The following collection of papers were presented at the 2009 annual Prosperity Symposium which took place at Brocket Hall in Hertfordshire, England in June 2009. These papers will soon be available to buy as a single volume from the American Enterprise Institute Press.
The Effects of the Economic Crisis on the Poorest Developing Countries, Paul Collier, June 2009
Abstract: Collier's paper examines the impact of the global economic crisis on ‘the developing countries’. Collier begins with the impact of the crisis and emphasises that in order to consider appropriate responses, both by policy makers within affected countries and internationally, the crisis has to be set in the context of structural macroeconomic problems that will need to be addressed in order for the marginalized countries to converge.
The Role of Trust in the 2008 Financial Crisis, Luigi Zingales, June 2009
Abstract: "Virtually every commercial transaction" – wrote Kenneth Arrow – several decades ago-- "has within itself an element of trust”. In this paper, Luigi Zingales argues that trust plays a role in affecting people’s priors. Then, drawing on the Chicago Booth/Kellogg School Financial Trust Index, he is able to show that trust in key financial institutions dropped significantly in the Fall of 2008. The major cause of this drop is linked to the type of government intervention during the crisis. In conclusion, Zingales shows how this drop in trust affected everyday decisions. He goes on to show how it affects the probability of a run on your own bank, the probability of investing in the stock market, even the demand to massively regulate the business, which in turn will affect the business confidence to operate.
Praying Alone Is No Fun: Religion, Social Networks, and Subjective Well-being, Chaeyoom Lim & Robert Putnam, June 2009
Abstract: The positive association between religious commitment and subjective well-being is well documented. However, whether this association indicates a causal relationship remains unclear. The causal mechanism underlying the relationship between religion and subjective well-being is also not well known. Using a new panel dataset, this study offers stronger evidence for the causal effect of religiosity on life satisfaction. Putnam and Lim also demonstrate that social networks formed in congregations and a sense of strong religious identity are the key factors that mediate the linkages between religion and life satisfaction. People with religious affiliations are more satisfied with their lives mainly because they attend religious services more frequently and build social networks with people who share their faith and religious experience, thus building a strong sense of belonging to a community of religious faith.
Why Societies Stay Stuck in Bad Equilibrium: Insights from Happiness Studies amidst Prosperity and Adversity, Carol Graham, June 2009
Abstract: In the past few years there has been a burgeoning literature on the economics of happiness. While the understanding and pursuit of happiness has been a topic for philosophers – and psychologists - for decades, it is a novel one for economists. This paper builds on research that I have done on happiness across the world, in very poor and in very rich countries, and in several regions of the world. Graham's research suggests a role for adaptation in explaining why some societies stay stuck in bad equilibrium, with high levels of poverty, corruption, and other negative phenomena, and yet most citizens record relatively high levels of happiness, while in others, which are materially better off by significant orders of magnitude, many citizens report to be miserable.
The United States-Peru Trade Promotion Agreement: What did you expect? Philip I. Levy, June 2009
Abstract: Bilateral free trade agreements have been the major means of opening markets over the last decade. This study aims to explore the broader benefits through an in-depth look at the case of Peru. In particular, it seeks to shed light on some of the debates about free trade agreements by asking what the Peruvians sought to achieve through the FTA. Were they seeking new access to the United States market? Or were they using the agreement as a vehicle to strengthen economic and governance reforms?
Postwar Nation-Building: U.S. Policy in Germany after the Second World War and the Lessons for the Twenty-First Century, Jeremi Suri, June 2009
Abstract: Nation-building in post-war Germany is surely not a model for other American activities. Chronological, geopolitical, and cultural context matter enormously. That said, the process of adjusting and adapting policy, as exhibited in post-war Germany, is very instructive for other cases. The policies that contributed to the transformation of Western Europe – particularly the Marshall Plan – were not planned or even fully thought out. They emerged from constant political give-and-take, negotiation and compromise, adjustment to circumstances, experimentation, and strategic risk-taking. Nation-building in postwar Germany was political horse-trading, often of a dirty and unsavoury variety. The will and ability of Americans to undertake politics in this form, with consistency, is a necessary part of nation-building. Strategists and citizens must recognize that, and prepare accordingly, whether the focus of American activities is the former slave-holding South, the Philippines, post-war Germany, Vietnam, Iraq, or Afghanistan.