BOOK LINK:
Here is a summary of the key points from the excerpt:
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Deep divisions are tearing apart societies, causing new anxieties and anger. The divides are based on geography, education, and morality.
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Less educated, struggling workers in provincial areas are rebelling against the more educated urban elite. This provincial group has replaced the traditional working class as the revolutionary force.
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These groups are angry about economic declines. Globalization and technology have eliminated many jobs, especially for older and younger workers.
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This has led to family breakdown, substance abuse, violence, and declining life expectancy among less educated whites in America and Europe.
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Young people face mass unemployment and are pessimistic about the future. Capitalism is failing to raise living standards for all.
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The less educated fear the growing distance from the educated elite and loss of safety nets. This shreds political allegiances and trust.
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Voters have turned to ideologues and populists, who offer easy answers but can’t address complex divides. Viable solutions require pragmatic analysis, not moral ideology or populist distraction.
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The author has personally experienced these divides but maintains a pragmatic approach despite passion for solutions.
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Sheffield exemplifies the collapse of industry and ensuing economic divide in the UK. The author has lived this tragedy personally through the diverging fortunes of relatives.
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Meanwhile, the author benefited from opportunities like Oxford education that led to career success, highlighting the widening inequality.
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The author has also witnessed the global inequality between prosperous countries like the US/UK and impoverished nations like Africa.
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These three divides - urban vs rural, social classes, and global rich vs poor - shape the author’s sense of purpose.
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The left-wing social democrats and right-wing centrists originally developed pragmatic policies based on community reciprocity that addressed people’s anxieties.
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But these parties were later captured by intellectuals attracted to utilitarianism, a philosophy focused on redistribution and technocratic governance.
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Economics adopted utilitarianism despite its flaws, enabling paternalistic policies detached from community obligations.
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This change eroded the social contract between citizens and the state. The urban renewal policies of the postwar era exemplify the confident paternalism that resulted.
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Neighbourhoods were bulldozed and replaced with modernist infrastructure like flyovers and high-rise towers, despite a backlash from communities who felt their way of life was being destroyed.
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Recent research in social psychology by Jonathan Haidt shows that most people cherish values like loyalty, fairness, liberty, hierarchy, care and sanctity, but the “Utilitarian vanguard” driving these changes valued only care and equality.
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The vanguard was WEIRD (Western, Educated, Industrial, Rich, Developed), and their atypical values and meritocratic superiority led them to override community values.
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The backlash promoted individual rights over obligations and community, through libertarianism and group rights movements like feminism and African American rights.
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Utilitarian economists and Rawlsian lawyers promoted ideologies focused on the individual and group differences, moving away from inclusive social democracy.
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Right-wing parties also moved towards ideologies focused on individualism and meritocracy, rather than community.
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Social democracy worked post-WW2 due to the shared national identity from the war effort, but declined as this eroded and its intellectual premises were undermined.
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Social democracy is in crisis due to the rise of a new ideology that has displaced communitarianism. This new ideology prioritizes the interests of metropolitan elites over ordinary people and working-class communities.
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The new ideology is rooted in utilitarianism and emphasizes individual consumption over relationships and community obligations. It depicts people as selfish and targets assistance to ‘victim’ groups rather than supporting struggling communities.
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To revive social democracy, we need practical policies grounded in an ethical framework of community and reciprocity rather than just maximizing utility. This means rebalancing power in the spheres of the state, firms, and families.
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The geographical and class divides can be narrowed through a range of coordinated policies: tax reforms to distribute the gains of major cities, sustaining families, changing education and skills systems, reforming firms to restore purpose, and curtailing excess consumption by elites.
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The overall goal should be an ethical capitalism that supports community as well as prosperity. This requires moving beyond siloed academic perspectives and rebuilding a communitarian center in politics.
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Modern capitalism has achieved prosperity but lacks morality and purpose. Capitalism should enable mass prosperity and human flourishing, combining prosperity with belonging and esteem.
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Decentralized, competitive markets are the only way to deliver prosperity. But belonging comes from mutual regard, not self-interest. A moral capitalism supporting prosperity, esteem, and belonging is possible.
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Critics see capitalism as fatally tainted by greed. Some defend it by arguing the end justifies the means. But a capitalism driven solely by greed would malfunction. Moral purpose must infuse the means.
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Economic models assume people are selfish, greedy, and lazy. But even billionaires have larger purposes beyond consumption. Morality stems from emotions and sentiments, not just reason.
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We have obligations of intimacy to family, of reciprocity to friends, and of shared humanity to strangers. These create a wedge between self-interest and moral duties.
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Morality evolved to support cooperation in groups. But it can malfunction, causing exclusion of outsiders. Moral capitalism needs to foster wide ethical groups.
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People have the weakest sense of obligation to help distant strangers in distress, as illustrated by Adam Smith’s example of an earthquake in China not preventing an Englishman from enjoying dinner.
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Between intimacy and distant duties are obligations supported by emotions like shame and esteem that facilitate reciprocity - “I’ll help you if you help me.” This relies on trust underpinned by values that discourage breaching obligations.
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People care about esteem from others, not just their own consumption. Social psychology supports Smith’s view that morality stems more from values than reason.
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Reason evolved for persuading others, not improving our own decisions. Massive brain expansion was driven by the need for sociality, not individual rationality.
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Values like fairness and loyalty support the norm of reciprocity, making demanding obligations sustainable. Experiments show reciprocity is key for this.
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Pragmatism sees morality as fitting actions to communal values and context, contrasting with ideologies claiming supremacy of one value from reason.
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Institutions encapsulate accumulated social learning, so following them can be best for many moral decisions, balancing the risks of individual practical reasoning.
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Evolution selected for cravings for belonging and esteem alongside greed. Language enabled narratives to spread values. Reciprocity emerged from imitation within groups.
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Descartes’ “cogito ergo sum” is backwards - we deduce ourselves from our world, not the other way around. Our sense of self comes from the relationships and narratives we are immersed in from birth.
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Feral children like the “babes in the wood” show that without socialization, children do not develop normal human capabilities like language and reasoning. The Romulus and Remus myth is wrong - they do not build great civilizations.
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Through repeated exposure to narratives, children rapidly develop a sense of group belonging and norms of behavior. This happens before they develop reasoning abilities.
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Narratives serve three key functions: establishing group identity and belonging, setting social norms and obligations, and explaining how the world works causally.
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Belief systems based on reciprocal obligations and shared identity allow the creation of cooperative communities, but can also have harmful consequences like nationalism.
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Research shows norms evolve through a process like natural selection - people adopt the norms of those around them, especially happier/more successful people. But dysfunctional norms can emerge and become locked in.
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This challenges conservative thinking - traditions and existing social norms cannot be presumed functional or optimal just because they are time-tested. Dysfunctional norms can become entrenched through historical accident.
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Philosophers often revere the institutions of society as embodying collective wisdom, but sometimes those institutions formalize dysfunctional norms. However, this does not justify abandoning institutions in favor of unfettered reason, which can also lead to disaster.
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Modern prosperity depends on large organizations like families, firms, and states, which are more effective than small groups or individuals at many activities. Some ideologies oppose these organizations, but the evidence shows they are indispensable.
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Leaders of organizations cannot rely on power alone. To motivate people, they create a sense of shared identity, obligation, and purpose through narratives. This transforms power into legitimate authority.
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Shared narratives have enabled modern societies to function much better than earlier ones. But narratives can also divide societies if groups form isolated “echo chambers.”
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Business leaders like Johnson & Johnson’s CEO have used narratives about corporate purpose and values to motivate employees to act morally and serve customers, benefiting both society and shareholders.
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In sum, while narratives can be misused, they are generally constructive in building the shared identities and norms that allow modern institutions to function effectively. But we must remain wary of isolating into polarized groups and extreme ideologies.
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Leaders can shape group behavior through narratives that tap into shared moral values like care, fairness, loyalty, authority, and sanctity. These narratives create a belief system that generates reciprocal obligations.
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Obligations matter because they can override individual self-interest and wants. Belief systems sustained by narratives and signaling actions allow societies to generate extensive reciprocal obligations.
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Ideologies privilege one moral value over others, inevitably conflicting with some values. Populism glorifies values but ignores reason and institutions.
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An ethical capitalism should meet standards built on shared moral values, refined by reason, and reproduced through reciprocal obligations in families, firms, and society.
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Obligations are as important as rights. Rights require counterpart obligations to be meaningful. A focus just on rights privileges lawyers over other perspectives.
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Leaders should build reciprocal obligations through narratives that tap shared values, not sever morality from values as ideologies do, or discard reason and institutions as populists do. This can create an ethical capitalism.
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The post-WW2 period from 1945-1970 saw an unprecedented rise of the “ethical state” in Western democracies, with a strong sense of shared identity and mutual obligation between citizens. This enabled an expansion of the welfare state and social democracy.
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This was enabled by the legacy of WW2 as a common endeavour that fostered a sense of national community and reciprocity. People complied with high taxes, conscription etc.
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However, the social democratic consensus eroded over time as identity fragmented. The utilitarian and Rawlsian approaches promoted globalism and group identities over national identity.
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Meanwhile, economic changes like rising complexity required more specialist skills and education, widening inequality. This created a divide between highly educated cosmopolitan elites and less educated provincial populations.
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As national identity declined, willingness to support the welfare state and mutual obligation also declined. Widening inequality meant more people needed support.
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Together these eroded the social contract underpinning the post-war ethical state. By 2017 social democratic parties were in crisis, abandoned by voters.
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The decline of shared identity and rise of inequality undermined the foundations the ethical state had been built on. States cannot be more ethical than their societies.
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The author uses the framework of Identity Economics to explain how social identities influence behavior. Each person has two main identities - their job and nationality - that generate esteem.
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People can choose which identity to make more salient. Making an identity more salient increases the esteem it generates.
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In the post-war period, most people chose to make their national identity most salient, leading to an egalitarian society.
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Over time, higher skilled and educated people switched to making their job identity more salient as incomes diverged. This increased their esteem.
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Those with less prestigious jobs maintained their national identity as most salient. As the higher skilled peeled off, this reduced the esteem for those remaining behind.
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The identity cleavage led the higher skilled to denigrate national identity to differentiate themselves, generating resentment among the less skilled.
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The unravelling of shared identity weakened obligations and reduced trust between the groups. The less fortunate recognized the declining sense of obligation among the elite.
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This erosion of trust helps explain the decline in support for high redistributive taxes to help the poor after the postwar period.
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Social democracy is unravelling due to a decline in trust and cooperation in society. This is driven by a weakening of the sense of shared identity and reciprocal obligations between citizens.
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As society has become more diverse, people feel less connected to those unlike themselves. This makes it harder to empathize and care about their fellow citizens’ welfare.
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Nationalist populism exploits this by turning groups against each other, further corroding trust and cooperation. But educated elites also contribute by not offering an alternative unifying identity.
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Surveys show younger Britons are less willing to pay taxes to support society than older generations, reflecting declining reciprocity.
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With less trust and cooperation, it becomes harder to build authority and gain consent for policies. This leads to non-compliance and ineffective government.
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The solution lies in building new inclusive identities that span divisions and restore reciprocity between citizens. This is challenging but vital for social democracy to thrive again.
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There is a tension between our increasingly global identities and affiliations, and the spatial nature of our political systems and policies.
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One possibility is retaining generosity to the poor globally, but reducing it nationally. This would help the global poor but hurt the national poor.
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Another is extending generosity globally without reducing it nationally. This would require a massive increase in taxation that is likely impractical.
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A third is reducing generosity nationally under the guise of global caring. This would allow the well-off to keep more of their income.
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Shared national identity has declined due to rising complexity and individualism. This threatens social cohesion and generosity.
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Nationalists promote exclusive identities that divide societies. Cosmopolitans abandon national identity. Both undermine social cohesion.
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We need a notion of patriotism that fosters inclusive national identity open to all citizens, without being dangerous or divisive. This could restore social cohesion.
In summary, we must find a balance between global interconnectedness and national social cohesion built on an inclusive, civic patriotism. This is needed to maintain generosity and trust in increasingly complex societies.
The old methods for building shared national identity like war, myths of ethnic purity, and cultural idiosyncrasies are no longer viable in modern multicultural societies. Shared values also do not work well as a basis for national identity since values differ widely within countries. Global governance is unrealistic since people identify more with their nation than with global institutions. A sense of belonging to a place is a more promising basis for national identity. Place-based identity is deeply rooted in our evolutionary psychology and taps into powerful territorial instincts. Narratives about the history and character of a place can reinforce this. Politicians have wrongly denigrated place-based belonging, leaving it open to nationalist groups with divisive agendas. But patriotism defined as belonging to a place is seen positively across society and ages, unlike political ideologies. Patriotism can inspire cooperation rather than zero-sum nationalism. Home ownership fosters the inner core of belonging to place, so policies to promote it can strengthen national identity. In summary, place-based patriotism is a viable way to build inclusive national identity in modern multicultural societies.
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Firms are core to capitalism, yet many view capitalism as greedy and corrupt largely due to deteriorating corporate behavior.
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Economist Milton Friedman promoted the view that a firm’s sole purpose is to make profits. This view became prevalent in business schools and companies like ICI.
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Public opinion disagrees - most believe profit should be one consideration among many, not the sole purpose.
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When ICI changed its mission statement to focus on maximizing shareholder value, it went into decline and was taken over. Focusing only on profits can be disastrous.
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Firms need a sense of purpose beyond just profits. Employees are motivated by contributing to society through their work.
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Bear Stearns’ focus on profits for employees led to unethical behavior that bankrupted the firm and contributed to the 2008 financial crisis.
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Successful firms like Toyota focused on building quality and relationships with the workforce, not just profits.
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Public policy needs to promote ethical corporate behavior focused on obligations to customers and employees, not just shareholders. Businesses exist to serve society.
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Capitalism is not intrinsically flawed, but profit should not be the sole purpose of a company. Companies need a sense of broader purpose aligned with stakeholders like workers and customers.
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The problem is that the wrong people now control companies - shareholders who provide capital but may not suffer losses if the company fails. Workers and other stakeholders bear more risk but have no control.
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Shareholders lack knowledge and long-term commitment to effectively oversee management. Founding families who retain shares play this role better.
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In Britain, ownership is fragmented across pension funds that lack company knowledge and just sell shares if profits dip.
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Management focuses on quarterly profits and share price to avoid takeovers. CEO tenures are short.
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CEO pay is tied to short-term share price performance rather than long-term company health. The shareholder value ideology has given the wrong incentives.
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Better corporate governance is needed, giving more voice to workers and long-term stakeholders, not just short-term shareholders. Companies need a sense of purpose beyond profits.
Here is a summary of the key points about term performance:
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In the UK and US, where financial markets are most developed, CEOs have very short tenures and are focused on short-term performance rather than long-term company building. This is infecting non-financial companies too.
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CEO pay has skyrocketed compared to average worker pay, with no evidence of improved company performance. In the UK it has gone from 30x to 150x worker pay over 30 years. In the US from 20x to 231x.
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The financial sector exemplifies this model, with CEO pay now 500x average worker pay. This has changed the ethics and culture at the top.
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CEOs are incentivized to boost short-term profits, often by cutting investment, rather than building sustainably profitable companies.
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Quarterly profit chasing leads to worse long-term performance. But CEO tenures are short, so they focus on quick boosts to profit like cutting investment or creative accounting.
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Widening pay gaps between workers and executives also makes it harder to build cooperative, committed workforces essential for long-term success.
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This short-termism is damaging for pension funds, which need long-term growth from companies to meet obligations.
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The problems reflect fixable policy mistakes, not inherent flaws in capitalism. Ideological extremes of unrestrained markets or state control have inhibited pragmatic solutions.
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The current corporate governance system, where company boards represent shareholder interests alone, arose historically but is no longer optimal. Risks are now spread through diversification and there are other long-term stakeholders, like employees and customers, who are unrepresented.
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Alternative models like mutuals, where employees and/or customers have ownership and board representation, may better serve the interests of all stakeholders. The John Lewis Partnership in Britain is a successful example of this.
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However, mutuals are vulnerable to demutualization, where current owners can take the company public and personally profit. This happened to many British building societies, with poor results - it allowed risky strategies for short-term gain, leading to failures.
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Worker representation on boards, as in Germany, is one pragmatic solution. But other stakeholder interests must also be considered.
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Competition naturally aligns business interests with customers, but vested interests lobby for unfair advantages. Communism showed state control is not the answer. Market competition is still the best check on vested interests.
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The principle of maintaining competition can be used to counter vested interests trying to gain unfair advantages. Arguments against competition often mask self-interest and motivated reasoning.
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Markets, not government intervention, disciplined GM and Bear Stearns. But competition is sometimes insufficient, requiring active public policies.
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Vested interests create artificial barriers to competition. In some sectors, technological barriers like economies of scale lead to natural monopolies in networks like electricity grids.
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Global e-companies like Facebook and Google have network effects tending toward natural global monopolies, which are highly dangerous when unregulated.
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In sectors with economies of scale, competition fails to restrain dominant companies from gaining exceptional returns. This calls for targeted public policies like regulation or public ownership.
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Regulation has limitations - it’s difficult to set prices without full information, and governments often lack credibility to maintain contracts. Short political cycles discourage investment.
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Global regulation is very difficult, with national capacity but global companies. Public ownership also has downsides like inefficiencies and politicization seen when UK utilities were nationalized. Evidence suggests rail improved but water worse under privatization.
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Regulation and public ownership of companies have serious limitations, so other approaches should be considered.
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Taxation could be used to capture some of the excessive profits (“economic rents”) of large firms in sectors where big is naturally more productive and profitable. Differentiating corporate tax rates by size could help address this.
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Public interest representation on company boards could ensure decisions consider broad societal impacts, not just narrow corporate interests. This could be mandated by law, with liability for ignoring major public costs.
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Ordinary citizens can play a “policing” role in holding companies accountable to decent standards and purposes, through esteem/shame and speaking out. This requires rebuilding norms and obligations between companies and society.
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Government has a key role in fostering new identities and narratives to achieve this. Ethical citizens need to understand corporate purpose and obligations, and apply gentle pressure.
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Individuals should consider moving jobs if their employer lacks social purpose and they cannot alter its direction. Better to work somewhere with values aligned to your own.
I have summarized the key points from the passage:
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The “ethical family” belief system that was widespread in 1945 involved mutual obligations between generations - middle-aged parents accepted responsibilities towards both their children and their own aging parents.
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This system was destabilized by several shocks:
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The birth control pill separated sex from conception, enabling more casual relationships and easing the process of finding a compatible spouse.
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Intellectual movements like feminism and Playboy prioritized self-fulfillment over family obligations. Laws made divorce easier, reflecting a shift from mutual obligations to self-fulfillment.
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University expansion equalized numbers of educated men and women, enabling better matchmaking. Legalized abortion provided a backup to birth control.
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Among the educated elite, these shocks replaced the old family ethics of obligation with new ethics of self-fulfillment. Divorce initially spiked but then declined as better matchmaking created compatible couples focused on mutual achievement.
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High-achieving parents began intensively investing in their children’s success. This compounded divergence between social classes as less educated families remained more traditional.
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The educated “upper” class adopted new ethics of self-fulfillment and personal achievement, leading to smaller families, more divorce initially, and more intensive parenting (“trophy children”).
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The less educated “lower” class was hit by several shocks - increased sexual activity due to the Pill/abortion, more single parenthood, economic decline for men, and high divorce rates.
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For the upper class, divorce declined after an initial surge and single parenthood is low. For the lower class, divorce kept rising and single parenthood exploded.
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The state stepped in with “rights of the child”, leading to many children removed from birth parents and placed in foster care rather than adopted.
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In the US, over half of children born to less educated mothers grow up without their biological father, leading to adverse outcomes like behavioral problems, substance abuse, lower education, etc.
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Divergence in family structures between upper and lower classes reinforces class rigidity and lack of social mobility.
So in summary, the new ethics of self-fulfillment had negative impacts on the lower class family structure, while the upper class families recovered traditional stability. This class divergence in family structure leads to poor outcomes for lower class children and rigidifies class divisions.
I cannot provide a summary that reflects all the nuances and details of the original text. However, I can attempt to briefly summarize some key points:
The passage argues that family structures and parenting approaches have diverged between educated, affluent families and less educated, lower income families. Affluent families engage in intensive “hothousing” of children with lots of enriching activities and encouragement. Poorer families tend to be more stressed and chaotic, with less time and resources for child enrichment. This is driving widened gaps in school readiness and educational achievement between richer and poorer children.
The passage cites research suggesting that success and failure tend to persist across multiple generations within families, beyond what can be explained by inheritance of wealth. This may reflect inheritance of norms, values and beliefs - “family culture” - that contributes to success or disadvantage.
Overall, the passage implies a need to find a balance between individual fulfillment and meeting family obligations, suggesting the trends towards family breakdown have been detrimental and a restoration of the “ethical family” may be warranted.
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The world leaders after 1945 recognized obligations to help other societies and build reciprocal obligations through purpose-specific clubs and enlightened self-interest. This transformed the world for the better compared to the problems inherited from empires, ideologies, economic collapse, and war.
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They met duties of rescue through assisting refugees and despairing societies. They built new clubs like NATO for security through reciprocal obligations among members. The UN, IMF, and World Bank fostered cooperation on human rights, the economy, and development.
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Later leaders did not understand this process. Utilitarian and Rawlsian ideologies eroded the enlightened self-interest principles. The world is better than in 1945 but has deteriorated from the post-war peak.
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To build an ethical world, duties of rescue should be recognized and met. More clubs should be built on reciprocal obligations and enlightened self-interest. The senior generation should promote the obligations of extended families. Progress depends upon purposive cooperation, not ideologies.
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After WWII, leaders created international organizations based on reciprocity and enlightened self-interest, like NATO, the EEC/EU, GATT/WTO, and the IMF. These “clubs” helped transform the world by getting nations to cooperate.
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The clubs worked well when membership was limited, but as they expanded their membership and scope, reciprocity and self-interest eroded. Some like the WTO became ineffective, while others like the EU and IMF turned into quasi-empires where powerful states impose rules on weaker ones.
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Ideology shifted from pragmatism towards ideals of inclusion and equality. This undermined reciprocity and obligations, weakening the international order.
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To rebuild an ethical world order, we likely need new, multipurpose clubs of key nations driven by reciprocity and self-interest, as well as reformed versions of old clubs. We also still need organizations focused on duty and rescue. A balance of obligations, reciprocity and rescue is needed.
Here is a summary of the key points about the geographic divide between booming metropolises and struggling provincial cities:
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Since around 1980, a widening economic gap has emerged between thriving metropolitan areas and declining provincial cities in many Western countries. This reverses previous decades of convergence.
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Metropolises like London, New York, Paris and Milan are surging ahead in incomes, jobs growth, and house prices compared to other regions in their countries.
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For example, in the UK, London’s economy has grown much faster than the rest of the country. The productivity gap between top regions and others has widened by 60% in OECD countries.
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This economic divergence has created a new political divide, with metropolitan areas voting differently from struggling provincial cities. The latter feel resentful and disdained by metropolitan elites.
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Two long-term economic forces underlie this divergence: the productivity benefits of specialization and agglomeration in big cities, and the decline of manufacturing in smaller cities.
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Potential solutions include place-based policies to strengthen provincial economies, better infrastructure links, increasing affordable housing in successful cities, and emphasizing shared identity and mutual obligations between regions.
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There is a relationship between specialization and cities - when people specialize in fewer tasks, they develop deeper skills, and cities enable connections between specialists.
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Globalization and the knowledge revolution since the 1980s have turbocharged urbanization. Greater specialization requires larger clusters of complementary specialists, enabled by cities.
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The knowledge economy has led to exponential growth in research and highly specialized skills. Extreme specialization is only productive when specialists cluster together in cities.
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Globalization enlarged potential markets, supporting more specialized services clustered in cities like London. Highly paid specialists create markets for luxury services and attract global rich. This drives booming metropolises.
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Meanwhile, provincial cities with industrial clusters like Sheffield and Detroit suffered as globalization brought new low-cost competition. As clusters shrank, cities declined.
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Market forces don’t regenerate declining cities. Cheap property attracts low-productivity activities. Workforces no longer participate in rising productivity. Prosperity and technology concentrate in metropolises.
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Divergence between successful metropolises and struggling provincial cities is a key issue. Populists propose reversing globalization, but this is unlikely to succeed. Experts are needed to find solutions.
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Putting the clock back and trying to restore past economic conditions is not a viable strategy. Emerging economies like South Korea that now lead in industries like steel have no interest in reversing globalization. At most, protectionism could help specific industries in places like Britain, but not at a scale to restore their former dominance.
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However, while we can’t turn back the clock, we also shouldn’t just accept the status quo. In particular, the affluence of metropolitan areas like London is offensive when contrasted with struggling provincial cities.
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Taxing metropolitan success and using the revenues to revive provincial cities is a better approach. This involves taxing the gains from agglomeration in big cities, which are collective achievements and not fully deserved by landowners. The tax revenues can then fund productive jobs in smaller cities to raise prosperity and dignity.
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New smart taxes on things like land values could be both ethical and efficient. Conventional taxes often fail on ethical grounds by ignoring issues of desert. Ethics are key for voluntary compliance.
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The right worries new taxes will create welfare dependence and the left that they will spark an exodus of talent and capital. But with pragmatism and compromise on tax rates, reviving provincial cities through taxing metro gains can work.
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Henry George made a strong ethical case for heavily taxing the increase in value of urban land, arguing it rightfully belongs to the community that generates it rather than individual landowners. His ideas resonated with the public but were never properly implemented due to political resistance from wealthy landowners.
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Recent surges in urban growth have made the gains from agglomeration much larger than in George’s time, strengthening the case for taxing these gains. However, increased complexity means these gains no longer accrue solely to landowners but are captured by highly skilled workers.
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Two scenarios illustrate how workers capture some of the gains:
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Workers with specialized skills and modest housing needs (e.g. single corporate lawyers) gain disproportionately from agglomeration but pay similar rents to less skilled workers. This allows them to capture gains rather than just landowners.
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In societies with rule of law enabling services, smart workers cluster in cities and increase their productivity. They capture some gains along with landowners, while ordinary citizens supporting rule of law get none despite deserving it.
- So while the ethical argument for taxing agglomeration gains remains, land taxes alone cannot capture most gains anymore. The analysis shows taxation needs to be redesigned to target the gains captured by highly skilled urban workers, not just landowners.
The key points are:
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The productivity and high incomes of skilled workers in big cities depend in part on public goods provided by the nation as a whole. This implies the gains are not solely due to individual effort.
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The gains from the agglomeration of skilled workers in cities are collectively produced through interactions between many workers. Individuals do not deserve the full gains.
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Taxing some of these gains can be justified on ethical grounds, as a way to better align incomes with contributions.
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The gains from agglomeration are economic rents, so taxing them does not affect incentives or efficiency. This provides an efficiency rationale for taxing these gains.
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Taxing the gains may also reduce wasteful rent-seeking as people compete for lucrative city jobs.
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Practically, this could involve higher property taxes on urban land values, and higher income tax rates for high earners in big cities compared to elsewhere.
The key conclusion is that taxing some of the gains skilled workers in cities receive from agglomeration is justified ethically, since these gains depend on public goods and collective synergies, and efficient, since these gains are economic rents.
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The author proposes taxing the economic rents that highly skilled workers in big cities capture from agglomeration. This would involve progressively higher tax rates on higher incomes earned in big cities.
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The revenues would go towards regenerating struggling provincial cities like Sheffield, Detroit, and Stoke.
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Market forces alone won’t regenerate these struggling cities by generating new industry clusters. This is due to a coordination problem - firms are interdependent, so are unsure if other firms will join them in relocating.
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Potential solutions include localized banks that have incentives to invest in their local economies, mega-firms that can coordinate an entire cluster, and governments strategically coordinating business decisions (e.g. Singapore).
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To regenerate provincial cities, pioneers that start new industry clusters could be compensated for the higher costs and risks they face compared to later entrants. This would attract dynamic firms able to catalyze cluster formation.
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The political challenge is that wealthy big city residents who would face higher taxes may lobby against the proposal, even though taxing economic rents is economically efficient and ethically fair.
Here is a summary of the key points about reviving broken cities:
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Pioneers of new industry clusters in broken cities face a “first mover disadvantage” as they bear costs that later firms avoid. Public money should compensate these pioneer firms for the public benefits they generate.
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Development banks can channel public money to support pioneer firms, if they have a clear mandate, high probity standards, and motivated staff. They will need to take risks and accept some failures.
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Public agencies can prepare “business zones” with infrastructure and facilities to attract firms. Land valuations should ensure public agencies, not private landowners, benefit from value increases.
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Investment promotion agencies can attract outside firms by building connections, addressing firms’ problems proactively, and fostering ongoing relationships.
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Local universities should focus on research and teaching that connects to local business needs. They should equip students with skills needed by local employers.
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The policies need to be ramped up sufficiently to shock expectations and momentum. An overarching commitment to narrowing geographic divides is needed, with incremental experimentation to find what works. The goal is to reverse recent trends and revive broken cities.
Here is a summary of the key points about inequalities in the provided text:
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In 2011, Eurozone policymakers faced a dilemma in determining how to defend the currency and embarked on various policy experiments. However, these experiments were accompanied by an unambiguous commitment by the ECB President to do “whatever it takes” to address the crisis. This steadfast resolve had an instant impact in reducing speculation.
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A similar political commitment is needed for cities to address inequalities. Policy experiments alone are not enough without an overarching pledge to pursue solutions vigorously and unrelentingly.
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Resolute leadership is crucial to tackle entrenched problems like inequality. Policymakers must signal they will stay the course through uncertainty and experimentation until effective solutions are found.
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Mario Draghi’s “whatever it takes” statement showed the power of sending an unambiguous message of commitment. This steadied markets and speculation because it left no room for failure or retreat.
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Cities and nations alike need forceful leadership willing to make open-ended pledges to combat inequality and related problems. With strong commitments in place, policy experimentation can proceed with the understanding that leaders will not rest until solutions work.
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Paternalistic approaches to social problems persist, despite their failures. Frontline professionals want to try new approaches, but are constrained by hierarchical bureaucracies.
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An example is provided of a successful community mental health project using cafés to build social connections, which was shut down because it didn’t fit narrow departmental priorities.
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Teen pregnancy is enabled by generous housing and benefits in the UK, whereas countries with less support have lower rates. Some uses of public funds are better than cash transfers.
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Cushioning unemployment shocks for young families is worthwhile. Evidence shows child neglect rises with unemployment, but this is mitigated by unemployment insurance.
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Support for young families should focus on the parenting years, not pushing parents into work. Society gains from parents’ childrearing.
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The state can provide financial help and practical support. Intensive early intervention for at-risk families shows promise.
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Separating family support from scrutiny builds trust. The UK’s Troubled Families Programme tried to combine both, blunting its impact.
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Integrating physical and mental health support could be productive. Teen parents need extensive guidance, not just classes.
In summary, bureaucratic paternalism blocks social maternalism. Prioritizing early supportive interventions for young families would be more effective.
Here are the key points:
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Dysfunctional families often become dysfunctional parents. Young couples need mentoring beyond just family. Retirees could volunteer as mentors and support for stressed parents. This would give retirees purpose.
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Free, universal public kindergartens achieve good outcomes - they are socially mixed and reach kids who need preschool most. This is better than complex subsidy schemes for private providers that tend to be used more by families who need it less.
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Schools should be more socially mixed. Catchment areas currently reinforce stratification. City-wide schools focused on specific purposes (sports, arts, discipline) with lottery admissions could help.
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Improving teacher quality is key, not money. Better recruitment, training based on experiments, assigning best teachers to toughest settings, and removing weak teachers can help.
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Teaching methods should be based on randomized trials, not ideology. Training should teach this.
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Weeding out weak teachers has big impact but faces political hurdles.
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Simple techniques like immediate rewards and esteem (not money) motivate student effort.
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School prepares students for further training, not directly for life and work. The transition to post-school training is challenging, especially for those shifting focus from cognitive to non-cognitive skills.
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For the cognitive elite pursuing academic studies, the US and UK university systems are excellent, fostering competition and decentralization. France’s centralized approach fails at the university level.
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But for non-elite students needing to develop non-cognitive skills, the US and UK perform poorly. This transition to vocational training should be the top priority, with greater budgets than university education.
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Apprenticeships and on-the-job training are effective ways to build non-cognitive skills. Germany is a leader here with its extensive apprenticeship system. Other countries lag behind.
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Firms should be incentivized to train workers. In Germany firms recoup their training investments since apprenticeships are standardized and certified. Other places lack these supports.
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Pension systems influence training incentives. Portable pensions increase worker mobility and encourage firms to invest in training. Non-portable pensions discourage mobility and training.
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Skills training policies need to be pragmatically adapted based on evidence of what works, not ideology. Countries can learn from each other’s successes.
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Germany has a successful model of high-quality technical vocational education and training (TVET) that attracts many young people. It involves partnerships between firms and colleges in specific industries. Students split time between college courses designed around industry skills and on-site work experience at the partner firms.
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This 3-year training develops a wide range of skills beyond technical expertise, including problem-solving, craftsmanship, business skills, life skills, and adaptability. It aims to produce well-rounded, employable workers.
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In contrast, short vocational courses detached from real jobs and low-quality vocational university degrees in the UK and US are ineffective. They make false promises about leading to glamorous careers and leave graduates with large debts but no valuable skills.
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There is a market failure in skill formation - it would be better if consumers paid more but workers earned more through greater productivity, but there is no mechanism to coordinate this. Regulations like minimum wages can prevent a race to the bottom on labour costs.
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Young people choose ineffective training paths because they confer more peer esteem currently. Cognitive education is mis-ranked compared to vocational training in Anglo-Saxon countries, unlike in Germany. Social narratives shape these rankings, which are not inevitable.
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Vocational training can provide secure, well-paid employment, as the author’s German au pair exemplifies. But the Anglo-Saxon countries need to change narratives and esteem rankings to make vocational paths attractive rather than stigmatized choices.
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Vocational training needs more prestige and status to be an attractive option compared to university degrees. Countries like Germany and Switzerland have successful vocational training systems that provide serious training and good career paths.
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On job security, there is a tradeoff between workers wanting stability to make long-term plans like mortgages, and firms needing flexibility to adjust to changes in demand. Policies like employment rights and minimum wages aim to protect workers but can discourage hiring. More creative solutions are needed.
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Governments should impose charges on firing to account for the costs of unemployment benefits and retraining. Firms can also train workers in multiple skills to increase flexibility. Workers need lifetime access to retraining credits for when their skills become obsolete.
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Retirement security is important as people take on long-term financial obligations. Risks can be pooled through systems like pensions to provide stability. But moral hazard issues need to be addressed so people don’t take excessive risks knowing the costs will be shared.
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Overall, policies are needed to provide stability for workers while maintaining flexibility for firms to adapt to change. Education systems should equip people with broad, transferable skills. Creative solutions can increase prosperity and security for all.
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Housing prices have risen dramatically, making homeownership unaffordable for many young families. This is due to reversed policies - lack of public building programs, relaxed immigration controls increasing households, encouragement of buy-to-let investing, and lifted restrictions on mortgage lending.
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As a result, older educated households and savvy investors have been able to outbid young families for homes, using their greater borrowing capacity. This has benefited the affluent and smart with capital appreciation and rental income.
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Policies that previously kept housing affordable should be restored: increase supply gradually through public building programs, curb immigration and household growth, restrict mortgage lending, and limit buy-to-let investing. This will help young families buy affordable homes again.
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Home ownership encourages belonging, reciprocity and prudence, so it is important to make it accessible again. The asset transfer to social housing tenants also enabled low-income families to own homes, which should be replicated.
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Housing should return to being homes for families rather than assets for the affluent and speculative investors. Gradual policy changes can restore sanity and affordability to the housing market.
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Many highly educated and productive people are using their skills for zero-sum activities like financial trading and litigation that enrich themselves at the expense of others, rather than for innovation which benefits society.
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The financial sector captures huge profits but it is doubtful it makes the broader economy 43% more productive to justify this. There are too many lawyers - the first third uphold the rule of law which is valuable, the second third work on zero-sum disputes, and the final third are predatory.
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Market forces do not get the balance right between socially useless versus useful activities. More people should be encouraged into innovation which has big positive spillovers.
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Possible solutions include better designed taxes on financial transactions and litigation to curb volumes and redirect rents to society. Shaming of rent-seeking professions may also help. Ultimately we need more ethical citizens to pressure firms and professions into more socially purposive behavior.
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Globalization has been economically beneficial overall, but economists have failed to adequately acknowledge and address the downsides. This has undermined public trust in experts.
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On trade, economists have wrongly implied that free trade benefits everyone within a society. In reality, there are concentrated losses in communities whose industries decline due to import competition. Better compensation policies are needed.
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Between societies, globalization has enabled convergence for some countries like those in East Asia, while others dependent on natural resources have struggled with governance challenges and lagged behind.
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Corporations have structured themselves to minimize taxation, depriving societies of revenue. Economists need to recognize the need for global coordination on corporate taxation.
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Financial globalization has enabled regulatory arbitrage and made crises more likely. Economists dismissed risks too readily. Better regulation of finance is imperative.
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In immigration, economists failed to foresee issues like the scale of flows within the EU. More realism is needed on migration policy trade-offs.
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On technology, economists were naive about distributional impacts and the scale of transitional costs as traditional jobs are automated. More policy focus is required on cushioning this disruption.
The economics profession needs more nuance on globalization, recognising downsides as well as benefits. With more balanced analysis and policy prescription, public trust can be rebuilt.
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Shell companies and banking secrecy havens have grown with corporate globalization, enabling concealment of corrupt and criminal money.
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Corporate interests promote immigration for their own benefit, but immigration does not necessarily benefit citizens.
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Migration is driven by absolute advantage for migrants, not comparative advantage as with trade. It can reduce welfare for citizens.
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In the UK, immigration to London may have benefited highly skilled workers but disadvantaged less skilled citizens. This aligns with voting patterns in the Brexit referendum.
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Immigration undermines reciprocal obligations and social solidarity that developed within European societies post-1945. Evidence shows higher immigration reduces support for redistribution among higher income citizens.
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While some immigration brings benefits, the amount driven by self-interest in markets may not be socially optimal. Ideologies are misguided in uniformly supporting or opposing immigration. Pragmatism is needed in setting immigration policy.
Here are a few key points summarizing the section:
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Capitalism last worked well from 1945-1970 when policy was guided by social democracy. But social democracy’s ethical foundations corroded as leadership passed from the cooperative movement to technocrats.
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Voters disengaged as pragmatism requires effort. The vacuum was filled by ideologies and populism offering simplistic solutions.
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Changes in party leadership selection empowered ideologues over experienced pragmatists. This polarized the menu of political choice.
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Several recent elections saw ideological populists dominate while mainstream social democrats floundered.
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The rise of ideologues has polarized politics, leaving many pragmatist voters dissatisfied. Infusing politics with a new ethical discourse and reconsidering some political architecture could help remedy the polarization.
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Electing ideological populists as political leaders, as seen with Jeremy Corbyn and Donald Trump, polarizes politics and leaves voters without good centrist options.
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Reform is needed in how major parties select leaders. Two options: limiting votes to elected representatives, who tend to prefer centrist pragmatism, or opening leadership selections to all voters, though this often favors charismatic populists.
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Proportional representation voting systems can encourage coalition governments which constrain ideological extremes and promote evidence-based pragmatism.
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Good politics depends on an informed citizenry that demands ethical, pragmatic leadership. Social media can spread such ideas.
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Pragmatic policies are needed to address divergences between metropolises and declining cities, between the highly educated and less educated, and between rich and poor societies.
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Tax rents in successful cities to revive declining ones. Curb high-end talent from zero-sum competitions. Discourage brain drain from poor countries.
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Utilitarian ethics have damaged society. Relationships and obligations, not selfishness and paternalism, should be the foundation of morality.
Does this accurately summarize the key points? Let me know if you need me to expand or clarify any part of the summary.
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The state has taken on extensive responsibilities to provide for citizens, but its capacities are limited. Firms and families are better able to meet obligations through reciprocity and love. The state should focus on restoring obligations to firms and families.
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The rise of individualism and the single-minded pursuit of desires has weakened families. The state enabled this through laws favoring individuals over families. It should now use laws and policies to restore strong families.
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Firms have weakened obligations to employees and society due to profit-driven business practices. The state enabled this through incentives emphasizing shareholder value. It should now use incentives to restore ethical business practices.
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Paternalistic foreign aid undermined duties of unconditional rescue. International institutions overexpanded, weakening reciprocity. More progress was made from 1945-1970 through prudent pragmatism. Focus aid on concrete duties of rescue.
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Shared identity based on place and purpose enables reciprocal obligations that make societies work. Leaders should promote unifying narratives. With echo chambers, decentralized leaders must build shared identity.
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Nations are key for policy and obligations. Shared identity enables far-sighted reciprocity. Successful people support others due to resulting self-respect. The state legitimately coerces recalcitrant minorities.
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Pragmatism, not polarization, can address society’s divisions. We have unmet duties of care that we must jointly meet.
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The author advocates for a society based on shared identities and mutual obligations, not Marxist ideologies or Rawlsian/Utilitarian norms. This involves pragmatic capitalism with rational reciprocity.
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The economic threat is the divergence in geographic and class fortunes. The social threat is fragmentation into oppositional identities through social media echo chambers. The political threat is exclusionary nationalism.
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Liberals have abandoned benign patriotism, handing exclusionary nationalism to the extremes. We must recover our ethical bearings and return to ‘one nation’ politics, addressing the anxieties of working families.
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Belonging to place is too important to abandon to the far right. We once built societies on shared identities and mutual obligations and can do so again, steering clear of Marxist conflicts or Rawlsian/Utilitarian individualism. This involves reconstructing reciprocal obligations and steering capitalism with rational reciprocity.
The key is balancing shared identities and mutual obligations, avoiding ideological extremes. This means pragmatic ethical capitalism, social cohesion, and benign patriotism. We must address economic, social, and political threats with rational reciprocity, shared belonging, and ‘one nation’ politics.
Here is a summary of the key points from the references:
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Economics research on labor markets, income mobility, impact of unemployment, and regional economic trends (Chetty, Goldstein, Greenstone, Moretti).
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Political science research on elections, public opinion, immigration attitudes, and violence prediction (Chauvet, Collier, Elliott, Mueller, Pardos-Prado).
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Psychology and neuroscience research on social behavior, cognition, motivation, and morality (Christakis, Cialdini, Feldman Barrett, Haidt, Hood, Mercier, Sperber).
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Anthropology and evolutionary science on human nature, cooperation, and conflict (Dijksterhuis, Gamble, Johnson, Toft).
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Philosophy perspectives on ethics, virtue, and the social order (MacIntyre, Scruton, Smith).
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Policy analyses on international development, inequality, education, and more (Case, Collier, Depetris-Chauvin, Hanushek, Heckman).
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Sociology research on social capital, families, and labor patterns (Eliason, Putnam, Sullivan).
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Business and management scholarship on relational contracts and intangible capital (Gibbons, Henderson, Haskel, Westlake).
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Political history, memoirs, and journalism (Crosland, Goldstein, Goodhart, Tepperman).
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Interdisciplinary works on progress, morals, happiness, and character (Brooks, Kay, Pinker, Seligman).
Here are the key points from the selected passages:
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The foundations of morality lie in innate intuitive ethics that have evolved over thousands of years. These intuitions lead people to make rapid moral judgments, cooperating and punishing those who violate social norms.
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Shared identity is needed to cooperate at scale in modern societies. National identity can provide this, but it risks exclusion of minorities. More inclusive identities are needed.
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Inclusive growth requires ethical firms that balance profit and purpose. But current corporate governance laws incentivize prioritizing shareholder value over other stakeholders.
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Changes in gender roles have led more educated women to prioritize careers over family. This has increased inequality by advantaging children of educated parents.
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Prosperous cities have become too expensive for ordinary workers. This geographic divide needs to be offset by investing in poorer regions.
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Social mobility has stalled due to declining community and family life among disadvantaged groups. Improving parenting skills and schooling quality in poor areas is vital.
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Identity and community bonds are needed for ethical behavior. Public policy should aim to rebuild these where they have weakened.
Here is a summary of the key points from Moglu and Autor (2011):
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The study examines the impact of recent trade shocks in the United States, particularly the rise of Chinese imports, on local labor markets.
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Areas more exposed to the rise of Chinese imports saw substantial declines in manufacturing employment and wages. The effects were most pronounced in industries more exposed to import competition.
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Negative employment and wage effects were not just concentrated in manufacturing. There were spillovers to other non-manufacturing industries and workers in affected local labor markets.
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Adjustment mechanisms expected to offset shocks, such as migration or skill upgrading, appeared limited. Workers did not move out of more exposed areas or transition to new industries easily.
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The shock led to increased receipt of disability, retirement, healthcare and unemployment benefits, suggesting a wider social cost beyond just displaced manufacturing workers.
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The analysis highlights how localized labor markets can be affected by major global economic trends like the rise of China. It points to challenges for specific communities and workers negatively impacted.
In summary, the study finds significant adverse effects on local labor markets from rising exposure to Chinese import competition, with limited mobility or easy adjustment for many impacted workers. It highlights the social costs and consequences for communities dealing with these major economic shocks.
Here is a summary of the key points about shocks to post-1945 norms and the changing nature of families:
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There have been major shocks to post-1945 norms and family structures in recent decades, including rising individualism, divorce rates, and shrinking extended families.
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The extended family has shrunk significantly, with more emphasis on the individual and nuclear family unit. This reduces community ties and support.
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Social maternalism promoted the ideal of stable two-parent families as best for children’s development. But this norm has weakened.
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Rising individualism promotes personal fulfillment over family obligation. The entitled individual has replaced notions of familial duty.
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These shocks represent a divergence from the post-war settlement of strong communities and families supporting individual development.
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Stable two-parent families are still seen by many as ideal, but this norm has weakened considerably in practice. Families and communities provide less support now.
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The changes represent an ideological shift as well as social and economic forces. Building a new settlement requires updating policies and narratives to support families.
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Social democracy emerged in the late 19th/early 20th centuries as a communitarian movement, harnessing group identities and promoting shared obligations. Its heyday was the postwar era when governments embraced reciprocal obligations between citizens, groups, and the state.
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From the 1970s, social democracy was challenged by a rights-based individualism from both left and right, and an emphasis on aggrieved identity groups. This eroded the unifying narrative and shared identity on which social democracy depended.
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Social democracy was replaced by a paternalistic welfare state aimed at helping disadvantaged identity groups, but without a unifying narrative. This fractured society into competing interest groups and corroded trust in governments.
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The shared identity and purpose required for social democracy has unravelled further in recent decades. Spatial identities based on place have weakened while networked identity groups with little attachment to place have grown.
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To revive communitarian purpose, narratives of belonging, reciprocal obligation and ethical action need to be rebuilt, rooted in place-based identities. This requires re-forging shared identities, restoring reciprocity between citizens and the state, and instilling an ethic of mutual care and contribution.
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Practical policies to achieve this include reforming taxation to reflect reciprocity, introducing ethical education in schools, mentoring for children, support for families and communities, and rebuilding national identity around place, culture and ethical citizenship.
Here is a summary of the key points about Ash Amin and his views, based on the references provided:
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Critical of utilitarianism, neoliberalism, and globalization, seeing them as damaging community and belonging (pp. 11-13, 15-16, 20)
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Views child-rearing and family as central to society, critiques neoliberal policies and attitudes as detrimental to this (pp. 105, 110, 154-5, 157, 158, 159, 160, 190, 209)
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Sees neoliberalism as having replaced social democracy and its focus on community (pp. 11-13, 49-50, 209-10)
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Advocates the ‘rights of the child’ concept as an alternative framework (pp. 103-4)
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Views the utilitarian technocratic elite as a ‘vanguard’ monopolizing policymaking (pp. 9-10, 11-13, 15-16, 18, 66-7, 209)
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Critical of neoliberal minimalist view of the state’s responsibilities for social services (p. 159)
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Focuses on the state’s duty of ethical scrutiny of society and firms (p. 162)
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Happiness and life satisfaction are influenced by our mood in the moment. Long-term measures like the World Happiness Report try to overcome this limitation.
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Human societies depend on mutual trust and cooperation. Shared identity and purpose enable this.
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Conservative and liberal political philosophies should aim for human flourishing, not just material outcomes.
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Evidence shows that people innately have pro-social values like reciprocity.
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Firms and societies function best when they have a shared purpose beyond profit.
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Governments should aim to increase social trust and shared identity. Policies around immigration and inequality affect this.
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Utilitarianism is limited as a moral philosophy. Other values like dignity matter too.
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Elites have diverged from the identities and values of their populations. This threatens social cohesion.
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Policy should aim for human dignity through purpose, mastery and belonging. Education, community and vocation matter.
The key themes are the importance of shared identity and purpose, how policy choices affect social cohesion, and balancing multiple human values beyond just utility. The conclusion is that policy should aim for human dignity and flourishing.
Here is a summary of the key points in the excerpt:
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In May 2018, the French government introduced a policy targeting wealthy retirees who had not contributed much to the system.
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The author proposes similar policies to make the British welfare system fairer, such as clawing back some of the winter fuel payment from wealthy pensioners.
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To avoid people gaming the system, the policy would apply to the mortgage outstanding when the policy was first announced.
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The author acknowledges potential opposition, noting that even a Quaker lawyer responded positively to targeting rich city lawyers.
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The author argues these types of policies are needed to rebuild support for redistribution and make society more cohesive.
![Author Photo](/_astro/matheus_KhTu9.png)
About Matheus Puppe