J. Bradford DeLong's Blog, page 2078

Greg Marx: Career Ladders

Greg Marx:

Remapping Debate: February 9, 2011 — As American policy-makers grope for strategies to deliver broadly shared economic prosperity, calls for increased education are more insistent than ever.... The importance of education to an individual’s earnings potential, and the value of public investment to promote education and innovation, is indeed one of the few things on which most economists agree. But a closer look at the actual experience of American workers in recent decades suggests that the message often implied by what might be called “the education answer” — that vast quantities of good-paying jobs are waiting to be created in new, scientific-sounding industries, and that a bachelor’s degree is the key to landing one of them — is woefully incomplete.

Some form of post-secondary education or training does seem to have become, as one recent report put it, “the only pathway” to a middle-class job. But if education has become a necessary prerequisite for economic success in modern-day America, it is hardly sufficient.... [O]ver a period of several decades, workers with only a bachelor’s degree have not fared particularly well. It’s true that the college-educated continue to do far better than those below them on the education scale... higher education is still generally a good investment. The so-called “college wage premium,” which rose sharply during the 1980s, persists... the average worker over age 25 with a bachelor’s degree but no advanced degree earned about 66 percent more than a high school graduate of the same age....

MIT economist David Autor wrote recently that “the real hourly earnings of males with a four-year college degree and no post-college education rose by only 10 percent between 1979 and 2007.” The growth in the college wage premium for men over that period, Autor wrote, was as much a function of declining earnings for those without college degrees as it was gains for those with them....

Autor suggested that public policy could focus on rebuilding career pathways and systems for people who will not go to college — and who will continue to make up a substantial portion of the labor force, even if efforts to boost enrollment succeed.... There are good jobs for those workers that don’t require a college degree, Autor said, but in most cases they will require some sort of post-secondary skill development. He cited several medical paraprofessional jobs as examples: X-ray technician, phlebotomist, EMT. The problem, he said, is that compared to the formal and informal networks that guide people through careers at the top of the earnings pyramid, there is no comparable information mechanism farther down the scale....

Sum believes universities and students can both do better in terms of identifying and preparing for job opportunities. But the more fundamental problem, in his account, is a simple shortage of jobs in the college labor market. “There’s nothing that guarantees that supply [of college graduates] creates its own demand,” Sum said. “You’ve got to have more demand growth.”... [I]t would be hard to argue with the basic point that a college degree is a less certain (and far costlier) investment than it was a generation ago. “There are no safe haven positions, except for tenured faculty members and federal judges,” said Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University. “Everybody else is at risk, or needs to be responsive to this change.”...

“We need to get away from the claim that low wages are the result of insufficient human capital,” Lind said. “What’s left out of this in the journalistic accounts is sheer, naked power.” He offers an alternative way to understand the impressive income gains for workers with advanced degrees, one rooted in their stronger institutional protections rather than the intrinsic value of their education: “If you smash the service workers’ unions and the manufacturing unions, but you leave the doctors’, the lawyers’, and the professors’ guilds intact, you get a more polarized society.”...

Claudia Goldin is a professor of economics at Harvard University; along with her co-author Lawrence Katz, she has been a key voice arguing that a shortfall in educational achievement is leading to widening inequality. In a recent interview, Goldin called for stricter standards in education, but recoiled at the idea of interventions in the marketplace. “I don’t even understand what the labor market side of things can possibly do,” she said. “Make the American workforce a better workforce. And I’m not saying all will be solved, but we’ll certainly be better off.”...

Liveblogging World War II: March 2, 1941

German units of List's 12th Army begin to move into Bulgaria...

Friday March 4, 2011: The Value of Global History for Modern Political Economy

Topic:

There is a growing faction in the academy arguing that education for global citizenship requires that students learn some "global history." Certainly our Political Economy major here at Berkeley has placed a lot of its chips on this bet. But is this argument true? What is the value of "global history" for the student and analyst of modern political economy issues, anyway?

Panel:

Chair, J. Bradford DeLong, UCB Economics

Speaker, Tyler Stovall, UCB History and Undergraduate Interdisciplinary Studies

Speaker, Alan Karras, UCB International and Area Studies

Speaker, Mark Healey, UCB History and Latin American Studies

Location: Blum Hall Plaza Level

Time: 2:10-2:40: Panelists. 2:40-3:10: Discussion. 3:10-4:00: Reception.

What I think I will say:

There is a growing faction in the academy arguing that education for global citizenship requires that students learn some "global history." Certainly our Political Economy major here at Berkeley has placed a lot of its chips on this bet. But is this a good bet? What is the value of "global history" for the student and analyst of modern political economy issues, anyway?

Karl Marx wrote that the "country that is more developed industrially... shows to the less developed the image of its own future..." Karl Marx was wrong. Nevertheless, past examples of globalization, marketization, industrialization, democratization, bureaucratization, et cetera do provide a set of benchmarks, contrasts, and perhaps--for those people making their own history but not as they choose today--models. One of the intellectual bets of the Political Economy major is that we will all be better at analyzing and understanding the world today if our knowledge of the world of the past is deep and strong.

How is this working out for us?

Bruce Bigelow: Xconomy

San Diego-Area Business, Life Sciences, and Technology News | Xconomy

Why Oh Why Can't We Have a Better Press Corps? (Yes, It Is the Washington Post Again)

Outsourced to Paul Krugman:

Dagny Taggart Wept: Oh, boy — this George Will column (via Grist) is truly bizarre:

So why is America’s “win the future” administration so fixated on railroads, a technology that was the future two centuries ago? Because progressivism’s aim is the modification of (other people’s) behavior. Forever seeking Archimedean levers for prying the world in directions they prefer, progressives say they embrace high-speed rail for many reasons—to improve the climate, increase competitiveness, enhance national security, reduce congestion, and rationalize land use. The length of the list of reasons, and the flimsiness of each, points to this conclusion: the real reason for progressives’ passion for trains is their goal of diminishing Americans’ individualism in order to make them more amenable to collectivism.

As Sarah Goodyear at Grist says, trains are a lot more empowering and individualistic than planes — and planes, not cars, are the main alternative to high-speed rail.

And there’s the bit about rail as an antiquated technology; try saying that after riding the Shanghai Maglev.

But anyway, it’s amazing to see Will — who is not a stupid man — embracing the sinister progressives-hate-your-freedom line, more or less right out of Atlas Shrugged; with the extra irony, of course, that John Galt’s significant other ran, well, a railroad.

Solving Computer Problems

Charles Stross:

Travel tips - Charlie's Diary: Lesson learned: any computer problem can be fixed if you can throw money at it and you still have access to your data. Oh, and carry a bluetooth keyboard everywhere, at all times...

Menzie Chinn: No Signs of Crowding Out

Sane economic policymakers would be pushing for more fiscal stimulus right now until there were signs of crowding out.

Menzie Chinn:

Econbrowser: Crowding Out Watch, Updated: I'm teaching the concept of portfolio crowding out in my intermediate macro course (handout with algebra here) now, and as I was going through the notes, I observed that last I had checked, there was (still!) little evidence of crowding out. Here's the graph, updated with data through 2/25 (that is, pretty much the same story as last time I discussed this, despite the hysterics).... Relative to my September post, the ten year TIPS is slightly up, but the five year remains at zero (well, actually negative). This means that whatever upward pressure there is on government interest rates due to the large supply of government debt, it is being offset by low demand from the private sector (or by demand from offshore sources).

Of course, the crowding out of investment phenomenon relies upon a variety of assumptions. It follows from a two asset model (money, bonds), with the right parameter values. With three assets, one can get "crowding in". And even if interest rates had risen, if investment depends upon income (or the change in income), one could still get a net increase in investment from a positive fiscal impulse.

Another implication of having interest rates at zero (at least the five year real) is that if fiscal policy is made more contractionary (as in some recent plans), then the contractionary impact should be large (this is just the mirror image of fiscal policy effectiveness in a liquidity trap). For more discussion/links of the economics, see here. For recent discussion of the impact by the economic research firms, see here and here. In his testimony today, Fed Chairman Bernanke indicated he believed the Moody's Analytics estimate was high, as it was described to him (although there was some back and forth on whether the estimates pertained to calender or fiscal years, and the magnitude of the cuts, so I'm not sure exactly how much of a difference there is in terms of per dollar impact).

Department of "Huh?!"

Gwynn Davies:

Gavyn Davies | Insight into macroeconomics and the financial markets from the Financial Times – FT.com: The combination of a rapidly growing economy, and a surge in oil prices, has raised questions about the strength of the doves’ hand at the Fed...

Huh?! Sub-4%/year growth at a time when the unemployment rate is 9% is not a "rapidly growing economy." This is not strong GDP growth for the situation. It is mediocre.

Davies goes on:

Previously in firm control, the doves had until yesterday been silent about the recent mixture of strong GDP growth and rising headline inflation. Was the case for exceptionally easy monetary policy beginning to fray at the edges? Not in the mind of New York Fed President Bill Dudley, who is among the most eloquent spokespersons for the dovish standpoint.... Bill Dudley confirmed that the US economy is now growing at an accelerating rate, but said that this reflected the success of Fed policy, rather than providing any case for changing it. He conceded that the structural unemployment rate may have risen to between 6 and 7 per cent, but argued that much of this increase may be temporary...

And--with unemployment at 9%--is in any event irrelevant, as Dudley goes on to say:

And, in any event, he suggested that employment could rise by 300,000 per month for two years before the economy would run out of spare capacity. On the commodity price surge, he said that this would not be a sufficient reason for tightening monetary policy, unless it started to increase inflation expectations. Assuming this does not happen, Bill Dudley will remain an influential dove for a long time. And this is important, because his recent thinking has been very close to that of US Federal Reserve chairman Ben Bernanke himself.

Dudley is, of course, 100% correct.

Liveblogging World War II: March 1, 1941

Andrew Glass:

Truman Committee formed March 1, 1941 - Andrew Glass - POLITICO.com: On this day in 1941, the Senate by unanimous consent created a special investigative committee charged with stamping out waste, corruption and profiteering in the U.S. defense industry, which had moved into high gear as World War II swept across Europe. Harry Truman, a Missouri Democrat, was chosen by the Senate as chairman of the committee. Truman conceived the idea for the panel soon after completing a 10,000-mile inspection tour of military bases. During his trip, Truman found repeated instances of contractors being paid set fees regardless of performance and that certain firms were receiving more than their fair share of contracts.

Senior military officials voiced their opposition to President Franklin Roosevelt. Reaching back in history, they cited the problems caused during the Civil War by the Joint Committee on the Conduct of the War. Capitol Hill leaders, however, convinced Roosevelt that Truman was a reliable sort and, moreover, could not do too much damage with a committee budget of $15,000.

An Appeciation of Felix Salmon

There is 1000 times as much good stuff to read as any of us could possibly read. So we read a little: things and people that we have found interesting in the past. And when we run into somebody in the hallway, we ask them what they have recently read that was interesting. Weblogs greatly expand the number of people we run into in the hallway: although in this case it is, of course, a virtual hallway.

Which then creates the problem of which of the thousands of doors on your virtual hallway you knock on.

Ever since Felix Salmon started working for Nouriel Roubini, he has been very high on my list of weblogs to read. Why? Because he writes very well. Because he reads an immense amount. Because he is pragmatic and empirical: "this proves my ideology is right!" is not a message he wants to send anyone. And because he reads different things from me and things differently enough from me that I learn a huge amount.

Felix Salmon suits me. Would he suit you? He really ought to. Too many people are either on Team Politics or Team Ideology or Team I-Talk-My-Book. You cannot learn much from them.

Take a look at, recently:

http://blogs.reuters.com/felix-salmon/2011/02/28/annals-of-white-collar-crime-james-altucher-edition

http://blogs.reuters.com/felix-salmon/2011/02/24/why-it-pays-to-ignore-the-market/

http://blogs.reuters.com/felix-salmon/2011/02/24/will-the-governments-mortgage-settlement-work/

http://blogs.reuters.com/felix-salmon/2011/02/23/why-do-we-want-stocks-to-go-up/

http://blogs.reuters.com/felix-salmon/2011/02/23/austeritys-inauspicious-historical-precedents/

http://blogs.reuters.com/felix-salmon/2011/02/23/the-salmon-cottrell-huffpo-bet/

http://blogs.reuters.com/felix-salmon/2011/02/21/the-steady-savings-retirement-plan/

http://blogs.reuters.com/felix-salmon/2011/02/18/learning-from-boeings-outsourcing-disaster/

http://blogs.reuters.com/felix-salmon/2011/02/11/judging-treasurys-housing-report/

http://blogs.reuters.com/felix-salmon/2011/02/08/how-aig-died/

All ten of these are worth reading for me. I would have gotten to about three of them without Felix.