Because of their more limited inequality and more comprehensive social welfare systems, many perceive average welfare to be higher in Scandinavian societies than in the United States. Why then does the United States not adopt Scandinavian-style institutions? More generally, in an interdependent world, would we expect all countries to adopt the same institutions? To provide theoretical answers to this question, we develop a simple model of economic growth in a world in which all countries benefit and potentially contribute to advances in the world technology frontier. A greater gap of incomes between successful and unsuccessful entrepreneurs (thus greater inequality) increases entrepreneurial effort and hence a country’s contribution to the world technology frontier. We show that, under plausible assumptions, the world equilibrium is asymmetric: some countries will opt for a type of “cutthroat” capitalism that generates greater inequality and more innovation and will become the technology leaders, while others will free-ride on the cutthroat incentives of the leaders and choose a more cuddly form of capitalism. Paradoxically, those with cuddly reward structures, though poorer, may have higher welfare than cutthroat capitalists; but in the world equilibrium, it is not a best response for the cutthroat capitalists to switch to a more cuddly form of capitalism. We also show that domestic constraints from social democratic parties or unions may be beneficial for a country because they prevent cutthroat capitalism domestically, instead inducing other countries to play this role. "
" we develop a simple model of economic growth in a world in which all countries benefit and potentially contribute to advances in the world technology frontier" ". A greater gap of incomes between successful and unsuccessful entrepreneurs (thus greater inequality) increases entrepreneurial effort and hence a country’s contribution to the world technology frontier"
the meidner dilemma wage solidarity plus uneven profit production artificially contrived scarcity monopsonistic and monpolistic pricing power
"The United States is also
widely viewed as a more innovative economy, providing greater incentives to its entrepreneurs
and workers alike, who tend to respond to these by working longer hours, taking more risks and
playing the leading role in many of the transformative technologies of the last several decades
ranging from software and hardware to pharmaceuticals and biomedical innovations."
or is there a social democrat bribed layer
because wage solidarity is non existent
lots may hide inside that closet eh ??
butr ace here has his
entrepreneurs
do they share their unequal gains more or less with their "employees"
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