Donald Palmer of University of California, Davis reviews, “The Fracturing of the American Corporate Elite” by Mark S. Mizruchi. The Econlit abstract of this book begins: “Examines the rise and fall of the American corporate elite between 1945 and the present and considers the role of this decline in the current crises of American democracy and economics. Discusses the rise of the American corporate elite; the state and the economy; labor as uneasy partner; the banks as mediators; the breakdown of the postwar consensus; winning the war but losing the battle—the fragmentation of the American corporate elite; the aftermath; and the ineffectual elite. Mizruchi is Barger Family Professor of Organizational Studies and Professor of Sociology and Business Administration at the University of Michigan.”

This article examines the impact of unemployment insurance (UI) on the allocation of labor across industries. An overlooked aspect of UI is the effect of imperfect experience rating on hiring. Firms in more stable industries generally pay more into the UI system than their workers ever receive in benefits, thus subsidizing more volatile industries. The results indicate that industry employment shares are significantly affected by UI and that there is a net shift of resources from the service industry to the construction industry. The estimates also imply that layoff unemployment is increased by about 5% because of UI-induced employment shifts.

Uskali Maki read three books by McCloskey on the "rhetoric of economics" with sympathy. But he wants McCloskey to choose between a coherence and a correspondence theory of truth. McCloskey notes in reply that modern epistemology - by contrast with the analytic philosophy circa 1955 that many philosophers of economics espouse - rejects the choice. Modern epistemology would say that economic scientists argue in many legitimate ways, governed by ethics. In brief, as Maki agrees, economics has a rhetoric. Rhetoric is a better guide than 1955-style analytic philosophy.

Auditing, Stratified Sampling, Substantive test, Stochastic modeling

Using variation in payday lending restrictions over time and across states, we study competition in the market for small, short-term consumer loans. We find that banks and credit unions reduce overdraft credit limits and prices when payday credit, a possible substitute, is prohibited. These findings suggest that depositories respond to payday loan bans by taking less risk, bouncing checks that they would have otherwise covered. The decline in overdraft prices is surprising when viewed in isolation, but sensible given that depositories incur lower credit losses as they limit overdraft coverage. We find some evidence that credit unions’ overdraft activities are more profitable when payday loans are prohibited, consistent with decreased competition. In addition to characterizing the impact of prohibiting payday lending, a common state policy change in recent years, our findings illuminate competition in the small-dollar loan market by highlighting the importance of non-price adjustments to credit offers.