Robert J. Shiller

So, there’s a recent book by Scheve and Stasavage [Taxing the Rich, a History of Fiscal Fairness in the United States and Europe], who argued through a history of data from many countries, to look at what causes taxes on the high-income people to go up? And what causes redistributions to low-income people to go up? You might think rising inequality does that. But they … [ Read more ]

Eric Beinhocker

Traditional economics views the economy in a fairly mechanistic way. If people are rational and we want to change their behavior then we just need to change their incentives. Thus, a lot of policy is conducted through tinkering with the tax code or subsidies, for example if one wants more innovation, give an R&D tax credit; if one wants less smoking, tax it heavily. Of … [ Read more ]

Daniel Gross

The labor market isn’t like the stock market, where buyers and sellers meet and conduct deals instantaneously with the stroke of a key. In fact, the labor market is in many ways remarkably inefficient. And people and institutions often can’t move fast enough — or may lack or lose the potential to move — to fill open positions.

How Emerging Markets Can Finally Arrive

Throughout much of human history, economic output was firmly yoked to the size of a country’s labor force. Because productivity growth was negligible, the countries with the largest populations, such as China and India, could put the most people to work. They reigned as the world’s largest economies. Things changed suddenly during the late 1700s. A number of economic, institutional, and other factors coalesced in … [ Read more ]

Daniel Gross

Markets on the whole may be efficient, but the U.S. doesn’t just have one labor, housing, or office market. There are hundreds of labor and housing markets, and thousands of submarkets. And they are full of imbalances, shortages, gluts, and other inefficiencies.

Daniel Gross

By many measures, the labor market has never been better, with historically low unemployment rates and historically high levels of payroll jobs and job openings. So one service worker might be reasonably optimistic about finding a better position at better wages. And yet anxiety and economic insecurity remains rampant — in part because an increasing number of people rightly fear that their work could one … [ Read more ]

Yuval Noah Harari

Trade may seem a very pragmatic activity, one that needs no fictive basis. Yet the fact is that no animal other than Sapiens engages in trade, and all the Sapiens trade networks about which we have detailed evidence were based on fictions. Trade cannot exist without trust, and it is very difficult to trust strangers. The global trade network of today is based on our … [ Read more ]

Ryan Avent

[Adam] Smith saw things differently. Trade is not zero-sum, he wrote. Rather, trade increases the size of the market, which allows for greater labour specialization. Specialized labour is more productive than non-specialized labour, so that a world of trade and specialization, in which many people focus on one task and exchange their produce with others in mutually beneficial trades, is one in which everyone is … [ Read more ]

Ryan Avent

People, essentially, do not create their own fortunes. They inherit them, come to them through the occupation of some state-protected niche, or, if they are very brilliant and very lucky, through infusing a particular group of men and women with the germ of an idea, which, in time and with just the right environment, allows that group to evolve into an organism suited to the … [ Read more ]

Ryan Avent

The wealth of humans is societal. But the distribution of that wealth doesn’t rest on markets or on social perceptions of who deserves what but on the ability of the powerful to use their power to retain whatever of the value society generates that they can.

That is not a radical statement. People take what they can take, and it is only the interplay of countervailing … [ Read more ]

Ryan Avent

The wealth of humanity is limited by our ability to produce goods and services of value. The production of goods and services of value increasingly rests on the collection, processing and management of information. There is no value without the knowledge of what can be produced, what ought to be produced, and how it can be produced most effectively. It is the information-processing structures of … [ Read more ]

Tim O’Reilly

Markets are not infallible. Government can play a role here, as it did with the Internet, GPS, and the Human Genome Project. And government’s role is not limited just to projects that require coordinated effort beyond the capability of even the largest commercial actors. Government must deal with market failure. This can be the failure of the commons, outright malfeasance by commercial actors, or problems … [ Read more ]

Tim O’Reilly

Because of the demands of financial markets, companies often find short-term advantage in cutting employment, since driving the stock price gives owners a better return than actually employing people to get work done. Eventually “the market” sorts things out (in theory), and corporations are once again able to offer jobs to willing workers. But there is a lot of unnecessary friction.

One of the challenges … [ Read more ]

How the Profound Changes in Economics Make Left Versus Right Debates Irrelevant

Economic thinking is changing. If that thesis is correct – and there are many reasons to believe it is – then historical experience suggests policy and politics will change as well. How significant that change will be remains to be seen. It is still early days and the impact thus far has been limited. Few politicians or policymakers are even dimly aware of the changes … [ Read more ]

David Brooks

The sociologist Daniel Bell once argued that capitalism would undermine itself because it encouraged hedonistic short-term values for consumers while requiring self-disciplined long-term values in its workers.

NAFTA’s Impact on the U.S. Economy: What Are the Facts?

When President Bill Clinton signed the North American Trade Agreement (NAFTA) in December 1993, he predicted that “NAFTA will tear down trade barriers between our three nations, create the world’s largest trade zone, and create 200,000 jobs in [the U.S.] by 1995 alone. The environmental and labor side agreements negotiated by our administration will make this agreement a force for social progress as well as … [ Read more ]

One Quarter of Entrepreneurs in the United States Are Immigrants

Immigrants are 15 percent of the overall United States population, but they become entrepreneurs at a much higher rate, according to new research by William Kerr and Sari Pekkala Kerr.

Jonathan Haidt

Dynamism is the drive to work, create, and innovate. It’s the desire to solve problems and do big things. Free market societies bring out dynamism like no other kind of society. But we also know creative destruction can hurt people. That feels wrong. We turn to government to tame capitalism, to make it more decent.

Four Fundamentals of Workplace Automation

As the automation of physical and knowledge work advances, many jobs will be redefined rather than eliminated—at least in the short term.

Machine Money and People Money

At the outset of the Great Depression, John Maynard Keynes penned a remarkable economic prognostication: that despite the ominous storm that was then enfolding the world, mankind was in fact on the brink of solving “the economic problem” — that is, the quest for daily subsistence.

The world of his grandchildren — the world of those of us living today — would, “for the first time…be faced with [mankind’s] real, his permanent … [ Read more ]