An Uneven Planet Globalization, Capital, & Inequality in the 21 st Century
Today s Discussion Brief Review Globalization The Problem of Inequality Picketty & the Politics of Redistribution
Brief Review
Classical Economics Revisited Keynes and Hayak led the 20 th century s revision and renewed embrace, respectively, of free market liberalism. Keynes Hayak
What Is Globalization? The Making of Globalization
Globalization & St. Jobs
ipod Employment In 2006, the ipod employed nearly twice as many people outside the United States as it did in the country where it was invented 13,920 in the United States, and 27,250 abroad.
ipod Employment In 2006, about half of the foreign ipod jobs 12,270 were in China. Other jobs were found in countries like the Philippines. 12,270 ipodjobs 4,750 ipodjobs
Foreign ipod Worker Salaries The 13,920 U.S. workers earned nearly $750 million, while the 27,250 non-american employees earned less than $320 million.
U.S. ipod Worker Salaries More than half the U.S. jobs 7,789 went to retail and other nonprofessional workers, like office support staff and freight and distribution workers, who collectively earned $220 million.
U.S. ipod Worker Salaries More than half the U.S. jobs 7,789 went to retail and other nonprofessional workers, like office support staff and freight and distribution workers, who collectively earned $220 million.
U.S. ipod Worker Salaries The big winners from Apple s innovation were the 6,101 engineers and other professional workers in the United States, who made more than $525 million in 2006.
ipod CEO Compensation Despite a $1 annual salary, Steve Jobs still topped Forbes' list of highest paid CEOs for 2006, with $646+ million in stockbased compensation (more than twice the next most paid CEO).
Neoliberal Economics The Making of Globalization
Globalization > Technology +
Keynes and the Post-War Era Dow Jones Industrial Average, Bretton 1800-2003 Woods, NH Mt. Washington Hotel, July 1944 Dollar pegged at $35 per ounce
Keynes and the Post-War Era Dow Jones Industrial Average, 1800-2003
The Course of Bretton Woods
The End of Bretton Woods 4.9 U.S. Exports and Imports, 1960-1972 Billions of dollars
The End of Bretton Woods 4.11 U.S. Fiscal Deficits, 1965-1972 Billions of dollars
Hayek Revival During post-war era, Keynesianism was the dominant economic approach, while Hayek s views were marginalized As state-led growth stagnated in the 1970s, Hayek s views gained currency and more states adopted marketbased approaches After Von Hayek received the Nobel Prize Economics in 1976, his views grew in popularity and application in the United Kingdom and the United States.
Tough Medicine from U.S. In 1981 Paul Volcker raised Fed interest rates, tightening money supply Inflation dropped, but the U.S. economy fell into recession Developing world experienced debt crisis Reagan Reaganomics sucks
U.S. Fiscal Irresponsibility 1982 Volcker brings back the punch bowl (lowers interest rates) Stronger dollar allows more consumption Massive fiscal deficits Explosion of U.S. foreign debt Reagan
Market Deregulation Transportation: Rail, air, trucking, & shipping markets were gradually deregulated Communications: Telephone and cable deregulation Energy: Oil and natural gas deregulation partly responded to OPEC Deregulation reduced barriers to entry for new competitors and introduced competitive pricing systems, thereby helping to break up monopolies and reduce prices for consumers.
Unleashing International Capital 1981 U.S. legalizes international banking 1984 /$ agreement liberalizes Japanese investment 1986 London Stock Exchange accepts foreign securities deals Ronald Reagan and Margaret Thatcher
Foreign Direct Investment (FDI) Shift
Implications Rise of institutional capital investment Greater capital mobility for efficient production Greater currency speculation & market volatility Weaker role of government foreign reserves
The Wealth of Nations in the Global Era Chicago Boy: Milton Friedman
The Wealth of the Rich in the Global Era Chicago Boy: Milton Friedman
Extreme'Wealth'Concentra0ons'
Global'Distribu0on'of'Wealth'
U.S.'Incomes'and'Shares'of'Income'
The'Future'Looks'Even'Brighter'
Does'Inequality'Hurt'Markets?'
Inequality and Redistribution Piketty and Capital in the 21 st Century
A'New'American'Gilded'Age'
U.S.'vs.'European'Income'Inequali0es'
Public'vs.'Private'Capital'
The'New'Billionaires'
Why'so'much'inequality?''
Educational inequality
Productivity vs. Income
Productivity vs. Income
Executive compensation
USD 2011 Tax Return
USD 2013 Tax Return
What'is'to'be'done?'
Final Thoughts
The'Future'of'Capital:'Asia'
Concluding Thoughts Office Hours M 2-4, T 4-5, Th 10-12 Concluding Quote: A man can t ride your back unless it is bent. Martin Luther King, Jr., 1960