate raider, corporate social responsibility, creative destruction, deskilling, discounted cash flows, disintermediation, Donald Trump, family office, financial innovation, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Gordon Gekko, hiring and firing, income inequality, invisible hand, Jeff Bezos, job-hopping, John von Neumann, Joseph Schumpeter, Kenneth Arrow, London Whale, Long Term Capital Management, market fundamentalism, Menlo Park, new economy, obamacare, oil shock, pattern recognition, performance metric, Peter Thiel, Plutocrats, plutocrats, profit maximization, profit motive, pushing on a string, Ralph Nader, Ralph Waldo Emerson, RAND corporation, random walk, rent-seeking, Ronald Coase, Ronald Reagan, Sand Hill Road, Saturday Night Live, shareholder value, Silicon Valley, Skype, Steve Jobs, survivorship bias, The Nature of the Firm, the scientific method, Thorstein Veblen, union organizing, urban renewal, Vilfredo Pareto, War on Poverty, William Shockley: the traitorous eight, women in the workforce, Y Combinator

“How on earth can anyone argue that the machinery of democratic capitalism is politically neutral and ‘fair’?” Spender is no anticapitalist. Indeed, as both a former top corporate executive as well as a former business school dean, he is nothing but sympathetic to these sorts of educational challenges. He is simply pointing out that the benefits of Western capitalism have come with a complicated and wholly political set of trade-offs. The reason French economist Thomas Piketty’s 2014 book, Capital in the Twenty-First Century, took off like a rocket was that he examined some of those trade-offs, such as economic inequality, and put forth well-researched arguments that they might not be sustainable, either socially or politically. The point here isn’t whether Piketty is correct, it’s that a book of that importance has never come out of the Harvard Business School. When HBS turns its eye to inequality, it is merely to make the corporatist assertion that it is a problem that business itself can solve.

Clearly, the fees we can charge MBA students are correlated with the salaries they can get when they go get jobs.” He’s right: HBS has explicitly compared the rate of median salary increase of its graduates to the rate of tuition increase when it has sought to justify increases in tuition, in the process reducing an education to nothing more than a return-on-investment calculation. Thomas Piketty, author of the surprise 2014 bestseller, Capital in the Twenty-First Century, is arguably the world’s top expert on income inequality—not from a “what to do about it perspective,” but the mere fact of it, as represented by his unrivaled analysis of data, across both geographies and time. In a 2003 paper cowritten with Emmanuel Saez, “Income Inequality in the United States, 1913–1998,” he encapsulated the dynamics of increasing inequality in the United States in just two sentences: “The marginal product of top executives in large corporations is notoriously difficult to estimate, and executive pay is probably determined to a significant extent by herd behavior.

A Universal Desire for More Equal Pay,” Perspectives on Psychological Science 9, no. 6 (2014): 587–93. 4Michael I. Norton and Dan Ariely, “Building a Better America—One Wealth Quintile at a Time,” Perspectives on Psychological Science 6, no. 9 (2011): 9–12. 5Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913–1998 (series Updated to 2000 Available),” working paper, National Bureau of Economic Research, September 2001, http://www.nber.org/papers/w8467. 6Liam Murphy, “Why Does Inequality Matter? Reflections on the Political Morality of Piketty’s Capital in the Twenty-First Century,” Tax Law Review, April 1, 2015, https://www.highbeam.com/doc/1P3–3831048851.html. 7Gerald F. Davis, “Corporate Power in the 21st Century,” in Subramanian Rangan, ed., Performance and Progress: Essays on Capitalism, Business and Society (Oxford, U.K.: Oxford University Press, forthcoming). 8“At the Center of Corporate Scandal Where Do We Go From Here?


pages: 293 words: 81,183

Doing Good Better: How Effective Altruism Can Help You Make a Difference by William MacAskill

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barriers to entry, basic income, Black Swan, Branko Milanovic, Cal Newport, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Brooks, effective altruism, en.wikipedia.org, end world poverty, experimental subject, follow your passion, food miles, immigration reform, income inequality, index fund, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, job automation, job satisfaction, labour mobility, Lean Startup, M-Pesa, mass immigration, meta analysis, meta-analysis, microcredit, Nate Silver, Peter Singer: altruism, purchasing power parity, quantitative trading / quantitative finance, randomized controlled trial, self-driving car, Skype, Stanislav Petrov, Steve Jobs, Steve Wozniak, Steven Pinker, The Future of Employment, The Wealth of Nations by Adam Smith, universal basic income, women in the workforce

References to the 1 percent versus the 99 percent—i.e., the rest of the population—quickly became shorthand for the income gap in America. Inequality in America is getting starker over time: while typical household income grew by less than 40 percent between 1979 and 2007, the income of the richest 1 percent grew by 275 percent in that same time period. The French economist Thomas Piketty, who gained international fame for his 2014 book Capital in the Twenty-First Century, has suggested that the level of income inequality in the United States is “probably higher than in any other society at any time in the past, anywhere in the world.” This can lead those of us who aren’t in that 1 percent to feel powerless, but this focus neglects just how much power almost any member of an affluent country has. If people focus exclusively on American inequality, they’re missing an important part of the bigger picture.

In an effort to avoid technical vocabulary whenever possible, throughout this book I use “typical” to refer to “median,” and “average” to refer to “mean.” while typical household income: Congressional Budget Office, Trends in the Distribution of Household Income Between 1979 and 2007, October 2011, http://www.cbo.gov/sites/default/files/10-25-HouseholdIncome_0.pdf. “probably higher than in any other society”: Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), 265. Consider this graph of global income distribution: The data on world income distribution is drawn from several sources. The figures for between the richest 1 percent and the richest 21 percent are based on microdata from national household surveys carried out in 2008, kindly provided by Branko Milanovic. The figures for the poorest 73 percent are based on the 2008 data from PovcalNet (http://iresearch.worldbank.org/PovcalNet/index.htm?


pages: 318 words: 77,223

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse by Mohamed A. El-Erian

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activist fund / activist shareholder / activist investor, Airbnb, balance sheet recession, bank run, barriers to entry, break the buck, Bretton Woods, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, collapse of Lehman Brothers, corporate governance, currency peg, Erik Brynjolfsson, eurozone crisis, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, friendly fire, full employment, future of work, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, inflation targeting, Jeff Bezos, Kenneth Rogoff, Khan Academy, liquidity trap, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, Norman Mailer, oil shale / tar sands, price stability, principal–agent problem, quantitative easing, risk tolerance, risk-adjusted returns, risk/return, Second Machine Age, secular stagnation, sharing economy, sovereign wealth fund, The Great Moderation, The Wisdom of Crowds, too big to fail, University of East Anglia, yield curve, zero-sum game

Federal Reserve Board of Governors, “Changes in US Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin 100, no. 4 (September 2014), http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf. 6. Rakesh Kochhar and Richard Fry, “Wealth Inequality Has Widened Along Racial, Ethnic Lines Since the End of the Great Recession,” Pew Research Center, December 12, 2014, http://www.pewresearch.org/fact-tank/2014/12/12/racial-wealth-gaps-great-recession/. 7. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014). 8. Mohamed A. El-Erian, “The Inequality Trifecta,” Project Syndicate, October 17, 2014, http://www.project-syndicate.org/commentary/imf-world-bank-annual-meetings-and-inequality-by-mohamed-a--el-erian-2014-10. 9. Madeline Ostrander, “What Poverty Does to the Young Brain,” New Yorker, June 4, 2015, http://www.newyorker.com/tech/elements/what-poverty-does-to-the-young-brain. 10.

As noted earlier, the expansion of their balance sheets has tended to support the wealthy since the latter hold a disproportionately large share of the financial assets being targeted for support by central bank action. Given all this, it should come as no surprise that there is now quite a bit of general interest in the matter. Recall how in 2014 a big economic tome (almost seven hundred pages, including research analysis and historical insights) on inequality by French economist Thomas Piketty shot up to the top of bestseller lists, triggering lots of discussions, panels, and interviews in the process.7 At the 2014 IMF–World Bank Annual Meeting in Washington, D.C., inequality was the most common topic in seminars organized by the official sector, industry groups, and think tanks. There is also a growing realization that the effects of inequality may well have evolved beyond questions of fairness, and beyond the threats it poses to social, geopolitical, and political well-being: Inequality also creates adverse economic feedback loops that make it much harder for the advanced countries to emerge from their generalized economic malaise.

Deep Work: Rules for Focused Success in a Distracted World by Cal Newport

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8-hour work day, Albert Einstein, barriers to entry, business climate, Cal Newport, Capital in the Twenty-First Century by Thomas Piketty, Clayton Christensen, David Brooks, David Heinemeier Hansson, deliberate practice, Donald Knuth, Donald Trump, Downton Abbey, en.wikipedia.org, Erik Brynjolfsson, experimental subject, follow your passion, Frank Gehry, informal economy, information retrieval, Internet Archive, Jaron Lanier, knowledge worker, Mark Zuckerberg, Marshall McLuhan, Merlin Mann, Nate Silver, new economy, Nicholas Carr, popular electronics, remote working, Richard Feynman, Richard Feynman, Ruby on Rails, Silicon Valley, Silicon Valley startup, Snapchat, statistical model, the medium is the message, Watson beat the top human players on Jeopardy!, web application, winner-take-all economy, zero-sum game

The New Yorker, January 29, 2010, http://www.newyorker.com/online/blogs/georgepacker/2010/01/stop-the-world.html. The Metric Black Hole “A ‘free and frictionless’ method of communication” and other details of Tom Cochran’s e-mail experiment: Cochran, Tom. “Email Is Not Free.” Harvard Business Review, April 8, 2013. http://blogs.hbr.org/2013/04/email-is-not-free/. “it is objectively difficult to measure individual”: from page 509 of Piketty, Thomas. Capital in the Twenty-First Century. Cambridge, MA: Belknap Press, 2014. “undoubtedly true”: Manzi, Jim. “Piketty’s Can Opener.” National Review, July 7, 2014. http://www.nationalreview.com/corner/382084/pikettys-can-opener-jim-manzi. This careful and critical review of Piketty’s book by Jim Manzi is where I originally came across the Piketty citation. The Principle of Least Resistance “At first, the team resisted”; “putting their careers in jeopardy”; and “a better product delivered to the client” as well as a good summary of Leslie Perlow’s connectivity research can be found in Perlow, Leslie A., and Jessica L.

This example generalizes to most behaviors that potentially impede or improve deep work. Even though we abstractly accept that distraction has costs and depth has value, these impacts, as Tom Cochran discovered, are difficult to measure. This isn’t a trait unique to habits related to distraction and depth: Generally speaking, as knowledge work makes more complex demands of the labor force, it becomes harder to measure the value of an individual’s efforts. The French economist Thomas Piketty made this point explicit in his study of the extreme growth of executive salaries. The enabling assumption driving his argument is that “it is objectively difficult to measure individual contributions to a firm’s output.” In the absence of such measures, irrational outcomes, such as executive salaries way out of proportion to the executive’s marginal productivity, can occur. Even though some details of Piketty’s theory are controversial, the underlying assumption that it’s increasingly difficult to measure individuals’ contributions is generally considered, to quote one of his critics, “undoubtedly true.”

Of course, just because it’s hard to measure metrics related to deep work doesn’t automatically lead to the conclusion that businesses will dismiss it. We have many examples of behaviors for which it’s hard to measure their bottom-line impact but that nevertheless flourish in our business culture; think, for example, of the three trends that opened this chapter, or the outsize executive salaries that puzzled Thomas Piketty. But without clear metrics to support it, any business behavior is vulnerable to unstable whim and shifting forces, and in this volatile scrum deep work has fared particularly poorly. The reality of this metric black hole is the backdrop for the arguments that follow in this chapter. In these upcoming sections, I’ll describe various mind-sets and biases that have pushed business away from deep work and toward more distracting alternatives.


pages: 320 words: 87,853

The Black Box Society: The Secret Algorithms That Control Money and Information by Frank Pasquale

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Affordable Care Act / Obamacare, algorithmic trading, Amazon Mechanical Turk, American Legislative Exchange Council, asset-backed security, Atul Gawande, bank run, barriers to entry, basic income, Berlin Wall, Bernie Madoff, Black Swan, bonus culture, Brian Krebs, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, Chuck Templeton: OpenTable, cloud computing, collateralized debt obligation, computerized markets, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, Debian, don't be evil, drone strike, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, Filter Bubble, financial innovation, financial thriller, fixed income, Flash crash, full employment, Goldman Sachs: Vampire Squid, Google Earth, Hernando de Soto, High speed trading, hiring and firing, housing crisis, informal economy, information asymmetry, information retrieval, interest rate swap, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, Julian Assange, Kevin Kelly, knowledge worker, Kodak vs Instagram, kremlinology, late fees, London Interbank Offered Rate, London Whale, Marc Andreessen, Mark Zuckerberg, mobile money, moral hazard, new economy, Nicholas Carr, offshore financial centre, PageRank, pattern recognition, Philip Mirowski, precariat, profit maximization, profit motive, quantitative easing, race to the bottom, recommendation engine, regulatory arbitrage, risk-adjusted returns, Satyajit Das, search engine result page, shareholder value, Silicon Valley, Snapchat, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical arbitrage, statistical model, Steven Levy, the scientific method, too big to fail, transaction costs, two-sided market, universal basic income, Upton Sinclair, value at risk, WikiLeaks, zero-sum game

Ben Austen, “The YouTube Laugh Factory: A Studio System for Viral Video,” 260 NOTES TO PAGES 86–90 Wired, December 16, 2011, http://www.wired.com /magazine/2011/12/ff_you tube/all /. 159. On the barriers to organization of digital labor, see Scholz, Digital Labor. 160. Lawrence Lessig, Remix: Making Art and Commerce Thrive in the Hybrid Economy (New York: Penguin, 2008), 128. 161. James Galbraith, The Predator State (New York: Free Press, 2008), xix. 162. Thomas Piketty, Capital in the Twenty-First Century (Cambridge: Harvard University Press, 2014): 571. 163. Turow, The Daily You. 164. Jerry Kang, “Race.Net Neutrality,” Journal on Telecommunications and High Technology Law 6 (2007): 9–10. 165. Ibid. See also Jack Balkin, “Media Access: A Question of Design,” George Washington Law Review 76 (2008): 933. 166. “Complaint of McGraw-Hill Companies, Inc.,” McGraw-Hill Companies, Inc. v.

MacKinnon, Consent of the Networked; Anupam Chander, “Facebookistan,” North Carolina Law Review 90 (2012): 1807–1844. 304 NOTES TO PAGES 214–218 95. For the strange career of neoliberal approaches to antitrust law, see Robert Van Horn and Philip Mirowski, “Reinventing Monopoly,” in The Road from Mount Pèlerin, ed. Philip Mirowski and Dieter Plehwe (Cambridge, MA: Harvard University Press, 2009), 219 ff. 96. C. Wright Mills, The Power Elite. New ed. (New York: Oxford University Press, 2000). First published 1956. 97. Thomas Piketty, Capital in the Twenty-First Century (Cambridge: Harvard University Press, 2014), 574. 98. Pope Francis, Evangelii Gaudium (Apostolic Exhortation), November 24, 2013, para. 55. Available at http://w2.vatican.va /content /francesco/en /apost _exhortations/documents/papa-francesco_esortazione-ap_20131124 _evangelii -gaudium.html. ACKNOWLEDGMENTS This book is based on ten years of research covering law, technology, and social science.

This allows them to offer data-driven targeting to advertisers, with whose handsome payments they can buy content, apps, and other enticements (the fruits of other people’s ingenuity) that draw a bigger audience still, and so on. The well-realized technological vision that attracts the initial user base deserves recompense. But it does not entitle present corporate leaders to endlessly leverage past success into future dominance. What Thomas Piketty said of unlimited capital accumulation applies as well to untrammeled tech giants: “the past devours the future.”162 The data advantage of the Silicon Valley giants may owe as much to fortuitous timing as to anything inherent in the firms themselves. Social theorist David Grewal has explained the “network power” of English as a lingua franca; it’s not “better” than other languages; it’s not easier to learn, or any more expressive.


pages: 775 words: 208,604

The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, corporate governance, cosmological principle, crony capitalism, dark matter, declining real wages, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, Plutocrats, plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

If there were more economists like him, more historians would be listening. About a decade ago, Steve Friesen made me think harder about ancient income distributions, and Emmanuel Saez further piqued my interest in inequality during a shared year at Stanford’s Center for Advanced Study in the Behavioral Sciences. My perspective and argument have been inspired in no small measure by Thomas Piketty’s work. For several years before his provocative book on capital in the twenty-first century introduced his ideas to a wider audience, I had read his work and pondered its relevance beyond the last couple of centuries (also known as the “short term” to an ancient historian such as myself). The appearance of his magnum opus provided much-needed impetus for me to move from mere contemplation to the writing of my own study. His trailblazing has been much appreciated.

Laxenburg, Austria: International Institute for Applied Systems Analysis, IR-07–024. Machin, Stephen. 2008. “An appraisal of economic research on changes in wage inequality.” Labour 22: 7–26. Maddison project. “Maddison project.” http://www.ggdc.net/maddison/maddison-project/home.htm. Magness, Phillip W., and Murphy, Robert P. 2015. “Challenging the empirical contribution of Thomas Piketty’s Capital in the twenty-first century.” Journal of Private Enterprise 30: 1–34. Mahler, Vincent A. 2010. “Government inequality reduction in comparative perspective: a cross-national study of the developed world.” Polity 42: 511–541. Maisels, Charles K. 1990. The emergence of civilization: from hunting and gathering to agriculture, cities, and the state in the Near East. London: Routledge. Malinen, Tuomas. 2012.

“On the long-run evolution of inheritance: France 1820–1998.” Quarterly Journal of Economics 126: 1071–1131. Piketty, Thomas. 2013. Le capital au XXIe siècle. Paris: Éditions du Seuil. Piketty, Thomas. 2014. Capital in the twenty-first century. Trans. Arthur Goldhammer. Cambridge, MA: Harvard University Press. Piketty, Thomas. 2015a. “Vers une économie politique et historique: réflexions sur le capital au XXIe siècle.” Annales: Histoire, Sciences Sociales, 125–138. Piketty, Thomas. 2015b. “Putting distribution back at the center of economics: reflections on Capital in the twenty-first century.” Journal of Economic Perspectives 29: 67–88. Piketty, Thomas, Postel-Vinay, Gilles, and Rosenthal, Jean-Laurent. 2006. “Wealth concentration in a developing economy: Paris and France, 1807–1994.” American Economic Review 96: 236–256.


pages: 354 words: 92,470

Grave New World: The End of Globalization, the Return of History by Stephen D. King

9 dash line, Admiral Zheng, air freight, Albert Einstein, Asian financial crisis, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Sanders, bilateral investment treaty, bitcoin, blockchain, Bonfire of the Vanities, borderless world, Bretton Woods, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collateralized debt obligation, colonial rule, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, debt deflation, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Snowden, eurozone crisis, facts on the ground, failed state, Fall of the Berlin Wall, falling living standards, floating exchange rates, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, global value chain, hydraulic fracturing, Hyman Minsky, imperial preference, income inequality, income per capita, incomplete markets, inflation targeting, information asymmetry, Internet of things, invisible hand, joint-stock company, Long Term Capital Management, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, moral hazard, Nixon shock, offshore financial centre, oil shock, old age dependency ratio, paradox of thrift, Peace of Westphalia, Plutocrats, plutocrats, price stability, profit maximization, quantitative easing, race to the bottom, rent-seeking, reserve currency, reshoring, rising living standards, Ronald Reagan, Scramble for Africa, Second Machine Age, Skype, South China Sea, special drawing rights, technology bubble, The Great Moderation, The Market for Lemons, the market place, trade liberalization, trade route, Washington Consensus, WikiLeaks, Yom Kippur War, zero-sum game

Subdued labour incomes – thanks to a mixture of weak demand, technological change and competition from cheaper labour elsewhere in the world – meant that gains in sales revenues alone led to higher corporate profits; higher profits, in turn, fed through to further stock market gains, even in the absence of a recovery in investment. For both the owners and managers of companies, this appeared to be a case of ‘heads I win, tails you lose’, triggering much gnashing of teeth and, not surprisingly, a renewed interest in the causes of, and the cures for, rising income inequality. Not for nothing did Thomas Piketty’s Capital in the Twenty-First Century become a New York Times bestseller. Piketty made the strong claim that the rate of return on capital was – in the absence of wars and revolutions – always likely to be higher than the rate of economic growth: the implication was simply that the already well-off – basically those with no shortage of capital – would steadily get richer, a conclusion that appeared very much to be playing out before our eyes.

(i), (ii), (iii), (iv), (v) Byzantium (i) Cabinet (UK) (i) California (i), (ii) caliphates (i), (ii), (iii) Callaghan, Jim (i), (ii) Cameron, David (i) Canada a reputable country (i) Asian Development Bank and (i) closes gap on US (i) Irish emigrate to (i), (ii) North America Free Trade Agreement (i), (ii) TPP (i) Cape of Good Hope (i) capital, mobility of (i), (ii), (iii), (iv) see also cross-border capital flow Capital in the Twenty-First Century (Thomas Piketty) (i) capitalism communism and (i) free-market capitalism (i), (ii), (iii), (iv) Fukuyama’s disciples on (i) Steffens and Shaw on (i) US economic model and (i) Caribbean (i) Carter, Jimmy (i) Castillon, Battle of (i) Castro, Fidel (i) Catherine of Aragon (i) Catherine the Great (i) Catholics (i), (ii), (iii) Caucasus (i), (ii) Central African Republic (i), (ii) Central America (i) Central Asia (i), (ii), (iii) see also Asia central banks (i), (ii) see also bankers inflation targets (i) Kosmos (i) price distortion (i) printing money (i), (ii) quantitative easing (i), (ii), (iii) zero interest rates and (i) Chad (i) Chechens (i) checks and balances (i), (ii) Chile (i) China (i), (ii), (iii), (iv) 1980 emergence (i) ageing population (i) attracting Western investment (i) balance of payments surplus (i) boom to slowdown (i) Brazil and (i) British in (i) Coca-Cola and (i) demand for German goods (i) Deng Xiaoping (i) Disney and (i) economic resurgence (i), (ii) excess capital in US (i) foreign capital for (i) iPhones (i) Japan and (i) living standards (i) military spending (i) OECD and (i) per capita incomes (i), (ii) ratifies Paris climate deal (i) rise of renminbi (i), (ii) Russia threatens (i) South China Sea and neighbour disputes (i) TPP and (i) treaty ports (i) Trump’s protectionism and (i) US tries to contain (i), (ii), (iii) Chongqing (i), (ii) Christianity (i), (ii), (iii), (iv), (v) Churchill, Winston (i), (ii), (iii), (iv)n1 CIA (i) Ciudadanos (i) Cleveland, Grover (i) climate change (i), (ii) Clinton, Hillary 2016 campaign (i) Bernie Sanders opposes (i) concerns of supporters (i) rejects TPP (i), (ii) Syria (i) wins Democrat nomination (i) clubs (i), (ii) Cobden, Richard (i), (ii), (iii) Coca-Cola (i) ‘coffin ships’ (i) Cold War binary rivalry, a (i) economic differences (i) end of (i), (ii) globalization and (i) NATO and (i) Soviet living standards (i) collateralized debt obligations (CDOs) (i) Collins, Philip (i) Columbus, Christopher (i), (ii), (iii) commodity markets (i), (ii), (iii) common sense (i) Commonwealth (i) communism Berlin Wall and (i) capitalism and (i) Cuba (i) Marx’s stages (i) Shaw extols (i) Soviet Union collapse and (i), (ii) Como, Lake (i) Comptoir National d’Escompte de Paris (i) Concert of Europe (i) Congo (i) Congress (US) 1933 banking crisis (i) American public’s confidence in (i) Bush Jnr on terrorism (i) Immigration Act 1917 (i) Japanese sanctions (i), (ii) Smoot–Hawley tariff (i) Congress of Vienna (i), (ii), (iii), (iv) Connally, John (i) Conolly, Arthur (i) Conservative Party (i), (ii) Constantinople (i), (ii) Constitutional Tribunal (Poland) (i) ‘Convention of Peking’ (i) Convention on the International Regulations for Preventing Collisions at Sea (i) Corbyn, Jeremy (i), (ii) Córdoba (i), (ii) corporate scandals (i) Corroyer, Edouard (i) Court of Cassation (Egypt) (i) Crécy, Battle of (i) Creole languages (i) Crimea (i), (ii) Crimean War (19th century) (i) crop yields (i) cross-border capital flow allocation of resources and (i) emerging markets and (i), (ii) extraordinary growth of (i), (ii), (iii) globalization dominated by (i) inequality and (i) Varoufakis tries to limit (i) Cuba (i) Czech Republic (i) Czechoslovakia (i) Darius the Great (i) Darwin, Charles (i) Davos (i), (ii) de Gaulle, Charles (i), (ii) debt (i) Africa (i) China (i) debt to income ratios (i) government debt (i) Latin America (i) low inflation and (i) deflation (i), (ii), (iii), (iv) Delhi (i) demand management (i), (ii) Democratic Party (US) (i), (ii) Democratic Republic of the Congo (i) Denfert-Rochereau, Eugène (i) Deng Xiaoping (i), (ii), (iii), (iv) Denmark (i), (ii) Department of Housing and Urban Development (US) (i) deposit insurance (i) devaluation 1930s (i), (ii), (iii) dollars, gold and (i) Eisenhower and Britain (i) franc (i) right conditions for (i) Diaoyu (i) Disney (i), (ii) Doha Round (i) dollar (US) see American dollar Dow Jones Industrial Average (i) Draghi, Mario (i) Duisburg (i) Duterte, Rodrigo (i), (ii) DVDs (i) East Africa (i) see also Africa Eastern Europe EU and its effects (i) importing democracy (i) joining the EU (i), (ii) Molotov–Ribbentrop Pact (i) New World emigration (i) Ottoman Empire and (i) Soviet communism and (i), (ii), (iii) ‘Economic Theory of Clubs’ (James Buchanan) (i) Ecuador (i) Eden, Anthony (i), (ii) Edison, Thomas (i) Edison Electric (i) educational attainment (i) Edward VI, King (i) Egypt (i), (ii), (iii) Einstein, Albert (i) Eisenhower, Dwight D.

Financial Flows and the International Monetary System, National Bureau of Economic Research Working Paper No. 21172, Cambridge, MA, May 2015 Petri, P. and M. Plummer. The Economic Effects of the Trans-Pacific Partnership: New estimates, Peterson Institute for International Economics Working Paper 16-2, Washington, DC, January 2016 Pettis, M. The Great Rebalancing: Trade, conflict and the perilous road ahead for the world economy, Princeton University Press, Princeton, NJ, 2013 Piketty, T. Capital in the Twenty-First Century, trans. A. Goldhammer, Belknap Press, Cambridge, MA, 2014 Pinker, S. and A. Mack. ‘The world is not falling apart’, Slate, 2014, available at: http://www.slate.com/articles/news_and_politics/foreigners/2014/12/the_world_is_not_falling_apart_the_trend_lines_reveal_an_increasingly_peaceful.html Rachman, G. Zero-Sum World: Politics, power and prosperity after the crash, Atlantic Books, London, 2010 Rachman, G.


pages: 558 words: 168,179

Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer

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affirmative action, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-communist, Bakken shale, bank run, battle of ideas, Berlin Wall, Capital in the Twenty-First Century by Thomas Piketty, carried interest, centre right, clean water, Climategate, Climatic Research Unit, collective bargaining, corporate raider, crony capitalism, David Brooks, desegregation, diversified portfolio, Donald Trump, energy security, estate planning, Fall of the Berlin Wall, George Gilder, housing crisis, hydraulic fracturing, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, job automation, low skilled workers, mandatory minimum, market fundamentalism, mass incarceration, Mont Pelerin Society, More Guns, Less Crime, Nate Silver, New Journalism, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, oil shock, Plutocrats, plutocrats, Powell Memorandum, Ralph Nader, Renaissance Technologies, road to serfdom, Ronald Reagan, school choice, school vouchers, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, the scientific method, University of East Anglia, Unsafe at Any Speed, War on Poverty, working poor

Hacker and Paul Pierson, Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class (Simon & Schuster, 2010), says in 2007 that the top 1 percent of earners took home 23.5 percent of the country’s income, when capital gains and dividends were factored in. Liberal critics: See Chrystia Freeland, Plutocrats: The Rise of the New Global Super-rich and the Fall of Everyone Else (Penguin, 2012), 3. “We are on the road”: Paul Krugman, speaking in an interview with Bill Moyers about Thomas Piketty’s book Capital in the Twenty-First Century. “What the 1% Don’t Want Us to Know,” BillMoyers.com, April 18, 2014. “Wealth begets power”: Joseph E. Stiglitz, “Of the 1%, by the 1%, for the 1%,” Vanity Fair, May 2011. Thomas Piketty: Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Belknap Press/Harvard University Press, 2014). “disconnect themselves”: Mike Lofgren, “Revolt of the Rich,” American Conservative, Aug. 27, 2012. Only one full guest list: The list was published by the Web site ThinkProgress, on October 20, 2010, in a news story by Lee Fang.

As the conservative Nobel Prize–winning economist Milton Friedman wrote, “A society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom…On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.” In the new millennium, however, this consensus was beginning to fray. A growing number of academics studying the nexus of politics and wealth regarded the accelerating inequality in America as a threat not only to the economy but to democracy. Thomas Piketty, an economist at the Paris School of Economics, warned in his zeitgeist-shifting book, Capital in the Twenty-First Century, that without aggressive government intervention economic inequality in the United States and elsewhere was likely to rise inexorably, to the point where the small portion of the population that currently held a growing slice of the world’s wealth would in the foreseeable future own not just a quarter, or a third, but perhaps half of the globe’s wealth, or more.


pages: 497 words: 150,205

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

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

713 http://www.economist.com/blogs/freeexchange/2012/06/innovation 714 Thomas Paine, Agrarian Justice, 1797 715 http://www.progress.org/banneker/chur.html 716 John Stuart Mill, Principles of Political Economy, 1848, quoted in Richard Reeves, John Stuart Mill: Victorian Firebrand, Atlantic: 2007 717 Friedrich Hayek, Individualism and Economic Order, University of Chicago: 1948. http://library.mises.org/books/Friedrich%20A%20Hayek/Individualism%20and%20Economic%20Order.pdf 718 http://www.worldbank.org/en/region/eca/publication/golden-growth 719 http://www.bankofengland.co.uk/publications/Documents/speeches/2010/speech442.pdf 720 http://www.lrb.co.uk/v34/n04/andrew-haldane/the-doom-loop 721 Facundo Alvaredo, Tony Atkinson, Thomas Piketty and Emmanuel Saez, “The World Top Incomes Database” http://topincomes.parisschoolofeconomics.eu/#Database: 722 Ibid. Table 4 723 Thomas Piketty, Capital in the Twenty-First Century, Harvard: 2014 724 David Sainsbury, Progressive Capitalism: How To Achieve Economic Growth, Liberty and Social Justice, Biteback: 2013 725 "Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.

The top 1 per cent earned 7.02 per cent of national income, nearly twice the 3.97 per cent they received in 1981, while the top 0.1 per cent obtained 2.19 per cent, nearly three times the 0.77 per cent they obtained in 1986. The top 0.01 per cent took home 0.75 per cent, nearly five times the 0.17 per cent they got in 1980. Looking at the Gini coefficient, a measure of a society’s overall income inequality, Britain and Italy are the most unequal societies in western Europe, while Denmark is the most equal, with Sweden just behind.722 The distribution of wealth is generally much more unequal. And as Thomas Piketty of the Paris School of Economics has pointed out, as growth slows and with it the creation of new wealth, old (inherited) fortunes weigh more heavily than before.723 A decent society should want to encourage effort and enterprise – by everyone, not just those who end up billionaires – without rewarding undeserved or unearned income. Battles between right and left about how high tax rates should be generally fail to make this distinction: those who want to cut taxes point to people like James Dyson, those who want to raise them point to Fred Goodwin.


pages: 409 words: 118,448

An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy by Marc Levinson

affirmative action, airline deregulation, banking crisis, Big bang: deregulation of the City of London, Boycotts of Israel, Bretton Woods, Capital in the Twenty-First Century by Thomas Piketty, car-free, Carmen Reinhart, central bank independence, centre right, clean water, deindustrialization, endogenous growth, falling living standards, financial deregulation, floating exchange rates, full employment, George Gilder, Gini coefficient, global supply chain, income inequality, income per capita, indoor plumbing, informal economy, intermodal, invisible hand, Kenneth Rogoff, knowledge economy, late capitalism, linear programming, lump of labour, manufacturing employment, new economy, Nixon shock, North Sea oil, oil shock, Paul Samuelson, pension reform, price stability, purchasing power parity, refrigerator car, Right to Buy, rising living standards, Robert Gordon, rolodex, Ronald Coase, Ronald Reagan, Simon Kuznets, statistical model, strikebreaker, structural adjustment programs, Thomas Malthus, total factor productivity, unorthodox policies, upwardly mobile, War on Poverty, Washington Consensus, Winter of Discontent, Wolfgang Streeck, women in the workforce, working-age population, yield curve, Yom Kippur War, zero-sum game

Mizoguchi, “Long-run Fluctuations in Income Distribution in Japan,” Economic Review 37 (1986): 152–158, cited in Toshiaki Tachibanaki, Confronting Income Inequality in Japan (Cambridge, MA: MIT Press, 2005), 59. 4. Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez, “The Top 1% in International and Historical Perspective,” Journal of Economic Perspectives 27 (2013): 7; Richard T. Griffiths, “Economic Growth and Overfull Employment in Western Europe,” in Richard T. Griffiths and Toshiaki Tachibanaki, eds., From Austerity to Affluence: The Transformation of the Socio-Economic Structure of Western Europe and Japan (New York: St. Martin’s Press, 2000), 68–72; Takenori Inoki, “From Rapid Growth to the End of Full Employment in Japan,” in Griffiths and Tachibanaki, eds., From Austerity to Affluence, 87. 5. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). 6. Carmen DeNavas-Walt, Bernadette D.

In some cases, national union leaders even bargained with the heads of business organizations and government officials to set the share of national income that would be paid out in workers’ wages and the share that would be paid out in profits, evening out the distribution of income by limiting the amount that could go to corporate shareholders or the owners of small businesses.4 But as the economist Thomas Piketty has shown, one of the most significant causes of greater equality in the postwar world had less to do with economic policy than with tragedy. World War II destroyed massive amounts of capital: apartments, shops, office blocks, and factories were blown to bits, along with production machinery and household furnishings. Even those business firms whose assets were not destroyed or confiscated saw their profits hurt by price controls, shortages of raw materials, and the financial problems of their customers.


pages: 327 words: 90,542

The Age of Stagnation by Satyajit Das

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

These included attractive women dressed as imperial concubines, discounts for people who lost weight, and appeals to patriotism. The most novel involved the offer of 1,000 free live chickens to prospective customers. After a desperate scramble by locals, only chicken feathers and a few lost shoes were left. It was an apt postscript to the latest installment in the rise and fall of emerging markets. In 2014, Thomas Piketty, a French economics professor, had an unexpected bestseller with the English translation of Capital in the Twenty-First Century. Self-consciously evoking Karl Marx, the 700-page book analyzed income and wealth distribution. Like Casablanca's Captain Renault, who was shocked to find that gambling was going on under his nose, the world appeared surprised that inequality was increasing and that capitalism concentrates wealth over time. Not everyone agreed with the conclusion.

Nicholas Stern, The Economics of Climate Change: The Stern Review, Cambridge University Press, 2007. Alan Weisman, The World without Us, Picador, 2007. Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power, Touchstone Books, 1991. ——, The Quest: Energy, Security, and the Remaking of the Modern World, Penguin, 2011. Inequality and Trust Geoffrey Hosking, Trust: A History, Oxford University Press, 2014. Thomas Piketty, Capital in the Twenty-First Century, Belknap Press, 2014. Richard Wilkinson and Kate Pickett, The Spirit Level: Why Greater Equality Makes Societies Stronger, Bloomsbury Press, 2011. Satyajit Das is a globally respected former banker and consultant with over thirty-five years’ experience in financial markets. He presciently anticipated, as early as 2006, the Global Financial Crisis and the subsequent sovereign debt problems, as well as the unsustainable nature of China's economic success.


pages: 403 words: 111,119

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

3D printing, Asian financial crisis, bank run, basic income, battle of ideas, Berlin Wall, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, dematerialisation, Douglas Engelbart, Douglas Engelbart, en.wikipedia.org, energy transition, Erik Brynjolfsson, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, land value tax, Landlord’s Game, loss aversion, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, mobile money, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, Richard Thaler, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, South Sea Bubble, statistical model, Steve Ballmer, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

World Bank (1978) World Development Report, Washington, DC: World Bank, p. 33. 10. Krueger, A. (2002) ‘Economic scene: when it comes to income inequality, more than just market forces are at work’, New York Times, 4 April 2002, available at: http://www.nytimes.com/2002/04/04/business/economic-scene-when-it-comes-income-inequality-more-than-just-market-forces-are.html?_r=0 11. Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. 12. Ostry, J. D. et al. (2014) Redistribution, inequality and growth. IMF Staff discussion note, February 2014, p. 5. https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf 13. Quinn, J. and Hall, J. (2009) ‘Goldman Sachs vice-chairman says “learn to tolerate inequality” ’, Daily Telegraph 21 October 2009. http://www.telegraph.co.uk/finance/recession/6392127/Goldman-Sachs-vice-chairman-says-Learn-to-tolerate-inequality.html 14.

Pearce, J. (2012) ‘The case for open source appropriate technology’, Environment, Development and Sustainability, 14: 3. Pearce, J. et al. (2012) ‘A new model for enabling innovation in appropriate technology for sustainable development’, Sustainability: Science, Practice and Policy, 8: 2, pp. 42–53. Persky, J. (1992) ‘Retrospectives: Pareto’s law’, Journal of Economic Perspectives 6: 2, pp. 181–192. Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press. Pizzigati, S. (2004) Greed and Good. New York: Apex Press. Polanyi, K. (2001) The Great Transformation. Boston: Beacon Press. Pop-Eleches, C. et al. (2011) ‘Mobile phone technologies improve adherence to antiretroviral treatment in resource-limited settings: a randomized controlled trial of text message reminders’, AIDS 25: 6, pp. 825–834.

Far from being inevitable, the Kuznets process had turned out to be avoidable: it was indeed possible to achieve growth with equity. What’s more, starting in the early 1980s, many high-income countries that believed they had successfully made it over the curve’s hump saw their income distribution begin to widen again, resulting in the infamous rise of the one percent accompanied by flat or falling wages for the majority. It was, however, the economist Thomas Piketty’s 2014 long view of the dynamics of distribution under capitalism that made the underlying story plain to see. By asking not just who earns what but also who owns what, he distinguished between two kinds of households: those that own capital – such as land, housing, and financial assets which generate rent, dividends and interest – and those households that own only their labour, which generates only wages.


pages: 261 words: 86,905

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

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

From there, it is a short move towards the politics of economics, maybe beginning with Ha-Joon Chang’s 23 Things They Don’t Tell You about Capitalism, a highly effective account of the arguments and evidence against neoliberal free-market orthodoxies. A number of very good recent books look at the effect of these policies in terms of their impact at the top end of the income distribution, and the consequences of that inequality for everyone else: Chrystia Freedland’s Plutocrats, Robert Frank’s Richistan, Jaron Lanier’s Who Owns the Future?, and George Packer’s The Unwinding. Spring 2014 saw the publication of Thomas Piketty’s masterpiece Capital in the Twenty-First Century, an important, powerful, and densly argued study of the shift in the balance of power between capital and labor. There is a notable gap in the market here: there are attacks on the existing neoliberal order, but there doesn’t seem to be a powerful popular counternarrative. It’s not as if there are no arguments on the economic and political right, and no one who believes and indeed acts on those arguments; but they aren’t well represented in book form.

Citizens for Tax Justice, an organization that advocates for a more progressive tax system, has estimated that, when federal, state and local taxes are taken into account, the top 1 percent paid only slightly more than 20 percent of all American taxes in 2010—about the same as the share of income they took home, an outcome that is not progressive at all. With such low effective tax rates—and, importantly, the low tax rate of 20 percent on income from capital gains—it’s not a huge surprise that the share of income going to the top 1 percent has doubled since 1979, and that the share going to the top 0.1 percent has almost tripled, according to the economists Thomas Piketty and Emmanuel Saez. Recall that the wealthiest 1 percent of Americans own about 40 percent of the nation’s wealth, and the picture becomes even more disturbing.64 prop trading In proprietary trading, banks bet their own money for their own benefit, as opposed to making such trading only on behalf of their clients. It is supposed to be banned by the forthcoming Volcker rule. quantitative easing (QE) An “unconventional” technique used by governments and central banks when interest rates are too low to go down any further, but the need for economic stimulus still exists.

Undoing the Demos: Neoliberalism's Stealth Revolution by Wendy Brown

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Affordable Care Act / Obamacare, bitcoin, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, corporate governance, credit crunch, crowdsourcing, David Brooks, Food sovereignty, haute couture, immigration reform, income inequality, invisible hand, labor-force participation, late capitalism, means of production, new economy, obamacare, occupational segregation, Philip Mirowski, Ronald Reagan, sexual politics, shareholder value, sharing economy, The Chicago School, the market place, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trickle-down economics, Washington Consensus, Wolfgang Streeck, young professional, zero-sum game

“Remarks by the President in the State of the Union Address,” February n o t e s   225 12, 2013, White House Office of the Press Secretary, available at http://www. whitehouse.gov/the-press-office/2013/02/12/remarks-president-state-unionaddress, p. 1. 13. Ibid., pp. 1–9. The one exception to this was gun control, which may also explain why Obama gave up on it so quickly in 2013. 14. Ibid., p. 2. 15. Ibid., p. 4. 16. Ibid., p. 5. 17. Ibid., p. 6. 18. Ibid., p. 6. 19. Ibid., p. 7. 20. Ibid., p. 8. 21. Ibid., pp. 8–9. 22. See Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Belknap Press of Harvard University Press, 2014) and “Dynamics of Inequality,” an interview with Piketty, New Left Review 85 (January–February 2014). Many are arguing with Piketty’s policy prescriptions, few with his fundamental claim that capital accumulation without growth is at the bottom of intensifying inequality. 23. There are many other examples of the neoliberalization of social justice concerns by the Obama administration.

The first is intensified inequality, in which the very top strata acquires and retains ever more wealth, the very bottom is 28  u n d o in g t h e d e m o s literally turned out on the streets or into the growing urban and suburban slums of the world, while the middle strata works more hours for less pay, fewer benefits, less security, and less promise of retirement or upward mobility than at any time in the past half century. While they rarely use the term “neoliberalism,” this is the emphasis of the valuable critiques of Western state policy offered by economists Robert Reich, Paul Krugman, and Joseph Stiglitz and of development policy offered by Amartya Sen, James Ferguson, and Branko Milanvic, among others.24 Growing inequality is also among the effects that Thomas Piketty establishes as fundamental to the recent past and near future of post-Keynesian capitalism. The second criticism of neoliberal state economic policy and deregulation pertains to the crass or unethical commercialization of things and activities considered inappropriate for marketization. The claim is that marketization contributes to human exploitation or degradation (for example, Third World baby surrogates for wealthy First World couples), because it limits or stratifies access to what ought to be broadly accessible and shared (education, wilderness, infrastructure), or because it enables something intrinsically horrific or severely denigrating to the planet (organ trafficking, pollution rights, clearcutting, fracking).


pages: 831 words: 98,409

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

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activist fund / activist shareholder / activist investor, assortative mating, bank run, barriers to entry, Bernie Sanders, Black Swan, 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, diversification, East Village, Elon Musk, eurozone crisis, family office, financial repression, Gini coefficient, glass ceiling, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, John Meriwether, Kenneth Arrow, Kenneth Rogoff, knowledge economy, London Whale, Long Term Capital Management, Mark Zuckerberg, mass immigration, McMansion, mittelstand, money market fund, Myron Scholes, NetJets, Network effects, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, Plutocrats, plutocrats, Ponzi scheme, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, rolodex, Satyajit Das, shareholder value, Silicon Valley, sovereign wealth fund, Stephen Hawking, Steve Jobs, The Future of Employment, The Predators' Ball, too big to fail, women in the workforce, young professional

“Homepage,” Douglas Rushkoff, http://www.rushkoff.com. 6. Robin Greenwood and David Scharfstein, “The Growth of Modern Finance,” Journal of Economic Perspectives 27(2) (Spring 2013): 3-28. 7. Oxfam International, “Richest 1% Will Own More Than All the Rest by 2016,” press release, January 19, 2015, https://www.oxfamorg/en/pressroom/pressreleases/2015-01-19/richest-1-will-own-more-all-rest-2016. 8. For reference, see also: Thomas Piketty, Capital in the Twenty-First Century (Boston: Harvard University Press, 2014), 1, 237, Kindle edition. 9. Donella H. Meadows, Thinking in Systems: A Primer (Chelsea, VT: Chelsea Green Publishing), 3, Kindle edition. 10. Joseph E. Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York: W. W. Norton & Company, 2012), 121, Kindle edition. 11. Nick Hanauer, “The Pitchforks Are Coming...

There are no barriers to entry as it is not a licensed profession, and anyone can call him- or herself a consultant. Therefore, having top academic credentials, policy experience, and access to high-caliber networks provide thought leaders with distinct competitive advantages that propel them into the league of superhubs. Most thought leaders in finance are economists. A select few have become academic celebrities, such as Thomas Piketty, Nassim Taleb, and Paul Krugman, because they have touched the Zeitgeist. They are their own brands, with rock star status and almost cultlike followings. Inundated with media requests, exclusive invitations, and offers to join prestigious boards, their work surpasses the insular world of academia and becomes the center of public attention. They often contribute to the public discourse by translating their abstract and complex analyses into layman’s terms.


pages: 424 words: 121,425

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran

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access to a mobile phone, affirmative action, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, Kickstarter, M-Pesa, McMansion, microcredit, mobile money, moral hazard, mortgage debt, new economy, Own Your Own Home, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, white flight, working poor

The eventual downturn that “white flight” created in these urban areas also resulted in “bank flight” as private business followed the white customers out. The social contract forged during the Great Depression stabilized U.S. banking for several decades. For fifty years, the banking sector experienced measured growth and success while the rest of the economy generally thrived. This growth and stability coincided with exceptional international economic growth. As Thomas Piketty explains in Capital in the Twenty-First Century, the time between the Great Depression and the 1970s marked a unique period in world history of relative equalities of wealth and remarkable economic growth.89 Surely, sustained economic growth contributed to a stable and successful banking system. And so did the federal deposit insurance fund, which succeeded in finally ending the confidence-destroying runs that had historically wreaked havoc on banks.

Freddie Mac, “Company Profile,” accessed September 30, 2014, www.freddiemac.com/corporate/company_profile/. 88. For a comprehensive discussion of “redlining,” see Charles Lewis Nier, III, “The Shadow of Credit: The Historical Origins of Racial Predatory Lending and its Impact upon African American Wealth Accumulation,” University of Pennsylvania Journal of Law and Social Change (2008). 89. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press: 2014), 80. 90. Martin Luther King Jr., “I Have a Dream,” accessed March 19, 2015, www.thekingcenter.org/archive/document/i-have-dream-1. 91. Richard Scott Carnell, Jonathan R. Macey, and Geoffrey P. Miller, The Law of Banking and Financial Institutions, 350 (New York: Aspen Publishers, 2009). 92. Jan Blakeslee, “ ‘White Flight’ to the Suburbs: A Demographic Approach,” University of Wisconsin Institute for Research on Poverty Newsletter Vol. 3, No. 2 (1978–1979), 1. 93.

Before the civil-rights-era laws forbidding discrimination in banking were passed, many blacks were left out of the mainstream banking institutions. Many blacks had to form their own institutions—black-owned banks. The story of black banking is too rich to be summarized in this text but will be the topic of the author’s future research and study. 36. Regulation Q, 12 CFR §217. 37. Thomas Picketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014). 38. Connecticut Department of Banking, “ABCs of Banking,” accessed March 17, 2015, www.ct.gov/dob/cwp/view.asp?a=2235&q=297892. 39. “The relaxation of restrictions on intrastate branching and interstate banking that took place in the 1980s and early 1990s facilitated both mergers and consolidations. While only sixteen states permitted unrestricted intrastate branching in 1984, by 1994 the number had risen to forty.


pages: 414 words: 119,116

The Health Gap: The Challenge of an Unequal World by Michael Marmot

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active measures, active transport: walking or cycling, Affordable Care Act / Obamacare, Atul Gawande, Bonfire of the Vanities, Broken windows theory, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, centre right, clean water, congestion charging, correlation does not imply causation, Doha Development Round, epigenetics, financial independence, future of work, Gini coefficient, Growth in a Time of Debt, illegal immigration, income inequality, Indoor air pollution, Kenneth Rogoff, Kibera, labour market flexibility, lump of labour, Mahatma Gandhi, meta analysis, meta-analysis, microcredit, New Urbanism, obamacare, paradox of thrift, race to the bottom, Rana Plaza, RAND corporation, road to serfdom, Simon Kuznets, Socratic dialogue, structural adjustment programs, the built environment, The Spirit Level, trickle-down economics, urban planning, Washington Consensus, Winter of Discontent, working poor

I have long harboured a wish to adapt her most famous opening line, and write: ‘It is a truth universally acknowledged that a single man not in possession of a good fortune must be in want of a life.’ Single, poor, his prospects for life expectancy are not good.) Large inequalities of wealth and income and a preponderance of inherited wealth characterised nineteenth-century Britain and France. These insights and the concern that we may be heading that way again are the message of Thomas Piketty’s Capital in the Twenty-First Century. For a 685-page economics book, published by a university press, to become a best-seller – it sold out within days, and was likely to have sold 200,000 copies within three months – and for its author, a serious French economics professor, to become a superstar, Capital must be tapping in to something important. It is. There are two issues that Piketty highlights: growing inequalities of wealth and income and the fact that, in the future, much of the wealth will be inherited rather than earned.

But half the people in the world have less than $3,650 each; and the richest 20 per cent have 94.5 per cent of all the wealth. What the figures on income and wealth show is that there are oceans of money sloshing about. It is not easy to maintain the fiction that we do not have enough money to do good things. The problem is that, within countries, the concentration of wealth is becoming more extreme. That was the message of Piketty’s Capital in the Twenty-First Century. At the same time as wealth concentration is increasing, all across Europe and the US we are being lectured to on the dire importance of austerity. Public services have to be cut back because . . . because . . . we cannot afford them? John Maynard Keynes, immediately after the Second World War, wrote: ‘The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems – the problems of life and of human relations, of creation and behaviour and religion.’8 In country after country, too much of our public conversation is about how we can grow national income, too little about how we can improve society.

Available from: http://dx.doi.org. 12Lundberg O, Aberg Yngwe M, Kolegard Stjarne M, Bjork L, Fritzell J. The Nordic Experience: welfare states and public health (NEWS). Health Equity Studies. 2008; 12. 13Woolf SH, Aron L, editors. U.S. Health in International Perspective: Shorter Lives, Poorer Health. National Research Council; Institute of Medicine. Washington, DC: The National Academies Press, 2013. 14Stiglitz J. The Price of Inequality. New York: Penguin, 2013. 15Piketty T. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press, 2014. 16Vardi N. The 25 Highest-Earning Hedge Fund Managers and Traders. Forbes. 2014. 17Ostry JD, Berg A, Tsangarides CG. IMF Staff Discussion Note: Redistribution, Inequality, and Growth. International Monetary Fund, 2014. 18Sen A. Inequality Reexamined. Oxford: Oxford University Press, 1992. 19Dahl E, van der Wel KA. Educational inequalities in health in European welfare states: a social expenditure approach.


pages: 515 words: 126,820

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

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Airbnb, altcoin, asset-backed security, autonomous vehicles, barriers to entry, bitcoin, blockchain, Bretton Woods, business process, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Erik Brynjolfsson, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Galaxy Zoo, George Gilder, glass ceiling, Google bus, Hernando de Soto, income inequality, informal economy, information asymmetry, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, social graph, social software, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Uber and Lyft, unbanked and underbanked, underbanked, unorthodox policies, wealth creators, X Prize, Y2K, Zipcar

Anyone who has been jobless knows how it erodes self-esteem and well-being. Those with power and wealth are getting ahead, and those without are falling behind. This new prosperity paradox, not to be confused with the intergenerational “Paradox of Prosperity” coined by economists such as Gilbert Morris, has befuddled every policy maker in the Western world. One of the best-selling business books of 2014, Capital in the Twenty-First Century by Thomas Piketty, became the #1 best seller on the New York Times hardcover nonfiction list in 2014. A tour de force of academic scholarship, Capital explains why inequality is accelerating and will likely continue to do so as long as the return on capital exceeds long-term economic growth. The rich have gotten richer because their money made them more money than their work did. Hence, the proliferation of new millionaires and billionaires.

Ibid. 7. www.worldbank.org/en/news/press-release/2015/04/15/massive-drop-in-number-of-unbanked-says-new-report; and C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Philadelphia: Wharton School Publishing, 2009). This figure is an estimate. 8. Interview with Joyce Kim, June 12, 2015. 9. www.ilo.org/global/topics/youth-employment/lang—en/index.htm. 10. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, Mass.: Belknap Press, 2014). 11. www.brookings.edu/~/media/research/files/papers/2014/05/declining%20business%20dynamism%20litan/declining_business_dynamism_hathaway_litan.pdf. 12. Ruth Simon and Caelainn Barr, “Endangered Species: Young U.S. Entrepreneurs,” The Wall Street Journal, January 2, 2015; www.wsj.com/articles/endangered-species-young-u-s-entrepreneurs-1420246116. 13.

Airbnb, 115–17 Big Seven, 128–42 distributed applications, 117–22 distributed autonomous enterprises, 126–28 hacking your future, 142–44 Buterin, Vitalik, 87–88, 262, 278–80 autonomous agents, 123, 125 consensus mechanisms, 31 futarchy, 220 re-architecting the firm, 18, 87–88, 96, 100–101 Buzzcar, 137 Byrne, David, 227 Byrne, Patrick, 83 Byzantine Generals’ Problem, 241 Cabell, James Branch, 277 California Public Employees’ Retirement System, 77 Campus microgrids, 148 “Canonical persona,” 16, 140 Cap-and-trade system, 222–23 Capital in the Twenty-First Century (Piketty), 173, 175 Carlyle, James, 69 Cars, 137, 164–67, 165–67 Cavoukian, Ann, 27, 28, 41, 42, 51–52, 275 CBW Bank, 73 Ceglowski, Maciej, 254, 275 Central banks (banking), 9, 31, 57, 286–87, 293–96, 309 Cerf, Vint, 274, 281, 299 Chain (company), 67–68 Chamber of Digital Commerce, 208, 287, 288, 302, 303 Change.org, 304 Chase, Robin, 137 Chaum, David, 4, 219 Chesky, Brian, 135 China, 13, 56, 174, 243–45, 264, 266–67, 272 Choi, Constance, 288, 307 Christie, Chris, 98 Circle, 83, 284 Circle Internet Financial, 71–72 Cisco Quad, 139 Civil Justice Council, U.K., 221 Clark, David, 281 Clark, Jeremy, 215 Climate change, 149, 221–23 Cloud computing, 118, 122 Coalition for Automated Legal Applications (COALA), 301–2, 303 Coase, Ronald, 74, 92–93, 100, 105, 121, 142, 319n Cohen, Bram, 119, 262 Coinbase, 44, 83–84, 284, 302 Coin Center, 286, 287, 302, 303 CoinPip, 217 Collaboration, 139–42 Collins, John, 302 Colu, 238 CommitCoin, 215 “Commons-based peer production,” 129 Competitive advantage, 64, 66, 110–11, 140 Complex instruction set computer (CISC), 260–61 CompuServe, 118 Computer viruses, 122, 123 Computing, evolution of, 150–52 Conflict adjudication, 100, 105, 219, 221 Conflicts of interest, 100, 125 Consensus mechanisms, 30–33, 36–37, 95, 98, 262, 266, 305 Consensus Systems (ConsenSys), 15, 87–92, 99, 101, 112–14, 130 Consideration, 10, 30 Conspiracy theories, 213 Content ID, 235 Contract breaches, 104, 258 Contracting costs, 99–101 Contracts.


pages: 829 words: 229,566

This Changes Everything: Capitalism vs. The Climate by Naomi Klein

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1960s counterculture, activist fund / activist shareholder / activist investor, battle of ideas, Berlin Wall, big-box store, bilateral investment treaty, British Empire, business climate, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, Climategate, cognitive dissonance, colonial rule, Community Supported Agriculture, complexity theory, crony capitalism, decarbonisation, deindustrialization, dematerialisation, Donald Trump, Downton Abbey, energy security, energy transition, equal pay for equal work, Exxon Valdez, failed state, Fall of the Berlin Wall, feminist movement, financial deregulation, food miles, Food sovereignty, global supply chain, hydraulic fracturing, ice-free Arctic, immigration reform, income per capita, Intergovernmental Panel on Climate Change (IPCC), Internet Archive, invention of the steam engine, invisible hand, Isaac Newton, James Watt: steam engine, light touch regulation, market fundamentalism, moral hazard, Naomi Klein, new economy, Nixon shock, Occupy movement, offshore financial centre, oil shale / tar sands, open borders, patent troll, Pearl River Delta, planetary scale, post-oil, profit motive, quantitative easing, race to the bottom, Ralph Waldo Emerson, Rana Plaza, Ronald Reagan, smart grid, special economic zone, Stephen Hawking, Stewart Brand, structural adjustment programs, Ted Kaczynski, the scientific method, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, transatlantic slave trade, trickle-down economics, Upton Sinclair, uranium enrichment, urban planning, urban sprawl, wages for housework, walkable city, Washington Consensus, Whole Earth Catalog, WikiLeaks

And each news story about an Italian or Greek pensioner who took his or her own life rather than try to survive under another round of austerity is a reminder of how many lives continue to be sacrificed for the few. The failure of deregulated capitalism to deliver on its promises is why, since 2009, public squares around the world have turned into rotating semipermanent encampments of the angry and dispossessed. It’s also why there are now more calls for fundamental change than at any point since the 1960s. It’s why a challenging book like Thomas Piketty’s Capital in the Twenty-First Century, exposing the built-in structures of ever-increasing wealth concentration, can sit atop bestseller lists for months, and why when comedian and social commentator Russell Brand went on the BBC and called for “revolution,” his appearance attracted more than ten million YouTube views.66 Climate change pits what the planet needs to maintain stability against what our economic model needs to sustain itself.

Department of Energy, Office of Energy Efficiency and Renewable Energy, June 14, 2013, http://energy.gov; “Greenhouse Gas 100 Polluters Index,” Political Economy Research Institute, University of Massachusetts Amherst, June 2013, http://www.peri.umass.edu. 47. Borgar Aamaas, Jens Borken-Kleefeld, and Glen P. Peters, “The Climate Impact of Travel Behavior: A German Case Study with Illustrative Mitigation Options,” Environmental Science & Policy 33 (2013): 273, 276. 48. Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014); Gar Lipow, Solving the Climate Crisis through Social Change: Public Investment in Social Prosperity to Cool a Fevered Planet (Santa Barbara: Praeger, 2012), 56; Stephen W. Pacala, “Equitable Solutions to Greenhouse Warming: On the Distribution of Wealth, Emissions and Responsibility Within and Between Nations,” presentation to International Institute for Applied Systems Analysis, November 2007, p. 3. 49.

., 211–12, 328 cadmium, 176 Caldeira, Ken, 263–64, 271 Calgary, Canada, 2, 245–49 California, 13, 52, 347 California, University of: at Davis, Institute of Transportation Studies at, 101 at Irvine, 14 Cameron, David, 7, 106–7, 110, 149, 251 Cameron, James, 449 Canada, 11, 17, 19, 71, 83, 143 divestment movement in, 354 environmental legislation in, 202 extractive industry subsidies in, 127 fossil fuels in, 69, 79, 178 fracking in, 299, 303–4, 313 government attacks on Indigenous land rights in, 381–82 government repression of environmental protest in, 299, 303 politics of climate change in, 36, 46 pro-mining policies of, 382 S&P rating of, 368 tar sands in, see Alberta tar sands weakening of environmental protections in, 381–82 Canadian Association of Petroleum Producers, 149 Canadian Auto Workers Union, 122 Canadian Centre for Policy Alternatives, 70, 129, 400 Canadian Natural Resources, 281 Canadian Security Intelligence Service, 362 cancer, tar sands linked to, 327 cap-and-trade system, 208, 218, 226–29, 287 cap and dividend, 118 capitalism, 22, 25, 38–39, 47, 61, 88, 89, 125, 158, 159, 176, 179, 228n, 233, 450 and attempts to mitigate climate change, 230–55 climate change as argument against, 157 climate change regulation seen as threat to, 31, 33 conservation and, 185–86 deregulated, 18, 20, 75, 154 disaster, 51, 109, 154, 233 fossil fuels and, 175, 176 Gaia, 231 industrial, 173–74, 177 nature vs., 177, 186 rebranding of, 252 see also free-market ideology Capital in the Twenty-First Century (Piketty), 154–55 carbon: atmospheric, 109 high-risk, 130 new sources of, 141 carbon bubble, 358 carbon budget, collective, 153 carbon cowboys, 220–21 carbon credits, 305 carbon dioxide, 143 recycling into products, 246–47 carbon emissions, 14, 23, 79 caps on, 118, 141, 208, 218, 226–29, 287 climate debt and, 409 cutting of, see carbon reduction of developing world, 409–10 historical evidence for, 415, 452 Industrial Revolution and increase in, 175–76, 409 rising levels of, 4, 11, 13, 14–15, 26 of U.S., 113, 409 wartime activities and, 17 wealth and, 113–14 see also greenhouse gas emissions Carbon Engineering, 281 carbon footprint, 77, 144, 178, 235, 247, 248, 288 carbon markets, 211, 218–25, 233 failure of, 224–25, 252 carbon offsets, 8, 39, 212, 251, 287 ineffectiveness of, 223–24, 387 carbon sequestration, 134, 218, 221–23, 232, 245, 247–48, 284, 439 carbon-sucking machines, 236, 244, 245, 254, 257, 260, 263, 279, 288 carbon taxes, 112, 114, 125, 157, 218, 250, 400, 461 Carbon Tracker Initiative, 148 carbon trading, 39, 87, 124, 125, 199–201, 208, 218, 226–29, 287, 418 Carbon War Room, 199, 264 Cargill, 89 Caribbean, 240, 414–15 caribou, 435 Carleton College, 401 Carmichael, Ruth, 433–34 cars, 16, 90–91, 116, 210 Carson, Rachel, 185, 201, 207, 286, 337 Carter, Bob, 33, 47 Carter, Jimmy, 116–17, 205 Carter, Nick, 349 Case for Climate Engineering, A (Keith), 275 Casselton, N.Dak., 312, 333 Castro, Rodrigo, 161 Caterpillar, 227 Cato Institute, 32, 33, 36, 39, 45, 142 CBC, 362 CBS This Morning, 288 cell phones, 91n Cenovus, 349 Center for American Progress, 111 Center for Biological Diversity, 206 Center for Strategic and International Studies, 53 Center for Sustainable Shale Development (CSSD), 216, 356n Central America, sweatshops in, 81 Centre for Science and Environment, 96, 414 Centrica, 149 centrism, 22, 59, 83 Cha, J.


pages: 1,104 words: 302,176

The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World) by Robert J. Gordon

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3D printing, Affordable Care Act / Obamacare, airline deregulation, airport security, Apple II, barriers to entry, big-box store, blue-collar work, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, creative destruction, deindustrialization, Detroit bankruptcy, discovery of penicillin, Donner party, Downton Abbey, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, feminist movement, financial innovation, full employment, George Akerlof, germ theory of disease, glass ceiling, high net worth, housing crisis, immigration reform, impulse control, income inequality, income per capita, indoor plumbing, industrial robot, inflight wifi, interchangeable parts, invention of agriculture, invention of air conditioning, invention of the telegraph, invention of the telephone, inventory management, James Watt: steam engine, Jeff Bezos, jitney, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, labor-force participation, Loma Prieta earthquake, Louis Daguerre, Louis Pasteur, low skilled workers, manufacturing employment, Mark Zuckerberg, market fragmentation, Mason jar, mass immigration, mass incarceration, McMansion, Menlo Park, minimum wage unemployment, mortgage debt, mortgage tax deduction, new economy, Norbert Wiener, obamacare, occupational segregation, oil shale / tar sands, oil shock, payday loans, Peter Thiel, pink-collar, Productivity paradox, Ralph Nader, Ralph Waldo Emerson, refrigerator car, rent control, Robert X Cringely, Ronald Coase, school choice, Second Machine Age, secular stagnation, Skype, stem cell, Steve Jobs, Steve Wozniak, Steven Pinker, The Market for Lemons, Thomas Malthus, total factor productivity, transaction costs, transcontinental railway, traveling salesman, Triangle Shirtwaist Factory, Unsafe at Any Speed, Upton Sinclair, upwardly mobile, urban decay, urban planning, urban sprawl, washing machines reduced drudgery, Washington Consensus, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, working poor, working-age population, Works Progress Administration, yellow journalism, yield management

The American Grocery Store: The Business Evolution of an Architectural Space. Westport, CT/London: Greenwood Press. McCarthy, Jeanette J., McLeod, Howard L., and Ginsburg, Geoffrey S. (2013). “Genomic Medicine: A Decade of Successes, Challenges, and Opportunities,” Science Translational Medicine 5, no. 189: 189sr4. McCloskey, Deidre. (2014). “Measured, Unmeasured, Mismeasured, and Unjustified Pessimism: A Review Essay of Thomas Piketty’s Capital in the Twenty-First Century,” Erasmus Journal of Philosophy and Economics 7, no. 2: 73–115. McDowell, M. S. (1929). “What the Agricultural Extension Service Has Done for Agriculture,” Annals of the American Academy of Political and Social Science 142 (March): 250–56. McIntosh, Elaine N. (1995). American Food Habits in Historical Perspective. Westport, CT/London: Praeger. McKee, John M. (1924). “The Automobile and American Agriculture,” Annals of the American Academy of Political and Social Science 115 (November): 12–17.

Phillips, Ronnie J. (2000). “Digital Technology and Institutional Change from the Gilded Age to Modern Times: The Impact of the Telegraph and the Internet,” Journal of Economic Issues 34, no. 2 (June): 266–89. Pierce, Bessie Louise. (1957). A History of Chicago, vol. III: The Rise of a Modern City 1871–1893. Chicago, IL/London: University of Chicago Press. Piketty, Thomas. (2014). Capital in the Twenty-First Century. Cambridge, MA/London: Belknap Press of Harvard University Press. Piketty, Thomas, and Emmanuel Saez. (2003). “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118, no. 1 (February): 1–39. Pinker, Steven. (2011). The Better Angels of Our Nature: The Decline of Violence in History and Its Causes. London: Allen Lane. Pletz, John. (2015). “No More Pens, No More Books,” Crain’s Chicago Business, April 20, p. 4.

A symbol of rising inequality, a topic treated in chapter 18, is the ever-growing chasm between domestic travel in economy class and the quality of the premium cabin on international flights, whether from San Francisco to Hong Kong or from Seattle to Amsterdam. As stated by the Economist in its issue of September 20, 2014: Nowadays those at the cheap end of the plane barely have room to open their copies of Thomas Piketty’s Capitalism, at the top of the national best-seller lists for its lament about the new age of inequality. Airlines keep cramming more bodies into economy class while passengers, despite their moans, regard this as a fair tradeoff for cheap fares. But in the front of the cabin carriers have made seats as plush as first class seats used to be a few years earlier.48 One exception to the discomfort of economy-class air travel is the spread of inflight entertainment options.


pages: 237 words: 64,411

Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence by Jerry Kaplan

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Affordable Care Act / Obamacare, Amazon Web Services, asset allocation, autonomous vehicles, bank run, bitcoin, Bob Noyce, Brian Krebs, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, combinatorial explosion, computer vision, corporate governance, crowdsourcing, en.wikipedia.org, Erik Brynjolfsson, estate planning, Flash crash, Gini coefficient, Goldman Sachs: Vampire Squid, haute couture, hiring and firing, income inequality, index card, industrial robot, information asymmetry, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Loebner Prize, Mark Zuckerberg, mortgage debt, natural language processing, Own Your Own Home, pattern recognition, Satoshi Nakamoto, school choice, Schrödinger's Cat, Second Machine Age, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, Skype, software as a service, The Chicago School, The Future of Employment, Turing test, Watson beat the top human players on Jeopardy!, winner-take-all economy, women in the workforce, working poor, Works Progress Administration

Income data is from the World DataBank, “GNI per Capita, PPP (Current International $)” table, accessed November 29, 2014, http://databank.worldbank.org/data/views/reports/tableview.aspx#. 4. For example, Robert Reich (http://en.wikipedia.org/wiki/Robert_Reich, last modified December 31, 2014); Paul Krugman (http://en.wikipedia.org/wiki/Paul_Krugman, last modified December 12, 2014); and the recent influential book by Thomas Piketty, Capital in the Twenty-first Century (Cambridge, Mass.: Belknap, 2014). 5. This analogy relies primarily on income data from the U.S. Census (http://www.census.gov/hhes/www/income/data/historical/families/index.html, last modified September 16, 2014). 6. I recall as a child buying packs of “chocolate cigarettes” (cylindrical sticks of candy wrapped in rolling papers). 7. However, high homeownership rates have a strong negative effect on employment because people can’t easily migrate to follow the jobs.


pages: 443 words: 98,113

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

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

He concluded in his epochal General Theory that, as capitalism spread, it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital … [W]hilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital … I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work.2 Eighty years on, the rentier is anything but dead; rentiers have become the main beneficiaries of capitalism’s emerging income distribution system. Yet the term does not appear in the index of Tony Atkinson’s magisterial book Inequality, while Thomas Piketty’s much-cited tome Capital in the Twenty-First Century claims that rentier capitalism has faded.3 Keynes was mistaken because he did not foresee how the neoliberal framework built since the 1980s would allow individuals and firms to generate ‘contrived scarcity’ of assets from which to gain rental income. Nor did he foresee how the modern ‘competitiveness’ agenda would give asset owners power to extract rental subsidies from the state.

But first we need to understand just why and how the rentiers are running away with most of the income and wealth. NOTES 1 An Economy for the 1%, Oxfam Briefing Paper 210, January 2016. 2 J. M. Keynes, The General Theory of Employment, Interest and Money (Palgrave Macmillan, 1936), Chapter 24. 3 A. B. Atkinson, Inequality: What can be done? (Cambridge, MA, and London: Harvard University Press, 2015); T. Piketty, Capital in the Twenty-First Century (Boston: Harvard University Press, 2014). 4 Some use a more restrictive definition to mean an economy where more is collected in rent than in taxes, the rent comes from foreign sources, only an elite gain from rent seeking and the government is the main rent collector. See H. Beblawi, ‘The rentier state in the Arab world’, in G. Lucciani (ed.), The Arab State (London: Routledge, 1990), pp. 85–98. 5 For an interpretation, see G.

In 2015, the government announced it would pay £2.3 billion in subsidies to developers to build 200,000 ‘starter homes’ for sale at a 20 per cent discount; these can be resold at market prices by lucky recipients, who will be among the better-off, with money for a deposit and an income to support a mortgage. Another plan is to encourage ‘shared ownership’, where people buy a share of a house and pay rent on the rest, with an option to buy in full later. None of this helps low-income groups. Housing wealth has been key to rising inequality in Britain and elsewhere. One study argues that the rising share of income going to capital identified by Piketty in Capitalism in the Twenty-First Century is largely attributable to increased payments to house owners.33 In seven rich countries, capital income from housing accounted for 3 per cent of the total in 1950 but 10 per cent today. These results may be exaggerated, since rental income has been growing from other sources too. But, without doubt, housing-based inequality has been fuelled by government subsidies that have neither moral nor economic justification.


pages: 274 words: 93,758

Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

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Andrei Shleifer, asset-backed security, Bernie Madoff, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, corporate raider, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, en.wikipedia.org, endowment effect, equity premium, financial intermediation, financial thriller, fixed income, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, late fees, loss aversion, Menlo Park, mental accounting, Milgram experiment, money market fund, moral hazard, new economy, Pareto efficiency, Paul Samuelson, payday loans, Ponzi scheme, profit motive, publication bias, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, the new new thing, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, Vilfredo Pareto, wage slave

Auerbach (Chicago: University of Chicago Press, 1988), pp. 33–68. 30. Brian Hindo and Moira Herbst, “Personal Best Timeline, 1986: ‘Greed Is Good,’ ” BusinessWeek, http://www.bloomberg.com/ss/06/08/personalbest _timeline/source/7.htm. 31. Bruck, The Predators’ Ball, p. 320. 32. Bruck, The Predators’ Ball. 33. FDIC v. Milken, pp. 70–71. 34. Alison Leigh Cowan, “F.D.I.C. Backs Deal by Milken,” New York Times, March 10, 1992. 35. See Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), p. 291, fig. 8.5, and p. 292, fig. 8.6. 36. Andrei Shleifer and Robert W. Vishny, “The Takeover Wave of the 1980s,” Science 249, no. 4970 (1990): 745–49. Chapter Eleven: The Resistance and Its Heroes 1. For 2013. World Bank, “Life Expectancy at Birth, Male (Years)” and “Life Expectancy at Birth, Female (Years),” accessed March 29, 2015, http://data .worldbank.org/indicator/SP.DYN.LE00.MA.IN/countries and http://data .worldbank.org/indicator/SP.DYN.LE00.FE.IN/countries. 2.

“Bill to Let Medicare Negotiate Drug Prices Is Blocked.” New York Times, April 18, 2007. Last accessed April 30, 2015. http://www .nytimes.com/2007/04/18/washington/18cnd-medicare.html?_r=0. “The Personal Reminiscences of Albert Lasker.” American Heritage 6, no. 1 (December 1954). Accessed May 21, 2015. http://www.americanheritage .com/content/personal-reminiscences-albert-lasker. Piketty, Thomas. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press, 2014. Pizzo, Stephen, Mary Fricker, and Paul Muolo. Inside Job: The Looting of America’s Savings and Loans. New York: Harper Perennial, 1991. “Poor Beer vs. Pure Beer.” Advertisement reproduced in Current Adver­ tising 12, no. 2 (August 1902): 31. Accessed June 13, 2015. https://books .google.com/books?id=Xo9RAAAAYAAJ&pg=RA1-PA31&lpg=RA1-PA31&dq =schlitz+beer+both+cost+you+alike,+yet+one+costs+the+maker+twice+as +much+as+the+other+one+is+good+and+good+for+you&source=bl&ots =5jCKe1yFqB&sig=-X5uwF5VqK6BicU41zneHyNRMmU&hl=en&sa=X&ei BIBLIOGR APHY Akerlof.indb 197 197 6/19/15 10:24 AM =1lp2VbPQEc6VyATjjoOYCA&ved=0CB4Q6AEwAA#v=onepage&q=schlitz %20beer%20both%20cost%20you%20alike%2C%20yet%20one%20costs% 20the%20maker%20twice%20as%20much%20as%20the%20other%20one %20is%20good%20and%20good%20for%20you&f=false.


pages: 484 words: 104,873

Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford

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3D printing, additive manufacturing, Affordable Care Act / Obamacare, AI winter, algorithmic trading, Amazon Mechanical Turk, artificial general intelligence, assortative mating, autonomous vehicles, banking crisis, basic income, Baxter: Rethink Robotics, Bernie Madoff, Bill Joy: nanobots, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chris Urmson, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, computer age, creative destruction, debt deflation, deskilling, diversified portfolio, Erik Brynjolfsson, factory automation, financial innovation, Flash crash, Fractional reserve banking, Freestyle chess, full employment, Goldman Sachs: Vampire Squid, Gunnar Myrdal, High speed trading, income inequality, indoor plumbing, industrial robot, informal economy, iterative process, Jaron Lanier, job automation, John Markoff, John Maynard Keynes: technological unemployment, John von Neumann, Kenneth Arrow, Khan Academy, knowledge worker, labor-force participation, labour mobility, liquidity trap, low skilled workers, low-wage service sector, Lyft, manufacturing employment, Marc Andreessen, McJob, moral hazard, Narrative Science, Network effects, new economy, Nicholas Carr, Norbert Wiener, obamacare, optical character recognition, passive income, Paul Samuelson, performance metric, Peter Thiel, Plutocrats, plutocrats, post scarcity, precision agriculture, price mechanism, Ray Kurzweil, rent control, rent-seeking, reshoring, RFID, Richard Feynman, Richard Feynman, Rodney Brooks, secular stagnation, self-driving car, Silicon Valley, Silicon Valley startup, single-payer health, software is eating the world, sovereign wealth fund, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, Steven Pinker, strong AI, Stuxnet, technological singularity, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Coming Technological Singularity, The Future of Employment, Thomas L Friedman, too big to fail, Tyler Cowen: Great Stagnation, union organizing, Vernor Vinge, very high income, Watson beat the top human players on Jeopardy!, women in the workforce

Excessive risk aversion could lead to less entrepreneurship, lower incomes, and less vibrant market demand.* Yet another problem, of course, is paying for these equity endowments. My guess is that redistribution of vast amounts of capital would prove even more politically toxic than would be the case for income. One possible mechanism for prying wealth away from its current owners was proposed by Thomas Piketty in his book Capital in the Twenty-First Century: a global tax on wealth. Such a tax would require cooperation between nations in order to avoid massive capital flight into lower-tax jurisdictions. Nearly everyone (including Piketty) agrees that this would be impractical for the foreseeable future. Piketty’s book, which was deluged with attention in 2014, argues that future decades are likely to be marked by an inevitable progression toward increased inequality of both income and wealth.

., 214–215 Bernanke, Ben, 37 big data, xv, 25n, 86–96 collection of, 86–87 correlation vs. cause and, 88–89, 102 deep learning and, 92–93 health care and, 159–160 knowledge-based jobs and, 93–96 machine learning and, 89–92 The Big Switch (Carr), 72 Bilger, Burkhard, 186 “BinCam,” 125n “Bitter Pill” (Brill), 160 Blinder, Alan, 117–118, 119 Blockbuster, 16, 19 Bloomberg, 113–114 Bluestone, Barry, 220 Borders, 16 Boston Consulting Group, 9 Boston Globe (newspaper), 149 Boston Red Sox, 83 Boston University, 141 Bowley, Arthur, 38 Bowley’s Law, 38–39, 41 box-moving robot, 1–2, 5–6 brain, reverse engineering of human, 237 breast cancer screening, 152 Brill, Steven, 160, 163 Brin, Sergey, 186, 188, 189, 236 Brint, Steven, 251 Brooks, Rodney, 5 Brown, Jerry, 134 Brynjolfsson, Erik, 60, 122, 254 Bureau of Labor Statistics, 13, 16, 38n, 158, 222–223, 281 Bush, George W., 116 business interest lobbying, economic policy and, 57–58 “Busy child scenario,” (Barrat) 238–239 Calico, 236 California Institute of Technology, 133 Canada, 41, 58, 167n, 251 “Can Nanotechnology Create Utopia?” (Kaku), 247n capital individual endowments of, 273–275 taxes on, 277–278 Capital in the Twenty-First Century (Piketty), 275 capitalism, drive to automate and, 255–256 Car and Driver (magazine), 185 carbon-based materials, 70, 70n carbon nanotubes, 70n, 245 carbon tax, 272 Carr, Nicholas, 72, 254, 256, 257 cars, autonomous, xiii, 94, 176, 181–191 cause, big data and correlation vs., 102 CBE. See competency-based education (CBE) CBS News, 249 CDOs. See collateralized debt obligations (CDOs) Center for Economic and Policy Research, 171n Central Intelligence Agency, 46, 85 cervical cancer screening, 152–153 chargemaster prices, 160–161, 164 cheating, MOOCs and, 136–137 Cheney, Dick, 240 chess, 97–98, 122, 123 Chicago, data portal of city of, 87–88 China American consumer spending and, 54 college graduates overqualified for occupations in, 251 consumer demand in, 223–227 globalization and, 53 industrial automation in, 3, 10–11, 225–226 labor’s share of national income in, 41 offshoring and, 120 reshoring and, 9 saving rate in, 224–225 super-intelligence and, 236n China rebalancing, 224–225 Chomsky, Noam, 129, 236 Christensen, Clayton, 142 Chronicle of Higher Education (journal), 139 Chrysler, 76 Circuit City, 16 Cisco, 234 Citigroup, 103, 198 citizen’s dividend, 266–267 Cleveland Clinic, 102 Clifford, Stephanie, 8 climate change, xvii, 211–212, 282–283 Clinton, Bill, 242 cloud computing, 52, 104–107, 109 cloud robotics, 20–23 cobalt poisoning, 145–146 cognitive capability, global competition for jobs and, 120 cognitive computer chip, 72 cognitive computing, 96–104 collaboration software, 64 Collapse: How Societies Choose to Succeed or Fail (Diamond), x collateralized debt obligations (CDOs), 56 college-educated workers, 120–121, 126–128 college graduates, declining income and underemployment for recent, 48–49 College Unbound (Selingo), 140 college wage premium, 48n Colton, Simon, 112 “The Coming Technological Singularity” (Vinge), 233 community colleges, 276–277 comparative advantage, 73–75 compensation.


pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

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activist fund / activist shareholder / activist investor, Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, bonus culture, Bretton Woods, business climate, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, Fractional reserve banking, full employment, God and Mammon, Gordon Gekko, greed is good, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, labour market flexibility, liberal capitalism, light touch regulation, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, mass immigration, means of production, Menlo Park, money market fund, moral hazard, moveable type in China, Myron Scholes, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Paul Samuelson, Plutocrats, plutocrats, price stability, principal–agent problem, profit motive, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, Veblen good, We are the 99%, Wolfgang Streeck, zero-sum game

Also a reference from Daunton. 195 The Cash Nexus: Money and Power in the Modern World 1700–2000, Allen Lane/ The Penguin Press, 2001. The phrase ‘cash nexus’ comes from Thomas Carlyle, who used it in Chartism, 1840, and Past and Present, 1843. 196 See Gold and Iron: Bismarck, Bleichröder and the Building of the German Empire, Fritz Stern, Vintage Books, 1979. 197 The British Tax System, Oxford University Press, 1978. 198 Remarks from Ayrshire Pullman Motor Services v. Inland Revenue, 1929. 199 Capital in the Twenty-First Century, Harvard University Press, 2014, translated by Arthur Goldhammer. 200 I owe this insight to Brian Reading of Lombard Street Research. 201 Penguin Classics, 2009, translation by David Constantine. All subsequent quotes from Goethe are from the same source. 202 Stabilizing an Unstable Economy, Yale University Press, 1986. 203 ‘Manifest der Kommunistischen Partei’ in Marx-Engels Werke, Vol. 4, Berlin, 1969.

James Buchanan and his followers saw the state as predatory, using its monopoly power over the tax base to maximise revenue. On this view, politicians and bureaucrats were ‘personal utility maximisers’ who needed to be curbed. Such thinking played a part in the Californian tax revolt in the late 1970s that led to the famous Proposition 13 referendum, which put a curb on property taxes. Now a new challenge has arisen from the left of centre. The French economist Thomas Piketty has advanced a novel theory of capitalist accumulation, backed by a mass of data on income and wealth over three centuries, which asserts that the ratio of capital to income will rise without limit so long as the rate of return on capital is significantly higher than the rate of growth of the economy. Piketty argues that, historically, this is a normal state of affairs. The only deviations from the norm have occurred when much of the return on wealth has been expropriated or destroyed, or when economies have grown exceptionally rapidly, as in the post-war reconstruction of Europe or the catch-up growth now taking place in emerging markets.

Frugal Innovation: How to Do Better With Less by Jaideep Prabhu Navi Radjou

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3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, barriers to entry, Baxter: Rethink Robotics, Bretton Woods, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cloud computing, collaborative consumption, collaborative economy, Computer Numeric Control, connected car, corporate social responsibility, creative destruction, crowdsourcing, Elon Musk, financial exclusion, financial innovation, global supply chain, income inequality, industrial robot, intangible asset, Internet of things, job satisfaction, Khan Academy, Kickstarter, late fees, Lean Startup, low cost carrier, M-Pesa, Mahatma Gandhi, megacity, minimum viable product, more computing power than Apollo, new economy, payday loans, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, precision agriculture, race to the bottom, reshoring, ride hailing / ride sharing, risk tolerance, Ronald Coase, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, software as a service, Steve Jobs, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, transaction costs, unbanked and underbanked, underbanked, women in the workforce, X Prize, yield management, Zipcar

We also want to thank the public relations teams at the companies that appear in our case studies for arranging interviews with their corporate executives. Lastly, we appreciate the care and support of our families and friends throughout the writing of this book. We couldn’t have done any of this without them. Notes and sources Notes 1Frugal innovation: a disruptive growth strategy 1Rosemain, M., “Renault 2013 Sales Gain on Surging Demand for Dacia Cars”, Bloomberg, January 21st 2014. 2Piketty, T. and Goldhammer, A., Capital in the Twenty-first Century, Belknap Press, 2013. 3Cone, C., global chair, Edelman Business + Social Purpose, interview with Navi Radjou, November 26th 2012. 4European Commission, “Environment: New rules on e-waste to boost resource efficiency”, press release, August 13th 2012. 5Mainwaring, S., We First: How Brands and Consumers Use Social Media to Build a Better World, Palgrave Macmillan, 2011. 6Hatch, M., The Maker Movement Manifesto: Rules for Innovation in the New World of Crafters, Hackers, and Tinkerers, McGraw-Hill, 2013. 7Rifkin, J., The Age of Access: The New Culture of Hypercapitalism, Where All of Life Is a Paid-for Experience, J.P.

Car purchases by Americans aged 18–34 fell 30% between 2007 and 2012. In Japan, where the poverty rate shot up to a record 16% in 2012, consumers are shifting from premium brands to inexpensive private-label products in retail stores. Rather than eating out, more Japanese workers now pack their own lunch, earning themselves the nickname bento-danshi or “box-lunch man”. These changes are here to stay. Thomas Piketty, a French economist, predicts that income inequality in developed economies will widen in the coming decades, as long-term annual growth rates remain stuck below 2%.2 With inflation outpacing their incomes since 2007, 76% of US adults now believe their children will be financially worse off than them in the future. And well over half of consumers, surveyed by Booz & Company (now Strategy&), a global management consultancy, in late 2012, reported that they would not revert to their previous spendthrift behaviour when times improve.


pages: 504 words: 126,835

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

Airbnb, Albert Einstein, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, BRICs, Burning Man, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, Clayton Christensen, Colonization of Mars, commoditize, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Elon Musk, Erik Brynjolfsson, fear of failure, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, high net worth, hiring and firing, 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, labour market flexibility, laissez-faire capitalism, lump of labour, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, 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, technological singularity, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen: Great Stagnation, University of East Anglia, unpaid internship, Vanguard fund, Yogi Berra

Instinctively defensive, operating under a compliance mentality supported by their financiers and government regulations, companies lost the entrepreneurial appetite for transforming markets with big innovation. As the managerialist disposition for predictability and preservation seized the corporate world, capitalism lost its orientation. It wrecked its compass for economic dynamism and competition that contests markets. Now capitalism is challenged, not from outside competition, but by the four horsemen of capitalist decline. The existential challenge of capitalism in the twenty-first century is a growing inability to foster contestable innovation and entrepreneurial competition. The importance can hardly be exaggerated: reversing capitalism’s decline is pivotal to stopping the growing populist unrest in the West. Capitalism is no longer what most people think it is. 2 WHEN CAPITALISM BECAME MIDDLE-AGED The long, dull, monotonous years of middle-aged prosperity … are excellent campaigning weather for the devil.

While, for instance, the growth in net worth of US nonfinancial company holdings in foreign subsidiaries accelerated from the late 1980s up to the late 1990s, a trend decline followed and its trend growth in the past ten years has been lower than from the late 1950s to the early 1980s. 47.PR Newswire, “Dealogic Data.” 48.M&A activity is generally higher in periods of high stock market valuation. 49.Doidge, Karolyi, and Stulz, “The US Listing Gap.” 50.Litan, “Among Ingredients Needed for Faster Growth?” 51.The Economist, “Corporate Cocaine.” 3 The Color of Capitalism Is Gray 1.Team, “Harley-Davidson’s Success.” 2.Gross et al., “The Turnaround at Harley-Davidson.” 3.Piketty, Capital in the Twenty-First Century. 4.Kohn and Yip-Williams, “The Separation of Ownership from Ownership.” 5.Beetsma and Vos, “Stabilisers or Amplifiers.” 6.Vitali, Glattfelder, and Battiston, “The Network of Global Corporate Control.” 7.Minsky, “Uncertainty and the Institutional Structure of Capitalist Economies,” sec. 4. 8.Kay, Other People’s Money, 1–2. 9.Greenwood and Scharfstein, “The Growth of Modern Finance”; Weissmann, “How Wall Street Devoured Corporate America.” 10.Federal Reserve, “Assets and Liabilities.” 11.Harris, Schwedel, and Kim, “A World Awash in Money.” 12.Greenwood and Scharfstein, “The Growth of Modern Finance.” 13.Roxburgh et al., “The Emerging Equity Gap.” 14.Awford, “Room for a (Souped-up) Ford Fiesta?”

49.Haldane, “Patience and Finance.” 50.Zweig, “Why Hair-Trigger Traders Lose the Race.” 51.NYSE, “Fact Book Online: Interactive Viewer.” 52.MoneyBeat, “Why Hair-Trigger Traders Lose the Race” and NYSEData.com Factbook, “Interactive Viewer.” 53.Philippon and Reshef, “Wages and Human Capital in the US Financial Industry.” 54.Greenwood and Scharfstein, “The Growth of Modern Finance.” 55.Cecchetti and Kharroubi, “Why Growth in Finance Is a Drag on the Real Economy.” 56.Arcand, Berkes, and Panizza, “Too Much Finance?”; Cecchetti and Kharroubi, “Reassessing the Impact of Finance on Growth.” 57.Swagel, “The Financial Crisis.” 58.Cecchetti and Kharroubi, “Why Growth in Finance Is a Drag on the Real Economy.” 59.Christensen, Kaufman, and Shih, “Innovation Killers,” 1–2. 60.Piketty, Capital in the Twenty-First Century, 264–81. 4 The Rise and Rise Again of Corporate Managerialism 1.Martti, Nokia: The Inside Story. 2.Steinbock, The Nokia Revolution. 3.Ahmad, Nokia’s Smartphone Problem. 4.Kuittinen, “Nokia Sells Handset Business to Microsoft.” 5.Lomas, “Nokia’s $7.2BN Devices & Services Exit.” 6.Cheng, “It’s Official: Motorola Mobility Now Belongs to Lenovo.” 7.Bass, “Microsoft’s Concept Videos.” 8.Jenkins, “Jenkins: Only Bill Gates Can Change Microsoft.” 9.Yarow, “Here’s What Steve Ballmer Thought about the iPhone.” 10.A good survey of companies failing at exits is McGrath, The End of Competitive Advantage. 11.Steinberg, “Among the First to Fall at I.B.M.” 12.Crainer, “‘Saving Big Blue.’” 13.Clinch, “How Apple Prompted This Country’s Downgrade.” 14.Schumpeter, Capitalism, Socialism and Democracy, 132. 15.Coase, “The Nature of the Firm,” 388. 16.Oliver Williamson, who received the Nobel Prize in economics for his work on economic governance, developed the idea of firm boundaries and put the emphasis on the internal or endogenous capacity of the firm to generate output that is more competitive than the market. 17.Santos and Eisenhardt, “Organizational Boundaries and Theories of Organization,” 491. 18.Coase, “The Nature of the Firm,” 390. 19.Coase, “The Nature of the Firm,” 404–5. 20.Zenger, Felin, and Bigelow, “Theories of the Firm–Market Boundary.” 21.Tett, The Silo Effect. 22.Morieux, “How Too Many Rules at Work Keep You from Getting Things Done.” 23.See, for instance, Caliendo and Rossi-Hansberg, “The Impact of Trade on Organization and Productivity.” 24.Zhou, “Coordination Costs, Organization Structure and Firm Growth.” 25.Langlois and Everett, “Complexity, Genuine Uncertainty, and the Economics of Organization”; Joskow, “Vertical Integration.” 26.Strom, “Big Companies Pay Later.” 27.Rajan and Zingales, “The Firm as a Dedicated Hierarchy.” 28.Bhide, The Origin and Evolution of New Business, 94. 29.Rajan and Zingales, “The Firm as a Dedicated Hierarchy,” 7. 30.Teece, “Profiting from Technological Innovation.” 31.Jensen, “Agency Cost of Free Cash Flow, Corporate Finance, and Takeovers.” 32.Stein, “Agency, Information and Corporate Investment”; Matvos and Seru, “Resource Allocation within Firms.” 33.See Berger and Ofek, “Diversification’s Effect on Firm Value”; Rajan, Servaes, and Zingales, “The Cost of Diversity.” 34.Scharfstein and Stein, “The Dark Side of Internal Capital Markets.” 35.Scharfstein and Stein.


pages: 464 words: 121,983

Disaster Capitalism: Making a Killing Out of Catastrophe by Antony Loewenstein

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activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, American Legislative Exchange Council, anti-communist, Asian financial crisis, British Empire, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, clean water, collective bargaining, colonial rule, corporate social responsibility, Corrections Corporation of America, Edward Snowden, facts on the ground, failed state, falling living standards, Ferguson, Missouri, financial independence, full employment, G4S, Goldman Sachs: Vampire Squid, housing crisis, illegal immigration, immigration reform, income inequality, Julian Assange, mandatory minimum, market fundamentalism, mass incarceration, Naomi Klein, neoliberal agenda, obamacare, Occupy movement, offshore financial centre, open borders, private military company, profit motive, Ralph Nader, Ronald Reagan, Satyajit Das, Scramble for Africa, Slavoj Žižek, stem cell, the medium is the message, trade liberalization, WikiLeaks

The challenge faced by opponents of rampant capitalism was how to focus their rage coherently against increasingly pervasive forces. The study of capitalism is soaring at universities across America, indicating the desire on the part of tomorrow’s graduates to understand the tenuous connection between democracy and the capitalist economy.12 The phenomenal success of French economist Thomas Piketty’s book Capital in the Twenty-First Century—a work arguing that social discord is the likely outcome of surging financial inequality —indicates that the public knows there is a problem and is in search of clear accounts of it. Piketty advocates a global system of taxation on private property. “This is the only civilized solution,” he told the Observer newspaper.13 In 2014, even the world’s leading economic think-tank, the Paris-based Organization for Economic Cooperation and Development, urged higher taxes for the rich to help the bottom 40 percent of the population.

Index Abbott, Tony 279, 286 Abdul (asylum seeker) 286 Abu Ghraib prison 15 abuse 258–62 aid 123 child 102 drug 37–9 human rights 110 labor 29 outsourced 260–1 in prisons 216–17, 218 sexual 252–8, 280–1 accountability 16, 30–1, 180, 277, 291, 310 Adam, Harry 118 AECOM 53–4 Aegis Defence Services 33 Afghan Institute for Strategic Studies 44 Afghanistan 12, 19–56, 59–63, 117, 175 arrival of PMCs 20 asylum seekers from 69–70 Australian contractors 60 casualties 32, 326n27 Chinese support for 37 contractors 28–31 corruption 22, 24, 27, 42, 45, 328n48, 329–30n58 counterinsurgency 43, 52–3 departure of foreign troops 62–3 dependence on America 45 development support 62–3, 324n2, 324n3 drug economy 37–9 election, 2004 31–2 election, 2009 32 election, 2014 32 entrepreneurs 56 fear of resurgent Taliban 44–5 financial situation 62–3 future of PMCs in 23 GDP 330n61 human rights 42 inequality 56 insurgency 12, 32 intelligence gathering 51–6 intelligence-sharing nations 21 invasion of 20, 31 labor abuses 29 laws against PMCs 21 locals’ view of 48 mineral rights 24, 330n65 mining industry 24, 49–50, 330n65 Ministry of Interior 21, 40–2 Ministry of Mines 50 natural resources 49 night raids 43, 46, 52, 54, 55, 328–9n50 occupation of 22, 31–5, 36, 43, 44, 52–3, 63, 325n10 official line 40–3 past conflicts 36–7 PMC numbers 20 population surveys 330–1n66 private military companies 16, 19–25, 33–5, 41–3, 44, 46–8, 48, 50, 59–62, 331n69 propaganda 26 reconstruction 325n11 resource exploitation 49–50 security forces 27, 330n61 Soviet invasion 37 suicide attacks 41 suicide rates 332n83 Taliban rule 25 translators 55, 325n19 USAID 327–28n46 US military bases 28 violence 20 war economy 25–31, 38, 63 warlords 32–3, 44, 326n28, 326–7n30 women in 44, 47–8, 48–9, 50–1, 330n59 Afghanistan Analysts Network 54–6, 328–9n50 Afghanistan Reconstruction Group 26 Afghan police force 27 Afghan Public Protection Force 21 Africa 23 African-Americans, incarceration rates 195, 196 Agility Logistics 124 aid Afghanistan 62–3 Australia 50 contracts 123–5 corruption 126, 171 criticism of process 144–7 food 145–6 fraud 123–4 Haiti 12, 108, 120, 144–7, 340n56, 342n89 human rights abuses 123 NGO-ization of 137–41 Papua New Guinea 13, 158–9, 167, 171–5, 179 profiteering 139 waste 146 aid dependency 121, 126 AIDS 89 Alexander, Michelle 195–6 Alex, Commander 156–7 Al-Hussein, Zeid Ra’ad 277 Al Jazeera America 29 American Correctional Association (ACA) conference, 2014 202–11 American Legislative Exchange Council (ALEC) 201 American University of Afghanistan 43–4 Amnesty International 259 Anastasiou, Vassilis 102 Anti-Defamation League 93 anti-fascist activism 93–4 anti-Semitism 90–1, 93 Arab Spring 97, 127–8 Arawa, Papua New Guinea 158, 167, 180–4 Aristide, Jean-Bertrand 26, 112–13, 151 Arizona 200–2 AshBritt 108 Ashton, Paul 201 assassinations 323n33, 331n69 Assessing Progress in Haiti Act (US) 124 Asylum Help 234 asylum seekers abuse 258–62 austerity 69 Australia 269–305 children 249–50 closed hospitality centers 67–8 costs 304 demonization of 77, 288 deportations 258–63 destinations 68 detention centers 13, 64–71, 76, 77–80, 230–5, 245–51, 271 detention costs 281–3 detention network privatization 77 Greece 64–71, 75–7, 77–80, 89 indefinite detention 68 lack of sympathy for 287–8 medical care 77–80, 256–8 mental health 254–5, 285, 286, 295, 302 motivation 68, 302–3 numbers reaching Europe 96 privatized housing 230–5 processing times 300–1 public sympathy 271 racist violence 71 reception centers 67 refugee crisis 95–8 self-harm 295–6 sexual abuse 280–1 Syntagma Square protest, 2014 70 United Kingdom 230–5, 244, 245–51, 252–8, 258–63 women 253–4 Athens 67, 102–3 Metropolitan Community Clinic 80–4 AusAID 158–9, 161, 171–5, 182, 189–91, 331–2n77 austerity, opposition to 72–5 Austin American-Statesman 108 Australasian Centre for Corporate Responsibility 190 Australasian Correctional Management (ACM) 282 Australia 8, 104 and Afghanistan 50 aid 50 asylum policy development 275–85, 286, 357n4, 357n9 asylum seeker network 269–305 asylum seekers 13 Community Assistance Program 304 complicity with BCL 160 Department of Immigration and Border Protection (DIBP) 271, 274, 279, 281–2, 284,286, 289–93, 295, 297–8, 300–1, 303 detention centers 13, 271, 274, 276, 278–9, 280–5, 285–305, 356n2, 357n11 detention costs 281–3 economic reforms 322n16 exploitation of Papua New Guinea 169–75 foreign policy 173–4 goals in PNG 172 immigration policy 278 “Mining for Development” initiative 190 the Pacific Solution 276–81 and Papua New Guinea 154, 160, 163, 167, 169–75, 176–7, 179, 188–91 PMC contractors 60 privatization 361n51 and Rio Tinto 162 state-ownership approach to resources 177 tender process 289–90 turnback policy 280, 286 Australian Mercy 285 Australian Navy 276 Australian Strategic Policy Institute 190 Autonomous Bougainville Government 161, 167, 178–80, 184, 346n33 Avera eCare 205 Avon Protection 203 Bagram prison 31 Bainimarama, Frank 346–7n41 Baker, Charles 117 Baldry, Eileen 285 Balkonis, Thomas 78–80 Bamazon (TV program) 306–7 Bangladesh 341n65 bank bailouts 3 bankers bonuses 4 Ban Ki-moon 113 Bank of America 3 Barnardo’s 249–50, 266 Barrick Gold 174 Batay Ouvriye 126 Bauer, Shane 204, 207–8, 210 bearing witness 9–10 Becket House, London 263 Bedford, Yarl’s Wood detention centre 252–8, 265 Behavioral International 227 Berati, Reza, murder of 283 Berghorn, George H. 204 Berman, Steve 187 BHP Billiton 172–3, 187, 189 Bigio, Gilbert 108 Bill and Melinda Gates Foundation 114 Bishop, Julie 176, 182 black sites 16 Blackwater 16, 35, 59, 323–4n40, 331n69 Blair, Tony 60, 236 Blanchard, Olivier 99 bloggers 308 Bloom, Devin D. 307 Blue Mountain Group 30 Boeing 15–16 Bolivia 26, 125 Booz Allen Hamilton 15 border controls, privatization 241 Bougainville Copper Limited (BCL) 159, 159–61, 162, 163, 184–6, 188, 190, 343n6 Bougainville, Papua New Guinea 154–64, 167–9, 176, 178–80, 184–5 Bougainville Revolutionary Army (BRA) 154–5, 163–4, 176, 343n6 Bougainville Women in Mining 183–4 Bozorg (asylum seeker) 232–3 Brand, Russell 267–8 bribery 22, 38, 41, 329–30n58 Brown, Bob 174 Brown, Michael, killing 203 Buckles, Nick 283 Burma 14 Bush, George W. 7, 25, 43, 118, 149 Cable, Vince 236 CACI 15–16 California 5, 196–7, 208 Callick, Rowan 176 Call Sense 210 Cambodia 276 Cameron, David 50, 62, 243, 244, 252, 263 Campbell, Chad 201 Campbell, David 284, 359n30 Campsfield detention facility 246–9, 266–7 Canada 120, 304 Capita 241–2 Capital in the Twenty-First Century (Piketty) 6 capitalism 1–2 critiques 361n5 disaster 6–9 Klein’s critique of 7–8 predatory 11, 13–14, 162, 310–11 unregulated 135–6 Caracol industrial park, Haiti 116, 128–33, 133–6, 148 Carol (senior analyst) 54–6 Carr, Bob 188–9 Cash, Linda 279 Centre for Economic and Policy Research (CEPR) 124–5 Centre for Public Integrity 34 Chalmers, Camille 151–2 Chaman (Afghan refugee) 64–71 Channel 4 News 253, 267 Chaparro, Enrique Mari 137–9 cheap labor 117, 127, 132, 133, 144 Chemonics 123 Cheney, Dick 28, 30 CHF International 138–9 child abuse 102 children detention 249–50, 272 immigrants 212, 225 malnourished 82 in prisons 208 child slaves 145 China 14, 16, 24, 37, 49, 170 China Metallurgical Group Corporation (MCC) 24 cholera 113–16 Chomsky, Noam 238, 310 Christmas Island 269–75, 356n1 Christmas Island Community Reference Group 356–7n3 Christmas Island detention facility 271, 272–3, 274, 276, 278–9, 285–9, 299–305, 356n2 Chrysohoidis, Michalis 67–8 CIA 15, 59, 110, 331n69, 331n73 Citizens for a Free Kuwait 25 City AM (newspaper) 236–7 civilian casualties, Afghanistan 32 Clarke, Victoria 26 Clayton Homes 118 climate change 1–2, 8 Clinton, Bill 116, 118–19, 122, 123, 135 Clinton Foundation 118, 126, 136 Clinton, Hillary 8, 30, 118, 125, 131, 135, 171 Clive (information management consultant) 51–2 Clive (Serco contractor) 289–92 Coffey International 162 Colas, Landry 131 Cold War 33, 111 Collective Against Mining 121 colonialism 109, 160 Comcast 5 Commission on Wartime Contracting (US) 34 Community Assistance Program, Australia 304 community mapping 58 Conflict Mapping in Afghanistan since 1978 (Independent Human Rights Commission) 32 Congo, Democratic Republic of 120 contractors, Afghanistan 28–31 Conway, Jim 208–9 copper mining, ecological damage of 173 Corcoran, Thomas J. 110–11 Corinth detention centre 64, 78–80 Corizon 209 corporate ideology 14 corporate power 7 Corporate Responsibility Coalition 187–8 Corporate Watch 255, 263 CorrectHealth 199 Corrections Corporation of America (CCA) 13, 197–8, 199, 201–2, 211–22, 227, 228, 284–5 corruption Afghanistan 24, 27, 42, 45, 328n48, 329–30n58 aid 126, 171 Greece 64, 72 Haiti 141 overcharging 240–1 Papua New Guinea 170, 171, 188 price-gouging 292 counternarcotics information campaign 26 Crocker, Ryan C. 43 Crockett, Greg 204–5 Crossbar 204–5 Cuba 122 cultural sensitivity 21 Daily Mail 235 Daily Telegraph (Sydney newspaper) 172 Damana, Chris 184–5 Das, Satyajit 309 Daveona, Lawrence 177–8 David (Serco source) 292 Davis, Raymond 57, 331n73 Davis, Troy 199 Davos conference, 2015 2–3 debtocracies 99 Defence Logistics Agency 29 democracy 16, 311 Democracy Now!

Ashraf 42–3 Haiti 26, 105–53, 175, 308 aid 12, 108, 120, 123–8, 144–7, 342n89 aid delivery failure 340n56 aid dependency 121, 126 American colonialism 109–13 American corporate pillaging 111–12 American investment 116–20 American policy 115–16, 116–20, 134 Aristide rule 112–13 beggars 106 Canadian aid 120 Caracol industrial park 116, 128–33, 133–6, 148 challenge facing 152–3 child slaves 145 cholera outbreak 113–16 CIA involvement 110 and the Cold War 111 corruption 141 coup, 2004 112 death toll, cholera outbreak 113 death toll, earthquake 107, 145 debt 127 Duvalier dictatorship 109–12 earnings 117, 132, 144 earthquake, January 2010 12, 107, 117 earthquake, January 2010, aftermath of 105–7 economic exploitation 132, 133–6 economic fragility 109–13 economic resistance 150 eco-system damage 130 effect of neoliberalism on 112–13 exploitation 107–8 foreign investment 116–18, 121–2, 133–6 French aid 120 historical background 109–13 homelessness 107 housing 129–30, 140, 150–1 human rights 110, 116 indigenous development 147–9, 150–2 job creation 131 leadership 119–20 living conditions 105–7, 141–4 mining regulation 120–1 National Palace demolition 137–9 NGO-ization of 137–41 occupation of 127 organisations populaires 112 paramilitary groups 109 political freedom 109 Presidential elections, 2015 140 reconstruction gold rush 107–9 refugee camps 141–4 religious faith 106 resource exploitation 120–1 revolution 109 rice imports 122–3 sovereignty 135, 146, 152 tourism 152 unemployment rate 127 unregulated capitalism 135–6 UN stabilization force 113, 115–16 women in 142–3 workers’ rights 148 Haiti Economic Lift Program 133 Haiti Grassroots Watch 117, 120 Haiti-Liberte 108–9 Halliburton 28 Hallward, Peter 109, 111–12, 152 Hamburg 84, 311 Hammond, Philip 16 Harding, Richard 284 Hardwick, Nick 263–7 Harper, Stephen 120 Harry (Christmas Islander) 272–3 Hastings, Michael 26 Hayatullah (asylum seeker) 301–3, 360n49 Headley, Linden 220–1 health services privatization, United Kingdom 244–5 heart disease 14 Hellenic Broadcasting Corporation 74 Hellenic Foundation for European and Foreign Policy 96 Hellenic Republic Asset Development Fund 101–2 helplessness, feeling of 308–9 Higgins, Greg 128 Hill+Knowlton 25–6 History Channel 306–7 homelessness 107 Honduras 225 Howard, John 275–6, 279 humanitarian relief, NGO-ization of 137–41 humanitarian work, military and 58–9 human rights 123 Afghanistan 42 commodification of 308 disregard for 9 and economic freedom 2 Haiti 110, 116 Human Rights Defense centre 216 Human Rights Watch 47, 48, 67, 71, 196, 200 Human Terrain System 53, 331n67 human trafficking 29, 70 Huppert, Julian 249–51 Hurricane Katrina 26, 118, 124, 337n6 Hurricane Sandy 8 Hyman, Christopher 290 identity, questions of 103–4 immigrants children 212, 225 criminalization 198–9 demonization of 226 deportation 212, 227–8 detention centers 211–28 incarceration rates 195 legal representation 217–18 United Kingdom 243–4 United States of America 198–9, 211–28 see also asylum seekers imperialism, legacy of 10–11 Independent Human Rights Commission, Conflict Mapping in Afghanistan since 1978 32 Independent Timbers and Stevedoring 344n19 IndustriALL 187 inequality 2–4, 56, 242–3, 302–3 information management consultancy 51–6 Innocent, Alix 130–2 Integrity Watch Afghanistan 24 intellectuals, responsibility of 310 intelligence gathering, privatization 51–6 Inter-American Development Bank 123, 130 Interfaith Prison Coalition 216 Interim Haiti Recovery Commission (IHRC) 118 International Criminal Court (ICC) 43 International Health and Medical Services 295 International Monetary Fund (IMF) 4–5, 62, 72, 99, 112, 127 International Organization for Migration 74 International Relief and Development (IRD) 28 International Security Assistance Force (ISAF) 32 interrogators and interrogation, privatization 15 Inter-Services Intelligence 56, 331n73 “Invisible Suffering” (MSF) 75 Iran 23, 49 Iraq 12, 14, 25, 27, 28, 323n33 Islamabad 56, 57 Islamic State (ISIS) 16, 41 Jack (PMC owner) 20–5 Jalalabad 38 Japan 11 Jean, Arnolt 121 Jean, Wyclef 141 job creation 131 John (BCL manager) 160–1, 164–5, 166–7 John (detention center guard) 296–8 Jones, Justin 198 Josephine (teacher, PNG) 183 Josh (PMC contractor) 59–60 journalism, usefulness of 309 J/P Haitian Relief Organization 137–9 JSOC 59 Jubilee 159 Jubilee Australia 190–1 Justice Police Institute (JPI) 201 Justinvil, Pierre 130 Kabul 19, 36 drinking holes 59–62 drug abuse 38–9 population 45 private military companies 19–25 suicide attacks 41 women in 47–8 Kambana, Adrienne Makenda 258–9 Kampagiannis, Thanasis 93–5 Kandahar 55 Karachi 56 Karunakara, Unni 139 Karzai, Ahmed Wali 41 Karzai, Hamid 27, 31–2, 41, 44, 47 Katz, Jonathan 119, 139–40 Kauona, Samuel 161, 178–80, 346n35 Kavo, Havila 186 KBR 28 Keerfa, the Movement United Against Racism and the Fascist Threat 93 Kelleher, Joan 285–6 Keller, Ska 97 Kemish, Ian 189 Kentucky 205, 228 Kerry, John 30, 62 Khalilzad, Zalmay 50 Khan, Muhammad Alamgir 57 Khogyani, Saima 48–50 Khyber News Bureau 58–9 Kilcullen, David 53 Kim Woong-ki 133 Kirra, Bernadine 185 Klein, Naomi 6–8, 11 KOFAVIV 142–3 Koim, Sam 188 Koofi, Maryam 50–1 Korean Peninsula 23 Kosovo 26 Kotsioni, Ioanna 76–7 Krugman, Paul 243 Kuwait 25 labor abuses 29 Laleau, Wilson 116–17 Lamothe, Laurent 120 landowner rights 177 Langdon, Robert 60, 332n82 Lasslett, Kristian 159–60, 161 Lebrun, Jean Robert 148 Lemberg-Pedersen, Martin 96–7 Leonard (teacher, PNG) 181 Lepani, Charles 189 Libby Sacer Foundation 103–4 Libya 16, 30 Limits to Growth, The (Randers) 1–2 Lloyds Banking Group 16 lobbying 124 Lockheed Martin 31 Logan, Steve 198–9 London, Becket House 263 Louisiana 200 Lucke, Lewis 108–9 Lujan, Nathan K. 306–7 Lumpkin, Georgia, USA 222–3 Stewart immigration detention center 211–22 McDowall, Paul 252 McDowell, Janine 252 McFate, Sean 16 McGregor-Smith, Ruby 242, 245–9 McKibben, Bill 8–9 McLean, Murray 11 Malmström, Cecilia 98 Management and Training Corp 218–19 Management Today 242 Manjoo, Rashida 252 Manus Island 276–7, 280, 281, 282–3, 297, 357n11 market principles, application of 14–15 market system 2 Marr, David 282 Martelly, Michel 106, 110, 116, 117, 140, 339n34 Mason, Paul 73, 267 MASS Design Group 114–15 Matheson, Scott 299 Maywood, California 5 Médecins de Monde (MdM) 77–80 Médecins Sans Frontières (MSF) 75–7, 114, 183 media outlets, ownership of 5 Medical Association of Athens 84 medical care asylum seekers 77–80, 78–80, 256–8 detention centers 77–80, 266, 295 Germany 84 Greece 80–4 prisons 205, 209, 214–15, 215–16 Medical Justice 256–8, 260 Medina, Roberto Martinez 218 Meek, James 234, 239 Mehmood, Tahir, death of 241 mental health 254–5, 285, 286, 295, 302 mentally disturbed people, incarceration rates of 201 mercenaries 20, 59 Merkel, Angela 73 Merten, Kenneth 107–8, 339n34 Metropolitan Community Clinic, Athens 80–4 Michael (asylum seeker) 230–2 Migration Policy Institute (MPI) 212 MiHomecare 255 military ideology 15 Miller, Phil 263 “Mining for Development” initiative, Australia 190 Ministry of Public Order and Citizen Protection, Greece 76 MINUSTAH 113, 115–16 Mitie 242, 245–9, 255 Mlotshwa, Emma 255–8 Moise, Rosembert 150 Momis, John 159, 161, 169 Monaghan, Karon 260 Monbiot, George 9, 236 Money Morning 49 Monsanto 267 Moradian, Davood 44–6 Morales, Evo 125 Morales, Pablo 107 Morauta, Mekere 188 Morrison, Scott 279–80 Mortime, Antonal 140 Morumbi 346n33 MSS Security 296–8 Mubenga, Jimmy, killing of 258–60 Mudd, Gavin 185 Mundell, Robert 84 Munnings, Kate 358n25 murders, private military companies 15, 46, 57, 60, 323–4n40 Murdoch, Rupert 5, 41, 359n30 Musharraf, Pervez 57 MWH Americas 124 Nader, Ralph 173 Namaliu, Sir Rabbie 160, 343n6 Namorong, Martyn 190 Nashville, Tennessee 209 Nathan (PNG resident) 167–8 National Audit Office 236 National Health Service 244–5 National Institute of Money in State Politics 201 National Research Council 198 nation building 23 Nation (magazine) 118 Nation (newspaper) 57 NATO 32, 55, 63 Nauru 275–6, 276, 276–7, 280–1, 283, 296 Needham, Emma 299 neo-colonization 190 neoliberalism 83, 112–13 New Economics Foundation 243 Newmont Mining 120 News Corporation 5 New York Times 8, 38, 101, 113, 115, 118, 131, 141, 199, 212, 226, 243, 284, 340n56 New Zealand 361n51 New Zealand Aid Programme 158–9 Nicaragua 134 Nicholls, Adelina 224–6 No Logo (Klein) 7–8 non-government organizations, and humanitarian relief 137–41 North American Free Trade Agreement 225 Northrop Grumman 35 Norway 2, 186–7 Obama, Barack 3, 31, 35, 45, 118, 124, 149, 195, 212, 221–2, 224 obesity 14 Occupy movement 5–6, 309 Occupy Wall Street 3 O’Faircheallaigh, Ciaran 162 Office for the Coordination of Humanitarian Affairs, United Nations 139 O’Grady, Mary Anastasia 134 Ohio 197–8 oil prices 166 Ona, Francis 169, 178 O’Neill, Peter 159, 166, 171, 186, 188, 347n50 One World 117 Operation Enduring Freedom 31 organisations populaires, Haiti 112 Organization for Economic Cooperation and Development 6, 267 outsourcing 28–30 outsourcing contractors, United Kingdom 240–2 overcharging 29 overconsumption 8 Oxfam 191, 242–3 Pakistan 12, 56–9, 62 community mapping 58 Federally Administrated Tribal Areas 58 feeling of occupation 59 private military companies 56, 57 state absence 56–7 Taliban in 31 US army action 58 Palast, Greg 84 Panagiotaros, Ilias 91–3 Panguna Landowners’ Association 177 Panguna mine, Papua New Guinea 154–64, 164–5, 167, 168, 177–8, 181, 182, 184–6, 191–2 Panguna town, Papua New Guinea 165–7 Papua New Guinea 11–12, 12, 117, 154–92 agricultural exports 174 aid 13, 167, 171–5, 179 and America 170–1 and Australia 154, 160, 163, 167, 169–75, 176–7, 188, 188–91 Australian exploitation of 169–75 Australian goals 172 Australian government aid 158–9, 171–5, 179, 182, 189–91 Autonomous Bougainville Government 161, 167, 178–80, 184, 346n33 average age 158 baby boom 157 BCL legacy 160–1 Bougainville mining legislation 161 and China 170 civil disturbances 175 civil war 154–5, 158–9, 161, 163–4, 178–80, 180–2, 187 constitutional planning committee 169 corruption 170, 171, 188 desire for independence 176–8 education 158, 166–7, 167–8 environmental destruction 157–8 foreign investment 186–7 forest 336n19 gold panning 164 Grasberg mine 187 independence 169–70 lack of change 167–9 life expectancy 175 maternal mortality rate 183 mining boom 13, 156, 169–76, 184–91, 344n50 mining waste 157 officials’ role 175–6 Ok Tedi Mine 157–8, 173, 188, 345n23 opposition to mining 168–9, 174, 178–80 Panguna Landowners’ Association 177 Panguna mine 154–64, 164–5, 167, 168, 177–8, 181, 182, 184–6, 191–2 Panguna reserves 186 Panguna town 165–7 pollution 157, 164, 173 poverty 175 private military companies 180 Ramu nickel mine 174 reconciliation meeting, February 2013 158–9 resource exploitation 120, 154–64, 176, 184–91, 344n19, 346n33 the Sandline controversy 180 sovereign fund 188 sovereignty 156, 175–6, 176–8, 191, 192 Task Force Sweep 188 weapons decommissioning 181–2 women in 182–4 World War II 170 Papua New Guinea Sustainable Development Program (PNGSDP) 345n23 Partners in Health 113–14 Partners Worldwide 136 Pay Any Price (Risen) 11 Peace and Security Project 98 peace building 54–5 Peck, Raoul 118–19 Penn, Sean 137–9 Pennsylvania 209 Pentagon, the, waste 34–5 people-smugglers 70, 287 Peshawar 57–9 Peter (PMC contractor) 59–60 Petraeus, David 52–3 Piketty, Thomas, Capital in the Twenty-First Century 6 Pilger, John 10, 245 Pindar, Paul 241–2 Pipiro, Moses 184 Pita, Aaron 181–2 Platform of Haitian Human Rights Organizations 140 Podur, Justin 115, 147 police militarized 203, 238 privatization 240 surveillance 6 police brutality Greece 83 United States of America 203 pollution, Papua New Guinea 157, 164, 173 Port-au-Prince 105–7, 107, 116, 118, 127, 128, 146, 149–50, 150–1 Port Moresby 166 poverty 98–9, 175 PPSS 206 predatory capitalism 11, 13–14, 162, 310–11 press freedom 74, 75 price-gouging 292 Prince, Erik 16 prisons and the prison industry 197, 202–11 abuse 216–17, 218 access 219 American Correctional Association (ACA) conference, 2014 202–11 bed mandate 226–7 children in 208 emotional impact of incarceration 207–8 employee wages 223 exploitation 227 failure of private 200–1 female population 197 food 215 green technology 204 incarceration rates 195–6, 200, 201, 204 inmate labor 205–6, 211, 213 lack of oversight 216, 228–9 lack of transparency 225–6 medical care 205, 209, 214–15, 215–16 money saving 217 occupancy quotas 226–7, 228 opposition to private 223–8 overcrowding 196 phone call costs 214 prisoner costs 200–1 privacy 208–9 private operators 196–8 privatization 13, 195–229, 240, 264–5 profits 197, 201–2 Scandinavian 208–9 solitary confinement 208, 209, 218–19 state oversight 205 Stewart immigration detention center, Lumpkin, Georgia, USA 211–22 suicide rate 209, 217 United Kingdom 240, 264–5 uprisings 208–9 visit 211–22 private military companies 12 accountability 16 Afghanistan 19–25, 33–5, 41–3, 44, 46–8, 50, 59–62, 331n69 Australian contractors 60 casualties 32, 326n27 clients 20–1 connection between 23–4 contractor motivations 59–62 employees 22, 47, 57 exploitation by 22 fees 21 future 23 hiring practices 61 influence 41–2 justifications 22–3 killings 46, 57, 60, 61 lack of state control 34, 47 locals view of 46–8 motivation 23 murders 15, 46, 57, 60, 323–4n40 and nation building 23 need for 21 numbers 20 origins 33 Pakistan 56, 57 Papua New Guinea 180 problem of 42 recruits 20 regulations 21, 22 and sovereignty 22–3 static work 21–2 transparency 34 weapons 20, 21 private power 4, 9 private security contractors, motivations 59–62 privatization asylum seeker detention network 77 Australia 361n51 border controls 241 contractor privacy 248–9 costs 236 detention centers 13, 98, 230–5, 245–51, 280–5, 289–99 disaster relief 108–9 economic logic of 289–99 failure of 239 Golden Dawn and 92–3 Greece 72, 98, 100–2, 307–8 and the IMF 4–5 intelligence gathering 51–6 justification 238–9, 245–6 Klein’s critique of 6–7 opposition to 100, 101, 102–3, 251 overcharging 240–1 prisons 13, 195–229, 240, 264–5 public services 230–68 as recent history 311 resistance to 7 revolving door 197 scale in UK 244 school teachers 4 surveillance 15 tender process 289–90 transparency 246, 290–1 United Kingdom 230–68, 310 of war 7 and waste reduction 30 profit, and poverty-level wages 117 prostitution 102 Psarras, Dimitris 85–7, 93 public services, privatization 230–68 Public Service Strategy Board 245–6 punishment, outsourcing 264–5 Putin, Vladimir 90, 93 racism 80, 259–60, 294 Raleigh, Jeff 26 Ramsbotham, David 260–1 Randers, Jørgen, The Limits to Growth 1–2 rape 47, 142–3, 183 Rau, Cornelia 289 Reagan, Ronald 238 Red Cross 342n89 refugee camps, Haiti 141–4 refugee crisis, Europe 95–8 refugees see asylum seekers Regan, Tony 159, 161 Rendon Group 26 Rene, George Andy 136 Reporters Without Borders 74 resource curse 13 resource exploitation accountability 180 Afghanistan 24, 49–50 Christmas Island 274 as entertainment 306–7 Haiti 120–1 impact 164–5, 166–7, 168 landowner rights 177 opposition to 178–80 Papua New Guinea 120, 154–64, 176, 184–91, 344n19, 346n33 regulation 120–1 responsibility 161 toxic dilemma of 162 and violence 159–60, 163–4, 167–8 “Restore Haiti” conference 136 Rhiannon, Lee 50 Rice, Susan 116 Rio Tinto 154, 157, 159, 162, 180, 186–8, 189 Risen, James, Pay Any Price 11 Roches, James Des 33 Roka, Theonila 159 Rolling Stone 41 Rompos, Antonios 78–80 Rooney, Nahau 281 Roupakias, Giorgos 90 Royal Mail 236 Roy, Arundhati 5–6, 307–8 Rubio, Marco 228 Rudd, Kevin 289, 290 Rumsfeld, Donald 26, 29–30 Saddam Hussein 25 Sae-A 130, 131, 132, 134, 135, 148 SAIC 31 Sally (case manager) 300–1, 303–4 Samaras, Antonis 94–5 Sanderson, Janet A. 115 Sandline 180 Sanon, Reyneld 150–1 Sarantou, Elina 66–7 Sarobi 38 Sassen, Saskia 99 Sassine, George 134–6 Sathi (asylum seeker) 253–4 Scahill, Jeremy 15 Scarperia, Annette 206 Schäuble, Wolfgang 75 Schofield, Josh 206 Schuller, Mark 107 Schumer, Chuck 228 Schwartz, Timothy 144–7, 342n92 Schweich, Thomas 38 Sean (Serco source) 292–4 Security and Management Services 57 security, outsourcing see private military companies Sediqqi, Sediq 41–2 sentencing reform, United States of America 198 September 11 terrorist attacks, 2001 7, 33 Serco 13, 232, 235, 240, 248, 252, 264, 270, 271, 277, 278, 279, 280, 282, 284, 289–99, 359n30 Shah, Rajiv 123 Shahshahani, Azadeh 226–7 Shah, Silky 222, 227–8 Sharon (detention center worker) 298 Sheffield 230–5, 262 Shell 186 Shield Defence Systems 204 shock doctors 8 Shock Doctrine: The Rise of Disaster Capitalism (Klein) 6–7, 11 Sideris, Christos 80–4 Simon (teacher) 272 Singer, P.


pages: 478 words: 126,416

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

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Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, corporate governance, Credit Default Swap, cross-subsidies, dematerialisation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, John Meriwether, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost carrier, M-Pesa, market design, millennium bug, mittelstand, money market fund, moral hazard, mortgage debt, Myron Scholes, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, regulatory arbitrage, Renaissance Technologies, rent control, Richard Feynman, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, Schrödinger's Cat, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, Washington Consensus, We are the 99%, Yom Kippur War

It was not only Goldman that benefited from heavenly inspiration; Jeff Skilling claimed to have been doing God’s work at Enron: McLean, B., and Elkind, P., 2003, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, New York, Penguin. p. xxv. 2. Putnam, R.D, 2000, Bowling Alone, New York, Simon and Schuster, brought the concept of social capital and the phrase into wide modern usage. 3. The data in the widely cited book by Thomas Piketty (2014, Capital in the Twenty-First Century, Cambridge, MA, The Belknap Press of Harvard University Press) relies primarily on the first of these approaches – the assessment of physical assets – although much of his discussion would seem to concern the second. 4. The quality of these estimates is not high, especially in relation to long-lived public assets. The principal method of calculation applies the ‘perpetual inventory’ method, which uses a solera principle in which reported new investment is added each year and the existing stock revalued and depreciated.

, 2012, ‘Wages and Human Capital in the US Financial Industry, 1909–2006’, Quarterly Journal of Economics, 127 (4): 1551–1609. Philips, C.B., Kinniry Jr, F.M., Schlanger, T., and Hirt, J.M., 2014, ‘The Case for Index-Fund Investing’, Vanguard Research, April, https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/article/IWE_InvComCase4Index. Piketty, T., 2014, Capital in the Twenty-First Century, Cambridge, MA, The Belknap Press of Harvard University Press. Porter, G.E., and Trifts, J.W., 2014, ‘The Career Paths of Mutual Fund Managers: The Role of Merit’, Financial Analysts Journal, 70 (4), July/August, pp. 55–71. Potts QC, R., Erskine Chambers, 24 June 1997, para. 5, citing Wilson v. Jones (1867) 2 Exch. Div. 150; cited in Kimball-Stanley, A., 2008, ‘Insurance and Credit Default Swaps: Should Like Things Be Treated Alike?’


pages: 437 words: 115,594

The Great Surge: The Ascent of the Developing World by Steven Radelet

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Admiral Zheng, agricultural Revolution, Asian financial crisis, bank run, Berlin Wall, Branko Milanovic, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, clean water, colonial rule, creative destruction, demographic dividend, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, Erik Brynjolfsson, European colonialism, F. W. de Klerk, failed state, Francis Fukuyama: the end of history, Gini coefficient, global supply chain, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, John Snow's cholera map, Joseph Schumpeter, Kenneth Arrow, land reform, low skilled workers, M-Pesa, megacity, Mikhail Gorbachev, off grid, oil shock, out of africa, purchasing power parity, race to the bottom, randomized controlled trial, Robert Gordon, Second Machine Age, secular stagnation, Simon Kuznets, South China Sea, special economic zone, Steven Pinker, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, women in the workforce, working poor

It requires a growth-and-development strategy focused on creating economic opportunities for the majority of people (including the poor), coupled with strategic investments in health, education, and infrastructure, and well-designed safety nets. That the dominant trend across developing countries has been little change in inequality will come as a surprise to those who have been following the big debates about growing income inequality in rich countries. Thomas Piketty’s blockbuster Capital in the Twenty-First Century sparked widespread debate on the nature of economic growth and income distribution in the world’s richest countries, especially the United States, France, and the United Kingdom. The debates start with the fact—and it is a well-documented fact—that income inequality improved between the end of World War II and the late 1970s but has worsened in many rich countries since then.

Abacha, Sani, 99, 113 Abdullah II, King of Jordan, 187 Abu Dhabi, 159 Abundance (Diamandis and Kotler), 300 Acemoglu, Daron, 13, 129, 140, 249 Achebe, Chinua, 72 Aden, Zheng He’s trip to, 152 Afghanistan, 9, 208, 285 education in, 215 as landlocked, 202, 205 Soviet invasion of, 134, 146 US war in, 8, 10, 118, 119, 141, 146 Africa, 37, 44, 46 agriculture in, 261 climate change and, 284 democracy in, 108, 110–11 GMOs in, 172 Green Revolution and, 170–73 growth in, 50, 189 malaria in, 211–13 megacities in, 277 mobile phones in, 157 pessimism about, 12 protests in, 102 resources in, 261 Africa Betrayed (Ayittey), 140 African National Congress Party (ANC), 143, 182, 185 agricultural productivity, 22, 25, 38, 305 agriculture, 37, 44, 45, 56–57, 166, 258, 283, 293 in Africa, 261 in Asia, 201 in China, 35 geography and, 204–5 Green Revolution and, 38, 79, 170–73, 204 growth in production of, 273–74 improvements in, 194–95 trade in, 273 AIDS, 20, 75, 81–82, 83, 94, 95, 173, 174–75, 182, 205, 214, 221, 246, 266 air defense identification zone (ADIZ), 288 air travel, 168–69, 169 Aker, Jenny, 177 Akuffo, Fred, 189 Albania, 50, 108, 159 Algeria, 114 life expectancy in, 78 poverty in, 36 Allende, Salvador, 143–44 aluminum, 53 American Association for the Advancement of Science (AAAS), 172, 281–82 American Indians, 112, 142 American Medical Association, 172 Amin, Idi, 127 Andes, University of the, 247 Andropov, Yuri, 134 Angola, 114, 145 forest loss in, 280 war in, 100 antibiotics, 77, 94, 267 antimicrobial resistance, 267 antiretroviral therapy (ART), 174, 214 apartheid, 44, 57, 68, 100, 103, 135, 141, 180, 182 Apple, 46 Aquino, Benigno, 143, 149 Aquino, Cory, 17, 104, 109, 184, 185, 186 Arabian Peninsula, 152 Arab Spring, 255, 263 Aral Sea, 285 Argentina, 100 financial crisis in, 255 slowing of progress in, 250, 262 Arias, Oscar, 18, 149, 184 Armenia, 113 and democracy, 248, 263 economic problems in, 255 Army Air Corps, US, 210 Arndt, Channing, 226, 227 Arnquist, Sarah, 176–77 Arrow, Kenneth, 62–63 artemisinin-based combination therapies (ACTs), 213, 267 Asia, 79 education in, 201 financial crisis in, 38, 39, 126, 144 health in, 201 megacities in, 277 values in, 121, 122–23 Asian Infrastructure Investment Bank (AIIB), 259 assassinations, 118 assembly, freedom of, 198–99 Australia, 25, 78, 167, 231, 281, 291 malaria in, 210 Austria, as landlocked, 202 authoritarianism, 3, 8, 22, 99, 101–3, 106, 107, 109, 120, 121–22, 125–29, 141, 146, 149, 188, 222, 224, 249–51, 255, 263–66 Ayittey, George, 140 Azerbaijan, 114 Babangida, Ibrahim, 99 Bali, 286 Bamako, 265 Banerjee, Abhijit, 14, 31 Bangladesh, 18, 37, 45, 127, 144, 159, 271 building collapse in, 162 data entry firms in, 178 democracy in, 124 education in, 87 garments from, 59 growth in, 6, 45, 238, 242, 271 inequality in, 67 jeans from, 56 MAMA in, 178 threats to gains in, 271–72 war in, 145 Zheng He’s trip to, 152 Ban Ki-moon, 284–85 banks, 56, 154, 241, 303 technology for, 175, 179 Bǎè Chuán, 152 bar associations, 110 Barlonyo camp, 287 Barre, Mohammed Siad, 99 Barro, Robert, 87 Bashir, Omar al-, 185 Batavia, 137 Bauer, Peter, 213, 220, 221 Bazzi, Sami, 225 bed nets, 94, 213 Belarus, 114, 185 Belgian Congo, 13, 140 Belize, 56, 69–70 benign dictators, 125–26 Benin, 103, 144, 216 Berlin Wall, fall of, x, 103, 123, 134, 143, 148 Bermeo, Sarah, 223 Better Angels of Our Nature, The (Pinker), 115 Bhavnani, Rikhil, 225 Bhote Koshi River, 203 Bill & Melinda Gates Foundation, 95, 161, 171, 212 biodiversity loss, 9, 63 biofuels, 281 Birdsall, Nancy, 298 Birendra Bir Bikram Shah Dev, King of Nepal, 122 Bismarck, Otto Eduard Leopold von, 146 Black Death, 276 black markets, 192 Boeing 707, 168 Boğaziçi University, 247 Bokassa, Jean-Bédel, 222 Boko Haram, 287 Bolivia, 162, 202, 205, 280 Bollyky, Thomas, 268 Boone, Peter, 225 border disputes, 288–91 Borlaug, Norman, 170 Botchwey, Kwesi, 189 Botswana, 9, 37, 207 aid to, 214, 216 as democracy, 98, 263 education in, 190 growth in, 5, 7, 15, 50, 126, 128, 141, 236 as landlocked, 202 life expectancy in, 81, 266 Bottom Billion, The (Collier), 118, 188, 202, 205, 217, 303 Bourguignon, François, 25, 27, 28 Brazil, 20, 22, 36, 38, 45, 155, 186 coastal vs. isolated areas in, 201 data entry firms in, 178 democracy in, 123 economic problems in, 186, 255 future of, 234 growth in, 6, 7, 20, 22, 45, 58, 235, 262 household income in, 50 inequality in, 66–67 infrastructure financing in, 259–60 innovation in, 302 natural capital in, 63 protests in, 263 reforms in, 186, 192 trade encouraged by, 155 universities in, 247 breast feeding, 178 British Royal Society, 172 British Shell Transport and Trading Company, 138 British South Africa Company, 180 Brown, Drusilla, 165 Brükner, Markus, 226 Brynjolfsson, Erik, 166, 300 budget deficits, 295 Buenos Aires, 201 Bulgaria, 7, 134, 143 Burkina Faso: demonstrations in, 281 education in, 87 as landlocked, 205 Song-Taaba Yalgré women’s cooperative in, 178 Burnside, Craig, 225 Burundi, 49 inequality in, 69–70 lack of growth in, 50 as landlocked, 202 Buthelezi, Mangosuthu, 185 Cabbages and Kings (O. Henry), 97 Cairo, 206, 216 California, 281 call centers, 56, 178, 262 Cambodia, 11, 36, 106, 114, 159 camels, 152 Cameroon, 281 Canada, 47, 210, 231 Cape Town, University of, 247 capitalism, 122, 146, 147–48, 149, 156, 162, 163, 250, 264, 303 in Asia, 155–57 Capital in the Twenty-First Century (Piketty), 68–69 capital markets, 164 carbon dioxide, 278, 282 carbon emissions, 297 Cardoso, Fernando, 186–87 Caribbean, 36 Carnation Revolution, 105 Carothers, Thomas, 112 Case Studies in Global Health, 214 cash transfer programs, 38 cassava, 171, 215 Castro, Fidel, 100, 144 Catholicism, 120–21, 123 cattle plague, 215 CD4 cell count, 175 Ceauşescu, Nicolae, 143 Center for Global Development, 298 Center for Systemic Peace, 107 Centers for Disease Control and Prevention (CDC), US, 210 Central Africa, 205 Central African Republic, 49, 50, 222 Central America: crime in, 264 megacities in, 277 wars in, 81, 141 Central Asia, 36, 141, 147 Central Bank, Gambia, 190 Central Military Commission, 134 Chad: child mortality in, 84 health improvements in, 93 as landlocked, 205 war in, 145 Chandy, Laurence, 42, 243–44 Chavez, Hugo, 113 Chen, Shaohua, 27, 29 Chernenko, Konstantin, 134 Chernobyl nuclear power plant, 134 childbirth, 74, 75–82 child mortality, 24, 72–96, 74, 85, 93, 246 Chile, 47, 127 coup in, 100 democracy in, 104, 123 growth in, 6, 7, 45, 128, 147 individual leadership in, 187 life expectancy in, 78 malaria in, 210 Pinochet’s rule in, 107–8, 122, 141, 143–44 trade encouraged by, 155 Chiluba, Frederick, 133 China, ix–x, 3, 7, 20, 22, 106, 126, 144, 203, 292, 298, 300 authoritarian capitalism in, 147, 265–66 Coca-Cola in, 46 in confrontations with neighbors, 273 demand in, 53 demographic dividend in, 236 and dictatorships, 222 emigration from, 284 exploration by, 151–53 exports from, 154 future of, 234, 249–52 growth in, 6, 8–9, 15, 17, 21, 35–36, 45, 50, 62, 71, 125, 128, 147, 154, 201, 232, 233, 235–37, 242, 269 health in, 201 income in, 201 individual leadership in, 187 inequality in, 66, 69–70 infrastructure financing in, 259–60 innovation and technology in, 154–55, 302 market reforms in, 35, 102, 134–35, 192 natural capital in, 63 opening of, 5 per capital income in, 153 pollution in, 62 poverty reduction in, 201, 244 savings and investment in, 235 slowdown in growth of, 235–37, 249, 255, 257, 293 universities in, 247 US relationship with, 298–99 cholera, 77 Chun Doo-hwan, 99 Churchill, Winston, 97 civil liberties, 99, 199 civil rights, 112 civil servants, 102 civil war, 7 in Africa, 12 decline in, 115–16, 116 Civil War, US, 142 Clemens, Michael, 225 climate change, 4, 9, 19, 21, 63, 233, 234, 256, 272–73, 278, 281–84, 285–86, 296–97, 301, 305 coal, 44, 53, 278 Coca-Cola, 46, 159 cocoa, 163, 189 Cold War, 4, 7, 11, 16, 44, 52, 81, 100, 103, 115, 116, 131, 135, 144, 145, 146, 150, 156, 183, 184, 214, 223 Collier, Paul, 14–15, 118, 188, 202, 205, 213, 217, 227, 292, 303 Collins, Daryl, 32, 33–34 Collor de Mello, Fernando, 186 Colombia, 22, 237 data entry firms in, 178 universities in, 247 colonialism, 43–44, 52, 140, 147, 148, 149, 156 and independence, 140–43 of Indonesia, 136–40 Columbus, Christopher, 152 Coming Anarchy, The (Kaplan), 11 Commission on Growth and Development, 86, 165–66, 188 commodities, 53–57, 55, 163 Communism, 4, 11, 124, 125, 135, 139, 143, 146, 147, 149, 150, 184, 250 demise of, 16, 183 Communist Party, China, 123, 138, 250 Communist Party, Indonesia, 138 Communist Party, Soviet, 133, 138 comprehensive capital, 62–63 conflict, see violence Confucianism, 122 Congo, 114, 144, 185, 213, 243, 285 child mortality in, 84 civil war in, 181, 206 coup in, 100 education in, 190 lack of growth in, 50 war in, 81 Congress, US, 298 construction, 37, 45 consumption, 40–41, 40 Contingent Reserve Arrangement, 259 contract enforcement, 261 Converse, Nathan, 198 copper, 53 corn, 162, 281 corruption, 112, 261, 264 in Brazil, 186 in Thailand, 254 in US, 142 Costa Rica, 18, 58, 159 aid to, 223 as democracy, 7, 98, 123 growth in, 50 costume jewelry, 56 Côte d’Ivoire, 163, 263 cotton, 25 creative destruction, 249 Cuba, 22, 141, 145 and democracy, 248 dictatorship in, 100, 106, 144 Cultural Revolution, 35, 128, 153, 185 currencies, and resource curse, 206 Cuyamel Fruit Company, 97–98 Czechoslovakia, 143 protests in, 134 Velvet Revolution in, 103 Czech Republic, 184 da Gama, Vasco, 152 dairy products, 280 Darfur, 8, 10, 206 Dasgupta, Partha, 62–63 data entry firms, 178 Davies, Sally, 267 DDT, 212 Deaton, Angus, 89, 213 debts, 11, 193 in Africa, 12 deficits, 101 dehydration, 94, 173 de Klerk, F.


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

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3D printing, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, 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, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, hiring and firing, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labor-force participation, liberal capitalism, Malacca Straits, Mark Zuckerberg, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, Plutocrats, 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, 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, working-age population

It is no doubt striking that multibillionaires like Bill Gates and Carlos Slim routinely see their fortunes fluctuate by hundreds of millions on any given day, but it signifies nothing in particular. Only in the broader year-to-year changes does the information get interesting. Lately some of this billionaire data has surfaced in serious economic discussions. In his generally admiring review of Thomas Piketty’s 2013 international best seller on inequality, Capital in the Twenty-First Century, former U.S. Treasury secretary Lawrence Summers questioned the French author’s claims about the enduring power of inherited wealth in the United States by pointing to the high degree of churn among American billionaires. Summers highlighted the fact that only one out of every 10 names on the original Forbes list in 1982 were still on the list in 2012.

Nuzzo, Carmen, Elga Bartsch, Paul Campbell Roberts, and Jessica Alsford. “Sustainable Economics: Mind the Inequality Gap.” Morgan Stanley Research, 2015. Pani, Marco. “Hold Your Nose and Vote: Why Do Some Democracies Tolerate Corruption?” International Monetary Fund, 2009. Parks, Ken. “Argentina Moves to Trim Costly Utility Subsidies.” Wall Street Journal, March 27, 2014. Pikkety, Thomas. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press, 2013. “Putin Publicly Humiliates Business Tycoons Solving Social Crisis in Russian Town.” Pravda, June 5, 2009. Robertson, Charles. “Will Anti-Corruption Legislation Prolong Corruption?” Renaissance Capital, December 5, 2012. Sharma, Ruchir. “For True Stimulus, Fed Should Drop QE3.” Financial Times, September 10, 2012. Sharma, Ruchir. “Liberals Love the ‘One Percent.’”


pages: 494 words: 116,739

Geek Heresy: Rescuing Social Change From the Cult of Technology by Kentaro Toyama

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active measures, Albert Einstein, Berlin Wall, Bernie Madoff, blood diamonds, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, commoditize, computer vision, conceptual framework, delayed gratification, Edward Glaeser, en.wikipedia.org, end world poverty, epigenetics, Erik Brynjolfsson, Francis Fukuyama: the end of history, fundamental attribution error, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, liberation theology, libertarian paternalism, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Nicholas Carr, North Sea oil, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, Powell Memorandum, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Silicon Valley, Simon Kuznets, Steve Jobs, Steven Pinker, technoutopianism, The Fortune at the Bottom of the Pyramid, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K

Journal of Personality and Social Psychology 99(5):771–784, http://psycnet.apa.org/journals/psp/99/5/771/. Piff, Paul K., Daniel M. Stancato, Stéphane Côté, Rodolfo Mendoza-Denton, and Dacher Keltner. (2012). Higher social class predicts increased unethical behavior. In Proceedings of the National Academy of Sciences, www.pnas.org/content/early/2012/02/21/1118373109. Piketty, Thomas. (2014). Capital in the Twenty-First Century. Arthur Goldhammer, trans. Belknap Press of Harvard University Press. Piketty, Thomas, and Emmanuel Saez. (2003). Income inequality in the United States, 1913–1998. Quarterly Journal of Economics 143(1):1–39, http://qje.oxfordjournals.org/content/118/1/1. Pinker, Steven. (2011). The Better Angels of Our Nature: Why Violence Has Declined. Viking. Plato. (1956). Great Dialogues of Plato.

Of note, self-licensing occurs even when all that a person does is make a public statement of good intention, which is particularly relevant for Toms Shoes and other purchases where apparent proof of goodness is publicly visible. 35.To be clear, I’m not against capitalism. Capitalism is a terrific economic engine, and the developing world could benefit from more for-profit companies. (One problem with firms like Toms is that the owners are rich-world people, while their workers are not.) But capitalism on its own concentrates wealth (and therefore power) in the hands of a few, as so many have noted, from Karl Marx to Thomas Piketty (2014). Other forces are needed to spread growth widely, whether it’s cooperatives, unions, progressive taxation, universal provision of basic needs, private charity, or a combination of these and other factors. Social-enterprise hype glorifies market mechanisms and therefore crowds out important approaches that come with few extrinsic rewards. We need more of what liberation theology calls a “preferential option for the poor” (Farmer 2005, p. 139). 36.Franzen (2010), p. 439. 37.Fisher (2012). 38.McNeil (2010). 39.UNESCO (2012).


pages: 388 words: 125,472

The Establishment: And How They Get Away With It by Owen Jones

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anti-communist, Asian financial crisis, bank run, battle of ideas, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, centre right, citizen journalism, collapse of Lehman Brothers, collective bargaining, don't be evil, Edward Snowden, Etonian, eurozone crisis, falling living standards, Francis Fukuyama: the end of history, full employment, G4S, glass ceiling, hiring and firing, housing crisis, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Dyson, laissez-faire capitalism, light touch regulation, market fundamentalism, mass immigration, Monroe Doctrine, Mont Pelerin Society, moral hazard, Neil Kinnock, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, old-boy network, open borders, Plutocrats, plutocrats, popular capitalism, profit motive, quantitative easing, race to the bottom, rent control, road to serfdom, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, stakhanovite, statistical model, The Wealth of Nations by Adam Smith, transfer pricing, union organizing, unpaid internship, Washington Consensus, wealth creators, Winter of Discontent

Wealthy individuals shell out cash to think tanks who promote their economic interests, after all, and the rise of the New Right has purged dissidents from economic faculties, ensuring that climbing the academic ranks depends on conforming to the line. Yet there remains a diverse range of economists and other experts – some of whom I have interviewed in the course of this book – who refuse to adhere to the status quo. In 2014 the French economist Thomas Piketty caused an intellectual sensation with the publication of his book Capital in the Twenty-First Century, which exposed how inequality perpetuates itself and called for higher income taxes and a global tax on wealth. The problem is that such dissidents are often all too disparate and fragmented, working on individual projects that generally do not receive the attention of a hostile media. Ironically, defenders of the British Establishment preach a doctrine of rampant individualism, yet they are often impressively disciplined about working together as a collective group with shared goals; while those of us who oppose them preach solidarity, yet too often we operate individually and act like mavericks.


The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

accounting loophole / creative accounting, Ada Lovelace, Airbnb, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, Ben Bernanke: helicopter money, bitcoin, blockchain, Bretton Woods, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, David Graeber, deskilling, Diane Coyle, discrete time, distributed ledger, diversification, double entry bookkeeping, ethereum blockchain, fiat currency, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, labour market flexibility, large denomination, liquidity trap, London Whale, low skilled workers, M-Pesa, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, Satoshi Nakamoto, Satyajit Das, savings glut, seigniorage, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Von Neumann architecture, Washington Consensus

(Romer, 2015) (Also see ‘The Trouble With Macroeconomics’, Romer, 2016). 177 Chapter 4 ■ Complexity Economics: A New Way to Witness Capitalism Romer’s analysis tests the mathematical foundations of a number of seminal articles in the field of economics including - Solow’s 1956 mathematical theory of growth, Gary Becker’s 1962 mathematical theory of wages, McGrattan and Prescott’s 2010 paper on price-taking models of growth and Boldrin and Levine’s 2008 paper on Perfectly Competitive Innovation. He also analyses the work of other prominent economists such as Robert Lucas (Nobel Prize in Economics in 1995) and Thomas Piketty (who wrote Capital in the Twenty-First Century) among others. His analysis shows how Mathiness has been used repeatedly to bend data to fit a model. More disturbingly, these practices have been accepted by the academic community which makes the discipline of economics divergent from Popper’s scientific method of testing. A few extracts from his paper illustrate these statements, ’In addition to using words that do not align with their formal model, Boldrin and Levine (2008) make broad verbal claims that are disconnected from any formal analysis.


pages: 823 words: 206,070

The Making of Global Capitalism by Leo Panitch, Sam Gindin

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accounting loophole / creative accounting, active measures, airline deregulation, anti-communist, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Basel III, Big bang: deregulation of the City of London, bilateral investment treaty, Branko Milanovic, Bretton Woods, BRICs, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collective bargaining, continuous integration, corporate governance, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, dark matter, Deng Xiaoping, disintermediation, ending welfare as we know it, eurozone crisis, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, full employment, Gini coefficient, global value chain, guest worker program, Hyman Minsky, imperial preference, income inequality, inflation targeting, interchangeable parts, interest rate swap, Kenneth Rogoff, land reform, late capitalism, liberal capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, manufacturing employment, market bubble, market fundamentalism, Martin Wolf, means of production, money market fund, money: store of value / unit of account / medium of exchange, Monroe Doctrine, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, new economy, non-tariff barriers, Northern Rock, oil shock, precariat, price stability, quantitative easing, Ralph Nader, RAND corporation, regulatory arbitrage, reserve currency, risk tolerance, Ronald Reagan, seigniorage, shareholder value, short selling, Silicon Valley, sovereign wealth fund, special drawing rights, special economic zone, structural adjustment programs, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, very high income, Washington Consensus, Works Progress Administration, zero-coupon bond, zero-sum game

Yet it was especially notable that the fissures the crisis produced did not take the form of conflicts between capitalist states, but of social conflict within them. The significance of the fact that the political fault-lines of global capitalism run within states rather than between them is, we suggest, replete with implications for the American empire’s capacity to sustain global capitalism in the twenty-first century. It is also pregnant with possibilities for the emergence of new movements to transcend capitalist markets and states. I PRELUDE TO THE NEW AMERICAN EMPIRE 1 The DNA of American Capitalism The role that the United States came to play in the making of global capitalism was not inevitable, but nor was it accidental. The American empire did not appear from nowhere.

Only in this sense can it also be said that with the fall in the rate of profit the system collapses, since the profit rate falls because the mass of profit relatively decreases.” Quoted in Russell Jacoby, “Politics of the Crisis Theory,” Telos, Spring 1975, p. 35. 97 See Simon Mohun, “Distributive Shares in the US Economy 1964–2001,” Cambridge Journal of Economics 30: 3 (2006). 98 For wages and labor compensation, see Economic Report of the President, Washington, DC, 2002, Tables, B-47, B-48, and B-60. For CEO compensation, see Emmanuel Saez and Thomas Piketty, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118: 1 (2003), Table b4, column 6, updated at elsa.berkeley.edu. 99 US Bureau of Labor Statistics, International Labor Comparisons: Productivity and unit labor costs in manufacturing, Table 1, available at bls.gov. Note as well that productivity measures in manufacturing are much more reliable than in the service sector, where difficulties in measuring output understate the numbers. 100 For a convincing empirical link between the recovery in the rate of profit after the early 1980s and trends in the output per unit of capital stock (capital productivity), see Gerard Duménil and Dominique Lévy, “The Profit Rate: Where and How Much Did It Fall?