1. Brookings: Prospects for Ending Extreme Poverty by 2030
2. Carpe Diem: World trade and output both reached new all-time record highs in November and are nearly 10% above previous peaks
3. PBS Newshour: More than 200 million people were unemployed in the world in 2013
Worldwide, the number of unemployed people rose by 5 million in 2013 to 202 million, according to the International Labor Organization’s Global Employment Trends report. The global unemployment ratio of youth to adults has reached a new high. The jobless rate for 15- to 24-year-olds hit 13.1 percent in 2013 (or 74.5 million), nearly three times the adult rate.
The organization predicts unemployment will worsen, with 215 million jobless by 2018. Roughly 40 million net jobs will be added each year, the ILO estimates, but that won’t be enough to absorb the 42.6 million people expected to enter the labor force each year. ...
4. Conversable Economist: Limited U.S. Power in a Globalizing Economy
Just to be clear, the U.S. economy is not becoming a economic minnow like Belize or Burundi. But 65 years ago, as the high-income countries climbed out of the wreckage left by World War II and today's emerging economies had not yet engaged in the global economy, the U.S. economy had an extraordinary time of dominance. For a time in the 1960s, it was common to hear that the planned economy of the USSR would outstrip the U.S. economy. In the 1970s and into the 1980, Japan was going to rule the world economy. Around 2000 and the launch of the euro, there was talk about the economic rise of the European Union. But now, we are seeing the rise of a multipolar and distributed world economy, with faster growth happening in the emerging economies, but with stronger linkages of trade and global supply chains reaching across the world economy. The U.S. can certainly be an active and leading participant in shaping the world's economic future. But neither the U.S., nor some combination of high-income countries around the world, has the power to dictate what configurations will emerge.
5. Business Insider: Here's A Chart Of Interest Rates Going Back To 3000 BC
6. PBS: Is the famous ‘paradox of choice’ a myth? Barry Schwartz
"Paradox of choice" is tha notion that too many choices become overwhelming and make life decisions less satisying.
... Often people choose on the basis of essentially irrelevant features of plans, just because the relevant features are too complex to evaluate. Has anyone ever suggested that the sensible alternative to too many options is a single option? Absolutely and unequivocally not. Psychology has known about “single option aversion” for a half century. With too few options, there is the risk that none will be satisfactory, whereas with too many, there is the risk of paralysis, confusion and dissatisfaction.
The trick is to find the middle ground — the “sweet spot” — that enables people to benefit from variety and not be paralyzed by it. Choice is good, but there can be too much of a good thing. Adam Grant and I recently published a paper suggesting that this “too much of a good thing” phenomenon is pervasive in psychology. ...
7. TED: Paul Piff - Does money make you mean?
"It's amazing what a rigged game of Monopoly can reveal. In this entertaining but sobering talk, social psychologist Paul Piff shares his research into how people behave when they feel wealthy. (Hint: badly.) But while the problem of inequality is a complex and daunting challenge, there's good news too. (Filmed at TEDxMarin.)"
8. Forbes: Downton Abbey Makes A Powerful Case For Economic Freedom
... One of the great things about Downton Abbey is that it allows fans to escape their worries and fantasize about life on a luxurious estate in early 20th century England. But the truth is, few of us could tolerate what we’d be forced to live with, and live without, in that world. ...
9. Carpe Diem: The middle class is shrinking ... because they are moving into the upper class! Census data on income distribution reveal evidence of rising income levels for a rising share of American households
10. AEI: This chart shows how tough it is for the poor to recover from a bad start in life
11. Business Insider: Millennials Are The Most Financially Conservative Generation Since The Great Depression
... According to a new report from investment banking company UBS, Millennials are the most financially conservative generation to come around since the Great Depression. The report, which focused on investors between the ages of 21 and 36, found that Millennials are risk averse when it comes to investing — dedicating 52% of their investment portfolios to cash, compared to 23% cash for other investors. They are also more likely to believe that working hard (69%) and living frugally (45%) puts you on the path to success rather than long-term investing (28%). ...
12. NPR: The Middle Class Took Off 100 Years Ago ... Thanks To Henry Ford?
January 1914 was a frigid month in Detroit — much like January 2014 has been, but nonetheless thousands lined up in the bitter cold outside to take Henry Ford up : $5 a day, for eight hours of work in a bustling factory.
That was more than double the average factory wage at that time, and for U.S. workers it was one of the defining moments of the 20th century. Five dollars in 1914 translates to roughly $120 in today's money. While many economists say today's employers could take some pointers from Ford, they also say 2014 is a totally different world for U.S. businesses and workers. ...
... "It was mainly to stabilize the workforce. And it sure did," Kreipke says. "And raised the bar all over the world."
He says to understand why Ford thought this was a smart move in January 1914, you have to go back to another huge shift that happened a few months earlier: By 1913, Model T production totaled 200,000 — a feat made possible by the creation of the first moving assembly line. Conveyor belts transported small parts to workers, each of whom performed a specific task.
This tremendously sped up production, but Ford still had a problem: While he had standardized production, he hadn't standardized his workforce. Now, he didn't need particularly skilled workers; he just needed ones who would do the same repetitive, specialized tasks hour after hour, day after day.
Kreipke says there was chronic absenteeism and lots of worker turnover. So Ford gambled that higher wages would attract better, more reliable workers. ...
... "Today, overwhelmingly employers view the lowest wage as the most competitive wage," Shaiken says.
These days, global supply chains feed a hypercompetitive auto industry where no one wants to give up even an inch of ground, and keeping up with technology takes precedent over stabilizing the workforce. This just isn't Henry Ford's economy anymore, Shaiken says.
"There are very real economic pressures out there that push down on wages," he says. "So it's not a simple story, but that doesn't mean that there isn't a core truth into what Ford found." ...
13. Business Insider: An Economist Explains Why Wage Growth Is Poised To Take Off
14. Conversable Economist: U.S. Household Finances Rebound
15. Greg Mankiw: Does income inequality increase mortality?
Angus [Deaton] writes the following (emphasis added):
Darren Lubotsky and I 7 have investigated the relationship between income inequality, race, and mortality at both the state and metropolitan statistical area level. In both the state and the city data, mortality is positively and significantly correlated with almost any measure of income inequality. Because whites have higher incomes and lower mortality rates than blacks, places where the population has a large fraction of blacks are also places where both mortality and income inequality are relatively high. However, the relationship is robust to controlling for average income (or poverty rates) and also holds, albeit less strongly, for black and white mortality separately. Nevertheless, it turns out that race is indeed the crucial omitted variable. In states, cities, and counties with a higher fraction of African-Americans, white incomes are higher and black incomes are lower, so that income inequality (through its interracial component) is higher in places with a high fraction black. It is also true that both white and black mortality rates are higher in places with a higher fraction black and that, once we control for the fraction black, income inequality has no effect on mortality rates, a result that has been replicated by Victor Fuchs, Mark McClellan, and Jonathan Skinner9 using the Medicare records data. This result is consistent with the lack of any relationship between income inequality and mortality across Canadian or Australian provinces, where race does not have the same salience. Our finding is robust; it holds for a wide range of inequality measures; it holds for men and women separately; it holds when we control for average education; and it holds once we abandon age-adjusted mortality and look at mortality at specific ages. None of this tells us why the correlation exists, and what it is about cities with substantial black populations that causes both whites and blacks to die sooner.
In a review of the literature on inequality and health, I note that Wilkinson's original evidence, which was (and in many quarters is still) widely accepted showed a negative cross-country relationship between life expectancy and income inequality, not only in levels but also, and more impressively, in changes. But subsequent work has shown that these findings were the result of the use of unreliable and outdated information on income inequality, and that they do not appear if recent, high quality data are used. There are now also a large number of individual level studies exploring the health consequences of ambient income inequality and none of these provide any convincing evidence that inequality is a health hazard. Indeed, the only robust correlations appear to be those among U.S. cities and states (discussed above) which, as we have seen, vanish once we control for racial composition. I suggest that inequality may indeed be important for health, but that income inequality is less important than other dimensions, such as political or gender inequality.10
16. Pew Research: There's More to the Story of the Shrinking (Gender) Pay Gap
17. The Daily Beast: No, Women Don’t Make Less Money Than Men
... In its fact-checking column on the State of the Union, the Washington Post included the president’s mention of the wage gap in its list of dubious claims. “There is clearly a wage gap, but differences in the life choices of men and women… make it difficult to make simple comparisons.” ...
... Much of the wage gap can be explained away by simply taking account of college majors. Early childhood educators and social workers can expect to earn around $36,000 and $39,000, respectively. By contrast, petroleum engineering and metallurgy degrees promise median earnings of $120,000 and $80,000. Not many aspiring early childhood educators would change course once they learn they can earn more in metallurgy or mining. The sexes, taken as a group, are somewhat different. Women, far more than men, appear to be drawn to jobs in the caring professions; and men are more likely to turn up in people-free zones. In the pursuit of happiness, men and women appear to take different paths.
But here is the mystery. These and other differences in employment preferences and work-family choices have been widely studied in recent years and are now documented in a mountain of solid empirical research. By now the President and his staff must be aware that the wage gap statistic has been demolished. This is not the first time the Washington Post has alerted the White House to the error. Why continue to use it? ...
18. Atlantic: How When Harry Met Sally Explains Inequality
A new study says that educated people marrying each other has increased inequality by 25 percent.
19. Reuters: The real future of U.S. manufacturing
... The assertion that the United States, or any nation, requires continued investment in the technologies that will drive future production is indisputable. On that score, at least, the Obama White House is fighting the proverbial good fight.
The contention, however, that these technologies and the factories that harness them for production will be sources of well-paid, solidly middle-class jobs, is flawed. In our political debates, we maintain the comforting fiction that a manufacturing revival can and will go hand-in-hand with a jobs revival. Yet, as Obama’s initiative shows, the two can be — and increasingly are — uncoupled.
The issue is not the hollowing-out of manufacturing as defined by less production. Yes, many less expensive, simpler products are now made more cheaply elsewhere and are unlikely to be made in the United States anytime soon — even with the “on-shoring” of manufacturing. Though China ceases to be the place of low-cost production, Vietnam, the Philippines and who knows where else (even Mexico) will be more attractive for apparel, furniture, electronics and anything plastic for a long time to come.
The high-end production that these new U.S. innovation hubs seek to promote is indeed in demand around the world. It is something where, as yet, China and other low-cost manufacturing centers have not excelled. This is why China actually imports considerable billions of higher-end equipment – particularly from Japan and Germany. So it is true that the United States could have a competitive advantage, especially given the plethora of research universities and the wealth of highly-educated talent that can be used for just this type of production.
But all this is not the same as a job creator for a workforce of at least 120 million and counting in nation of more than 320 million people. These high-tech factories might employ hundreds of people in conjunction with industrial robots, using sophisticated software systems for design and production. These factory workers bear little resemblance to the 1950s line workers doing rote tasks. They are more like Silicon Valley engineers or lab technicians. These are high-skill jobs — and not nearly as plentiful as the factory jobs of the past. ...
Related: Bloomberg - Factory Jobs Are Gone. Get Over It
... In 1953 manufacturing accounted for 28 percent of U.S. gross domestic product, according to the U.S. Bureau of Economic Analysis. By 1980 that had dropped to 20 percent, and it reached 12 percent in 2012. Over that time, U.S. GDP increased from $2.6 trillion to $15.5 trillion, which means that absolute manufacturing output more than tripled in 60 years. Those goods were produced by fewer people. According to the Bureau of Labor Statistics, the number of employees in manufacturing was 16 million in 1953 (about a third of total nonfarm employment), 19 million in 1980 (about a fifth of nonfarm employment), and 12 million in 2012 (about a tenth of nonfarm employment).
Service industries—hotels, hospitals, media, and accounting—have taken up the slack. Even much of the value generated by U.S. manufacturing involves service work—about a third of the total. More than half of all people still employed in the U.S. manufacturing sector work in such services as management, technical support, and sales. ...
20. PBS: Paul Soloman on Man vs the Machine: Will Human Workers Become Obsolete?
21. Huff Post: The End of Capitalism
Interesting thoughts. I don't know if he has it just right, but I do think he is correct that we may be on the verge of something as transformative to capitalism as industrialization was to agricultural societies:
... The location of creation has switched. Under industrial capitalism, machines operating centrally created riches. James Watt perfected his steam engine, but then the machines took on a life of their own - the machines themselves, and machine-like corporations built around them, churned out money. People danced around the edges, enlarging and improving the machines, putting them together in large mills or mines to turbo-charge productivity, adapting their pace of work to that of the machines. The machines and the capitalists were in charge.
Now it is not machines or their owners, but creative individuals who are center-stage. People not only invent new technology - they are the new technology. As sociologist Manuel Castells says, "For the first time in history, the human mind is a direct productive force ... Computers, communication systems, and genetic decoding and programming are all amplifiers and extensions of the human mind."
In the West, knowledge has become personalized. Open innovation requires it. The effect of open innovation is to transfer initiative and wealth from established corporations to new ones, and from shareholders to individuals. From thought to action, individuals are at the heart of creation, including wealth creation. Every element of the unique human personality takes part in creation - intellect, imagination, emotion, calculation, empathy, and the ability to evoke enthusiasm from other seriously talented people. Each person does it their way. Steve Jobs may not have been the nicest person in Silicon Valley, but he got amazingly talented people to distort reality and create previously unimaginable products. The individual is everything.
In all kinds of ways, therefore, we are moving away from capitalism, from an economy centered on capital and large, established, hierarchical corporations. But we are not moving from private hierarchy to public hierarchy, from capitalism to socialism or communism. Free enterprise is alive and well - arguably too alive and well. The new system is even more market-oriented than capitalism, and much more decentralized. It is as decentralized as any system can possibly be, because it is decentralized to individuals, and above all to a tiny minority of new superstar individuals. Welcome to the personalized economy. ...
22. Carpe Diem: Cash for kidneys will solve the organ shortage, save money spent on dialysis, and then we’ll wonder why it took so long
(Not necessarily agreeing here. Just reporting.)
Economists Gary Becker and Julio Elias make the case in today’s WSJ that a market for organs and donor compensation of about $15,000 would eliminate the growing kidney shortage. As the chart above shows, the kidney waiting list has nearly doubled from 50,000 in 2001 to almost 99,000 today, while the number of annual kidney transplant operations has increased only slightly from 14,279 in 2001 to fewer than 17,000 in 2013. Over the last eight years, kidney transplants have remained stuck at slightly below 17,000 per year, while the kidney waiting list has swelled by almost 30,000. Therefore, there an additional 30,000 patients today (99,000) than in 2006 (69,600) competing for the same number of transplants. And that’s why, as Becker and Elias point out, the average waiting time for a kidney has increased to 4.5 years from 2.9 years a decade ago. The authors argue that “Paying donors for their organs would finally eliminate the supply-demand gap.”
Isn’t donor compensation immoral? No, according to Becker and Elias (emphasis added: ...
Comments