Economists in the Wild

MRU introduces a new series, Economists in the Wild. In this series, we talk with economists in widely varying fields about their cutting edge research. First up in the series is David Autor on the rise of superstar firms and the fall of the labor share.

More great material for your online economics seminars and a great resource to use with Modern Principles!

Comments

Labor share in the U.S. has declined but not labor share globally. Similarly, inequality has risen and risen substantially in the U.S. but not globally. Why? The shift of the production function to the global economy, moving relatively high paying industrial jobs to places like China and creating relatively high paying industrial jobs in places like China where they did not exist before, while leaving relatively low paying service jobs in the U.S. Globally everything looks better for labor, but in the U.S., not so much. Not everything is rosy within countries that have benefited from the shift, as inequality is rising in places like China to levels higher than in the U.S. But the reference point in places like China is far different: a poor, agriculture based economy with few industrial jobs and widespread poverty. Back in the U.S., the investor class has greatly benefited, as the shift in production has greatly reduced production costs while greatly increasing profits. Tech firms have both facilitated and benefited from the shift, facilitated by creating the platforms that are necessary for global supply chains and global trade, benefited by the revenues generated in providing the platforms with relatively few but high paid employees and generating enormous profits. So are things better or are they worse?

I know, Cowen warns us to be suspicious of "simple stories", but is my story any simpler than Autor's story (technology, failure of competition, and superstar firms)?

Narrative dissonance is economically precedented by indentured ossification, rendering implicit rent-seeking inconvertible.

That someone is making a Markov salad, with a wreath of pretty flowers which smell bad.

Are the dangerous distortions in the allocation of credit to the real economy caused by the risk weighted bank capital requirements taboo? An issue that shall not be discussed?
http://subprimeregulations.blogspot.com/2019/07/risk-weights-are-to-access-to-credit.html

"cutting edge"? Oh, Mr Tab!

How is "scale without mass" or Superstar firms *not* a technology advancement? Seems like a subset of a broader catagory.

Autor is a highly respected economist and I don't mean to be critical of him specifically; indeed, who am I to criticize David Autor. Here's a quote from his Wikipedia page: "Autor showed that U.S. exposure to Chinese trade competition "caused higher unemployment, lower labor force participation, and reduced wages in local labor markets that house import-competing manufacturing industries". The study nonetheless finds that trade is a net gain for the population as a whole, and Autor has been an advocate for the Trans-Pacific Partnership as a means to protect U.S. workers."

U.S. "exposure" to Chinese trade competition? Jobs and other captains of U.S. industry took the "virus" to China, not the other way round. Trade is a net gain to the "population" as a whole. Which "population" would that be? Autor has been an advocate for the Trans-Pacific Partnership as a means to "protect" U.S. workers? No, the TPP was intended to provide an alternative for U.S. business to shift production to Asia other than China.

Autor didn't write his Wikipedia page, but I suggest he have someone to correct or clarify it. I wouldn't want anyone to conclude that Autor believes something he doesn't. That wouldn't be fair.

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