- 行业: Economy; Printing & publishing
- Number of terms: 15233
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Laws can be an important source of economic efficiency – or inefficiency. Early economists such as Adam Smith often wrote about the economic impact of legal matters. But economics subsequently focused more narrowly on things monetary and commercial. It was only in the 1940s and 1950s, at the University of Chicago Law School, that the discipline of law and economics was born. It is now a substantial branch of economics and has had an impact beyond the ivory towers. The "economics" of law and economics is firmly in the liberal economics camp, favoring free markets and arguing that regulation often does more harm than good. It stresses the economic value of having clear, enforceable property rights, and of ensuring that these can be bought and sold. It has encouraged many antitrust policy¬makers to focus on maximizing consumer welfare, rather than, say, protecting small firms or opposing big ones just because they are big. It has also ventured into broader sociological issues, for instance, analyzing the economic causes of criminality and how to structure legal incentives to reduce crime. (See also evolutionary economics. )
Industry:Economy
Henry George, a 19th-century American eco¬nomist, believed that taxes should be levied only on the value of land, not on labor or capital. This “single tax”, he asserted in his book, PROGRESS AND POVERTY, would end unemployment, poverty, inflation and inequality. Many countries levy some tax on land or property values, although George’s single tax has never been fully implemented. This is mainly because of fears that it would drive down land prices too much or discourage efforts to improve the quality (that is, the economic value) of land. George addressed this concern by arguing that the tax should be levied only against the value of “unimproved” land. Certainly, a land tax has obvious advantages: it is simple and cheap to levy; evasion is all but impossible; and it penalizes owners who do not put their land to work.
Industry:Economy
One of the factors of production, along with labor, capital and enterprise. Pending colonization of the moon, it is in fairly fixed supply. Marginal increases are possible by reclaiming land from the sea and cutting down forests (which may impose large economic costs by damaging the environment), but the expansion of deserts may slightly reduce the amount of usable land. Owners earn money from land by charging rent.
Industry:Economy
The time taken to find a new job. Because some people will devote all their time to this search, there will always be some frictional unemployment, even when there is otherwise full employment.
Industry:Economy
A Nobel prize-winning economist, James Tobin (1918-2002) theorized that firms would continue to invest as long as the value of their shares exceeded the replacement cost of their assets. The ratio of the market value of a firm to the net replacement cost of the firm’s assets is known as “Tobin’s Q”. If q is greater than 1, then it should pay the firm to expand, as the profit it should expect to make from its assets (reflected in the share price) exceeds the cost of the assets. If Q is less than 1, the firm would be better off selling its assets, which are worth more than shareholders currently expect the firm to earn in profit by retaining them. Tobin also gave his name to the “Tobin tax”, a (so far unimplemented) proposal to reduce speculative cross-border flows of capital by levying a small tax on foreign exchange transactions.
Industry:Economy
Exports and imports of things you cannot touch or see: services, such as banking or advertising and other intangibles, such as copyrights. Invisible trade accounts for a growing slice of the value of world trade.
Industry:Economy
Adam Smith’s shorthand for the ability of the free market to allocate factors of production, goods and services to their most valuable use. If everybody acts from self-interest, spurred on by the profit motive, then the economy will work more efficiently, and more productively, than it would do were economic activity directed instead by some sort of central planner. It is, wrote Smith, as if an “invisible hand” guides the actions of individuals to combine for the common good. Smith recognized that the invisible hand was not infallible, however, and that some government action might be needed, such as to impose antitrust laws, enforce property rights, and to provide policing and national defense.
Industry:Economy
Putting money to work, in the hope of making even more money. Investment takes two main forms: direct spending on buildings, machinery and so forth, and indirect spending on financial securities, such as bonds and shares. Traditionally, economic theory says that a country’s total investment must equal its total savings. But this has never been true in the short run and, as a result of globalization, may never be even in the long run, as countries with low savings can attract investment from overseas and foreign savers lacking opportunities at home can invest abroad (see foreign direct investment). The more of its GDP a country invests, the faster its economy should grow. This is why governments try so hard to increase total investment, for instance, using tax breaks and subsidies, or direct public spending on infrastructure. However, recent evidence suggests that the best way to encourage private-sector investment is to pursue stable macroeconomic policies, with low inflation, low interest rates and low rates of taxation. Curiously, economic studies have not found evidence that higher levels of investment lead to higher rates of GDP growth. One explanation for this is that the circumstances and manner in which money is invested count at least as much as the total sums invested. It ain’t how much you do, it’s the way that you do it.
Industry:Economy
When central banks try to influence an exchange rate by buying the currency they want to appreciate and selling the one they want to weaken. The evidence seems to suggest that it is at best a short-term measure. In the longer term, governments probably do not have the resources to beat market forces.
Industry:Economy
Valuable things, even though you cannot drop them on your foot – an idea, say, especially one protected by a patent; an effective corporate culture; human capital; a popular brand. Contrast with tangible assets.
Industry:Economy
