📖 I’m 10% done reading Economy, Society, and Public Policy by CORE Team

Finished chapter one. I like that this text has so many linked resources, but some of the links to the sister texts make me think I’d be getting a deeper and more technical understanding by reading them instead of this more introductory text. Still, this has some tremendous value even as a refresher.


Annotations from Unit 1 Capitalism and democracy: Affluence, inequality, and the environment

Government bodies also tend to be more limited in their capacity to expand if successful, and are usually protected from failure if they perform poorly.

They can expand in different ways however. Think about the expansion of empires of Egypt, Rome, and the Mongols in the 12th Century. What caused them to cease growing and decrease? What allowed them to keep increasing?
Annotated on February 10, 2020 at 04:50PM


Capitalism is an economic system that can combine centralization with decentralization.

How can we analogize this with the decentralization of the web and its economy?
Annotated on February 10, 2020 at 04:50PM


Market competition provides a mechanism for weeding out those who underperform.

Note how this has failed in the current guilded age of the United States where it is possible for things to be “too big to fail”.
Annotated on February 10, 2020 at 04:50PM


First, because capital goods do not fall from the sky: all countries that have successfully moved from poverty to affluence have done so, of necessity, by accumulating large amounts of capital. We will also see that a crucial feature of capitalism is who owns and controls the capital goods in an economy.

Annotated on February 10, 2020 at 03:11PM


Yet some things that we value are not private property—for example, the air we breathe and most of the knowledge we use cannot be owned, bought, or sold.

Annotated on February 10, 2020 at 04:49PM


We should be sceptical when anyone claims that something complex (capitalism) ‘causes’ something else (increased living standards, technological improvement, a networked world, or environmental challenges), just because we can see there is a correlation.

Great and ridiculous examples of this can be found at https://www.tylervigen.com/spurious-correlations
Annotated on February 10, 2020 at 08:59PM


Figure 1.16 Graph with y-axis that jumps around in scale

Note the dramatic inconsistency of the scale on the left hand side. What is going on here?
Annotated on February 10, 2020 at 09:23PM


Firms should not be owned and managed by people who survive because of their connections to government or their privileged birth: Capitalism is dynamic when owners or managers succeed because they are good at delivering high-quality goods and services at a competitive price. This is more likely to be a failure when the other two factors above are not working well.

Here is where we’re likely to fail in the United States by following the example of Donald Trump, who ostensibly has survived solely off the wealth of his father’s dwindling empire. With that empire gone, he’s now turning to creating wealth by associating with the government. We should carefully follow where this potentially leads the country.
Annotated on February 10, 2020 at 09:31PM


In some, their spending on goods and services as well as on transfers like unemployment benefits and pensions, accounts for more than half of GDP.

What is the Government’s proportion of the US GDP presently?
Annotated on February 10, 2020 at 09:34PM


James Bronterre O’Brien, told the people:‘Knaves will tell you that it is because you have no property, you are unrepresented. I tell you on the contrary, it is because you are unrepresented that you have no property …’

great quote
Annotated on February 10, 2020 at 09:53PM


Yet some things that we value are not private property—for example, the air we breathe and most of the knowledge we use cannot be owned, bought, or sold.

Annotated on February 10, 2020 at 04:49PM

Read How to Calculate and Use Purchasing Power Parity – PPP: Why Does a Big Mac Cost a Lot Less in China? (The Balance)
Purchasing power parity is a theory that says prices of goods between countries should equalize over time. Formula, how to use, and examples.

After the war, the Swedish economist Gustav Cassel suggested multiplying each currency’s pre-war value by its inflation rate to get the new parity. That formed the basis for today’s PPP.

Annotated on January 30, 2020 at 12:29PM

Why We Don’t Live in a PPP World
PPP depends on the law of one price. That states that once the difference in exchange rates is accounted for, then everything would cost the same.
That’s not true in the real world for four reasons. First, there are differences in transportation costs, taxes, and tariffs. These costs will raise prices in a country. Countries with many trade agreements will have lower prices because they have fewer tariffs. Socialist countries will have higher costs because they have more taxes. 
A second reason is that some things, like real estate and haircuts, can’t be shipped. Only ultra-wealthy global travelers can compare the prices of homes in New York to those in London. 
A third reason is that not everyone has the same access to international trade. For example, someone in rural China can’t compare the prices of oxen sold throughout the world. But Amazon and other online retailers are providing more real purchasing power parity to even rural dwellers.
A fourth reason is that import costs are subject to exchange rate fluctuations. For example, when the U.S. dollar weakens, then Americans pay more for imports.

Annotated on January 30, 2020 at 12:31PM

👓 Special measures: well-being | Economist Espresso

Read Special measures: well-being (Economist Espresso)
How should society’s progress be measured? GDP tends to be used as a proxy. But its imperfections are widely known: it focuses on market-oriented production, for instance, and ignores how the gains from that output are distributed. Today experts gather in Seoul to discuss work on alternative measures led by Joseph Stiglitz and Jean-Paul Fitoussi, two eminent economists, and commissioned by the OECD, a group of mostly rich countries. Their report recommends adding a number of indicators to policymakers’ dashboards, including measures of inequality, environmental sustainability, happiness and trust. Economic insecurity—such as income buffers available to people when trouble strikes—also matters. If governments had considered insecurity during the 2007-08 financial crisis, they would have provided their economies with more support, and continued to do so even after GDP started to recover. But, as the report says, “what you measure affects what you do.”