*Innovation Economics*
That is the new book by Rob Atkinson and Stephen Ezell. It is far more mercantilist than I feel comfortable with, yet it is full of information and argumentation, and it is a book one can profitably engage with. Here is one excerpt:
The largely consensus view among U.S. economic elites is that the massive U.S. job loss in manufacturing is simply a reflection of manufacturing doing well: using technology to automate work and to become more efficient. It’s the agriculture story they tell us…
There are two big problems with this view. The first is that it is not supported by the official government data. In fact, U.S. manufacturing lost jobs much faster in the 2000s than in the 1990s, even though productivity growth was similar during the two decades. In the 1990s, U.S. manufacturing employment fell 1 percent, while productivity increased 56 percent. Yet, in the 2000s, manufacturing employment fell 32 percent while productivity increased only slightly faster, 61 percent. So, clearly, higher productivity was not the main cause of the manufacturing employment collapse.
As Michael Mandel has pointed out repeatedly, there are also problems with the data, and here are our authors on that point:
…a closer look reveals that every durable goods industry grew more slowly in output than GDP except one: computer/electronics which grew a whopping 720 percent faster than GDP…To put this in perspective, this one sector accounted for 113 percent of U.S. manufacturing output growth in the 2000s, even though, in 1997, it accounted for just 12 percent of manufacturing output.
Note that a lot of this measured growth is quality improvement in computers, rather than growth of the sector in the traditional sense of having a rapidly expanding industry. Employment in that sector fell. The performance of the other manufacturing sectors is not so impressive:
…during 2001-2010, manufacturing minus computers actually lost 6 percent of its value-added. Output of the electrical equipment and wood products industries declined by 7 percent, plastics by 8 percent, fabricated metals by 10 percent, printing by 12 percent, furniture by 19 percent, nonmetallic minerals and primary metals and paper by 31 percent, apparel by 34 percent, and textiles and motor vehicles by 39 percent. In other words, thirteen manufacturing sector that made up 58 percent of U.S. manufacturing employment all produced less in 2010 than in 2001, all at a time when the overall economy grew 15.8 percent.
I suppose you could say that education and health care have in fact seen striking advances in productivity during this period. Or you could recall my portrait in The Great Stagnation of an economy which has only a very small number of dynamic sectors, with computers of course in the lead. Overall it is not a pretty picture.
New issue of Econ Journal Watch
You will find it here. The contents include:
James Tooley on Abhijit Banerjee and Esther Duflo’s Poor Economics: Banerjee and Duflo propose to bypass the “big questions” of economic development and focus instead on “small steps” to improvement. But, says Tooley, they proceed to make big judgments about education in developing countries, judgments not supported by their own evidence.
Why the Denial? Pauline Dixon asks why writers at UNESCO, Oxfam, and elsewhere have denied or discounted the success and potentiality of private schooling in developing countries.
Neither necessary nor sufficient, but… Thomas Mayer critically appraises Stephen Ziliak and Deirdre McCloskey’s influential writings, particularly The Cult of Statistical Significance. McCloskey and Ziliak reply.
Was Occupational Licensing Good for Minorities? Daniel Klein, Benjamin Powell, and Evgeny Vorotnikov take issue with a JLE article by Marc Law and Mindy Marks. Law and Marks reply.
Mankiw vs. DeLong and Krugman on the CEA’s Real GDP Forecasts in Early 2009: David Cushman shows how a careful econometrician might have adjudicated the debate among these leading economists over the likelihood of a macroeconomic rebound.
Assorted links
*Libertarianism: What Everyone Needs to Know*
That is the new Jason Brennan book, which has yet to arrive on my doorstep.
For the pointer I thank David Levey.
Is the Indian left preparing its cave-in on FDI?
It seems there is still some fight left in them:
…leftwingers inside and outside the Congress party, including a few of Mr Singh’s allies in the multi-party coalition, oppose economic liberalisation and in some cases regard retail reform as a capitalist plot masterminded by Walmart.
“The tragedy is that our prime minister has begun to worship the US,” said Sitaram Yechury, leader of the opposition Communist Party of India – Marxist. “Congress wants Indians to be slaves and foreigners to be our masters. We will not accept FDI [foreign direct investment] in retail. We will protest this decision till our last breath.”
On the political right, BJP leaders – backed by small shopkeepers wary of retail competitors – sense an opportunity to destabilise the government before its term expires in 2014 and are not shy in pursuing that goal through short-term alliances with the hard left.
Developing…
Are the Republicans preparing their cave-in on taxes?
“This is a referendum on taxes,” said Rep. Tom Cole (R-Okla.), a senior member of the House Budget Committee. “If the president wins reelection, taxes are going up” for the nation’s wealthiest households, and “there’s not a lot we can do about that.”
Funny words from a party that might control Congress, or at least the House. Read the Constitution! Here is much more.
I’ve long maintained that Republican legislators do not hate high taxes, they only hate having to vote for high taxes. Come this December, they may pretend to voters that they are more or less powerless, while negotiating some concessions from Obama (and other Democrats) behind the scenes. A lot of them are probably relieved or happy that taxes can go up, and furthermore they can then complain about this the next time around.
Go ask Ramsay MacMullen
It used to seem shocking that five of the ten richest counties in the United States were part of the DC Metropolitan Statistical Area, but the 2011 American Community Survey numbers released yesterday show that the DC suburbs now account for seven of the ten richest counties in America.
Loudon, Fairfax, and Arlington in Virginia lead the way followed by Hunterdon County, NJ then Howard County in Maryland; Somerset, NJ; Prince William and Fauquier in Virginia; Douglas, CO; and Montgomery County, MD.
Here is more. File under “Makers vs. Takers.” Here is Will Wilkinson on making vs. taking.
Does work or school boost your vocabulary more?
From the new James R. Flynn book:
It appears that the world of work, which follows university, has been the main force behind the adult vocabulary gains of the last half-century…Note that in 1953, low-IQ people enhanced their vocabularies over the ages of 17 to 22 far more than low-IQ people did in 2000. I suggest the hypothesis that they were more likely to be settled in apprenticeships or adult jobs in those days than today. Even the high-IQ people increased their vocabularies more between the ages of 17 to 22 in 1953 than in 2000. Apparently being placed in work was more potent than being in a tertiary institution.
Isn’t it also the case that we have been moving to a flatter, simpler English for a long time? Try reading some James Fenimore Cooper. Plus schools are less likely to make you memorize long, classic poems, which is another good way of building vocabulary.
Assorted links
1. There is no great stagnation (video).
2. Update on the French economy (there is a great stagnation).
3. Interesting findings on poverty, mobility, and happiness.
4. Martin Wolf on the UK productivity and output puzzles.
Some life expectancies are shrinking
For generations of Americans, it was a given that children would live longer than their parents. But there is now mounting evidence that this enduring trend has reversed itself for the country’s least-educated whites, an increasingly troubled group whose life expectancy has fallen by four years since 1990.
And this:
The steepest declines were for white women without a high school diploma, who lost five years of life between 1990 and 2008, said S. Jay Olshansky, a public health professor at the University of Illinois at Chicago and the lead investigator on the study, published last month in Health Affairs. By 2008, life expectancy for black women without a high school diploma had surpassed that of white women of the same education level, the study found.
Here is more, scary throughout. We are not as healthy as we thought we were.
Can a Google autocomplete function be libelous?
…for Bettina Wulff it’s a nightmare. The wife of former German President Christian Wulff wants the search engine to cease suggesting terms that she finds defamatory. This has nothing to do with the search results, but rather with the recommendations made by Google’s “Autocomplete” function, a service that is also offered by competitors like Bing and Yahoo. All one has to do is type her first name and the first letter of her last name to get search suggestions such as “Bettina Wulff prostitute,” “Bettina Wulff escort” and “Bettina Wulff red-light district.”
Don’t forget the problem of cascades here:
The Autocomplete function, the usefulness of which Google so guilelessly praises as a means of giving one’s fingers a rest, undeniably helps spread rumors. Assuming that someone unsuspectingly begins to look for information on “Bettina Wulff” and is offered “prostitute,” “Hanover” and “dress” as additional search terms — where, independent of their actual interests, will users most likely click?
The new (and inaugural?) Chinese translation of Finnegans Wake
In volume one, it seems that only half the words of the original are kept. M.A. Orthofer reports:
Beijing University teacher Liu Yiqing is quoted:
“There is still something we can improve in the way the footnotes are presented,” she says. “While putting every possible meaning in Chinese into the text, it will break the integrity of the story. We should make it a story that is also interesting for college students to read and understand.”
Also via Orthofer, here is one measure of which is the most frequently liberated book.
Sentences to ponder
Real earnings for young college grads have fallen by over 15% since 2000, or by about $10,000 in 2011 dollars
Michael Mandel’s tweet is here, and link to the underlying material is here.
Don’t be misled by claims of a “high” or “rising” college premium, that is indeed true relative to high school (or less), but many of those wages are down even more. In absolute terms the return to college is not doing well.
Sir John Strachey’s *India: its Administration & Progress*
This is a fascinating and indeed highly readable book. The third edition dates from 1903 but it is based on some 1884 lectures. Here is one excerpt:
If the richer classes in China were deprived of Indian opium they would suffer as the richer classes in Europe would suffer if they were deprived of the choice vintages of Bordeaux and Burgundy, or as tobacco-smokers would suffer if not more cigars were to come from Cuba. In such a case, in our own country, the frequenters of public-houses would be conscious of no hardship, and the vast majority of the opium-smokers of China would be equally unconscious if they received no more opium from India [TC: China itself produced a lot of opium]. If, in deference to ignorant prejudice, India should be deprived of the revenue which she now obtains from opium, an act of folly and injustice would be perpetrated as gross as any that has ever been inflicted by a foreign Government on a subject country. India now possesses the rare fortune of obtaining from one of her most useful products a large revenue without the imposition of taxes on her own people…
Recommended, especially if you like to discover what people were really thinking at the time.