Ronnie J. Phillips

Entrepreneurship and Philanthropy in American Capitalism

American capitalism differs from all other forms of industrial capitalism is its historical focus on both the creation of wealth (entrepreneurship) and the reconstitution of wealth (philanthropy). Philanthropy is part of the implicit social contract that continuously nurtures and revitalizes economic prosperity. Much of the new wealth created historically has been given back to the community, to build up the great social institutions that have a positive feedback on future economic growth. This entrepreneurship-philanthropy nexus has not been fully explored by either economists or the general public. The purpose of this paper is to suggest that American philanthropists – especially those who have made their own fortunes – create foundations that, in turn, contribute to greater and more widespread economic prosperity through knowledge creation. If we do not analyze philanthropy we can understand neither how economic development occurred nor what accounts for American economic dominance.

Payday Loan Pricing

We estimate the pricing determinants for 35,098 payday loans originated in Colorado between 2000 and 2006, and generate a number of results with implications for public policy. We find evidence consistent with classical price competition early in the sample, but as time passed these competitive effects faded and the data become more consistent with a variety of strategic pricing practices. On average, loan prices moved upward toward the legislated price ceiling over time, consistent with implicit collusion facilitated by price focal points. Large multi-store payday firms tended to charge higher prices than independent single-store operators, but were less likely to exploit inelastic demand near military bases and in largely minority neighborhoods. Of the three loan pricing measures used in our analysis, the annual percentage interest rate (APR) favored by regulators and analysts performed poorly.

Entrepreneurship, State Economic Development Policy, and the Entrepreneurial University

In this paper, we discuss the nature of the university-industry relationship and recommend specific policies to help achieve the goal of greater economic growth. We argue that state-supported research universities can be used to integrate entrepreneurship into state economic development and incubate entrepreneurial companies. Regional entrepreneurship policy is a new strategy that regards economic development as a process that goes from supporting research and development to creating and growing new businesses. Specifically, we believe that an entrepreneurial higher education system is a key to state-level economic policies. There is an opportunity at research universities to combine the human capital talent available on faculties with the needs and expertise of private industry to accelerate entrepreneurship and economic growth.

The Internet Revolution, the “McLuhan” Stage of Catch-up, and Institutional Reforms in Asia

The Asian crisis of the late 1 990s altered the fortunes of those stricken countries overnight, turning the much-ballyhooed economic miracle into chaos. Japan too became (and still is) trapped in a banking crisis of its own making after the bubble of 1987-1990. A supposedly distinctive East Asian, or Japanese, model of economic growth suddenly lost its luster, and the American model of free-market capitalism came to triumph. The Asian economies were then compelled to reform their regulatory and institutional structures by adopting more market-oriented approaches. Those that had to depend on bailouts from the IMF were forced to accept a wide-ranging reform program as obligatory conditions for the rescue loans. The themes of this paper are (1) that the Asian crises were the inevitable outcomes of the dirigiste development policies the Asian economies pursued in their successful catch-up growth, (2) that such an institutional regime, however, finally met its match in the form of free-market global capitalism, especially in terms of unbridled capital flows, and (3) that East Asias present trend of deregulation and marketization is all the more pushed by the institutional requirements of the Internet revolution as the region struggles to catch up in the digital age.

The Role Of Morris Plan Lending Institutions In Expanding Consumer Micro-Credit In The United States

This paper examines the rise of the Morris Plan banks, in the early part of the twentieth century, in providing consumer credit. Morris Plan banks emerged at a time when formal consumer credit markets were virtually non-existent. Credit unions also appeared in the United States at the same time. Within twenty years of their appearance, Morris Plan banks dominated consumer lending. The demise of Morris Plan banks begins with the full recovery of banking after the Great Depression. This paper analyzes the structure of Morris Plan lending in light of the recent literature concerning joint liability credit institutions. Our analysis suggests that the success of the Morris Plan lending structure may be attributed partly to it alleviating informational asymmetries and costs associated with lending. The analysis also suggests that the Morris Plan structure grew faster than credit unions because it imposed less joint liability on borrowers than did credit unions. Ultimately, the emergence of Morris Plan banks during this period is an interesting historical example of an institution arising organically within the private sector to meet a credit need and disappearing after alternative institutional forms, which were less costly to borrowers, emerged as consumer credit markets matured.

‘War news’ and black market exchange rate deviations from purchasing power parity: Wartime South Vietnam

Abstract This study evaluates the impact of ‘war news’ on black market exchage rate deviations from purchasing power parity (PPP). In wartime Vietnam, the greater the number and intensity of U.S. troop engagements with the enemy, the greater the confidence in the South Vietnamise government and its fist currency. During the period of heaviest U.S. military operations, from 1967 to mid-1969, about 20–25 percent of the value of the piaster on the black market can be attributed to this confidence factor. The results suggest that where variables to measure the news are available, short-run deviations from PPP can be readily explained.

The Entrepreneurship-Philanthropy Nexus: Nonmarket Source of American Entrepreneurial Capitalism

What differentiates American capitalism from all other forms of industrial capitalism is a historical focus on both the creation of wealth (entrepreneurship) and the reconstitution of wealth (philanthropy). Philanthropy has been part of the implicit American social contract that continuously nurtures and revitalizes economic prosperity. Much of the new wealth created historically has been given back to the community to build many of the great social institutions that have paved the way for future economic growth. This entrepreneurship-philanthropy nexus has not been fully explored by either economists or the general public. The purpose of this paper is to suggest that American philanthropists—particularly those who have made their own fortunes—create foundations that, in turn, contribute to greater and more widespread economic prosperity through knowledge creation. Analyzing philanthropy sheds light on our current understanding of how economic development has occurred, as well as the roots of American economic dominance.

Community Development Banks

The Clinton/Gore proposal for the creation of a network of 100 community development banks (CDBs) to revitalize communities is bold, and will contribute to the success of the U.S. economy. Banks are essential institutions in any community, and the establishment of a bank is often a prerequisite for the investment process. For this reason, the creation of banks in communities lacking such institutions is important to the welfare of these communities. The vitality of the American economy depends on the continual creation of new and initially small firms. Because it is in the public interest to foster the creation of new entrants into industry, trade, and finance, it is also in the public interest to have a set of strong, independent, profit-seeking banking institutions that specialize in financing smaller businesses. When market forces fail to provide a service that is needed and potentially profitable, it is appropriate for government to help create the market. Community development banks fall into such a category. They do not require a government subsidy, and after start-up costs, the banks are expected to be profitable. The primary perspective of this concept paper is that the main function of the financial structure is to advance the capital development of the economy-to increase the real productive capacity and wealth-producing ability of the economy. The second assumption is that capital development is encouraged by the provision of a broad range of financial services to various segments of the U.S. economy, including consumers, small and large businesses, retailers, developers, and all levels of government. The third is that the existing financial structure is particularly weak in servicing small and start-up businesses, and in servicing certain consumer groups. The fourth is that this problem has become more acute because of a decrease in the number of independent financing alternatives and a rise in the size distribution of financing sources, which have increased the financial systems bias toward larger transactions. These are assumptions that appear to be supported by the evidence: they are also incorporated in other proposals that advance programs to develop community development banking.

The Role of the International Monetary Fund in the Post-Bretton Woods Era

This paper examines the changing role of the International Monetary Fund (IMF) in the world economy in the 1970s and into the 1980s. Though the IMF was established in 1945 by the Bretton Woods Agreement to aid countries with short term balance of payments problems, its role in recent years has changed dramatically. Many people argue that the IMF is becoming a world central bank with powers of surveillance over domestic economic policies, conditional loans to deficit countries, and control of world liquidity. The extent to which this is the case is a main focus of this paper. In order to do this, it is necessary to review the events in the international monetary system in the 1970s with special attention given to those factors which affected the IMFs role. Though there are various interpretations of the IMFs role from both the mainstream and the radical-left, an alternative interpretation, which differs from those interpretations in many respects, is presented. My argument is that the IMF emerged in the 1970s as a global capitalist planner in response to the international economic crisis. Through international monetary reforms which occurred in the 1970s the IMF has played a pivotal role in the attempt to restore global accumulation. The failure of the IMF to accomplish this goal has been a direct result of global working class resistance to its policies.

Regulating Financial Markets: Assessing Neoclassical and Institutional Approaches

Global financial markets are currently perceived to be in crisis. Debate over regulatory reform in the financial industry has, consequently, assumed national prominence. Although many American industries are heavily regulated, including public utilities, telecommunications, and transportation, the financial industry arguably exhibits the most complex system of regulation in this country. This complexity is exacerbated by recent technological changes within the banking industry, as well as by the effects of these changes on the competitive structure of domestic banking and other financial markets. Institutionalists have traditionally argued for government intervention when the market fails to produce a socially desirable outcome. While we do not deny these arguments, we would also suggest that the technological change inherent in a financial innovation may in fact promote a progressive institutional change that enhances social welfare. The problems of inefficiency or inequity in the financial sector may, consequently, be ameliorated by technological change. This implies that government regulatory intervention may not always be necessary in the event of a failure of the market to provide an optimum outcome.