The Price of Inequality: How Today's Divided Society Endangers Our Future (67 page)

20.
Alexander J. Field,
A Great Leap Forward: 1930s Depression and U.S. Economic Growth
(New Haven: Yale University Press, 2011).

21.
They are called “GSE,” government-sponsored enterprises, because they were originally started by the government. They had long been turned over to the private sector—Fannie Mae in 1968—but the government took them over in the midst of the financial crisis.

22.
Or in which they hold a substantial fraction, through their holdings of securities.

23.
Chapter 4 defined the concept of a “public good” in the technical sense in which economists use that term—something from which everyone benefits. Because everyone benefits, whether he pays for the good or not, everyone is tempted to let others pay for the good—which is referred to as being a free rider. That’s why such goods
have
to be publicly provided if they are to be provided in adequate supply.

24.
Some restraints remained—such as that contributions to Super-Political Action Committees (Super-Pacs) could not be directly coordinated with the campaign committees of candidates.

25.
From Walter Dean Burnham, “Democracy in Peril: The American Turnout Problem and the Path to Plutocracy,” Roosevelt Institute Working Paper no. 5, December 1, 2010. Data for Australia refer to maximum poll over the period 1975 to 1996; for the United States, for the somewhat longer period 1974–2008.

26.
For instance, in systems where representation in Congress (parliament) are proportional to the total vote garnered in a state. Some countries have a mix of “district” representatives (as we have) and proportional representation.

27.
Adam Smith understood as much. See his
The Theory of Moral Sentiments
(1759),
published in 2000 by Prometheus Books, in Amherst, NY
.
See also Emma Rothschild and Amartya Sen, “Adam Smith’s Economics,”
The Cambridge Companion to Adam Smith
(Cambridge: Campbridge University Press, 2006), pp. 319–65, especially the discussion of the commonwealth beginning on p. 347.

I
NDEX

Abed, Fazle Hasan, 196

Acacia Research Corporation, 203

Accenture, 360

advertising, 147, 335, 348, 354

   
see also
marketing

affirmative action, 282

Afghanistan, 143, 176, 209, 211, 218

Africa, 23, 40

African Americans:

   discrimination against, 68, 69, 70, 71, 129, 303, 305, 308, 328, 367, 369

   disenfranchisement of, 345, 349

   wealth of, 13, 70, 71, 329, 384

agriculture:

   government subsidies in, 51, 64, 179, 180, 320, 326, 379

   in Great Depression, 56–57, 231, 233

AIG, 35, 49, 67, 180, 253, 369

airlines, deregulation of, 317

air traffic controllers, 65

Alien Torts Statute, 59

Ally, 374

Alperovitz, Gar, 78

alternative minimum tax, 394

American Airlines, 318

American Tobacco Company, 317

Andreessen, Marc, 318

Angelides, Phil, 372

antiglobalization movement, xiii, 277

Apple, 203, 360

Arab Spring, ix–xi, xiv, 287

Archer Daniels Midland (ADM), 51, 320

Arnall, Roland, 333

Asia, 64, 157

   financial crisis in, 61, 231, 352, 353

AT&T, 44, 203, 317

Atkinson, Anthony B., xxiii

auction theory, 50

austerity, 207, 220, 221, 230–36

Australia, 5, 14, 18, 22, 135, 286

autoworkers, 67

balanced-budget multiplier, 217–18, 379

Bangladesh, microcredit schemes in, 196, 197

bankers:

   bonuses for, x, xiv, xv, 21, 79, 141, 169, 245, 247, 270, 319, 333, 363

   criminal prosecution of, xvi, 70, 119, 199, 205–6, 372, 373

   economic influence of, xxii–xxiii, 79–80, 240

   private incentives of, 33, 34, 87, 90, 96, 109–10

   risky behavior by, xi, xxiii, 37, 90, 101, 109, 171, 198, 239–40, 246, 247, 269, 270, 336, 387

   
see also
corporations; financial markets; financial sector

Bank of America, 70, 374

bankruptcy:

   corporate, 313

   derivatives claims in, 49, 271

   government regulation of, 30

   personal, 10, 275, 301

   reform of, 58

   student debt in, 58, 94, 195, 196, 265, 271, 323, 371

   
see also
Chapter 11; foreclosures

bankruptcy law, 193–97, 201, 202, 270, 271, 284

Bardeen, John, 41

Bartel, Larry, xxiv

Basov, Nikolay, 315

Bear Stearns, 388

Belgium, 19, 22, 286

Berlusconi, Silvio, 349

Bernanke, Ben, 247, 248, 252, 257, 389

Berners-Lee, Tim, 41, 315

Bhutan, 122, 312

Bilmes, Linda, 176

Bipartisan Policy Center, 207

Bischoff, Kendra, 75

BlackBerry, 203

Blankfein, Lloyd, 124

Bloomberg, Michael, xiv

bondholders, 168, 240, 261

bonds, municipal, 212, 378

Bowles, Erskine, 207

Bowles-Simpson Deficit Reduction Commission, 207, 221, 379, 380

Brattain, Walter, 41

Brazil, 5, 51, 249

   economic growth in, 139, 298, 353

Bridgestone/Firestone, 104

British Petroleum (BP), xviii, 99, 189, 190, 367, 374

“Buffett rule,” 395

Buffett, Warren, 77, 180, 269, 333, 395, 396

Burnham, Walter Dean, 130

Bush, George W., 71, 73, 86, 87, 97, 101, 114, 169, 177, 208, 212, 221, 228, 330, 360, 383

Bush administration, xiv, 167, 168, 171, 178

business:

   anticompetitive behavior in, 44–46, 317, 318

   corruption in, 176

   government partnerships with, 174

   government regulation of, 47

   innovations in, 35, 46, 41, 78, 96, 178–79, 314, 315

   political power of, 47, 50, 51, 62, 95, 99, 101, 111, 131–32, 135, 136, 285, 286, 319, 325, 350

   teamwork in, 113, 343

   trust in, 121–22

   
see also
corporations; financial sector

business, small, 61, 167, 225, 226, 241, 245, 395

California, electricity market liberalization in, 177–78

campaign finance, 37, 47, 131–32, 135, 136, 162, 196, 200, 206, 285–86, 319, 325, 350, 373, 397

Canada, 5, 18, 19

capital, 59, 323

   social, 122–23, 125, 135

capital controls, 60, 181, 182, 277, 353

capital gains, 71–72, 87, 88, 115, 211, 274, 297, 298, 315, 330, 361, 378, 395

Cardoso, Enrique, 5

Carter, Jimmy, 71

Cayman Islands, 270

cell phones, 98, 203, 274

Census Bureau, U.S., 27, 305

Central Intelligence Agency (CIA), 209

Chait, Jonathan, 19, 116–17

Chapter 11, 284, 313, 363

   
see also
bankruptcy

Chavez, Hugo, 40

Cheney, Richard, 101

Chicago school, 44–45, 47, 256, 317, 391

child care, 10, 301

Chile, 141, 258

China, 19, 54, 64, 249, 280

   economic strength of, 144, 175

   inflation in, 259–60

Citibank, 204–5, 369, 387

cities, community segregation in, 75–76

Citizens United v. Federal Election Commission,
131, 135, 285, 350

civil rights, 133, 158

class warfare, 180, 222

Clayton Holdings, 373

Clinton, Bill, 71, 87, 99, 114, 175, 179, 330, 387

Clinton administration, 48, 50, 163, 180, 249, 360

Coakley, Martha, 200

Coase, Ronald, 190

cognitive capture, 48, 100, 161–62, 249

Colbert, Jean-Baptiste, 32

colleges, 19, 307–8

Commission on the Measurement of Economic Performance and Social Progress, xxix, 185, 304, 339, 347

Commission on Wartime Contracting in Iraq and Afghanistan, 176

communism, failure of, 104, 123, 157, 163, 292

competition:

   excess profits and, 35, 36, 43

   in globalization, 60, 141, 142

   government regulation of, xiii, 30, 31, 35, 36, 39, 40, 44, 47, 57, 89, 175, 267, 269, 270–71

   imperfect, 34, 35

   
see also
monopolies

Congress, U.S., 60, 86, 194, 221, 252, 262, 288, 311, 317, 320

   corporate influence in, 48, 50, 95, 99, 194, 285

   lobbying in, 48, 95, 185, 324

   tax legislation in, 87, 251, 376

   
see also
House of Representatives, U.S.; Senate, U.S.

Congressional Oversight Panel, 193

consumerism, 104–6, 341

consumer protection, 136, 175, 192, 193, 197

contracts, 197, 271

Cordray, Richard, 370

corporate governance laws, 31, 38, 39, 41, 57, 66–67, 87, 111, 270, 271

corporations, xviii, 91, 100–101, 147, 348

   deregulation in, 89, 102, 177–78

   dishonest accounting in, 87, 110, 111, 271

   dividend payments by, 88, 212

   economic influence of, xxii–xxiii

   executive compensation in, 3, 21, 31, 40, 42, 65, 66, 67, 79, 87, 104, 109, 110, 111, 153–54, 271, 296, 309, 316, 328, 333

   government munificence toward, 40, 48, 49–51, 97, 99, 136, 179–80, 189, 191, 210, 214, 215, 216, 222, 224, 228, 272–73

   idea-shaping by, 147, 150–51, 160, 179

   legal advantages of, 66, 132, 189–90, 191, 202, 272, 327, 374

   patent control by, 43, 202–3

   risk-taking by, xviii, 99, 189, 339

   shareholder influence in, 31, 66, 67, 135, 271, 285, 328

   taxation of, 62, 73–74, 95, 115, 142, 179, 214, 215, 221–22, 224, 225, 270, 272, 273–74, 278, 283, 296, 331

   as tax shelters, 73, 270, 296

   
see also
business

Council of Economic Advisers, 99, 110, 174, 179, 185, 330, 387

credit default swaps (CDSes), 46, 248, 255, 256

creditworthiness, 58, 108

Crick, Francis, 41

crime, 15, 69, 303, 304

Daly, Lew, 78

debit cards, 324

debt:

   international, 138

   U.S., 207, 217, 219

   
see also
bankruptcy; credit default swaps (CDSes); deficit reduction; foreclosures; predatory lending; student loans

debt ceiling, 207, 376

Declaration of Independence, 158

Defense Department, U.S., 209

defense industry, government procurement in, 40, 101, 176, 210, 224, 272

deficit, U.S., 114, 115, 179, 208–11, 251, 279, 330, 340, 383

deficit reduction, 207–32, 237, 256, 279, 377

   expenditure implications of, 93, 115, 217

   Right’s insistence on, 216, 217, 229

   strategies for, 211–16, 224, 228, 235, 236

democracy, U.S., 118–45

   corruption in, 132, 143, 162, 200

   diminishing confidence in, xii, 120–21, 127–28, 129, 131, 132, 133, 134, 143, 144, 250–54, 288

   disenfranchisement in, 129–35, 345

   globalization and, 138–45

   ideological battle over, 155, 162

   media’s role in, 128–29, 135, 136, 163, 252, 286

   trust and, 125–26

   weakening of, 136–38, 142

   
see also
politics, U.S.

Democratic Party, U.S., 116, 117, 130, 349, 358

Denmark, 18, 19, 183, 385

derivatives, 35–36, 43, 49, 219, 246, 247, 253, 256, 269, 270, 271, 313, 320, 387, 390, 394

developing world, xii, 16, 141, 157, 233, 289

   financial sector’s influence in, 181–82

   inflation in, 259, 392

   labor in, 63, 64, 326, 397

Dexia, 256, 390

Diamond, Peter, 319

Dingell, John, 387

Dirksen, Everett, 97–98

discrimination, 53, 68–71, 201, 282, 356

disenfranchisement, 129–31, 134–35, 146, 349, 351

dividends, 72, 88, 212, 378

Dodd-Frank bill, 119, 136–37, 193, 247, 269, 388

Donovan, Shaun, 362

earned-income tax credit, 74, 277

East Asia financial crisis, 61, 231, 352, 353

East India Company, 43, 357

Economic Mobility Project, 18, 19

Economic Policy Institute, 19

economics:

   behavioral, 113, 148, 150–51, 152, 356

   collective action in, 93

   confidence in, 231

   development, 102

   discrimination theories in, 68–69

   distribution of endowments in, 30–31

   efficiency in, xi, 34, 35, 36, 56, 59–60, 62, 126, 363

   externalities in, 34, 173, 188, 190, 257, 316

   game theory in, 44, 68

   idea-shaping in, 147, 148–62

   information asymmetries in, 34, 44, 68–69, 173, 257

   perceptions in, 161, 184

   Right’s view of, xxii, 25–27, 44, 106, 107, 108, 114, 116, 152, 155, 157, 161, 173

   standard model of, xxv–xxvi, 30, 33, 44–45, 47, 53, 65, 77, 113, 126, 146–47, 149, 150, 182–83, 243, 257, 260–61, 266–67

   supply-side, 221, 224–25, 235, 282, 283

   trade-offs in, 239, 264

   trickle-down, 6–7, 62, 154, 282

   
see also
financial markets

economy, U.S.:

   alternative frameworks for, xxi–xxii, xxiii, 88, 154–55, 264

   bubbles in, 54, 85, 86, 87, 88–89, 183, 211, 258, 261–62, 271, 378, 391

   conventional view of, xxiii, 6, 7, 25, 27, 92, 107, 152, 182–84, 229, 258, 267, 292

   demand in, 56, 57, 85, 86–89, 91, 225, 230, 236, 242, 250, 263, 282, 334

   Gini coefficient in, 23, 303, 309, 310

   global influence of, 143, 145

   gross domestic product in, 15, 62, 83, 97, 98–99, 105, 182–84, 185, 211, 215, 218, 234, 268

   gross national product in, 184

   growth in, 4, 6, 7, 22, 24, 92, 100, 117, 143, 157, 175, 178, 217, 237, 264, 268, 279, 282–84, 298, 336

   idea-shaping and, 148, 151–52, 154–55, 163–79, 182–85, 222, 236, 256–63

   inefficiency in, xi, xiv, xx, xxii, 6, 58, 83, 84, 85, 89, 90, 91, 92–106, 107, 117, 165–66, 207, 266–67

   inflation in, 241, 259

   instability in, 5, 84–91, 117, 165, 176, 240, 246, 254, 258, 264, 271, 336

   monopolies in, 41–42, 44–47

   myths in, 224–36

   politics’ linkage with, xi, xix–xx, xxiv, 34, 38–39, 47, 52–53, 59, 65, 66, 89, 118, 131, 135, 138, 151, 173, 266, 287, 288–89, 348

   privatization in, 176–77, 226, 228

   productivity in, 50, 54, 56, 62, 65, 67, 78, 90, 92–106, 108, 114, 115, 117, 124, 125, 127, 283, 336, 384

   reform in, 267, 268–85

   saving in, 1, 13, 39, 70, 71, 85, 88, 171, 233, 244, 330, 380, 383

   size of, 392

   stimulus for, 86, 211, 216–18, 232–34, 236

   structural changes in, 53–54, 56, 232–33, 235, 263, 277, 285

   unfairness in, x, xi, xii, xiv, xx, xxii, 2, 6–7, 114–15, 117, 127, 133, 134, 143, 144, 169, 173, 174, 189, 191, 204, 239, 244, 245–46, 266–67, 268, 348

   
see also
financial markets

education, 7, 112, 143, 160, 161

   cost of, 57, 75, 94, 275

   government support for, 5, 15, 75, 84, 93, 102, 108, 115, 155, 196, 216, 217, 263, 267, 275, 281, 282, 283

   inequality in, xiv, 19, 20, 30–31, 68, 75, 94, 102, 108, 160, 307–8, 322