Category Archives: Media

Updates from Chicago Booth

Local communities are driving global politics

By Raghuram G. Rajan – We live in a strange time.

Countries are more prosperous than ever before, new technologies that promise to solve our most intractable problems are on the horizon, and yet there is widespread unhappiness in some of the richest countries in the world. White males of working age in the United States are killing themselves through alcohol, drugs, and suicide at a rate that is as if 10 Vietnam Wars were raging simultaneously.

The immediate reason appears to be economic despair, as moderately educated workers lose jobs because of trade and automation. But workers lose (and gain) jobs regularly.

Why are even well-educated workers, holding decent middle-class jobs, so disheartened now? What should we do?

What we are seeing is a consequence of the information-technology revolution that started in the early 1970s, magnified by trade.

Every past technological revolution has been disruptive, prompted a societal reaction, and eventually resulted in societal change that helped us get the best out of the revolution. We have felt the disruption of the IT revolution, which has sometimes been punctuated by dramatic episodes such as the 2007–10 global financial crisis; we are now seeing the reaction in populist movements of the extreme left and right.

What has not happened yet is the necessary societal change, which is why so many despair of the future.

We are at a critical moment in human history, when wrong choices could derail human economic progress. more> https://goo.gl/aLSuFh

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How Does Fascism Sneak Into Pop Culture?

BOOK REVIEW

Against the Fascist Creep, Author: Alexander Reid Ross.

By Elizabeth King – Donald Trump’s rise from real-estate businessman and washed-up reality television star to United States president has many people thinking anew about fascism.

The fascist tradition of using the arts as vehicles for expanding the movement is visible in the U.S. today, in some cases in eerily similar ways to the original rise of European fascism in the early 20th century.

In Futurism, we see some early examples of “cultural fascism,” if you will. Filippo Marinetti, founder of the Futurist movement, would be a good place to start. Futurism was founded in Italy in the early 1900s, and was one of the earliest proto-fascist and, in some cases, fascist movements. The idea [of Futurism] was to return to the noble myth [of] the new man who stands for family and tradition, but in a super-powered world of dynamism and adventure.

But if you look at the emergence of fascism and the development of fascism in its original form, one of the interesting things that you see in cultural avenues is that they are often primarily interested in disruption.

And, inevitably, there are liberals in mainstream institutions who accept the expressions of [fascist disruptors] insofar as it is expression, and insofar as it’s good to explore the arts and humanities. So there’s a tendency to accept these movements to some degree, and perhaps even adopt some of their mindsets under this position. This is incredibly dangerous, because fascism is so vitriolic and mercurial that it’s difficult to contain. more> https://goo.gl/gSRBwt

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This striking feature of Manila makes it an emblematic global city

BOOK REVIEW

A World of Homeowners: American Power and the Politics of Housing Aid, Author: Nancy Kwak.

By Nancy Kwak – In our urbanizing world, Manila, and a few other rapidly growing world cities, are not only just helpful in understanding how global cities work; they are indispensable.

The most striking aspect of life in Manila, however, lies not in physical attributes but rather in the legal status of the communities living above and around these waterways.

A city can be predominantly informal with lively black markets and mostly unregulated labor and housing. Informality does not have to occur on the margins of everyday life

Even a casual look at Manila, and other burgeoning global cities, shows that the functioning of the urban economy depends on informality. Informality allows workers to subsist on marginal incomes.

Informality provides homes where the formal market does not. Despite or perhaps because of their meager pay, these workers’ role in the global service economy is anything but marginal.

A shoe repairman sets up a roadside station where he fixes the shoes of the restaurant worker who in turn serves food to visiting investors and local business-people. Workers rest in informal settlements before getting up to drive the jeepneys that transport young men and women inexpensively to Makati’s call centers. There, they will answer questions and complaints from customers of global firms headquartered in New York, London, and more. All for a low wage.

Informality provides the foundation for local and global profits. more> https://goo.gl/T7ba1y

Insanely Concentrated Wealth Is Strangling Our Prosperity

Today’s mountains of wealth throttle the very engine of wealth creation itself.

By Steve Roth – In 1976 the richest people had $35 million each (in 2014 dollars). In 2014 they had $420 million each — a twelvefold increase. You can be sure it’s gotten even more extreme since then.

These people could spend $20 million every year and they’d still just keep getting richer, forever, even if they did absolutely nothing except choose some index funds, watch their balances grow, and shop for a new yacht for their eight-year-old.

If you’re thinking that they “deserve” all that wealth, and all that income just for owning stuff, because they’re “makers,” think again: between 50% and 70% of U.S. household wealth is “earned” the old-fashioned way (cue John Houseman voice): it’s inherited.

American households’ total wealth is about $95 trillion. That’s more than three-quarters of a million dollars for every American household. But roughly 50% of households have zero or negative wealth. more> https://goo.gl/7xjgHf

Five Stages of Economic Grief

BOOK REVIEW

Economyths: 11 Ways That Economics Gets it Wrong, Author: David Orrell.
A Failure of Capitalism: The Crisis of ’08 and the Descent, Author: Richard Posner.
Economics Rules, Author: Dani Rodrik.
The Trouble With Physics, Author: Lee Smolin.

By David Orrell – When Economyths first came out, most economists were in a state of denial – especially those at the top of the profession. Future laureate Tom Sargent said in a 2010 interview “It is just wrong to say that this financial crisis caught modern macroeconomists by surprise.” (No mention of whether the non-modern macroeconomists saw it coming too.)

Laureate Robert Lucas preferred to see the unpredictability as a natural result of future laureate Eugene Fama’s efficient market hypothesis (though as Posner notes, that didn’t stop him from predicting, shortly after Lehman’s collapse, that the crisis would soon go away).Fama agreed that the efficient market hypothesis ‘did quite well in this episode’. The Nobel committee apparently agreed too.

As reality sank in, economists soon began lashing out in anger at anyone who dared criticize their field, including yours truly (I’m going to talk about this because it seems to be quite a general problem). At Canada’s top-ranked economics blog Worthwhile Canadian Initiative, for example, a group of prominent academics, including regular contributors to national publications (Globe and Mail, National Post, Maclean’s, Literary Review of Canada, etc.), shared their professional thoughts about the book online.

Descriptors used included idiotic, ignorant, intellectually lazy, juvenile, random, rubbish, semi-articulated, and ‘sort of like Malcolm Gladwell without the insight’ – ouch. Someone even compared me to a climate change denier (not uncommon, as it turns out). more> https://goo.gl/nAhwBT

Beyond “Amazon Idol” toward a real regional growth strategy

By Mark Muro and Amy Liu – Amazon’s request for proposals (RFP) for a second headquarters complex continues to rivet city lovers, economic development leaders, and the site selection crowd (and its critics). Like a reality TV show, millions are pulling for their favorite cities. And why not: winning the title could be life-changing for some lucky metro.

Yet there’s a problem here: while the fall’s “Amazon Idol” competition is garnering high ratings, the fact remains that it is a major distraction from the glaring need for the country to systematically think about a much larger development problem—the nation’s gaping regional prosperity divides.

At present, America possesses no strategy—let alone serious policies—for addressing the uneven allocation of growth across the nation’s 50 states and hundreds of metropolitan areas. more> https://goo.gl/FaHpZR

Updates from Adobe

Brooke Shaden Connects Through Art

By Alyssa Coppelman – Photographer Brooke Shaden crafts images that are steeped in symbolism. Each image encapsulates a full story, or at least a crucial plot point. It makes sense that she got her start by experimenting with filmmaking—most dubiously when she made her first video at age 13, set to an N’Sync song.

After going to college in order to study filmmaking, Shaden realized she preferred photography, notably because she could work alone and more quickly than when making a film. And while she was able to take elements of her formal filmmaking training and apply them to photography, she is otherwise self-taught.

When searching for ideas to translate into photographs, Shaden loves to explore overarching concepts. “Symbolism and storytelling elements like conflict and characterization are at the core of why I want to create,” she explains. “When I am brainstorming, I often write down keywords—themes, loose ideas—that are occupying my mind in that moment. From there, I write down descriptions of visuals that go with those words in an effort to visually bring about art from the ideas. I focus on location, color, and character, and sometimes props or wardrobe, as well. Once I have the idea, I write down a little paragraph about what the image is, why it is meaningful, and how I plan to technically achieve it.”

Because her planning phase is so thorough, Shaden generally spends only five to fifteen minutes, depending on the image’s complexity, actually shooting. more> https://goo.gl/dXJZsb

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Is taxation theft?

BOOK REVIEW

Anarchy, State and Utopia, Author: Robert Nozick.

By Philip Goff – Outside of academia, almost everyone assumes that the money I get in my pay-packet before the deduction of taxes is, in some morally significant sense, ‘mine’.

This assumption, although almost universal, is demonstrably confused.

There is no serious political theory according to which my pre-tax income is ‘mine’ in any morally significant sense. Moreover, this matters: this confused assumption is a major stumbling block to economic reform, causes low and middle earners to vote against their economic interests, and renders it practically impossible to correct the economic injustices that pervade the modern world.

Your gross, or pre-tax income, is the money the market delivers to you. In what sense might it be thought that you have a moral claim on this money? One answer might be that you deserve it: you have worked hard and have done a good job, and consequently you deserve all your gross income as recompense for your labor. According to this line of reasoning, when the government taxes, it takes the money that you deserve for the work you do.

This is not a plausible view. For it implies that the market distributes to people exactly what they deserve for the work that they do.

But nobody thinks a hedge-fund manager deserves many times more wealth than a scientist working on a cure for cancer, and few would think that current pay ratios in companies reflect what philosophers call desert claims.

Probably you work very hard in your job, and you make an important contribution. But then so do most people, and the market distribution of wealth patently does not reward in proportion to how hard-working people are, or how much of a contribution they make to society. more> https://goo.gl/vTK8Vn

How The OECD Wants To Make Globalization Work For All

By Ronald Janssen – In its key issues paper for the Ministerial Council, the OECD recognizes that the frictional costs of opening to world trade have been much higher than so far assumed.

Workers losing their job because of competition with low wage economies were supposed to find new jobs elsewhere and do so quickly because the same process of globalization would be pushing up overall national income.

The OECD now openly admits that this assumption was wrong.

A second critical stance is taken on what the OECD calls a ‘plausible’ link between globalization and rising inequalities. Here, it explicitly admits that globalization has weakened the bargaining power of labor in advanced economies, invoking the threat of cheap import competition from low wage countries as well as that of moving investment and production there.

Trade and investment deals are often rushed through parliaments when all details have been negotiated, thus providing big business the opportunity to weigh on decision-making by massive lobbying of governments in the preceding trade negotiations themselves. The OECD specifically adds that ‘the cost-benefit balance of provisions such as ISDS look increasingly questionable, especially when both sides are advanced economies with low risk of discriminatory treatment of foreign investors and reliable judicial systems.” more> https://goo.gl/TM76h7

Our illusory sense of agency has a deeply important social purpose

BOOK REVIEW

The Cognitive Neuropsychology of Schizophrenia, Author: Chris Frith.

By Chris Frith – We humans like to think of ourselves as mindful creatures. We have a vivid awareness of our subjective experience and a sense that we can choose how to act – in other words, that our conscious states are what cause our behavior. Afterwards, if we want to, we might explain what we’ve done and why. But the way we justify our actions is fundamentally different from deciding what to do in the first place.

Or is it? Most of the time our perception of conscious control is an illusion. Many neuroscientific and psychological studies confirm that the brain’s ‘automatic pilot’ is usually in the driving seat, with little or no need for ‘us’ to be aware of what’s going on. Strangely, though, in these situations we retain an intense feeling that we’re in control of what we’re doing, what can be called a sense of agency. So where does this feeling come from?

Humans are social animals, but we’d be unable to cooperate or get along in communities if we couldn’t agree on the kinds of creatures we are and the sort of world we inhabit. … more> https://goo.gl/yohWCj