The Map and the Territory by Alan Greenspan — ELEVEN | THE ONSET OF GLOBALIZATION, INCOME INEQUALITY, AND THE RISE OF THE GINI AND THE CRONY

1. 1. The Greatest Generation created the global economic structure tied to the U.S. dollar, propelling America to unrivaled economic power.
2. 2. Income inequality began its inexorable rise in the early 1970s, driven by globalization, the rise of superearners, and stock price growth.
3. 3. The decline of labor unions from 35% of the private workforce in the 1950s to 7% in 2012 reduced their wage premium and contributed to rising inequality.
4. 4. The rise of superearners, exemplified by the Beatles, shows how global markets allow top talent to capture vast incomes, increasing inequality.
5. 5. Stock price growth relative to wages is a major driver of inequality, as CEO compensation is tied to firm market value.
6. 6. H-1B visa restrictions protect high-income earners from global wage competition, artificially inflating incomes in finance and tech.
7. 7. The 1959 steel strike, which shut down the industry for 116 days, marked the beginning of the end of America's postwar steel supremacy.
8. 8. The rise in social benefits at 9.4% annually since 1965, versus nominal GDP growth of 6.8%, has crowded out capital investment and slowed economic growth.
9. 9. The Dodd-Frank Act's designation of systemically important financial institutions (SIFIs) effectively guarantees them, creating moral hazard and crony capitalism.
10. 10. Crony capitalism emerges when government discretion favors certain firms, shielding them from creative destruction and reducing economic flexibility.
11. 11. The U.S. has fallen from first to seventh in global competitiveness since 2008, partly due to increasing market rigidity from government intervention.
12. 12. The fundamental driver of capitalism is competition, which requires allowing failing firms to go bankrupt rather than propping them up.