The Financial Crisis of 1929 Reexamined: The Role of Soaring Inequality

The financial crisis of 1929 that triggered the Great Depression has been endlessly studied. Still there is little consensus regarding what caused it. This article claims that wage stagnation and exploding inequality fueled three dynamics that set the stage for a financial crisis. First, consumption was constrained by the smaller share of total income accruing to workers, thereby restricting investment opportunities in the real economy. Flush with greater income and wealth, the elite flooded financial markets with credit, helping keep interest rates low and encouraging the creation of new credit instruments, some of which recycled the rich's surplus assets as debt to those less well off. Second, greater inequality pressured households to find ways to consume more in order to maintain their relative social status, resulting in reduced household saving, greater household debt, and possibly longer work hours. Third, as the rich took larger shares of income and wealth, they gained relatively more command over everything, including ideology. Reducing taxes on the rich, favoring business over labor, and failing to regulate newly evolving credit instruments flowed out of this ideology.     

Liberating HR through technology

Workforce management applications are expected to drive the next phase of enterprise‐wide applications market growth. But will firms actually benefit from these applications? Horror stories of failed technology implementation efforts abound and hardly inspire confidence. Treating installation of HR technology as a form of innovation, we introduce a model that describes the technology implementation process. The model brings to the fore various issues that merit the attention of academics and practitioners alike. It appears that firms that undertake technology initiatives with a view to enable the HR function to focus more on value‐added activities are the ones most likely to realize the full potential of technology. © 2004 Wiley Periodicals, Inc.     

Public-good valuation and intra-family allocation

I derive values of marginal changes in a public good for two-person households, measured alternatively by household member i’s willingness to pay (WTP) for the good on behalf of the household, WTP _i (H), or by the sum of individual WTP values across family members, WTP(C). Households are assumed to allocate their resources in efficient Nash bargains over private and common household goods. WTP _i (H) is then defined by trade-offs between the public good and the household good, and WTP(C) by trade-offs of between the public good and private goods. WTP _i (H) is found to be higher (lower) than WTP(C) when member i has a relatively high (low) marginal valuation of the public good, but tends on average to equal WTP(C). As a consequence, individuals tend to represent households correctly on average when questioned about the household’s WTP for a public good, even when they are purely selfish and answer truthfully. Adding all members’ WTP answers on behalf of the household then leads to double counting. Pure and paternalistic altruism (the latter attached to consumption of the public good) move each member’s WTP on behalf of the household closer to the true sum of individual WTP, but only paternalistic altruism raises this sum.      

(Non)optimality of the Friedman rule and optimal taxation in a growing economy with imperfect competition

This paper shows that if capital generates production externality, there exists a wedge between returns to money and to capital, driving the Friedman rule is not optimal. However, in the absence of capital externality, the Friedman rule may be valid even under imperfect competition.     

Retail revolution and the village shop,c. 1660–1860

Village shops have been largely overlooked in the recent literature on British retailing in the eighteenth and nineteenth centuries, which has sought to redefine the parameters and timing of retail transformation. While urban shops have been explored in detail, often in ways that highlight their role in a parallel transformation in consumption patterns, little attempt has been made to look inside village shops or examine the character and practices of rural retailers. This article addresses this lacuna and offers fresh insights into the shifting position of village shops in these broader economic, business, and social changes. Taking a long view of the period c. 1660–1860, it draws on a wide range of sources to examine the stock sold and the degree of specialization exhibited by village shops, and the changing trading practices of village shopkeepers, including the provision of credit, the pricing of goods, and marketing activities. In doing so, the article highlights both long‐term continuities and important innovations of the type that also characterize urban shops, and argues that village shops, while central to rural social and economic networks, were also intimately bound into broader retail systems.