David Leonhardt is frequently cogent, but his new piece "Who Gets Credit for the Recovery?" is risible.
I agree with his implicit premise: The economy is gonna do what the economy is gonna do and political involvement will mostly be credit-claiming or blame-avoidance, but after that we part company.
The biggest problem I see is the notion that anyone is giving out "credit" for the pathetic mess that is our "recovery". Yes, housing seems to turning a corner, but let's get real.
Fewer people have jobs now than did before the crash, even though 4 years have passed and the population has grown.
Housing starts remain well below pre-crash levels.
Real GDP growth so far is lower in 2012 than it was in 2011, and the 2011 figure is lower than the 2010 figure. And, given that we were emerging from a deep recession, the 2010 figure (2.4%) stunk!
Things are so bad that Democratic loyalists are celebrating a 2% growth rate in the 3rd quarter.
Things are so bad that it took a 9.6% increase in Federal government spending to get that dizzying 2% figure.
Behold: the world according to DL:
Showing posts with label credit where credit is due. Show all posts
Showing posts with label credit where credit is due. Show all posts
Saturday, October 27, 2012
Sunday, February 19, 2012
More on manufacturing (don't forget the "e")
People, I give you Robert Reich vs. Laura Tyson.
First, here's Tyson arguing that manufacturing jobs should be prioritized:
"...on average manufacturing jobs are high-productivity, high value-added jobs with good pay and benefits. Even though the premium on manufacturing wages has been declining over time, it remains significant. Between 2005 and 2010, average weekly earnings in manufacturing were about 21 percent higher than average weekly private non-agricultural earnings. In 2009, the average manufacturing worker earned $74,447 in annual pay and benefits compared with $63,122 for the average non-manufacturing worker."
As I've pointed out pointedly in the past, this is simply logically incorrect. You cannot use averages to represent what is happening on the margin. If the premium is falling, that clearly means that the marginal wage for new jobs is significantly lower than the average pay for all existing jobs. The correct comparison is between wages for new jobs across sectors (marginal analysis), NOT average wages for all jobs across sectors (infra-marginal garbage).
This point is magnificently made by Reich:
Even if we didn’t have to compete with lower-wage workers overseas, we’d still have fewer factory jobs because the old assembly line has been replaced by numerically-controlled machine tools and robotics. Manufacturing is going high-tech. Bringing back American manufacturing isn’t the real challenge, anyway. It’s creating good jobs for the majority of Americans who lack four-year college degrees. Manufacturing used to supply lots of these kind of jobs, but that was only because factory workers were represented by unions powerful enough to get high wages. That’s no longer the case. Even the once-mighty United Auto Workers has been forced to accept pay packages for new hires at the Big Three that provide half what new hires got a decade ago. At $14 an hour, new auto workers earn about the same as most of America’s service-sector workers.
Bravo, Roberto!
Marginal wages in manufacturing are much lower than average wages, and many new jobs are ones that require a high degree of skills/education.
Reich's solution to create jobs and raise wages for non-college Americans is to re-empower unions! This would certainly raise wages, but would in all likelihood not be a big boon for increasing the number of jobs.
I think this issue of what to do about living standards of "unskilled" workers in America is going to continue to worsen and the only feasible long run solution is going to be a type of guaranteed basic income policy.
Hey if Herbert Simon, Freddy Hayek, Bob Solow AND Milton Friedman all agree on it, it must be worth considering, right?
First, here's Tyson arguing that manufacturing jobs should be prioritized:
"...on average manufacturing jobs are high-productivity, high value-added jobs with good pay and benefits. Even though the premium on manufacturing wages has been declining over time, it remains significant. Between 2005 and 2010, average weekly earnings in manufacturing were about 21 percent higher than average weekly private non-agricultural earnings. In 2009, the average manufacturing worker earned $74,447 in annual pay and benefits compared with $63,122 for the average non-manufacturing worker."
As I've pointed out pointedly in the past, this is simply logically incorrect. You cannot use averages to represent what is happening on the margin. If the premium is falling, that clearly means that the marginal wage for new jobs is significantly lower than the average pay for all existing jobs. The correct comparison is between wages for new jobs across sectors (marginal analysis), NOT average wages for all jobs across sectors (infra-marginal garbage).
This point is magnificently made by Reich:
Even if we didn’t have to compete with lower-wage workers overseas, we’d still have fewer factory jobs because the old assembly line has been replaced by numerically-controlled machine tools and robotics. Manufacturing is going high-tech. Bringing back American manufacturing isn’t the real challenge, anyway. It’s creating good jobs for the majority of Americans who lack four-year college degrees. Manufacturing used to supply lots of these kind of jobs, but that was only because factory workers were represented by unions powerful enough to get high wages. That’s no longer the case. Even the once-mighty United Auto Workers has been forced to accept pay packages for new hires at the Big Three that provide half what new hires got a decade ago. At $14 an hour, new auto workers earn about the same as most of America’s service-sector workers.
Bravo, Roberto!
Marginal wages in manufacturing are much lower than average wages, and many new jobs are ones that require a high degree of skills/education.
Reich's solution to create jobs and raise wages for non-college Americans is to re-empower unions! This would certainly raise wages, but would in all likelihood not be a big boon for increasing the number of jobs.
I think this issue of what to do about living standards of "unskilled" workers in America is going to continue to worsen and the only feasible long run solution is going to be a type of guaranteed basic income policy.
Hey if Herbert Simon, Freddy Hayek, Bob Solow AND Milton Friedman all agree on it, it must be worth considering, right?
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