On: Growth, Cities, and the State of Economics.
Date: April 2019
Background: Nobel Laureate, professor at New York University.
- The difference between objects and ideas:
- External world in economics usually characterized by objects, endowments.
- People compete for scarce objects, using their natural endowments.
- More people = fewer goods per person (zero sum game).
- Ideas are insights about how to rearrange the objects in the world.
- How to transform them to turn them from things that are less valuable to us into things that are more valuable to us.
- Ideas let us get more value out of a fixed set of objects.
- If there are more people, even though there may be less total objects per person, these additional people might discover something valuable.
- And this is where the difference between objects and ideas surely matters.
- Tendency of economics to pay more attention to things that are more easily measurable:
- Difficult to capture aspects of human well-being in economic theories.
- Difficult to deal with things that emerge from social interactions, such as norms and values.
- Substantial numbers of people are unhappy with society they live in:
- Charter cities: create society with norms and rules that people would rather live in.
- Very difficult to achieve, unlikely to succeed.
- Proper data collection and data summary is increasingly overlooked in (economic) science.
- Data manipulation and theorization get more rewarded.
- Limited role of World Bank in current economic landscape.
- Modest financial cloud (USD 200 billion in lending power).
- Generates USD 2 billion in profits, which is used to support its bureaucracy (staff salaries).
- Probably better ways to use USD 2 billion to provide global public goods.
- People tend to be more productive in cities:
- An individual’s income grows faster in cities than in rural areas.
- Rent is correlated with income (income higher, rent can be higher).
- Inevitable that affordability gap increases between cities and rural areas (unless cities expand vastly).
- Ideas are insights about how to rearrange the objects in the world; more people = more insights = opportunity for more value/person.
- Economics has difficulties capturing individual well-being and emergent cultural norms.