*A Capitalism for the People*

by on March 30, 2012 at 10:23 am in Uncategorized | Permalink

The author is Luigi Zingales, and the subtitle is Recapturing the Lost Genius of American Prosperity.  I know you have book fatigue, popular economics book fatigue, policy book fatigue, and books-with-subtitles-like-this fatigue, all at once.  But this book is really, really good.  It hits all the right notes, is clearly written, and refers to academics as the new crony capitalists.”  I agreed with almost all of it.

If I had to pick out one book, of this entire lot of books, to explain what is going on right now to a popular audience of non-economists, this might well be it.  It is due out in June.

Paul March 30, 2012 at 10:55 am

Sorry, had no where else to put this but what would you make of a tax lottery system given the mega millions hype. Where as an incentive to file personal tax (fully at that) returns the promise of a certain random amount of people who file are given a tax free 100% return. Do you think the incremental tax collection would easily offset the expense in lost collections?

Willitts March 30, 2012 at 11:04 am

Not likely. In finance and economics, there seemed to be an anomaly of people simultaneously insuring against low probability events with large losses while simultaneously making gambles at low cost for large potential returns but minuscule chances to win. This conundrum was solved with the concept of loss aversion and inflection points in the utility function.

What you describe is a choice between paying a relatively large amount of taxes versus paying no taxes and some low probability of getting caught. The prospect of a free tax bill or even a mega lottery isn’t as rewarding as taking a 10% pay increase for yourself by not correctly filing taxes.

Willitts March 30, 2012 at 10:58 am

The idea that academics are crony capitalists is hardly new. In the same farewell address where Eisenhower earned about the power and influence of the military industrial complex, he gave this warning:

“The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present –and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.”

You could call this the scientific or academic industrial complex. Look at the power and i.fluence of academia in the current administration! Chu, Kagan, Summers, Romer, Warren, etc. Look at how academics responded in amici briefs to the Supreme Court on the health care act.

Ike prefaced his remarks about the MIC with strong support for a mighty and flexible national defense infrastructure. Ike’s farewell is probably one of the speeches in history most taken out of context and least fully-explored. Washington’s farewell address ranks high too among the misused.

http://mcadams.posc.mu.edu/ike.htm

Floccina March 30, 2012 at 12:26 pm

+1

Andrew' March 30, 2012 at 12:32 pm

According to recent articles, this complex underlies the loss of confidence in “science” on the right.

We should have known exactly why the lefty agit-prop around science was BS just because they were saying it, but it appears clear that the loss of confidence (they’d have you believe that The Right changed rather than the left’s approach to science changed, the Left btw was skeptical of science when it was controlled more by the right for nat’l defense) has to do with the government manipulating institutions nominally labeled scientific.

http://www.insidehighered.com/news/2012/03/29/study-tracks-erosion-conservative-confidence-science

Evil or ignorant, same question as ever.

dbeach March 30, 2012 at 2:25 pm

No, I don’t think so. The loss of confidence in science on the right is the result of the massive anti-science campaign waged by each of the twin pillars of the right, evangelical Christians and corporations, especially those in extractive industries.

The idea that government-sponsored science has become a corrupt tool of the left, during a period in which Republicans controlled the government more than half the time, seems dubious in the extreme.

I suspect that the “crony capitalist” line refers to academics taking grant money from businesses, not from the government.

JWatts March 30, 2012 at 1:59 pm

+1 Very informative. Thanks!

Kevin March 30, 2012 at 11:03 am

Amazon lists this is a “16 & Up” read. What is your opinion about buying some copies for a high school capstone course I am teaching? The students are bright and very ambitious, but they are certainly high schoolers.

Any guidance would be much appreciated.

Michael Heller March 30, 2012 at 11:04 am

“refers to academics as the new crony capitalists”

What and where *could* he mean? The insiders’ publishing game? Recruitment and tenure? Capture by business? Profiteering research? Theft of ideas? I look forward to clarification.

I wonder if he means the observable tendency for a few branches of social science to gravitate towards the entertainment industry and blogging where the first signs of informal networking cartelization or closure and exclusion have been noticed creeping in here and there. Maybe this has been a kind of temporary monopoly position which is the just reward for genuine innovation.

Nah. But if he did, then, as always, the solution to the problem would be intensified competition.

The Other Jim March 30, 2012 at 12:34 pm

The “Book Description” on the Amazon page makes the book look like recycled, cliched, 99-percenter drivel. While you mention “crony capitalism” as a problem — the fact the Government is picking winners and losers, and always picks the people that prop up Government — the Book Description indicates nothing more than a brainless wailing against Big Business.

Is the book less childish than the Description indicates? If so, how?

UnlearningEcon March 30, 2012 at 8:33 pm

I’m guessing in your view, competitive capitalism is just sitting there nice and happy then the big bad government comes along to loot and pillage it?

mgoodfel March 30, 2012 at 2:11 pm

No Kindle edition?

TGGP March 30, 2012 at 10:41 pm

I’ve been disappointed in what I’ve read from Zingales.

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