An economic history of Europe CH: 11 (Chapter 7: Money, credit and banking…
An economic history of Europe CH: 11
Inequality among and within nations: past, present, future
Why is there inequality?
unequal access to welfare as manifested in consumption, health, life expectancy and schooling.
income is an imperfect guide to welfare distribution because some aspects of welfare are only vaguely linked to income
in poor nations the poor are considerably poorer than the poor in rich nations but the rich are approximately as rich as the rich in rich nations just fewer.
poor nations remain poor because they lack the ability, in terms of institutions and education, to exploit modern technology.
corruptions and more generally poor quality of public governance.
colonial rule has been harmful as the administrative units (later to become nations states) were drawn arbitrarily
none of the measures are perfect. commonly used measure is the mini coefficient
mini of 1 is only theoretically possible
Lorenz curves: shows what part of the population owns what
hunter gatherer can only be equal because everyone just earns the income to survive. the more income the more interesting g to see whether the society gets more unequal. Considering Rome it was incredibly unequal compared to the subsistence wage.As the maximum going coefficient for Rome was 0.55 and that of the United States i 2000 was 0.98
inequality in Europe fell in the 20th century, the rise of mass education could be one possible explanation
countries with more inequality have a lower social mobility than those that are more equal. However, the causality is unclear.
on average still 5% difference in pay
is inequality on the rise again?
inequality within nations has declined from the early modern period to current day. Progressive taxation and mass education are some of the reasons. The decline in inequality has been reversed since the 1980s
in the UK, the richest 5% take home 18% of the national income, which is 6% up from 1980
the world mini coefficient adjusted to population size of the country has fallen from 0.55 in 1950 to 0.5 in 2000
Towards a broader concept of welfare
human development index has been created with the components: per capita income, education and life expectancy
speculation about future trends in world income inequality
Chapter 7: Money, credit and banking
the origins of money
barter includes the coincidence of wants
The revival of the monetary system in Europe: coins and bills of exchange
70 different coins were used in the Holy Roman Empire
banks went bankrupt all the time in the early days because they did not hold enough deposits
The emergence of paper money
the only thing that mattered was the reputation of the bank. People had to trust the bank
the slow acceptance for fiat money is that it needs trust from the public
it was in the interest of all banks to establish an agency because if one bank fucks up then the reputation of all other is being damaged as well.
no inflation problems as long as it is tied to gold. However, afterwardsnwhen the link to gold was finally abandoned after the demise of the reestablished gold standard int he inter-war years, the problem arose of how to constrain he monetary authorities from embracing inflationary policies -> accountable government and an independent central bank
The impact of banks on economic growth
there are three ways: the impact of the savings ratio, the impact on the efficiency, and the effect of increased monetisation of the economy
the spread of banks increased the savings rate. In preindustrial times the savings rate was rarely above 5%
in the beginning a conservative strategy
reflections on recent financial crises