*Money Changes Everything*
The author is William N. Goetzmann, and the subtitle is How Finance Made Civilization Possible. This is a very good general history about the useful role finance has played through the ages.
I also have been enjoying Robert Teitelman’s Bloodsport: When Ruthless Dealmakers, Shrewd Ideologues, and Brawling Lawyers Toppled the Corporate Establishment, a general history of American corporate deal-making.
Temporary and on-call employment is up after all
There has been some back and forth on this topic over the last few years, but it now seems to be settled. Neil Irwin reports:
…new research…indicates the proportion of American workers who don’t have traditional jobs — who instead work as independent contractors, through temporary services or on-call — has soared in the last decade. They account for vastly more American workers than the likes of Uber alone.
Most remarkably, the number of Americans using these alternate work arrangements rose 9.4 million from 2005 to 2015. That was greater than the rise in overall employment, meaning there was a small net decline in the number of workers with conventional jobs.
…The labor economists Lawrence F. Katz of Harvard and Alan B. Krueger of Princeton found that the percentage of workers in “alternative work arrangements” — including working for temporary help agencies, as independent contractors, for contract firms or on-call — was 15.8 percent in the fall of 2015, up from 10.1 percent a decade earlier. (Only 0.5 percent of all workers did so through “online intermediaries,” and most of those appear to have been Uber drivers.)
And the shift away from conventional jobs and into these more distant employer-employee relationships accelerated in the last decade. By contrast, from 1995 to 2005, the proportion had edged up only slightly, to 10.1 percent from 9.3 percent. (The data are based on a person’s main job, so someone with a full-time position who does freelance work on the side would count as a conventional employee.)
Here is the full NYT coverage.
Thursday assorted links
1. Can an outsider become Amish?
2. Martin Gurri on Donald Trump.
3. Richard McKenzie defends tipping (pdf).
4. Princeton University Press will be publishing Bryan Caplan’s book on education.
5. Obamacare’s biggest success? Hospital readmission rates.
How out of bounds is the $15 California minimum wage?
By 2022, when fully phased in (small firms with fewer than 25 workers would have until 2023 to comply), the California minimum wage would represent 69 percent of the median hourly wage in the state, assuming 2.2 percent annual growth from the current median of roughly $19 per hour.
That 69 percent ratio would be all but unprecedented, in U.S. terms and internationally. The current California minimum wage represents about half the state’s median hourly wage, just as the federal minimum wage averaged 48 percent of the national median between 1960 and 1979, according to a 2014 Brookings Institution paper by economist Arindrajit Dube. (It is currently 38 percent of the national median.)
Other industrial democracies with statutory minimum wages typically set theirs at half the national median wage, too.
That is from Charles Lane. This is also worth noting:
Dube, generally a supporter of minimum wages, recommended that states use 50 percent of the median as their benchmark in the United States. (He told me by email that California’s experiment is worth running and monitoring.)
Yet Alan Krueger, among many others, is against it. On what grounds is it worth running?
Arrived in my pile
I get many, these are some of the ones which look the best:
1. George S. Yip and Bruce McKern, China’s Next Strategic Advantage: From Imitation to Innovation. Every book on this topic is worth reading, this one too.
2. George Hawley, Right-Wing Critics of American Conservatism. University Press of Kansas has been sending me more books lately, they are developing quite a nice line of publications.
3. Tom Vanderbilt, You May Also Like: Taste in an Age of Endless Choice.
4. Justin Schmidt, The Sting of the Wild: The Story of the Man Who Got Stung for Science. A popular science book on insect stings, so far it is quite good.
5. Salil Tripathi, The Colonel Who Would Not Repent: The Bangladesh War and its Unquiet Legacy.
6. Robert S. Levine, The Lives of Frederick Douglass, this one is excellent based on about thirty minutes of browsing.
Politically incorrect paper of the day, installment #6739
This one is about the power of the individual, the authors are Makan Amini, Mathias Ekström, Tore Ellingsen, Magnus Johannesson, and Fredrik Strömsten:
Failure to express minority views may distort the behavior of company boards, committees, juries, and other decision-making bodies. Devising a new experimental procedure to measure such conformity in a judgment task, we compare the degree of conformity in groups with varying gender composition. Overall, our experiments offer little evidence that gender composition affects expression of minority views. A robust finding is that a subject’s lack of ability predicts both a true propensity to accept others’ judgment (informational social influence) and a propensity to agree despite private doubt (normative social influence). Thus, as an antidote to conformity in our experiments, high individual ability seems more effective than group diversity.
The co-editor on the paper was John List, a paragon of both innovation and self-criticism, but perhaps we need to ask a diverse focus group instead…
For the pointer I thank the excellent Kevin Lewis.
Wednesday assorted links
1. Lester Thurow has passed away. And NYT coverage.
2. Profile of the earlier Krugman-Thurow debates.
3. “Rationally, said Mr. Irwin, “It’s too late to get upset about China.”” (NYT link here).
4. Where are we with Chinese banks and bad debt?
5. David Colander on nuance in teaching economics, and Mankiw responds.
Did NAFTA help the U.S. auto industry?
There are still more than 800,000 jobs in the American auto sector. And there is a good case to be made that without Nafta, there might not be much left of Detroit at all.
“Without the ability to move lower wage jobs to Mexico we would have lost the whole industry,” said Gordon Hanson of the University of California, San Diego, who has been studying the impact of Nafta on industries and workers since its inception more than two decades ago.
Even in the narrowest sense — to protect jobs in car assembly plants — a wall of tariffs against America’s southern neighbor would probably do more harm than good.
And this:
The Honda CR-V assembled in El Salto, Jalisco, for example, uses an American-made motor and transmission. Roughly 70 percent of its content is either American or Canadian, according to government statistics.
This regional integration gave the United States-based auto industry a competitive edge that was critical to its survival. “There was a concern 20 years ago that an auto industry production chain would develop across Asia, including China and Taiwan and Southeast Asia,” Professor Hanson said. “Maybe Nafta saved us from that.”
That is from Eduardo Porter at the NYT.
How much do state-level business conditions matter?
Georgeanne M. Artz, Kevin D. Duncan, Arthur P. Hall and Peter F. Orazem have a new paper on that topic. The answer seems to be that state-level business conditions do not matter so much, at least not in their currently measurable forms:
This study submits 11 business climate indexes to tests of their ability to predict relative economic performance on either side of state borders. Our results show that most business climate indexes have no ability to predict relative economic growth regardless of how growth is measured. Some are negatively correlated with relative growth. Many are better at reporting past growth than at predicting the future. In the end, the most predictive business climate index is the Grant Thornton Index which was discontinued in 1989.
While I don’t think this is the final word on the topic, the burden of proof clearly lies on the side which claims they do matter a good deal.
My favorite things Nebraska
If it is the most obscure state, I thought it worth a ponder and profile of what they have produced. And the answers are surprisingly strong:
1. Author: I’ll take Willa Cather over Raymond Chandler, but neither puts the state to shame. I don’t care for Nicholas Sparks’s writings, but he makes the list. Malcolm X wrote one of the great memoirs of American history.
2. Actors and actresses: There is Brando, Harold Lloyd, Hilary Swank, Henry Fonda, Montgomery Clift, and James Coburn. What a strong category.
3. Dancer and singer: Fred Astaire, try this from Swing Time. For his underrated singing, try “Cheek to Cheek.”
4. Music: I can think only of Elliott Smith, am I missing anything?
5. TV personalities: Johnny Carson and Dick Cavett. Did you know that Carson learned Swahili on-line after his retirement and became fluent in the language?
6. Painter: Edward Ruscha.
7. Album, set in: Bruce Springsteen’s Nebraska, favorite song “Open All Night.”
8. Movie, set in: Election. I feel there are others too, Nebraska for one but presumably a fair number of Westerns too.
9. Investor: Duh.
10. Economist: Lawrence Klein was born in Omaha, although I cannot say his is my favored approach. How about Edith Abbott?
11. Other: I cannot count L. Ron Hubbard as a positive. I believe I have neglected some native Americans born in Nebraska, maybe some cowboys too. I don’t have favorite cowboys.
The bottom line: People, this state should not be so obscure!
Brexit markets in everything
Ukip-backed Brexit campaign employs EU migrants to rally support
Leave.EU employs four phone bank staff from EU countries including Slovakia. Their job is to rally voters across the UK to back Brexit. The appointments come despite Leave.EU claiming that “as the world’s fifth biggest economy, the UK is well placed to supply its own labour”.
How many stadiums for the Twin Cities?
The Twin Cities of Minneapolis and St. Paul have been an epicenter of the U.S. stadium-and-arena boom, rolling out five major sports facilities since 1990 that together cost more than $2 billion.
Now, the neighboring cities are readying for a sixth: a 20,000-seat, $150 million Major League Soccer stadium to be built by 2018 in St. Paul about halfway between the two downtowns.
The St. Paul City Council earlier this month approved $18 million in spending on infrastructure for the stadium, which is meant to spur neighboring real-estate development. The stadium, which is otherwise to be constructed with private dollars, also would be exempt from property taxes.
…The Twin Cities have been particularly zealous. Locals attribute that in part to the unusual political dynamics of having two cities adjacent to one another—with their downtowns just 12 miles apart—and a layering of other different governmental bodies that have given public aid.
Here is the Eliot Brown WSJ story, via Alex Xenopoulos.
Tuesday assorted links
1. The Arab roots of Sicilian food.
3. Testing Jane Jacobs for Italy.
4. I say worry about what has destroyed past civilizations. That is usually warfare, conquest, and environmental problems.
Labor Market Rigidity and the Disaffection of European Muslim Youth
In Belgium high unemployment and crime-ridden Muslim ghettos have fomented radicalism but as Jeff Jacoby writes:
Muslims in the United States…have had no problem acclimating to mainstream norms. In a detailed 2011 survey, the Pew Research Center found that Muslim Americans are “highly assimilated into American society and . . . largely content with their lives.” More than 80 percent of US Muslims expressed satisfaction with life in America, and 63 percent said they felt no conflict “between being a devout Muslim and living in a modern society.” The rates at which they participate in various everyday American activities — from following local sports teams to watching entertainment TV — are similar to those of the American public generally. Half of all Muslim immigrants display the US flag at home, in the office, or on their car.
Jacoby, however, doesn’t explain why these differences exist. One reason is the greater flexibility of American labor markets compared to those in Europe.
Institutions that make it more difficult to hire and fire workers or adjust wages can increase unemployment and reduce employment, especially among immigrant youth. Firms will be less willing to hire if it is very costly to fire. As Tyler and I put it in Modern Principles, How many people will want to go on a date if every date requires a marriage? The hiring hurdle is especially burdensome for immigrants given the additional real or perceived uncertainty from hiring immigrants. One of the few ways that immigrants can compete in these situations is by offering to work for lower wages. But if that route is blocked by minimum wages or requirements that every worker receive significant non-wage benefits then unemployment and non-employment among immigrants will be high generating disaffection, especially among the young.
Huber, for example, (see also Angrist and Kugler) finds:
Countries with more centralized wage bargaining, stricter product market regulation and countries with a higher union density, have worse labour market outcomes for their immigrants relative to natives even after controlling for compositional effects.
The problem of labor market rigidity is especially acute in Belgium where the differences between native and immigrant unemployment, employment and wages are among the highest in the OECD. Language difficulties and skills are one reason but labor market rigidity is another, as this OECD report makes clear:
Belgian labour market settings are generally unfavourable to the employment outcomes of low-skilled workers. Reduced employment rates stem from high labour costs, which deter demand for low-productivity workers…Furthermore, labour market segmentation and rigidity weigh on the wages and progression prospects of outsiders. With immigrants over-represented among low-wage, vulnerable workers, labour market settings likely hurt the foreign-born disproportionately.
…Minimum wages can create a barrier to employment of low-skilled immigrants, especially for youth. As a proportion of the median wage, the Belgian statutory minimum wage is on the high side in international comparison and sectoral agreements generally provide for even higher minima. This helps to prevent in-work poverty…but risks pricing low-skilled workers out of the labour market (Neumark and Wascher, 2006). Groups with further real or perceived productivity handicaps, such as youth or immigrants, will be among the most affected.
In 2012, the overall unemployment rate in Belgium was 7.6% (15-64 age group), rising to 19.8% for those in the labour force aged under 25, and, among these, reaching 29.3% and 27.9% for immigrants and their native-born offspring, respectively.
Immigration can benefit both immigrants and natives but achieving those benefits requires the appropriate institutions especially open and flexible labor markets.
Solitary confinement often isn’t solitary
…over 80 percent of the 10,747 federal prisoners in solitary have a cellmate.
In many places, prisons have turned to double celling to cope with overcrowding. “If you can come up with a better way to do this, understanding the fact that we are 162 percent of capacity without double celling, I’m willing to listen to you,” an Illinois Corrections Department spokesman told reporters and mental health advocates in 1994, when the state faced criticism for doubling up the mental health units at Menard. Illinois is under particular pressure as one of the most over-stuffed prison systems in the country.
“We’ve done this utterly bizarre thing, which is to put two people in cells that were built for one and leave them both in there for 23 or more hours a day,” says Craig Haney, a psychologist who has studied solitary for more than 30 years.
That is from Christie Thompson, via The Browser.