NOTES

Foreword

1. There are some examples where it did work. Probably the best example was Russia during the Second World War, when Stalin managed to create a successful wartime industrial economy. But making it work required wartime focus (not too much choice of what needed to be made – just arms and more arms!); popular mobilisation resulting from the necessity of winning the war and defending the homeland from the Nazi invader; and of course utter brutality in forcing compliance.

2. See, for example, Milton Friedman, ‘The Hong Kong Experiment’, The Hoover Digest, 1998, no. 3.

3. https://www.tralac.org/discussions/article/6574-the-rise-of-developing-countries-in-the-world-economy-and-environmental-considerations-of-development.html Blog posted 6 November 2014.

4. Cebr’s World Economic League Table 2018, available from Cebr website.

5. https://www.forbes.com/sites/kristinstoller/2017/05/24/the-worlds-largest-tech-companies-2017-apple-and-samsung-lead-facebook-rises/#400fed3dd140.

6. I was also a main board director of the telecom equipment company Marconi, helping rescue the company from the near bankruptcy that the previous management had driven it towards.

Prologue

1. This data for 2013 was marginally updated in April 2018. The latest estimates suggest that the 2013 poverty level on this definition has fallen to 10.9% rather than 10.7% and the number to 783 million rather than 769 million. See http://blogs.world-bank.org/developmenttalk/april-2018-global-poverty-update-world-bank for more detail and explanations.

2. ‘New Insights on Poverty’, https://www.ted.com.

3. http://www.xinhuanet.com/english/2018-03/05/c_137018278.htm.

4. https://www.statista.com/statistics/381356/london-homelessness-rough-sleepers-timeline/.

5. http://abc7news.com/news/data-shows-sf-has-2nd-highest-homeless-population-in-us/1407123/.

6. Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014.

7. Three different sources: Matthew 26:10, Mark 14:7 and John 12:8. Also an earlier quotation from Deuteronomy 15:11.

8. They are called public schools because when they came into existence the alternative was private tuition.

9. My own former school, Stonyhurst, was started in St Omer in France when penal laws prevented Catholic education in England. The school moved to Bruges and then Liege before being allowed into England in 1794.

10. Arthur Brooks, President of the American Enterprise Institute based in Washington, DC, makes the important point that it is necessary to reinstate the ‘dignity of labour’. His analysis, which is essentially similar to that in this book but uses different words, is that the psychological problems of many previously hard-working blue-collar males emerge from the decline in what he calls the dignity of labour. Arthur C. Brooks @arthurbrooks February 13, 2017 | Foreign Affairs The dignity deficit: Reclaiming Americans’ sense of purpose.

Chapter 1

1. http://www.independent.co.uk/sport/football/premier-league/wayne-rooney-salary-four-times-greater-than-entire-manchester-united-squad-in-1969-accounts-reveal-a6838386.html.

2. While I was writing this Wayne Rooney scored his 250th goal for Manchester United, also overtaking Sir Bobby Charlton’s record number of goals for his club.

3. There had been a maximum wage in the English Football League of £8 per week during the season for the period from 1921 until the Second World War started in 1939. Post-war this wage was set at £12 in 1947 rising to £20 in 1958. The cap was abolished in 1961.

4. This section is based on my Gresham Professorial Lecture on Inequality given on 18 September 2013 http://www.nationalarchives.gov.uk/education/politics/g3/www.gresham.ac.uk/lectures-and-events/how-does-globalisation-affect-inequality-globally.

5. Jonah Goldberg, Suicide of the West: How the Rebirth of Tribalism, Populism, Nationalism, and Identity Politics is Destroying American Democracy, Crown Forum, 2018.

Chapter 2

1. Thomas Piketty, Capital in the Twenty-First Century, Harvard University Press, 2014.

2. See for example, Steven N. Kaplan and Joshua D. Rauh, ‘Family, Education, and Sources of Wealth among the Richest Americans, 1982-2012’, American Economic Review, vol. 103, no. 3, May 2013, pp. 158-62, who argue that the data is much more consistent with economic factors than Piketty’s sociological explanations.

3. D. Autor, D. Dorn, L.F. Katz, C. Patterson and J.V Reenen, ‘Concentrating on the Fall of the Labor Share’, American Economic Review Papers and Proceedings [Internet] 2017; 107 (5), pp. 180-85.

4. https://www.theatlantic.com/business/archive/2016/06/the-problem-with-inequality-according-to-adam-smith/486071/ by Dennis Rasmussen.

5. https://obamawhitehouse.archives.gov/the-press-office/2013/12/04/remarks-president-economic-mobility.

6. Adam Smith, The Theory of Moral Sentiments, 1759.

7. Adam Smith, The Wealth of Nations, 1776.

8. See the next note.

9. A Theory of Justice is a work of political philosophy and ethics by John Rawls, in which the author attempts to solve the problem of distributive justice (the socially just distribution of goods in a society) by utilising a variant of the familiar device of the social contract. The resultant theory is known as ‘Justice as Fairness’, from which Rawls derives his two principles of justice. Together, they dictate that society should be structured so that the greatest possible amount of liberty is given to its members, limited only by the notion that the liberty of any one member shall not infringe upon that of any other member. Secondly, inequalities either social or economic are only to be allowed if the worst-off will be better off than they might be under an equal distribution. Finally, if there is such a beneficial inequality, this inequality should not make it harder for those without resources to occupy positions of power, for instance public office.

10. http://blog.acton.org/archives/71399-hayek-inequality-poverty-alleviation.html.

11. http://blog.bearing-consulting.com/wp-content/uploads/2012/09/Economic.Growth.and_.Income.Inequality.pdf.

12. Piketty, op. cit., p. 15.

13. Anthony B. Atkinson, Inequality, What Can be Done?, Harvard University Press, 2015, p. 45.

14. https://macaulay.cuny.edu/eportfolios/thorne15/files/2015/03/Cole-Milton-Friedman-on-Income-Inequaity.pdf.

15. Milton and Rose D. Friedman, Free to Choose, Harcourt Brace Jovanovich, 1980, p. 148.

16. ‘The Methodology of Positive Economics’, in Essays in Positive Economics, University of Chicago Press, 1953.

17. Ibid., Section 5.

18. Economics and Equality, edited by the Rt Hon Aubrey Jones, Papers presented to Section F (Economics) of the 1975 Annual Meeting of the British Association for the Advancement of Science, Philip Allan Publishers Ltd 1976

19. Anthony Atkinson, The Economics of Inequality, Oxford University Press, 1975.

20. Anthony B. Atkinson, Thomas Piketty and Emmanuel Saez, ‘Top Incomes in the Long Run of History’, Journal of Economic Literature, 2011, 49: 1, 3-71.

21. Op. cit.

22. Claudia Goldin and Lawrence F. Katz, The Race between Education and Technology, NBER Working Paper No. 12984, issued March 2007.

23. D. Autor, D. Dorn, L.F. Katz, C. Patterson and J.V. Reenen, ‘Concentrating on the Fall of the Labor Share’, American Economic Review Papers and Proceedings [Internet]. 2017; 107 (5): 180-5.

24. Mai Dao, Mitali Das, Zsoka Koczan and Weicheng Lian, ‘Routinisation, Globalisation, and the Fall in Labour’s Share of Income’, Vox, 8 September 2017.

25. Daron Acemoğlu and James Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Crown Business, 2012.

26. Friedman tried to explain the idea in very simple terms (Capitalism and Freedom, pp. 191-4; Free to Choose, pp. 120-3), though his discussion is actually rather hard to follow on a first reading.

27. http://www.dklevine.com/general/aandrreview.pdf.

28. Martin Jacques, When China Rules the World: The End of the Western World and the Birth of a New Global Order, Penguin, 2009.

29. Larry Bartels, Unequal Democracy: The Political Economy of the New Gilded Age, Princeton University Press, 2010.

30. Oddly there is at least one place where businesses do have the vote, less than a mile from my office. The City of London Corporation is the world’s oldest continuously surviving ‘democratic’ institution, dating from Anglo-Saxon times. Democracy as it evolved meant that the City’s rulers first consulted and then allowed to vote on legislation the commoners, who were the freemen who had served their apprenticeships and who had become ‘free’ to set up their own businesses. Today, because of the preponderance of people who work in the City over those who live there (a daytime population of over 600,000 compared with 9,000 residents) it is deemed acceptable in this unique case for there to be a business vote based on property ownership. Currently there are 24,000 business voters. I must declare a family interest since my father, Sir Francis McWilliams, was elected as a Common Councilman, then Alderman and eventually became the Lord Mayor of the City of London with this electorate, though his ward, Aldergate, was dominated by Barbican residents.

31. Jeffrey Sachs, The Price of Civilization: Economics and Ethics After the Fall, Random House, 2012.

32. Joseph Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future, Penguin Books, 2016.

33. See this review in The Guardian: https://www.theguardian.com/books/2012/jul/13/price-inequality-joseph-stiglitz-review.

34. ‘An Ordinary Joe’, The Economist, 23 June 2012.

35. Paul Krugman, The Return of Depression Economics, Allen Lane, 2008.

36. Paul Krugman, End This Depression Now!, W.W Norton Ltd., May 2012.

37. Paul Krugman, ‘Challenging the Oligarchy’, New York Review of Books, 17 December 2015 http://www.nybooks.com/articles/2015/12/17/robert-reich-challenging-oligarchy/.

38. ‘Changes in Relative Wages, 1963–1987: Supply and Demand Factors’, Quarterly Journal of Economics 107, no. 1, February 1992.

39. L.F. Katz and D.H. Autor, ‘Changes in the Wage Structure and Earnings Inequality’, in Handbook of Labor Economics, ed. O. Ashenfelter and D. Card, vol. 3A, 1999, pp. 1463-1555.

40. Robert Reich, The Work of Nations: Preparing Ourselves for 21st Century Capitalism, Alfred A. Knopf, 1992.

41. Lawrence Mishel, Heidi Shierholz and John Schmitt, ‘Don’t Blame the Robots: Assessing the Job Polarization Explanation of Growing Wage Inequality’, EPI–CEPR working paper, November 2013.

42. Simon Johnson and James Kwak, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, Pantheon, 2010.

43. Angus Deaton, The Great Escape: Health, Wealth and the Origins of Inequality, Princeton University Press, 2015.

44. Branko Milanovic, Global Inequality: A New Approach for the Age of Globalisation, Harvard University Press, 2016.

45. Martin Wolf, Why Globalisation Works, Yale University Press, 2005.

46. https://www.ft.com/content/5557f806-5a75-11e7-9bc8-8055f264aa8b.

47. https://blogs.imf.org/2017/09/20/growth-that-reaches-everyone-facts-factors-tools/.

48. Kohler et al., ‘Greater Post-Neolithic Wealth Disparities in Eurasia than North America and in Mesoamerica’, Nature 351, 30 November 2017.

49. https://capx.co/why-inequality-can-make-us-all-richer/?omhide=true&utm_source=CapX+Newsletter&utm_campaign=a425ee4ab4-EMAIL_CAMPAIGN_2017_07_17&utm_medium=email&utm_term=0_dcdc78d804-a425ee4ab4-179153845.

50. http://www.economicsuk.com/blog/002193.html.

51. http://www.economicsuk.com/blog/002223.html.

52. https://www.gc.cuny.edu/CUNY_GC/media/CUNY-Graduate-Center/PDF/Centers/LIS/imperialism_forcirculation_3.pdf.

53. https://promarket.org/inequality-imperialism-first-world-war/.

54. John A. Hobson, Imperialism: A Study, James Pott & Co., 1902; reprinted in 1975 by Gordon Press New York.

55. https://www.google.co.uk/search?q=inequality+and+disappearing+large+firm+premium&rlz=1C1GGRV_enGB751GB751&oq=inequality+and+disappearing+large+firm+premium&aqs=chrome..69i57.10744j1j8&sourceid=chrome&ie=UTF-8.

56. Presented at the meeting of the American Social Sciences Association in conjunction with the American Economics Association Conference in Philadelphia, 5-7 January 2018.

57. https://www.oxfam.org/en/pressroom/pressreleases/2018-01-22/richest-1-percent-bagged-82-percent-wealth-created-last-year.

58. https://www.credit-suisse.com/corporate/en/research/research-institute/global-wealth-report.html.

59. https://www.oxfam.org.uk/media-centre/press-releases/2017/01/eight-people-own-same-wealth-as-half-the-world.

60. https://www.oxfam.org/en/pressroom/pressreleases/2018-01-22/richest-1-percent-bagged-82-percent-wealth-created-last-year.

61. http://www.100people.org/statistics_100stats.php?section=statistics.

Chapter 3

1. I am grateful to Daron Acemoglu, Elizabeth and James Killian, Professor of Economics at the Massachusetts Institute of Technology and co-author of Why Nations Fail, for this distinction.

2. Milton Friedman and Rose D. Friedman, Free to Choose: A Personal Statement, Harcourt, 1980.

3. The term is taken from Samuel P. Huntington, Clash of Civilizations and the Remaking of World Order, Simon and Schuster, 1996.

4. For more details read the relevant section of the OECD glossary of statistical terms https://stats.oecd.org/glossary/detail.asp?ID=5528.

5. This is the theory presented by the interesting but amateur historian Gavin Menzies in his best-selling book 1421: The Year China Discovered the World, Bantam, 2003.

6. http://www.chengho.org/museum/web/history.html.

7. For example, David Landes, one of the most respected economic historians, asked why China failed to turn its lead in technology in the 15th century into a sustained advance in technology in ‘Why Europe and the West? Why Not China?’, Journal of Economic Perspectives, vol. 20, no. 2, Spring 2006, pp. 3-22.

8. Peter Jay, The Wealth of Man, Public Affairs, 2000.

9. https://www.washingtonpost.com/archive/lifestyle/1979/05/30/peter-jay-racing-home-to-england/0506621d-801d-48a2-b525-1b8fdd04746d/.

10. This is essentially the view of Max Weber in his path-breaking book, The Protestant Ethic and the Spirit of Capitalism, Andesite Press, 2015; originally published in German as Die protestantische Ethik und der Geist des Kapitalismus, J.C.B. Mohr, Tübingen, 1905.

11. See my last book, The Flat White Economy, Duckworth, 2016.

12. Molly B. Kroker, ‘The “Great Divergence” Redefined: the Rise and Fall of the West and the Recovery of China’, Inquiries Journal 6, 2014, no. 9. https://www.inquiriesjournal.com/articles/917/3/the-great-divergence-redefined-the-rise-and-fall-of-the-west-and-the-recovery-of-china.

13. For a fuller explanation see the American historian Arthur Herman’s book, How the Scots Invented the Modern World, Crown Publications, 2002.

14. See the new biography of Telford by Julian Glover: Man of Iron: Thomas Telford and the Building of Britain, Bloomsbury, 2017.

15. There are two main series for this: C. Feinstein, ‘Changes in Nominal Wages, the Cost of Living, and Real Wages in the United Kingdom over Two Centuries, 1780-1990’, in P. Scholliers and V. Zamagni (eds), Labour’s Reward, Edward Elgar, 1995, pp. 3-36, 258-66, and P.H. Lindert and J.G. Williamson, ‘English Workers’ Living Standards During the Industrial Revolution: A New Look’, Economic History Review 36 (1983), 1-25. Both are described well in Robert C. Allen, ‘The Great Divergence in European Wages and Prices from the Middle Ages to the First World War’, Explorations in Economic History 38, 2001, 411-47, available online at http://www.idealibrary.com.

16. Groningen Growth and Development Centre, Faculty of Economics and Business, Groningen University http://www.rug.nl/ggdc/historicaldevelopment/ (in 1990 Geary-Khamis dollars). Geary-Khamis dollars are hypothetical units of currency with the same purchasing power as one US dollar in the relevant base year, in this case 1990.

17. The only study I can find in the academic literature that even considers this issue is Keunho Park and Hiroko Kawasakiya Clayton, ‘The Vietnam War and the “Miracle of East Asia” ’, Inter-Asia Cultural Studies 4, issue 3, 2003, 372-98, which points out that it is traditional for economic development studies ‘to search for general theories of economic development … accidental factors, including the Vietnam War, should be abstracted from economic development …’.

18. Stephen Daggett, Specialist in Defense Policy and Budgets, ‘Costs of Major U.S. Wars’, 29 June 2010, Congressional Research Service 7-5700 www.crs.gov RS22926.

19. D.F. McWilliams, ‘Offshore Manufacturing in a Developing Country: A Malaysian Case Study’, Lincoln College Oxford, unpublished M.Phil thesis.

20. All the numbers for the world economic history used here are from the Maddison Data Archive at the Groningen Growth and Development Center at Groningen University in the Netherlands. Angus Maddison was a major scholar whose life work was producing historically comparable data. His series cover world GDP, population and GDP per capita and go back to the year 1. The figures are calculated in Geary-Khamis dollars at 1990 prices. This is essentially a purchasing power parity measure. This is appropriate for the historical data for periods when market exchange rates often did not exist or were unrepresentative.

21. Now the principal of Gresham College.

22. https://www.gresham.ac.uk/series/the-rise-and-fall-of-european-empires-from-the-16th-to-the-20th-century/ gives Sir Richard Evans’ views on the subject.

23. Claudia Goldin and Lawrence F. Katz, The Race between Education and Technology, Harvard University Press, 2010; Lawrence F. Katz and Kevin M. Murphy, ‘Changes in Relative Wages, 1963-1987: Supply and Demand Factors’, Quarterly Journal of Economics 107, no. 1, February 1992; Laurence F. Katz and David H. Autor, ‘Changes in Wage Structure and Earning Inequality’ https://eml.berkeley.edu//~saez/course131/Katz-Autor99.pdf; Robert Reich, The Work of Nations: Preparing Ourselves for 21st Century Capitalism, Alfred A. Knopf, 1992; Lawrence Mishel, Heidi Shierholz and John Schmitt, ‘Don’t Blame the Robots: Assessing the Job Polarization Explanation of Growing Wage Inequality’, EPI-CEPR working paper, November 2013.

24. Mai Dao, Mitali Das, Zsoka Koczan and Weicheng Lian, ‘Routinisation, Globalisation, and the Fall in Labour’s Share of Income’, Vox, 8 September 2017.

25. https://www.pwc.co.uk/services/economics-policy/insights/the-impact-of-automation-on-jobs.html.

26. Ernest W. Burgess and Paul Wallin, ‘Homogamy in Social Characteristics’, American Journal of Sociology, vol. 49, no. 2, September 1943, pp. 109-24.

27. https://www.forbes.com/sites/eriksherman/2017/08/20/genetic-engineering-will-make-income-inequality-much-worse/#4a66e7f03d75.

Chapter 4

1. https://www.kingsfund.org.uk/publications/inequalities-life-expectancy?gclid=CjwKEAiAoaXFBRCNhautiPvnqzoSJABzHd6hYsCcymR-HfLV9lGlZPZB0ttHKVUlVf2TokAwwNUF-BoCksTw_wcB://www.rcpch.ac.uk/news/rcpch-launches-landmark-state-child-health-report.

2. Fred Hirsch, The Social Limits to Growth, Routledge & Kegan Paul, 1977.

3. Impact of the Shortage of Housing on Young People- Parliamentresearchbriefings.files.parliament.uk/documents/LLN-2016…/LLN-2016-0056.pdf.

4. Office for National Statistics, ‘UK Perspectives 2016: Housing and Home Ownership in the UK’, 25 May 2016.

5. Cambridge Centre for Housing and Planning Research, ‘Estimating the Scale of Youth Homelessness in the UK’, p. 3.

6. PricewaterhouseCoopers, UK Economic Outlook, July 2016, p. 17.

7. C. Larsen, The Rise and Fall of Social Cohesion, Oxford University Press, 2013.

8. E. Durkheim, The Division of Labor in Society, trans. G. Simpson, The Free Press, 1960 [1893].

9. Both passages from ‘On England’, speech to the Annual Dinner of the Royal Society of St George at the Hotel Cecil, 6 May 1924, in Stanley Baldwin, On England and Other Addresses, Philip Alan, 1933, p. 341.

10. https://www.theguardian.com/society/2006/jan/21/health.politics.

11. http://www.gcph.co.uk/latest/blogs/555_life_expectancy_in_calton-no_longer_54.

12. I am grateful to Dr Amanda Diotaiuti for drawing this to my attention.

13. https://www.brookings.edu/bpea-articles/mortality-and-morbidity-in-the-21st-century/.

14. http://www.pnas.org/content/112/49/15078.

15. Sir Francis McWilliams GBE, ‘Pray Silence for Jock Whittington’: From Building Sewers to Suing Builders, Malu Publications.

16. https://www.nytimes.com/2016/06/24/us/politics/partisanship-republicans-democrats-pew-research.html?_r=0.

17. Ibid.

18. https://www.washingtonpost.com/news/in-theory/wp/2016/03/11/three-reasons-political-polarization-is-here-to-stay/?utm_term=.157049936bbf.

19. There is a good description of the history of the Swedish tax system in Mikael Stenkula, Dan Johansson and Gunnar Du Rietz, ‘Marginal Taxation on Labour Income in Sweden from 1862 to 2010’, Scandinavian Economic History Review, 62:2, 2014, pp. 163-87,

Chapter 5

1. Anthony Atkinson, ‘On the Measurement of Inequality’, Journal of Economic Theory, vol. 2, issue 3, 1970, pp. 244-63.

2. Gerald Auten (Office of Tax Analysis, U.S. Treasury Department) and David Splinter (Joint Committee on Taxation), ‘Income Inequality in the United States: Using Tax Data to Measure Long-term Trends’, 12 November 2017 [draft version subject to change], U.S. Congress Working Paper available at: http://davidsplinter.com/AutenSplinter-Tax_Data_and_Inequality.pdf.

3. This is a standard result for this type of analysis. See the references to a range of studies on p. 17 of Bruce D. Meyer and James X. Sullivan, ‘Measuring the Well-Being of the Poor Using Income and Consumption’, NBER Working Paper No. 9760, June 2003.

4. Auten and Splinter, op. cit.

5. Source: World Income Database (mainly compiled by Thomas Piketty and Emmanuel Saez) http://wid.world/.

6. This is earlier data and is no longer contained in the latest version of the database, so should be considered less robust than the other data.

7. Please note that for the UK the series changes slightly during the period and starts in 1981, not 1980. But this doesn’t seriously affect the trend.

8. There are good summaries of the Giles critiques in the New York Times and The Economist: https://www.nytimes.com/2014/05/31/upshot/everything-you-need-to-know-about-thomas-piketty-vs-the-financial-times.html?_r=0; http://www.economist.com/news/finance-and-economics/21603022-latest-controversy-around-thomas-pikettys-blockbuster-book-concerns-its.

9. Ibid.

10. http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=AD783798-ED07-E8C2-4405996B5B02A32Ehttps://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/methodologies/theginicoefficient.

11. 18 September 2013 https://www.gresham.ac.uk/lectures-and-events/how-does-globalisation-affect-inequality-globally.

12. https://www.oecd.org/els/soc/49499779.pdf.

13. Istvan Gyorgy Toth, ‘Time Series and Cross-country Variation of Income Inequalities in Europe on the Medium Run: Are Inequality Structures Converging in the Past Three decades?’ Gini Policy Institute http://www.gini-research.org/system/uploads/566/original/GINI_Policy_Paper_3.pdf?1384954508

14. Original income includes sources of earned income such as wages, salaries and pensions, and unearned income, i.e. income from investments. However, income from benefits such as state pensions, family credit and income support is not included. Gross income comprises all sources of income, that is original income plus income from benefits. Disposable income is gross income less income tax and national insurance contributions.

15. ‘London’s Contribution to the UK Economy 1992’ and a succession of subsequent Cebr reports.

16. Tim Worstall, The Truth about Income Inequality CapX, 25 May 2017.

17. Milanovic tweet, 13 August 2017: Two centuries of global income inequality reflecting world’s economic history (recalculated using the new Maddison project data). https://twitter.com/BrankoMilan/status/896687954587942912.

18. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/compendium/wealthingreatbritainwave4/2012to2014/chapter2totalwealthwealthingreatbritain2012to2014#distribution-of-aggregate-total-wealth.

19. Christopher A. Sarlo, ‘Understanding Wealth Inequality in Canada’, Frazer Institute, April 2017.

20. http://www.resolutionfoundation.org/app/uploads/2016/09/Examining-an-elephant.pdf.

21. This discussion is heavily based on the helpful analysis by the Canadian Conference Board in http://www.conferenceboard.ca/hcp/hot-topics/worldinequality.aspx #ftn3-ref.

22. Richard Freeman, Speech at the OECD Policy Forum on Tackling Inequality, Paris, 2 May 2011.

23. https://www.cebr.com/reports/world-economic-league-table-2017/.

24. BBC News Report 3 May 2018 based on Musicians Union survey downloaded from https://www.bbc.co.uk/news/entertainment-arts-43976334.

25. Max Roser and Esteban Ortiz-Ospina, 2017, ‘Income Inequality’, published online at https://ourworldindata.org/income-inequality/.

26. Effects of taxes and benefits on UK household income: financial year ending 2016, ONS https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2016.

27. For a slightly unedifying discussion of this see the Twitter link between the author and @jdportes.

28. Nanak C. Kakwani, ‘Measurement of Tax Progressivity: An International Comparison’, Economic Journal 87 (345), March 1977, pp. 71-80.

29. Barry Bracewell-Milnes, ‘Measurement of Tax Progressivity: A Comment’, Economic Journal 89 (355), September 1979, pp. 648-1.

30. Effects of taxes and benefits on UK household income: financial year ending 2016, ONS https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2016.

31. David Willetts, The Pinch: How the Baby Boomers Took Their Children’s Future – And Why They Should Give it Back, Atlantic Books, 2010. An interesting review is shown here: https://www.theguardian.com/books/2010/feb/20/pinch-baby-boomers-willetts-millar.

Chapter 6

1. http://blogs.worldbank.org/developmenttalk/2017-global-poverty-update-world-bank.

2. ‘The State of the US Economy’, a report by Douglas McWilliams on his five-week sabbatical in the US, September 2013, Cebr.

3. See Chapter 5 for more details.

4. José Cuesta, Mario Negre and Christoph Lakner, ‘Know Your Facts: Poverty Numbers’, 7 November 2016 http://voxeu.org/article/know-your-facts-poverty-numbers.

5. In my Gresham lecture on inequality (18 September 2013) I referred to this quote from the BBC GCSE Bite Size page for geography: ‘Globalisation operates mostly in the interests of the richest countries, which continue to dominate world trade at the expense of developing countries. The role of LEDCs in the world market is mostly to provide the North and West with cheap labour and raw materials.’ The BBC quoted in support of this ‘environmentalists, anti-poverty campaigners and trade unionists’. http://www.bbc.co.uk/schools/gcsebitesize/geography/globalisation/globalisation_rev5.shtml.

6. Max Roser and Esteban Ortiz-Ospina, ‘Global Extreme Poverty’, published online at https://ourworldindata.org/extreme-poverty/.

7. François Bourguignon and Christian Morrisson, ‘Inequality among World Citizens: 1820-1992’, American Economic Review, vol. 92, no. 4, 2002, pp. 727-44.

8. http://www.bbc.co.uk/news/resources/idt-841ebc3a-1be9-493b-8800-2c04890e8fc9. The BBC data is from 2016 and the population estimates have been updated since.

9. https://www.quora.com/What-percentage-of-the-worlds-population-lives-in-a-war-zone-and-how-does-this-figure-compare-to-that-of-previous-generations.

10. https://www.pri.org/stories/2012-03-22/why-world-bank-has-no-real-intentions-reducing-poverty.

11. http://www.fao.org/state-of-food-security-nutrition/en/.

12. See https://www.cnbc.com/2017/07/06/global-food-prices-set-two-year-high-in-june-as-meat-dairy-wheat-climb.html for a chart showing this.

13. http://www.who.int/nutgrowthdb/jme_brochure2016.pdf.

14. https://www.pri.org/stories/2012-03-22/why-world-bank-has-no-real-intentions-reducing-poverty.

15. All this data is from the Maddison-Project, http://www.ggdc.net/maddison/maddison-project/home.htm, 2013 version. For more details see J. Bolt and J.L. van Zanden, ‘The Maddison Project: Collaborative Research on Historical National Accounts’, Economic History Review 67 (3), 2014, 627-51.

16. Martin Ravallion, The Economics of Poverty: History, Measurement, Policy, Oxford University Press, 2015.

17. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/503015/Rough_Sleeping_Autumn_2015_statistical_release.pdf.

18. http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/578991/IPOL_BRI(2016)578991_EN.pdf.

19. http://www.endhomelessness.org/library/entry/SOH2016.

20. https://www.economist.com/news/international/21719790-going-will-be-much-harder-now-world-has-made-great-progress.

21. https://www.brookings.edu/wp-content/uploads/2017/02/global_20170228_global-middle-class.pdf.

22. https://www.firstthings.com/web-exclusives/2013/11/whats-behind-the-stunning-decrease-in-global-poverty http://www.cityam.com/article/1379464840/anti-globalisation-campaigners-got-it-wrong-trade-defeating-poverty. Article by Douglas McWilliams.

23. Max Roser, ‘Life Expectancy’, published online at https://ourworldindata.org/life-expectancy/.

24. These are estimates from the Global Burden of Disease 2013 Institute for Health Metrics and Evaluation, Washington. This study has just been updated (May 2018) but the latest report does not change any key conclusions.

25. https://ourworldindata.org/literacy/.

26. http://www.xinhuanet.com/english/2018-03/05/c_137018278.htm.

27. https://ourworldindata.org/extreme-poverty.

28. http://news.bbc.co.uk/today/hi/today/newsid_8714000/8714127.stm.

29. I asked, only partly in jest, if they would allow me to use the description in my advertising. I don’t think they saw the joke.

30. http://www.reuters.com/article/us-eurozone-greece-poverty-idUSKBN15Z1NM

31. http://www.middleeasteye.net/news/poverty-iraq-promised-reforms-1887217637

Chapter 7

1. Arthur Okun, Equality and Efficiency: The Big Tradeoff, Brookings Press, 1975; republished with a foreword by L. Summers, 2015.

2. Era Dabla-Norris, Kalpana Kochhar, Nujin Suphaphiphat, Frantisek Ricka, Evridiki Tsounta, ‘Causes and Consequences of Income Inequality: A Global Perspective’, IMF, Washington, June 2015.

3. Bert Bakker, Onbegrepen Europa nieuw licht op een eeuwenoude tweedeling, Atlas Contact, 2017.

4. Financial Times (London) Saturday 28 April 2018. I am grateful to Mr Martin Piers for drawing this letter to my attention.

5. This section is heavily based on a good review article: Markus Brückner and Daniel Lederman, ‘Effects of Income Inequality on Economic Growth’, Vox, 7 July 2015.

6. O. Galor, ‘Inequality, Human Capital Formation, and the Process of Development’, Brown University Working Papers, 2011-17.

7. J.D. Ostry, A. Berg and G.D. Tsangarides, ‘Redistribution, Inequality, and Growth’, IMF Staff Discussion Note no. SDN/14/02, February 2014.

8. M. Brueckner and D. Lederman, ‘Effects of Income Inequality on Aggregate Output’, World Bank Policy Discussion Paper 7317, 2015.

9. O. Galor and J. Zeira, ‘Income Distribution and Macroeconomics’, Review of Economic Studies 60, 1993, pp. 35-52.

10. Robert J. Barro, ‘Economic Growth in a Cross Section of Countries’, Quarterly Journal of Economics 106, issue 2, 1991, pp. 407-43.

11. Gerald W. Scully, ‘What is the Optimal Size of Government in the United States’, National Centre for Policy Analysis report no. 188, Dallas, Texas, November 1994.

12. https://www.fraserinstitute.org/sites/default/files/measuring-government-in-the-21st-century.pdf.

13. This is mainly taken from Table 16 in Patrick Minford, ‘Tax and Growth: Theories and Evidence’, Taxation, Government Spending and Economic Growth, Institute for Economic Affairs, London, November 2016, pp. 105-21.

14. Robert J. Barro, ‘Economic Growth in a Cross Section of Countries’, Quarterly Journal of Economics 106, issue 2, 1991, pp. 407-43.

15. R. Koester and R. Kormendi, ‘Taxation, Aggregate Activity and Economic Growth: Cross-country Evidence on Some Supply-side Hypotheses’, Economic Inquiry 27, 1989, pp. 367-86.

16. P. Hansson and M. Henrekson, ‘A New Framework for Testing the Effect of Government Spending on Growth and Productivity’,Public Choice 81, 1994, pp. 381-401.

17. P. Cashin, ‘Government Spending, Taxes and Economic Growth’, IMF Staff Papers 42(2), 1995, pp. 237-69.

18. E.M. Engen and J. Skinner, ‘Taxation and Economic Growth’, National Tax Journal 49, 1996, pp. 617-42.

19. W. Leibfritz, J. Thornton and A. Bibbee, ‘Taxation and Economic Performance’, OECD Working Paper 176, 1997.

20. A. Alesina, S. Ardagna, R. Perotti and F. Schiantarelli, ‘Fiscal Policy, Profits, and Investment’, American Economic Review 92, 2002, pp. 571-89 (this covers essentially the same ground as the paper by the same authors below).

21. M. Bleaney, N. Gemmell and R. Kneller, ‘Testing the Endogenous Growth Model: Public Expenditure, Taxation and Growth over the Long Run’, Canadian Journal of Economics 34(1), 2000, pp. 36-57.

22. S. Folster and M. Henrekson, ‘Growth Effects of Government Expenditure and Taxation in Rich Countries’, Stockholm School of Economics Working Paper 391, 2000.

23. A. Bassanini and S. Scarpettta, ‘Does Human Capital Matter for Growth in OECD Countries? Evidence from PMG Estimates’, OECD Economics Department Working Paper 282, 2001.

24. Patrick Minford, ‘Tax and Growth: Theories and Evidence’, Taxation, Government Spending and Economic Growth, Institute for Economic Affairs, London, November 2016, pp. 105-21.

25. I. Ball and G. Pflugrath, ‘Government Accounting: Making Enron Look Good’, World Economics 13(1), January-March 2012.

26. G. Leach, The Negative Impact of Taxation on Economic Growth, Reform, 2003.

27. Alberto Alesina, Silvia Ardagna, Roberto Perotti and Fabio Schiantarelli, ‘Fiscal Policy, Profits and Investment’, March 1999, revised September 2000 http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.203.5980&rep=rep1&type=pdf.

28. http://www.heritage.org/Research/Reports/2010/06/Confronting-the-Unsustainable-Growth-of-Welfare-Entitlements-Principles-of-Reform-and-the-Next-Steps.

29. A. Niskanen, ‘Welfare and the Culture of Poverty’, Cato Journal 16, no. 1, 1996.

30. Charles Murray, Losing Ground: American Social Policy 1950-1980, Basic Books, 1984, pp. 58, 125, 115.

Chapter 8

1. I am grateful for the article on this in ‘Quote and Counterquote’ for its explanation http://www.quotecounterquote.com/2009/11/rich-are-different-famous-quote.html.

2. In the 1938 anthology of Hemingway stories, The Fifth Column and the First Forty-Nine Stories, New York, Charles Scribner and Sons.

3. Douglas McWilliams and Mark Pragnell, ‘The Rich – Are they Different?’, Prospect, 20 October 1995.

4. Property is always going to be important in areas where for either geographical or planning reasons there is a shortage of land. Many of the key companies in Hong Kong and Singapore are property-based as a result. And the property industry is also a critical one for London today – by and large London has been well served by its developers, but with property so intrinsic to economic cycles, it has been a roller-coaster ride.

5. https://www.uk.capgemini.com/experts/thought-leadership/world-wealth-report-2016.

6. Knight Frank, The Wealth Report http://content.knightfrank.com/research/83/documents/en/the-wealth-report-2017-4482.pdf.

7. Zoe Dare Hall, ‘Who Are London’s Super Rich Property Buyers’, Daily Telegraph, 18 May 2017.

8. Caroline Freund and Sarah Oliver, ‘The Origins of the Superrich: The Billionaire Characteristics Database’, Petersen Institute Working Papers 16, 1 February 2016.

9. Ibid.

10. Steven N. Kaplan and Joshua Rauh, ‘It’s the Market: The Broad-Based Rise in the Return to Top Talent’, Journal of Economic Perspectives 27, no. 3, Summer 2013, pp. 35-56.

Chapter 9

1. One of the most notable discussions of the deserving and undeserving poor, and also incidentally Type 1 Inequality, was in Robert Tressel’s The Ragged Trousered Philanthropists, published posthumously in 1914: ‘Poverty is not caused by men and women getting married; it’s not caused by machinery; it’s not caused by “over-production”; it’s not caused by drink or laziness; and it’s not caused by “over-population”. It’s caused by Private Monopoly.’ The concept dates from well before Victorian times, though it is associated with that era. In Elizabethan times, the Queen’s adviser William Cecil (later Lord Burghley) introduced Poor Law reforms leading to legislation starting in 1563 to help the ‘deserving poor’.

2. http://www.wsj.com/specialcoverage/malaysia-controversy.

3. Jeffrey Sachs blog, ‘What I did in Russia’. http://jeffsachs.org/2012/03/what-i-did-in-russia/.

4. Bernard Black, Reinier Kraakman and Anna Tarassova, ‘Russian Privatization and Corporate Governance: What Went Wrong?’, 52 Stanford Law Review (2000), pp. 1731-1808.

5. https://www.cebr.com/reports/world-economic-league-table-2018/.

6. http://www.bloomberg.com/news/articles/2014-12-18/bp-s-dudley-relives-russian-nightmare-alongside-rosneft-boss. Indeed, the latest reports on this suggest that blood tests subsequently revealed an attempt to poison him (Daily Telegraph, 30 April 2018) although they do not reveal who had done this.

7. http://www.thisismoney.co.uk/money/news/article-1507704/Marconi-men-share-16387m-windfall.html.

8. https://www.quora.com/Would-companies-be-better-off-hiring-cheaper-CEOs.

9. This section is heavily based on http://www.bloomberg.com/news/articles/2013-06-06/costco-ceo-craig-jelinek-leads-the-cheapest-happiest-company-in-the-world.

10. http://www.bloomberg.com/news/articles/2013-06-06/costco-ceo-craig-jelinek-leads-the-cheapest-happiest-company-in-the-world.

11. http://money.cnn.com/gallery/investing/2015/12/23/best-ceos-2015/.

12. http://www.nytimes.com/roomfordebate/2013/11/10/prosecuting-executives-not-companies-for-wall-street-crime/bankers-have-done-more-damage-than-mobsters.

13. https://www.russellsage.org/sites/all/files/Rethinking-Finance/Philippon_v3.pdf.

14. http://www.bis.org/publ/rpfx16.htm.

15. https://blogs.cfainstitute.org/investor/2012/06/28/investment-management-fees-are-much-higher-than-you-think/.

16. Burton G. Malkiel, ‘Asset Management Fees and the Growth of Finance’, Journal of Economic Perspectives 27, no. 2, Spring 2013, pp. 97-108.

17. The classic book on this is Fred Schwed Jr, Where are the Customers’ Yachts? or A Good Hard Look at Wall Street, first published in 1940. The most recently published edition with illustrations by Peter Arno and an introduction by Jason Zweig was published in 2005 by Wiley. The title comes from a question to a broker looking out over the harbour in New York. ‘Whose are these yachts?’ ‘Oh, those are the brokers’ yachts.’ ‘So where are the customers’ yachts?’

18. This article can be accessed in various guises. I have quoted from the text made available by Vanguard. But the most accessible version is John C. Bogle, ‘The Road Not Taken’, Journal of Portfolio Management, Fall 2017, 44 (1) 83-90; DOI: https://doi.org/10.3905/jpm.2017.44.1.083

19. http://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp.

20. http://www.ibtimes.co.uk/pay-structure-uks-finance-industry-too-high-admits-standard-life-chairman-1560626#.

21. Gavyn was a contemporary of mine in my M.Phil course at Oxford and is (I assume now was) a fellow cricketer. I’m normally quite a good judge of character and I would be very surprised if he turned out to be a crook or even someone who had behaved unprofessionally, despite working for Goldman. But he has certainly made more money than anyone else in our M.Phil class, mainly through finding arbitrage opportunities from his economic understanding (he ended up running a hedge fund). I don’t agree with his left-wing politics but I do not find it difficult to respect people with views that are different from mine! I suspect there are many others working for Goldman who are perfectly honest.

22. http://www.corp-research.org/goldman-sachs.

23. http://www.businessinsider.com/the-secret-goldman-sachs-greece-deal-thats-described-as-a-very-sexy-story-between-two-sinners-2012-3?IR=T.

24. https://www.thenation.com/article/Goldman-greek-gambit/.

25. https://en.wikipedia.org/wiki/Carlos_Slim.

26. http://www.forbes.com/sites/doliaestevez/2014/07/09/in-a-surprising-move-mexican-billionaire-carlos-slim-to-sell-telecom-assets-in-compliance-with-new-antitrust-rules/#3bf93d252624.

27. http://www.nytimes.com/2016/08/10/world/americas/mexicos-carlos-slim-helu.html?_r=0.

Chapter 10

1. http://www.ukbusinessforums.co.uk/threads/clogs-to-clogs-in-three-generations-and-variants.224877/.

2. One is reminded of the comment of the famous footballer George Best about what had happened to his wealth: ‘I spent a lot of money on booze, birds and fast cars. The rest I squandered …’ http://www.the42.ie/17-most-memorable-george-best-quotes-1094674-Nov2015/.

3. http://familylinevideo.com/family-documenting-three-generations/.

4. http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/shirtsleeves-shirtsleeves-three.

5. https://www.ft.com/content/25a029f6-64f7-11e4-bb43-00144feabdc0.

6. Guglielmo Barone and Sauro Mocetti, ‘Intergenerational mobility in the very long run: Florence 1427-2011’, June 2015 http://www.eui.eu/Documents/DepartmentsCentres/Economics/Seminarsevents/Mocetti.pdf

7. I’ve always been tempted to buy a property on one of the Italian lakes but once, when I got near to doing so, I checked the likely transactions charges. They amounted to nearly 20% of the property value. If you lose a fifth of your investment every time you have a property transaction you are unlikely to transact very frequently. It is not surprising that I backed off from the potential purchase quickly. For more detail see http://www.homesinitaly.co.uk/smx/home/fees/.

8. George-Levi Gayle and Andrés Hincapié, ‘Which Persists More from Generation to Generation—Income or Wealth?’ Regional Economist, Federal Reserve Bank of St Louis, July 2016.

9. http://scienceblogs.com/gregladen/2011/03/01/how-long-is-a-generation/.

10. Energy: oil, gas, coal, any consumable fuels.

Materials: chemicals, metals & alloys, mining, packaging.

Industrials: construction, engineering, distribution, transport, HR & office services.
Consumer products

Discretionary (more sensitive to economic cycles): automobiles, home building & appliances, leisure, textiles & clothing, hotels, restaurants, advertising, entertainment, publishing, retailing.

Staples (less sensitive to economic cycles): food & drugs, brewing & spirits, supermarkets, tobacco, non-durable household goods & personal products.

Healthcare: pharmaceuticals, biotechnology, health services & equipment.
Financials: banking, investments, hedge funds, insurance, property & real estate.

IT & telecoms: software, internet, technological hardware (computers, phones etc.), electronic equipment, semi conductors, network carriers.

Direct inheritance: land, divorce settlement (inheritance of entire net worth).

11. I am grateful to my old friend David Collas for suggesting this point to me.

12. http://www.independent.co.uk/student/news/number-of-students-who-marry-after-studying-the-same-subject-at-university-on-the-rise-new-data-10380976.html.

13. https://www.theatlantic.com/sexes/archive/2013/04/college-graduates-marry-other-college-graduates-most-of-the-time/274654/.

14. A good study by the Joseph Rowntree Foundation looks in depth at the relationship between poverty and parenting: https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/parenting-poverty.pdf.

15. Jay Belsky, ‘The Determinants of Parenting: A Process Model’, Child Development, 1984, 55, pp. 83-96.

16. Daniel S. Shaw, ‘Parenting Programs and Their Impact on the Social and Emotional Development of Young Children’, PhD thesis, University of Pittsburgh, USA December 2014.

17. Memorial eulogy by Sir Francis McWilliams at the funeral for his sister Helen Harris, 19 January 2017.

18. Susanne Huber and Martin Fieder, ‘Worldwide Census Data Reveal Prevalence of Educational Homogamy and its Effect on Childlessness’, Department of Anthropology, University of Vienna, Vienna, Austria http://journal.frontiersin.org/article/10.3389/fsoc.2016.00010/full.

19. Sebastian Aguiar, ‘Intelligence: The History of Psychometrics’, Institute for Ethics and Emerging Technologies, 31 October 2014. http://ieet.org. Retrieved 9 November 2015.

20. My mother used to run kindergartens in Malaysia and ended up in the mid-1970s with about 600 children being educated in three sites. Most of the children (largely of Chinese or South Asian background) were fluently trilingual (Chinese or a South Asian dialect; English and Bahasa Kebangsaan – Malay) by the age of six. And even people in menial jobs such as domestic service would spend as much as a third of their income to send their children to kindergarten to improve their chances in life.

Part IV

1. https://www.johnkay.com/2017/04/05/basics-basic-income/

Chapter 11

1. A good description of these is given in ‘Disruptive Technologies: Advances That Will Transform Life, Business, and the Global Economy’ by the McKinsey Global Institute, May 2013 http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/disruptive-technologies

2. Let me be clear. Autonomous vehicles will create huge opportunities and if managed properly should make traffic safer, quicker, less stressful and cheaper. See my paper on this: https://cebr.com/wp/wp-content/uploads/2017/07/Abolishing-traffic-jams-v3.0.docx.

3. Anthony Hilton, ‘Which Party is Even Remotely Ready for the Tech Revolution?’, Evening Standard, Thursday 18 May 2017.

4. http://www.bbc.co.uk/news/business-16611040.

5. Anthony Hilton, op. cit.

6. https://www.gresham.ac.uk/lectures-and-events/how-does-globalisation-affect-inequality-globally

7. David H. Autor, Frank Levy and Richard J. Murnane, ‘The Skill Content of Recent Technological Change: An Empirical Exploration’, Quarterly Journal of Economics 118, 2003, pp. 1279-1333.

8. Anthony B. Atkinson, Inequality: What Can be Done?, Harvard University Press, 2015, p. 88

9. http://calbudgetcenter.org/blog/bringing-down-the-unemployment-rate-depends-on-getting-the-long-term-unemployed-back-to-work/.

10. Cebr World Economic League Table 2018, released 26 December 2017.

11. See World Economic League Table 2018 for details.

12. https://www.theatlantic.com/health/archive/2017/01/teens-drugs-iceland/513668/.

13. George J. Stigler, ‘The Economics of Information’, Journal of Political Economy 69, issue 3, June 1961, pp. 213-22.

14. Best described in George Gilder, Microcosm: The Quantum Revolution in Economics and Technology, Touchstone, 1990.

15. J.R. Hicks, Value and Capital, Oxford University Press, 1939.

16. A. Chua, Battle Hymn of the Tiger Mother, Penguin, 2011.

Chapter 12

1. http://www.britishpoliticalspeech.org/speech-archive.htm?speech=202.

2. George-Levi Gayle and Andrés Hincapié, ‘Which Persists More from Generation to Generation – Income or Wealth?’, Regional Economist, Federal Reserve Bank of St Louis, July 2016.

3. See for example the European Expert Network on Economics of Education (EENEE) EENEE Analytical Report No. 21 prepared for the European Commission by Jo Blanden and Sandra McNally, February 2015. This provides a useful summary.

4. Eduardo Porter, ‘Education Gap between Rich and Poor is getting Wider’, New York Times, 22 September 2015. https://www.nytimes.com/2015/09/23/business/economy/education-gap-between-rich-and-poor-is-growing-wider.html

5. Bruce Bradbury, Miles Corak, Jane Waldfogel and Elizabeth Washbrook, ‘Too Many Children Left Behind: The U.S. Achievement Gap in Comparative Perspective’, for the Russell Sage Foundation https://www.russellsage.org/publications/too-many-children-left-behind.

6. To understand this better see https://cepa.stanford.edu/content/widening-academic-achievement-gap-between-rich-and-poor-new-evidence-and-possible.

7. I am grateful to Roland Johnson, House Master at Stowe School, for discussing this point with me.

8. See https://www.spectator.co.uk/2016/02/to-survive-as-a-tory-teacher-you-have-to-keep-quiet/ for an interesting description of life as a teacher by someone whose views did not fit with the prevailing left-wing orthodoxy.

9. https://www.gov.uk/government/publications/pupil-premium-conditions-of-grant-2016-to-2017.

10. http://www.suttontrust.com/wp-content/uploads/2015/06/Pupil-Premium-Summit-Report-FINAL-EDIT.pdf.

11. Brad Hershbein, Melissa S. Kearney and Lawrence H. Summers, ‘Increasing Education: What it Will and Will Not Do for Earnings and Earnings Inequality’, Brookings Upfront, Tuesday 31 March 2015.

12. Arthur C. Brooks @arthurbrooks February 13, 2017 | Foreign Affairs The dignity deficit: Reclaiming Americans’ sense of purpose.

13. https://www.simplypsychology.org/maslow.html gives a simple description of Maslow’s hierarchy of needs.

14. This is the classic Human Givens approach to psychological balance. I don’t fully subscribe to the approach which I believe to be too absolute and too unwilling to cope with the diversity of human experience, but I think it gives useful guidance for understanding common psychological issues. http://www.hgfoundation.com/what_are_the_human_givens.html

Chapter 13

1. The novelist John Le Carré’s description of his visit to his Russian publisher in his autobiography The Pigeon Tunnel is probably the most dramatic description of gangster capitalism I’ve ever read or observed.

2. Adam Smith, The Wealth of Nations, p. 14.

3. Cebr’s ethics policy can be downloaded from the link at the bottom of this page: https://cebr.com/about-cebr/our-approach/.

4. https://www.recode.net/2017/7/21/16008504/apple-amazon-google-record-lobby-trump-immigration-science-privacy.

5. See for example, just based on random googling, this link between working for IBM and being a scoutmaster https://www.linkedin.com/in/kent-bruinsma-2a275925/.

Chapter 14

1. Roland Andersson and Bo Söderberg, ‘Elimination of Rent Control in the Swedish Rental Housing Market: Why and How?’, Journal of Housing Research 21, no. 2, 2012, pp. 159-82.

2. I am grateful to The Guardian, 19 August 2015, for much of this description. https://www.theguardian.com/world/2015/aug/19/why-stockholm-housing-rules-rent-control-flat.

3. This section draws heavily on analysis by Marginal Revolution. http://marginalrevolution.com/marginalrevolution/2015/07/rent-control.html.

4. http://www.bbc.com/capital/story/20160517-this-is-one-city-where-youll-never-find-a-home.

5. https://www.imf.org/en/News/Articles/2016/09/28/MS092916-Sweden-Concluding-Statement-of-IMF-Mission.

6. https://www.bloomberg.com/news/articles/2017-12-14/housing-slump-gathers-pace-in-sweden-with-buyers-losing-faith.

7. Bill Bryson, The Road to Little Dribbling, Doubleday, 2015.

8. The word was first coined by the marketing department of the estates department of the Metropolitan Railway in 1915!

9. ‘Shaping the Nation’, Confederation of British Industry and Royal Institute of Chartered Surveyors, Report of the Planning Task Force, CBI, RICS, 1992.

10. Review of Housing Supply Final Report – Recommendations http://news.bbc.co.uk/nol/shared/bsp/hi/pdfs/17_03_04_barker_review.pdf.

11. ‘The Future Homes Commission: An Inquiry into the Design and Delivery of the UK’s Future Homes’, RIBA 2012 available at https://issuu.com/ribacomms/docs/futurehomecommissionhires2.

12. https://www.theguardian.com/money/2015/jul/16/tenants-in-england-spend-half-their-pay-on-rent.

13. Douglas McWilliams and Mark Pragnell, ‘The Rich – Are they Different?’, Prospect, 20 October 1995. http://www.prospectmagazine.co.uk/magazine/thericharethey-different-wealth-income-inequality-investment-tax.

14. Peter Ganong and Daniel Shoag, ‘Why Has Regional Income Convergence in the U.S. Declined?’, Journal of Urban Economics, January 2015. http://scholar.harvard.edu/files/shoag/files/why_has_regional_income_convergence_in_the_us_declined_01.pdf.

15. Douglas McWilliams, ‘Will There Be a Shortage of Spending Power?’, Gresham Professorial Lecture, 28 February 2013. http://www.gresham.ac.uk/lectures-and-events/will-there-be-a-shortage-of-spending-power.

16. For a flavour of the opposing view see Claudio Borio and Piti Disyatat, ‘Global Imbalances and the Financial Crisis: Link or No Link?’, BIS Working Papers No. 346, Bank for International Settlements.

17. See for example https://www.cityoflondon.gov.uk/business/economic-research-and-information/research-publications/Documents/Research-2015/Impact-of-Crossrail-briefing-paper.pdf.

18. http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/bulletins/labourproductivity/2015-10-01).

19. https://www.ons.gov.uk/economy/economicoutputandproductivity/publicservicesproductivity/articles/publicservicesproductivityestimatestotalpublicservices/totalpublicservice2013.

Chapter 15

1. I dealt with the high cost of living in Western economies, particularly in Europe, in my Gresham professorial lecture of February 2013 ‘How to Make Western Economies More Competitive’. http://www.gresham.ac.uk/lectures-and-events/how-to-make-western-economies-more-competitive

2. Data from Bureau of Labour Statistics News Release Spending Patterns 2014/15, 30 August 2016. http://www.bls.gov/news.release/cesan.nr0.htm.

3. Numbeo Property Prices comparison https://www.numbeo.com/property-investment/compare_cities.jsp?country1=Nigeria&country2=Italy&city1=Lagos&city2=Anzio+%28Rome%29&tracking=getDispatchComparison.

4. Author’s calculations based on BLS statistics, notably the Spending Patterns 2014/15 data mentioned above and also http://www.bls.gov/opub/btn/volume-5/pdf/expenditures-on-celluar-phone-services-have-increased-significantly-since-2007.pdf.

5. Source: International Telecommunications Union (Table 4.2 in the ITU’s Measuring the Information Society 2015).

Chapter 16

1. http://www.usgovernmentspending.com/social_security_spending_by_year.

2. http://uk.businessinsider.com/universal-basic-income-scheme-for-the-uk-2016-6.

3. By coincidence, my company Cebr was tasked with auditing this manifesto, though we did not audit the basic income proposals which were not spelt out sufficiently firmly to be audited.

4. Seán Healy, Michelle Murphy, Seán Ward and Brigid Reynolds, ‘Basic Income – Why and How in Difficult Economic Times: Financing a BI in Ireland’, Social Justice Ireland. http://www.bien2012.de/sites/default/files/paper_253_en.pdf.

5. https://static1.squarespace.com/static/56eddde762cd9413e151ac92/t/5a5f54ff53450ae87509190a/1516197120863/Universal+Basic+Income.pdf.

6. https://www.whitehouse.gov/sites/default/files/docs/ERP_2016_Book_Complete%20JA.pdf.

7. David H. Autor, ‘Why Are There Still So Many Jobs? The History and Future of Workplace Automation’, Journal of Economic Perspectives, vol. 29, no. 3, Summer 2015, pp. 3-30.

8. https://www.gov.uk/government/statistics/taxi-and-private-hire-vehicles-statistics-england-2015.

9. http://www.alltrucking.com/faq/truck-drivers-in-the-usa/.

Chapter 17

1. ‘Income Inequality and Growth: The Role of Taxes and Transfers’, OECD Economics Department Policy Notes no. 9, January 2012.

2. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/theeffectsoftaxesandbenefitsonincomeinequality/1977tofinancialyearending2015.

3. https://www.ifs.org.uk/publications/9178.

4. By far the most detailed report covering this is ‘The Single Income Tax Final Report of the 2020 Tax Commission’ (421 pages), produced by the Taxpayers’ Alliance. The author was a member of the Commission and personally wrote the part of the report dealing with the economic analysis of the impact of the proposals using the dynamic tax model developed by Cebr for the Taxpayers Alliance.

5. Stuart Ball, ‘Baldwin, Stanley, first Earl Baldwin of Bewdley (1867-1947)’, Oxford Dictionary of National Biography, Oxford University Press, September 2004; online edn, May 2008, retrieved 28 March 2009.

6. http://www.bbc.co.uk/news/uk-england-london-41468761.

7. http://www.telegraph.co.uk/news/uknews/12046438/true-and-fair-foundation-hornets-nest-charity-report.html.

8. See ‘How winning the lottery makes you miserable’ Melissa Chan, Time Magazine, 12 January 2016.

Chapter 18

1. http://www.huffingtonpost.co.uk/entry/jeremy-corbyns-full-10-point-plan-to-rebuild-and-transform-britain_uk_57a30d8ce4b06c6e8dc6af2a.

2. https://berniesanders.com/issues/income-and-wealth-inequality/.

3. https://www.donaldjtrump.com/policies/economy.

4. https://www.cebr.com/reports/the-economic-impact-of-president-trump/.

5. ‘How Preferential Trade Agreements Affect the U.S. Economy’, Congress of the United States Congressional Budget Office, September 2016.

6. See, for example, Richard M. Alston, J.R. Kearl and Michael B. Vaughan, ‘Is There a Consensus Among Economists in the 1990s?’, American Economic Review 82, no. 2, May 1992, pp. 203-9; and Daniel B. Klein and Charlotta Stern, ‘Economists’ Views and Voting’, Public Choice 126, March 2006, 331-42. More recently, a 2012 Initiative on Global Markets survey of prominent economists found that 94% of the respondents agreed with the statement, ‘Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.’ See Chicago Booth, ‘Free Trade’ (Initiative on Global Markets Forum, 13 March 2012, http://tinyurl.com/igm-chicago). Several of the respondents in that survey noted that society should do a better job compensating the workers and businesses that lose income as a result of trade.

7. https://www.donaldjtrump.com/policies/immigration.

8. See Douglas McWilliams, The Flat White Economy, Chapter 6.

9. The Guardian, 3 July 2017

10. The Conservative Party Manifesto 2017 https://www.conservatives.com/manifesto.

11. The Flat White Economy: How the Digital Economy is Transforming London and Other Cities of the Future, Duckworth, 2015 (updated paperback edition March 2016).

12. The Flat White Economy, updated paperback edition March 2016, p. 140.

13. Jonathan Portes and Giuseppe Forte, ‘The Economic Impact of Brexit-induced Reductions in Migration to the UK’, Vox, 5 January 2017 http://voxeu.org/article/economic-impact-brexit-induced-reductions-migration-uk.

14. C. Vargas-Silva, ‘Potential Implications of Admission Criteria for EU Nationals Coming to the UK’, Migration Observatory report, COMPAS, University of Oxford, 2016.

15. Migration Watch, ‘UK Immigration Policy Outside the EU’, 2016 http://www.migrationwatchuk.org/briefing-paper/371.

16. E. Boubtane, J.C. Dumont and C. Rault, ‘Immigration and Economic Growth in the OECD Countries 1986-2006’, CESifo Working Paper Series No. 5392, 2015. Available at SSRN: https://ssrn.com/abstract=2622005.

17. The Migration Observatory, ‘The Fiscal Impact of Immigration in the UK’, Oxford University, 14 September 2016.

18. ‘Migrants in the UK Labour Market: An Overview’, 1 December 2016, Table 1, based on the 2015 Labour Force Survey.

19. ‘Migrants in the UK Labour Market: An Overview’, 1 December 2016, Table 2, based on the 2015 Labour Force Survey.

20. ‘Migrants in the UK Labour Market: An Overview’, 1 December 2016, Figure 3, based on the 2015 Labour Force Survey.