New rents economy – U.S. inequality in the 21st Century

Rents in the U.S. economy now constitute a significant and growing fraction of national income. In effect, the post-industrial U.S. is becoming more like Saudi Arabia as these new rents arise in very concentrated form. Thus, policy is now obliged to focus more on distribution rather than the traditional emphasis on production and efficiency. The expanding impacts of trade and technology now combine with the increased production of ‘knowledge goods’ to sharply increase income inequality. The paper argues that the root cause of the inequality surge is the proliferation of new rents in sharp contrast to the Piketty’s focus on capital accumulation in a neoclassical context. Once rents exceed a certain threshold (share of national income), then it is no longer permissible to maintain the neoclassical presumption that it can be neglected. Then the policy implications are completely revered – even revolutionary – with regard to the stance on redistributions, higher education, incentives and capital taxation, etc

NEW RENTS ECONOMY - U.S. INEQUALITY IN THE 21ST CENTURY

ABSTRACT Rents in the U.S. economy now constitute a significant and growing fraction of national income. In effect, the post-industrial U.S. is becoming more like Saudi Arabia as these new rents arise in very concentrated form. Thus, policy is now obliged to focus more on distribution rather than the traditional emphasis on production and efficiency. The expanding impacts of trade and technology now combine with the increased production of 'knowledge goods' to sharply increase income inequality. The paper argues that the root cause of the inequality surge is the proliferation of new rents in sharp contrast to the Piketty's focus on capital accumulation in a neoclassical context. Once rents exceed a certain threshold (share of national income), then it is no longer permissible to maintain the neoclassical presumption that it can be neglected. Then the policy implications are completely revered - even revolutionary - with regard to the stance on redistributions, higher education, incentives and capital taxation, etc

Total factor productivity growth in East Asia: A critical survey

This article surveys the recent empirical literature on total factor productivity (TFP) growth in East Asia, and the debate about the sources of growth in the region. It is concluded that: (i) the main merit of this literature is that it has helped focus the attention of scholars on the growth process of East Asia; (ii) the theoretical problems underlying the notion of TFP are so significant that the whole concept should be seriously questioned; (Hi) the TFP growth estimates for the region vary significantly, even for the same country and time period; and (iv) research on growth in East Asia based on the estimation of TFP growth is an activity subject to decreasing returns. If we are to advance in understanding how East Asia grew during the last 30 years we need new avenues of research.