The book does exactly what it says on the cover! Linda Yueh explore the lives and work for the greatest economists, the times they lived in, their personal situations and how they would have adressed the situation we find ourselves in at present.
▶ Adam Smith’s magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, took a decade to write. It sets out the concept of the ‘invisible hand’, which refers to the unseen market forces that set prices by equating supply and demand.
▶ When countries grow, they tend to industrialize, so they move out of agriculture and into manufacturing, which has higher productivity or output per worker and thus generates higher wages. Industrialization is how countries become middle class and prosper. Deindustrialization then follows.
▶The 2008 crisis revealed the downside to having an economy with a large financial services sector. Banks had become complex and interconnected, and their business became harder to understand and to regulate. Their responsibility for causing the worst recession in a century prompted calls from the public to regulate the banks more tightly in the US and UK.
▶ Every individual … neither intends to promote the public interest, nor knows how much he is promoting it … he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
▶ China remains a communist state governed by the Chinese Communist Party. It’s therefore unsurprising that the rule of law and other market-supporting institutions, such as private property protection, are weak, as there is no independent judiciary.
▶ Winston Churchill observed in 1945 speaking in the House of Commons of the British Parliament: ‘The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries’?
▶ During the economic boom of the 1950s in the United States, the top 1 per cent did only a little better than the rest, gaining some 5 per cent of the increased income. But since the Great Recession, the top 1 per cent have accounted for 95 per cent of the income gain, leaving the bottom 99 per cent with just 5 per cent of the gain between them.
▶ For instance, a CEO of America’s largest listed (S&P 500) companies earns, on average, over 200 times that of an average worker in the same company. In the 1960s, it was twenty times as much. Why has this happened? Former US Labor Secretary Robert Reich gives decreased unionization weakening the bargaining power over wages of workers as one cause.
▶ Alfred Marshall’s process of creating eonocmic theories: