Investment, Resources, Invention, and Technological Change
America is:
- Resource rich
- Skilled labor abundant
- Energetic, entrepreneurial labor abundant (to have crossed an ocean...)
America is also capital rich, and new capital rich--hence technologically advanced ** The furnace where the future is being forged...
Labor and Capital
America's Commitment to Education:
- Iowa: Claudia Goldin and Larry Katz look at Iowa high schools
- America has a very strong and very early commitment to general education
- Europe: why not provide people with the education they'll need early (answer: people change jobs, the economy changes, the background knowledge base is very important)
- Europe: educate the working classes and they'll ask for more (response: yes, that's the point)
- America's commitment to human capital as a very powerful multiplier of productivity
America and Unions: The Early Stages:
- America has a long history of labor unions
- America has a long, bloody labor history
- Pinkertons
- Federals--Grover Cleveland vs. John Peter Altgeld in the breaking of the Pullman strike
- Early unions: Knights of Labor
- Early unions: IWW
- Union threat: the IWW and Henry Ford's $5 day.
- Just because unions don't have lots of members and win lots of strikes doesn't mean that they are unimportant
America and Unions: Craft Unions:
- Craft unions: the AFL
- Craft unions: the AMA
- After WWI: the Palmer Raids and the Red Scare
- The 1920s: Welfare Capitalism
- Legal doctrines: Lochner and its friends
America and Unions: The Great Depression and After:
- Sit-down strikes
- Industrial unionism--the CIO
- The AFL-CIO
- The UMW and the Teamsters
- The NLRA and the NLRB
- The War Labor Board
- The Taft-Hartley Act
Rolling Back Unionized America
- Lawyers
- Right-to-work
- Interstate competition
- International competition *Monopoly and voice faces of unionism
The situation today: public-sector unions have a powerful edge. private sector unions... not so...
- What role has globalization played in the erosion of union power? Uncertain...
Investment Banking: Routing Around Capital Market Failures:
- The coming of the corporation: limited liability and professional management
- Who guards the guardians? Example: Leland Stanford (and Huntington, and Hopkins, and Crocker), the Central Pacific, and British investors...
- Separation of ownership from management creates all kinds of principal-agent and management-monitoring problems
- How to solve them? Finance capitalism. J.P. Morgan and the "Money Trust"
- Complaints about the Money Trust: Louis Brandeis: "personal power is unAmerican"
- Complaints about the Money Trust: the Northern Securities Panic
- Progressive attack on the Money Trust fails--until 1933 comes
* Finance After the Great Depression:*
- With the coming of FDR, the Progressive Era program for taming the Money Trust is dusted off and put into action:
- The exaltation of management at the expense of ownership and monitoring
- The end of utility empires--the PUHC Act
- The separation of investment from commercial banking
- The large-scale provision of information
- The level playing field
- The Berle-Means problem: managers select themselves, so how are stockholders' interests guarded?
- The Galbraithian "technostructure"
Recent Finance:
- The coming of the 1980s
- Junk bonds
- Takeovers
- Rapidly-climbing CEO pay
- The reintegration of high finance
- How well do our financial markets really work? It's still an open question
Upward Mobility
Horatio Alger and Benjamin Franklin
Europe is supposed to be about who your family is America is supposed to be about who you are--although it was one of Napoleon's generals who said that "I am my ancestors" Abraham Lincoln's belief: anyone who wants to can move up--a combination of: Plenty of room at the top Lots of immigrants to (temporarily) fill in at the bottom A fairly equal distribution of wealth meaning that starts were not too far apart All This Changes in the Middle of the Gilded Age:
The Closing of the Frontier and the Great Immigration Wave
No more free land--direct effects (can't homestead) and indirect effects (immigrants now put downward pressure on real wages) Immigrants: are the "new immigrants" not from northwest Europe American? In the case of Asians, the answer is "obviously no" "Races" in Pennsyvlania in 1910: whites, blacks, slavs, Latins... The peak of American inequality Ending the Gilded Age
Progressives The New Deal picks up the Progressive Era program, and enacts it Immigration restrictions play an uncertain but probably large role Social democracy and social insurance... Minimum wages Unions again Middle-Class America
The Great Compression in wages Unions? Wartime (WWII, that is)? Social changes Supply and demand? Free land again--this time free land to buy a house within commuting distance of anywhere... The Returns to Skill
The overeducated American The enormous expansion of wage inequality since 1970 All of a sudden, position matters a lot The Anemia of Social Democracy in America
America was never as upwardly mobile a place as it thought it was... Europe was never as rigid a place as it thought it was... Increasing risk (but the "risk" of being bankrupt instead of dead is a good thing--as Martha Stewart would say--no? Why Doesn't the United States Have a European-Style Welfare State?
Racism? The myth of Horatio Alger? Another possible answer: it's just taking us a long time to build it up...
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