NOTES
INTRODUCTION
4 S. Djankov, R. La Porta, F. Lopez-de-Silanes, and A. Shleifer, “The Regulation of Entry,”
Quarterly Journal of Economics 117 (February 2002): 1–37.
5 L. Guiso, P. Sapienza, and L. Zingales, “People’s Opium? Religion and Economic Attitudes,”
Journal of Monetary Economics 50 (2003): 225–282.
6 Jonathan Reuter and Eric Zitzewitz, “Do Ads Influence Editors? Advertising and Bias in the Financial Media,”
Quarterly Journal of Economics 121, no. 1 (2006): 197–227.
7 Richard Smith, “Conflicts of Interest: How Money Clouds Objectivity,”
Journal of the Royal Society of Medicine 99 (June 2006): 292–297.
ONE
1 Rafael Di Tella and Robert MacCulloch, “Why Doesn’t Capitalism Flow to Poor Countries?” Economic Studies Program, The Brookings Institution,
Brookings Papers on Economic Activity 40, no. 1 (2009): 285–332.
2 A. Alesina, E. Glaeser, and B. Sacerdote, “Why Doesn’t the US Have a European-Style Welfare State?” Economic Studies Program, The Brookings Institution,
Brookings Papers on Economic Activity 32, no. 2 (2001): 187–277.
3 Primo Rapporto Luiss,
Generare Classe Dirigente: Un Percorso da Costruire (Rome: Luiss University Press, 2007).
5 See Daron Acemoglu, Simon Johnson, and James Robinson, “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,”
Quarterly Journal of Economics, November 2002, vol. 117, pp. 1231–1294, and Acemoglu, Daron, Simon Johnson, and James Robinson, “The Colonial Origins of Comparative Development: An Empirical Investigation,”
American Economic Review, December 2001, vol. 91, pp. 1369–1401.
6 Adam Hochschild,
King Leopold’s Ghost: A Story of Greed, Terror, and Heroism in Colonial Africa (Boston: Mariner Books, 1999).
7 R. Rajan and L. Zingales, “The Great Reversals: The Politics of Financial Development in the 20th Century,”
Journal of Financial Economics 69 (2003): 5–50.
8 L. Guiso, P. Sapienza, and L. Zingales, “Does Local Financial Development Matter?”
Quarterly Journal of Economics 119 (2004): 929–969.
9 Moore v. American Tobacco et al., Case No. 94–1429, filed May 23, 1994.
TWO
1 This is the title of a book about the early history of southeastern Pennsylvania. See James T. Lemon,
The Best Poor Man’s Country (Baltimore: Johns Hopkins University Press, 1972).
2 Julia B. Isaacs, “International Comparisons of Economic Mobility,”
Economic Mobility Project: An Initiative of The Pew Charitable Trusts,
www.pewtrusts.org.
3 Roger Abravanel,
Meritocrazia (Milano: Garzanti, 2008).
4 Jodi S. Cohen, “Clout Goes to College,”
Chicago Tribune, May 29, 2009.
5 What we do not easily observe is the vast amount of money that champions make through advertising. The fact that this amount is known to have increased tremendously in the last twenty years makes the evolution of the prize money even more remarkable.
6 Steve Kaplan and Joshua Rauh, “Wall Street and Main Street: What Contributes to the Rise in the Highest Income,”
Review of Financial Studies 23, no. 3 (2010): 1004–1050.
9 If the surge in the prize money were due to increasing donations by rich golf-loving executives who are now better able to subsidize the prize out of their personal fortunes, this rise in value could simply be an effect of the increased income divide between executives and workers, not a manifestation of its underlying causes. In fact, it is the other way around. The Masters started as a subsidized event and is now a money-making machine, even without donations or exorbitant ticket prices—just international appeal.
10 Clifford Roberts,
The Story of the Augusta National Golf Club (Garden City, NY: Doubleday, 1976), p. 59.
11 David Westin, “Purse Exceeds $1 Million,”
Augusta Chronicle, April 7, 2001.
12 Bob Harig, “Unlike Most Practice Rounds, the Masters’ Brings Plenty of Passion,”
ESPN.com, April 7, 2008.
13 Westin, “Purse Exceeds $1 Million.”
15 Marianne Bertrand and Antoinette Schoar, “Managing with Style: The Effect of Managers on Corporate Policy,”
Quarterly Journal of Economics 118 (2003): 1169–1208.
17 Pew Economic Mobility Project, “Findings from a National Survey & Focus Groups on Economic Mobility,” March 12, 2009.
www.economicmobility.org.
19 OECD, “A Family Affair: Intergenerational Social Mobility Across OECD Countries,”
Economic Policy Reforms 2010: Going for Growth (OECD Publishing, 2010), pp. 181–198.
20 Daniel Aaronson and Bhashkar Mazumder, “Intergenerational Economic Mobility in the United States, 1940 to 2000,”
Journal of Human Resources 43, no. 1 (2008): 139–172.
THREE
3 Technically, this result derives from the fact that the competitive equilibrium is in the core; hence no coalition is made better off by closing off trade with the rest of the economy. I thank Oliver Hart for pointing this out to me.
4 Sandra Black and Philip Strahan, “The Division of Spoils: Rent Sharing and Discrimination in a Regulated Industry,”
American Economic Review 91, no. 4 (September 2001): 814–831. A wage differential is not necessarily evidence of discrimination, since it can reflect unobserved differences. Yet if there is effective discrimination, there will be a wage gap.
5 “‘The East India Company: Its History and Results,’ by Karl Marx,”
New York Daily Tribune, July 11, 1853.
6 R. Ekelund and R. Tollison,
Politicized Economies: Monarchy, Monopolies, and Mercantilism (College Station: Texas A&M Press, 1997), p. 196.
8 Adam Smith,
The Wealth of Nations, Book V, Chapter I, Article 1d (New York: Bantam Books, 2003), p. 941.
9 Nick Robins,
The Corporation That Changed the World: How the East India Company Shaped the Modern Multinational (London/Ann Arbor: Pluto Press, 2006), p. 92.
10 Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (1993).
11 Alan Greenspan, “Antitrust,” in Ayn Rand, ed.,
Capitalism: The Unknown Ideal (New York: New American Library, 1967), p. 71.
12 The threat of entry is credible only if new potential entrants do not have to pay a lot to enter. In most situations, however, they do. Consider, for instance, a new cell phone operator trying to enter the US market. It has to build a network and it has to advertise. These costs are not fully recoverable if it is forced to exit; hence the operator’s threat of entry is not credible. See William J. Baumol, John C. Panzar, and Robert D. Willig,
Contestable Markets and the Theory of Industry Structure (New York: Harcourt Brace Jovanovich, 1982).
15 “Oil Production Subsidiaries,”
Troika Dialog Research Report, February 2000.
16 Owen Lamont, “Cash Flow and Investment: Evidence from Internal Capital Markets,”
Journal of Finance 52, no. 1 (1997): 83–109.
17 R. Rajan, H. Servaes, and L. Zingales, “The Cost of Diversity: Diversification Discount and Inefficient Investment,”
Journal of Finance 55 (2000): 35–80.
18 Rui Silva, “The Real Cost of Conglomerates,” University of Chicago working paper (2011).
19 James Bovard, “Archer Daniels Midland: A Case Study in Corporate Welfare,”
Cato Institute Policy Analysis, September 26, 1995.
21 Michael Fumento, “Some Dare Call Them Robber Barons,”
National Review, March 13, 1987, p. 32.
22 Michael J. Weiss, “The High-Octane Ethanol Lobby,”
New York Times, April 1, 1990.
23 Dan Carney, “Dwayne’s World,”
Mother Jones, July/August 1995.
24 Bovard, “Archer Daniels Midland: A Case Study in Corporate Welfare.”
25 Fumento, “Some Dare Call Them Robber Barons,” p. 32.
26 Wilson, “Price-Fixer to the World.”
27 Mitchell Martin, “Citicorp and Travelers Plan to Merge in Record $70 Billion Deal: A New No.1: Financial Giants Unite,”
New York Times, April 7, 1998.
FOUR
4 Sidney Ratner, James H. Soltow, and Richard Sylla,
The Evolution of the American Economy: Growth, Welfare, and Decision Making (New York: MacMillan, 1993).
5 Thomas Hart Benton,
Political Science (New York: D. Appleton and Company, 1854), p. 372.
6 Randall Kroszner and Raghuram Rajan, “Is the Glass-Steagall Act Justified? Evidence from the U.S. Experience with Universal Banking 1921–1933,”
American Economic Review 84 (1994): 810–832.
7 Randall Kroszner and Philip Strahan, “What Drives Deregulation? Economics and Politics of the Relaxation of Bank Branching Restrictions in the United States,”
Quarterly Journal of Economics 44, no. 4 (November 1999): 1437–1467.
8 Jith Jayaratne and Philip Strahan, “The Finance-Growth Nexus: Evidence from Bank Branch Deregulation,”
Quarterly Journal of Economics 111, no. 3 (1996): 639–670.
9 David A. Skeel, Jr.,
Debt’s Dominion: A History of Bankruptcy Law in America (Princeton, NJ: Princeton University Press, 2001).
10 H.R. REP. NO. 55–65, at 43 (1897).
12 Skeel, Jr.,
Debt’s Dominion. 13 Charles Jordan Tabb, “The Top Twenty Issues in the History of Consumer Bankruptcy,”
University of Illinois Law Review 2007 (1): 9-30.
14 William C. Whitford, “A History of the Automobile Lender Provisions of BAPCPA,”
University of Illinois Law Review 143 (2007).
15 Victoria F. Nourse and Jane S. Schacter, “The Politics of Legislative Drafting: A Congressional Case Study,”
New York University Law Review 77 (2002): 575–623 at 612.
16 145 Cong. Rec. H2723 (daily edition, May 5, 1999), as cited in John A. E. Pottow, “A U.S. Perspective on the Contextual Terrain of Political Economy in Insolvency Reform. In
Canadian Bankruptcy and Insolvency Law: Bill C-55, Statute C.47 and Beyond, Chapter 15, p. 379.
17 Wenli Li, Michelle J. White, and Ning Zhu, “Did Bankruptcy Reform Cause Mortgage Default to Rise?” NBER Working Paper No. 15968, 2010. John Y. Campbell, Stefano Giglio, and Parag Pathak, “Forced Sales and House Prices,”
American Economic Review 101, no. 5 (2011): 2108–2131.
18 Kimberly Anne Summe, “Lessons Learned from the Lehman Bankruptcy,” in Kenneth E. Scott, George P. Shultz, and John B. Taylor, eds.,
Ending Government Bailouts as We Know Them (Stanford: Hoover Institution, Stanford University), ch. 5.
21 A. Dyck, Adair Morse, and Luigi Zingales, “Who Blows the Whistle on Corporate Fraud?”
Journal of Finance 65, no. 6 (2010): 2213–2253.
22 Stephanie D. Moussalli and O. Ronald Gray, “Illuminating the Limits of Auditor Accountability Through a Historical Review of Internal Control Evaluation” (January 2, 2010),
http://ssrn.com/abstract=1760542.
24 Dyck, Morse, and Zingales, “Who Blows the Whistle on Corporate Fraud?”
26 A. Dyck, Adair Morse, and Luigi Zingales, “How Pervasive Is Corporate Fraud?” University of Chicago working paper (2011).
28 Testimony by Alan Greenspan before the House Committee of Government Oversight and Reform (October 23, 2008).
29 This story is based on Rachel Sanderson, Guy Dinmore, and Gillian Tett, “Finance: An Exposed Position,”
Financial Times, March 8, 2010.
30 “Cities in the Casino. A Derivatives Farce Makes Its Way to Court in Milan. Others Are Sure to Follow,”
The Economist, March 18, 2010.
31 Kroszner and Rajan, “Is the Glass-Steagall Act Justified?”
32 L. Guiso, P. Sapienza, and L. Zingales, “Time Varying Risk Aversion,” University of Chicago working paper (2012).
33 R. Rajan and L. Zingales, “Banks and Markets: The Changing Character of European Finance,” in
The Transformation of the European Financial System, Vítor Gaspar, Philipp Hartmann, and Olaf Sleijpen, eds. European Central Bank, 2003.
34 R. Rajan and L. Zingales, “Which Capitalism? Lessons from the East Asian Crisis,”
Journal of Applied Corporate Finance 11, no. 3 (Fall 1998): 40–48.
35 R. Rajan and l. Zingales, “The Great Reversals: The Politics of Financial Development in the 20th Century,”
Journal of Financial Economics 69 (2003): 5–50.
36 “Credit Default Swaps and Counterparty Risks,” European Central Bank (2010).
37 Michael Gofman, “A Network-Based Analysis of Over-the-Counter Markets,” University of Chicago working paper (2011).
38 Thomas Philippon, “The Evolution of the US Financial Industry from 1860 to 2007,” New York University working paper (November 2008).
39 When the seller negotiates a lower commission, he must not only bargain with his own real estate agent, but also with the prospective buyer’s agent, who holds a big bargaining chip: the power to steer his client away from the property.
40 Chang-Tai Hsieh and Enrico Moretti (“Can Free Entry be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry,”
Journal of Political Economy 111, no. 5 [October 2003]: 1076–1121) demonstrate this point empirically, using variation in land-–instead of house—prices across US cities. If land prices go up, a house does not become any more difficult to sell. Yet, if the agent commission stays fixed, selling a house becomes more lucrative thanks to the land’s escalating value. The effect is an increase in the fraction of the labor force working as real estate agents, lower productivity (sales per agent or sales per hour worked) among agents, and real wages that remain flat.
41 Thomas Philippon and Ariell Reshef, “Wages and Human Capital in the U.S. Financial Industry: 1909–2006,” New York University working paper (December 2008).
42 Nancy Rose, “The Incidence of Regulatory Rents in the Motor Carrier Industry,”
Rand Journal of Economics 16 (Autumn 1985): 299–318.
43 Nancy Rose, “Labor Rent-Sharing and Regulation: Evidence from the Trucking Industry,”
Journal of Political Economy 95 (December 1987): 1146–1178.
44 Or, to be precise, 1,091,777. My calculation is based on Thomson One Banker data.
45 Elizabeth Gudrais, “Flocking to Finance,”
Harvard Magazine, May–June 2008, pp. 17–18.
FIVE
1 Quoted in Tom Kenworthy, “Are House Democrats Victims of Their Fund-Raising Success?”
Washington Post, October 30, 1989.
2 John R. Lott, Jr., “A Simple Explanation for Why Campaign Expenditures Are Increasing: The Government Is Getting Bigger,”
Journal of Law and Economics 43 (2000): 359–393.
3 Chris Edwards,
Downsizing the Federal Government (Washington, DC: Cato Institute, 2005).
5 Chris Edwards and Tad DeHaven, “Corporate Welfare Update,” Cato Institute,
Tax and Budget Bulletin 7 (May 2002).
7 John Porretto, “Lott: Cruise Ship Loss May Top $200M,” Associated Press, January 12, 2002.
9 John Friedman, “The Incidence of the Medicare Prescription Drug Benefit: Using Asset Prices to Assess its Impact on Drug Makers,” Harvard University working paper (2009).
10 Lee Drutman, “The Business of America Is Lobbying,” mimeo (2010).
12 Quoted in Matilde Bombardini and Francesco Trebbi, “Votes or Money? Theory and Evidence from the US Congress,”
Journal of Public Economics 95, nos. 7–8 (2011): 587–611 at 588.
14 Drutman, “The Business of America Is Lobbying,” p. 4.
17 Drutman, “The Business of America Is Lobbying,” p. 5.
20 Quoted inTom Finnigan, “All About Pork: The Abuse of Earmarks and the Needed Reforms,”
Policy Briefing Series, Citizens Against Government Waste, 2007.
21 Charles E. Russell, quoted in David G. Phillips, Judson A. Grenier, and George E. Mowry,
The Treason of the Senate (Chicago: Quadrangle Books, 1964), p. 20.
22 Robert G. Kaiser,
So Damn Much Money (New York: Vintage, 2009), p. 17.
23 Edwards,
Downsizing the Federal Government, pp. 8 and 112.
26 This belief, shared also by former British prime minister Margaret Thatcher, is supported by some recent evidence. People who become owners develop more promarket beliefs, from the conviction that effort is rewarded to the belief that one can make it on his own. See Rafael Di Tella, Sebastian F. Galiani, and Ernesto S. Schargrodsky, “The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters,”
Quarterly Journal of Economics 122, no. 1 (February 2007).
27 Congressional Budget Office, “Updated Estimates of the Subsidies to the Housing GSEs” (April 2004).
28 Gretchen Morgenson and Joshua Rosner,
Reckless Endangerment (New York: Times Books, 2011).
30 Quoted in Morgenson and Rosner,
Reckless Endangerment, p. 76.
31 Congressional Budget Office, “The Budgetary Cost of Fannie Mae and Freddie Mac and Options for the Future Federal Role in the Secondary Mortgage Market,” June 2, 2011.
32 For a discussion of industrial companies, see Gregor Andrade and Steve Kaplan, “How Costly Is Financial (Not Economic) Distress? Evidence from Highly Leveraged Transactions That Became Distressed,”
Journal of Finance 53 (October 1998): 1443–1494; regarding financial institutions, see Pietro Veronesi and Luigi Zingales, “Paulson’s Gift,”
Journal of Financial Economics 97, no. 3 (2010): 339–368.
33 Veronesi and Zingales, “Paulson’s Gift.”
34 Walker F. Todd, “Bailing Out the Creditor Class,”
The Nation, February 13, 1995, p. 193; Jeremy Adelman, “Tequila Hangover: Latin America’s Debt Crisis,”
Studies in Political Economy 55 (1998).
35 Alan Greenspan,
The Age of Turbulence (New York: Penguin Press, 2007), p. 159.
36 Benedetto De Martino, Colin F. Camerer, and Ralph Adolphs, “Amygdala Damage Eliminates Monetary Loss Aversion,”
Proceeding of the National Academy of Science 107, no. 8 (February 23, 2010): 3788–3792.
37 Bong-Chan Kho, Dong Lee, and René M. Stulz, “U.S. Banks, Crises, and Bailouts: From Mexico to LTCM,”
American Economic Review 90, no. 2 (May 2000): 28–31.
38 Mark Lewis, “Rubin Red-Faced over Enron? Not in the
Times,”
Forbes.com, February 11, 2002.
39 “The Politics of Enron: Four Committees in Search of a Scandal,”
The Economist, January 17, 2002.
40 “No Line Responsibilities,”
Wall Street Journal, December 3, 2008.
41 Gérard Gennotte and Hayne Ellis Leland, “Market Liquidity, Hedging, and Crashes,”
American Economic Review (December 1990): 999–1021.
43 Ben Bernanke and Mark Gertler, “Monetary Policy and Asset Price Volatility,” in Federal Reserve Bank of Kansas City,
New Challenges for Monetary Policy (1999), pp.77–128 at p. 78.
44 David S. Scharfstein and Jeremy Stein, “This Bailout Doesn’t Pay Dividends,”
New York Times, October 20, 2008.
46 For some direct evidence, see L. Guiso, P. Sapienza, and L. Zingales, “Time Varying Risk Aversion,” University of Chicago working paper (2012).
47 These losses are calculated
ex ante, at the time of the intervention; see Veronesi and Zingales, “Paulson’s Gift.”
Ex post taxpayers ended up with a small gain, but that was just luck.
SIX
1 Andrew Pierce, “The Queen Asks Why No One Saw the Credit Crunch Coming,”
Telegraph, November 5, 2008.
3 C. Himmelberg, Christopher Mayer, and Todd Sinai, “Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions,”
Journal of Economic Perspectives 19 (2005): 67–92.
4 Robert Shiller,
Irrational Exuberance (New York: Broadway Books/ Crown Business, 2nd ed., 2005), p. 13.
6 Joseph E. Stiglitz, Jonathan M. Orszag, and Peter R. Orszag, “Implications of the New Fannie Mae and Freddie Mac Risk-Based Capital Standard,”
Fannie Mae Papers 1, no. 2 (March 2002): 2.
7 Inasmuch as I gathered this information from the Internet, my estimates likely underestimate the phenomenon.
8 It is important to note that academic economists also benefit from another feature that regulators lack: intense competition. When the industry has captured most of the field and general consensus reigns, there is a natural incentive for academics to be controversial and say the opposite—an incentive that does not exist for regulators.
9 Alexander Ljungqvist, Christopher Malloy, and Felicia Marston, “Rewriting History,”
Journal of Finance, forthcoming.
10 Henry Thomas Stelfox, Grace Chua, Keith O’Rourke, and Allan S. Detsky, “Conflict of Interest in the Debate over Calcium-Channel Antagonists,”
New England Journal of Medicine 338 (January 8, 1998): 101–106.
11 Deborah E. Barnes and Lisa A. Bero, “Why Review Articles on the Health Effects of Passive Smoking Reach Different Conclusions,”
Journal of the American Medical Association 19, no. 19 (1998): 1566–1570.
12 See Robert T. Foley,
German Strategy and the Path to Verdun: Erich von Falkenhayn and the Development of Attrition, 1870–1916 (Cambridge: Cambridge University Press, 2005).
13 Arthur Meier Schlesinger,
A Thousand Days: John F. Kennedy in the White House (Boston: Houghton Mifflin, 1965), p. 250.
SEVEN
1 Charles Postel,
The Populist Vision (New York: Oxford University Press, 2007), p. vii.
2 Margaret Canovan,
Populism (New York/London: Harcourt Brace Jovanovich, 1981), pp. 289, 293, 294.
6 I consider the following to be (or to have been) communist countries: China, North Korea, Albania, the USSR, Bulgaria, the Czechoslovak Republic, East Germany, Hungary, Mongolia, Poland, Romania, Vietnam (DRV), and Yugoslavia. In 1950, when the world population was 2,532,000,000, the total population of these countries was 864,000,000.
7 The world illiteracy figure is quoted from UNESCO, “World Illiteracy at Mid-Century: A Statistical Study” (1957),
http://unesdoc.unesco.org/images/0000/000029/002930eo.pdf (accessed February 7, 2012); the US illiteracy figure is quoted from National Center for Education Statistics, “Illiteracy,”
120 Years of Literacy, http://nces.ed.gov/naal/lit_history.asp#illiteracy (accessed February 7, 2012); and the high school data are quoted from Robert J. Barro and Jong-Wha Lee, “A New Data Set of Educational Attainment in the World, 1950–2010,” NBER working paper (2010).
8 Angus Maddison,
Dynamic Forces in Capitalist Development: A Long-Run Comparative View (New York: Oxford University Press), pp. 284–292.
9 “A Game of Catch Up,”
The Economist, September 24, 2011, p. 16.
10 The countries in question are Cuba, Laos, North Korea, and Vietnam. The respective population figures are quoted from the CIA’s
World Fact Book. 12 Edwin G. West, “Are American Schools Working? Disturbing Cost and Quality Trends,”
Cato Policy Analysis 26 (August 9, 1983).
13 Marco Pagano, Ailsa A. Röell, and Josef Zechner, “The Geography of Equity Listing: Why Do Companies List Abroad?”
Journal of Finance 57, no. 6 (December 2002).
14 David Daniels, “In Dodd-Frank’s Shadow: The Declining Competitiveness of U.S. Public Equity Markets,”
Harvard Business Law Review (March 28, 2011).
15 Committee on Capital Markets Regulation, “The Competitive Position of the U.S. Public Equity Market” (December 2007).
17 M. Halling, M. Pagano, O. Randl, and J. Zechner, “Where Is the Market? Evidence from Crosslistings in the U.S.,” University of Vienna working paper (2006).
20 “Base Point Early Payment Default: Links to Fraud and Impact on Mortgage Lenders and Investment Banks,” BasePoint Analytics LLC working paper (2007).
23 William H. Riker, Liberalism Against Populism (San Francisco: W. H. Freeman, 1982), p. 10.
24 Ronald Formisano,
For the People: American Populist Movements from the Revolution to the 1850s (Chapel Hill: University of North Carolina Press, 2008), p. 20.
25 Postel,
The Populist Vision, p. 5.
26 From the
St. Louis Globe-Democrat, in
Clinton Caucasian, December 1, 1892. See Postel,
The Populist Vision, p. 4.
27 Margaret Canovan, “Taking Politics to the People: Populism as the Ideology of Democracy,” in Yves Mény and Yves Surel, eds.,
Democracies and the Populist Challenge (New York: Palgrave, 2002), p. 27.
28 Rudiger Dornbusch and Sebastian Edwards, “The Macroeconomics of Populism,” in Rudiger Dornbusch and Sebastian Edwards, eds.,
The Macroeconomics of Populism in Latin America (Chicago: University of Chicago Press, 1991).
29 Daron Acemoglu, Georgy Egorov, and Konstantin Sonin, “A Political Theory of Populism,” MIT working paper (2010).
30 Sapienza and Zingales, “A Trust Crisis.”
EIGHT
1 I thank my colleague Steve Davis for this suggestion.
2 C. Schoen et al., “State Trends in Premiums and Deductibles, 2003–2010: The Need for Action to Address Rising Costs,” Commonwealth Fund, November 2011.
3 Susan Fleck, John Glaser, and Shawn Sprague, “The Compensation-Productivity Gap: A Visual Essay,”
Monthly Labor Review (January 2011): 57–69.
5 Theodore Caplow, Louis Hicks, and Ben J. Wattenberg,
The First Measured Century: An Illustrated Guide to Trends in America, 1900–2000 (Washington, DC: American Enterprise Institute Press, 2001).
6 Dennis Cauchon, “Grants More Than Offset Soaring University Tuition,”
USA Today, June 27, 2004.
7 Fleck, Glaser, and Sprague, “The Compensation-Productivity Gap.
8 Frank Geary and Tom Stark, “Examining Ireland’s Post-Famine Economic Growth Performance,”
Economic Journal (October 2002): 919–935.
9 D. Raff and L. Summers, “Did Henry Ford Pay Efficiency Wages?”
Journal of Labor Economics 5, no. 4 (October 1987): pp. S57–S86.
10 C. Shapiro and J. Stiglitz, “Equilibrium Unemployment as a Worker Discipline Device,”
American Economic Review 74, no. 3 (June 1984): pp. 433–444.
11 Sherwin Rosen, “The Economics of Superstars,”
American Economic Review 71, no. 5 (1981): 845–858; R. H. Frank and P. J. Cook,
The Winner-Take-All Society (New York: Free Press, 1995).
12 Matthew J. Salganik et al., “Cultural Market Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market,”
Science 311, no. 854 (2006).
13 Implicitly, I assumed that the promise is contingent on the realization of profits. One could pay up front in cash to adopt it. There are two problems with this strategy, though. First, it is hard to verify use: people can download the software to receive the bonus and then not use it. Second, this strategy would require very deep pockets, again creating a barrier to entry.
14 See, for example, Sherwin Rosen, “Authority, Control, and the Distribution of Earnings,”
Bell Journal of Economics 13, no. 2 (1982): 311–323.
15 See, for example, Stephen A. Marglin, “What Do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production,”
Review of Radical Political Economics (July 1974): 60–112.
16 Lucian Bebchuk and Jesse Fried,
Pay Without Performance: The Unfulfilled Promise of Executive Compensation (Cambridge, MA: Harvard University Press, 2004).
17 Edward P. Lazear, Kathryn L. Shaw, and Christopher T. Stanton, “The Value of Bosses,” Stanford University working paper (2011).
18 Kevin J. Murphy, “Executive Compensation,” in Orley C. Ashenfelter and David Card, eds.,
Handbook of Labor Economics, vol. 3 (Amsterdam: North Holland, 1999).
19 Bengt Holmstrom, “Moral Hazard and Observability,”
Bell Journal of Economics 10 (1979): 74–91.
20 Marianne Bertrand and Sendhil Mullainathan, “Are CEOs Rewarded for Luck? The Ones Without Principals Are,”
Quarterly Journal of Economics 116, no. 3 (2001): 901–932.
21 Jay Yarow, “Developing Nissan’s Electric Car Cost ‘Significantly’ Above $500 Million,”
Business Insider, July 28, 2009.
22 Edward P. Lazear and Sherwin Rosen, “Rank-Order Tournaments as Optimum Labor Contracts,”
Journal of Political Economy (October 1981): 841–864.
23 V. A. Ramey, “Time Spent in Home Production in the 20th Century United States: New Estimates from Old Data,”
Journal of Economic History 69 (March 2009): 1–47.
24 G. Ramey and V. A. Ramey, “The Rug Rat Race,” Brookings Papers on Economic Activity, Spring 2010.
25 John Bound, Brad Hershbein, and Bridget Terry Long, “Playing the Admissions Game: Student Reactions to Increasing College Competition,” NBER working paper 15272, August 2009.
26 Alex Williams, “Lost Summer for the College-Bound,”
New York Times, June 4, 2006.
27 Cecilie Rohwedder, “London Parents Scramble for Edge In Preschool Wars,”
Wall Street Journal Online, February 12, 2007, p. A1.
28 In “Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables,”
Quarterly Journal of Economics 117, no. 4 (2002): 1491–1528, Stacy Berg Dale and Alan B. Krueger find that students of highly selective colleges do not earn more over their lifetime than similar students who go to less selective colleges. Yet, students who attend colleges with higher tuitions or spending-per-student (such as Ivy League ones) do.
29 My calculations come from the data of the National Association of Colleges and University Business Officers; see
http://tinyurl.com/7fa32vg.
30 Erick Hurst, “Did the Construction Boom During the 2000s Distort the Labor Supply of Low Skilled Men?” University of Chicago working paper (2011).
34 For example, Robert Leslie Shapiro (one of O. J. Simpson’s attorneys) created Legal
Zoom.com, which provides legal services over the Internet, competing with existing law firms. Once legal services are offered online, they can easily be offered from another country, as long as people there study US law. To see how online teaching is changing the world, see
http://www.wired.com/magazine/2011/07/ff_khan/all/1.
35 Hurst, “Construction Boom.”
38 W. L. Sanders and J. C. Rivers, “Cumulative and Residual Effects of Teachers on Future Student Academic Achievement,” in
Research Progress Report (Knoxville: University of Tennessee Value-Added Research and Assessment Center, 1996).
39 Eric A. Hanushek, “The Trade-off Between Child Quantity and Quality,”
Journal of Political Economy 100, no. 1 (1992): 84–117.
40 Eric A. Hanushek and Steven G. Rivkin, “How to Improve the Supply of High Quality Teachers,” in Diane Ravitch, ed.,
Brookings Papers on Education Policy 2004 (Washington, DC: Brookings Institution Press, 2004), pp. 7–25.
41 Eric A. Hanushek, “The Economic Value of Higher Teacher Quality,” NBER working paper 16,606, 2010.
42 Barber, Chijioke, and Mourshed,
World’s Best-Performing School Systems.
43 Eric A. Hanushek, “Teacher Deselection,” in Dan Goldhaber and Jane Hannaway, eds.,
Creating a New Teaching Profession (Washington, DC: Urban Institute Press, 2009), 165–180.
44 Eric A. Hanushek and Ludger Woessmann,
The High Cost of Low Educational Performance: The Long-Run Impact of Improving PISA Outcomes (Paris: Organization for Economic Cooperation and Development, 2010).
45 Hanushek, “The Economic Value of Higher Teacher Quality.”
46 See, for example, Erin Richards and Amy Hetzner, “Choice Schools Not Outperforming MPS,”
Journal Sentinel, March 29, 2011,
http://tinyurl.com/7sgja22.
47 Cecilia Elena Rouse, “Private School Vouchers and Student Achievement: An Evaluation of the Milwaukee Parental Choice Program,”
Quarterly Journal of Economics (May 1998): 553–602.
48 Cecilia Elena Rouse and Lisa Barrow, “School Vouchers and Student Achievement: Recent Evidence, Remaining Questions,” Princeton University working paper (2008).
49 Chang-Tai Hsieh and Miguel Urquiola, “The Effects of Generalized School Choice on Achievement and Stratification: Evidence from Chile’s Voucher Program,”
Journal of Public Economics 90 (2006): 1477–1503.
50 Justine S. Hastings and Jeffrey M. Weinstein, “Information, School Choice, and Academic Achievement: Evidence from Two Experiments,” NBER working paper 13623 (2007), p. 4.
51 Raghuram Rajan and Luigi Zingales,
Saving Capitalism from the Capitalists (New York: Random House, 2003).
52 Congressional Budget Office, “Trends in the Distribution of Household Income Between 1979 and 2007,” October 2011.
NINE
1 Richard P. Chait and Zachary First, “Bullish on Private Colleges,”
Harvard Magazine, November–December 2011.
3 Congressional Budget Office, “Costs and Policy Options for Federal Student Loan Programs,” March 2010.
4 College Board,
Trends in Student Aid 2010 (Washington, DC: College Board, 2010), p. 10.
5 Dennis Cauchon, “Student Loans Outstanding Will Exceed $1 Trillion This Year,”
USA Today, October 25, 2011.
6 Clayton M. Christensen and Michael Horn,
Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns (New York: McGraw-Hill, 2008).
7 David I. Auerbach and Arthur L. Kellermann, “A Decade of Health Care Cost Growth Has Wiped Out Real Income Gains for an Average US Family,”
Health Affairs 30, no. 9 (2011): 1630–1636.
8 Michael F. Cannon, “A Better Way to Generate and Use Comparative-Effectiveness Research,”
Cato Institute Policy Analysis, February 6, 2009.
9 Katherine Baicker and Amitabh Chandra, “Medicare Spending, the Physician Workforce, and Beneficiaries’ Quality of Care,”
Health Affairs web exclusive (April 7, 2004): 184–197.
10 W. G. Manning et al.,
Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment (Santa Monica, CA: RAND Corporation, 1988).
11 Cory Gusland et al., “Consumer-Driven Health Plan Effectiveness: Case Study: State of Indiana,” Mercer Global, May 20, 2010.
12 For a quick introduction, see, for example, Dan Ariely,
Predictably Irrational: The Hidden Forces That Shape Our Decisions (New York: HarperCollins, 2008), and Richard H. Thaler and Cass R. Sunstein,
Nudge: Improving Decisions About Health, Wealth, and Happiness (New York: Penguin, 2009).
13 Xavier Gabaix and David Laibson, “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets,”
Quarterly Journal of Economics 121, no. 2 (2006): 505–540.
14 Christina Binkley, “Lucky Numbers Casino Chain Mines Data on Its Gamblers, and Strikes Pay Dirt,”
Wall Street Journal, May 4, 2000.
15 Sumit Agarwal et al., “Inconsistent Regulators: Evidence from Banking,” University of Chicago working paper (2011).
16 Eugene F. Fama, “Agency Problems and the Theory of the Firm,”
Journal of Political Economy 88 (1980): 288–307; Eugene F. Fama and Michael Jensen, 1983, “Separation of Ownership and Control,”
Journal of Law & Economics 26 (1983): 301–325.
17 “Top 10 Crooked CEOs: Dennis Kozlowski,”
Time, June 9, 2009.
TEN
1 Edward Banfield,
The Moral Basis of a Backward Society (Glencoe, IL: The Free Press, 1958).
2 Kenneth Arrow, “Philosophy & Public Affairs,” Vol. 1, No. 4 (Summer 1972), p. 357.
4 Luigi Guiso et al., “Cultural Biases in Economic Exchange?”
Quarterly Journal of Economics 124, no. 3 (2009): 1095–1131.
5 Luigi Guiso, Paola Sapienza, and Luigi Zingales, “Does Culture Affect Economic Outcomes?”
Journal of Economic Perspectives (2006) 20: 23–48; Eric M. Uslaner, “Where You Stand Depends Upon Where Your Grandparents Sat: The Inheritability of Generalized Trust,” mimeo, University of Maryland–College Park, 2007.
6 Luigi Guiso et al., “Cultural Biases in Economic Exchange.”
7 The factual account is quoted from the PBS documentary
Triumph of the Nerds: The Rise of Accidental Empires. The transcript can be found at
www.pbs.org/nerds. And the economic interpretation is based on Luca Anderlini and Leonardo Felli, “Transaction Costs and the Robustness of the Coase Theorem,”
Economic Journal 116 (2006): 223–245.
8 L. Guiso, P. Sapienza, and L. Zingales, “Civic Capital as the Missing Link,” NBER working paper 15845, March 2010; Jess Benhabib, Alberto Bisin, and Matthew O. Jackson, eds.,
Handbook of Social Economics, vol. 1A (San Diego/Amsterdam: North-Holland, 2011).
9 Ray Fisman and Edward Miguel, “Corruption, Norms, and Legal Enforcement: Evidence from Diplomatic Parking Tickets,”
Journal of Political Economy 115, no. 6 (2007): 1020–1048.
11 Orazio Attanasio, Luca Pellerano, and Sandra Polanía Reyes, “Building Trust? Conditional Cash Transfer Programmes and Social Capital,”
Fiscal Studies 30, no. 2 (2009): 139–177.
12 Robert D. Putnam,
Making Democracy Work (Princeton, NJ: Princeton University Press, 1993).
13 Luigi Guiso, Paola Sapienza, and Luigi Zingales, “Long-Term Persistence,” NBER working paper W14278 (2008).
14 Nathan Nunn and Leonard Wantchekon, “The Slave Trade and the Origins of Mistrust in Africa,”
American Economic Review 101, no. 7 (2011): 3221–3252.
15 Paola Sapienza and Luigi Zingales, “Blame Silvio’s Antics for Italy’s Bond Market Fall,”
Financial Times, July 14, 2011.
16 Yann Algan, Pierre Cahuc, and Andrei Shleifer, “Teaching Practices and Social Capital,” Harvard University working paper (2011).
17 Luigi Guiso, Paola Sapienza, and Luigi Zingales, “The Determinants of Strategic Default on Mortgages,”
Journal of Finance, forthcoming.
18 Robert H. Frank, Thomas Gilovich, and Dennis T. Regan. “Does Studying Economics Inhibit Cooperation?”
Journal of Economic Perspectives 7, no. 2 (1993): 159–171.
19 Gary Becker, “Crime and Punishment: An Economic Approach,”
Journal of Political Economy 76 (1968): 169–217.
20 L. Guiso, P. Sapienza, and L. Zingales, “People’s Opium? Religion and Economic Attitudes,”
Journal of Monetary Economics 50 (2003): 225–282.
21 L. Guiso, P. Sapienza, and L. Zingales, “The Values of Corporate Values,” University of Chicago working paper (2011).
22 Lauren Cohen, Andrea Frazzini, and Christopher Malloy, “The Small World of Investing: Board Connections and Mutual Fund Returns,”
Journal of Political Economy 116 (2008): 951–979.
ELEVEN
1 John F. Kennedy, “To Keep the Lobbyist Within Bounds,”
New York Times Magazine, February 19, 1956;
Congressional Record (March 2, 1956): 3802–3803.
2 Rajeev Syal and Jeevan Vasagar, “Anthony Giddens’ Trip to See Gaddafi Vetted by Libyan Intelligence Chief,”
The Guardian, March 4, 2011.
3 Benjamin Pauker, “Understanding Libya’s Michael Corleone,”
Foreign Policy, March 7, 2011.
5 Marianne Bertrand, Matilde Bombardini, and Francesco Trebbi,
Is It Whom You Know or What You Know? An Empirical Assessment of the Lobbying Process. University of Chicago working paper, 2011.
7 Vidal Blanesi, Mirko Draca Jordi, and Christian Fons-Rosen, “Revolving Door Lobbyists,” London School of Economics working paper (2010).
8 Bertrand, Bombardini, and Trebbi,
Is It Whom You Know? 9 John Boehner, “For a Majority That Matters,” January 9, 2006. Cited in Bertrand, Bombardini, and Trebbi, “Is It Whom You Know,” p. 14.
10 Atif Mian, Amir Sufi, and Francesco Trebbi, “The Political Economy of the U.S. Mortgage Default Crisis, 2010,”
American Economic Review 100 (December 2010): 1967–1998.
12 G. Becker, “A Theory of Competition Among Pressure Groups for Political Influence,”
Quarterly Journal of Economics 98, no. 3 (1983): 371–400.
13 Robert J. Barro,
Getting It Right: Markets and Choices in a Free Society (Cambridge, MA: MIT Press, 1996), p. 169.
14 R. H. Coase, “The Coase Theorem and the Empty Core: A Comment,”
Journal of Law, Economics, and Policy 24, no. 1 (1981): 183–187.
15 Eric Lichtblau, “Obama Backers Tied to Lobbies Raise Millions,”
New York Times, October 27, 2011.
16 R. La Porta, F. Lopez-de-Silanes, and A. Shleifer, “The Economic Consequences of Legal Origins,”
Journal of Economic Literature 46 (June 2008): 285–332.
18 Michael Jensen, “Some Anomalous Evidence Regarding Market Efficiency,”
Journal of Financial Economics 6, nos. 2–3 (1978): 95–101 at 95.
19 This section and the next draw heavily from A. Dyck, D. Moss, and L. Zingales, “Media vs. Special Interests,” NBER working paper #14360 (2008).
20 Marie Brenner, “The Man Who Knew Too Much,”
Vanity Fair, May 1996.
21 Dyck, Moss, and Zingales, “Media vs. Special Interests”; David Ström-berg, “Mass Media Competition, Political Competition, and Public Policy,”
Review of Economic Studies 71 (2004): 265–284.
22 Brenner, “The Man Who Knew Too Much.”
23 Jonathan Reuter and Eric Zitzewitz, “Do Ads Influence Editors? Advertising and Bias in the Financial Media,”
Quarterly Journal of Economics 121, no. 1 (2006): 197–227.
24 David Graham Phillips, “The Treason of the Senate,”
Cosmopolitan, April 1906, p. 488.
25 This and the following information comes from Forest Reinhardt and Richard Vietor,
Starkist (A) and Starkist (B), Harvard Business School cases 794–128 and 794–139 (Cambridge, MA: Harvard Business School Press, 1994).
26 Reinhardt and Vietor,
Starkist (A) and Starkist (B), p. 3.
27 Richard Vietor,
Allied Signal: Managing the Hazardous Waste Liability Risk, Harvard Business School case 793–044 (Cambridge, MA: Harvard Business School Press, 1993).
30 A. Dyck and L. Zingales, “The Corporate Governance Role of the Media,” in R. Islam,
The Right to Tell: The Role of the Media in Development (Washington, DC: World Bank, 2002).
32 Edward Glaeser, Jose Scheinkman, and Andrei Shleifer, “The Injustice of Inequality,”
Journal of Monetary Economics, Carnegie-Rochester Series on Public Policy (January 2003); Edward Glaeser and Andrei Shleifer, “The Rise of the Regulatory State,”
Journal of Economic Literature XLI (June 2003): 401–425.
33 Louis Brandeis, “Opportunity in the Law,” address delivered May 4, 1905, before the Harvard Ethical Society.
TWELVE
1 Lawrence Lessig,
Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It (New York: Twelve, 2011).
2 Elaine Buckberg, Jonathan Macey, and James Overdahl, “Will Court Short-Circuit Dodd-Frank?”
Politico.com, August 15, 2011.
6 See, for instance, P. Milgrom and J. Roberts, “Bargaining Costs, Influence Costs, and the Organization of Economic Activity,” in J. E. Alt and K. A. Shepsle, eds.,
Perspectives on Positive Political Economy (Cambridge: University of Cambridge Press, 1990), pp. 57–89; and E. Glaeser and A. Shleifer, “A Reason for Quantity Regulation,”
American Economic Review Papers and Proceedings (May 2001).
7 Sanjour, “Designed to Fail.”
8 Author’s calculations, based on Internal Revenue Service data.
9 GAO Report to Congressional Requesters, “Comparison of the Reported Tax Liabilities of Foreign- and U.S.-Controlled Corporations, 1998–2005” (July 2008), p. 8.
10 Author’s calculations, based on data from
The Economic Report of the President: 2011. 11 Nanette Byrnes, “What U.S. Companies Really Pay in Taxes,”
Bloomberg BusinessWeek, April 23, 2009.
12 Jack Abramoff,
Capitol Punishment: The Hard Truth About Washington Corruption from America’s Most Notorious Lobbyist (New York: WND Books, 2011), p. 243.
13 Raquel Meyer Alexander, Stephen W. Mazza, and Susan Scholz, “Measuring Rates of Return for Lobbying Expenditures: An Empirical Analysis Under the American Jobs Creation Act,” University of Kansas working paper (2009).
14 Of course, this provision would have to deal with nontaxable entities like foundation and university endowment. Today, the profits distributed to these entities as dividends are subject to the 35 percent corporate tax rate, while they avoid any personal tax. With the proposed reform, they will see the tax burden on these profits decrease without having a correspondingly higher personal tax burden. So a compensating tax would have to be studied for these entities.
15 G. Stuart Mendenhall, “Death and Taxes,”
Annals of Internal Medicine 149, no. 11 (December 2, 2008): 822–824.
16 Technically, it is a discounted number of expirations in the following ten years, where the annual discount rate is set at 100 percent per year. See Scott R. Baker, Nicholas Bloom, and Steven J. Davis, “Measuring Economic Policy Uncertainty,” University of Chicago Working paper (2012).
17 Peter Schweizer,
Throw Them All Out (Boston: Houghton Mifflin Harcourt Trade, 2011).
THIRTEEN
1 Bernard Lewis,
The Jews of Islam (Princeton, NJ: Princeton University Press, 1984).
2 Adam Smith,
An Inquiry into the Nature and Causes of the Wealth of Nations, Book 5, Chapter 2, Article 1 (1776).
3 Frank Ramsey, “A Contribution to the Theory of Taxation,”
Economic Journal 37 (1927): 47–61.
4 Martin Feldstein, “The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act,”
Journal of Political Economy 103, no. 3 (1995).
5 Thomas Piketty, Emmanuel Saez, and Stefanie Stantcheva, “Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities,” NBER working paper 17616 (2011).
6 Jon Gruber and Emmanuel Saez, “The Elasticity of Taxable Income: Evidence and Implications,”
Journal of Public Economics 84 (2002): 1–32.
7 Henrik Kleven, Camille Landais, and Emmanuel Saez, “Taxation and International Migration of Superstars: Evidence from the European Football Market,” NBER working paper 16545 (2010).
8 Another possible justification is that the government ameliorates some inefficiency in the financial market that prevents people from financing their investments with future returns. For instance, the government may be better at enforcing contracts than the private sector is (see my example in Chapter 8). If this is the case, the government should help the private sector enforce those contracts and not substitute for it. In practice, many policies targeted to reduce alleged credit inefficiencies are disguised income transfers.
FOURTEEN
1 Anton R. Valukas, “Examiner’s Record,” U.S. Bankruptcy Court, Southern District of New York, 2010,
http://jenner.com/lehman/ (accessed February 10, 2012).
2 Author’s calculation from the S&P/Case-Shiller Home Price Index.
3 Phillip Swagel, “The Financial Crisis: An Inside View,” Brookings paper on economic activity, Spring 2009.
4 See Luigi Zingales, “The Future of Securities Regulation,”
Journal of Accounting Research 47, no. 2 (2009): 391–425.
5 J. P. Hawley and A. T. Williams,
The Rise of Fiduciary Capitalism: How Institutional Investors Can Make Corporate America More Democratic (Philadelphia: University of Pennsylvania Press, 2000).
6 Zingales, “The Future of Securities Regulation.”
7 International Monetary Fund,
Global Financial Stability Report: Meeting New Challenges to Stability and Building a Safer System, World Economic and Financial Surveys, April 2010; Bank for International Settlements,
Triennial and Semiannual Surveys: Positions in Global Over-the-Counter (OTC) Derivatives Markets at End-June 2010, Monetary and Economic Department, November 2010.
8 Zingales, “The Future of Securities Regulation.”
9 This proposal is based on my joint work with Oliver Hart. See Oliver Hart and Luigi Zingales, “Curbing Risk on Wall Street,”
National Affairs no. 3 (2010): 20–34; and “A New Capital Regulation for Large Financial Institutions,”
American Law and Economic Association Review 13 no. 2 (2011): 453–490.
FIFTEEN
1 Laura S. Unger, “Testimony Concerning the Effects of Decimalization on the Securities Markets,” U.S. Securities and Exchange Commission,
http://tinyurl.com/6teffw5.
2 Raghuram G. Rajan and Luigi Zingales,
Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity (New York: Crown Business, 2003).
3 William G. Christie and Paul H. Schultz, “Why Do NASDAQ Market Makers Avoid Odd-Eighth Quotes?”
Journal of Finance 49, no. 5 (1994).
4 Lauren Cohen, Andrea Frazzini, and Christopher Malloy, “The Small World of Investing: Board Connections and Mutual Fund Returns,”
Journal of Political Economy 116 (2008): 951–979.
5 Maxim Mironov,
Economics of Spacemen: Estimation of Tax Evasion in Russia (Chicago: University of Chicago Press, 2006).
6 Itzhak Ben-David, “Financial Constraints and Inflated Home Prices During the Real-Estate Boom,”
American Economic Journal: Applied Economics 3 (2011): 55–78.
7 Sumit Agarwal et al., “Inconsistent Regulators: Evidence from Banking,” University of Chicago working paper (2011).
8 Louis Brandeis,
Other People’s Money, and How Bankers Use It (New York: Frederick A. Stokes,), p. 92.