October 8, 2012
Written By: Dennis Shen
In academic circles, it has become commonly accepted that rapid economic growth can increase inequality. This has been supported by international developments in recent decades that show declining inequality between countries but increasing inequality within countries. China and the United States are just two examples. To explain the reason, some point to globalization as the natural conduit not only for high growth and inter-country convergence but also the agent for downward domestic pressures on working class payrolls, capping wage increases in response to international labor competition and resulting in intra-country divergence. Others have argued that unregulated laissez-faire economics is both an apparatus for rapid economic advances and the natural environment for the development of a Darwinian economy (see Robert Frank’s “The Darwin Economy”) of winners and losers across an increasingly segmented income distribution, requiring a strong state to intervene and re-balance.
In a recent article on Project Syndicate (link here), Columbia professor Alexander Stille acknowledged this accepted relationship between rapid economic growth and increasing inequality, but also interestingly pointed to a novel alternative hypothesis: in addition to rapid growth driving rising inequality, could times of relatively weak growth also be associated with the very same inequality phenomena? As Stille writes, “might slow growth and rising inequality – the two most salient characteristics of developed economies nowadays – also be connected?” At first, it would seem counter-intuitive that very weak growth be commonly associated.
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February 22, 2012
Written by: Dennis Shen
The crisis of the natural commons – our forests, our waterways, our skies, our marine fisheries, our biodiversity – is rooted in an existing failure of the international economic and regulatory system to internalize a critical externality. It reflects a system deficiency to place a price and regulate the use of the earth’s depletable and valuable natural ecosystems in a time in which continued freedom to over-use may pose real risk to the sustainability of these natural systems and in turn, the sustainability of our long-term economic path.
In 1776, Adam Smith, in the Wealth of Nations, stated that an individual, by pursuing his own interest, will be “led by an invisible hand to promote an end which was no part of his intention.” And in the case of private, tradable goods – the invisible hand of competitive markets has, in testament, done wonders to foster the efficient exchange of assets and maximize the product of human labour. But the marketplace works under assigned boundaries and if the current rules state the goal to be maximum short-term exploitation at the cost of long-term consequences, then that is exactly what the markets will institute into practice.
The reason a sustainable architecture to our global economy (that internalizes the price of common goods) has been difficult to come by is in part due to the historical misconception that the natural ecosystems are so vast that they cannot possibly be significantly influenced by man – a misconception founded on a history of people in which exploitation of nature has seemingly taken place without boundary or repercussion.
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February 19, 2012
Written By: Matthew Oxenford
I’ve been struck by two stories running at low intensity on either side of the Atlantic for the last several months. At first, they don’t seem related. First, there is a notable uptick in anti-German sentiment that has been documented Greece and in several other countries that may need to be bailed out by the wealthier EU countries if the Euro project is to survive (See Reuters article from 16 February: “Greece-Germany tension rises, reflects wider European rift“). Secondly, the Republican Presidential primary in the United States has taken turn towards attacking the social safety net, even though the most reliably Republican regions of the United States are indeed the poorest, and most in need of the safety net (Paul Krugman’s recent article in the New York Times, “Moochers Against Welfare” is a good encapsulation of the trend). These seem unrelated, but they really have the same ultimate cause, one that has profound implications for both the United States and Europe.
The trend in the United States has been going on for longer, so let’s look at it first. Republican political rhetoric has been dominated by the trope that government should not be in the business of redistributing money to undeserving people even while the poorest of the U.S. States are the most reliably Republican. Every year, rich states, like Massachusetts, Connecticut and New York receive less than a dollar in federal spending for every dollar they pay in taxes.
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February 1, 2012
Written By: Dennis Shen
Capitalism and democracy are often characterized as the twin virtues that have defined America’s modern history and success. But capitalism and democracy do not exist in uniformity: to be more capitalistic does not invariably make us more democratic. Instead, there has always existed an intricate balance between free market principles and strong democratic governance, oftentimes counterbalancing one another, that has determined the long-run health and sustainability of a political and economic system. America’s past success in becoming the world’s leading nation was founded and sustained by its managing this balance between private markets and government better than perhaps any other country in history. The ingenuity and allocative efficiency of free markets in partnership with the vision and moral leadership of a strong American government helped design the modern world and make it in the image of a fair and decent people.
But this balance between markets and government can break down if not very carefully maintained. At the core of America’s problems today is an existing imbalance of too much dependence on unregulated, free market capitalism and too little government oversight and leadership.
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January 18, 2012
Written By: Joel Suss
Today, Wikipedia has taken itself offline in protest. Thousands of other sites, including the host of this blog, WordPress, are taking part by removing content or by being blacked-out, protesting the first attempt by the US government to censure and control the internet. It is a monumental and unprecedented day in the life of the internet.
While the stated objective of the legislation, to tackle online intellectual property theft, is valid in principle, the effects were they to become law would have serious negative implications for the internet and may not even be effective in limiting piracy. Here are some important details about the two bills, Stop Online Piracy Act (SOPA) and Protect Intellectual Property Act (PIPA): They would allow the attorney general to create a list of sites that must be blocked. Now here is the kicker: service to these sites may be shut off without a court hearing or trial. SOPA, the bill originating in the House of Representatives, goes even further than the Senate’s PIPA, allowing private companies to sue providers for hosting sites that infringe on copyright, even if it is unwittingly doing so. Imagine Google being bombarded with lawsuits, effectively crippling it.
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January 17, 2012
Written By: Joel Suss
We are the information generation.
We can all readily witness the power of the internet in terms of social communication: from catalyzing the toppling of dictators in the Arab world to the Indignados movement in Spain. But it is the unprecedented flow of information which constitutes the real revolution of our time.
Never before has information been so accessible. We are hyper-connected. Our very existence is being fundamentally re-shaped, our brains literally being re-wired. Recent scientific studies show how the human brain is actually evolving before our eyes in response to information technology (see http://www.sciencemag.org/content/early/2011/07/13/science.1207745 to read a number of academic articles on the subject). Studies primarily demonstrate the connection between memory and the omnipresence of information, namely that we don’t need to commit anything to heart anymore since everything one wants to know is readily retrievable on the World Wide Web. What is less understood is how the information revolution is transforming our social selves.
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