Diane Coyle

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pages: 159 words: 45,073

GDP: A Brief but Affectionate History by Diane Coyle

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Asian financial crisis, Berlin Wall, big-box store, Bretton Woods, BRICs, clean water, computer age, conceptual framework, crowdsourcing, Diane Coyle, double entry bookkeeping, en.wikipedia.org, endogenous growth, Erik Brynjolfsson, Fall of the Berlin Wall, falling living standards, financial intermediation, global supply chain, happiness index / gross national happiness, income inequality, income per capita, informal economy, John von Neumann, Kevin Kelly, Long Term Capital Management, mutually assured destruction, Nathan Meyer Rothschild: antibiotics, new economy, Occupy movement, purchasing power parity, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thorstein Veblen, University of East Anglia, working-age population

GDP GDP A BRIEF BUT AFFECTIONATE HISTORY DIANE COYLE PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD Copyright © 2014 by Diane Coyle Requests for permission to reproduce material from this work should be sent to Permissions, Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 6 Oxford Street, Woodstock, Oxfordshire OX20 1TW press.princeton.edu Jacket typography by Jerome Corgier/Marlena Agency. Jacket design by Kathleen Lynch/Black Kat Design. All Rights Reserved Library of Congress Cataloging-in-Publication Data Coyle, Diane. GDP : a brief but affectionate history / Diane Coyle. pages cm. Includes bibliographical references and index. ISBN 978-0-691-15679-8 (hardcover : alk. paper) 1.

Hausman, “Valuation of New Goods under Perfect and Imperfect Competition,” NBER Working Paper no. 4970, December 1994. 12. William D. Nordhaus, “The Progress of Computing,” Department of Economics, Yale University, August 2001. 13. William J. Baumol, The Free-Market Innovation Machine (Princeton, NJ: Princeton University Press, 2002). 14. Mark Bils and Peter J. Klenow, “The Acceleration in Variety Growth,” American Economic Review 91, no. 2 (2001): 274–280. 15. Diane Coyle, The Weightless World (Oxford: Capstone, 1996). CHAPTER 5: OUR TIMES: THE GREAT CRASH 1. James Glassman and Kevin Hassett, Dow 36,000 (New York: Three Rivers Press, 1999). 2. Robert Shiller, Irrational Exuberance (Princeton, NJ: Princeton University Press, 2000). 3. See John Kay, Obliquity (London: Profile Books, 2010). 4. Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, NJ: Princeton University Press, 2000). 5.

Jonathan Gershuny, “Time-Use Surveys and the Measurement of National Well-Being,” Centre for Time-Use Research, Department of Sociology, University of Oxford, September 2011, http://www.ons.gov.uk/ons/rel/environmental/time-use-surveys-and-the-measurement-of-national-well-being/article-by-jonathan-gershuny/index.html. 28. Quoted in The Observer, 24 March 2013, http://www.guardian.co.uk/money/2013/mar/24/poorer-familes-deserve-childcare. Accessed 27 March 2013. 29. Michael Sandel, “What Money Can’t Buy: The Moral Limits of Markets,” Tanner Lectures on Human Values, delivered at Brasenose College, Oxford, 1998. 30. See Diane Coyle, The Economics of Enough (Princeton, NJ: Princeton University Press, 2011). 31. For details, see http://www.ons.gov.uk/ons/guide-method/user-guidance/well-being/index.html. 32. David G. Blanchflower and Andrew G. Oswald, “Is Well-being U-Shaped over the Life Cycle?” Social Science and Medicine 66, no. 8 (2008): 1733–1749. 33. William D. Nordhaus and James Tobin, “Is Growth Obsolete?” in Economic Research: Retrospect and Prospect, vol. 5, Economic Growth, ed.


pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

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accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, disintermediation, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, income inequality, income per capita, industrial cluster, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, light touch regulation, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, Pareto efficiency, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey, zero-sum game

The Economics of Enough THE ECONOMICS OF ENOUGH HOW TO RUN THE ECONOMY AS IF THE FUTURE MATTERS DIANE COYLE PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD Copyright © 2011 by Diane Coyle Requests for permission to reproduce material from this work should be sent to Permissions, Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 6 Oxford Street, Woodstock, Oxfordshire OX20 1TW press.princeton.edu Jacket art: Julee Holcombe, Babel Revisited, copyright © 2004. All Rights Reserved Library of Congress Cataloging-in-Publication Data Coyle, Diane. The economics of enough : how to run the economy as if the future matters / Diane Coyle. p. cm. Includes bibliographical references and index. ISBN 978-0-691-14518-1 (hardcover : alk. paper) 1.

“Inequality and Growth in a Panel of Countries.” Journal of Economic Growth 5, pp. 87–120. Baumol, William. 1993. “Social Wants and Dismal Science: The Curious Case of the Climbing Costs of Health and Teaching.” Proceedings of the American Philosophical Society 137:4, pp. 419–40. Baumol, William, with William Bowen. 1966. Performing Arts: The Economic Dilemma. Cambridge, MA: MIT Press and the Twentieth Century Fund. Beck, Thorsten, Diane Coyle, Mathias Dewatripont, Xavier Freizas, and Paul Seabright. 2010. “Bailing out the Banks: Reconciling Stability and Competition.” London: Centre for Economic Policy Research. Becker, Sasha, Karolina Ekholm, and Marc-Andreas Muendler. 2009. “Offshoring and the Onshore Composition of Tasks and Skills.” Discussion Paper No. 7391. London: CEPR. Bell, Daniel. 1976. The Cultural Contradictions of Capitalism.

Journal of Public Economics 88, pp. 1359–86. Blinder, Alan S. 2006. “Offshoring: The Next Industrial Revolution?” Foreign Affairs 85:2, pp. 113–25. ———. 2009. “How Many U.S. Jobs Might Be Offshorable.” World Economics 10:2, pp. 41–78. Blond, Philip. 2010. Red Tory. London: Faber. Bobbitt, Philip. 2002. The Shield of Achilles: War, Peace, and the Course of History. New York: Knopf. Bourguignon, Francois, and Diane Coyle. 2003. “Inequality, Public Perception, and the Institutional Responses to Globalization.” Mondea y Cridito 216, pp. 211–50. Bowles, Samuel, and Herbert Gintis. 2002. “Social Capital and Community Governance.” Economic Journal 112, pp. 419–36. Boyle, James. 2008. The Public Domain: Enclosing the Commons of the Mind. New Haven, CT: Yale University Press. Brafman, Ori, and Rod Beckstrom. 2006.


pages: 235 words: 62,862

Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek by Rutger Bregman

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autonomous vehicles, banking crisis, Bartolomé de las Casas, basic income, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, George Santayana, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labour market flexibility, labour mobility, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Future of Employment, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey

“A wave of euphoria swept over Italians,” reported The New York Times, “after economists recalibrated their statistics taking into account for the first time the country’s formidable underground economy of tax evaders and illegal workers.”4 And that’s to say nothing of all the unpaid labor that doesn’t even qualify as part of the black market, from volunteering to child care to cooking, which together represents more than half of all our work. Of course, we can hire cleaners or nannies to do some of these chores, in which case they count toward the GDP, but we still do most ourselves. Adding all this unpaid work would expand the economy by anywhere from 37% (in Hungary) to 74% (in the UK).5 However, as the economist Diane Coyle notes, “generally official statistical agencies have never bothered – perhaps because it has been carried out mainly by women.”6 While we’re on the subject, only Denmark has ever attempted to quantify the value of breastfeeding in its GDP. And it’s no paltry sum: In the U.S., the potential contribution of breast milk has been estimated at an incredible $110 billion a year7 – about the size of China’s military budget.8 The GDP also does a poor job of calculating advances in knowledge.

Yale Brozen, “Automation: The Retreating Catastrophe,” Left & Right (September 1966). https://mises.org/library/automation-retreating-catastrophe 21. David Rotman, “How Technology Is Destroying Jobs,” MIT Technology Review (June 12, 2013). http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs 22. Quoted in: Brynjolfsson and McAfee, The Second Machine Age, p. 27. 23. Ian Morris, Why The West Rules – For Now (2010), p. 495. 24. Morris, Why The West Rules, p. 497. 25. Diane Coyle, GDP. A Brief but Affectionate History (2014), p. 79. 26. Frank Levy and Richard Murnane, The New Division of Labor (2004). 27. There are indications that even jobs for the highly-skilled have come under pressure since 2000, leading them to snap up the less-skilled jobs. Increasingly, employees are overqualified for their jobs. See: Paul Beaudry, David A. Green and Ben Sand, “The Great Reversal in the Demand for Skill and Cognitive Tasks,” National Bureau of Economic Research (January 2013). http://www.economics.ubc.ca/files/2013/05/pdf_paper_paul-beaudry-great-reversal.pdf 28.

Tim Webb, “Japan’s economy heads into freefall after earthquake and tsunami,” The Guardian (March 13, 2011). http://www.theguardian.com/world/2o11/mar/13/japan-economy-recession-earthquake-tsunami 2. Merijn Knibbe, “De bestedingsgevolgen van de watersnoodramp: een succesvolle ‘Keynesiaanse’ schok,” Lux et Veritas (April 1, 2013). http://www.luxetveritas.nl/blog/?p=3006 3. Frédéric Bastiat, “Ce qu’on voit et ce qu’on ne voit pas” (1850). http://bastiat.org/en/twisatwins.html 4. Quoted in: Diane Coyle, GDP. A Brief but Affectionate History (2014) p. 106. 5. OECD (2011), “Cooking and Caring, Building and Repairing: Unpaid Work around the World,” Society at a Glance 2011, p. 25. http://www.oecd-ilibrary.org/social-issues-migration-health/society-at-a-glance-2011/cooking-and-caring-building-and-repairing_soc_glance-2011-3-en Also see: Coyle, GDP, p. 109. 6. Coyle, p. 108. 7. J.P. Smith, “‘Lost milk?’


words: 49,604

The Weightless World: Strategies for Managing the Digital Economy by Diane Coyle

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barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, clean water, computer age, Corn Laws, creative destruction, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, full employment, George Santayana, global village, hiring and firing, Howard Rheingold, income inequality, informal economy, invisible hand, Jane Jacobs, Joseph Schumpeter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Marshall McLuhan, mass immigration, McJob, microcredit, moral panic, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pensions crisis, Ronald Reagan, Silicon Valley, spinning jenny, The Death and Life of Great American Cities, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the relevant copyright, designs and patents acts, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers. The Weightless World Strategies for Managing the Digital Economy Diane Coyle Copyright © Diane Coyle 1997 The right of Diane Coyle to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988 First Published 1997 Capstone Publishing Limited Oxford Centre for Innovation Mill Street Oxford OX2 0JX United Kingdom All rights reserved. Except for the quotation of short passages for the purposes of criticism and review, no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.

Anthony Bevins, Yvette Cooper, Matt Hoffman, Andrew Marshall, Hamish McRae, Suzanne Moore, John Price, Polly Toynbee, Roger Trapp and David Walker all — whether they knew it or not — made an important contribution to The Weightless World. Finally, I’d like to express heartfelt gratitude to those people at the Organisation for Economic Co-operation and Development who went out of their way to look up all sorts of figures and publications for me, in a true spirit of wanting to further our understanding of the world. Responsibility for the finished product, with all its infelicities, warts and omissions, is mine. Diane Coyle June 1997 Chapter One. The Weightless World A single imported greetings card with a microchip that plays Happy Birthday when the card is opened contains more computer power than existed on the planet 50 years ago. It weighs a gram or so. This might seem an odd choice of example to illustrate economic progress, but weightlessness is the key to understanding the new industrial revolution we are living through.


pages: 275 words: 84,980

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

agricultural Revolution, Airbnb, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, distributed ledger, double entry bookkeeping, ethereum blockchain, facts on the ground, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, large denomination, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, technoutopianism, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

When these estimates were added Italy’s GDP surpassed the United Kingdom’s and Italy was asked to make a greater contribution to the European Union. Oops! Anyway, to restore fair contributions, some years later EU statisticians revised their methodologies to treat the black economy equally in all EU countries and things like software and drug dealing and prostitution were added to the figures in 1991, which in turn boosted the UK economy significantly. Diane Coyle explores this statistical revision in her book GDP: A Brief but Affectionate History, saying that ‘the largely cash-based informal economy of moonlighting, avoiding taxes and regulations, but creating work and output, has been placed inside the production boundary’ (Coyle 2014). So it is measured, but the people in that economy are not contributing their fair share to the national piggy bank.

In this category, e-cash is really a symptom of fundamental change: as the developed economies have become information economies, the problem of trying to measure, assess and control those economies has sharpened. Economists already wonder about existing measures. Figures that may have understated actual growth and productivity gains over the past few years could have sent the wrong signals to both policy makers and financial markets. In what economist Diane Coyle called the ‘weightless economy’ (Coyle 1997a) the task of measuring and managing economic activity may well move beyond the bounds of what is possible through traditional structures, and electronic money could contribute to (but not create) a real problem for governments: the lack of intermediaries for reporting on monetary flows. The idea of a weightless economy, with no physical means of exchange, is now taken for granted but I’m not sure that the implications are.

How are these transactions to be accounted (absent a win–win–win shared ledger)? And if they cannot be accounted, how are they to be managed? Since the government cannot simply measure all the money flows in the economy and use that actual data instead of ancient statistical estimates that often need to be revised, it has, in essence, no idea what is going on. This was observed most famously, as Diane Coyle has noted, when Denis Healey went cap in hand to the IMF because Britain was in recession – only to discover, when the figures were later updated, that it hadn’t been. This led me to reflect on the old Robert Heinlein science fiction novel Beyond This Horizon, in which cash is extinct and all payments run through computers and all the computers are connected to the government computer so the government can twiddle the knobs and dials to keep the economy on course.


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

Brain Arthur, Doyne Farmer, Andreas Antonopoulos, Satyajit Das, Joyce Appleby, Yanis Varoufakis, Patrick O’Sullivan, Nigel Allington, Mark Esposito, Sitabhra Sinha, Thomas Sowell, Niall Ferguson, Andy Stern, Alan Kirman, Neel Kashkari, Danny Dorling, David Graeber, Amir Sufi, Atif Mian, Vitalik Buterin, Andy Haldane, Gillian Tett, Martin Sandbu, Robert Reich, Kenneth Rogoff, Paul Beaudry, Michael Kumhof, Diane Coyle, Ben Dyson, Dirk Helbing, Guy Michaels, David Autor, Richard Gendal Brown, Tim Swanson, David Andolfatto, Paul Pfleiderer, Zoltan Pozsar, Frank Levy, Richard Murnane, César Hidalgo, and Robin Hanson, among others. An equal measure of thanks also needs to be given to all the academics and researchers whom I had the chance to meet via the Institute of New Economic Thinking. Without the conversations I had with them, the final chapter of this book would have had a very different look.

The most advanced Chatbot today is Xiaoice (pronounced Shao-ice) developed by Microsoft, and GDP appears constantly in the news, business, and politics. Yet in recent times, its ability to appropriately represent the true productivity of a country is increasingly criticized. While writing a critique on this topic is beyond the scope of this book, readers are invited to look at other indicators such as the Social Progress Index and the OECD Better Life Index. Another excellent resource is Diane Coyle’s, GDP: A Brief but Affectionate History, which shows why this statistic was invented, how it has changed, what are its pros and cons and why it is inappropriate for a 21st century economy driven by innovation, services, and intangible goods. 21 140 Chapter 3 ■ Innovating Capitalism which can respond with human-like answers, questions, and “thoughts.” If a user sends a picture of a broken ankle, Xiaoice will reply with a question asking about how much pain the injury caused, for example (Slater-Robins, 2016).


pages: 164 words: 57,068

The Second Curve: Thoughts on Reinventing Society by Charles Handy

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Airbnb, basic income, Bernie Madoff, bitcoin, bonus culture, British Empire, call centre, Clayton Christensen, corporate governance, delayed gratification, Diane Coyle, Edward Snowden, falling living standards, future of work, G4S, greed is good, informal economy, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, Kodak vs Instagram, late capitalism, mass immigration, megacity, mittelstand, Occupy movement, payday loans, peer-to-peer lending, Plutocrats, plutocrats, Ponzi scheme, Ronald Coase, shareholder value, sharing economy, Skype, Steve Jobs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Veblen good, Walter Mischel

Given these and numerous other flaws in the measure it is a fool’s errand to try to compare growth rates across different countries and currencies. In truth we do not know how well our economy or our society is really growing at any given time, even in economic terms, let alone human well-being. A Second Curve badly needs a more satisfactory measure of a society’s growth. In her illuminating book GDP: A Brief but Affectionate History, the economist Diane Coyle suggests that policymakers should adopt a dashboard of different measures. Sadly, politicians and the public yearn for the simplicity of a single number and, says Coyle, GDP is the best we have. Unfortunately it is used in public debate as the only measure in common use to assess our progress as a society. This is something it was never intended to do. We need Coyle’s dashboard, complex though it will inevitably be.


pages: 275 words: 77,017

The End of Money: Counterfeiters, Preachers, Techies, Dreamers--And the Coming Cashless Society by David Wolman

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Bay Area Rapid Transit, Berlin Wall, Bernie Madoff, bitcoin, Bretton Woods, carbon footprint, cashless society, central bank independence, collateralized debt obligation, corporate social responsibility, credit crunch, cross-subsidies, Diane Coyle, fiat currency, financial innovation, floating exchange rates, German hyperinflation, greed is good, Isaac Newton, M-Pesa, Mahatma Gandhi, mental accounting, mobile money, money: store of value / unit of account / medium of exchange, offshore financial centre, Peter Thiel, place-making, placebo effect, Ponzi scheme, Ronald Reagan, seigniorage, Silicon Valley, special drawing rights, Steven Levy, the payments system, transaction costs

I would also like to thank the following people for providing assistance with resources, added explanation, logistical support, research guidance, editing, encouragement, and invaluable criticism: Aaron Ernst, Adam Rogers, Aiichiro Kurata, Aimee Geissler, Allen Kupetz, Andrew Steckl, Andy Jordan, Anil Kakani, Anne Marie DiStefano, Anthony Effinger, Astrid Mitchell, Carlson Chambliss, Carol B., Charlotte Webb, Coert Voorhees, Daniel Lowther, David Abrams, David Tidmarsh, Diane Coyle, Einar Baldvin Stefánsson, Erik Jensen, Erik Steiner, Frederick Reimers, Glenn Wood, Greg Lastowka, Hannes van Rensburg, Heather Wax, Heidar Gudjonsson, James Grant, Jan S., Jason Jarrell, Jim Bruene, Jim Rosenberg, Jonathan Carver, Jonathan Lipow, Joshua Davis, Julian Smith, Kabir Kumar, Kakha Bendukidze, Kathleen Vohs, Kiera Butler, Lee Voo van der, Lewis Iadarola, Liana McCabe, Lisa Rutherford, Mark Pickens, Mark Robinson, Marta Peiret, Matt Dill, Matteo Chiampo, Michael Linton, Michael Salmony, Mugdha Bhargava, Neha Mehra, Nick Hughes, Nick McKenzie, Oakley Brooks, Ólafur Ísleifsson, Pallab Mitra, Paul Collins, Paul Makin, Peter Fishman, R.


pages: 772 words: 203,182

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right by George R. Tyler

8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, bank run, banking crisis, Basel III, Black Swan, blood diamonds, blue-collar work, Bolshevik threat, bonus culture, British Empire, business process, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Gordon Gekko, hiring and firing, income inequality, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, labor-force participation, labour market flexibility, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, pension reform, performance metric, pirate software, Plutocrats, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, Sand Hill Road, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Great wealth is the imprimatur of mankind’s most evolutionary fit, and the means for such evolutionary superiority to be perpetuated. This pseudoscientific logic helped assuage any guilt and deflected brickbats from critics such as Mark Twain. During the Reagan era, similar pseudoscientific rationale was provided by the themes of shareholder capitalism, and especially by Ayn Rand. The outcome is that business leaders are constantly driving one another to garner more income. As Diane Coyle, visiting professor at the University of Manchester, wrote: “[The] banking bonus culture validated making a lot of money as a life and career goal…. Remuneration consultants … helped ratchet up the pay and bonus levels throughout the economy.”13 “Too much” became “never enough.” In hindsight, it’s clear that CEOs pursuing their own magnified self-interest within this new environment enabled business leaders to engage in de facto class warfare as they strove to seize a larger share of the gains from growth.

Nabil Al-Najjar, Sandeep Baliga, and David Besanko, “Market Forces Meet Behavioral Biases: Cost Misallocation and Irrational Pricing,” Rand Journal of Economics 39, 214–237, 2008. 9 Richard Roll, “The Hubris Hypothesis of Corporate Takeovers,” Journal of Business 59, 197–216, 1986. 10 Mark Armstrong and Steffen Huck, “Behavioral Economics As Applied to Firms: A Primer,” January 2010. 11 Robert Reich, Supercapitalism (New York: Vintage Books/Random House, 2008), 108. 12 David Cay Johnston, Perfectly Legal (New York: Portfolio/Penguin Group, 2003), 240. 13 Diane Coyle, The Economics of Enough: How to Run the Economy As If the Future Matters (Princeton, NJ: Princeton University Press, 2011). 14 Paul K. Piff, Daniel M. Stancata, Stephane Cote, Rodolfo Mendoza-Denton, and Dacher Keltner, “Higher Social Class Predicts Increased Unethical Behavior,” Proceeds of the National Academy of Sciences, February 27, 2012. 15 For example, see: Randall Morck, Andrie Shleifer, and Robert Vishny, “Alternative Mechanisms for Corporate Control,” American Economic Review, 1989, 79:842–852. 16 Ian Austen, “Shake-Up at Canadian Pacific Railway As Activist Investor Takes Control,” New York Times, May 18, 2012. 17 Peter Whoriskey, “The Lake Wobegon Effect Lifts CEO’s Pay,” Washington Post, Oct. 4, 2011, and Ryan Chittum, “Cronyism and Executive Compensation,” The Audit, Columbia Journalism Review, Oct. 4, 2011. 18 Whoriskey, Ibid. 19 Heather Landy, “Executives Took, But the Directors Gave,” New York Times, April 5, 2009. 20 David Cay Johnston, Perfectly Legal, 2003, 250. 21 David Carr, “Why Not Occupy Newsrooms?


pages: 339 words: 105,938

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

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

We just have to accept on trust the ‘inescapable economic logic’, or similar threatening phrase, which leads to a particular conclusion, however unpalatable. Black box economics is not just the creation of policy entrepreneurs. Serious economists who make a virtue of their political neutrality can also unintentionally reinforce the black box image, because of their astonishing arrogance. For instance, Diane Coyle, formerly of The Independent, concludes her book with ‘ten rules of economic thinking’, one of which is ‘where common sense and economics conflict, common sense is wrong’.3 This imperious tone does not encourage people to embrace the wisdom of economists. People feel they are being told what to think, rather than encouraged to understand. Besides, common sense is sometimes wiser than economics.


pages: 561 words: 87,892

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

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Admiral Zheng, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, Francis Fukuyama: the end of history, full employment, George Akerlof, German hyperinflation, Gini coefficient, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, knowledge economy, labour market flexibility, labour mobility, liberal capitalism, low skilled workers, market clearing, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, old age dependency ratio, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, 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 for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, women in the workforce, working-age population, Y2K, Yom Kippur War

My economic horizons have been expanded as a result of regular attendance at events where I have had the chance to converse with fellow economists. Of particular value have been regular meetings at the Bank for International Settlements in Basel, the Oesterreichische Kontrollbank AG (OeKB) in Vienna and the Accumulation Society in London. I have also benefited from my occasional involvement with the Business Council for Britain. Those who offered encouragement when the book was merely a vague concept include Diane Coyle, Hamish McRae and Martin Wolf. All three know a lot more than I do about writing books and all were kind enough to steer me in the right direction. I am enormously grateful to the people at Yale University Press. Special thanks go to Phoebe Clapham, my editor, who was dogged in her determination to turn my scribblings into a coherent final manuscript. I also offer my gratitude to Sarah Harrison and Liz Pelton, who have provided so much support on publicity.

When the Money Runs Out: The End of Western Affluence by Stephen D. King

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Albert Einstein, Asian financial crisis, asset-backed security, banking crisis, Basel III, Berlin Wall, Bernie Madoff, British Empire, capital controls, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, congestion charging, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-subsidies, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, fixed income, floating exchange rates, full employment, George Akerlof, German hyperinflation, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, market clearing, mass immigration, moral hazard, mortgage debt, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, old age dependency ratio, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, South Sea Bubble, sovereign wealth fund, technology bubble, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, trickle-down economics, Washington Consensus, women in the workforce, working-age population

Chapter 1 Taking Progress for Granted Chapter 2 The Pain of Stagnation Chapter 3 Fixing a Broken Economy Chapter 4 Stimulus Junkies Chapter 5 The Limits to Stimulus: Lessons from History Chapter 6 Loss of Trust, Loss of Growth Chapter 7 Three Schisms Chapter 8 From Economic Disappointment to Political Instability Chapter 9 Dystopia Chapter 10 Avoiding Dystopia Notes Bibliography Index 4099.indd 5 vii 1 9 37 55 69 97 121 151 179 207 231 263 273 279 29/03/13 2:23 PM To Yvonne, Helena, Olivia and Sophie 4099.indd 6 29/03/13 2:23 PM ACKNOWLEDGEMENTS Thanks must go first and foremost to those who provided detailed comments on the manuscript. I am particularly grateful to John Llewellyn, Peter Hennessy (or, to give him his full title, Baron Hennessy of Nympsfield), Chris Brown-­Humes and Karen Ward for their extraordinary generosity in reading drafts of the entire book, in the process saving me from otherwise inevitable logical or factual embarrassment. Diane Coyle was a source of inspiration when the book was in its planning stages. Later, as she launched her own quest into the usefulness of economics, she encouraged me to think more deeply about the relationship between economics and history (her edited book What’s the Use of Economics? is essential reading for anyone wondering how to rebuild the reputation of our profession). Colleagues and friends have been important sources of support throughout.


pages: 309 words: 86,909

The Spirit Level: Why Greater Equality Makes Societies Stronger by Richard Wilkinson; Kate Pickett

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basic income, Berlin Wall, clean water, Diane Coyle, epigenetics, experimental economics, experimental subject, Fall of the Berlin Wall, full employment, germ theory of disease, Gini coefficient, God and Mammon, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, labor-force participation, land reform, Louis Pasteur, meta analysis, meta-analysis, Milgram experiment, moral panic, offshore financial centre, phenotype, Plutocrats, plutocrats, profit maximization, profit motive, Ralph Waldo Emerson, statistical model, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, upwardly mobile, World Values Survey, zero-sum game

The complementarity of liberty and equality has been proclaimed in the writings of many democratic thinkers, including the social philosopher L. T. Hobhouse, who believed that liberty depended, in all its domains, on equality – equality before the law, equality of opportunity, equality of parties to a contract.395 Employee-ownership provides a way of increasing liberty and equality together. RUNNING WITH THE TECHNOLOGICAL TIDE In her book, The Weightless World, Diane Coyle points out that although people in most industrialized countries experienced something like a twentyfold increase in their real incomes during the twentieth century, the weight of all that was produced at the end of the century was roughly the same as it had been at the beginning.396 She also says that the average weight of one dollar’s worth of US exports (adjusted for inflation) fell by a half between 1990 and 1996.


pages: 421 words: 125,417

Common Wealth: Economics for a Crowded Planet by Jeffrey Sachs

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agricultural Revolution, air freight, back-to-the-land, British Empire, business process, carbon footprint, clean water, colonial rule, corporate social responsibility, correlation does not imply causation, creative destruction, demographic transition, Diane Coyle, Edward Glaeser, energy security, failed state, Gini coefficient, Haber-Bosch Process, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of agriculture, invention of the steam engine, invisible hand, Joseph Schumpeter, knowledge worker, labor-force participation, labour mobility, low skilled workers, mass immigration, microcredit, oil shale / tar sands, old age dependency ratio, peak oil, profit maximization, profit motive, purchasing power parity, road to serfdom, Ronald Reagan, Simon Kuznets, Skype, statistical model, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, unemployed young men, War on Poverty, women in the workforce, working-age population

The result is a truly inspirational book’ Robert Matthews, BBC Focus ‘Never has the challenge of saving the world felt as simple’ Edmund Conway, Daily Telegraph ‘Lively, provocative and readable … will make the world a better place’ Tim Congdon, Spectator ‘Genuinely impressive … Sachs stands in the great tradition of campaigning intellectuals and has been an effective advocate of urgent policy action’ Diane Coyle, Independent ‘A manifesto for securing a bright future for Earth’ Michael Sargent, Nature ‘Packed with statistics and carefully worded arguments’ Economist ‘A vital read … Common Wealth is full of big ideas and is written by a star in the constellation of gurus … a serious book that deserves to be widely read and debated’ Management Today ‘One of America’s most prominent economists’ Noel Malcolm, Sunday Telegraph ‘Common Wealth explains the most basic economic reckoning that the world faces … Despite the rearguard opposition of some vested interests, policies to help the world’s poor and the global environment are in fact the very best economic bargains on the planet’ Al Gore ABOUT THE AUTHOR Jeffrey D.


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

Thank you to Frédéric Michel for his kindness and support over the years and for introducing me to so many interesting people. Thank you to Peter Mandelson, Ben Wegg Prosser (a very old friend), Stephen Adams and everyone at Global Counsel. David Bowers and Dominic White at Absolute Strategy Research are always insightful and David has been particularly kind; thank you to Beth McCann for introducing us. Diane Coyle at Enlightenment Economics is lovely. Varun Chandra has been very kind. I have had many stimulating conversations with Gene Frieda at Moore Capital Management. Among bank economists, Stephen King at HSBC, Willem Buiter at Citi, Erik Nielsen at Unicredit and George Magnus, formerly of UBS, stand out. Julian Callow at Barclays is consistently positive about Europe. Thanks too to Paul Adamson and Hendrik Bourgeois.


Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo

Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Berlin Wall, Bernie Madoff, bitcoin, Bonfire of the Vanities, bonus culture, break the buck, Brownian motion, business process, butterfly effect, capital asset pricing model, Captain Sullenberger Hudson, Carmen Reinhart, Chance favours the prepared mind, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, Diane Coyle, diversification, diversified portfolio, double helix, easy for humans, difficult for computers, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, interest rate derivative, invention of the telegraph, Isaac Newton, James Watt: steam engine, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, merger arbitrage, meta analysis, meta-analysis, Milgram experiment, money market fund, moral hazard, Myron Scholes, Nick Leeson, old-boy network, out of africa, p-value, paper trading, passive investing, Paul Lévy, Paul Samuelson, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, quantitative hedge fund, quantitative trading / quantitative finance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Shiller, short selling, sovereign wealth fund, statistical arbitrage, Steven Pinker, stochastic process, survivorship bias, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

My first exposure to continuous-time econometrics was as his research assistant, and I have very fond memories of sitting side by side with Jerry in the basement of the Harvard Science Center debugging Fortran code for estimating the parameters of a Brownian motion with an absorbing barrier. And I benefited greatly from the advice, guidance, and inspiration of many other faculty and students during this period, including Dick Caves, Diane Coyle, Ben Friedman, Dale Jorgenson, Nobu Kiyotaki, Whitney Newey, Pat Newport, the late David Pickard, Tom Sargent, Mike Spence, Phil Vasan, and Mark Watson— it’s only through the passage of time that I’ve come to realize just how much impact they had on me. But my biggest single intellectual debt during this time was to Bob Merton, to whom I owe my career in academic finance. Bob’s 15.415 Finance Theory class was a turning point in my graduate education.