Results for “age of em” 17236 found
Those new service sector jobs average is over spelling bee tutor edition
In the world of competitive spellers, Sylvie Lamontagne is known as a juggernaut. She placed fourth in last year’s Scripps National Spelling Bee, and ninth in 2015. Last summer, she traveled to California and won the Spelling Bee of China’s North America Spelling Champion Challenge, a contest for kids in the United States and China.
Now that the 14-year-old from Denver is no longer eligible to compete in this week’s National Spelling Bee at the Gaylord National Resort and Convention Center in Maryland — which is televised on ESPN and often turns kids like Sylvie into momentary celebrities — she’s focusing on a new vocation: spelling bee coach.
Sylvie’s rate? $200 an hour.
Hiring coaches isn’t new. But bee aficionados say a recent surge in competition, and a tightening of rules meant to limit co-champions, has spawned a demand for younger coaches such as Sylvie: high-schoolers or college kids, months or just a few years into their bee retirement, who can pass along fresh intelligence on words to memorize and how to decode bizarre words based on their language of origin.
That is from Ian Shapira at WaPo.
Companies by revenue per employee
I was surprised by some of this:
We found that Energy companies have the highest average Revenue per Employee, while Industrials and Consumer Discretionaries perform worst on this metric.
Technology companies performed at the lower end of the range on Revenue per Employee; part of the reason for this however, is other companies in spaces like Energy and Healthcare have large non-employee costs that Technology companies do not have.
…AmerisourceBergen, a pharmaceutical distributor, tops the list, generating more than $7.9M per employee in 2016. With a reported team of 19,000, which is less than half the workforce of Cardinal Health (37,300) and McKesson (68,000), the company compares favorably to its peers on revenue per employee. Cardinal Health and McKesson‘s RPE were $3.3M and $2.8M, respectively. Overall, Healthcare companies score well on revenue per employee, though they have other huge costs (the costs of administering drugs and health services).
As for the lowest revenue per employee:
It is perhaps unsurprising that Restaurant and Hotel chains make up the majority of the list. What is more striking is that IT providers Cognizant and Accenture have among the lowest revenue per employee in the Index.
There are several useful tables at the link. I do not think this is making any adjustment for independent contractors.
For the pointer I thank the estimable Chug.
Is non-supervisory wage growth slowing?
That is nominal rates of change, and that is from Pedro Nicolaci da Costa.
“If only there were a vast empirical literature…”
Paul Krugman blogged on that, with initial impetus from Noah Smith. Here is Noah:
If you and your buddies have a political argument, a vast literature can help you defend your argument even if it’s filled with vague theory, sloppy bad empirics, arguments from authority, and other crap. If someone smart comes along and tries to tell you you’re wrong about something, just demand huffily that she go read the vast literature before she presumes to get involved in the debate. Chances are she’ll just quit the argument and go home, unwilling to pay the effort cost of wading through dozens of crappy papers. And if she persists in the argument without reading the vast literature, you can just denounce her as uninformed and willfully ignorant. Even if she does decide to pay the cost and read the crappy vast literature, you have extra time to make your arguments while she’s so occupied. And you can also bog her down in arguments over the minute details of this or that crappy paper while you continue to advance your overall thesis to the masses.
…My solution to this problem is what I call the Two Paper Rule. If you want me to read the vast literature, cite me two papers that are exemplars and paragons of that literature. Foundational papers, key recent innovations – whatever you like (but no review papers or summaries). Just two. I will read them.
If these two papers are full of mistakes and bad reasoning, I will feel free to skip the rest of the vast literature. Because if that’s the best you can do, I’ve seen enough.
Those are both interesting posts, but my perspective is different, probably more as a matter of temperament than thinking they are objectively wrong. Here are a few comments:
1. The best two papers on ethics are not very convincing. Nonetheless people who have worked their way through a good amount of that literature are much better at ethical reasoning than those who have not.
2. The best two papers on global warming are not very convincing. What is convincing is how many different perspectives and how many different branches of science point toward broadly similar conclusions. In fact the aggregate effect here is quite overwhelming (don’t debate gw in the comments, not today; I’ll delete). It is a question of many moats, not all of them being entirely muddy.
3. I see the Smith-Krugman standard as fairly economistic, and fairly MIT-late 20th century at that. It is one vision of what a good literature looks like, and a fairly narrow one. It will elevate simple answers in status, whether or not that is deserved. It discriminates against dialogic knowledge, book-based knowledge, historical knowledge, and knowledge when the answers and methods are not very exact. There is the risk of ending up too certain about one’s knowledge.
That all said, I do understand that specialized top researchers, including Nobel Laureates, often may do better holding relatively narrow methodological visions. Look at all the Nobel Prizes that have been awarded to Chicago. It might be entirely correct to insist that Becker’s treatise on the family pay more attention to anthropology, but that doesn’t mean he should have followed that advicee.
4. The standard seems to discourage reading, and I would not want to teach it to my students. I teach something more like “always read more, unless you are writing or doing relevant quantitative work. And one reason you write is to improve the quality of your reading. Read more and write more, all the time.” I still think that is better advice for most (not all) people.
5. Isn’t there a lot to be said for deferring to the opinions of those who have read through the “muddy moat”? By no means are they all partisans, and the non-partisan ones care most of all about the truth. After all, they did all that reading! Defer, rather than trust so much in your ability to pick you the right two papers, or have someone pick them out for you. I have a much more positive view of survey articles than does Noah, while understanding they do often leave you fairly agnostic on major issues.
6. If the truth of the matter is in fact muddy, you may need to dip into the muddy moat to learn that.
7. The difference between total value and marginal value may be relevant. You might conclude a field literature has low total value, but the marginal value of learning more about that area still could be quite high. That is in part because muddy fields and results don’t spread so readily, and so dipping into the muck can yield some revelations. That is another reason why I would not offer the “two paper standard” as practical advice.
8. If anything, I would put the reading pressure on the other side, namely more rather than less. Rather than encouraging readers to dismiss or downgrade fields, I would urge them to consult different disciplines altogether, including political science, sociology, and anthropology, others too. This is much easier to do if you take a more positive attitude toward survey articles.
9. This is quite a subjective impression, but I worry that the dogmatic will use the two paper standard to dismiss or downgrade particular lines of investigation.
10. I don’t know if Noah and Paul were referring to my colleague Garett Jones, who frequently tweets “…if only there were a vast empirical literature” when he sees claims that he regards as empirically false. Now, I am not the Garett Jones oracle, but I always took his use of the word “vast” to be slightly sarcastic. Usually these are cases where even a fairly cursory knowledge of the literature in question would indicate something is wrong with the claim at hand. In my view, Garett is not demanding “vastness” of effort, rather he is criticizing those who don’t grasp what the effort space looks like in the first place.
Should a state government decide marginal increments of health care?
That is one of the debates swirling around the resuscitated Republican health care plan (NYT summary), which now seems to have some chance of passing. Sarah Kliff writes:
The Republican solution to sick people who need health insurance in a post-Obamacare world is increasingly coming to center on three words: high-risk pools.
The White House has reportedly secured the support of Rep. Fred Upton (R-MI), a longtime legislator, by promising an additional $8 billion to fund these programs. That would mean the Republican plan has nearly $115 billion that states could use, if they wanted to, for high-risk pools.
…There were 35 state high-risk pools before the Affordable Care Act passed. To control costs, they would often do things like charge higher premiums than the individual market. Most had waiting periods before they would pay claims on members’ preexisting conditions, meaning a cancer patient would need to pay premiums for six months or a year before the high-risk pool would cover her chemotherapy treatments.
Kliff then notes those pools have proved quite expensive. And:
The Republican bill doesn’t require states to build high-risk pools — it just gives them the option. And it has little to say about how states should build them if they decide to do so. It is possible they would also have lifetime limits and preexisting condition waiting periods. Those details are hugely important, but are unlikely to get sorted out until after the bill passes and the Trump administration begins to write regulations.
I don’t favor ACHA, which I see as bringing no benefit and also as involving a cynical desire to repeal Obamacare simply to fulfill a campaign promise (and it needs a CBO score). Still, I see many people fulminating about this change toward high risk pools, yet without defending their position much beyond a hand wave. Should all requests for emergency medical care receive additional government funding? Obamacare itself does not embody anything remotely like that principle, for instance consider all the medical conditions not covered under the mandate, or covered only imperfectly. Not to mention the rare diseases that receive only limited R&D dollars. And we’re about to run out of yellow fever vaccine — nasty! The list goes on and on. How are those pandemic preparations coming?
If the federal government is asked to pick up the tab for high-risk pools or some rough equivalent, it probably visualizes the cost in terms of either additional borrowing or as a common pool problem. It is close to a free lunch in political terms, arguably even a political benefit, now that Obamacare is more popular.
If balanced-budget state governments are asked to pick up the tab, they will wonder whether that money should better be spent on schools, roads, and prisons. Many of them will be reluctant. Maybe that is right or wrong, but is “let’s have a democratically elected state government decide how much to subsidize medical care for those with preexisting conditions” such a morally outrageous view? I guess it is these days. The simple but underemphasized truth is that under the new bill state governments can spend as much as they want on high-risk pools.
(Is it not sobering to think that if the high-risk patients are put into a separate pool, and have to ask for state-level but taxpayer-sourced money in a direct and transparent manner, the political support for that funding is not so strong? That is perhaps the real lesson here. In this debate, both sides are the enemies of transparency.)
Which is the better perspective? Federal or local? The answer is obvious if you believe all requests for emergency medical care should receive additional government funding. But, as I’ve mentioned, no one believes that. I do see people who cite that principle when it is convenient in one part of a debate, and who forget about the same principle for other policy choices.
And please, don’t compare these marginal health care expenditures to “tax cuts for the rich” — instead advocate for where you most want to see the money spent! Don’t let the silly Republicans bail out your analytical apparatus once again; any program is easy to justify in your own mind if you put it up against what you consider to be a very weak alternative use of the funds. It is fine to say “bigger subsidies for high-risk pools are better than tax cuts for the rich, but they are still only my 17th most preferred use for the funds.”
Along related lines, while I favor taking in many more refugees, I also understand that any feasible migration policy involves leaving many refugees and potential migrants to their possible deaths, and with a relatively high probability in some cases. So if your moral argument is “we should let in person x, or person x will die,” you need to provide a limiting principle once again.
Most generally, beware of moral arguments that a) lower the status of some other group of people, and b) do not state and justify their limiting principles. They are ways of substituting in pleasurable moralizing in lieu of dealing with the really tough questions.
Addendum: Here are some new and relevant results cited by David Leonhardt, I haven’t had time yet to read through them.
How much of educational political polarization is due to feminization?
The shrinking of the middle is largely due to a recent rise in the share of women (who also represent a majority of college students) who identify as either liberal or far left. The share of female respondents, but not male respondents, who describe their political views this way was at an all-time high (41.1 percent for women, 28.9 percent for men). Left-wing views peaked for men way back in 1971, at 43.6 percent.
That is from the always interesting Catherine Rampell. The “political gender gap” across men and women, in these numbers, never has been higher, see the link for a picture and details but by one measure it is 12.2 percentage points.
Given the distribution of the “political correctness movement” across majors, how much it is simply the result of the increased feminization of education itself?
Good endorsements for the forthcoming Peter Leeson book
I hope Peter remains my colleague for a long time to come:
COMING FALL 2017
“This book has a surprise—not to mention a puckish joke—on every page. It’s strange, it’s fascinating, and it’s one of the most original books I’ve ever read.”
—Tim Harford, author of The Undercover Economist“The most interesting book I have read in years! Peter Leeson displays his unique talent: unearthing mankind’s seemingly craziest behaviors, and then showing that these behaviors, against all odds, ultimately make perfect sense. WTF?! is like Freakonomics on steroids.”
—Steven D. Levitt, co-author of Freakonomics“A fascinating tour of the world’s strangest customs and behaviors, led by a brilliant, funny, and eccentric tour guide. It’s okay to gawk, he says, but it’s even better to empathize and, armed with Leeson’s insights, there’s no reason why we can’t do both.”
—Steven E. Landsburg, author of The Armchair Economist“Your initial reaction might be ‘WTF!?’ How can medieval trials by ordeal, wife sales, and divine curses all boil down to rational economic behavior? But Leeson will lead you deftly through the logic and history behind these seemingly senseless rituals. Keep an open mind and this book will surprise, teach, and entertain!”
—Andrei Shleifer, Harvard University
Here is the link. Here is the Amazon link, you can request to be emailed when it becomes available. I thank Peter Boettke for the pointer, and I look forward to reading the book.
Las Vegas average is over no arbitrage condition
Now operators have started scrutinizing complimentary drinks, introducing new technology at bars that track how much someone has gambled—and rewards them accordingly with alcohol. It’s a shift from decades of more-informal interplay between bartenders and gamblers.
Sports books have capitalized on big events, too. During March Madness, a five-person booth at the Harrah’s Las Vegas sports book cost $375 per person, which included five Miller Lite or Coors Light beers a person. In the past, seating at most sports books was free and first-come, first-served, even during big events. Placing a small bet or two could get you free drinks.
“The number-crunchers, the bean-counters have ruined Las Vegas,” said Brad Johnson, who lives in North Carolina and has come to Las Vegas almost every year since the early 1970s. “There’s no value to it; there’s no benefit.”
Casinos on the Strip now derive a smaller share of revenue from gambling. In 1996, more than half of annual casino revenue on the Strip came from gambling. Last year, the share was down to about a third, according to the University of Nevada-Las Vegas. More of the revenue comes from hotels, restaurants and bars.
That is from Chris Kirkham at the WSJ, via Annie Lowrey.
Problems with destination-based corporate taxes and the Ryan blueprint
That is a recent paper by Reuven S. Avi-Yonah and Kimberly Clausing. It has content throughout, but this struck me as the most interesting section:
1. A U.S. pharmaceutical with foreign subsidiaries could develop its intellectual property in the United States (claiming deductions for wages, overhead and R&D), and then sell (i.e., export) the foreign rights to its Irish subsidiary (at the highest price possible). The proceeds would not be taxable. Ireland would allow that subsidiary to amortize its purchase price. This creates tax benefits in each jurisdiction by reason of the different regimes. If the Irish subsidiary manufactures drugs, the profits could be distributed up to the U.S. parent tax-free under a territorial system. If the Irish subsidiary is in danger of becoming profitable for Irish tax purposes, the U.S. parent would just sell it more IP.
2. If an Irish parent owns a U.S. subsidiary, the Irish parent can issue debt to fund the purchases of the IP. The U.S. subsidiary then invests the cash to generate more IP (expensing all equipment and deducting all salaries) and sells the IP to its parent.
3. If an Irish parent has purchased the U.S. IP rights, it would not want to license the rights to the U.S. subsidiary (income for Irish parent under Irish tax law and no deduction for U.S. subsidiary). So it just contributes the rights to another U.S. subsidiary. Could the U.S. subsidiary amortize the parent’s basis under the Blueprint? When one U.S. subsidiary licenses to another, no net tax would be paid. Any royalties would be taxable to the licensor but deductible for the payor.
4. How does the Blueprint work for services? If a U.S. hedge fund manager provides services to an offshore hedge fund, is that considered an export that is tax exempt? What if the U.S. manager develops a trading algorithm and sells it (or licenses) it to an offshore hedge fund? Are the proceeds and royalties exempt? If so, then the hedge fund becomes a giant tax shelter to the manager, because he would not pay 25% on this income–he would pay zero, with no further tax. This is much better than the current carried interest provision, which has attracted bipartisan condemnation because it enables individuals with income of many millions to pay a reduced rate. The Blueprint result is much worse.
Demovote 101, the future polity that is Danish?
What are we doing
We are devising a way to hack direct democracy into representative without changing the rules by building two things: 1) A web-based platform for Danish citizens to vote on all legislature put forth in parliament. 2) A political party to vote according to the general vote on the platform.
Why are we doing it
We believe that the current representative democracy holds a faulty incentive structure for politicians making it inefficient. We follow politics closely and see a need for reform. Giving back decision making powers to the public makes it impossible to block legislation that citizens want and pass legislation that they do not. By taking agency out of the equations, everyone shares a common goal.
Here is the link. Wouldn’t it be funny if this party did not win every election?
Empiricism and humility
Here is a Noah Smith post on those topics, and here is Adam Ozimek, both responding to Russ Roberts. Rather than adjudicate the varying points of view here, I will stress some points of my own:
1. The political process does not select for humble versions of empiricism. Those end up with virtually no political influence, whereas some of the more dogmatic form of empiricism may find some traction.
2. A lot of the bias in empirical methods comes simply from which questions are asked/answered. Post Trump and De Vos, I see plenty of commentators and researchers reporting “vouchers don’t raise test scores” and virtually no “vouchers increase parental satisfaction.” Is that empiricism? In isolation, maybe. In terms of reflecting the broader spirit of science, not so much. It is also not humility.
3. I also see bias in terms of framing and contextualizing. One empirical result is “over a short time horizon, a $15 minimum wage in Seattle hasn’t destroyed many jobs.” Another empirical result is “rises in the prices of inputs virtually always lower input demand, with larger effects over longer time horizons.” There is also “non-pecuniary factors of jobs adjust downward, in response to wage minimums, thereby removing the benefits for the workers from the wage hike.” One side claims the mantle of empiricism with #1, the other side claims the mantle of empiricism with #2 and #3. Overall the course of that debate does make me more skeptical about “empiricism as we find it,” though not about proper empiricism. And note that the scholarly division of labor does in fact give any particular individual a sufficient excuse not to be doing the task of overall synthesis.
4. I find a very common pattern among both researchers and commentators. They first form broadly empirical judgments about social systems, based on overall views of history, current politics (too much), and some of their relatively general empirical judgments, such as whether elasticities are large or small, or the relative crookedness of politicians vs. businesspeople, or the relative competence of voters, and so on. Those are empirical judgments, though usually in non-formal, non-directly testable ways, and also inter-smushed with ethical judgments, for better or worse.
They then view very particular empirical debates through the broader lenses they have chosen. For instance, views on politics used to correlate with views on the interest elasticity of money demand. Today views on politics correlate with views on minimum wage elasticity, and so on.
It’s the kind of empiricism outlined in the first paragraph of #4 that has the greater predictive value for beliefs. Furthermore it is sometimes (not always) the more important form of empiricism for settling many questions of policy.
5. I am sympathetic with the view that the broader empiricism outlined at the top of #4 is overused. Yet many of the critics of that broad approach simply wish to protect the presuppositions of the academic status quo from being disrupted by the possibility of other broad paradigms. In other words, I worry that criticizing “ideology” is too often a means of cementing in the dominant ideology in academia (and journalism), rather than an actual critique of ideology.
6. Most generally, humility is always scarcer than one might think. Perhaps that should be one of Cowen’s Laws.
General complaints about economic inequality do not seem to spur action
This article presents a national measure of Americans’ level of concern about economic inequality from 1966 to 2015, and analyzes the relationship between this construct and public support for government intervention in the economy. Current research argues that concerns about economic inequality are associated with a desire for increased government action, but this relationship has only been formally tested using cross-sectional analyses. I first use a form of dynamic factor analysis to develop a measure of national concern over time. Using an error correction model I then show that an increase in national concern about economic inequality does not lead to a subsequent increase in support for government intervention in the economy. Instead there is some evidence that, once confounding factors are accounted for, an increase in concern could lead to reduced support for government intervention.
That is from a new paper by Graham Wright, via the excellent Rolf Degen. I think of one possible mechanism for this result in these terms. As one group of commentators repeats the message: “Group X doesn’t have enough,” or “Group X is being ripped off,” in fact many voters process the message as “Group X is actually a low status group.” And so they do not end up supporting more redistribution to Group X.
“Be careful how complain” is one of the overarching points here, and it is a point which is not heeded so very often.
*How Emotions are Made*
That is the new book by Lisa Feldman Barrett, and the subtitle is The Secret Life of the Brain. I am not well-informed in this area, but here were some of my takeaways:
1. The previous dominant view of emotions, sometimes associated with Paul Ekman, suggests that emotions are a natural and pre-programmed response to changes in the environmental. Imagine a wolf snarling if a potentially hostile animal crosses its path.
2. According to Barrett, the expressions of human emotions are better understood as being socially constructed and filtered through cultural influences: “”Are you saying that in a frustrating, humiliating situation, not everyone will get angry so that their blood boils and their palms sweat and their cheeks flush?” And my answer is yes, that is exactly what I am saying.” (p.15) In reality, you are as an individual an active constructor of your emotions. Imagine winning a big sporting event, and not being sure whether to laugh, cry, scream, jump for joy, pump your fist, or all of the above. No one of these is the “natural response.”
3. Immigrants eventually acculturate emotionally into their new societies, or at least one hopes: “Our colleague Yulia Chentsova Dutton from Russia says that her cheeks ached for an entire year after moving to the United States because she never smiled so much.” (p.149)
3b. There is also this: “My neighbor Paul Harris, a transplanted emotion researcher from England, has observed how American academics are always excited by scientific puzzles — a high arousal, pleasant feeling — but never curious, perplexed, or confused, which are low arousal and fairly neutral experiences that are more familiar to him.” (p.149)
3c. It can be very hard to read the emotions on faces across cultures, and Barrett is opposed to what she calls “emotional essentialism.”
3d. From her NYT piece: “My lab analyzed over 200 published studies, covering nearly 22,000 test subjects, and found no consistent and specific fingerprints in the body for any emotion. Instead, the body acts in diverse ways that are tied to the situation.”
4. One reason for my interest in this work is that it potentially provides microfoundations for thinking about how “culture” matters for economic and other social outcomes. It also helps explain the importance of peers for education, and for that matter for religious experience, in the same outlined by William James. It may help explain Jonathan Haidt-related research results about disgust. It also provides potential microfoundations for explaining how individuals with different cognitive profiles (autism, Williams and Rett, Down syndrome, etc.), will, for related reasons, process some emotions differently too, although Barrett does not explore this route.
5. The concepts of a “control network” and an “introceptive network” are explained and presented as critical for controlling emotions, and in terms of the broader theory the mind is fundamentally about prediction. From my outsider point of view, the emphasis on prediction seems a little too strong. For instance, there may also be a need to make ourselves predictable to others, even if that lowers out own ability to predict.
6. “Affect is not just necessary for wisdom; it’s also irrevocably woven into the fabric of every decision.” And she refers repeatedly to: “…your inner, loudmouthed, mostly deaf scientist who views the world through affect-colored glasses.”
7. I found the chapter on animals the most problematic for the broader thesis. It seems to me that the Ekman view really does handle the snarling wolf pretty well and that is a case of emotional essentialism. Barrett tries to outline how humans are different from other mammals in this regard, but I came away thinking the truth might be a mix of her view and the Ekman view. It seems to me that some version of emotional essentialism provides an overarching constraint on the social construction of emotions, and furthermore there might be some regulating process at a higher level, mixing in varying proportions of essentialist and social construction features of emotional responses.
My apologies for any errors or misunderstandings in this presentation!
I can say this book is very well-written, it covers material not found in other popular science books, and it comes strongly recommended by Daniel Gilbert. I asked a friend of mine who researches directly in this area, and she reports that Barrett’s view is in fact taken seriously by other researchers, it has been very influential, and it is has been gaining in popularity. Make of that what you will.
Here is a very useful interview with the author. Here is her Northeastern home page. I recall reading somewhere that she is a big fan of chocolate, but can no longer find that link. Should I laugh, cry, or shrug my shoulders in response to that failure?
I thank Benjamin Lyons for the pointer to this work.
India is a much more Entrepreneurial Society than the United States (and that’s a problem)
India is a much more entrepreneurial society than the United States. That may seem surprising since India is poor and we typically associate entrepreneurship with being rich but it’s clearly true. Everyone here is on the make and open to an opportunity. You need to hire someone to fix your wifi or repair a bicycle or make a movie? You can find someone within hours. “Yes, we can do that” is the default answer to any question. Of course, it may have to be done illegally but, subject to that, it can be done. The can do attitude is especially prevalent in Mumbai but it’s true elsewhere in India as well.
Indians are entrepreneurial because they work for themselves. Overall, 95% 80-90% of Indians are self employed compared to just 10% of workers in the United States.* That is perhaps one reason why the National Academy of Science report on immigration found that “Indian immigrants are the most entrepreneurial of any group including natives.”
However, when we reverse the employment statistic–only ~15% of Indians work for a firm compared to approximately 90% of US workers we see the problem. Entrepreneurship in India isn’t a choice, it’s a requirement. Indian entrepreneurship is a consequence of India’s failed economy. As a I wrote in my Cato paper with Goldschlag, less developed countries in general, not just India, have more entrepreneurs,
If we define entrepreneurship as self-employment then there is much more entrepreneurship in poorer countries. People in poorer countries have to be entrepreneurs because there are relatively few jobs, that is to say few employers of large numbers of workers. Moreover, although not all self-employed workers have the skills or temperament for entrepreneurship, the identification of entrepreneurship with self-employment is not a definitional sleight-of-hand. Travelers to less developed economies often are surprised at how much more market oriented, dynamic and entrepreneurial these economies appear to the naked eye. Indeed, tourists are more likely to visit an actual market in a developing economy than they are at home. The visceral hustle and bustle of the town market is a display of real entrepreneurship. The greater familiarity that people in developing countries have with entrepreneurship is likely one reason why immigrants to the US are more than twice as likely to start new firms as are natives (Fairlie 2013).
The problem with developing countries is not that they lack entrepreneurs but that entrepreneurs cannot grow their firms large enough to become major employers.
The modal size of an Indian firm is 1 employee and the mean is just over 2. The mean number of employees in a US firm is closer to 20 but even though that is ten times the Indian number it obscures the real difference. The US has many small firms but what makes it different is that it also has large firms that employ lots of people. In fact, over half of all US workers are employed by the tiny minority (0.3%) of firms with over 500 employees.
Most workers in the United States work for large firms. In India, however, large firms are negligible as far as employment is concerned and that is a huge problem because large firms are more productive. India’s pre and post-colonial history all put barriers in the way of large firms that only recently have begun to fall. In Can Indian Grow?, Anantha Nageswaran and Gulzar Natarajan’s admirably clear and useful summary of the Indian economy, they summarizes some of the key issues:
Before independence, India’s colonial rulers snuffed out enterprise by exporting India’s raw materials to nurture businesses in their own countries. The capacity to create and nurture big businesses in the private sector in sufficient numbers has never been achieved since the state occupied the commanding heights of the Indian economy in the first three decades after independence. Moreover, the post-independence legal and regulatory framework favored small businesses: the production of certain items was reserved for small-scale industries, and labor protection was emphasized rather than efficiency and scale. Because of India’s experience of being ruled by a foreign trading company, a suspicion of big businesses still lingers.
As a result, small firms in India don’t grow:
Most Indian firms start in the informal sector and never grow or, worse, diminish in size over time: according to a 2013 International Finance Corporation study comparing the size of thirty-five year-old firms in India, Mexico, and the United States with their size at start-up, in India the size had declined by a fourth, in Mexico the size had doubled, and in the United States the firms were ten times as large. That is deeply troubling. As firms age, they are expected to get larger and to employ more people. Since India’s experience is orthogonal to this expectation, something in the Indian business ecosystem is badly broken.
Entrepreneurship, like other factors of production, can be misallocated. India has great entrepreneurs but their hard work, creativity, and risk taking is being wasted building tiny, stunted firms.
* The figure for 95% self-employed seemed high. I checked with the authors and after tracking down the figure they found a slight error. The 95% refers to workers in the informal sector. Most firms in the informal and formal sector are small, however, so the corrected figure is that about 80-90% of Indians are self-employed.
Akshardham Temple
Akshardham Temple in New Delhi, India, is the world’s largest Hindu temple. It’s constructed according to ancient Hindu architectural principles from pink sandstone and marble with no steel or concrete. Approaching the temple it rises to the sky like something out of the Game of Thrones.
Although hardly unknown, tourist guides typically don’t give it pride of place because it isn’t old, having opened in 2005 after just five years (!) of construction. My view, however, is that in 500 years people will flock to this site and marvel at how it was made without use of any robots. So why wait when you can see it now while it is still fresh. The Taj Mahal was new once, but that shouldn’t have deterred people from seeing it at the time.
[To make time, skip the Red Fort in Delhi as Agra Fort next to the Taj is similar to the Red Fort but better.]
The temple features beautiful carvings from thousands of artists but unfortunately, photography is not allowed. (The pictures I found were online). The elephants shown below are modelled on similar designs but at much smaller scale at ancient Hindu temples.
The site is easy to get to and there is no entrance fee. A small fee covers an Imax movie and a boat ride featuring Hindu history.
Akshardam was built by the Hindu organization BAPS:
Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha (BAPS) is a socio-spiritual Hindu organization with its roots in the Vedas. It was revealed by Bhagwan Swaminarayan (1781-1830) in the late 18th century and established in 1907 by Shastriji Maharaj (1865-1951). Founded on the pillars of practical spirituality, the BAPS reaches out far and wide to address the spiritual, moral and social challenges and issues we face in our world. Its strength lies in the purity of its nature and purpose. BAPS strives to care for the world by caring for societies, families and individuals. Its universal work through a worldwide network of over 3,850 centers has received many national and international awards and affiliation with the United Nations. Today, a million or more Swaminarayan followers begin their day with puja and meditation, lead upright, honest lives and donate regular hours in serving others. No Alcohol, No Addictions, No Adultery, No Meat, No Impurity of body and mind are their five lifetime vows. Such pure morality and spirituality forms the foundation of the humanitarian services performed by BAPS.
BAPS has built temples like this throughout the world. In fact, you don’t have to come to India to see one! I said Akshardham Temple is the world’s largest (working) Hindu temple but it is about to be eclipsed by another temple built by BAPS in Robbinsville, New Jersey! Yes, New Jersey.
Go see it!
