Two premieres

by on March 14, 2014 at 10:49 am in Current Affairs, Economics | Permalink

Here is Josh Barro for The New York Times, on why it still feels like we are in a recession to so many people.

Here is Catherine Rampell for The Washington Post on why low labor turnover is a bad sign for the economy.

We welcome both to their new jobs and look forward to reading more, I am big admirers of them both.

Ray Lopez March 14, 2014 at 11:31 am

Why does this important post have no comments? Let me be the first!

I don’t read newspapers anymore. I read this blog, technical books, an occasional work of fiction, and I play chess, program, and do some work professionally. It fills up my time. I just took up swimming too, now that I’m near a pool.

I quit full-time work in 2004 and have not looked back. YOLO and why wait until you’re 65 to enjoy life? BTW it’s more fun in the Philippines.

Lay Ropez March 14, 2014 at 8:41 pm

This is an important article. After all I am reading it. It is almost as important as the fact Megan Fox has not gone out with me. What is wrong with Megan Fox?

But enough about Ms Fox. Let’s focus on something more important: me. I am unbelievably handsome, rich and clever. You peons are lucky to be reading me.

Richard Besserer March 14, 2014 at 11:58 am

Hmmm. To me the secular decline in the labour share sounds to me like a good reason to depend less on taxation of labour income and more on taxation of consumption—less for re-distributive purposes than the simple fact that that’s where the money is—with personal deductions replaced by a “national dividend” of some sort.

Of course, that’s unlikely to happen in most developed countries, where populists would much rather try (and fail) to re-distribute wealth towards the parts of the working class they pander to the most by restricting immigration, abandoning free trade, capital controls, or all three.

One doesn’t have to consider wealth re-distribution “just” (however one defines that) to believe that if the labour and capital share of output had grown at more or less the same rate since (say) 1980 or so, we would be having far fewer arguments about immigration and Europeans, especially, would be having fewer arguments about whether a pan-European free trade area is worth the trouble than they are.

john personna March 14, 2014 at 12:40 pm

Interesting pieces. I guess they are both good “explainers,” but I am surprised that they both go number:story in a 1:1 fashion. Less integration than I expected.

I’ll have to think about it though. Maybe they both did pick good “one numbers” to use to describe a thing.

chuck martel March 14, 2014 at 1:15 pm

What’s the best single word to describe Barro’s piece? I’m going to go with “insipid”, adj. without distinctive, interesting, or attractive qualities: an insipid tale/. Some team of government economists, maybe, says that the so-called recession is over, so it is. Of course, that’s in the aggregate, a spiking DJ, NASDAQ and S&P are all we need to know to realize it. The man in the cul-de-sac doesn’t deal with the aggregate. If he’s got a job, everything is hunky-dory, if not, we’re in a depression.

“Our main economic policy debates still focus around what policies will improve overall economic growth, instead of the problem of growth not adequately translating into improvements in employment and wages.”

The best economic policy would be no economic policy at all. Then entrepreneurs and business could concentrate on development, production and marketing instead of stuffing their square peg into the government’s round hole.

john personna March 14, 2014 at 1:49 pm

Here are some things you may not be aware of, as a writer. First, a highly emotional response will split your readership. You beg mood affiliation early on. Second, “If he’s got a job, everything is hunky-dory, if not, we’re in a depression.” was a pretty clear straw-man of a much subtler claim about growth and reward. Finally, your closing prescription says grow business without connecting it to national welfare. Ultimately if you believe business growth will come back around, and help “the man in the cul-de-sac” you should connect those dots.

rayward March 14, 2014 at 1:40 pm

Josh Barro fell far from the tree. The declining share of national income going to wages and salary has correlated with __________________ [fill in the blank]. We’ve had all kinds of warnings that exceeding this or that ratio will mean the end of life as we know it, yet very little if any discussion about the declining share of national income going to wages and salary. Whether he intended it or not, Barro’s post highlighted the gaping hole in contemporary American politics, on the left and the right. Of course, with an aging population one would expect the political focus to shift to where the votes are and policies that contribute to a declining share of national income going to wages and salary. And the tidal wave of baby boom retirement hasn’t even come ashore!

john personna March 14, 2014 at 1:50 pm

I thought his piece was on “the declining share of national income going to wages and salary.”

Brian Donohue March 15, 2014 at 6:18 pm

Don’t you see the demographic connection? What share of you income is labor income nowadays?

Ricardo March 17, 2014 at 12:45 am

Demographics are not everything. Median real wages have failed to keep up with GDP growth (I will leave aside the rather pointless debate on whether they have literally stagnated or grown at a fraction of a percent per year compounded). Additionally, if you break down labor force participation by gender and age bracket, rates have declined between 1992 and 2012 for males 25-34, 35-44 and 45-54. Interestingly, the one group in which one sees more men working is that of men aged 60 and over.

Female labor force participation is about the same as it was in 1992 with fairly small heterogeneity across age brackets.

The Other Jim March 14, 2014 at 3:16 pm

The Barro piece is weak. Despite 4 years of media cheerleading that “the recession is over!”, the economy is very bad, and everyone knows this. The prices of food and fuel keep rising, but is very difficult to get a job, get a promotion, switch jobs, or get a raise. And that is really all you need to know.

What you should learn from this is that the word “recession” is a quite meaningless term that the media loves to exploit for political purposes. It should be thrown out, and replaced with something useful.

Anon March 14, 2014 at 4:03 pm

Employment rate for working age women has increased from 50% to 74% since 1950 (see chart here: Unmeasured household work in 1970, as a percentage of GDP is certainly higher than it is today, which means GDP was understated relative to today. Meanwhile, much of the unmeasured household work is now performed through employment of low-wage childcare, food service, and other outsourced household jobs, which lowers the distribution of income relative to 1970.

1970: GDP understated more than today; wage distribution overstated more than today

I want to agree with Barro, but it’s too easy to undermine his argument with micro data. Incorporate the changes in demographics, and then make the case that inequality is rising. The case will be much stronger.

Anon March 14, 2014 at 4:06 pm

Sorry, employment rate for women was 50% in 1970, not 1950 (it was closer to 40% in 1950).

uffs March 14, 2014 at 4:09 pm

Given how much economic loss hurts people e.g. highly irrational loss aversion, we in the US would probably have been better off without much of the growth over the last few decades as it’s turning out to have been a mirage.

D March 14, 2014 at 4:24 pm

Barro’s analysis has never impressed me. Worse, he acts like a 12 year old on Twitter 24/7.

What is it about people who went from right to left – Barro, A. Sullivan, Bruce Bartlett – that makes them so damn childish (Barro and Bartlett) or unstable (Sullivan)?

Engineer March 15, 2014 at 4:49 pm

What is it about people who went from right to left – Barro, A. Sullivan, Bruce Bartlett – that makes them so damn childish (Barro and Bartlett) or unstable (Sullivan)?

One day there’s the realization that if you want to further your career, hang around with the cool people etc. you have to change your tune. From the next day onward you focus on ingratiating the bosses and the cool people.

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