Simon Kuznets

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pages: 303 words: 74,206

GDP: The World’s Most Powerful Formula and Why It Must Now Change
by Ehsan Masood
Published 4 Mar 2021

There was, however, one sector of the economy where incomes not only had stayed constant but had even managed to register a small increase. This was the column marked “Government.” According to Simon Kuznets and his team, between 1929 and 1932 income distributed by government entities was up from $6.5 billion to $6.8 billion, reflecting a small increase in public works programs.5 In many ways, the rise in government spending isn’t as intriguing as is its inclusion in Kuznets’s national accounts. This is because, for much of his professional life, Simon Kuznets fought the inclusion of government spending in GDP. Data from businesses formed the cornerstone of his methodology, and he was confident in the quality of the data he and his team had gathered.

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But he misjudged the US administration’s determination, indeed its insistence, that public spending be included as a positive indicator for economic health. By 1941 Simon Kuznets’s days as America’s chief national accountant were over. It was Keynes who had effectively helped his younger American colleagues win the argument and defined GDP for generations to come. NOTES 1. David Moss and Joseph P. Gownder, “The Origins of National Income Accounting,” Harvard Business Review, December 30, 1998. This is a Harvard Business School case study in which the authors reproduce three primary documents, including the 1932 US Senate resolution in which Simon Kuznets was commissioned. 2. Carol S. Carson, “The History of the United States National Income and Product Accounts,” Review of Income and Wealth 21 (1975): 153–181.

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—Richard Stone, “The Fortune Teller,” Economica X (1943) John Maynard Keynes’s role in constructing what eventually became GDP, and his concurrent debate with Simon Kuznets about the place for public spending—the G in the GDP formula—has been one of economic history’s best-kept secrets. But Keynes wasn’t working alone. He had a partner in this endeavor, another of his students and fellow Cambridge economist Richard Stone (1913–1991). After Simon Kuznets, Stone, too, would win a Nobel Prize for his work on national income accounting.1 Shortly before his death on April 21, 1946, Keynes persuaded the powers at the University of Cambridge to create a new Department of Applied Economics.

Visions of Inequality: From the French Revolution to the End of the Cold War
by Branko Milanovic
Published 9 Oct 2023

Pareto, Manual of Political Economy, 199–200. 6. Simon Kuznets 1 . Simon Kuznets was born in 1901 in the city of Pinsk, then part of the Russian Empire and now in Belarus. During World War I and the Russian civil war, his family was forced by the tsarist government to relocate to Kharkiv, in today’s Ukraine. He studied at a gymnasium there and in 1918 entered the Kharkiv Commercial Institute, where studies were often interrupted by war. In 1922, Kuznets emigrated, via Danzig (Gda ń sk), to the United States. The only detailed account of his early life can be found in Moshe Syrquin, “Simon Kuznets and Russia: An Uneasy Relationship,” in Russian and Western Economic Thought: Mutual Influences and Transfer of Ideas, ed.

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Classification: LCC HB523 .M53 2023 | DDC 339.2—dc23/eng/20230428 LC record available at https:// lccn .loc .gov /2022062085 CONTENTS Prologue 1 Fran ç ois Quesnay: Social Classes in a “Rich Agricultural Kingdom” 2 Adam Smith: “Progress of Opulence” and an Implicit Theory of Income Distribution 3 The Ricardian Windfall: David Ricardo and the Absence of the Equity–Efficiency Trade-off 4 Karl Marx: The Decreasing Rate of Profit but Constant Pressure on Labor Incomes 5 Vilfredo Pareto: From Classes to Individuals 6 Simon Kuznets: Inequality during Modernization 7 The Long Eclipse of Inequality Studies during the Cold War Epilogue: The New Beginning Notes Acknowledgments Index Prologue The objective of this book is to trace the evolution of thinking about economic inequality over the past two centuries, based on the works of some influential economists whose writings can be interpreted to deal, directly or indirectly, with income distribution and income inequality. They are Fran ç ois Quesnay, Adam Smith, David Ricardo, Karl Marx, Vilfredo Pareto, Simon Kuznets, and a group of economists from the second half of the twentieth century (the latter collectively influential even as they individually lack the iconic status of the prior six).

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e One seemingly obvious reason that it cannot be symmetrical is because the bottom of income distribution must have a minimal level of income, or otherwise people would not be able to survive; and, on the other extreme, the right-hand side of the distribution is unlimited because there is no ceiling to income. This is, of course, very different from other phenomena, where there are natural limits. CHAPTER SIX Simon Kuznets: Inequality during Modernization Simon Kuznets was arguably (with the other contender being John Maynard Keynes) the most important economist of the twentieth century. 1 He laid the foundations of the two most important areas in economics. First, his early work on national accounts in the 1930s and 1940s helped define the national economic aggregates that have become the indispensable basis for monitoring economic growth and changes in people’s welfare.

pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet
by Klaus Schwab
Published 7 Jan 2021

Notes 1 Kuznets was born in Pinsk, then part of the Russian Empire. Nowadays, Pinsk is part of Belarus. 2 “Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics”, Chapter 5: The Scientific Methods of Simon Kuznets, Robert William Fogel, Enid M. Fogel, Mark Guglielmo, Nathaniel Grotte, University of Chicago Press, p. 105, https://www.nber.org/system/files/chapters/c12917/c12917.pdf. 3 A direct quotation of Kuznets’ autobiography for the Nobel Prize committee. The Nobel Prize, “Simon Kuznets Biographical,” 1971, https://www.nobelprize.org/prizes/economic-sciences/1971/kuznets/biographical/. 4 “GDP: A brief history,” Elizabeth Dickinson, Foreign Policy, January 2011, https://foreignpolicy.com/2011/01/03/gdp-a-brief-history/. 5 Ibidem. 6 “Beyond GDP: Economists Search for New Definition of Well-Being,” Der Spiegel, September 2009, https://www.spiegel.de/international/business/beyond-gdp-economists-search-for-new-definition-of-well-being-a-650532.html. 7 Phone interview with Diane Coyle by Peter Vanham, August 18, 2019. 8 Measured in constant 2010 US dollars. 9 World Bank, GDP Growth (annual %), 1961–2018, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG. 10 “What's a Global Recession,” Bob Davis, The Wall Street Journal, April 2009, https://blogs.wsj.com/economics/2009/04/22/whats-a-global-recession/. 11 United States Census Bureau, International Data Base, September 2018, https://www.census.gov/data-tools/demo/idb/informationGateway.php. 12 “World Economic Outlook,” International Monetary Fund, Updated July 2019, https://www.imf.org/en/Publications/WEO/Issues/2019/07/18/WEOupdateJuly2019. 13 “World Economic Outlook,” International Monetary Fund, April 2019, Appendix A https://www.imf.org/~/media/Files/Publications/WEO/2019/April/English/text.ashx?

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, James Atlas, October 1989, https://www.nytimes.com/1989/10/22/magazine/what-is-fukuyama-saying-and-to-whom-is-he-saying-it.html. 22 “Pioneers in China,” 1993, ZF Heritage, zf.com/mobile/en/company/heritage_zf/heritage.html. 23 Eurofound, “Pacts for Employment and Competitiveness: Ravensburger AG,” Thorsten Schulten, Hartmut Seifert, and Stefan Zagelmeyer, April 2015, https://www.eurofound.europa.eu/es/observatories/eurwork/case-studies/pecs/pacts-for-employment-and-competitiveness-ravensburger-ag-0. 24 GDP Growth, Annual (%), 1961–2019, The World Bank, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG. 25 International Monetary Fund, New Data on Global Debt, https://blogs.imf.org/2019/01/02/new-data-on-global-debt/. 26 Gross debt position, Fiscal Monitor, April 2020, International Monetary Fund, https://www.imf.org/external/datamapper/datasets/FM. 27 Global Footprint Network, https://www.footprintnetwork.org/2019/06/26/press-release-june-2019-earth-overshoot-day/. 2 Kuznets’ Curse : The Issues of the World Economy Today There might have been no better person to piece together the puzzle of the world economy today than Simon Kuznets, a Russian-born1 American economist, who died in 1985. It may seem odd at first that a man who passed away in the mid-1980s would be so relevant to today's global economic challenges, but I believe the issues we are facing today may not have become so problematic had we better heeded the lessons of this Nobel Prize–winning economist.

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That we are facing this myriad of economic crises may well be Kuznets’ curse. It is the ultimate “I told you so” of an oft misunderstood economist and forms the root of the feeling of betrayal people have toward their leaders. But before we get deeper into this curse, let's examine who exactly Simon Kuznets was and find out what people remembered him for. The Original Kuznets’ Curse: GDP as Measure of Progress Simon Smith Kuznets was born in Pinsk, a city in the Russian Empire in 1901, the son of Jewish parents.3 As he made his way through school, he showed a talent for mathematics and went on to study economics and statistics at the University of Kharkiv (now in Ukraine).

pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet
by Klaus Schwab and Peter Vanham
Published 27 Jan 2021

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pages: 251 words: 69,245

The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality
by Branko Milanovic
Published 15 Dec 2010

Vignette 1.5 - Was Socialism Egalitarian? Vignette 1.6 - In What Parisian Arrondissement Should You Live in the ... Vignette 1.7 - Who Gains from Fiscal Redistribution? Vignette 1.8 - Can Several Countries Exist in One? Vignette 1.9 - Will China Survive in 2048? Vignette 1.10 - Two Students of Inequality: Vilfredo Pareto and Simon Kuznets CHAPTER 2 Vignette 2.1 - Why Was Marx Led Astray? Vignette 2.2 - How Unequal Is Today’s World? Vignette 2.3 - How Much of Your Income Is Determined at Birth? Vignette 2.4 - Should the Whole World Be Composed of Gated Communities? Vignette 2.5 - Who Are the Harraga? Vignette 2.6 - The Three Generations of Obamas Vignette 2.7 - Did the World Become More Unequal During Deglobalization?

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As for income distribution within nations, Pareto failed to define a theory of change in it, although “failure” is not a wholly appropriate term simply because Pareto thought, and believed to have empirically proved, that income distribution must be more or less fixed and thus that there were no laws of its “change” with development. There was, Pareto argued, only a “law of its fixity.” It wasn’t until 1955 that Simon Kuznets, a Russian-American economist and statistician, proposed the first real theory of what propels change in income distribution. (He is profiled, together with Pareto, in Vignette 1.10.) He argued—having had access to not many more data points than Pareto (although the data were of a different kind, household, not fiscal, surveys)—that inequality among people is not the same regardless of the type of society but varies predictably as society develops.

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There are some earlier and incomplete surveys from nineteenth-century England and the early-twentieth-century United States and Soviet Russia, but we can hardly speak of anything serious and usable before approximately the early 1950s. (You may recall that Pareto’s speculations were based on fiscal data, whereas Simon Kuznets had hardly a dozen surveys to draw upon—even as late as 1955.) For developing countries the situation is even worse; very often there is nothing before the 1970s or even the 1980s. This is particularly true for African nations, where household surveys developed, often with the assistance of international organizations, only in the 1980s.23 What about the two most populous countries in the world?

pages: 264 words: 76,643

The Growth Delusion: Wealth, Poverty, and the Well-Being of Nations
by David Pilling
Published 30 Jan 2018

How about providers of services, whose contributions to society—healthy minds (psychoanalysts), humor (clowns), education (teachers)—may be harder to count than horseshoes or bushels of wheat? In the twentieth century communist countries largely ignored services altogether. Even today we struggle to measure their economic contribution. Modern national accounts of the type used by virtually every country in the world today only really began to take shape in the 1930s. Simon Kuznets is usually credited with the invention of GDP, the quintessence of the national accounting system. But Kuznets, rather like Victor Frankenstein, soon saw his creation take on a life—and a direction—of its own. * * * — The man who is said to have invented our way of measuring growth was born in 1901 into a merchant family in the town of Pinsk in what was then part of the Russian empire.

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Joshua Abramsky and Steve Drew were not bored; they were responding to a diktat from Eurostat, the statistical arm of the European Union, which wanted EU nations to standardize how they calculated national income. One of the anomalies in how countries compile their national accounts is their treatment of illegal activities, such as gambling, prostitution, and the handling of stolen goods. Simon Kuznets thought only activities that contribute to human welfare should be counted, but who was to decide what they were? He thought advertising was worthless. Perhaps someone else would judge video games a waste of time, or stop counting alcohol and cigarettes or junk food on the grounds that they are bad for one’s health.

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Adherence to standard methodology notwithstanding, Ryan is at pains to point out that Kenya’s economic statistics are in no way comparable with those of, say, the US. “You are measuring elephants and rhubarb,” he says, conjuring up a metaphor that makes the comparison of apples and oranges seem mundane. So he has adapted the “rhubarb” methodology designed by Simon Kuznets to measure the US economy to the realities of an “elephant” economy like Kenya’s. “It’s perfectly correct for the developed world,” he says. “It makes admirable sense for the developed world. But it doesn’t necessarily transfer neatly into a developing-country context.” Kenya is a country of roughly 45 million people.

pages: 159 words: 45,073

GDP: A Brief but Affectionate History
by Diane Coyle
Published 23 Feb 2014

Clark was appointed in 1930 to provide statistics to the newly created National Economic Advisory Council, the first body ever created by the British government to provide formal economic advice. The experience of the Depression created this demand for statistics that might help the government figure out how to bring to an end the unprecedented economic slump. Across the Atlantic, in the United States, Simon Kuznets had a similar motivation. The government of Franklin Delano Roosevelt wanted a clearer picture of the state of an economy trapped in a seemingly endless depression. The National Bureau of Economic Research was requested to provide estimates of national income. Kuznets, who later won the Nobel Memorial Prize in Economic Science for this work, took on the task of developing Clark’s methods and applying them to the U.S. economy.

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In a book published in 1996 I noted the phenomenon that growth in GDP for more than a decade had literally not weighed anything: all the incremental value-added growth was in intangibles of one kind or another.15 A measure of the national economy designed for tangible, physical products only is not really a good measure of an increasingly weightless economy. The lesson to draw from this discussion is that GDP is not, and was never intended to be, a measure of welfare. It measures production. As we saw in chapter 1, Simon Kuznets, one of the pioneers of national accounting, was keen to develop a measure of economic welfare. But the demands of wartime meant his ambition was overtaken by the need to measure production and productive capacity, in order to use scarce material resources and labor as efficiently as possible.

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“Economists all know that, and yet their everyday use of GNP as the standard measure of economic performance apparently conveys the impression that they are evangelistic worshippers of GNP,” remark William Nordhaus and James Tobin.33 Besides, whether or not the task ought to be measuring welfare rather than GDP was debated in the early years of GDP’s development, as we saw in chapter 1, and it has been debated ever since. Simon Kuznets, working on measuring national income in the 1930s, wrote: It would be of great value to have national income estimates that would remove from the total the elements which, from the standpoint of a more enlightened social philosophy than that of an acquisitive society represent dis-service rather than service.

pages: 235 words: 62,862

Utopia for Realists: The Case for a Universal Basic Income, Open Borders, and a 15-Hour Workweek
by Rutger Bregman
Published 13 Sep 2014

Susan Steed and Helen Kersley, “A Bit Rich: Calculating the Real Value to Society of Different Professions,” New Economics Foundation (December 14, 2009). http://www.neweconomics.org/publications/entry/a-bit-rich 29. Kevin Kelly, “The Post Productive Economy,” The Technium (January 1, 2013). http://kk.org/thetechnium/2013/01/the-post-produc 30. Simon Kuznets, “National Income, 1929-1932,” National Bureau of Economic Research (June 7, 1934). http://www.nber.org/chapters/c2258.pdf 31. Coyle, p. 14. 32. Simon Kuznets, “How to Judge Quality,” The New Republic (October 20, 1962). 9 Beyond the Gates of the Land of Plenty 1. OECD, “Aid to developing countries rebounds in 2013 to reach an all-time high” (April 8, 2014). http://www.oecd.org/newsroom/aid-to-developing-countries-rebounds-in-2013-to-reach-an-all-time-high.htm 2.

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A few months earlier, President Hoover had dispatched a number of Commerce Department employees around the country to report on the situation. They returned with mainly anecdotal evidence that aligned with Hoover’s own belief that economic recovery was just around the bend. Congress wasn’t reassured, however. In 1932, it appointed a brilliant young Russian professor by the name of Simon Kuznets to answer a simple question: How much stuff can we make? Over the next few years, Kuznets laid the foundations of what would later become the GDP. His initial calculations caused a flurry of excitement and the report he presented to Congress became a national bestseller (itself adding to the GDP, one 20-cent copy at a time).

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“The GDP and related data are like beacons that help policymakers steer the economy toward the key economic objectives.”21 At the start of the 20th century the U.S. government employed a grand total of one economist; more accurately, an “economic ornithologist,” whose job was to study birds. Less than 40 years later, the National Bureau of Economic Research payrolled some 5,000 economists, in the sense that we use the word. These included Simon Kuznets and Milton Friedman, ultimately two of the century’s most important thinkers.22 All across the world, economists began to play a dominant role in politics. Most were educated in the United States, the cradle of the GDP, where practitioners pursued a new, scientific brand of economics revolving around models, equations, and numbers.

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Double Entry: How the Merchants of Venice Shaped the Modern World - and How Their Invention Could Make or Break the Planet
by Jane Gleeson-White
Published 14 May 2011

It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything, in short, except that which makes life worthwhile. Like many before and after him—including the GNP’s creator, Simon Kuznets—Senator Robert Kennedy believed there was something profoundly wrong with the way we calculate our national wealth and with the numbers we produce to do so, such as the GNP and the Gross Domestic Product (GDP). As Kennedy pointed out, these numbers generate alarming anomalies: in their parlance cigarette advertising is worth more than the health of a child.

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Over the next four years in the United States, 11,000 banks failed, production collapsed by more than a half and unemployment soared, peaking at 13 million or nearly one-quarter of the workforce. At sea in their attempts to develop a coherent response to the crisis, the administrations of Herbert Hoover and then Franklin Delano Roosevelt commissioned Russian-born economist Simon Kuznets to develop comprehensive estimates of the income of the United States to guide their policies. In March 1933, Roosevelt succeeded Hoover as US president and immediately implemented his ‘Hundred Days’: ‘a presidential barrage of ideas and programmes unlike anything known to American history’. The following year, in May 1934, the British economist John Maynard Keynes went to America to see the New Deal in action.

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It was not until the depression of the 1930s that the idea of looking at a national economy in terms of accounting became widespread and the first attempts were made to calculate not just a nation’s income but also its expenditure. The first official measure of the overall US economy—measures of national savings, consumption and investment—was devised by Simon Kuznets and his colleagues in the 1930s to provide policymakers with a comprehensive picture of what was going on. No comprehensive measures of national income and output had existed before then. It was the Depression that raised the need for national accounts such as the Gross Domestic Product (GDP)—or, as economist William D.

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Stuffocation
by James Wallman
Published 6 Dec 2013

“Unemployment soared to 25% in the UK” Source: Stephen Constantine, Unemployment in Britain Between the Wars (London: Longman, 1980). “30% unemployed in Australia” Source: Australian government figures. Simon Kuznets Read more about the rise of economics and the life of Simon Kuznets in Robert Fogel, Simon S Kuznets April 30, 1901–July 9, 1985 (Cambridge, MA: NBER, 2000); and Simon Kuznets et al., National Income, 1929-32 (NBER, June 1934). “As recently as the late 19th century, economics was considered of such little importance that at Oxford University, for example, there was only one part-time lecturer, and at American universities it was merely one section of one segment of an entire course” Sources: Robert Fogel, Simon S Kuznets April 30, 1901–July 9, 1985 (Cambridge, MA: NBER, 2000); and Gerard M Koot, English Historical Economics, 1870-1926 : The Rise of Economic History and Neomercantilism (Cambridge: Cambridge University Press, 1987).

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How could any leader make plans when he could not see the whole picture? So the US senate commissioned a private enterprise called the National Bureau of Economic Research (NBER), which had been collecting records for some time, to create a set of national income accounts. The lead researcher on the project was a man by the name of Simon Kuznets. Born in Pinsk in what was then Russia in 1901, Kuznets had briefly served as a statistician in Odessa in the Ukraine. He had arrived in the US in 1922. He had distinguished himself, so far, only at Columbia University. He was about to create his magnum opus. It is hard for us to imagine economics as anything other than what it is today – a central consideration of our lives.

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Ron Inglehart Again, Ron Inglehart, “The Silent Revolution in Europe: Intergenerational Change in Post-Industrial Societies”, American Political Science Review Vol. 65, No. 4, December 1971. To see the shift away from materialistic values, see the World Values Survey (www.worldvaluessurvey.org). The changing make-up of our economy Compare the type of items in Simon Kuznets, National Income, 1929-32 (Cambridge, MA: NBER, June 1934) with those in today’s economies. Consider also, Francisco J Buera and Joseph P Kaboski. “The Rise of the Service Economy”, American Economic Review Vol. 102, No. 6, 2012. For an easy introduction, see the video infographic “The iPhone Economy” at www.nytimes.com.

The State and the Stork: The Population Debate and Policy Making in US History
by Derek S. Hoff
Published 30 May 2012

Norton, 1973), he wrote, “That modern economic growth meant a strikingly accelerated rise not only in product per capita but also in population does not imply that the latter was a necessary condition for the former” (2). 119. Simon Kuznets, Six Lectures on Economic Growth (New York: Free Press of Glencoe, 1959), 37. The next year, Kuznets suggested that larger populations 298 notes to chapter four happily produce more geniuses (“Population Change and Aggregate Output,” in Demographic and Economic Change in Developed Countries [Princeton: Princeton University Press, 1960], 324–39). 120. Simon Kuznets, “Toward a Theory of Economic Growth,” in National Economic Welfare at Home and Abroad, ed. Robert Lekachman (Garden City, N.Y.: Doubleday, 1955; New York: Russell & Russell, 1961), 23. 121.

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The US should have a population policy authoritative enough to be quotable.”112 Frank Notestein, director of the Princeton Office of Population Research, told Osborn, “It does seem wise to have meetings devoted to problems of the United States for their intrinsic merits and for the fact that it is wise from a public relations point of view.”113 But the largest factor in the Population Council’s growing desire to address domestic issues was the Baby Boom; and the goal was to measure the applicability of the consequences of population growth in the developing world to the United States’ own demographic expansion. The committee members began with an anti–population growth bias.114 But for the first meeting they fielded papers from several influential population experts with a wide range of views: Spengler; Arnold Harberger, a University of Chicago economist; Simon Kuznets, one of the giants of twentieth-century economics; geochemist Harrison Brown; Ansley Coale of Coale-Hoover fame; and Theodore Schultz, an agricultural economist about to relocate to the University of Chicago and emerge as a leading human capital theorist. Spengler, Brown, and Coale represented the pessimists.

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He recalled in his memoirs, “I believed that rapid population growth was the main obstacle to the world’s economic development and one of the two main threats to humankind (nuclear war being the other).”44 Simon’s first article on population, drawing on an earlier focus on the economics of advertising, recommended methods for marketing family planning programs in the developing world.45 Almost immediately after joining the population movement, however, Simon’s views shifted 180 degrees to a full rejection of Malthusianism. Simon’s about-face came partly from studying the historical analyses of Simon Kuznets, Richard Easterlin, and others who noted the absence of a strict relationship between population and economic growth, as well as the work of the agricultural and resource economists Ester Boserup, Theodore Schultz, Harold Barnett, and Chandler Morse. Simon’s main epiphany, however, came during a 1969 trip to Washington, D.C., ironically to visit USAID to discuss family planning programs.

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Global Inequality: A New Approach for the Age of Globalization
by Branko Milanovic
Published 10 Apr 2016

In Chapter 2 we consider within-nation inequalities, and in Chapter 3, among-nation inequalities. In Chapter 2, I use long-term historical data on income inequality, going back in some cases to the Middle Ages, to reformulate the Kuznets hypothesis, the workhorse of inequality economics. This hypothesis, formulated by Nobel Prize–winning economist Simon Kuznets in the 1950s, states that as countries industrialize and average incomes grow, inequality will at first increase and then decrease, resulting in an inverted-U-shaped curve when one plots inequality level against income. The Kuznets hypothesis has recently been found wanting because of its inability to explain a new phenomenon in the United States and other rich countries: income inequality, which had been decreasing through much of the twentieth century, has recently been on an upswing.

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Data source: Author’s calculations from various Forbes lists. 2 Inequality within Countries Introducing Kuznets Waves to Explain Long-Term Trends in Inequality The long swings in income inequality must be viewed as part of a wider process of economic growth and interrelated with similar movements in other elements. —SIMON KUZNETS The Origins of Dissatisfaction with the Kuznets Hypothesis Dissatisfaction with the Kuznets hypothesis—the idea that inequality is low at very low income levels, then rises as the economy develops, and eventually falls again at high income levels—is not new, but recent developments seem to have delivered it a coup de grâce.

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Fourth, there is a tension between the concept of development that stresses the development of people within their own countries and a broader concept of development that focuses on the betterment of an individual’s position regardless of where he or she lives. We need to dispose of one fallacy, however, before we move on to discuss these four tensions. The fallacy is the view that the reduction of absolute poverty worldwide would somehow alleviate or even eliminate these tensions. Simon Kuznets dismissed this idea long ago (in 1954). Huge gaps in income and standard of living between, for example, a New Yorker and a member of a tribe in the Amazon render any meaningful contact and comparison of ways of life between them impossible. But large income gaps, that is income gaps smaller than what we called “huge” in the previous sentence, between peoples who belong to the same civilizational circle and interact with each other—which today includes practically everybody in the world—make political tensions worse: “Since it is only by contact that recognition and tension are created … the reduction of physical misery [in underdeveloped countries] … permit[s] an increase rather than a diminution of political tensions” (Kuznets [1958] 1965, 173–174).

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The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It
by Timothy Noah
Published 23 Apr 2012

Upon retiring from NYU in 1945, King became chairman of the Committee for Constitutional Government, an anti–New Deal organization originally founded to oppose Roosevelt’s 1937 court-packing scheme, which outraged King. Well before he died in 1962 at age eighty-two, King saw his legacy eclipsed by the work of a Russian émigré who in 1927 had succeeded King at the NBER and in 1971 would win the Nobel Prize in economics. His name was Simon Kuznets, and among his many lasting contributions to economics was the creation of the analytic foundation for the study of income inequality. Kuznets had (and continues to have) legions of admirers in the economics profession. King was not one of them. In a 1940 letter to one of the NBER’s directors, King quarreled with what he termed Kuznets’s “assumption … that environment and luck are the principal determinants of a persons [sic] success or failure in life.”

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But sampling becomes a lot less accurate when you’re measuring trends within a very small subgroup of the larger population. And the proportion of households with annual incomes above $1 million is well under 1 percent.1 Rather than rely on the Current Population Survey for broad-brush data about the rich, Piketty and Saez did what Simon Kuznets had done prior to his groundbreaking 1954 analysis of U.S. income distribution. They looked at data from the Internal Revenue Service. Except perhaps for a very few criminals who possess a superhuman ability to hide enormous quantities of cash, everyone in the United States who makes $1 million or more files a yearly tax return, and the IRS keeps track of precisely how much each of these people rakes in.

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Between these two extremes is found inequality of condition, wealth, knowledge—the power of the few, the poverty, ignorance and weakness of all the rest.” 16. In fairness to Kuznets, he himself characterized his income-inequality theory as “5 percent empirical information and 95 percent speculation, some of it possibly tainted by wishful thinking.” 17. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (Mar. 1955), 1–28. 18. Steven R. Weisman, The Great Tax Wars (New York: Simon & Schuster, 2002), 353. 19. Claudia Goldin and Robert Margo, “The Great Compression: The Wage Structure in the United States at Mid-Century,” Quarterly Journal of Economics 107, issue 1 (Feb. 1992), 1–34. 20.

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Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America
by Jamie Bronstein
Published 29 Oct 2016

Being drafted took away male workers’ freedom of choice, forcing them into low-paid employment as soldiers. They were replaced by teenagers, retired workers, women, and members of minority groups. This sent the overall unemployment rate to 1.4 percent, but, Higgs argued, resulted in less comfort and happiness overall. Economist Simon Kuznets pointed out that during World War II, much was spent on war materiel and that war goods do not improve the well-being of Americans, but rather, in moments of existential crisis, make it possible for well-being to exist at all. Kuznets argued that many military products should not even be counted as part of the gross national product (GNP), and of course, to exclude military products from GNP would show a shrinking American productivity during wartime.

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Murrow and show producer Fred Friendly gave little sense of what might concretely be done to improve the living conditions of the migrants or the educational prospects of their children, gesturing vaguely in the direction of farmworkers’ unions while at the same time acknowledging the extreme imbalance of power between the migrants and their farm employers. Harvest of Shame was part of a larger discourse about hidden poverty and the costs of economic inequality that emerged in the late Eisenhower administration and then grew louder in the 1960s. In 1962, the historian Gabriel Kolko published Wealth and Power in America. The economist Simon Kuznets had claimed that income in the United States necessarily would become more evenly distributed over time. Kolko attacked Kuznets with a statistical analysis demonstrating that Americans in fact had a remarkable lack of upward mobility. Kolko pointed out that large numbers of Americans could not afford medical expenses nor even to replace their clothing.

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Shammas, “A New Look,” 420. 20. Williamson and Lindert, “Three Centuries of American Inequality,” 11, 15, 20. 21. Mark W. Frank, “Inequality and Growth in the United States: Evidence from a New State-Level Panel of Income Inequality Measures,” Economic Inquiry vol. 47 no. 1 (2009): 55–68. 22. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review vol. 45 no. 1 (1955): 1–30. 23. Milanovic, Haves and Have-Nots, 91. 24. Williamson and Lindert, “Three Centuries of American Inequality,” 56, 59; Jeffrey Williamson and Peter H. Lindert, American Inequality: A Macroeconomic History (New York: Academic Press, 1980), 258. 25.

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Capitalism in America: A History
by Adrian Wooldridge and Alan Greenspan
Published 15 Oct 2018

The problem with calculating GDP and MFP over a long period is that the further back you go in time, the more difficult it is to find solid statistics. The U.S. government only began collecting systematic data on national income and product accounts in the 1930s, when it called on the expertise of Simon Kuznets of Stanford University and the National Bureau of Economic Research. For prior data, historians have to rely mainly on the decennial census, which started in the 1790s. Historians supplement official census data with scattered data on industrial production, crops, livestock, and hours worked, but, as Paul David identified, such data were not very accurate before the 1840s.

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The Fed then made a desperate situation still worse in the autumn of 1931 by sharply raising interest rates in order to preserve the value of the dollar. In reflecting on this catalogue of errors, it is important to make allowance for circumstances. Policy makers still had only a hazy picture of the national economy. It took the shock of the Great Depression itself to persuade the government to employ Simon Kuznets and the National Bureau of Economic Research to prepare a comprehensive set of national income accounts. The world had never experienced anything like the Great Depression before: policy makers were sailing into a global storm without a map to guide them. At first they didn’t know how bad it was going to get.

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The engines of America’s great prosperity machine are no longer firing as effectively as they once did. Growth in nonfarm business output per hour from 2011 to 2016 has averaged a scant 0.7 percent annually, and real GDP growth only 2.2 percent annually. Moreover, stagnation is producing a populist backlash that threatens to clog up those engines even more. Simon Kuznets once remarked, “We Americans are so used to sustained economic growth in per capita product that we tend to take it for granted—not realizing how exceptional growth of this magnitude is on the scale of human history.” People usually respond very poorly to losing something they take for granted: first they deny they’ve lost it, continuing to spend the proceeds of prosperity as if nothing has changed, and then they start ranting and raving.

The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)
by Phil Thornton
Published 7 May 2014

The permanent income hypothesis Friedman’s contribution to economics began, not with the high-minded world of finance ministers and central banks, but in the milieu of doctors and dentists. After his work on the New Deal, Friedman got a job at the National Bureau of Economic Research, where he assisted Simon Kuznets – who later won the Nobel for his work on the idea of gross national product – in his studies of professional income. They concluded that the medical profession’s monopoly powers had raised substantially the incomes of doctors relative to those of dentists – indeed, publication of the work, that was completed in 1940, was delayed until after the Second World War because of the controversy it created within the Chapter 7 • Milton Friedman149 bureau.

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Roosevelt) 148 New Keynesianism 159, 163 New Neoclassical Synthesis 111 Nicholas I, Tsar 52 NINJA (No Income, No Job, No Assets) homebuyers 61–2 Nixon, Richard 109, 146 Nobel laureates Kenneth Arrow (1972) 191, 213 Gary Becker (1992) 194, 195–6 Ronald Coase (1991) 73 Peter Diamond (2010) 179 Eugene Fama (2013) 160, 187 Milton Friedman (1976) 146, 147–8, 154, 161 Lars Peter Hansen (2013) 160 Friedrich Hayek (1974) 137 Daniel Kahneman (2002) 218, 220 Paul Krugman (2008) 180, 191 Simon Kuznets (1971) 148 Robert Lucas (1995) 202 Robert Merton (1997) 187 Edmund Phelps (2006) 213 Paul Samuelson (1970) 168 Myron Scholes (1997) 187 Vernon Smith (2002) 218 non-accelerating inflation of unemployment (NAIRU) 153–5 Nordhaus, William 171, 178 North American Free Trade Agreement 41, 187 North, Lord 23 Obama, Barack 162, 190 offshoring of jobs 41 OPEC 22 opportunity cost concept 201, 205 optimism bias and overconfidence 226–7 outsourcing 21 overlapping generations (OLG) model 178–80 Pareto, Vilfredo 182 Pareto efficiency 182 pensions and pension funds 178 permanent income hypothesis (Friedman) 148–50 Perot, Ross 41 Phelps, Edmund 154, 213 Philip, Prince 158 Pigou, A.C. 95 Pinochet, Augusto 161 political economy 28, 74, 93 population growth theories Malthus 31 Ricardo 31, 32–3 Posner, Richard 215 Predictably Irrational (Ariely, 2009) 234 prejudice economic perspective of Becker 196–7, 198–9 views of Friedman 157 price, as interaction of supply and demand (Marshall) 75–9 prices and knowledge (Hayek) 131–3 Prices and Production (Hayek, 1931) 126, 130 Principles of Economics (Marshall, 1890) 72, 76, 77–8, 87–8, 188 private savings, influence of taxation policy 43–4 private sector windfalls, impact of stimulus measures 43–4 privatisation of state-owned monopolies 21 246Index productivity, and division of labour 11–14 Prospect Theory (Kahneman) 228–32, 234 protectionism 22–3, 33–5, 41–2, 185 public goods economics 175–8 purchasing price parity (PPP) measures 186 quantitative easing 162, 163 quantity theory of money, criticism by Keynes 97 Rae, John 23 rational choice model (Becker) 197, 212–15, 216 challenge from Kahneman 221–33 rational expectations hypothesis 111, 137 Reagan, Ronald 19, 20, 139, 146, 158, 160 recession drivers of (Keynes) 101 see also Great Recession (2009) reflection effect 229 revealed preference theory 180–1 reverse elasticity 84 Ricardo, Abraham 28–9 Ricardo, David (1772–1823) 27–46, 183 attack on the Corn Laws 33–5 early life and influences 28–30 from finance to economics 30–1 global free trade 40–2 government debt 38–9 influence of Adam Smith 30 international trade and comparative advantage 35–8 key ideas 46 long-term legacy 40–4 on the general workings of the economy 31–3 on wealth creation and distribution 31–3 political career 30 population growth theories 31, 32–3 The Principles of Political Economy and Taxation (1817) 28, 31–3, 188 Ricardian equivalence 38–9 Ricardo effect 33 verdict 45–6 wine and cloth example 35, 37, 40–1 Ricardian equivalence 38–9 Ricardo effect 33 Robbins, Lionel 122, 129 Rogeberg, Ole 211 Rogoff, Kenneth 189–90 Roosevelt, Franklin D. 148 Samuelson, Paul (1915–2009) 37, 106, 137, 159, 167–92 autarky concept 184 early life and influences 169–70 economics in action 190–1 Economics: An Introductory Analysis (1948) 168, 171–3, 188–9 efficient markets 187 ethical judgements in economics 182–3 explaining trade imbalances 184–5 factor price equalisation theorem 186–7 financial economics 187 Foundations of Economic Analysis (1947) 168, 169–70 global public goods 177–8 influence of Keynes 171–2 influence on economic theory 189–90 intergenerational economics 178–80 international economics and trade 183–7 key economic theories and writings 171–87 long-term legacy 188–91 mathematical approach to economic issues 169–70 microeconomic market system 172–3, 174 multiplier effect 174–5 Index247 neoclassical synthesis 174 neo-Keynesianism 168–9, 173–5 Nobel Prize in economic sciences (1970) 168 oscillator model of business cycles 174–5 overlapping generations (OLG) model 178–80 public goods and public finance 175–8 public goods economics 175–8 revealed preference theory 180–1 understanding consumer behaviour 180–1 verdict 191–2 warrant pricing 187 welfare economics 181–3 Scholes, Myron 187 Schwartz, Anna 150–1, 162 Scottish Enlightenment 3 Second World War 95, 96 self-interest theory of Adam Smith 2–3, 6, 8–9, 20 Skidelsky, Robert 114, 128 slavery 10–11 Smith, Adam (1723–90) 1–25, 97, 230–1 A Theory of Moral Sentiments (1759) 2, 5–6 division of labour and productivity 11–14 drivers of rates of pay 12–13 early life and character 3–5 free-market mechanism of supply and demand 8–9 free international trade 13–14 from philosophy to economics 6–7 functions funded by general taxation 16 functions of the state 16–18 functions that users should pay for 16–17 idea of ‘natural liberty’ 8 idea of ‘sympathy’ of people for each other 6 key ideas 25 long-term legacy 19–23 market price of a commodity 15–16 on slavery 10–11 personal legacy 23 pin factory example 11–13 role of the state in the economy 9, 10 self-interest theory 2–3, 6, 8–9, 20 taxation principles 17–18 the evil of cartels and monopolies 10–11 the invisible hand 7–9 the market mechanism 15–16 The Wealth of Nations (1776) 2–3, 6, 7–25, 188 verdict 23–4 Smith, Vernon 218 Smoot-Hawley Tariff Act (US) 42 social security systems 179 social welfare function 182–3 socialism 134–6 sovereign debt crisis in Greece 113–14 Soviet Union, collapse of 140, 158 Sraffa, Piero 130–1 stagflation in the 1970s 154, 173–4 Standard Oil Company of New Jersey 21 state-owned monopolies, privatisation programmes 21 Statecraft (Thatcher, 2002) 19 status quo bias 227–8 stimulus measures, debate over effects of 43–4 stimulus versus austerity debate 43–4, 140–1 Stockholm School of Economics 168 Stolper, Wolfgang 184–5 Stolper–Samuelson theorem 184–5 Strachey, Lytton 94 structural unemployment 155 substitution effect, response to price change 82, 83 Summers, Anita 190 Summers, Lawrence 190 Summers, Robert 190 Sunstein, Cass 234 248Index supply and demand market mechanism 8–9, 15–16, 75–84 supply side economics 127, 201 surplus value of labour (Marx) 54–6 taxation policy influence on private savings 43–4 views of Adam Smith 16–18 taxpayers, view of government debt (Ricardo) 38–9 Thaler, Richard 232, 234, 235 Thatcher, Margaret 19, 138–9, 155, 160–1 The General Theory of Employment, Interest and Money (Keynes, 1936) 99–106 The Principles of Political Economy (Mill, 1848) 188 The Principles of Political Economy and Taxation (Ricardo, 1817) 28, 31–3, 188 The Road to Serfdom (Hayek, 1944) 135, 138, 140 The Wealth of Nations (Smith, 1776) 2–3, 6, 7–25, 188 Thinking, Fast and Slow (Kahneman, 2012) 226–7, 234 time factor and the value of capital (Hayek) 124–6 in the supply and demand model 77–9 Townshend, Charles 5, 6–7 Toyota, production systems 21 trade barriers 22–3, 41–2, 185 Corn Laws 33–5 trade imbalances, Samuelson’s explanation 184–5 trade unions 19 transient income concept 149 Treatise on Human Nature (Hume) 4 Treaty of Versailles 95–6 Tversky, Amos 218, 220, 221–5, 228–33, 235 Ulam, Stanislaw 37 uncertainty and investment volatility 104–5 unemployment causes of (Keynes) 101 frictional 155 ‘natural’ rate of (Friedman) 153–5 relationship with inflation 153–5 structural 155 United States housing market crisis (2008) 61–2, 112 import tariffs after the Wall Street Crash 42 savings and investment imbalance with China 113 trade imbalance with China 45 US Federal Reserve 111–12 action to control inflation 161 and the 2008 financial crisis 235 influence of monetary policy 159 money supply and the Great Depression (1930s) 150–2 quantitative easing (2009 onward) 162 role in the Great Depression (1930s) 159 utilitarianism 31, 182 value and costs of production 75–7 distribution of economic value (Marx) 54–6 surplus value of labour (Marx) 54–6 Voltaire 7 wages drivers of wage rates (Smith) 12–13 effects of reducing (Keynes) 101–2 relationship to rents and profits 32–3 surplus value of labour (Marx) 54–6 Wall Street Crash (1929) 23, 42 Wallich, Henry 190–1 warrant pricing (Samuelson) 187 wealth creation and distribution, view of Ricardo 31–3 Index249 welfare economics 181–3 White, Harry Dexter 108 Wilberforce, William 10 Wittgenstein, Ludwig 121 women in the workforce 202 Wood, Kingsley 106 Woolf, Leonard 94 World Bank Group 109 World Trade Organization (WTO) 22, 40–1, 185

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Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist
by Kate Raworth
Published 22 Mar 2017

His list got longer but the questions never aimed higher, to encourage the students to consider the economy’s purpose. How had the GDP growth cuckoo so successfully hijacked the economic nest? The answer can be traced back to the mid 1930s – as economists were just settling upon a goalless definition of their discipline – when the US Congress first commissioned economist Simon Kuznets to devise a measure of America’s national income. The calculation he made came to be known as Gross National Product, and was based on the income generated worldwide by the nation’s residents. For the first time, thanks to Kuznets, it became possible to put a dollar value on America’s annual output and hence its income – and to compare it to the year before.

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What’s more, he argued, the steep ‘social pyramid’ that his data had repeatedly revealed must be a fixed fact of human nature, making attempts at redistribution counterproductive. The way to help the worst off was to expand the economy, he concluded, and the wealthy were best placed to make that happen.4 Converging, diverging, or ever-fixed? Debates over the likely path of income inequality raged on, but in 1955 the story took a crucial turn, quite literally. When Simon Kuznets – the brilliant inventor of national income accounting – gathered together long-run trend data on incomes in the US, UK and Germany, he was taken aback by what he found. In all three countries, income inequality measured before tax had been falling at least since the 1920s, and even possibly before the First World War.

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Persky, J. (1992) ‘Retrospectives: Pareto’s law’, Journal of Economic Perspectives 6: 2, pp. 181–192. 5. Kuznets, S. (1955) ‘Economic growth and income inequality’, American Economic Review, 45: 1, pp. 1–28. 6. Kuznets, S. (1954) Letter to Selma Goldsmith, US Office of Business Economics, 15 August 1954, Papers of Simon Kuznets, Harvard University Archives, HUGFP88.10 Misc. Correspondence, Box 4. http://asociologist.com/2013/03/21/on-the-origins-of-the-kuznets-curve/ 7. Kuznets, S. (1955) ‘Economic growth and income inequality’, American Economic Review, 45: 1, pp. 1–28. 8. Lewis, W. A. (1976) ‘Development and distribution’, in Cairncross, A. and Puri, M.

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Why Information Grows: The Evolution of Order, From Atoms to Economies
by Cesar Hidalgo
Published 1 Jun 2015

They also modeled economic growth as the tug-of-war between an economy’s savings rate (the capital that it keeps for later use) and capital depreciation (the wear and tear that erodes capital). Robert Solow advanced the prototypical model of economic growth in the 1950s—a timely development, as the data needed to evaluate such models were just becoming available. Simon Kuznets, the Russian-born economist who fathered GDP, had finished creating the system of national accounts a couple of decades earlier, helping generate the economic metric that dominated the twentieth century.4 Solow’s model, however, did not measure up well when it was compared with empirical data.

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Gross domestic product (GDP) displaced GNP as the official metric in the 1990s. GDP considers the production of goods and services within a country. GNP considers the goods and services produced by the citizens of a country, whether or not those goods are produced within the boundaries of the country. 5. Simon Kuznets, “Modern Economic Growth: Findings and Reflections,” American Economic Review 63, no. 3 (1973): 247–258. 6. Technically, total factor productivity is the residual or error term of the statistical model. Also, economists often refer to total factor productivity as technology, although this is a semantic deformation that is orthogonal to the definition of technology used by anyone who has ever developed a technology.

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Common Wealth: Economics for a Crowded Planet
by Jeffrey Sachs
Published 1 Jan 2008

The Encyclopedia of Life could have one expandable Web page per species, documenting all known aspects of the species: genomics, cladistics and evolution, behavior, range, abundance, ecological relations with other species, threats to survival, and so forth. CHAPTER 7: GLOBAL POPULATION DYNAMICS 159 “There doesn’t seem ”: “How to Deal with a Falling Population” The Economist 284, no. 8539 (July 28, 2007): 11. 160 Simon Kuznets and Michael Kremer: Michael Kremer, “Population Growth and Technological Change: One Million B.C. to 1990,” The Quarterly Journal of Economics 108, no. 3 (August 1993): 681–716; Simon Kuznets, “Population Change and Aggregate Output,” Demographic and Economic Change in Developed Countries (Princeton, NJ: Princeton University Press, 1960): 324–40. 177 The standard tests have: Robert J. Barro and Xavier Sala-i-Martin, Economic Growth, 2nd edition (Cambridge, Mass.: MIT Press, 2004). 177 each country’s average annual growth rate: Initial income is expected to have a negative effect: richer countries should grow less rapidly, and poor countries more rapidly, because of the phenomenon of convergence.

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THE DEBATE OVER POPULATION Economists tend to be divided into three camps: population optimists, who say that today’s population growth is good for development or is at least neutral; population pessimists, who say that population growth has already gone too far to avoid disaster; and those (including myself) who believe in the importance of spurring the demographic transition to lower fertility rates in the poorest countries. Population optimists maintain that there are no real bounds to the Earth’s population because technology can and will keep ahead of the curve. One variant of this optimism is associated with the ideas of economists Simon Kuznets and Michael Kremer, who have each argued that a larger global population will tend to bring about the very technological advances that are needed to sustain that larger population. From their viewpoint, an important part of economic advance comes from the scientific and technological discoveries of geniuses in society.

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The Great Divide: Unequal Societies and What We Can Do About Them
by Joseph E. Stiglitz
Published 15 Mar 2015

The 99 percent’s boat was sinking, or at least not doing very well. Meanwhile, the other ship was sailing magnificently. Piketty showed that the United States was not alone: similar patterns could be seen elsewhere. Economists had misinterpreted what was happening in the aftermath of World War II. Simon Kuznets, one of the founders of our system of national accounts (by which we measure the size of the economy), who received a Nobel Prize in 1971, had suggested that after an initial period of growth, in which there was an increase in inequality, as economies became richer they became more equal. Experiences since 1980 have showed that this was not true.

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Now comes Thomas Piketty, who warns us in his justly celebrated new book, Capital in the Twenty-first Century, that matters are only likely to get worse. Above all, he argues that the natural state of capitalism seems to be one of great inequality. When I was a graduate student, we were taught the opposite. The economist Simon Kuznets optimistically wrote that after an initial period of development in which inequality grew, it would begin to decline. Although data at the time were scarce, it might have been true when he wrote it: The inequalities of the 19th and early 20th centuries seemed to be diminishing. This conclusion appeared to be vindicated during the period from World War II to 1980, when the fortunes of the wealthy and the middle class rose together.

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In the initial stages of development, some parts of the country start to grow more than others. Almost always, development is about industrialization and urbanization; with urban incomes so much higher than those in the rural areas, early on inequality grows. But as the rural sector diminishes in importance, inequality diminishes. That’s one of the reasons that Simon Kuznets had anticipated that the widely observed increases in inequality in early stages of development would be reversed. China is so far no exception to this pattern. The United States (and increasingly other advanced countries) are. The diminution of inequality did mark the United States in the first three-fourths of the last century, but beginning with the Reagan era, matters reversed.

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Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes
by Mark Skousen
Published 22 Dec 2006

Keynes defined effective demand as aggregate output (Y), which is the sum of consumption (C) and investment (I). Hence, Y= C +1 Today we refer to Y or "aggregate effective demand," as gross domestic product (GDP). GDP is defined as the value of final output of goods and services during the year. Simon Kuznets, a Keynesian statistician, developed national income accounting in the early 1940s as a way to measure Keynes's aggregate effective demand. Keynes effectively demonstrated 10. Foster and Catchings rejected all arguments and never paid the prize money. that if savings are not invested by business, GDP does not reach its potential; recession or depression indicates a lack of effective demand.

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How did Friedman almost single-handedly change the intellectual climate back from the Keynesian model to the neoclassical model of Adam Smith? After acquiring academic credentials, he focused on scholarly technical work, particularly empirical evidence to test the Keynesian model. He learned the importance of sophisticated quantitative analysis from Simon Kuznets, Wesley Mitchell, and other stars at the National Bureau of Economic Research. Friedman started teaching at Chicago in 1946, where he stayed until his official retirement in 1977. Following Frank Knight's retirement in 1955, Friedman continued the Chicago tradition and even strengthened it with an upgraded version of Irving Fisher's quantity theory of money, which he applied to monetary policy.

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In Defense of Global Capitalism
by Johan Norberg
Published 1 Jan 2001

This is corroborated by the fact that the connection between inequality and growth is quite clear in nondemocratic states, but not apparent in modern, liberal ones.13 But can the opposite effect also hold? Is it true that increased growth leads to greater inequality, as is widely maintained? Economists sometimes refer to ‘‘Kuznets’s inverted U-curve,’’ which is based on a 1955 article by the economist Simon Kuznets, who argued that economic growth in a society initially leads to greater inequality and only after some time to a reduction of inequality. Many have accepted this thesis as truth, and it is sometimes used to discredit the idea of growth, or at least to demand redistributive policies. Kuznets himself did not draw any such drastic conclusions.

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Olinto, Asset Distribution, Inequality, and Growth, World Bank Policy Research Paper no. 2375 (Washington: World Bank, 2000). For the connection with democracy, see Klaus Deininger and Lyn Squire, ‘‘New Ways of Looking at the Old Issues: Asset Inequality and Growth,’’ Journal of Development Economics 57 (1998): 259–87. 14. Simon Kuznets, ‘‘Economic Growth and Income Inequality,’’ American Economic Review 45 (March 1955): 26. 15. World Bank, Income Poverty: Trends in Inequality (Washington: World Bank, 2000), http://www.worldbank.org/poverty/data/trends/inequal.htm. The data refuting Kuznets are presented in Deininger and Squire, pp. 259–287.

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What's Wrong With Economics: A Primer for the Perplexed
by Robert Skidelsky
Published 3 Mar 2020

Historical data join comparative data as a source for econometric studies. There has been an enormous expansion of the data base for econometrics in recent years. Examples include the many attempts to establish an empirical basis for the quantity theory of money; the long time-series developed by Simon Kuznets (1901–1985) on national income and its components to test for the consumption function; and E.F. Denison’s use of time-series to estimate relationships of key inputs (labour, capital, education, efficiency) in the growth of output.4 But as we have already argued in Chapter 5, econometrics is vastly oversold as a way of testing theories: in addition to model specification problems, as soon as you get enough observations, too much time has passed to assume conditions are stationary.

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It is the sum of the annual market value of all final goods and services. But it excludes uncosted goods like volunteering, housework, and child-rearing and includes the costs of fighting crime, pollution, drug addiction, resource depletion, and so on. Even the father of national income statistics, Simon Kuznets, argued that ‘the welfare of a nation can scarcely be inferred from a measure of national income’.19 Some economists have suggested making ‘happiness’ rather than GNP the goal of policy. Everyone can agree, surely, that making people happier, in the sense of improving their psychological well-being, is a laudable goal.

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Capital in the Twenty-First Century
by Thomas Piketty
Published 10 Mar 2014

To summarize: he occasionally sought to make use of the best available statistics of the day (which were better than the statistics available to Malthus and Ricardo but still quite rudimentary), but he usually did so in a rather impressionistic way and without always establishing a clear connection to his theoretical argument. 9. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (1955): 1–28. 10. Robert Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics 70, no. 1 (February 1956): 65–94. 11. See Simon Kuznets, Shares of Upper Income Groups in Income and Savings (Cambridge, MA: National Bureau of Economic Research, 1953). Kuznets was an American economist, born in Ukraine in 1901, who settled in the United States in 1922 and became a professor at Harvard after studying at Columbia University.

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Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge for the century now under way? These are the questions I attempt to answer in this book. Let me say at once that the answers contained herein are imperfect and incomplete.

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In particular, the very high level of private wealth that has been attained since the 1980s and 1990s in the wealthy countries of Europe and in Japan, measured in years of national income, directly reflects the Marxian logic. From Marx to Kuznets, or Apocalypse to Fairy Tale Turning from the nineteenth-century analyses of Ricardo and Marx to the twentieth-century analyses of Simon Kuznets, we might say that economists’ no doubt overly developed taste for apocalyptic predictions gave way to a similarly excessive fondness for fairy tales, or at any rate happy endings. According to Kuznets’s theory, income inequality would automatically decrease in advanced phases of capitalist development, regardless of economic policy choices or other differences between countries, until eventually it stabilized at an acceptable level.

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The New Economics: A Bigger Picture
by David Boyle and Andrew Simms
Published 14 Jun 2009

We will build roads and railways, develop atomic power and help with the re-equipment and modernization of the whole of industry.’ WHY DID AN APPARENTLY POOR PACIFIC ISLAND HIT THE TOP? 37 In fact, the idea of GDP dated back further than 1954, to the battle to rescue the world from the Great Depression, and then from Hitler. It was developed by some of the young economists around Keynes and Simon Kuznets in the USA as a way of working out the total productive power of the economy, a by-product of those techniques of investment that allowed Britain to out-produce Nazi Germany. Once the war was over, this seemed to provide the perfect scorecard for an impoverished nation: measure national success by the total amount of money that changed hands, and nothing else.

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She wrote a paper for the Women and Food conference in Sydney in 1982, and submitted it for comment to Australia’s deputy chief statistician. ‘His memo of reply to me – a classic of sexist economic assumptions – was one of the major incentives to write this book,’ she wrote in the introduction. WHY DID AN APPARENTLY POOR PACIFIC ISLAND HIT THE TOP? 39 She also discovered the lists of students who worked under the economist Simon Kuznets (who originally warned against over-reliance on growth as a measure) in the 1930s to develop national accounting in the first place, before it had become the theory of economic growth. The names were all men, but at the bottom was an important note: ‘Five clerks, all women with substantial experience and know-how, assisted importantly in this work.’

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Losing Control: The Emerging Threats to Western Prosperity
by Stephen D. King
Published 14 Jun 2010

THE EMERGING GAP As we have seen, growing income inequality is not confined to parts of the developed world. China has witnessed a widening gap between a growing middle class and the majority of people who still remain wrapped in poverty. Other emerging economies have also seen a growing divide between rich and poor.11 These developments are consistent with the thoughts of Simon Kuznets (1901–85), arguably the father of modern national accounts, who described the changes in the distribution of income as economies shifted from agrarian to urban societies.12 The argument is straightforward. Urban workers are more productive than their inefficient rural counterparts. As urban development lifts off, so the nation as a whole becomes more productive.

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Francis Jones, Daniel Annan and Saef Shah, ‘The distribution of household income 1977 to 2006/07’, Office for National Statistics, Economic and Labour Market Review, 2.12 (2008), pp. 18–31. 11. Some emerging economies, notably those in Latin America, have always had high levels of income inequality: political systems have allowed the middle classes to extract reasonable incomes even though rates of economic growth have often been poor. 12. Simon Kuznets, ‘Toward a theory of economic growth’. in Robert Lekachman, National Policy for Economic Welfare at Home and Abroad (Doubleday, Garden City, NY, 1955). 13. Source: UN Food and Agriculture Organization. 14. Source: Prabhu Pingali, Westernization of Asian Diets and the Transformation of Food Systems: Implications for Research and Policy, ESA Working Paper No. 04–17, Rome, September 2004. 15.

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The Vanishing Middle Class: Prejudice and Power in a Dual Economy
by Peter Temin
Published 17 Mar 2017

He assumed that members of the capitalist sector reinvest their retained earnings. In other words, both models rely on savings, but the determinants of investment are quite different. Lewis and Solow were working within a Keynesian framework in which capital referred to the means of production: factories and machines are the prime examples. Simon Kuznets, a third Nobel Laureate in economics, also was focused on economic growth in the 1950s. Using the data available to him, he formulated what came to be called the Kuznets Curve that asserted that income inequality would first rise and then fall during economic growth. He was reacting to the declining income inequality he observed around him and a political-economic view that richer countries would choose policies that increased equality.

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Fields, Karen E., and Barbara J. Fields. 2012. Racecraft: The Soul of Inequality in American Life. New York: Verso. Fitzsimmons, Emma G., and David W. Chen. 2015. “Aging Infrastructure Plagues Nation’s Busiest Rail Corridor.” New York Times, July 26. Fogel, Robert W. 1987. “Some Notes on the Scientific Methods of Simon Kuznets.” NBER Working Paper No. 2461, December. Foner, Eric. 1988. Reconstruction: America’s Unfinished Revolution, 1863–77. New York: Harper and Row. Forsberg, Mary E. 2010. “A Hudson Tunnel That Goes One Way.” New York Times, October 27. Fortner, Michael Javen. 2015. “The Real Roots of the ’70s Drug Laws.”

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Less Is More: How Degrowth Will Save the World
by Jason Hickel
Published 12 Aug 2020

But beginning in the early 1930s, during the Great Depression, something happened that added real fuel to these flames. The Depression devastated the economies of the United States and Western Europe, and governments found themselves scrambling for a response. In the United States, officials reached out to the economist Simon Kuznets and asked him to develop an accounting system that would reveal the monetary value of all the goods and services produced in the economy. The idea was that if you can see what is happening in the economy more clearly, you can figure out where things are going wrong and intervene more effectively.

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Over and over again, it turns out that the dominant belief in the necessity of growth is under-justified. Those who call for continued growth at the expense of ecological stability are ready to risk everything – literally – for the sake of something we don’t really even need. We need new indicators of progress – but that’s not enough When Simon Kuznets introduced the GDP metric to the US Congress back in the 1930s, he was careful to warn that it should never be used as a normal measure of economic progress. Focusing on GDP would incentivise too much destruction. ‘The welfare of a nation can scarcely be inferred from a measure of national income,’ Kuznets said.

pages: 298 words: 95,668

Milton Friedman: A Biography
by Lanny Ebenstein
Published 23 Jan 2007

At the same time, his Columbia ties deepened as a result of his greater association with Mitchell and others at the National Bureau who were affiliated with the university. Friedman lectured part-time at Columbia and associated socially with many from the Columbia crowd. At the National Bureau, Friedman served as research assistant to Columbia graduate Simon Kuznets, a Mitchell disciple, who had organized the Conference on Research in National Income and Wealth. Kuznets was one of Friedman’s last mentors, along with Burns and Jones at Rutgers, Viner and Knight at Chicago, Hotelling at Columbia, and Mitchell at the National Bureau. Kuznets impressed on Friedman the value of Mitchell’s quantitative and statistical approach.

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The delay was the result of unusual circumstances. Columbia at this time required that a candidate’s dissertation be published before the degree would be awarded. A major controversy arose with respect to Friedman’s dissertation, Income from Independent Professional Practices, which he co-wrote with Simon Kuznets of the National Bureau. Kuznets wrote a preliminary manuscript, which Friedman completely rewrote between 1938 and 1941. The study covers five professional fields, including doctors and dentists. The average income of physicians at this time exceeded that of dentists by about one-third. Friedman and Kuznets argued that the reason for this difference was in part that the American Medial Association (AMA) hindered entrance to the medical profession, restricting the supply of doctors and thereby driving their price up.

pages: 606 words: 87,358

The Great Convergence: Information Technology and the New Globalization
by Richard Baldwin
Published 14 Nov 2016

This proximity fostered innovation that triggered a dynamic of lower costs and further local concentration in the nations that started ahead (the North Atlantic economies and Japan). The flip side was a downward spiral in the ancient manufacturing consumption / production clusters. This industrialization of the North and deindustrialization of the South is one of the most striking aspects of Phase Three’s reversal of fortunes. As Simon Kuznets wrote in Economic Growth and Structure, “Before the nineteenth century and perhaps not much before it, some presently underdeveloped countries, notably China and parts of India, were believed by Europeans to be more highly developed than Europe.”4 During the eighteenth century, the Indian cotton textile industry was the global leader in terms of quality, production, and exports.

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See also Bairoch, Economics and World History (London: Harvester Wheatsheaf, 1993); and Bairoch and Richard Kozul-Wright, “Globalization Myths: Some Historical Reflections on Integration, Industrialization, and Growth in the World Economy,” Discussion Paper 113, United Nations Conference on Trade and Development, Geneva, 1996. 3. The quote comes from a speech Bismarck gave in 1879 supporting a protectionist law. Quoted in William Harbutt Dawson, Protection in Germany: A History of German Fiscal Policy during the Nineteenth Century (London: P. S. King & Son, 1904). 4. Simon Kuznets, Economic Growth and Structure: Selected Essays (London: Heinemann Educational Books, 1965). 5. Lant Pritchett, “Divergence, Big Time,” Journal of Economic Perspectives 11, no. 3, (1997): 3–17; Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton, NJ: Princeton University Press, 2000). 6.

pages: 568 words: 174,089

The Power Elite
by C. Wright Mills and Alan Wolfe
Published 1 Jan 1956

From what we know—and we know only a small part—of the legal and the illegal ways of the heavily taxed, we seriously wonder if the drop from 19.1 to 7.4 per cent is as much an illustration of how well the corporate rich have learned to keep information about their income from the government than of an ‘income revolution.’ No one, however, will ever really know. For the kind of official investigation required is not politically feasible. See Simon Kuznets, ‘Shares of Upper Income Groups in Income and Savings,’ National Bureau of Economic Research, Inc., Occasional Paper No. 35, pp. 67 and 59; and Simon Kuznets, assisted by Elizabeth Jenks, Shares of Upper Income Groups in Income and Savings (New York: National Bureau of Economic Research, Inc., 1953). For one debate over the methods employed by Kuznets by means of a different interpretation of tax data, see J.

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If one were to include these in the 1949 returns to make them comparable with the 513 in 1929, there would be 145 million-dollar incomes in 1949. On the proportion of families with incomes of less than $2,000 in 1939, see The New York Times,’ (5 March 1952) presentation of Bureau of Census data. 9. ‘Preliminary Findings of the 1955 Survey of Consumer Finances,’ Federal Reserve Bulletin, March 1955, page 3 of reprint. 10. Simon Kuznets, an expert with tax-derived data, finds that the share in total income after taxes of the richest 1 per cent (which goes down to families earning a mere $15,000) of the population has decreased from 19.1 per cent in 1928 to 7.4 per cent in 1945; but he carefully adds: ‘It must be evident from our presentation that we encountered considerable difficulty in contructing estimates with a high degree of reliability and in unearthing data for checking the several hypotheses.’

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Red Plenty
by Francis Spufford
Published 1 Jan 2007

For a consideration of the specific window of opportunity that was open to a command economy in the middle of the twentieth century, see Stephen Broadberry and Sayantan Ghosal, ‘Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870’, Structural Change and Economic Dynamics vol. 16 issue 4 (December 2005), pp. 437–66. 15 Indeed, there was a philosophical issue here: for the planners’ philosophical fidelity to Marx, despite everhing, see Paul Craig Roberts, Alienation and the Soviet Economy (Albuquerque: University of New Mexico Press, 2002). 16 This made it difficult to compare Soviet growth: there is a whole specialised literature, spread over fifty years, on the difficulty of assessing the USSR’s growth rate. For an accessible way in, see Alec Nove, Economic History of the USSR, and Paul R. Gregory and Robert C. Stuart, Russian and Soviet Economic Performance and Structure, 6th edn. (Reading MA: Addison-Wesley, 1998). For Western calculations during the Cold War, see Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963); Janet G. Chapman, Real Wages in Soviet Russia Since 1928, RAND Corporation report R-371-PR (Santa Monica CA, October 1963); Franklyn D. Holzman, ed., Readings on the Soviet Economy (Chicago: Rand-McNally, 1962).

…

For a consideration of the specific window of opportunity that was open to a command economy in the middle of the twentieth century, see Stephen Broadberry and Sayantan Ghosal, ‘Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870’, Structural Change and Economic Dynamics vol. 16 issue 4 (December 2005), pp. 437–66. 15 Indeed, there was a philosophical issue here: for the planners’ philosophical fidelity to Marx, despite everything, see Paul Craig Roberts, Alienation and the Soviet Economy (Albuquerque: University of New Mexico Press, 2002). 16 This made it difficult to compare Soviet growth: there is a whole specialised literature, spread over fifty years, on the difficulty of assessing the USSR’s growth rate. For an accessible way in, see Alec Nove, Economic History of the USSR, and Paul R. Gregory and Robert C. Stuart, Russian and Soviet Economic Performance and Structure, 6th edn. (Reading MA: Addison-Wesley, 1998). For Western calculations during the Cold War, see Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963); Janet G. Chapman, Real Wages in Soviet Russia Since 1928, RAND Corporation report R-371-PR (Santa Monica CA, October 1963); Franklyn D. Holzman, ed., Readings on the Soviet Economy (Chicago: Rand-McNally, 1962).

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Bauer, Nine Soviet Portraits (Boston: MIT Press, 1965) Anthony Beevor and Luba Vinogradova, eds, A Writer at War: Vasily Grossman with the Red Army 1941–1945 (London: Harvill, 2005) Mark R. Beissinger, Scientific Management, Socialist Discipline and Soviet Power (Cambridge MA: Harvard University Press, 1988) Raissa L. Berg, Acquired Traits: Memoirs of a Geneticist from the Soviet Union, trans. David Lowe (New York: Viking Penguin, 1988) Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963) Abram Bergson, Economics of Soviet Planning (New Haven CT: Yale University Press, 1964) —, Planning and Productivity Under Soviet Socialism (New York: Columbia University Press, 1968) Isaiah Berlin, Russian Thinkers, ed.

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The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society
by Binyamin Appelbaum
Published 4 Sep 2019

The government slowly expanded its role in the economy, creating a national currency and then a central bank; establishing federal regulators, first for the railroads and then for a growing range of other industries; and legislating limits on monopolies. But the government remained a small and peripheral actor. As the country sank into the Great Depression, Congress still lacked basic information about the economy. In 1932, it commissioned an estimate of the decline in economic activity; the economist Simon Kuznets reported back in January 1934 that national income had fallen by half between 1929 and 1932. The data was two years old; it still seemed precious. The government printed forty-five hundred copies of the report, and quickly sold them all.25 From the first half of the twentieth century emerged a political consensus that governments should play a much larger role in managing the economy during the second half of the twentieth century.

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Both taxing and spending were modest by the standards of developed nations. Instead, by creating a society of smallholders, and then investing in education, Taiwan provided a large share of its population with both the financial and intellectual capital that made it possible to build prosperous lives. The economist Simon Kuznets famously argued that economic growth caused inequality to rise and then fall. In Taiwan, it fell and then stayed down.113 Many economists remained convinced Taiwan was not a model for other countries. They shared the judgment offered by Larry Summers in the early 1990s, during his time as the World Bank’s chief economist: “For most developing countries, relying on imperfect markets rather than imperfect governments has a greater chance for promoting growth.”114 Friedman was not alone in insisting that Taiwan and South Korea would have grown even faster with less management.115 This judgment, however, is not shared by the Taiwanese government, which continues to manage development.

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The most thorough and persuasive account of Friedman’s intellectual development is an unpublished 2018 manuscript by Edward Nelson, a Federal Reserve economist, “Milton Friedman and Economic Debate in the United States, 1932–1972,” 2018, books A and B; available at https://sites.google.com/site/edwardnelsonresearch/. 21. Friedman’s doctorate was from Columbia, not Chicago. He spent his second year of graduate studies at Columbia on a fellowship, and returned there to complete the work. His adviser was Simon Kuznets, who won a Nobel Prize for his pioneering role in the development of statistical methods for measuring national economic activity. A version of the thesis was published as Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945). Friedman’s views of the medical profession remained unchanged.

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A Pelican Introduction Economics: A User's Guide
by Ha-Joon Chang
Published 26 May 2014

.* The school emphasized the importance of understanding the history of how the material production system has changed, both influencing and influenced by law and other social institutions.12 The Developmentalist tradition in the modern world: Development Economics The Developmentalist tradition was advanced in its modern form in the 1950s and the 1960s by economists such as, in alphabetical order, Albert Hirschman (1915–2012), Simon Kuznets (1901–85), Arthur Lewis (1915–91) and Gunnar Myrdal (1899–87) – this time, under the rubric of Development Economics. Writing mostly about the countries on the periphery of capitalism in Asia, Africa and Latin America, they and their followers not only refined the earlier Developmentalist theories but also added quite a lot of new theoretical innovations.

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The most reasonable conclusion to draw from the review of various theories and empirical evidence is that neither too little nor too much inequality is good. If it is excessively high or excessively low, inequality may hamper economic growth and create social problems (of different kinds). The Kuznets hypothesis: inequality over time Simon Kuznets, the Russian-born American economist, who won one of the first Nobel Prizes in Economics (in 1971 – the first one was in 1969), proposed a famous theory about inequality over time. The so-called Kuznets hypothesis is that, as a country develops economically, inequality first increases and then decreases.

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The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor
by David S. Landes
Published 14 Sep 1999

Also my colleagues in departments of economics and history in Columbia University (Carter Goodrich, Fritz Stern, Albert Hart, and George Stigler especially); in the University of California at Berkeley (Kenneth Stampp, Hans Rosenberg, Richard Herr, Carlo Cipolla, Henry Rosovsky, and Albert Fishlow especially); and at Harvard (Simon Kuznets, C. Crane Brinton, Alexander Gerschenkron, Richard Pipes, David and Aida Donald, Benjamin Schwartz, Harvey Leibenstein, Robert Fogel, Zvi Griliches, Dale Jorgensen, Amartya Sen, Ray Vernon, Robert Barro, Jeff Sachs, Jess Williamson, Claudia Goldin, Daniel Bell, Nathan Glazer, Talcott Parsons, Brad DeLong, Patrice Higonnet, Martin Peretz, Judith Vichniac, Stephen Marglin, Winnie Rothenberg).

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To this day, British buyers of electrical appliances must deal with a diversity of plugs and outlets, and customers pay shopkeepers to ready equipment for use. The British economy grew in these new branches as it had in the old—like Topsy. This marriage of science and technique opened an era that Simon Kuznets called “modern economic growth.”14 It was not only the extraordinary cluster of innovations that made the Second Industrial Revolution so important—the use of liquid and gaseous fuels in internal combustion engines, the distribution of energy and power via electric current, the systematic transformation of matter, improved communications (telephone and radio), the invention of machines driven by the new sources of power (motor vehicles and domestic appliances).

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Where before technology had led science in this area, now science led and gave the steam engine a new lease on life. On the logistic (lazy-S) curve of possibilities implicit in a given technological sequence—slow gains during the experimental preparatory stage, followed by rapid advance that eventually slows down as possibilities are exhausted—see the classic essay of Simon Kuznets, “Retardation of Industrial Growth.” † Pig (cast) iron is high in carbon content (over 4 percent). It is very hard, but will crack or break under shock. It cannot be machined, which is why it is cast, that is, poured into molds to cool to shape. Wrought iron can be hammered, drilled, and otherwise worked.

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Men Without Work
by Nicholas Eberstadt
Published 4 Sep 2016

6.We cannot readily calculate the corresponding proportion in 1948 because the Census Bureau online historical data series for annual CPS-based estimates of age-and sex-specific enrollments only extend back to 1961. See “School Enrollment Reports and Tables from Previous Years,” U.S. Census Bureau, http://www.census.gov/hhes/school/data/cps/previous/index.html. CHAPTER 4 1.Robert William Fogel et al., Political Arithmetic: Simon Kuznets and the Empirical Tradition in Economics (Chicago: University of Chicago Press, 2013), introduction, http://www.nber.org/chapters/c12912.pdf. 2.Dora L. Costa, “The Wage and the Length of the Work Day: From the 1890s to 1991” (working paper, National Bureau of Economic Research, Cambridge, MA, April 1998), http://www.nber.org/papers/w6504. 3.Dora L.

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The Great Escape: Health, Wealth, and the Origins of Inequality
by Angus Deaton
Published 15 Mar 2013

Top Incomes in the United States The study of income inequality was transformed by a 2003 study by two economists, Thomas Piketty, now of the Paris School of Economics, and Emmanuel Saez of the University of California at Berkeley.24 It had long been known that the data on incomes from household surveys were not very useful for looking at very high incomes; there are too few such people to show up regularly in nationally representative surveys. (Even if approached at random, they might also be less likely to answer.) Piketty and Saez greatly extended a method that had been originally used in 1953 by Nobel laureate economist Simon Kuznets, who worked with data from income-tax records.25 The rich, like everyone else, have no choice but to file tax returns, and so they are fully represented in the income-tax data. Piketty and Saez’s results have changed the way that people think about income inequality, particularly at the top of the distribution.

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Lee, 1999, “Wage inequality in the United States during the 1980s: Rising dispersion or falling minimum wage,” Quarterly Journal of Economics 114(3): 977–1023. 23. Congressional Budget Office, 2011, Trends in the distribution of household income between 1979 and 2007, Washington, DC. 24. Thomas Piketty and Emmanuel Saez, 2003, “Income inequality in the United States 1913–1998,” Quarterly Journal of Economics 118(1): 1–41. 25. Simon Kuznets, 1953, Shares of upper income groups in income and saving, National Bureau of Economic Research. 26. Incomes in the Piketty-Saez analysis are taxable incomes and are incomes of tax units, not of families or of households, which would include unrelated individuals. The Congressional Budget Office income numbers quoted earlier include some of the items included in the national accounts, but not in the surveys.

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An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy
by Marc Levinson
Published 31 Jul 2016

The state’s inability to deliver the ever-rising living standards it had promised would lead to a palpable social anger, with substantial political consequences. Why, in the postwar years, had life gotten so much better for almost everyone? The best-known answer, the one that most influenced elite opinion, was advanced by the renowned American economist Simon Kuznets. His explanation, which linked the development of an advanced industrial society to a more equitable distribution of income, became known as the Kuznets curve. Kuznets, trained as a statistician in Bolshevik Russia, fled to the United States in 1922. He studied economics at Columbia University, earning his master’s degree one year ahead of Arthur Burns, and then became a protégé of business cycle theorist Wesley Mitchell, who would also guide Burns’s career.

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National Income 1929–32: Letter from the Acting Secretary of Commerce Transmitting in Response to Senate Resolution No. 220 (72nd Congress) a Report on National Income, 1929–32 (Washington, DC, 1934), 7. Gross national product was for many years the most widely followed measure of economies’ size. It has largely been supplanted by gross domestic product, a measure that excludes net income from foreign sources. 2. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45 (1955): 1–28. Kuznets acknowledged that his findings pertained to the economies of Europe, North America, and Japan, and that the distribution of income in “underdeveloped” countries might not even out in the same way. 3. The data on income distribution in this paragraph are taken from Anthony B.

pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The
by Mariana Mazzucato
Published 25 Apr 2018

On the other hand, he stressed, activities which do generate welfare should be included - even if they are not paid for. In these, he included free or subsidized government services. One of Pigou's most prominent disciples was the first person to provide an estimate of the fall in national income of the United States during the Great Depression. The Belarusian-born Simon Kuznets (1901-85), a Professor of Economics at Harvard, won the Nobel Prize in Economics in 1971 for his work on national accounts. Believing that they incurred costs without adding to final economic output, Kuznets, unlike Pigou, excluded from the production boundary all government activities that did not immediately result in a flow of goods or services to households - public administration, defence, justice, international relations, provision of infrastructure and so on.9 Kuznets also believed that some household expenditure did not increase the material standard of living, but simply paid for the cost of modern life - in particular the ‘inflated costs of urban civilization', such as having to maintain a bank account, pay trade union dues or the social obligation to be a member of a club.

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Businesses would buy at least some of those goods (e.g. some public services cost money) with a fee; but because they were spending more on them (than if government was not producing anything, and therefore not buying supplies from businesses), their operating surplus and value added would inevitably fall. Government's share of GDP would rise, but the absolute size of GDP would stay the same. This does, of course, run counter to Keynesian attempts to show how increases in government demand could lift GDP. Many economists made exactly this argument in the 1930s and 1940s -in particular Simon Kuznets, who suggested that only government nonmarket and free goods provided to households should be allowed to increase GDP. Nevertheless, the convention that all government spending counts as final consumption arose during the Great Depression and the Second World War, when the US needed to justify its enormous government spending (the spike in the light-grey line in Figure 8 in the early 1940s).

pages: 288 words: 16,556

Finance and the Good Society
by Robert J. Shiller
Published 1 Jan 2012

Without e ective rules one is forced to do things that one nds personally questionable to stay in business. That is why businesses set up their own self-regulatory organizations, which impose rules that are usually (though, to be sure, not always) in the public interest. But there are some who think that regulators are not doing anything of the sort. Milton Friedman, following his 1954 study with Simon Kuznets of occupational incomes and regulation, made a strongly worded argument against regulation, particularly occupational licensing, in his 1962 book Capitalism and Freedom.1 He thought regulation was little more than a cynical ploy to limit the supply of services so as to keep their prices high. Friedman’s book turned out to be very in uential, creating a measure of public distaste for regulation.

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Freud, Sigmund. 1952 [1930]. Civilization and Its Discontents, trans. Joan Reviere. The Major Works of Sigmund Freud. Chicago: William Benton / Encyclopaedia Britannica. Friedman, Milton (with Rose D. Friedman). 1962. Capitalism and Freedom. Chicago: University of Chicago Press. Friedman, Milton, and Simon Kuznets. 1945. Income from Independent Professional Practice. New York: National Bureau of Economic Research. Gale, David., and Lloyd S. Shapley. 1962. “College Admissions and the Stability of Marriage.” American Mathematical Society Monthly 69(1):9–15. Gartner, John D. 2005. The Hypomanic Edge: The Link between (a Little) Craziness and (a Lot of) Success in America.

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Samuelson Friedman: The Battle Over the Free Market
by Nicholas Wapshott
Published 2 Aug 2021

Friedman was taken on by the National Resources Committee in Washington, D.C., to research how Americans spent their incomes, work that would eventually find its way into Friedman’s 1957 book, A Theory of the Consumption Function. In the fall of 1937, Friedman switched to the National Bureau of Economic Research (NBER) in New York, where he was made assistant to Simon Kuznets,17 who was researching the incomes of professional Americans to provide the federal government with the first accurate assessment of total national income.18 Part of Friedman’s workload was to complete a study Kuznets was undertaking into professional qualifications, in particular the difference in salaries between doctors and dentists.

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As Friedman’s campaigning gathered pace, Samuelson could hardly ignore his rival’s many achievements. At first, as was the Keynesian way with dissenters, Samuelson ignored Friedman, or ridiculed his insurgent status. In the first edition of his Economics textbook, Friedman’s name appears just once, and even then only in a footnote citing a paper he had written with Simon Kuznets. But as Friedman’s long march gathered pace, Samuelson was obliged to credit him with a succession of triumphs. Friedman, meanwhile, insisted that he had not deliberately conspired to undermine the existing order. “People have a tendency to attribute to me a long-term plan,” he wrote. “I did no planning whatsoever.

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Career and Family: Women’s Century-Long Journey Toward Equity
by Claudia Goldin
Published 11 Oct 2021

She demonstrated the economic importance of women’s labor in the language of national income accounting, just as that arcane field was taking form. We’ve grown so accustomed to front-page stories that use economists’ lingo—GNP, GDP, national income, unemployment rate—that we don’t realize just how recently these notions were crafted. The person who played an outsized role in their creation was an immigrant named Simon Kuznets. Simon Kuznets emigrated from Russia in 1922 and received a PhD from Columbia University in 1926. A year later, he became a staff researcher at the National Bureau of Economic Research (NBER), an institution founded in New York City in 1920 to provide the US with its statistical foundations, something the government began to undertake in the 1930s.

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The Economics of Inequality
by Thomas Piketty and Arthur Goldhammer
Published 7 Jan 2015

In the 1890s Eduard Bernstein insisted that Marx’s proletarianization thesis did not hold because the social structure was clearly becoming more diverse and wealth was spreading to ever broader segments of society. It was not until after World War II, however, that it became possible to measure the decrease in wage and income inequality in the Western countries. New predictions were soon forthcoming. The most celebrated was that of Simon Kuznets (1955): according to Kuznets, inequality would everywhere be described by an inverted U curve. In the first phase of development, inequality would increase as traditional agricultural societies industrialized and urbanized. This would be followed by a second phase of stabilization, and then a third phase in which inequality would substantially decrease.

The Limits of the Market: The Pendulum Between Government and Market
by Paul de Grauwe and Anna Asbury
Published 12 Mar 2017

It will therefore be a very long time before the internal regulator will guide the system from the satisfaction of material requirements towards non-material needs. Meanwhile the market system sails inevitably towards its limits. Kuznets’s Dream Based on a statistical analysis of US tax data between  and , the American economist Simon Kuznets came to the remarkable conclusion in  that income inequality in the US had dropped substantially. Based on this fact, Kuznets decided that capitalism contains a law which ensures that as a country becomes richer, income inequality drops. He expressed this in what would later be called the Kuznets curve, as shown in Figure ..

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Seven Crashes: The Economic Crises That Shaped Globalization
by Harold James
Published 15 Jan 2023

What drives globalization, the increased economic and political interconnectedness of the world, and what are its vulnerabilities? It is common to think of the globalization phenomenon as an inexorable self-driving process, a peculiar feature of contemporary civilization, fueled by technical change in what is sometimes called, in a term popularized by the economist Simon Kuznets, Modern Economic Growth.1 In reality, though, interconnectedness is an uneven and erratic development, shaped by collective responses to disruptions and crises. In those moments, prices—or the attempts to suppress them—generate the signals that guide the reactions. Their yoyo movements may confuse and disorientate: they prompt new ways of thinking—sometimes productive, sometimes dangerous.

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The combination of technical and geographic change always required competence, and that demanded adaptation and learning: looking to a future, by learning from a dismal past. In the gloom of 1919, Keynes had feared that “[a]ll this makes it increasingly probable that things will have to get worse before they can get better.” 9 But we learn most when the present is most dismal. Notes Introduction 1. Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread, Studies in Comparative Economics 7 (New Haven: Yale University Press, 1966). 2. Ian Goldin and Mike Mariathasan, The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It (Princeton: Princeton University Press, 2014). 3.

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Unsustainable Inequalities: Social Justice and the Environment
by Lucas Chancel
Published 15 Jan 2020

Let us now turn to the relationship between inequality and economic growth, or, more broadly, between inequality and a healthy economy. Let us begin by recalling a theory I mentioned earlier, which for several decades strongly influenced thinking about this relationship. It was illustrated by the famous Kuznets curve, plotted in 1955 by the Belarusian American economist Simon Kuznets, a future Nobel laureate, who argued that income inequality rises during the initial stages of a country’s development and then flattens out before finally falling, at least in the case of the United States, the United Kingdom, and Germany between the end of the nineteenth century and the middle of the twentieth.26 The explanation Kuznets gave for this pattern is that when a society industrializes, some will benefit from the strong growth of the industrial sector and others will not—hence the rise in inequality in the initial phases of a country’s development.

Crisis and Leviathan: Critical Episodes in the Growth of American Government
by Robert Higgs and Arthur A. Ekirch, Jr.
Published 15 Jan 1987

See "A Theory of Competition among Pressure Groups for Political Influence," Quarterly Journal of Economics 98 (Aug. 1983): 383. 7. Edward S. Herman, Corporate Control, Corporate Power (New York: Cambridge University Press, 1981), pp. 299-300. For comparative international data on the growth of government, see Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, Conn.: Yale University Press, 1966), pp. 236-239; Leila Pathirane and Derek W. Blades, "Defining and Measuring the Public Sector: Some International Comparisons," Review of Income and Wealth 28 (Sept. 1982): 261-289; Alt and Chrystal, Political Economics, pp. 199-219. 8.

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Henry Steele Commager (New York: Appleton-CenturyCrofts, 1948), II, pp. 143-146, 174-180. 3. Andrew Carnegie, Triumphant Democracy: Sixty Years'March of the Republic, rev. ed. (New York: Charles Scribner's Sons, 1893), p. 494; Henry George, Progress and Poverty (New York: Modern Library, n.d.), p. 7. 4. Simon Kuznets, Capital in the American Economy, Its Formation and Financing (Princeton, N.J.: Princeton University Press, 1961), p. 64; Stanley Lebergott, "Labor Force and Employment, 1800-1960," in National Bureau of Economic Research, Conference on Research in Income and Wealth, Output, Employment, and Productivity in the United States after 1800 (New York: Columbia University Press, 1966), p. 118. 5.

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Wealth and Poverty: A New Edition for the Twenty-First Century
by George Gilder
Published 30 Apr 1981

Yet this expected inflation would radically erode the capital prospects of American business unless taxes on wealth were drastically reduced. In this predicament the liberal economists found it possible to sing all their same old songs. They cited Denison’s Law to show that savings rates over the centuries had maintained an even level, regardless of interest rates, although Nobel winner Simon Kuznets had widely different estimates; and the idea that interest rates do not affect savings is self-evidently false. As economists have done for centuries, the liberals speculated that the vital energy and innovative genius of capitalism were near exhaustion and that government would now have to take the lead.

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Kenniston, Kenneth Keynes, John Maynard Keynesian school Khrushchev, Nikita Klein, Burton knowledge technocracy Kodak. See Eastman Kodak Company Ko Kolakowski, Leszek Korea Korean War Krehm, William Kristol, Irving Kroc, Ray Krugman, Paul Kudlow, Larry Kuznets, Simon Kuznets curve Kwakiutl L labor, capitalization of elasticity of Labor Department labor market, equal rights agencies and restrictions labor unions Laffer, Arthur Laffer curve and Lafferite economics Laissez-faire land. See real estate land grant agricultural colleges Lasch, Christopher lasers Latin America Latvia Lauder, Estée Law Enforcement Assistance Administration Law of mind Law of Reciprocity Left legalized aliens legislators Lehman Brothers Leibenstein, Harvey leisure Levi-Strauss, Claude Levitt, Theodore Lewis, Michael Lewis the Fourteenth Lewis, W.

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More: The 10,000-Year Rise of the World Economy
by Philip Coggan
Published 6 Feb 2020

Capital in this sense means wealth; if the return from owning land, or equipment, or financial assets is greater than the growth of GDP, then the rich (who own most of the capital) will keep getting richer.27 But the trend did seem to change as industrialisation developed. British inequality peaked in around 1867 and US inequality in the early 20th century.28 Simon Kuznets, the economist who devised GDP measures (see Appendix), suggested that inequality would decline as societies became richer. More people would be educated, and would be able to take high-skilled jobs; they would also demand policies that redistributed income in their favour. The very high taxes required to finance the two world wars clearly made a dent in inequality.

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(Port of Felixstowe) APPENDIX The numbers game The Great Depression was the biggest event in global economic history. When it struck, knowledge of the economy was very limited. The concept of gross domestic product (GDP) was not defined, let alone measured, until 1934 when it was defined as “national income”. The task of establishing a measure of national income fell to a brilliant economist named Simon Kuznets, after a US Senate committee asked him to do so. With the help of staff from the Commerce Department and the National Bureau of Economic Research, Kuznets managed to set the blueprint for national accounts in 1934 within 12 months of being handed the assignment.1 A fuller report followed in 1937.

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Grand Transitions: How the Modern World Was Made
by Vaclav Smil
Published 2 Mar 2021

In contrast, many late starters have moved from traditional agrarian or pastoral/nomadic societies to resource extractors (Iran or Saudi Arabia) or to providers of manufactured goods, often with concentration on particular sectors: post-1950 Taiwan and post-1970 South Korea are perhaps the most successful examples of this rapid shift. Studies of structural shifts began during the 1930s (Fisher 1939; Clark 1940) and attracted greater attention after World War II with major (and now considered classic) contributions by Jean Fourastié (1949), Theodore Schultz (1953), Walter Rostow (1960), and Simon Kuznets (1966). Following the structural transition from traditional economies to modern societies is often problematic because reliable data on employment and origins of GDP may be only of recent origin and because many totals are insufficiently subdivided. Most commonly, labor data are available only for broad categories of primary, secondary, and tertiary production.

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Neither of these indices deals with environmental degradation that obviously detracts from quality-of-life gains, but a proposal by Daly and Cobb (1989) to include it in the per capita Index of Sustainable Welfare (ISEW) was never developed into an accepted tool. And a truly representative index should also account for dis-services caused by economic growth, perhaps along the lines suggested by Simon Kuznets before WW II (Kuznets 1937). His short (and obviously arguable) list of such dis-services, common in all modern acquisitive societies, included all military expenses, most outlays on advertising, costs of many financial and speculative activities, and, most importantly, those outlays on our urban living (such as extensive transportation or expensive houses) that became necessary in order to cope with the modern world’s difficulties and that amount to costs implicit in our civilization.

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The Globalization of Inequality
by François Bourguignon
Published 1 Aug 2012

Inequality fell once the economy had fully settled into the new regime and the mechanisms for redistributing income had been reconfigured. We don’t observe such a turnaround among the Asian giants. The Forces behind R ising Inequality 113 Globalization, Deregulation, Inequality Around sixty years ago, the U.S. economist Simon Kuznets, who had studied the evolution of inequality in several developed countries, formulated a hypothesis that would become widely influential. His idea was that in an initial stage, the process of economic development increases inequality by displacing a portion of the population from traditional occupations toward more productive, but also more heterogeneous, jobs, thus creating more inequality.

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This Could Be Our Future: A Manifesto for a More Generous World
by Yancey Strickler
Published 29 Oct 2019

When GDP goes up, businesses, consumers, and government are spending more money than in the recent past. In economic terms, this is referred to as a growing economy. When GDP goes down, this means less money is being spent. When this happens for at least six months, this is called a recession. The person who introduced GDP to the world was an economist named Simon Kuznets. Kuznets proposed GDP after the Great Depression as a bird’s-eye view of what was happening in the economy. Within a decade it became a global standard. Today virtually all economies on Earth are measured this same way. When Kuznets proposed the metric, he pointed out some of its limitations.

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The Technology Trap: Capital, Labor, and Power in the Age of Automation
by Carl Benedikt Frey
Published 17 Jun 2019

The technological virtuosity of the nineteenth and early twentieth centuries took some time to trickle down to the economics profession. But in the 1950s, Robert Solow, who would go on to win the Nobel Prize in Economics in 1987, found that virtually all economic advance over the twentieth century had been thanks to technology. And others documented that those gains had been widely shared. Simon Kuznets found that America had become more equal and advanced his theory of capitalist development in which inequality automatically decreases along the industrialization path. Nicholas Kaldor observed that labor had consistently reaped about two-thirds of the gains of growth. And Solow developed a theoretical framework in which progress delivered equal benefits for every social group around that time.

…

In the 1950s, Robert Solow advanced a model of a balanced growth path, in which progress delivered equal benefits for every social group; Kaldor put forward his stylized facts of economic growth, showing that the labor share of income had remained roughly constant, at two-thirds of national income, despite rapid mechanization; and Simon Kuznets advanced his hugely optimistic theory of economic progress in which inequality automatically decreases, regardless of economic policy choices.54 Their optimism surely seemed warranted at the time. Schumpeterian growth did indeed make America both richer and more equal. Like the doomsday economists of the Industrial Revolution, however, twentieth-century economists were unfortunately fond of developing iron laws of economics that could be used to explain the trajectory of capitalist development for every time and place, though it is not hard to understand their appeal.

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Wealth, Poverty and Politics
by Thomas Sowell
Published 31 Aug 2015

William Easterly, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor (New York: Basic Books, 2013), p. 79. 30. Kay S. Hymowitz, “Brooklyn’s Chinese Pioneers,” City Journal, Spring 2014, pp. 26, 27. 31. Irving Howe, World of Our Fathers, pp. 156–159; Jacob Riis, How the Other Half Lives: Studies Among the Tenements of New York (New York: Charles Scribner’s Sons, 1914), p. 125. 32. Simon Kuznets, “Immigration of Russian Jews to the United States: Background and Structure,” Perspectives in American History, Vol. IX (1975), pp. 115–116. 33. Reports of the Immigration Commission, The Children of Immigrants in Schools (Washington: Government Printing Office, 1911), Vol. I, p. 110. 34. Carl C.

…

Solomon Grayzel, A History of the Jews: From the Babylonian Exile to the End of World War II (Philadelphia: The Jewish Publication Society of America, 1947), pp. 355–356, 386–394; Jonathan I. Israel, European Jewry in the Age of Mercantilism: 1550–1750 (Oxford: Clarendon Press, 1985), pp. 5, 6. 45. W. Cunningham, Alien Immigrants to England (London: Frank Cass & Co., Ltd., 1969), Chapter 6. 46. Simon Kuznets, “Immigration of Russian Jews to the United States: Background and Structure,” Perspectives in American History, Vol. IX (1975), p. 39. 47. Donald L. Horowitz, Ethnic Groups in Conflict (Berkeley: University of California Press, 1985), pp. 176–177. 48. Hugh LeCaine Agnew, Origins of the Czech National Renascence (Pittsburgh: University of Pittsburgh Press, 1993), p. 51. 49.

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Slouching Towards Utopia: An Economic History of the Twentieth Century
by J. Bradford Delong
Published 6 Apr 2020

There were then in 1870 1.3 billion people alive, 2.6 times as many as there had been in 1500. Farm sizes were only two-fifths as large, on average, as they had been in 1500, canceling out the overwhelming bulk of technological improvement, as far as typical human living standards were concerned. Around 1870 we crossed over another divide into yet another new watershed: the age Simon Kuznets called an era of “modern economic growth.”24 During the period that would follow, the long twentieth century, there came an explosion. The approximately seven billion people in 2010 had a global value of knowledge index of 21. Pause to marvel. The value of knowledge about technology and organization had grown at an average rate of 2.1 percent per year.

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Madeleine Albright, Fascism: A Warning, New York: HarperCollins, 2018. 21. Fred Block, “Introduction,” in Karl Polanyi, Great Transformation. 22. See Charles I. Jones, “Paul Romer: Ideas, Nonrivalry, and Endogenous Growth,” Scandinavian Journal of Economics 121, no. 3 (2019): 859–883. 23. Clark, Farewell, 91–96. 24. Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread, New Haven, CT: Yale University Press, 1966. 25. Edward Shorter and Lawrence Shorter, A History of Women’s Bodies, New York: Basic Books, 1982. Consider that one in seven of the queens and heiresses apparent of England between William I of Normandy and Victoria of Hanover died in childbed. 26.

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Capitalism and Freedom
by Milton Friedman
Published 1 Jan 1962

The Virginia case is discussed in chapter vii. 6 The increased return may be only partly in a monetary form; it may also consist of non-pecuniary advantages attached to the occupation for which the vocational training fits the individual. Similarly, the occupation may have non-pecuniary disadvantages, which would have to be reckoned among the costs of the investment. 7 For a more detailed and precise statement of the considerations entering into the choice of an occupation, see Milton Friedman and Simon Kuznets, Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945), pp. 81–95, 118–37. 8 See G. S. Becker, “Underinvestment in College Education?” American Economic Review, Proceedings L (1960), 356–64; T. W. Schultz, “Investment in human Capital,” American Economic Review, LXI (1961), 1–17. 9 Despite these obstacles to fixed money loans, I am told that they have been a very common means of financing education in Sweden, where they have apparently been available at moderate rates of interest.

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After the New Economy: The Binge . . . And the Hangover That Won't Go Away
by Doug Henwood
Published 9 May 2005

Real incomes across the distribution grew strongly and in parallel, -with incomes of the poorer half of the population even outgrowing those of the richer over some periods, resulting in a mild compression of the income distribution (that is, a trend toward greater equality). Of course, even at its most egalitarian postwar moment, the U.S. remained a polarized society, but it was still widely thought that something had changed to make the new arrangements permanent. In 1955, Simon Kuznets pubHshed his famous "inverted U" theory of capitalist evolution: that income inequaHty rises in the early stages of development and faUs as economies mature. Economists came to believe this as a fact of their After the New Economy .525 .500 .475 .450 .425 .4001-.375 income inequality (Cini index) U.S., 1913-2001 "science," and you still hear it from development specialists at the World Bank and in academia to excuse the vast increase in inequaUty in the Third World over the last fifteen years.

Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages
by Carlota Pérez
Published 1 Jan 2002

Each technological revolution, then, is an explosion of new products, industries and infrastructures that gradually gives rise to a new techno-economic paradigm, which guides entrepreneurs, managers, innovators, investors and consumers, both in their individual decisions and in their interactions, for the whole period of propagation of that set of technologies. A. Five Technological Revolutions in Two Hundred Years At several moments in his thinking about development, Simon Kuznets explored the notion of epochal innovations as those capable of inducing significant changes in the direction of growth. In his Nobel lecture in 1971, he stated: The major breakthroughs in the advance of human knowledge, those that constituted the dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations.

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100 Plus: How the Coming Age of Longevity Will Change Everything, From Careers and Relationships to Family And
by Sonia Arrison
Published 22 Aug 2011

Princeton economists Gene Grossman and Alan Krueger made a similar argument and were among the first to demonstrate how this works in a 1991 paper about free trade.36 They showed that, although “economic growth brings an initial phase of deterioration” in environmental quality, it is “followed by a subsequent phase of improvement.”37 Such an inverted U curve is often referred to as an environmental Kuznets curve (EKC), named after economist Simon Kuznets, who argued that as incomes rise, there is an initial phase of great inequality, which is followed later by a reduction of that inequality. This theory, which won Kuznets the Nobel Prize in 1971, works in a similar way when applied to the environment. A typical EKC looks like Figure 3.4, and the actual numbers will vary depending on the environmental problems described (air pollutants, deforestation, etc.).

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Kicking Awaythe Ladder
by Ha-Joon Chang
Published 4 Sep 2000

Ely subsequently influenced the American Institutionalist School through his disciple, John Commons.19 Ely was one of the founding fathers of the American Economic Association(AEA); to this day, the biggest public lecture at the Association's annual meeting is given in Ely's name, although few of the present AEA members would know who he was. After the Second World War, when the development of post-colonial countries became a major issue, the historical approach was deployed very successfully by many founding fathers of 'development economics'.20 The likes of Arthur Lewis, Walt Rostow and Simon Kuznets formulated their theories of the 'stages' of economic development on the basis of their extensive knowledge of the history of industrialization in developed countries.21 Also influential was the 'late development' thesis of the Russian-born American economic historian, Alexander Gerschenkron, who, drawing on European experiences of industrialization, argued that the continuously increasing scale of technology would make it necessary for countries embarking on industrialization to deploy more powerful institutional vehicles in order to mobilise industrial financing.

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Plenitude: The New Economics of True Wealth
by Juliet B. Schor
Published 12 May 2010

Few economists go all the way with the Cornucopians, but a larger number are believers in a more moderate variant of eco-optimism, which argues that growth itself will save the environment. Represented in a concept called the Environmental Kuznets Curve, it is modeled on studies of inequality carried out in the 1950s and ’60s by the economist Simon Kuznets. Kuznets saw a humpback data pattern across nations. At a given point in time, some had low levels of both income and inequality, some had more inequality and more income, and some had high incomes with low inequality. From this finding, most economists came to believe that countries must endure a growing concentration of income as they develop, but that once they become wealthy, they can buy themselves more fairness.

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Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One
by Meghnad Desai
Published 15 Feb 2015

Mitchell’s research was independently validated by the work of Joseph Kitchin (1861–1932).7 In 1923, Kitchin published his study of cycles in American and British data for 1890–1922. He found short cycles of 40 months and major cycles of between 7 and 11 years. Kitchin thus also corroborates the ten-year cycle of Juglar and Marx. Other economists such as Simon Kuznets, a Nobel Laureate, and Moses Abramovitz as well as W. Arthur Lewis, another Nobel Prize winner, discovered longer cycles of between 14 and 22 years in length. Cycles could be thus discerned in the data. But an explanation for what caused cycles remained elusive: Was it investment in house-building, or demographics?

pages: 333 words: 76,990

The Long Good Buy: Analysing Cycles in Markets
by Peter Oppenheimer
Published 3 May 2020

Interest in economic cycles, and their impact on financial markets and prices, has a long history and there are many theories on how they function. The Kitchin cycle, after Joseph Kitchin (1861–1932), is based on a 40-month duration, driven by commodities and inventories. The Juglar cycle is used to predict capital investment (Clement Juglar, 1819–1905) and has a duration of 7–11 years, whereas the Kuznets cycle for predicting incomes (Simon Kuznets, 1901–1985) has a duration of 15–25 years and the Kondratiev cycle (Nikolai Kondratiev, 1892–1938) has a duration of 50–60 years, driven by major technological innovations. There are, clearly, problems with all of them and the fact that there are so many different descriptions of cycles points to the fact that there are many different drivers.

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The War on Normal People: The Truth About America's Disappearing Jobs and Why Universal Basic Income Is Our Future
by Andrew Yang
Published 2 Apr 2018

There’s a saying in business that “what gets measured gets managed for.” We need to start measuring different things. The concept of GDP and economic progress didn’t even exist until the Great Depression. It was invented so that the government could figure out how bad the economy was getting and how to make it better. The economist Simon Kuznets, upon introducing the concept of GDP to Congress in 1934, remarked that “economic welfare cannot be adequately measured unless the personal distribution of income is known. And no income measurement undertakes to estimate the reverse side of income, that is, the intensity and unpleasantness of effort going into the earning of income.

pages: 280 words: 74,559

Fully Automated Luxury Communism
by Aaron Bastani
Published 10 Jun 2019

Given its centrality in any discussion of what kind of economic model is preferable, it’s easy to presume that the idea of GDP is as old as capitalism itself – that it was perhaps contrived by the likes of Adam Smith or David Ricardo. Yet to the contrary, it is a relatively recent development, devised by the economist Simon Kuznets in the 1930s in response to the Great Depression. It turns out that the central imperative of modern societies – that economic growth should be pursued as an end in itself – only started to reign supreme a century and a half after the Second Disruption began. Perhaps even more surprising is that scepticism of it is almost as old as the measure itself.

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The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century
by Walter Scheidel
Published 17 Jan 2017

However, although information on housing inequality derived from house-tax data and reported wages has been marshaled to show that incomes continued to become more unequal during the first half of the nineteenth century as well, it remains controversial how much weight this particular material can bear.26 Figure 3.4Inequality trends in Latin America in the long run This is even more true of an earlier notion that various indicators of inequality rose during the first half or two-thirds of the nineteenth century and subsequently declined until the 1910s, producing a gently inverted U-curve that would be compatible with the economist Simon Kuznets’s idea that economic modernization might first increase and then lower inequality within a society in transition. The observation that wage dispersal grew between 1815 and 1851, peaked in the 1850s and 1860s, and subsequently declined until 1911 may be an artifact of the underlying data for different professions, which exhibit contradictory trends.

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Considering the severity of these transformative shocks and the multifaceted nature of their effect on overall social, political, and economic development, the question of how much subsequent levels of inequality were determined by economic growth and per capita output as such would seem rather meaningless.2 In the following, I explore the contribution of economic development to income inequality in two ways: by considering claims that per capita GDP per se is systematically correlated with inequality measures and by focusing on parts of the world that were not involved in the violent dislocations from 1914 to 1945—or up to the 1970s if we include communist revolutions in Asia—or, more precisely, that were not as directly involved in them as were most rich Western countries and large parts of Asia: Africa, the Middle East, and, above all, Latin America. We owe the classic formulation of the idea that income inequality is linked to and driven by economic development to economics Nobel laureate Simon Kuznets. Back in the 1950s, Kuznets, a pioneer in the study of income disparities in the United States, proposed a deliberately simple model. Economic advances beyond the traditional agrarian mode initially raise inequality if mean incomes are higher—and perhaps also more unevenly distributed—in cities than in the countryside, and urbanization increases the urban share of the population and the weight of the urban sector in the national economy, thereby inflating income differentials and also overall inequality.

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Life as a Passenger: How Driverless Cars Will Change the World
by David Kerrigan
Published 18 Jun 2017

They made them, they went out there, and society eventually realized its value." Chapter 8 - The Driverless Dividend “The major breakthroughs in the advance of human knowledge, those that constitute the dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations” Simon Kuznet’s Nobel lecture, 1971 The course of human civilization has been shaped by transportation for millennia. The Romans would not have expanded across Europe without the paved roadway, the Mongols could not have conquered Asia without the horse, America would not have grown inexorably without the train, and modern trade would not be possible without container ships and jet airliners.

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What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live
by Rachel Botsman and Roo Rogers
Published 2 Jan 2010

The United States and the European Union account for approximately one-third of this amount. The simplicity of the measurement of GDP is also its downfall. The argument against GDP fetishism is that we are more than what we make. Even the inventor of the GDP, the late Russian-American economist Simon Kuznets, was aware that the model of GDP had significant shortcomings. “The welfare of a nation can scarcely be inferred from a measure of national income,” he said in 1934. Imagine walking into a cocktail party and instead of making casual conversation everyone asked, “How much money do you make?” At the very least you would find it embarrassingly gauche, but you probably also would be somewhat offended.

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The Autonomous Revolution: Reclaiming the Future We’ve Sold to Machines
by William Davidow and Michael Malone
Published 18 Feb 2020

Suppose low-cost virtual travel substitutes for going there. Suppose you can get rid of your car because work and shopping come to you. Well, in those cases you might be able to live better on less income. In a world in which everything else is being redefined, our definitions of quality of life have to change as well. Simon Kuznets, who developed a system of national accounts, is considered to be the father of GDP. He received the Nobel Prize in Economics for his work, which took place during the 1930s. During that time, Presidents Hoover and Roosevelt were working to combat the Great Depression but had only fragments of indirect data, such as freight car loadings and stock prices, with which to evaluate the effectiveness of their new policies.36 The measurement schemes Kuznets devised helped them develop more finely honed approaches.

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The Capitalist Manifesto
by Johan Norberg
Published 14 Jun 2023

The EPI concludes that ‘environmental performance correlates strongly with a country’s wealth’, although there are also countries at each level of prosperity that perform both better and worse.25 In the literature there is a discussion about a possible ‘Kuznets curve’ for the environment. Many forms of environmental degradation follow the pattern of a ‘U’ turned upside-down, a shape that the economist Simon Kuznets had previously used to describe the relationship between growth and inequality. As countries begin to urbanize and industrialize, the damage to nature and health increases rapidly, but after a certain point increased income is associated with environmental improvements. The hypothesis is controversial and many researchers object that there is no automatic connection and that it does not apply to all forms of environmental damage.

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Stealth of Nations
by Robert Neuwirth
Published 18 Oct 2011

Unlike Proudhon and Gesell, Keynes offered no utopian solution (though he did credit Mandeville and Gesell as being among the “brave army of heretics” who called into question traditional economic nostrums) and he didn’t suggest that all inequities should be abolished, just that the size of the differential should be limited. “There is social and psychological justification for significant inequalities of incomes and wealth,” he wrote, “but not for such large disparities as exist today.” Simon Kuznets, the great modern explicator of inequality, won the Nobel Prize in economics in 1971 for his work suggesting that inequality starts out as relatively minor in agricultural society, grows massively with industrialization, but tends to lessen in the later stages of industrial development. (As a modern example of how this might work, Bill Gates and Warren Buffett are both fabulously wealthy, but the difference between their assets and the wealth of the average American of today is likely less than the gap that existed between John D.

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I'm a stranger here myself: notes on returning to America after twenty years away
by Bill Bryson
Published 6 Jun 2000

What is interesting is that it is becoming increasingly evident that most of these inconceivably vast sums that get bandied about by economists and policy makers are almost certainly miles out anyway. Take gross domestic product, the bedrock of modern economic policy. GDP was a concept that was originated in the 1930s by the economist Simon Kuznets. It is very good at measuring physical things—tons of steel, board feet of lumber, potatoes, tires, and so on. That was all very well in a traditional industrial economy. But now the greater part of output for nearly all developed nations is in services and ideas—things like computer software, telecommunications, financial services—which produce wealth but don’t necessarily, or even generally, result in a product that you can load on a pallet and ship out to the marketplace.

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The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies
by Erik Brynjolfsson and Andrew McAfee
Published 20 Jan 2014

He had to rely on scattered data like freight car loadings, commodity prices, and stock price indexes that gave only an incomplete and often unreliable view of economic activity. The first set of national accounts was presented to Congress in 1937 based on the pioneering work of Nobel Prize winner Simon Kuznets, who worked with researchers at the National Bureau of Economic Research and a team at the U.S. Department of Commerce. The resulting set of metrics have served as beacons that helped illuminate many of the dramatic changes that transformed the economy throughout the twentieth century. But as the economy has changed so, too, must our metrics.

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The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril
by Satyajit Das
Published 9 Feb 2016

Since 2008, China's headline growth of around 8 percent has been driven by investment funded by new bank lending, from state-controlled banks, averaging around 30–40 percent of GDP. Some 10–20 percent of these loans may prove incapable of being repaid, amounting to losses of 3–8 percent of GDP. If these losses are correctly accounted for by writing them off against income, Chinese growth is much lower. Economist Simon Kuznets, who formulated the concept of GDP, cautioned against an over-simplified quantitative measurement providing a misleading illusion of precision. Senator Robert Kennedy gave the most eloquent criticism of GDP, highlighting distinctions between quantity and quality of growth: Our gross national product…if we should judge America by that—counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.

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The Meritocracy Trap: How America's Foundational Myth Feeds Inequality, Dismantles the Middle Class, and Devours the Elite
by Daniel Markovits
Published 14 Sep 2019

Goldin and Katz summarize the contrasting eras: “The movement from artisanal production to factories in the nineteenth century involved the substitution of capital and unskilled labor for skilled (artisanal) labor, while the adoption of continuous-process and unit drive methods in the twentieth century involved the substitution of capital and skilled (educated) labor for unskilled labor.” Goldin and Katz, The Race Between Education and Technology, 125. “a decrease in the fraction”: See Joseph J. Spengler, “Changes in Income Distribution and Social Stratification: A Note,” American Journal of Sociology 59, no. 3 (November 1953): 247. Simon Kuznets famously held a similar view. Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review 45, no. 1 (March 1955): 1. See also Jeffrey Winters and Benjamin Page, “Oligarchy in the United States?,” Perspectives on Politics 7, no. 4 (December 2009): 731. now opposes economic equality: A common view treats technology’s forward march as a brute fact to which social and economic life must adjust, but that society cannot aspire to control, and for which society cannot be held to account.

pages: 411 words: 95,852

Britain Etc
by Mark Easton
Published 1 Mar 2012

Economists, not social scientists, were invited to sit closest to the seat of power. Tangible wealth, rather than ethereal well-being, became the fundamental political goal. Even finding a single accepted measure of affluence proved tricky, and it wasn’t until the 1930s that Russian-born economist Simon Kuznets came up with the concept of Gross Domestic Product (GDP). For industrialised countries such as Britain, trying to recover from the deprivations of the Second World War in the 1940s and 50s, GDP was embraced as the best way to monitor material and social development. Despite Kuznets’ own warning that his measure should not be used as a surrogate for well-being, those three letters became the focus of UK government activity, recited mantra-like as an incantation for a better life.

pages: 378 words: 102,966

Affluenza: The All-Consuming Epidemic
by John de Graaf , David Wann , Thomas H Naylor and David Horsey
Published 1 Jan 2001

As long as the GDP goes higher, everything’s cool. Politicians point to a swelling GDP as proof that their economic policies are working, and investors reassure themselves that with the overall expansion of the economy, their stocks will also expand. Yet even the chief architect of the GDP (then GNP), Simon Kuznets, believed that “the welfare of a nation can scarcely be inferred from a measurement like GNP.”5 Here’s why: although the overall numbers continue to rise, many key variables have grown worse. As we have already mentioned, the gap between the rich and everyone else is expanding. In addition, the nation is borrowing more and more from abroad, a symptom of anemic savings and mountains of household debt.

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The Upside of Inequality
by Edward Conard
Published 1 Sep 2016

As marginal producers raise their productivity—what economists call their marginal product of labor—to survive, wages rise. Under these conditions, competition for workers seems to lead to a never-ending spiral of productivity improvements and wage increases. These circumstances led economists to believe that income inequality narrows as countries grow richer—what economists call a Kuznets curve, after Simon Kuznets, the economist who theorized it. In agrarian economies, where a small cabal of landowners initially controls the means of production, industrialization of those economies often broadens ownership of the means of production and raises wages, which narrows income inequality. Similarly, where a broad base of uneducated talent becomes educated, income inequality again may narrow.

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The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay
by Guy Standing
Published 13 Jul 2016

This is what platform corporations want, and what neo-liberals have always wanted, because they depict all collective bodies as distorting the market and preventing market clearing.30 The platforms are reducing the rental income gained by those inside occupational communities and transferring that to themselves, further reducing the returns to labour and work. One of the least analysed aspects of the neo-liberal agenda has been the re-regulation of occupations, including all the great professions. Milton Friedman, an architect of the Chicago school of economics, wrote his first book (with Simon Kuznets) in 1945 on the medical professions, criticising their rent seeking through restricting the supply of doctors, imposing high standards, controlling fees and so on. When the neo-liberals achieved domination of the economics profession and economic policymaking in the 1980s, they launched an onslaught on occupational self-regulation.

The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities
by Mancur Olson

If all goes well (it rarely does), I shall devote my presidential address to the Southern Economic Association to this question; it will be published in the Southern Economic Journal in early 1983. 39. 1 am thankful to Ed Kearl for help on this point. 40. 1 am grateful to Moses Abramovitz, Geoffrey Brennan, and Simon Kuznets for giving me a fuller appreciation of the salience of this distinction. 41. "Thoughts on Catch-Up," October 1978, manuscript distributed to the conference on "The Political Economy of Comparative Growth Rates." University of Maryland, December 1978. 42. See Moses Abramovitz, "Notes on International Differences in Productivity Rates" in Mueller, The Political Economy of Growth. 43.

Forward: Notes on the Future of Our Democracy
by Andrew Yang
Published 15 Nov 2021

I’ve run several organizations, and one of the lessons I learned is “you make what you measure.” If you don’t measure the right things, you won’t solve the right problems. Right now, we’re measuring the wrong things. We trumpet gross domestic product as the barometer of economic progress. Even the inventor of GDP, Simon Kuznets, said at its invention in 1934 that it was a terrible measure of national well-being and cautioned against using it as such, and here we are riding it into the ground eighty-seven years later. Bobby Kennedy famously echoed this idea, saying that GDP “does not allow for the health of our children, the quality of their education, or the joy of their play…[I]t measures everything, in short, except that which makes life worthwhile.”

pages: 335 words: 101,992

Not the End of the World
by Hannah Ritchie
Published 9 Jan 2024

However, there are also more localised pieces of evidence that its discovery might be as early as 1.5 to 2 million years ago. iv We’re focusing on the Kuznets Curve of environmental problems here, but this theory of things getting worse before they get better is not just applicable to the environment. In fact, the original Kuznets Curve was about income inequality: Simon Kuznets hypothesised that inequality got worse as a country industrialised, but then fell again as the country got much richer. v Globally, around 15,000 people die from disasters each year. This figure can vary from year to year, usually depending on whether there have been any large earthquakes, which are the deadliest disaster events today.

pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics
by William R. Easterly
Published 1 Aug 2002

The better state of social security in the United States, compared to other rich countries, is that our population is growing faster (thanks to immigration, not to fertility, as it turns out). A more ethereal reason that there could be positive effects of higher population is the genius principle. The more babies there are, the greater is the likelihood that one of them will grow up to be Mozart, Einstein, or Bill Gates. This effect, first pointed out by Simon Kuznets and Julian Simon,raises the stock of ideas that can then be used by any size population to better itself. Since ideas can be shared with additionalpersons at zero cost-an unlimited number of people can listen to a Mozart aria-new ideas are used moreeffectively in large than in small populations.

pages: 332 words: 106,197

The Divide: A Brief Guide to Global Inequality and Its Solutions
by Jason Hickel
Published 3 May 2017

Of all the economic ideas out there today, this is perhaps the most hegemonic. It is so commonly accepted that almost nobody thinks to question it. We tend to take the GDP measure for granted as though it has always existed. Most people don’t realise that it was invented only recently. It has a history. During the 1930s, the economists Simon Kuznets and John Maynard Keynes set out to design an economic aggregate that would help policymakers figure out how to escape the Great Depression. The goal was to calculate the total monetary value of all the goods and services produced in the economy so they could see more clearly what was going wrong and what needed to be done to fix it.

pages: 374 words: 111,284

The AI Economy: Work, Wealth and Welfare in the Robot Age
by Roger Bootle
Published 4 Sep 2019

But it is likely that the balance of the factors listed above will enable the mass of people to enjoy increasing incomes even as robots and AI start to proliferate. And it is perfectly plausible that there will not be a significant increase in income inequality. If there is, it may well be a temporary phenomenon. The great economist Simon Kuznets argued that economic development would at first increase inequality but that subsequently this widening would be reversed. Moreover, this story fits in with the history of the Industrial Revolution. As I showed in Chapter 1, in the first few decades of the nineteenth century the real incomes of workers fell.

pages: 443 words: 112,800

The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World
by Jeremy Rifkin
Published 27 Sep 2011

The gross domestic product (GDP) was created in the 1930s to measure the value of the sum total of economic goods and services generated over a single year. The problem with the index is that it counts negative as well as positive economic activity. If a country invests large sums of money in armaments, builds prisons, expands police security, and has to clean up polluted environments and the like, it’s included in the GDP. Simon Kuznets, an American who invented the GDP measurement tool, pointed out early on that “[t]he welfare of a nation can . . . scarcely be inferred from a measurement of national income.”28 Later in life, Kuznets became even more emphatic about the drawbacks of relying on the GDP as a gauge of economic prosperity.

pages: 414 words: 119,116

The Health Gap: The Challenge of an Unequal World
by Michael Marmot
Published 9 Sep 2015

The bulk of the chapter will then deal with health inequalities. Piketty’s central point is that the return on capital is higher than the growth of income. Therefore capital accumulates. Prior to Piketty’s painstaking collection and analysis of data, economists were not so concerned with distribution. Simon Kuznets, a distinguished US economist, observed that in the US and some other countries, as their economies developed and grew, up t0 the mid-twentieth century, inequality diminished. Inequality was just a stage of development, no need to worry about it, no politics involved. Piketty, drawing on detailed study of the data over a longer period of time, points out that the period Kuznets was observing, roughly 1914–70, was an aberration.

pages: 387 words: 120,155

Inside the Nudge Unit: How Small Changes Can Make a Big Difference
by David Halpern
Published 26 Aug 2015

The first class of problems have kept philosophers happy, if no one else, for a good 200 years. But without an answer to the second question – measurement – the whole debate had to be left to philosophers in their armchairs. Measuring well-being: from GDP to SWB (subjective well-being) In 1937, Simon Kuznets presented the report National Income, 1929– 35 to the US Congress, which contained the initial idea of a single measure of economic progress. This measure became known as Gross Domestic Product (GDP), and was designed to capture the economic activity of an entire country. Since the Second World War, GDP has been used to measure and compare countries’ economic growth, but has also been used as a proxy for how well off the country’s citizens are.

pages: 376 words: 118,542

Free to Choose: A Personal Statement
by Milton Friedman and Rose D. Friedman
Published 2 Jan 1980

See Yale Brozen and Milton Friedman, The Minimum Wage Rate (Washington, D.C.: The Free Society Association, April 1966); Finis Welch, Minimum Wages: Issues and Evidence (Washington, D.C.: American Enterprise Institute, 1978); and Economic Report of the President, January 1979, p. 218. 8. See Milton Friedman and Simon Kuznets, Income from Independent Professional Practice (New York: National Bureau of Economic Research, 1945), pp. 8–21. 9. Michael Pertschuk, "Needs and Incomes," Regulation, March/April 1979. 10. William Taylor, Executive Vice-President of the Valley Camp Coal Company, as quoted in Melvyn Dubofsky and Warren Van Tine, John L.

pages: 437 words: 115,594

The Great Surge: The Ascent of the Developing World
by Steven Radelet
Published 10 Nov 2015

Economist Branko Milanovic explores these and other ideas about inequality in developing countries in his terrific book The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality.21 Inequality Within Countries Most people have a strong presumption that inequality within countries worsens as economic growth proceeds, and—possibly—gets better at higher income levels. Much of the early research on development, especially the work of Simon Kuznets and Sir Arthur Lewis in the 1950s, suggested that would be the case. Stylistically, everyone starts out poor but equal; then some people begin to earn higher incomes, creating a widening income gap; and then over time others catch up and partially close the gap. But extensive research shows that, over the past several decades, this pattern has not held.

pages: 573 words: 115,489

Prosperity Without Growth: Foundations for the Economy of Tomorrow
by Tim Jackson
Published 8 Dec 2016

On the footprint of metals, see Wiedmann et al. (2015). 21 See, for example, ‘Digging for victory’, The Economist, 15 November 2008, p. 69. 22 Krugman (2014), NCE (2014), Stern (2007) and UNEP (2011) are amongst the many proponents of this kind of argument. 23 This relationship is sometimes called the Environmental Kuznets Curve after the economist Simon Kuznets, who proposed that a similar inverted U-shaped relationship exists between incomes and income inequality. Evidence of the income Kuznets curve is also difficult to find (OECD 2008). For more discussion of the Environmental Kuznets Curve hypothesis, see, for example, Grossman and Krueger (1995), Jackson (1996), Rothman (1998). 24 Booth (2004: 73 et seq.).

Human Frontiers: The Future of Big Ideas in an Age of Small Thinking
by Michael Bhaskar
Published 2 Nov 2021

They are cumulative, local, small scale and occupy the vast majority of what counts as invention, but nonetheless sometimes concatenations of the latter lead to the former. Many others have suggested similar structures to illustrate how markets, companies, products and technologies form and flourish. Some innovations have outsized impact – Simon Kuznets called them ‘epochal innovations’ and the economist Carlota Perez explicitly refers to them as ‘techno-economic paradigm shifts’.18 Epochal innovations are crises that initiate new paradigms. The writer and executive Safi Bahcall talks of ‘loonshot’ business, say a small drug company or indie film crew, versus ‘franchises’ like big pharma companies and Hollywood studios.19 Franchise projects are entrenched blockbusters: the last Harry Potter, not the first; the iPhone XII, not the iPhone.

pages: 453 words: 117,893

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems
by Linda Yueh
Published 4 Jun 2018

Friedman considered this his most technical piece of research, for which he was to later win the Nobel Prize, along with his work on monetary economics and business cycles.5 After two years in Washington, Friedman moved back to New York to work at the National Bureau of Economic Research (NBER). One of his professors from Columbia, Wesley Mitchell, was director. He also taught part-time at Columbia and worked as a research assistant for Simon Kuznets, who was to go on and win the 1971 Nobel Prize in economics. He had encouraged Friedman to work with empirical data, which at the time was a field in its formative stage, and became an important part of Friedman’s approach to economics. In September 1939 war broke out in Europe, but with little immediate effect on either Friedman or America generally, which was not to enter the war for another two years.

pages: 374 words: 113,126

The Great Economists: How Their Ideas Can Help Us Today
by Linda Yueh
Published 15 Mar 2018

pages: 426 words: 118,913

Green Philosophy: How to Think Seriously About the Planet
by Roger Scruton
Published 30 Apr 2014

Hence the first concern of democratic governments is to encourage economic growth, regardless of its environmental costs. It is true that serious poverty is a major cause of environmental degradation and that a certain level of prosperity is necessary if people are to free the energy and resources required to protect their environment.11 Studies have suggested that the curve postulated by Simon Kuznets, which shows income inequality at first rising and then falling as societies develop, is exhibited also by key environmental factors. Above an average annual per capita income of $4,000 to $5,000, it has been suggested, environmental degradation steadily declines.12 Nevertheless, whether expressed as a prediction or as a recommendation, the statement that there are ‘limits to growth’ has an air of intuitive plausibility.

pages: 420 words: 124,202

The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention
by William Rosen
Published 31 May 2010

.: Inventors Publishing, 1931). 7 “lack of capital” Ibid. 8 more than half will continue to invest their time Thomas Astebro, “Inventor Perseverance After Being Told to Quit: The Role of Cognitive Biases,” Journal of Behavioral Decision Making 20, January 2007. 9 “may be inventors” Scherer, “Invention and Innovation in the Watt-Boulton Steam Engine Venture,” citing Joseph Schumpeter’s Theory of Economic Development. 10 Another study, this one conducted in 1962 Donald W. MacKinnon, “Intellect and Motive in Scientific Inventors: Implications for Supply,” in Simon Kuznets, ed., The Rate and Direction of Inventive Activity: Economic and Social Factors (Princeton: Princeton University Press, 1962). 11 the eighteenth-century Swiss mathematician Daniel Bernoulli Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk (New York: John Wiley & Sons, 1996). 12 “The more inventive an independent inventor is” MacKinnon, “Intellect and Motive in Scientific Inventors: Implications for Supply,” in Kuznets, ed., Rate and Direction of Inventive Activity. 13 “first scientific man to study the Newcomen engine” “Henry Beighton” in Oxford Dictionary of National Biography. 14 Leonhard Euler applied Usher, History of Mechanical Inventions. 15 His published table of results Jennifer Karns Alexander, The Mantra of Efficiency: From Waterwheel to Social Control (Baltimore: Johns Hopkins University Press, 2008). 16 The resulting experiment Pacey, Maze of Ingenuity. 17 His example showed a generation of other engineers Mokyr, “The Great Synergy,” quoting Cardwell, 1994. 18 “In comparing different experiments” Pacey, Maze of Ingenuity. 19 As far back as the 1960s Dean Keith Simonton, “Creativity as Blind Variation and Selective Retention: Is the Creative Process Darwinian?”

pages: 481 words: 120,693

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else
by Chrystia Freeland
Published 11 Oct 2012

Finally, in fully industrialized or postindustrial societies, income inequality would again decrease as education became more widespread and the state played a bigger, more redistributive role. This view of the relationship between economic development and income inequality was first and most clearly articulated by Simon Kuznets, a Belarusian-born immigrant to the United States. Kuznets illustrated his theory with one of the most famous graphs in economics—the Kuznets curve, an upside-down U that traces the movement of society as its economy becomes more sophisticated and productive, from low inequality, to high inequality, and back down to low inequality.

pages: 478 words: 126,416

Other People's Money: Masters of the Universe or Servants of the People?
by John Kay
Published 2 Sep 2015

A reasonable guess might be that between 100,000 and 150,000 people in Britain are finance professionals dealing in wholesale markets (what might generally be described as ‘the City’) and that two to three times that number support them. The principles of national income accounting were set out around the time of the Second World War by a group of economists – notably Simon Kuznets, James Meade and Richard Stone – and these principles are the standard means of measuring the economic contribution of a commercial activity. We assess the car industry by its added value: the difference between the selling price of the car and the cost of the steel, rubber and other materials that went into it.

pages: 494 words: 116,739

Geek Heresy: Rescuing Social Change From the Cult of Technology
by Kentaro Toyama
Published 25 May 2015

Variations of this quotation are often attributed to Albert Einstein, but thanks to O’Toole (2010), I was able to trace its true source to sociologist William Bruce Cameron (1963), p. 13. 56.The United States grew to be a major economic power well before we were able to measure GDP. In the 1930s, the economist Simon Kuznets architected the first system of national income accounts. Since then, GDP has taken on a life of its own in exactly the ways that Kuznets cautioned against. A good account of his warnings and our failure to take them into account is offered by Rowe (2008). 57.Rankism – the root of all forms of discrimination and abuse of power – is nicely defined and demolished by Robert W.

pages: 412 words: 128,042

Extreme Economies: Survival, Failure, Future – Lessons From the World’s Limits
by Richard Davies
Published 4 Sep 2019

Petty, Stone and GDP William Petty’s works are set out in his 1662 book on taxation and in his 1676 Political Arithmetick; his contribution to the development of systems of national accounts is traced in Kendrick (1970) and more recently in Davies (ed.) (2015). While other economists – notably Simon Kuznets in the US – helped develop modern GDP measures, Richard Stone was arguably the most important, winning the Nobel Prize for his work in 1984. His contribution is discussed in Johansen (1985) and much more detail on all the various contributors is set out in Studenski (1958), while an accessible modern history is Coyle (2014).

pages: 424 words: 119,679

It's Better Than It Looks: Reasons for Optimism in an Age of Fear
by Gregg Easterbrook
Published 20 Feb 2018

But US federal spending for the poor, the working poor, the lower middle class, the disabled, and the retired is more substantial than generally understood. That federal entitlement spending is backed by two sources—taxes on the affluent and borrowing from the young through the national debt. Both are income-transfer mechanisms. Yet income inequality still is high. The Belarus-born economist Simon Kuznets, who won the Nobel Prize in Economics in 1971, showed that industrial development first increases and then decreases inequality. This formula has held since 1971 in most nations: if Kuznets continues to be correct, inequality in China soon will moderate. But inequality currents of the past century in the United States and Europe have been more like rolling waves than Kuznets expected, even discounting for the world wars.

pages: 480 words: 119,407

Invisible Women
by Caroline Criado Perez
Published 12 Mar 2019

And the decision over which to include is somewhat arbitrary. Until the 1930s we didn’t really measure the economy with any seriousness. But that changed in the wake of the Great Depression. In order to address the economic meltdown, governments needed to know more precisely what was going on, and in 1934 a statistician called Simon Kuznets produced the United States’ first national accounts.1 This was the birth of GDP. Then the Second World War came along, and it was during this period, explains Coyle, that the frame we use now was established. It was designed to suit the needs of the war economy, she tells me. ‘The main aim was to understand how much output could be produced and what consumption needed to be sacrificed to make sure there was enough available to support the war effort.’

pages: 436 words: 76

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor
by John Kay
Published 24 May 2004

Harsanyi USA 1994 Game theory Friedrich von Hayek Austria/ UK 1974 Economic systems James J. Heckman USA 2000 Econometrics John R. Hicks UK 1972 General equilibrium theory Daniel Kahneman USA 2002 Behavioral economics Leonid Vitaliyevich Kantorovich USSR 1975 Optimization modeling Lawrence R. Klein USA 1980 Econometrics Tjalling C. Koopmans USA Simon Kuznets USA 1975 Optimization modeling 1971 Empirical studies of economic growth Wassily Leontief USA 1973 Input-output analysis Appendix { 359} Name Country Year Subject Arthur Lewis UK 1979 Development economics Robert E. Lucas Jr. USA 1995 Real business cycle theory Harry M. Markowitz USA 1990 Finance theory Daniel L.

pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies
by Judith Stein
Published 30 Apr 2010

Gilbert Burck, “American Genius for Productivity,” Fortune (July 1955), 87. 4. Jack Metzgar, Striking Steel: Solidarity Remembered (Philadelphia: Temple University Press, 2000), 37. 5. Kenneth T. Jackson, Crabgrass Frontier, The Suburbanization of the United States (New York: Oxford University Press, 1985), 283–84. 6. Simon Kuznets, Share of Upper Income Groups in Income and Savings (New York: National Bureau of Economic Research, 1953); Joint Economic Committee, Productivity, Prices, and Incomes, 89th Cong., 2d sess. (Washington, D.C.: Government Printing Office, 1967). 7. Alfred E. Eckes Jr. and Thomas W. Zeiler, Globalization and the American Century (Cambridge: Cambridge University Press, 2003), 57–58. 8.

pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back
by Douglas Rushkoff
Published 1 Jun 2009

The less people spend on killing roaches, the worse it is for the economy by corporate and government measures. The universal metric of our economy’s health is the GDP, a tool devised by the National Bureau of Economic Research to help the Hoover administration navigate out of the Great Depression. Even the economist charged with developing the metric, Simon Kuznets, saw the limitations of the policy tool he had created, and spoke to Congress quite candidly of the many dimensions of the economy left out of his crude measure. Burning less gas, eating at home, enjoying neighbors, playing cards, and walking to work all subtract from the GDP, at least in the short term.

pages: 494 words: 132,975

Keynes Hayek: The Clash That Defined Modern Economics
by Nicholas Wapshott
Published 10 Oct 2011

Serious recruitment and careful placement of sympathetic allies in key Washington offices became an imperative.”42 Inspired by a common creed, the young Keynesians sought each other out in the corridors of power and began meeting at the National Planning Association, set up in 1934. Keynesian ideas also took root in America thanks to the work of econometricians and statisticians like Simon Kuznets, professor of economics and statistics at the University of Pennsylvania, and his followers at the National Bureau of Economic Research and the U.S. Department of Commerce, whose work logging the workings of the economy warranted Kuznets an honorable mention in The General Theory. Although Kuznets never became a Keynesian, his pioneering work on compiling statistics about national income and gross national product were called in evidence to fuel Keynes’s argument that bolstering aggregate demand would boost economic growth.

Year 501
by Noam Chomsky
Published 19 Jan 2016

In his 1952 study of late development, Alexander Gerschenkron describes the “approximate sixfold increase in the volume of industrial output” as “the greatest and the longest [spurt of industrialization] in the history of the country’s industrial development,” though this “great industrial transformation engineered by the Soviet government” had “a remote, if any” relation to “Marxian ideology, or any socialist ideology for that matter”; and was, of course, carried out at extraordinary human cost. In his studies 10 years later of long-term trends in economic development, Simon Kuznets listed Russia among the countries with the highest rate of growth of per capita product, along with Japan and Sweden, with the US—having started from a far higher peak—in the middle range over a century, slightly above England.3 The ultranationalist threat was greatly enhanced after Russia’s leading role in defeating Hider left it in control of Eastern and parts of Central Europe, separating these regions too from the domains of Western control.

pages: 462 words: 129,022

People, Power, and Profits: Progressive Capitalism for an Age of Discontent
by Joseph E. Stiglitz
Published 22 Apr 2019

“Transcript of the Press Conference on the Release of the October 2017 World Economic Outlook” (Washington, DC: International Monetary Fund, Oct. 13, 2017); and Christine Lagarde, “2018 Article IV Consultation for the United States Opening Remarks” (Washington, DC: International Monetary Fund, June 14, 2018). 9.This was a central insight of Nobel Prize winner Simon Kuznets, and the fact that it always seemed so, as he wrote in the middle of the twentieth century, led it to be called Kuznets’s Law. 10.This book builds on my earlier work on globalization, financialization, inequality, and innovation, weaving these threads together, showing their interrelation in a tapestry that, I hope, is a convincing depiction of the sources of progress and the pitfalls that we’ve encountered along the way.

pages: 470 words: 130,269

The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas
by Janek Wasserman
Published 23 Sep 2019

The atmosphere of industrial revolutions—of ‘progress’—is the only one in which capitalism can survive.”23 Despite the book’s sweeping scope, vast erudition, and hortatory rhetoric, Business Cycles misfired. The academic community lavished praise on its ambition—Oskar Lange grouping it in “intention and horizon” with Marx’s Kapital—yet few read the work and fewer still deemed it an important contribution. Schumpeter, Simon Kuznets argued, had not produced the “exact economics” to which he aspired, nor had he reconciled economic, statistical, and historical approaches successfully. At a 1939 workshop at Harvard, it became clear that nobody had studied the book, which exasperated the vain Schumpeter. He viewed Business Cycles as his magnum opus, which would confirm his status as the era’s greatest economist.

pages: 442 words: 130,526

The Billionaire Raj: A Journey Through India's New Gilded Age
by James Crabtree
Published 2 Jul 2018

Most inequality studies had little to say about the super-rich, who are tiny in number and thus hard to capture in research surveys. But Piketty’s data also showed the share held by the very richest—the “0.001%,” as he called them—shooting up even more quickly. Echoing Bhagwati, not everyone viewed this widening gap as a problem. One theory—known as the Kuznets curve, after economist Simon Kuznets—suggests that rising inequality is transitory, as most countries become more unequal in their early stages of development and then less so as they grow rich. As a result, mainstream economists have often argued that inequality acts as a spur to effort and that in any case it will decline in time.

The Hour of Fate
by Susan Berfield

Located on Fifth Avenue: Details from “In New Quarters,” New York Sun, March 5, 1881; 1901 Union League Club Annual Report; Henry Bellows, Union League Club History; “Lost Union League Clubhouse,” daytoninmanhattan.com. 12. Morgan’s first father-in-law: Jonathan Sturges, father of Morgan’s first wife, Amelia Sturges. 13. Gross national product: Simon Kuznets, Capital in the American Economy: Its Formation and Financing (Princeton, NJ: Princeton University Press, 1961), 557–58. 14. “Vexatious” legislation: “The Financial Situation,” New York Sun, December 31, 1900, 7. 15. More than twelve hundred: Lewis L. Gould, Reform and Regulation: American Politics from Roosevelt to Wilson, 16. 16.

pages: 621 words: 157,263

How to Change the World: Reflections on Marx and Marxism
by Eric Hobsbawm
Published 5 Sep 2011

Even the natural sciences came under attack, not only because of the potential or actual damage caused by technology, but because their validity as modes of understanding the world was questioned. This was perhaps least marked in economics, where Marxists had always been peripheral, though among the first ten Nobel laureates in this field there were three who were formed or partly formed in the early years of the Soviet Union or who were still active there (Wassily Leontief, Simon Kuznets, Leonid Kantorovitch). However, from 1974, when Friedrich von Hayek received the prize, still balanced by his ideological opposite, the Swede Gunnar Myrdal, and 1976, when it was given to Milton Friedman, it became markedly identified with a sharp turn away from Keynesian and other interventionist theories and a return to an increasingly uncompromising laissez-faire.

pages: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All
by Costas Lapavitsas
Published 14 Aug 2013

Quigley, NY: Russell Sage Foundation, 2006, pp. 221–58; Facundo Alvaredo and Emmanuel Saez, ‘Income and Wealth Concentration in Spain from a Historical and Fiscal Perspective’, Journal of the European Economic Association 7:5, 2009, pp. 1140–67; Anthony Atkinson, Thomas Piketty, and Emmanuel Saez, ‘Top Incomes in the Long Run of History’, Journal of Economic Literature 49:1, 2011, pp. 3–71. 23 Simon Kuznets, ‘Economic Growth and Income Inequality’, American Economic Review 45:1, 1955. 24 Branko Milanovic has produced innovative work that assesses global inequality by measuring within-country as well as across-country inequality. The top 10 percent of the income distribution in a poor developing country, after all, might have a lower average income than the bottom 10 percent of a rich developed country.

pages: 653 words: 155,847

Energy: A Human History
by Richard Rhodes
Published 28 May 2018

When they examined the relationship between the level of air pollution and increasing income in a cross section of urban areas in forty-two countries, they found that for two pollutants—sulfur dioxide and “smoke”—concentrations increased with per capita gross domestic product (GDP) at low national income levels but decreased with GDP growth at higher levels of income.35 The graph of the SO2 finding in their influential 1991 paper looks like this: Smog obscuring the George Washington Bridge, New York City, 1973. The curve on the Princeton economists’ graph happened to resemble a Kuznets curve, a visualization of a controversial economic theory named after the twentieth-century Belarussian American economist Simon Kuznets. Kuznets had related increasing income and income inequality, a different relationship entirely. The Princeton economists’ version thus came to be called an environmental Kuznets curve (EKC). In its standard form, it looks like this: Environmental Kuznets curve. An environmental Kuznets curve models a relationship such as the one the Princeton economists had found: increasing pollution in the earlier stages of industrialization and then, at a threshold point of rising personal income, increasing efforts to reduce pollution.

pages: 807 words: 154,435

Radical Uncertainty: Decision-Making for an Unknowable Future
by Mervyn King and John Kay
Published 5 Mar 2020

The R&A is the rule-making spin-off from the Royal and Ancient Golf Club of St Andrews, which maintains the world-famous links of that town. 3 Carter (2019). 4 Kelvin was the great physicist whom we met in chapter 3 dismissing the possibility of manned flight. 5 Knight (1940) fn. 10. 6 McCoy, Prelec and Seung (2017). 7 Goldstein and Gigerenzer (2002) p. 76. 8 Lenin (1909) p. 397. 9 Kahneman (2011) pp. 156–8. 10 Ibid. p. 158. 11 Carroll and Gardner (2000) p. 155. 12 Carroll and Gardner (2000) pp. 157–64. 13 We take comfort from the knowledge that one of the doyens of classical statistics, Maurice Kendall, used the same analogy with Carroll sixty years ago and added, ‘if you think all this is ridiculous and beneath the notice of grave and serious-minded adults, you may care to know that the students of the theory of probability are still discussing the question whether one can take an even chance on the truth of any proposition whose meaning is not known’ (quoted in Shackle 1968, p. 35). 14 Lucas (1988), published (2011) p. 4. 15 Cochrane (2009). 16 Romer (2015). 17 Carroll and Gardner (2000) pp. 225–6. 18 GDP is a construct, created by national statistical agencies, and derived from many thousands of data points drawn from a multiplicity of sources. The principles of the estimation of GDP were established in the late 1930s and early 1940s, by the American Simon Kuznets and the British economists Richard Stone and James Meade. These principles have subsequently been greatly elaborated by statisticians around the world, and today there is a United Nations System of Standardised National Accounts, a weighty document which is subject to regular revision and whose procedures are followed in statistical agencies in all major countries.

pages: 515 words: 152,128

Material World: A Substantial Story of Our Past and Future
by Ed Conway
Published 15 Jun 2023

As policymakers scrambled to come up with answers, they realised that they didn’t even have a practicable picture of the way things worked today. There is an analogy here with the last world war: in a bid to understand the resources at their disposal, in the 1940s policymakers at the US Department of Commerce commissioned an economist, Simon Kuznets, to come up with a system of national accounts. It gave rise to what we today know as gross domestic product. In the 2020s, as it pondered whether it could achieve ‘semiconductor sovereignty’, the same department ordered a survey of the entire silicon-chip supply chain. As they charted the links and connections from mine head to wafer manufacture to fabrication plant and the constellation of essential inputs along the way, they began to create a primitive map of this corner of the Material World.

pages: 547 words: 172,226

Why Nations Fail: The Origins of Power, Prosperity, and Poverty
by Daron Acemoglu and James Robinson
Published 20 Mar 2012

But it wasn’t, because the government then forcibly converted all the dollar bank accounts into pesos, but at the old one-for-one exchange rate. Someone who had had $1,000 saved suddenly found himself with only $250. The government had expropriated three-quarters of people’s savings. For economists, Argentina is a perplexing country. To illustrate how difficult it was to understand Argentina, the Nobel Prize–winning economist Simon Kuznets once famously remarked that there were four sorts of countries: developed, underdeveloped, Japan, and Argentina. Kuznets thought so because, around the time of the First World War, Argentina was one of the richest countries in the world. It then began a steady decline relative to the other rich countries in Western Europe and North America, which turned, in the 1970s and ’80s, into an absolute decline.

pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future
by Joseph E. Stiglitz
Published 10 Jun 2012

Stiglitz, Mismeasuring Our Lives: Why GDP Doesn’t Add Up (New York: New Press, 2010), and available at http://www.stiglitz-sen-fitoussi.fr/en/index.htm. (Translations are available in Chinese, Korean, Italian, and other languages.) 75. This point was made right at the start, by the early developer of the national income accounts, Simon Kuznets, who noted that “the welfare of a nation can scarcely be inferred from a measure of national income.” Kuznets, “National Income, 1929–1932,” 73rd U.S. Cong., 2d sess., 1934, Senate doc. no. 124, p. 7. Chapter Seven JUSTICE FOR ALL? HOW INEQUALITY IS ERODING THE RULE OF LAW 1. There are many instances where laws can be seen as preserving inequities.

pages: 566 words: 163,322

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
by Ruchir Sharma
Published 5 Jun 2016

Some world leaders still tend to dismiss vices like inequality, and the corruption that often feeds it, as timeless and inevitable sins that are common to all countries, particularly poor ones in the chaotic early stages of development. But this is a cop-out. Developing societies do tend to be more unequal than rich ones, but it is increasingly unclear that their inequality problem will naturally disappear. The belief that inequality fades over time had been the working assumption since the 1950s, when the economist Simon Kuznets pointed out that countries tend to grow more unequal in the early stages of development, as some poor farmers move to better-paying factory jobs in the cities, and less unequal in the later stages, as the urban middle class grows. Today, however, inequality appears to be rising at all stages of development: in poor, middle-class, and rich countries.

Termites of the State: Why Complexity Leads to Inequality
by Vito Tanzi
Published 28 Dec 2017

I had also spent another two years working for a CongressionalPresidential Commission (the Outdoor Recreation Resources Review Commission) that was tasked with determining the optimal use for the extensive public land owned by the US federal government. This commission produced several reports that set the stage for the future use of public land. During the years I spent at Harvard, in the first half of the 1960s, some of the leading economists of the time – Paul Samuelson, Robert Solow, Simon Kuznets, Kenneth Arrow, Franco Modigliani, Wassily Leontief, Kenneth Galbraith, Robert Dorfman, Alvin Hansen, Otto Eckstein, James Duesenberry, and several others – were in the Boston area, either at Harvard or at MIT. Richard Musgrave, who was then considered the leading public finance economist in the United States, would come to Harvard a little later and would be the second reader of my doctoral dissertation; I thus completed my public finance preparation under a third refugee from Nazi Germany.

Money and Government: The Past and Future of Economics
by Robert Skidelsky
Published 13 Nov 2018

Share of US income going to the top36 25 20 (per cent) Share of the different groups in total income 15 10 5 0 1910 Top 1% (annual incomes above $352,000 in 2010) Top 5%–1% (annual incomes between $150,000 and $352,000 in 2010) Top 10%–5% (annual incomes between $108,000 and $150,000 in 2010) 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 means that inequality will rise even more. Piketty predicts that growth will not exceed 1–1.5 per cent in the long-run, whereas the average return on capital will be 4–5 per cent. (This contrasts with the predictions of the American statistician Simon Kuznets, whose data – dating from 1955 – showed inequality naturally diminishing over time.) Using large data sets, Piketty presented a U-shaped curve running from the late nineteenth century to today, with a ‘compression’ of inequality between 1914 and 1970. It is a sign of the importance of Piketty’s intervention that it provoked a furious debate.

pages: 840 words: 202,245

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present
by Jeff Madrick
Published 11 Jun 2012

He helped develop the nation’s tax withholding system, which made possible the rapid growth of government that he ultimately deplored. There is no greater irony in American economic history. He later said his experience in government reinforced his doubts about its efficiency. Friedman received his Ph.D. from Columbia in 1945. His doctoral thesis already contained conservative claims. Written with the future Nobelist Simon Kuznets, it was titled “Income from Independent Professional Practice,” and argued that state limitations on the number of entrants, even if the desire is to maintain a high standard, into professions like medicine, dentistry, and law raised fees artificially and reduced the accessibility of the professional services.

pages: 637 words: 199,158

The Tragedy of Great Power Politics
by John J. Mearsheimer
Published 1 Jan 2001

Organski, Population and World Power (New York: Knopf, 1961); and Michael S. Teitelbaum and Jay M. Winter, The Fear of Population Decline (Orlando, FL: Academic Press, 1985). 20. The Chinese and Russian figures are from World Bank Atlas, 2000 (Washington, DC: World Bank, April 2000), pp. 24–25. The U.S. figure is from the Census Bureau. 21. Simon Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, CT: Yale University Press, 1966), chap. 2. 22. On the importance of wealth for military might, see Robert Gilpin, War and Change in World Politics (Cambridge: Cambridge University Press, 1981); Paul M. Kennedy, The Rise and Fall of British Naval Mastery (London: Allen Lane, 1976); Paul M.

pages: 789 words: 207,744

The Patterning Instinct: A Cultural History of Humanity's Search for Meaning
by Jeremy Lent
Published 22 May 2017

“Big ideas,” McNeil observes, “all became orthodoxies, enmeshed in social and political systems, and difficult to dislodge even if they became costly.”68* The “Hedonic Treadmill” A powerful example of ideological lock-in is the standard of gross domestic product (GDP), by which the performance of governments and countries is judged across the world. The economist who invented it in the 1930s, Simon Kuznets, warned that it was a “potentially dangerous oversimplification that could be misleading” and subject to “resulting abuse.” However, in the aftermath of World War II, as the world was gearing up for the Great Acceleration, GDP was formally incorporated into official policy making.69 The basic fault with GDP as a measure of a country's performance is that it fails to distinguish between activities that promote welfare and those that reduce it.

pages: 879 words: 233,093

The Empathic Civilization: The Race to Global Consciousness in a World in Crisis
by Jeremy Rifkin
Published 31 Dec 2009

Every type of economic activity is calculated in the GDP, including the building of more prisons, enlarging the police force, military spending, spending for cleaning up pollution, increased health-care costs resulting from cigarette smoking, alcohol, and obesity, as well as the advertising spent to convince people to smoke and drink more or eat processed and fatty fast food. Simon Kuznets, the man who invented GDP, warned in his first report to the U.S. Congress in 1934 that “[t]he welfare of a nation can . . . scarcely be inferred from a measurement of national income.”38 Thirty years later Kuznets addressed the subject of GDP’s inherent limitations even more strongly writing that “[d]istinctions must be kept in mind between quantity and quality of growth. . . .

pages: 1,034 words: 241,773

Enlightenment Now: The Case for Reason, Science, Humanism, and Progress
by Steven Pinker
Published 13 Feb 2018

In the absence of an Income Distribution Authority that parcels out identical shares, some people are bound to take greater advantage of the new opportunities than others, whether by luck, skill, or effort, and they will reap disproportionate rewards. An increase in relative inequality (measured by the Gini or income shares) is not mathematically necessary, but it is highly likely. According to a famous conjecture by the economist Simon Kuznets, as countries get richer they should get less equal, because some people leave farming for higher-paying lines of work while the rest stay in rural squalor. But eventually a rising tide lifts all the boats. As more of the population gets swept into the modern economy, inequality should decline, tracing out an inverted U.

Growth: From Microorganisms to Megacities
by Vaclav Smil
Published 23 Sep 2019

Its oft-repeated definition seems straightforward: GDP expresses the monetary value of all final goods and services that are produced or provided within the borders of a country during a specified period of time (monthly or quarterly in national reports, per year for international comparisons). But measuring GDP growth, and hence ascertaining its disappointing or satisfactory rates, is an inherently difficult matter and one whose systematic practice is quite recent. Its origins go back to the 1930s when Simon Kuznets was asked by the US Congress to estimate the country’s national income (Kuznets 1934). Its scope was defined by John Maynard Keynes, the measure became a key tool for the international financial institutions set up by the Bretton Woods agreement in 1944, and it was widely applied for the first time to the growing post-WWII economies (Coyle 2014).

George Marshall: Defender of the Republic
by David L. Roll
Published 8 Jul 2019

Army Eighth Air Force bombed railroad yards near Rouen, the first attack by American bombers on Nazi-occupied Europe. This modest success fueled the hopes and ambitions of airpower advocates. By mid-September, Marshall signed off on a recommendation to expand the number of army air groups from 115 to 273, an aspirational goal that prevailed for the rest of the war.7 Meanwhile, economists working under Simon Kuznets and Robert R. Nathan at the War Production Board circulated a 140-page report, claiming that it was not feasible for the American economy to expand fast enough to supply an army of more than 100 divisions by the end of 1943 and at the same time meet the needs of the navy, the army air force, the civilian workforce, and the British and Soviet allies who were relying on lend-lease aid.

pages: 1,205 words: 308,891

Bourgeois Dignity: Why Economics Can't Explain the Modern World
by Deirdre N. McCloskey
Published 15 Nov 2011

Gregory Clark (2009) argues that Maddison’s figure of a little over a dollar a day in 1800 is too low for subsistence. 5. “World,” CIA World Factbook (accessedApril 10, 2013). 6. The economic historian Stefano Fenoaltea and the economist Philipp Lepenies have both pointed out to me recently that for short-run reasons of policy at the time, the concept of national product used by Simon Kuznets, the deviser of the modern program of income measurement, and eventually by Maddison, did not go beyond trading figures, that is, what people could buy. Homework is mostly ignored. It is a major error for the long run (as Kuznets and other students of the matter realized), since production in the home of, say, made clothing and processed food was a large part of consumption in earlier times, as was at all times the care industry for children, husbands, and parents (as the economist Nancy Folbre has persuasively argued).