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Republican Party is an illiberal anti-democratic nativist global outlier, with positions more extreme than France’s National Rally, and in line with the Germany’s AfD, Hungary’s Fidesz, Turkey’s AKP and Poland’s PiS, according to the widely respected V-Dem (Varieties of Democracy) Institute.

The GOP has been sliding into authoritarianism over two decades, using increasingly demonizing rhetoric against its opponents.

Historically, democracy dies.

Three-quarters of Americans disapprove of the January 6 mob’s actions, and Trump’s seemingly immovable approval floor dropped by about more than six points. In the days after, only 13 percent of Americans considered themselves “Trump Supporters” while another 16 percent considered themselves “Traditional Republicans.” If “Trump Supporters” were their own party, they’d be about as popular as Germany’s far-right AfD, which polled at about 15 percent for 2019, though their support more recently dropped off to 11 percent.

. For decades, majorities of Americans have told pollsters they want more parties to choose from, and registered their dissatisfaction with the two-party system by increasingly identifying as independents.

But as the two parties began sorting more clearly along liberal-conservative lines as “culture war” issues starting in the 1970s, and as American politics nationalized around these cultural issues, and, starting in the 1990s, as the long-time Democratic control of the House ended, every election became a high-stakes all-or-nothing fight for control of federal power.

The only way to elevate the moderate Republicans is for Congress to use its constitutional authority (Article I, Section IV) to change how we vote, and create electoral opportunities for a center-right to rise again.

A second, related point is that economic history teaches students the importance of context

Third, economic history is an unapologetically empirical field, exclusively dedicated to understanding the real world.

Fourth, economic history is a rich source of informal theorising about the real world, which can help motivate more formal theoretical work later on (Wren-Lewis 2013).

ifth, even once the current economic and financial crisis has passed, the major long run challenges facing the world will still remain.

Sixth, economic theory itself has been emphasising – for well over 20 years now – that path dependence is ubiquitous (David 1985)

Finally, and perhaps most importantly from the perspective of an undergraduate economics instructor, economic history is a great way of convincing undergraduates that the theory they are learning in their micro and macro classes is useful in helping them make sense of the real world.

Such trading on information originating outside the company is generally not covered by insider trading regulation.

Insider trading is quite different from market manipulation, disclosure of false or misleading information to the market, or direct expropriation of the corporation’s wealth by insiders.

Regulation of insider trading began in the United States at the turn of the twentieth century, when judges in several states became willing to rescind corporate insiders’ transactions with uninformed shareholders.

One of the earliest (and unsuccessful) federal attempts to regulate insider trading occurred after the 1912–1913 congressional hearings before the Pujo Committee, which concluded that “the scandalous practices of officers and directors in speculating upon inside and advance information as to the action of their corporations may be curtailed if not stopped.”

The Securities Acts of 1933–1934, passed by the U.S. Congress in the aftermath of the stock market crash, though aimed primarily at prohibiting fraud and market manipulation, also targeted insider trading.

As of 2004, at least ninety-three countries, the vast majority of nations that possess organized securities markets, had laws regulating insider trading

Several factors explain the rapid emergence of such regulation, particularly during the last twenty years: namely, the growth of the securities industry worldwide, pressures to make national securities markets look more attractive in the eyes of outside investors, and the pressure the SEC exerted on foreign lawmakers and regulators to increase the effectiveness of domestic enforcement by identifying and punishing offenders and their associates operating outside the United States.

Many researchers argue that trading on inside information is a zero-sum game, benefiting insiders at the expense of outsiders. But most outsiders who bought from or sold to insiders would have traded anyway, and possibly at a worse price (Manne 1970). So, for example, if the insider sells stock because he expects the price to fall, the very act of selling may bring the price down to the buyer.

A controversial case is that of abstaining from trading on the basis of inside information (Fried 2003).

There is little disagreement that insider trading makes securities markets more efficient by moving the current market price closer to the future postdisclosure price. In other words, insiders’ transactions, even if they are anonymous, signal future price trends to others and make the current stock price reflect relevant information sooner.

Accurately priced stocks give valuable signals to investors and ensure more efficient allocation of capital.

The controversial question is whether insider trading is more or less effective than public disclosure.

Insider trading’s advantage is that it introduces individual profit motives, does not directly reveal sensitive intercorporate information, and mitigates the management’s aversion to disclosing negative information (

Probably the most controversial issue in the economic analysis of insider trading is whether it is an efficient way to pay managers for their entrepreneurial services to the corporation. Some researchers believe that insider trading gives managers a monetary incentive to innovate, search for, and produce valuable information, as well as to take risks that increase the firm’s value (Carlton and Fischel 1983; Manne 1966).

Another economic argument for insider trading is that it provides efficient compensation to holders of large blocks of stock

A common contention is that the presence of insider trading decreases public confidence in, and deters many potential investors from, equity markets, making them less liquid (Loss 1970).

Empirical research generally supports skepticism that regulation of insider trading has been effective in either the United States or internationally, as evidenced by the persistent trading profits of insiders, behavior of stock prices around corporate announcements, and relatively infrequent prosecution rates (Bhattacharya and Daouk 2002; Bris 2005).

Despite numerous and extensive debates, economists and legal scholars do not agree on a desirable government policy toward insider trading. On the one hand, absolute information parity is clearly infeasible, and information-based trading generally increases the pricing efficiency of financial markets. Information, after all, is a scarce economic good that is costly to produce or acquire, and its subsequent use and dissemination are difficult to control. On the other hand, insider trading, as opposed to other forms of informed trading, may produce unintended adverse consequences for the functioning of the corporate enterprise, the market-wide system of publicly mandated disclosure, or the market for information.

Applied welfare economics is the fruition of microeconomics.

It is hard to imagine a basic course in microeconomics failing to include numerous cases and examples drawn from all of the fields listed above. This is because microeconomics is so basic. It represents the trunk of the tree from which all the listed subfields have branche

The specialization of production and the institutions of trade, commerce, and markets long antedated the science of economics. Indeed, one can fairly say that from the very outset the science of economics entailed the study of the market forms that arose quite naturally (and without any help from economists) out of human behavior

In microeconomics this is translated into the notion of people maximizing their personal “utility,” or welfare.

At the beginning of the process, those who adopted the new hybrids made handsome profits.

The economics of supply and demand has a sort of moral or normative overtone, at least when it comes to dealing with a wide range of market distortions. In an undistorted market, buyers pay the market price up to the point where they judge further units not to be worth that price, while competitive sellers supply added units as long as they can make money on each increment.

The strength of microeconomics comes from the simplicity of its underlying structure and its close touch with the real world. In a nutshell, microeconomics has to do with supply and demand, and with the way they interact in various markets.

If price controls keep bread (or anything else) artificially cheap, the predictable result is that less will be supplied than is demanded.

Had the government given wheat farmers coupons, each of which permitted the farmer to market one bushel of wheat, wheat marketings could have been cut by the desired amount. Production inefficiencies could be avoided by allowing the farmers to buy and sell coupons among themselves.

monopoly represents the artificial restriction of production by an entity having sufficient “market power” to do so.

Modern monopolies are a bit less transparent, for two reasons. First, even though governments still grant monopolies, they usually grant them to the producers. Second, some monopolies just happen without government creating them, although these are usually short-lived.

A final example of what occurs with official prices that are too high is the phenomenon of “rent seeking,” which occurs when someone enters a business to earn a profit that the government has tried to make unusually high.

If the wage does not adjust downward to equate supply and demand, the rate of urban unemployment will rise until further migration is deterred. Still other examples are in banking and drugs.

Rent seeking also occurs when something of value (like import licenses or radio/TV franchises) is being given away or sold below its true value

The great unifying principles of microeconomics are, ever and always, supply and demand. The normative overtone of microeconomics comes from the fact that competitive supply price represents value as seen by suppliers, and competitive demand price represents value as seen by demanders.

Over multiple years, family income fluctuates, and so the distribution of multiyear income is moderately more equal than the distribution of single-year income.

n one sense, the growth of inequality in the last part of the twentieth century comes as a surprise. In the 1950s, the bottom part of the income distribution contained large concentrations of two kinds of families: farm families whose in-kind income was not counted in Census data, and elderly families, many of whom were ineligible for the new Social Security program

Over subsequent decades, farm families declined as a proportion of the population while increased Social Security benefits and an expanding private pension system lifted elderly incomes. Both trends favored greater income equality but were outweighed by four main factors.

Family structure. Over time, the two-parent, one-earner family was increasingly replaced by low-income single-parent families and higher-income two-parent, two-earner families

Trade and technology increasingly shifted demand away from less-educated and less-skilled workers toward workers with higher education or particular skills. The result was a growing earnings gap between more- and less-educated/skilled workers.

With improved communications and transportation, people increasingly functioned in national, rather than local, markets. In these broader markets, persons with unique talents could command particularly high salaries.

In 2002, immigrants who had entered the country since 1980 constituted nearly 11 percent of the labor force (see immigration). A relatively high proportion of these immigrants had low levels of education and increased the number of workers competing for low-paid work.

A second offset to estimated inequality is economic mobility. Because most family incomes increase as people’s careers develop, long-run incomes are more equal than standard single-year statistics suggest

Is inequality of wages and incomes bad? The question seems ludicrous. Of course inequality is bad, isn’t it? Actually, no. What matters crucially is how the inequality came about.

Inequality of wages and incomes is clearly bad if it results from government privileges. Many people would find such an outcome unjust, but even more important to many economists is that such inequality sets up perverse incentives.

But inequality in wages and incomes in relatively free economies serves two important social functions.

He points out that if one HIV vaccine had succeeded, the company behind it would have won big. Instead, all of the competitors in the vaccine field learned from collective failure and contributed to collective wisdom. The many false starts of HIV vaccination sired an explosion of new technologies and helped usher in a possible new golden age of vaccines.

We can call our record-breaking vaccine-development process good luck. Or we can call it what it really is: a ringing endorsement for the essential role of science in the world.

As a parable of scientific progress, I sometimes imagine the life cycle of a tree. Basic scientific research plants a variety of seeds. Some of these seeds fail entirely; the research goes nowhere. Some seeds become tiny shrubs; the research doesn’t fail entirely, but it produces little of value

And some seeds blossom into towering trees with abundant fruit that scientists, companies, and technologists pluck and turn into the products that change our lives. For years, mRNA technology looked like a shrub. In 2020, it blossomed in full view.

These cognitive errors, which distract leaders from optimal policy making and citizens from taking steps to promote their own and others’ interests, cannot merely be ascribed to repudiations of science.

The first error that thwarts effective policy making during crises stems from what economists have called the “identifiable victim effect.” Humans respond more aggressively to threats to identifiable lives, ie, those that an individual can easily imagine being their own or belonging to people they care about (such as family members) or care for (such as a clinician’s patients) than to the hidden, “statistical” deaths reported in accounts of the population-level tolls of the crisis

Yet such views represent a second reason for the broad endorsement of policies that prioritize saving visible, immediately jeopardized lives: that humans are imbued with a strong and neurally mediated3 tendency to predict outcomes that are systematically more optimistic than observed outcomes

A third driver of misguided policy responses is that humans are present biased, ie, people tend to prefer immediate benefits to even larger benefits in the future.

Even if the tendency to prioritize visibly affected individuals could be resisted, many people would still place greater value on saving a life today than a life tomorrow.

Similar psychology helps explain the reluctance of many nations to limit refrigeration and air conditioning, forgo fuel-inefficient transportation, and take other near-term steps to reduce the future effects of climate change

The fourth contributing factor is that virtually everyone is subject to omission bias, which involves the tendency to prefer that a harm occur by failure to take action rather than as direct consequence of the actions that are taken

Although those who set policies for rationing ventilators and other scarce therapies do not intend the deaths of those who receive insufficient priority for these treatments, such policies nevertheless prevent clinicians from taking all possible steps to save certain lives.

An important goal of governance is to mitigate the effects of these and other biases on public policy and to effectively communicate the reasons for difficult decisions to the public. However, health systems’ routine use of wartime terminology of “standing up” and “standing down” intensive care units illustrate problematic messaging aimed at the need to address immediate danger

Second, had governments, health systems, and clinicians better understood the “identifiable victim effect,” they may have realized that promoting flattening the curve as a way to reduce pressure on hospitals and health care workers would be less effective than promoting early restaurant and retail store closures by saying “The lives you save when you close your doors include your own.”

Third, these leaders’ routine use of terms such as “nonpharmaceutical interventions”9 portrays public health responses negatively by labeling them according to what they are not. Instead, support for heavily funding contact tracing could have been generated by communicating such efforts as “lifesaving.

Fourth, although errors of human cognition are challenging to surmount, policy making, even in a crisis, occurs over a sufficient period to be meaningfully improved by deliberate efforts to counter untoward biases

Even after slavery, these schools continued to oppress Black people by not allowing them to enroll as students.

Even though the nation’s 100 or so HBCUs represent less than 3% of the nation’s 4,360 colleges and universities, they graduated 13% of Black undergraduate college students nationally in the 2017-2018 school year.

The disparities transcend higher education. White families, on average, tend to have 10 times the wealth of Black families.

Yet scholars and economists studying racial economic inequality, such as William A. Darity Jr., point to the need for federal action. This action could range from economic reparations and endowment-building at HBCUs to debt forgiveness for Black students.

hus Copernicus started to look for something simpler, almost at the same time that Michelangelo undertook another great project, that of decorating the ceiling of the Sistine Chapel.

Copernicus had a full Renaissance résumé: studies in medicine, art, mathematics, canon law and philosophy; experience as an economist and a diplomat; and also a good position as an ecclesiastical official.

By 1514, he had already written a sketch of his theory, although he did not publish it for fear of being condemned as a heretic and also because he was a perfectionist. He spent 15 more years repeating his calculations, diagrams and observations with the naked eye, prior to the invention of the telescope.

Copernicus was the first to recite them in order: Mercury, Venus, Earth, Mars, Jupiter and Saturn, the 6 planets that were then known.

When Copernicus finally decided to publish his theory, the book’s publisher softened it in the prologue: he said that there were “only easier mathematics” for predicting the movements of the planets, and not a whole new way of looking at the reality of the universe. But this was understood as a challenge to Aristotle, to the Church, and to common sense.

It would be 150 years before the Copernican revolution triumphed, and the world finally admitted that the Earth was just one more spinning top.

Jacobs’s emphasis on the relational nature of thinking is essential for understanding why there is so much bad thinking in political life right now.

Jacobs makes good use of C. S. Lewis’s concept of the Inner Ring. In every setting — a school, a company or a society — there is an official hierarchy. But there may also be a separate prestige hierarchy, where the cool kids are. They are the Inner Ring.

think of how you really persuade people. Do you do it by writing thoughtful essays that carefully marshal facts? That works some of the time.

Jacobs notices that when somebody uses “in other words” to summarize another’s argument, what follows is almost invariably a ridiculous caricature of that argument, in order to win favor with the team.

“The passion for the Inner Ring is most skillful in making a man who is not yet a very bad man do very bad things.”

I’d say that if social life can get us into trouble, social life can get us out.

Jacobs nicely shows how our thinking processes emerge from emotional life and moral character. If your heart and soul are twisted, your response to the world will be, too.

the real way to persuade people is to create an attractive community that people want to join. If you do that, they’ll bend their opinions to yours. If you want people to be reasonable, create groups where it’s cool to be reasonable.

Jacobs mentions that at the Yale Political Union members are admired if they can point to a time when a debate totally changed their mind on something. That means they take evidence seriously; that means they can enter into another’s mind-set. It means they treat debate as a learning exercise and not just as a means to victory.

How many public institutions celebrate these virtues? The U.S. Senate? Most TV talk shows? Even the universities?

People will, for example, identify and attack what Jacobs calls the Repugnant Cultural Other — the group that is opposed to the Inner Ring, which must be assaulted to establish membership in it.

Branko Milanovic, a former economist at the World Bank, called it “one of the watershed books in economic thinking.

“Capital in the Twenty-First Century,” with its title echoing Marx’s “Das Kapital,” is meant to be a return to the kind of economic history, of political economy, written by predecessors like Marx and Adam Smith. It is nothing less than a broad effort to understand Western societies and the economic rules that underpin them.

he said, are his generation’s “founding experiences”: the collapse of Communism, the economic degradation of Eastern Europe and the first Gulf War, in 1991.

Those events motivated him to try to understand a world where economic ideas had such bad consequences. As for the Gulf War, it showed him that “governments can do a lot in terms of redistribution of wealth when they want.” The rapid intervention to fo

The reason that postwar economies looked different — that inequality fell — was historical catastrophe. World War I, the Depression and World War II destroyed huge accumulations of private capital, especially in Europe. What the French call “les

In 2012 the top 1 percent of American households collected 22.5 percent of the nation’s income, the highest total since 1928. The richest 10 percent of Americans now take a larger slice of the pie than in 1913, at the close of the Gilded Age, owning more than 70 percent of the nation’s wealth. And half of that is owned by the top 1 percent. Advertisement Continue reading the main story Mr. Piketty, father of three daughters — 11, 13 and 16 — is no revolutionary. He is a member of no political party, and says he never served as an economic adviser to any politician. He calls himself a pragmatist, who simply follows the data.

Net wealth is a better indicator of ability to pay than income alone, he said. “All I’m proposing is to reduce the property tax on half or three-quarters of the population who have very little wealth,” he said. Write A Comment Published a year ago in French, the book is not without critics, especially of Mr. Piketty’s policy prescriptions, which have been called politically naïve. Others point out that some of the increase in capital is because of aging populations and postwar pension plans, which are not necessarily inherited.More criticism is sure to come, and Mr. Piketty says he welcomes it. “I’m certainly looking forward to the debate.”

“This study is an important step in trying to understand the roots of common-sense understanding of other people’s actions. It shows quite strikingly that in some sense, the basic math that is at the heart of how economists think about rational choice is very intuitive to babies who don’t know math, don’t speak, and can barely understand a few words

“Abstract, interrelated concepts like cost and value — concepts at the center both of our intuitive psychology and of utility theory in philosophy and economics — may originate in an early-emerging system by which infants understand other people's actions,” she says. 

In other words, they apply the well-known logic that all of us rely on when we try to assess someone’s preferences: The harder she tries to achieve something, the more valuable is the expected reward to her when she succeeds.”

“We have to recognize that we’re very far from building AI systems that have anything like the common sense even of a 10-month-old,” Tenenbaum says. “But if we can understand in engineering terms the intuitive theories that even these young infants seem to have, that hopefully would be the basis for building machines that have more human-like intelligence.

Striking the right balance between markets and government is the central issue in policy debates over economic developmen

What is the role of governments in promoting economic growth?

What can governments do to seize the opportunities of globalization, while minimizing its downsides?

we have to recognize that the tension between markets and government is not new. In fact, it has been the central issue in the evolution of political economy over the last 200 years.

There have been three distinct phases in this evolution.

Phase One: The rise of the market

The “rise of the market” began in the late 18th century, shaped by the writings of Adam Smith and David Ricardo. The “invisible hand” of the market guided supply and demand toward equilibrium and efficiency.

This phase came to an end in the 1930s, when the concept of self-correcting markets collapsed under the weight of the Great Depression.

Falling prices, instead of bringing demand and supply into equilibrium,

Phase Two: The rise of government

markets were inherently unstable. Left on their own, they may not always self-correct

Government intervention was necessary to boost aggregate demand during periods of high unemployment.

The 1940s also saw the advent of the welfare state.

The welfare state was enabled through redistributive taxation and government regulation.

Phase Three: The return of the market

This phase began with growing disenchantment with government’s ability to deliver and was driven forward mainly by U.S.-based economists

The stagflation of the 1970s — persistently high inflation and unemployment — called into question the ability of governments to fine-tune the economy. Meanwhile, the welfare state began to impose an unsustainable fiscal burden,

Friedrich Hayek and Milton Friedman led the charge against “Big Government.” They argued eloquently how an overreaching government dulled the fundamental human instincts that power the capitalist system:

In the 1980s, U.S. President Ronald Reagan and UK Prime Minister Margaret Thatcher reduced taxes, deregulated industries, privatized state-owned enterprises, curbed union power, and scaled back welfare programs. The global economy boomed.

Phase Four: Balancing markets and governments

The financial crisis has revealed significant imperfections in market mechanisms: information asymmetry, moral hazard, systemic risks and behavioral or nonrational motivators of choice.

In a more globalized and complex economy, governments have fewer levers to pull

It has also revealed the inherent limitations of governmen

Neither market fundamentalism nor central planning has worked.

Yet one thing is certain: The choice is not between big government and small government. It is about creating effective government. What matters is what governments do, not how big they are.

Tourism can potentially offer a fairly swift peace dividend

Tourism and ecosystem services offer far more promising returns for the rural economy.