📖 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

Watched Thomas Piketty: The long-run economics of wealth inequality from YouTube

Thomas Piketty, Professor of Economics at the Paris School of Economics and bestselling author of Capital in the 21st Century, tells The CORE Project (http://core-econ.org) how he "tries to be useful" by collecting long-run data into the distribution of wealth - and what it tells us about the effects of wealth inequality on society.

📖 I’m 4% done reading Economy, Society, and Public Policy by CORE Team

Read sections 1.0-1.3. I’m loving the graphs, charts, videos, and supplementary interactive material they’re including in the book. It’s completely fascinating and quite a different reading experience on a computer versus either paper or e-reader.

Having immediate access to data like this make for a more interesting Economics experience.


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

Cyril Ramaphosa

https://en.wikipedia.org/wiki/Cyril_Ramaphosa
Annotated on January 30, 2020 at 12:00PM

PPP

PPP stands for Purchasing Power Parity
How to Calculate and Use Purchasing Power Parity – PPP
Annotated on January 30, 2020 at 12:07PM

But some have taller skyscrapers at the back, meaning a greater disparity between the top 10% and the rest of the population, whereas others have a less steep profile.

It might be more interesting if the top decile in each country were broken into tenths to show the even more severe disparities. I suspect that some of the height differences would be even more drastic if we could see the top 1% or even the top 0.1% on these graphs.
Annotated on January 30, 2020 at 12:36PM

A thousand years ago, the world was flat, economically speaking.

I don’t think we have to go back even this far. If I recall correctly, even 150 years ago the vast majority of the world’s population were subsistence farmers. It’s only been since the 20th century and the increasing spread of the industrial revolution that the situation has changed:

Even England remained primarily an agrarian country like all tributary societies for the previous 4,000 years, with ca. 50 percent of its population employed in agriculture as late as 1759.

–David Christian, Maps of Time (pp 401) quoting from Crafts, British Economic Growth, pp. 13–14. (See also Fig 13.1 Global Industrial Potential from the same, for a graphical indicator.
Annotated on January 30, 2020 at 01:03PM

If you have never seen an ice-hockey stick (or experienced ice hockey) this shape is why we call these figures ‘hockey-stick curves’.

I’m glad they’ve included an image of a hockey stick to provide the context here, but I’ve always thought of it rotated so that the blade was on the ground and the sharp angle of the handle itself indicated the exponential growth curve!
Annotated on January 30, 2020 at 01:18PM

Annotated Unequal Scenes - USA (unequalscenes.com)

"Some inequality of income and wealth is inevitable, if not necessary. If an economy is to function well, people need incentives to work hard and innovate.The pertinent question is not whether income and wealth inequality is good or bad. It is at what point do these inequalities become so great as to pose a serious threat to our economy, our ideal of equal opportunity and our democracy."
—Robert Reich

An important observation. What might create such a tipping point? Is there a way to look back at these things historically to determine the most common factors that would create such tipping points?
Replied to Jennifer Hall Lee: In Pasadena, the Fund-Raising for Schools Reflects the Income Inequality in Society by Diane RavitchDiane Ravitch (Diane Ravitch's blog)
Jennifer Hall Lee is a parent activist in Pasadena, California. She wrote this article about the different amounts of money available to different types of schools in Pasadena. Remember that one of…
It’s probably also worth noting that the Pasadena School district was one of the first in the country to begin busing in the early 70’s. This caused a dramatic split in the community and created a dramatic rise in the number of private schools here.

Private schools were not included in this new plan [busing], and because of that, people who didn’t agree with the plan — and could afford it — sent their kids to affluent private schools. This lead to around 30 private schools (currently 53) being present in the city of Pasadena.

Roxanne Elhachem, Colorado Boulevard.net

To my knowledge there are easily about 20 private elementary schools within Pasadena with tuitions beginning at $15,000 per year and going up as high as $40,000+/year. The wealth disparities within Pasadena are pulling so many students out of public schools and into private schools has also caused the city to begin significantly cutting back on budgets and closing/consolidating schools to stay solvent.

Read Income Inequality Is Reflected in Local School Districts by Jennifer Hall Lee (ColoradoBoulevard.net)

I have written before about my volunteerism as chair of the annual fund in my local public junior high school. That experience gives a unique perspective on the income inequality issues we face today.

Let’s look at a few of the current annual fund goals for schools in the Pasadena area.

  • $75,000 is the annual fund goal for Eliot Arts Magnet Academy (a PUSD school).
  • $500,000 is the annual fund goal for an Altadena charter school.
  • $4.3 million is the annual fund goal for a Pasadena private school.

These annual fund numbers reflect the income levels of parents because when you set a goal for an annual fund you must reasonably expect that the goal can be reached. Annual funds in public schools derive monies primarily through parents and alumni.

👓 In San Francisco, Making a Living From Your Billionaire Neighbor’s Trash | New York Times

Read In San Francisco, Making a Living From Your Billionaire Neighbor’s Trash (New York Times)
In a city swollen by the wealth of the tech industry, the rich and poor live very separate lives. But sometimes they connect through the garbage.

🎧 ‘The Daily’: 10 Years After the Financial Crisis | New York Times

Listened to ‘The Daily’: 10 Years After the Financial Crisis by Michael Barbaro from New York Times

A look at how the economic collapse exposed profound problems underlying the American dream.

What a great overview. So little has changed… I’m starting to think that our financial system is even more fragile than I had expected it might be.

👓 Where Boys Outperform Girls in Math: Rich, White and Suburban Districts | New York Times

Read Where Boys Outperform Girls in Math: Rich, White and Suburban Districts by Claire Cain Miller (nytimes.com)
A study of 10,000 school districts shows how local norms help grow or shrink gender achievement gaps.

🎧 ‘The Daily’: Racism’s Punishing Reach | The New York Times

Listened to ‘The Daily’: Racism’s Punishing Reach by Michael Barbaro from nytimes.com
For decades, Americans have believed that the best way to end racial inequality is to end class inequality. But a landmark 30-year study is debunking that logic.



On today’s episode:
• Emily Badger writes about cities and urban policy for The Upshot, The New York Times’s data-driven venture.
• William O. Jawando worked in the Obama administration on My Brother’s Keeper, a mentoring initiative for black boys.

Background reading:
• Extensive data shows the punishing reach of racism for black boys.
Is there no humanity left in the world? The more I see and hear of the world, the more I want to remove the positive connotation that the word humanity is frequently assigned.

This story is both very powerful and painfully depressing for me, and yet I know there are many that are still far worse. I hope we can find something in these statistics that can help drastically improve the paying field.

🔖 Linking Economic Complexity, Institutions and Income Inequality

Bookmarked Linking Economic Complexity, Institutions and Income Inequality by Dominik Hartmann, Miguel R. Guevara, Cristian Jara-Figueroa, Manuel Aristarán, César A. Hidalgo (arxiv.org)
A country's mix of products predicts its subsequent pattern of diversification and economic growth. But does this product mix also predict income inequality? Here we combine methods from econometrics, network science, and economic complexity to show that countries exporting complex products (as measured by the Economic Complexity Index) have lower levels of income inequality than countries exporting simpler products. Using multivariate regression analysis, we show that economic complexity is a significant and negative predictor of income inequality and that this relationship is robust to controlling for aggregate measures of income, institutions, export concentration, and human capital. Moreover, we introduce a measure that associates a product to a level of income inequality equal to the average GINI of the countries exporting that product (weighted by the share the product represents in that country's export basket). We use this measure together with the network of related products (or product space) to illustrate how the development of new products is associated with changes in income inequality. These findings show that economic complexity captures information about an economy's level of development that is relevant to the ways an economy generates and distributes its income. Moreover, these findings suggest that a country's productive structure may limit its range of income inequality. Finally, we make our results available through an online resource that allows for its users to visualize the structural transformation of over 150 countries and their associated changes in income inequality between 1963 and 2008.
MIT has a pretty good lay-person’s overview of this article. The final published version is separately available.

 

Income inequality linked to export “complexity” | MIT News

Read Income inequality linked to export “complexity” (MIT News)
The mix of products that countries export is a good predictor of income distribution, study finds.
Continue reading Income inequality linked to export “complexity” | MIT News