With wages stagnant, precarious work morecommon, and decent working class jobs harder to find, the only way many familiescould hope to achieve the “middle class dream” was through an ongoing increasein debt (through mortgages, credit cards, student loans, and other forms).
Makes me curious about things like minimum wage policies or debt forgiveness because of the impact that it might have on the reliance of debt.
ou’dhave to find someone who wanted to buy your used car, but who also wanted topart with something you wanted – like a month’s rent on a vacation cottage, alarge-screen television set, or whatever else you were interested in purchasing.It would be very hard to consummate such a deal. Money is thus essential foreffective exchange.
Stanford explains how money is essential for effective exchange, and while Kling agrees he also believes that trust plays a major role in bartering.
Underneath, the economyis ultimately about working to produce concrete goods and services, with the endgoal of meeting concrete human needs.
If the economy is focused on concrete needs, should there be different policies on investments and production priorities?
In many situations, people can choose either to coop-erate or to defect. To cooperate means to obey norms thatare beneficial when everyone follows them but that are notnecessarily in your best interest in the short run. To defectmeans to do what is best for you in the short run, even thoughthere would be adverse consequences if everyone were to actthat way.
I think its interesting how everybody is going to think differently and choose their own way. Makes me wonder which side has more people, most likely cooperate, and by how many.
For specialization to take place, people need to trust thatthe work that they perform today will yield goods and servicesthat they can consume in the future.
Kling focuses on social trust and Stanford focusus on institutional help to secure this trust.
People with advanced degrees have seen their incomes risesharply, whereas those without college degrees have tendedto fall behind.
If this continues, what are the economic consequences going to be for inequality and trust in institutions?
The debt contract puts a gun to the head of managers. Theymust repay the debt on schedule, or they will lose control of
Does this kind of pressure lead to bad decision making that can lead to a negative out put?
For example,the general public may demonize people as defectors on thebasis of their ethnicity or their occupation.
Does this discrimination reduce cooperation in markets, or shape economic opportunities, wages, and mobility?
Yet no form of government alwaysprevents officials from abusing powe
If no government is able to prevent officials from abusing power, does this mean that well designed markets need constant managing and accountability to maintain fairness?
Salespeople and politicians tend to be more successful ifthey sound like they are our friends. Some of them becomemasters of deception.
I think it is interesting that Kling connects sales people and politicians. How much of economic and political life is built on manufactured trust, rather than true accountability?