The Map and the Territory by Alan Greenspan — FOURTEEN | THE BOTTOM LINE

1. 1. Many economic choices are demonstrably stable over the long run, as shown by statistically significant regression equations.
2. 2. Social benefits as a share of GDP rose from 4.7% in 1965 to nearly 15% by 2012, largely due to Medicare and other entitlements.
3. 3. Gross private domestic savings as a share of GDP have been remarkably stable since 1870, but social benefits have diverted savings from investment to consumption.
4. 4. The top quintile of income earners accounted for 94% of individual income tax liabilities in 2009, up from 64% in 1981, and their marginal savings rate is triple the average.
5. 5. American business is doing well due to suppressed wage costs, with hourly wages rising less than 2% annually, partly from declining private sector union participation.
6. 6. There is an upper limit to human IQ but no upper limit to technology complexity, implying a growing need for automation and robots with simulated intelligence.
7. 7. The doctrine of 'too big to fail' is spawning crony capitalism and must be addressed by forcing banks to slim down below a size threshold where failure is non-contagious.
8. 8. Modern industrial capitalism, despite its excesses, is the most effective economic organization ever devised, but creative destruction inevitably causes hardship for displaced workers.
9. 9. The political schism over budget priorities is unprecedented in the postwar era, and the loss of bipartisan compromise threatens America's preeminent economic status.
10. 10. The only way to achieve permanently lower tax rates is to lower spending, and the bias toward unconstrained deficit spending is the top domestic economic problem.
11. 11. Raising capital requirements for banks can address financial instability without toppling the system, even if some banks must shrink due to inadequate returns on equity.
12. 12. Despite temporary breakdowns, the U.S. financial system remains at the forefront globally, and no viable competitor to the dollar as reserve currency is in sight.