Economic thinking is changing. If that thesis is correct – and there are many reasons to believe it is – then historical experience suggests policy and politics will change as well. How significant that change will be remains to be seen. It is still early days and the impact thus far has been limited. Few politicians or policymakers are even dimly aware of the changes … [ Read more ]
When President Bill Clinton signed the North American Trade Agreement (NAFTA) in December 1993, he predicted that “NAFTA will tear down trade barriers between our three nations, create the world’s largest trade zone, and create 200,000 jobs in [the U.S.] by 1995 alone. The environmental and labor side agreements negotiated by our administration will make this agreement a force for social progress as well as … [ Read more ]
Immigrants are 15 percent of the overall United States population, but they become entrepreneurs at a much higher rate, according to new research by William Kerr and Sari Pekkala Kerr.
As the automation of physical and knowledge work advances, many jobs will be redefined rather than eliminated—at least in the short term.
At the outset of the Great Depression, John Maynard Keynes penned a remarkable economic prognostication: that despite the ominous storm that was then enfolding the world, mankind was in fact on the brink of solving “the economic problem” — that is, the quest for daily subsistence.
The world of his grandchildren — the world of those of us living today — would, “for the first time…be faced with [mankind’s] real, his permanent … [ Read more ]
A true marketplace needs natural pull on both the consumer and supplier side of the market. Aggregating suppliers is a necessary, but insufficient step on its own. You must also organically aggregate demand. With each step, it should get easier to acquire the incremental consumer AS WELL AS the incremental supplier. Highly liquid marketplaces naturally “tip” towards becoming a clearinghouse where neither the consumer nor … [ Read more ]
There are not a lot of resources to help you build analytics marketplaces and other kind of networks. At daphni, we deeply believe in the platformization of the economy and look closely at these models. Several founders have asked us tips to structure their data-driven approach, so we’ve decided to publish a guide to help founders do it. We divided the guide in 2 parts: … [ Read more ]
Meeting increasing global demand requires dramatically improving resource productivity. Yet technological advances mean companies have an extraordinary opportunity not only to meet that challenge but to spark the next industrial revolution as well.
Two scholars measure the economic impact of VC-funded companies.
If demography is destiny, global growth is headed for a slowdown. History, however, suggests that productivity could ride to the rescue.
Editor’s Note: an obvously topical article, but one which contains some interesting generalized observations and concepts, so definitely worth a read.
Despite its ability to generate prosperity, capitalism is under attack. By shaking up our long-held assumptions about how and why the system works, we can improve it.
Professor Shane Greenstein is annoyed by “Internet exceptionalism,” the prevalent idea that the Internet defies economic logic, that there’s never been anything like it in business history, and that its impact supersedes everything. In his new book, Greenstein argues that the Internet actually follows classic patterns of economic behavior, detailing the commercial forces that guided the Internet’s path from cool invention to successful innovation. … [ Read more ]
One oft-cited source of productivity is learning by doing, which is the ability of workers to raise productivity through experience. In fact, economists have credited the Horndal effect to learning by doing. The longer workers do the same type of job the better they get. The result is higher production without having to put in new machines or hire more workers.
Several studies have looked into … [ Read more ]
When a company undergoes a technological change — such as introducing robots or reorganizing the workflow in manufacturing — does it mainly make individual workers more productive because they will be able to churn out more widgets per hour? Or does it make all factors of production equally more productive — workers can produce more widgets, state-of-the-art equipment can accomplish tasks faster, materials that can … [ Read more ]
We have become much more productive—output per hour worked increased more than fourfold between 1950 and 2012, according to the Bureau of Labor Statistics. But the amount we work hasn’t fallen anywhere near as fast. In the United States, the average working year went from 1,963 hours in 1950 to 1,790 hours last year, a drop of less than 10%.
This has prompted some people to … [ Read more ]
Entrepreneurship can be personally rewarding and good for the economy, if we wipe the stardust from our eyes.
A look at a set of theoretical frameworks that attempt to go beyond the production function approach that dominates textbook discussions of economic organization, with a focus on the capability approach, drawing heavily on the work of Frank Knight and Hendrik Houthakker. (Knight identified the fundamental problem of economic organization as the search for and coordination of different capabilities that are dispersed throughout the larger … [ Read more ]
In 1970, in “Efficient Capital Markets: a Review of Theory and Empirical Work,” Gene Fama defined a market to be “informationally efficient” if prices at each moment incorporate all available information about future values. Informational efficiency is a natural consequence of competition, relatively free entry, and low costs of information. If there is a signal, not incorporated in market prices, that future values will be … [ Read more ]
There is no shortage of money managers who claim they can beat market benchmarks, some with impressive track records. And one stream of research suggests that some people can identify and profit from mispriced securities in the stock market. Chicago Booth Professor Lubos Pastor believes that money managers are not only skilled, but becoming ever more skilled over time. So should you dump your index … [ Read more ]
Late Chicago Booth Professor (and Nobel Laureate) George Stigler pioneered the concept of regulatory capture. In simple words, regulatory capture exists when a regulatory agency, created to act in the public interest, ends up advancing interests of the industry it is charged with regulating. Since Stigler, when economists talk about regulatory capture, they do not imply that regulators are corrupt or lack integrity. In fact, … [ Read more ]