Podcast appearances and mentions of Oliver Hart

On this episode I went surfing on some sound waves with Rex Costello and Oliver Hart from ISTA. We spoke about Laguna Beach house shows in HS, vibrations, their producer Sam Cohen, exterior illusions, our rhythmic heartbeat, and as always so much more.Check out ISTA on instagram. & Watch the Aim for the Heart video here!Keep up with the show and Amandolin here.Support the show on PATREON.Until the next transmission. Amandolin

In this episode of the Moral Imagination Podcast I speak with Catherine Pakaluk about her book Hannah's Children: The Women Quietly Defying the Birth DearthOver the last 200 years, we have seen a decline in birth rates in the United States and abroad, especially in Western countries. Most European countries are no longer at replacement rates and face serious population decline. Reuters reported that Japan's population will decline by a staggering 30% in the next fifty years. In the United States, in the year 1800, the typical woman would have about 7 or 8 children. By 1900 that number was cut in half to 4. By 2000 the number cut in half again to about 2 children, which is just about replacement rate. The Wall Street Journal recently reported on the the record-low birthrate in the US, and how increasing numbers of people plan to have no children. In the midst of declining marriages, childlessness, and low birthrates, Pakaluk studied the increasing minority of women in the Western world who have chosen to have five or more children — the top 5% of childbearing.Her book is a mix of ethnography, sociology, and economics, and includes a critique of the dominant model of social and economic research. One thing that stands out with many of the women she interviews is how at some point a shift took place in their attitude — from seeing children as a choice, like a consumer good among other choices, to a different attitude of receptivity and openness to having another child, and then another. She talks about the many forces that promote small families — the cost of children, overpopulation propaganda, education, feminism, environmentalism, consumerism and more. But Pakaluk emphasizes that encouraging women to have more children cannot be addressed simply by implementing pro-family policies like some countries have tried to do. Good policy is not insignificant — for example in most US states parents who want to send their children to religious schools have to pay twice for school through tax and tuition. But she argues that the real problems go much deeper. They are religious, spiritual, and metaphysical: a vision of life that sees being as good, children as a blessing, and family as essential for a good life. Pakaluk compares having a large family to running a marathon—except longer, harder, and more fulfilling. Government family policy would be like giving everyone a pair of good running shoes for the marathon. That could help, but it won't get most people to run. There must be a deeper motivation, and this almost always comes from religious belief and the virtues of faith, hope, the goodness of being, and the value of generosity and sacrifice that come from it. Themes and Topics we discuss include: * Demographics and Population Decline * Family policies * Feminism * Education * Career vs Family and Children * Conflicting Desires* Difficulties and Advantages of a Large Family * The Role of Religious Schools* Community * Plausibility Structures* Consumerism * Individualism* Social Pressure * Religious Freedom * Fortitude, Patience * Boys and Girls Sports * Novak Djokovic and Kobe Bryant * Voting Patterns * Climate* Creation and the Goodness of Being * and more Biography Catherine Ruth Pakaluk (Ph.D, 2010) joined the faculty at the Busch School in the summer of 2016, and is the founder of the Social Research academic area, where she is an Associate Professor of Social Research and Economic Thought. Formerly, she was Assistant Professor and Chair of the Economics Department at Ave Maria University. Her primary areas of research include economics of education and religion, family studies and demography, Catholic social thought and political economy. Dr. Pakaluk is the 2015 recipient of the Acton Institute's Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.”Pakaluk did her doctoral work at Harvard University under Caroline Hoxby, David Cutler, and 2016 Nobel-laureate Oliver Hart. Her dissertation, “Essays in Applied Microeconomics”, examined the relationship between religious ‘fit' and educational outcomes, the role of parental effort in observed peer effects and school quality, and theoretical aspects of the contraceptive revolution as regards twentieth century demographic trends.   Beyond her formal training in economics, Dr. Pakaluk studied Catholic social thought under the mentorship of F. Russell Hittinger, and various aspects of Thomistic thought with Steven A. Long. She is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael Pakaluk and eight children.Resources Hannah's ChildrenFlight from Woman Neil Postman: Technopoly Joseph Ratzinger: Homilies on Genesis On the Jewish - Christian Idea of the Goodness of Being Get full access to The Moral Imagination - Michael Matheson Miller at www.themoralimagination.com/subscribe

Listen to the full episode with a free account on Locals: https://theruthinstitute.locals.com/post/5618983/podcast-catherine-pakaluk-explains-why-5-of-women-decide-to-have-more-children   In an age where many women have decided that having children is not worth it, there are women all around the country who have decided to have more children. Catherine Pakaluk, an economist and director of Social Research at the Catholic University, recently asked the question why do these women decide to have more children? She traveled across the country and spoke with 55 women, all of whom had 5 or more children, to find out why they decided to have more children. Her new book, "Hannah's Children: the Women Quietly Defying the Birth Dearth," contains her research and stories of the women she interviewed. And you can enter to win one of five autographed copies of the book, for free! Just send an email to Bookgiveaway@ruthinstitute.org before May 16th at 12 PM Central to be entered to win.    Buy the book, Hannah's Children, here: https://www.amazon.com/Hannahs-Children-Quietly-Defying-Dearth/dp/1684514576   You can follow her on X here: https://twitter.com/CRPakaluk   Watch this video on the birth dearth next: https://www.youtube.com/watch?v=GHO4GBetaBw   Catherine Ruth Pakaluk (Ph.D, 2010) joined the faculty at the Busch School in the summer of 2016, and is the founder of the Social Research academic area, where she is an Associate Professor of Social Research and Economic Thought. Formerly, she was Assistant Professor and Chair of the Economics Department at Ave Maria University. Her primary areas of research include economics of education and religion, family studies and demography, Catholic social thought and political economy. Dr. Pakaluk is the 2015 recipient of the Acton Institute's Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.”   Pakaluk did her doctoral work at Harvard University under Caroline Hoxby, David Cutler, and 2016 Nobel-laureate Oliver Hart. Her dissertation, “Essays in Applied Microeconomics”, examined the relationship between religious ‘fit' and educational outcomes, the role of parental effort in observed peer effects and school quality, and theoretical aspects of the contraceptive revolution as regards twentieth century demographic trends.      Beyond her formal training in economics, Dr. Pakaluk studied Catholic social thought under the mentorship of F. Russell Hittinger, and various aspects of Thomistic thought with Steven A. Long. She is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael Pakaluk and eight children.   Have a question or a comment? Leave it in the comments, and we'll get back to you!   Subscribe to our YouTube playlist:  @RuthInstitute  Follow us on Social Media: https://www.instagram.com/theruthinstitute https://twitter.com/RuthInstitute https://www.facebook.com/TheRuthInstitute/ https://theruthinstitute.locals.com/newsfeed   Press: NC Register: https://www.ncregister.com/author/jennifer-roback-morse Catholic Answers: https://www.catholic.com/profile/jennifer-roback-morse The Stream: https://stream.org/author/jennifer-roback-morse/ Crisis Magazine: https://crisismagazine.com/author/jennifer-roeback-morse   Father Sullins' Reports on Clergy Sexual Abuse: https://ruthinstitute.org/resource-centers/father-sullins-research/   Buy Dr. Morse's Books: The Sexual State: https://tanbooks.com/products/books/the-sexual-state-how-elite-ideologies-are-destroying-lives-and-why-the-church-was-right-all-along/ Love and Economics: https://ruthinstitute.org/product/love-and-economics-it-takes-a-family-to-raise-a-village/ Smart Sex: https://www.amazon.com/-/he/Jennifer-Roback-Morse-PhD/dp/0981605923   Listen to our podcast: Apple Podcasts - https://podcasts.apple.com/us/podcast/the-ruth-institute-podcast/id309797947 Spotify - https://open.spotify.com/show/1t7mWLRHjrCqNjsbH7zXv1   Subscribe to our newsletter to get this amazing report: Refute the Top 5 Gay Myths https://ruthinstitute.org/refute-the-top-five-myths/   Get the full interview by joining us for exclusive, uncensored content on Locals: https://theruthinstitute.locals.com/support

Catherine Ruth Pakaluk (Ph.D, 2010) joined the faculty at the Busch School in the summer of 2016, and is the founder of the Social Research academic area, where she is an Associate Professor of Social Research and Economic Thought. Formerly, she was Assistant Professor and Chair of the Economics Department at Ave Maria University. Her primary areas of research include economics of education and religion, family studies and demography, Catholic social thought and political economy. Dr. Pakaluk is the 2015 recipient of the Acton Institute's Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.” Pakaluk did her doctoral work at Harvard University under Caroline Hoxby, David Cutler, and 2016 Nobel-laureate Oliver Hart. Her dissertation, “Essays in Applied Microeconomics”, examined the relationship between religious ‘fit' and educational outcomes, the role of parental effort in observed peer effects and school quality, and theoretical aspects of the contraceptive revolution as regards twentieth century demographic trends.    Beyond her formal training in economics, Dr. Pakaluk studied Catholic social thought under the mentorship of F. Russell Hittinger, and various aspects of Thomistic thought with Steven A. Long. She is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael Pakaluk and eight children.   Read Edith Stein here:   Essays On Woman (The Collected Works of Edith Stein) (English and German Edition) https://a.co/d/7IHdJZY   Edith Stein: The Philosophical Background https://a.co/d/h8F3cIA

This talk was given on January 12, 2023, at John Hopkins University. For more information on upcoming events, please visit our website at www.thomisticinstitute.org. About the speaker: Catherine Ruth Pakaluk is an Associate Professor of Social Research and Economic Thought and the head of the Social Research academic area at the Busch School of Business at the Catholic University of America. She is the author of several influential articles and was the 2015 recipient of the Acton Institute's Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.” Dr. Pakaluk is the Founder and Director of the new American Fertility Project based at Catholic University, and is the author of a forthcoming book on liberty and Catholic social thought. Pakaluk earned her doctorate in economics in 2010 at Harvard University under the 2016 Nobel-laureate Oliver Hart, and is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael and eight children.

This lecture was given at the University of South Carolina on September 29, 2022. For more information on upcoming events, visit thomisticinstitute.org. About the speaker: Catherine Ruth Pakaluk is an Assistant Professor of Social Research and Economic Thought and the head of the Social Research academic area at the Busch School of Business at the Catholic University of America. She is the author of several influential articles and was the 2015 recipient of the Acton Institute's Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.” Dr. Pakaluk is the Founder and Director of the new American Fertility Project based at Catholic University, and is the author of a forthcoming book on liberty and Catholic social thought. Pakaluk earned her doctorate in economics in 2010 at Harvard University under the 2016 Nobel-laureate Oliver Hart, and is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael and eight children.

Will cryptocurrencies save the world or create a new can of worms? Antoinette Schoar joins Vasant Dhar in episode 42 of Brave New World to take us on a dispassionate tour through the world of Bitcoin, blockchains and DeFi. Useful resources: 1. Antoinette Schoar At MIT Sloan School of Management and Google Scholar. 2. Cryptocurrencies and decentralized finance (DeFi) -- Igor Makarov and Antoinette Schoar 3. David Yermack on The Crypto Revolution -- Episode 30 of Brave New World. 4. Bitcoin: A Peer-to-Peer Electronic Cash System -- Satoshi Nakamoto. 5. Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador -- Fernando Alvarez, David Argente and Diana Van Patten. 6. Incomplete Contracts and Control -- Oliver Hart's Nobel Prize Lecture.

John Leland (1754-1841) was one of the most influential and entertaining religious figures in early America. As an itinerant revivalist, he demonstrated an uncanny ability to connect with a popular audience, and contributed to the rise of a "democratized" Christianity in America. A tireless activist for the rights of conscience, Leland also waged a decades-long war for disestablishment, first in Virginia and then in New England. Leland advocated for full religious freedom for all-not merely Baptists and Protestants-and reportedly negotiated a deal with James Madison to include a Bill of Rights in the Constitution. Leland developed a reputation for being "mad for politics" in early America, delivering political orations, publishing tracts, and mobilizing New England's Baptists on behalf of the Jeffersonian Republicans. He crowned his political activity by famously delivering a 1,200-pound cheese to Thomas Jefferson's White House. Leland also stood among eighteenth-century Virginia's most powerful anti-slavery advocates, and convinced one wealthy planter to emancipate over 400 of his slaves. Though among the most popular Baptists in America, Leland's fierce individualism and personal eccentricity often placed him at odds with other Baptist leaders. He refused ordination, abstained from the Lord's Supper, and violently opposed the rise of Baptist denominationalism. In the first-ever biography of Leland, Eric C. Smith recounts the story of this pivotal figure from American Religious History, whose long and eventful life provides a unique window into the remarkable transformations that swept American society from 1760 to 1840.-Eric C. Smith is the Senior Pastor of Sharon Baptist Church in Savannah, Tennessee, and a historian of American Baptists and early American religion. He is also the author of Oliver Hart and the Rise of Baptist America (OUP, 2020) and Order & Ardor: The Revival Spirituality of Oliver Hart and the Regular Baptists of Eighteenth-Century South Carolina (USC Press, 2018). He and his wife, Candace, have three children.

On this Episode of Dad Is Not A Noun Eyedea to us, Mikey to his mom Kathy Averill. I had privilege to talk to Kathy Averill on how Mikey's music and his love for people impacted the world.. On Saturday, October 16, 2010, we lost our beloved friend, family member and artist Micheal “eyedea” Larsen at the age of 28. Eyedea, who was most notably known for his music with Eyedea & Abilities, Oliver Hart, Face Candy and Carbon Carousel, was an artist in its truest form. He will be deeply missed, but never forgotten. In the days to come, we feel the focus should be on Micheal's life, music and legacy. Let's celebrate his life, remember his music and never forget what he has given us all. We miss you. We love you. And, you will not be forgotten. Micheal “eyedea” Larsen 11.09.81 ”“ 10.16.10 R.I.P.

Oliver Hart

This lecture was given at the University of Kansas on March 25, 2021. For more information on upcoming events, please visit our website at www.thomisticinstitute.org About the speaker: Catherine Ruth Pakaluk (Ph.D, 2010) joined the faculty at the Busch School in the summer of 2016, and is the founder of the Social Research academic area, where she is an Assistant Professor of Social Research and Economic Thought. Formerly, she was Assistant Professor and Chair of the Economics Department at Ave Maria University. Her primary areas of research include economics of education and religion, family studies and demography, Catholic social thought and political economy. Dr. Pakaluk is the 2015 recipient of the Acton Institute’s Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.” Pakaluk did her doctoral work at Harvard University under Caroline Hoxby, David Cutler, and 2016 Nobel-laureate Oliver Hart. Her dissertation, “Essays in Applied Microeconomics”, examined the relationship between religious ‘fit’ and educational outcomes, the role of parental effort in observed peer effects and school quality, and theoretical aspects of the contraceptive revolution as regards twentieth century demographic trends. Beyond her formal training in economics, Dr. Pakaluk studied Catholic social thought under the mentorship of F. Russell Hittinger, and various aspects of Thomistic thought with Steven A. Long. She is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael Pakaluk and eight children.

Our OG podcast homie Oliver Hart aka Nick Gamble aka Lucifer stopped by the updated studio and we went on a wild ride about America being soft and the new Cancel Culture movement, Colorado's Stanley Hotel, Aliens, and much more --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app

Spinning! Doctoring! Harps! It's all here on this episode of Spin Doctors. This week Professional Rapper Mikey Boohyah drops in with his favorite album: Oliver Hart's The Many Faces of Oliver Hart. Don't be distracted by Mikey's fish tank and trust me, Nick's audio gets better in the next few episodes. Thanks to Pale Blue Dot for our theme For You... The Many Faces of Oliver Hart is © Oliver Hart and Rhymesayers Entertainment available under CC BY-NC 2.5 Follow us on IG and Twitter @spindocpod Questions? Criticisms? Comments? Email spindoctorspod@gmail.com

Komende Maandag word 2020 se Nobelpryswenners in Ekonomie aangekondig. Dalk wonder jy, wat maak dit saak? Dit is erkenning vir werk wat iewers in die wêreld ʼn impak gemaak het en maak dalk meer saak as wat ons dink. Byvoorbeeld, in 2016 het Oliver Hart en Bengt Holmstrom die prys gedeel vir hulle bydra tot kontrakteorie en hoe ondernemings kan verseker dat hulle net die mees produktiewe werkers indiensneem, en hulle kry om so hard as moontlik te werk. Dit het 'n belangrike impak gehad op hoe ondernemings prestasie beloon.

This newsletter is really a weekly public policy thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question: how do I think about a particular public policy problem/solution?PS: If you enjoy listening instead of reading, we have this edition available as an audio narration courtesy the good folks at Ad-Auris. If you have any feedback, please send it to us.India Policy Watch #1: 50 Years Of That Friedman NYT ArticleInsights on burning policy issues in India— RSJOn September 13, 1970, Milton Friedman wrote his famous piece on the social responsibility of business in The New York Times. The clarity of Friedman’s thinking and his powerful articulation of the doctrine of shareholder value maximisation has made it, arguably, the most influential business article of all time. Friedman scoffs at businesses talking of ‘social responsibility’ suggesting any attempt to do so will turn political that will force the individual to conform to the more general social interest. Who determines this social interest? In the hands of a dictator or a demagogue, this decision can be detrimental to society. It is a compelling article. I would suggest you read it before you dismiss it as free-market fundamentalism. Friedman concludes:“But the doctrine of “social responsibility” taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book “Capitalism and Freedom,” I have called it a “fundamentally subversive doctrine” in a free society, and have said that in such a society, there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud.”   Enduring AppealOver the years it has been attacked and its central message discredited in the light of the global financial crisis. Even businesses are reluctant these days to invoke shareholder value maximisation as their goal. There have been calls for societal value maximisation, stakeholder wealth creation and conscious capitalism to replace the Friedman doctrine. All good intentions aside, nothing has truly replaced it in how businesses operate. What explains its enduring appeal? Three reasons:A simple and measurable metric: The shareholder value maximisation goal is easy to set and monitor. It helps that there is a common understanding of the metric. The alternatives are amorphous. It is difficult to understand what does maximising societal value entail, for instance. Who will define what society wants? Are societal objectives of India and the US similar?Rewarding the risk takers: The shareholders invest risk capital in an enterprise. This willingness to take risk is what leads entrepreneurs to build new products, satisfy the consumers and create new jobs. The shareholders deserve the pursuit of maximum return by the firms for this risk they undertake. It is up to them what they do with these returns. They can invest it in newer enterprises or use it to improve the society as they deem fit. The management or anyone else should have no claim on how to invest the returns that belong to the shareholders.Shareholders are the residual claimants: Everyone who contributes to the value creation of an enterprise – the employees, the management team and the customers – get their fixed claim on the value through compensation for their efforts, stock options and the value derived from the products or services offered by the enterprise. Only when these fixed claimants are served well, the value for the residual claimant (the shareholder) is maximised. So, the pursuit of shareholder value will by itself serve the other stakeholders well.Rajan’s ReassessmentPromarket, a publication of the Stigler Centre at Chicago Booth School of Business, is marking the 50-year anniversary of the Friedman article with a debate on the social responsibility of business on its pages. Eminent academists like Oliver Hart, Luigi Zingales and Lucian Bebchuk have written with depth and intellect on the relevance of the Friedman doctrine in today’s times. This week Raghuram Rajan weighed in on the debate with an article titled “50 Years Later, It’s Time to Reassess”. Rajan takes a clear-eyed view on what has worked for the Friedman doctrine and where it is fraying. He repeats the usual points that we have listed above in favour of the doctrine. Additionally, he emphasises the political argument of Friedman for shareholder value maximisation that seems relevant in the current times when we are debating the enormous clout of big tech in our lives. Rajan writes:“Finally, Milton Friedman thought that there was a political argument for shareholder value maximization, which keeps the role of the government and the role of the corporation separate. He thought that was important because he felt that corporate social responsibility was a backdoor way for special interests to push what they could not get through Parliament and therefore make rules for the firm which they could not make through legislation. In some sense, this is a very important argument because it says that sometimes, these pressures can be anti-democratic rather than pro-democratic—that because you’re frustrated in Congress or in Parliament, you might try to push that stuff through the backdoor by directly targeting corporations.”    But Rajan believes this separation of business from politics that Friedman advocated has turned into its primary problem:“And that leads to what I think is the deepest problem with Milton Friedman: shareholder value maximization means completely turning a tin ear to politics. It sounds sinister. It sounds pro-rich. It sounds evil, even if it may be the right thing to do for society under many circumstances.”I’m not quite sure why something that sounds evil while it might be the “right thing to do for society” needs to change. There are many economic concepts that sound evil or counter-intuitive – efficient market mechanism, free trade, comparative advantage or Ricardian equivalence. They shouldn’t be discarded or changed because of it. Instead, they need to be explained better.But Rajan goes ahead proposing an alternative:“The alternative, in my view, is to maximize the value of long-term investors in the firm. This is different from the Business Roundtable statement, in that you can identify who these long-term stakeholders are. If you are a firm with a lot of impulse customers, they’re not your long-term investors—they come in and buy as they wish. If, however, you have long-term employees, they are long-term investors because their sweat equity is embedded in the firm. Similarly, shareholders, long-term debt holders, long-term suppliers, these are long-term stakeholders. A firm could say, when forced to choose between two stakeholders: I will choose the action that enhances the overall value of these stakeholders.”There is a problem with this formulation – how will you know from the start who will be a long-term investor? For Rajan, the ‘impulse customers’ aren’t long-term investors. But won’t the impulse customer of today be a firm’s long-term customer over time? A similar argument can be made for long-term shareholders or long-term suppliers. They all will have to start somewhere in developing a relationship with a firm. Also, how do you define the length of time that will qualify a relationship as long-term? Not surprisingly, this alternative to shareholder value suggested by Rajan meets the same fate as others. It sounds good on paper but fails to be specific.Rajan comes around to it by the end of his piece:“Corporate boards should take pride in the investors they stand for. Being nice to everyone is, however, infeasible, meaningless, and simply deflection. That is what I take away from Milton Friedman.”Friedman’s doctrine remains the most elegant and practical way for firms to pursue its objectives that deliver the most value to society. For Friedman, enterprises in a competitive market pursuing shareholder maximisation will do well for society. But a monopoly will have to do more. As he wrote:“The participant in a competitive market has no appreciable power to alter the exchange, he is hardly visible as a separate entity, hence it is hard to argue he has any ‘social responsibility.”“The monopolist is visible and has power. It is easy to argue that he should discharge his power not solely to further his own interest but to further socially desirable ends.”So, a firm operating in a competitive market is free to pursue shareholder value maximisation. The shareholders can define the value differently in today’s world that goes beyond monetary rewards. This could include the environment, sustainable growth, or social equity. But for Friedman, this can’t be imposed by others on the shareholders. The decision has to be that of the shareholders alone.A Framework a Week: What Made the US Enable China’s Rise?Tools for thinking public policy— Pranay KotasthaneThis question that has been bugging me over the last few months: what explains that the US — now single-mindedly focused on countering on PRC’s rise — aided and abetted the PRC’s rise in the first place? Despite its enormous intellectual horsepower, why wasn't the US able to anticipate and mount a response to the PRC challenge long before?As it turns out, an incumbent great power enabling the rise of its own future rival is not an anomaly. In fact, that’s the default case. At least that’s the core argument of an excellent book Over the Horizon: Time, Uncertainty, and the Rise of Great Powers by David Edelstein (You can read a top-notch book review by my colleague Aditya Ramanathan here). The book presents a framework that manages to explain the US-China relationship quite well.The core argument in Edelstein’s words is that:… uncertainty about the future reinforces the pressures on state leaders to focus on the short term. Leaders of existing great powers are disinclined to expend considerable resources on an uncertain long-term threat. When existing powers focus on the short term, mutually beneficial cooperation with rising powers becomes more likely. Conversely, the more state leaders become alerted to the potentially threatening long-term intentions of a rising power, the less likely cooperation in the short term with a rising great power becomes.This is a counter-intuitive proposition. Offensive realism theory argues that all that matters is relative power. Regardless of a rising power’s intentions, its rise is reason enough for an incumbent power to confront the contender as soon as possible. And yet, the empirical approach of declining powers has been quite the opposite. European powers cooperated with Bismarckian Germany, Britain capitulated to the American rise, European states, again, co-operated with Germany in the inter-war period, and finally, the US supported China’s entry to WTO and turned a blind eye to PRC’s aggressive actions and increasing capabilities for nearly fifteen years before executing a u-turn.The author argues that this divergence from theory can be explained by taking into account two more variables. Not just relative power, but perceived intentions, and time horizons of states together explain if a declining power will confront, co-operate, or compete with a rising power. The framework that brings together all this is shown below.When a rising power has a long-term focus and a declining power has a short-term focus, the two end up co-operating rather than contesting. This configuration occurs, for instance, when rising powers adopt a “hide our capacities and bide our time” approach. They focus on building long-term capabilities instead of attracting undue attention of the incumbent powers towards them. This is what PRC under Deng Xiaoping and Germany under Bismarck did. If successful, this strategy makes declining powers discount long-term threats and instead focus on short-term gains through co-operation. This is precisely what happened between the US and PRC after the Sino-Soviet split. PRC resisted overt provocation throughout the 80s and 90s, while the US companies and consumers benefited from PRC’s manufacturing prowess. By 2010, PRC’s time horizons changed. Its aggression towards its neighbours signalled that it was now focused on consolidating its position in the short-term. Meanwhile, the US was still focused on the short-term horizon. The aftereffects of 9/11 still loomed large, and the US strategic thinking was preoccupied with other issues — Iraq, Afghanistan, Russia, and Iran. The result was a mixture of skirmishes and pragmatic cooperation between the US and PRC.By 2016, PRC’s continuing arrogance against its neighbours, the BRI ambition, attempts at influencing politics in countries such as Australia, and rapid buildup of technological power meant that the US was forced to extend its time horizon and look at PRC as a structural adversary. The result is that we are heading towards a preventive “war” — a scenario where the US is confronting PRC directly and provocatively not by force (yet) but in trade and technology domains. This framework also explains that a preventive “war” scenario is not inevitable. If there is a rethink in PRC’s approach, a shift to either of the remaining three quadrants is possible. With Xi Jinping at the helm, it looks unlikely though. Despite the perception that PRC thinks long-term, Xi is operating with an extremely short-term time horizon and inviting pushbacks from a host of countries as a result.India Policy Watch #2: No Looking Back On Agriculture ReformsInsights on burning policy issues in India —RSJThe Lok Sabha passed three bills relating to agriculture this week. These bills replace the existing ordinances that came into effect in June. These bills are part of the agriculture reforms package that was unveiled by the FM in May this year. The bills will now be tabled in the Rajya Sabha on Sunday. These reforms were long due. Despite the obvious failures of the state in the farming sector, successive governments balked at reforms. The entrenched ‘aristocracy’ of rich farmers, commission agents and farmer leaders thwarted all attempts. This time is different. For once the numerical advantage of this government and the political capital of the PM are being put to use for structural reforms that will serve us well in the long-term. The small and marginal farmers have suffered under the benevolent tyranny of the state. These reforms will liberate the sector. Yet, there is a minor political storm brewing. Shiromani Akali Dal (SAD), a long-time ally of BJP in the state of Punjab, has opposed the legislations. On Thursday, its lone representative in the Union Cabinet, Harsimrat Kaur Badal, resigned. The SAD leader, Sukhbir Singh Badal, spoke against the bill in Lok Sabha:“These bills have many provisions that go against farmers’ interests. We have repeatedly asked the government that please address the apprehensions of farmers, but the government had done nothing. Therefore, I oppose these bills.”There are farmer protests in Punjab and Haryana against the bills. There is a possibility it could spread to other states. The usual bogey of capitalists and big businesses is being brought up. This is a government that’s especially sensitive to this kind of criticism. We hope it stays the course and uses its formidable skill in setting the narrative to sell these reforms to the farming community. Farmers Aren’t FreeThe reasons for the protests are instructive in understanding why critical reforms in any sector in India remain difficult to implement. A vocal minority that stands to lose the most has organized itself to protest while the majority for whom the benefits are diffused is silent. To understand the reforms, it is important to understand the ‘unconstitutionality’ of the current system:Farmers can only sell their produce at the state APMC registered mandis. There is no freedom to sell produce outside of the mandis. There’s no freedom to conduct inter-state trade for the farmers. There is only a single buyer – the state. There is no competition. The state sets the price of the produce. The state has its approved ‘middlemen’ to facilitate the process of buying from the farmers. Since the farmers are often small and poor, their ability to reach the mandi, to negotiate the byzantine paperwork of license fees and commission, and store their produce is limited. There’s a long chain of small and big traders and commission agents who fill in to provide these services. This is a deeply entrenched cartel that buys low from the farmers and bids up the price to the wholesaler. The farmers are at their mercy while the end consumers pay for the cartelisation. The evergreen anecdote of farmers making Rs. 2 for every kilo of onions they grow while the consumers shelling Rs. 80 a kilo is a result of this. There’s no freedom for the farmer to sell their labour for a price through a contract. This is a freedom guaranteed by the constitution to every citizen. Except the farmer. So, small and marginal farmers can’t enter into contracts with private buyers of farm produce to aggregate their produce and sell it a pre-determined price. There are restrictions on how much stock of ‘essential commodities’ can be held by farmer or a trader. The essential commodities include cereals, potatoes, onions, oilseeds and pulses. So, the market mechanism of stabilising price through supply management and storage isn’t available. There’s no incentive for players to set up modern warehouses and cold supply chains for these commodities. The result is frequent price fluctuations and criminal wastage of food. The Sum Of All Good IntentionsThe dismal state of Indian agriculture bears no repetition. The farm income growth has been stagnant for the last 6 years. The small and marginal farmers who constitute 86 per cent of India’s peasantry barely make a living out of farming with average per capita annual income below Rs. 100,000. About 45 farmers die by suicide on an average every day. The Food Corporation of India (FCI) buys the produce at the minimum support prices (MSP) from the mandis and distributes it at a subsidised rate through the public distribution system (PDS). This subsidy bill has grown to unmanageable level. The FCI borrows from National Small Savings Funds (NSSF) to keep its operations going. It is estimated this loan will rise to Rs. 3.5 lakh crores in FY ‘21 from Rs. 2.5 lakh crores in FY ’20. Millions of ordinary Indians trust NSSF with their lifelong savings. It is anybody’s guess when FCI will be able to pay back NSSF. If this appears like a giant Ponzi scheme, that’s what it is. The food grains stocked at FCI are at an all-time high but there’s no market mechanism for its distribution when people needed it the most during the pandemic. They had to wait for the largesse of the state for the stored grains to reach them. This is a broken system. Even if you set out to create a dysfunctional system, you’d have struggled to reach here.Who in their right minds would want this structure to continue? Who has it helped except entrenched cartels and a few dynasties of ‘farmer leaders’ who have built a system of patronage? It is the established rural structures that’s protesting. That doesn’t want to let go. They must be ignored. How We Got Here?The obvious question that comes up is why did we opt for such a system? The answer is that old Voldemort of all public policy choices in India – good intentions. The colonial powers had systematically exploited Indian farmers to the point of destitution. Nehru was taken in by Fabian socialism that was in fashion during that time. His first visit to USSR in 1927 and the subsequent success of Stalin’s first five-year plan in state-controlled agriculture strengthened his views. Then there was the 1943 Bengal famine. The political and cultural impact of the famine still persists. A large part of our permanent suspicion of private capital and markets can be traced to the famine and the perception of how rich traders and merchants hoarded food grains and profiteered while millions died of starvation. The plays, songs and films of the Indian People’s Theatre Association (IPTA) left a deep imprint in our popular culture about the apathy of capitalism. This informed our public debate and politics in a manner where the economic right was forever tainted with the colonial anti-poor and anti-farmer philosophy. That’s why there was no trace of the market mechanism when laws for the farm sector were drafted after independence.Sen On FamineIt is worth taking a short detour on famines here. Amartya Sen’s famous work on Bengal famine blamed the lack of accountability of the colonial government that didn’t have to face elections as the primary reason for the starvation deaths. His insight was simple and profound. Famines aren’t a food availability problem. They are ‘entitlement failures’ that can happen with even minor imbalances of production or some unintended effects of government policy. Sen defined entitlement as:“The set of alternative commodity bundles that a person can command in a society using the totality of rights and opportunities that he or she faces.”The entitlement set is the range of goods and services she can acquire by exchanging or converting her resources or labour. In famines, these entitlement sets fail to provide her food in exchange thus setting in starvation. In case of Bengal famine, the proximate cause of entitlement failure was the inflation caused by the WW2 where the food prices rose by 300 per cent while farm wages rose by 30 per cent. This failure was exacerbated by the refusal on part of the colonial government to freely distribute food grains that were available in abundance. We haven’t moved too far away from that reality today despite the best intentions of the state to help farmers. Stay The CourseNotwithstanding the obvious failures of our agriculture policies and the relative success of the market mechanism in other sectors, we raise the spectre of capitalists and big businesses harming our farmers whenever efforts at structural reforms are discussed. The farmers have been for long in the grip of the predatory state. These reforms will empower farmers. The government must ride over the resistance and set the farmers free.    Addendum— Pranay KotasthaneAny reform that is even remotely seen to impact the MSP gravy train is bound to face opposition from a host of incumbent beneficiaries. One, the farmers growing the 22 crops backed by the MSP. Two, the traders getting a percentage of the MSP. And three, the state governments making money by charging hefty commissions for the sale of produce at APMCs. None of this is surprising.That apart, there are at least two other critiques that merit serious attention.The timing critique. Agriculture in India is a sob story even in the best of times. And here we are, in the midst of an unprecedented supply and demand shock caused by COVID-19. So any reform that might remotely lead to lower incomes because of a dilution of the MSP promise is bound to face the question: why now? Can’t the cognitive maps of those losing out be aligned to absorb the short-term losses? The credibility critique. It’s tough to take a government seriously that claims it is liberating farmers even as it has no qualms in banning onion exports simultaneously. The fact that these legislations say nothing about the impact on the existing procurement price mechanisms has led to suspicions about government intentions. As Mekhala Krishnamurthy writes in The Print:..instead of building up the confidence to develop a comprehensive framework for agricultural reform for these states, with a credible time horizon and coordinated support for farmers, the position on agricultural reforms has become further vitiated and volatile. Even if the three farm sector Bills do not directly legislate on MSP and procurement policy, it is simply not tenable to spearhead major national reforms in agricultural markets in India without making room for detailed deliberations on the future of where and how price support and procurement policies fit in. Moreover, not having taken state governments into confidence calls into question the implementation credibility of these legislations.So, what remains to be seen is how the government signals credibility amidst an economic crisis for a long-pending reform. This story is not over, not just yet.HomeWorkReading and listening recommendations on public policy matters[Article] Oliver Hart in Promarket on ‘How Shareholders Don’t Always Want To Maximize Shareholder Value’. [Article] Ashok Gulati in The Indian Express on why this is a 1991 moment for agriculture.[Podcast] We have an All Things Policy episode on Opportunity Cost neglect in Public Policy.[Paper] Dani Rodrik and Stephen Walt present their vision of the future world order.That’s all for this weekend. Read and share. Get on the email list at publicpolicy.substack.com

收听提示 1、诺贝尔经济学家为什么会自杀？ 2、什么是数字货币、比特币，有什么区别？ 3、移动支付会给我们的未来带来什么影响？ 4、什么是契约经济学？ 本集嘉宾 聂辉华，中国人民大学经济学院教授、博士生导师曾在美国哈佛大学从事一年博士后研究，师从2016年诺贝尔经济学奖得主、契约理论泰斗哈特（Oliver Hart）教授。 本集推荐 不完美世界的博弈：契约经济学35讲 《八分》第二季已经完结，我们会在10月见面。

收听提示 1、诺贝尔经济学家为什么会自杀？ 2、什么是数字货币、比特币，有什么区别？ 3、移动支付会给我们的未来带来什么影响？ 4、什么是契约经济学？ 本集嘉宾 聂辉华，中国人民大学经济学院教授、博士生导师曾在美国哈佛大学从事一年博士后研究，师从2016年诺贝尔经济学奖得主、契约理论泰斗哈特（Oliver Hart）教授。 本集推荐 不完美世界的博弈：契约经济学35讲 《八分》第二季已经完结，我们会在10月见面。

Imagine you’re married, but you never discussed children with your partner beforehand. Then imagine your partner doesn’t want children, but you do. Your wedding day contract made no mention of kids, and legally everything is fine – but you’re still disappointed. Contracts are everywhere in society, and the example of children and marriage is just one example that shows that many contracts are - as Oliver Hart would say - incomplete.In a conversation with The Nobel Prize’s Adam Smith, Hart explores the importance of words and language for a researcher, how being good at economics is about learning to THINK like an economist and how Oliver Hart’s parents influenced him to think that anyone who’s not left-wing is an idiot.In 2016 Oliver Hart was awarded the Prize in Economic Sciences, together with the Finnish economist Bengt Holmström, for his contribution to contract theory. See acast.com/privacy for privacy and opt-out information.

This lecture was given at the University of Utah on 14 November 2019. Catherine Ruth Pakaluk (PhD, 2010) is an Assistant Professor of Social Research and Economic Thought at the Tim and Steph Busch School of Business at The Catholic University of America. Formerly, she was Assistant Professor and Chair of the Economics Department at Ave Maria University. Her primary areas of research include economics of education and religion, family studies and demography, Catholic social thought, and political economy. Dr. Pakaluk is the 2015 recipient of the Acton Institute’s Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.” Pakaluk did her doctoral work at Harvard University under Caroline Hoxby, David Cutler, and 2016 Nobel-laureate Oliver Hart. She has co-authored widely cited articles in social science and epidemiological journals, including Demography, Economic Inquiry, and the Journal of the National Cancer Institute. Beyond her formal training in economics, Dr. Pakaluk studied Catholic social thought under the mentorship of F. Russell Hittinger, and various aspects of Thomistic thought with Steven A. Long. She is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael Pakaluk and their eight children. For more information on this and other events go to thomisticinstitute.org/events-1

This lecture was given by Prof. Catherine Pakaluk at the United States Naval Academy on 10 September 2019. Catherine Ruth Pakaluk (Ph.D, 2010) joined the faculty at the Busch School of Business at the Catholic University of America in the summer of 2016 and is Assistant Professor of Social Research and Economic Thought. Formerly, she was Assistant Professor and Chair of the Economics Department at Ave Maria University. Her primary areas of research include economics of education and religion, family studies and demography, Catholic social thought and political economy. Dr. Pakaluk is the 2015 recipient of the Acton Institute’s Novak Award, a prize given for “significant contributions to the study of the relationship between religion and economic liberty.” Pakaluk did her doctoral work at Harvard University under Caroline Hoxby, David Cutler, and 2016 Nobel-laureate Oliver Hart. Her dissertation, “Essays in Applied Microeconomics,” examined the relationship between religious ‘fit' and educational outcomes, the role of parental effort in observed peer effects and school quality, and theoretical aspects of the contraceptive revolution as regards twentieth century demographic trends. Beyond her formal training in economics, Dr. Pakaluk studied Catholic social thought under the mentorship of F. Russell Hittinger, and various aspects of Thomistic thought with Steven A. Long. She is a widely-admired writer and sought-after speaker on matters of culture, gender, social science, the vocation of women, and the work of Edith Stein. She lives in Maryland with her husband Michael Pakaluk and eight children. For more information on this and other events, go to thomisticinstitute.org/events-1

Oliver Hart, Nobel-winning Harvard economist, and Kate Vitasek, faculty at the University of Tennessee, argue that many business contracts are imperfect, no matter how bulletproof you try to make them. Especially in complicated relationships such as outsourcing, one side ends up feeling like they're getting a bad deal, and it can spiral into a tit for tat battle. Hart and Vitasek argue that companies should instead adopt so-called relational contracts. Their research shows that creating a general playbook built around principles like fairness and reciprocity offers greater benefits to both businesses. Hart and Vitasek, with the Swedish attorney David Frydlinger, cowrote the HBR article "A New Approach to Contracts."

Four massage therapists bare it all. --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app Support this podcast: https://anchor.fm/hardcore-healing/support

To help address the big questions that shape our world, UBS has sought out a number of Nobel Laureates in the economic sciences to ask them to share insights, discuss their research and open their inquiring minds. This week we’re hearing from Oliver Hart, the Andrew E Furer Professor of Economics at Harvard University, and 2016 Nobel prize recipient. Hart discusses his recent focus on the theme of corporate social responsibility and how this fits in to his life’s work on the theory of the firm and contract theory

My guest today is Oliver Hart, the sixth Nobel Prize winner to appear on this podcast. He is a British-born American economist, and currently the Andrew E. Furer Professor of Economics at Harvard University. He received the Nobel Memorial Prize in Economic Sciences in 2016 for his work on contract theory. Oliver is an expert on contract theory, theory of the firm, corporate finance, law and economics. He studies how ownership roles, structure and contractual arrangements are used in the governance and boundaries of corporations. The topic is the economics behind a Nobel Prize. In this episode of Trend Following Radio we discuss: Contracts Venture capital Residual control Irrational exuberance Currency equilibrium Bitcoin Differences in bitcoin and blockchain Efficient Market Theory Jump in! --- I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel Facebook: @trendfollowing LinkedIn: @covel Instagram: @mikecovel Hope you enjoy my never-ending podcast conversation!

Oliver Hart is the 6th Nobel Prize winner to appear on Trend Following Radio. He is a British-born American economist, and currently the Andrew E. Furer Professor of Economics at Harvard University. He received the Nobel Memorial Prize in Economic Sciences in 2016 for his work on contract theory. Oliver is an expert on contract theory, theory of the firm, corporate finance, law and economics. He studies how ownership roles, structure and contractual arrangements are used in the governance and boundaries of corporations. How did he get his start? After receiving his PhD from Princeton in 1974, he began studying general equilibrium under uncertainty – particularly the behavior of firms when under uncertainty. Summer of 1983 was when his career path shifted – specifically to contracts. He became less interested in what firms should do, and more interested in how firms align with what shareholders want them to do. Following the 2008 financial crisis, Oliver believed it was dangerous to start intervening in such a fragile economy. Yes, it was an unprecedented crisis but, Oliver believes it was totally overblown. No physical or human assets were disappearing and we had mechanisms such as bankruptcy to fall back on. What was the reasoning behind some banks beings saved and others not? Wall Street was bailed out but mainstream was not? Oliver looked at the crisis as arbitrary and rigged. Michael and Oliver wrap the podcast up discussing the differences in block chain and bitcoin and end the podcast with a 6 minute bonus Q&A.

Behind every influential person is a teacher or experience that encourages them to follow their curiosities. Kathy Averill would discuss the world with her son, Michael Larsen. For kathy, no question was too small. Kathy encouraged her son to explore the world. From listening to Mikey’s music in any of his bands, Eyedea and abilities, Oliver Hart, Carbon Carousel, I can see how Kathy’s teaching influenced such a beautiful mind. From rap battling to jazz freestyle hip hop fusion - Mikey was driven, curious, and very playful. I wanted to talk to Kathy to listen to her experience raising Michael Larsen and ultimately her individual experience. You can check out his albums and merch → http://bit.ly/Eyedea If you're looking for a great documentary, check out, "The World Has No Idea," on itunes, google play, amazon prime or here → http://bit.ly/2EktF0q

Behind every influential person is a teacher or experience that encourages them to follow their curiosities. Kathy Averill would discuss the world with her son, Michael Larsen. For kathy, no question was too small. Kathy encouraged her son to explore the world. From listening to Mikey’s music in any of his bands, Eyedea and abilities, Oliver Hart, Carbon Carousel, I can see how Kathy’s teaching influenced such a beautiful mind. From rap battling to jazz freestyle hip hop fusion - Mikey was driven, curious, and very playful. I wanted to talk to Kathy to listen to her experience raising Michael Larsen and ultimately her individual experience. You can check out his albums and merch → http://bit.ly/Eyedea If you're looking for a great documentary, check out, "The World Has No Idea," on itunes, google play, amazon prime or here → http://bit.ly/2EktF0q

Contracts are an integral part of life. Many of our daily interactions include either a verbal or written contract. What contract is implied when you buy/sell investments? Oliver Hart, Nobel Prize winner and Economics Professor at Harvard University, explains “contract theory.” He defines what a contract is and how people enter into agreements. Listen to their discussion of bond contracts and other investment agreements that require a contract. Why do people frequently sign contracts that they may not fully understand? They also dive into the legal enforcement of contracts and the problems a contract can cause for both parties. Is your current bank or brokerage firm providing the services you need? Doug shares the story of a client who set up a U.S. investment account through his Israeli bank. He points out the folly of this decision (from an American tax point of view) and where the bank might have gone astray wrong with its financial planning models. To learn more about how to plan a bond ladder, watch this short video, Learn How to Make a Bond Ladder. If you’re not sure your current brokerage firm is giving you the service you need, watch U.S. Brokerage Accounts for Non-U.S. Residents. To follow Professor Oliver Hart visit his website. If you’re not already receiving updates on new episodes, sign up now, and as a special bonus, receive Doug’s free ebook The Retirement Planning Book. Note, Doug is an investment advisor and does not give tax or pension advice.

点击每期节目可以看到具体文稿内容The Economist: Oliver Hart and Bengt Holmstrom win the Nobel prize for economic sciencesSUPPOSE that you and I are interested in opening a lemonade stand together. We agree that I will bring the materials we need (cups, stand and so forth) while you will make the lemonade. I'll do the pouring while you mind the cashbox and at the end we will split the proceeds fairly. A doubt niggles, though. I am worried you might, at the end, try to hog the contents of the cashbox. We therefore decide to draw up a contract (common practice in the lemonade-stand industry) dictating that the returns to our operation must be split evenly. But then you start to worry: much of the success of our stand will depend on the quality of the lemonade, over which I have no control. What if I decide to slack off and piggyback on your lemonade-brewing genius, knowing that after you pour your sweat into the lemonade (not literally), the split is still an even 50-50? We therefore set to haggling over language in the contract setting out precisely how each of us should do our respective jobs.Contracts play a critical role in the operation of the modern economy. They set out who is allowed to do what with the land they own, the people they employ and the songs they store on their smartphones. They underpin nearly all of the banking and insurance sectors. Individuals are self-interested, but to take advantage of economic opportunity people must often work together and find ways to align their interests (or minimise conflicts of interest). That's where contracts come in. This morning, The Swedish Riksbank awarded this year's Nobel prize for economic sciences to Oliver Hart, a British economist at Harvard University, and Bengt Holmstrom, a Finnish economist at MIT, for their work improving our understanding of how and why contracts work, and when they can be made to work better.968重庆之声每周一至周五8点56分每天三分钟养成良好英语听说习惯

Today’s guest is Bengt Holmström. Bengt is Finnish, but he’s spent the last 40 years living in the US. Currently he’s a professor of economics at MIT. Bengt was recently awarded the Nobel prize in economic sciences together with his Harvard colleague Oliver Hart for their contribution to contract theory. Essentially, Bengt has spent decades studying incentives and trying to figure out how to design better incentive structures. This has been a recurring theme on the podcast so I’m sure you can appreciate how excited I am to have Bengt on as a guest. We talk about what it feels like to win the Nobel prize, incentives (obviously), and how transparency isn’t necessarily always a good thing.

What follows is an edited transcript of my conversation with Judy Stephenson. Petersen: You're listening to Economics Detective Radio. My guest today is Judy Stephenson of Oxford University's Wadham college. Judy, welcome to Economics Detective Radio. Stephenson: Thank you very much. It's nice to be here. Petersen: So, our topic for today is economic history. Specifically we’ll be looking at some interesting research Judy has done on wage rates in the early modern period in London. This period is particularly interesting because it's the start of the Industrial Revolution which leads to a dramatic increase in the growth living standards and of technology and that trend of course is what has shaped our modern world and made it different from the world of the past. So, it's very important of course to understand this period if we want to understand the world as it is now. So Judy, start by giving us historical background. What was the world like in the period you study? Stephenson: Well, I work mostly on researching London, so urban environments. And London is very developed in this period between about 1600 and 1800. And London becomes the biggest city in the world during this period and as the biggest city in the world it's hugely vibrant, some of the largest merchant houses in the world are there, banking is advanced and developing. Most of the occupations of London are tertiary or service sector, even at this early date. The river is a huge source of both transportation and work, the port is where much of the capital, both physical and financial, from around the world comes through the city, and the professions and bureaucracy are well established in London in this period. It's growing at all levels of society, from the very poorest to the very richest exponentially. So, if you look at the population growth overall in the U.K. in the late 17th century from 1500-1600 to 1700, that actually is pretty much stable or slightly declining. But the population of London grows by a third or something in that period. London is this hugely vibrant commercial social and cultural center and it's pretty much overtaken Amsterdam, which has come to the end of its golden age in the mid 17th century, right at this period. So, although the world more generally and in a wider sense can be typified by pre-industrial or agrarian values, London is very commercial in this period. Petersen: Okay, so, if I were to get in a time machine and go back in time, maybe London would be more familiar to me, would seem, feel more modern than almost any other place. Stephenson: I think it would be very familiar to you the way of getting around would be a sedan chair or a carriage. You can hire them on the street, in fact you send your boy out to get one. It looks very like Uber, it's a gig economy. And most people working in unskilled, or who didn't have a trade or didn't have a profession or skill probably didn't have steady jobs. They thought of themselves as having work that they could rely on, but it wasn't wholly reliable and they definitely didn't have a contract that would keep them going, they probably didn't have many rights either. And they probably worked at two or three things and everything---the traditional literature about London in this period is one of inequality. So the very very poor literally scavenging on the streets among the smut because the streets were the sewers in those days, and the very very rich living in these incredibly grand environments with retinues and servants. It's a golden age for the aristocracy after they had a pretty rubbish time in the 16th century. It's a golden age for the aristocracy, it's a golden age for art, for architecture, for all these things but it is also a period of desperate poverty and mortality. The plague doesn't die out in London until the end of the 17th century, but still very very high infant mortality and living standards are nothing like they become in the later 19th century, after they sorted out all those things. But from a commercial point of view, you might well recognise it. Petersen: It's very interesting---and of course the whole period is interesting---but it's particularly interesting for what it becomes, really. The rest of the world starts becoming more like London, starting in this period. Stephenson: Yes. Petersen: And so you study wage rate of some of the day labourers and the workers in that period. How have economic historians gone about measuring things and getting data that far back in the past? Stephenson: Well, data on wages and prices for this period was originally gathered by a guy---Thorold Rogers---who was a 19th century historian who started collecting wages and prices in the mid 19th century and finished 40 years later, literally a broken man. These are seven volumes from around England and he basically went into any long run institution where there was an archive or records, as they were called in those days, and just noted the quantities and prices found in the books. But it was a huge project way before the days of even print noting, before the days of an efficient typewriter, let alone a computer. It was pretty haphazard as to what he was actually recording but it's very accurate. But he tended to take down labour costs or wages as day rates, and what he mostly found were builders because he was in big Oxford colleges and places like Westminster Abbey which had buildings from the 13th century and had required a lot of building maintenance and surprisingly he didn't find many other wages. So this way of recording had a sort of half dependence. These day rates because they were the only ones that people could find it was assumed that wages---wage rates are very hard to find but there's always good ones for builders---and it was assumed that builders were the same everywhere in terms of skill levels so these could be comparative. And Arthur Bowley---who is known as the father of modern statistics, an economist and statistician again working in the end of the 19th century and in the early 20th century---used builders in his first attempts to think statistically about an average wage, an average worker, and to establish a real wage. And Bowley’s work is absolutely seminal in the history of statistics, econometrics, and economic history. And he used Rogers' and others' wage rates of builders. And this tradition carried on as other historians gathered more rates, like Elizabeth Gilboy in the 1930s, and then Phelps Brown and Hopkins used all these people's data when they came up with the seminal Seven Centuries of Building Wages in 1955. And what Phelps Brown and Hopkins had done was they took all those day rates from the builders, and then they took a series of wages and prices and they created a basket of goods and they offset the wages against the prices and they came up with an index of the real wage or living standards across the ages. And this has been the standard for measuring welfare since 1955. And because it's very difficult to find wage rates for the 18th century for some of the reasons I spoke about a minute ago---not many people have jobs, etc etc etc---the dependence on builders' wages continued until, with the most amazing econometric and advanced econometrics techniques that Greg Clarke and Robert Allen were using, they still use that data from the 1930s. I think the latest good index Jeremy Boulton made in the early ‘90's, where he collected about 2,700 observations of wage rates. The key thing to remember here is all of these wage rates came from bills in the archives of the institutions. So they’re not really wages. In fact they are not wages at all. So, I don't know if you've ever worked for somebody and been charged out by the day, have you? Petersen: I have not, but my wife is charged out, she works in data science and yes, she gets one wage and she's charged out to other firms at a different rate. Stephenson: And what she's charged out is higher, right? So, when I worked in advertising, I cost my clients about 1,800 pounds a day, I saw about 350 of that. What a bloody enormous margin, actually. You got to look at how IPG were not making a really stonking profit on that but you know there's overhead and those kinds of things. Well, in the 18th century everything, but particularly in the building trades, that's exactly how you dealt with masons or bricklayers or carpenters or labourers. And any economy that has to organize production---and the building they were organizing was pretty big, the Great Fire of London destroyed the old city and was completely rebuilt in about a decade---there's some serious organizational coordination mechanism problems of making all that stuff happen. And the 18th century way of doing it is contract it out. Firms are a series of sub-contracts and so the way wage rates have been collected were the sums that were paid to contractors and what those contractors pay their men were substantially lower than those wages that Phelps Brown and Hopkins had used, or Robert Allen had used and Rogers and people have recorded. Petersen: Okay. In your paper you mention Robert Allen and he had a hypothesis that based on these faulty rage weights that high wages in London were a contributing factor in kicking off mechanization in the Industrial Revolution. So, can you talk a little bit about that hypothesis and how your new look at the data has, I suppose, called it into question? Stephenson: Yeah. So, Allen has made the most seminal contribution to the study of the Industrial Revolution. So, the Industrial Revolution is the savored big debate in economic history really and it's a favorite big debate for lots of parts or disciplines within economic history. The history of technology people like it because of the gadgets, the history of macroeconomics and supply and demand people like it because of the factor prices, the history of the organizational people and sociological people like it because of the institutions in the factories. So it has this broad appeal for everybody who's interested in the economics of the long run. Essentially, the core issue around the Industrial Revolution is it's unexplained. Why did it occur in England before anywhere else? It's this naughty problem that had never really been adequately explained until the early 2000s. Then there were two competing---well not two competing but two complementary---explanations by sort of giants of economic history in the same period. So, Bob Allen explained it through England being a high-wage economy and Joel Mokyr explained it through a series of innovations and enlightenment and how that brings about sort of an intellectual enlightment in scientific innovation. Allen’s theory was the economists’ theory and still is. And essentially what he proposed is that the high wages of England incentivized the owners of production to substitute capital for labour. Essentially because of the way series are constructed when you take all those comparative wage series of Amsterdam, London, Milan, Florence, Madrid, Antwerp, Strasbourg, when you sort of put them all together as a real wage series in the long run, the English wages looked substantially higher by comparison, particularly after 1650. It looked like the cost of labour for capital in England was much higher than it was in the rest of North Western Europe or Italy, where you had the traditional textile industries and banking, where there was some quite advanced commerce in places. Allen argued that the high wage economy first of all created those incentives but that also it had created higher human capital and skills, attracted capital to it, to prepare England for industrialization in the long run. But that the trigger was induced innovation through relative factor prices. And part of his theory also was that coal was cheap and available in England, which is very hard to argue that it wasn't, the coal in China is in Mongolia, the Dutch don't have any they've got coal in the Ruhr, of course. But you know coal has been at the center of English energy requirements for a very long time as Tony Wrigley has written about in a very distinct way actually in a lovely book called Energy and the English Industrial Revolution, which is the kind of thing your children could read. So the relative factor prices between energy and capital and labour were unique in England is Allen’s argument. So, obviously if you find out that the wages are 20% to 30% to even 40% lower than Allen thought, that presents a problem for that theory. Petersen: I believe I heard once that Germany had coal but it had to be transported over land and so was as good as useless to them before the age of the steam engine and trucking. Coal is really important. And so Robert Allen felt that high wages in London and in England were important but it seems like this issue of measuring the contract rate instead of the wage rate casts doubt on that, or even---does it close the whole gap between London and the rest of Europe? Stephenson: Good question. And that really depends on what sort of organizational form or coordination mechanism was in place in other countries. So,I've looked into this with Amsterdam and Antwerp quite a bit already. I've done some work with Heidi Deneweth who works on the Low Countries on economy and building particularly. She's at Ghent. And we're finding in the way that building is organized in Amsterdam, in London, is that in London very much the state has completely outsourced everything. So, the city doesn't employ people directly, that's too much hassle. It seems like the cost of management to something is very high in England because they outsource everything: the navy, the supply, the whole thing. Bits of the navy are integrated into it, but a lot of it, particularly the supply to it, is outsourced and all building is outsourced. Whereas in Amsterdam the city still employs people who are digging dikes, and looking after canals, and doing maintenance work on public buildings. Whereas in London the comparable projects which would be stopping London Bridge from falling down, or wharfing the fleet ditch and making these canals and things. Those are given to large contractors and the contractors are solely responsible for labour. Whereas there is some relationship between labour and the city, people are directly employed in Amsterdam, this is indicative only and we need to do a lot more work on comparing contracts in the same types of organizations. And then there's a guy called Luca Maccarelli, who is an established Italian historian of the building industry and industry in Milan generally and he has looked at some of the data for the wages for Florence and Milan particularly and he has shown that the day rate was only part of the wage there. In fact the contractors were throwing food, bonuses, cash savings, access to places to stay, and all sorts of perks at workers to try and induce them to work. So the wage in Italy was probably a little bit higher. In fact, Mark Reilly has said that we've understated Italy’s by 15-20% and then the person who's done the most work on France so far is Vincent Geloso, who's shown that the Strasbourg wages are probably problematic. But all this comparative stuff is at a really early stage. And we need people to get out into the field, the way I've been in the field in London, and look at more the form of employment and the form of the wage in those places. And really understand, the figures that we've got are they real or have they got other sort of recording factors like I've shown in London? So it's too soon to say although we started work on that. Petersen: So, for the modern era we have people collecting data and they're making a big effort to collect the same data across time and across place. Surveys asking the same survey question to everyone, or government data and making sure it's collected in the same way every year but when we're going back to the past, of course there was no one in the year 1700 collecting data on Italy, and London, and Amsterdam, and all these different places. And so we have to stitch it together from what is available and often that's very different datasets. Stephenson: Exactly, and different types of records. So, it may be the case that all the records are a bit skewed and you know there'll be a new schema once we have all the new data together that does reproduce the Allen’s story. And remember that we need to take the prices of goods into account. It's a real wage calculation he's done not just a nominal wage calculation. But until we've done that, what we do know is the living standards in England were not what Allen thought at the moment but you've got to do the whole comparative thing to know. Petersen: So, how do you distinguish the skilled from the unskilled? How do you make sure you're comparing the same kind of labour? Stephenson: That's a good question. Traditionally pretty much everywhere in Europe we've gathered two types of wage: a skilled wage for what we call craftsmen and craftsman are people who have completed an apprenticeship, who are qualified, that's the idea. So, a mason who has studied seven years in England---doesn't seem to be as long anywhere else---or a carpenter who has studied in the long run. So, who has invested time in the development of the human capital and acquired skills and then we think about the unskilled person as a counterpoint as being the labourer. And this is another important distinction because you know building labourers are actually of two kinds: there's the completely unskilled guy. Actually there are three kinds: there's the completely unskilled guy who's basically just handing them nails or wheeling a barrel around. But then there's the more skilled or semi-skilled assistant who actually is doing a lot more than that, who is preparing the work for the craftsman, who knows which tools go with which materials and who is fully assisting a craftsman and they couldn't really do the work without them. And you call that semi-skilled. And then there's a labourer who is hired really for their brawn. They've got a premium for being extremely strong and what you tend to see in building accounts is people who are actually hired by the load. They get 2 shillings and 8 to move a ton over a day or something---and probably need more than one man to do that---but so there's a brawn premium in these labourers or unskilled. And actually from Phelps Brown and Hopkins onwards we've taken this semi-skilled or brawn wage to be the unskilled wage, but these people aren't unskilled. Whereas the unskilled, the guy wheeling the barrel, or just picking out nails was paid a lot less than those. So, if the rate for the semi-skilled guy was 18 pence a day in 1700, the rate for the unskilled guy was 12 to 14. So you can see there's a considerable premium in here. That's another thing that colours our understanding of welfare because usually it's the unskilled or subsistence wage that the macroeconomist is interested in. They relate unskilled and subsistence even though they maybe should not. It's that unskilled wage that is an indication of supply and demand in the labour market, and the draw of that. So taking building labour to a semi-skilled to be unskilled leads to some problems because it implies that unskilled people in London could afford four times the subsistence basket of welfare goods in 1700, when actually they could barely afford two. So, if you're going to use a welfare basket these rates have a real issue and the distinction between skilled is… Petersen: So, the reason maybe we care more about unskilled wages is because that's the wage that you'd expect to see in other places in the economy. For instance unskilled work in agriculture or working in a shop or things that we don't have data for we can sort of guess because presumably there's a labour market and people have mobility and if there was too big a gap between wages for different unskilled jobs then people would move, they’d arbitrage away that difference. So your paper, it has some sort of case studies. You have data from particular construction projects. I thought those might be interesting to go through. So, one of them is the reconstruction of St Paul's Cathedral after the Great Fire of London, which is a massive project, could you talk a little bit about that? Stephenson: Well, yes it's a famous project because the old St. Paul’s had stood since I think the 14th century. It was this you know cultural and emotional symbol for Londoners apparently, and it had been redesigned---the front had been redesigned---by Indigo Jones, the kind of father of classical architecture in England. And it was completely destroyed by the fire and this was a sort of symbolic task to rebuild and so Christopher Wren hailed the King, came up with the design and you know Wren is pretty much the father of modern architecture and he's this enormous intellectual as well as architectural figure, he's very much part of the enlightenment. So the project lasted about 35-40 years, so they declared it finished in 1711 and the Great Fire was 1666 and it's still there today, absolutely intact, it survived the Second World War. So it's this incredible and very emotive building. The interesting thing from a work point of view is it's very much a craftsman's building, it's not an artist's building. So there is sculpture there, there is painting but nothing like a European cathedral like St. Peter's, St. Paul’s is very much a display of English craftsmanship and baroque style and most of it is stone faced. So, I have these wonderful papers, which are the day books of one of the Master Masons, one of the contracting masons who built the south west tower on the west front. His name was William Camster, his father was also a contracting mason on a separate contract and in the network of masons who served, ran and worked. We’d ran over 30 or 40 years and he was on site for about 10 years of the project from 1700 to 1709 or so and some after and I have his day books right, years of this, where he records every single man that was working for him and what they paid him. So, it's got an appeal because you can go and see what they did---which is very rare---working on the 18th century that you get some wage records and you can actually see the product as well. So, it's quite nice from that point of view. So, from an economist's point of view the interesting thing is the way that they contracted the construction because they just started out one contract at a time and then if it worked, they’d go "Yes. We'll do that again." So, they had these repeated idiosyncratic contingent claims contracting going on and on and on and obviously disputes arise and they resolve them, or people drop out and they get new contractors. But the whole thing is basically on a rolling contingent claims contract what Oliver Hart and Holmström said could never happen. Oliver Williamson would have had his head in his hands. But the other notable thing is that the contractors financed this really because the Crown didn't pay them. It did pay them but the Crown and the city, they leveraged the coal tax but mostly people waited two or three years on contracts to be paid. So, the cost of financing that was just swallowed up by the contractors, it was in the price. And that's one of the reasons why you see a margin on labour and materials. But the interest costs for St. Paul's were as a total of the entire bill over 35 years about 20%, and very little of that had been lent by citizens and the city, a lot of that had come from the contractors themselves through just rolling over bills. Petersen: That's interesting. So, we know not only what they were paying their day labours, but also implicitly we know the interest rate for that time. Stephenson: We do. Yes, 6% for to and from the cathedral. Six percent on an annualized basis. Stephen Quinn and Temin and Voth have found higher rates, above 8% for some private lending around the same time. And it is likely that these contractors will have had to have done some private borrowing or lending within their networks to keep rolling this finance over. Because they will have bought the stone, they will have paid the carter, they will have paid the labours who are working for the carter, they will have paid the craftsman, so they may have well have to borrow to do all those things but 6% is what they got from the cathedral. But the real question is then, so these networks of supply chains are surviving on that kind of finance. So really big contracts essentially on a very high level of trust or a very high level of interest. We need to do more work to find out which, but it does seem like these networks---because they repeatedly contract---they have good information and it's more effective than you would imagine those types of contracts to be. Petersen: And of course they're contracting---it's the government paying for it ultimately right? Stephenson: Yes, and it's financed through the coal tax which is also interesting. Bearing in mind the price of coal is relevant to development at this time. The coal tax was levied at a shilling a cauldron after the Great Fire to rebuild the churches for the city and then it was maintained through and into the Georgian period by parliament who kept sort of either adding to it or continuing it and apparently it was detested and greatly avoided. But we definitely need some more research on how this work, and how people avoided it, and and what it did to coal consumption. Because you find in the accounts that the coal tax, they're expecting this much per year from it and consistently about 10 to 15% less comes in. So they have to turn to the city or to commissioners and people who might have money to borrow from them and tide it over. So financing the thing was unconventional. Petersen: So, we usually think of government debt as being highly safe at least in the modern period but back then it may not have been. Stephenson: Yes, and I don't know what the connection to other Treasury things are and Bank of England and everything. At the time it looks like it's just private between St. Paul's and the commissioners for St. Paul’s and either citizens or contractors and that it wasn't actually securitized as a state promise, but there may have been connections. It's something I haven't delved into enough. Petersen: So, another construction project, in this case it's a maintenance project, is the famous London Bridge which of course in the nursery rhyme "London Bridge is falling down" which apparently was true. Can you tell me a little bit about that? Stephenson: So, well London Bridge was it was built the end of 13th century and it's 19 stone piers across the Thames. It must have been the most fascinating and amazing structure, it stood for pretty much 500 years, but by the end of the 16th century in the early 17th century it is falling down. And the Thames because this sort of development further up river as well, the Thames is actually a very strongly flowing tidal river at this stage and the force of the water force through those 19 piers is wearing away. So they built wooden starlings, so they built a wooden constructions they look like boats around the piers, trying to guide the water through and these of course made the problem worse and they made the waters faster. So to pass under the bridge in a boat at high tide apparently you could drop 10 feet through the rushing rapids beneath. So you pay the shootsman who was contracted by the bridge to guide you through the piers. And it was really quite dangerous. So, the bridge has a number of maintenance problems: the first is the starlings the mason repairs. The second is until the mid 18th century the bridge was covered in housing just like Ponte Vecchio in Florence as a proper living bridge the housing was also in a state of disrepair and some of it owned by the bridge and some of it owned privately. So the bridge tried to take over the property that isn't theirs and then get rid of the housing that isn't working, it's falling into disrepair over this period. And there's a guy called Mark Leighton who's written a brilliant thesis at the University of Leicester all about how the bridge masters and the City of London get rid of the housing in the mid 18th century. But essentially the bridge is the only crossing from side to side, from north to south or vice versa until 1750. There isn't another way to cross the Thames. There was a little wooden bridge up in Putney in 1729. London Bridge it's got all of the infrastructure of London basically. And so it's hugely congested and falling apart. So, the maintenance bills are are huge. Oh yeah as well. So as well as the starlings you then have water wheels which are basically bringing the water from the New River Company and the Thames to give water to the city. So those are also in operation, these whole teams of little engineers looking after the water wheels. So it's a really busy bridge it's got people scrambling over it all the time looking after it, not before the shootsman or anybody else doing any work on it and those people were paid not very much. The master craftsmen were paid for their contract and got a really good rate for looking after the contract, and then they hired others piecemeal so they'd hire well-known carpenters or masons. But they'd never have regular days or regular work and then the labourers were paid by the tide. So at high tide you could work on the bridge or you could work on the upper bits of the bridge if you were in a boat; at low tide you could access all those damaged starlings and piers. So at low tide they worked in boats and that meant that in the winter you might only get four tides in the week depending on when the tide and the light coincided, in the summer you could maybe get 11 and then when they didn't need any work done you wouldn't get any tides at all. So, there were quite a number of people. It varied from teams of 12 to teams of 80 or so who were employed in this fashion in a piecemeal just waiting for a little sort of bit of peace work on London Bridge. So, it's an interesting bit of contact with the sort of materiality of the world as well, everything was literally ruled by when the water came in. Petersen: Right. And since it's such a long period of time, I suppose you can get a decent time series of that change in the wages over that period. Stephenson: Yes, from a labour economist point of view, one of the fascinating things about the 18th century is this persistence of rates, particularly for labourers, it's a very monopsonistic market it's a classic monopsonistic market. It's a wage posting. One where employers basically will see who will come at this set wage and what happens is they don't change the wage. The fluctuation happens around the number of days worked. So people don't turn up, or don't get work when there is less to do. The number of days fall away and when there is high demand, an upward-sloping curve, the number of days go up for everybody. But a transaction cost analysis would suggest that the 18th century employer understood the costs of such information very well indeed because they weren't going to have any asymmetry of information. They were going to post ‘this is what you get,’ particularly the unskilled hand and the time or the amount of work that you got was how the fluctuations and the dispersion occurred. So there's a lot more work to be done on that because nobody's really ever looked at this kind of market in those modern terms, understanding it as monopsonistic or having search or information costs. And it's only with these levels of micro data that we can begin to understand that it might have worked like the labour market we know. Until about 20 years ago people thought---until much more recently actually, the last paper I can see about this is in 2007 by Leonard Schwartz---that essentially before 1840 it's a market dominated by custom not by market forces. But on a micro analysis it looks very much like there are just the kind of market forces at play that we understand today. So, wage posting at the lower level, a little bit of wage bargaining at the skills level, and supply and demand do actually equilibrate but not through the rate, through the number of days worked, which of course brings about the income. Petersen: So, the third construction project you discuss is the Westminster Bridge, which I suppose is that that second bridge you mentioned earlier. Stephenson: Yes, the second bridge, the cross rail of the 18th century. Petersen: Is that interesting from an economic history point of view, we have a lot of data from that? Stephenson: You get less data because I don't have anybody's nice little book saying who came in and on which day, so I don't have the number of days' work for Westminster Bridge. The interesting thing about Westminster Bridge is the different kinds of contract. Everybody, they were making contracts for hundreds of thousands of pounds with the masons and engineers and they also had a contract with a guy who had a horse and three piles for 27 pounds for the year. So, you've got this variation in value or risk from a financial point of view which is quite dramatic. But the key thing is that at Westminster Bridge you find the tide and the day model as well. So a much smaller number of days than you would expect that are actually billed to the institution, but this means of paying by the tide, which protects productivity from an employer's point of view. So that also occurs at Westminster Bridge. And what you find is that people are doing quite advanced and quite dangerous work, but without the danger money. They were given gin instead. So they sank caissons, this is one of the earliest uses of caissons designed to create the piers. So these things are experimental to say the least, and they put people in diving gear into the caissons and it must have been terrifying, you know, what if the stuff gave way and they went under the Thames. In February, because that's the time you want to be in the Thames! You know, in 18th century diving gear. And got them to work on the masonry or on the carpentry on the bed of the river for the same rate as you could be having quite a nice comfy time carving out something simple, or doing some basic maintenance work on a couple of windows on some bridge houses. So, yes very dangerous work. There seemed to be a lot of skill available, ready to do that work at those kinds of rates. Petersen: So, where do you see this research program going in the future? Stephenson: There's obviously an issue about the rate of welfare, the real wage and welfare in the 18th century and to be honest if we're going to make a serious contribution to that, we need to start looking at people who aren't builders. I've started a project with the Cambridge Group for the History of Population and Social Structure, where I spent a year before I went to Oxford, on London occupations. Because that Cambridge group, they are the masters of working on occupational structure in the long run in England and we are sampling institutions that bought goods and services widely. And the kind of bills and the kind of businesses that they deal with to understand what sort of people were employed where. So, to try and get some welfare and some wage data beyond builders that we can normalize and use properly. I think the second direction for this research is to understand how labour markets worked. Was there such a thing as custom? Because one of the old things we believe about the Industrial Revolution, and this idea doesn't really stand up anymore, but it's something that's still emotionally alluring for a lot of people, we see the Industrial Revolution as that sort of capitalism thing and our version of capitalism got going. But if people already understood transaction cost economics, and Christopher Wren writes like Oliver Williamson sometimes, then maybe the market didn't start then, maybe they already had a view of the market. And there are some organizational things that we need to be looking at from that point of view. Essentially the 18th century will always be interesting because it is a free market. It is unregulated, there's no corporation tax and the finance is not state controlled at all. This is before the gold standard, this is before states get interested in managing money in a big way. There is monetary policy but it's not in the same way we conceive it now. And so labour and capital have a relationship that is unencumbered by the state, by government, by regulation. So what is the outcome of that? Was it a race to the bottom, was there any equilibrium, what happened? So, there's a contribution to be made to studying that as a sort of a history of ideas thing as well. It's hugely rich but those are broadly the three things that are on my agenda right now. Petersen: My guest today has been Judy Stephenson. Judy thanks for being a part of Economics Detective Radio. Stephenson: Thank you very much. I very much enjoyed talking to you.  

tbs eFM Highlights Interview with Bengt Holmstrom tbs eFM This Morning interviews the legend, Bengt Holmstrom 2016.10.17 [The Best Incentive, No Incentive] Turning the world of economics on it's head, Bengt Holmstrom along with Oliver Hart received the Nobel Prize in Economics for their research into incentivised contracts and how they really work in the real world. So in amongst all the different prizes that have been handed out in recent weeks we now have the pleasure of catching up on the line with professor Bengt Holmstrom from Finland, a US based scholar who has been awarded jointly with professor Oliver Hart from Britain the Nobel Economics Prize for their research into real life contracts. Good morning to you, first of all from Seoul. It's great to have you on the line. -Good to hear you. And, I mean obviously your day job is working at MIT Department of Economics, this subject is very familiar to you, but this research goes back decades, doesn't it? You looked into contracts, the way they're structured, can you tell us what was so ground-breaking that drew the Nobel Economics Prize's attention? -Well, it is correct that this is work that was done, you know, in the late 70's, 80's, 90's and these were times when people started getting interested in the role of information in economic decision making and how to treat, you know among other things, contracts and what kind of incentive they provide and so on. And this is not the first prize in incentive contracting but it is the first prize perhaps focusing on what's called contract theory, which deals with incentivising people to do things right. I mean some of that borrows from common sense, doesn't it? How do you take the common sense idea that, you know, if I want to get a job done I give someone a contract to perform and I try to make sure the contract is as appealing as possible to suit both parties? How do you take that further, that idea? -Yes, it's very important to understand that there are two stages of a model, if you want to apply it, you know, there's a part of this stage which is about trying to understand why contacts look the way they do in reality, and this was new. You know, the traditional economic theory just assumed that if we write a contract and then it's enforced the way it is and that's what happens, that's what's written in the contract. This theory takes into account the fact that you don't know the same information as the other side and so on so it's much more complicated in that sense to even study the question of quality and conceptual issues. But some of the, when you do models, you do want them to be giving obvious answers to obvious questions. So, you know, some of it seems to the outside as obvious because partly there's a sense that the model is sensible one. And the model is like a conversation partner; you want it to answer in a sensible way to simple questions. You know, so if I give you stronger incentives do you want it to provide, the person to work more or do more closely what you want and so on. So that, I would say that there are a couple of things in my book that matter, there are other things that work that Oliver was very significant, discoveries that he made. In my book, the key thing was to understand exactly what information is relevant for contracting? And a lot of people at the time I wrote my thing thought that you know, if it gets very noisy the information it becomes irrelevant. But to make matters simple in some sense I showed that that's not the right way to think about it. And it turns out that it's always relevant, or most of the time relevant and when it's not relevant it's for a very different reason than they used to think. It led to relative performance evaluation, there's a lot of people who think it's natural but even there there's a question of how you weigh the different measure that reflect relevance and the logic of why relative performance evaluation matters. And it is about filtering out information that is relevant, that's the basic idea. And sometimes in order to filter out information that's irrelevant you need to bring in information that is not directly related to what I'm doing but it just filters out the noise. So that was the first step and I stop here because I will explain the second step which is much bigger than this, but it was a way of getting started. Firstly, at this point I'd like to ask about the legal implications for this, whether this empowers workers when they go into contracts, because sometimes here in Korea we hear red flags go up when you talk about performance related pay. In fact, it's the workers themselves who protest against those sorts of deals. -Yes, so that's the second part, the question is why is there so much work that isn't performance based? And that's where my book is relevant, especially is relevant showing that when you have a situation where people, these early models were about incentivising a particular task or job or action really. And then what we worked on was what happens when people can do many different things. So that was the first step and then you can get to a situation where if you on one hand need to for instance bring – you want your worker to sort of make sure that the reputation of the firm is growing or at least maintained, on the other hand you want the worker to work very hard to say produce short term results, these are inconsistent with each other. And therefore, you know, if you are really worried about reputation, say or, environmental issues which are very hard to measure but you are worried about them that downstream somewhere, five years from now six years from now some bad things will happen, you know, environmental consequences then the best way and almost the only way to provide incentive for that is to not provide incentives for current performance and then structure instead – and this is very critical – then structure instead the task in such a matter that even though they don't have any incentive these people will still do a good job. Now one has to realize that people, it's not like people do nothing if you don't provide them incentive. So it is about realizing that a lot of the incentive issues don't have to do with whether they work hard or don't work hard but whether they work smartly and on the right things. So this was a big shift in the theory of incentives, to align it better with reality and that I would say is one of the major contributions by this, and most of the work we've done. And (that is) understanding that sometimes the best incentive is no incentive and that leaves then to a reset the instruments, you know, realizing that one of the, that actually firms in some sense are in the business of not providing very strong market wide consensus. So this movement towards you know, saying that we have to incentivise people who are inside the firm and provide priority incentives in some instances it's very misguided. And I don't know if you have followed the Wells Fargo case, you know, the scandals from Wells Fargo, but that's a good illustration of it. They were incentivised to create new accounts and new products and have customers buy the products and initially it worked very well because there were customers wanted it but then they forced upon customers products that they didn't want and then eventually, they just created customers, products that were actually just fictitious. Well the Wells Fargo case is certainly something that our listeners can look into further, because we are so short on time I had to ask you and I need to get your thoughts during our own interview on what you said in a press conference after winning this prize. You talked about owner management and you used the family management of Korean conglomerates as an example, is that a fundamentally flawed model in the modern age? -I don't recall that I said that, most of the things you see are not flawed, I don't believe in the thought that, you know somehow Korea could have systematically for decades done a flawed model. I can't believe that… It's a very top-down model, I didn't say you said that, I'm just asking if it's flawed, in your opinion? If we need to get away from this conglomerate structure because we have a lot of young people who can't even get contracts. -I would not position myself ever, my interest is in understanding why did you do that, it's therefore a doctor, you know, I first want to diagnose why are you doing that, why is this happening? Because my premise is that there's a good reason why you are doing it, good in the sense of there's a reason; good reason a rational reason in some sense. Now that reason may be connected to a wrong objective or a narrow objective or maybe not a desirable social objective but narrowly good for this conglomerate or whatever. That we can fix, but to believe that people could systematically make mistakes, big mistakes, I'm not, that's not part of the economics I'm doing. Now I understand, but what was your purpose then of highlighting the Korean system at the press conference? -Well, I think the reason it was we probably didn't have capital markets at the time in Finland, so we didn't have – and we still don't have – very well working capital markets in the sense of the US. In fact, the US capital market is shrinking right now, that is the stock market. Half of the stocks on the New York stock exchange have been delisted because of regulations, because the stock market is more expensive than it used to be, backlashes, corporate governance is so intense that it's just not worthwhile being on the stock market. So you know, the reason the Koreans, and I'm guessing because I haven't studied you at all, but it is because you didn't have a very functional stock market and you used internal capital markets and it made perfectly good sense. Now, as the world is changing and you want capital from abroad, you want a broader resharing and information flow into Korea, then that model may not be sensible anymore, but it's not that you did stupid things. I mean Korea is a very successful in the history of economics, I mean economic development. So you have a fabulous example of how you can grow fast out of a failure – Finland by the way is the same. Finland was very poor, you know, seventy years ago, it's a miracle really. And South Korea is a miracle. So it would be stupid for an economist to say that it was a stupid system that brought you that kind of miracle. No. I mean it's just with specific reference to you contract expertise, as you mentioned it's not something that you've gone into yourself but clearly we have a problem right now with the way that the economy is structured; the top down approach with what some people view as not necessarily the fairest system and not necessarily the fairest contracts. But maybe that's something that you can look into in the future professor Holmstrom, we've got to leave it there. Thank you so much for taking the time to speak with us. -Thank you. Bye bye. Professor Bengt Holmstrom at MIT Department of Economics. You can get in touch with us right now, you can send us a message via Facebook by searching tbs eFM This Morning.

Three experts on media and telecom weigh in on the AT&T and Time Warner merger. Scott Galloway, a professor of marketing at New York University, says we are at peak advertising and people will pay to opt out of advertising. Craig Moffett, a partner and senior research analyst at MoffettNathanson, says an AT&T and Time Warner deal won't result in cost savings. Rich Greenfield and Walter Piecyk, analysts at BTIG, say we are moving away from watching linear television and moving to an on-demand world with no commercials. Plus, Oliver Hart, a professor of economics at Harvard University and this year's Nobel Prize winner in economics, says he would ask about the efficiency gains of AT&T and Time Warner. Learn more about your ad-choices at https://www.iheartpodcastnetwork.com

Three experts on media and telecom weigh in on the AT&T and Time Warner merger. Scott Galloway, a professor of marketing at New York University, says we are at peak advertising and people will pay to opt out of advertising. Craig Moffett, a partner and senior research analyst at MoffettNathanson, says an AT&T and Time Warner deal won't result in cost savings. Rich Greenfield and Walter Piecyk, analysts at BTIG, say we are moving away from watching linear television and moving to an on-demand world with no commercials. Plus, Oliver Hart, a professor of economics at Harvard University and this year's Nobel Prize winner in economics, says he would ask about the efficiency gains of AT&T and Time Warner.

..1-Vertice Putin – Erdogan ad Istanbul. ..I due leader uniti su economia e affari ma finora divisi sulla questione siriana. ( Emanuele Valenti) ..2-Trump – Clinton: “Il dibattito più brutto di sempre”...La rassegna stampa di Esteri. ..3-Yemen, il giorno dopo il raid su un funerale. ..Sotto accusa l'Arabia Saudita e i suoi fornitori di armi. ..( Riccardo Noury Amnesty – Italia) ..4-Economia: Il Nobel 2016 assegnato a Oliver Hart e Bengt Holmstrom. “ meritano il premio per il loro contributo alla teoria dei contratti” si legge nella motivazione. ..( Intervista all'economista Andrea Fumagalli) ..5-Andrzej Wajda, una storia polacca. È morto a 90 anni il regista di cinema che raccontò le battaglie, le tragedie e le vittorie del proprio popolo. ( Marina Fabbri) ..6-Rubrica sportiva: al via i mondiali di ciclismo. Li ospita al Qatar nel mirino dei sindacati internazionali per le violazioni dei diritti dei lavoratori. ..( Dario Falcini)

..1-Vertice Putin – Erdogan ad Istanbul. ..I due leader uniti su economia e affari ma finora divisi sulla questione siriana. ( Emanuele Valenti) ..2-Trump – Clinton: “Il dibattito più brutto di sempre”...La rassegna stampa di Esteri. ..3-Yemen, il giorno dopo il raid su un funerale. ..Sotto accusa l'Arabia Saudita e i suoi fornitori di armi. ..( Riccardo Noury Amnesty – Italia) ..4-Economia: Il Nobel 2016 assegnato a Oliver Hart e Bengt Holmstrom. “ meritano il premio per il loro contributo alla teoria dei contratti” si legge nella motivazione. ..( Intervista all'economista Andrea Fumagalli) ..5-Andrzej Wajda, una storia polacca. È morto a 90 anni il regista di cinema che raccontò le battaglie, le tragedie e le vittorie del proprio popolo. ( Marina Fabbri) ..6-Rubrica sportiva: al via i mondiali di ciclismo. Li ospita al Qatar nel mirino dei sindacati internazionali per le violazioni dei diritti dei lavoratori. ..( Dario Falcini)

..1-Vertice Putin – Erdogan ad Istanbul. ..I due leader uniti su economia e affari ma finora divisi sulla questione siriana. ( Emanuele Valenti) ..2-Trump – Clinton: “Il dibattito più brutto di sempre”...La rassegna stampa di Esteri. ..3-Yemen, il giorno dopo il raid su un funerale. ..Sotto accusa l'Arabia Saudita e i suoi fornitori di armi. ..( Riccardo Noury Amnesty – Italia) ..4-Economia: Il Nobel 2016 assegnato a Oliver Hart e Bengt Holmstrom. “ meritano il premio per il loro contributo alla teoria dei contratti” si legge nella motivazione. ..( Intervista all'economista Andrea Fumagalli) ..5-Andrzej Wajda, una storia polacca. È morto a 90 anni il regista di cinema che raccontò le battaglie, le tragedie e le vittorie del proprio popolo. ( Marina Fabbri) ..6-Rubrica sportiva: al via i mondiali di ciclismo. Li ospita al Qatar nel mirino dei sindacati internazionali per le violazioni dei diritti dei lavoratori. ..( Dario Falcini)