by Tyler Cowen
on December 12, 2012 at 1:10 pm
1. Erik Voeten with some remarks toward a theory of treaties.
2. Milton Friedman on the popularity of the Fed.
3. What V.S. Naipaul thinks of Jane Austen.
4. New paper on Albert Hirschman and the World Bank, and Rajiv Sethi on Hirschman.
5. Further skepticism on productivity increases in U.S. manufacturing.
6. Raj Chetty video lectures on taxes and redistribution, not viewed but self-recommending.
I admire Naipaul as a writer, but given that he is such a horrible human being in his personal life, I can see why he wouldn’t like Austen. And his wife seems fairly obnoxious.
They both seemed pretty obnoxious and haughty. That interview was pretty void of content.
They clearly are obnoxious, but that was a great read, like out of a very good novel. I am very happy Tyler posted that. He is right about Buddenbrooks, not enough people read that anymore.
Anyway, if I boycotted artists who were awful people I wouldn’t have much pleasure in life. “Bend in the River” and “The Enigma of Arrival” are among the better novels written in the past 50 years.
By the way, mrmandias is completely correct, the writers brought up showed an incredibly shallow political obsession. Why is everyone with a reputation for political incorrectness asked about Orwell? At least he didn’t bring up Chesterton, but clearly not because he knew better.
I thought his wife sounded like the sort of person it would be fun to have a conversation with. The brief comments on Austen (essentially – I don’t like big novels by English geniuses born long before me, I don’t like fiction involving romance between human beings)
were so profoundly and even awesomely stupid, milky-way-over-the-outback-at-midnight-level-of-awesomelyness, stupid, that I believe they are some sort of weird 20th century meta-comical schtick (perhaps throwing a bone to the moronic inferno?); I am sure he expects his readers to know he is too smart to mean what he seems to say about Austen.
5. I fail to understand the problem being described. Are the only economic models of manufacturing growth those that conclude less workers are needed because those remaining workers themselves are making more widgets? Because if that’s the case there’s a lot of low-hanging fruit out there for economists to study. As a person working in manufacturing, no person actually in manufacturing believes machine operators are what’s making our productivity grow. It’s the increasing automation of machines via engineering advances first and growing understanding of production results and market behavior via computer models that are causing that growth. And to a large extent the ability to find alternative inputs as manufacturing “raw materials” and capital goods from a growing global market feeds nicely into those two segments I described. But I wanted to comment on this line by line because I don’t understand what Taylor is getting at.
1) Most of the productivity growth in manufacturing is computers.
Uh, yeah. Computers not just of the human-use kind, more importantly. Computers that are used to more expediently and more reliably control increasingly complex manufacturing operations. Operations literally impossible for any human to do no matter how much training or how many unions would exist. The simple fact is that to remain competitive at this point in time the machines are too complex and too fast for a human to do anything other than slow it down or make it more error prone. So how are they measuring “computers”? And who cares if productivity drops by half without “computer” manufacturing? Why do they believe that should be as strongly correlated to the drop in manufacturing employment as I perceive is implied in Taylor’s bringing it up? Perhaps that should be a trigger that it’s being incorrectly measured? Or that employment was unusually high for low-productivity employees within manufacturing as opposed to service. Maybe it’s easy to see a low-productivity worker in the service industry compared to manufacturing.
2) Most of the productivity growth in manufacturing computers is because computers are becoming so much faster and better over time, and government statistics count that a productivity growth, not because an average worker is producing a dramatically greater quantity of computers.
So? If the goal is to computer faster and the average worker produces a faster computer how is that not productivity growth? Perhaps computers/worker output is the wrong measure. Perhaps it should be FLOPS/worker (floating point operations per second per worker). Maybe they’re just trying to fit a better definition into a model that uses a poor one just for the sole purpose of comparing to other industries like Service?
3) A sizeable share of what looks like growth in manufacturing productivity is actually from importing less expensive inputs to production.
So the only reason this is a problem is because the cheaper input is from China or Mexico instead of North Carolina? Is this a real concern or just low-level racism we’re talking about here? I guess this is just an issue with the way the model works then and not some critique about whether or not productivity is actually rising due to human capital?
4) If productivity in manufacturing rises because of automation, then those gains in productivity may benefit the owners of the machines–that is, benefit capital rather than labor.
Um, yeah. This is bordering on the argument that the point of consumption is production rather than consumption. This seems bizarre for any adult to be talking about.
5) If low-wage labor-intensive manufacturing tasks are now more likely happen overseas, an higher-wage tasks remain in the U.S., then it may appear as if the productivity of an average U.S. manufacturing worker is higher–but it’s just a shift in the composition of U.S. manufacturing workers.
It doesn’t just appear that way. IT IS THAT WAY. And how is this an indication that something “unhealthy” is occurring?
This article and it’s assertions are just bizarre, through and through.
This struck me as odd, too:
“4) If productivity in manufacturing rises because of automation, then those gains in productivity may benefit the owners of the machines–that is, benefit capital rather than labor. Houseman: “And then another standard story has to do with automation. Basically, capital is substituting for labor. Automation can lead to job losses. And the returns from automation, or higher capital use, won’t necessarily be shared with workers.”
This is not an argument against increasing productivity – this is an argument about who benefits from it. I thought the arguments presented in this post were a bit muddled.
“As a person working in manufacturing, no person actually in manufacturing believes machine operators are what’s making our productivity grow. It’s the increasing automation of machines via engineering advances first and growing understanding of production results and market behavior via computer models that are causing that growth.”
I’m not sure this is a valid point. Worker productivity gains have almost always been the result of either better tools and/or better processes. So industrial automation that creates more output for the same amount of worker hours is considered worker productivity gains and always has been.
It may not be a valid point from an economists perspective. But they can then expect to be continually baffled as to why more widgets per worker isn’t resulting in higher worker pay. But I am still curious about exactly how they define a manufacturing worker. The person standing next to the machine in a uniform may not be seeing better pay. But the person standing next to the machine with their tie tucked into their button up shirt certainly has been. If the two aren’t equated you won’t see worker pay going up as I am seeing happen in the real world with engineers vs. machine operators.
magilson, I’m not sure you’re really getting the article. First, I should say that you have correctly pointed out that the computers issue (#1 and #2 in your post) is probably the weakest argument presented and that labor’s falling share of income (#4) of income is more of a value judgement than a reason to be skeptical about rising productivity.
However, your criticisms in #3 and #5 don’t quite hold up. For his point about #3, you need to understand that the government calculates GDP as the value of FINISHED goods and products. If a car tire comes from the US (or whatever country it has historically come from), then there is no problem, but if a domestic-purchasing car manufacturer starts buying tires from a foreign country, the value of the FINAL car does not change, so productivity growth stemming from cheaper foreign imports is purely a statistical anomaly. #4 is also a statistical anomaly — to see this, imagine that there are 10 workers in the US, 5 of whom earn $10/hour and 5 of whom earn $4/hour. If industry offshores all of the $4/hour jobs, then the average wage has gone up even though the remaining 5 workers are not suddenly more productive. This would be true even if some of the $10/hour jobs were also lost.
For #3, fine. I’m willing to accept that it’s an “issue” because of the way the model is constructed. But does it not strike anyone as wrong to be concerned about cheaper inputs? How is that some mark against US manufacturing as being “unhealthy”?
On #5, why is it important that the number of workers be held constant in the comparison. Worker output IS rising. Why is it constantly seen as “unhealthy” that fewer, increasingly more productive workers are employed in manufacturing? We do not hold this same standard to farming as we now do through this romantic lens being applied to factory jobs.
The point of manufacturing is not manufacturing for it’s own sake. I’m just not seeing the point Taylor is trying to make.
Neither of these are value judgements.
That Erik Voeten post doesn’t seem linkage worthy. The last 3 paragraphs distill to: human rights treaties are hortative. The first 3 paragraphs distill to: Republicans are opposed, Republicans are stupid, therefore opposition is stupid. If you care about the topic, skip that and look for substantive coverage (e.g., how does Article 30 interact with (or possibly undermine) non-human rights treaties- e.g., transportation, trade, intellectual property?).
re#3. I’ve always liked Naipul’s writing, but I don’t see how a crusty, hard-bitten old man (or anyone really) can go on and on about a cat that died a year ago.
And then the Wodehouse hate? Not cricket, old boy.
“can go on and on about a cat that died a year ago.”
I think it is that they don’t like people. They don’t really like cats for that matter! But it’s not so much that they don’t like people, they don’t really acknowledge people.
Wodehouse and Austen? This isn’t literary critique, this is signaling that you’re a big furry deal in the writing world so you can get away with obviously stupid opinions.
Jane Austen would find it impossible to get an agent today, much less get published. It’s an oddity that her work has survived, especially when that of someone like Robert Smith Surtees has been forgotten.
Are you talking about the “Rejecting Jane” article? Because I can’t imagine someone writing in 19th-century prose would get far these days, no matter what.
The link to Raj’s lectures isn’t working for me and a Google search didn’t bring anything up. Does anyone have a working link?
The whole website the video is hosted on (supplysideliberal.com) seems to be down.
I think the United States’ general aversion to signing a treaty is fair. George Washington warned us not to get entrapped in permanent foreign alliances, and I think the sentiment among some of the Republicans reflects this historical notion.
However, what is scary is the idea of a treaty as anathema to sovereignty. A long-term intention to leave the United Nations has its merits (its such a corrupt and overlarge organization). However, considering that we are part of this alliance, citing plain false arguments to avoid ratification is senseless.
As the rest of the world ascends economically and thus politically, our ability to ignore multilateral forums will be sorely challenged, there is a tipping point on the way when we will be forced to comply with an international consensus or risk getting left out. That said the phrase “international consensus” brought out a chortle.
1. So it’s hard to get treaties ratified–although actually the numbers show only that it’s hard for Obama–because no domestic group benefits from most treaties, and a number of domestic groups think they will be harmed? That seems like a very good reason not to ratify treaties. I mean, if a significant number of citizens perceive a state action as inimical to their interests, surely that creates a strong presumption against the state doing that thing, no?
“I mean, if a significant number of citizens perceive a state action as inimical to their interests, surely that creates a strong presumption against the state doing that thing, no?”
Not if you’re a rootless cosmo… err, global utility maximizer.
No, we need to sign up for whatever the UN is offering because if we don’t, the Europeans will laugh at us at cocktail parties or something.
And yet we are considered by a great many of the worlds people a master manipulator of global institutions for our bennefit. The New York HQ’d UN being a primary example. This is the central nonsense of the Republican and Public stance. We are one of only three states that can routinely sustain this double standard.
Wait what? Are you saying the most powerful nation in the history of the planet is not beloved the world over? Get over it. As Burke said “A great empire and little minds go ill together.”
Get over what? This is not a conversation about love, The issue at hand is how long we can maintain the double standards, and my point is that our ability is steadily declining. Like most Americans you both under and over estimate opinions of America,
Can someone please explain Milton Friedman’s “poor performance” comment? What metrics is he using to judge the Federal Reserve?
The Fed has not achieved a positive result in 100 years. Fred likely originated with the devastating Panic of 1907, the “rich man’s panic; Wall Street stock glut; bank runs; currency shortages – showed the need for an elastic currency. This possibly opened the way for Wilson to create the FRB in 1913.
In “America’s Great Depression,” Murray Rothbard explained the beginnings of the Depression as the inflationary monetary policy of the newly formed Federal Reserve – which was masked by large increases in productivity that were occurring due to easy money and tax cuts in the 1920’s.
The Fed’s easy-money policies led to an inordinate expansion of credit, installment buying and fantastic speculation in the stock market. Sound familiar?
Milton Friedman and Anna Schwartz argued in their famous treatise, “A Monetary History of the United States,” that the failure of the newly formed Fed to offset the massive decline in the money supply was a primary reason for the depth and length of the Great Depression.
Deposits and currency held by the public fell by more than one-third from 1929 to 1933. The Fed did little to correct. When Britain abandoned the gold standard in September 1931, the Fed, believe it or not, raised the discount rate, the rate that it charges member banks to borrow. The proper course would have been to purchase bonds, adding reserves in member banks and increasing the money supply. IOnstaed, the Fed allowed the money supply to shrink by one-third.
Ted craig why do you confuse personal life with literary merit? I think Naipaul’s views on Austen are arrogant but not because I don’t like his personal life. I would have found the observations arrogant even if the guy who made them is a saint.
I’m not confusing personal life with literary merit at all. But your personality impacts your tastes. It’s not surprising that somebody like Naipaul, who treated his first wife like he did, would find little appeal in Austen’s work.
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