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XXI Century Odyssey Forum

If something characterizes the course of these first twenty years of the XNUMXst century, it is, paradoxically, the absence of a consolidated synthesis that allows contemporary reality to be categorized under a sufficiently descriptive formula.

As the long history of thought has taught us, in this case too conceptual difficulties are an eloquent index of the object's resistance to submit to the discipline of language, because the new reality has not yet found its definitive form of expression. And it is precisely that uncertainty, in which the old has not yet disappeared and I move it struggles to emerge that defines a time of transition.

With great modesty, but also with great enthusiasm, we intend to illuminate with a small light, however weak it may be, the world in which we are going to live.

We invite you all to this exciting task!

Mariano bacigalupo

Director.
Councilor of the CNMC. University Professor (UNED). Member of the Academic Council of Fide

Alvaro Lobato

Director.
Founding Patron of Fide.

Jorge Padilla

Director.
Senior Managing Director of Compass Lexecon in Europe. Member of the International Academic Council of Fide

Recommended Publications

Discover all the publications, session summaries and other documents related to the activity of this forum:

Nicolas Baumard

Abstract

Since the Industrial Revolution, human societies have experienced high and sustained rates of economic growth. Recent explanations of this sudden and massive change in economic history have held that modern growth results from an acceleration of innovation. But it is unclear why the rate of innovation drastically accelerated in England in the eighteenth century. An important factor might be the alteration of individual preferences with regard to innovation resulting from the unprecedented living standards of the English during that period, for two reasons. First, recent developments in economic history challenge the standard Malthusian view according to which living standards were stagnant until the Industrial Revolution. Pre-industrial England enjoyed a level of affluence that was unprecedented in history. Second, behavioral sciences have demonstrated that the human brain is designed to respond adaptively to variations in resources in the local environment. In particular, Life History Theory, a branch of evolutionary biology, suggests that a more favorable environment (high resources, low mortality) should trigger the expression of future-oriented preferences. In this paper, I argue that some of these psychological traits - a lower level of time discounting, a higher level of optimism, decreased materialistic orientation, and a higher level of trust in others - are likely to increase the rate of innovation. I review the evidence regarding the impact of affluence on preferences in contemporary as well as past populations, and conclude that the impact of affluence on neurocognitive systems may partly explain the modern acceleration of technological innovations and the associated economic growth.

Keywords: Life History Theory; cultural evolution; psychology of poverty.

 

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Benjamin M. Friedman. Knopf

Abstract

In The Moral Consequences of Economic Growth, Benjamin Friedman argues that growth reduces the strength of interpersonal income comparisons, and thereby tends to increase the desire for pro-social legislation, a position he supports by drawing on the historical records of the US and several Western European countries. We test this hypothesis using a variable from the World Values ​​Survey that measures an individual's taste for government responsibility, which we interpret as a measure of the demand for egalitarian social policy. Our results provide support for a modified version of Friedman's hypothesis. In particular, we find that the taste for government responsibility is positively related to the recent change in the growth rate and negatively related to the change in income inequality. We conclude by discussing the implications of these findings for attempts to further the egalitarian social goals.

 

Keywords: Growth, Morality, Welfare state, Redistribution, Preferences, Values

 

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  • Fausto Panunzi, Bocconi University - Department of Economics; European Corporate Governance Institute (ECGI); Center for Economic Policy Research (CEPR)
  • Nicola Pavoni, Bocconi University - Department of Economics
  • Guido tabellini, Bocconi University - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

 

Date Written: August 25, 2020

Abstract

This paper studies electoral competition over redistributive taxes between a safe incumbent and a risky opponent. As in prospect theory, economically disappointed voters become risk lovers, and hence are intrinsically attracted by the more risky candidate. We show that, after a large adverse economic shock, the equilibrium can display policy divergence: the more risky candidate proposes lower taxes and is supported by a coalition of very rich and very disappointed voters, while the safe candidate proposes higher taxes. This can explain why new populist parties are often supported by economically dissatisfied voters and yet they run on economic policy platforms of low redistribution. We show that survey data on the German SOEP are consistent with our theoretical predictions on voters' behavior.

 

Keywords: populism, prospect theory, behavioral political economics

 

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4 November,

Speaker: Miguel de la Mano, Executive Vice President in Compass Lexecon's Brussels office 

Moderator: Álvaro Lobato, Founding patron of FIDE and co-director of the forum.

Ordoliberalism emerged in Germany, at the critical juncture of the 1930s, at the University of Freiburg, coinciding with the institutional crisis of the Weimar Republic and the explosive rise of National Socialism. However, its successful practical application only took place after the Second World War when the model of the Social Market Economy of the Federal Republic of Germany achieved extraordinary success.

Ordoliberalism postulates a regulative capitalism, an institutional framework in which the market can operate without additional restrictions. Competition between companies is the guiding criterion and the State only has a normative and institutional function. The question is whether, in the current conditions of the digital revolution, preventive competition policies, with a clear ordoliberal root, are adequate and effective.

At present, continental competition policy emanating from the European Commission has clearly modified the intervention threshold through a reversal of the burden of proof, something equivalent to "shoot first, ask questions later." It is true that today no one denies the immense power of the so-called big tech. In many areas they exercise a de facto monopoly in various activities and services. It is also true that these are highly innovative companies, well capitalized, that have little debt on their balance sheets and that clearly generate economies of scale on the demand side. It is possible to identify a clear consumer surplus, a set of digital goods that are not counted in gross domestic product but that significantly improve consumer welfare. A study undertaken by Erik Brynjolfsson of the Sloan School of Business at MIT concluded that relinquishing consumers to such goods would amount to $ 18.000.

The question then is whether competition laws are still useful? Or is it necessary to carry out other types of interventions? By the way, these large companies also obtain extraordinary profits, but in any case the issue of taxation can be adjusted as necessary because, as has been proven, it does not slow down innovation. It seems that the appropriate thing is to tax those negative externalities that are detected a posteriori in the market in order to discourage its practice. Miguel de la Mano is in favor of the analysis of economic effects a posteriori because they are more effective than ex-ante regulations and also have a profound deterrent effect and serve as “notice to sailors”. To some extent, the most effective competition policy is one that is not seen, the one that incorporates the effect of deterrence.

Academic coordination: Victoria Dal Lago Demmi

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