Economics

Deirdre N. McCloskey on “How the West Got Rich”

June 6, 2016
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Deirdre N. McCloskey on “How the West Got Rich”

In a recent piece for the Wall Street Journal, Deirdre N. McCloskey underlines some of the major themes that inform her decade-in-the-making trilogy The Bourgeois Era, including those particular to its most recent volume, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World. Denying the centrality of accumulated capital, and turning instead to the accumulation of ideas, McCloskey posits “betterment” at the core of, well, how we became bourgeois. More about this in her book, but here’s a teaser from the WSJ: What caused it? The usual explanations follow ideology. On the left, from Marx onward, the key is said to be exploitation. Capitalists after 1800 seized surplus value from their workers and invested it in dark, satanic mills. On the right, from the blessed Adam Smithonward, the trick was thought to be savings. The wild Highlanders could become as rich as the Dutch—“the highest degree of opulence,” as Smith put it in 1776—if they would merely save enough to accumulate capital (and stop stealing cattle from one another). A recent extension of Smith’s claim, put forward by the late economics Nobelist Douglass North (and now embraced as orthodoxy by the World Bank) is that the real elixir is institutions. On this . . .

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5/6: Deirdre McCloskey at Seminary Co-op

May 6, 2016
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5/6: Deirdre McCloskey at Seminary Co-op

From a recent profile of Deirdre McCloskey in the Chronicle of Higher Education: As the University of Chicago Press plans to release next month the final volume of McCloskey’s ambitious trilogy arguing that bourgeois values, rather than material circumstances, catalyzed the past several centuries’ explosion in wealth, her gender change may be the least iconoclastic thing about her. A libertarian with tolerance for limited welfare interventions by government, an economist who critiques the way her colleagues apply statistics and mathematical models, a devout Christian who emphasizes charity and love but within free-market strictures, a learned humanist politically to the right of many of the scholars who inspire her, McCloskey is a school of one. “Everybody regards her as a superb intellectual and somebody who has for many years disregarded disciplinary boundaries,” says the economic historian Joel Mokyr, of Northwestern University. . . . “I’ve seen so many academic careers end not with a bang but with a whimper. I thought that would happen to me,” she says. “I am so glad that in my old age I have found a project that uses what talents I have.” McCloskey’s singularity can be traced to her lifelong journeys across gender, politics, academic outlook, . . .

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House of Debt awarded the 2016 Laing Prize

April 28, 2016
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House of Debt awarded the 2016 Laing Prize

*** The University of Chicago Press is pleased to announce that House of Debt: How They (and You) Caused the Great Recession and How We Can Prevent It from Happening Again, by Amir Sufi and Atif Mian, has been awarded the 2016 Gordon J. Laing Prize. The prize was announced during a reception on April 21st at the University of Chicago Quadrangle Club. The Gordon J. Laing Prize is awarded annually by the University of Chicago Press to the faculty author, editor, or translator of a book published in the previous three years that has brought the greatest distinction to the Press’s list. Books published in 2013 or 2014 were eligible for this year’s award. The prize is named in honor of the scholar who, serving as general editor from 1909 until 1940, firmly established the character and reputation of the University of Chicago Press as the premier academic publisher in the United States. Taking a close look at the financial crisis and housing bust of 2008, House of Debt digs deep into economic data to show that it wasn’t the banks themselves that caused the crisis to be so bad—it was an incredible increase in household debt in the . . .

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Free e-book for March: The Longevity Seekers

March 7, 2016
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Free e-book for March: The Longevity Seekers

Our free e-book for March is Ted Anton’s The Longevity Seekers: Science, Business, and the Fountain of Youth  *** People have searched for the fountain of youth everywhere from Bimini to St. Augustine. But for a steadfast group of scientists, the secret to a long life lies elsewhere: in the lowly lab worm. By suppressing the function of just a few key genes, these scientists were able to lengthen worms’ lifespans up to tenfold, while also controlling the onset of many of the physical problems that beset old age. As the global population ages, the potential impact of this discovery on society is vast—as is the potential for profit. With The Longevity Seekers, science writer Ted Anton takes readers inside this tale that began with worms and branched out to snare innovative minds from California to Crete, investments from big biotech, and endorsements from TV personalities like Oprah and Dr. Oz. Some of the research was remarkable, such as the discovery of an enzyme in humans that stops cells from aging. And some, like an oft-cited study touting the compound resveratrol, found in red wine—proved highly controversial, igniting a science war over truth, credit, and potential profit. As the pace of . . .

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On personal liability: Better Bankers, Better Banks in the NYT

February 19, 2016
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On personal liability: Better Bankers, Better Banks in the NYT

A recent New York Times piece on the necessary culpability of bankers in bank misconduct builds on interviews with Claire A. Hill and Richard W. Painter, the authors of Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment, which argues that it’s the bankers’ ability to hide behind their banks to dodge any personal stakes in the hefty fines, penalties, and legal fees levied by the government in the wake of the financial crisis of 2008, or any forthcoming. And Hill and Painter have a plan for how to change that—make bankers personally liable. Here’s a bit from the NYT: A different proposal comes in a new book by Claire A. Hill and Richard W. Painter, professors at the University of Minnesota Law School. In “Better Bankers, Better Banks,” they argue for making financial executives personally liable for a portion of any fines and fraud-based judgments a bank enters into, including legal settlements. The professors call this covenant banking. And it looks a lot like the kind of personal liability that was a fact of life among the top Wall Street firms when they were private partnerships. With their own money at risk, partners of Salomon Brothers, Lehman Brothers and Goldman Sachs were much . . .

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If the US economy is so good, why does it feel so bad?

January 19, 2016
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If the US economy is so good, why does it feel so bad?

“If the US economy is so good, why does it feel so bad?”* by Salvatore Babones (*adapted from Sixteen for ’16: A Progressive Agenda for a Better America, first published on the Policy Press Blog) *** With a 2 percent annual growth rate, 5 percent unemployment, and zero inflation, the US economy is the envy of the world. Growth seems to be rising and unemployment seems to be falling, which means that most analysts expect an even better US economy in 2016. Throw in low gas prices and a strong dollar, and what’s not to like? If the US economy is doing so well, why are ordinary people so unhappy with their own economic prospects? The aggregate US economy may be growing but most people’s personal economies are not. Census Bureau data show that real per capita income is still below 2007 levels—despite six years of solid economic growth. And Bureau of Labor Statistics data show that despite today’s low unemployment rates the jobs still haven’t come back. Back in 2006 the employment rate of the civilian population—the proportion of adults who had jobs—was over 63 percent. Allowing for people who are still in school, people who are retired, people who . . .

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The Political Origins of Inequality

December 22, 2015
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The Political Origins of Inequality

“How To Spread the World’s Wealth beyond Corporate Elites,” from The Political Origins of Inequality: We have reached a crossroads in our history. For all the achievements and riches of our time, the world has never been so unequal or more unjust. A century ago, at the time of the First World War, the richest 20% of the world’s population earned eleven times more than the poorest 20%. By the end of the twentieth century they earned seventy-four times as much. Today, despite seven decades of international development, three decades of the Washington Consensus, and a decade and a half of Millennium Development Goals, our world is even more divided among the haves, the have-nots, and—as President George W. Bush once quipped in an after-dinner speech—the have-mores. When it comes to wealth, rather than income, the picture is more extreme. Globally, the richest 1% now own nearly half of all the world’s wealth. The poorest 50% of the world, by contrast—fully 3 billion people—own less than 1% of its wealth. Anyone with assets of more than $10,000 a year is an exception to the global norm and is better off than 70% of everyone else alive. Yet most of us . . .

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Can We Race Together? An Autopsy

April 8, 2015
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Can We Race Together? An Autopsy

“Can We Race Together? An Autopsy”* by Ellen Berrey *** Corporate diversity dialogues are ripe for backlash, the research shows, even without coffee counter gimmicks. Corporate executives and university presidents are, yet again, calling for public discussion on race and racial inequality. Revelations about the tech industry’s diversity problem have company officials convening panels on workplace barriers, and, at the University of Oklahoma spokespeople and students are organizing town-hall sessions in response to a fraternity’s racist chant. The most provocative of the efforts was Starbucks’ failed Race Together program. In March, the company announced that it would ask baristas to initiate dialogues with customers about America’s most vexing dilemma. Although public outcry shut down those conversations before they even got to “Hello,” Starbucks said it would nonetheless carry on Race Together with forums and special USA Today discussion guides. As someone who has done sociological research on diversity initiatives for the past 15 years, I was intrigued.  For a moment, let’s take this seriously What would conversations about race have looked like if they played out as Starbucks imagined, given the social science of race? Can companies, in Starbucks’ CEO Howard Schultz’s words, “create a more empathetic and inclusive society—one conversation . . .

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House of Debt on the Independent’s Best of 2014

December 16, 2014
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House of Debt on the Independent’s Best of 2014

Atif Mian and Amir Sufi’s House of Debt, a polemic about the Great Recession and a call to action about the borrowing and lending practices that led us down the fiscal pits, already made a splash on the shortlist for the Financial Times‘s Best Business Book of 2014. Now, over at the Independent, the book tops another Best of 2014 list, this time proclaimed, “the jewel of 2014.” From Ben Chu’s review, which also heralds another university press title—HUP’s blockbuster Capital by Thomas Piketty (“the asteroid”): As with Capital, House of Debt rests on some first-rate empirical research. Using micro data from America, the professors show that the localities where the accumulation of debt by households was the most rapid were also the areas that cut back on spending most drastically when the bubble burst. Mian and Sufi argue that policymakers across the developed world have had the wrong focus over the past half decade. Instead of seeking to restore growth by encouraging bust banks to lend, they should have been writing down household debts. If the professors are correct—and the evidence they assemble is powerful indeed—this work will take its place in the canon of literary economic breakthroughs. We’ve blogged about . . .

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House of Debt on FT’s shortlist for Business Book of the Year

September 24, 2014
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House of Debt on FT’s shortlist for Business Book of the Year

Congrats (!) to House of Debt authors Atif Mian and Amir Sufi for making the shortlist for the Financial Times and McKinsey Business Book of the Year. Now in competition with five other titles from an initial offering of 300 nominations, House of Debt—and its story of the predatory lending practices behind the Great American Recession, the burden of consumer debt on fragile markets, and the need for government-bailed banks to share risk-taking rather than skirt blame—will find out its fate at the November 11th award ceremony. From the official announcement: “The provocative questions raised by this year’s titles have been addressed with originality, depth of research and lively writing.”  The award, now in its 10th edition, aims to find the book that provides “the most compelling and enjoyable insight into modern business issues, including management, finance and economics.” The judges—who include former winners Mohamed El-Erian and Steve Coll—also gave preference this year to books “whose influence is most likely to stand the test of time.” To read more about House of Debt, including a list of reviews and a link to the authors’ blog, click here. . . .

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