Sublime

If one sentence were to sum up the mechanism driving the Great Stagnation, it is this: Recent and current innovation is more geared to private goods than to public goods. That simple observation ties together the three major macroeconomic events of our time: growing income inequality, stagnant median income, and, as we will see in chapter five, the

Small numbers have a strong gravity toward mediocrity.

foundations were laid in Victorian times. Now it is changing radically. Standard economics is suddenly being challenged by a number of new approaches: behavioral economics, neuroeconomics, new institutional economics. One of the new approaches came to life at the Santa Fe Institute: complexity economics.

Having worked with Keynes, Galbraith did not believe that “perfect competition” would solve this problem. He believed instead that the key was “countervailing power”—which is to say, the power not of those who compete but of those who bargain with a giant. He argued that countervailing power could prevent economic exploitation. Unfortunately,

les clients étaient ravis d’avoir enfin le choix de payer des prix plus élevés pour un smartphone qui marche véritablement. En soi, le dynamisme des nouveaux monopoles explique pourquoi les anciens monopoles n’étouffent pas l’innovation.

“In equilibrium systems, everything adds up nicely and linearly. It is trivial to generalize to many agents; this simply corresponds to connecting more glasses of water. The effect on the water level from adding several drops of water is proportional to the number of drops. One does not have to think about the individual drops. In physics, we refer

But both economic theory and historical experience suggest that a perfectly equal society would be much poorer than the societies that we live in today. In other words, by allowing for a degree of inequality, we can make everyone better off.

The Power Law of Distribution