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121. Economics for Inclusive Prosperity: An Introduction

Author:
Suresh Naidu, Dani Rodrik, and Gabriel Zucman
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
We live in an age of astonishing inequality. Income and wealth disparities between the rich and the poor in the United States have risen to heights not seen since the gilded age in the early part of the 20th century, and are among the highest in the developed world. Median wages for American workers remain at 1970s levels. Fewer and fewer among newer generations can expect to do better than their parents. Organizational and technological changes and globalization have fueled great wealth accumulation among those able to take advantage of them, but have left large segments of the population behind. U.S. life expectancy has declined for the third year in a row in 2017, and the allocation of healthcare looks both inefficient and unfair. Advances in automation and digitization threaten even greater labor market disruptions in the years ahead. Climate change fueled disasters increasingly disrupt everyday life. Greater prosperity and inclusion both seem attainable, yet the joint target recedes ever further.
Topic:
Economics, Capitalism, Inequality, Economic Policy, and Economic Theory
Political Geography:
United States

122. Towards a Better Financial System

Author:
Anat R. Admati
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
The financial system is fragile and distorted because current rules fail to counter the distorted incentives by banking institutions to borrow excessively and to remain opaque. Better-designed rules to reduce the reliance on debt and ensure that institutions use significantly more equity would enable the financial system to serve society better. Revising counterproductive tax and bankruptcy codes that, together with the extensive safety net offered to the financial system currently encourage dangerous conduct, would also be beneficial.
Topic:
Economics, International Trade and Finance, Finance, Economic Policy, Economic Theory, and Macroeconomics
Political Geography:
United States

123. An Expanded View of Government’s Role in Providing Social Insurance and Investing in Children

Author:
Sandra E. Black and Jesse Rothstein
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
While private provision of goods often yields the efficient outcome, there are a number of goods that are not efficiently provided in the private market. Here, we outline two such situations: investments in child care and education, and insurance against risks created by business cycles, poor health, and old age. Because private markets work poorly for these goods, and the costs of market failure are large, standard economic reasoning implies a significant role for government provision. The reduction in economic insecurity that this would bring could help to improve political stability as well, by reducing the stakes that people perceive in discussions of trade, immigration, technological change, and countercyclical policy (Inglehart and Norris, 2016). Many observers (e.g, Hacker, 2018) have pointed to economic anxiety as a potential contributor to populist reactions in the U.S. and many European countries; a public sector that acts to reduce the risk that households face could ameliorate this, generating political spillovers and improving the state of the country more broadly.
Topic:
Economics, Education, Health, Health Care Policy, Children, Economic Policy, and Economic Theory
Political Geography:
United States and Europe

124. Election Law and Political Economy

Author:
Ethan Kaplan
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
In sum, political institutions in the United States favor higher income individuals over lower income individuals and ethnic majorities over ethnic minorities. This is accomplished through a myriad of policies which impact who votes, allow for differential influence and access by the wealthy, structure voting districts to dilute the impacts of under-represented voters, and allow for oversized influence of pro-business owner ideas through media and membership organizations.
Topic:
Economics, Law, Elections, Democracy, Economic Policy, and Voting
Political Geography:
United States

125. Labor in the Age of Automation and Artificial Intelligence

Author:
Anton Korinek
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
As technology advanced in recent decades, it increasingly left workers behind and led to sharp increases in inequality. The current wave of progress in artificial intelligence is likely to accelerate these trends. This note lays out three complementary approaches to countering these developments. Firstly, since technological progress generates net gains for society as a whole, the winners could in principle compensate the losers and still be better off. Secondly, progress should be steered to minimize the losses of workers. Thirdly, there is an important role for government intervention in information technology to thwart the rise of monopolies that extract rents from society. The note concludes with some speculations on the impact of artificial intelligence increasingly rivaling human labor.
Topic:
Economics, Science and Technology, Labor Issues, Economic Policy, Macroeconomics, and Artificial Intelligence
Political Geography:
United States

126. How to think about finance?

Author:
Atif Mian
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
There has been a major structural shift in financial markets since the 1980s. The world is awash in credit, and credit is cheaper than ever before. I discuss how increasing financial surpluses within parts of the economy have resulted in an expansion in the supply of credit, which has largely financed the demand-side of the real economy. This increasing reliance on “credit as demand” raises some serious policy questions going forward. I discuss the importance of equitable and inclusive growth, fair taxation system and risk-sharing in creating a financial system that promotes prosperity and stability.
Topic:
Economics, International Trade and Finance, Finance, Economic Policy, and Economic Theory
Political Geography:
United States

127. Worker Collective Action in the 21st Century Labor Market

Author:
Suresh Naidu
Publication Date:
01-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
Private sector union density in the United States has fallen below 7%, but new historical evidence shows high union density played an important role in compressing the US income distribution at mid-century and lowering intergenerational income persistence. Other recent evidence on pervasive labor market power suggests that unions may be able raise wages without severe dis-employment effects, and may alleviate inefficient contracting problems. Despite substantial survey evidence indicating latent demand for unions, employers have successfully fought unionization efforts in rising service sectors, and a combination of legal restrictions and economic transformations have impaired the ability of US unions to solve collective action problems at the appropriate scale – an issue that economics may be able to help ameliorate.
Topic:
Economics, Labor Issues, Income Inequality, and Labor Policies
Political Geography:
United States

128. Confronting Rising Market Power

Author:
Jonathan B. Baker and Fiona Scott Morton
Publication Date:
05-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
Rising market power in the U.S. economy is not just a microeconomic problem, as the textbook analysis shows, creating allocative efficiency losses and transferring wealth away from victimized participants in the affected markets. Rising market power also undermines inclusive prosperity by contributing to inequality and slowed economic growth. Modern economic research points to multiple ways to attack market power and enhance competition, including ways of strengthening antitrust enforcement, improving antitrust rules and institutions, and deploying regulation to enhance competition.
Topic:
Economics, Economic Policy, Economic Theory, Macroeconomics, and Microeconomics
Political Geography:
United States

129. Antitrust and Labor Market Power

Author:
José Azar, Ioana Marinescu, and Marshall Steinbaum
Publication Date:
05-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
Starting with the Chicago School’s influence in the late 1970s and 1980s, antitrust enforcement has been weakened under the assumption that market power is justified by economic efficiency. While consumers are the main focus of antitrust enforcement, the weakening of antitrust enforcement has likely also adversely impacted workers, thus contributing to increasing inequality.
Topic:
Economics, Labor Issues, Economic Policy, Economic Theory, and Antitrust Law
Political Geography:
United States

130. It’s Good Jobs, Stupid

Author:
Daron Acemoglu
Publication Date:
06-2019
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
Progressive policy proposals that would have appeared radical just a few years ago, including high marginal tax rates, wealth taxes, universal basic income, single-payer health insurance, and free college for all, are now on the agenda. The recognition that we can do more to create shared prosperity — that is, economic growth benefiting society at large, not just corporations and the very well-educated — is a welcome development. But are we targeting the right policies? We are at a critical juncture both economically and politically. We do not have much time left to reverse the trend towards greater inequality and worsening economic prospects for less educated Americans before its social consequences become more deeply ingrained. And the 2020 presidential election may provide a unique opportunity to adopt fundamentally different economic policies. Failing to identify the right policy priorities would not only squander this critical juncture; it could also deepen the rift between the different wings of US politics.
Topic:
Economics, Labor Issues, Employment, Labor Policies, Economic Policy, and Economic Theory
Political Geography:
United States