Kruse Kronicle

Economics Links

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 20^th 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: ...

Muhammad Yunus On Defining Success With Money: 'That's The Wrong Way'

Yunus' take on social business and defining success with money.

Proof Jesus Was Not a Capitalist: The Richest 1 Percent Own Half the World's Wealth - My Response

Rev. Dr. Susan Brooks Thistlethwaite has a post at the Huffington Post today titled Proof Jesus Was Not a Capitalist: The Richest 1 Percent Own Half the World's Wealth. Here is my response.

She writes:

...Biblically speaking, probably not. As Jesus warned, you have to choose. Either money rules you, or your highest values rule you. There's no middle ground. "No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money." (Luke 16:13)

Jesus was not a capitalist.

God's rules on economics, as articulated both by the prophets and Jesus of Nazareth, are strikingly clear. Not small concentrations of great wealth and the vast majority of people in poverty, but 'each under their own vine and fig tree, living without fear.' (Micah 4:4) Jesus announces his ministry as "good news to the poor" (Luke 4:18), that is, the "Jubilee," the really radical redistributive economic strategy of ancient Israel.

So, is it likely the leaders gathered at the World Economic Forum in Davos serve that vision, a vision of a reasonable abundance shared by all, or are they in service to the vast accumulated wealth of the 1 percent? Is it going to be possible for people at that meeting to enact policies that start to close this disastrous economic gulf between the rich and the poor? ...

First, advanced agrarian societies of the Near East and Rome are the contexts of the Bible (Hebrew and Christian Testaments.) To the limited degree they thought in macroeconomic terms, the economy was a zero-sum game. Land and labor were the two inputs for production. Both were relatively fixed. There was little you could do to alter land productivity, and one person's labor was not substantially different from another's. Consequently, with variable productivity off the table, economics was constrained to considerations of consumption and distribution. Both personal and societal abundance was cyclical, and sharing the fixed pie was essential for community survival.

The great divergence of the past two centuries is the realization that productivity can be radically altered. Productivity can be altered radically by applying technology, energy, exchange, stable institutions, and improving human capital. But these changes have included concentrating wealth into productive assets and assuming larger risks to achieve greater productivity effectively. We live in a different world from advanced agrarian societies, and applying morals from their context directly to ours is useless.

Second, the Jubilee was categorically not a "radical redistributive economic strategy." Land was to revert to its perpetual owners every 50 years. Jubilee stated that if someone needed to "sell" their land, the price would be determined based on the number of crops gathered between the "sale" date and the next Jubilee. Then the land would revert to the perpetual owner. In other words, it was a lease. A person could "sell" their labor under the same conditions. These provisions only applied to agricultural land and had nothing to do with non-agricultural land or other private property. Significantly, it ensured that everyone had access to at least a minimal level of capital (land and labor) to provide for themselves and to produce goods for exchange, living individually and corporately as God's stewards. That has interesting theological implications for economics, but it was not radical redistribution.

Third, from where does abundance come? Apart from air and sunlight, name one thing humans use that does not require human action to transform matter, energy, and data from a less useful form to a more useful form. Absent human action, there is near absolute scarcity of the things that humanity uses. If we each had to provide for ourselves and our families alone, our days would be precarious, doing little else but hunting and gathering our way through life. But we achieve high productivity levels through specialization, technology, the concentration of wealth in productive enterprises, and trade (i.e., capitalism), resulting in unprecedented abundance. Had Jesus known that productivity could be radically altered, I suspect he may have offered different guidance (and I don't mean a blanket blessing of the American economic system.)

Fourth, just what is the negative impact of inequality that should give us pause? The article doesn't say, but it is strongly implied: If wealth is becoming concentrated at the top, then it must be that it is being taken from others, making them poor (1% are wealthy while 99% are in poverty) ... the rich are getting richer, and the poor are getting poorer. She is not alone in this thinking. A recent survey of Americans showed that 66% of respondents think that the proportion of the global population living in poverty has doubled in the past twenty years and another 29% think there has been no change (total of 95%), when in fact the proportion has been halved:

Source: Brookings

Furthermore, the number of well-paying jobs is expanding around the world. Life expectancy at birth, the most holistic measure of human well-being, is now at seventy years and closing in on the eighty-year mark enjoyed by the wealthiest nations. Studies show that inequality within nations is increasing, but inequality between nations is falling.

Now none of this is to say that rising inequality is good or bad. We have to be specific about what metric we use. If the metric is that inequality means more poverty and is therefore bad, then the assertion that inequality is "bad" isn't true. People are not getting poorer. That doesn't mean inequality isn't problematic for other reasons, but we must be specific about what we are tackling.

Finally,

"Unregulated market capitalism has only one master, and that is money. And that is why 85 people control half the wealth of the whole world."

Dr. Thistlethwaite, if you identify one nation on the face of the earth with "unregulated market capitalism," I will write you a check for $1,000 here and now. They don't exist! This issue is not unregulated market capitalism but corporatism. If there is a governance problem, it is that the biggest corporate entities and government have joined together to stack things in favor of their mutual interests over and against market forces that might threaten them. That is corporatist business capitalism and antithetical to market capitalism. Furthermore, economists have not reached a consensus on why there has been an increasing concentration at the top, but the idea that it is summed up in "unregulated market capitalism" is just absurd.

With all that said, I'm not saying that growth in inequality isn't a problem and isn't worthy of theological and moral reflection. I am asking for a more responsible discussion.

I will also agree that change begins from the bottom up. Muhammad Yunus uses the image of a bonsai tree. The seed that grows into the tiny bonsai tree is the same seed that grows into the tall tree in the forest. The difference is that the bonsai grows from the limited foundation of the flowerpot, while the tall tree has the rich foundation of the forest bed. The poor are bonsai people. By improving the soil in which they grow, instituting property rights and the rule of law, and including them in networks of productivity and exchange, they too can flourish as people in wealthier nations have. Trickle-up capitalism is a promising strategy. It is already at work around the world. Let's join them and support them. Populist ideological warfare about poorly defined issues and remedies is nothing but a moralistic distraction. The world deserves better from Christian thinkers.

Nordic welfare state being cut down to size

Yahoo! News: Nordic welfare state being cut down to size

Copenhagen (AFP) - The Nordic model, known for high taxes and its cradle-to-grave welfare system, is getting a radical makeover as nations find themselves cash-strapped.

During the post-war period, the Scandinavian economies became famous for a "softer" version of capitalism that placed more importance on social equality than other western nations, such as Britain and the United States, did.

But globalisation, economic necessity and an ideological shift to the right has led to a scaling back of the public sector.

In Sweden, visitors are sometimes surprised to learn about year-long waiting times for cancer patients, rioting in low-income suburbs and train derailments amid lagging infrastructure investment.

"The generosity of the system has declined," said Jonas Hinnfors, a professor of political science at the University of Gothenburg.

"Much of this already started changing in the 1980s and especially in the 1990s," he added. ...

Max Weber Was Wrong (About Capitalism)

Public Discourse: Max Weber Was Wrong - Samuel Greg

... Second, the empirical evidence disproving Weber’s connection between Protestantism and the emergence of capitalism is considerable. Even Catholic critics of modern capitalism have had to concede that “the commercial spirit” preceded the Reformation by at least two hundred years. From the eleventh century onward, the words Deus enim et proficuum (“For God and Profit”) began to appear in the ledgers of Italian and Flemish merchants. This was not a medieval version of some type of prosperity gospel. Rather, it symbolized just how naturally intertwined were the realms of faith and commerce throughout the world of medieval Europe. The pursuit of profit, trade, and commercial success dominated the life of the city-states of medieval and Renaissance Northern Italy and the towns of Flanders, not to mention the Venetian republic that exerted tremendous influence on merchant activity throughout the Mediterranean long before 1517.

Since Weber’s time, much scholarly work has been done to illustrate the advanced state of market-driven economic development in the Middle Ages. Throughout the 1940s and 1950s, the Belgian scholar Raymond de Roover penned numerous articles illustrating that, during the Middle Ages, financial transactions and banking started to take on the degree of sophistication that is commonplace today. Likewise, The Commercial Revolution of the Middle Ages, by the Italian-American historian of medieval European economic history, the late Robert S. Lopez, shattered the historical claims that formed much of the background of Weber’s argument. Lopez demonstrated in great detail the way in which the Middle Ages “created the indispensable material and moral conditions for a thousand years of virtually uninterrupted growth.”

In recent decades, the historians Edwin Hunt and James Murray have illustrated just how much the medieval period was characterized by remarkable innovation in methods of business organization. They also suggest that the advent of modernity actually heralded the expansion of state economic intervention and regulation in an effort to constrain economic freedom. In a similar fashion, the sociologist Rodney Stark has gathered together disparate sources of historical and economic analysis to illustrate the origins of capitalism and major breakthroughs in the theory and practice of wealth creation in the medieval period. Central to Stark’s analysis is his highlighting of the way pre-Reformation Western Christianity saw the world as one in which humans were called upon to use their reason and innate creativity to develop its resources—including economically.

Here one could add that, before Adam Smith, some of the most elaborate thinking about the nature of contracts, free markets, interest, wages, and banking that developed after the Reformation was articulated in the writings of Spanish Catholic scholastic thinkers of the sixteenth and seventeenth centuries. Theologians such as Francisco de Vitoria OP, Martín de Azpilcueta, Juan de Mariana SJ, and Tomás de Mercado OP, anticipated many of the claims made by Smith two centuries later.

To be sure, much of this thinking occurred by way of side-effect rather than as a result of the systematic analysis undertaken by Smith. For as commercial relationships expanded throughout Europe in the centuries preceding and following the Reformation, there was a marked increase in the number of penitents asking their confessors for guidance about moral questions with a strong economic dimension. What was the just price? When was a person no longer obliged to adhere to a contract? When was charging interest legitimate? When did it become usurious? As a result, priests looked to theologians for guidance on how to respond to their penitents’ questions. Thus, as Jürg Niehans stressed in his History of Economic Theory:

The scholastics thus found it necessary to descend from theology into the everyday world of economic reality, of early capitalism, foreign trade, monopoly, banking, foreign exchange and public finance. What one knew about these things in the School of Salamanca was hardly less than Adam Smith knew two hundred years later, and more than most students know today.

Even when we consider modern capitalism’s emergence, a direct connection between this event and Protestantism is very open to question. ...

This is a really excellent piece on the history of capitalism.

Economics Links

1. Carpe Diem: 5 Reasons Why 2013 Was The Best Year In Human History

1. Fewer people are dying young, and more are living longer. ...
2. Global economic growth in the past five decades has dramatically reduced poverty and made people around the world happier. ...
3. War is becoming rarer and less deadly. ...
4. Rates of murder and other violent crimes are in free-fall. ...
5. There’s less racism, sexism, and other forms of discrimination in the world. ...

2. Everyone is putting out their most important economic charts list for 2013:  Atlantic: The Most Important Economic Stories of 2013—in 44 Graphs.  Economist: 2013 in charts.  Huffington Post: The 13 Most Important Charts Of 2013.

3. Economist: The world has become better fed over the past 50 years

MANY people will groan after stuffing themselves on a Christmas feast. A traditional three-course turkey dinner can be as much as 3,500 calories. Such indulgences are a luxury in many parts of the world—but thankfully less so. Over the past half-century, the amount of food that people consume has increased (measured in calories), according to the UN’s Food and Agriculture Organisation. Our interactive map and chart tracks countries across five decades, letting users select places, years on the timeline or any chart-line. (It performs poorly on smartphones; our apologies.) ...

In a related story at NPR: More People Have More To Eat, But It's Not All Good News

... The good news is: The percentage of the world's population getting what the researchers say is a sufficient diet has grown from 30 percent to 61 percent.

In 1965, a majority of the world survived on less than 2,000 calories a day per person. This was especially true in parts of the Middle East, Africa, Latin America, China and Southeast Asia. Now, 61 percent of the world has access to 2,500 or more calories a day.

But one thing the scientists discovered is that the countries that have a history of food insufficiency didn't just up and start growing lots more food. Instead, for the most part they're increasing supply by importing food from abroad. ...

I'm unclear why the author thinks importing food is a problem but other challenges he mentions in the article are an issue.

4. Carpe Diem: When it comes to home appliances, the ‘good old days’ are now: they’re cheaper, better, more energy efficient than ever

... In 1981, the 24-inch built-in dishwasher pictured above from a 1981 Wards Christmas catalog sold for $359.88. The average hourly manufacturing wage then was $7.42, meaning that it would have taken 48.5 hours of work at the average hourly wage for a typical factory worker to earn enough income 32 years ago to purchase the dishwasher above. ...

... The new Kenmore 24-inch built-in dishwasher pictured above is currently listed on the Sears website for sale at $539.99. At the current average hourly wage of $20.26 for production workers, the average factory worker today would only have to work 26.7 hours to earn enough pre-tax income to buy today’s energy-efficient dishwasher, which is only a little more than one-half of the 48.5 hour time-cost for the 1981 model.

Bottom Line: Today’s modern household appliances are not only cheaper than ever before, they are the most energy-efficient appliances in history, resulting in additional savings for consumers through lower operating costs. The average dishwasher today is not only more than twice as energy-efficient as a comparable 1981 model, but its real cost today is only about 50% of the price of the 1981 dishwasher, measured in hours worked at the average hourly wage. Put those two factors together, and the average American’s dishwasher today is about six times superior to the dishwasher of thirty years ago. ...

5. Carpe Diem: How much did real US median income increase from 1979 to 2007? A lot depends on the measure of income used

"The median income data [often cited] are on tax units rather than households, they do not include many government transfer payments, they are pre-tax rather than post-tax, they do not adjust for changes in household size, and they do not include nontaxable compensation such as employer-provided health insurance.

Does this matter?  Yes!"

6. American Interest: Economic Mobility is a Male Problem

The biggest victim of family breakdown might be lower-class men. In City Journal Kay Hymowitz has a fascinating yet alarming piece on how family breakdown hurts men’s prospects more than women’s. One of the most interesting facts she highlights is that if you separate out men from women, women in America are roughly as upwardly mobile as women anywhere else in the world. It’s only when you add men back in and compare the US whole population to populations abroad that things look bleak:

Numerous studies have confirmed that the U.S. has less upward mobility than just about any developed nation, including England, the homeland of the peerage. Yet, if you look at boys separately from girls, as the Finnish economist Markus Jäntti and his colleagues at the Bonn-based Institute for the Study of Labor did, the story changes markedly. In every country studied, girls are more likely than boys to climb up the income ladder, but in the United States, the disadvantage for sons is substantially greater than in other countries. Almost 75 percent of American daughters escape the lowest quintile—not unlike girls in the comparison countries of the United Kingdom, Denmark, Finland, Norway, and Sweden. Fewer than 60 percent of American sons experience similar success. ...

7. AEI Ideas: 3 charts that show what’s really going on with economic mobility in the US

8. Washington Post: Full employment, not inequality, should be the top economic priority - Ezra Klein

... While there are ways to reduce inequality without doing much about employment (say, by taxing the rich and using the proceeds on defense spending), it's hard to imagine full employment not doing much to reduce inequality. ...

... All that said, income inequality and social mobility really are startling trends that people should be very worried about and that the political system should be working aggressively to solve, or at least ameliorate. I don't have many policy disagreements with the folks focusing on inequality. But politics is about prioritization, and what politicians end up doing is in part driven by what problems their political coalitions are most worried about. ...

9. Conversable Economist: Falling Unemployment and Falling Labor Force Participation

10. Business Insider: This Map Shows Which Parts Of The Country Have A Huge Gender Gap In The Workforce

11. PBS: The rise of the 'new rich': 1 in 5 Americans will reach affluence in their lives

It's not just the wealthiest 1 percent.

Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America's economy and politics. This little-known group may pose the biggest barrier to reducing the nation's income inequality.

The growing numbers of the U.S. poor have been well documented, but survey data provided to The Associated Press detail the flip side of the record income gap -- the rise of the "new rich." ...

12. Atlantic Cities: America's Wealth Is Staggeringly Concentrated in the Northeast Corridor

 

13. New York Times: Demand Soaring, Poor Are Feeling Squeezed

... Today, millions of poor Americans are caught in a similar trap, with the collapse of the housing boom helping stoke a severe shortage of affordable apartments. Demand for rental units has surged, with credit standards tight and many families unable to scrape together enough for a down payment for buying a home. At the same time, supply has declined, with homebuilders and landlords often targeting the upper end of the market. ...

14. Bloomberg: North America to Drown in Oil as Mexico Ends Monopoly

The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75-year-old barrier to foreign investment in its oil fields.

Plagued by almost a decade of slumping output that has degraded Mexico’s take from a $100-a-barrel oil market, President Enrique Pena Nieto is seeking an end to the state monopoly over one of the biggest crude resources in the Western Hemisphere. The doubling in Mexican oil output that Citigroup Inc. said may result from inviting international explorers to drill would be equivalent to adding another Nigeria to world supply, or about 2.5 million barrels a day....

15. Oil Price: Cheap Fossil Fuels: Good or Bad for the World’s Poor?

... Let’s try reconciling all of the themes raised in Lomborg’s article and in my comments by reframing them in this way:

•    Yes, fossil fuels are going to be with us for a while. For that reason, a smart energy policy needs to focus on shifting the mix of fossil fuels, so far as is possible, to relatively clean natural gas and away from relatively dirty coal, while also keeping the pressure on for energy conservation across the board.
•    Price signals are one way to keep the pressure on. A carbon tax is a somewhat crude way to penalize relatively dirty fuels, in that climate change is not the only issue. We should be concerned, too, about sulfur and mercury from burning coal, urban air pollution from gasoline and diesel fuels, and local environmental risks of fracking for natural gas. Still, a carbon tax serves at least roughly to penalize the dirtiest fuels the most.
•    And yes, no environmental policy is going to be successful politically if it is seen as a matter of saving the earth versus helping the poor. Fuel subsidies have to go, since, realistically, they are a burden, not a boon, to the poor, but at the same time, some of the budgetary economies from the elimination of subsidies and some of the revenues from carbon taxes should  go toward smarter policies to help the world’s least advantaged.

Those ideas might help point us toward policies that are good for both the poor and the planet.

16.  askblog: The Market is a Process, not a Decision Mechanism

... I think that many commentators contrast the market and government as mechanisms for making decisions. In this contrast, the market sometimes has an efficiency advantage, but government is presumed to have a moral-authority advantage.

Instead, think of the market as a process for testing hypotheses. The process is brutally empirical, winnowing out losing strategies and poor execution. In contrast, elections are a much weaker testing mechanism. Elections are unable to winnow out sugar subsidies, improvident loan guarantees, schools that produce bad outcomes, etc. ...

17. Quartz:  Why the left-leaning Nelson Mandela was such a champion of free markets

One often overlooked aspect of Nelson Mandela’s legacy is South Africa’s economy. Parallel to everything amazing the man is connected to—freeing the country from the shackles of apartheid, subordinating retribution in favor of peace and reconciliation, and unifying a volatile nation at risk of civil war—he laid the groundwork for South Africa as the continent’s economic powerhouse. ...

18. Atlantic: Why Economics Is Really Called 'the Dismal Science'

... But this origin myth is, well, mythical. Carlyle did coin the phrase "the dismal science." And Malthus was, without question, dismal.

But Carlyle labeled the science "dismal" when writing about slavery in the West Indies. White plantation owners, he said, ought to force black plantation workers to be their servants. Economics, somewhat inconveniently for Carlyle, didn't offer a hearty defense of slavery. Instead, the rules of supply and demand argued for "letting men alone" rather than thrashing them with whips for not being servile. Carlyle bashed political economy as "a dreary, desolate, and indeed quite abject and distressing [science]; what we might call ... the dismal science.” ...

Why the Church Needs Business

Huffington Post: Why the Church Needs Business

... Beyond the mess that has been the Vatican bank, the Catholic Church can learn a lot from business. This may seem counterintuitive, but the same church that has (rightly) spoken out so forcefully on the excesses and the limitations of capitalism desperately needs some capitalistic skills.

How is it that so many seem to have so little expertise in what so many people take for granted? Not long after the financial crisis in 2008, one priest confidently told me, "Capitalism is dead." I asked him if he could still go to the corner and buy a hotdog. Yes, he said. "That's capitalism," I said. "It's not dead." A few days later another priest with a Ph.D. asked me, as he read about the financial crisis, "What's a bond?"

Whence the lack of business knowledge among otherwise smart and talented (and highly educated) men and women? There are two simple reasons:

First, many cardinals, archbishops, bishops, priests, sisters and brothers now in their 60s and 70s (that is, those running things in the church) often entered their seminaries or religious orders right out of college, even high school. Thus, many (not all, but many) did not have the important experience of having to earn a paycheck, balance a checkbook, manage employees, read a balance sheet, invest in the stock market, and so on.

The second reason is more basic. Once in the seminary or religious order, business education was not a part of their training. This is an immense lacuna in the training or priests and men and women in religious orders. ...

In How the Church Fails Businesspeople (and what can be done about), John Knapp reports that one of the biggest obstacles the church has with influencing businesspeople to think more ethically and theologically about their own lives is the business practices of the church. A congregation's or denomination's sloppiness with finances, the belief that fundamental realities about business and economics can just magically be suspended, and, too often, defensiveness (if not hostility) toward sound business practices causes businesspeople to tune out what the church has to say about material matters. The church holds no credibility. It is good that Pope Francis recognizes the need for gifted businesspeople to aid the church's mission.

How Pope Francis Misunderstands the World

Atlantic: How Pope Francis Misunderstands the World

We're living at a far more equal, peaceful, and prosperous time than the pontiff acknowledges....

Pope Francis is Times' Person of the Year, an excellent pick in my estimation. He strikes me as a man with incredible integrity. I'm enjoying watching him live into this new calling.

The response to his Evangelii Gaudium is particularly interesting to me, with the left gleeful about his condemnation of capitalism and the right going apoplectic about the same. In our age of bumper sticker sound bites, I don't think either side is listening with appropriate nuance. I haven't read and digested the whole document, but I have read the sections that deal with economic issues. I don't see a radical departure from what previous popes have written.

Twenty years ago, Pope John Paul II wrote the following in Centesimus Annus:

Can it perhaps be said that after the failure of communism capitalism is the victorious social system and the capitalism is the victorious social system and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this model which ought to be proposed to the countries of the Third World which are searching for the path of true economic and civil progress?

The answer is obviously complex. If by "capitalism" is meant an economic system which recognizes the fundamental and positive role of business, the market, private property, and the resulting responsibility for the means of production as well as free creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a "business economy," "market economy," or simply "free economy." But if by "capitalism" is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative. (Centesimus Annus, 42)

I don't find Pope Francis saying a great deal different, although his emphasis may be slightly different. We need to remember that John Paul II ministered under the tyranny of Soviet Communism while Francis did so under the tyranny of right-wing dictatorship. These differences are surely a factor.

The part that does trouble me some, as it does with an overwhelming number of religious figures who speak to economic issues, is a distorted picture of what is happening in the world. It isn't what is said. It's what's missing. For the past century or two, we have been living through the most astonishing surge in human flourishing in history. That reality needs to be discussed every bit as much as the challenges and the injustices.

David Ropeik, in How Risky Is It Really: Why Our Fears Don't Always Match the Facts, shows that we are innately inclined to fixate on threats and negative developments. People who do so aren't stupid or ideological … they are human. All of us do it. The inclination to focus on threats is instinctive and has served humans well over millennia. But in the face of complex issues, we need to consider our concerns with more objective analysis. Otherwise, we run the risk of doing more harm than good. We need to approach problems with warm hearts and cool heads.

I have some minor quibbles with Tupy in the article, but it brings important balance. I've documented similar factors in past series like American Social Indicators and World Social Indicators, two series I intend to update next year. The challenge is to hear the Pope's important calls for the inclusion of the poor and his warning against our propensity to justify indifference. Not heeding the Pope's warnings is also to misunderstand the world. But we need to heed the warnings with an informed understanding of what is unfolding in the world. Read the Atlantic article and see what you think.

All the Countries That Contribute to a Single Jar of Nutella

Atlantic: All the Countries That Contribute to a Single Jar of Nutella

A great map that gives insight into how the global market works. As I read this, the stories of "I, Pencil" and "I, Smartphone," which I've previously blogged about here, illustrate the amazing complexity of market economies and how things are coordinated.

How Mandela Shifted Views on Freedom of Markets

New York Times: How Mandela Shifted Views on Freedom of Markets

When you think about Nelson Mandela, you probably think about freedom — free people, free country, free speech. What may be overshadowed by Mr. Mandela’s extraordinary legacy was his complicated journey to support free markets and a free economy.

When Mr. Mandela was released from prison in 1990, he told his followers in the African National Congress that he believed in the nationalization of South Africa’s main businesses. “The nationalization of the mines, banks and monopoly industries is the policy of the A.N.C., and a change or modification of our views in this regard is inconceivable,” he said at the time.

Two years later, however, Mr. Mandela changed his mind, embracing capitalism, and charted a new economic course for his country.

The story of Mr. Mandela’s evolving economic view is eye-opening: It happened in January 1992 during a trip to Davos, Switzerland, for the annual meeting of the World Economic Forum. Mr. Mandela was persuaded to support an economic framework for South Africa based on capitalism and globalization after a series of conversations with other world leaders.

“They changed my views altogether,” Mr. Mandela told Anthony Sampson, his friend and the author of “Mandela: The Authorized Biography.” “I came home to say: ‘Chaps, we have to choose. We either keep nationalization and get no investment, or we modify our own attitude and get investment.”

Inside South Africa, Mr. Mandela’s quick reversal was viewed with skepticism, and questions have long persisted about whether he was somehow pressured by the West to open up the country’s economy.

However, according to Tito Mboweni, a former governor of the South African Reserve Bank, who accompanied Mr. Mandela to Davos, Mr. Mandela’s change of heart was genuine. ...

Economics Links

1. Poor and Middle Class Incomes Have Increased Significantly

"... Using this more sophisticated cost-of-living adjustment, which is preferred by the Congressional Budget Office and Federal Reserve Board, the increase in median household income was not 5 percent but 16 percent from 1979 to 2012. In 2007, like 1979 a peak in the business cycle, median income as defined by the Census Bureau was 25 percent higher than in 1979. 

Similarly, the official Census Bureau figures indicate that the household at the 20th percentile of income—poorer than 80 percent of households and richer than only 20 percent of them—was no better off in 2012 than in 1979. Switching to the better cost-of-living adjustment, however, shows a 10 percent improvement—and a 19 percent improvement comparing the 1979 peak to the 2007 peak.

The Census Bureau narrowly defines income to exclude the non-cash benefits that constitute an important part of the safety net, as well as employer-provided fringe benefits. That means it assumes that food stamps, Medicaid, Medicare, and employer-provided health insurance have no value to families trying to pay their bills and live more comfortably. For that matter, it considers income before taxes are deducted, missing any increase in disposable income that declining taxes may have yielded. 

From 1979 to 2007, median pre-tax income defined to include non-cash benefits rose by about 30 percent. I find about the same increase for median post-tax income, but my estimates do not account for tax credits. The Congressional Budget Office reports a 33 percent increase in pre-tax income and a 42 percent increase in post-tax income. At the 20th percentile, pre-tax income rose by 26 to 38 percent, depending on how Medicare and Medicaid are valued. The truth is almost surely somewhere in the middle. The post-tax increase was similar.

Finally, the Census Bureau figures do not account for the fact that households have become smaller over time. When households have fewer mouths to feed, a given amount of income goes a longer way, so even if incomes had not grown, Americans would have been better off. 

After adjusting for household size, median pre-tax income was about 40 percent higher in 2007 than in 1979, and according to CBO, post-tax income was 49 percent higher. At the 20th percentile, size-adjusted household income rose by 28 to 46 percent (with the health insurance valuation much more consequential than the inclusion of taxes).

These are sizable gains over time—just not as large as those experienced in the “Golden Age” of the 1950s and 1960s or as substantial as those seen at the top of the income distribution. ...

I want to study this report a little more.

2. 21 Charts On US Inequality That Everyone Should See

3. American Inequality in Six Charts

4. Here's Who Earns The Minimum Wage, In 3 Graphs

5. The Mythology of the Minimum Wage

... A more effective way to help those in need is for policymakers to work on improving programs that have a track record of success, such as the earned income tax credit (EITC). The EITC has proven to be very effective at moving Americans from out of work to having a job. The EITC is also more effective at targeting those in poor households because it is based on income and not just wages. In the end, the EITC benefits 56.1 percent of workers in poverty.

A strong social safety net is one of the most important things a nation can provide its people, but an increase in the minimum wage should not be part of the strategy. Redistributing income from those who need it the most--the job seekers--to those who need it the least-- job holders in high income households expands the income divide and is a counterproductive anti-poverty policy.

6. Should Walmart Pay Its Workers More?

... It’s important to highlight the plight of the working poor. At a time when food stamps are being cut and some on the right attempt to argue against the basic idea of a safety net it is useful to show what actual need looks like in this country, and that many who work hard still encounter real economic hardship. So by all means, let’s talk about increasing the EITC, making a better and more robust safety net, and ways to improve the welfare of low-income people in this country. But let’s not pretend that a huge percentage of the context in which this story is being discussed isn’t that it is Walmart’s duty to raise the wages above the current market level. I’m happy to talk about economic hardship and things to do about it, but let’s not ignore the conversation most people are actually having and the bad ideas actually being proposed.

7. Krugman: The Amorality Of The Market Economy Can Not Be Legislated Away

... The final argument is his attempt to get at what the liberal case for higher minimum wages is at it’s core: it’s about opposing the idea that wages are determined by prices.

In short, what the living wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price–determined by supply and demand, the same as the price of apples or coal. And it is for that reason, rather than the practical details, that the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away.

I think Krugman’s points on the minimum wage are still very applicable despite being published way back in 1998.

8. The Minimum Wage and the Laws of Economics

I can’t open the paper these days without stumbling onto something about the minimum wage, which I take to be a good thing as it’s a simple, popular way to help address the problem of very low-wage work in America.  It’s not a complete solution; it’s not the only solution — it is, in fact, a relatively small-bore policy that sets an important labor standard: the government will compensate for the severe lack of bargaining clout among our lowest-wage workers by setting a floor below which we won’t allow their wages to fall.

It’s also that case that we need to look carefully these days at any policies that will help offset income inequality and wage stagnation, especially ones with low budgetary costs, or in this case, virtually none.  That’s one reason that I expect President Obama to amplify these points in an economics speech on Wednesday in Washington. ...

... Thus we can conclude that at least part of the problem with the low-wage labor market is the quality of the jobs, at least from the perspective of compensation, not the quality of the workers.  Sure, soft skills — showing up on time, dealing maturely with peers — are as important as ever, but people with shortcomings in those areas show up in all sectors.  Typical low-wage workers don’t lack the skills to do their jobs.  They lack the bargaining power to be paid decently for the work.  Relative to most others in the job market, they’re least able to press for a share of the profits they’re helping to generate.

When you think of it this way, a lot of the cramped economic debate opens up.  Since workers are not really paid their precise marginal product, you wouldn’t expect them to be laid off because of a moderate, mandated wage increase.  In periods of high profitability, you’d expect some of the wage increase to be paid for out of profits.  In a real-world context, you’d want a policy taking direct aim at deteriorated job quality and thus helping to offset the acute lack of bargaining clout among low-wage workers.

Does that mean completely ignoring the “laws” of supply and demand and setting the minimum at any level we want?  Of course not.  Workers may not be paid their “marginal product,” but there is some rough correlation between their pay and the value of their work (the great labor economist Richard Freeman gets at this by using the flat edge of the chalk to draw demand curves).  History teaches that moderate wage increases — say, those including not much more than 10 percent of the work force in their sweep — have nothing like the job-loss effects that opponents claim (which isn’t to say “zero,” but the beneficiaries far outnumber those hurt by the policy). ...

9. Retail Wages Are Market Wages, Not a Welfare Program

... Employers pay employees based on the worth of the employee, how much profit that person adds to the company’s bottom line. That amount has no connection at all to the cost of living or to any neutral observer’s idea of what a “fair” wage might be. A business has no reason to care or to know how much money you need (or think you need) to live the life you have chosen to live. Businesses care about what each employee does for them.

An employer may choose to pay a higher-than-market wage for a variety of reasons, but those reasons do not include charity. Some companies (including some retailers such as Costco) follow the efficiency wage hypothesis, positing that paying a higher than normal wage will induce the employee to work extra hard and be very loyal to that employer. This is perfectly rational economics if the hypothesis proves true. Companies are still only paying for what they receive; they have simply found a way to get more profit per employee by paying them higher wages. Other firms may pay more, or provide better benefits, to reduce employee turnover, which can be very costly to the company. Many tech firms are examples of both these behaviors.

The two most recent welfare reforms in this country, in 1975 and in 1996, have both tried to engineer a system of complementary social safety net features and incentives to work. In both cases, the welfare system was judged to have become too skewed toward the safety net and to actively be discouraging people from working. For example, in the 1990s a single mother of two would have needed a job paying well over $20,000 before it would have made economic sense to leave welfare and start working. Simply losing her Medicaid eligibility would have cost her around $10,000 per year even back then. People were being penalized for working. Most people will not work if it makes them poorer.

The point of the current system is to encourage people to work by not making them ineligible for benefits simply by virtue of being employed. Thus, having workers at retail stores or fast food restaurants who also qualify for public assistance is not a reason to condemn those employers, but instead one to praise the politicians and public policy experts who redesigned the welfare system. ...

10. When it comes to home appliances, the ‘good old days’ are now

11. About Half of Kids With Single Moms Live in Poverty

... Among all children living only with their mother, nearly half — or 45% — live below the poverty line, the Census Bureau said. For those living with just the father, about 21% lived in poverty. By comparison, only about 13% of children with both parents present in the household live below the poverty line. ...

12. The End Of The Era Of Multinationals

... But since I clearly can’t help myself, I will make a prediction. When tax reform does come, and whatever it means whenit gets here, U.S. multinationals will pay a price. Now, I’m no communist; in fact, I’m a practicing capitalist, but the multinationals sort of deserve what’s coming, because they’re sort of pigs. They have been working the U.S. tax system for years – just like they have been working tax systems around the world. They have managed to build up quite an arsenal of weapons to help themselves – things like transfer pricing, check-the-box, tax havens, deferral, just to name a few. All these weapons are legal. The system seems rigged their way. ...

13. The Largest U.S. Charities For 2013

Its incoming donations didn’t go up much. But by a wide margin, United Way remains No.1 on the annual Forbes list of the largest U.S. charities.

The Alexandria, Va.-based network of more than 1,000 separate units largely dependent on paycheck deductions received $3.9 billion in gifts for the year ending December 31, 2012, $24 million more than the previous year. In a difficult economic environment, that represented a 0.6% increase.

No. 2 again is the  Salvation Army , a church better known for its social services efforts whose U.S. headquarters also is in Alexandria.  Its donations rose 11% to $1.9 billion, more than making up for a 6% fall from the previous year.

A list newcomer comes in at No. 3, Task Force for Global Health, which is based in Decatur, Ga. To implement its health activities in 50 countries, including the U.S., the charity brought in $1.7 billion, most of it donated medicines.

Rounding out the billion-dollar-donation club:  Feeding America at $1.5 billion and Catholic Charities USA at $1.4 billion. Feeding America, a Chicago-based supplier of of food banks, saw its incoming gifts, mainly donated food, rise a whopping 33%, in contrast to a 10% donation drop at Catholic Charities, which directs its efforts toward fighting poverty. ...

Planet Money Makes A T-Shirt: The world behind a simple shirt, in five chapters

NPR has a wonderful set of five short videos (most about 1.5 minutes) that follow the creation of a t-shirt from the cotton field to the store. It is a well-done and thoughtful presentation about the wonder and challenges of living in a global economy. Be sure to check it out at Planet Money Makes A T-Shirt The world behind a simple shirt, in five chapters.

Capitalism and the Kingdom - Bob Lupton

I love Bob Lupton's monthly posts in Urban Perspectives newsletter. I identify with what he writes in his latest installment, Capitalism and the Kingdom. Capitalism is not "biblical" in the sense of being prescribed by God. And in that sense, there is no "biblical" economic system. All economic systems are human constructs that incorporate human wisdom and sin. This is not to say that the Bible doesn't give us insight into what constitutes shalom and insight into anthropology. We begin with those insights and work from there to discern the most shalom-filled world we can.

After spending thirty years studying and working on poverty, I am deeply persuaded along with Lupton that business, jobs, and market economies (my word for Lupton's "capitalism") are superior to other options for pursuing shalom in the world ... not biblical, not ordained by God, not perfect ... superior. That doesn't make me right, but it is an honest confession of how I have come to my present conclusions.

The curious thing about this is my inclinations and motivations are likely more similar to people who see themselves as progressive. From childhood, I've been captivated by questions about how to work for a more just and shalom-filled world, particularly as this relates to people at the margins. My graduate degrees, one academic and the other applied were grounded in understanding how society changes and how to change it. I have not come to economics out of a desire for financial success or to buttress deeply held political convictions. I've come to it from a genuine desire for understanding that informs discipleship.

The most challenging thing for me is the realization that most people want to process the issues that concern me through a political lens, first and foremost. I read recently that people are more willing to marry someone of a different religion than they are someone of an opposing political party. I suspect political affiliation may have eclipsed religion as an identity marker in our culture. Consequently, I find many progressives, or people who the Religious Right has burned, will not give me an ear from the start. Their filters tell them I am not one of them, and they need not engage, or they engage with me as the uncompromising ideologue they already know I am. Many on the right overestimate my identification with their political agenda and ambitions. And let me be clear that my mission is not to find some "third way" between extremes. The people that captivate me are those who I sense are rooted in a quest for understanding that runs much deeper than political justification. And I am especially captivated by the people who can ask good questions regardless of how closely our conclusions to date may align. I very much sense Lupton is a kindred spirit, which is why I appreciate him and identify so strongly with this article.

Capitalism and the Kingdom

I have never placed a political campaign sign in my yard. Not that I am disinterested in who gets elected to public office. That's clearly important to me. But to go public with my political biases is likely to alienate about half of the supporters of my non-profit. It's better for business, I have found, to keep my political opinions to myself, to talk out of both sides of my mouth when necessary, and keep my mouth shut when in doubt.

Some might call me spineless. I prefer diplomatic. I can usually see both sides of an issue and when I can find common ground between differing opinions I do my best to steer the conversation toward mutual understanding. When that doesn't work I try to offer some conciliatory comment and then change the subject.

But there is one subject I have always been very straight about: caring for the poor. This is a conviction. There may be disagreement about just how best to do this caring, but for me compassionate and just treatment of the poor is a non-negotiable. It is a Divine mandate. And I will go to the mat over this one.

Because I have been politically elusive, my Democratic friends often pigeonhole me as a Republican with a big heart. My Republican friends peg me as a Democrat who is opposed to entitlements. Both camps seem to think I'm an anomaly. That's probably good for keeping diverse friends and satisfied supporters.

But after forty-plus years of living and serving among the poor, I have witnessed nearly every expression of care that good people have visited upon the less fortunate – from feeding the homeless, to counseling pregnant girls to keep their babies, to patching widows' roofs, to advocating for addicts who need treatment. I have done all of these and hundreds more. And I have been joined by countless others whose hearts compel them to help those in need. Sometimes our service has made a difference (though its really hard to tell, especially in the short run). Sometimes we have inflicted unintentional harm (and that too is hard to tell, since we never quite know what is behind the smiles). One thing I am quite sure of, however: it is much safer being a supportive listener than it is being an eager helper. And another thing I have learned: when you do for others what they have the capacity to do for themselves, you are likely doing them a disservice.

After four decades of serving, the romance is gone. I am left with an unvarnished view of the realities of urban poverty. But the Divine calling imposed upon me to become a neighbor to the poor has never been lifted. And because my commitment and voice and heart remain on the side of the poor, my Democratic friends want to embrace me as a fellow liberal (who has a few right-wing tendencies!). And because I have seen the destructive effects of subsidizing poverty and oppose dependency-producing entitlements, I am accepted by Republican friends as a fellow conservative (but with a heart!). Lately, however, (ever since I came out of the closet with Toxic Charity) I fear this delicate balance I have maintained for so long is beginning to "list to the starboard" (that's tilt to the right). I have begun to publicly declare that the only thing that will enable the poor to emerge from poverty is a decent job. And the primary creators of decent jobs are business people who believe deeply in the free enterprise system. Coming out on the side of capitalism identifies me with Republicans. You see why I'm in trouble now, don't you?

In one of my recent Urban Perspectives I said:
For-profits and not-for-profits represent two fundamental divisions of our economy: wealth creation and wealth transfer. Business is the wealth creator; all others exist on the transfer of that wealth… How strange that business creators, so essential to our well-being, are so often viewed as somehow less spiritual, less compassionate than those who live off the wealth they produce! Strange, too, how we esteem sacrificial non-profit "servants" but malign as greedy capitalists the for-profit producers who underwrite their charities.

One minister friend responded:
Interesting post. I've always loved your even handed approach and refusal to tow the liberal or conservative line. But some of the language in this one surprised me. Capitalism could be baptized but it is not God's final revelation. Some of the language you use here of Ordained For-Profit sector sounds like a myth that profit-driven life will bring the kingdom.

My more liberal friends are suspect of the free enterprise system. They point out to me the excesses, the CEO's who live in opulence and cut their minimum wage employees to thirty hours a week to avoid having to provide health insurance. They say that a system propelled by greed is anything but righteous. They have ready examples of the Enron's that defraud their employees and the BP's that destroy our environment. The for-profit sector is not to be trusted, they contend. Wealth producers, if not carefully controlled and regulated, will more than likely exploit their workers, despoil the environment, cut safety corners, avoid (if not evade) paying taxes, conceal health hazards, and squeeze every penny to the bottom line.

My liberal friends have a point. A competitive economic system can indeed produce winners and losers. And without oversight it can lead to cartels and monopolies. Unchecked greed can certainly be very destructive. All true. But then a socialistic system can produce similar inequities and injustices (minus the wealth creation). Obviously, no economic system is without its shortcomings. But recent history, ever since the collapse of the Soviet Union, and the subsequent economic struggles of many European Union member countries, it has become abundantly clear that socialism has failed to deliver on its promises. We are also witnessing the dramatic expansion of economic vitality (and poverty reduction) in China and India as they have cracked open the doors to free enterprise. With all of its potential for exploitation and excess, the capitalistic system is certainly winning the day.

Because capitalism and political freedom are so often linked together, it is tempting to connect them with Judeo-Christian values. That's what my pastor friend was concerned about when he referred to the "myth that profit-driven life will bring the kingdom." Because capitalism has worked so well for us (most of us), making us the most prosperous nation in history, it is tempting to equate it with Shalom. In Judeo-Christian teaching, Shalom, or wholeness, prosperity and peace, is the end to which all righteous people aspire, both here and in the hereafter. Associating capitalism with Shalom may be tempting, yes, but as my minister friend rightly points out: "Capitalism could be baptized but it is not God's final revelation."

I am convinced that the only thing that will enable the poor to emerge from poverty is a decent job. I am further convinced that the best chance of creating decent jobs lies with our free market capitalists. Does this mean that capitalism is the Divine design for bringing about Shalom? I suspect not. Nor is any economic system devised by flawed humanity. But in spite of its bent toward self-interest, even with its excesses and inequities, capitalism has an historic opportunity to create shared prosperity that can benefit every person on the globe. What capitalism needs in order to fulfill its promise is sanctified self-interest.

(Reposted with permission)

Economics Links

1. Timothy Taylor (The Conservable Economist) has several interesting graphs on The Global Wealth Distribution

2. Britain Just Privatized Its Mail Service at a $1 Billion Discount

The largest initial public offering in Europe in more than two years could have been even larger. The privatization of the Royal Mail, in which around two-thirds of the company’s shares began trading Friday morning, raised £1.7 billion ($2.7 billion) for the government.

Frenzied trading pushed the Royal Mail’s shares up by nearly 40% within minutes of the opening bell. This followed enormous demand for the initial allocation of shares, with the retail portion of the offering oversubscribed by seven times and institutional investors bidding for 20 times as many shares as they were allowed. ...

3. The CPI for clothing has fallen by 3.3% over the last 20 years, while overall prices increased by 63.5%

4. Staying Put: Why Income Inequality Is Up And Geographic Mobility Is Down

MARTIN: In the early 1950s, you say in your piece, about 3.5 percent of all American households moved from one state to another in any given year. You said that this held up through the '70s and then started to fall around 1980. You're saying that the latest available data shows that interstate migration is stuck at about 1.7 percent. This is about the lowest level in...

NOAH: Yeah.

MARTIN: ...about, what, three decades?

NOAH: Yeah. Less than half. ...

... MARTIN: So what does? NOAH: Well, I think it's two things, and one is the familiar story of income inequality. And the other is - has to do with housing prices. Incomes have been stagnant for, really, going back to the late 1970s. They've been stagnant relative to the income growth that we saw before 1979, and they have been literally stagnant for about a dozen years. Median income is now a little below what it was in the late 1990s. And you combine that with rising housing prices, then it becomes difficult for people to move to jobs because they can't afford to live where the new jobs are. ...

... NOAH: Yes, that sounds to me like a very common experience. And yes, obviously people are moving, you know, but in the aggregate, people are moving a lot less than they used to. And, you know, when you look back through American history, I mean, you sort of think - American history really is the story of a succession of movements. There was the westward movement. There was the movement, in the early part of the 20th century, from farms to the cities. There was the great black migration of the early and middle 20th centuries. There was the move to the Sunbelt in the 1970s. That was really the last time people were, in large numbers, moving to jobs. People are still moving to the Sunbelt today, but now it's not moving to jobs. They're moving there for the warm weather or for the cheaper housing. ...

I'm not endorsing his solutions, but the analysis is interesting.

5. Why Did Jews Become Moneylenders? Because They Could

6. One reason C.E.O. pay keeps rising: Open Season

... the drive for transparency has actually helped fuel the spiralling salaries. For one thing, it gives executives a good idea of how much they can get away with asking for. A more crucial reason, though, has to do with the way boards of directors set salaries. ...

... This isn’t just an American problem. Elson notes that, when Canada toughened its disclosure requirements, executive salaries there rose sharply, and German studies have found something similar. ...

... Transparent pricing has perverse effects in other fields. In a host of recent cases, public disclosure of the prices that hospitals charge for various procedures has ended up driving prices up rather than down. And the psychological causes in both situations seem similar. We tend to be uneasy about bargaining in situations where the stakes are very high: do you want the guy doing your neurosurgery, or running your company, to be offering discounts? Better, in the event that something goes wrong, to be able to tell yourself that you spent all you could. And overspending is always easier when you’re spending someone else’s money. Corporate board members are disbursing shareholder funds; most patients have insurance to foot the bill. ...

7. Americans Significantly Overestimate The Percent Of People On Food Stamps

... Around 14.3% of the nation is on SNAP — roughly 1 in 7 Americans — but still people thought participation was much higher, with the average being 22.5%. ...

8. Europe Can’t Find Balance Between Green Goals and Growth

... Europe hoped to act as a global leader by setting its ambitious 2020 climate goals, but its position as a first mover in green policy has only managed to put European industry at a competitive disadvantage relative to the rest of the world. Green energy is more expensive than brown energy and must be propped up by government subsidies to gain significant market share. The costs of these subsidies get passed on to consumers, meaning households and businesses must pay out the nose for electricity. If you’re a decent-sized widget manufacturer in Germany, options in the developing world and shale-rich America start to look more appealing. ...

9. Yes, Economics Is a Science by Raj Chetty

... But the headline-grabbing differences between the findings of these Nobel laureates are less significant than the profound agreement in their scientific approach to economic questions, which is characterized by formulating and testing precise hypotheses. I’m troubled by the sense among skeptics that disagreements about the answers to certain questions suggest that economics is a confused discipline, a fake science whose findings cannot be a useful basis for making policy decisions.

That view is unfair and uninformed. It makes demands on economics that are not made of other empirical disciplines, like medicine, and it ignores an emerging body of work, building on the scientific approach of last week’s winners, that is transforming economics into a field firmly grounded in fact.

It is true that the answers to many “big picture” macroeconomic questions — like the causes of recessions or the determinants of growth — remain elusive. But in this respect, the challenges faced by economists are no different from those encountered in medicine and public health. Health researchers have worked for more than a century to understand the “big picture” questions of how diet and lifestyle affect health and aging, yet they still do not have a full scientific understanding of these connections. Some studies tell us to consume more coffee, wine and chocolate; others recommend the opposite. But few people would argue that medicine should not be approached as a science or that doctors should not make decisions based on the best available evidence. ...

One Person's Exploitation is Another Person's Blessing

Writing in his recent post The Alleged "Perils" of "Premature De-Industrialisation." Economist Gavin Kennedy writes:

"...  I also recall more recently of a Vietnamese woman on being questioned by a Western journalist about her 14-hour working day that she worked six days a week in a new computer-board manufacturing plant near her home village. The Western Journalist considered this was a dreadful example of Western capitalist exploitation of the Vietnamese poor and he seemed to want her to receive US wage rates, so she boldly introduced him to the real world. She told him of the real effect that the 14-hour days for light work in an air-conditioned computer factory: it was not exploitation in her circumstance because it was a significant improvement on her experience of grinding 18-hours, seven-day working in near-by farming fields, and it paid her a whole lot more, and more regularly, than in her previous working life. True, by US standards, her pay was still small and her hours were long, but in Vietnam in the 21st century, it was better paid than any financial rewards from the grinding uncertainties of heavy fieldwork to which she was condemned in before the arrival of the local factory.

I think some Western economists should get out more."

This is a delicate topic. There is slave labor in various locales around the world, with people made to work in unbearable conditions, but most manufacturing labor in newly industrializing economies comes from people freely choosing that work. Why? Because life in rural villages is often filled with long hard work just to stay above subsistence and with no prospect of economic improvement. Industrial jobs pay better, offer more opportunities, and have better working conditions. What many of us Westerners see as substandard work conditions are seen by locals as radical improvements. The typical pattern is that worker skill sets and productivity begin to rise. Work hours shorten, managerial skills are learned, productivity rises, and prosperity cycles upward. People are not being ripped from lives of idyllic peasantry into slave camps. People living on bare subsistence are choosing greater wealth and opportunity. But this is where the topic is delicate.

It is myopic to look at these situations through Western eyes and see injustice everywhere, as this critique correctly exposes. But it is also myopic to think that industrializing countries will magically go through the industrialization process with the best interest of workers in mind and that multinational corporations, if not closely watched, will never exploit workers. Both critics and advocates of industrialization need to be sure they are looking through the eyes of locals toward opportunity and justice, not just playing out Western ideologies in other locales.

Norway Breaks with Social Democracy

New Geography: Norway Breaks with Social Democracy

Largely uncommented on in the US press, Europe’s long-standing social democratic tilt has changed. During recent years, almost all Western European nations have seen a dramatic fall in support for the traditional Social Democratic parties, which for so long have dominated the political landscapes. In response, the centre-left parties have morphed, moving towards greater emphasis on the benefits of free markets and individual responsibility. In several countries the former communist parties now claim that they fill the role of traditional Social Democrats. A new breed of modernized centre-left parties is likely to replace several centre‑right governments during coming years. The third consecutive loss for the German Social Democrats illustrates the continuing difficulties for Europe’s labor movements to gather the strong support that they previously almost took for granted.

Until recently oil-rich Norway has remained unique, as the only nation where Social Democrats have resisted change to highly generous welfare benefits. In 1999 the former Swedish social democratic minister of business, Björn Rosengren, famously called Norway “the last Soviet state” due to the lack of willingness to adopt market policies. But now even Norway is shifting with the recent election of a centre‑right government formed by Erna Solberg. Making the transition from a full-scale welfare state to a system which consistently rewards work more than public handouts will be a difficult one for Norway. Hopefully, the newly elected government will draw inspiration from the neighbor to the east.

Politicians in Norway for long admired the Swedish social system, seeing their larger neighbor as a pioneer of Social Democratic policies.

Recently however, particularly the left has begun to emphasize the uniqueness of the Norwegian Welfare Model rather than the Scandinavian Welfare Model. Swedish policies have even been used in the recent election as deterrence by the left. It is easy to see why. The current centre-right government in Sweden, elected in 2006 and re‑elected in 2010, has focused on a broad reform agenda. The workfare policies introduced include: somewhat less generous benefits, tax reductions aimed particularly at those with lower incomes, liberalizations of the temporary employment contracts and a gate-keeping mechanism for receiving sick and disability benefits. ...

I always think of articles like these every time I hear American conservatives complain we are becoming more like Sweden or liberals highlighting how we need to adopt socialism based on how happy the Scandinavians are. Both sides may want to look a little closer.

 

Economics Links

1. Did living standards improve during the Industrial Revolution?

... So, while the Industrial Revolution ultimately led to big increases in wealth, progress was unsteady. For much of the period, the average person was not reaping the benefits of economic change.

So much for wages. Other measures of standard of living should be considered. ...

This a great piece highlighting the methods economic historians use to evaluate standards of living.

2. Annual Food Inflation

3.  Robert Reich on free markets

... In reality, the "free market" is a bunch of rules about (1) what can be owned and traded (the genome? slaves? nuclear materials? babies? votes?); (2) on what terms (equal access to the internet? the right to organize unions? corporate monopolies? the length of patent protections? ); (3) under what conditions (poisonous drugs? unsafe foods? deceptive Ponzi schemes? uninsured derivatives? dangerous workplaces?) (4) what's private and what's public (police? roads? clean air and clean water? healthcare? good schools? parks and playgrounds?); (5) how to pay for what (taxes, user fees, individual pricing?). And so on.

These rules don't exist in nature; they are human creations. Governments don't "intrude" on free markets; governments organize and maintain them. Markets aren't "free" of rules; the rules define them....

All true, but the rules were not arbitrarily written yesterday. Centuries of trial and error are reflected in the rules. That doesn't make them all just or above modification, but neither are they a game thrown together at a whim. To claim there are no free markets because government frames elements of exchange is like saying there is no such thing as free speech because government frames elements of public dialog.

4. American Farmers Say They Feed The World, But Do They?

... So I called , an economist at Cornell University who studies international agriculture and poverty.

They're both right," he says, chuckling. "Sometimes the opposite of a truth isn't a falsehood, but another truth, right?"

It's true, he says, that bigger harvests in the U.S. tend to make food more affordable around the world, and "lower food prices are a good thing for poor people." ...

... But Mellon is right, too, Barrett says. The big crops that American farmers send abroad don't provide the vitamins and minerals that billions of people need most. So if the U.S. exports lots of corn, driving down the cost of cornmeal, "it induces poor families to buy lots of cornmeal, and to buy less in the way of leafy green vegetables, or milk," that have the key nutrients. In this case, you're feeding the world, but not solving the nutrition problems. ...

 5. Why the U.S. Needs to Fall Out of Love With Homeownership

... Less developed countries have consistently higher levels of homeownership, while more advanced nations combine higher levels of economic development with substantially lower levels of homeownership.  (The correlation between the two is -.40 overall and it rises to -.58 when she removed outliers Singapore, Norway, Luxembourg and Switzerland). American political rhetoric tends to equate rising homeownership rates with strong economic development. Instead, the opposite is true. The rate of homeownership declines as nations get wealthier.

One reason for this may be because people in less developed nations have fewer options of where to put their money. In agrarian economies, land ownership is the basic source and measure of wealth. In more advanced capitalist economies, people have many more investment options. Many of the places with the highest rates of homeownership are in former Communist nations of Eastern Europe. ...

... And numerous studies have found that excessive homeownership significantly distorts the economy, diverting investment away from much more needed areas like technology and knowledge.

Homeownership continues to make sense for many Americans. But for those whose income is limited or who are still building their careers, a house can be an anchor than limits their ability to move to where jobs are.  ...

6. Household Incomes Remain Flat Despite Improving Economy

7. Brazil's New Middle Class: A Better Life, Not An Easy One

Tens of millions of Brazilians have risen out of poverty over the past decade in one of the world's great economic success stories. The reasons are many: strong overall economic growth, fueled by exports. A rise in the minimum wage. A more educated workforce. And big government spending programs, including direct payments to extremely poor families.

But becoming middle class in Brazil means a better life, not an easy one. The new, lowest rung of the middle class is what in the U.S. would be called the working poor, with monthly incomes of between $500 and $2,000.

Yet this group is driving consumer spending in Brazil as they cobble together enough money to buy a television, a cell phone or pay for their children to go to a private school. ...

Technology Is Wiping Out Companies Faster than Ever

MIT Technology Review: Technology Is Wiping Out Companies Faster than Ever

... Today’s S&P 500 includes many familiar firms, like Apple, AT&T, Corning, Ford, Intel, and Yahoo (and Hewlett-Packard, too). Yet at today’s fast rate of turnover, three out of four names on the list will be banished into obscurity within the next fifteen years.

Foster’s view is that big companies can’t ever out-innovate the market. Instead, he thinks that to stay big, companies need to be willing to exit old businesses and enter new ones—and do it quite boldly. (HP, by contrast, can’t decide whether to jettison its PC business.) ...

How iPhone Is Made: A Surprising Report on How Much of Apple’s Top Product is US-manufactured

Finances Online: How iPhone Is Made: A Surprising Report on How Much of Apple’s Top Product is US-manufactured

... In this infographic we trace the iPhone supply and manufacturing chain. We’re providing snippets of information on both of the existing flagship model plus early breaking rumors for the next-gen iPhones. Did you know, for example, that 90% of all the rare-earth minerals used on an iPhone 5’s circuitry, screen, speakers, and glass cover are mined in China and Inner Mongolia? And did you know that Foxconn might soon be overtaken by Pegatron as Apple’s biggest manufacturing partner in China?

What does the rest of the world contribute to the making of the iPhone? Let’s find out!

 

Republished from www.financesonline.com

Saturday Links

Pickings have been slim this week, and I'm late getting the links posted. Hopefully, we will get back on track this week.

1. Hidden environmentalists: India's waste pickers

In Pune, India, a city that suffered a waste disposal crisis in 2010, an alliance of waste pickers has established an inclusive, sustainable model for solid waste management that presents a potential blueprint for the future.

... They formed SWaCH – India's first wholly-owned cooperative of self-employed waste pickers. Since 2005, SWaCH has worked in partnership with city authorities, providing door-to-door collection for a small fee and – unlike other contractors that favor landfills and incineration units – recycling and composting the city's rubbish.

However, as Vishnu, head of operations, explains, it is an initiative driven primarily by social, rather than environmental forces. Before SWaCH, waste pickers rummaged through landfills to find scraps to sell. "They were not working in a clean area – there are snakes and pigs and dogs. And they were not getting enough sellables to sustain their families." By incorporating waste pickers into the municipal mechanism for waste collection and formalizing what had previously been a completely unregulated economy, SWaCH has provided increased economic security and social uplift for thousands of families in Pune. ...

2. Discover asks How Many People Ever Lived?

While I was writing The Cancer Chronicles, I came to a point, early on, where I wondered how many people had ever been alive in the world. The best answer I could find came from a study by an organization called the Population Reference Bureau: 108 billion.

I was stunned by the magnitude of the number. It is still common to hear that more people are alive today than have ever lived. Or an even more extreme claim: that 75 percent of everyone who ever walked the earth is living today. But that is not even close to being correct. By the Population Reference Bureau's reckoning, the proportion of living to dead is only about 6 percent. ...

3. The Rise Of The Renting And Sharing Economy Could Have Catastrophic Ripple Effects

... "The potential impacts of renting/leasing as a long-term trend, though, are worrisome: Renting and sharing could lead to lower home sales (and, subsequently lower home values and net worths), as well as lower auto and retail sales," write the strategists. "The ripple effects could also be catastrophic: Adjusting to a consumer who does not necessarily buy, but rather rents, would necessitate a shift in production, sales, and even employment structures. Everything interesting in economics happens at the margin, so if the nth consumer chooses to rent an apartment instead of buying a house or making do with a car-share program instead of purchasing a new vehicle, then demand for new houses and cars drops."...

4. Lawrence Berkeley National Labs: Solar Costs Continue To Fall

... Lawrence Berkeley National Labs (LBNL) recently released their report summarizing the trends in installed costs of solar installations from 1998 to 2012. They looked at over 92,000 installations over the past two years, and found that the cost dynamics continue to move strongly downward.

Some of the main findings:

Installations in the U.S. more than quadrupled from 2009 to 2012, going from 7,000 megawatts to 31,000.

Costs continue to fall at a healthy clip, with the most recent year-over-year declines of 14% for systems less than 10 kilowatts (kW), 13% for systems in the 10 – 100 kW range, and 6% for systems larger than 100 kW. Median installed prices were $5.3, $4.9, and $4.6 per watt respectively. LBNL attributes these declining U.S. prices mainly to falling module prices, which accounted for 80% of the total price drop.

The trend in 2013 appears to be continuing. The initial data available from the California Solar Initiative shows prices falling by 10-15% in the first six months of this year.

LBNL did note that the module prices appeared to be stabilizing in 2013, but the report also commented that experience from other countries suggests the price declines can and will continue. The median installed price of small residential PV systems last year (without tax) was $2.6 in Germany (fully half the price in the U.S.), $3.1 in Australia, and $3.1 per watt in Italy.

Many of these additional gains will come about as a result of reductions in soft costs, as permitting becomes streamlined, and companies develop more efficient customer acquisition and financing tools. ...

5. Germany Fights Population Drop

... In its most recent census, Germany discovered it had lost 1.5 million inhabitants. By 2060, experts say, the country could shrink by an additional 19 percent, to about 66 million. ...

... Germany, however, an island of prosperity, is spending heavily to find ways out of the doom-and-gloom predictions, and it would seem ideally placed to show the Continent the way. So far, though, even while spending $265 billion a year on family subsidies, Germany has proved only how hard it can be. That is in part because the solution lies in remaking values, customs and attitudes in a country that has a troubled history with accepting immigrants and where working women with children are still tagged with the label "raven mothers," implying neglectfulness.

If Germany is to avoid a major labor shortage, experts say, it will have to find ways to keep older workers in their jobs, after decades of pushing them toward early retirement, and it will have to attract immigrants and make them feel welcome enough to make a life here. It will also need to get more women into the work force while at the same time encouraging them to have more children, a difficult change for a country that has long glorified stay-at-home mothers....

... Demographers say that a far better investment would be to support women juggling motherhood and careers by expanding day care and after-school programs. They say recent data show that growth in fertility is more likely to come from them. ...

6. A Surprising Map of the World Shows Just How Big China's Population Is

In order to comprehend what it means for one country to have one-fifth of the world's population, this nifty map (from the indispensable @Amazing_Maps on Twitter) divides the world into five regions, each with the same population of China.

Should Uncle Sam Chase a Scandinavian Model?

New Geography: Should Uncle Sam Chase a Scandinavian Model?

When American progressives dream their future vision of America, no place entices them more than the sparsely populated countries of Scandinavia. After all, here are countries that remain strongly democratic and successfully capitalist, yet appear to have done so despite enormously pervasive welfare systems. ...

... But before we all go out drinking aquavit, shouting "skol" and dyeing our hair blonde, it makes sense to recognize that not only is relatively small, historically homogenous Scandinavia an ill-suited role mode for a megapower like the U.S., but that, in many ways, the Nordic system may be far more limited than its admirers here might acknowledge. ...

... In addition, not all the reasons for Scandinavia's relative health are those that would warm the heart of U.S. progressives. These countries, led by Sweden, have reformed many aspects of their welfare state, including such things as labor laws, and reduced taxes in ways that make them more competitive – and far less egalitarian than in the past.

Another positive factor for Scandinavia lies in their exploitation of resources, something many progressives, notably green policy aficionados, tend to view with disdain. Sweden exports loads of iron ore to drive its economy and employs massive dams to drive hydropower, which accounts for 42.8 percent of their energy. Norway benefits from a gusher of oil and gas that, producing nearly 2 million barrels of oil per day, making it the 14th largest oil producer in the world despite having a population of 5 million. If anything, Norway can be a model socialist economy because its economic base resembles the Nordic enclave of North Dakota. Overall, the tiny country produces nearly 15 times as much oil per person than the U.S.

There's also the matter of scale. Demographically, Scandinavia's population is microscopic compared to our far vast multi-ethnic Republic. Taken together the four Scandinavian countries – Finland, Denmark, Sweden and Norway – are home to barely 26 million people, far fewer than California and about the same as Texas. These hardy souls are widely dispersed. The population density of Norway and Finland is roughly half that of the U.S., while that of Sweden is one-third less.

Sweden, to put things in perspective, has fewer people than Los Angeles County. ...

... Scandinavia's greatest strength may lie in its least political correct asset: its Nordic culture. Scandinavians' traditional interest in education, hard work and good governance serves them well both at home and abroad. It's not socialism that is primarily responsible. ...

... More troubling still, notes Sanandaji, who is of Swedish-Kurdish ancestry, many young Scandinavians also seem to be rejecting the old Nordic social compact. Increasing numbers of people under 40 are retiring early, citing disabilities and sickness.

These trends point to serious problems for countries whose birthrates, despite widely praised natalist policies, are dropping and generally are below ours. With immigration growing ever more unpopular, further demographic decline in the Nordic countries seems inevitable.

As a result, the Scandinavian welfare state faces challenges arguably far worse than those here at home. ...

Saturday Links

1. Mark Buchanan asks Is Economics a Science or a Religion?

2. Poverty has moved to the suburbs

I don't think this should be seen as necessarily a bad thing. A few decades ago, the idea was to "warehouse" the poor in large urban complexes. There has been an intentional effort at dispersal through various means including creating mixed-income neighborhoods.

3. Crime has plummeted in the rich world, even amid the recession.

4. 5 Charts That Perfectly Capture The Incredible Rise Of China

5. How (and why) Africa should solve its own problems

Africa cannot rely on outside people to come and feed our poor or treat our sick, says African businessman and philanthropist Mo Ibrahim. The key is good governance, in both the public and private sectors.

6. World Bank: Africa held back by land ownership confusion

Africa's economic growth is being held back by confusion over who owns vast swathes of agricultural land, according to a World Bank report.

7. Deforestation in Africa's Congo Basin rainforest slows

Tree loss in one of the world's largest rainforests has slowed, a study suggests.

Satellite images of Africa's Congo Basin reveal that deforestation has fallen by about a third since 2000.

Researchers believe this is partly because of a focus on mining and oil rather than commercial agriculture, where swathes of forest are cleared. ...

 8. Brazil's Evangelicals A Growing Force In Prayer, Politics

... Recent polls show that evangelical Christianity is the fastest-growing sect in Brazil. According to the Pew Research Center, 22 percent of the Brazilian population identifies as evangelical Christian — up from 5 percent in 1970. Unfortunately for the Catholic Church, most of them switched from Roman Catholicism.

These days, only about 62 percent of people in Brazil say they are Catholic. In absolute numbers, however, this still makes Brazil the country with the most Catholics in the world. ...

9. For Developing World, a Streamlined Facebook

MENLO PARK, Calif. — Facebook has been quietly working for more than two years on a project that is vital to expanding its base of 1.1 billion users: getting the social network onto the billions of cheap, simple "feature phones" that have largely disappeared in America and Europe but are still the norm in developing countries like India and Brazil.

Facebook soon plans to announce the first results of the initiative, which it calls Facebook for Every Phone: More than 100 million people, or roughly one out of eight of its mobile users worldwide, now regularly access the social network from more than 3,000 different models of feature phones, some costing as little as $20.

Many of those users, who rank among the world's poorest people, pay little or nothing to download their Facebook news feeds and photos, with the data usage subsidized by phone carriers and manufacturers. ...

10. The Huge Threat to Capitalism That Republicans Are Ignoring (I don't agree with a couple of points but I think his thesis is spot on.)

11. Big Racial Divide over Zimmerman Verdict

12. The Wal-Mart Slayer: How Publix's People-First Culture Is Winning The Grocer War

Family-run Publix is both the largest employee-owned company and the most profitable grocer in America. Those two facts are linked, and they might be the formula for fending off Bentonville's retail behemoth. ...

... When a middle-aged woman asks about a box of crackers, no aisle number is blurted out. Instead, an employee races off to find the item, just as he is trained to do. At checkout, shoppers move to the front quickly, thanks to a two-customer-per-line goal enforced by proprietary, predictive staffing software. Baggers, a foggy memory at most large supermarket chains, carry purchases to the parking lot. Even Publix's president, Todd Jones, who started out as a bagger 33 years ago, stoops down to pick up specks of trash on the store floor.

"We believe that there are three ways to differentiate: service, quality and price," Jones says. "You've got to be good at two of them, and the best at one. We make service our number one, then quality and then price."...

... Publix, the seventh-largest private company in the U.S. ($27.5 billion in sales) and one of the least understood thanks to decades of media reticence, is also the largest employee-owned company in America. For 83 years Publix has thrived by delivering top-rated service to its shoppers by turning thousands of its cashiers, baggers, butchers and bakers into the company's largest collective shareholders. All staffers who have put in 1,000 work hours and a year of employment receive an additional 8.5% of their total pay in the form of Publix stock. (Though private, the board sets the stock price every quarter based on an independent valuation; it's pegged at $26.90 now, up nearly 20% already this year.) How rich can employees get? According to Publix, a store manager who has worked at the company for 20 years and earns between $100,000 and $130,000 likely has $300,000 in stock and has received another $30,000 in dividends. ...

 13. Grocery shopping online: Can it replace trips to the store?

The website mySupermarket.com compares the prices of groceries online and works to reduce shipping costs. But a limited selection means grocery store runs aren't a things of the past just yet.

14. 25 Everyday Things Made Obsolete This Century. What would you add to the list?

katmere via Flickr

Saturday Links

1. Public Religion Research Institute: Survey | Do Americans Believe Capitalism and Government are Working?: Religious Left, Religious Right and the Future of the Economic Debate

2. Gallup reports Sub-Saharan Africa Is Wildly Optimistic About Its Future

3. U.S. could lead world oil production by 2017, study says

Domestic shale oil production could shoot up to 5 million barrels per day by 2017, making the United States the top oil producing country in the world, according to a researcher at Harvard Kennedy School.

4. Will Europe Hit a Demographic Tipping Point?

... In 1968 Paul Ehrlich’s doomsday tome The Population Bomb predicted mass starvation and civilizational collapse in much of the world due to overpopulation. But the more serious problem – particularly in traditionally higher-income countries – today is actually too few, not too many new people. The pivot to seeing this as the problem has come through something very basic: pension math. Across the developed world, public pension systems built on the assumption of continued population growth are now facing an actuarial day of reckoning as the bills come due while birth rates have plummeted.

A society needs a total fertility rate – that is, the average number of children born to each woman – of 2.1 just to maintain its population without immigration. Some European countries like France (2.03) and the UK (1.98) are in reasonably good shape, but they are the exception. The total fertility rate in Greece is 1.43, in Germany 1.36, in Spain 1.36, in Portugal 1.30, and in Poland 1.30. Much of southern and central Europe hovers near the so-called “lowest-low” rate of 1.3 in which the population is naturally being cut in half every 45 years.

Simple birth rates alone have caused some to posit a societal going out of business sale in Europe. However, just as extrapolation of high population growth rates in the past led to wildly alarmist claims that proved false, so today we must be careful about not proclaiming Europe is doomed. But with the population on tap to be halved every generation, the runway to turn things around is difficult to conjure. And while we’ve seen many countries make the shift from high to low birth rates, there isn’t a huge track record of success in the other direction. ...

5. Hunger Makes People Work Harder, and Other Stupid Things We Used to Believe About Poverty

The article includes this interesting graph:

6. Forget Microlending. India Needs Basic, Competent Credit Reporting - Businessweek

Development economists talk a lot about credit. Figure out a way to get it to people in a developing economy, rather than just large companies or the state itself, and you can encourage small-scale risk-taking. Microlending offers very small loans to individuals, often $100 or less. The idea won Muhammad Yunus a Nobel Prize in 2006. More recently, microfinance and mobile banking have offered ways to save and insure on a small scale, allowing people take risks with their own money. Speaking in Mumbai earlier this month, K. C. Chakrabarty, deputy governor of the Reserve Bank of India, offered an additional way to expand credit: better credit reporting. No shepherds with phones, no happy mothers of four with new sewing machines. Just credit reporting, plain old attention to detail, and administrative competence.

7. Why We Need to Treat America's Poorest Neighborhoods Like Developing Countries

The article includes maps showing life expectancy across several metropolitan areas. Here is the one for my hometown, Kansas City.

8. Racial Disparities in Life Spans Narrow, but Persist

The gap in life expectancy between black and white Americans is at its narrowest since the federal government started systematically tracking it in the 1930s, but a difference of nearly four years remains, and federal researchers have detailed why in a new report.

9. The Unsettling Link Between Sprawl and Suicide

A new scientific working paper (spotted by Tim De Chant of Per Square Mile) contends that as population density decreases, the suicide rate among young people increases. This effect becomes particularly pronounced below 300 inhabitants per square kilometer — roughly the density of San Diego County.

10. Big Data, for Better or Worse: 90% of World's Data Generated Over Last Two Years

11. The one event that destroyed the PC industry

12. Tweets that got people arrested

13. Religion & Wikipedia: The 'Edit Wars' Rage On

Scientists have analyzed page edits in 10 editions of Wikipedia to determine the topics most often fought over by editors of the open encyclopedia. The most debated topics included many religious subjects, like Jesus and God, according to research done by Taha Yasseri, Anselm Spoerri, Mark Graham, and János Kertész.

Rather than merely citing pages that changed a lot, they identified pages involved in "edit wars," that involved editors making changes that were almost instantly undone by another contributor. This proved the best method of finding controversial pages, as pages often updated could simply belong to a rapidly changing field or topic. However, pages with words and phrases constantly removed and reinserted indicated a passionate disagreement surrounding the issue at hand.

The most controversial pages across all ten editions of Wikipedia were:

• Israel
• Adolf Hitler
• The Holocaust
• God

Other controversial subjects were Jesus, the Prophet Muhammad, and Christianity.

14. The curious case of the fall in crime

... Cherished social theories have been discarded. Conservatives who insisted that the decline of the traditional nuclear family and growing ethnic diversity would unleash an unstoppable crime wave have been proved wrong. Young people are increasingly likely to have been brought up by one parent and to have played a lot of computer games. Yet they are far better behaved than previous generations. Left-wingers who argued that crime could never be curbed unless inequality was reduced look just as silly.

There is no single cause of the decline; rather, several have coincided. Western societies are growing older, and most crimes are committed by young men. Policing has improved greatly in recent decades, especially in big cities such as New York and London, with forces using computers to analyse the incidence of crime; in some parts of Manhattan this helped to reduce the robbery rate by over 95%. The epidemics of crack cocaine and heroin appear to have burnt out.

The biggest factor may be simply that security measures have improved. Car immobilisers have killed joyriding; bulletproof screens, security guards and marked money have all but done for bank robbery. Alarms and DNA databases have increased the chance a burglar will be caught. At the same time, the rewards for burglary have fallen because electronic gizmos are so cheap. Even small shops now invest in CCTV cameras and security tags. Some crimes now look very risky—and that matters because, as every survey of criminals shows, the main deterrent to crime is the fear of being caught. ...

15. By 2030, Half of All Colleges Will Collapse

 

Saturday Links

I skipped Saturday Links last week due to the holiday weekend. I'm catching up this week.

1. Faith in the Free Market

"... Selke, now 36, is part of a vanguard of young Christians who believe that God uses not only the church and formal ministry but every sphere of society, including business and free markets, to advance his work of shalom. Selke parlayed his experience analyzing companies, creating spreadsheets, and evaluating profitable opportunities for an investment bank into helping social entrepreneurs—people who create organizations in order to benefit society.

In 2010, Selke co-founded Hub Ventures, an accelerator in San Francisco investing in entrepreneurs launching companies that produce a social good. The 12-week program provides up to $20,000 in seed funding, mentorship, workshops, and access to investors in exchange for an average of a 6 percent ownership stake. What separates Selke's program from other business accelerators en vogue in Silicon Valley is the focus on "entrepreneurs building technology solutions for a better world," Selke says. ..."

2. The Global Low Fertility Panic: Just a Phase?

"...Our new book, The Global Spread of Fertility Decline: Population, Fear, and Uncertainty (Yale University Press, 2013) analyzes these trends and the demographic, political and economic consequences and uncertainties as low fertility has become a global phenomenon. Like other facets of globalization, low fertility rates are by no means universal: High fertility persists in sub-Saharan Africa and in parts of the Middle East, but elsewhere low fertility is more the rule than the exception. These underlying trends in childbearing mean that in the near future the rate of population growth both in Europe and Asia are likely to decline. The world is not on a path of unrestrained demographic growth, as some believe. People all over the world have hit the brakes.

Thirty years ago only a small fraction of the world's population lived in the few countries with fertility rates substantially below the "replacement level" - the rate at which the fertility of a hypothetical cohort of women would exactly replace itself in the next generation - normally set at 2.1 children per woman for populations with low mortality conditions. Fast forward to 2013, with roughly 60 percent of the world's population living in countries with such below-replacement fertility rates.

The consequences of these changes are striking. ..."

3. Immigration and Entrepreneurship

According to a Small Business Administration-commissioned report in 2012 by Robert W. Fairlie, an economics professor at the University of California, Santa Cruz, the business ownership rate is higher for immigrants than the native-born, with 10.5 percent of the immigrant work force owning a business compared with 9.3 percent of the native-born work force.

4. Graft Is On The Rise Around The World

5. Job-Stealing Robots Go Global

Asian workers have scored some victories in rising wages, but many are learning something the West has known for some time: Employers will seek out the cheapest labor on offer, and machines are even cheaper than an underpaid human. In the late 20th century, manufacturing jobs shifted from America to China, then from China to Southeast Asia, and now even those are being automated.

For America, at least, this trend shouldn't be so disconcerting. After all, it's developed economies like ours that are designing the robots Nike is now using. Low-wage manufacturing jobs are drying up, but they're being replaced by jobs in building, operating, and repairing the tech in question. Increasingly, companies will be likely to "onshore" these jobs to America, when shipping and distribution becomes much easier and cheaper. Manufacturing, it seems, will come full circle.

6. Economist Mark Perry with a provocative claim: Yes, the middle-class has been disappearing, but they haven't fallen into the lower-class, they've risen into the upper-class

 

7. Co.exist with what they see as 4 Bogus Claims About Why Walmart Can't Pay A Living Wage (I'm not in full agreement but they make they present their side articulately.)

8. Gallup Has Never Seen So Many Americans Sitting Out Of The Stock Market

9. K-State study: Arguments about money best predictor of divorce

"Results revealed it didn't matter how much you made or how much you were worth," Britt said in the university statement. "Arguments about money are the top predictor for divorce because it happens at all levels."

She said couples should seek a financial planner as part of premarital counseling, and talk about finances.

10. How the Dismal Science Got Its Name (It had nothing to do with Thomas Malthus or scarcity ... or even with students who have suffered through Econ 101 classes.)

 11. Matt Ridley writes I may follow the crowd, but not because it's a crowd

"... My friend objected that I seemed to follow the herd on matters like the reality of evolution and the safety of genetically modified crops, so why not on climate change? Ah, said I, but I don't. I agree with the majority view on evolution, not because it is a majority view but because I have looked at evidence. It's the data that convince me, not the existence of a consensus. ..."

12. Dan Lewis debunks the myth that the end of the telegraph is here: The Spread of a False Fact

13. PC sales see 'longest decline' in history

Global personal computer (PC) sales have fallen for the fifth quarter in a row, making it the "longest duration of decline" in history.

14. Time of 'Incredible Violence': Historian Gives Readers Glimpse of Medieval Life

15. Farming Got Hip In Iran Some 12,000 Years Ago, Ancient Seeds Reveal

Archaeologists digging in the foothills of Iran's Zagros Mountains have discovered the remains of a Stone Age farming community. It turns out that people living there were growing plants like barley, peas and lentils as early as 12,000 years ago.

The findings offer a rare snapshot of a time when humans first started experimenting with farming. They also show that Iran was an important player in the origin of agriculture.

16. LGBT group finds acceptance at evangelical college

"... Fuller's community standards states that "sexual abstinence is required for the unmarried" and marriage is between one man and one woman.

Nevertheless, Fuller's decision not to push back against OneTable is a critical step toward acceptance for gay evangelical students, said Justin Lee, the executive director of the Gay Christian Network, which tracks the burgeoning movement. An increasing number of young people have been coming out on Christian campuses nationwide, whether they are accepted or not, and Fuller's move acknowledges that and provides a touchstone for students who would otherwise keep their sexuality a secret, he said. ..."

17. New generation activists build bridges

A traditional organizing approach makes opponents into 'enemies,' but a new crop of union and other activists is using love and empathy to create alliances and new possibilities.

 

It is capitalism, not democracy, that the Arab world needs most

Telegraph: It is capitalism, not democracy, that the Arab world needs most

Property rights for aid: this could be the most effective anti-poverty strategy in history

... But the Arab Spring was a demand for freedom, not necessarily democracy – and the distinction between the two is crucial. Take, for example, the case of Mohammed Bouazizi, who started this chain of events by burning himself alive on a Tunisian street market two years ago. As his family attest, he had no interest in politics. The freedom he wanted was the right to buy and sell, and to build his business without having to pay bribes to the police or fear having his goods confiscated at random. If he was a martyr to anything, it was to capitalism.

All this has been established by Hernando de Soto, a Peruvian economist who travelled to Egypt to investigate the causes of the Arab Spring. His team of researchers found that Bouazizi had inspired 60 similar cases of self-immolation, including five in Egypt, almost all of which had been overlooked by the press. The narrative of a 1989-style revolution in hope of regime change seemed so compelling to foreigners that there was little appetite for further explanation. But de Soto’s team tracked down those who survived their suicide attempts, and the bereaved families. Time and again, they found the same story: this was a protest for the basic freedom to own and acquire ras el mel, or capital.

 

Thoughts on the "The Limits to Panic"

Forty-one years after the publication of the infamous Limits to Growth, Bjorn Lomborg offers this excellent piece, The Limits to Panic:

... But the report's fundamental legacy remains: we have inherited a tendency to obsess over misguided remedies for largely trivial problems, while often ignoring big problems and sensible remedies.

In the early 1970's, the flush of technological optimism was over, the Vietnam War was a disaster, societies were in turmoil, and economies were stagnating. Rachel Carson's 1962 book Silent Spring had raised fears about pollution and launched the modern environmental movement; Paul Ehrlich's 1968 title The Population Bomb said it all. The first Earth Day, in 1970, was deeply pessimistic.

The genius of The Limits to Growth was to fuse these worries with fears of running out of stuff. We were doomed, because too many people would consume too much. Even if our ingenuity bought us some time, we would end up killing the planet and ourselves with pollution. The only hope was to stop economic growth itself, cut consumption, recycle, and force people to have fewer children, stabilizing society at a significantly poorer level.

That message still resonates today, though it was spectacularly wrong. For example, the authors of The Limits to Growth predicted that before 2013, the world would have run out of aluminum, copper, gold, lead, mercury, molybdenum, natural gas, oil, silver, tin, tungsten, and zinc.

Instead, despite recent increases, commodity prices have generally fallen to about a third of their level 150 years ago. Technological innovations have replaced mercury in batteries, dental fillings, and thermometers: mercury consumption is down 98% and, by 2000, the price was down 90%. More broadly, since 1946, supplies of copper, aluminum, iron, and zinc have outstripped consumption, owing to the discovery of additional reserves and new technologies to extract them economically.

Similarly, oil and natural gas were to run out in 1990 and 1992, respectively; today, reserves of both are larger than they were in 1970, although we consume dramatically more. Within the past six years, shale gas alone has doubled potential gas resources in the United States and halved the price.

As for economic collapse, the Intergovernmental Panel on Climate Change estimates that global GDP per capita will increase 14-fold over this century and 24-fold in the developing world.

The Limits of Growth got it so wrong because its authors overlooked the greatest resource of all: our own resourcefulness. Population growth has been slowing since the late 1960's. Food supply has not collapsed (1.5 billion hectares of arable land are being used, but another 2.7 billion hectares are in reserve). Malnourishment has dropped by more than half, from 35% of the world's population to under 16%.

Nor are we choking on pollution. Whereas the Club of Rome imagined an idyllic past with no particulate air pollution and happy farmers, and a future strangled by belching smokestacks, reality is entirely the reverse.

In 1900, when the global human population was 1.5 billion, almost three million people – roughly one in 500 – died each year from air pollution, mostly from wretched indoor air. Today, the risk has receded to one death per 2,000 people. While pollution still kills more people than malaria does, the mortality rate is falling, not rising.

Nonetheless, the mindset nurtured by The Limits to Growth continues to shape popular and elite thinking. ...

... Obsession with doom-and-gloom scenarios distracts us from the real global threats. Poverty is one of the greatest killers of all, while easily curable diseases still claim 15 million lives every year – 25% of all deaths.CommentsThe solution is economic growth. When lifted out of poverty, most people can afford to avoid infectious diseases. China has pulled more than 680 million people out of poverty in the last three decades, leading a worldwide poverty decline of almost a billion people. This has created massive improvements in health, longevity, and quality of life. ...

The key issue here is innovation. Think in terms of a continuum. At one end is the ape from the opening of 2001: A Space Odyssey. The first human ancestor discovers the idea of using a large bone to manipulate his environment.

Further along, the continuum might be simple tools like hammers and plows. They are extensions of the human body. Then come machines. Human beings are no longer wielding tools but are directing and servicing machines. Next, there is artificial intelligence, where computers can make some decisions for us, as well as do repetitive dehumanizing work. Finally, at the other end might be something like the replicator in Star Trek, where you simply state your wish, and a device rearranges atoms to create the desired object.

The problem with the Limits to Growth mentality is that it is locked into a current point along the continuum. It correctly observes that there is a fixed amount of resources in the world, but it incorrectly assumes that economic growth means increased use of materials at a rate proportional to the rate of economic growth. To get the depletion date for a resource, you calculate the quantity of a material known to exist, calculate the annual present usage of the material, project a rate of economic growth, and subtract the projected annual usage from the total.  

Total Resource/Current Annual Resource Usage = Years to Depletion (Increase economic growth and the years to depletion shrinks.)

Since the material quantities are fixed, the only variable is economic demand. Consequently, economic growth … whether from escalating wants and needs per capita or increasing population … is unsustainable. (Similarly, take the current pollution level and multiply it times the economic growth rate to see how polluted the world will be.) Human innovation is nowhere in sight!  

But we are not frozen at a point on the continuum. Human creativity is constantly changing the equation. Here is how.

First, in the short run, there is productivity. As demand for a natural resource grows, going after previously unconsidered deposits becomes more profitable. For example, copper is everywhere but varies in accessibility and quality. Accessible quality copper is the first to be used. But as demand increases, new techniques are invented for finding copper, accessing deposits, and processing copper. The Limits to Growth report estimated copper available worldwide in 1972 and projected we would run out by 2000. Today, not only have we not run out, but we are using more annually, and the amount of available copper has grown magnitudes larger.

Second, economizing. Figuring out how to do twice as much (sometimes much more) with the same resource changes the equation. Household appliances today use less than half the power they did forty years ago and often have features that were not imagined then.

Third, substitution of less plentiful resources with more plentiful ones, especially renewable ones. It is true that over a long time horizon, copper would one day be depleted, barring changes in consumption. But as productivity and economizing gradually lose their ability to keep copper plentiful, the price will rise. Recycling copper will become more attractive. But even more likely is replacement of copper with other alternatives. Think how much of our communication now is done with sand (fiber optics are made from silica) versus copper (our old phone lines.) Furthermore, virtually everything made of nonrenewable resources can eventually be made using renewable resources.

Fourth, nanotechnology. We are in the beginning stages of manipulating matter at the molecular level. Nanorobots, about fifteen times an atom's size, can disassemble molecules and assemble atoms into new molecules. 3-D printers are already "printing" a range of items, including human tissue and organs. Scientists are developing printed food for long-term space voyages. Something akin to a replicator is not that unthinkable. The range of materials we can use for particular applications, our ability to manipulate matter at the molecular level, and our flexibility in forming matter into useful forms continue to evolve.

A finite stock of materials is not a limit to economic growth. That is not to say we are without challenges. While many resources can be made more plentiful over time, it is true that in the very near term, there can be shortages and injustices. Extraction of raw materials without adequate consideration for environmental impact could lead to horrific consequences. I'm not saying everything will magically take care of itself. I'm making the case that opposition to economic growth based on static zero-sum perceptions of the world that sees inevitable depletion of resources or over-population is groundless.

Why Some Companies Seem To Last Forever

Business Insider: Why Some Companies Seem To Last Forever

... What explains this longevity? Stanford Graduate School of Business Professor Charles O’Reilly calls it "organizational ambidexterity": the ability of a company to manage its current business while simultaneously preparing for changing conditions. "You often see successful organizations failing, and it's not obvious why they should fail," O’Reilly says. The reason, he says, is that a strategy that had been successful within the context of a particular time and place may suddenly be all wrong once the world changes.

Staying competitive, then, means changing what you're doing. But the change can't be an abrupt switch from old to new — from print to digital distribution, say, or from selling products to selling services — if that means abandoning a business that's still profitable. Hence the call for ambidexterity. You can't just choose between exploiting your current opportunities and exploring new ones; you have to do both. And the companies that last for decades are able to do so time and time again. ...

I think there is a message for congregations and denominations as well.

Saturday Links

1. Climate change: A cooling consensus

... Mr Cohn does his best to affirm that the urgent necessity of acting to retard warming has not abated, as does Brad Plumer of the Washington Post, as does this newspaper. But there's no way around the fact that this reprieve for the planet is bad news for proponents of policies, such as carbon taxes and emissions treaties, meant to slow warming by moderating the release of greenhouse gases. The reality is that the already meagre prospects of these policies, in America at least, will be devastated if temperatures do fall outside the lower bound of the projections that environmentalists have used to create a panicked sense of emergency. Whether or not dramatic climate-policy interventions remain advisable, they will become harder, if not impossible, to sell to the public, which will feel, not unreasonably, that the scientific and media establishment has cried wolf.

Dramatic warming may exact a terrible price in terms of human welfare, especially in poorer countries. But cutting emissions enough to put a real dent in warming may also put a real dent in economic growth. This could also exact a terrible humanitarian price, especially in poorer countries. Given the so-far unfathomed complexity of global climate and the tenuousness of our grasp on the full set of relevant physical mechanisms, I have favoured waiting a decade or two in order to test and improve the empirical reliability of our climate models, while also allowing the economies of the less-developed parts of the world to grow unhindered, improving their position to adapt to whatever heavy weather may come their way. I have been told repeatedly that "we cannot afford to wait". More distressingly, my brand of sceptical empiricism has been often met with a bludgeoning dogmatism about the authority of scientific consensus. ...

2. The 40 Biggest Economies In The World

3. How the world's population has changed

4. Americans are giving less money to God

Americans donated $316 billion to charitable causes in 2012, a 3.5% increase from 2011, a new report by the Giving USA Foundation found. But while charitable donations to education increased 7% to $41 billion, religious donations dropped slightly (by 0.2%) to $101.54 billion. "Americans continue to be the most generous people in the world, despite discretionary income percentages nearing all-time lows," says Eileen Heisman, CEO of the National Philanthropic Trust. But donors are writing the checks to different recipients.

5. I'm not endorsing this analysis, but here is The Capitalist's Case for a $15 Minimum Wage.

6. Gil Press says The 'End Of Innovation' Crowd Doesn't Get IT

In one camp are economists such as Robert Gordon and Tyler Cowen that tell us that we have reached "a technological plateau." We are experiencing today the waning of the economic impact of the technological revolutions of the 19^th and early 20^th centuries. The IT revolution, they argue, is different from earlier technological revolutions in its more limited impact on productivity growth and standards of living.

In the other camp are economists such as Ben Bernanke, Chairman of the Federal Reserve Board, who recently told the graduating class at Bard College:"…innovation, almost by definition, involves ideas that no one has yet had, which means that forecasts of future technological change can be, and often are, wildly wrong. A safe prediction, I think, is that human innovation and creativity will continue; it is part of our very nature. Another prediction, just as safe, is that people will nevertheless continue to forecast the end of innovation."

7. How Technology Is Changing The Future Of Capitalism From Competing To Sharing

Can't get a loan from a bank to start your business? You can create a Kickstarter and raise all the money you need from the people who'd be interested in your product in the first place.

It's amazing to see the ways people are coming up with to better take advantage of the web to collaborate on and share the things that we used to have to pay for ourselves.

8. U.S. for first time in 50+ years a net gasoline exporter

9. U.S. Sustains Support For Small Modular Nuclear Reactors

Despite the political fallout from the Fukushima crisis, the U.S. Department of Energy remains committed to commercializing small modular nuclear reactor (SMR) technologies.

10. Houses that flip and fold into place

Turns out, prefab may be the most environmentally friendly way to build a house. When a house is built in a factory there's less waste -- materials can be precision measured and cut -- plus a prefab structure can be erected within a couple of weeks -- avoiding months and months of workmen driving greenhouse gas spewing trucks to the site. One speaker at Fortune's Brainstorm Green conference earlier this year, Bill Haney -- founder and CEO of Blu Homes, cited another advantage of prefab housing: "No one can build a traditional house on time or on budget. Psychology Today cited a study that said it's more painful to build a house than it is to have a loved one die."

Haney has added a high-tech element to his prefab green houses. Applying technology developed at MIT, Blu Homes designs its modern structures using steel frames that fold on hinges much like a card table. Today, most prefab homes must be delivered at great expense on wide-load trucks that are too big to travel on many roads and have to be accompanied by escort cars. A Blue Home, by contrast, can be folded up to fit on an 18-wheeler, allowing the house to be shipped relatively cheaply and easily from the company's factory in Vallejo, Calif.

11. 71% Of Millennials Want Their Co-Workers To Be A 'Second Family'

12. Demographic Changes Impact Religious Institutions

13. A fascinating piece on Why Men Die Younger Than Women: The 'Guys Are Fragile' Thesis

14. Scientists discover why leprosy disappeared from Europe

The material they found was "a mixture of human DNA, microorganisms and contaminating DNA from other bones and surrounding soil," said Cole, but they were able to fully reconstruct a 600-year-old strain of leprosy and map its genome, only to find that it is essentially identical to living leprosy infecting people in the developing world today.

Cole told NPR, "If the explanation of the drop in leprosy cases isn't in the pathogen, then it must be in the host, that is, in us."

The scientists believe that a certain gene that makes people highly resistant to leprosy spread through the population of Europe, gradually conveying a kind of mass immunity.

15. World's last telegram to be sent next month

16. Top 10 People with Only One Known Photograph

17. Psychologist Analyzes Superheroes

18. Joel Willitts on "Storied Typology" – A possibly more biblical way of thinking about the relationship between the OT & NT

Admittedly, I'm just beginning to work this out, but if we think of Bible as Story and we read the earlier bits as indispensible building blocks in the narrative development toward its resolution than there's no need to denigrate the earlier in view of the later bits of the story. Each part has its place in the story bringing it to its final act, although even this analogy must be carefully delimited. Because "final" in this sense does not mean "The End, but a new stage of the story. So because of the earlier blocks of the story, later scenes and characters become "narratological necessities" (to quote my good friend Daniel Kirk). Furthermore, if there is something of an "incompleteness" to the earlier parts of the story, it is incomplete only as earlier scenes are incomplete without subsequent ones. It is correct then to see the Bible's story as progressive. In Stephen Wellum's words, "it is a word-act revelation that is progressively given" (Kingdom Through Covenant, 90). Instead of using the label "progressive revelation" it may be more useful in stressing the storied nature of the development to call it "storied revelation"- Scripture is a story that unfolds. All of this, of course assumes that God has generated His Story and that story is contained in the Old and New Testaments of the Christian canon.

How Free Trade Might Be the World's Best Option

Huffington Post: How Free Trade Might Be the World's Best Option - Bjorn Lomborg

... The classic argument for free trade points out that specialization and exchange benefits everyone, because goods are produced by the countries that specialize in those goods and produce them most efficiently. The standard World Bank models show that realistic free trade, even just by the end of this decade would increase global GDP by several hundred billion dollars per year, with perhaps $50 billion accruing to the developing countries. Towards the end of the century, the annual benefit will likely exceed Cameron's $1 trillion annually, with half going to the developing world.

But a growing number of academic studies now show that the free trade story goes much further than simple specialization. History shows that open economies grow faster. Good examples include Korea from 1965, Chile from 1974 and India from 1991, which all saw their growth rates increase significantly after liberalization. Even modestly freer trade helps domestic markets become more efficient and get supply chains better integrated. At the same time trade transfers knowledge, which spurs innovation. Free trade means we don't all have to reinvent the wheel over and over again.

This is perhaps best captured in a recent state-of-the-art literature review by Professor Kym Anderson for the Copenhagen Consensus think tank. Anderson, one of the World Bank's lead modelers, shows that the long-run benefits from even a modestly successful Doha free trade round would be vast. The annual GDP compared to no extra free trade would in 2020 be about $5 trillion larger, with $3 trillion going to the developing world. Towards the end of the century, slightly higher growth rates will have accumulated to benefits exceeding $100 trillion annually, with most going to the developing world. By then, benefits would add about 20 percent annually to developing world GDP. ...

Once More on Adam Smith and Self-Interest

Adam Smith's Lost Legacy (Gavin Kennedy): Once More on Adam Smith and Self-Interest

... Consider what Adam Smith states early in Wealth Of Nations about "self-interest":

"In civilized society he stands at all times in need of the co–operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is intirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only.6 He will be more likely to prevail if he can interest their self–love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self–love, and never talk to them of our own necessities but of their advantages" (WN I.ii.2: 26-27).

Read the above carefully. To obtain our self-interests of obtaining the ingredients of our dinner (or whatever), we must persuade the "butcher, brewer, and baker" to supply them to us. Insisting on our self-interest as imagined by the lonesome image of the Hollywood scriptwriter would not secure our dinner  (or anything else) for us. We must persuade them to supply us; not demand they meet our needs. What about their needs? What do they do? Just say in response: "yes, sir, no sir, three bags full sir"?

Indeed, Smith underlines that point by insisting that we must address "their self–love, and never talk to them of our own necessities but of their advantages". In short, we mediate our different self-interests by taking into account the self-interests of others. This is the exact opposite of Arturo Cuenllas's presentation.

An egoistic non-cooperator would soon starve. ...

Yogi Berra once said, "I didn't really say all the things I said." Smith has to be the Yogi Berra of economists. Misunderstanding Adam Smith's ideas about "self-interest" can only be second to misunderstanding his two passing references to an "invisible hand" in The Wealth of Nations.

Need for Historical Perspective on Poverty

One of my favorite niche economics blogs is Gavin Kennedy's Adam Smith's Lost Legacy. Many of his posts go after people using Adam Smith's "invisible hand" metaphor. He tirelessly points out that Smith used the metaphor only twice in The Wealth of Nations, and on neither occasion was it used to describe the economics in the way attributed to Smith by economists in the second half of the Twentieth Century. But his larger concern is rampant illiteracy about Smith, but also about our economic past in general. He recently encountered someone who wants to replace the "invisible hand" with the "invisible heart." Here is part of his response in his post Need for Historical Perspective on Poverty.

... It seems to be another blueprint to save the world from the only phenomenon called 'capitalism' that has raised millions from poverty to standards of living beyond anything achieved in previous millennia, including the frightful poverty experiences of Soviet-style communism.

Much of the ancient curse of poverty persists in large geographical spaces of the world affecting billions of people, though the total numbers living on $1 a day has diminished at an historical high also by a billion or so since the 1960s.   The poor in the richer countries have lower standards than the very rich, but those poor are incomparably richer than the richest minority living in the millennia before the change from agriculture and primitive commercial markets, including the richest Emperors, Kings, War Lords and Conquerors. I

It would help if those who seek to "tackle the problem of poverty" for the very best of humanitarian reasons, like Terry Hallman and Sir Ronald Cohen, and many others, would get some historical perspectives on the relative scale of human poverty over the last 1,000 years. ...

Amen!

Forget ‘Buy American’? U.S. Retailers Push an ‘Imports Work’ Campaign

Time: Forget 'Buy American'? U.S. Retailers Push an 'Imports Work' Campaign

... You may not have noticed, but last week was promoted as something called "Imports Work Week." The celebrate the importance of imports in the U.S., a group of business associations led by the National Retail Federation (NRF) has released a study showing the many ways that imports benefit American consumers and businesses alike.

Cheaper prices are the most obvious benefit. "In the past decade, the price of television sets sold in the United States has dropped 87 percent. Computers have gone down 75 percent, toys 43 percent and dishes and flatware by a third," the NRF's Jon Gold explains in a blog post. "Why? The answer is easy – imports."

But the benefits don't stop there, according to the study, which runs down how imports also help farmers, mom-and-pop businesses, working-class Americans, and even U.S. manufacturers. Here are a few of the groups that should love what imports do for them, per the report:

• Imports improve American families’ standard of living. They help families make ends meet by ensuring a wide selection of budget-friendly goods, like electronics we use to communicate and many clothes and shoes we wear, and improve the year-round supply of such staples as fresh fruits and vegetables.

• Imports support more than 16 million American jobs. A large number of these import-related jobs are union jobs, held by minorities and women, and are located across the United States.

• More than half the firms involved in direct importing are small businesses, employing fewer than 50 workers.

• American manufacturers and farmers rely on imports including raw materials and intermediate goods to lower their production costs and stay competitive in domestic and international markets. Factories and farms purchase more than 60 percent of U.S. imports. ...

Protectionism is one of the most persistent misunderstandings I encounter when discussing economics. What person wants to make everything the use ... car, computer, house, clothes, etc. ... or become an expert on any number of topics to live self-sufficiently ... medicine, climate, chemistry, biology, etc. At the micro-level of our personal lives, we intuitively understand that specializing in our work and engaging in exchange with neighbors who specialize in their work benefits everyone involved. We seem to get that the benefits multiply if we expand trade beyond our neighborhood to our city, state, region, and country. But this understanding flies out the window when expanding the idea beyond national borders.

Some will say their concern is international trade is unfair because workers in other countries get paid lower wages. But they are also far less productive. Given a relatively free market, as workers' productivity increases, so do their wages. And while there are certainly some exploitive circumstances around the world, multinational corporations and their satellites typically offer some of the highest wages and have the most sought-after jobs. There are challenges when societies of different degrees of development interact, but I don't perceive that this is really the issue behind much protectionist thinking. Rather it is the abstract belief that our country will be better off if our country made everything we consume, a standard we do not apply to our state, city, neighborhood, or family. And this is particularly problematic for the many who say they want justice for the poor but want to exclude the foreign poor from growing productivity and exchange networks.

 

The Rise Of Social Entrepreneurship Suggests A Possible Future For Global Capitalism

Forbes: The Rise Of Social Entrepreneurship Suggests A Possible Future For Global Capitalism

... Barely half of Americans polled in 2010 by GlobeScan said they believed in the free-market system, down from 80 percent in 2002. A large majority had lost trust in government. The most recent Edelman Trust Barometer found that trust in business has been below 50 percent for 8 of the past 12 years. Throughout Europe, only small minorities said they believed in free-market capitalism.

Meanwhile, social entrepreneurs are developing innovative business models that blend traditional capitalism with solutions that address the long-term needs of our planet. They are tackling chronic social problems, ranging from healthcare delivery in sub-Saharan Africa to agricultural transformation in East Asia and public-school funding in the United States. Social entrepreneurs are working in close collaboration with local communities, incubating groundbreaking (and often lifesaving) innovations; modeling synergistic partnerships with governments, companies, and traditional charities; and building business models that deploy technology and enable networking to create wins for investors and clients alike. “Social entrepreneurs are mad scientists in the lab,” says Pamela Hartigan, director of the Skoll Centre for Social Entrepreneurship at Oxford University. “They’re harbingers of new ways of doing business.”

We believe this collaborative approach offers intriguing hints about how enterprises of all sizes can deliver value for themselves and society. Below we suggest four ways in which social entrepreneurs are showing the way forward.

USING PROFIT TO FUND PURPOSE ...

DELIVERING INDIVIDUALIZED PRODUCTS THAT MARRY NEED AND WANT ...

CROWDSOURCING THE SOLUTION ...

WORKING THEMSELVES OUT OF A JOB ...

How Nations Succeed: What's the Secret to Ending Poverty?

This piece is a little too narrow in attributing positive change almost exclusively to markets. I would argue that things are considerably more complicated, and the video would be more convincing with some balance. But the video does powerfully place our economic moment in time in context.

Is It Crazy to Think We Can Eradicate Poverty?

New York Times: Is It Crazy to Think We Can Eradicate Poverty?

... Fortunately, this deadly and cyclical form of poverty [living on less than $1.25 a day] is already on its way toward obsolescence, and much faster than many development economists expected. The first Millennium Development Goal — to halve the proportion of the world population living in dire poverty by 2015 — was met five years early, as the rate fell to an estimated 21 percent in 2010, from 43 percent in 1990. Some economists had feared that the recession would arrest or even reverse the trend, given how interconnected the global economy is, but the improvement continued, unabated. Annual growth dipped for developing economies in 2009 but has since rebounded to about 5.3 percent a year, a figure dragged down by weaker peripheral European economies.

For much of the improvement, the world can thank one country: China, which alone accounts for about half of the decline in the extreme poverty rate worldwide. It has also driven significant gains across the region. In the early 1980s, East Asia had the highest extreme-poverty rate in the world, with more than three in four people living on less than $1.25 a day. By 2010, just one in eight were. But other middle-income countries, like Brazil, Nigeria and India, have experienced significant growth, too — in no small part because tens of millions of the very poor have moved from rural areas to cities, where they become richer, healthier and more productive for their economies....

... For the poor living in poor countries, particularly the profoundly unstable ones, gains have been harder-fought and slower, a trend that the World Bank’s own economists describe as worrisome. But that is not to play down the successes so far. In 2008, for the first time since the bank started measuring the statistics, the number of people living in dire poverty and the dire-poverty rate fell in every region around the world. Extreme poverty in sub-Saharan Africa has at last dipped below the 50 percent mark. Still, many within the development world doubt the ability of NGOs to cure the world’s most troubled nations of their woes. “I don’t think we have a recipe for fixing the Congo or South Sudan or Afghanistan,” says Birdsall, of the Center for Global Development. ....

 

 

Pro-business vs. pro-market

I came across this quote a couple of weeks ago by Luis Zinagles in his article Capitalism After the Crisis (HT: Carpe Diem)

True capitalism lacks a strong lobby.

That assertion might appear strange in light of the billions of dollars firms spend lobbying Congress in America, but that is exactly the point. Most lobbying seeks to tilt the playing field in one direction or another, not to level it. Most lobbying is pro-business, in the sense that it promotes the interests of existing businesses, not pro-market in the sense of fostering truly free and open competition. Open competition forces established firms to prove their competence again and again; strong successful market players therefore often use their muscle to restrict such competition, and to strengthen their positions. As a result, serious tensions emerge between a pro-market agenda and a pro-business one, though American capitalism has always managed this tension far better than most.

This also explains why many people bristle at the term "free market." They incorrectly perceive that "free market" means unfettered businesses having the freedom to stack things in their favor (and indeed some business lobbyists try to twist free market constructs to justify efforts to curb challenges from competition contributing to the confusion.) They advocate for "fair trade," but free trade is fair trade. They should be championing a free market in opposition to many pro-business agendas.

Why the US economy doesn’t weigh as much as we thought it did

AEI Ideas: Why the US economy doesn’t weigh as much as we thought it did

... One way of analyzing the changing nature of the US economy is by looking at how much GDP physically weighs. Former Federal Reserve Chairman Alan Greenspan once remarked that the value of US GDP is five times as great as it was 50 years ago. Yet “the physical weight of our gross domestic product is evidently only modestly higher today than it was 50 or 100 years ago.” Very little of the nation’s economic growth ”represents growth in the tonnage of physical materials — oil, coal, ores, wood, raw chemicals. The remainder represents new insights into how to rearrange those physical materials to better serve human needs.”

In other words, to paraphrase economist Paul Romer, more and more we create value by coming up with different “recipes” to rearrange the physical world. Ideas and innovation are what truly drive growth. So even though America becomes more productive and the size of the economy bigger, it doesn’t gain any weight — just wealth.

Interesting way of illustrating how advanced economies are changing.

The Hard Truth about Economic Inequality that Both the Left and Right Ignore

PBS Newshour: The Hard Truth about Economic Inequality that Both the Left and Right Ignore

Jerry Muller is one of my favorite economic historians. This piece offers an insightful analysis of inequality in advanced market economies. As I read this piece, I kept thinking back to Robert Fogel's (another favorite economic historian) The Fourth Great Awakening and the Future of Egalitarianism, where he makes the case that the economic challenge of this century will be focused on human capital. I don't think the left or right ideologies have come to grips with this yet. Muller begins:

Inequality is increasing almost everywhere in the post-industrial capitalist world. Despite what many think, this is not the result of politics, nor is politics likely to reverse it. The problem is more deeply rooted and intractable than generally recognized.

Inequality is an inevitable product of capitalist activity, and expanding equality of opportunity only increases it -- because some individuals, families, and communities are simply better able than others to exploit the opportunities for development and advancement that today's capitalism affords. Some of the very successes of western capitalist societies in expanding access and opportunity, combined with recent changes in technology and economics, have contributed to increasing inequality. And at the nexus of economics and society is the family, the changing shape and role of which is an often overlooked factor in the rise of inequality.

Though capitalism has opened up ever more opportunities for the development of human potential, not everyone has been able to take full advantage of those opportunities or to progress very far once they have done so.

Formal or informal barriers to equality of opportunity, for example, have historically blocked various sectors of the population -- such as women, minorities, and poor people -- from benefiting fully from all capitalism offers. But over time, in the advanced capitalist world, those barriers have gradually been lowered or removed, so that now opportunity is more equally available than ever before. The inequality that exists today arguably derives less from the unequal availability of opportunity than it does from the unequal ability to exploit opportunity.

And that unequal ability, in turn, stems from differences in the inherent human potential that individuals begin with and in the ways that families and communities enable and encourage that human potential to flourish. ...

The bolded sentence is my doing. Read the whole thing. Thoughtful stuff.

Unfair Trade

Foreign Affairs: Unfair Trade

The Fair-Trade Movement Does More Harm Than Good

... Until now, any questioning of the fair-trade movement has been limited to the micro level. The movement has faced repeated criticisms, for example, for the relatively expensive fees that producers must pay to get a fair-trade label, which make it ineffective for many poor farmers. Another area of concern is just how lucrative the process is for middlemen and retailers. Finally, several studies show that very little of the premium that consumers pay actually reaches needy producers. Consumers might be surprised to learn that only one or two percent of the retail price of an expensive cup of "ethical" coffee goes directly to poor farmers.

The adverse effects of fair trade are even more worrying at the macro level. First, fair trade deflects attention from real, long-term solutions to rural poverty in developing countries; and second, it has the potential to fragment the world agricultural market and depress wages for non-fair-trade farm workers. ...

... Fair-trade enthusiasts might argue that the world would be better off if the fair-trade market replaced the free-trade one. But in fact, such an outcome would destroy the livelihoods of millions of farmers who do not have the luxury of paying for fair-trade certification. To survive, these farmers would likely have to stop planting basic crops, such as wheat, corn, and rice, and shift to cash crops, such as coffee, tea, and fruits, which could bring in the income for certification. The immediate effect would be a prohibitive hike in food prices. Further, as farmers shift their production, non-fair-trade basic food products would become more vulnerable to price instability caused by supply and demand shocks, because there would be fewer producers willing to take the risk of non-subsidized farming.

If the fair-trade movement eventually came to encompass all categories of agricultural production (including basic food products), the price shocks would be even worse. Rather than responding to market prices, farmers in developing countries would be incentivized to produce whatever products garner the greatest subsidies. With subsidies, not consumer demand, dictating production, consumers in the developed and developing worlds would see further increases in basic food prices. ...

... Self-proclaimed ethical consumers need to start looking reality in the eye. Fair trade is a form of protectionism, and it should not be allowed to hide behind the mask of morality. There is nothing ethical about privileging small groups of producers while the majority are sinking deeper into poverty.

This is one of those topics where a particular activity (buying fair trade goods) feels so worthwhile and yet does harm in ways that are not readily discernable. Regarding commodities, I suspect the authors correctly say fair trade does more harm than good. Fair trade doesn't fully account for the economic complexity involved. It becomes yet another form of toxic charity. However, it is unclear that all fair trade products have the same consequences. For instance, handcrafted products sold through stores like Ten Thousand Villages are not commodities; I don't think they are subject to the same economic realities. I haven't seen a detailed analysis by an economist that would help me clarify the differences.

Once again, we must heed the admonition to act with warm hearts and cool heads. For an insightful booklet on the problems with Fair Trade Coffee, see Victor Claar's Fair Trade? Its Prospects as a Poverty Solution. I suspect that what he says about coffee applies to all agricultural commodities.

We are not running out of commodities

I've been writing about the common misperception of the economy as a zero-sum game and the fear that we will soon (or ever) run out of nonrenewable resources. This is counterintuitive to so many people that I need to address it in detail. I wrote a draft of this section for my book, but I need to massage more before posting it here.

In the meantime, Mark Perry has this interesting chart from his post Bad news for pessimists: Malthus was wrong. If commodities are becoming scarcer, then prices will go up. But as this chart shows, commodity prices, over the long haul, are getting less expensive in real dollars. Other databases I've seen show this as true as far back as the mid-1800s. The trend is expected to continue for the foreseeable future. Why? In future posts, I'll get to that, but here is the evidence making my point. Read Perry's post for more details on the data.

Saturday Links

1. Scientific American has some interesting thoughts on How Your Language Affects Your Wealth and Health

... Different languages have different ways of talking about the future. Some languages, such as English, Korean, and Russian, require their speakers to refer to the future explicitly. Every time English-speakers talk about the future, they have to use future markers such as "will" or "going to." In other languages, such as Mandarin, Japanese, and German, future markers are not obligatory. The future is often talked about similar to the way present is talked about and the meaning is understood from the context. A Mandarin speaker who is going to go to a seminar might say "Wo qu ting jiangzuo," which translates to "I go listen seminar." Languages such as English constantly remind their speakers that future events are distant. For speakers of languages such as Mandarin future feels closer. As a consequence, resisting immediate impulses and investing for the future is easier for Mandarin speakers. ...

2. Fair Trade 2.0? Coffee's Economics, Rewritten by Farmers

3. R. J. Moeller qutoes from John Mackey's (Whole Foods CEO) new book:

"Capitalism has a purpose beyond just making money. I think the critics of capitalism have got it in this very small box. That it's all about money. It's based in being greedy, selfish and exploitative. And yet, I haven't found it to be that way. Most of the hundreds of entrepreneurs I know and have met did not start their business primarily out of a desire to make money. Not that there's anything wrong with making money. My body cannot function unless it produces red-blood cells. No red-blood cells and I'm a dead man. But that's not the purpose of my life.

Similarly, a business cannot exist unless it produces a profit . . . but that's not the only reason it exists."

4. David Henderson with thoughts on the economic impact of marriage: "Get Married and Stay Married"

When I was writing a review of Dwight Lee's and Richard McKenzie's excellent book, Getting Rich in America: 8 Simple Rules for Building a Fortune and a Satisfying Life, I called Dwight to ask a question and we got talking about Rule #5: Get Married and Stay Married. Dwight pointed out that if you follow the other 7 rules but don't get married or stay married, you have a substantial probability of building a fortune and a satisfying life. But, he said, if you don't get married and stay married, you tend not to follow at least some of the other 7 rules.

5. With more thoughts on the economic impact of marriage, Glen Reynolds reflects on The other marriage inequality

While the upscale college-educated crowd continues to marry at very high rates, marriage rates are plummeting among those further down on the socioeconomic ladder.

6. Steven Pearlstein with a thoughtful essay: Is capitalism moral?

... A useful debate about the morality of capitalism must get beyond libertarian nostrums that greed is good, what's mine is mine and whatever the market produces is fair. It should also acknowledge that there is no moral imperative to redistribute income and opportunity until everyone has secured a berth in a middle class free from economic worries. If our moral obligation is to provide everyone with a reasonable shot at economic success within a market system that, by its nature, thrives on unequal outcomes, then we ought to ask not just whether government is doing too much or too little, but whether it is doing the right things.

7. Matt Ridley with an interesting piece on how Obsidian chronicles ancient trade. This conclusion was interesting.

Instead, Dr. Butzer argues that Sargon's conquest itself caused the collapse of trade by destroying cities and disrupting what had till then been "an inter-networked world-economy, once extending from the Aegean to the Indus Valley." In other words, as with the end of the Roman empire, the collapse of trade caused the collapse of civilization more than the other way around.

8. Speaking of economic History, Rewriting Biblical history? Agriculture might be 5,000 years older than believed.

A new find suggests farmers in Bible lands built channels for irrigation long before historians thought they did, allowing for cultivated vineyards, olives, wheat and barley.

9. Americans Just Keep Driving Less And Less

10. The New York Times on New Reasons to Change Light Bulbs. (To LEDs)

11. Science 2.0 on A Biological Basis For Gender Differences In Math?

... "Educational systems could be improved by acknowledging that, in general, boys and girls are different," said University of Missouri biologist David Geary in their statement. "For example, in trying to close the sex gap in math scores, the reading gap was left behind. Now, our study has found that the difference between girls' and boys' reading scores was three times larger than the sex difference in math scores. Girls' higher scores in reading could lead to advantages in admissions to certain university programs, such as marketing, journalism or literature, and subsequently careers in those fields. Boys lower reading scores could correlate to problems in any career, since reading is essential in most jobs."

Generally, when conditions are good, the math gap increases and the reading gap decreases and when conditions are bad the math gap decreases and the reading gap increases. This pattern remained consistent within nations as well as among them, according to the work by Geary and Gijsbert Stoet of the University of Leeds that included testing performance data from 1.5 million 15-year-olds in 75 nations. ...

12. Malcolm Gladwell was half right. Professor Jonah Berger on his new book, Contagious: Why Things Catch On.

13. Scientific Explanations for Why Spoilers Are So Horrible

14. Mashable has great advice with 5 Alternatives to Unfriending Someone on Facebook

15. David Brooks with insight on How Movements Recover

... Two rival reform movements arose to restore the integrity of Catholicism. Those in the first movement, the Donatists, believed the church needed to purify itself and return to its core identity. ...

... In the fourth century, another revival movement arose, embraced by Augustine, who was Bishop of Hippo. The problem with the Donatists, Augustine argued, is that they are too static. They try to seal off an ark to ride out the storm, but they end up sealing themselves in. They cut themselves off from new circumstances and growth.

Augustine, as his magisterial biographer Peter Brown puts it, "was deeply preoccupied by the idea of the basic unity of the human race." He reacted against any effort to divide people between those within the church and those permanently outside. ....

16. A great piece by someone who considers them unaffiliated with any religion. Every Christian and congregation needs to reflect on the insignificance of the church in this writer's life. His tribe is growing: The significant insignificance of religion

Saturday Links

1. The Economist has an interesting graph showing that capitalism has led to greater happiness in member countries of the Commonwealth of Independent States (former Soviet Union countries excluding the three baltic countries.)

2. AEI has an informative piece on economic mobility in the United States: How's the American Dream doing? Well, which one?

There are two ways to define economic mobility: 1) absolute mobility, whether each generation is financially better off than the one before; and 2) relative mobility, whether you can change your income rank  vs. your parents. Most Americans probably think both measures important. We want to be more prosperous than mom and dad, but also be able to change our circumstances and make our dreams come true. ...

... A San Francisco Fed study – using data tracking families since 1968 — looks at both versions of the American Dream, finding one healthier than the other. Looking at absolute mobility, researchers Leila Bengali and Mary Daly find the United States "highly mobile." Over the sample period, 67% of US adults had higher family incomes than their parents, including 83% of those in the lowest birth quintile, or bottom 20% (versus 54% for children born into the top quintile, or top 20%.) ...

3. Concerning gender income inequality, Mark Perry says 'Studies' that compare average wages by gender, without controlling for demographic factors, can't be taken seriously

4. Clive Crook thinks an ownership society may be the answer to reducing wealth inequality: Liberals Should Embrace the Ownership Society

... It's true that conservatives' standard proposals for privatizing Social Security and voucherizing Medicare would shift risk onto beneficiaries -- but this plainly isn't a necessary consequence of the basic principle. I agree with Konczal that adequate insurance against economic risk, underwritten by the government, is essential. I also agree that most conservatives aren't interested in providing that guarantee. That's exactly why liberals ought to take up the ownership society themselves.

Ownership entails risk, it's true, but insurance can minimize it. Ownership also provides control, independence and self-respect -- things it wouldn't hurt liberals to be more interested in. And when it comes to inequality and stagnating middle incomes, ownership can give wage slaves a stake in the nation's economic capital.

Done right, an equity component in government-backed saving for retirement could be the best idea liberals have had since the earned-income tax credit (oh, sorry, that started out as a conservative idea as well). ...

5. Scientific American: Massive Open Online Courses, aka MOOCs, Transform Higher Education and Science

6. Scientific American also has an interesting piece on how Brain Researchers Can Detect Who We Are Thinking About

FMRI scans of volunteers' media prefrontal cortexes revealed unique brain activity patterns associated with individual characters or personalities as subjects thought about them.

7. Gizmodo reports that Sex in Space Could Be Deadly.

Researchers already knew humans, animals and plants have evolved in response to Earth's gravity and they are able to sense it. What we are still discovering is how the processes occurring within the cells of the human and plant bodies are affected by the more intense gravity, or hypergravity, that would be found on a large planet, or the microgravity that resembles the conditions on a space craft.

8. Walgreens Building First Self-Powered Store

According to estimations, engineers expect the the store to generate around 265,000 kilowatt hours (kWh) per year. Store operation will only require 200,000 kWh, so perhaps that extra wattage could be pumped back into the grid or used to power nearby utilities.

9. CNN reports on How online ruined dating ... forever

When people can browse potential dates online like items in a catalog, geo-locate hook-ups on an exercise bike just seven feet away, arrange a spontaneous group date with the app Grouper or arrange a bevy of blind dates in succession with Crazy Blind Date, it makes me wonder if all this newfound technological convenience has, in fact, made romance that much more elusive. Now, we may be more concerned with what someone isn't rather than what they are. And as that twenty-something entrepreneur reminded me over coffee, services like OkCupid, and even Facebook, sap a lot of the mystique out of those first few dates. So, sure, it may be easier than ever to score a date, but what kind of date will it really be?

10. Interesting piece on Why Do People Use Nope Even Though No Is Shorter?

11. Is the New Pope More Liberal Than the Last Two? Why It's Hard to Tell. Emily Chertoff offers some insightful analysis.

12. Michael Bird offers this quote from Michael Goheen and Craig Bartholomew's "The Drama of Scripture" in his post The Importance of the Narrative of Scripture.

Many of us have read the Bible as if it were merely a mosaic of little bits – theological bits, moral bits, historical-critical bits, sermon bits, devotional bits. But when we read the Bible in such a fragmented way, we ignore it's divine author's intention to shape our lives through its story. All humanity communities live out some story that provides a context for understanding the meaning of history and gives shape and direction to their lives. If we allow the Bible to become fragmented, it is in danger of being absorbed into whatever other story is shaping our culture, and it will thus cease to shape our lives as it should. Idolatry has twisted the dominant cultural story of the secular Western world. If as believers we allow this story (rather than the Bible) to become the foundation of our thought and action, then our lives will manifest not the truths of Scripture, but the lies of an idolatrous culture. Hence the unity of Scripture is no minor matter: a fragmented Bible may actually produce theologically orthodox, morally upright, warmly pious idol worshippers! (p. 12).

13. Scot McKnight has a great piece on what constitutes legalism: Legalism: Old and New Perspectives

14. Thom S. Rainer on Ten Things Pastors Wish They Knew Before They Became Pastors

1. I wish someone had taught me basic leadership skills. "I was well grounded in theology and Bible exegesis, but seminary did not prepare me for the real world of real people. It would have been great to have someone walk alongside me before my first church."
2. I needed to know a lot more about personal financial issues. "No one ever told me about minister's housing, social security, automobile reimbursement, and the difference between a package and a salary. I got burned in my first church."
3. I wish I had been given advice on how to deal with power groups and power people in the church. "I got it all wrong in my first two churches. I was fired outright from the first one and pressured out in the second one. Someone finally and courageously pointed out how I was messing things up almost from the moment I began in a new church. I am so thankful that I am in the ninth year of a happy pastorate in my third church."...

Read the whole thing.

15. Joseph Sunde rates the 5 TV Shows That Demonstrate the Importance of Ordinary Work

Dan Pallotta: The way we think about charity is dead wrong

A thought-provoking piece about how we think about charity. His characterization of Puritanism is way off, but most of his substantive points are important to consider.

 

Saturday Links

1. Conventional wisdom says wearing the red shirt in Star Trek will get you killed. Not so fast. Statistical analysis in Significance Magazine disagrees. (Keep your redshirt on: a Bayesian exploration)

"... In spite of wearing a redshirt, there is only an 8.6% chance of a member of the operations or engineering departments becoming a casualty. These personnel should ensure that their life insurance plans are based on their departments and not their uniform color.

Although Enterprise crew members in redshirts suffer many more casualties than crew members in other uniforms, they suffer fewer casualties than crew members in gold uniforms when the entire population size is considered. Only 10% of the entire redshirt population was lost during the three year run of Star Trek. This is less than the 13.4% of goldshirts, but more than the 5.1% of blueshirts. What is truly hazardous is not wearing a redshirt, but being a member of the security department. The red-shirted members of security were only 20.9% of the entire crew, but there is a 61.9% chance that the next casualty is in a redshirt and 64.5% chance this red-shirted victim is a member of the security department. The remaining redshirts, operations and engineering make up the largest single population, but only have an 8.6% chance of being a casualty.

Red uniform shirts are safe, as long as the wearer is not in the security department."

 2. Interesting piece on automation in the Economist: Robocolleague

Robots are getting more powerful. That need not be bad news for workers. ...

... Historically, technological advances have been relatively benign for workers. Labour-market trends through the 19th and 20th centuries show surprising continuity, according to Lawrence Katz of Harvard University and Robert Margo of Boston University. In recent decades, for example, computerisation and automation have displaced “middle-skilled” workers at the same time as employment among high- and low-skilled workers has increased. This “hollowing out” is not new, Messrs Katz and Margo note. Early industrialisation had similar effects. Middle-skilled artisans, like trained weavers, were put out of work by industrial textile production, but the fortunes of less-skilled factory workers and white-collar factory managers steadily improved. Mechanisation’s insatiable appetite for routine work of all types has yet to create mass unemployment. Quite the opposite.

The worry is that technology now has its sights set on non-routine tasks as well as mundane ones. Yet Mr Autor notes that just because a skilled job can be automated does not mean it will be. The number of workers used to build Nissan vehicles varies a lot between Japan, where labour is expensive, and India, where it is abundant and cheap. The relative cost of different types of workers matters for firms as they choose how to deploy new technologies. ...

3. Speaking of technology and its impact on industries Technology Upends Another Industry: Homebuilding

4. Businessweek has a piece about Indie Capitalism

Indie Capitalism has three foundational principles:

• Creativity generates economic value. Creativity is the source of profit. Yes, efficiency can squeeze more out of what exists, but creativity gives us originality, which translates into a market advantage and big margins.

• Creativity drives capitalism. These past few years we have been victimized by the disastrous results of “creativity” applied to the financial sector (mortgage-backed securities, for starters). What we lost sight of is that the scaling of creativity to actually make things of value sold in the marketplace is the true heart of our economic system. It is the true generator of net new jobs, wealth, and tax revenue.

• Creative destruction is crucial to economic growth. Crony capitalism, which relies on monopoly and political power, is antithetical to entrepreneurial capitalism. A faster cycle of birth, growth, and death of companies boosts creativity, economic value, and growth.

5. Business Insider reports on Why Manufacturing Jobs Are Returning To America For The First Time In Decades

 The bottom line: For the first time in decades, several key economic drivers have created a competitive advantage for the U.S. that will encourage corporate strategic decisions on capital allocation and acquisitions for generations to come.

Here's why:

1. Cheap and abundant natural gas. ...

2. Innovation. Despite talk of a brain drain, the U.S. remains the global innovation leader, maintaining a position enjoyed for 50 years. ...

3. Rule of law. Without the means to protect intellectual property, it cannot be exploited for competitive advantage. ...

4. Human capital. The wage gap between the U.S. and China has been shrinking. ...

5. De-complexity. Western multinationals continue to struggle with management of operations in developing countries. ...

6. Public policy and abundance. The federal government appears to be seizing the opportunity to promote job growth at home.

7. Credit, currency and the coming wave of mergers and acquisitions.

6. 3-D Printed Car Is as Strong as Steel, Half the Weight, and Nearing Production.

"Picture an assembly line not that isn’t made up of robotic arms spewing sparks to weld heavy steel, but a warehouse of plastic-spraying printers producing light, cheap and highly efficient automobiles.

If Jim Kor’s dream is realized, that’s exactly how the next generation of urban runabouts will be produced. His creation is called the Urbee 2 and it could revolutionize parts manufacturing while creating a cottage industry of small-batch automakers intent on challenging the status quo. ..."

7. And more about 3-D Printing. 3D Printing On The Frontlines — Army Deploying $2.8M Mobile Fabrication Labs.

Throughout history, war and innovation have gone hand in hand, whether it’s breakthroughs out of heavily funded R&D programs or makeshift contraptions thrown together with spare parts. Soldiers are trained to use the technology on hand to get the job done, one way or the other.

But how would military operations change if soldiers on the battlefield could have the best of both worlds: access to expert engineers able to fabricate custom-designed fixes right on-the-spot and in very little time? ...

8. And how about 4-D printing? 4D Printing Is The Future Of 3D Printing And It’s Already Here

"It may sound strange and far out, but it’s actually quite simple. 4D printing is being billed as a process where synthetic objects can change and adapt themselves to the environment. In a recent TED interview, Tibbits compared the process of 4D printing to the process of natural adaptation:

Natural systems obviously have this built in — the ability to have a desire. Plants, for example, generally have the desire to grow towards light and they generate energy from the translation of photosynthesis, carbon dioxide to oxygen, and so on. This is extremely difficult to build into synthetic systems — the ability to “want” or need something and know how to change itself in order to acquire it, or the ability to generate its own energy source. If we combine the processes that natural systems offer intrinsically (genetic instructions, energy production, error correction) with those artificial or synthetic (programmability for design and scaffold, structure, mechanisms) we can potentially have extremely large-scale quasi-biological and quasi-synthetic architectural organisms."

7. The New York Times reports that Music Industry Sales Rise, and Digital Revenue Gets the Credit

The music industry, the first media business to be consumed by the digital revolution, said on Tuesday that its global sales rose last year for the first time since 1999, raising hopes that a long-sought recovery might have begun.

The increase, of 0.3 percent, was tiny, and the total revenue, $16.5 billion, was a far cry from the $38 billion that the industry took in at its peak more than a decade ago. Still, even if it is not time for the record companies to party like it’s 1999, the figures, reported Tuesday by the International Federation of the Phonographic Industry, provide significant encouragement.

The Economist also posted this chart this week:

8. Teleworking: The myth of working from home from the BBC. "Yahoo has banned its staff from "remote" working. After years of many predicting working from home as the future for everybody, why is it not the norm?"

9.  Europe's Youth Unemployment Nightmare Started Long Before The Euro Crisis 

"Reasons for high unemployment among the young include ineffective education systems (the share of early school dropouts is 20% in Italy and 30% in Spain) and dual labour markets with highly protected jobs for older employees. The good performance of Germany is not least a result of the German apprenticeship system, which facilitates labour market access for school leavers by lowering the company’s costs for employing them. The OECD’s latest “Going for Growth” report recommends reforms to strengthen the vocational training systems as one of the most effective ways to fight structural youth unemployment. This would also be a reasonable starting point for the EU’s youth employment programme."

10. Benjamin Wright - Book Review: God at Work: Your Christian Vocation in All of Life by Gene Edward Vieth, Jr.

11. Rough Type: Students to e-textbooks: no thanks

"What’s most revealing about this study is that, like earlier research, it suggests that students’ preference for printed textbooks is reflects the real pedagogical advantages they experience in using the format: fewer distractions, deeper engagement, better comprehension and retention, and greater flexibility to accommodating idiosyncratic study habits. Electronic textbooks will certainly get better, and will certainly have advantages of their own, but they won’t replicate the particular advantages inherent to the tangible form of the printed book."

12. How Many Ph.D.'s Actually Get to Become College Professors?

13. Top 10 Causes of Death in the U.S.

14. ABC reports that Young Hispanics Leaving Catholic Church for Protestant Faith

The Catholic Church has struggled to bring in young members in the United States. Less than half of U.S. Hispanics between 18 and 29 identify as Catholic, compared with the 60+ percent of Hispanics older than 50.

15. Robert Jones says Don't write off mainline Protestants

The narrative of decline in the mainline church underestimates the continuing influence of its members, says a religion researcher.

16. Some interesting observations by NYU psychologist Jonathan Haidt. He says we tend to process our social world through three lenses: Social distance, hierarchy, and disgust. Conservatives tend to have a lower threshold of revulsion, while liberals, and particularly libertarians, have a higher threshold.

17. Bruce Fieler has an interesting piece in the Atlantic. Want to Give Your Family Value and Purpose? Write a Mission Statement

Saturday Links

1. Christian History magazine has an entire issue devoted to Christians in the New Industrial Economy: The World Changed, the Church Responded. It is a priceless collection of essays on how various religious traditions responded to (or failed to) the challenges of the Industrial Revolution.

Issue 104 examines the impact of automation on Europe and America and the varying responses of the church to the problems that developed. Topics examined are mission work, the rise of the Social Gospel, the impact of papal pronouncements, the Methodist phenomenon, Christian capitalists, attempts at communal living and much more.

2. Orange County Register says Don't count out mainline Protestants yet.

As flocks shrink, denominations that once defined America fight to stay relevant with new ways of reaching out.

3. The Washington Post reports that Megachurches thriving in tough economic times.

"Despite the tough economy, many of the nation’s largest churches are thriving, with increased offerings and plans to hire more staff, a new survey shows.

Just 3 percent of churches with 2,000 or more attendance surveyed by Leadership Network, a Dallas-based church think tank, said they were affected “very negatively” by the economy in recent years. Close to half — 47 percent — said they were affected “somewhat negatively,” but one-third said they were not affected at all. ..."

4. Harvard Business Review: Steve Blank on Why Big Companies Can't Innovate

... It's not surprising that younger entrepreneurial firms are considered more innovative. After all, they are born from a new idea, and survive by finding creative ways to make that idea commercially viable. Larger, well-rooted companies however have just as much motivation to be innovative — and, as Scott Anthony has argued, they have even more resources to invest in new ventures. So why doesn't innovation thrive in mature organizations? ...

... First, he says, the focus of an established firm is to execute an existing business model — to make sure it operates efficiently and satisfies customers. In contrast, the main job of a start-up is to search for a workable business model, to find the right match between customer needs and what the company can profitably offer. In other words in a start-up, innovation is not just about implementing a creative idea, but rather the search for a way to turn some aspect of that idea into something that customers are willing to pay for. ...

... discovering a new business model is inherently risky, and is far more likely to fail than to succeed ...

... Finally, Blank notes that the people who are best suited to search for new business models and conduct iterative experiments usually are not the same managers who succeed at running existing business units. ...

5. A fascinating, if sobering, look at the conflict over islands off the coast of East Asia. Trouble at sea

6. The rise of post-industrial China? (Economist)

7. New Geography thinks U.S. LATE TO THE PARTY ON LATIN AMERICA, AFRICA.

"President Barack Obama's proposed tilt of U.S. priorities toward the Pacific – and away from the historical link to Europe – represents one of the most encouraging aspects of his foreign policy. Although welcome, we should recognize that this shift comes about three decades too late and that it may miss the rising geopolitical centrality of sub-Saharan Africa and Latin America. The emergence of these longtime historically impoverished backwaters has been largely missed as American policy-makers and businesses are now obsessed with the challenges and opportunities posed by the emergence of China and, to a lesser extent, India. Sub-Saharan Africa, for example, over the past decade has produced six of the world's 10 fastest-growing economies. Through 2011-15, according to the International Monetary Fund, seven of the fastest-growing countries will be African, and Africa as a whole will surpass the slowing growth rates in Asia, particularly China.

This growth has caused the region's poverty rates, still unacceptably high, to fall from 56.5 percent in 1990 to 47 percent today. Further growth will likely push poverty levels down further."

8. New Geography also asks, Is the Family Finished? Some interesting thoughts about the impact of declining birthrates in the U.S.

9. A Portrait of U.S. Immigrants

Pew Research Center has compiled key findings from a new analysis of the nation’s foreign-born population, based on U.S. Census Bureau’s 2011 American Community Survey.

10. Marketing Daily says More Latinos See Themselves As Bicultural

With more than half the population of many U.S. cities who are multicultural and Hispanics comprising more and more of the U.S. population, when does it become meaningless and redundant to execute marketing strategy that is directed to a general market and a Latino market perceived to be homogenous?

11. Committee on Economic Development has an interesting piece looking at both the ideological and economic aspects underlying the debate about the minimum wage. Raising the Minimum Wage: “Which Side Are You On?”

"It is an easy call if you are either (a) a strict libertarian or (b) an enthusiastic advocate of the less fortunate with limited concern about the scarcity of resources.  (If you belong to both of those groups, there is little advice that I can offer.)  However, in between those poles of opinion, things become rather murky, rather quickly."

12. Being a Republican or a Democrat may all be in your head: Republican Brains Differ From Democrats' In New FMRI Study

... Comparing the Democrat and Republican participants turned up differences in two brain regions: the right amygdala and the left posterior insula. Republicans showed more activity than Democrats in the right amygdala when making a risky decision. This brain region is important for processing fear, risk and reward.

Meanwhile, Democrats showed more activity in the left posterior insula, a portion of the brain responsible for processing emotions, particularly visceral emotional cues from the body. The particular region of the insula that showed the heightened activity has also been linked with "theory of mind," or the ability to understand what others might be thinking. ...

... The functional differences did mesh well with political beliefs, however. The researchers were able to predict a person's political party by looking at their brain function 82.9 percent of the time. In comparison, knowing the structure of these regions predicts party correctly 71 percent of the time, and knowing someone's parents' political affiliation can tell you theirs 69.5 percent of the time, the researchers wrote. ...

13. Health Care Without the Doctors Coming to a Walmart Near You

STERLING, Va. - Perched by a computer monitor wedged between shelves of cough drops and the pharmacy in a bustling Walmart, Mohamed Khader taps out answers to questions such as how often he eats vegetables, whether anyone in his family has diabetes and his age.

He tests his eyesight, weighs himself and checks his blood pressure as a middle-aged couple watches at the blue-and-white SoloHealth station advertising "free health screenings." ...

... As Americans gain coverage under the federal health law, putting increased demand on primary care doctors and spurring interest in cheaper, more convenient care, unmanned kiosks like these may be part of what their manufacturer bills as a "self-service healthcare revolution." ...

14. Is this a case of marketing going too far? Young Japanese Women Rent Out Their Bare Legs as Advertising Space

15. Nanotechnology Rebuilds the Periodic Table

Recent developments in the field of nanotechnology might give new meaning to the phrase “nothing gold can stay.” Atoms and bonds developed not by Mother Nature, but by scientists, are gaining momentum as the building blocks for cutting-edge materials.

Using nanoparticles as “atoms” and DNA as “bonds,” Chad Mirkin, the director of Northwestern University’s International Institute for Nanotechnology, is constructing his very own periodic table. So far Mirkin has built more than 200 distinct crystal structures with 17 different particle arrangements. ...

16. ExtremeTech says NASA’s cold fusion tech could put a nuclear reactor in every home, car, and plane.

17. Atlantic Cities has some great maps showing the impact of railroads on travel time in the early 19th Century, thus shrinking the nation. A Mapped History of Train Travel in the United States

18. A soccer goalie's worst nightmare.

19. You might want to think twice before a game of horse with this cheerleader.

How China Became Capitalist

CATO: How China Became Capitalist

... Nonetheless, China has been transformed from the inside out over the past 35 years. This transformation is the story of our time. The struggle of China, in other words, is the struggle of the world. ...

Conclusion

Given our account of how China became capitalist, what can we say about the form of capitalism that has emerged in China? A persisting feature of China’s market transition is the lack of political liberalization. This is not to say that the Chinese political system has stood still over the past 35 years. The Party has distanced itself from radical ideology; it is no longer communist except in name. In recent years, the internet has increasingly empowered the Chinese to exercise their political voice. Nonetheless, China remains ruled by a single political party.

This continuity hides a fundamental change in China’s political reality. With the death of Deng Xiaoping, “strongman” politics was brought to a closure. Under Jiang Zemin and Hu Jintao, China is no longer ruled by a charismatic leader. In that sense, Chinese politics today is qualitatively different from the time of Mao and Deng. But the Chinese government has not come to terms with this political change on the ground; there have been few efforts at institution-building to prepare China for the new political reality.

The combination of rapid economic liberalization and seemingly unchanged politics has led many to characterize China’s market economy as state-led, authoritarian capitalism, which many people have rightly recognized as fragile and unsustainable. When and how China will embrace democracy, and whether the Party will survive democratization, are the main questions asked about China’s political future. In our book, a different perspective is offered. It provides a different diagnosis of the main flaw of the Chinese market economy: China has developed a robust market for goods, but it still lacks a free market for ideas.

The market for ideas points to an alternative way of thinking about China’s political future. Our reasoning is mainly based on the following two considerations. First, multiparty competition does not work unless it is cultivated and disciplined by a free market for ideas, without which democracy can be easily hijacked by interest groups and undermined by the tyranny of the majority. The performance of democracy critically depends on the market for ideas, just like privatization depends on the market for capital assets. Second, multi- party competition had virtually no precedent in Chinese history. Indeed, the Chinese word for the “party” (党) has a strong negative connotation in traditional Chinese political thinking. “Forming a party and pursuing self-interest” (结党营私) has been consistently denounced as undermining the political ideal, which is “what is under heaven is for all” (天下为公). In contrast, the market for ideas has a deep and revered root in traditional Chinese thinking; “let one hundred schools of thought contend” has been respected as a political ideal since the time of Confucius. In our view, the market for ideas promises a more gradual and viable approach to rebuilding Chinese politics on the principles of tolerance, justice, and humility.

Over the past 35 years, China has embraced capitalism not just in the economy. The Theory of Moral Sentiments has more than a dozen Chinese translations; the book has won the heart and mind of premier Wen Jiabao. The message of Adam Smith resonates strongly with the Chinese, not least because of its striking affinity with the traditional Chinese thinking on economy and society. A surprising outcome of China’s transition to capitalism is that China has found a way back to its own cultural roots. ...

Saturday Links

1. I love maps and charts. Naturally, I was drawn to this: 36 Maps That Explain The Entire World. Here is just one example:

2. Roger Pielke, Jr., says It's Time to Bury the Easterlin Paradox.

"The Easterlin paradox suggest that in terms of human happiness -- a squishy concept to be sure -- there is a limit to economic growth beyond which there really is just no point in attaining more wealth. Further, a decoupling between income and happiness at some threshold would imply that GDP would not be a good measure of welfare, we would need some other metric.

A recent paper (PDF) by Daniel Sacks, Betsey Stevenson and Justin Wolfers argues that the Easterlin paradox is also wrong. ..."

3. John Danforth thinks We Need Less Religion in our Politics and Less Politics in our Religion.

4. I opined about this in yesterday's post, but I'm linking it again. One of the better Salon pieces I've read. When liberals ignore injustice

"Why isn't there more outrage about the president's unilateral targeted assassination program on the left?"

5. Arnold Kling with an interesting piece on the role of Jews in the rise of the modern urbanized economic order. The Unintended Consequences of God

"In those days, most people were farmers, for whom literacy’s costs generally outweighed its benefits. However, in an urbanized society with skilled occupations, literacy pays off. As urbanization gradually increased in the late Middle Ages, Jews came to fill high-skilled occupations. Botticini and Eckstein argue that literacy, rather than persecution, is what led Jews into these occupations."

6. New Geography wants to know Is Urbanism The New Trickle-Down Economics?

"But while progressives would clearly mock this policy [trickle-down economics], modern day urbanism often resembles nothing so much as trickle-down economics, though this time mostly advocated by those who would self-identify as being from the left. The idea is that through investments catering to the fickle and mobile educated elite and the high end businesses that employ and entertain them, cities can be rejuvenated in a way that somehow magically benefits everybody and is socially fair."

7. NPR has a nice piece on mini-reactors. Are Mini-Reactors The Future Of Nuclear Power?

8. Mark Perry excerpts a quote from green libertarian John Mackey, CEO of Whole Foods Market.

“Capitalism is the greatest creation humanity has done for social cooperation. It has lifted humanity out of the dirt. In statistics we discovered when we were researching the book, about 200 years ago when capitalism was created, 85% of the people alive lived on $1 a day. Today, that number is 16%. Still too high, but capitalism is wiping out poverty across the world. 200 years ago illiteracy rates were 90%. Today, they are down to about 14%. 200 years ago the average lifespan was 30. Today it is 68 across the world, 78 in the States, and almost 82 in Japan. This is due to business. This is due to capitalism. And it doesn’t get credit for it. Most of the time, business is portrayed by its enemies as selfish and greedy and exploitative, yet it’s the greatest value creator in the world.”

9. Economist Gavin Kennedy with some interesting thoughts on the relationship between the state and the economy in developing nations:

The problem is to achieve the right balance between a competitive market economy and an effective state:  markets where possible; the state where necessary.

10. Climate Change: Key Data Points from Pew Research. Highlights some interesting shifts in the public's priorities.

11. Great piece about yet another way family life is changing. Yes, I’m a Homemaker

I’m a guy. My wife works. We’ve got no kids. I’m a stay-at-home dude.

"... What a sweet picture this conjures: the stay-at-home dad nurturing his children, looking after the house and helping support his wife in her budding career and shelving his own big ambitions for later. Now it gets a little awkward. There is no adorable kid, nor plans to have one. No starter home that needs knocking into shape. I'm not just doing this temporarily until I find something meaningful to do. I’m actually a full-time homemaker ... not stay-at-home dad but stay-at-home dude. A conversational pause. Where do you mentally file this guy? Usually I just change the subject. ..."

12. The Atlantic reports that Women Are Often Remarkably Reluctant to Ask for Help Around the House

A new study shows that high-earning women are more likely to let their houses be messy than to hire a housekeeper or get their husbands and kids to pitch in. ...

... "You can purchase substitutes for your own time, you can get your husband to do more, or you can all just do less," Killewald says. "Whether women outsource housework in particular has less to do with resources, but whether or not paid labor is viewed as an appropriate strategy for undertaking domestic work.

Doing less housework seems to be a popular option. ...

13. Business insider reports on a finding that is no shock to me: Men Really Do Have A Harder Time Reading Other People's Emotions.

Psychiatrists have concluded that males take longer to assess facial expressions as their brains have to work twice as hard to work out whether another person looks friendly or intelligent.

14. Daniel Kirk with a thoughtful piece Homosexuality under the Reign of Christ

15. Facebook Unfriending Has Real-Life Consequences

In particular, researchers found that 40% of people say they would avoid someone who unfriended them on Facebook, while 50% say they would not avoid a person who unfriended them. Women were more likely than men to avoid someone who unfriended them, the researchers found.

16. The Future of Librarians in an EBook World

... Libraries are responding to the decline of print in a variety of creative ways, trying to remain relevant – especially to younger people – by embracing the new technology. Many, such as New York’s Queens Public Library, are reinventing themselves as centers for classes, job training, and simply hanging out. In one radical example, a new $1.5 million library scheduled to open in San Antonio, Texas, this fall will be completely book-free, with its collection housed exclusively on tablets, laptops, and e-readers. “Think of an Apple store,” the Bexar County judge who is leading the effort told NPR. It’s a flashy and seductive package.

But libraries are about more than just e-readers or any other media, as important as those things are. They are about more than just buildings such as the grand edifices erected by Carnegie money, or the sleek and controversial new design for the New York Public Library’s central branch. They are also about human beings and their relationships, specifically, the relationship between librarians and patrons. And that is the relationship that the foundation created by Microsoft co-founder’s Paul G. Allen is seeking to build in a recent round of grants to libraries in the Pacific Northwest. ...

17. 3-D Printing just gets more amazing. A 3D Printer That Generates Human Embryonic Stem Cells

3-D printers can produce gun parts, aircraft wings, food and a lot more, but this new 3-D printed product may be the craziest thing yet: human embryonic stem cells. Using stem cells as the "ink" in a 3-D printer, researchers in Scotland hope to eventually build 3-D printed organs and tissues. A team at Heriot-Watt University used a specially designed valve-based technique to deposit whole, live cells onto a surface in a specific pattern.

Nordic Countries Reinventing Their Model of Capitalism

The Economist: Nordic Countries Reinventing Their Model of Capitalism

... Sweden has reduced public spending as a proportion of GDP from 67% in 1993 to 49% today. It could soon have a smaller state than Britain. It has also cut the top marginal tax rate by 27 percentage points since 1983, to 57%, and scrapped a mare’s nest of taxes on property, gifts, wealth and inheritance. This year it is cutting the corporate-tax rate from 26.3% to 22%.

Sweden has also donned the golden straitjacket of fiscal orthodoxy with its pledge to produce a fiscal surplus over the economic cycle. Its public debt fell from 70% of GDP in 1993 to 37% in 2010, and its budget moved from an 11% deficit to a surplus of 0.3% over the same period. This allowed a country with a small, open economy to recover quickly from the financial storm of 2007-08. Sweden has also put its pension system on a sound foundation, replacing a defined-benefit system with a defined-contribution one and making automatic adjustments for longer life expectancy.

Most daringly, it has introduced a universal system of school vouchers and invited private schools to compete with public ones. Private companies also vie with each other to provide state-funded health services and care for the elderly. Anders Aslund, a Swedish economist who lives in America, hopes that Sweden is pioneering “a new conservative model”; Brian Palmer, an American anthropologist who lives in Sweden, worries that it is turning into “the United States of Swedeamerica”.

There can be no doubt that Sweden’s quiet revolution has brought about a dramatic change in its economic performance. The two decades from 1970 were a period of decline: the country was demoted from being the world’s fourth-richest in 1970 to 14th-richest in 1993, when the average Swede was poorer than the average Briton or Italian. The two decades from 1990 were a period of recovery: GDP growth between 1993 and 2010 averaged 2.7% a year and productivity 2.1% a year, compared with 1.9% and 1% respectively for the main 15 EU countries. ...

... The other Nordic countries have been moving in the same direction, if more slowly. Denmark has one of the most liberal labour markets in Europe. It also allows parents to send children to private schools at public expense and make up the difference in cost with their own money. Finland is harnessing the skills of venture capitalists and angel investors to promote innovation and entrepreneurship. Oil-rich Norway is a partial exception to this pattern, but even there the government is preparing for its post-oil future.

This is not to say that the Nordics are shredding their old model. They continue to pride themselves on the generosity of their welfare states. About 30% of their labour force works in the public sector, twice the average in the Organisation for Economic Development and Co-operation, a rich-country think-tank. They continue to believe in combining open economies with public investment in human capital. But the new Nordic model begins with the individual rather than the state. It begins with fiscal responsibility rather than pump-priming: all four Nordic countries have AAA ratings and debt loads significantly below the euro-zone average. It begins with choice and competition rather than paternalism and planning. The economic-freedom index of the Fraser Institute, a Canadian think-tank, shows Sweden and Finland catching up with the United States (see chart). The leftward lurch has been reversed: rather than extending the state into the market, the Nordics are extending the market into the state. ...

Tea Party Libertarians and Small Organic Farmers Make Strange Political Bedfellows

U.S. News:  Tea Party Libertarians and Small Organic Farmers Make Strange Political Bedfellows

The unlikely coalition between Tea Party libertarians and small organic farmers.

Laura Bledsoe didn't set out to join a political movement, she merely wanted to serve what she considered a sustainable meal. ...

... But it soon became apparent that her nervousness wasn't unfounded.

The health inspector arrived simultaneously with several of the event's guests. The Bledsoes led her to where the food was being prepared while the guests were guided on a chaperoned tour of the farm by interns.

"She literally came in and started looking for things she could find fault with," Laura recalls. "That just became apparent in her attitude and demeanor with how she handled things."

The health inspector raised several concerns, but chief among them was the meat the Bledsoes were preparing to serve. Because the event was advertised as a "zero mile footprint," the meat hadn't been sent through a USDA processing plant, as is required for any meat purchased at a grocery store or restaurant, so the inspector deemed it illegal to serve.

"She immediately demanded that we send our guests home and cease the event, and if we didn't she would call the police and have them personally escorted off the property."

Increasingly panicked, flustered, and "having a nervous breakdown," Laura attempted to reason with the inspector without success. In addition to being ordered to send their guests home, the farmers were also told they needed to pour bleach over all the meat to ensure it would never be served.

"It's one thing when you throw out a piece of food that you have no relationship to," Laura says. "But we raised these animals. When you raise animals and slaughter them and then prepare them, it's with great reverence that you eat this food. The total disregard for any of that was just appalling to me."

In the middle of this disruption, the Bledsoes recalled they had a number for the Farm to Consumer Legal Defense Fund, a non-profit organization that protects the legal rights of family farms and artisan food producers. Though it was a Friday evening, the organization's lead counsel Gary Cox called them back within 15 minutes. He instructed them to ask if the inspector if she had a search warrant, if she didn't, Cox told them to tell her to leave the property.

The tactic worked. Though the health inspector threatened to come back with the police, she left, leaving the Bledsoes to explain what had happened to their guests. They had already poured bleach on the meat, but they were still able to serve their vegetable dishes without further disturbance, and of the 100 who signed up for the event, only a handful left because of time constraints, Laura says.

While the Bledsoes didn't immediately hear back from the health department, they decided to send out an E-mail recounting the experience to shareholders of their local food delivery service, known as a CSA. Soon, the story went viral, traveling the globe and leading to hundreds of E-mails from farmers and activists. Eventually, Laura was contacted by Nevada lawmakers, many of whom were sympathetic to her cause and wanted to reform state laws so that such a fiasco wouldn't happen again.

Without even meaning to, the Bledsoes found themselves swept up in a political movement that has only accrued momentum in recent years, one in which owners of small local farms and gardens are pitted against government agencies, both local and federal, over the rights of property owners and private citizens in terms of how and where they can prepare their food.

But what is perhaps even more peculiar about this movement is its bipartisan interest. Among its most vocal proponents you'll find an amalgamation of ardent Tea Party libertarians—concerned over property rights and the over-extended reach of government—and liberal environmentalists who believe the local, organic farm is the ecologically-friendly solution to the nation's health woes. ...

This is a wonderful case study of markets, public policy, and the challenge of crafting appropriate regulations. In many industries, regulation is as much about creating barriers against new competitors entering the industry as it is about safety or protecting consumers. It is a false perception that large corporations do not like regulation. In fact, enlisting government help in erecting barriers to new competitors is an intentional competitive strategy. I don't know if that is necessarily the case here, but we can see how it adversely impacts small farmers, whether by design or not.

Practically human: Can smart machines do your job?

Associated Press: Practically human: Can smart machines do your job?

... To better understand the impact of technology on jobs, The Associated Press analyzed employment data from 20 countries; and interviewed economists, technology experts, robot manufacturers, software developers, CEOs and workers who are competing with smarter machines.

The AP found that almost all the jobs disappearing are in industries that pay middle-class wages, ranging from $38,000 to $68,000. Jobs that form the backbone of the middle class in developed countries in Europe, North America and Asia.

In the United States, half of the 7.5 million jobs lost during the Great Recession paid middle-class wages, and the numbers are even more grim in the 17 European countries that use the euro as their currency. A total of 7.6 million midpay jobs disappeared in those countries from January 2008 through last June.

Those jobs are being replaced in many cases by machines and software that can do the same work better and cheaper.

"Everything that humans can do a machine can do," says Moshe Vardi, a computer scientist at Rice University in Houston. "Things are happening that look like science fiction."...

... So machines are getting smarter and people are more comfortable using them. Those factors, combined with the financial pressures of the Great Recession, have led companies and government agencies to cut jobs the past five years, yet continue to operate just as well.

How is that happening?

-Reduced aid from Indiana's state government and other budget problems forced the Gary, Ind., public school system last year to cut its annual transportation budget in half, to $5 million. The school district responded by using sophisticated software to draw up new, more efficient bus routes. And it cut 80 of 160 drivers. ...

... -In South Korea, Standard Chartered is expanding "smart banking" branches that employ a staff of three, compared with an average of about eight in traditional branches. ...

... -The British-Australian mining giant Rio Tinto announced plans last year to invest $518 million in the world's first long-haul, heavy-duty driverless train system at its Pilbara iron ore mines in Western Australia. The automated trains are expected to start running next year. The trains are part of what Rio Tinto calls its "Mine of the Future" program, which includes 150 driverless trucks and automated drills.

Like many technologically savvy startups, Dirk Vander Kooij's furniture-making company in the Netherlands needs only a skeleton crew - four people ...

... -Google's driverless car and the Pentagon's drone aircraft are raising the specter of highways and skies filled with cars and planes that can get around by themselves. ...

... "Trying to keep it from happening would have been like the Teamsters in the early 1900s trying to stop the combustion engine," Lavin says. "You can't stand in the way of technology."

The upside of emerging technology is that most will make goods and services less expensive. That improves our living standard. The downside is that much of the work we used to do to earn wages to buy goods and services is rapidly changing. As the last sentence of the article notes, this is not the first time we have been in these circumstances. Years ago, I read that in 1885, approximately 80% of everything we consumed in the U.S. was produced at home. By 1915, 80% was produced outside the home. It created massive economic dislocations. Each time these disruptions occur, it is hard for the people living at that time to foresee the new economic order.

Christian thinkers must wrestle with the challenges of technological innovation. Creative destruction (the market dynamic where jobs and industries are destroyed in the wake of creating new ones) has always been difficult for ethics. It is painful, but other alternatives' social cost is also quite high. Anti-technological calls to abandon consumerism or just saying that "the market will sort it all out" are not legitimate responses. I think topics like this should be central to our theological reflection about human labor and the economy.