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My hypothesis is not that the French are lazier than others, but that their labor policies give them less incentive to work.

(p. A8) PARIS -- When he won the presidential election two years ago, Nicolas Sarkozy urged the French to get up early and work more to earn more.

A study released Monday suggests they missed the wake-up call.

France is the industrialized country where people spend the longest periods sleeping, according to a series of surveys on social habits conducted by the Paris-based Organization for Economic Cooperation & Development.

The French sleep a daily average of 530 minutes, compared with 518 for Americans and 469 for Koreans -- the OECD's "most awake" nation, according to the study.

For the full story, see:

DAVID GAUTHIER-VILLARS. "France Wrests Title of Sleeping Giant." Wall Street Journal (Tues., MAY 5, 2009): A8.

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(p. 149) When Borgenicht came home at night to his children, he may have been tired and poor and overwhelmed, but he was alive. He was his own boss. He was responsible for his own decisions and direction. His work was complex: it engaged his mind and imagination. And in his work, there was a relationship between effort and reward: the longer he and Regina stayed up at night sewing aprons, the more money they made the next day on the streets.

Those three things -- autonomy, complexity, and a connection between effort and reward--are, most people agree, the three qualities that work has to have if it is to be satisfying. It is not how much money we make (p. 150) that ultimately makes us happy between nine and five. It's whether our work fulfills us. If I offered you a choice between being an architect for $75,000 a year and working in a tollbooth every day for the rest of your life for $100,000 a year, which would you take? I'm guessing the former, because there is complexity, autonomy, and a relationship between effort and reward in doing creative work, and that's worth more to most of us than money.

Work that fulfills those three criteria is meaningful. Being a teacher is meaningful. Being a physician is meaningful. So is being an entrepreneur, and the miracle of the garment industry--as cutthroat and grim as it was--was that it allowed people like the Borgenichts, just off the boat, to find something meaningful to do as well."" When Louis Borgenicht came home after first seeing that child's apron, he danced a jig. He hadn't sold anything yet. He was still penniless and desperate, and he knew that to make something of his idea was going to require years of backbreaking
labor. But he was ecstatic, because the prospect of those endless years of hard labor did not seem like a burden to him. Bill Gates had that same feeling when he first sat down at the keyboard at Lakeside. And the Beatles didn't recoil in horror when they were told they had to play eight hours a night, seven days a week. They jumped at the chance. Hard work is a prison sentence only if it does not have meaning. Once it does, it becomes the kind of thing that makes you grab your wife around the waist and dance a jig.

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

(Note: italics in original.)

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"ROYAL SUBJECTS; Donna Farmer, with her children, applauds Disney's efforts." Source of photo and caption: online version of the NYT article quoted and cited below.

In Gary Becker's initially controversial doctoral dissertation, he argued that those who discriminate in the labor market pay a price for their prejudice: they end up paying higher wages, than do those employers are not prejudiced.

The bottom line is that the free market provides incentives for the encouragement of diversity and tolerance.

Similarly, Donna Farmer argues, in the passages below, that the marketplace provides the Disney company with incentives to have "The Princess and the Frog" appeal to black audiences.

(p. 1) "THE Princess and the Frog" does not open nationwide until December, but the buzz is already breathless: For the first time in Walt Disney animation history, the fairest of them all is black.

. . .

After viewing some photographs of merchandise tied to the movie, which is still unfinished, Black Voices, a Web site on AOL dedicated to African-American culture, faulted the prince's relatively light skin color. Prince Naveen hails from the fictional land of Maldonia and is voiced by a Brazilian actor; Disney says that he is not white.

"Disney obviously doesn't think a black man is worthy of the title of prince," Angela Bronner Helm wrote March 19 on the site. "His hair and features are decidedly non-black. This has left many in the community shaking (p. 8) their head in befuddlement and even rage."

Others see insensitivity in the locale.

"Disney should be ashamed," William Blackburn, a former columnist at The Charlotte Observer, told London's Daily Telegraph. "This princess story is set in New Orleans, the setting of one of the most devastating tragedies to beset a black community."

ALSO under scrutiny is Ray the firefly, performed by Jim Cummings (the voice of Winnie the Pooh and Yosemite Sam). Some people think Ray sounds too much like the stereotype of an uneducated Southerner in an early trailer.

Of course, armchair critics have also been complaining about the princess. Disney originally called her Maddy (short for Madeleine). Too much like Mammy and thus racist. A rumor surfaced on the Internet that an early script called for her to be a chambermaid to a white woman, a historically correct profession. Too much like slavery.

And wait: We finally get a black princess and she spends the majority of her time on screen as a frog?

. . .

Donna Farmer, a Los Angeles Web designer who is African-American and has two children, applauded Disney's efforts to add diversity.

"I don't know how important having a black princess is to little girls -- my daughter loves Ariel and I see nothing wrong with that -- but I think it's important to moms," she said.

"Who knows if Disney will get it right," she added. "They haven't always in the past, but the idea that Disney is not bending over backward to be sensitive is laughable. It wants to sell a whole lot of Tiana dolls and some Tiana paper plates and make people line up to see Tiana at Disney World."

For the full article, see:

BROOKS BARNES. "Her Prince Has Come. Critics, Too." The New York Times, SundayStyles Section (Sun., May 31, 2009): 1, 8-9.

(Note: ellipses added.)

The published version of Becker's doctoral dissertation is:

Becker, Gary S. The Economics of Discrimination. 2nd Rev ed, Economic Research Studies. Chicago: University of Chicago Press, 1971.

Movie still of Princess Tiana from Disney's "The Princess and the Frog" to be released in December 2009. Source of movie still: online version of the NYT article quoted and cited above.

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(p. 146) This was the second great advantage of the garment
industry. It wasn't just that it was growing by leaps and bounds. It was also explicitly entrepreneurial. Clothes weren't made in a single big factory. Instead, a number of established firms designed patterns and prepared the fabric, and then the complicated stitching and pressing and button attaching were all sent out to small contractors. And if a contractor got big enough, or ambitious enough, he started designing his own patterns and preparing his own fabric. By 1913, there were approximately (p. 147) sixteen thousand separate companies in New York City's garment business, many just like the Borgenichts' shop on Sheriff Street.

"The threshold for getting involved in the business was very low. It's basically a business built on the sewing machine, and sewing machines don't cost that much," says Daniel Soyer, a historian who has written widely on the garment industry. "So you didn't need a lot of capital. At the turn of the twentieth century, it was probably fifty dollars to buy a machine or two. All you had to do to be a contractor was to have a couple sewing machines, some irons, and a couple of workers. The profit margins were very low but you could make some money."

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

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(p. 145) "There is no doubt that those Jewish immigrants
arrived at the perfect time, with the perfect skills," says
the sociologist Stephen Steinberg. "To exploit that opportunity,
you had to have certain virtues, and those immigrants
worked hard. They sacrificed. They scrimped and
saved and invested wisely. But still, you have to remember
that the garment industry in those years was growing
by leaps and bounds. The economy was desperate for the
skills that they possessed."

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

(Note: italics in original.)

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(p. 141) "To me the greatest wonder in this was not the mere
quantity of garments--although that was a miracle in
itself--" Borgenicht would write years later, after he
became a prosperous manufacturer of women's and children's
clothing, "but the fact that in America even poor
people could save all the dreary, time-consuming labor of
making their own clothes simply by going into a store and
walking out with what they needed. There was a field to
go into, a field to thrill to."

Borgenicht took out a small notebook. Everywhere he
went, he wrote down what people were wearing and what
was for sale--mens wear, women's wear, children's wear. He
wanted to find a "novel" item, something that people would
wear that was not being sold in the stores. For four more
days he walked the streets. On the evening of the final day
as he walked toward home, he saw a half dozen girls playing
hopscotch. One of the girls was wearing a tiny embroidered
apron over her dress, cut low in the front with a tie in the
back, and it struck him, suddenly, that in his previous days
of relentlessly inventorying the clothing shops of the Lower
East Side, he had never seen one of those aprons for sale.

He came home and told Regina. She had an ancient
sewing machine that they had bought upon their arrival in
America. The next morning, he went to a dry-goods store
on Hester Street and bought a hundred yards of gingham
and fifty yards of white crossbar. He came back to their
tiny apartment and laid the goods out on the dining room
table. Regina began to cut the gingham--small sizes for
toddlers, larger for small children--until she had forty (p. 142)
aprons. She began to sew. At midnight, she went to bed
and Louis took up where she had left off. At dawn, she rose
and began cutting buttonholes and adding buttons. By ten
in the morning, the aprons were finished. Louis gathered
them up over his arm and ventured out onto Hester Street.

"Children's aprons! Little girls' aprons! Colored ones,
ten cents. White ones, fifteen cents! Little girls' aprons!"

By one o'clock, all forty were gone.

"Ma, we've got our business," he shouted out to Regina,
after running all the way home from Hester Street.

He grabbed her by the waist and began swinging her
around and around.

"You've got to help me," he cried out. "We'll work
together! Ma, this is our business."

Source:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

(Note: italics in original.)

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Source of cartoon: online version of the WSJ commentary quoted and cited below.

(p. A17) . . . the evidence that we discovered in our new study for the American Legislative Exchange Council, "Rich States, Poor States," published in March, shows that Americans are more sensitive to high taxes than ever before. The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.

Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.

. . .

. . . , Barry W. Poulson of the University of Colorado last year examined many factors that explain why some states grew richer than others from 1964 to 2004 and found "a significant negative impact of higher marginal tax rates on state economic growth." In other words, soaking the rich doesn't work. To the contrary, middle-class workers end up taking the hit.

For the full commentary, see:

ARTHUR LAFFER and STEPHEN MOORE. "Soak the Rich, Lose the Rich Americans know how to use the moving van to escape high taxes." Wall Street Journal (Mon., MAY 18, 2009): A17.

(Note: ellipses added.)

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Source of book image: http://bharatkhetan.com/akanksha/?p=19

Malcolm Gladwell is on a roll. His three recent books have been best-sellers: The Tipping Point, Blink, and now Outliers. All three books are well-written, and deal with important issues.

I suspect that sometimes Gladwell over-simplifies and over-generalizes. But he often makes plausible, thought-provoking claims, and he presents academic research in a clear, painless way.

In the Outliers book, I enjoyed his examples: the NHL hockey players who are overwhelmingly born in the same three months, the entrepreneurial immigrant Jews entering the clothing business, silicon valley superstars having access to computers at an early age.

To Gladwell, the main point of the book is that over-achievers owe their success to lucky circumstances. But to me, the main point was a different one: in case after case, the successful put in a huge number of hours (about 10,000) of practice to achieve the mastery of their activities.

To use the memorable analogy from Collins' Good to Great: hour after hour, day after day, year after year, they all kept "pushing the flywheel" to reach the threshold of excellence.

The reference for Outliers is:

Gladwell, Malcolm. Outliers: The Story of Success. New York, NY: Little, Brown, and Co., 2008.

The reference for Collins' book is:

Collins, Jim. Good to Great: Why Some Companies Make the Leap. And Others Don't. New York: HarperCollins Publishers, Inc., 2001.

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Source of image of graph: http://www.econ.canterbury.ac.nz/personal_pages/bob_reed/econ3003/book/chap26a.gif (Original source of graph: Viscusi, W. Kip, John M. Vernon, and Joseph E. Harrington, Jr. Economics of Regulation and Antitrust. 2nd ed. Lexington, MA: D.C. Heath and Company, 1992, page 714.)

The graph above, from a leading textbook on the economics of regulation, strikingly shows that OSHA had no discernible effect on reducing workplace accidents.

(Note: I am grateful to Susan Dudley who mentioned this graph in one of the Association of Private Enterprise Education sessions in Guatemala City, and who graciously elaborated the source in conversation afterwards.)

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(p. xxii) To me this is the first principle of life, the foundational principle, and a lesson you can't learn at the feet of any wise man: Get up! The art of living is simply getting up after you've been knocked down. It's a lesson taught by example and learned in the doing. I got that lesson every day while growing up in a nondescript split-level house in the suburbs of Wilmington, Delaware. My dad, Joseph Robinette Biden Sr., was a man of few words. What I learned from him. I learned from watching. He'd been knocked down hard as a young man, lost something he knew he could never get back. But he never stopped trying. He was the first one up in our house every morning, clean-shaven, elegantly dressed, putting on the coffee, getting ready to go to the car dealership, to a job he never really liked. My brother Jim said most mornings he could hear our dad singing in the kitchen. My dad had grace. He never, ever gave up, and he never complained. The world doesn't owe you a living, Joey," he used to say, but without rancor. He had no time for self-pity. He didn't judge a man by how many times he got knocked down but by how fast he got up.

Get up! That was his phrase, and it has echoed through my life. The world dropped you on your head? My dad would say, Get up! You're lying in bed feeling sorry for yourself? Get up! You got knocked on your ass on the football field? Get up! Bad grade? Get up! The girl's parents won't let her go out with a Catholic boy? Get up!

Source:

Biden, Joe. Promises to Keep: On Life and Politics. New York: Random House, 2007.

(Note: the italics in the quoted passage are in the original.)

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"Thomas Lee, one of the men featured in the documentary "A Father's Promise," watching a video of himself from 1996." Source of caption and photo: online version of the NYT review quoted and cited below.

(p. C11) The program, with Al Roker as host, follows up a "Dateline NBC" report from 1996 that recorded several births among black women at a Newark hospital and interviewed the unmarried fathers of the children as they earnestly vowed to be there as their babies grew up. The piece was an attempt to look at the alarming rate of fatherless households among blacks.

It is, of course, a problem that has not gone away since 1996, and Mr. Roker's program tracks down three of those newborns and the fathers who promised to stand by them. That none did -- jail, joblessness, depression and general irresponsibility intervened -- somehow isn't surprising.

. . .

. . . the Rev. Eugene F. Rivers of Azusa Community Church in Boston explains in very personal terms why he discounts the easy economic explanations that so often get the blame for fatherless households.

"I had a child out of wedlock," he says. "That was a bad decision. I can't say capitalism did it to me."

For the full review, see:

NEIL GENZLINGER. "Television Review; 'A Father's Promise'; Old Pledges Are Broken, Young Hope Stays Intact." The New York Times (Sat., February 7, 2009): C11.

(Note: ellipses added.)

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(p. 164) The reason the system of capitalism without capitalists is failing throughout most of Europe is that it misconceives the essential nature of growth. Poring over huge aggregations of economic data, economists see the rise to wealth as a slow upward climb achieved through the marginal productivity gains of millions of workers, through the slow accumulation of plant and machinery, and through the continued improvement of "human capital" by advances in education, training, and health. But, in fact, all these sources of growth are dwarfed by the role of entrepreneurs launching new companies based on new concepts or technologies. These gains generate the wealth that finances the welfare state, that makes possible the long-term investments in human capital that are often seen as the primary source of growth.

Source:

Gilder, George. Recapturing the Spirit of Enterprise: Updated for the 1990s. updated ed. New York: ICS Press, 1992.

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"Michelle Rhee, second from left, with faculty and staff members of Washington schools last month at an awards ceremony." Source of the caption and photo: online version of the NYT article quoted and cited below.

(p. A1) WASHINGTON -- Michelle Rhee, the hard-charging chancellor of the Washington public schools, thinks teacher tenure may be great for adults, those who go into teaching to get summer vacations and great health insurance, for instance. But it hurts children, she says, by making incompetent instructors harder to fire.

So Ms. Rhee has proposed spectacular raises of as much as $40,000, financed by private foundations, for teachers willing to give up tenure.

Policy makers and educators nationwide are watching to see what happens to Ms. Rhee's bold proposal. The 4,000-member Washington Teachers' Union has divided over whether to embrace it, with many union members calling tenure a crucial protection against arbitrary firing.

. . .

Ms. Rhee has not proposed abolishing tenure outright. Under her proposal, each teacher would choose between two compensation plans, one called green and the other red. Pay for teachers in the green plan would rise spectacularly, nearly doubling by 2010. But they would need to give up tenure for a year, after which they would need a principal's recommendation or face dismissal.

For the full story, see:

SAM DILLON. "A School Chief Takes On Tenure, Stirring a Fight." The New York Times (Thurs., November 13, 2008): A1 & A19.

(Note: ellipsis added.)

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"French Caterpillar executive Nicolas Polutnik, center, with workers after his release Wednesday." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) PARIS -- Of the 22,000 workers Caterpillar Inc. plans to lay off this year, the French ones have perhaps the most radical tactic for negotiating their severance deals.

In an aggressive, and peculiarly French, negotiating strategy, they held their managers hostage. The workers detained the director of their plant and four other managers for about 24 hours this week. Workers released them only after the company agreed to resume talks with unions and a government mediator on how to improve compensation for workers who are being laid off.

. . .

Jérôme Pélisse, a sociologist, surveyed 3,000 companies in 2004 and found that 18 of them had experienced an executive detention in the prior three years.

For the full story, see:

DAVID GAUTHIER-VILLARS and LEILA ABBOUD. "In France, the Bosses Can Become Hostages." Wall Street Journal (Fri., APRIL 3, 2009): B1 & B5.

(Note: ellipsis added.)

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A23) The turn-of-the-20th-century war of capital and labor is not even half-remembered now. But the glum slab of the Los Angeles Times building will remind anyone who cares to look. The antiunion rallying cry of "True Industrial Freedom" is carved deeply into its façade. Completed in 1935, the building is a cenotaph for the 21 nonunion pressmen and linotype operators who were blown up on an early October morning in 1910 and died in a storm of fire and collapsing masonry.

The dynamiting of the Los Angeles Times was, for Howard Blum in "American Lightning," the war's decisive engagement. After it, a national campaign of union-led terrorism was exposed; labor sympathizers who defended the bombers were proved to be gullible (if not dishonest); and the political force of American socialism was wrecked. Reputations were wrecked, too, principally that of Clarence Darrow, who was then a renowned labor lawyer.

. . .

In 1910, Los Angeles was a young boomtown aching for water and respectability. To the owner of the Los Angeles Times, Harrison Gray Otis, respectability included making sure that the city was uninfested by union labor. It was an era of deep enmity and suspicion between business and labor, when it was not uncommon for strikes to end in riots and death. Otis and the Times preached the open shop with such vehemence that it was almost inevitable that they would become targets of prounion wrath.

The dynamite conspiracy unraveled when a second, unexploded bomb in Los Angeles was found to match another bomb discovered a month earlier by a Burns operative in a rail yard in Peoria, Ill. Burns tied the evidence to a campaign of terror against the National Erectors Association, a union-busting alliance of builders. The target of the association's animus was the union shop in general and the Structural Iron Workers Union in particular. John McNamara was the union's secretary-treasurer. His brother James was a union agent. Their weapons against the association and its allies were nitroglycerine and dynamite.

For the full review, see:

D.J. WALDIE. "Bookshelf; Dynamite and Deadlines." The Wall Street Journal (Tues., SEPTEMBER 16, 2008): A23.

(Note: ellipsis added.)

The reference to the book under review, is:

Blum, Howard. American Lightning. New York: Crown Publishers, 2008.

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(p. A15) It's important to acknowledge that dynamic product markets create dynamic labor markets as well. In recent years, government statistics show that about 25,000 jobs are destroyed and created every hour that America is open for business. All this economic change is essential, but it presents very real challenges to workers.

For the full commentary, see:

MARTIN NEIL BAILY and MATTHEW J. SLAUGHTER. "What's Behind the Recent Productivity Slowdown." The Wall Street Journal (Sat., DECEMBER 13, 2008): A15.

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In the Clinton administration, Martin Neil Baily was the Chair of the Council of Economic Advisers. He is one of those Democratic economists, along with Brad DeLong and Larry Summers, who appreciates the importance of innovation through the process of creative destruction, in making our lives better.

(p. A15) The economic attention of U.S. government and business leaders is fixed squarely on the downturn and financial crisis. Whether or not bailouts are proper short-term medicine, economists agree that the long-run solution for restoring economic growth lies in raising productivity.

The single best measure of a country's average standard of living is productivity: the value of output of goods and services a country produces per worker. The more workers produce, the more income they receive, and the more they can consume. Higher productivity results in higher standards of living.

So how has U.S. productivity grown recently? Unfortunately, very slowly. After averaging 2.7% productivity growth from 1995 through 2002, annual growth of productivity in the nonfarming business sector has slowed dramatically -- to just 1.7% in 2005, 1.0% in 2006, and 1.4% in 2007. At this new average rate of under 1.4%, it would take nearly 52 years for average U.S. living standards to double -- versus just 26 years at the earlier average. Signs of this slowdown are apparent, particularly in the waning competitiveness of U.S. sectors like automobiles, financial services and information technology.

On Monday, we are issuing a new report that details a set of policies the government could implement to boost U.S. productivity growth. Time is of the essence in addressing this challenge because the economy-wide impacts of structural policies tend to appear only gradually, in part because of many-year corporate planning horizons. It is also because faster productivity growth will ease the burden of massive U.S. fiscal deficits now projected for the coming years.

A central theme of this report is the critical role that competitive product markets play in spurring productivity growth and boosting standards of living. One of the great U.S. policy successes of recent decades has been the bipartisan removal of regulations that stifle competition and innovation in product markets. U.S. industries that face strong competitive intensity are more productive than highly regulated or otherwise sheltered industries. This competition, in turn, yields higher incomes and greater choices for consumers.

Maintaining the productivity benefits of product market competition requires sound choices in areas including trade and investment, regulation and infrastructure.

For the full commentary, see:

MARTIN NEIL BAILY and MATTHEW J. SLAUGHTER. "What's Behind the Recent Productivity Slowdown." The Wall Street Journal (Sat., DECEMBER 13, 2008): A15.

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Source of cartoon: online version of the WSJ article quoted and cited below.

Labor is usually viewed as a victim of the process of creative destruction, because some old jobs are destroyed when a new technology replaces an old one. But part of the process is the creation of new jobs, and on average, the new jobs are created have better characteristics than the old jobs that are destroyed.

The article quoted below, discusses some of the characteristics that make a job better or worse.

(p. D2) Nineteen years ago, Jennifer Courter set out on a career path that has since provided her with a steady stream of lucrative, low-stress jobs. Now, her occupation -- mathematician -- has landed at the top spot on a new study ranking the best and worst jobs in the U.S.

"It's a lot more than just some boring subject that everybody has to take in school," says Ms. Courter, a research mathematician at mental images Inc., a maker of 3D-visualization software in San Francisco. "It's the science of problem-solving."

The study, released Tuesday from CareerCast.com, a new job site, evaluates 200 professions to determine the best and worst according to five criteria inherent to every job: environment, income, employment outlook, physical demands and stress. (CareerCast.com is published by Adicio Inc., in which Wall Street Journal owner News Corp. holds a minority stake.)

The findings were compiled by Les Krantz, author of "Jobs Rated Almanac," and are based on data from the U.S. Bureau of Labor Statistics and the Census Bureau, as well as studies from trade associations and Mr. Krantz's own expertise.

According to the study, mathematicians fared best in part because they typically work in favorable conditions -- indoors and in places free of toxic fumes or noise -- unlike those toward the bottom of the list like sewage-plant operator, painter and bricklayer. They also aren't expected to do any heavy lifting, crawling or crouching -- attributes associated with occupations such as firefighter, auto mechanic and plumber.

For the full story, see:

SARAH E. NEEDLEMAN. "Doing the Math to Find the Good Jobs; Mathematicians Land Top Spot in New Ranking of Best and Worst Occupations in the U.S." The Wall Street Journal (Tues., Jan. 6, 2008): D2.

For the ranking of 200 jobs, and the components that went into the ranking, see:

http://www.careercast.com/jobs/content/JobsRated_Top200Jobs

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Mark Casson has argued that the more original the entrepreneur's innovation, the more likely he will need to finance all, or a large part, of it himself. To the extent that this is true, it represents an important argument for allowing the accumulation of wealth (and thereby an argument against substantial personal income, and inheritance, taxes.)

Here is an example, consistent with Casson's argument, of a self-financed entrepreneur:

(p. 36) The idea of loading film into a camera, snapping the picture and then sending the film to a store to be processed was the brainchild of an American from Rochester, New York, called George Eastman. One day in 1879, at the bank where he had worked since leaving school at the age of fourteen, he didn't get the promotion he was expecting. So he left and used his savings to set himself up as a "Maker and Dealer in Photographic Supplies." At this time, picture taking was a messy, cumbersome and expensive business, involving glass-late negatives, buckets of chemicals an monster wooden cameras. When Eastman had finished his experiments with the process, his slogan promised, "You press the button. We do the rest."

Source:

Burke, James. The Pinball Effect: How Renaissance Water Gardens Made the Carburetor Possible - and Other Journeys. Boston: Back Bay Books, 1997.

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(p. 156) Because it proceeds by competitively destroying old businesses and hence the existences dependent upon them, there always corresponds to it a process of decline, of loss of caste, of elimination. This fate also threatens the entrepreneur whose powers are declining, or his heirs who have inherited his wealth without his ability. This is not only because all individual profits dry up, the competitive mechanism tolerating no permanent surplus values, but rather annihilating them by means of just this stimulus of the striving for profits which is the mechanism's driving force; but also because in the normal case things so happen that entrepreneurial success embodies itself in the ownership of a business; and this business is usually carried on further by the heirs on what soon become traditional lines until new entrepreneurs supplant it. An American adage expresses it: three generations from overalls to overalls. And so it may be. Exceptions are rare, and are more than compensated for by cases in which the descent is still faster. Because there are always entrepreneurs and relatives and heirs of entrepreneurs, public opinion and also the phraseology of the social struggle readily overlook these facts. They constitute "the rich" a class of inheritors who are removed from life's battle. In fact, the upper strata of society are like hotels which are indeed always full of people, but people who are forever changing.

Source:

Schumpeter, Joseph A. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Translated by Redvers Opie. translation of 2nd German edition that appeared in 1926; translation first published by Harvard in 1934 ed. London: Oxford University Press, 1961.

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James Burke, writing of the ninth-century AD (the century of Charlemagne's death in 814 AD):

(p. 32) It was at this time too that anti-Semitism, previously rare, began to increase. Money-lending, which was forbidden by the Christian Church, was permitted under Jewish law, and the Jews, prevented from owning land, turned to the new business currency. Many of them grew rich and were resented.

Source:

Burke, James. The Day the Universe Changed: How Galileo's Telescope Changed the Truth and Other Events in History That Dramatically Altered Our Understanding of the World. Back Bay Books, 1995.

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"Dave Ratner, owner of four pet stores in Western Massachusetts, is worried about being able to pay into a state health benefits plan." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A16) AGAWAM, Mass. -- Dave Ratner, owner of Dave's Soda and Pet City, is pretty sure he is about to get "whacked" by the new state law that requires employers to contribute to health care benefits for their workers or pay a $295-per-employee penalty. In order to avoid thousands of dollars in fines, Mr. Ratner is considering not adding part-time workers at his four pet supply stores in Western Massachusetts.

But the penalty in Massachusetts is picayune compared with what some health experts believe Senator Barack Obama, the Democratic presidential nominee, might impose as part of his plan to provide affordable coverage for the uninsured. Though Mr. Obama has not released details, economists believe he might require large and medium companies to contribute as much as 6 percent of their payrolls.

That, Mr. Ratner said, would be catastrophic to a low-margin business like his, which has 90 employees, 29 of them full-time workers who are offered health benefits.

"To all of a sudden whack 6 to 7 percent of payroll costs, forget it," he said. "If they do that, prices go up and employment goes down because nobody can absorb that."

For the full story, see:

KEVIN SACK. "Businesses Wary of Details in Obama Health Plan." The New York Times (Mon., October 27, 2008): A16.

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   Source of the graph:  online version of the NYT article cited below.

(p. A1)  Young women in New York and several of the nation’s other largest cities who work full time have forged ahead of men in wages, according to an analysis of recent census data.

The shift has occurred in New York since 2000 and even earlier in Los Angeles, Dallas and a few other cities.

Economists consider it striking because the wage gap between men and women nationally has narrowed more slowly and has even widened in recent years among one part of that group: college-educated women in their 20s. But in New York, young college-educated women’s wages as a percentage of men’s rose slightly between 2000 and 2005.

The analysis was prepared by Andrew A. Beveridge, a demographer at Queens College, who first reported his findings in Gotham Gazette, published online by the Citizens Union Foundation. It shows that women of all educational levels from 21 to 30 living in New York City and working full time made 117 percent of men’s wages, and even more in Dallas, 120 percent. Nationwide, that group of women made much less: 89 percent of the average full-time pay for men.

Just why young women at all educational levels in New York and other big cities have fared better than their peers elsewhere is a matter of some debate. But a major reason, experts say, is that women have been graduating from college in larger numbers than men, and that many of those women seem to be gravitating toward major urban areas.

For the full story, see: 

SAM ROBERTS.  "For Young Earners in Big City, a Gap in Women’s Favor."  The New York Times (Fri., August 3, 2007):  A1 & A16.

   Source of the graph:  online version of the NYT article cited above.

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From McCraw's summary of an article entitled "The Function of Entrepreneurs and the Interest of the Worker" that Schumpeter published in 1927 in a labor magazine :

(p. 178) Schumpeter's key point here is one he hammered home many times: it is the insatiable pursuit of success, and of the towering premium it pays, that drives entrepreneurs and their investors to put so much of their time, effort, and money into some new project whose future is completely uncertain. High entrepreneurial returns are essential to generate gains not only for individuals but also for society, through the creation of new jobs.

Source:

McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

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(p. A9) A total of 24 states allow voters to change laws on their own by collecting signatures and putting initiatives on the ballot. It's healthy that the entrenched political class should face some real legislative competition from initiative-toting citizens. Unfortunately, some special interests have declared war on the initiative process, using tactics ranging from restrictive laws to outright thuggery.

The initiative is a reform born out of the Progressive Era, when there was general agreement that powerful interests had too much influence over legislators. It was adopted by most states in the Midwest and West, including Ohio and California. It was largely rejected by Eastern states, which were dominated by political machines, and in the South, where Jim Crow legislators feared giving more power to ordinary people.

But more power to ordinary people remains unpopular in some quarters, and nothing illustrates the war on the initiative more than the reaction to Ward Connerly's measures to ban racial quotas and preferences. The former University of California regent has convinced three liberal states -- California, Washington and Michigan -- to approve race-neutral government policies in public hiring, contracting and university admissions. He also prodded Florida lawmakers into passing such a law. This year his American Civil Rights Institute (ACRI) aimed to make the ballot in five more states. But thanks to strong-arm tactics, the initiative has only made the ballot in Arizona, Colorado and Nebraska.

"The key to defeating the initiative is to keep it off the ballot in the first place," says Donna Stern, Midwest director for the Detroit-based By Any Means Necessary (BAMN). "That's the only way we're going to win." Her group's name certainly describes the tactics that are being used to thwart Mr. Connerly.

Aggressive legal challenges have bordered on the absurd, going so far as to claim that a blank line on one petition was a "duplicate" of another blank line on another petition and thus evidence of fraud. In Missouri, Secretary of State Robin Carnahan completely rewrote the initiative's ballot summary to portray it in a negative light. By the time courts ruled she had overstepped her authority, there wasn't enough time to collect sufficient signatures.

Those who did circulate petitions faced bizarre obstacles. In Kansas City, a petitioner was arrested for collecting signatures outside of a public library. Officials finally allowed petitioners a table inside the library but forbade them to talk. In Nebraska, a group in favor of racial preferences ran a radio ad that warned that those who signed the "deceptive" petition "could be at risk for identity theft, robbery, and much worse."

Mr. Connerly says that it's ironic that those who claim to believe in "people power" want to keep people from voting on his proposal: "Their tactics challenge the legitimacy of our system."

For the full commentary, see:

JOHN FUND. "The Far Left's War on Direct Democracy." The Wall Street Journal (Sat., July 26, 2008): A9.

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Source of book image: http://www.arthurbrooks.net/images/book-2.gif

(p. A13) In "Gross National Happiness," Mr. Brooks has assembled an array of statistics to measure the mood of America's citizens and to discover the reasons they feel as they do. Most often he cites polls that ask for self-described happiness levels, matching up the answers with various beliefs, habits, life choices or experiences.

And what exactly is happiness? Who knows? The term might refer joy or contentment or moral self-approval or material well-being or appetitive pleasure - or some combination of them all. Mr. Brooks is aware of the problem. He says that Potter Stewart, the Supreme Court justice, could have been describing happiness when he said, of pornography, "I know it when I see it."

. . .

He challenges those partial to tales about long-suffering Wal-Mart workers and surly burger flippers to rethink their victimology creed. The woe is not nearly as widespread as rumored: 89% of Americans who work more than 10 hours a week are very satisfied or somewhat satisfied with their jobs while only 11% are not very satisfied or not at all satisfied. Most surprisingly, Mr. Brooks writes, there "is no difference at all in job satisfaction between those with below-average and above-average incomes."

What really makes Americans hate their jobs is a perception that advancement is impossible. And while Mr. Brooks agrees that the nation's income gap is growing, the national happiness level is steady. Just under one-third of American adults say that they are "very happy"; up to 15% are not too happy; and everyone else is somewhere in the middle. Those numbers have been roughly true since the early 1970s. More government spending doesn't seem to raise happiness levels, though direct government assistance may diminish it. Charitable giving, Mr. Brooks adds, generally lifts the spirits; Americans do a lot of it.

For the full review, see:

DAVE SHIFLETT. "Bookshelf; How to Be of Good Cheer." The Wall Street Journal (Mon., May 12, 2008): A13.

(Note: ellipsis added.)

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(p. C3) The United States may be synonymous with the high-tech revolution, but it is in danger of losing its high-tech edge, according to Cybercities 2008, a report released Tuesday by AeA, a technology industry trade association.

Because the federal government does not issue a sufficient number of green cards or work visas to talented foreign students studying here, there are a "tremendous number of unfilled jobs," said Christopher Hansen, AeA's chief executive.

"We educate them and then tell them to go home. This is absurd," said Mr. Hansen, whose group has lobbied to increase the number of visas for foreign technology industry workers.

For the full story, see:

ERIC A. TAUB. "U.S. High Tech Said to Slip." The New York Times (Weds., June 25, 2008): C3.

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Source of image: http://mjperry.blogspot.com/2008/02/blog-post_2174.html



Stephen Moore is right when he calls Drew Carey's "Living Large" video "wonderful."

It would be even more wonderful, if it gave a bit more emphasis, a la Schumpeter, to the positive effects of new products, in addition to its emphasis on declining prices of already existing products.

(p. W11) A few weeks ago I gave a talk on the state of the economy to a group of college students -- almost all Barack Obama enthusiasts -- who were griping about how downright awful things are in America today. As they sipped their Starbucks lattes and adjusted their designer sunglasses, they recited their grievances: The country is awash in debt "that we will have to pay off"; the middle class in shrinking; the polar ice caps are melting; and college is too expensive.

I've been speaking to groups like this one for more than 20 years, but I have never confronted such universal pessimism from a young audience. Its members acted as if the hardships of modern life are making it nearly impossible for them to get out of bed in the morning. So I conducted a survey of these grim youngsters. How many of you, I asked, own a laptop? A cellphone? An iPod, a DVD player, a flat-screen digital TV? To every question somewhere between two-thirds and all of the hands in the room rose. But they didn't even get my point. "Well, duh," one of them scoffed, "who doesn't have an iPod these days?" I was way too embarrassed to tell them that I, for one, don't. They thought that living without these products would be like going back to prehistoric times.

They seemed clueless that as recently as the early 1980s only the richest people in the world had cellphones and the quality of these products left much to be desired. Watch a movie from 20 years ago and you will laugh out loud seeing big clunky black machines that weighed as much as a brick, gave crackly service and cost $4,200. Now cellphones are practically free -- even disposable. And the cost of making calls has dropped dramatically too.

. . .

There's a wonderful new video on Reason.tv called "Living Large." In it, comedian Drew Carey goes to a lake in California where people are relaxing on $80,000 27-foot boats and goofing around on $25,000 jet skis that they have hitched to their $40,000 SUVs. Mr. Carey asks these boat owners what they do for a living. As it turns out, they aren't hedge-fund managers. One is a gardener, another a truck driver, another an auto mechanic and another a cop.

. . .

After my lecture, one young woman walked up to me on her way out and huffed: "What I favor is a radical redistribution of wealth in America." I tried to tell her that America's greatness is a result of our focus on creating wealth, not redistributing it. But it was too late -- she was already tuning in to her iPod.

For the full commentary, see:

STEPHEN MOORE. "DE GUSTIBUS; The Bare Necessities: A Generation Tries to Imagine Life Without iPods." The Wall Street Journal (Fri., March 14, 2008): W11.

(Note: ellipses added.)

The video is:

Carey, Drew. "Living Large: The Middle Class." reason.tv Posted February 8, 2008.

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(p. C1) Acting quickly after securing his party's presidential nomination, Barack Obama picked a well-known representative of Bill Clinton's economic policies as his economic policy director and signaled this week that the major players from the Clinton economics team were now in his camp -- starting with Robert E. Rubin.

Senator Obama, Democrat of Illinois, hired Jason Furman, a Harvard-trained economist closely associated with Mr. Rubin, a Wall Street insider who served as President Clinton's Treasury secretary. Labor union leaders criticized the move, and said that ''Rubinomics'' focused too much on corporate America and not enough on workers.

. . .

(p. C4) Mr. Furman, who served for a while as a special economic adviser in the Clinton administration, has taken some controversial positions. He argued in 2005, for example, that Wal-Mart, despite its conflicts with organized labor over pay and health insurance, was a good business model.

More recently, he argued that while the typical worker suffers from inadequate income, that worker's living standards, broadly measured, are higher today than those of their counterparts 30 years ago -- an argument in dispute among economists.

. . .

Until now, Austan Goolsbee, an economist at the University of Chicago, had been Mr. Obama's chief economic adviser. He remains an unpaid adviser. He said he was not a candidate for Mr. Furman's full-time job because of his university duties.

For the full story, see:

LOUIS UCHITELLE. "Union Critical of Obama's Top Economics Aide." The New York Times (Thurs., June 12, 2008): C1 & C4.

(Note: ellipses added.)

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(p. A15) Where are the pro-trade Democrats? America won't increase middle-class incomes and create jobs without them.

. . .

History proves that expanding trade and productivity help create growth. We learned that the hard way when the Smoot-Hawley tariff helped crush trade and exacerbate the Great Depression. Conversely, we have seen trade drive the economy during the great expansions of the 1960s and 1990s.

. . .

Trade gives poor people around the globe the opportunity to build a brighter future. During the Clinton administration, new trade programs like the African Growth and Opportunity Act helped key regions in the world succeed, while American workers stood to gain.

I helped found the Democratic Leadership Council in the wake of Walter Mondale's 49-state defeat in 1984, and we have always supported expanded trade. We still have a ways to go to win that argument in the Democratic Party. But the record is clear. Over the past 20 years, our party has grown stronger when we've been willing to do the right thing on the toughest issues, from putting the nation's fiscal house in order to overhauling a broken welfare system that trapped millions in poverty.

For the full commentary, see:

AL FROM. "Confessions of a Pro-Trade Democrat." The Wall Street Journal
(Mon., June 9, 2008): A15.

(Note: ellipses added.)

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Source of graph: online version of the WSJ article quoted and cited below.

(p. A23) . . . the impact of our technological innovation has helped lift untold numbers out of poverty.

This technology has created massive amounts of change. Like the Industrial Revolution before it, the current transformation is anything but pain-free. It's what Joseph Schumpeter called creative destruction. Google, Craigslist and Microsoft have been prospering. General Motors, United Airlines and the New York Times have not. In the midst of layoffs in the newsroom, it's hard to see anything good happening in the rest of the economy.

For the full commentary, see

BRIAN WESBURY. "Change We Can Believe In Is All Around Us." The Wall Street Journal (Weds., June 11, 2008): A23.

(Note: ellipsis added.)

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Some of us believe that the government should not discriminate on the basis of race, gender, or religion. Unfortunately, governments in the past and present have sometimes mandated or practiced discrimination. Examples from the past would include the Jim Crow laws that mandated racial discrimination against Afro-Americans.

A present example would be the mis-named "affirmative action" laws that mandate racial discrimination against whites.

In the article quoted below, note who has taken a stand on which side of this issue.

Is it appropriate for the University of Nebraska Foundation to be donating $25,000 to support the continuation of racial discrimination?

Note also the opposing positions of two 2006 Republican candidates for Senate: David Kramer is leading the drive to continue racial discrimination, while Pete Ricketts is contributing to ending racial discrimination.

(p. 1A) LINCOLN -- Leaders of the Nebraska Civil Rights Initiative called their anti-affirmative-action push one of the most successful petition drives in recent state history. But it's not yet known whether their proposed ban will go before voters in November.

"The citizens demand the opportunity to vote on the use of race and gender preferences and discrimination in state hiring, state contracts and state education," said Marc Schniederjans, treasurer of the group that said it submitted more than 167,000 signatures Thursday.

. . .

David Kramer, spokesman for the opposition group Nebraskans United, said he wasn't disheartened by the number of petition signatures or over the prospect that petition organizers said they planned to submit more signatures today.

. . .

(p. 2A) Connerly's American Civil Rights Coalition provided $370,750 of the $467,250 raised by the Nebraska petition group as of June 25. According to state records, the next largest donors were Paul Singer, a New York businessman, $50,000; William Grewcock, a former executive with Peter Kiewit Sons Inc., $25,000; and failed GOP U.S. Senate candidate Pete Ricketts, $25,000.

For Nebraskans United, the largest donations toward that group's $308,167 war chest have come from Omaha billionaire Warren Buffett, $50,000; philanthropist Richard Holland, $50,000; Dianne Lozier, Lozier corporate counsel, $50,000; Wallace Weitz, president of an Omaha-based mutual fund management company, $50,000; the Greater Omaha Chamber of Commerce, $36,250; the University of Nebraska Foundation, $25,000; and the Nebraska State Education Association, $25,000.

For the full story, see:

MARTHA STODDARD. "Petitions Turned In; Fight Far from Over." Omaha World-Herald (Fri., July 4, 2008): 1A-2A.

(Note: ellipses added.)

(Note: the online title of the article is "Anti-affirmative-action petitions turned in; verifying to begin.")

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"Government milk is sold mostly through curbside milk stalls. Some customers don't find the milk stands appealing since they can be dingy and the milk sometimes bad." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) MUMBAI -- Every workday morning, milkman D.T. Walkar faithfully comes to Worli Dairy to not deliver milk.

Most days, he and his fellow drivers at the government dairy sign in, then move to the rest area. While others read the paper, nap or play rummy, Mr. Walkar likes to do the Sudoku puzzle in the Maharashtra Times, unless someone else has gotten to it first. He then wanders around the complex and talks to friends. The last delivery trucks were sold last year. "The trucks are all gone so we just sit around and talk," says Mr. Walkar, 50 years old. "We are bored."

Once respected civil servants, Mr. Walkar and his 300-odd fellow drivers have been left in a strange limbo. Milk sales at their dairy have plummeted as the state government lost its monopoly on milk and consumer tastes changed. But because Indian work rules strictly protect government workers from layoffs, the delivery men show up for work each morning for eight-hour shifts, as they always did, then proceed to do nothing all day. They rarely, if ever, leave the plant.

. . .

(p. A5) In 2001, the Indian government started opening the dairy market in Maharashtra to competition. Private carriers with higher quality milk swiftly won customers by delivering milk to doorsteps. The government milkmen have always been restricted to delivering mostly to curbside milk stalls so they could cover a greater area.

Customers swiftly deserted. Many switched to heat-treated milk in sealed packages that resist spoiling. Some ditched the government's former best sellers of sweet Pineapple milk and spicy Masala milk for Coca-Cola and Sprite as Indian tastes westernized. Others never found the milk stands appealing -- they can be dingy and the milk sometimes bad.

For the full story, see:

ERIC BELLMAN. "Out to Pasture: India's Milkmen Bide Their Time; No Work, Secure Job Put Them in Limbo; Where's the Sudoku?" The Wall Street Journal (Sat., March 29, 2008): A1 & A5.

(Note: ellipsis added.)

"Because Indian work rules protect government workers from layoffs, 300-odd former milk truck drivers show up at the Worli Dairy for work each morning just as they always did, then do nothing all day. To pass the time, the men do puzzles, yoga or just sleep off the hours. Once, they tried planting a garden." Source of caption and photo: online version of the WSJ article quoted and cited above.

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Empirical comparisons between capitalism and socialism are in some ways unfair to capitalism, because many capitalism managers act as though they believed in socialist ideas. The difference in productivity and economic growth would be even greater, if capitalist managers consistently acted as though they believed in capitalism. Consider the following, from a portion of Execution written by Larry Bossidy:

(p. 73) Larry: When I see companies that don't execute, the chances are that they don't measure, don't reward, and don't promote people who know how to get things done. Salary increases in terms of percentage are too close between top performers and those who are not. There's not enough differentiation in bonus, or in stock options, or in stock grants. Leaders need the confidence to explain to a direct report why he got a lower than expected reward.

A good leader ensures that the organization makes these distinctions and that they become a way of life, down throughout the organization. Otherwise people think they're involved in socialism. That isn't what you want when you strive for a culture of execution. You have to make it clear to everybody that rewards and respect are based on performance.

Source:

Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.

(Note: in the book, the quotation is presented as being Bossidy's.)

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Levy and Murnane show that the computer has, on average, benefitted the situation of labor. After I presented a similar example at the Summer Institute in 2007, Dave Mitch asked me if this was in general true of advances in technology, or if it might be an exceptional case.

If computers represent one example of creative destruction, another example, in the process variety, would be the advent of factory production. In the following passage, Rosenberg and Birdzell suggest that factories also benefitted the situation of labor:

The low wages, long hours, and oppressive discipline of the early factories are shocking in that the willingness of the inarticulate poor to work on such terms bespeaks, more forcefully than the most eloquent words, the even more abysmal character of the alternatives they had endured in the past. But this was not the way the romantics of the nineteenth century read the message of the factories. (R & B 1986, p. 173)

In the above passage, Rosenberg and Birdzell suggest that the abysmal alternatives to factory work, that the poor faced, may partly have been the result of the enclosure movement having worsened the situation of the lowest agricultural workers, by denying them access to the fallow lands for animal grazing. But, in the passage below, they also imply that to some extent it may just have been due to the secularly persistent suffering that had long characterized much rural life.

Neither the entrepreneurs who built the factories nor anyone else supposed that they were engaged in a work of charity or an exercise of social conscience. But whatever the moral quality of their intentions, their actions advanced the interests of a down-trodden subproletariat---a subproletariat in part, perhaps, characteristic of pre-industrial societies and, in part, drawn from an agricultural work force hard pressed by the enclosure movement and a high rate of growth in agricultural productivity. (R & B 1986, p. 174)

They further point out that, although everyone was supposed to be compensated for losses from enclosure, the interests of the poorest were not well-represented in the decision-making bodies:

In theory, the acts compensated the cottagers for the loss of their common rights by giving them some of the enclosed land. But the cottagers were not effectively represented in Parliament, and there is much reason to believe that the compensation was in practice inadequate. (R & B 1986, p. 171)

DeLong and Summers note enclosure as one of the major institutional/policy actions that enabled a past episode of creative destruction to create a past 'new economy.' But the fact (if it is a fact) that a majority of farm labor was hurt by the enclosure, does not imply that this had to have been the case. It may in fact illustrate one of the major pints of DeLong and Summers, namely that it is extremely important to try to get institutions and policies right.

Sources mentioned above:

DeLong, J. Bradford, and Lawrence H. Summers. "The "New Economy": Background, Questions and Speculations." Federal Reserve Bank of Kansas City Economic Review (2001): 29-59.

Levy, Frank, and Richard J. Murnane. The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton, NJ: Princeton University Press, 2004.

Rosenberg, Nathan, and L.E. Birdzell, Jr. How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books, 1986.

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(p. 435) . . . , the inexorable growth in the proportion of our GDP that is conceptual, especially technological, has increased the value of intellectual power relative to the value of human brawn many times over many generations. I am old enough to remember when physical prowess on the job was the source of legend and reverence. A large statue of Paul Bunyan, the mythical logger, still oversees the northern Minnesota lake country. Stevedores of a century ago were extolled for their brute strength. Today, the activities once carried out by stevedores are often run by young women at a computer console.

Source:

Greenspan, Alan. The Age of Turbulence: Adventures in a New World Economic Flexibility. New York: Penguin Press, 2007.

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The story quoted below tells how outsourcing high-tech jobs to India has bid up the salaries of high-tech Indian engineers, thereby reducing the appeal of further outsourcing. Marvelous how the market works!

Another lesson from the story applies to forecasting: mechanical extrapolation of current trends is inferior to prediction that takes account of predictable changes in prices (in this case, salaries).

(p. A15) Around the century's turn, when U.S. companies first began flooding to India for its cheap labor, pundits warned that the subcontinent could increasingly rob the U.S. of high-end white-collar jobs. Debate was especially sharp in Silicon Valley, then in a slump, because India annually turns out nearly 500,000 engineering graduates.

. . .

Several years on, the forces of globalization are starting to even things out between the U.S. and India, in sophisticated technology work. As more U.S. tech companies poured in, they soaked up the pool of high-end engineers qualified to work at global companies, belying the notion of an unlimited supply of top Indian engineering talent. In a 2005 study, McKinsey & Co. estimated that just a quarter of India's computer engineers had the language proficiency, cultural fit and practical skills to work at multinational companies.

The result is increasing competition for the most skilled Indian computer engineers and a narrowing U.S.-India gap in their compensation. India's software-and-service association puts wage inflation in its industry at 10% to 15% a year. Some tech executives say it's closer to 50%. In the U.S., wage inflation in the software sector is under 3%, according to Moody's Economy.com.

Rafiq Dossani, a scholar at Stanford University's Asia-Pacific Research Center who recently studied the Indian market, found that while most Indian technology workers' wages remain low -- an average $5,000 a year for a new engineer with little experience -- the experienced engineers Silicon Valley companies covet can now cost $60,000 to $100,000 a year. "For the top-level talent, there's an equalization," he says.

For the full story, see:

Pui-Wing Tam and Jackie Range. "Second Thoughts: Some in Silicon Valley Begin to Sour on India; A Few Bring Jobs Back As Pay of Top Engineers In Bangalore Skyrockets." Wall Street Journal (Tues., July 3, 2007): A1 & A15.

(Note: ellipsis added.)

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The passages below are from a WSJ summary of an October 12, 2007 article in The Chronicle of Higher Education:

(p. A7) After feeling increasingly alienated by college celebrations of black heritage, English Prof. Jerald Walker opted to redefine his role on campus.

. . .

Prof. Walker decided he had had enough during a commencement ceremony for black students. He had misgivings over the concept itself: "After so recently celebrating our country's staunchest promoter of integration, I was being asked to celebrate segregation."

Afterward, he made the decision that he would no longer participate in events simply because of the color of his skin. "I intend to be visible," he says, "but only in ways I wish to be seen."

For the full summary, see:

"The Informed Reader; Universities; Black Professor Rebels Against Expected Campus Role." Wall Street Journal (Oct. 13, 2007): A7.

(Note: ellipsis added.)

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"Sarla Deepak Ire sells guavas on the Pushpak Express, from Lucknow to Mumbai, earning less than $3 a day." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 3) ABOARD THE PUSHPAK EXPRESS, India -- The man with neatly parted hair stood in the doorway of the hurtling train. And then, at the perfect moment, he jumped.

This was not about suicide, however. It was about tea.

Having popped out of the door, he clung to the knobs and rods of the train's exterior with one hand. His other hand gripped a vat of scalding tea tied to his belt.

He glided like a rock climber across the train's epidermis, from one foothold to the next. He reached the steel beam that connected the cars and walked it like a tightrope. Then, arriving at the next car, he hopped onto more footholds and, at last, ducked inside to utter his sales pitch: "Tea! Tea! Get your hot tea!"

Such acrobatics are not required on most of the world's trains, nor in this train's first- and second-class cars, which are connected with inside passageways. But this was third class on the Pushpak Express, a $6, 24-hour ride ferrying migrants from India's bleak heartland to the thriving coastal megalopolis of Mumbai, formerly Bombay. And in an echo of the ancient caste system, these passengers are physically sealed off from the compartments of the luckier born.

These passengers are also part of a great migration that is changing the world. Goldman Sachs, which has published projections about the Indian economy, predicts that 31 villagers will continue to show up in an Indian city every minute over the next 43 years -- 700 million people in all. This exodus, with a similar one in China, helped push the world over a historic threshold this year: the planet, for the first time, is more urban than rural.

. . .

Sonu Gupta, 15, was one of what the veterans call "new men." With his wiry frame, he looked more like 10. He was traveling with a friend from his village. If he can find work in Mumbai, Mr. Gupta will become his family's breadwinner. "I'm happy," he said, "and I'm scared."

For the full story, see:

ANAND GIRIDHARADAS. "Rumbling Across India Toward a New Life in the City." The New York Times, First Section (Sun., November 25, 2007): 3.

(Note: ellipsis added.)

The quotes below from a WSJ summary of a Nov. 16, 2007 The Chronicle of Higher Education article, suggests that we do not need to worry about the sometimes-alleged "shortage" of scientists and engineers:

(p. B14) The federal dollars pumped into university science departments has created more scientists and engineers than the market wants, said Michael S. Teitelbaum, vice president of Alfred P. Sloan Foundation, which sponsors research, at a hearing in Congress last week. Mr. Teitelbaum said the federal government should find a way to adjust how it funds university research so that university departments don't end up using the extra money to add graduate students and postdoctoral fellows

For the full summary, see:

"The Informed Reader; Science; U.S. Faces a Glut (Really) of Scientists, Engineers." The Wall Street Journal (Tues., November 13, 2007): B14.

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"Web entrepreneur Alex Hillman got together with a group of work-at-home businesspeople to create a hip space to work in Philadelphia." Souce of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

(p. 1D) "I always felt an obligation to the coffee shop. I was taking up precious space," Hillman said. "I was definitely drinking more coffee than I should have, so I wasn't sleeping."

 Even before he left his job, he had begun to learn about co-working, not to be confused with job-sharing, where two people take turns in the same stall in the cube farm.

Instead, think of co-working as an entrepreneurial version of parallel play, with owners of their own small businesses working side by side in a drop-in place that looks like a coffee cafe, minus the barista, with all the accoutrements of what's hip: high ceilings, beer fridge, pool table and Internet access.

Paying as little as $175 a month, they mostly work on their own. But they also trade ideas, help solve problems, and move in and out of loose collaborations.

Today's technology -- wireless access, cell phones, BlackBerries and laptops -- makes a mobile work force possible.

"I think when people work at home they have to come up with new ways to interact with people," said Daniel H. Pink, one of the first authors to write about independent contractors in his 2001 book "Free Agent Nation."

For the full story, see: 

THE PHILADELPHIA INQUIRER.  "Workplace; A step up from working in pj's."   Omaha World-Herald   (Monday, September 17, 2007):  1D & 2D.

The refererence to the Pink book is:

 Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

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 Source of graphic:  online version of the NYT article quoted and cited below.

(p. A1)  . . .  slight improvements in household income and a drop in the poverty rate came during a period of job growth, particularly toward the end of 2006, and declining inflation as a result of falling oil prices.  .  . .

Some Republicans seized on the new data as evidence that Bush administration policies had been good for people's pocketbooks. In a statement, President Bush said the news was a sign that Congress should not raise taxes. The data, he said, confirmed "that more of our citizens are doing better in this economy, with continued rising incomes (p. A14) and more Americans pulling themselves out of poverty."

. . .

Over all, the nation's median household income rose to $48,201 in 2006, from $47,845 in 2005. It was the second consecutive year in which income rose slightly faster than inflation, after five years of decline.

Douglas J. Besharov, a resident scholar at the American Enterprise Institute, a conservative research group, said that while the year-to-year increase in household income was small, the broader picture over the last few decades was more promising and more important.

"Over all," Mr. Besharov said, "a lot of groups have done better over the last 40 years."

For the full story, see: 

ABBY GOODNOUGH.  "Census Presents Mixed View of the Economy."  The New York Times  (Weds., August 29, 2007):  A1 & A14.

(Note:  the online version of the article had the title:   "Census Shows a Modest Rise in U.S. Income.")

(Note:  ellipses added.)

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      "At the Dahon bicycle plant in Shenzhen, China, pay has risen 10 to 15 percent a year, but productivity gains have held down costs."  Source of caption and photo:  online version of the NYT article quoted and cited below.

(p. A1) SHENZHEN, China, Aug. 28 -- At the Dahon bicycle factory here, Zhang Jingming's fingers move quickly and methodically -- grabbing bicycle seats, wrapping them in cardboard and smoothly attaching them to frames.

Working a 45-hour week, Mr. Zhang makes the equivalent of $263 a month; as recently as February, he was making just $197. Some of his higher pay comes from working more efficiently. "When I first started, I wasn't this fast," he said.

But a good portion reflects a raise Mr. Zhang got: to 1.45 cents for each bicycle seat from 1.32 cents. It is a small difference that signifies major change.

Chinese wages are on the rise. No reliable figures for average wages exist; the government's economic data are notably unreliable. But factory owners and experts who monitor the nation's labor market say that businesses are having a hard time finding able-bodied workers and are having to pay the workers they can find more money.

And higher wages in China are likely to lead to higher prices in the United States -- at the mall, at the grocery, even at the gas pump.

Chinese companies are already passing along some of their higher costs to overseas customers. Prices for goods from China, after years of gradual decline, have risen 1.2 percent since February, according to the Labor Department. July's increase was the biggest yet: 0.4 percent compared with June. Chinese companies and contractors are also passing on the cost of the rising value of their currency, the yuan, up 8.8 percent against the dollar in the last two years.

For decades, many labor economists said that China's vast population would supply a nearly bottomless pool of workers. So many people would be seeking jobs at any given time, this rea-(p. A9)soning went, that wages in this country would be stuck just above subsistence levels. As recently as four years ago, some experts estimated that most of the perhaps 150 million underemployed workers in the countryside would be heading to cities.

Instead, sporadic labor shortages started to appear in 2003 at factories in the Pearl River delta of southeastern China. Now those shortages have spread to factories up and down the Chinese coast, specialists say.

. . .

(p. A9) The hardest variable to judge in China's changing labor market is the pace of productivity growth. Since there are few reliable statistics, the best way to assess productivity is to look at individual factories like the Dahon operation here, which produces bicycles that collapse for easy storage.

David T. Hon, chief executive of the privately held Dahon Group, said that while he had been raising wages 10 to 15 percent a year, the average labor cost for each bicycle had actually edged downward. This is possible, he said, because sales are growing 30 percent a year and increasingly large-scale production has brought savings. The cost of engineering a new bicycle design, or handling the accounting and other back-office operations, is spread over more and more bicycles as production rises.

For the full story, see: 

KEITH BRADSHER.  "Wages Are on the Rise in China As Young Workers Grow Scarce."  The New York Times   (Weds., August 29, 2007):  A1 & A9.

(Note: ellipsis added.)

    Source of graph: online version of the NYT article quoted and cited above.

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"Polish women selling sausages at the Borough Market in London. The British have also grown to enjoy Polish food." Source of caption and photo: online version of the International Herald Tribune version of the article quoted and cited below.

(p. C1) LONDON, Oct. 18 -- When Piotr Farbiszewski landed here three years ago, he had enough money in his pocket to live for two weeks.

A successful technology consultant in Warsaw, he and his wife, Ela, a schoolteacher, had come to London to try it on for size; if they liked it, they would stay. To earn money, he worked as a builder while she flipped hamburgers.

They decided that they liked London, and within a year, Mr. Farbiszewski was a senior programmer at a software company. In March, the couple bought a small terraced house outside London, where they plan to raise a family.

"We're very happy here," Mr. Farbiszewski, 31, said. "The quality of life is better, the economy is stronger, there is less bureaucracy, it's a multicultural society and the lady in the supermarket will smile at me. People don't smile at each other in Poland."

The Farbiszewskis are small players in one of Europe's most successful immigration stories. Since Poland joined the European Union in 2004 and Britain, unlike France and most other members, welcomed Polish workers, an estimated 1.1 million Poles, mainly young, have come to Britain. Today, they are the third-largest group of immigrants in the country, behind (p. C5) Irish and Indians.

Britain has benefited. On Tuesday, the Home Office estimated that immigration added £6 billion ($12.3 billion) to the nation's economy last year. According to David Blanchflower of the Bank of England's monetary policy committee, East European immigration has also reduced inflation pressure by increasing the supply of goods and services.

Indeed, Britain may soon face a novel immigration problem. As Poland's economy has improved this year, immigration has slowed, which economists say could cause labor shortages in British industries.

For the full story, see:

JULIA WERDIGIER. "As the Poles Get Richer, Fewer Seek British Jobs." The New York Times (Fri., October 19, 2007): C1 & C5.

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   "Luis H. Rodriguez, an I.B.M. executive, with his children, Alec, 5, and Evia, 2, often works from his home or on the road."  Source of photo:  online version of the NYT article quoted and cited below.

Daniel Pink in his Free Agent Nation argued that a growing number of American workers would want the control, challenge and freedom of working for themselves as entrepreneurs, or "free agents."  To attract workers who have the option of being free agents, it is plausible that employers increasingly will have to offer jobs that provide workers with greater autonomy.  The article quoted below, suggests that this may in fact be happening, at least in information technology firms. 

(p. A1)  SOMERS, N.Y. -- It's every worker's dream: take as much vacation time as you want, on short notice, and don't worry about your boss calling you on it. Cut out early, make it a long weekend, string two weeks together -- as you like. No need to call in sick on a Friday so you can disappear for a fishing trip. Just go; nobody's keeping track. 

That is essentially what goes on at I.B.M., one of the cornerstones of corporate America, where each of the 355,000 workers is entitled to three or more weeks of vacation. The company does not keep track of who takes how much time or when, does not dole out choice vacation times by seniority and does not let people carry days off from year to year.

Instead, for the past few years, employees at all levels have made informal arrangements with their direct supervisors, guided mainly by their ability to get their work done on time. Many people post their vacation plans on electronic calendars that colleagues can view online, and they leave word about how they can be reached in a pinch.

"It's like when you went to college and you didn't have high school teachers nagging you anymore," said Mark L. Hanny, I.B.M.'s vice president of independent software vendor alliances. "Employees like that we put more accountability on them."

. . .

(p. 18)   Aided by broadband connections, cellphones and video conferencing software, 40 percent of I.B.M.'s employees have no dedicated offices, working instead at home, at a client's site, or at one of the company's hundreds of "e-mobility centers" around the world, where workers drop in to use phones, Internet connections and other resources.

. . .

Luis H. Rodriguez, the director of market management in I.B.M.'s software group, said he visits his office here in Somers about once a week, working the rest of the time on the road or at his home in Ridgefield, Conn., where he sat one recent afternoon at the kitchen table with his laptop open.

He said that in six years at I.B.M. he can recall only one time when he asked a co-worker not to take a long weekend off -- when their group was about to buy another company -- and that calling colleagues or checking e-mail while visiting relatives in Texas or Illinois is a fair trade for being able to work from home so he can spend more time with his children, Alec, 5, and Evia, 2.

. . .

"If you look at the organizations that have done more radical things, they tend to be technology companies with salaried people," where flexibility in job performance "is embedded into the culture of the place," noted Max Caldwell, a managing principal in the work force effectiveness area at Towers Perrin, a human resources consultant.

Indeed, I.B.M.'s Mr. Calo said that the flexibility has helped the company compete with the more freewheeling atmosphere at start-up rivals in the technology world that have lured away some of its talent over the years.

For the full story, see:

KEN BELSON.  "At I.B.M., a Vacation Anytime, Or Maybe No Vacation at All."   The New York Times  (Fri., August 31, 2007):  A1 & A18.

(Note:  ellipses added.)

The reference for the Pink book, is:

Pink, Daniel H.  Free Agent Nation:  How America's New Independent Workers Are Transforming the Way We Live.  New York: Warner Business Books, 2001.

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Source of graph: online version of the NYT article quoted and cited below.

(p. 14) To understand why consumption is a better guideline of economic prosperity than income, it helps to consider how our lives have changed. Nearly all American families now have refrigerators, stoves, color TVs, telephones and radios. Air-conditioners, cars, VCRs or DVD players, microwave ovens, washing machines, clothes dryers and cellphones have reached more than 80 percent of households.

As the second chart, on the spread of consumption, shows, this wasn't always so. The conveniences we take for granted today usually began as niche products only a few wealthy families could afford. In time, ownership spread through the levels of income distribution as rising wages and falling prices made them affordable in the currency that matters most -- the amount of time one had to put in at work to gain the necessary purchasing power.

At the average wage, a VCR fell from 365 hours in 1972 to a mere two hours today. A cellphone dropped from 456 hours in 1984 to four hours. A personal computer, jazzed up with thousands of times the computing power of the 1984 I.B.M., declined from 435 hours to 25 hours. Even cars are taking a smaller toll on our bank accounts: in the past decade, the work-time price of a mid-size Ford sedan declined by 6 percent.

For the full commentary, see:

W. MICHAEL COX and RICHARD ALM. "You Are What You Spend." The New York Times Company, Week in Review section (Sun., February 10, 2008): 14.

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Source of image: online version of the WSJ article quoted and cited below.

 

(p. B3)  What are the traits that chief executives of successful companies share? A new study suggests that hard-nosed personal virtues such as persistence and efficiency count for more than "softer" strengths like teamwork or flexibility.

The findings are sure to intensify debate about how much toughness is appropriate in a CEO. Some famously hard-charging bosses of big companies have retired or been shunted aside in recent years. Successors at companies such as General Electric Co., International Business Machines Corp. and Hewlett-Packard Co. are seen as quieter, less strident team-builders.

But the new study, by three University of Chicago business-school professors, draws on detailed personal assessments of 313 CEO candidates to present a starker view of good leadership's ingredients. Of these candidates, 225 were hired. Their subsequent performance fuels most of the study's conclusions.

"We found that 'hard' skills, which are all about getting things done, were paramount," says lead author Steven Kaplan, a professor of finance and entrepreneurship. "Soft skills centering on teamwork weren't as pivotal. That was a bit of a surprise to us."

Prof. Kaplan and colleagues Mark Klebanov and Morten Sorensen didn't size up the CEOs themselves. Instead, they tapped into a consultant's database long coveted by academic researchers. It contains assessments of individuals' strengths and weaknesses compiled by ghSmart Inc. The Chicago management-assessment company evaluates CEO candidates on behalf of corporate clients.

For the full story, see:

GEORGE ANDERS. "THEORY & PRACTICE; Tough CEOs Often Most Successful, A Study Finds."  The Wall Street Journal  (Mon., November 19, 2007):  B3.

Included with the WSJ article was an interesting summary table:

LEADING PROFILE

Here are five CEO traits that correlate most closely with business success at buyout companies -- and five that score lowest, according to University of Chicago researchers.

Traits that matter...

• Persistence
• Attention to detail
• Efficiency
• Analytical skills
• Setting high standards

...and not so much

• Strong oral communication
• Teamwork
• Flexibility/adaptability
• Enthusiasm
• Listening skills

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    "A priest passes an abandoned garage covered with graffiti in Milan. Italy's malaise, an economic, political, and social funk, was summed up in a recent poll: Italians report themselves to be the least happy people in Western Europe."  Source of caption and photo:  online verison of the NYT article quoted and cited below. 

(p. A1)  ROME — All the world loves Italy because it is old but still glamorous. Because it eats and drinks well but is rarely fat or drunk.  Because it is the place in a hyper-regulated Europe where people still debate with perfect intelligence what, really, the red in a stoplight might mean.

But these days, for all the outside adoration and all of its innate strengths, Italy seems not to love itself.   The word here is “malessere,” or “malaise”; it implies a collective funk — economic, political and social — summed up in a recent poll: Italians, despite their claim to have mastered the art of living, say they are the least happy people in Western Europe.

“It’s a country that has lost a little of its will for the future,” said Walter Veltroni, the mayor of Rome and a possible future center-left prime minister.  “There is more fear than hope.”

. . .

. . .   In 1987, Italy celebrated its economic parity with Britain.  Now Spain, which joined the European Union only a year earlier, may soon overtake it, and Italy has fallen behind Britain.

Italy’s low-tech way of life may enthrall tourists, but Internet use and commerce here are among the lowest in Europe, as are wages, foreign investment and growth. Pensions, public debt and the cost of government are among the highest.

. . .

(p. A18)  . . .  entrepreneurs complain that they are alone. Politicians offered little help making Italy competitive, and this remains a major impediment to making their gains grow. Businesses want less bureaucracy, more flexible labor laws and large investments in infrastructure to make moving goods around easier.

. . .  

. . .   Many worry . . . that Italy may share the same fate as the Republic of Venice, based in what many say is the most beautiful of cities, but whose domination of trade with the Near East died with no culminating event. Napoleon’s conquest in 1797 only made it official.

Now it is essentially an exquisite corpse, trampled over by millions of tourists.  If Italy does not shed its comforts for change, many say, a similar fate awaits it: blocked by past greatness, with aging tourists the questionable source of life, the Florida of Europe.

. . .  

. . .   “We have reached a point where hoping for some kind of white knight coming in saying, ‘We’ll sort you out,’ is over.”

“We Italians have our destiny in our hands more than ever before,” he said.

For the full story, see: 

IAN FISHER  "In a Funk, Italy Sings an Aria of Disappointment."  The New York Times  (Thurs., December 13, 2007):  A1 & A18.

(Note:  ellipses added.) 

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Stephanie and Bill Faunce moved their marketing company from Los Angeles to Steamboat Springs, Colorado.  Source of photo:  online version of the NYT article quoted and cited below.

Information technology is making life better by providing greater choice on where to live.  There is still a lively debate about which regions and cities will prosper.

One popular take on this issue is Richard Florida's The Rise of the Creative Class.  

(p. A1)  As technology enables people to live and work wherever they want, increasingly they are clustering in resort playgrounds like Steamboat Springs (pop. 9,315) that have natural amenities, good weather — and, now, lots of people like themselves.

In places like Nantucket, the Upper Peninsula of Michigan and Teton County, Idaho, the migrants are creating hybrid communities, implanting urban incomes, tastes, careers, ambitions, restaurants, cultural activities and networking opportunities into small towns that un-(p. A15)til recently could support none of these, and for which there has been little planning and still no consensus.

“You are seeing a transformation of rural communities,” said Jonathan Schechter, executive director of the Charture Institute in Jackson, Wyo., a nonprofit organization that studies small recreational towns.

Into quiet resort spots the migrants have come, laptops on their knees: fund managers from New York, software developers from California, consultants, proofreaders, engineers, inventors. “The same processes that led to the suburbanization of the United States after World War II,” Mr. Schechter said, “are now producing a virtual suburbanization in places like Jackson or Steamboat Springs.”

From 2000 to 2006, population in the 297 counties rated highest in natural amenities by the United States Department of Agriculture grew by 7.1 percent, 10 times the rate for the 1,090 rural counties with below-average amenities, the department reported.

In towns that once emptied after the ski season or the beach season, these “location-neutral” migrants are complicating the traditional dynamic between tourists and locals. Here as elsewhere, average homes have become unaffordable for teachers, firefighters and others — the people who created the good schools and community closeness that newcomers said drew them. The rate of change “is causing a whiplash,” Mr. Schechter said, “because the towns don’t have the political and economic systems in place to deal with them.”

Routt County, which includes Steamboat Springs, is one of the first places to identify these new émigrés as a source of economic growth and, paradoxically, community stability. A 2005 survey found that as many as 1 in 10 year-round households was involved in a location-neutral business. Unlike retirees and second-home buyers, who are also roosting in vacation towns, they send children to the local schools. “Without kids, you don’t have a community,” said Scott Ford, a counselor at the Small Business Resource Center at Colorado Mountain College.

Cloistered in home offices, isolated from the local economy, location-neutrals are often invisible even to one another, except when they appear on local committees.

Many work as hard as their urban counterparts, often juggling commitments in several time zones, but can step from their offices to a hiking trail or mountain stream.

. . .

For Bill and Stephanie Faunce, who run a marketing company for cable operators, small-town life often means starting work at 7 a.m. and quitting at 11 p.m., but with breaks to hike, ski or be with their two young children. Their goal in coming here was not to slow down but to eliminate urban distractions and pressures.

“There are no stressors here,” said Mr. Faunce, 43. “In L.A., it took 90 minutes to get to the office, so we had a Mercedes and a Land Rover. Now we drive a Suburban. In three years we’ve put 15,000 miles on it.”

For the full story, see:

JOHN LELAND.  "Off to Resorts, and Carrying Their Careers."  The New York Times  (Mon., August 13, 2007):  A1 & A15.

(Note:  ellipsis added.)

The reference for Florida's book, is:

Florida, Richard. The Rise of the Creative Class: And How It's Transforming Work, Leisure, Community and Everyday Life. New York: Basic Books, 2002.

   Source of maps:  online version of the NYT article quoted and cited above.

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       "Traders in the oil futures pit of the New York Mercantile Exchange on Tuesday" (January 22. 2008).  Source of caption and photo:  online version of the NYT commentary quoted and cited below. 

Raghuram Rajan is mentioned in the article quoted below.  I first ran across him as the co-author of a book that was billed as applying Schumpeterian ideas of creative destruction to issues of economic growth and development. 

Then, at the American Economic Association meetings in New Orleans in early January, I was on my way to a History of Economics Society reception, when I stumbled by chance into a modest reception in which Rajan was giving an informal speech on the subprime mortgage crisis.

It was such an interesting presentation, that I ended up totally missing the History of Economics Society reception.  Rajan argued that the main problem was one of misguided incentives.  Bonuses at top investment firms like Merrrill Lynch and JPMorgan Chase, are supposed to go to those whose investments produce high returns, with modest risks.  The problem with the complicated securities based on the subprime mortgages was that they produced high returns, but the risks were actually also fairly high.  The high-flying investors probably had some knowledge of this, but the public did not.  In most years the investors could invest in the high return, but high risk, securities, and collect huge bonuses.  But now the chickens have come home to roost.

Rajan suggested that the answer would be a change in the way in which the traders are given bonuses.  Instead of handing them out annually, let them become vested only after observing the investment's track record for several years.  If the investment goes south before the bonus is vested, the trader does not get the bonus.  This would provide an incentive and reward for those who accurately accessed the risk of their investments. 

(p. A1)  . . . , Wall Street hasn't yet come clean. Even after last week, when JPMorgan Chase and Wells Fargo announced big losses in their consumer credit businesses, financial service firms have still probably gone public with less than half of their mortgage-related losses, according to Moody's Economy.com. They're not being dishonest; they just haven't untangled all of their complex investments.

"Part of the big uncertainty," Raghuram G. Rajan, former chief economist at the International Monetary Fund, said, "is where the bodies are buried."

As Mr. Rajan pointed out, this situation is more severe than the crisis involving Long Term Capital Management in the late 1990s. That was a case in which a limited set of bad investments, largely at one firm, had the potential to drive down the value of other firms' holdings in the short term. Those firms then might have stopped lending money because they no longer had the capital to do so. But their own balance sheets were largely healthy.

This time, the firms are facing real losses, which will almost certainly curtail lending, and economic growth, this year.

For the full commentary, see: 

DAVID LEONHARDT.  "ECONOMIC SCENE; Worries That the Good Times Were Mostly a Mirage."  The New York Times  (Weds., January 23, 2008):  A1 & A23.

(Note:  ellipsis added.)

The Schumpeterian book co-authored by Rajan, is:

Rajan, Raghuram G., and Luigi Zingales.  Saving Capitalism from the Capitalists:  Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity.  New York:  Crown, 2003.

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   Source of graphic:  online version of the WSJ article cited below.

The innovation described in the article excerpted below is credited as arising from a 'skunk works' project.  There's a neat book called Skunk Works that describes how Lockheed set up an autonomous unit to develop the first stealth air force technology.  (Their plant was in a smelly part of town, so it was dubbed the 'Skunk Works.')

Clayton Christensen has recommended that established incumbent companies set up skunk works operations in order to develop disruptive technologies that would not survive if they were developed within the main corporate culture and infrastructure. 

(In the article excerpted below, it is puzzling to read that Alaska Air went to the trouble to take out a patent, even though they apparently have no intention of enforcing it.) 

(p. B1)  ANCHORAGE, Alaska -- When the Ted Stevens Anchorage International Airport was planning a new concourse, prime tenant Alaska Airlines insisted on a counterintuitive design: "The one thing we don't want is a ticket counter," said Ed White, the airline's vice president of corporate real estate.

So the 447,000-square-foot Concourse C, which opened in 2004, has only one small, traditional ticket counter, even though the carrier's 1.2 million Anchorage passengers checked in through that area last year. This unconventional approach -- which uses self-service check-in machines and manned "bag drop" stations in a spacious hall that looks nothing like a typical airport -- has doubled Alaska's capacity here, halved its staffing needs and cut costs, while speeding travelers through the building in far less time.

. . .

(p. B4)  Alaska's design in Anchorage has turned heads in the industry, and in 2006 the airline was awarded a U.S. patent for the check-in process, something it calls the two-step flow-through. Mr. White says his company isn't trying to keep competitors from going down the same path, but pursued the patent more to reward the many employees who helped to bring the idea to fruition.

Other airlines quickly sent scouts up to Anchorage to check out the new concourse, including a team from Delta Air Lines Inc., Mr. White says. A few months ago, Delta completed a $26 million renovation of its check-in hall at Hartsfield-Jackson Atlanta International Airport, and the finished product looks remarkably similar to that of Alaska Airlines. Greg Kennedy, Delta's vice president for customer service there, says the new layout has enabled the airline to process passengers checking in during the peak spring break travel period in 20 to 30 minutes at most, compared with two or three hours three years ago -- and all in the same amount of square footage but 50% more usable space. Mr. Kennedy says he isn't aware of a visit to Anchorage but doesn't dispute it.

. . .  

Alaska, the nation's ninth-largest carrier by traffic, started a "skunk works" lab a decade ago to figure out how to use technology to make air travel less of a hassle for passengers. Out of that effort came the airline's ground-breaking ability to sell tickets on the Internet and allow fliers to check in online, developments other carriers quickly followed.

For the full story, see: 

SUSAN CAREY.  "Case of the Vanishing Airport Lines; Alaska Air Speeds Up Flow Of Passengers by Jettisoning Traditional Ticket Counters."  The Wall Street Journal  (Thurs., August 9, 2007):  B1 & B4.

  Source of graphic:  online version of the WSJ article cited above.

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    "The bolt hole was designed to hide from angry textile workers."  Source of caption and photo:  the BBC article quoted and cited below, and viewable at   http://news.bbc.co.uk/1/hi/england/leicestershire/4791069.stm

A series of secret rooms and a tunnel have been discovered under a building in Loughborough. The secret living quarters belonged to John Heathcote, a man who invited the fury of the Luddites after inventing a lace-making machine in the early 1800s.

 . . .

Keeper of Charnwood Museum Susan Cooke added: "We don't know if (John Heathcote) did actually hide down there because he fled Loughborough and went to Devon."

 . . .

Activists smashed Heathcote's lacemaking machine in Loughborough in 1816.

For the full story, see:

"Workmen discover secret chambers."  BBC News online. Last updated: Tuesday, 15 August 2006.

(Note:  ellipses added.)

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   Source:  screen capture of a flash animated graphic that appears in the online version of the NYT article quoted and cited below.  The flash animated graphic allows you to move your cursor along the circles representing wealth, and at the top of the graphic appears the picture and a brief bio of the person who owned that amount of wealth (such as Rockefeller in the screen capture above).

(p. 18)  Mr. Weill’s beginnings were . . . inauspicious. A son of immigrants from Poland, raised in Brooklyn, a so-so college student, he landed on Wall Street in a low-level job in the 1950s. Harnessing entrepreneurial energy, deftness as a deal maker and an appetite for risk, with a rising stock market pulling him along, he built a financial empire that, in his view, successfully broke through the stultifying constraints that flowed from the New Deal. They were constraints not just on what business could or could not do, but on every high earner’s take-home pay.

“I once thought how lucky the Carnegies and the Rockefellers were because they made their money before there was an income tax,” Mr. Weill said, never believing in his younger days that deregulation and tax cuts, starting in the late 1970s, would bring back many of the easier conditions of the Gilded Age. “I felt that everything of any great consequence was really all made in the past,” he said. “That turned out not to be true and it is not true today.”

 

The Question of Talent

Other very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter’s “unique talent” for baseball, as Leo J. Hindery Jr. put it. “I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.”

He counts himself as a talented entrepreneur, having assembled from scratch a cable television sports network, the YES Network. “Jeter makes an unbelievable amount of money,” said Mr. Hindery, who now manages a private equity fund, “but you look at him and you say, ‘Wow, I cannot find another ballplayer with that same set of skills.’ ”

. . .

 

The New Tycoons

The new Gilded Age has created only one fortune as large as those of the Rockefellers, the Carnegies and the Vanderbilts — that of Bill Gates, according to various compilations. His net worth, measured as a share of the economy’s output, ranks him fifth among the 30 all-time wealthiest American families, just ahead of Carnegie. Only one other living billionaire makes the cut: Warren E. Buffett, in 16th place.

. . .

 

“I don’t think it is unreasonable,” he said, “for the C.E.O. of a company to realize 3 to 5 percent of the wealth accumulation that shareholders realize.”

That strikes Robert C. Pozen as a reasonable standard. He made a name for himself — and a fortune — overseeing the investment department at Fidelity.

Mr. Weill makes a similar point. Escorting a visitor down his hall of tributes, he lingers at framed charts with multicolored lines tracking Citigroup’s stock price. Two of the lines compare the price in the five years of Mr. Weill’s active management with that of Mr. Buffett’s Berkshire Hathaway during the same period. Citigroup went up at six times the pace of Berkshire.

“I think that the results our company had, which is where the great majority of my wealth came from, justified what I got,” Mr. Weill said.

 

New Technologies

Others among the very rich argue that their wealth helps them develop new technologies that benefit society. Steve Perlman, a Silicon Valley innovator, uses his fortune from breakthrough inventions to help finance his next attempt at a new technology so far out, he says, that even venture capitalists approach with caution. He and his partners, co-founders of WebTV Networks, which developed a way to surf the Web using a television set, sold that still profitable system to Microsoft in 1997 for $503 million.

Mr. Perlman’s share went into the next venture, he says, and the next. One of his goals with his latest enterprise, a private company called Rearden L.L.C., is to develop over several years a technology that will make film animation seem like real-life movies. “There was no one who would invest,” Mr. Perlman said. So he used his own money.

For the full story, see: 

LOUIS UCHITELLE.  "Age of Riches; The Richest of the Rich, Proud of a New Gilded Age."  The New York Times, Section 1  (Sun., July 15, 2007):  1 & 18-19. 

(Note:  ellipses added.)

   Entrepreneur Leo J. Hindery, Jr.   Source of photo:  online version of the NYT article quoted and cited above.

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"Bonnie Brown joined Google when it had 40 employees."  Source of caption and photo:  online version of the NYT article quoted and cited below. 

(p. A1)  SAN FRANCISCO, Nov. 11 — Bonnie Brown was fresh from a nasty divorce in 1999, living with her sister and uncertain of her future. On a lark, she answered an ad for an in-house masseuse at Google, then a Silicon Valley start-up with 40 employees. She was offered the part-time job, which started out at $450 a week but included a pile of Google stock options that she figured might never be worth a penny.

After five years of kneading engineers’ backs, Ms. Brown retired, cashing in most of her stock options, which were worth millions of dollars. To her delight, the shares she held onto have continued to balloon in value.

“I’m happy I saved enough stock for a rainy day, and lately it’s been pouring,” said Ms. Brown, 52, who now lives in a 3,000-square-foot house in Nevada, gets her own massages at least once a week and has a private Pilates instructor. She has traveled the world to oversee a charitable foundation she started with her Google wealth and has written a book, still unpublished, “Giigle: How I Got Lucky Massaging Google.”

When Google’s stock topped $700 a share last week before dropping back to $664 on Friday, outside shareholders were not the only ones smiling. According to documents filed on Wednesday with the Securities and Exchange Commission, Google employees and former employees are holding options they can cash in worth about $2.1 billion. In addition, current employees are sitting on stock and unvested op-(p. A16)tions, or options they cannot immediately cash in, that together have a value of about $4.1 billion.

Although no one keeps an official count of Google millionaires, it is estimated that 1,000 people each have more than $5 million worth of Google shares from stock grants and stock options.

For the full story, see:

KATIE HAFNER. "Google Options Make Masseuse a Multimillionaire."  The New York Times  (Mon., November 12, 2007): A1 & A16.

   Source of graphic:  online version of the NYT article quoted and cited above. 

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   "HOMELAND SECURITY.  Many women in Mexico, like Estela Palacio Calzada, with her granddaughter, rely on money sent back from the U.S. "  Source of caption and photo:  online version of the NYT article quoted and cited below.

Adam Smith argued in The Theory of Moral Sentiments, that altruism is more effective when it is directed toward those we know best--mainly our family, and immediate neighbors.

A policy implication may be that the most effective foreign aid is to have more open immigration policies, that then permit the migrants to send back funds to those in their home country who they know best.

THE money flows in dribs and drabs, crossing borders $200 or $300 at a time. It buys cornmeal and rice and plaid private school skirts and keeps the landlord at bay. Globally, the tally is huge: migrants from poor countries send home about $300 billion a year. That is more than three times the global total in foreign aid, making “remittances” the main source of outside money flowing to the developing world.

Surveys show that 80 percent of the money or more is immediately spent, on food, clothing, housing, education or the occasional beer party or television set. Still, there are tens of billions available for savings or investment, in places where capital is scarce. While remittances have been shown to reduce household poverty, policymakers are looking to increase the effect on economic growth.

Some migrants, for instance, send home money to savings accounts at small bank-like microfinance institutions, which use the resulting capital pool to lend to local entrepreneurs.

For the full story, see:

JASON DePARLE. "Migrant Money Flow: A $300 Billion Current."  The New York Times, Week in Review Section  (Sun., November 18, 2007):  3.

   Source of map graphic:  online version of the NYT article quoted and cited above.

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   King Edward's suite is enjoyed by Münster, Germany resident Henriette Heussner.  Source of photo:  online version of the NYT article quoted and cited below.

(p. A4) MARIANSKE LAZNE, Czech Republic — Anybody with a little cash in this quaint and quiet spa town can take a bath fit for a king.

Edward VII of Britain visited this bucolic corner of Bohemia six times during his short reign and each time took a bath in the Royal Cabin, as his private bathroom at the Nove Lazne hotel is still called. For about $45, you can, too.

. . .

King Edward’s Royal Cabin, a spacious Turkish-bath-style suite, is outfitted with a metal alloy tub and a medieval-looking oaken chair that serves as a toilet and a scale.

. . .

The windows are as delicately painted as a church’s stained glass, and the walls richly decorated with a tropical mural, just as they were in Edwardian days. Angels wearing miters look down from the ceiling.

Lying in the bath, staring up at the same blue parrot that King Edward surely contemplated on the opposite wall, one cannot help musing on the sameness of princes and paupers and those who are somewhere in between.

Tiny bubbles like the carbonation on a soda straw collect on the skin, and larger bubbles percolate around the bather, producing a peculiarly pleasant sensation.

An archaic water heater in a corner of the room clanks contentedly, keeping the bath at what the hotel staff call an “optimal” 97 degrees. The smell of the water is sulfuric and slightly metallic.

Much history and many baths have passed since the king bathed here. In the end, everyone grabs the same metal handle that he did to hoist himself up and out of the tub.

For the full story, see: 

CRAIG S. SMITH.  "MARIANSKE LAZNE JOURNAL; This Year at Marienbad, They’re Still Taking the Waters."  The New York Times  (Tues., July 3, 2007):  A4.

(Note:  ellipses added.)

   Source of maps:  online version of the NYT article cited above.

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   "Infosys employs workers in Brno, Czech Republic."   Source of caption and photo:  online version of the NYT article quoted, and cited, below.

(p. A1)  MYSORE, India — Thousands of Indians report to Infosys Technologies’ campus here to learn the finer points of programming. Lately, though, packs of foreigners have been roaming the manicured lawns, too.

Many of them are recent American college graduates, and some have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company’s American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

. . .

(p. A14)  Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers working 150 miles south of the United States border.

In Europe, too, companies now hire Infosys to manage back offices in their own backyards. When an American manufacturer, for instance, needed a system to handle bills from multiple vendors supplying its factories in different European countries, it turned to the Indian company. The manufacturer’s different locations scan the invoices and send them to an office of Infosys, where each bill is passed to the right language team. The teams verify the orders and send the payment to the suppliers while logged in to the client’s computer system.

More than a dozen languages are spoken at the Infosys office, which is in Brno, Czech Republic.

For the full story, see: 

ANAND GIRIDHARADAS.  "Outsourcing Comes Full Circle As India Starts to Export Jobs."  The New York Times   (Tues., September 25, 2007):  A1 & A14.

(Note:  the somewhat different title of the online version was:  "Outsourcing Works So Well, India Is Sending Jobs Abroad.")

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   Source of graphic:  online verion of the NYT article cited below.

(p. C1)  Jeffrey Taft is a road warrior in the global high-technology services economy, and his work shows why there are limits to the number of skilled jobs that can be shipped abroad in the Internet age.

Each Monday, Mr. Taft awakes before dawn at his home in Canonsburg, Pa., heads for the Pittsburgh airport and flies to Houston for the week.

He is one of dozens of I.B.M. services employees from around the country who are working with a Texas utility, CenterPoint Energy, to install computerized electric meters, sensors and software in a “smart grid” project to improve service and conserve energy.

Mr. Taft, 51, is an engineer fluent in programming languages and experienced in the utility business. Much of his work, he says, involves being a translator between the different vernaculars and cultures of computing and electric power, as he oversees the design and building of software tailored for utilities. “It takes a tremendous amount of face-to-face work,” he said.

What he does, in short, cannot be done overseas. But some of the programming work can be, so I.B.M. employees in India are also on the utility project team.

The trick for companies like I.B.M. is to figure out what work to do where, and, more important, to keep bringing in the kind of higher-end work that needs to be done in this country, competing on the basis of specialized expertise and not on price alone.

The debate continues over how much skilled work in the vast service sector of the American economy can migrate offshore to lower-cost nations like India. Estimates of the number of services jobs potentially at (p. C4) risk, by economists and research organizations, range widely from a few million to more than 40 million, which is about a third of total employment in services.

Jobs in technology services may be particularly vulnerable because computer programming can be described in math-based rules that are then sent over the Internet to anywhere there are skilled workers. Already, a significant amount of basic computer programming work has gone offshore to fast-growing Indian outsourcing companies like Infosys, Wipro and Tata Consultancy Services.

To compete, companies like I.B.M. have to move up the economic ladder to do more complicated work, as do entire Western economies and individual workers. “Once you start moving up the occupational chains, the work is not as rules-based,” said Frank Levy, a labor economist at the Massachusetts Institute of Technology. “People are doing more custom work that varies case by case.”

In the field of technology services, Mr. Levy said, the essential skill is “often a lot more about business knowledge than it is about software technology — and it’s a lot harder to ship that kind of work overseas.”

For the full story, see: 

STEVE LOHR.  "At I.B.M., a Smarter Way to Outsource."  The New York Times   (Thurs., July 5, 2007):  C1 & C4. 

Levy has co-authored a book that is relevant to the example and issues raised in the article.  See:

Levy, Frank, and Richard J. Murnane.  The New Division of Labor: How Computers Are Creating the Next Job Market.  Princeton, NJ:  Princeton University Press, 2004.

   IBM engineer Jeffrey Taft (blue shirt) has "local" knowledge of the connection between computer programming and the electric utility business.  Here he is on-site in Houston at the offices of CenterPoint Energy.  Source of graphic:  online verion of the NYT article cited above.

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    Source of graphs:  online version of the WSJ article cited below.

WASHINGTON -- Weighing in on an intensifying debate on income insecurity, three economists -- including two from the Federal Reserve -- have found that American families today are more likely to experience big drops in their income than three decades ago.

Their analysis, however, finds far less volatility in family income than some recent studies.

The authors of the new study, Douglas Elmendorf of the Brookings Institution and senior Fed economists Karen Dynan and Daniel Sichel, caution against interpreting their findings as evidence that families face more risk of hardship than before. They note that financial innovation has given Americans more ways to maintain their spending when their incomes fall. (Read the full study.)

The study found that the volatility of household income rose 23% between the early 1970s and early 2000s. While small changes in family income are no more frequent, large changes in income -- more than 50% -- are.

The probability that a family will experience a decline in annual income of 50% or more, compared with their average income in the previous three years, rose to 1.8% in 1995 from 0.6% in 1973. After 1995, the probability dipped, and has risen back to 1.7%.

"The increase in volatility we document is not trivial," Mr. Elmendorf said in an interview. "Our work is quite consistent with being concerned about the level and increase in volatility of household income."

That said, "I don't think our results support the view that the world is dramatically more adverse for households," he added.

. . .

Yet research into the assumption that income volatility has increased has reached differing conclusions. Yale University political scientist and author Jacob Hacker, in a 2006 book titled "The Great Risk Shift," documents a fivefold increase in household-income volatility between the early 1970s and early 1990s. Mr. Hacker, who described himself as "thunderstruck" by the result, has written widely and testified to Congress on the subject. He couldn't be reached for comment.

By contrast, the Congressional Budget Office, using a different set of data, found that earnings volatility for individuals -- as opposed to households -- has changed little since the early 1980s.

But the authors argue that bigger swings in income need not force households to slash their spending. They cite preliminary findings from other research they have conducted that show financial innovation, such as easier borrowing against the value of a home, has helped to insulate family spending patterns from fluctuations in income.

For the full story, see: 

GREG IP.  "Incomes Suffer More Volatility Amid Heightening Risks, Families Find Ways to Cushion Blows."  The Wall Street Journal   (Fri., June 22, 2007):  A4.

(Note:  ellipsis added.)

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Stephen J. Rose, the author of the commentary quoted below, was previously an advisor to Democratic President Clinton's former Secretary of Labor, Robert Reich.  He is currently a senior economic fellow with the Progressive Policy Institute.  The commentary is based on Rose's report "The Truth About Middle Class Jobs."

Economic change is a messy process. New technologies open up many opportunities for those prepared to take advantage of them. At the same time, old firms and their workers are displaced and forced to start over. In 1900, for example, 40% of the U.S. work force was involved in agriculture. Today, that figure is less than 2%, and no serious observer would argue that we are worse off as a result of this transformation.

Yet many of today's most prominent politicians and pundits are making an updated version of precisely this argument. They claim that the decline in the number of manufacturing jobs has led to the replacement of good middle-class jobs by low-skill, low-pay "hamburger-flipping" service jobs.

. . .

 Let us look at the distribution of earnings in 1979, compared with the distribution of earnings of the net new jobs created since that year.  . . .

. . .

Here's the bottom line: For three-quarters of the workforce (women and the top half of male earners), economic growth translated into earnings gains. But for male workers in the bottom half of the earnings distribution, the decline of unionized manufacturing employment has led to the drying up of some middle-class jobs for those with no post-secondary education.

For the clear majority of the workforce, then, the job market has become more welcoming, not less so. But where are these jobs?

Using a framework that I developed in the 1990s, I find that most of the employment gains over the last 30 years have been in business-management activities (administration, sales, finance and business services) as well as in professional services such as health care and education. While the percentage of U.S. jobs derived from manual work in agriculture, mining, timber and manufacturing has declined, the share of jobs related to low-skilled retail and personal/food services has remained steady.

For the full commentary, see: 

STEPHEN J. ROSE.  "The Myth of Middle-Class Job Loss."  The Wall Street Journal  (Weds., October 24, 2007):  A21.

(Note:  ellipses added.)

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   Source of graphic:  online version of the WSJ article excerpted and cited below.

Union endorsements could provide a big boost with next year's early, front-loaded primary calendar. Half of all 15.4 million union members live in six states -- California, New York, Illinois, Michigan, New Jersey and Pennsylvania -- and all but Pennsylvania will have voted by Feb. 5.

Major unions have already split their endorsements between three Democratic candidates: Sens. Hillary Rodham Clinton and Christopher Dodd, and former Sen. John Edwards. Union leaders are loath to repeat the division of support that marred the 2004 election, where major unions endorsed Richard Gephardt and Howard Dean, wasting resources on losing candidates. Only one Republican candidate, former Arkansas Gov. Mike Huckabee, has picked up a major union endorsement.

For the full story, see: 

NICK TIMIRAOS.  "HOT TOPIC; U.S. Unions: Still a Political Power?"  The Wall Street Journal  (Sat., September 29, 2007):  A7.

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   Source of graphic:  online version of the WSJ article excerpted and cited below.

Among the hottest Web sites of the past few years were job-search sites such as CareerBuilder.com and Monster.com. Helped by lavish advertising, they became household names. Newspapers, eager to tap the fast-growing online-ad market, teamed up with them.

Now, the hottest names in online recruitment are increasingly specialized job sites. That poses a threat to the growth prospects of the broad-based online job boards and their newspaper partners, analysts said.

In August, the number of unique visitors to CareerBuilder -- which is jointly owned by Gannett, Tribune, McClatchy and Microsoft -- dropped 2% to 20.2 million, while Monster.com's traffic rose 4% to 16.3 million visitors.

By contrast, technology-focused Dice.com saw its traffic jump 34% to 998,000. At Healthcaresource.com, which posts health-care jobs, traffic rose 36%. 

For the full story, see: 

EMILY STEEL.  "ADVERTISING; Job-Search Sites Face a Nimble Threat Online Boards Become Specialized, Threatening Web-Print Partnerships."   The Wall Street Journal  (Tues., October 9, 2007):  B10.

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   One of the panels from Ghiberti's restored "Gates of Paradise."  Source of the photo:  online version of the WSJ article cited below.

In my work on the labor economics of the process of creative destruction, I make use of the competition between Ghiberti and Brunelleschi over who would do the bronze door panels.  Brunelleschi withdrew, after a "tie" decision from the judges.  He then retooled, and bult the marvelous dome that is still one of the world's architectural marvels.

If Michelangelo's "David" heads the "must see" list of Renaissance masterpieces for most visitors to Florence, then I suspect "The Gates of Paradise," Lorenzo Ghiberti's monumental doors of the Baptistery of San Giovanni, rank a close second. The 20-foot-tall portal -- 10 exquisitely articulated gilt bronze reliefs of Old Testament scenes, framed by standing prophets, foliage and projecting heads -- has mesmerized viewers since its completion in 1452. Michelangelo himself is supposed to have given the doors the name by which they are still known.

. . .

Next year, visitors to Florence will again see "The Gates" restored to their full splendor, permanently installed in the Museo dell'Opera del Duomo.  

For the full commentary, see: 

KAREN WILKIN.  "Ghiberti's Doors Are Heavenly Again."   The Wall Street Journal  (Tues., June 5, 2007):  D5.

(Note:  ellipsis added.)

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The ranks of the richest Americans expanded last year at an increased pace, driven by a strong economy, but that growth is expected to moderate in coming years, according to a new study.

The 11th annual World Wealth Report, compiled by Merrill Lynch & Co. and Capgemini Group, shows that in 2006, the U.S. population of high-net-worth individuals -- those with at least $1 million in investible assets, excluding their primary residences -- rose 9.4% to 2.92 million. In 2005, the same population increased 6.8% to 2.67 million.

Robert McCann, president of Merrill Lynch Global Private Client Group, attributed the increased pace of wealth generation to gains in economic output and continued growth in the world's stock markets, two primary drivers of wealth creation.

For the full story, see:

DAISY MAXEY.  "Ranks of Rich in U.S. Grow at Faster Pace."   The Wall Street Journal   (June 28, 2007):  D6. 

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Perhaps the commentary excerpted below goes a bit too far.  I do not believe that paid work is necessary for happiness.  But I do think that a life mainly of leisure can wear thin.  A few months ago I heard Deirdre McCloskey say that we need "projects" to keep us moving forward.  I think that is right, and the best work involves challenging, meaningful projects.

By almost every measure, Europeans do work less and relax more than Americans. According to data from the Organization for Economic Co-operation and Development, Americans work 25% more hours each year than the Norwegians or the Dutch. The average retirement age for European men is 60.5, and it's even lower for European women. Our vacations are pathetically short by comparison: The average U.S. worker takes 16 days of vacation each year, less than half that typically taken by the Germans (35 days), the French (37 days) or the Italians (42 days).

. . .

For most Americans, work is a rock-solid source of life happiness. Happy people work more hours each week than unhappy people, and work more in their free time as well. Even more tellingly, people with more hours per day to relax outside their jobs are not any happier than those who have less non-work time. In short, the idea that our heavy workloads are lowering our happiness is twaddle.

. . .

This may be one reason why Americans tend to score better than Europeans on most happiness surveys. For example, according to the 2002 International Social Survey Programme across 35 countries, 56% of Americans are "completely happy" or "very happy" with their lives, versus 44% of Danes (often cited in surveys as the happiest Europeans), 35% of the French and 31% of Germans. Those sweet five-week vacations and 35-hour workweeks don't seem to be stimulating all that much félicité. A good old-fashioned 50-hour week might be a better option.

For the full commentary, see: 

ARTHUR C. BROOKS.  "Happy for the Work."  The Wall Street Journal  (Weds., June 20, 2007):  A16. 

(Note:  ellipses added.)

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(p. 7)  . . .  an enduring mystery of the retail economic world: why don't people in New York City want a Wal-Mart in Midtown?

Manhattan is the most underserved market I have ever seen for retail customers. There really is nowhere for bargains on ordinary household goods and groceries in the whole borough. Yes, I know unions hate Wal-Mart. But not every New Yorker is in a union, and every New Yorker needs food and paper towels. (I, by the way, am a member of three unions: the Screen Actors Guild, the American Federation of Television and Radio Artists, and the Writers Guild of America, West. How many unions is Mayor Michael Bloomberg in?)

Don't the consumers deserve a break, too? I know Wal-Mart is not hip, slick and cool. It's for people who have to live within a budget, not for people who see movies with subtitles and have houses on Martha's Vineyard (or would like to). But don't working-class people deserve bargains on their daily bread?

To keep Wal-Mart out of New York -- or my home, Los Angeles -- is simply to inflict a snobby class prejudice on working people. Why they and their representatives put up with this classist, ''let them eat Whole Foods'' nonsense is yet another mystery, and one that could be solved if politicians really cared about consumers.

For the full commentary, see: 

BEN STEIN.  "EVERYBODY'S BUSINESS; Assorted Mysteries of Economic Life."  The New York Times, Section 3  (Sun., May 13, 2007):  7.

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   Source of graph:  online version of the NYT article cited below.

WILL stocks suffer a multidecade bear market as the baby-boom generation sells its shares to support its retirement? Some have predicted such an outcome, but a new study — which projects huge growth in 401(k) assets in future decades — paints a far more sanguine picture.

The study, “New Estimates of the Future Path of 401(k) Assets,” has been circulating since earlier this month as a working paper from the National Bureau of Economic Research. Its authors are James M. Poterba, chairman of the economics department at the Massachusetts Institute of Technology; Steven F. Venti, an economics professor at Dartmouth; and David A. Wise, a professor of political economy at Harvard. A version is at www.nber.org/papers/w13083.

Despite the baby boomers’ liquidation of retirement assets in coming decades, the study estimates that the total size of 401(k) plans will nevertheless grow markedly. That forecast may come as a surprise to some people, the professors concede, because 401(k)’s now represent only a modest fraction of a typical retiree’s total wealth. But the professors point out that 401(k) plans have existed only since the early 1980s; by the time that today’s younger workers retire, they will have had many more years to contribute to their 401(k)’s than current retirees have had.

For the full commentary, see: 

MARK HULBERT.  "STRATEGIES; Baby Boomers Are Cashing In.  So What?"  The New York Times, Section 3  (Sun., May 27, 2007):  5.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

Many of us would say that income inequality is not bad, if it reflects differences in worker productivity.  One argument in the article excerpted below, is that information technology has allowed better measurement of worker productivity, and hence is partly responsible for the increase in income inequality.

. . . as companies and compensation consultants began using information technology to determine more accurately the contributions of individual employees, employers began to discriminate among employees based on performance. In a working paper, Professor MacLeod, along with Thomas Lemieux of the University of British Columbia and Daniel Parent of McGill University, mined census data and found that the proportion of jobs with a performance-pay component rose to 40 percent in the 1990s from 30 percent in the late 1970s.

''Since companies are better able to measure precisely what an employee contributes, we've seen a greater range of incomes among people doing roughly the same jobs,'' Professor MacLeod said.

The fact that more Americans are paid less on the basis of a job title and more on their individual output inexorably leads to greater inequality. The authors' conclusion is that the rise of performance-based pay has accounted for 25 percent of the growth in wage inequality among male workers from 1976 to 1993.

''All the bits of evidence we have tend to say that this trend is continuing,'' Professor Lemieux said. In 2003, the authors note, 44.5 percent of workers at Fortune 1000 companies received some form of performance-based pay, up from 34.7 percent in 1996. And think of the growing legions of self-employed -- people selling items on eBay, mortgage brokers and real estate brokers, freelance journalists and consultants of all types -- for whom all pay is performance-based. Among these growing cadres, the dispersion of incomes is rather large.

''When you look at the self-employed and contractors,'' Professor Lemieux said, ''inequality is much higher.''

For the full commentary, see: 

DANIEL GROSS.  "ECONOMIC VIEW; Income Inequality, Writ Larger."  The New York Times, Section 3  (Sun., June 10, 2007):  7.

(Note:  ellipsis added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of graph:  online version of the NYT article quoted and cited below.

(p. A1)  Like most companies, Office Depot has long made sure that its chief executive was the highest-paid employee. Ten years ago, the $2.2 million pay package of its chief was more than double that of his No. 2. The fifth-ranked executive received less than one-third.

But the incentive for reaching the very top of the company is now far greater. Steve Odland, who runs Office Depot today, made almost $12 million last year, more than four times the compensation of the second-highest-paid executive and over six times that of the fifth-ranking executive in the current hierarchy.

As executive pay has surged in most American companies, attention has focused on the growing gap between the earnings of top executives and the average wage of workers in cubicles or on the shop floor. Little noticed, though, is how much the gap has also widened between the summit and the next few echelons down.

. . .

The pay of chief executives, analysts say, is being driven by superstar dynamics similar to those that determine the inordinate rewards for pop stars and athletes — a phenomenon first explained by Sherwin Rosen of the University of Chicago in (p. C7) 1981 and underlined more than a decade ago by the economists Robert H. Frank and Philip J. Cook in their book “The Winner-Take-All Society” (Free Press, 1995).

As American companies, American hedge funds — and even American lawsuits — have grown in size, it has become ever more valuable to get the “best” chief executive or fund manager or litigator. This has fueled a fierce competition for talent at the top, which has pushed economic rewards farther up the ladder of success, concentrating the richest pay levels even more.

“There is an interaction between technology and scale which is true in all these businesses,” said Steven N. Kaplan, a finance professor at the Graduate School of Business of the University of Chicago. “One person can oversee more assets, and this translates into more money.”

. . .

As companies grow and expand globally, the value of the top executive can grow exponentially. In a study last year, two economists, Xavier Gabaix of the Massachusetts Institute of Technology and Augustin Landier of New York University, argued that the fast rise in pay of corporate C.E.O.’s mostly reflected the growing size of American corporations.

Processing reams of data, the economists estimated that hiring the most effective chief executive in the country would, statistically, increase the stock value of a company by only 0.016 percent, compared with hiring the 250th chief executive. But at a company like General Electric, which is worth about $380 billion, that tiny difference would amount to $60 million.

This, the economists argued, helps explain why that top chief executive earned five times as much as the 250th. “Substantial firm size leads to the economics of superstars, translating small differences in ability to very large deviations in pay,” the economists wrote.

For the full story, see: 

EDUARDO PORTER.  "More Than Ever, It Pays to Be the Top Executive."  The New York Times  (Fri., May 25, 2007):  A1 & C7.

(Note:  ellipses added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of graphic:  online version of the WSJ article cited below. 

The article excerpted below sketches one solution to the "problem" of the aging boomer workforce.  Michael Milken has suggested that the problem itself may be bogus, because aging, healthy, boomers will just keep on trucking a lot longer and stronger than is usually believed. 

The quality of life for some 80 million graying baby boomers in the U.S. may depend in large part on the fortunes of another high-profile demographic group: millions of mostly Hispanic immigrants and their children.

With a major part of the nation's population entering its retirement years and birth rates falling domestically, the shortfall in the work force will be filled by immigrants and their offspring, experts say. How that group fares economically in the years ahead could have a big impact on everything from the kind of medical services baby boomers receive to the prices they can get for their homes.

Immigrants and baby boomers are two groups whose destinies are converging in the next 20 years," says Dowell Myers, a demographer at the University of Southern California. "Baby boomers will surrender their economic role to this generation of immigrants and their children," who will evolve into a critical pool of laborers and taxpayers, he says.

Prof. Myers, author of the recent book "Immigrants and Boomers: Forging a New Social Contract for the Future of America," is among a crop of academics studying the link between the giant generation born between 1946 and 1964 and newcomers to the U.S., mainly Latin American immigrants.

For the full commentary, see: 

MIRIAM JORDAN. "Boomers' Good Life Tied To Better Life for Immigrants." The Wall Street Journal (Mon., May 7, 2007):  A2.

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   Source of graphic:  online version of the WSJ article cited below.

(p. A1)  LULEA, Sweden -- Lotta Landström is allergic to electricity -- so says her doctor. Along with hundreds of other Swedes diagnosed with the condition in recent years, she came to rely on state-funded sick pay.

But last year, Sweden's famously generous welfare system cut off Ms. Landström, a 35-year-old former teacher. Electro-hypersensitivity isn't widely recognized elsewhere in the world as a medical diagnosis. The decision to end her two years of benefits was part of a broad effort to crack down on sickness and disability benefits, according to Swedish welfare officials.

Swedes are among the healthiest people in the world according to the World Health Organization. And yet 13% of working-age Swedes live on some type of disability benefit -- the highest proportion on the globe. To explain this, many Swedish policy makers, doctors and economists blame a welfare system that is too lax and does little to verify individual claims.

At a time when low-cost competition from Asia is clobbering Europe's markets and straining its generous welfare states, governments from Finland to Portugal are trying to cut back and get more people to work. Sweden's bloated sick bay, which includes (p. A15) roughly 744,000 people on extended leave, has caused soul-searching about whether the system coddles Swedes and encourages them to feel sick.

"If we don't look out, we will end up with only two-thirds [of the labor force] in work, and one-third out, living on different kinds of subsidies," said Sweden's new prime minister, Fredrik Reinfeldt, in an interview earlier this year.

At a time when low-cost competition from Asia is clobbering Europe's markets and straining its generous welfare states, governments from Finland to Portugal are trying to cut back and get more people to work. Sweden's bloated sick bay, which includes roughly 744,000 people on extended leave, has caused soul-searching about whether the system coddles Swedes and encourages them to feel sick.

"If we don't look out, we will end up with only two-thirds [of the labor force] in work, and one-third out, living on different kinds of subsidies," said Sweden's new prime minister, Fredrik Reinfeldt, in an interview earlier this year.

. . .

Most of Sweden's boom in sickness absenteeism since the late 1990s is about more than simple fraud. Sick leave for psychological conditions such as depression, burnout or panic attacks has rocketed. Over 20% of the population complain of anxiety syndromes. "We are actually the safest country in the world," says David Eberhard, chief psychiatrist at St. Göran's hospital in Stockholm. But "people are feeling psychologically worse and worse."

Assar Lindbeck, one of Sweden's best-known economists, says the lenient welfare state has changed the country over the past generation. In place of the old Protestant work ethic, it has become acceptable to feel unable to work and to live on benefits, he says. "I would not call it cheating," Prof. Lindbeck says. "I would call it a drift in attitudes and social norms."

By being so accommodating, the Swedish system has encouraged Swedes to treat life's tribulations as clinical issues requiring sick leave, posits Anna Hedborg, a former Social Democrat cabinet minister: "As time has passed, we have medicalized all sorts of problems."

For the full story, see:

MARCUS WALKER.  "Rx FOR CHANGE; Sweden Clamps Down On Sick and Disability Pay; Once Freely Dispensed, Benefits Face Scrutiny; Ms. Lanström Is Cut Off."  The Wall Street Journal  (Weds., May 9, 2007):  A1 & A15.  

(Note:  ellipsis added.)

  A former Swedish teacher who had been receiving government disability payments for being allergic to electricity.   Source of photo:  online version of the WSJ article cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

Over the past 15 years, it has been opportunistic newcomers -- Houston, Charlotte, Las Vegas, Phoenix, Dallas, Riverside -- that have created the most new jobs and gained the most net domestic migration. In contrast there has been virtually negligible long-term net growth in jobs or positive domestic migration to places like New York, Los Angeles, Boston or the San Francisco Bay Area.

. . .

Fortunately the jobs are headed in the same direction. After all, companies depend not only on elite MBAs but upon on the collective skills of middle managers, technicians and skilled laborers. Most companies also tend to be more mindful of basic costs, taxes and regulations than the average hedge-fund manager or trustafarian.

This perhaps explains why the largest companies -- with the notable exception of Silicon Valley -- have continued to move toward the more opportunistic cities. New York and its environs, for example, had 140 such firms in 1960; in 2006 the number had dropped to less than half that, some of those running with only skeleton top management. Houston, in contrast, had only one Fortune 500 company in 1960; today it is home to over 20. Houston companies tend to staff heavily locally; this is one reason the city was able to replace New York and other high-cost locales as the nation's unchallenged energy capital. Another example of this trend is Charlotte's rise as the nation's second-ranked banking center in terms of assets, surpassing San Francisco, Chicago and Los Angeles, indeed all superstar cities except New York.

For the full commentary, see: 

JOEL KOTKIN.  "The Myth of 'Superstar Cities'."  The Wall Street Journal  (Tues., February 13, 2007):  A25.

(Note:  ellipsis added.)

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   Source of graph:  online version of the NYT article cited below.

(p. C1)  Last week, the Congressional Budget Office released a study that was arguably the fullest picture of (p. C12) economic volatility anyone has yet put together. Although some academics have taken a crack at the topic in recent years, they have had to rely on surveys in which people are asked how much money they make. The study by the C.B.O., as the budget office is known, used Social Security Administration records, which cover many more people than the surveys and are more reliable.

If you read the C.B.O. report, you can tell that its authors knew they were dealing with a delicate subject. The summary starts by noting that a “significant number of workers experience substantial variability in their total wage earnings,” which is certainly true. Only later do you come to the surprising part: there is the same amount of variability now that there was in the 1980s and 1990s. In journalism, this is known as burying the lead.

“Intuitively, you would think volatility is increasing,” said Senator Charles E. Schumer, Democrat of New York, who along with Senator Jim Webb of Virginia requested that the study be done. “But it isn’t, which I guess shows that the American economy has always been very flexible.”

Mr. Schumer’s point about intuition is an important one. We can all tick off reasons that the economy feels so volatile. Hardly a week goes by without another big corporation — the Tribune Company, Citigroup, DaimlerChrysler — announcing a big job cut. The number of temporary jobs, meanwhile, has mushroomed. Globalization and technological innovation are causing many of these changes, and labor unions are too weak to prevent them.

But there is also a whole set of other forces, harder to see and pushing in the other direction. Manufacturing, where furloughs and layoffs have always been the norm, accounts for a much smaller part of the work force than it used to, while more stable industries, like health care, have grown. This is one reason that recessions, and the job cuts they bring, haven’t happened as often as they once did.

. . .

In fact, research by Henry S. Farber, an economist at Princeton, has found that job loss rates have followed a cyclical pattern since the early ’80s, peaking around the same highs during recessions and falling to similar lows during expansions. (The rate has risen for workers who went to college and fallen a bit who those who didn’t.)

Americans, looking at their own jobs, realize that there hasn’t been a big change: in a recent Gallup Poll, 12 percent of respondents said it was very or fairly likely they would be laid off in the coming year. In the 1970s, ’80s and ’90s, at similar points in the business cycle, the percentage was virtually identical.

For the full commentary, see: 

DAVID LEONHARDT.  "ECONOMIX; What’s Really Squeezing the Middle Class?"  The New York Times  (Weds., April 25, 2007):  C1 & C12.

(Note:  ellipses added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of graph:  online version of the NYT article cited below.

(p. C1)  Last week, the Congressional Budget Office released a study that was arguably the fullest picture of (p. C12) economic volatility anyone has yet put together. Although some academics have taken a crack at the topic in recent years, they have had to rely on surveys in which people are asked how much money they make. The study by the C.B.O., as the budget office is known, used Social Security Administration records, which cover many more people than the surveys and are more reliable.

If you read the C.B.O. report, you can tell that its authors knew they were dealing with a delicate subject. The summary starts by noting that a “significant number of workers experience substantial variability in their total wage earnings,” which is certainly true. Only later do you come to the surprising part: there is the same amount of variability now that there was in the 1980s and 1990s. In journalism, this is known as burying the lead.

“Intuitively, you would think volatility is increasing,” said Senator Charles E. Schumer, Democrat of New York, who along with Senator Jim Webb of Virginia requested that the study be done. “But it isn’t, which I guess shows that the American economy has always been very flexible.”

Mr. Schumer’s point about intuition is an important one. We can all tick off reasons that the economy feels so volatile. Hardly a week goes by without another big corporation — the Tribune Company, Citigroup, DaimlerChrysler — announcing a big job cut. The number of temporary jobs, meanwhile, has mushroomed. Globalization and technological innovation are causing many of these changes, and labor unions are too weak to prevent them.

But there is also a whole set of other forces, harder to see and pushing in the other direction. Manufacturing, where furloughs and layoffs have always been the norm, accounts for a much smaller part of the work force than it used to, while more stable industries, like health care, have grown. This is one reason that recessions, and the job cuts they bring, haven’t happened as often as they once did.

. . .

In fact, research by Henry S. Farber, an economist at Princeton, has found that job loss rates have followed a cyclical pattern since the early ’80s, peaking around the same highs during recessions and falling to similar lows during expansions. (The rate has risen for workers who went to college and fallen a bit who those who didn’t.)

Americans, looking at their own jobs, realize that there hasn’t been a big change: in a recent Gallup Poll, 12 percent of respondents said it was very or fairly likely they would be laid off in the coming year. In the 1970s, ’80s and ’90s, at similar points in the business cycle, the percentage was virtually identical.

For the full commentary, see: 

DAVID LEONHARDT.  "ECONOMIX; What’s Really Squeezing the Middle Class?"  The New York Times  (Weds., April 25, 2007):  C1 & C12.

(Note:  ellipses added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

The Wall Street Journal summarizes an April 2, 2007 article by Noam Scheiber in The New Republic:

A new generation of economists has become so addicted to cleverness that dull but genuinely useful research is under threat.

"Freakonomics," the 2005 best seller that sought to explain the mysteries of everyday life through economics, is only partly to blame, writes Noam Scheiber. The deeper roots lie in a 1980s crisis of faith over economists' ability to reliably crunch numbers. Influential economist H. Gregg Lewis kicked it off by demonstrating that a host of broad, worthwhile empirical surveys of unions' impact on wages came to opposite conclusions, mostly thanks to the differing original assumptions by the studies' authors.

As a result, some economists retrenched, opting to focus on finding "solid answers to modest questions."

For the full summary, see:

"Informed Reader; Economics; How 'Freakonomics' Quashes Real Debates." The Wall Street Journal (Weds., March 28, 2007):  B11.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of book image:  http://ec1.images-amazon.com/images/P/159523005X.01._SCLZZZZZZZ_V46468787_SS500_.jpg

I saw Todd Buchholz on C-Span and on CNBC, and I enjoyed hearing his views, so I decided to buy his Bringing the Jobs Home.  I don't like the title, because it sort of implies that the job market is a zero-sum-game, in which one country's gain implies another country's loss.  Us true-blue free marketers believe that the market is a non-zero-sum game in which everyone everywhere can have jobs, and have better ones over time.

But Buchholz's little book is fun to read, and says much that is plausible about how the government hurts the worker and reduces the efficiency of the labor market. 

Read the following excerpt for part of his rousing conclusion to the book.

(And, Aaron, I agree with you that Buchholz is wrong to say the American spirit is "innate.") 

(p. 177)  . . . :  Since the 1960s, each year we've lost a little nerve, gained another bureaucrat, another lawyer, another layer of protection against life's uncertainties.  We have gotten used to a government that aims to coddle us but ends up both preventing us from growing and dampening the innate American spirit.  The spirit still stirs but gets buried under the weight of the nanny state.

. . .

(p. 178)  American government officials today cannot put our standard of living in a lockbox to preserve, protect and defend us.  Franklin D. Roosevelt warned us of fearing fear itself; now we fear life itself. 

. . .

(p. 179)  To paraphrase Churchill, Americans did not sail the perilous Atlantic, scale the Appalachians and struggle past the Rockies because we were made of cotton candy.

Source: 

Buchholz, Todd G. Bringing the Jobs Home: How the Left Created the Outsourcing Crisis--and How We Can Fix It. New York: Sentinel, 2004.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (2)

The story below provides further evidence that those who are working hard to make English the mandatory language of the United States, should find themselves a real problem to worry about.

PARIS, April 7 — When economics students returned this winter to the elite École Normale Supérieure here, copies of a simple one-page petition were posted in the corridors demanding an unlikely privilege: French as a teaching language.

“We understand that economics is a discipline, like most scientific fields, where the research is published in English,” the petition read, in apologetic tones. But it declared that it was unacceptable for a native French professor to teach standard courses to French-speaking students in the adopted tongue of English.

In the shifting universe of global academia, English is becoming as commonplace as creeping ivy and mortarboards. In the last five years, the world’s top business schools and universities have been pushing to make English the teaching tongue in a calculated strategy to raise revenues by attracting more international students and as a way to respond to globalization.

Business universities are driving the trend, partly because changes in international accreditation standards in the late 1990s required them to include English-language components. But English is also spreading to the undergraduate level, with some South Korean universities offering up to 30 percent of their courses in the language. The former president of Korea University in Seoul sought to raise that share to 60 percent, but ultimately was not re-elected to his post in December.

In Madrid, business students can take their admissions test in English for the elite Instituto de Empresa and enroll in core courses for a master’s degree in business administration in the same language. The Lille School of Management in France stopped considering English a foreign language in 1999, and now half the postgraduate programs are taught in English to accommodate a rising number of international students.

Over the last three years, the number of master’s programs offered in English at universities with another host language has more than doubled, to 3,300 programs at 1,700 universities, according to David A. Wilson, chief executive of the Graduate Management Admission Council, an international organization of leading business schools that is based in McLean, Va.

“We are shifting to English. Why?” said Laurent Bibard, the dean of M.B.A. programs at Essec, a top French business school in a suburb of Paris that is a fertile breeding ground for chief executives.

“It’s the language for international teaching,” he said. “English allows students to be able to come from anyplace in the world and for our students — the French ones — to go everywhere.”

For the full story, see: 

DOREEN CARVAJAL.  "English as Language of Global Education."  The New York Times  (Weds., April 11, 2007):  A21.

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    Source of graphic:  online version of the WSJ article cited below.

For awhile, during the Clinton administration, many Democratic economists, such as Alan Blinder, seemed to solidly support free trade as an engine for economic growth.  But now several Democratic economists, such as Blinder as described in the excerpt below, seem to be returning to the usual Democratic protectionist policies.

If the goal is economic progress and growth, such policies remain ill-advised, no matter how effective they are at helping Democrats to win elections.  To whit:  Ed Leamer provides the arguments and evidence against worries about outsourcing in his long, but excellent, review of Thomas Friedman's hand-wringing in The World is Flat.  (See way below for the reference.)

(p. A14)  Mr. Blinder's job-loss estimates in particular are electrifying Democratic candidates searching for ways to address angst about trade. "Alan, because of his stature, provided a degree of legitimacy to what many of us had come to feel anecdotally -- that the anxiety over outsourcing and offshoring was a far larger phenomenon than traditional economic analysis was showing," says Gene Sperling, an adviser to President Clinton and, now, to Hillary Clinton. Her rival, Barack Obama, spent an hour with Mr. Blinder earlier in this year.

Mr. Blinder's answer is not protectionism, a word he utters with the contempt that Cold Warriors reserved for communism. Rather, Mr. Blinder still believes the principle British economist David Ricardo introduced 200 years ago: Nations prosper by focusing on things they do best -- their "comparative advantage" -- and trading with other nations with different strengths. He accepts the economic logic that U.S. trade with large low-wage countries like India and China will make all of them richer -- eventually. He acknowledges that trade can create jobs in the U.S. and bolster productivity growth.

But he says the harm done when some lose jobs and others get them will be far more painful and disruptive than trade advocates acknowledge. He wants government to do far more for displaced workers than the few months of retraining it offers today. He thinks the U.S. education system must be revamped so it prepares workers for jobs that can't easily go overseas, and is contemplating changes to the tax code that would reward companies that produce jobs that stay in the U.S.

His critique puts Mr. Blinder in a minority among economists, most of whom emphasize the enormous gains from trade. "He's dead wrong," says Columbia University economist Jagdish Bhagwati, who will debate Mr. Blinder at Harvard in May over his assertions about the magnitude of job losses from trade. Mr. Bhagwati says that in highly skilled fields such as medicine, law and accounting, "If we do a real balance sheet, I have no doubt we're creating far more jobs than we're losing."

. . .

He was silent when his former Princeton student, N. Gregory Mankiw, then chairman of President Bush's Council of Economic Advisers, unleashed a political firestorm by reciting standard theory but appearing indifferent to pain caused to those whose jobs go overseas. "Does it matter from an economic standpoint whether items produced abroad come on planes and ships or over fiber optic cables?" Mr. Mankiw said at a February 2004 briefing. "Well, no, the economics is basically the same....More things are tradable than...in the past, and that's a good thing."

Mr. Blinder says he agreed with Mr. Mankiw's point that the economics of trade are the same however imports are delivered. But he'd begun to wonder if the technology that allowed English-speaking workers in India to do the jobs of American workers at lower wages was "a good thing" for many Americans. At a Princeton dinner, a Wall Street executive told Mr. Blinder how pleased her company was with the securities analysts it had hired in India. From New York Times' columnist Thomas Friedman's 2005 book, "The World is Flat," he found anecdotes about competition to U.S. workers "in walks of life I didn't know about."

Mr. Blinder began to muse about this in public. At a Council on Foreign Relations forum in January 2005 he called "offshoring," or the exporting of U.S. jobs, "the big issue for the next generation of Americans." Eight months later on Capitol Hill, he warned that "tens of millions of additional American workers will start to experience an element of job insecurity that has heretofore been reserved for manufacturing workers."

At the urging of former Clinton Treasury Secretary Robert Rubin, Mr. Blinder wrote an essay, "Offshoring: The Next Industrial Revolution?" published last year in Foreign Affairs. "The old assumption that if you cannot put it in a box, you cannot trade it is hopelessly obsolete," he wrote. "The cheap and easy flow of information around the globe...will require vast and unsettling adjustments in the way Americans and residents of other developed countries work, live and educate their children." (Read that full article.)

. . .

Diana Farrell, head of the McKinsey Global Institute, a pro-globalization think-tank arm of the consulting firm that has done its own analysis of vulnerable jobs, calls Mr. Blinder "an alarmist" and frets about the impact he is having on politicians, particularly the Democrats who see resistance to free trade as a political winner. She insists many jobs that could go overseas won't actually go.

Ms. Farrell says Mr. Blinder's work doesn't take into account the realities of business which make exporting of some jobs impractical or which create offsetting gains elsewhere in the U.S. economy. He counters he is looking further into the future than McKinsey -- 10 or 20 years instead of five -- and expects more technological change than the consultants do "even without the Buck Rogers stuff."

For the full story, see:

DAVID WESSEL and BOB DAVIS.  "JOB PROSPECTS; Pain From Free Trade Spurs Second Thoughts; Mr. Blinder's Shift Spotlights Warnings Of Deeper Downside."  The Wall Street Journal  (Weds., March 28, 2007):  A1 & A14. 

(Note:  ellipses added.)

For Leamer's wonderful riff on why we need not worry about outsourcing, see:

Leamer, Edward E.  "A Flat World, a Level Playing Field, a Small World after All, or None of the Above? A Review of Thomas L. Friedman's the World Is Flat."  Journal of Economic Literature  45, no. 1 (March 2007):  83-126.

  Alan S. Blinder.  Source of photo:  online version of the WSJ article cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

     Source of graphic:  online version of the NYT article cited below.

(p. 1)  TALK to Kenneth Doolittle about General Motors, where he once supervised a team of assembly line workers, and he readily speaks with pride about his job and the self-esteem it provided. “I loved all of it — the people, the work,” he says. “I was in a position finally where people listened to me when I spoke. I wasn’t just a Joe-Nobody. I contributed.”

Talk to Mr. Doolittle a little longer and he gradually describes why he decided to take a buyout from G.M. — joining more than 80,000 Big Three employees in the largest exodus of workers from a single American industry in decades.

. . .

The exodus that Mr. Doolittle is joining is voluntary. Some have changed their minds. More than 3,000 workers who signed up over the last year to leave Ford and G.M. subsequently decided to stay. These are, after all, the highest-paying blue-collar jobs left in America. Even so, workers are departing from the auto industry en masse, escaping — as they put it in interviews — increasingly difficult working conditions at companies they fear will desert them.

. . .

(p. 9)  When G.M. decided to close his plant in 2005, Mr. Doolittle’s seniority gave him every right to transfer to a much newer factory right next door, where G.M. is building a popular Cadillac sedan and is likely to do so for as long as Mr. Doolittle might have wanted a job. But he balked because of the change in stature that would accompany the switch.

Since his departure last year, he has struggled to occupy his time. Divorced, with four grown children, he divides his days between an apartment in Lansing and a trailer parked on a small lakefront plot that he owns north of the city. He has typed out on a laptop three novels “about my life experience.” And to make up some of his lost income — his $36,000 pension is 60 percent of his old pay — he works 20 hours a week, at $10 an hour, doing maintenance at Sears stores.

“That is just enough to keep me from watching Jerry Springer every day,” he said. “I don’t want to sit in front of a TV; I’m too young for that.”

. . .

Across America, more than 30 million people have been forced out of jobs since the early 1980s, the Bureau of Labor Statistics reports, and regaining lost incomes has not been easy. Nearly 50 million new jobs have been created over that same period, according to the bureau, so there are always new opportunities but more often than not at lower pay. Among those who have lost work, only a third held new jobs two years later that paid as well as those that were lost, according to the bureau’s surveys of displaced workers. Another third of those displaced were in jobs that paid, on average, 15 to 20 percent less than their previous employment — while the final third had dropped out of the labor force entirely.

The Census Bureau reported a jump in net migration out of Michigan last year: some 42,300 people left, up from 29,700 in 2005. That was far and away the largest outflow from the state since 1984, during the Rust Belt crisis, census data show.  . . .

. . .

The exodus is reminiscent of the Dust Bowl migration from the prairie states in the 1930s, when unemployed farmers gave up and trekked west to California. The Dust Bowl migration, on its face, was much more brutal — the number of displaced Okies, as they were called, was far greater than the current number of departing auto workers, and there were not corporate and public subsidies at the time to soften the hardship.

“The Okies did not know whether they would get to their destination before they starved to death,” said Daniel Luria, an economist at the Michigan Manufacturing Technology Center. “The labor market prospects for the auto workers are not good, but they have assets. They are not in danger of immediately falling into poverty.”

For the full story, see:

UCHITELLE, LOUIS .  "The End of the Line as They Know It."  The New York Times, Section 3   (Sun., April 1, 2007):  1, 9, & 10.

(Note:  ellipses added.)

Novelist Kenneth Doolittle.  Source of photo:  screen capture from online version of the NYT article cited above.

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   Source of graphic:  online version of the NYT article cited below.

FROM issues of crime and punishment to the proper domain of the spiritual and temporal powers, Americans and Europeans have long cast a skeptical eye at one another across the Atlantic.

Perhaps nowhere has the gaze been more jaundiced than in the area of work. From the perspective of Western Europe, American employers have a relatively free hand to hire and fire, coupled with meager and short-lived unemployment benefits. America’s deregulated labor markets seem to provide hardly any safety net when it comes to economic dislocations of workers.

Americans, by contrast, have found it hard to resist a touch of schadenfreude at the joblessness stoked by European governments’ intervention in labor markets, with rules on everything from wages to layoffs, on top of generous unemployment benefits.

For the full commentary, see: 

EDUARDO PORTER.  "Economic View; A Bridge Over the Atlantic, in Labor Policy."  The New York Times, Section 3  (Sun., April 1, 2007):  5.

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   A "local" Phoenix talk show host, Joe Crummey, broadcasts from his home in California.  Source of photo:  online version of the NYT article cited below.

The Internet is sometimes viewed as labor's enemy because it reduces the cost of outsourcing.  But it goes both ways:  labor can offer its services to a wider world because of the Internet. 

LOS ANGELES, March 27 — When people hear the radio host Joe Crummey on Phoenix’s popular KFYI murmur sarcastically, “We don’t have enough human rights activists in this town,” they know he means Phoenix.

Ditto for when he offers to assess the “east side west side traffic right now.”

As it turns out, Mr. Crummey, whose favorite talk show topics include immigration, patriotism and Arizona politics, is indeed reporting for duty in the valley. Just not in the Phoenix Valley.

Rather, it is here, in the San Fernando Valley, where he works via the Internet from his home on the top of a hill in the Studio City section of Los Angeles. Listeners in Phoenix are none the wiser.

Armed with four computers, a digital recorder, a constant stream of Fox News and a professional microphone, Mr. Crummey holds court for three hours each weekday during Phoenix’s drive-home time slot — from about 400 miles away in a neighboring state.

For the full story, see:

JENNIFER STEINHAUER.  "Live, From Station KFYI in ...Well, That’s Complicated."  The New York Times  (Weds., March 28, 2007):  A11.

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   A break lounge at Google's Manhattan offices.  Source of photo:  online version of the NYT article cited below.

You could be forgiven for not knowing that a satellite Google campus is growing in downtown Manhattan. There is no Google sign on the building, and it’s hard to catch a glimpse of a Googler, as employees call themselves, on the street because the company gives them every reason to stay within its candy-colored walls.

From lava lamps to abacuses to cork coffee tables, the offices may as well be a Montessori school conceived to cater to the needs of future science-project winners.

. . .

“These are power geniuses,” said Jane Risen, a statuesque brunette who works in training for the sales staff and is considered among the best dressed on campus — she was wearing a brown blazer from the Gap. “If they don’t have the same social skill or style sense, they’re extremely interesting people or else they don’t get hired.”

. . .

The strategy of keeping employees happy and committed to spending endless hours on campus seems to be working. Richard Burdon, 37, an engineer who joined Google two years ago, has been staying past midnight to prepare for the introduction of a project. (Google’s Manhattan engineers have been responsible for developing Google Maps and are working on some 100 other projects.)

“Google is about as interesting as starting your own startup because you can really follow your own ideas,” said Mr. Burdon, who previously worked for Goldman Sachs, Sony and I.B.M. The only time he could remember leaving the office during the workday was to buy a friend a birthday present.

For the full story, see: 

DEBORAH SCHOENEMAN.  "Can Google Come Out to Play?"  The New York Times  (December 31, 2006).

(Note:  ellipses added.)

   Work and non-work at Google's Manhattan offices.  Source of photos:  online version of the NYT article cited above.

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Source of graphic:  online version of the WSJ article cited below.

'The term 'income inequality' is a bit misleading because it suggests in a somewhat pejorative way that the rich are getting richer at the expense of the poor," Edward Lazear, a Stanford University labor economist who is now chairman of Mr. Bush's Council of Economic Advisers, said last May. While it's a concern that some people are being left behind, he said, "There is some good news...most of the inequality reflects an increase in returns to 'investing in skills.'"

Mr. Lazear has nurtured his relationship with Mr. Bush. His office is decorated with photos of the two mountain biking. When he gave Mr. Bush a copy of the Economic Report of the President this year, Mr. Bush gave him a bear hug and kissed the top of his bald head, according to people who were present.

For the full story, see:

GREG IP and JOHN D. MCKINNON.  "THE OUTLOOK; Bush Reorients Rhetoric, Acknowledges Income Gap."  The Wall Street Journal  (Mon., March 26, 2007):  A2.

   Source of graphic:  online version of the WSJ article cited above.

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Call them silver entrepreneurs or senior entrepreneurs or third-age entrepreneurs. They are people who do not want -- or are not financially able -- to idle away their retirement years and, instead, opt to start a business.

. . .  

The numbers of retired people rejecting the unfettered leisure that has been the American model since the 1940's in favor of starting up a small business are not exact. Federal government data suggests there are now at least three million entrepreneurs who are 55 and over -- up one-third from the number counted in 2000.

''It's like this sea swell that has been under the radar,'' said Linda Wiener, the aging issues expert for Monster.com, the jobs search Web site. ''There are people who don't want to work an hourly job, and are wondering what are they going to do for the next 30 years?''

A majority of 800 workers surveyed last year for the John J. Heldrich Center for Workforce Development at Rutgers University indicated in their responses that traditional retirement was obsolete. Two-thirds expect to work after 55, and about 15 percent wanted to start their own business after they retired, the survey found.

For the full story, see: 

Elizabeth Olson.  "Small Business; In Life's Second Act, Some Take On A New Role: Entrepreneur."  The New York Times  (Thurs., September 28, 2006):  C6.

(Note:  ellipsis added.)

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Cultural history background for the young:  at the beginning of every installment of the "Rowan and Martin Laugh-In" TV comedy review (circa 1968-1973), someone would sarcastically intone that the show was being broadcast from "beautiful downtown Burbank." 

Excerpted below is Daniel Pink's incredible conversation with a Burbank city clerk:

(p. 199)  What led me to this 100,000-person city in California's San Fernando Valley---past the fish fountains, to the steps of City Hall---was a rumor I'd heard that Burbank puts free agents in jail.

. . .

(p. 200)  After fifteen minutes of probing, here's the gist of what he tells me:  If I want to write from a home office in Burbank, I first must apply for a home occupation license.  The city would examine my application, and then come to my house to inspect the office from which I intended to work.  Once the inspector deemed my home office safe for writing and unthreatening to my neighbors, I could begin earning a living, my workplace now officially blessed by the city.

But that was only the beginning.  I'd have to pay a special tax.  And I'd have to abide by the strictures of Burbank Municipal Code Section 31-672---which, among other things, said:  My office couldn't be larger than four hundred square feet or 20 percent of my home's square footage.  I couldn't put my home office in a "garage, carport, or any other area required or designated for the parking of vehicles."  The only "materials, equipment, and/or tools" I could use to do my work were things used by "a normal household."  I couldn't use my home office to repair cars, sell guns, or operate a kennel.  And the only folks who could ever work with me in the office were people who lived with me.

That last provision alarmed me.

Pointing to Section 31-672(c), I ask, "Does this mean I can't have a meeting at my house?"

"Yep," says the clerk.  "You'd have to somewhere else."

"Let me get this straight," I say.  "Let's say I'm a writer collaborating on a screenplay.  If my collaborator comes over and we work on the screenplay together, that's against the law?  It's a misdemeanor to have a meeting at your house?"

"Yep," says the clerk.

"Isn't California a 'three strikes and you're out' state?"

"Yep."

Burbank, we we have a problem.  I hope it's unlikely that a free agent who has three meetings at her house, and gets caught, prosecuted, and convicted each time, goes to jail for the rest of her life.  But the mere possibility reflects a wider problem with America's legal, policy, and tax regimes.  They were built for a (p. 201) work world that has largely disappeared, and are ill equipped for the new world that has arrived.

Source:

Pink, Daniel H.  Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live.  New York: Warner Business Books, 2001.

(Note:  italics in original; ellipsis added.)

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(p. 161)  These coffee places, most of which didn't even exist ten years ago, had several virtues.  They were always in convenient locations.  They permitted, even welcomed, patrons to sit and talk for several hours.  And they had tables for spreading out my materials and electrical outlets for plugging in my equipment.  In short, they provided a four-hour office rental for the price of a three-dollar latte.

. . .  

(p. 162)  Starbucks and its caffeinated cousins are part of what I call the free agent infrastructure.  The components of this infrastructure, which I'll review in a moment, include copy shops, office supply superstores, bookstore cafés, overnight delivery services, executive suites, and the Internet.  Like America's system of federal highways, the free agent infrastructures form the physical foundation on which the economy operates.  But unlike the federal highway system, which was planned and paid for by the government, this infrastructure emerged more or less spontaneously.  Like so many other aspects of Free Agent Nation, it is self-organized.  Nobody is in charge of it.  That's why it woks.  It  works so well, in fact, that few people realize that this collection of commercial Establishments even constitutes an infrastructure.

Source:

Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

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(p. 53)  Recall the story of Netscape, once the darling of the New Economy.  Netscape was formed in 1994.  It went public in 1995.  And by 1999, it was gone, purchased by America Online and subsumed into AOL's operation.  Life span:  four years.  Half-life:  two years.  Was Netscape a company---or was it really a project?  Does the distinction even matter?  What matters most is that this short-lived entity put several products on the market, prompted established companies (notably Microsoft) to shift strategies, and (p. 54) equipped a few thousand individuals with experience, wealth, and connections that they could bring to their next project.

And Netscape is not alone.  A University of Texas study found that between 1970 and 1992, the half-life of Texas businesses shrank by 50 percent.  Likewise, a Federal Reserve analysis of New York companies found that the type of firm that created the most new jobs (microbusineses with fewer than ten employees) often had the shortest life span.  The life cycle of companies has been that jobs, too, have diminishing half-lives.  Ten years ago, nobody ever heard of a Web developer.  Ten years from now, nobody may remember Web developers.

Most important, at the very moment the longevity of companies is shrinking, the longevity of individuals is expanding.  Unlike Americans in the twentieth century, most of us today can expect to outlive just about any organization for which we work.  It's hard to imagine a lifelong job at an organization whose lifetime will be shorter--often much shorter--than your own.

Source:

Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

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   Source of book image:  http://g-ec2.images-amazon.com/images/G/01/ciu/10/ae/8ca3d250fca0f5b077de4010.L.jpg

Daniel Pink's 2001 Free Agent Nation has been on my to-read list since it first came out.  It finally made it to the top---at least in the author-abridged two-cassette incarnation.

I always found the basic idea appealing:  the appeal of the freedom of working for yourself---Harry Browne's How I Found Freedom in an Unfree World, but for real. 

But I also was a little anxious; fearful that the book would place too much emphasis on seeming flash-in-the-pan dot.com labor market phenomena and rhetoric.

To my relief, I can report that little in the book depends on the dot.com over-exuberance.  The internet appears, as an infrastructure enabler, but the free agents are mainly doing more standard stuff, but doing it from a home office, and doing it project-by-project.

Pink is not an academic, which has pros and cons.  One of the pros is that his prose is pleasant.  Another is that he has an ear for a good story and a telling example.  Perhaps a con is that he often hasn't had the time, or the interest, (or maybe the data just don't exist) to often follow-up with how widespread his examples are.

Still there's some good stuff here.  Like suggesting that free agency is what you would expect more of us to pursue, as we work our way up Abraham Maslow's hierarchy of human needs.  (In college I was enthused enough about Maslow that I was thinking of minoring in psychology, until they told me how many hours I would have to run rats through mazes before I'd be allowed to open a Maslow book.)

And there's plausible discussion about how in some ways free agency is more secure than a regular job (multiple clients means diversification).  And there is more freedom to control your own time, and be your authentic self.

There's also some good discussion of how the government makes free agency harder through health care and taxation policies.

All-in-all, this book helps make the case that labor can thrive in a Schumpeterian world of creative destruction.

Reference to the book:

Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of book image:  http://g-ec2.images-amazon.com/images/G/01/ciu/10/ae/8ca3d250fca0f5b077de4010.L.jpg

Daniel Pink's 2001 Free Agent Nation has been on my to-read list since it first came out.  It finally made it to the top---at least in the author-abridged two-cassette incarnation.

I always found the basic idea appealing:  the appeal of the freedom of working for yourself---Harry Browne's How I Found Freedom in an Unfree World, but for real. 

But I also was a little anxious; fearful that the book would place too much emphasis on seeming flash-in-the-pan dot.com labor market phenomena and rhetoric.

To my relief, I can report that little in the book depends on the dot.com over-exuberance.  The internet appears, as an infrastructure enabler, but the free agents are mainly doing more standard stuff, but doing it from a home office, and doing it project-by-project.

Pink is not an academic, which has pros and cons.  One of the pros is that his prose is pleasant.  Another is that he has an ear for a good story and a telling example.  Perhaps a con is that he often hasn't had the time, or the interest, (or maybe the data just don't exist) to often follow-up with how widespread his examples are.

Still there's some good stuff here.  Like suggesting that free agency is what you would expect more of us to pursue, as we work our way up Abraham Maslow's hierarchy of human needs.  (In college I was enthused enough about Maslow that I was thinking of minoring in psychology, until they told me how many hours I would have to run rats through mazes before I'd be allowed to open a Maslow book.)

And there's plausible discussion about how in some ways free agency is more secure than a regular job (multiple clients means diversification).  And there is more freedom to control your own time, and be your authentic self.

There's also some good discussion of how the government makes free agency harder through health care and taxation policies.

All-in-all, this book helps make the case that labor can thrive in a Schumpeterian world of creative destruction.

Reference to the book:

Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of book image:  http://g-ec2.images-amazon.com/images/G/01/ciu/10/ae/8ca3d250fca0f5b077de4010.L.jpg

Daniel Pink's 2001 Free Agent Nation has been on my to-read list since it first came out.  It finally made it to the top---at least in the author-abridged two-cassette incarnation.

I always found the basic idea appealing:  the appeal of the freedom of working for yourself---Harry Browne's How I Found Freedom in an Unfree World, but for real. 

But I also was a little anxious; fearful that the book would place too much emphasis on seeming flash-in-the-pan dot.com labor market phenomena and rhetoric.

To my relief, I can report that little in the book depends on the dot.com over-exuberance.  The internet appears, as an infrastructure enabler, but the free agents are mainly doing more standard stuff, but doing it from a home office, and doing it project-by-project.

Pink is not an academic, which has pros and cons.  One of the pros is that his prose is pleasant.  Another is that he has an ear for a good story and a telling example.  Perhaps a con is that he often hasn't had the time, or the interest, (or maybe the data just don't exist) to often follow-up with how widespread his examples are.

Still there's some good stuff here.  Like suggesting that free agency is what you would expect more of us to pursue, as we work our way up Abraham Maslow's hierarchy of human needs.  (In college I was enthused enough about Maslow that I was thinking of minoring in psychology, until they told me how many hours I would have to run rats through mazes before I'd be allowed to open a Maslow book.)

And there's plausible discussion about how in some ways free agency is more secure than a regular job (multiple clients means diversification).  And there is more freedom to control your own time, and be your authentic self.

There's also some good discussion of how the government makes free agency harder through health care and taxation policies.

All-in-all, this book helps make the case that labor can thrive in a Schumpeterian world of creative destruction.

Reference to the book:

Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of book image:  http://g-ec2.images-amazon.com/images/G/01/ciu/10/ae/8ca3d250fca0f5b077de4010.L.jpg

Daniel Pink's 2001 Free Agent Nation has been on my to-read list since it first came out.  It finally made it to the top---at least in the author-abridged two-cassette incarnation.

I always found the basic idea appealing:  the appeal of the freedom of working for yourself---Harry Browne's How I Found Freedom in an Unfree World, but for real. 

But I also was a little anxious; fearful that the book would place too much emphasis on seeming flash-in-the-pan dot.com labor market phenomena and rhetoric.

To my relief, I can report that little in the book depends on the dot.com over-exuberance.  The internet appears, as an infrastructure enabler, but the free agents are mainly doing more standard stuff, but doing it from a home office, and doing it project-by-project.

Pink is not an academic, which has pros and cons.  One of the pros is that his prose is pleasant.  Another is that he has an ear for a good story and a telling example.  Perhaps a con is that he often hasn't had the time, or the interest, (or maybe the data just don't exist) to often follow-up with how widespread his examples are.

Still there's some good stuff here.  Like suggesting that free agency is what you would expect more of us to pursue, as we work our way up Abraham Maslow's hierarchy of human needs.  (In college I was enthused enough about Maslow that I was thinking of minoring in psychology, until they told me how many hours I would have to run rats through mazes before I'd be allowed to open a Maslow book.)

And there's plausible discussion about how in some ways free agency is more secure than a regular job (multiple clients means diversification).  And there is more freedom to control your own time, and be your authentic self.

There's also some good discussion of how the government makes free agency harder through health care and taxation policies.

All-in-all, this book helps make the case that labor can thrive in a Schumpeterian world of creative destruction.

Reference to the book:

Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of book image:  http://g-ec2.images-amazon.com/images/G/01/ciu/10/ae/8ca3d250fca0f5b077de4010.L.jpg

Daniel Pink's 2001 Free Agent Nation has been on my to-read list since it first came out.  It finally made it to the top---at least in the author-abridged two-cassette incarnation.

I always found the basic idea appealing:  the appeal of the freedom of working for yourself---Harry Browne's How I Found Freedom in an Unfree World, but for real. 

But I also was a little anxious; fearful that the book would place too much emphasis on seeming flash-in-the-pan dot.com labor market phenomena and rhetoric.

To my relief, I can report that little in the book depends on the dot.com over-exuberance.  The internet appears, as an infrastructure enabler, but the free agents are mainly doing more standard stuff, but doing it from a home office, and doing it project-by-project.

Pink is not an academic, which has pros and cons.  One of the pros is that his prose is pleasant.  Another is that he has an ear for a good story and a telling example.  Perhaps a con is that he often hasn't had the time, or the interest, (or maybe the data just don't exist) to often follow-up with how widespread his examples are.

Still there's some good stuff here.  Like suggesting that free agency is what you would expect more of us to pursue, as we work our way up Abraham Maslow's hierarchy of human needs.  (In college I was enthused enough about Maslow that I was thinking of minoring in psychology, until they told me how many hours I would have to run rats through mazes before I'd be allowed to open a Maslow book.)

And there's plausible discussion about how in some ways free agency is more secure than a regular job (multiple clients means diversification).  And there is more freedom to control your own time, and be your authentic self.

There's also some good discussion of how the government makes free agency harder through health care and taxation policies.

All-in-all, this book helps make the case that labor can thrive in a Schumpeterian world of creative destruction.

Reference to the book:

Pink, Daniel H. Free Agent Nation: How America's New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

In the excerpt below, the WSJ summarizes an article that appeared in Forbes on March 12, 2007.  The summarized study implies that those who are innately conscientious end up being rewarded with higher income.  I hope it is true.  My guess is that the world comes closer to working that way under capitalist institutions, than under other economic systems.  (Note that this study was done by the United States Bureau of Labor Statistics, which implies that we're talking about what happens in the United States.)

The insight originates in 1979, when the Bureau of Labor Statistics paid 12,700 young people $50 to take a range of tests, one of which required a simple code to be deciphered. The BLS has since surveyed the test takers regularly. Going through the data, Carmit Segal, a postdoctoral fellow at Harvard Business School, found a strong relationship between someone's score in the coding test and his or her income over 20 years later, even taking into account differences in IQ.

Ms. Segal argues those who did well on the test were driven entirely by an innate conscientiousness, because candidates had nothing to gain from doing well on it.

For the full story, see: 

"The Informed Reader; Workplace; Job Test That Predicts Effort Gets Help From Professors."  The Wall Street Journal  (Mon., February 26, 2007):  B6.

(Note:  the online version has a different subtitle:  "A Tricky Test Could Reveal Job Applicants' Work Ethic")

Posted by Art Diamond at 1:01 AM | Permalink | Comments (2)

(p. A1)  JUCHITÁN, Mexico -- For as long as anyone can remember, shopping for many items in this Zapotec Indian town meant lousy selection and high prices. Most families live on less than $4,000 a year. Little wonder that this provincial corner of Oaxaca, historically famous for keeping outsiders at bay, welcomed the arrival of Wal-Mart.

Back home in the U.S., Wal-Mart Stores Inc. is known not only for its relentless focus on low prices but also for its many critics, who assail it for everything from the wages it pays to its role in homogenizing American culture. But while its growth in the U.S. is slowing, Wal-Mart is striking gold south of the border, largely free from all the criticism. Like Wal-Mart fans in less affluent parts of America, most shoppers in developing countries are much more concerned about the cost of medicine and microwaves than the cultural incursions of a multinational corporation.

That fact is making Wal-Mart a dominant force in Latin America. Wal-Mart de México SAB, a publicly traded subsidiary, is not only the biggest private employer in Mexico -- it's the biggest single retailer in Latin America. Sales at Wal-Mex, as the Mexican unit is called, are forecast to rise 16% to $21 billion this year, representing a quarter of Wal-Mart's foreign revenue. International revenue soared 30% to $77.1 billion, accounting for 22% of Wal-Mart's sales, in the fiscal year ended Jan. 31. Wal-Mex profits are forecast to grow 20% to $1.3 billion this year.

. . .

(p. A14)  In Mexico, Wal-Mart has been a counterweight to the powers that control commerce. One of the most closed economies in the world until the late 1980s, Mexico was dominated for decades by a handful of big grocers and retailers. All were members of a national retailing association called ANTAD, and cutthroat competition was taboo. At the local level, towns are still hostage to local bosses, known here as caciques, the Indian word for local strongmen who control politics and commerce.

. . .

In recent months, as rising prices for U.S. corn pushed up the price of Mexico's corn tortilla, a staple for millions of poor, Wal-Mart could keep tortilla prices largely steady because of its long-term contracts with corn-flour suppliers. The crisis turned into free advertising for Wal-Mart, as new shoppers lined up for the cheaper tortillas.

Wal-Mart also overcame a Juchitán cacique, or local boss: Héctor Matus, a trained doctor who goes by La Garnacha, the name for a fried tortilla snack popular in town. Dr. Matus, 55, owns six pharmacies, stationery stores and general stores. He has also held an array of political posts, including Juchitán mayor and state health minister. As town mayor from 2002 to 2004, he says he blocked a national medical-testing chain from opening in town because it meant low-price competition to local businessmen doing blood work.

But Dr. Matus couldn't persuade local and state officials to block Wal-Mart, and he is feeling the pinch. Sales are off 15% at his stores since Wal-Mart arrived, and he is now lowering prices in response. Even so, he's still more expensive. A box of Losec stomach medicine costs 80 pesos ($7.30) at one of Dr. Matus's stores, marked down from 86 pesos. The price at Wal-Mart is 77 pesos ($7.20).

Dr. Matus isn't happy about the competition. "I could still kick them out of town, because I know how to mobilize people," he said, sitting in his living room surrounded by pictures of him with leading Mexican politicians dating back to the 1970s. Despite his bravado, town officials say Wal-Mart is staying. "The ones who have benefited the most [from Wal-Mart] are the poorest," says Feliciano Santiago, the deputy mayor. "I hope another one comes."

. . .

Gisela López, the 31-year-old head of billing at the Juchitán store, benefited from the retailer's system of promoting from within. Raised by her uneducated, Zapotec-speaking grandparents, Ms. López earned a computer degree at Juchitán's small technical college and then left for the booming northern city of Monterrey in search of opportunity.

Lacking connections, she couldn't find the office job she dreamed about, and took a job at one of Wal-Mart's stores. After three months, Ms. López made cashier supervisor, and later moved over to the billing department. When Wal-Mart opened a store in Juchitán, Ms. López jumped at the chance to move home -- and was promoted to billing chief in the process.

"It's a very different place to work, because you can succeed by your own effort," says Ms. López, whose $12,000-a-year salary now puts her in Mexico's middle class.

Ms. López's story of economic mobility is a rare one. Most of her childhood friends don't have steady jobs, she said. The success stories are friends who inherited jobs from their parents at the state oil company's big refinery in Salina Cruz, about an hour away.

For the full story, see:

JOHN LYONS.  "SOUTHERN HOSPITALITY; In Mexico, Wal-Mart Is Defying Its Critics; Low Prices Boost Its Sales and Popularity In Developing Markets."   The Wall Street Journal  (Mon., March 5, 2007):  A1 & A14. 

(Note:  ellipses added.)

Source of map and images:  online version of the WSJ article cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   A Kodak digital production printer.  Source of photo:  online version of the NYT article cited below. 

Digital photography replacing film technology is an example of Schumpeter's process of creative destruction, and maybe also of the gradual growth of a disruptive technology.  Leading incumbent firms frequently have trouble prospering, or even surviving, during such a change.  Both the Wall Street Journal and the New York Times had articles on the latest news from Kodak.  Here is an excerpt from the New York Times version:  

On Tuesday, as the Eastman Kodak Company unveiled its long-anticipated consumer inkjet printer in New York, the mood at the company’s Rochester headquarters could not have been more positive.

“People know we are back on the offensive,” said Frank Sklarsky, Kodak’s chief financial officer.  “And that’s making them a lot more charged up about coming to work.”

But yesterday, Kodak gave them reason again to feel depressed.  The company said it would cut 3,000 more jobs this year, on top of the 25,000 to 27,000 it had already said would be gone by the end of 2007.  At that rate, Kodak will end the year with about 30,000 employees, half the number of just three years ago and a fraction of the 145,000 people it employed in 1988, when its brand was synonymous with photography.

Kodak executives insist that the new cuts do not indicate any snags in the continuing struggle to transform itself from a film-based company into a major competitor in digital imagery.  And analysts, too, say the cuts are inevitable, and probably healthy.

For the full NYT story, see: 

CLAUDIA H. DEUTSCH.  "Shrinking Pains at Kodak."  The New York Times   (Fri., February 9, 2007): C1 & C4.

For the related WSJ story, see: 

WILLIAM M. BULKELEY and ANGELA PRUITT.  "Kodak Sees More Job Cuts, Higher Restructuring Costs."  The Wall Street Journal  (Fri., February 9, 2007):  B4.

     Source of the first and third graphic:  the WSJ article cited above.  Source of the second graphic:  the NYT article cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Source of graphic:  online version of the NYT article cited below. 

It would be interesting to explore why the gap in growth rates was smaller last year than previously.  Was it a statistical fluke?  Or did the U.S. labor market become somewhat less flexible?  Or maybe the job market in Europe and Japan became somewhat more flexible? 

FOR more than a decade, many American economists have pointed to Europe and Japan as prima facie evidence that layoffs in the United States are a good thing. The economies in those countries were not nearly as robust as this country’s. And the reason? Too much job security in Europe and Japan, the economists said.

American employers, in sharp contrast, have operated with much more “flexibility.” Hiring and firing at will, they shift labor from where it is not needed to where it is needed. If Eastman Kodak is struggling to establish itself in digital photography, then Kodak downsizes and labor moves to industries and companies that are thriving — software, for example, or health care, or Wal-Mart Stores or Caterpillar.

This shuffling out of one job and into another shows up in the statistics as nearly full employment. Never mind that the shuffling does not work as efficiently as the description implies or that many of the laid-off workers find themselves earning less in their next jobs, an income roller coaster that is absent in Europe and Japan. A dynamic economy leaves no alternative, or so the reasoning goes among mainstream economists.

“Trying to prevent this creative destruction from happening is a recipe for less economic growth and less productivity,” said Barry Eichengreen, an international economist at the University of California, Berkeley.

For the full commentary, see: 

LOUIS UCHITELLE.  "ECONOMIC VIEW; Job Security, Too, May Have a Happy Medium."  The New York Times, Section 3 (Sun., February 25, 2007):  5.

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          In Mount Vernon, New York, Maria de Oliveira (center) waited three months for an opening in this English class.  Source of photo:  online version of the NYT article quoted and cited below.

In the United States, other things equal, those who speak English earn more than those who do not.  So there is a substantial incentive for immigrants to learn English, even in the absence of the much-debated proposed laws to mandate English in various ways.  Consider the evidence in the article excerpted below: 

(p. A1)  MOUNT VERNON, N.Y. — Two weeks after she moved here from her native Brazil, Maria de Oliveira signed up for free English classes at a squat storefront in this working-class suburb, figuring that with an associate’s degree and three years as an administrative assistant, she could find a good job in America so long as she spoke the language.

The woman who runs the classes at Mount Vernon’s Workforce and Career Preparation Center added Ms. Oliveira’s name to her pink binder, at the bottom of a 90-person waiting list that stretched across seven pages. That was in October. Ms. Oliveira, 26, finally got a seat in the class on Jan. 16.

“I keep wondering how much more I’d know if I hadn’t had to wait so long,” she said in Portuguese.

. . .

Luis Sanchez, 47, a Peruvian truck driver for a beer distributor in New Brunswick, has been in this country (p. C14) 10 years — and on the waiting list for English classes in Perth Amboy five months. “You live from day to day, waiting to get the call that you can come to class,” Mr. Sanchez said in Spanish, explaining that he knew a little English but wanted to improve his writing skills so he could apply for better jobs. “I keep on waiting.”

. . .

In Newburgh, N.Y., an Orange County town where one in five of the 29,000 residents are immigrants, Blanca Saravia has amassed an impressive portfolio of odd jobs since arriving from Honduras in 2004: gas station attendant, office janitor, cook’s helper, and, for the last 14 months, packager at a local nail-polish factory. Speaking in her native Spanish, Ms. Saravia said that she has been able to get by with co-workers’ translating, but that “when the boss gives orders, I don’t understand.”

. . .

. . .   Ahmed Al Saidi, 49, who works at a gas station and moved from Yemen in 1994, said in halting English that he wants to learn the language “for better work and to talk to people when I go to the store.”

Ms. Oliveira, the immigrant from Brazil, said she still knows too little English to venture into the marketplace; her husband, who is American born and supports the couple financially, encouraged her to enroll in the classes, held five mornings a week.

“I hope that when I’m speaking a little better, I’ll be able to find a job where I can use the English I learned here and the skills I have from back home,” she said in Portuguese. “When I was on the waiting list, there were times I thought this time would never come.” 

For the full story, see: 

FERNANDA SANTOS.  "Demand for English Lessons Outstrips Supply."  The New York Times  (Tues., February 27, 2007):  A1 & C14.

(Note:  ellipses added.)

  Source of graphic:  online version of the NYT article quoted and cited above.

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We went to see "The Bridge to Tarabithia" this afternoon (2/25/07), which I thought was a sad, but good, movie aimed at older children, but with enough plot and enough characters to care about, to be of interest to adults too.

I heard a quote in the movie that I liked and I don't remember having heard before.  It's source was given as Teddy Roosevelt, who is not one of my favorite presidents, because of his efforts to increase the size and power of government.  But he wasn't all bad, and he sometimes spoke well:

Far and away the best prize that life offers is the chance to work hard at work worth doing.

 

Theodore Roosevelt, Speech in New York, September 7, 1903 [26th president of US (1858 - 1919)]

Source of quote, and information about quote: http://www.quotationspage.com/quote/2056.html

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   Source of graphic:  online version of the WSJ article quoted and cited below.

(p. A10)  CARACAS, Venezuela -- Oil-rich Venezuela has experienced the kind of economic boom in recent years that should be flush with job opportunities. But an increasing number of professionals, many of them from the oil industry, are looking abroad for work, driven away by President Hugo Chávez's effort to extend state control over the economy, and by inflation verging on 20%.

Since his re-election in December, Mr. Chávez has pursued an agenda of "21st Century Socialism," painting a future of "communal cities" and state-run cooperatives dedicated to production, not profit.

. . .

Still, at the U.S. Embassy call center for visas in Caracas, the lines have been jammed since Mr. Chávez announced in early January the nationalization of the electricity industry and Venezuela's largest telecommunications firm. "It doubled practically overnight," said a U.S. diplomat.

The number of Venezuelans receiving U.S. legal permanent residence more than doubled from 2000 to 2005, when 10,870 got their green cards. In that period the overall number of green cards increased by a third. During that period the number of Venezuelan-born U.S. residents increased 42%, to 151,743, according to the U.S. Census Bureau.

. . .

Any opposition-minded oil workers still left at PdVSA face a difficult environment. During the presidential campaign last year, PdVSA President Rafael Ramirez told company executives to join Mr. Chávez's political movement or hit the road. In 2003, Mr. Chávez sacked around 20,000 PdVSA staffers -- about half the company's work force -- for walking off the job, calling them "terrorists." A majority of them were the managers, accountants and field engineers who turned the state oil venture into a world-class oil company during a period of robust expansion in the 1990s.

Many found work elsewhere, including in Mexico, Canada and Saudi Arabia, at a time of high demand for experienced oil workers.

The lost expertise has taken a toll on PdVSA, the country's largest single employer. Its share of the global market for crude oil supply is shrinking, and accidents and outages are on the rise. Analysts say the cost to PdVSA of producing a barrel of oil has nearly doubled in the past five years to more than $4.50.

For the full story, see: 

PETER MILLARD.  "Professionals Exit Venezuela; Chávez's Grip on Power Drives Out Oil Experts; Support Hugo or You Go."  The Wall Street Journal  (Thurs., February 15, 2007):  A10.

(Note:  ellipses added.)

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   Manuel and mother Mercedes of the entrepreneurial Miranda family, inspect the corn flatbread called "arepa."  Source of photo:  online version of the NYT article cited below.

Immigrant entrepreneurship contributes to the vitality and dynamism of New York and the nation.  Note the graphic at the bottom of this entry shows that employment increases in the same areas of the city in which immigrant entrepreneurship is thriving.   

Manuel A. Miranda was 8 when his family immigrated to New York from Bogotá. His parents, who had been lawyers, turned to selling home-cooked food from the trunk of their car. Manuel pitched in after school, grinding corn by hand for traditional Colombian flatbreads called arepas.

Today Mr. Miranda, 32, runs a family business with 16 employees, producing 10 million arepas a year in the Maspeth section of Queens. But the burst of Colombian immigration to the city has slowed; arepas customers are spreading through the suburbs, and competition for them is fierce. Now, he says, his eye is on a vast, untapped market: the rest of the country.

. . .

“Immigrants have been the entrepreneurial spark plugs of cities from New York to Los Angeles,” said Jonathan Bowles, the director of the Center for an Urban Future, a private, nonprofit research organization that has studied the dynamics of immigrant businesses that turned decaying neighborhoods into vibrant commercial hubs in recent decades. “These are precious and important economic generators for New York City, and there’s a risk that we might lose them over the next decade.”

A report to be issued by the center today highlights both the potential and the challenge for cities full of immigrant entrepreneurs, who often face language barriers, difficulties getting credit, and problems connecting with mainstream agencies that help businesses grow. The report identifies a generation of immigrant-founded enterprises poised to break into the big time — or already there, like the Lams Group, one of the city’s most aggressive hotel developers, or Delgado Travel, which reaps roughly $1 billion in annual revenues.

In Los Angeles, at least 22 of the 100 fastest-growing companies in 2005 were created by first-generation immigrants. In Houston, a telecommunications company started by a Pakistani man topped the 2006 list of the city’s most successful small businesses.

 But even in those cities and New York, where immigrant-friendly mayors have promoted programs to help small business, the report contends that immigrant entrepreneurs have been overlooked in long-term strategies for economic development.

. . .

Now, some children of the early influx are trying to build on their parents’ success — success that itself has increased the cost of doing business, by driving up rents and creating congestion.

One example is Jay Joshua, a Manhattan company that designs souvenirs and then has them manufactured in Asia and imported. Jay Chung, who arrived from South Korea in 1981 as a graduate student in design, started printing his computer-graphic designs for New York logos and peddling them to local T-shirt shops. His company is now one of the city’s leading suppliers of tourist items, from New York-loving coffee mugs to taxicab Christmas ornaments.

Mr. Chung’s son Joshua, 26, who was 3 when he immigrated, joined the company after studying business management in college, and recently helped land orders for a new line of Chicago souvenirs. But frustration mixes with pride when the Chungs, both American citizens now, discuss the company’s growth.

“It’s really hard to conduct a business over here as a wholesaler,” Mr. Chung said in the company’s West 27th Street showroom, chockablock with samples. “We get a ticket every 20 minutes, no matter what. We need more convenient places with less rent, less traffic.”

Thirty years ago their wholesale district was desolate. Now hundreds of Korean-American importers are there, said Jay Chung, who is a leader of the local Korean-American business association. They face a blizzard of parking tickets and high commercial rents — nearly $20,000 a month for 1,400 square feet, he said.

For the full story, see:

NINA BERNSTEIN. "Immigrant Entrepreneurs Shape a New Economy."  The New York Times  (Tues., February 6, 2007):  C13.

(Note:  the ellipses are added.)

The author of the New York Times article has contributed to a New York Times digital video clip that is based on the article and is entitled "Immigrant Entrepreneurs:  A Tour of One Bustling Ethnic Enclave."

    Entrepreneur father Jay and son Joshua own a firm that supplies New York City souveniers.  Source of photo:  online version of the NYT article cited above.

  Source of graph:  online version of the NYT article cited above.

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  Patrick Logue the former real estate agent and current dog trainer.  Source of photo:  online version of the WSJ article cited below.

Selling homes has turned into a dog-eat-dog business, so Patrick Logue decided to work with some friendlier canines.

Mr. Logue quit his job as a real-estate agent near Fort Myers, Fla., in December. Then he set up shop as a franchisee of the dog-training chain Bark Busters. So far, he says, "I have zero regrets."

. . .

Mr. Logue, a 34-year-old former golf pro, became an agent for the Assist-2-Sell franchise chain in the Fort Myers area about three years ago. He says his commission income was nearly $100,000 in his first year and $180,000 in his second. Then it plunged to $40,000 last year. "Nothing was selling," he says.

For the full story, see:

JAMES R. HAGERTY and ANJALI ATHAVALEY.  "Amid Slump, Real-Estate Agents Hang Up Their Blazers; Housing Downturn Leads To an Industry Shakeout; Seeking Alternative Careers."  The Wall Street Journal  (Weds., February 7, 2007):  B6. 

(Note:  ellipsis added.)

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   Engineer Benedikt Thoma is moving his family to Canada from Germany for a brighter future.  Source of photo:  online verion of the NYT article cited below.

ESCHBORN, Germany, Feb. 3 — Benedikt Thoma recalls the moment he began to think seriously about leaving Germany. It was in 2004, at a New Year’s Day reception in nearby Frankfurt, and the guest speaker, a prominent politician, was lamenting the fact that every year thousands of educated Germans turn their backs on their homeland.

“That struck me like a bolt of lightning,” said Mr. Thoma, 44, an engineer then running his family’s elevator company. “I asked myself, ‘Why should I stay here when the future is brighter someplace else?’ ”

In December, as his work with the company became an intolerable grind because of labor disputes, Mr. Thoma quit and made plans to move to Canada. In its wide-open spaces he hopes to find the future that he says is dwindling at home. As soon as he lands a job, Mr. Thoma, his wife, Petra, and their two teenage sons will join the ranks of Germany’s emigrants.

There has been a steady exodus over the years, but it has recently become Topic A in a land already saddled with one of the most rapidly aging and shrinking populations of any Western nation. With evidence that more professionals are leaving now than in past years, politicians and business executives warn about the loss of their country’s best and brightest.

. . .

. . . , there is plenty of anecdotal evidence that Germany has become less attractive for people in fields like medicine, academic research and engineering. Those who leave cite chronic unemployment, a rigid labor market, stifling bureaucracy, high taxes and the plodding economy — which, though better recently, still lags behind that of the United States.

. . .

In Mr. Thoma’s view, the root of the problem is [that] . . . Germany, . . . , has a “blockage” in its society.

“Germans are so complacent,” he said, sitting at the dining table in his neat-as-a-pin home here. “They don’t want to change anything. Everything is discussed endlessly without ever reaching a solution.”

As an example he cites the stalemate between his family’s firm and its 89 employees. After the firm became unionized, he said, the two sides began bickering over wages and working conditions.

With much of his 80-hour workweeks eaten up by those disputes, Mr. Thoma said he had developed high blood pressure and other ailments. He told his brothers he was burned out and ready to leave. 

For the full story, see:

MARK LANDLER.  "Germany Agonizes Over a Brain Drain."  The New York Times  (Tues., February 6, 2007):  A10.

(Note:  ellipses added.)

     Source of graphic:  online verion of the NYT article cited above.

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   French rock icon Johnny Hallyday.  Source of photo: http://hosted.ap.org/photos/6/6b7deb53-a318-477d-90b7-fb5abe488774-big.jpg

In the dark of winter, the French rock 'n' roll icon Johnny Hallyday has abandoned France to settle in a snow-dusted mountain chalet, joining a scattered flock of superrich tax refugees in serene Switzerland.

Numbering about 3,700, according to Swiss statistics, these millionaire and billionaire exiles are variously coveted and resented in Switzerland, where local governments are competing in what critics scorn as a fierce race to the bottom to lure wealthy foreigners with individually negotiated tax breaks.

''I'm sick of paying, that's all,'' Mr. Hallyday, 63, said in a rebellious outburst to the celebrity magazine Paris Match, which devoted eight pages to his departure. ''I believe that after all the work I have done over nearly 50 years, my family should be able to live in some serenity. But 70 percent of everything I earn goes to taxes.''

The notion of a French symbol decamping to a newly renovated refuge in the town of Gstaad had an incendiary effect on French politics, prompting President Jacques Chirac to express restrained regrets about the rocker's actions.

For the full story, see: 

DOREEN CARVAJAL.  "Swiss Tax Deals Lure the Superrich, but Are They Fair?"  The New York Times, Section 1  (Sun., January 14, 2007):   - B11.

    Hallyday's chalet in Gstaad, Switzerland.  Source of photo: http://www.20minutes.fr/articles/2006/12/20/20061220-people-A-Gstaad-le-chalet-de-Johnny-fait-etrique-pour-une-rock-star.php

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An early free-market economist claims that in a free-market economy, a worker's happiness depends mainly on her own actions:

But whenever property is secure, industry free, and the public burdens moderate, the happiness or misery of the labouring classes depends almost wholly on themselves. Government has there done for them all that it should, and all in truth that it can do. It has given them security and freedom. But the use or abuse of these inestimable advantages is their own affair. They may be either provident or improvident, industrious or idle; and being free to choose, they are alone responsible for the consequences of their choice.

The passage was brought to my attention by an HES Posting from Michael Perelman.  The thread was continued by Torsten Schmidt, and the final information on the pages where the passage may be found, was added by Masazumi Wakatabe.

The reference for the source of the passage is:

McCulloch, J.R.  A Treatise on the Circumstances which Determine the Rate of Wages and the Condition of the Labouring Classes, second edition, corrected and improved, 1854, 16-17.

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   Source of graphic:  online version of the WSJ article cited below.

Silicon Valley's nascent economic recovery gathered steam last year, with the nation's technology capital adding more than 30,000 jobs and showing gains in areas such as average annual wages and household income.

That was the conclusion of an annual report from Joint Venture Silicon Valley, a nonprofit group representing businesses and government agencies in the San Francisco and San Jose, Calif., area.

"Silicon Valley is back and it's rebooting," said Russell Hancock, Joint Venture's president and chief executive. "This is familiar since the Valley has already done it five or six times over its history. It regroups, then reboots."

The report comes as Silicon Valley, which prospered during the dot-com frenzy in the late 1990s, has struggled to remake itself in the wake of the tech crash in 2000. In the years since, the region has experienced job losses and a slowdown in growth at many tech companies. The area began to turn the corner in 2005 when a net gain of 2,000 jobs was recorded, the first time since 2001 that there had been an overall increase in jobs. Start-up activity has also become widespread again, with Internet firms specializing in online video, social networking and "clean technology" springing up.

For the full story, see:

PUI-WING TAM.  "No Longer Down in Silicon Valley Jobs, Wages Show Gains As Bust Fades Further; Small Firms Fuel Rebound."  The Wall Street Journal  (Mon., January 29, 2007):  B5.

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   Source of graphic:  online version of the NYT article cited below.

Union membership dropped sharply last year in the United States, as the percentage of manufacturing workers in unions fell below the percentage of American workers in unions for the first time in modern history.

The Bureau of Labor Statistics reported Thursday that union membership fell by 326,000 in 2006, to 15.4 million workers, bringing the percentage of employees in unions to 12 percent, down from 12.5 percent in 2005. Those figures are down from 20 percent in 1983 and from 35 percent in the 1950s.

Work force experts said the decline in union membership was caused by large-scale layoffs and buyouts in the auto industry and other manufacturing industries, together with the labor movement’s difficulties in organizing nonunion workers fast enough to offset those losses.

For the full story, see: 

STEVEN GREENHOUSE.  "Sharp Decline in Union Members in ’06."  The New York Times (Fri., January 26, 2007):  A11.

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     Bernanke in Omaha addressing the Chamber of Commerce (left) and after receiving a plaque officially appointing him as an "admiral" of the Nebraska Navy (right, ha, ha).  Source of the left photo:   http://www.omaha.com/neo-images/photos/large/ap-nenh10102061909.jpg   Source of the right photo:  online version of the NYT article cited below.

Last week, on 2/6/07, I attended a large Chamber of Commerce luncheon at which Federal Reserve Chair Ben Bernanke was the featured speaker.  The talk was subtle and restrained, but interesting.  Apparently it was one of the first speeches by Bernanke, since becoming chair, to address an economic issue broader than the macro policy issues that the fed usually addresses.  The headlines in the Omaha World-Herald and the Wall Street Journal missed the main point, I think.

The main point was not to criticize the inequality of the United States economy, but to praise its dynamism.  He pointed out the extent to which living standards have improved as a result of that dynamism.  And he wanted mainly to suggest that when we adopt policies aimed at reducing inequality, we be careful to be sure that the policies do not have the unintended consequence of reducing the dynamism. 

In particular, he suggested that much of the inequality was driven by an increasing skill premium, and that the most constructive way to reduce inequality would be to reduce the skill premium by increasing the supply of skilled labor.  This implies that individuals, and government, invest in increasing skills through increased access to community colleges, universities, online education, and the like.

For the full NYT article, see:

"Bernanke Suggests How to Narrow Wage Gap."  The New York Times   (Weds., February 7, 2007):  C13.

For the full WSJ article, see:

DAVID WESSEL.  "Fed Chief Warns of Widening Inequality; Bernanke Urges Steps That Avoid Harm to Economy."  The Wall Street Journal  (Weds., February 7, 2007):  A6.

For the full Omaha World-Herald article, see: 

STEVE JORDON.  "Fed chief says income gap poses problems."  Omaha World-Herald (Wednesday, February 7, 2007):   1D & 2D.

(Note:  the online version of the article had the slightly different title "Growing income gap poses problems, Fed chief says" and is dated 2/6/07.  The article may have first appeared in the paper's evening edition on 2/6/07.  My copy was the morning edition of 2/7/07.)

For the text of Bernanke's "The Level and Distrubution of Economic Well-Being" presentation, see:  http://www.federalreserve.gov/boarddocs/Speeches/2007/20070206/default.htm

   Source of graphic:  online version of the WSJ article cited above.

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   Graphic on optimal savings.  Source of graphic:  online version of the NYT article cited below.

Could it be possible that you are saving too much for your retirement?

. . .

. . . , a small band of economists from universities, research institutions and the government are clearly expressing the blasphemy that many Americans could be saving less than they are being told to by the financial services industry — and spending more — while they are younger. The negative savings rate, they say, is wildly distorted.

According to them, the financial industry, with its ostensibly objective online calculators, overstates how much money someone will need in retirement. Some, in fact, contend that financial firms have a pointed interest in persuading people to save much more than they need because the companies earn fees on managing that money.

The more realistic amount could be as little as half the typical recommendation made by Fidelity, Vanguard or any number of other financial institutions.

For a middle-income couple, that could mean trading $400,000 in retirement money for about $3,000 a year more during prime working years to spend on education or home improvement. “For a middle-class household, that’s a lot of money,” said Laurence J. Kotlikoff, a Boston University economics professor, who is on the forefront of this research into spending and savings, and is selling his own retirement calculator.

. . .

Nevertheless, the loose confederation of well-regarded economists, who have not been working in concert, say their research points to the startling conclusion that many Americans are saving too much, not too little. Indeed, their studies of the savings and spending habits of the generation born between 1931 and 1941 revealed that at least 80 percent had accumulated more than enough wealth for retirement. While they have not studied the baby boom generation as closely, they believe that the greater wealth of that generation should also leave those retirees secure.

A study last October by another group of economists, including two working for the Federal Reserve Board, found 88 percent of retirees age 51 and older had adequate wealth.

“Even the most casual reading of the popular press will have you convinced that Americans are heading like lemmings over a cliff,” said John Karl Scholz, an economics professor at the University of Wisconsin at Madison. “Going into this, I had no idea that we’d find any results anything like this.”

. . .

Mr. Scholz said he and his co-authors of a study, “Are Americans Saving ‘Optimally’ for Retirement?” found oversaving across all economic and education levels and most ethnic or racial groups as well. (It found that Hispanics tended to save less.) Those who were not saving enough were usually missing their target by only a small amount.

The one exception to this optimism involves people who enter retirement single, either because their spouse died early, they divorced, or they never married. The studies found this group did not save enough.

For the full story, see:

DAMON DARLIN. "Your Money; A Contrarian View: Save Less and Still Retire With Enough." The New York Times (Sat., January 27, 2007):  ??.

(Note:  ellipses added.)

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Residential plastic pipe. Source of photo: http://www.omaha.com/index.php?u_pg=46

(p. D1)  The City of Omaha is considering allowing an alternative to copper pipes in residential plumbing, a move the local builders association says could keep new home prices from rising so fast.

. . .

(p.  D2)  "Omaha is kind of unique in not allowing plastic. It's kind of an isolated pocket," said Blas Hernandez, Papillion's chief building official, who also has worked in the Kansas City, Denver, upstate New York and central Nebraska areas.

Mike Lipke, western regional manager for FlowGuard Gold CPVC pipes, agreed. He said Omaha and Chicago stand out among Midwestern cities for not allowing plastic water pipes.

Several people with long tenure in the building industry said they believe Omaha has lagged in adoption of plastics because the material is less labor-intensive to install and organized labor has fought to protect work for its members.

Stephen Andersen, business manager for the 470-member Omaha Plumbers Local 16, said he doesn't think it's necessarily faster to install plastic pipes, and he personally favors copper "because it's such a good product, a proven product."

. . .

With the housing market slowed and copper prices still high, now may be the time to make affordability the most important consideration, said Paul Frazier, president of the Frazier Co. and a member of the Metro Omaha Builders Association's board.

"MOBA is fully behind" the proposed change, President Rocky Goodwin said. Frazier represented MOBA in discussions with the Omaha Plumbing Board.

"We're long overdue for this," Frazier said. "Anything that holds costs down while doing as good or better job is a good thing.

. . .

Lipke, who sells CPVC, said all the model codes and all 50 states approve the use of plastic and plastic has captured two-thirds of the market.

. . .

"People might try it because it's less money, but they won't keep using it if it doesn't work," Lipke said. "It's a good product, and it certainly shouldn't be banned the way it is in Omaha."

For the full story, see: 

DEBORAH SHANAHAN.  "Omaha may lift ban on residential plastic pipe."  Omaha World-Herald (Wednesday, January 24, 2007):  D1 & D2. 

(Note:  ellipses added.)

[Joseph Schumpeter was born on February 8, 1883.]

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

 

The strong bipartisan support for increasing the federal minimum wage to $7.25 an hour from the current $5.15 -- a 40% increase -- is a sad example of how interest-group politics and the public's ignorance of economics can combine to give us laws that manage to be both inefficient and inegalitarian.

An increase in the minimum wage raises the costs of fast foods and other goods produced with large inputs of unskilled labor. Producers adjust both by substituting capital inputs and/or high-skilled labor for minimum-wage workers and, because the substitutes are more costly (otherwise the substitutions would have been made already), by raising prices. The higher prices reduce the producers' output and thus their demand for labor. The adjustments to the hike in the minimum wage are inefficient because they are motivated not by a higher real cost of low-skilled labor but by a government-mandated increase in the price of that labor. That increase has the same misallocative effect as monopoly pricing.

Although some workers benefit -- those who were paid the old minimum wage but are worth the new, higher one to the employers -- others are pushed into unemployment, the underground economy or crime. The losers are therefore likely to lose more than the gainers gain; they are also likely to be poorer people. And poor families are disproportionately hurt by the rise in the price of fast foods and other goods produced with low-skilled labor because these families spend a relatively large fraction of their incomes on such goods. And many, maybe most, of the gainers from a higher minimum wage are not poor. Most minimum-wage workers are part time, and for the majority their minimum-wage income supplements an income derived from other sources. Examples are retirees living on Social Security or private pensions who want to get out of the house part of the day and earn pin money, stay-at-home spouses who want to supplement their spouse's earnings, and teenagers working after school. An increase in the minimum wage will thus provide a windfall to many workers who are not poor.

Some economists deny that a minimum wage reduces employment, though most disagree. And because most increases in the minimum wage have been slight, their effects are difficult to disentangle from other factors that affect employment. But a 40% increase would be too large to have no employment effect; about a tenth of the work force makes less than $7.25 an hour. Even defenders of minimum-wage laws must believe that beyond some point a higher minimum would cause unemployment. Otherwise why don't they propose $10, or $15, or an even higher figure?

A number of countries, including France, have conducted such experiments; the ratio of the minimum wage to the average wage is much higher in these countries than in the U.S. Economists Guy Laroque and Bernard Salanie find that the high minimum wage in France explains a significant part of the low employment rate of married women. Mr. Salanie has argued that the minimum wage also contributes to the dismal employment prospects of young persons in France, including Muslim youths, an estimated 40% of whom are unemployed. 

For the full commentary, see: 

GARY S. BECKER and RICHARD A. POSNER.  "How to Make the Poor Poorer."  The Wall Street Journal (Fri., January 26, 2007):  A11.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

   Barney Frank. Source of photo: http://www.house.gov/frank/welcome.html

Policy-makers are often enthused by the innovation unleashed by Schumpeter's process of creative destruction, but draw back out of fear of the destruction of jobs.  In the passage below, Barney Frank expresses that fear.

I think that there are answers to the fear.  More and better jobs are created, than destroyed; workers can invest in general skills that do not depreciate, and retool the specific skills that do depreciate; and conscientious workers suffer from lack of recognition and upward mobility, when creative destruction is stiffled.  The pain is less than usually thought, and the gain is greater. 

One of the consequences of this separation between economic growth and the well-being of the great majority of citizens is that an increasing number of citizens don't care about economic growth.  Not surprising.  Not only do they not benefit, but in many cases they get the short-term disruptive effects.

I mean, there was a great concept from Joseph Schumpeter of creative destruction in which, as the old economic order is destroyed, resources are freed up for the new order.

Well, increasingly, we have people who see the destruction in their own lives, but don't see that they're going to be part of the new creation.

Source:

Transcript of remarks delivered at the National Press Club on "Wages" by Democratic Representative Barney Frank of Massachusetts, on January 3, 2007.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

Basic price theory seems to imply that raising the minimum wage, will result in greater unemployment.  Almost all economists accepted this conclusion until several years ago, when some empirical results seemed to challenge it.  Now there is active debate. 

Here is the abstract of a relevant, just-published, article in the leading journal in the field of labor economics:

We infer the employment response to a minimum wage change by calibrating a model of employment for the restaurant industry. Whereas perfect competition implies that employment falls and prices rise after a minimum wage increase, the monopsony model potentially implies the opposite. We show that estimated price responses are consistent with the competitive model. We place fairly tight bounds on the employment response, with the most plausible parameter values suggesting that a 10% increase in the minimum wage lowers low-skill employment by 2%-4% and total restaurant employment by 1%-3%.

The article reference is:

Aaronson, Daniel, and Eric French. "Product Market Evidence on the Employment Effects of the Minimum Wage." Journal of Labor Economics 25, no. 1 (Jan. 2007): 167-200.

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  A dental grill, one form of the hip-hop jewelry sometimes called "bling-bling."  Source of image:  http://www.thesmokinggun.com/archive/0410062teeth1.html

If all you want for Christmas is to gild your front teeth, you may have to buy the bling-bling somewhere other than the Gold Plaza II kiosk at Crossroads Mall.

That's because an employee of that shop, Bhavin Dalal, faces a felony charge of practicing dentistry without a license.  He's accused of helping customers fit their teeth for glittering mouthpieces known as grills.

It's the first such case in Nebraska involving the hot hip-hop fashion accessory.  And Dalal and his attorney, James Martin Davis, plan to fight it tooth and nail.

Dalal entered a not guilty plea Friday in Douglas County Court.  Davis blasted the Nebraska Health and Human Services System for its investigation of Dalal and the charge that resulted.

"It's overzealousness on the part of a bunch of bureaucrats" who don't want people to wear grills, Davis said.

For the full story, see:

CHRISTOPHER BURBACH.  "Dental Grill Seller Feels State Law's Bite."  Omaha World-Herald  (Saturday, December 2, 2006):  1A & 2A. 

(Note:  the slightly different online title for the article is:  "State puts bite on grill seller")

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A paper by current head of the President's Council of Economic Advisors, Ed Lazear, is significant for what it says near the end about economists forgetting facts, because the facts do not fit into current theory.

(p. 260)  Human capital theory is primarily a supply-side approach that focuses on the characteristics and skills of the individual workers.  It pays far less attention to the environments in which workers work.  As such, the human capital framework has led researchers to focus on one class of questions, but to ignore others.  Specifically, little attention has been paid to the jobs in which workers are employed. 

(p. 263) The fact that some jobs and some job characteristics are more likely to lead to promotions than other jobs is not surprising.  But the analysis suggests that other ways of thinking about wage determination, namely, through job selection, may have been unduly ignored in the past. 

. . .

Researchers have begun to make jobs rather than individuals the unit of analysis.  This change of focus can illuminate new issues and provide answers to questions that were once posed and forgotten.  The questions were forgotten not for lack of importance, but for lack of theoretical frame-works.  The theory is now developed and awaits confirmation in the data.

For the full paper, see:

Lazear, Edward P.  "A Jobs-Based Analysis of Labor Markets."  American Economic Review 85, no. 2 (May 1995):  260-265.

(Note:  elipsis added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

Several years ago, I got up in the middle of the night to call the United States embassy in Beijing, in order to beg an embassy official to issue a visa to our best applicant for our open Research Assistant position.  He did not want to do so, solely on the grounds that she might not return to China.  The woman we wanted to hire had sky-high credentials by every measurable criterion, and based on letters of recommendation, was exceptional by the non-measurable criteria too. 

How bizarre is the immigration policy of the United States when we view it as a problem that such a person might honor us by wanting to stay in the United States?

PALO ALTO, Calif. - Some of technology's biggest names shared the stage at Stanford University last week to discuss the future of American innovation.

Yahoo co-founder Jerry Yang and Kleiner Perkins Caufield & Byers venture capitalist John Doerr were among the members of two panels at a technology summit at the university.

The third annual innovation summit, where industry leaders talked about emerging trends and government technology policy, was organized by TechNet, an advocacy group that lobbies on behalf of tech executives.

. . .  

The executives also lamented government policies limiting student and work visas, warning that this shuts out people like Google co-founder Sergey Brin and former Intel chief executive Andrew Grove.

"We have this crazy policy in the U.S. that says smart people can't come here. I think we all agree it makes absolutely no sense," Yang said. "Are people going to want to build a company in the U.S. . . . or in the new talent centers?"

For the full story, see: 

SAN JOSE MERCURY NEWS.  "Technology summit sees risks for U.S."  Omaha World-Herald  (Sunday, November 19, 2006):  7D.

(Note:  the ellipsis between paragraphs was added; the ellipsis in the Yang quote was in the original article.)

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Karl Marx, John Maynard Keynes, and many others, have suggested that there is some level of income at which we will have enough, and want no more. 

David Friedman, in his price theory text, and others, have doubted this.  I am with the doubters.  I suspect that we sometimes think a certain amount of money would satiate us, because at some level way beyond our current income, it does not reward us to think too much about how we might spend so much money.

But if you are Rockefeller, and you see what good comes with founding universities, curing diseases, and the like, then you can easily imagine what good would come from even more money, even if, like Rockefeller, you are the richest person on the face of the earth.

In the discussion excerpted below, Robert Frank gives another argument for joining the doubters:  that as our income rises, so do our standards for quality.  (I think this argument is sound, but less important than the one sketched above.)  

When my wife and I were living in Paris a few years ago, we went out to dinner with well-to-do friends who were visiting from the United States.  The restaurant we chose had a good reputation and, by our standards, was not cheap.  But although my wife and I enjoyed our meals enormously, our friends found theirs disappointing.  I'm confident they were not trying to impress us or make us feel inferior.  By virtue of their substantially higher income, they had simply grown accustomed to a higher standard of cuisine.

. . .

By placing the desire to outdo others at the heart of his description of insatiable demands, Keynes relegated such demands to the periphery.  But the desire for higher quality has no natural limits.  Keynes and others were wrong to have imagined that a two-hour work week might someday enable us to buy everything we want.  That hasn't happened and never will.

For the full commentary, see: 

ROBERT H. FRANK.  "ECONOMIC SCENE; The More We Make, the Better We Want."  The New York Times  (Thurs., September 28, 2006):  C3.

(Note:  ellipsis added.)

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Wise words from Frederick W. Taylor, who is known as the father of scientific management:

(p. B1) "When a naturally energetic man works for a few days beside a lazy one," Mr. Taylor wrote, "the logic of the situation is unanswerable.  'Why should I work hard when that lazy fellow gets the same pay I do and does only half the work?' "

As quoted in: 

CYNTHIA CROSSEN.  "DEJA VU; Early Industry Expert Soon Realized a Staff Has Its Own Efficiency."  Wall Street Journal  (Mon., November 6, 2006):  B1.

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One of Sherwin Rosen's most important articles is "The Economics of Superstars" in which he argues that if a superstar's performance is even slightly better than the next best performer's, if the performance can be cheaply reproduced (as with radio, CDs, etc.) then a small premium multiplied thousands of times, might result in huge differences in earnings.

This argument works, so long as most of us are interested in the same sort of performance, and are willing to pay some small premium for the best performer of it.  But what if we care as much about the content of the performance as the quality of the performance?  (In other words, we care as much about what is done, as we care about how well it is done.) 

The new book The Long Tail can be taken to imply that there are many niches, and that the days of the "superstar" are over (or at least that in the future, the compensation of the superstars will not be quite so super).  If this argument works, and I think it does, then it implies that the new technologies will serve consumers by better matching consumer preferences with the services provided, and also implies that a more diverse group of suppliers (performers) will be able to sustain themselves.

More speculatively, it seems as though it might imply greater equality in the labor market.  If this last is true, it goes against most accounts of the effects of recent high technology on the labor market.

The reference to the Rosen article is:

Rosen, Sherwin.  "The Economics of Superstars."  American Economic Review 71, no. 5 (Dec. 1981): 845-58.

The reference to The Long Tail is:

Anderson, Chris.  The Long Tail.  New York:  Hyperion, 2006.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (1)

Gerstner is known for turning around IBM, when many business experts thought it was headed down the tubes.  His book is useful as a report on what happened at IBM during his time as CEO, and also has some more broadly applicable observations.  I'll mention a few of these in this and a few other postings in the next couple of weeks. 

It is interesting how many successful and important business leaders and experts have spent some time associated with the McKinsey consulting group, where Gerstner started his career.  One major McKinsey figure, Richard Foster, is a strong advocate and elaborator of Schumpeter's process of creative destruction. 

I wonder if perhaps some of the success of McKinsey is due to the firm's embracing and applying Schumpeter's ideas?

Those who oppose creative destruction emphasize the destructive effect that the process has on some workers.  In fact the effects on labor are seen by many (e.g., Thomas Friedman) who are otherwise sympathetic, to be the major drawback of the process.  As a result some of them (e.g., Thomas Friedman) propose paternalistic 'safety net' labor policies.

We usually think of government as the main implementer of such policies, but among firms, IBM's labor policies were among the most paternalistic.  This is usually viewed as one of the positives about IBM.  But one of Gerstner's insights is to suggest that some of those in the IBM work force were hurt by IBM's paternalistic policies:

(p. 186)  . . . I came to feel that the real problem was not that employees felt they were entitled.  They had just become accustomed to immunity from things like recessions, price wars, and technology changes.  And for the most part, they didn't even realize that this self-contained, insulated system also worked against them.  I was shocked, for instance, to discover the pay disparities---particularly in very important technical and sales professions---of IBM comployess when comapred to the competition and the industry in general.  Our best people weren't getting what they deserved.

Maybe I should mention that I don't endorse everything in the book.  For example, Gerstner seems to think that a desire to "win" is crucial to success in business.  But I think the analogy between business and competitive sports is usually taken too far.  Can't one also succeed in business from a desire to innovate and to improve the world?

The reference on the book is: 

Gerstner, Louis V., Jr.  Who Says Elephants Can't Dance? Leading a Great Enterprise through Dramatic Change.  New York:  HarperCollins, 2002.

(Note:  in the quote, the ellipsis was added, but the italics was in the original.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

  Source of graph:  online version of the WSJ article cited below.

The Census Bureau tells us that some time in the weeks ahead the U.S. population will reach 300 million.  . . .

This demographic milestone is not cause for alarm -- as some prophets of doom would have it.  Rather, it is cause for celebration.  We 300 million Americans are on balance healthier and wealthier and freer than any population ever:  We breathe cleaner air, drink cleaner water, earn higher incomes, have more leisure time, and live in less crowded housing.  Every natural resource we depend on -- water, food, copper and, yes, even oil -- is far more abundant today measured by affordability than when our population was 100 million or even 30 million.

Thanks to the rapid pace of technological progress, there's every reason to believe these resources will be still more abundant when our population reaches 400 million -- which should happen about 40 years from now.  As the late economist Julian Simon reminded us, thanks to our free market capitalist system, the history of America is one of leaving the storehouse for every successive generation more endowed with wealth, knowledge and natural resources.

For the full commentary, see:

STEPHEN MOORE.  "Supply Side; 300,000,000."  Wall Street Journal  (Tues., October 3, 2006):  A26.

(Note:  ellipsis added.)

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  Source of graphic:  online verison of the NYT article quoted and cited below.

United States cardiologists are reluctant to prescribe fish oil, wanting more definitive data on efficacy.  But a lack of definitive data on efficacy doesn't stop them from performing costly and risky procedures such as the application of stents.  Possibly relevant:  installing stents is much more lucrative for cardiologists, than prescribing fish oil.  Doctors are not bad people, but like most of us, they respond to financial incentives.

(p. D5) ROME — Every patient in the cardiac care unit at the San Filippo Neri Hospital who survives a heart attack goes home with a prescription for purified fish oil, or omega-3 fatty acids.

“It is clearly recommended in international guidelines,” said Dr. Massimo Santini, the hospital’s chief of cardiology, who added that it would be considered tantamount to malpractice in Italy to omit the drug.

In a large number of studies, prescription fish oil has been shown to improve survival after heart attacks and to reduce fatal heart rhythms.  The American College of Cardiology recently strengthened its position on the medical benefit of fish oil, although some critics say that studies have not defined the magnitude of the effect.

But in the United States, heart attack victims are not generally given omega-3 fatty acids, even as they are routinely offered more expensive and invasive treatments, like pills to lower cholesterol or implantable defibrillators.  Prescription fish oil, sold under the brand name Omacor, is not even approved by the Food and Drug Administration for use in heart patients.

“Most cardiologists here are not giving omega-3’s even though the data supports it — there’s a real disconnect,” said Dr. Terry Jacobson, a preventive cardiologist at Emory University in Atlanta.  “They have been very slow to incorporate the therapy.”

For the full story, see:

ELISABETH ROSENTHAL  "In Europe It’ s Fish Oil After Heart Attacks, but Not in U.S."  The New York Times  (Tues., October 3, 2006):  D5.

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I’ve slogged through enough reports from the National Academy of Sciences to know they’re often not shining examples of the scientific method.  But — call me naïve — I never thought the academy was cynical enough to publish a political tract like “Beyond Bias and Barriers,” the new report on discrimination against female scientists and engineers.

. . .

I consulted half a dozen of these experts about the report, and they all dismissed it as a triumph of politics over science.  It’s classic rent-seeking by a special-interest group that stands to get more money and jobs if the recommendations are adopted.

“I am embarrassed,” said Linda Gottfredson of the University of Delaware, “that this female-dominated panel of scientists would ignore decades of scientific evidence to justify an already disproved conclusion, namely, that the sexes do not differ in career-relevant interests and abilities.”

. . .

After decades of schools pushing girls into science and universities desperately looking for gender diversity on their faculties, it’s insulting to pretend that most female students are too intimidated to know their best interests.  As Science magazine reported in 2000, the social scientist Patti Hausman offered a simple explanation for why women don’t go into engineering:  they don’t want to.

“Wherever you go, you will find females far less likely than males to see what is so fascinating about ohms, carburetors or quarks,” Hausman said.  “Reinventing the curriculum will not make me more interested in learning how my dishwasher works.”

For the full commentary, see:

JOHN TIERNEY.  "Academy of P.C. Science."  The New York Times   (Tues., September 26, 2006):  A23.

(Note:  the title of the online version was "Academy of P.C. Sciences.")

(Note:  ellipses added.) 

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  Source of book image:  http://www.mactime.ru/Environ/WebObjects/mactime.woa/2/wa/Main?textid=6114&level1=mactimes&wosid=b2qk07iEkIh6GoutH7IbVg

Many scholars interpret Schumpeter as believing that large firms would increasingly become the main source of innovation.  Scherer, Christensen, and many others, have provided plenty of reason to doubt this belief.  Here is another reason, from one of the innovators who helpted bring us the personal computer:

What emerges in "iWoz" is a chatty memoir full of surprises.  Yes, Mr. Wozniak cherishes workbench minutiae, such as his tips for connecting circuitry wires.  But he also sees this book as a chance to cut through cliché and explain himself to a larger audience.  He reveals a technology pioneer who is more charming and annoying -- and whose life is more poignant -- than we expected.

. . .

As Apple roared ahead, going public in 1980 and then becoming one of the 500 largest U.S. companies, Mr. Wozniak's golden moment came to an end.  New products weren't developed anymore by a brilliant prankster working with barely any sleep.  There were now teams, committees and market studies.

Mr. Wozniak by his own account didn't like these changes, and he didn't want to rise into senior management.  He hung on at Apple as a lone engineer -- and he says he still collects a tiny paycheck from the company -- but from the mid-1980s onward turned his attention to other things.

. . .

Fortunately, Mr. Wozniak finishes strong.  In his final chapter, he offers a bit of advice to gifted engineers:  "Work alone."  Big companies tend to stifle innovation, he explains.  It's lonely and risky to work solo.  No matter.  "Man, it will be worth it in the end," he writes.  His life bears out the truth of that simple claim.

For the full review, see: 

GEORGE ANDERS.  "BOOKS; Technostalgia; Steve Wozniak looks back on the computer revolution and his role as Apple's co-founder."  Wall Street Journal  (Sat., September 30, 2006):  P8.

(Note:  ellipses added.)

The reference to the book by Wozniak: 

Steve Wozniak, with Gina Smith.  iWoz  Norton, 2006.  313 pages, $25.95.

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WASHINGTON (AP) - Intel Corp. Chairman Craig Barrett said Tuesday that U.S. jobs will continue to move offshore at a rapid pace unless corporate America forces the health care industry to adopt systems that will cut costs and improve efficiency.

"Every job that can be moved out of the United States will be moved out . . . because of health care costs," which averaged more than $6,000 per person in 2004, Barrett said at a conference sponsored by eHealth Initiative, a nonprofit coalition of health information technology interest groups.

. . .

Barrett was joined on-stage by Wal-Mart Stores Inc. Executive VP Linda Dillman.  Barrett said the health care industry could learn from the efficiency of the retail giant, which tracks every item in inventory.

For the full story, see: 

"Health care waste costs jobs, says Intel chief."  Omaha World-Herald  (Wednesday,  September 27, 2006):  3D. 

(Note:  ellipsis in the Barrett quote, in original; ellipsis between paragraphs, added.)

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  Source of graphic:  online version of the NYT article cited below.

It is widely recognized that income inequality increased in the 1990’s, but nobody knows quite why. Despite the lack of hard evidence, there are plenty of theories.

. . .

Two University of Texas researchers, James K. Galbraith and Travis Hale, added an interesting twist to this debate in a paper, “Income Distribution and the Information Technology Bubble” (utip.gov.utexas.edu/abstract.html#UTIP27).

According to Mr. Galbraith and Mr. Hale, much of the increase in income inequality in the late 1990’s resulted from large income changes in just a handful of locations around the country — precisely those areas that were heavily involved in the information technology boom.

. . .

A big advantage of looking at county data is that it is possible to identify counties that contributed the most to the increase in income inequality from 1994 to 2000.  It turns out that the five biggest winners in this period were New York; King County, Wash. (with both Seattle and Redmond); and Santa Clara, San Mateo and San Francisco, Calif., the counties that make up Silicon Valley.  The five biggest losers were Los Angeles; Queens; Honolulu; Broward, Fla.; and Cuyahoga, Ohio.

What do the counties in the first list have in common?  Their economies were all heavily driven by information technology in the late 90’s.  This is true for the rest of the list of winners as well.  Harris, Tex. (home to Houston and Enron); Middlesex, Mass. (home to Harvard and M.I.T.); Fairfield, Conn.; Alameda, Calif.; and Westchester, N.Y., were also among the top 10 income gainers in this period.

The authors point out that half the 80 American companies in the CNET Tech Index are in those top 10 counties.  Furthermore, when income inequality decreased after 2000, the income drop in the high-tech counties contributed most to the decline. 

For the full commentary, see:

HAL R. VARIAN.  "ECONOMIC SCENE; Many Theories on Income Inequality, but One Answer Lies in Just a Few Places."  The New York Times  (Thurs., September 21, 2006):   C3.

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More baby boomers are asking themselves, Why retire?  It's a cliché to say that 60 is the new 40, but it has some biological and psychological validity.  Advanced biomedical research is leading to continued progress against cancer, heart disease, arthritis, dementia and other conditions that forced people out of the workforce before they wanted to quit.  In the future, aging workers will be healthier and will use broadband technology to live and work from anywhere at the increasing proportion of jobs that involve knowledge rather than physical labor.  They'll spend more years earning income, often in multiple careers, instead of selling assets.

Fewer people will retire in their 60s simply because they know that average life expectancy at birth is increasing at an astounding rate.  Americans, who could expect to live an average of 47 years in 1900, now enjoy life spans approaching 80 years.  (It already exceeds 80 for women.)  An American who makes it to age 65 can look forward to living almost two decades more.  Worldwide, the increase has been even more dramatic.  In a single century -- despite wars, AIDS and other scourges -- the global average more than doubled to 66 years.  Nobel laureate Robert Fogel believes it will exceed 100 years within this century.

More than just the length of life, the number of healthy years will also increase.  When people are vibrant into their 80s and 90s, 65 will evolve from the traditional retirement age to a mid-career milestone for those who choose to keep working.  Who wants to retire when you have fulfilling work, when you earn a good income, and when you feel great?  According to a Yahoo! poll, 70% of people over 55 say it's never too late to start a new business.

For the full commentary, see:

MICHAEL MILKEN.  "The Boom Generation Seventh Decade."  Wall Street Journal  (Tues., September 19, 2006):  A20.

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  Artistic vision of germ-laden hand.  (This is not the photographic image mentioned below, and used as a hospital screen-saver.)  Source of image:  online version of the NYT article cited below.

(p. 22)  Leon Bender noticed something interesting: passengers who went ashore weren’t allowed to reboard the ship until they had some Purell squirted on their hands.  The crew even dispensed Purell to passengers lined up at the buffet tables.  Was it possible, Bender wondered, that a cruise ship was more diligent about killing germs than his own hospital?

Cedars-Sinai Medical Center, where Bender has been practicing for 37 years, is in fact an excellent hospital.  But even excellent hospitals often pass along bacterial infections, thereby sickening or even killing the very people they aim to heal.  In its 2000 report “To Err Is Human,” the Institute of Medicine estimated that anywhere from 44,000 to 98,000 Americans die each year because of hospital errors — more deaths than from either motor-vehicle crashes or breast cancer — and that one of the leading errors was the spread of bacterial infections.

. . .

. . . the hospital needed to devise some kind of incentive scheme that would increase compliance without alienating its doctors.  In the beginning, the administrators gently cajoled the doctors with e-mail, (p. 23) faxes and posters.  But none of that seemed to work.  (The hospital had enlisted a crew of nurses to surreptitiously report on the staff’s hand-washing.)  “Then we started a campaign that really took the word to the physicians where they live, which is on the wards,” Silka recalls.  “And, most importantly, in the physicians’ parking lot, which in L.A. is a big deal.”

For the next six weeks, Silka and roughly a dozen other senior personnel manned the parking-lot entrance, handing out bottles of Purell to the arriving doctors.  They started a Hand Hygiene Safety Posse that roamed the wards and let it be known that this posse preferred using carrots to sticks:  rather than searching for doctors who weren’t compliant, they’d try to “catch” a doctor who was washing up, giving him a $10 Starbucks card as reward.  You might think that the highest earners in a hospital wouldn’t much care about a $10 incentive — “but none of them turned down the card,” Silka says.

When the nurse spies reported back the latest data, it was clear that the hospital’s efforts were working — but not nearly enough.  Compliance had risen to about 80 percent from 65 percent, but the Joint Commission required 90 percent compliance.

These results were delivered to the hospital’s leadership by Rekha Murthy, the hospital’s epidemiologist, during a meeting of the Chief of Staff Advisory Committee.  The committee’s roughly 20 members, mostly top doctors, were openly discouraged by Murthy’s report.  Then, after they finished their lunch, Murthy handed each of them an agar plate — a sterile petri dish loaded with a spongy layer of agar.  “I would love to culture your hand,” she told them.

They pressed their palms into the plates, and Murthy sent them to the lab to be cultured and photographed.  The resulting images, Silka says, “were disgusting and striking, with gobs of colonies of bacteria.”

The administration then decided to harness the power of such a disgusting image.  One photograph was made into a screen saver that haunted every computer in Cedars-Sinai.  Whatever reasons the doctors may have had for not complying in the past, they vanished in the face of such vivid evidence.  “With people who have been in practice 25 or 30 or 40 years, it’s hard to change their behavior,” Leon Bender says.  “But when you present them with good data, they change their behavior very rapidly.”  Some forms of data, of course, are more compelling than others, and in this case an image was worth 1,000 statistical tables.  Hand-hygiene compliance shot up to nearly 100 percent and, according to the hospital, it has pretty much remained there ever since.

For the full commentary, see:

STEPHEN J. DUBNER and STEVEN D. LEVITT.  "FREAKONOMICS; Selling Soap."  The New York Times Magazine (Section 6)  (Sunday, September 24, 2006):  22-23.

(Note:  ellipses added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (1)

  November 9, 1952 NYT ad announcing the introduction of the snowblower.  Source of image:  online version of the NYT article cited below.

(p. C1)  When the first snow falls on the North Shore of Chicago this winter, Robert Gordon will take his Toro snow blower out of the garage and think about how lucky he is not to be using a shovel.  Mr. Gordon is 66 years old and evidently quite healthy, but his doctor has told him that he should never clear his driveway with his own hands.  “People can die from shoveling snow,” Mr. Gordon said.  “I bet a lot of lives have been saved by snow blowers.”

If so, most of them have been saved in the last few decades.  A Canadian teenager named Arthur Sicard came up with the idea for the snow blower in the late 1800’s, while watching the blades on a piece of farm equipment, but he didn’t sell any until 1927.  For the next 30 years or so, snow blowers were hulking machines typically bought by cities and schools.  Only recently have they become a suburban staple.

Yet the benefits of the snow blower, namely more free time and less health risk, are largely missing from the government’s attempts to determine Americans’ economic well-being.  The same goes for dozens of other inventions, be they air-conditioners, cellphones or medical devices.  The reasons are a little technical — they involve the measurement of inflation — but they’re important to understand, because the implications are so large.

. . .

(p. C10)  In the early 1950’s, Toro began selling mass-market snow blowers, which weighed up to 500 pounds and cost at least $150.  As far as the Bureau of the Labor Statistics was concerned, however, snow blowers did not exist until 1978.  That was the year when the machines began to be counted in the Consumer Price Index, the source of the official inflation rate.  By then, the cheapest model sold for about $100.

In practical terms, this was an enormous price decline compared with the 1950’s, because incomes had risen enormously over this period.  Yet the price index completely missed it and, by doing so, overstated inflation.  It counted the rising cost of cars and groceries but not the falling cost of snow blowers.

. . .

Mr. Gordon, besides being a fan of snow blowers, also happens to be one of the country’s leading macroeconomists.  A decade ago he served on a government-appointed group known as the Boskin Commission.  It argued, as Mr. Gordon still does, that the government exaggerated inflation by more than one percentage point every year.

. . .

. . .  Mr. Gordon’s adjustments show that men actually got a 27 percent raise in this period and women 65 percent.  The gains are not as big as those of the 1950’s and 60’s, but they do sound far more realistic than the official numbers.  Think about it:  we live longer than people did in the 1970’s, we’re healthier while alive, we graduate from college in much greater numbers, we’re surrounded by new gadgets and we live in bigger houses.  Is it really plausible, as some Democrats claim, that the middle class has made only marginal progress?

For the full commentary, see: 

DAVID LEONHARDT.  "Economix; Life Is Better; It Isn’t Better. Which Is It?"  The New York Times  (Weds., September 20, 2006):  C1 & C10.

(Note:  ellipsis added.)

   Source of graphic:  online version of the NYT article cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

 

Scholarly studies show Wal-Mart's price reductions to be sizable.  Economist Emek Basker of the University of Missouri found long-term reductions of 7 to 13 percent on items such as toothpaste, shampoo and detergent.  Other companies are forced to reduce their prices.  On food, Wal-Mart produces consumer savings that average 20 percent, estimate Jerry Hausman of the Massachusetts Institute of Technology and Ephraim Leibtag of the Agriculture Department.

All told, these cuts have significantly raised living standards.  How much is unclear.  A study by the economic consulting firm Global Insight found that from 1985 to 2004, Wal-Mart's expansion lowered the consumer price index by a cumulative 3.1 percent from what it would have been.  That produced savings of $263 billion in 2004, equal to $2,329 for each U.S. household.  Because Wal-Mart financed this study, its results have been criticized as too high.  But even if price savings are only half as much ($132 billion and $1,165 per household), they'd dwarf the benefits of all but the biggest government programs. 

For the full commentary, see:

Robert J. Samuelson.  "Wal-Mart as Red Herring."  The Washington Post  (Wednesday, August 30, 2006):  A19.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (1)

I think it was the poet Gwendolyn Brooks who once described Chicago as the "city of the out-stuck neck."  Chicago's current Mayor Daley did himself and the city proud recently when he had the guts to stick his neck out by vetoing the proposed Chicago minimum wage. He deserves a salute from Chicago's consumers and poor.  Democrat Daley is the mayor of the out-stuck neck.

Chicago Mayor Richard M. Daley used the first veto of his 17-year tenure to reject a living-wage ordinance aimed at forcing big retailers to pay wages of $10 an hour and health benefits equivalent to $3 an hour by 2010.

The veto is important to Wal-Mart Stores Inc., which plans to open its first store in Chicago late this month in the economically depressed 37th ward.

. . .

In vetoing the ordinance, Mayor Daley cited a potential loss of jobs.  In recent weeks, several big retailers had written to his office to oppose the ordinance.  "I understand and share a desire to ensure that everyone who works in the city of Chicago earns a decent wage," the mayor wrote to the aldermen yesterday.  "But I do not believe that this ordinance, well intentioned as it may be, would achieve that end.  Rather, I believe that it would drive jobs and business from our city."

For the full story, see: 

KRIS HUDSON.  "Chicago's Daley Vetoes Bill Aimed At Big Retailers."   Wall Street Journal  (Thurs.,   September 12, 2006):  A4.

(Note:  I can't find the exact source of the out-stuck neck quote, but one reference on the web is:  http://starbulletin.com/97/05/22/sports/fitzgerald.html )

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

 Source of book image:  http://www.aei.org/books/bookID.497,filter.all/book_detail.asp

Ben Wattenberg had already been predicting a world population decline for years, when he published The Birth Dearth in 1987.  Back then, scepticism was widespread.  Governments and philanthropists spent billions promoting birth control to restrain population growth.  Many were still convinced of the wisdom of Isaac Ehrlich, darling of the environmentalist enemies of economic growth, who had predicted disaster in his Population Bomb.

(Note that the plausibility of many environmentalist disaster scenerios is based on the assumption of continuous population growth.) 

The current decline in birth rates is not a total puzzle.  Nobel-prize winner Gary Becker long-ago claimed that quality of children is what economists call a 'normal' good, which means that families invest more in quality as their incomes rise.  As families invest more in quality, they invest less in quantity.

Whatever the reasons, the evidence continues to accumulate that Wattenberg was right:

After a long decline, birthrates in European countries have reached a historic low, as potential parents increasingly opt for few or no children.  European women, better educated and integrated into the labor market than ever before, say there is no time for motherhood and that children are too expensive anyway.

The result is a continent of lopsided societies where the number of elderly increasingly exceeds the number of young -- a demographic pattern that is straining pension plans and depleting the work force in many countries.

For the full story, see:

ELISABETH ROSENTHAL.  "European Union's Plunging Birthrates Spread Eastward."  The New York Times   (Mon., September 4, 2006):  A3.

   Source of graphic:  online version of the NYT article cited above.

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

Source of graphic:  online version of the NYT article cited below.

WASHINGTON, Aug. 20 — Ten years after a Republican Congress collaborated with a Democratic president to overhaul the nation’s welfare system, the implications are still rippling through policy and politics.

The law, which reversed six decades of social welfare policy and ended the idea of free cash handouts for the poor, was widely seen as a victory for conservative ideas.  When it was passed, some opponents offered dire predictions that the law would make things worse for the poor.  But the number of people on welfare has plunged to 4.4 million, down 60 percent.  Employment of single mothers is up.  Child support collections have nearly doubled.

“We have been vindicated by the results,” said Representative E. Clay Shaw Jr., Republican of Florida and an architect of the 1996 law who was vilified at the time.  “Welfare reform was one of the most successful policy changes in our nation’s history.”

For the full story, see: 

ROBERT PEAR and ERIK ECKHOLM. "A Decade After Welfare Overhaul, a Shift in Policy and Perception." The New York Times (Mon., August 21, 2006):  A12.

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We are . . . all constantly reminding each other that "money doesn't buy happiness."

Economists aren't so sure.  They note that people with a lot of money tend to express a higher subjective happiness than people with very little.  According data from surveys by the National Opinion Research Center, for example, people in the top fifth of income earners are about 50% more likely to say they are "very happy" than people in the bottom fifth, and only about half as likely to say they are "not too happy."

There is, however, generally very little change in the average level of happiness in populations getting richer over the years.  For instance, the percentage of the U.S. population saying it was "very happy" in 1972 was exactly the same as it was in 2002:  30.3%.  Social critics of "consumerism" explain this by claiming that what makes rich people happy is not money per se, but rather the fact that they