open economy

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pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

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Asian financial crisis, capital controls, clean water, correlation does not imply causation, creative destruction, Deng Xiaoping, Edward Glaeser, Gini coefficient, half of the world's population has never made a phone call, Hernando de Soto, illegal immigration, income inequality, informal economy, Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, liberal capitalism, manufacturing employment, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, profit motive, race to the bottom, rising living standards, school vouchers, Silicon Valley, Simon Kuznets, structural adjustment programs, The Wealth of Nations by Adam Smith, Tobin tax, trade liberalization, trade route, transaction costs, trickle-down economics, union organizing, zero-sum game

A country can acquire comparative advantages by 117 chance. Computer corporations pop up in Silicon Valley and fashion tycoons set up shop in Milan, not because nature smiles on them, but because they can make use of the specialized contacts, knowledge, and manpower that, for one reason or another, have begun to accumulate in each place. Free trade brings prosperity 0 5,000 10,000 15,000 20,000 25,000 1 (most open economies) 5432 (least open economies) Per capita GDP in USD (1998) 2,916 4,794 6,397 13,984 22,306 The countries of the world, divided into fifths by degrees of economic freedom Source: James Gwartney and Robert Lawson, eds., Economic Freedom of the World 2001 (Vancouver: Fraser Institute, 2001). The simple examples given above expose the hollowness of the argument that countries should be self-sufficient and produce for their own populations.

That would almost have tripled the population’s incomes. Of course, any such estimate has to be taken with a grain of salt, but even with a generous margin of error, the figure remains shockingly high compared with Africa’s actual growth during the years in question—a mere 0.8 percent per year.29 If we examine the track record of the African countries that have opted for free trade and more open economies, it seems entirely plausible that a liberal policy could have been so successful. The cattle farmers of Botswana were quick to realize that it was in their interest to campaign for more open markets, and that meant that large parts of the economy were already exposed to competition by the end of the 1970s. Botswana has protected rights of ownership and has never nationalized businesses. Through its association with the EU, the country’s exports to Europe are exempt from duties and quotas.

Open developing countries had on average an annual growth rate of 4.49 percent those two decades, while closed developing countries had only 0.69 percent. Open industrialized countries had an annual growth of 2.29 percent, while closed ones experienced only 0.74 percent growth. It must be emphasized that this is not a matter of how much countries earn because others are open to their exports, but of how much they earn by keeping their own markets open. The 129 results show that the open economies had a faster growth rate than the closed ones every year between 1970 and 1989. No free trade country in the study had an average growth rate of less than 1.2 percent annually, and no open developing country had a growth rate of less than 2.3 percent! Free trade and growth during the 1970s and 1980s Percentage GDP growth 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Open developing countries Closed developing countries Open industrialized countries Closed industrialized countries 0.74 2.29 0.69 4.49 Source: Jeffrey Sachs and Andrew Warner, ‘‘Economic Reform and the Process of Global Integration,’’ Brookings Papers on Economic Activity 1, 1995.


pages: 356 words: 103,944

The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

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affirmative action, Asian financial crisis, bank run, banking crisis, bilateral investment treaty, borderless world, Bretton Woods, British Empire, capital controls, Carmen Reinhart, central bank independence, collective bargaining, colonial rule, Corn Laws, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, Doha Development Round, en.wikipedia.org, endogenous growth, eurozone crisis, financial deregulation, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, George Akerlof, guest worker program, Hernando de Soto, immigration reform, income inequality, income per capita, industrial cluster, information asymmetry, joint-stock company, Kenneth Rogoff, labour market flexibility, labour mobility, land reform, liberal capitalism, light touch regulation, Long Term Capital Management, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, microcredit, Monroe Doctrine, moral hazard, night-watchman state, non-tariff barriers, offshore financial centre, oil shock, open borders, open economy, Paul Samuelson, price stability, profit maximization, race to the bottom, regulatory arbitrage, savings glut, Silicon Valley, special drawing rights, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tobin tax, too big to fail, trade liberalization, trade route, transaction costs, tulip mania, Washington Consensus, World Values Survey

Why didn’t the world economy fall off the same protectionist cliff that it did in the Great Depression of the 1930s? In the decades since, modern industrial societies have erected a wide array of social protections—unemployment compensation, adjustment assistance and other labor market interventions, health insurance, family support—that mitigate demand for cruder forms of protection such as sheltering the economy behind high tariff walls. The welfare state is the flip side of the open economy. Markets and states are complements in more ways than one. Globalization’s Love-and-Hate Relationship with the State Now we can begin to appreciate how greatly international commerce differs from domestic economic transactions. If you and I are citizens of the same country, we operate under an identical set of legal rules and benefit from the public goods that our government provides. If we are citizens of different countries, none of this is necessarily true.

Even at the height of economic liberalism during the nineteenth century, political insulation of trade policy remained limited and protection made a quick reappearance when agricultural prices fell. The politicization of trade policy increased further during the interwar period. The inability of governments to respond to the grievances of domestic businesses, workers, and farmers in the context of an open economy contributed to the Great Depression. As World War II drew to a close, John Maynard Keynes and Harry Dexter White were looking for ways to square the circle. How could an open global economy be restored in a world where domestic politics reigned supreme? Keynes, the English don, had already made his mark as the preeminent economist of his generation and as an acute commentator on contemporary politics and politicians.

The Asian financial crisis followed in 1997–98, which would then spill over to Russia (1998), Brazil (1999), Argentina (2000), and eventually Turkey (2001). These are only the better-known cases. One review identified 124 banking crises, 208 currency crises, and 63 sovereign debt crises between 1970 and 2008.28 After a lull in the early years of the new millennium, the subprime mortgage crisis centered in the United States triggered another powerful set of tremors, confronting financially open economies with a sudden dearth of foreign finance and bankrupting a few among them (Iceland, Latvia). Most of these cases follow the same boom-and-bust pattern. First, there is a phase of relative euphoria during which a country receives significant amounts of foreign lending. This stage is fueled by stories in financial markets that emphasize the bright prospects ahead. The country has reformed its policies and stands at the cusp of a productivity explosion.


pages: 145 words: 43,599

Hawai'I Becalmed: Economic Lessons of the 1990s by Christopher Grandy

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Bretton Woods, business climate, dark matter, endogenous growth, inventory management, Long Term Capital Management, market bubble, Maui Hawaii, minimum wage unemployment, open economy, purchasing power parity, Silicon Valley, Telecommunications Act of 1996

At virtually the same time, the U.S. economy slipped into recession, which ushered in a break in westbound visitor demand. Finally, the Japanese economy followed the U.S. downturn, thereby threatening the heart of the 1980s economic boom. Together, these three pinpricks burst Hawai‘i’s economic bubble. As if to add insult to injury, Mother Nature contributed to Hawai‘i’s woes as Hurricane Iniki flattened a large part of Kaua‘i’s economy. Such shocks reflect the downside of open economies that, like Hawai‘i’s, provide high standards of living. It may be impossible to reduce these risks through diversification because they are systemwide. Even so, as argued in later chapters, the pace of recovery from such shocks can be increased through economic policies that preserve openness to new ideas and capital and that allow businesses both to succeed and fail. The Gulf War Iraq’s invasion of Kuwait is a good example of how events on the opposite side of the globe can directly affect Hawai‘i.

This became clearer in 1997 and 1998 when the Asian crisis plunged Japan into recession anew and many of its banks came close to toppling. Conclusion Open economic engagement with the outside world carries risks as well as rewards. This chapter has discussed three events that shocked Hawai‘i’s economy in the early 1990s and marked the beginning of what would turn out to be a long period of little or no growth. Such risks are always a possibility for open economies. Whether and how fast an economy recovers depends on the economic structure prior to the shocks and the willingness to respond in appropriate ways. As we will see in the next chapter, Hawai‘i went through a period of blame and denial in the early 1990s. It was also a period of crisis, soul-searching, and reform. Ultimately, Hawai‘i took steps to redress some of the problems at home. These could not guarantee economic recovery, but they were important because they showed that Hawai‘i can take necessary, if not sufficient, steps toward long-term economic health.

Elections in which pocketbook issues dominate are often turning points: Cayetano was surely doomed to be a one-term governor. Hawai‘i’s economic fortunes may lie outside its control, but political incumbents no doubt find this little comfort. Voters want to hold someone accountable, and the person who runs for executive office effectively offers to make himself or herself a scapegoat. It hardly mattered that Hawai‘i has a very open economy—that is, sensitive to outside economic influences. It hardly mattered that, as a result, an incumbent can do relatively little to affect the state’s economic fortunes for the good—though an incumbent may do much that can devastate the economy. What presumably mattered was that many people were not better off in 1998 than in 1994. Cayetano had a long history with the Democratic Party. The Democrats had controlled the governor’s office and the legislature since 1963.


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

If the financial and monetary authorities managed to sustain the pegged exchange rate, despite the depression, adjustment would then occur via falling nominal wages and prices (what the Eurozone calls ‘internal devaluation’), emigration and a write-down of the bad debt of insolvent banks, non-financial companies, households and possibly even the government. In time, with competitiveness restored and debt restructured, the economy would recover. This used to happen in the nineteenth century. It has happened, more recently, in small open economies, such as Hong Kong after the Asian financial crisis and the Baltic states after the crises that began in in 2007. This is, in effect, the old gold-standard mechanism. If, however, the authorities let the peg go, the adjustment would be accompanied by a depreciation of the nominal exchange rate. That would obviate debt deflation and the need to cut nominal wages and prices. It is likely, though not certain, that the result would be a swifter and less painful adjustment, without a tidal wave of defaults.

As professors O’Rourke and Taylor remark, based on interwar experience, ‘large public debts are difficult or impossible to stabilize when deflation is increasing the real value of the debt and slowing economic growth’.10 The Baltic Example11 At this stage, some bright spark, seeking to counsel the desperate, will point to tiny Latvia, deemed a great success of the ‘internal devaluation’ and ‘austerity’ strategy. But this is largely an illusion. What is possible for tiny open economies, without their own banking systems (and so no need to bail out the banks) and next to no government debt before the crisis, is impossible for others. All three small Baltic states – Estonia (population 1.3 million), Latvia (population 2 million) and Lithuania (population 3 million) – enjoyed credit-driven booms prior to the financial crisis. In 2007, Latvia’s current-account deficit was 22 per cent of GDP, Estonia’s was 16 per cent and Lithuania’s 14 per cent.

First, according to Eurostat, Latvian labour costs per hour, in 2012, were a quarter of those of the Eurozone as whole, 30 per cent of those in Spain and 50 per cent of those of Portugal. Given the potential for further rapid rises in productivity and its integration into the Scandinavian economic system, Latvia did not need a big real depreciation to become competitive. Second, these are very small open economies. The more open the economy the larger is the portion of output not dependent on recession-hit domestic spending. This makes external adjustment a more potent alternative to domestic stimulus than in larger economies. Between 2007 and 2012, Latvia’s current-account deficit shrank by 21 per cent of GDP. The same absolute adjustment would amount to just 0.3 per cent of Italian GDP. External markets will hardly notice Latvia’s adjustment.


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

But as a subject, macroeconomics was taught and debated in terms of a closed economy, with only a small walk-on part for trade. Finance was discussed only in relation to public finance and government bonds. The private equity and bond markets and the commercial credit created by banks were ignored. Walrasian economics visualized barter as the principal way of allocation, and money played just an epiphenomenal part in general equilibrium. The reality, however, was one of open economies, multiple currencies, international trade and finance, and forex markets. There was no theory to cope with these new facts. Neither Keynesian theory nor monetarism looked beyond the closed economy. Stagflation and the Return of Unorthodox Economics Economics aims to be a science. Yet political events constantly change its agenda. The collapse of the Bretton Woods settlement as a consequence of American overspending and inflation exposed all the economies to the risks of inflation, which they struggled to control.

The bubble burst, and so what they were getting out was lower than the recent market price. But more important, the Central Bank of Thailand did not have the dollar reserves to be able to convert baht investments into dollars for the sellers. The baht went off the peg and crashed on the forex market. The contagion of this shock spread to otherwise healthy economies such as Malaysia, South Korea and Indonesia. They were open economies relying on exports and receiving large capital inflows. They had been hailed just a decade previously as Asian Tigers. Now they were caught in a global storm. They had insufficient reserves to facilitate withdrawals of large amounts of foreign capital. There was drastic depreciation in the currencies of all the major Asian countries that had opened up their capital markets. The Asian crisis was a deeply humiliating experience for these countries, which had to rush to the IMF for emergency help.

Deficits high during the upswing rose during the recession, as would be expected. The cumulative burden of deficits incurred in good times added to those required in bad times means that the debt burden is rising, not falling. More borrowing would need to be shown to be a cure rather than a worsening of the problem. In a closed economy, as Keynes argued, any increase in the savings rate may lead to a drop in income. But in an open economy within a global capital market, repayment of debts may attract capital from abroad as the credit rating of the country improves. The recession was caused by overspending by governments and households thanks to cheap credit fueled by the global imbalances. It is the sort of recession predicted by Hayek in his work during the 1930s. It is widely agreed by governments across OECD countries that the path of fiscal expansion is closed off.


pages: 230 words: 62,294

The Coffee Book: Anatomy of an Industry From Crop to the Last Drop by Gregory Dicum, Nina Luttinger

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California gold rush, clean water, corporate social responsibility, cuban missile crisis, Edward Lloyd's coffeehouse, European colonialism, Honoré de Balzac, illegal immigration, land reform, land tenure, open economy, price stability, Ray Oldenburg, The Great Good Place

Uribe, Brown Gold: The Amazing Story of Coffee (New York: Random House, 1954), 92–94. CHAPTER 3: THE RISE OF THE INTERNATIONAL COFFEE TRADE 1 Stavitsky, as quoted in Robert H. Bates, Open-Economy Politics: The Political Economy of the World Coffee Trade (Princeton: Princeton University Press, 1997), 126. 2 Congressional Record, May 20, 1963, 8552. 3 North London Haslemere Group, Coffee: The Rules of Neocolonialism (London: Third World First, 1972), 5. 4 Pan-American Coffee Bureau, U.S. and the International Coffee Agreement, 1964. 5 Joseph Short, American Business and Foreign Policy: Cases in Coffee and Cocoa Trade Regulation 1961–1974 (New York: Garland Publishing Inc., 1987), 151–52. 6 Interviewed by Joseph Short, as quoted in ibid., 153–54. 7 Bates, Open-Economy Politics, 153. 8 Begun as a consortium of smaller roasters to compete with the instant coffees of the conglomerates, Tenco was bought by Minute Maid, which was in turn acquired by Coca-Cola in 1960. 9 Charles Meono, ed., Coffee & Tea Industries, February 1962, 28. 10 International Coffee Agreement, 1968. 11 North London Haslemere Group, Coffee, 16. 12 Another standout was OPEC, which is more like the earlier coffee agreements in that consumers do not participate.

A Brief History of Coffee Production and Consumption with an Appendix containing letters written during a trip to the coffee plantations of the East, and through the coffee consuming countries of Europe. New York: American Grocer Publishing Association, 1884. Uribe, Andrés C. Brown Gold: The Amazing Story of Coffee. New York: Random House, 1954. Wallengren, Maja. “Costa Rica’s Coffee Heading for Change.” Tea & Coffee Trade Journal 170, no. 2 (February 1998): 45–46. CHAPTER 3: THE RISE OF THE INTERNATIONAL COFFEE TRADE Bates, Robert H. Open-Economy Politics: The Political Economy of the World Coffee Trade. Princeton: Princeton University Press, 1997. de Graaf, J. The Economics of Coffee. Wageningen, Netherlands: Center for Agricultural Publishing and Documentation (Pudoc), 1986. Food and Agriculture Organization. Commodity Review and Outlook / FAOSTAT Database. Rome, 1986–2005. Furtado, Celso. The Economic Growth of Brazil: A Survey from Colonial to Modern Times.


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

It is an open economy that does not discriminate against foreigners, newcomers or anyone else in society. It is an adaptable economy that takes change in its stride and adjusts to evolving tastes, technologies and circumstances rather than trying to cling to the past. It is a dynamic economy that always strives to do better: encouraging and embracing new and different ways of doing things and seeking to surpass the limits imposed by current technologies and institutions. And it is a decent economy: one where there is a rough correspondence between rewards and merit, where inequalities of wealth and power are not so great that they become entrenched and where suffering is minimised. A good economy generates sustained rises in living standards that are widely shared. It’s an open economy that adds up.

He bolstered his theoretical arguments by pointing to evidence from several European countries documented in a paper he co-wrote.197 So influential was Alesina’s presentation that it was quoted in EU finance ministers’ conclusions. Alesina’s methodology and findings were quickly debunked by an IMF paper in September 2010.198 Yet even at the time the argument was preposterous. It is one thing to show that a few small, open economies that cut government borrowing by spending less recorded positive growth – when interest rates also fell, the currency depreciated and their export markets were buoyant. It is quite another to posit that if the entire eurozone slashes government spending at a time when the private sector is trying to pay down debt, banks won’t lend and its main trading partners, notably Britain and the US, are in a similar situation, the economy will grow.

And Portugal eased off on austerity: the fiscal squeeze in 2013 halved and the deficit target was set at 5.8 per cent of GDP, the same as in 2012.225 When the economy then perked up, eurozone officials had the gall to claim this as evidence that austerity worked. Austerity has also destabilised Italy’s public finances, plunging the economy into a recession from which it had not escaped by the end of 2013, as the footnotes detail.226 What about Latvia, which is often held up as a model of successful austerity for the rest of the eurozone? It may be feasible for a tiny open economy to turn itself around in 2009–10 by slashing government spending and raising taxes because it could fill the gap through higher exports to its much larger trading partners whose economies happened to be buoyant at the time.227 But such a strategy can scarcely succeed for a continent-sized economy, especially when demand is weak in most of its major trading partners. To suggest otherwise is merely a version of the Alesina fallacy.


pages: 353 words: 81,436

Buying Time: The Delayed Crisis of Democratic Capitalism by Wolfgang Streeck

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activist fund / activist shareholder / activist investor, banking crisis, basic income, Bretton Woods, capital controls, Carmen Reinhart, central bank independence, collective bargaining, corporate governance, creative destruction, David Graeber, deindustrialization, Deng Xiaoping, Eugene Fama: efficient market hypothesis, financial deregulation, financial repression, fixed income, full employment, Gini coefficient, Growth in a Time of Debt, income inequality, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, labour mobility, late capitalism, liberal capitalism, means of production, moral hazard, Myron Scholes, Occupy movement, open borders, open economy, Plutonomy: Buying Luxury, Explaining Global Imbalances, profit maximization, risk tolerance, shareholder value, too big to fail, union organizing, winner-take-all economy, Wolfgang Streeck

‘Mit dem Euro geht die Rechnung nicht auf’, MaxPlanckForschung, vol. 11/3, 2011, pp. 12–17. ———. ‘Monetary Union, Fiscal Crisis and the Pre-Emption of Democracy’, Zeitschrift für Staats- und Europawissenschaaften, vol. 9/2, 2011, pp. 163–98. ———. ‘Rettet Europa vor dem Euro’, Berliner Republik, vol. 14/2, 2012, pp. 52–61. ———. and Vivien A. Schmidt (eds), Welfare and Work in the Open Economy, Vol. 1, From Vulnerability to Competitiveness, Oxford: Oxford University Press, 2000. ———. and Vivien A. Schmidt (eds), Welfare and Work in the Open Economy, Vol. 2, Diverse Responses to Common Challenges, Oxford: Oxford University Press, 2000. Schlieben, Michael, ‘Die wählen sowieso nicht’, Zeit online, 13 May 2012. Schmitter, Philippe C. and Gerhard Lehmbruch (eds), Trends Towards Corporatist Intermediation, London: Sage, 1979. ———. and Wolfgang Streeck, The Organization of Business Interests: Studying the Associative Action of Business in Advanced Industrial Societies, MPIfG Discussion Paper No. 99/1, Cologne: MaxPlanck-Institut für Gesellschaftsforschung, 1999.

Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, Boston: Beacon Press, p. 251). 51 For a selection from the abundant literature on the subject, see H. Katz and O. Darbishire, Converging Divergences: Worldwide Changes in Employment Systems, Ithaca, NY: Cornell University Press, 2000. 52 For a survey of the evolution of the welfare state since the 1980s, see F. Scharpf and V. Schmidt (eds), Welfare and Work in the Open Economy, vol. 1, From Vulnerability to Competitiveness, Oxford: Oxford University Press, 2000; F. Scharpf and V. Schmidt, Welfare and Work, vol. 1, Diverse Responses to Common Challenges, Oxford: Oxford University Press, 2000; as well as the editors’ introduction to Francis G. Castles et al. (eds), The Oxford Handbook of the Welfare State, Oxford: Oxford University Press, 2010, pp. 1–15, and the articles in the same volume by M.


pages: 310 words: 90,817

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown by Detlev S. Schlichter

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bank run, banks create money, British Empire, capital controls, Carmen Reinhart, central bank independence, currency peg, fixed income, Fractional reserve banking, German hyperinflation, global reserve currency, inflation targeting, Kenneth Rogoff, Long Term Capital Management, market clearing, Martin Wolf, means of production, money market fund, moral hazard, mortgage debt, open economy, Ponzi scheme, price discovery process, price mechanism, price stability, pushing on a string, quantitative easing, reserve currency, rising living standards, risk tolerance, savings glut, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Y2K

As we have shown in detail, a monetary system that constantly injects money via the loan market will systematically distort interest rates in a specific direction. This must lead to economic dislocations and ultimately to recessions. A rising propensity to save is by itself insufficient to cause economic disruptions, but money injections must always lead to economic dislocations. The international aspect of the savings glut theory is equally insufficient to help explain a crisis. In an open economy it simply doesn’t matter whether the savings are raised locally or abroad. To take the obvious example, if the Chinese lowered their present consumption demand and thus freed up resources for investment and then decided that there were not enough promising investment opportunities in China, and that it was preferable to entrust these resources for some time to the Americans, this would result in capital flowing to the United States (or the control over physical resources shifting to U.S. persons and corporations), it would lower interest rates in the United States and thus lower the return threshold for potential investment projects there.

This is likely to receive the full backing of the fractional-reserve banks as it allows a further extension of the credit boom. One of the key constraining factors for money- and credit-expansion, for as long as money is still essentially a commodity, such as gold, is the potential outflow of that commodity. The money-induced economic boom will increase the demand for goods and services, and in an open economy this means also the demand for foreign goods and services. But the domestically created fiduciary media will not be accepted in foreign countries. Foreign suppliers of goods will have to be paid in gold. Increasing gold outflows will soon restrain the domestic banks’ ability to create fiduciary media. An additional factor leading to gold outflows is that under domestic legal arrangements the monetary units created by the fractional-reserve banks out of nothing continue to carry the same purchasing power as the gold money to which they represent claims and which remains strictly limited in its supply.

However, domestic inflationism, all else being equal, should lead to a decline of the currency’s exchange value on the foreign exchange market and a drop in its international purchasing power. While this, in itself, will not have to cause domestic monetary authorities to tighten policy, it will certainly be another factor that makes the inflationary consequences of the present policy visible to the public. It is clear that the hard-to-conceal decline of a currency’s foreign exchange value can be a further and important early warning signal, in particular for an open economy. Not unlike the competition between otherwise unconnected and independent fractional-reserve banks, which at the earlier stage of monetary history, before the introduction of central banks, constrained the banking sector’s ability to create money, can the independence of a number of territorial money monopolists potentially provide an at least tentative check on overly aggressive domestic money creation.


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

The economic emergence of Japan and newly industrialising countries such as South Korea led to low-cost competition for manufacturing in the developed world that produced repeated balance of payments crises, most notably in the UK. The tripling of oil prices in 1973 by the Organization of Petroleum Exporting Countries (OPEC) added to the inflationary pressure inherent to Keynesianism, which relied on stimulating aggregate demand to maintain ‘full’ [sic] employment. In an open economy system, Keynesianism in one country could not work, as was demonstrated by President François Mitterrand’s illfated attempt in 1981 to boost the French economy. It was the end of the road for that approach. The social democratic model – entailing modest redistribution via high marginal tax rates, labour-based social security, and government as the employer of last resort – had run its course.

‘Ultra-loose monetary policy’ has instead provided a subsidy to the finance industry to acquire and drive up asset prices, on its own account or as loans for others to do so.26 The IMF estimated that in 2012 the subsidy to banks from cheap money was worth up to $70 billion in the USA, $110 billion in the UK and Japan and $300 billion in the Eurozone. The total was bigger than Sweden’s GDP and more than the net profit of the 1,000 biggest banks. In an open economy system with capital flows in all directions and ample opportunities for rent seeking, any increase in the money supply will be directed to where it can earn the highest return. So money has poured into property and other assets that offer the prospect of higher returns or capital gains. This has pushed up prices and created destabilising asset bubbles. The printing of money has been a wonderful source of unearned rental income for bankers, shadow bankers and other financiers.

But, to have a chance of success, it must have three features: a sense of unity around commonly held beliefs; a sustainable understanding of the flaws, inequities and unsustainability of existing arrangements; and a reasonably clear vision of feasible goals. Although there are other matters on which to revolt, here we will concentrate on what is required to achieve Keynes’s ‘euthanasia of the rentier’, in the context of an irretrievable breakdown in the twentieth-century income distribution system. Politicians should be more honest. If they believe in free markets and an open economy, as they claim, they should recognise that the Great Convergence traced in Chapter 1 will continue, that average real wages will continue to stagnate and that wages for the precariat in the industrialised world will continue to fall. Of course, efforts should be made to raise productivity and skills. But no individual country can presume to do better than others pursuing the same ends. It is disingenuous if not dishonest to urge everyone to do the same thing and imagine that all will gain.


pages: 226 words: 59,080

Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik

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airline deregulation, Albert Einstein, bank run, barriers to entry, Bretton Woods, butterfly effect, capital controls, Carmen Reinhart, central bank independence, collective bargaining, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price stability, prisoner's dilemma, profit maximization, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

These last have very little to do with the discipline of economics, but everything to do with reality. * I heard this joke on a BBC radio program when I was a college student, and it was told, characteristically, by an economist, E. F. Schumacher. Economists are their own harshest critics. † Jagdish Bhagwati has been a tireless advocate of free trade since the 1980s. In his early academic work, he showed that an open economy may lose something from growth, because of attendant changes in the world prices of its imports and exports. He also analyzed at length the presence of market distortions and the needed policy responses, showing that laissez-faire was suboptimal under a wide range of conditions. Jagdish Bhagwati, “Immiserizing Growth: A Geometrical Note,” Review of Economic Studies 25, no. 3 (June 1958): 201–5; Bhagwati and V.

Angrist, “Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records,” American Economic Review 80, no. 3 (June 1990): 313–36. 16. Donald R. Davis and David E. Weinstein, “Bones, Bombs, and Break Points: The Geography of Economic Activity,” American Economic Review 92, no. 5 (2002): 1269–89. 17. David R. Cameron, “The Expansion of the Public Economy: A Comparative Analysis,” American Political Science Review 72, no. 4 (December 1978): 1243–61. 18. Dani Rodrik, “Why Do More Open Economies Have Bigger Governments?” Journal of Political Economy 106, no. 5 (October 1998): 997–1032. 19. Robert Sugden, “Credible Worlds, Capacities and Mechanisms” (unpublished paper, School of Economics, University of East Anglia, August 2008). CHAPTER 4: Models and Theories 1. Andrew Gelman, “Causality and Statistical Learning,” American Journal of Sociology 117 (2011): 955–66; Andrew Gelman and Guido Imbens, Why Ask Why?


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The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent by Vivek Wadhwa

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3D printing, card file, corporate governance, crowdsourcing, Elon Musk, immigration reform, labour mobility, Marc Andreessen, open economy, pattern recognition, Ray Kurzweil, Sand Hill Road, Silicon Valley, Silicon Valley startup, software as a service, the new new thing, Y2K

Detractors of the H-1B program feel it promotes wage arbitrage and a modern version of indentured servitude that depresses the wages of US workers in STEM fields. I agree with aspects of both arguments, but I believe that allowing for a more liberal H-1B policy will end any semblance of wage depression, as talented immigrants would quickly achieve market wages for their skills. Most important, the history of the world shows that open economies grow faster than closed ones. Labor represents one of the most critical economic inputs. Yet US policy still views the average H-1B immigrant as a number rather than as a contributor. First-Class Minds, Second-Class Citizens Puneet Arora arrived in the United States in 1996 for a residency in internal medicine at Southern Illinois University. He entered on a J-1 visa, designed for work-study exchange programs.


pages: 481 words: 120,693

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

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activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, assortative mating, banking crisis, barriers to entry, Basel III, battle of ideas, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Branko Milanovic, Bretton Woods, BRICs, business climate, call centre, carried interest, Cass Sunstein, Clayton Christensen, collapse of Lehman Brothers, commoditize, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Deng Xiaoping, don't be evil, double helix, energy security, estate planning, experimental subject, financial deregulation, financial innovation, Flash crash, Frank Gehry, Gini coefficient, global village, Goldman Sachs: Vampire Squid, Gordon Gekko, Guggenheim Bilbao, haute couture, high net worth, income inequality, invention of the steam engine, job automation, John Markoff, joint-stock company, Joseph Schumpeter, knowledge economy, knowledge worker, liberation theology, light touch regulation, linear programming, London Whale, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, Mikhail Gorbachev, Moneyball by Michael Lewis explains big data, NetJets, new economy, Occupy movement, open economy, Peter Thiel, place-making, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, postindustrial economy, Potemkin village, profit motive, purchasing power parity, race to the bottom, rent-seeking, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, self-driving car, short selling, Silicon Valley, Silicon Valley startup, Simon Kuznets, Solar eclipse in 1919, sovereign wealth fund, stem cell, Steve Jobs, the new new thing, The Spirit Level, The Wealth of Nations by Adam Smith, Tony Hsieh, too big to fail, trade route, trickle-down economics, Tyler Cowen: Great Stagnation, wage slave, Washington Consensus, winner-take-all economy, zero-sum game

If the sedentary partner paid for the entire mission, he received 75 percent of the profits; if he financed two-thirds of the voyage, he got half. The commenda was a powerful engine of both economic growth and social mobility—historians studying government documents from AD 960, 971, and 982 found that new names accounted for respectively 69 percent, 81 percent, and 65 percent of all the elite citizens cited. Venice’s elite were the chief beneficiaries of the rise of La Serenissima. But like all open economies, theirs was turbulent. We think of social mobility as an entirely good thing, but if you are already on top, mobility can also mean competition from outsider entrepreneurs. Even though this cycle of creative destruction had created the Venetian upper class, in 1315, when their city was at the height of its economic powers, they acted to lock in their privilege. Venice had prospered under a relatively open political system in which a wide swath of the people had a voice in the selection of the republic’s ruler, the doge, and successful outsiders could join the ruling class.

There are a lot of reasons to be worried about the rise of the plutocrats—the impact soaring inequality has on civic values, on crime rates, on morality, or even, according to some studies, on health. The big danger, though, is the one represented by La Serrata. As the people at the very top become ever richer, they have an ever greater ability to tilt the rules of the game in their favor. That power can be hard to resist. One reason La Serrata is such a useful example is that the Venetian oligarchs who closed off their society were the products of a robust, open economy. They didn’t start out as oligarchs—they’d made themselves into oligarchs. That’s important because as soaring income inequality has become an undeniable political fact, even in societies, such as the United States, that have been squeamish about open discussions of class, a dominant response has been to try to sort the plutocrats into the white hats and the black hats. Steve Jobs is a hero; Lloyd Blankfein is a villain.

“A truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital,” Buffett explained. “Though capitalism’s ‘creative destruction’ is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.” Like the Venetians who put themselves in the Book of Gold, Buffett understands that the creative destruction of an open economy is good for the country as a whole; but smart capitalists like him prefer to be defended by uncrossable moats. Buffett goes on to explain that his preferred moats are being a low-cost producer or possessing a well-known worldwide brand. But favorable government regulation can create a powerful moat, too. And taking advantage of that government moat is a business decision, not a question of ideology or morality, as we saw in hedge funder and antigovernment crusader Ken Griffin’s telling comment that CEOs’ “duties to their shareholders” justify business leaders’ opening their hands to a state “willing to hand out gifts.”


pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

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affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, capital controls, Cass Sunstein, central bank independence, clean water, collapse of Lehman Brothers, congestion charging, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, fixed income, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, John Markoff, Joseph Schumpeter, Kenneth Rogoff, libertarian paternalism, low skilled workers, lump of labour, Malacca Straits, market bubble, microcredit, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, The Market for Lemons, the rule of 72, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional, zero-sum game

The result, in the words of one economist, has been a “largely self-imposed economic exile.”19 At great cost, it turns out. The preponderance of evidence suggests that open economies grow faster than closed economies. In one of the most influential studies, Jeffrey Sachs, now director of The Earth Institute at Columbia University, and Andrew Warner, a researcher at the Harvard Center for International Development, compared the economic performance of closed economies, as defined by high tariffs and other restrictions on trade, to the performance of open economies. Among poor countries, the closed economies grew at 0.7 percent per capita annually during the 1970s and 1980s while the open economies grew at 4.5 percent annually. Most interesting, when a previously closed economy opened up, growth increased by more than a percentage point a year.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

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affirmative action, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Berlin Wall, Black Swan, Bretton Woods, capital controls, Cass Sunstein, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial innovation, floating exchange rates, full employment, Gini coefficient, global reserve currency, global village, high net worth, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Just-in-time delivery, Kenneth Rogoff, labour market flexibility, labour mobility, Long Term Capital Management, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, price stability, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, sovereign wealth fund, special drawing rights, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Washington Consensus, Westphalian system, women in the workforce, yield curve

The only country that is currently taking advantage of it is Peru, where nominal GDP, with a fairly stable exchange rate, has grown from approximately $55 billion in 2001 to $127 billion in 2009 and approximately $140 billion in 2010. The reasons for this strong growth include the metals boom (especially in gold mining), the rapid rise of consumer and mortgage credit that is leading to the emergence of a middle class, gradual fiscal reform (especially in public pensions), and a progressively more open economy (the average import tariff in 2010 was about 2 percent). The big economies are going to have to push major reforms through if they want to realize their potential. Energy reform is long overdue in Mexico, even after the tough government decision in October 2009 to fire all 42,000 unionized staff members of Luz y Fuerza del Centro (the state utility for Mexico City that was well known for its inefficiency and theft of electricity).

In part, this sharp turnaround is technical: it was driven by the poor performance of the economy in the first quarter of 2009. As is the case the world over, the prospects for sustained economic performance remain tentative. South Africa’s major trading partners are bedeviled by a blend of substantial pan-European public debt, Anglo-Saxon capital and financial market problems, and tectonic shifts in the structure of the global economy. As a small open economy, South Africa is affected by these global economic-financial forces. For much of the early 2000s, South Africa’s macro-financial and fiscal indicators compared favorably with those of many of its peer countries. This was, to a large extent, the outcome of a consistent and ambitious fiscal reform program over the 1994–2007 period. The Aparthied regime had left the country’s macroeconomic and fiscal configuration saddled with high public debt, excessive budgetary deficits, double-digit inflation, and a vulnerable currency.


pages: 267 words: 79,905

Creating Unequal Futures?: Rethinking Poverty, Inequality and Disadvantage by Ruth Fincher, Peter Saunders

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barriers to entry, ending welfare as we know it, financial independence, full employment, Gini coefficient, income inequality, income per capita, labour market flexibility, labour mobility, low skilled workers, low-wage service sector, marginal employment, minimum wage unemployment, New Urbanism, open economy, pink-collar, positional goods, purchasing power parity, shareholder value, spread of share-ownership, The Bell Curve by Richard Herrnstein and Charles Murray, urban planning, urban renewal, very high income, women in the workforce, working poor, working-age population

Accepting this argument would certainly reduce the size of the low-wage sector described in Table 7.6, but it would make the characteristics outlined in Table 7.7 even more sharply pronounced. In other words, while we might debate the size of the low-wage sector, its distinctiveness is beyond dispute. Note that considerable practical work along these lines was undertaken by Gosta Rehn in Sweden in the 1970s as part of the development of that country’s distinctive approach to blending wages and social policy as a basis for promoting the competitiveness of a small open economy. His ideas underpinned the push for universal child care rights, a year’s paid parental leave and rights to part-time retirement. These ideas, of course, built on the established rights to comprehensive retraining consequent upon dislocation from the labour market as part of economic restructuring. 228 PDF OUTPUT c: ALLEN & UNWIN r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 228 References REFERENCES Aaron, H. 1992 ‘The economics and politics of pensions: evaluating the choices’ Private Pensions and Public Policy, OECD, Paris ABC Audits 1998 ‘Weekend papers win in state market’ Ad News 14 August, p. 35 Abowd, J.M., Kramarz, F., and Margolis D.N. 1999 Minimum Wages and Employment in France and the United States, NBER Working Paper 6996, National Bureau of Economic Research, Cambridge, Mass.

M. and Chan, J.B.L. 1987 Visualising Deviance: A Study of News Organisation, Open University Press, Milton Keynes Erikson, R. and Uusitalo, H. 1987 ‘The Scandinavian approach to welfare research’ The Scandinavian Model: Welfare States and Welfare Research eds R. Erikson, E. Hansen, S. Ringen and H. Uusitalo, M.E. Sharpe, New York Erikson, R. and Goldthorpe, J.H. 1992 The Constant Flux. A Study of Class Mobility in Industrial Societies, Clarendon Press, Oxford Esping-Andersen, G. 1990 The Three Worlds of Welfare Capitalism, Polity Press, Cambridge ——1994 After the Golden Age: welfare and employment in open economies, Synthesis paper for UN Social Summit, UNRISD Ettema, J.S. and Glasser, T.L. 1988 ‘Narrative form and moral force: the realization of innocence and guilt through investigative journalism’ Journal of Communication vol. 38, no. 3, pp. 8–26 European Academy of the Urban Environment 1998 New Industrial Arrangements in the Labour Market: Transitional Labour Markets as a New Full Employment Concept, The Academy, Berlin 234 PDF OUTPUT c: ALLEN & UNWIN r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 234 REFERENCES European Commission 1997 ‘Modernising and improving social protection in the European Union’ http://europa.eu.int/en/comm/dg05/ soc-prot/com97102/commuen.htm Eurostat 1990 Poverty in Figures, Europe in the Early 1980s, Statistical Office of the European Communities, Luxembourg Fagan, R.H. and Webber, M. 1994 Global Restructuring: The Australian Experience Oxford University Press, Melbourne Farley, R. 1996 ‘The age of extremes: a revisionist perspective’ Demography vol. 33, no. 4, pp. 417–20 Feldstein, M. 1998 Income Inequality and Poverty NBER Working Paper 6770, National Bureau of Economic Research, Cambridge, Mass http://www.nber.org/papers/w6770 Ferrante, A. and Loh, N. 1996 Crime and Justice Statistics for Western Australia: 1994, mimeo, Crime Research Centre, University of Western Australia, Perth Fincher, R. and Nieuwenhuysen, J. eds 1998 Australian Poverty: Then and Now, Melbourne University Press, Melbourne Fincher, R. and Wulff, M. 1998 ‘The locations of poverty and disadvantage’ Australian Poverty: Then and Now eds R.


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Zero-Sum Future: American Power in an Age of Anxiety by Gideon Rachman

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Asian financial crisis, bank run, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Bretton Woods, BRICs, capital controls, centre right, clean water, collapse of Lehman Brothers, colonial rule, currency manipulation / currency intervention, deindustrialization, Deng Xiaoping, Doha Development Round, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, global reserve currency, greed is good, Hernando de Soto, illegal immigration, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, Live Aid, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, mutually assured destruction, Naomi Klein, offshore financial centre, open borders, open economy, Peace of Westphalia, peak oil, pension reform, Plutocrats, plutocrats, popular capitalism, price stability, RAND corporation, reserve currency, rising living standards, road to serfdom, Ronald Reagan, shareholder value, Sinatra Doctrine, sovereign wealth fund, special economic zone, Steve Jobs, Stewart Brand, The Chicago School, The Great Moderation, The Myth of the Rational Market, Thomas Malthus, trickle-down economics, Washington Consensus, Winter of Discontent, zero-sum game

In 2005, France’s referendum on the proposed European Union constitution was won by a “No” campaign that based its arguments on fear of the “Polish plumber”—shorthand for the low-wage competition that French workers had been exposed to after the enlargement of the European Union in 2004. Almost all French politicians paid lip service to the need to protect the European social model from “unfair competition,” but the big story was that mainstream European politicians remained committed to an open economy and to globalization. The enlargement of the European Union went ahead. And despite rejection in referenda in France and the Netherlands, the EU constitution was repackaged as the Lisbon Treaty and pushed through by parliamentary vote. It was not until the late 1990s that the argument that globalization was also bad for the developing world began to be made with real force. The trigger for this was the Asian economic crisis of 1997–98.

Early in his bestselling book Globalization and Its Discontents, he acknowledges that “because of globalization many people in the world now live longer than before and their standard of living is far better.”7 His anger and condemnation are focused on specific aspects of the process, in particular that policies advocated by the International Monetary Fund in response to the crises in Asia and Russia were, in his view, wrongheaded, biased toward the interests of Western banks, and caused unnecessary misery. Stiglitz’s work was an attack on what he regarded as “market fundamentalism” leading to premature liberalization of trade and foreign exchange regimes. Yet while the globalization consensus wobbled after the Asian, Russian, and Latin American crises, it fundamentally stayed in place. Open economies in a globalized world were clearly vulnerable to sudden financial crises, but turning your back on the world was not an attractive or practical remedy. South Korea and Thailand were two of the biggest victims of the Asian economic crisis, but the South Koreans only had to look across the border to North Korea to be reminded that economic isolation offered far worse and more devastating prospects.


pages: 361 words: 97,787

The Curse of Cash by Kenneth S Rogoff

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Andrei Shleifer, Asian financial crisis, bank run, Ben Bernanke: helicopter money, Berlin Wall, bitcoin, blockchain, Bretton Woods, capital controls, Carmen Reinhart, cashless society, central bank independence, cryptocurrency, debt deflation, distributed ledger, Edward Snowden, ethereum blockchain, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial exclusion, financial intermediation, financial repression, forward guidance, frictionless, full employment, George Akerlof, German hyperinflation, illegal immigration, inflation targeting, informal economy, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, moveable type in China, New Economic Geography, offshore financial centre, oil shock, open economy, payday loans, price stability, purchasing power parity, quantitative easing, RAND corporation, RFID, savings glut, secular stagnation, seigniorage, The Great Moderation, the payments system, transaction costs, unbanked and underbanked, unconventional monetary instruments, underbanked, unorthodox policies, Y2K, yield curve

First, the canonical Keynesian model of fiscal stimulus at the zero bound assumes a closed economy and ignores the fact that a part of the fiscal stimulus is likely to dissipate abroad. One of John Maynard Keynes’s brilliant simplifying assumptions was to assume a closed economy and ignore the rest of the world. The closed economy assumption is analytically elegant but not very realistic, even for the United States. Open economy spillovers imply that for fiscal stimulus policies to be fully effective, coordinated action across nations may be needed. Experience suggests, however, that this is easier said than done, especially when some countries have less faith in the Keynesian model than others. Second, the impact effect of fiscal policy can be sensitive to expectations about whether the fiscal impulse is temporary or permanent; a permanent shift implies higher future taxes and is more likely to crowd out private consumption.

Hamilton, James, and Jing Cynthia Wu. 2011. “The Effectiveness of Alternative Zero Bound Tools in a Zero Lower Bound Environment.” Journal of Money, Credit and Banking 44, suppl. (1): 3–46. Hellerstein, Rebecca, and William Ryan. 2011. “Cash Dollars Abroad.” Federal Reserve Bank of New York, Staff Report 400. Henderson, Dale, and Warwick McKibbin. 1993. “A Comparison of Some Basic Monetary Policy Regimes for Open Economies: Implications of Different Degrees of Instrument Adjustment and Wage Persistence.” Carnegie-Rochester Conference Series on Public Policy 39: 221–318. Henry, James S. 1980. “How to Make the Mob Miserable: The Cash Connection.” Washington Monthly 12(4): 54–61. Hicks, John R. 1969. A Theory of Economic History. Oxford: Clarendon Press. HM Revenue and Customs. 2015. Measuring Tax Gaps, 2015 Edition: Tax Gap Estimates for 2013–14.


pages: 650 words: 203,191

After Tamerlane: The Global History of Empire Since 1405 by John Darwin

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agricultural Revolution, Atahualpa, Berlin Wall, Bretton Woods, British Empire, Cape to Cairo, colonial rule, Columbian Exchange, cuban missile crisis, deglobalization, deindustrialization, European colonialism, failed state, Francisco Pizarro, invisible hand, Isaac Newton, joint-stock company, Khartoum Gordon, laissez-faire capitalism, land reform, Mahatma Gandhi, Malacca Straits, mutually assured destruction, new economy, New Urbanism, oil shock, open economy, price mechanism, reserve currency, Ronald Reagan, Scramble for Africa, South China Sea, South Sea Bubble, spice trade, The Wealth of Nations by Adam Smith, trade route, transaction costs, transatlantic slave trade

The high costs of long-distance trade, as well as large armed ships (the ‘East Indiamen’), shore establishments (with their garrisons to guard against attack by other Europeans or disorderly locals) and the diplomatic apparatus required for dealings with regional rulers and the Mughal court, had long made it necessary for European traders to be organized as joint-stock companies. These were forerunners of the modern corporation (with shareholders, a board and a management structure), and enjoyed a monopoly in the direct trade between their country and India. But their superficial modernity did not, of course, mean that European merchants were heralds of the open economy or the rule of the market. Indeed, they had little to sell, and they were forced to import bullion on a massive scale to pay for the Indian goods that they wanted to buy. Their commercial policy was to drive down the price and increase the quantity of the Indian textiles for which an insatiable demand existed in Europe. Hence the rival European companies (mainly after 1720 the English and French East India companies) were engaged in a constant effort to entice Indian weavers into their trading towns (like Madras or Pondicherry), where they had been allowed to build their ‘factories’ and exert their control over weavers and merchants in order to regulate the price, type and quality of the cloth produced.159 This led them into close but often quarrelsome relations with local rulers, whose wealth and power also depended upon the profits of trade and the shuffling of tax revenues between commerce and credit.

Resentment at this had made the Bombay Parsis among the earliest champions of Indian rights against the British Raj. On the other hand, even non-European merchants had nothing to gain if the world that commerce had made was divided into a patchwork quilt of fractious nation states whose rulers’ aims were unlikely to chime with those of the chambers of commerce in the great port cities. The merchants’ interests could be briefly summed up as the ‘open economy’, with no barriers to trade, the flows of credit and capital, or the movement of people (especially labour). This was the ‘empire of free trade’ that the British had pursued since the 1840s, when they had tried to enforce it (with some degree of success) on Latin America and the Middle East as well as India and China. It had required the newtransport technology to drawthe rest of the world towards the high-pressure zone of Euro-American commerce.

It helped to speed up the remarkable process by which more and more states adopted the ‘gold standard’: fixing their currency’s value in gold to expand their trade and encourage inward investment.74 London’s size and wealth thus grew in sympathy with the surging growth of international trade.75 Among its merchants and bankers, it was an article of faith that what was good for London was good for the world. The idea of free trade and the open economy was adopted in Britain in the 1840s and ’ 50s not just as a policy but as a total world-view, an ideology promoted with crusading passion. It imagined a world in which peoples would be freed from their bondage to rulers by the flood tide of commerce. Individual freedom and international trade would move forward together. Free trade was regarded as the key to British economic success, and to the economic progress of the rest of the world.


pages: 675 words: 141,667

Open Standards and the Digital Age: History, Ideology, and Networks (Cambridge Studies in the Emergence of Global Enterprise) by Andrew L. Russell

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barriers to entry, borderless world, Chelsea Manning, computer age, creative destruction, Donald Davies, Edward Snowden, Frederick Winslow Taylor, Hacker Ethic, Howard Rheingold, Hush-A-Phone, interchangeable parts, invisible hand, John Markoff, Joseph Schumpeter, Leonard Kleinrock, means of production, Menlo Park, Network effects, new economy, Norbert Wiener, open economy, packet switching, pre–internet, RAND corporation, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ronald Reagan, Silicon Valley, Steve Crocker, Steven Levy, Stewart Brand, technoutopianism, Ted Nelson, The Nature of the Firm, Thomas L Friedman, Thorstein Veblen, transaction costs, web of trust

By insisting on a “world open to American ideas and influence,” Open Door ideology created the conditions where Americans could pursue “informal empire” in the Pacific while proclaiming the high-minded and progressive principles of national self-determination and international peace.24 In the middle decades of the twentieth century, prominent philosophers, scientists, and theorists in the United States and Europe embraced “open” metaphors in their work. Unlike the Open Door policy’s explicit confrontation with international diplomacy in the early twentieth century, the mid-century experts who wrote about open societies, open economies, and open systems retreated from geopolitical realities and instead applied the discourses of openness to their theoretical, structural, and systematic investigations. For example, the philosophers Henri Bergson and Karl Popper posed stark dichotomies between social customs that they called “open” and “closed.” Bergson drew a distinction in The Two Sources of Morality and Religion (1932) between “closed morality” and “open morality,” where the former concept described an exclusionary and static society that promoted social cohesion and carried a deep preoccupation with strict internal obedience and war against all enemies.

Together they built a philosophical case that led to an inevitable (if understated) conclusion: open morality and open societies were superior alternatives to fascist and communist oppression.25 Experts in economics, sociology, and mathematics also adopted open metaphors in the 1930s and 1940s and, even more than the philosophers, took refuge from political and military conflict in the specialized language of their own disciplines. In 1939, the British Keynesian economist George Shackle published an article titled “The Multiplier in Closed and Open Systems,” a commentary on the theoretical uncertainties inherent in export and import values in an “open economy.”26 The language of open systems also appeared in the work of the sociologist Talcott Parsons, who in 1943 described the “Kinship System of the Contemporary United States” as an “open, multilineal, conjugal system,” one in which individuals choose their marriage partners rather than having marriages arranged on their behalf. In 1945, the term “open systems” appeared again in a different context – this time in the journal Philosophy of Science.


pages: 464 words: 139,088

The End of Alchemy: Money, Banking and the Future of the Global Economy by Mervyn King

Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bretton Woods, British Empire, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Hyman Minsky, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, liquidity trap, Long Term Capital Management, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

An alternative history of the pre-crisis period Could and should policy-makers have reacted sooner to the disequilibrium that was building up prior to the crisis? What strategies might have been deployed by the G7 countries before the crisis? With the benefit of hindsight, should interest rates have been higher during the period of the so-called Great Stability? We can explore these questions by going back to the pre-crisis period and asking whether there was an alternative policy that might have produced a different result. As a medium-sized, open economy, the United Kingdom offers a good example of how to think about an alternative monetary policy prior to the crisis. In the build-up to the crisis of 2007–9, the average growth rate of GDP was only a fraction above the previous fifty-year annual average of 2.75 per cent. There was no ‘boom’ in output growth that heralded an inevitable ‘bust’. Inflation was steady and close to the 2 per cent target; unemployment was close to estimates of its natural rate.

Kahneman, Daniel (2011), Thinking, Fast and Slow, Farrar, Straus and Giroux, New York. Kahneman, Daniel and Amos Tversky (1979), ‘Prospect Theory: An Analysis of Decision under Risk’, Econometrica, Vol. 47, pp. 263–91. Kalemli-Ozcan, Sebnem, Bent E. Sorensen and Sevcan Yesiltas (2012), ‘Leverage Across Firms, Banks and Countries’, Federal Reserve Bank of Dallas Conference on Financial Frictions and Monetary Policy in an Open Economy, mimeo. Kareken, John (1986), ‘Federal Bank Regulatory Policy: A Description and Some Observations’, Journal of Business, 59, pp. 3–48. Kay, John (2009), ‘Narrow Banking: The Reform of Banking Regulation’, Center for the Study of Financial Innovation Report, 15 September 2009. —— (2015), Other People’s Money: The Real Business of Finance, PublicAffairs, New York. Keating, Paul (2014), ‘Avoiding the Thucydides Trap in Asia’, mimeo, Sydney.


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

The infant industry argument, according to which temporary protections are necessary in order to encourage the development of certain activities, because they allow domestic producers to develop a market large enough to build up experience and be competitive at the international level, is certainly valid in the case of these economies, especially the poorest among them. Africa is a good example of this. As we saw before, it is unlikely that this continent could, over the long term, develop and absorb a rapidly growing labor force solely through the exportation of raw materials. The necessary diversification of African economies requires a period of industrialization that is currently incompatible with a fully open economy. On the other hand, this diversification might be feasible within the framework of regional customs unions that allow for expanded markets, while also temporarily protecting local businesses from Asian competition or, possibly, attracting foreign investment into the service of these expanded markets. Of course, a time frame would need to be set up for such a protectionist 180 Chapter 5 strategy, so as to avoid the development of inefficient rents in protected sectors and to ensure the credibility of such an undertaking.


pages: 261 words: 57,595

China's Future by David Shambaugh

Berlin Wall, capital controls, demographic dividend, demographic transition, Deng Xiaoping, facts on the ground, financial intermediation, financial repression, Gini coefficient, high net worth, knowledge economy, labour mobility, low skilled workers, market bubble, megacity, Mikhail Gorbachev, New Urbanism, offshore financial centre, open economy, Pearl River Delta, rent-seeking, secular stagnation, short selling, South China Sea, special drawing rights, too big to fail, urban planning, Washington Consensus, working-age population, young professional

Should China pursue this pathway it would, in all likelihood, bear a strong resemblance to the Singaporean model. In Singapore, to be sure, some rights are restricted and the ruling party remains in power. But Singapore has many aspects of democracy: multiple political parties, regular elections, a parliament and judiciary independent of the executive, a very open media (with restrictions), real rule of law, an exemplary professional civil service, no corruption, active NGOs, a full market-driven and open economy, a multiethnic society without discrimination, a high-quality and globalized educational system, and protection of many basic freedoms and human rights. China remains a very long way from having these progressive features, and it is highly doubtful that the Chinese Communist Party would tolerate them. Nonetheless, it is not inconceivable that China could move in this alternative direction—particularly growing out of Soft Authoritarianism, if it too reached its reform limits and China remained in a “trapped transition.”


Britannia Unchained: Global Lessons for Growth and Prosperity by Kwasi Kwarteng, Priti Patel, Dominic Raab, Chris Skidmore, Elizabeth Truss

Airbnb, banking crisis, Carmen Reinhart, central bank independence, clockwatching, creative destruction, Credit Default Swap, demographic dividend, Edward Glaeser, eurozone crisis, fear of failure, glass ceiling, informal economy, James Dyson, Kenneth Rogoff, knowledge economy, long peace, margin call, Mark Zuckerberg, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, Neil Kinnock, new economy, North Sea oil, oil shock, open economy, pension reform, price stability, profit motive, Ronald Reagan, Sand Hill Road, Silicon Valley, Steve Jobs, Walter Mischel, wealth creators, Winter of Discontent, working-age population, Yom Kippur War

The UK is just under 100,000 square miles in size, whereas Canada is over 38 times larger, the second largest country in the world.1 Whereas the UK has a gentle physical environment, Canada contains vast forests, volcanoes, much of the world’s fresh water and the immense Arctic wastes. Canadians are richer than Britons. In 2010, GDP per capita was $46,200 in Canada, around a quarter higher than the UK’s $36,400. Compared to their similarities however, these differences are trivial. Both are small, first world, open economies. Both have their own currencies, but depend for their prosperity on trade with larger neighbours. Both countries share much of a common heritage: the same language, the same monarch and similar political institutions. Both like to think of themselves as the best friend of the United States. Life expectancy in both is around 80 years, with the average age half that. The fundamentals of the UK and Canada, then, are largely similar.


pages: 330 words: 77,729

Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes by Mark Skousen

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Albert Einstein, banking crisis, Berlin Wall, Bretton Woods, business climate, creative destruction, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, full employment, Hernando de Soto, housing crisis, Hyman Minsky, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, liberation theology, liquidity trap, means of production, microcredit, minimum wage unemployment, money market fund, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, unorthodox policies, Vilfredo Pareto, zero-sum game

To truly liberate Latin America, he and other disciples of Adam Smith advocate open markets, foreign investment, low taxes, opportunities for business creation and ownership of property by all citizens, and political stability under the rule of law—a "liberal, pluralistic, communitarian, public-spirited, dynamic, inventive" nation not unlike the Asian tigers adopted in the recent past (Novak 1991, 32).9 Since the fall of Soviet communism and the socialist central-planning model, liberation theology has lost its steam and most Latin American countries have adopted a more open economy. Consequently, Latin nations have grown rapidly and the percentage of poor has declined. Orbis Books and the Maryknoll Fathers and Sisters ministry no longer publish books on liberation theology. The Next Revolution Only a few years after Marx's masterpiece, Capital, was published, a new breed of European economists came on the scene. These economists corrected the errors of Marx and the classical economists, and brought about a permanent revolution.


pages: 193 words: 63,618

The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla

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British Empire, carbon footprint, corporate social responsibility, David Ricardo: comparative advantage, deglobalization, Doha Development Round, Food sovereignty, global value chain, illegal immigration, income inequality, income per capita, invisible hand, Joseph Schumpeter, labour mobility, land reform, market fundamentalism, mass immigration, means of production, Mont Pelerin Society, Naomi Klein, non-tariff barriers, offshore financial centre, open economy, Philip Mirowski, Plutocrats, plutocrats, price mechanism, purchasing power parity, Ronald Reagan, Scientific racism, selection bias, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, transatlantic slave trade, trickle-down economics, Washington Consensus, zero-sum game

Renard, Marie-Christine (2003) ‘Fair Trade: Quality, Market and Conventions’, Journal of Rural Studies 19: 87–96. Rist, Gilbert (2006 [1996]) The History of Development: From Western Origins to Global Faith, 2nd edn (London: Zed Books). Rodriguez, Francisco and Rodrik, Dani (2000) ‘Trade Policy and Economic Growth: A Skeptic’s Guide to the Cross-national Evidence’, NBER Macroeconomics Annual 2000, 15: 261–338. Rodrik, Dani (1998) ‘Why do More Open Economies Have Bigger Governments?’, Journal of Political Economy, 106 (5): 997–1032. Rodrik, Dani (2006) ‘What’s So Special about China’s Exports?’ China and World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences 14(5): 1–19. Rodrik, Dani (2007a) One Economics, Many Recipes: Globalization, Institutions and Economic Growth (Princeton, NJ: Princeton University Press).


pages: 262 words: 66,800

Progress: Ten Reasons to Look Forward to the Future by Johan Norberg

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agricultural Revolution, anti-communist, availability heuristic, Bartolomé de las Casas, Berlin Wall, British Empire, business climate, clean water, continuation of politics by other means, Daniel Kahneman / Amos Tversky, demographic transition, desegregation, Donald Trump, Flynn Effect, germ theory of disease, Gini coefficient, Gunnar Myrdal, Haber-Bosch Process, Hans Island, Hans Rosling, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, Isaac Newton, Jane Jacobs, John Snow's cholera map, Kibera, Louis Pasteur, Mahatma Gandhi, meta analysis, meta-analysis, Mikhail Gorbachev, more computing power than Apollo, moveable type in China, Naomi Klein, open economy, place-making, Rosa Parks, sexual politics, special economic zone, Steven Pinker, telerobotics, The Wealth of Nations by Adam Smith, transatlantic slave trade, very high income, working poor, Xiaogang Anhui farmers, zero-sum game

So we constantly accumulate more scientific and other knowledge and every individual can contribute and achieve on the shoulders of hundreds of millions who have come before in a virtuous cycle. This book is about humanity’s triumphs. But it is not a message of complacency. It is written partly as a warning. It would be a terrible mistake to take this progress for granted. We have lived with these problems for most of history. There are forces at work in the world that would destroy the pillars of this development – the individual freedoms, open economy and technological progress. Terrorists and dictators do what they can to undermine open societies, but there are also threats from within our societies. There is widespread resentment against globalization and the modern economy from populists on both the left and the right. We can see the familiar hostility to the cosmopolitan, urban and fluid society that there has always been from those who are socially conservative, but today it is combined with the sense that the world outside is dangerous, and that we must build literal and figurative walls.

Global Governance and Financial Crises by Meghnad Desai, Yahia Said

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Asian financial crisis, bank run, banking crisis, Bretton Woods, capital controls, central bank independence, corporate governance, creative destruction, credit crunch, crony capitalism, currency peg, deglobalization, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, floating exchange rates, frictionless, frictionless market, German hyperinflation, information asymmetry, knowledge economy, liberal capitalism, liberal world order, Long Term Capital Management, market bubble, Mexican peso crisis / tequila crisis, moral hazard, Nick Leeson, oil shock, open economy, price mechanism, price stability, Real Time Gross Settlement, rent-seeking, short selling, special drawing rights, structural adjustment programs, Tobin tax, transaction costs, Washington Consensus

Developing countries are understandably incapable of maintaining exchange rate stability while the major currencies experience big fluctuations.12 Hence, currency co-ordination among the USA, Europe and Japan is desperately needed for the stability of their own currencies as well as other currencies in the world today. Despite frequent G7 meetings, existing arrangements leave much to be desired. Consequently, there are fluctuations of up to 20 per cent within a week. The effects of such huge swings on smaller open economies are not well understood, though they are expected to simply adjust to such changes. Since the East Asian crisis, the discussion on international financial reform to prevent future crises has emphasised questions of transparency and greater supply of information. However, there is no evidence that having more information 100 Jomo Kwame Sundaram will be enough to prevent crises. Also, efforts seem to be directed mainly to getting more information from governments, especially from the developing countries, with little done to get information on the various financial markets, especially the most volatile and vulnerable ones, such as those involving highly leveraged institutions and offshore markets.

Unhappy Union by The Economist, La Guardia, Anton, Peet, John

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bank run, banking crisis, Berlin Wall, Bretton Woods, capital controls, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, debt deflation, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, fixed income, Flash crash, illegal immigration, labour market flexibility, labour mobility, light touch regulation, market fundamentalism, moral hazard, Northern Rock, oil shock, open economy, pension reform, price stability, quantitative easing, special drawing rights, supply-chain management, The Great Moderation, too big to fail, transaction costs, éminence grise

Internal devaluation is difficult at the best of times. The IMF’s deputy managing director, Nemat Shafik, once memorably compared the process of recovering competitiveness to painting a house: If you have an exchange rate, you can move your brush back and forth. If you don’t have an exchange rate, you have to move the whole house. Successful adjustment requires flexible labour markets and an open economy that can export its way back to growth, as well as a population willing to put up with the pain. Greece had none of these: it was a closed, rigid economy and its politics was polarised by a history of occupation, civil war and military rule. As such, Greece was the most recalcitrant of the euro-zone countries to be rescued. Greek leaders, even as they slashed the budget, did not understand how extensive structural reforms needed to be, and made no progress on privatisation.


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

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Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamonds, Bob Geldof, borderless world, BRICs, British Empire, call centre, carbon footprint, charter city, clean water, cleantech, cloud computing, commoditize, continuation of politics by other means, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, facts on the ground, failed state, friendly fire, global village, Google Earth, high net worth, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, labour mobility, laissez-faire capitalism, Live Aid, Masdar, mass immigration, megacity, microcredit, mutually assured destruction, Naomi Klein, New Urbanism, off grid, offshore financial centre, oil shock, open economy, out of africa, Parag Khanna, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

The Beijing government controls its currency value to keep exports cheap, maintains strong oversight of the financial sector to avoid external control and overexposure to toxic assets, restricts procurement policies to benefit national suppliers, guides research and development to benefit national innovation, and selectively curbs imports of goods to maintain high domestic employment. In this way, semi-open economies from Brazil to India fared best in the financial crisis. Eventually, America wound up pursuing much the same course. Even George Soros has remarked that he is impressed by the China model, or what some are already calling the “Beijing Consensus.” There is something to be said for a system that peacefully transitions more than one billion people from revolutionary communism to Confucian capitalism.


pages: 1,351 words: 385,579

The Better Angels of Our Nature: Why Violence Has Declined by Steven Pinker

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1960s counterculture, affirmative action, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, availability heuristic, Berlin Wall, Bonfire of the Vanities, British Empire, Broken windows theory, California gold rush, Cass Sunstein, citation needed, clean water, cognitive dissonance, colonial rule, Columbine, computer age, conceptual framework, correlation coefficient, correlation does not imply causation, crack epidemic, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, demographic transition, desegregation, Doomsday Clock, Douglas Hofstadter, Edward Glaeser, en.wikipedia.org, European colonialism, experimental subject, facts on the ground, failed state, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, fudge factor, full employment, George Santayana, ghettoisation, Gini coefficient, global village, Henri Poincaré, Hobbesian trap, humanitarian revolution, impulse control, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, Isaac Newton, lake wobegon effect, libertarian paternalism, long peace, loss aversion, Marshall McLuhan, mass incarceration, McMansion, means of production, mental accounting, meta analysis, meta-analysis, Mikhail Gorbachev, moral panic, mutually assured destruction, open economy, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, race to the bottom, Ralph Waldo Emerson, random walk, Republic of Letters, Richard Thaler, Ronald Reagan, Rosa Parks, Saturday Night Live, security theater, Skype, Slavoj Žižek, South China Sea, statistical model, stem cell, Steven Levy, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, theory of mind, transatlantic slave trade, transatlantic slave trade, Turing machine, ultimatum game, uranium enrichment, V2 rocket, Vilfredo Pareto, Walter Mischel, WikiLeaks, women in the workforce, zero-sum game

Average scores on intelligence tests, though they started from lower levels, have been steeply rising in the countries in which the trends have been measured, such as Kenya and Dominica.280 Can we attribute any part of the New Peace to rising levels of reasoning in those countries? Here the evidence is circumstantial but suggestive. Earlier we saw that the New Peace has been led, in part, by a greater acceptance of democracy and open economies, which, as we have just seen, smarter people tend to favor. Put the two together, and we can entertain the possibility that more education can lead to smarter citizens (in the sense of “smart” we care about here), which can prepare the way for democracy and open economies, which can favor peace. It’s difficult to verify every link in that chain, but the first and last links have been correlated in a recent paper whose title is self-explanatory: “ABC’s, 123’s, and the Golden Rule: The Pacifying Effect of Education on Civil War, 1980–1999.” 281 The political scientist Clayton Thyne analyzed 160 countries and 49 civil wars taken from the dataset of James Fearon and David Laitin, which we visited in chapter 6.

Other than the end of the Cold War and the decline of ideology, what led to the mild reduction in the number of civil wars during the past two decades, and the steep reduction in battle deaths of the last one? And why do conflicts persist in the developing world (thirty-six in 2008, all but one of them civil wars) when they have essentially disappeared in the developed world? A good place to start is the Kantian triangle of democracy, open economies, and engagement with the international community. Russett and Oneal’s statistical analyses, described in the preceding chapter, embrace the entire world, but they include only disputes between states. How well does the triad of pacifying factors apply to civil wars within developing countries, where most of today’s conflicts take place? Each variable, it turns out, has an important twist. One might think that if a lot of democracy is a good thing in inhibiting war, then a little democracy is still better than none.

A mental model in which the world has a constant allotment of violence, so that every cease-fire is reincarnated somewhere else as a new war, and every interlude of peace is just a time-out in which martial tensions build up and seek release, is factually mistaken. Millions of people are alive today because of the civil wars and genocides that did not take place but that would have taken place if the world had remained as it was in the 1960s, 1970s, and 1980s. The conditions that favored this happy outcome—democracy, prosperity, decent government, peacekeeping, open economies, and the decline of antihuman ideologies—are not, of course, guaranteed to last forever. But nor are they likely to vanish overnight. Of course we live in a dangerous world. As I have emphasized, a statistical appreciation of history tells us that violent catastrophes may be improbable, but they are not astronomically improbable. Yet that can also be stated in a more hopeful way. Violent catastrophes may not be astronomically improbable, but they are improbable. 7 THE RIGHTS REVOLUTIONS I have a dream that one day this nation will rise up and live out the true meaning of its creed: “We hold these truths to be self-evident: that all men are created equal.”


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The end of history and the last man by Francis Fukuyama

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affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bonfire of the Vanities, centre right, cuban missile crisis, deindustrialization, Deng Xiaoping, European colonialism, F. W. de Klerk, Fall of the Berlin Wall, Francis Fukuyama: the end of history, full employment, Gini coefficient, Gunnar Myrdal, Hernando de Soto, income inequality, Isaac Newton, Joseph Schumpeter, kremlinology, labour mobility, land reform, long peace, Mikhail Gorbachev, nuclear winter, open economy, post-industrial society, postindustrial economy, RAND corporation, Ronald Reagan, Socratic dialogue, strikebreaker, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, zero-sum game

One measure of the growth of a broad, educated middle class is regular newspaper readership, the act which according to Hegel would replace the daily prayer for those middle-class societies at the end of history. Newspaper reader­ ship is now as high in Taiwan and South Korea as in the United States. Pye (1990a), p. 9. 16. Ibid. Taiwan by the early 1980s had the lowest "Gini coefficient" (a measure of even income distribution) of any developing country. See Gary S. Fields, "Employment, Income Distribution and Economic Growth in Seven Small Open Economies," Economic Journal 94 (March 1984): 7 4 - 8 3 . 17. On other attempts to defend dependencia theory from Asian evidence, see Peter Evans, "Class, State, and Dependence in East Asia: Lessons for Latin Amer­ icanists," and Bruce Cumings, "The Origins and Development of the Northeast Asian Political Economy: Industrial Sectors, Product Cycles, and Political Con­ sequences," both in Frederic C. Deyo, ed., The Political Economy of the New Asian Industrialism (Ithaca, N.Y.: Cornell University Press, 1989), pp. 4 5 - 8 3 , 2 0 3 - 2 2 6 . 18.

Princeton University Press, Princeton, N.J. Fackenheim, Emile. 1970. God's Presence in History: Jewish Affirmations and Philo­ sophical Reflections. New York University Press, New York. Field, Mark G., ed. 1976. Social Consequences of Modernization in Communist Soci­ eties. Johns Hopkins University Press, Baltimore. Fields, Gary S. 1984. "Employment, Income Distribution and Economic Growth in Seven Small Open Economies." Economic Journal 94 (March): 74^-83. Finifter, Ada. 1983. Political Science: The State of the Discipline. American Political Science Association, Washington, D.C. Fishman, Robert M. 1990. "Rethinking State and Regime: Southern Europe's Transition to Democracy." World Politics 42, no. 3 (April): 4 2 2 - 4 4 0 . Frank, André Gunder. 1969. Latin America: Underdevelopment or Revolution? Monthly Review Press, New York.


pages: 859 words: 204,092

When China Rules the World: The End of the Western World and the Rise of the Middle Kingdom by Martin Jacques

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Admiral Zheng, Asian financial crisis, Berlin Wall, Bob Geldof, Bretton Woods, BRICs, British Empire, credit crunch, Dava Sobel, deindustrialization, Deng Xiaoping, deskilling, discovery of the americas, Doha Development Round, energy security, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, illegal immigration, income per capita, invention of gunpowder, James Watt: steam engine, joint-stock company, Kenneth Rogoff, land reform, land tenure, Malacca Straits, Martin Wolf, Naomi Klein, new economy, New Urbanism, one-China policy, open economy, Pearl River Delta, pension reform, price stability, purchasing power parity, reserve currency, rising living standards, Ronald Reagan, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, spinning jenny, Spread Networks laid a new fibre optics cable between New York and Chicago, the scientific method, Thomas L Friedman, trade liberalization, urban planning, Washington Consensus, Westphalian system, Xiaogang Anhui farmers, zero-sum game

In 1970 its export trade made up only 0.7 per cent of the world’s total: at the end of the seventies, China’s imports and exports together represented 12 per cent of its GDP, the lowest in the world. China’s economic impact on the rest of the world was minimal for two reasons: firstly, the country was very poor, and secondly, it was very closed. But since 1978 China has rapidly become one of the world’s most open economies. Its average import tariff rate will decline from 23.7 per cent in 2001 to 5.7 per cent in 2011, with most of that fall having already taken place.139 Although its trade dependency (the proportion of GDP accounted for by exports and imports) was less than 10 per cent in 1978, by 2004 it had risen to 70 per cent, much higher than that of other large countries. China has now overtaken the United States to become the second largest exporter in the world, while in 2004 it ranked as the world’s third largest importer, accounting for 5.9 per cent of the global total.

Between 1980 and 2002, while China’s share of East Asian exports increased from 6 per cent to 25 per cent, Japan’s fell from 50 per cent to below 30 per cent; similarly, while China’s share of East Asian imports over the same period increased from 8 per cent to 21 per cent, Japan’s fell from 48 per cent to 27 per cent.45 Even at the peak of its economic power, Japan’s role was always limited by the fact that it steadfastly refused to open up its economy to exports from its neighbours (other than those from its own foreign subsidiaries) - or, indeed, to the rest of the world - so its influence was largely exercised by a combination of its own foreign direct investment in Japanese overseas subsidiaries, imports from those Japanese subsidiaries and Japanese exports to the region. In contrast China’s influence, because it has chosen to have an extremely open economy, is far more multifarious - as a market for the products of the region, as an exporter and as a multifaceted investor. Figure 24. Growing importance of Chinese market. Zhang Yunling, one of the architects of China’s new strategy, and Tang Shiping have described the aim as: ‘to make China a locomotive for regional growth by serving as a market for regional states and a provider of investment and technology’.46 The most obvious expression of this has been the way in which, in less than a decade, China has become one of - if not the - most important market for many countries in the region: in a few years’ time, it seems likely that it will be the single largest market for every country in the region.

The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

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air freight, airline deregulation, Albert Einstein, asset-backed security, bank run, Berlin Wall, Bretton Woods, business process, call centre, capital controls, central bank independence, collateralized debt obligation, collective bargaining, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Hernando de Soto, income inequality, income per capita, invisible hand, Joseph Schumpeter, labor-force participation, labour market flexibility, laissez-faire capitalism, land reform, Long Term Capital Management, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, new economy, North Sea oil, oil shock, open economy, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, reserve currency, Right to Buy, risk tolerance, Ronald Reagan, shareholder value, short selling, Silicon Valley, special economic zone, the payments system, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, working-age population, Y2K, zero-sum game

Fabian socialism was still reflected in Britain's social safety net but, from my perspective, in its most diluted form. Britain's success with the free-market thrust of Thatcher and "New Labour" suggests that their GDP-enhancing reforms are likely to persevere through the next generation. Britain's evolution from the ossified economy of the years immediately following World War II to one of the most open economies in the world is reflected in the intellectual journey of Gordon Brown, who described his 283 More ebooks visit: http://www.ccebook.cn ccebook-orginal english ebooks This file was collected by ccebook.cn form the internet, the author keeps the copyright. THE M O D E S OF C A P I T A L I S M industrywide unions and wage negotiation at a national level. In Germany labor representation on supervisory boards became mandatory.

Reality has not always matched this ideal, and discrimination against African Americans in particular forces us periodically to revisit the early constitutional debates about slavery and its violent resolution in the Civil War; we've come a long way, but we have a distance yet to travel. America's unrivaled protection of property rights has long attracted foreign investment to our shores. Some investors come in order to participate in a vibrant, open economy; others simply view the United States as a safe haven for their savings that is not available in their home country. As I shall explain, the ability of the American legal system to extend those cherished property rights to an economy predominantly driven by intellectual property will be a major challenge. And, of course, most detrimental of all to our standard of living would be a reemergence of protectionism and other policies that seek stability by preventing the change that is necessary for growth.


pages: 777 words: 186,993

Imagining India by Nandan Nilekani

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affirmative action, Airbus A320, BRICs, British Empire, business process, business process outsourcing, call centre, clean water, colonial rule, corporate governance, cuban missile crisis, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, digital map, distributed generation, farmers can use mobile phones to check market prices, full employment, ghettoisation, glass ceiling, global supply chain, Hernando de Soto, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, knowledge economy, labour market flexibility, land reform, light touch regulation, LNG terminal, load shedding, Mahatma Gandhi, market fragmentation, mass immigration, Mikhail Gorbachev, Network effects, new economy, New Urbanism, open economy, Parag Khanna, pension reform, Potemkin village, price mechanism, race to the bottom, rent control, rolodex, Ronald Reagan, school vouchers, Silicon Valley, smart grid, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, trickle-down economics, unemployed young men, upwardly mobile, urban planning, urban renewal, women in the workforce, working poor, working-age population

Radhakrishnan, noted, through “merchants who came to trade but stayed to rule.”4 Independent India, as a consequence, viewed trade as nothing more than Imperialism Lite, a system that would force us to remain under the British thumb; many believed that it would only mean continued colonial repression and economic exploitation for the country. India’s economic policy thus became “anti-colonialism without colonialism”—a former world power and remarkably open economy now viewed global markets with deep suspicion, and the government, with the support of Indian businesses, walled up the country’s markets with enormous trade restrictions. This equating of trade with imperialism has meant that as a free nation our views on globalization have been intertwined with our insecurities. Successive governments saw globalization as a threat, something that would force the country to become both deeply dependent on and vulnerable to the outside world.

We also need to clear the decks for more FDI to drive growth in sectors such as insurance and retail. Markets can only lift people out of poverty if these reforms are allowed to create the means for them to escape their circumstances. But the problem now may be a lack of pressure. “India has become adept at finding our way around our remaining obstacles in policies,” Omkar Goswami tells me. This strategy of taking detours around a country still not fully comfortable as an open economy has seeped into our everyday life. In cities we take routes through back roads—sometimes through neighborhoods where the houses hug so close to the median that the “road” may be a mere meter and a half across—to avoid potholes and traffic. We use generators to work through our power failures and pick private and foreign colleges in favor of our dismal, government-funded universities. Even the poor avoid public schools in favor of private ones.


pages: 267 words: 106,340

Europe old and new: transnationalism, belonging, xenophobia by Ray Taras

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affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, British Empire, carbon footprint, centre right, collective bargaining, energy security, full employment, Gunnar Myrdal, illegal immigration, immigration reform, low skilled workers, mass immigration, Mikhail Gorbachev, Naomi Klein, North Sea oil, open economy, postnationalism / post nation state, Potemkin village, Ronald Reagan, World Values Survey

What makes a people and a nation is a unique history and heritage, language and literature, songs and stories, traditions and customs, blood, soil and the mystic chords of memory. The EU is a thing of paper, an intellectual construct. Unlike a nation, it has no heart and no soul.” Box 3.4. Europe’s Mission in the World “The world needs the European method of putting together different national practices. The world needs the European principles of open societies and open economies. The world needs the European way of linking the imperative of freedom to the idea of solidarity and justice. The world needs the European priority in tackling climate change and promoting sustainable development with respect for our planet. By promoting its values and its interests, the Union not only delivers to its citizens but also helps the world to be a better place.” Source: José Manuel Durão Barroso, “The European Union after the Lisbon Treaty” (speech given at the 4th Joint Parliamentary Meeting on the Future of Europe, Brussels, December 4, 2007), http://europa.eu/rapid/pressReleasesAction.do?


pages: 381 words: 101,559

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

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Asian financial crisis, bank run, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, high net worth, income inequality, interest rate derivative, John Meriwether, Kenneth Rogoff, labour mobility, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, private sector deleveraging, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, sovereign wealth fund, special drawing rights, special economic zone, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, War on Poverty, Washington Consensus, zero-sum game

“A Modest Proposal for the G-20.” Project Syndicate, April 1, 2011. Subbotin, Alexander. “A Multi-Horizon Scale for Volatility.” Working paper prepared for Centre d’Économie de la Sorbonne, March 3, 2008. Svensson, Lars E. O. “Escaping a Liquidity Trap and Deflation: The Foolproof Way and Others.” Working Paper No. 10195, National Bureau of Economic Research, December 2003. ———. “The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap.” Working Paper No. 7957, National Bureau of Economic Research, October 2000. “Systematic Risk and the Redesign of Financial Regulation.” A Global Financial Stability Report, prepared for the International Monetary Fund, April 2010. Taylor, John B. “Discretion Versus Policy Rules in Practice.” Carnegie-Rochester Conference Series on Public Policy (1993): 195–214. ———.


pages: 358 words: 106,729

Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan

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accounting loophole / creative accounting, Andrei Shleifer, Asian financial crisis, asset-backed security, assortative mating, bank run, barriers to entry, Bernie Madoff, Bretton Woods, business climate, Clayton Christensen, clean water, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, diversification, Edward Glaeser, financial innovation, fixed income, floating exchange rates, full employment, global supply chain, Goldman Sachs: Vampire Squid, illegal immigration, implied volatility, income inequality, index fund, interest rate swap, Joseph Schumpeter, Kenneth Rogoff, knowledge worker, labor-force participation, Long Term Capital Management, market bubble, Martin Wolf, medical malpractice, microcredit, money market fund, moral hazard, new economy, Northern Rock, offshore financial centre, open economy, price stability, profit motive, Real Time Gross Settlement, Richard Florida, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, school vouchers, short selling, sovereign wealth fund, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Vanguard fund, women in the workforce, World Values Survey

Over nearly four decades, only five different models of the Ambassador car were produced, and the sole differences between them seemed to be the headlights and the shape of the grill. After growing rapidly just after independence, the Indian economy got stuck at a per capita real growth rate of about 1 percent—dubbed the “Hindu” rate of growth. Like Korea or Taiwan, India should have made the switch toward exports and a more open economy in the early 1960s. But because the protected Indian domestic market was large, at least relative to that of the typical late developer, firms were perfectly happy exploiting their home base despite government attempts to encourage exports. This is not to say that government efforts to change were particularly strenuous, especially given that protected firms were an important source of revenue to the ruling party for fighting elections.


pages: 261 words: 103,244

Economists and the Powerful by Norbert Haring, Norbert H. Ring, Niall Douglas

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accounting loophole / creative accounting, Affordable Care Act / Obamacare, Albert Einstein, asset allocation, bank run, barriers to entry, Basel III, Bernie Madoff, British Empire, central bank independence, collective bargaining, commodity trading advisor, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, diversified portfolio, financial deregulation, George Akerlof, illegal immigration, income inequality, inflation targeting, information asymmetry, Jean Tirole, job satisfaction, Joseph Schumpeter, Kenneth Arrow, knowledge worker, labour market flexibility, law of one price, light touch regulation, Long Term Capital Management, low skilled workers, mandatory minimum, market bubble, market clearing, market fundamentalism, means of production, minimum wage unemployment, moral hazard, new economy, obamacare, old-boy network, open economy, Pareto efficiency, Paul Samuelson, pension reform, Ponzi scheme, price stability, principal–agent problem, profit maximization, purchasing power parity, Renaissance Technologies, rolodex, Sergey Aleynikov, shareholder value, short selling, Steve Jobs, The Chicago School, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, ultimatum game, union organizing, Vilfredo Pareto, working-age population, World Values Survey

This means that low-wage workers in the secondary market are supposed to cut their wages even more in order to create enough demand for their own labor and for the labor of those descending from the primary labor market. Most modern neoclassical theorists will admit that the wage cuts needed to achieve this can be steep. There is no guarantee at all that you can live on the market-clearing wage (Kaufman 2009). In an open economy with exports, external demand might eventually solve the problem at low enough wages, but there is certainly no guarantee. With flexible exchange rates, the exchange rate often appreciates if wages and prices go down. This can cancel out the improvement in competitiveness brought about by lower wages. However, the most important problem is that low-wage workers in the non-export sector have to take the brunt of wage cuts to put the labor market back into equilibrium.


pages: 276 words: 82,603

Birth of the Euro by Otmar Issing

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accounting loophole / creative accounting, Bretton Woods, business climate, capital controls, central bank independence, currency peg, financial innovation, floating exchange rates, full employment, inflation targeting, information asymmetry, labour market flexibility, labour mobility, market fundamentalism, money market fund, moral hazard, oil shock, open economy, price anchoring, price stability, purchasing power parity, reserve currency, Y2K, yield curve

Basic figures are expressed in PPS, i.e. a common currency that eliminates the differences in price levels between countries, allowing meaningful volume comparisons of GDP between countries. Source: Eurostat. GDP in PPS terms of 175.05 against the average of 100, lay far ahead of the tail-ender Portugal, with per capita GDP in PPS terms of 61.57. The main features of this new currency area can be outlined as follows. While previously the member countries could be described as predominantly small, open economies, the euro area as a whole, with export and import shares (as a percentage of GDP) of 13.6 per cent and 12.0 per cent respectively, represents a large, relatively closed economic area (the comparable figures for the USA are 8.5 per cent und 11.1 per cent). In terms of the structure of the economy, the differences compared with the USA were relatively small. What is striking, in contrast, is the significantly higher share of the public sector in the euro area, including state transfer payments to private households.


pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

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Andrei Shleifer, business climate, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, Gini coefficient, Gunnar Myrdal, Hernando de Soto, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, manufacturing employment, Network effects, New Urbanism, open economy, Productivity paradox, purchasing power parity, rent-seeking, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

Free trade allows economies to specialize in what they are best at doing, exporting those things andimportingthethingstheyarenot so good at producing. Interference with trade distorts prices so that inefficient producers will get subsidized. This distortion could affect growth because inefficient resource use lowers the rate of return to investing in thefuture.14 The free trade arguments are now supported by theexperience of the pastfew decades, whichhas found that more open economies are richer and grow faster. Openness to trade has many dimensions, and all of these dimensions are positively associated with growth. Jeffrey Sachs and Andrew Warner defined countries as closed if they had any of the following: nontariff barriers covering 40 percent or more of trade, average tariff rates of 40 percent or more, a black market premium of 20 percent or more, a socialist economic system, or a state monopoly on major exports.


pages: 416 words: 106,582

This Will Make You Smarter: 150 New Scientific Concepts to Improve Your Thinking by John Brockman

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23andMe, Albert Einstein, Alfred Russel Wallace, banking crisis, Barry Marshall: ulcers, Benoit Mandelbrot, Berlin Wall, biofilm, Black Swan, butterfly effect, Cass Sunstein, cloud computing, congestion charging, correlation does not imply causation, Daniel Kahneman / Amos Tversky, dark matter, data acquisition, David Brooks, delayed gratification, Emanuel Derman, epigenetics, Exxon Valdez, Flash crash, Flynn Effect, hive mind, impulse control, information retrieval, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, Jaron Lanier, John von Neumann, Kevin Kelly, lifelogging, mandelbrot fractal, market design, Mars Rover, Marshall McLuhan, microbiome, Murray Gell-Mann, Nicholas Carr, open economy, Pierre-Simon Laplace, place-making, placebo effect, pre–internet, QWERTY keyboard, random walk, randomized controlled trial, rent control, Richard Feynman, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Satyajit Das, Schrödinger's Cat, security theater, selection bias, Silicon Valley, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, the scientific method, Thorstein Veblen, Turing complete, Turing machine, Vilfredo Pareto, Walter Mischel, Whole Earth Catalog, zero-sum game

Populaces recognize that economic middlemen (particularly ethnic minorities who specialize in that niche, such as Jews, Armenians, overseas Chinese, and expatriate Indians) are not social parasites whose prosperity comes at the expense of their hosts but positive-sum-game creators who enrich everyone at once. Countries recognize that international trade doesn’t benefit their trading partner to their own detriment but benefits them both and turn away from beggar-thy-neighbor protectionism to open economies which (as classical economists noted) make everyone richer and (as political scientists have recently shown) discourage war and genocide. Warring countries lay down their arms and split the peace dividend rather than pursuing Pyrrhic victories. Granted, some human interactions really are zero-sum; competition for mates is a biologically salient example. And even in positive-sum games, a party may pursue an individual advantage at the expense of joint welfare.

Crisis and Dollarization in Ecuador: Stability, Growth, and Social Equity by Paul Ely Beckerman, Andrés Solimano

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banking crisis, banks create money, barriers to entry, capital controls, Carmen Reinhart, carried interest, central bank independence, centre right, clean water, currency peg, declining real wages, disintermediation, financial intermediation, fixed income, floating exchange rates, Gini coefficient, income inequality, income per capita, labor-force participation, land reform, London Interbank Offered Rate, Mexican peso crisis / tequila crisis, microcredit, money: store of value / unit of account / medium of exchange, offshore financial centre, old-boy network, open economy, pension reform, price stability, rent-seeking, school vouchers, seigniorage, trade liberalization, women in the workforce

Processed. 126 CRISIS AND DOLLARIZATION IN ECUADOR Jaramillo, Fidel. 1994. “Ecuador: Estabilización, ingreso de capitales externos y conflictos de política macroeconomica.” Multiplica Working Paper. Quito, Ecuador. Kopits, George, E. Haindl, E. Ley, and J. Toro. 1999. “Ecuador: Modernización del Sistema Tributario. International Monetary Fund. Washington, D.C. Lane, P. 2002. “Exchange Rate Regimes and Monetary Policy in Small Open Economies.” In The Choice of Exchange Regime and Monetary Policy Rules. European Union. Forthcoming. Mancheno, Diego, J. Oleas, and P. Samaniego. 1999. “Aspectos teóricos y prácticos de la adopción de un sistema de convertibilidad en el Ecuador.” Notas Técnicas. Banco Central del Ecuador, Quito, Ecuador. Marx Carrasco V., Carlos. 2000. Dolarización: Un camino de espinas y espejismos. Cuenca, Ecuador.

Nation-Building: Beyond Afghanistan and Iraq by Francis Fukuyama

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Berlin Wall, business climate, colonial rule, conceptual framework, en.wikipedia.org, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Gunnar Myrdal, informal economy, land reform, microcredit, open economy, unemployed young men

The Soviet occupation and the exhaustion brought on by the protracted war have eliminated the once-murderous left-right ideological struggle, even as ethnic cleavages intensified. Afghanistan’s political and social institutions, under greater international scrutiny, probably stand a better chance of reform than at any time previously. A liberal state is usually felt to be best suited to fostering a sustainable political system and economic growth in Afghanistan. Individual freedoms, a vibrant civil society, and an open economy are prescribed and several familiar benchmarks indicating progress have been laid out. The United States and other Western countries tend to put a high premium on holding elections to provide greater legitimacy for those in authority. Under the best of circumstances, elections can be a means of coalition-building and reconciliation. Great significance is also given to agreement on a constitution that parcels out powers and enshrines rights.


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

The move away from neoliberalism is likely to involve higher rates of tax at the top end, dramatically increased education spending, and perhaps a rethinking of some of the ways in which capitalism can be inflected away from shareholder value towards models that include owners, managers, workers, and the surrounding community—a model that has been successful in, for instance, Germany. The provision of employment and training for apprentices is an explicit part of this. There will need to be a sharp increase in levels of social housing. The role model here is Singapore, which as well as consistently being voted the most open economy in the world—a beacon to free marketers everywhere—has the highest level of state and social housing in the world. The world capital of the free market is also the world capital of council houses. Not all the lessons of Singapore are about free markets. More generally, there will need to be a focus on material well-being in the round, and broader measures of quality of life than the mere narrow focus on GDP.


pages: 364 words: 99,897

The Industries of the Future by Alec Ross

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23andMe, 3D printing, Airbnb, algorithmic trading, AltaVista, Anne Wojcicki, autonomous vehicles, banking crisis, barriers to entry, Bernie Madoff, bioinformatics, bitcoin, blockchain, Brian Krebs, British Empire, business intelligence, call centre, carbon footprint, cloud computing, collaborative consumption, connected car, corporate governance, Credit Default Swap, cryptocurrency, David Brooks, disintermediation, Dissolution of the Soviet Union, distributed ledger, Edward Glaeser, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, fiat currency, future of work, global supply chain, Google X / Alphabet X, industrial robot, Internet of things, invention of the printing press, Jaron Lanier, Jeff Bezos, job automation, John Markoff, knowledge economy, knowledge worker, lifelogging, litecoin, M-Pesa, Marc Andreessen, Mark Zuckerberg, Mikhail Gorbachev, mobile money, money: store of value / unit of account / medium of exchange, new economy, offshore financial centre, open economy, Parag Khanna, peer-to-peer, peer-to-peer lending, personalized medicine, Peter Thiel, precision agriculture, pre–internet, RAND corporation, Ray Kurzweil, recommendation engine, ride hailing / ride sharing, Rubik’s Cube, Satoshi Nakamoto, selective serotonin reuptake inhibitor (SSRI), self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, social graph, software as a service, special economic zone, supply-chain management, supply-chain management software, technoutopianism, The Future of Employment, underbanked, Vernor Vinge, Watson beat the top human players on Jeopardy!, women in the workforce, Y Combinator, young professional

Economic reforms have lifted half a billion people out of poverty in China and cut poverty by more than half in India. They have transformed from countries where famines killed tens of millions of people during the 20th century to two of the largest and most vibrant economies in the world. Their futures will see transformative change every bit as exceptional as the past three decades have. For decades, China demonstrated that a somewhat open economy and a closed political system can achieve growth by being home to knowledge workers and manufacturing centers. But it is now seeking to prove that it can provide the conditions for innovation of its own. To this end, the core question for China’s future is whether its model of relative economic openness but tight political control can foster real innovation. Thus far, it seems that its knowledge economy has been hampered.


pages: 344 words: 93,858

The Post-American World: Release 2.0 by Fareed Zakaria

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affirmative action, agricultural Revolution, airport security, anti-communist, Asian financial crisis, battle of ideas, Berlin Wall, Bretton Woods, BRICs, British Empire, call centre, capital controls, central bank independence, centre right, collapse of Lehman Brothers, conceptual framework, Credit Default Swap, currency manipulation / currency intervention, delayed gratification, Deng Xiaoping, double entry bookkeeping, failed state, Fall of the Berlin Wall, financial innovation, global reserve currency, global supply chain, illegal immigration, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, Mahatma Gandhi, Martin Wolf, mutually assured destruction, new economy, oil shock, open economy, out of africa, Parag Khanna, postindustrial economy, purchasing power parity, race to the bottom, reserve currency, Ronald Reagan, Silicon Valley, Silicon Valley startup, South China Sea, Steven Pinker, The Great Moderation, Thomas L Friedman, Thomas Malthus, trade route, Washington Consensus, working-age population, young professional, zero-sum game

For this among many reasons, it is not the new Japan. Beijing has not adopted the Japanese (or South Korean) path of development, which was an export-led strategy that kept the domestic market and society closed. Instead, China opened itself up to the world. (It did this partly because it had no choice, since it lacked the domestic savings of Japan or South Korea.) Now China’s trade-to-GDP ratio is 70 percent, which makes it one of the most open economies in the world. Procter & Gamble sells $5 billion worth of products a year in China, and familiar products like Head & Shoulders shampoo and Pampers diapers are extraordinarily popular with consumers there. Starbucks is opening thousands of stores in Greater China and expects the country to soon displace Japan as its biggest market outside the United States. China is also very open to international brand names, whether of goods or people.


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

It plays well to America's desire to stand apart, its instinctive exceptionalism. As William G. Hyland, Deputy National Security Advisor to President Gerald Ford, noted, “protectionism is the ally of isolationism.”8 Europe too has many of the requirements of a closed economy. While individual European economies are modest in size, the EU constitutes over 25 percent of global GDP, making it the world's largest economic unit. The EU is a more open economy than the US, being the world's largest exporter and importer of goods and services. But around 75 percent of its trade is among member nations, aided by the absence of trade barriers and a common currency. Germany, the EU's largest economy and one of the world's largest exporters, sells over 60 percent of its products within the Eurozone. The EU is largely self-sufficient in food. Like the US, this is based in part on subsidies, minimum price schemes, and trade restrictions that favor European farmers.


pages: 205 words: 18,208

The Transparent Society: Will Technology Force Us to Choose Between Privacy and Freedom? by David Brin

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affirmative action, airport security, Ayatollah Khomeini, clean water, cognitive dissonance, corporate governance, data acquisition, death of newspapers, Extropian, Howard Rheingold, illegal immigration, informal economy, information asymmetry, Iridium satellite, Jaron Lanier, John Markoff, John von Neumann, Kevin Kelly, means of production, mutually assured destruction, offshore financial centre, open economy, packet switching, pattern recognition, pirate software, placebo effect, Plutocrats, plutocrats, prediction markets, Ralph Nader, RAND corporation, Robert Bork, Saturday Night Live, Search for Extraterrestrial Intelligence, Steve Jobs, Steven Levy, Stewart Brand, telepresence, trade route, Vannevar Bush, Vernor Vinge, Whole Earth Catalog, Whole Earth Review, Yogi Berra, zero-sum game, Zimmermann PGP

But consider how much better ecash will work if 95% of commercial transactions were openly announced, as just described. Insurance and liability problems would lessen. Authorities or commercial agents could concentrate on protecting the smaller number of cipher-secured trades, while the rest are safeguarded by openness. Villains who do succeed in stealing ecash would not be quite as seamlessly invisible as they might like when they try to spend it in a mostly open economy. Moreover, by reducing the total number of potential “prey” transactions in the marketplace, we will also decrease the overall number of predators. When there arenʼt many shadows, there will be fewer places for knaves to lurk, or to practice their skills by victimizing others. The second advantage to a transparency option would be that it is robust (a theme we will reiterate later). If only a small fraction of commercial deals are encrypted, no undiscovered flaw in the ciphering software can be used to steal the whole bank or to topple an entire economy.


pages: 483 words: 141,836

Red-Blooded Risk: The Secret History of Wall Street by Aaron Brown, Eric Kim

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activist fund / activist shareholder / activist investor, Albert Einstein, algorithmic trading, Asian financial crisis, Atul Gawande, backtesting, Basel III, Bayesian statistics, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Black Swan, capital asset pricing model, central bank independence, Checklist Manifesto, corporate governance, creative destruction, credit crunch, Credit Default Swap, disintermediation, distributed generation, diversification, diversified portfolio, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, experimental subject, financial innovation, illegal immigration, implied volatility, index fund, Long Term Capital Management, loss aversion, margin call, market clearing, market fundamentalism, market microstructure, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, natural language processing, open economy, Pierre-Simon Laplace, pre–internet, quantitative trading / quantitative finance, random walk, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, shareholder value, Sharpe ratio, special drawing rights, statistical arbitrage, stochastic volatility, The Myth of the Rational Market, Thomas Bayes, too big to fail, transaction costs, value at risk, yield curve

Money, which meant silver coin in Holland at the time, was not very stable. Inflation was high; prices doubled in the 20 years from 1606 to 1626. Worse, debasement was a chronic problem. This is true everywhere precious metal money is used, but it was particularly severe in Holland at this time for several reasons. The Thirty Years War required enormous expenditures, which were often financed by debasement of coins. Holland had a small, open economy, meaning that coins flowed into it from all over Europe; when people send coins, they send the lightest ones, the most debased ones. Finally, central authorities were weak in Holland, so individual state banks and independent mints were able to get away with more debasement than was tolerated in other countries. This did not amount to a large problem for someone who wanted to sell goods and buy other goods immediately with the proceeds.


pages: 564 words: 153,720

Uncommon Grounds: The History of Coffee and How It Transformed Our World by Mark Pendergrast

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business climate, commoditize, Edward Lloyd's coffeehouse, Honoré de Balzac, land reform, microcredit, Mikhail Gorbachev, new economy, open economy, out of africa, profit motive, Ray Oldenburg, Ronald Reagan, The Great Good Place, trade route, transcontinental railway, traveling salesman, women in the workforce

Michelli; Tribal Knowledge: Business Wisdom Brewed from the Grounds of Starbucks Corporate Culture (2006), by John Moore; Pour Your Heart Into It (Starbucks history, 1997), by Howard Schultz and Dori Jones Yang; My Sister’s a Barista (2005), by John Simmons; Everything But the Coffee: Learning About America from Starbucks (2009), by Bryant Simon; The Gospel According to Starbucks (2007), by Leonard Sweet; W. R. Grace: Grace: W. R. Grace & Company (1985), by Lawrence A. Clayton. Books on coffee prices and international commodity schemes include: Open Economy Politics (1997), by Robert H. Bates; The Corner in Coffee (fiction, 1904), by Cyrus Townsend Brady; The Coffee Paradox (2005), by Benoit Daviron and Stefano Ponte; An Oligopoly: The World Coffee Economy and Stabilization (1971), by Thomas Geer; Trading Down (2005), by Peter Gibbon and Stefano Ponte; The Brazilian Coffee Valorization of 1906 (1975), by Thomas H. Holloway; The International Political Economy of Coffee (1988), by Richard L.


pages: 484 words: 120,507

The Last Lingua Franca: English Until the Return of Babel by Nicholas Ostler

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barriers to entry, BRICs, British Empire, call centre, en.wikipedia.org, European colonialism, Internet Archive, invention of writing, Isaac Newton, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, mass immigration, open economy, Republic of Letters, Scramble for Africa, statistical model, trade route, upwardly mobile

This means that the sentences are not only ungrammatical and truncated, but often incomprehensible, especially to foreigners. Classic examples would be “You got money, sure can buy one” or “This is my one,” derived from zhe shi wo de. The ability to speak good English is a distinct advantage in terms of doing business and communicating with the world. This is especially important for a hub city and an open economy like ours. If we speak a corrupted form of English that is not understood by others, we will lose a key competitive advantage. My concern is that if we continue to speak Singlish, it will over time become Singapore’s common language. (Goh Chok Tong, at the launch of the “Speak Good English” Movement, April 29, 2000) In the Philippines, money is being spent to improve the quality of English on citizens’ lips: Education Secretary Fe Hidalgo said her department has allocated 581 million pesos to implement its English-proficiency program among teachers, saying the results of a recent English-proficiency test among them was not very encouraging.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

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1960s counterculture, affirmative action, airline deregulation, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Gunnar Myrdal, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, liberal capitalism, Long Term Capital Management, manufacturing employment, market bubble, Martin Wolf, new economy, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Ronald Reagan, Simon Kuznets, strikebreaker, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

The unstated corollary was that the trade surpluses accumulated by Germany and Japan would turn into deficits, like those in the United States. In other words, the two new economic powers would share the U.S. burden by opening their markets to the poor nations who needed to pay for their oil imports. The blueprint was a variant of Keynesian multiplier-analysis. Keynesian deficits increased a nation’s GDP by increasing the demand for goods. International Keynesianism worked slightly differently. In a world of open economies, import leakage reduced the domestic multiplier of additional government spending or tax cuts. Thus, some of a U.S. stimulus would be used by Americans to purchase foreign goods, thus boosting the exporter’s economy. If all of the richer countries raised government spending or cut taxes, no one nation would assume the burden, as the United States did in the postwar world. In the end, there would be more demand for the goods of poorer exporting nations that had accumulated large oil bills.


pages: 543 words: 147,357

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

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

The upside, in terms of macro-economic policy, is that the new realisation that increasing wages will simply price goods and services out of the market helps reinvent fiscal policy’s traction on demand and employment. Globalisation and the aftermath of the credit crunch are also important factors. The latter has left most economies, including Britain’s, with a substantial gap between what the economy has the capacity to produce and what it is producing – the so-called output gap. Globalisation and open economies add to the sense that playing fast and loose with wage and pricing policy in these circumstances is self-defeating: firms would just lose business to competitors. Nor are firms, consumers and workers so economically rational as the free-market economists supposed. The supposition was that, when confronted by a tax reduction, consumers would know it was only temporary and so would rationally save to pay for the inevitable later tax rise.


pages: 418 words: 128,965

The Master Switch: The Rise and Fall of Information Empires by Tim Wu

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accounting loophole / creative accounting, Alfred Russel Wallace, Apple II, barriers to entry, British Empire, Burning Man, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, don't be evil, Douglas Engelbart, Douglas Engelbart, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, zero-sum game

The open era of film was not, as that of radio was, launched by idealistic amateurs. But whatever the motive behind Laemmle and Fox’s instinct to fight the Trust, the effect was to blow open a new and incredibly powerful medium of expression and one with greater economic potential than had been allowed before. The film industry, once cracked, would be an extreme example of how an open industrial market and an open economy of ideas can overlap entirely. As the battle between the Independents and the Trust wore on, the Trust, perhaps increasingly desperate, began taking the law into their own hands. In came the private enforcers, on the theory that “though an injunction will not stop a man from making films, a broken camera will.”24 THE OUTCOME In 1912 it was by no means clear whether Hollywood or the East Coast Trust would dominate the future of American film (nor, for that matter, whether American film would be dominant in relation to European).


pages: 607 words: 133,452

Against Intellectual Monopoly by Michele Boldrin, David K. Levine

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

Razin (2004), “Curb Your Innovation: Corporate Conservatism in the Presence of Imperfect Intellectual Property Rights,” mimeo, New York University. Baker, D. and N. Chatani (2002), “Promoting Good Ideas on Drugs: Are Patents the Best Way? The Relative Efficiency of Patent and Public Support for Bio-medical Research,” briefing paper, Center for Economic and Policy Research. Baldwin, J. M. and P. Hanel (2003), Innovation and Knowledge Creation in an Open Economy: Canadian Industry and International Implications. Cambridge: Cambridge University Press. Barragan Arce, J. (2005), “The Apples of Competition: A Study of Plants Innovation in Nineteenth and Twentieth Century USA,” Ph.D. dissertation, University of Minnesota, in progress. Barro, R. J. and X. Sala-i-Martin (1995), Economic Growth. Cambridge, MA: MIT Press. Battacharya, S. and J. R. Ritter (1983), “Innovation and Communication: Signalling with Partial Disclosure,” Review of Economic Studies 50, 331–46.


pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

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Asian financial crisis, asset allocation, Berlin Wall, Bretton Woods, Brownian motion, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, information asymmetry, intangible asset, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, Paul Samuelson, quantitative trading / quantitative finance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, selection bias, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve

As we have argued before in this chapter, the magnitude of such indirect effects can be very significant and actually drive the accelerated growth of the economy. This can thus overwhelm any direct effect that population structure may have on asset returns. Third, the possible dependence between asset returns and demographic structure may be weakened by the increasing integration of world capital markets. For open economies with significant foreign investments, it is the global demographic structure that should matter. Finally, empirical data suggests that assets are sold much more slowly during retirement years than they are accumulated during working years. While not leading to a systematic meltdown, the stability of the markets and their susceptibility to external shocks may be significantly modified by the retirement of Baby Boomers.


pages: 413 words: 119,379

The Looting Machine: Warlords, Oligarchs, Corporations, Smugglers, and the Theft of Africa's Wealth by Tom Burgis

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Airbus A320, Berlin Wall, blood diamonds, BRICs, British Empire, central bank independence, clean water, colonial rule, corporate social responsibility, crony capitalism, Deng Xiaoping, Donald Trump, F. W. de Klerk, Gini coefficient, Livingstone, I presume, McMansion, megacity, offshore financial centre, oil shock, open economy, purchasing power parity, rolodex, Ronald Reagan, Silicon Valley, South China Sea, sovereign wealth fund, structural adjustment programs, trade route, transfer pricing, upwardly mobile, urban planning, Washington Consensus, WikiLeaks, zero-sum game

A November 2008 cable from the US embassy in Abuja, published in September 2011 by WikiLeaks, reported, ‘Ribadu also expressed concern for his former EFCC colleague and friend, Ibrahim Magu; he claims Magu is in danger because of his specific knowledge of the President’s relationship with Dahiru Mangal (an influential wealthy northern businessman who is currently under investigation and has ties to the Yar’Adua family and administration) and a money laundering operation which fronts as a legitimate company.’ ‘Nigeria: Further Harassment of Former Efcc Chair Ribadu’, 25 November 2008, WikiLeaks, www.wikileaks.org/plusd/cables/​08ABUJA2307_a.html. 12. Jan L. van Zanden, The Economic History of The Netherlands 1914–1995: A Small Open Economy in the ‘Long’ Twentieth Century (New York: Routledge, 1997), 165. 13. A Southern African Development Community study from 2000, cited in Economic Commission for Africa, ‘Minerals and Africa’s Development: The International Study Group Report on Africa’s Mineral Regimes’, November 2011, www.uneca.org/sites/default/files​/publications/mineral_africa​_development_report_eng.pdf. 14. UN Industrial Development Organisation (UNIDO) and UN Conference on Trade and Development (UNCTAD), ‘Fostering Industrial Development in Africa in the New Global Environment, Economic Development in Africa Report’, UNCTAD, July 2011, http://unctad.org/en/docs/​aldcafrica2011_en.pdf. 15.


pages: 466 words: 127,728

The Death of Money: The Coming Collapse of the International Monetary System by James Rickards

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Affordable Care Act / Obamacare, Asian financial crisis, asset allocation, Ayatollah Khomeini, bank run, banking crisis, Ben Bernanke: helicopter money, bitcoin, Black Swan, Bretton Woods, BRICs, business climate, capital controls, Carmen Reinhart, central bank independence, centre right, collateralized debt obligation, collective bargaining, complexity theory, computer age, credit crunch, currency peg, David Graeber, debt deflation, Deng Xiaoping, diversification, Edward Snowden, eurozone crisis, fiat currency, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, G4S, George Akerlof, global reserve currency, global supply chain, Growth in a Time of Debt, income inequality, inflation targeting, information asymmetry, invisible hand, jitney, John Meriwether, Kenneth Rogoff, labor-force participation, labour mobility, Lao Tzu, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market design, money market fund, money: store of value / unit of account / medium of exchange, mutually assured destruction, obamacare, offshore financial centre, oil shale / tar sands, open economy, Plutocrats, plutocrats, Ponzi scheme, price stability, quantitative easing, RAND corporation, reserve currency, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, special drawing rights, Stuxnet, The Market for Lemons, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, trade route, uranium enrichment, Washington Consensus, working-age population, yield curve

Wall Street Journal, June 13, 2013, online.wsj.com/article/SB10001424127887323734304578542941134353614.html. Stewart, James B. “The Birthday Party.” New Yorker, February 11, 2008, http://www.newyorker.com/reporting/2008/02/11/080211fa_fact_stewart. Subbotin, Alexander. “A Multi-Horizon Scale for Volatility.” Centre d’Economie de la Sorbonne, working paper, March 3, 2008. Swensson, Lars E. O. “The Zero Bound in an Open Economy: A Foolproof Way of Escaping from a Liquidity Trap.” National Bureau of Economic Research, Working Paper no. 7957, October 2000, http://www.nber.org/papers/w7957. ———. “Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others.” National Bureau of Economic Research, Working Paper no. 10195, December 2003, http://www.nber.org/papers/w10195. Taylor, Jason E., and Richard K.

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

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

The quality of democracy is severely limited by persistent and pervasive inequality.38 As we have argued, the high-stakes politics derived from the growing distance between the haves and the have-nots in Latin America are incompatible with the compromises and give-and-take accommodations that are necessary to establish firm foundations in young democracies. The possibilities for rapid growth and development are compromised because citizens do not have the skill sets to participate and compete in open economies. And for the region, competitiveness is key to improving living standards, attracting foreign investment, and escaping the natural resource curse of continued dependence on highly volatile commodity and mineral exports. According to Karl, the “commodity lottery” remains the fundamental basis for the vicious cycle of unequal development in the region, and mitigating inequality remains the central task that policymakers must address.39 She states that “this winner-loser setup is a self-reinforcing economic and political dynamic based on the concentration of both assets and power, the institutionalized bias this creates in political structures, and the permanent exclusion of large segments of the population.”40 Until this challenge is met, high-stakes politics will continue to dominate the scene.


pages: 437 words: 113,173

Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance by Ian Goldin, Chris Kutarna

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Airbnb, Albert Einstein, AltaVista, Asian financial crisis, asset-backed security, autonomous vehicles, banking crisis, barriers to entry, battle of ideas, Berlin Wall, bioinformatics, bitcoin, Bonfire of the Vanities, clean water, collective bargaining, Colonization of Mars, Credit Default Swap, crowdsourcing, cryptocurrency, Dava Sobel, demographic dividend, Deng Xiaoping, Doha Development Round, double helix, Edward Snowden, Elon Musk, en.wikipedia.org, epigenetics, experimental economics, failed state, Fall of the Berlin Wall, financial innovation, full employment, Galaxy Zoo, global supply chain, Hyperloop, immigration reform, income inequality, indoor plumbing, industrial cluster, industrial robot, information retrieval, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invention of the printing press, Isaac Newton, Islamic Golden Age, Khan Academy, Kickstarter, labour market flexibility, low cost carrier, low skilled workers, Lyft, Malacca Straits, mass immigration, megacity, Mikhail Gorbachev, moral hazard, Network effects, New Urbanism, non-tariff barriers, Occupy movement, On the Revolutions of the Heavenly Spheres, open economy, Panamax, Pearl River Delta, personalized medicine, Peter Thiel, post-Panamax, profit motive, rent-seeking, reshoring, Robert Gordon, Robert Metcalfe, Search for Extraterrestrial Intelligence, Second Machine Age, self-driving car, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, smart grid, Snapchat, special economic zone, spice trade, statistical model, Stephen Hawking, Steve Jobs, Stuxnet, TaskRabbit, The Future of Employment, too big to fail, trade liberalization, trade route, transaction costs, transatlantic slave trade, uranium enrichment, We are the 99%, We wanted flying cars, instead we got 140 characters, working poor, working-age population, zero day

The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It Divided Nations: Why Global Governance Is Failing, and What We Can Do About It Exceptional People: How Migration Shaped Our World and Will Define Our Future Globalization for Development: Meeting New Challenges The Case for Aid The Economics of Sustainable Development Economic Reform, Trade and Agricultural Development Modelling Economy-wide Reforms Trade Liberalization: Global Economic Implications Open Economies The Future of Agriculture Economic Crisis: Lessons from Brazil Making Race About the Authors IAN GOLDIN is Professor of Globalization and Director of the Oxford Martin School at the University of Oxford. He was Vice President of the World Bank, Chief Executive of the Development Bank of Southern Africa and an adviser to President Nelson Mandela. You can sign up for email updates here.

Making Globalization Work by Joseph E. Stiglitz

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affirmative action, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, Berlin Wall, business process, capital controls, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Gini coefficient, global reserve currency, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Kenneth Arrow, Kenneth Rogoff, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, trickle-down economics, union organizing, Washington Consensus, zero-sum game

John Maynard Keynes, the great economist of the mid-twentieth century, had responded to those who urged patience in the midst of the Great Depression as markets would in the long run restore the economy to full employment, by saying yes, but "In the long run, we are all dead."" That is why trade liberalization requires more than just onetime assistance to move from the old industries to the new. More open economies may be subject to all manner of shocks—domestic firms, for instance, may find it hard to compete with an onslaught of imports that suddenly become cheaper when a foreign country devalues its currency; as in a crisis. When Korea's currency was devalued, Korean steel exports to the United States increased, and American steelworkers complained. When Brazil has a good orange crop, Florida orange growers cry for help, and sometimes get it through one of the nontariff protectionist mechanisms described below.'6 Everyone feels the insecurity.


pages: 475 words: 155,554

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge by Faisal Islam

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Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, British Empire, capital controls, carbon footprint, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, crony capitalism, dark matter, deindustrialization, Deng Xiaoping, disintermediation, energy security, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, financial repression, floating exchange rates, forensic accounting, forward guidance, full employment, G4S, ghettoisation, global rebalancing, global reserve currency, hiring and firing, inflation targeting, Irish property bubble, Just-in-time delivery, labour market flexibility, light touch regulation, London Whale, Long Term Capital Management, margin call, market clearing, megacity, Mikhail Gorbachev, mini-job, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, North Sea oil, Northern Rock, offshore financial centre, open economy, paradox of thrift, Pearl River Delta, pension reform, price mechanism, price stability, profit motive, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, reshoring, Right to Buy, rising living standards, Ronald Reagan, savings glut, shareholder value, sovereign wealth fund, The Chicago School, the payments system, too big to fail, trade route, transaction costs, two tier labour market, unorthodox policies, uranium enrichment, urban planning, value at risk, working-age population, zero-sum game

The amount of capital that will potentially leave Iceland will surge once the likes of Kaupthing are unwound. The controls will be slowly lifted for individuals, but Iceland will need tools to control the potential outflow. The ultimate tool for Júlíusdóttir was to join the European Union and the Eurozone, but after losing the April 2013 general election, this seemed off the agenda. In the absence of the EU option, other economic thinkers on the island think that the way forward for a small open economy like Iceland is to copy the Asian countries. Iceland should have a managed floating exchange rate, and a large build-up of foreign-exchange reserves. ‘It has served the Asians well,’ says Guðmundsson at the Central Bank. So that’s an end to inflation targeting, and for the banks an end to the European single market. A single market without a single safety net in banking was one of the causes of Iceland’s excess.


pages: 515 words: 142,354

The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz, Alex Hyde-White

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bank run, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bretton Woods, capital controls, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, labour mobility, light touch regulation, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

A good regulatory regime would ban such financial products. 21 That is debt undertaken by a particular country within the eurozone. 22 The result is more general: it applies to any mobile factor of production. 23 See the discussion in chapter 7 on how the ECB secretly forced Ireland to do so. 24 Interestingly, this problem has long been recognized in the theory of fiscal federalism/local public goods. See, for instance, J. E. Stiglitz, “Theory of Local Public Goods,” in The Economics of Public Services, ed. M. S. Feldstein and R. P. Inman, (London: Macmillan, 1977), pp. 274–333; J. E. Stiglitz, “Public Goods in Open Economies with Heterogeneous Individuals,” in Locational Analysis of Public Facilities, ed. J. F. Thisse and H. G. Zoller (Amsterdam: North-Holland, 1983), pp. 55–78; and J. E. Stiglitz, “The Theory of Local Public Goods Twenty-Five Years after Tiebout: A Perspective,” in Local Provision of Public Services: The Tiebout Model After Twenty-Five Years, ed. G. R. Zodrow (New York: Academic Press, 1983), pp. 17–53.


pages: 868 words: 147,152

How Asia Works by Joe Studwell

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affirmative action, anti-communist, Asian financial crisis, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collective bargaining, crony capitalism, cross-subsidies, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, failed state, financial deregulation, financial repression, Gini coefficient, glass ceiling, income inequality, income per capita, industrial robot, Joseph Schumpeter, Kenneth Arrow, land reform, land tenure, large denomination, liberal capitalism, market fragmentation, non-tariff barriers, offshore financial centre, oil shock, open economy, passive investing, purchasing power parity, rent control, rent-seeking, Right to Buy, Ronald Coase, South China Sea, The Wealth of Nations by Adam Smith, urban sprawl, Washington Consensus, working-age population

Indeed, the disciplinary challenge becomes more arduous as deregulation proceeds, especially in the financial sector. The real problem is not one of state discipline or no state discipline, but one of the timing of the transition from developmental infant industry policies to policies which stress instead the interests of small businesses, consumers and passive investors. It is clearly possible for states to wait too long before they begin to unpick industrial policy and move to a more open economy. Countries such as Japan in Asia, or Italy in Europe, are the developmental equivalent of adults who refuse to leave home, preferring to stay in their bedrooms rather than confront the next stage of life – or the next stretch of the river, if we switch to the Japanese metaphor. These ‘big babies’, however, are the less significant issue. Much more striking is that the world is teeming with what can be described as developmental children who have been cast out on to the street at a young age and told to get a job.


pages: 537 words: 144,318

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money by Steven Drobny

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Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, backtesting, banking crisis, Bernie Madoff, Black Swan, Bretton Woods, BRICs, British Empire, business process, capital asset pricing model, capital controls, central bank independence, collateralized debt obligation, commoditize, Commodity Super-Cycle, commodity trading advisor, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, diversification, diversified portfolio, equity premium, family office, fiat currency, fixed income, follow your passion, full employment, George Santayana, Hyman Minsky, implied volatility, index fund, inflation targeting, interest rate swap, inventory management, invisible hand, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, market microstructure, moral hazard, Myron Scholes, North Sea oil, open economy, peak oil, pension reform, Ponzi scheme, prediction markets, price discovery process, price stability, private sector deleveraging, profit motive, purchasing power parity, quantitative easing, random walk, reserve currency, risk tolerance, risk-adjusted returns, risk/return, savings glut, selection bias, Sharpe ratio, short selling, sovereign wealth fund, special drawing rights, statistical arbitrage, stochastic volatility, survivorship bias, The Great Moderation, Thomas Bayes, time value of money, too big to fail, transaction costs, unbiased observer, value at risk, Vanguard fund, yield curve, zero-sum game

Our process essentially commences with a detailed and thorough analysis of the data, an analysis that can be either quantitative or qualitative. Quantitative filtering takes guidance from theory and our own internal research. For example, there is a lengthy list of macroeconomic priors—which we call “Basic Principles”—and known patterns for the evolution of macroeconomic variables. Some examples are the behavior and persistence of inflation in convergence economies, the trend for exchange rates in small, open economies, the relationship between price/earnings (P/E) multiples and exchange rate valuation in economies with large net trade surpluses, and the behavior of the central bank credibility premium after an inflationary bust. Financial markets invariably lag structural developments in the real economy, which is itself another of my Basic Principles. Our proprietary tools extrapolate estimates of fair value from Basic Principles, where any significant divergence of forward market pricing from our estimates immediately highlights something worth exploring.

The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What It Used to Be by Moises Naim

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additive manufacturing, barriers to entry, Berlin Wall, bilateral investment treaty, business process, business process outsourcing, call centre, citizen journalism, Clayton Christensen, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, conceptual framework, corporate governance, creative destruction, crony capitalism, deskilling, disintermediation, don't be evil, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, illegal immigration, immigration reform, income inequality, income per capita, intangible asset, intermodal, invisible hand, job-hopping, Joseph Schumpeter, Julian Assange, Kickstarter, liberation theology, Martin Wolf, mega-rich, megacity, Naomi Klein, Nate Silver, new economy, Northern Rock, Occupy movement, open borders, open economy, Peace of Westphalia, Plutocrats, plutocrats, price mechanism, price stability, private military company, profit maximization, Ronald Coase, Ronald Reagan, Silicon Valley, Skype, Steve Jobs, The Nature of the Firm, Thomas Malthus, too big to fail, trade route, transaction costs, Washington Consensus, WikiLeaks, World Values Survey, zero-sum game

Even the economic crash of 2008 failed to reverse the trend.48 As advanced economies were crashing, it became fashionable to predict that the natural reaction of these governments was to protect jobs and companies behind higher barriers to imports. That did not happen. The same was true about the possibility that countries would impose limits to the entry of foreign investors. That, too, didn’t happen. The truly global movement toward relatively free, open economies with broad capital markets and limited state ownership is one of the well-told tales of the last generation. With it 155 often comes the caution that at some point the pendulum might swing back—if not fully, then to a considerable extent. And indeed, it might appear at first glance that with the global recession of 2008–2009 came a swing back toward more government regulation and control in key industries.


pages: 411 words: 114,717

Breakout Nations: In Pursuit of the Next Economic Miracles by Ruchir Sharma

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3D printing, affirmative action, Albert Einstein, American energy revolution, anti-communist, Asian financial crisis, banking crisis, Berlin Wall, BRICs, British Empire, business climate, business process, business process outsourcing, call centre, capital controls, Carmen Reinhart, central bank independence, centre right, cloud computing, collective bargaining, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, demographic dividend, Deng Xiaoping, eurozone crisis, Gini coefficient, global supply chain, housing crisis, income inequality, indoor plumbing, inflation targeting, informal economy, Kenneth Rogoff, knowledge economy, labor-force participation, labour market flexibility, land reform, M-Pesa, Mahatma Gandhi, Marc Andreessen, market bubble, mass immigration, megacity, Mexican peso crisis / tequila crisis, new economy, oil shale / tar sands, oil shock, open economy, Peter Thiel, planetary scale, quantitative easing, reserve currency, Robert Gordon, Shenzhen was a fishing village, Silicon Valley, software is eating the world, sovereign wealth fund, The Great Moderation, Thomas L Friedman, trade liberalization, Watson beat the top human players on Jeopardy!, working-age population, zero-sum game

Indian socialist ideals heavily influenced the founders of independent Sri Lanka, and state spending came to be seen as a tool to deliver economic justice to Sinhalese. At its peak in the 1970s, state spending accounted for 59 percent of GDP, and four in ten Sri Lankans worked for the government, an extraordinarily high number. But by the late 1990s even the main left-leaning party, the SLFP, was moving toward a more modern development model built on an open economy and trade liberalization. State spending has fallen to about 30 percent of GDP today, and most parties agree this is movement in the right direction. Ultimately, the economic impact of Sri Lanka’s civil war was relatively mild despite the personal suffering of the people it swept up. According to USAID research, a typical civil war of fifteen-year duration reduces national GDP by around 30 percent, and it typically takes a decade just to recover the prewar levels of income.


pages: 264 words: 115,489

Take the money and run: sovereign wealth funds and the demise of American prosperity by Eric Curt Anderson

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asset allocation, banking crisis, Bretton Woods, business continuity plan, business intelligence, business process, collective bargaining, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, diversified portfolio, fixed income, floating exchange rates, housing crisis, index fund, Kenneth Rogoff, open economy, passive investing, profit maximization, profit motive, random walk, reserve currency, risk tolerance, risk-adjusted returns, risk/return, Ronald Reagan, sovereign wealth fund, the market place, The Wealth of Nations by Adam Smith, too big to fail, Vanguard fund

The relatively immature Chinese legal system, and a growing awareness of the potential dangers associated with foreign investment, suggest that Beijing is still a long way from promulgating its own version of FINSA 2007. United Arab Emirates: As home to the world’s largest sovereign wealth fund—the Abu Dhabi Investment Authority—and the inadvertent progenitor of FINSA 2007, the UAE appeared a prime target for our examination of overseas foreign investment laws and policies. The GAO reports U.S. State Department officials consider the UAE to be one of the most open economies in the Middle East. When it comes to foreign investment, the UAE has attempted to establish a set of codes in the form of the “Companies Law” and “Agencies Law.” The Companies Law states a foreign entity is prohibited from owning more than 49% of a UAE business, while the Agencies Law stipulates foreign importers must operate through an agent to bring goods into the country.72 Although the Companies and Agencies Laws may appear unduly restrictive, the UAE has set about removing some of the string through establishment of 32 free trade zones.


pages: 537 words: 158,544

Second World: Empires and Influence in the New Global Order by Parag Khanna

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Admiral Zheng, affirmative action, anti-communist, Asian financial crisis, Bartolomé de las Casas, Branko Milanovic, British Empire, call centre, capital controls, central bank independence, cognitive dissonance, colonial rule, complexity theory, continuation of politics by other means, crony capitalism, Deng Xiaoping, Dissolution of the Soviet Union, Donald Trump, Edward Glaeser, energy security, European colonialism, facts on the ground, failed state, flex fuel, Francis Fukuyama: the end of history, friendly fire, Gini coefficient, global reserve currency, global supply chain, haute couture, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Islamic Golden Age, Khyber Pass, knowledge economy, land reform, low skilled workers, mass immigration, means of production, megacity, Monroe Doctrine, oil shale / tar sands, oil shock, open borders, open economy, Parag Khanna, Pax Mongolica, Pearl River Delta, pirate software, Plutonomy: Buying Luxury, Explaining Global Imbalances, Potemkin village, price stability, race to the bottom, RAND corporation, reserve currency, rising living standards, Ronald Reagan, Silicon Valley, Skype, South China Sea, special economic zone, stem cell, Stephen Hawking, Thomas L Friedman, trade route, trickle-down economics, uranium enrichment, urban renewal, Washington Consensus, women in the workforce

Particularly with regimes that have souring ties with the United States, China builds strategic alliances by deepening commercial relations. 16 With its voracious appetite for natural resources, it has taken a lead in oil and gas production from Angola to Algeria to Sudan, importing more oil from Africa than from Saudi Arabia. 17 As with the other superpowers, China’s engagement can mean the difference between peace and genocide: In Sudan, China has sent UN peacekeepers but also covert military personnel to protect its oil facilities and a (nearly) thousand-mile pipeline to the Red Sea, all the while sandbagging UN resolutions aimed at halting the civil war in the country’s south and the ethnic cleansing pogroms in the Darfur region, where Chinese machine guns are plentiful. Countries from Libya to China are fueling Khartoum’s real estate bonanza despite American sanctions. China portrays African states as its partners, not as mercy cases, and many Arab and African governments enthusiastically speak of a “China model” of closed regimes with open economies. To revive the mid–twentieth century Sino-African kinship, China’s comprehensive packages of assistance, investment, professional training, and doctors dispatched throughout Africa demonstrate a fraternal spirit of “doing what it can,” as opposed to the Western-style economic “shock therapy.” China has canceled most African nations’ debts, provided soft loans, and increased imports from Africa by a factor of ten, moves that compete with and undermine Western aid policies that are increasingly perceived as ineffective.


pages: 489 words: 132,734

A History of Future Cities by Daniel Brook

Berlin Wall, British Empire, business process, business process outsourcing, call centre, carbon footprint, Celtic Tiger, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, Deng Xiaoping, desegregation, Edward Glaeser, Fall of the Berlin Wall, financial innovation, glass ceiling, indoor plumbing, joint-stock company, land reform, Mikhail Gorbachev, New Urbanism, open economy, Parag Khanna, Pearl River Delta, Potemkin village, profit motive, rent control, sovereign wealth fund, special economic zone, trade route, urban planning, urban renewal, working poor

In Dubai, it was Indians who became the importers for all the leading Japanese electronics companies, including Sony, NEC, and JVC, that were slapped with insurmountable import tariffs at home. A creek-dredging project to accommodate larger ships, launched by royal decree and completed in 1961, helped cement the deal with the regional traders as Dubai now provided both the economic environment and the physical facilities necessary for international commerce. While many Indian merchants used Dubai as a base to do business with the world’s open economies, others used it as a base to illegally do business with their homeland. When a Nehru-ordered tax on precious metals sent the price of gold in India to two times its price on the global market, gold smuggling became a major business in Dubai. With Bombay effectively knocked out of the world’s gold market, tiny Dubai became the second-largest destination for gold purchased on British exchanges, surpassed only by Britain’s wealthy, luxury-goods-producing neighbor, France.


pages: 708 words: 196,859

Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed

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Albert Einstein, anti-communist, bank run, banking crisis, Bretton Woods, British Empire, capital controls, central bank independence, centre right, credit crunch, currency manipulation / currency intervention, Etonian, full employment, German hyperinflation, index card, invisible hand, Lao Tzu, large denomination, Long Term Capital Management, margin call, market bubble, Mexican peso crisis / tequila crisis, mobile money, money market fund, moral hazard, new economy, open economy, Plutocrats, plutocrats, price stability, purchasing power parity, pushing on a string, rolodex, the market place

While other European countries let their currencies fall against gold, Schacht, motivated by a combination of concern for prestige and fear of inflation, refused to break officially from gold and devalue the Reichsmark. German goods were overpriced on the world markets and its exports stagnated. In order to cope with the pressures created by this bloated exchange rate, an elaborate system of import controls was put in place and foreign trade was largely based on barter. Under this “Schachtian” system, Germany was reoriented from an open economy integrated with the West to a closed autarkic economy connected to Eastern Europe and the Balkans, a precursor of the inefficient Soviet trade system of the 1950s and 1960s. Behind the gleaming achievements, therefore—the autobahns, the Volkswagen, the Junker bombers, and the Messerschmitt fighter planes—the Nazi economy was a rickety machine plagued by shortages and relying heavily on rationing to allocate scarce consumer goods.


pages: 552 words: 168,518

MacroWikinomics: Rebooting Business and the World by Don Tapscott, Anthony D. Williams

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accounting loophole / creative accounting, airport security, Andrew Keen, augmented reality, Ayatollah Khomeini, barriers to entry, bioinformatics, Bretton Woods, business climate, business process, car-free, carbon footprint, citizen journalism, Clayton Christensen, clean water, Climategate, Climatic Research Unit, cloud computing, collaborative editing, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, commoditize, corporate governance, corporate social responsibility, creative destruction, crowdsourcing, death of newspapers, demographic transition, distributed generation, don't be evil, en.wikipedia.org, energy security, energy transition, Exxon Valdez, failed state, fault tolerance, financial innovation, Galaxy Zoo, game design, global village, Google Earth, Hans Rosling, hive mind, Home mortgage interest deduction, interchangeable parts, Internet of things, invention of movable type, Isaac Newton, James Watt: steam engine, Jaron Lanier, jimmy wales, Joseph Schumpeter, Julian Assange, Kevin Kelly, knowledge economy, knowledge worker, Marc Andreessen, Marshall McLuhan, mass immigration, medical bankruptcy, megacity, mortgage tax deduction, Netflix Prize, new economy, Nicholas Carr, oil shock, old-boy network, online collectivism, open borders, open economy, pattern recognition, peer-to-peer lending, personalized medicine, Ray Kurzweil, RFID, ride hailing / ride sharing, Ronald Reagan, Rubik’s Cube, scientific mainstream, shareholder value, Silicon Valley, Skype, smart grid, smart meter, social graph, social web, software patent, Steve Jobs, text mining, the scientific method, The Wisdom of Crowds, transaction costs, transfer pricing, University of East Anglia, urban sprawl, value at risk, WikiLeaks, X Prize, young professional, Zipcar

Some companies will argue that it is not their responsibility or indeed their prerogative to meddle in the domestic affairs of sovereign nations. To be sure, bad things can happen when powerful companies have too much influence over the rules or rulers that govern their conduct. But if done transparently and in partnership with other legitimate bodies, a principled stand on the open Internet and an open economy is consistent with both Google’s mission and its business objectives. After all, one global open Internet is a much more fertile domain for Google’s services than one balkanized into regional subnets, where only some people get access to all of the world’s online information. If other companies were to join in the fight for freedom, perhaps this reality could materialize more quickly. The Global Network Initiative, for example, was founded by Google, Yahoo!

Frommer's Egypt by Matthew Carrington

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airport security, centre right, colonial rule, Internet Archive, land tenure, Maui Hawaii, open economy, rent control, rolodex, sustainable-tourism, trade route, urban planning, urban sprawl, walkable city, Yom Kippur War

Lead assassin Khalid Islambouli is said to have cried “Death to the Pharaoh!” as the attack was launched from the back of a truck as Mirage jets swooped overhead. Air Force General and Vice President Hosni Mubarak then became president. Mubarak’s subsequent tenure as president has been marked mainly by holding patterns with regard to regional politics and a drift away from the socialism of the past and toward a more open economy. The state of emergency that was declared in 1981 has never been lifted, effectively freezing the interplay between legislative and judicial bodies into rigid patterns enforced by executive diktat. The result has been a general political stagnation in Egypt for 26 years, with security forces playing a steadily increasing political role as the regime has come to rely on them to stifle dissenting voices that have been denied parliamentary expression.


pages: 780 words: 168,782

Strange Rebels: 1979 and the Birth of the 21st Century by Christian Caryl

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anti-communist, Ayatollah Khomeini, Berlin Wall, Bretton Woods, British Empire, colonial rule, Deng Xiaoping, financial deregulation, financial independence, friendly fire, full employment, income inequality, industrial robot, Internet Archive, land reform, land tenure, liberal capitalism, liberation theology, Mahatma Gandhi, means of production, Mikhail Gorbachev, Mohammed Bouazizi, Mont Pelerin Society, Neil Kinnock, new economy, New Urbanism, oil shock, open borders, open economy, Pearl River Delta, Plutocrats, plutocrats, price stability, rent control, road to serfdom, Ronald Reagan, single-payer health, special economic zone, The Chicago School, union organizing, upwardly mobile, Winter of Discontent, Xiaogang Anhui farmers, Yom Kippur War

All of these journeys had brought tangible benefits—including vital industrial investments from the Japanese as well as useful advice on the advantages of authoritarian capitalism from Singaporean prime minister Lee Kwan Yew. His visits to Singapore and Japan had also yielded plenty of favorable coverage in the media back home. But none of these trips had quite the impact of the one he took to America. It is one thing to hear about the advantages of an open economy; it is another to see them. Deng’s trip to the United States brought the potential benefits of modernization into the homes of ordinary Chinese. As for Deng himself, he later told his colleagues that his experiences in America had kept him awake for several nights after returning home. How could China possibly catch up?6 The triumph of Deng’s visit added to the growing political momentum in favor of change.


pages: 687 words: 209,474

Six Days of War: June 1967 and the Making of the Modern Middle East by Michael B. Oren

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Boycotts of Israel, British Empire, cuban missile crisis, European colonialism, friendly fire, open economy, Yom Kippur War

Memories of it would still be fresh, and its lessons seemingly clear, in 1967. But the Aswan Dam and Retama were merely exceptions in the otherwise rueful saga of the UAR. Under ‘Abd al-Hakim ‘Amer, whose administration of the joint government in Damascus was as inept as his generalship in 1956, the union began to unravel. Corruption and despotism reigned as unyielding state control was imposed on Syria’s traditionally open economy. Syrian officers were also incensed, finding themselves outside the loops of power. In September 1961, a clique of these officers, among them Salah Jadid and Hafez al-Assad, staged a successful coup and declared Syria’s departure from the union.24‘Amer and his staff were ingloriously herded onto a plane and whisked back to Cairo. Their sole memento of the United Arab Republic was the name itself, which Egypt unilaterally retained.


pages: 843 words: 223,858

The Rise of the Network Society by Manuel Castells

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Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, capital controls, complexity theory, computer age, computerized trading, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, financial deregulation, financial independence, floating exchange rates, future of work, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, James Watt: steam engine, job automation, job-hopping, John Markoff, knowledge economy, knowledge worker, labor-force participation, labour market flexibility, labour mobility, laissez-faire capitalism, Leonard Kleinrock, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-industrial society, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Robert Gordon, Robert Metcalfe, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Ted Nelson, the built environment, the medium is the message, the new new thing, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl, zero-sum game

The pressures toward greater flexibility of the labor market and toward the reversal of the welfare state in Western Europe come less from the pressures derived from East Asia than from the comparison with the United States.43 It will become increasingly difficult for Japanese firms to continue life employment practices for the privileged 30 percent of its labor force if they have to compete in an open economy with American companies practicing flexible employment (see chapter 3).44 Lean production, downsizing, restructuring, consolidation, and flexible management practices are induced and made possible by the intertwined impact of economic globalization and diffusion of information technologies. The indirect effects of such tendencies on the conditions of labor in all countries are far more important than the measurable impact of international trade or cross-border direct employment.


pages: 726 words: 172,988

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It by Anat Admati, Martin Hellwig

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Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bonus culture, break the buck, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversified portfolio, en.wikipedia.org, Exxon Valdez, financial deregulation, financial innovation, financial intermediation, fixed income, George Akerlof, Growth in a Time of Debt, income inequality, invisible hand, Jean Tirole, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, Larry Wall, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, margin call, Martin Wolf, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nick Leeson, Northern Rock, open economy, peer-to-peer lending, regulatory arbitrage, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Satyajit Das, shareholder value, sovereign wealth fund, technology bubble, The Market for Lemons, the payments system, too big to fail, Upton Sinclair, Yogi Berra

Hanson, Samuel, Anil K. Kashyap, and Jeremy C. Stein. 2011. “A Macroprudential Approach to Financial Regulation.” Journal of Economic Perspectives 25: (1): 3–28. Harding, John P., Eric Rosenblatt, and Vincent W. Yao. 2009. “The Contagion Effect of Foreclosed Properties.” Journal of Urban Economics 66 (3): 164–178. Harrison, Ian. 2004. “Banks, Capital and Regulation: Towards an Optimal Capital Regime for a Small Open Economy.” Working paper. Reserve Bank of New Zealand, Wellington. Hayes, Christopher. 2012. The Twilight of the Elites: America after Meritocracy. New York: Crown. Healy, Paul M., and Krishna G. Palepu. 2003. “The Fall of Enron.” Journal of Economic Perspectives 17 (2): 3–26. Hellwig, Martin F. 1991. “Banking, Financial Intermediation, and Corporate Finance.” In European Financial Integration, ed.


pages: 828 words: 232,188

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

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

The PRI returned to Los Pinos (the president’s residence) in 2012 after a twelve-year absence, this time hopefully more committed to a program of serious structural reform including liberalization of the critical energy sector. Climate and geography were among the original sources of the Latin American birth defect. The extractive slave economies established by the Spanish in Mexico, Peru, and elsewhere left a legacy of inequality that persisted long after the last silver mine closed and slowed the creation of a North American–style open economy. But although these material conditions influenced the nature of political institutions in Latin America, they did not altogether determine them. Formal institutions evolved over time in a democratic direction, just as in Europe. What remained much more constant was the region’s class structure—its division into whiter, wealthier elites, and poorer, darker masses—which then shaped the way that formal institutions operated.

The Man Behind the Microchip: Robert Noyce and the Invention of Silicon Valley by Leslie Berlin

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Apple II, Bob Noyce, collective bargaining, computer age, George Gilder, informal economy, John Markoff, laissez-faire capitalism, low skilled workers, means of production, Menlo Park, Murray Gell-Mann, open economy, Richard Feynman, Richard Feynman, Ronald Reagan, Sand Hill Road, Silicon Valley, Silicon Valley startup, Steve Jobs, Steve Wozniak, union organizing, War on Poverty, women in the workforce, Yom Kippur War

Japanese beating the heck: Ann Bowers, interview by author, 16 Aug. 2004. 20. 7,200 jobs, annual losses: Noyce, “Testimony on National Technology Development and Utilization Provided to the Technology Policy Task Force Committee on Science, Space, and Technology, U.S. House of Representatives,” 25 Sept. 1987. How to shut down Intel: Ann Bowers, interview by author, 16 Aug. 2004. Japanese Buy Intel: Inteleads, 1 April 1987, IA. It’s hard for someone: Daryl Hatano to author, 2 Feb. 1998. 21. Decline of empire: Noyce, Competing in an Open Economy, Keynote Address UCB [University of California at Berkeley], 22 Jan. 1987, IA. Death spiral: Noyce quoted in Evelyn Richards. “How America Lost the Edge on the World Trade Battlefield,” San Jose Mercury News, 20 April 1986. What would you call Detroit: Noyce quoted in Evelyn Richards, “Two Valley Visionaries Don’t See Same Horizon,” San Jose Mercury News, 20 Jan. 1986. Job loss figure: David Sylvester, “2017, A Silicon Valley Odyssey,” West Magazine (Sunday supplement to the San Jose Mercury News), 7 June 1987, 18.


pages: 823 words: 220,581

Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned? by Steve Keen

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accounting loophole / creative accounting, banking crisis, banks create money, barriers to entry, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, butterfly effect, capital asset pricing model, cellular automata, central bank independence, citizen journalism, clockwork universe, collective bargaining, complexity theory, correlation coefficient, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, diversification, double entry bookkeeping, en.wikipedia.org, Eugene Fama: efficient market hypothesis, experimental subject, Financial Instability Hypothesis, fixed income, Fractional reserve banking, full employment, Henri Poincaré, housing crisis, Hyman Minsky, income inequality, information asymmetry, invisible hand, iterative process, John von Neumann, laissez-faire capitalism, liquidity trap, Long Term Capital Management, mandelbrot fractal, margin call, market bubble, market clearing, market microstructure, means of production, minimum wage unemployment, money market fund, open economy, Pareto efficiency, Paul Samuelson, place-making, Ponzi scheme, profit maximization, quantitative easing, RAND corporation, random walk, risk tolerance, risk/return, Robert Shiller, Robert Shiller, Ronald Coase, Schrödinger's Cat, scientific mainstream, seigniorage, six sigma, South Sea Bubble, stochastic process, The Great Moderation, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, total factor productivity, tulip mania, wage slave, zero-sum game

Moore, B. J. (1988b) Horizontalists and Verticalists: The Macroeconomics of Credit Money, Cambridge: Cambridge University Press. Moore, B. J. (1997) ‘Reconciliation of the supply and demand for endogenous money,’ Journal of Post Keynesian Economics, 19(3): 423–8. Moore, B. J. (2001) ‘Some reflections on endogenous money,’ in L.-P. Rochon and M. Vernengo (eds), Credit, Interest Rates and the Open Economy: Essays on horizontalism, Cheltenham: Edward Elgar, pp. 11–30. Musgrave, A. (1981) ‘“Unreal assumptions” in economic theory: the untwisted,’ Kyklos, 34: 377–87, reprinted in B. Caldwell (1984), Appraisal and Criticism in Economics: A Book of Readings, London: Allen & Unwin. Muth, J. F. (1961) ‘Rational expectations and the theory of price movements,’ Econometrica, 29(3): 315–35. Nightingale, J. (2000) ‘Universal Darwinism and social research: the case of economics,’ in W.


pages: 710 words: 164,527

The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order by Benn Steil

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activist fund / activist shareholder / activist investor, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, capital controls, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, margin call, means of production, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, open economy, Paul Samuelson, Potemkin village, price mechanism, price stability, psychological pricing, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, The Great Moderation, the market place, trade liberalization, Works Progress Administration

Say, Jean-Baptiste (1767–1832). French economist. Best known for “Say’s Law,” an element of classical economic thinking that Keynes sought to demolish in his General Theory. Schacht, Hjalmar (1877–1970). German banker. President of the Reichsbank, 1926–30; Reich minister of economics, 1934–37. Famous for creating the “Schachtian” system of national economic management. Transformed Germany from an open economy integrated with the West to a closed, autarkic one, imposing strict import controls and conducting foreign trade bilaterally on a barter basis. Schumpeter, Joseph (1883–1950). Austrian-born American economist and political scientist. Famous for his focus on innovation and entrepreneurs as the critical drivers of the capitalist economic system. Was highly critical of Keynes’s methods and “stagnationism.”


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

Under these conditions, the only forces that can avoid an indefinite inegalitarian spiral and stabilize inequality of wealth at a finite level are the following. First, if the fortunes of wealthy individuals grow more rapidly than average income, the capital/income ratio will rise indefinitely, which in the long run should lead to a decrease in the rate of return on capital. Nevertheless, this mechanism can take decades to operate, especially in an open economy in which wealthy individuals can accumulate foreign assets, as was the case in Britain and France in the nineteenth century and up to the eve of World War I. In principle, this process always comes to an end (when those who own foreign assets take possession of the entire planet), but this can obviously take time. This process was largely responsible for the vertiginous increase in the top centile’s share of wealth in Britain and France during the Belle Époque.


pages: 1,208 words: 364,966

Pity the Nation: Lebanon at War by Robert Fisk

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airport security, Ayatollah Khomeini, Berlin Wall, British Empire, colonial rule, friendly fire, haute couture, mass immigration, Mikhail Gorbachev, open economy, Ronald Reagan, Yom Kippur War

In 1975, for instance, journalists arriving in Beirut would invariably be told by the Lebanese of the halcyon days which had just ended, of the peaceful Phoenician land in which Christians and Muslims had shown the world that historically religious antagonists could live in peace. Or, more to the point, how they could live in peace and make money. For as long as Lebanon’s economy grew, the dream years were credible even to the Lebanese themselves. The Sunnis and the Maronites were both beneficiaries of the extraordinary wealth that flowed into Beirut. As a financial centre with an open economy, as a trade intersection between Europe and the Middle East with a lucrative port in its capital, as a comparatively ‘free’ nation amid the dictatorships of the Arab world, Lebanon was to be blessed with the indulgence of both East and West, its modern-day caravanserais arriving hourly at the new international airport at Khalde. The first visions to distort this mirage had appeared on the southern border of Lebanon or from the sea off Beirut in 1946 when the Covenant was barely three years old.