Just Reward: The Nature of Work and Its Remuneration in the Economics and Ethics of Henry George

Work is a fundamental reality of human existence. This essay examines in general terms the idea of work and labor, briefly explains the biblical foundation of George's perspective on work, and presents George's analysis on unemployment, technological change, and true competition. Finally, it discusses how access to the natural opportunities land provides liberates labor and advances the just distribution of wealth, connects these insights to Catholic Social Teachings (CST), and calls for more cooperation between these natural allies.     

An Information‐Based Theory of Time‐Varying Liquidity

We propose an information‐based theory to explain time variation in liquidity and link it to a variety of patterns in asset markets. In “normal times,” the market is fully liquid and gains from trade are realized immediately. However, the equilibrium also involves periods during which liquidity “dries up,” which leads to endogenous liquidation costs. Traders correctly anticipate such costs, which reduces their willingness to pay. This foresight leads to a novel feedback effect between prices and market liquidity, which are jointly determined in equilibrium. The model also predicts that contagious sell‐offs can occur after sufficiently bad news.     

WAGE PENALTIES AND SEXUAL ORIENTATION: AN UPDATE USING THE GENERAL SOCIAL SURVEY

This study uses data from the 1988 to 2006 General Social Survey (GSS) to examine the effects of sexual orientation on earnings. Previous research using the GSS has found that lesbians earn 18%–23% more than similarly qualified heterosexual women and that wage penalties for gay men are slightly larger than the premia for lesbians. Using behavioral definitions of sexual orientation based on the previous year and the previous 5 yr of sexual activity, we find the familiar wage premia/penalties for lesbian/gay workers in our ordinary least squares estimations, but we find that these wage differences are falling over time. Furthermore, in contrast to the earlier results, for our regressions over the entire sample period, correcting for differential selection into full-time work reduces the estimated penalties for unmarried gay men and eliminates the entire wage premium for all lesbians. There is now a sizeable, though imprecisely measured, penalty for some lesbians. ( JEL J1, J3, J7)     

Securitization,Ratings, and Credit Supply

We develop a framework to explore the effect of credit ratings on loan origination. We show that ratings endogenously shift the economy from a signaling equilibrium, in which banks inefficiently retain loans to signal quality, toward an originate-to-distribute equilibrium with zero retention and inefficiently low lending standards. Ratings increase overall efficiency, provided that the reduction in costly retention more than compensates for the origination of some negative net present value loans. We study how banks' ability to screen loans affects these predictions and use the model to analyze commonly proposed policies such as mandatory “skin in the game.”     

THE UNBEARABLE AMBIGUITY OF ACCOUNTING

The paper argues that neither current, nor reformed, accounting can make unambiguous representations, but concludes that the pursuit of that unrealizable ideal is nonetheless perfectly real and eminently productive. Two significant texts in which the claim of judgement-free accounting (accrual or cash-flow) is privileged are analysed. Their attempts to explain, as distinct from simply assert, the possibility are shown to require a series of self-cancelling rhetorical moves. A number of implications of the analysis are then considered. In contrast with some prior literature which has concluded that a general abandonment of the myth of unambiguous accounting representations is both desirable and possible the article argues, in a discussion of the notion of a “regulative ideal”, that there is no necessary link between their critiques and the action they advocate. © 1997 Elsevier Science Ltd