Following on from Monday's post, click here to read an op-ed on the pros and cons of inequality, which draws heavily on Angus Deaton's work. It argues that inequality is good if it occurs as a result of industrialisation / innovation and if it spurs further innovation. However, too much inequality can undermine support for the political system and private enterprise. In other words, there is an optimal amount of inequality!
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.