December 11, 2017

Some Suggested Reading

Last week was a rich one for new articles on the topics we’ve been exploring lately, such as economic inequality, neoliberalism, globalization, and the need for an economic paradigm shift. If you’re so inclined, you might like to check these out:

This article from The Boston Review, by Dani Rodrick, an economist whose research covers globalization, economic growth and development, and political economy. He is the Ford Foundation Professor of International Political Economy at Harvard’s John F. Kennedy School of Government. He was previously the Albert O. Hirschman Professor in the School of Social Science at the Institute for Advanced Study in Princeton (2013-2015), and is President-Elect of the International Economic Association. Here’s a sample from the article:

As even its harshest critics concede, neoliberalism is hard to pin down. In broad terms, it denotes a preference for markets over government, economic incentives over social or cultural norms, and private entrepreneurship over collective or community action. It has been used to describe a wide range of phenomena—from Augusto Pinochet to Margaret Thatcher and Ronald Reagan, from the Clinton Democrats and Britain’s New Labour to the economic opening in China and the reform of the welfare state in Sweden.

The term is used as a catchall for anything that smacks of deregulation, liberalization, privatization, or fiscal austerity. Today it is reviled routinely as a short-hand for the ideas and the practices that have produced growing economic insecurity and inequality, led to the loss of our political values and ideals, and even precipitated our current populist backlash.

As we heap scorn on neoliberalism, we risk throwing out some of its useful ideas.

We live in the age of neoliberalism, apparently. But who are neoliberalism’s adherents and disseminators—the neoliberals? Oddly, you would almost have to go back to the early 1980s to find anyone explicitly embracing neoliberalism.

This report from Credit Suisse on the state of global wealth, as summarized here by Time Magazine. Again, a sample:

In its annual report on the state of global wealth, Credit Suisse says 1.1 million new millionaires were created in the U.S. in 2017. That brings the total number of millionaires in the U.S. up to approximately 15,356,000, or about one in every 20 Americans.

Americans now account for 43 percent of the world’s millionaires.

Yet not everyone is benefiting from the booming global economy. Credit Suisse finds that across all global regions, wealth inequality has increased from 2007 to 2016. And in every region of the world except for China, they say, median wealth has actually declined. Despite its plurality of millionaires, the U.S.’s median wealth of $55,876 puts it 21st place in the world, alongside Austria and Greece.

Median wealth per adult favors countries with lower levels of wealth inequality, Credit Suisse said, and there is exceptionally high disparity between the rich and poor in the U.S.

This article from the World Economic Forum, written by Alberto Gallo, Portfolio Manager and Head of Macro Strategies for Algebris Investments, a London-based asset management company which specializes in the global finance sector. The subject is economic inequality. Here’s a sample:

Paul Ryan, speaker of the House of Representatives, recently stated that “in our country, the condition of your birth does not determine the outcome of your life.”

Yet the idea that every American has an equal opportunity to move up in life is false. Social mobility has declined over the past decades, median wages have stagnated and today’s young generation is the first in modern history expected to be poorer than their parents. The lottery of life – the postcode where you were born – can account for up to two thirds of the wealth an individual generates.

Finally, I just finished the book Grave New World: The End of Globalization, The Return of History, by Stephen D. King (2017). Mr. King is Senior Economic Advisor to HSBC as well as an author, journalist, consultant. and specialist advisor to the House of Commons Treasury Committee. His other books include Losing Control: The Emerging Threats to Western Prosperity (2010) and When the Money Runs Out: The End of Western Affluence (2013). Grave New World is unique among those I’ve read in that it offers a multi-national history of globalization:

Globalization is often regarded as ‘one-way traffic’. In the modern age, we think of extraordinary advances in technology… Seen through these technological advances it is easy to believe that globalization is inevitable; that distances are becoming ever shorter; that national borders are slowly dissolving; and that, whether we like it or not, we live In a single global marketplace for goods, services, capital and labor.

Technology alone, however, does not determine globalization, and nor does it rule out competing versions of globalization at any one moment in time.

Globalization is driven not just by technological advance, but also by the development — and demise — of the ideas and institutions that form our politics, frame our economies and fashion our financial systems both locally and globally. When existing ideas are undermined and institutional infrastructures implode, no amount of new technology is likely to save the day.

Our ideas and institutions shift with alarming regularity… Even when patterns of globalization endure for many centuries, they can break down remarkably quickly, leading to dramatic changes in fortune.”

Happy reading! And Happy Thanksgiving! See you next week for a look at “bullshit jobs.”

 

Kevin Rhodes is on a mission to bring professional excellence and personal wellbeing to the people who learn, teach, and practice the law. His past blog posts for the CBA have been collected in two volumes — click the book covers for more information.

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