Not everyone realizes that the modern financial system has enabled us to end historical practices such as indentured servitude and apprenticeship. This episode uncovers how financial systems tackled market failures and transaction costs, drawing on insights from Jeffrey Hodgson's "The Wealth of a Nation: Institutional Foundations of English Capitalism." We'll explore the evolution of borrowing against future earnings and how modern financial institutions have streamlined processes that once resembled slavery, fostering the growth of capitalism.

We'll then shift gears to examine Glenn Lowry's groundbreaking views on educational investment, discussed in his book "Late Admissions" and echoed in his 1981 Econometrica paper. Lowry's exploration of intergenerational transfers and parental investments in education reveals significant inefficiencies in the current system, drawing parallels with Michael Hudson's analysis of financial markets. The conversation sheds light on the untapped potential of underprivileged children and the need for better financial instruments to optimize educational funding.

• Geoffrey Hodgson. The Wealth of a Nation: Institutional Foundations of English Capitalism. Princeton University Press. https://press.princeton.edu/books/hardcover/9780691247014/the-wealth-of-a-nation
• Glenn Loury, (1981). Intergenerational Transfers and the Distribution of Earnings. Econometrica, 49(4), 843–867. https://doi.org/10.2307/1912506
• What Causes Capitalism? STEPHEN DAVIES. REASON. https://reason.com/?p=8285302
• Nick Gillespie Interviews Glenn Loury, REASON, https://reason.com/podcast/2024/06/12/glenn-loury-tales-of-sex-drugs-and-capitalism/

You can follow Mike Munger on Twitter at @mungowitz