Daily Archives: November 13, 2018

How Capitalism Actually Generates More Inequality

By Geoffrey M. Hodgson – At least nominally, capitalism embodies and sustains an Enlightenment agenda of freedom and equality.

Typically there is freedom to trade and equality under the law, meaning that most adults – rich or poor – are formally subject to the same legal rules. But with its inequalities of power and wealth, capitalism nurtures economic inequality alongside equality under the law.

Today, in the USA, the richest 1 per cent own 34 per cent of the wealth and the richest 10 per cent own 74 per cent of the wealth. In the UK, the richest 1 per cent own 12 per cent of the wealth and the richest 10 per cent own 44 per cent of the wealth. In France the figures are 24 cent and 62 per cent respectively. The richest 1 percent own 35 percent of the wealth in Switzerland, 24 per cent in Sweden and 15 percent in Canada.

To what extent can inequalities of income or wealth be attributed to the fundamental institutions of capitalism, rather than a residual landed aristocracy, or other surviving elites from the pre-capitalist past? A familiar mantra is that markets are the source of inequality under capitalism. Can markets be blamed for inequality?

In real-world markets different sellers or buyers vary hugely in their capacities to influence prices and other outcomes. When a seller has sufficient salable assets to affect market prices, then strategic market behavior is possible to drive out competitors.

Would more competition, with greater numbers of market participants, fix this problem? If markets per se are to be blamed for inequality, then it has to be shown that competitive markets also have this outcome. more>

Updates from Chicago Booth

The secrets of shopping
By Amy Merrick – A woman suffering from a headache walks into a drugstore. She faces a shelf of remedies: mostly bottles of branded aspirin, such as Bayer. Next to those colorful, heavily advertised boxes are store-brand packages of generic aspirin. The woman puts the generic into her basket and goes home.

A quartet of researchers find that she’s not alone, as sophisticated shoppers—such as doctors or pharmacists, the people most likely to know whether the extra few dollars spent on a brand are worth it—opt to buy generic headache drugs more often.

In fact, a doctor or pharmacist is 18 percentage points more likely than the typical shopper to buy a private-label headache remedy. The magnitude of the difference surprised one of the researchers, Matthew Gentzkow, Richard O. Ryan Professor of Economics and Neubauer Family Faculty Fellow at Chicago Booth.

“The effects are really big across a lot of health-care categories,” Gentzkow says. The researchers estimate that if all US consumers were to start shopping like pharmacists, they could save a collective $410 million a year on headache remedies. more>

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Updates from Autodesk

Design Master Electrical
Design Master Software – Design Master Electrical is a complete electrical drafting and calculation software program that works directly inside AutoCAD. It is compatible with AutoCAD 2004 to 2019.

Engineers across the country are using it to complete their designs faster, easier, and with fewer errors.

You “accomplish more work in less time, with greater accuracy,” says Angie Hester of Trindera Engineering in Coeur d’Alene, ID.

“There’s never a disconnect of information between drawings and schedules,” explains Donald Evans of Evans Engineering and Consulting in Post Falls, ID. more>

The Liberal Conception Of ‘Freedom’ Is Incapable Of Addressing The Problems Of Contemporary Capitalism

By Andrea Lorenzo Capussela – In a forthcoming book, Branko Milanović identifies four ‘troublesome features’ in ‘meritocratic liberal capitalism’.

In its simplest form, liberal theory – equal rights for all citizens, which guarantee their freedom, which is in turn conceived as absence of interference – has no obvious answer to those problems. For if freedom is non-interference, then it is compatible with both inequality and private domination, at least within certain bounds, as neither directly interferes with people’s individual choices.

Indeed, accepting precarious employment is a choice. And as liberals cannot say that Milanović’s four ‘troublesome features’ pose a fundamental challenge to their idea of a good society, their answer is a Ptolemaic one: sets of diverse, if potentially effective remedies such as redistribution, poverty relief, active labor market policies, civic education, and policing fake-news.

For the liberal conception of freedom is not the only conceivable one. Another notion, equally negative, is the republican or neo-roman one, which views freedom as non-domination. If I depend on someone else’s arbitrary will, or am subject to their enormous and unchecked power, I am not free, irrespective of how that power is exercised.

Hence the paradox of the ‘free slave’, frequent in republican literature: liberal theory implies that the slave who has a kind master is free, as she suffers no interference in her choices; republicans object that this depends entirely on the master’s benevolence, which can be revoked at will and may have to be cultivated: domination and unfreedom remain, therefore, and typically lead to self-censorship and a slavish mentality. more>