On: Growth, Cities, and the State of Economics.

Episode: N/A

Date: April 2019

Background: Nobel Laureate, professor at New York University.

Key Subjects:

• The difference between objects and ideas:
  • Objects:
    • 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:
    • 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).

Key Takeaways:

• 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.

Worth Listening:

8/10