J. Bradford DeLong's Blog, page 95

A very nice look-back at a big story from a decade ago th...

A very nice look-back at a big story from a decade ago that simply did not happen:

Ben Casselman: The White-Collar Job Apocalypse That Didn���t Happen https://www.nytimes.com/2019/09/27/business/economy/jobs-offshoring.html: "'Where in retrospect I missed the boat is in thinking that the gigantic gap in labor costs between here and India would push it to India rather than to South Dakota', Mr. Blinder said in a recent interview.... Adam Ozimek revisited Mr. Blinder���s analysis to see what had happened over the past decade. Some job categories that Mr. Blinder identified as vulnerable, like data-entry workers, have seen a decline in United States employment. But the ranks of others, like actuaries, have continued to grow.... Over all, of the 26 occupations that Mr. Blinder identified as 'highly offshorable' and for which Mr. Ozimek had data, 15 have added jobs over the past decade and 11 have cut them. Altogether, those occupations have eliminated fewer than 200,000 jobs over 10 years, hardly the millions that many feared.... In the jobs that Mr. Blinder identified as easily offshored, a growing share of workers were now working from home. Mr. Ozimek said he suspected that many more were working in satellite offices or for outside contractors, rather than at a company���s main location. In other words, technology like cloud computing and videoconferencing has enabled these jobs to be done remotely, just not quite as remotely as Mr. Blinder and many others assumed.... Call centers. Telemarketing jobs have declined sharply in the United States since 2007, as much of the work was sent overseas. But the number of customer service representatives has continued to grow.... Telemarketers are essentially selling products and often working from a script. Customer service and other call-center work like tech support often require a more nuanced understanding of the customer experience...

#noted #notebookslouching #riseoftherobots #2019-10-31

There are remarkably good odds that the next global reces...

There are remarkably good odds that the next global recession will be triggered by the miscalculations of politicians who have no business holding any office whatsoever. I have but one quibble with Nouiiel Roubini's argument here. The situation in Argentina is dire for Argentina and the southern cone, but it is not the kidn of thing that can provoke a global recession. Trump and Johnson, by contrast, might:��

Nouriel Roubini: Four Collision Courses for the Global Econom https://www.project-syndicate.org/commentary/playing-chicken-with-global-economy-trump-china-iran-argentina-by-nouriel-roubini-2019-09: "Between US President Donald Trump's zero-sum disputes with China and Iran, UK Prime Minister Boris Johnson's brinkmanship with Parliament and the European Union, and Argentina's likely return to Peronist populism, the fate of the global economy is balancing on a knife edge. Any of these scenarios could lead to a crisis with rapid spillover effects.... In each case, failure to compromise would lead to a collision, most likely followed by a global recession and financial crisis.... The problem is that while compromise requires both parties to de-escalate, the tactical logic of chicken rewards crazy behavior. If I can make it look like I have removed my steering wheel, the other side will have no choice but to swerve. But if both sides throw out their steering wheels, a collision becomes unavoidable...

#noted #notebookmodernmacro #2019-10-31

Of all the very strange things the New York Times has pub...

Of all the very strange things the New York Times has published since October 1, 2016, perhaps the strangest is the Bret Stephens column comparing George Washington University Professor Dave Karpf to Joseph Goebbels.

Why did Stephens do this? Because Karpf had tweeted ���the bedbugs are a metaphor. The bedbugs are Bret Stephens��� in reply to New York Times assistant editor Stuart A. Thompson's tweet that there were bedbugs in the New York Times newsroom.

In response to things like this, I find the Washington Post's Alexandra Petri usually responds at the appropriate level. And she does so here:

Alexandra Petri: I Am a Bedbug and Would Like to Be Kept Out of This Mess: "My name has been soiled and made dirty like a place I would love to relax at with my blood meal. Please, I would like to be kept out of this mess. I know that, as a bedbug, this is not a phrase you would expect to hear vibrate forth through my rostrum, but hear me out. I am just trying to live my life. Instead, I have been thrust into a story I never asked to be part of. This is not my fight, and I don���t know any of the people involved. Please, stop using me to insult people. I don���t know these people. I don���t know anything other than that some of them emit kairomones and I need to make use of them for a blood meal to escape my final nymphal stage. That���s it. So stop invoking my name! Fight your own battles. I understand very well that I am not welcome in your society. This is the double standard. I have spent a long time developing a thick, chitinous skin, covered with bristles and hairs. But that does not mean that words do not sting, too...

#noted #journamalism #2019-10-31

No matter what our domestic economic problems, it is stil...

No matter what our domestic economic problems, it is still essential to remind ourselves that for humanity as a whole the years since 1980 have seen the greatest improvement in economic well-being, globally, of any forty-yer period in human history. We have been truly blessed:

Noah Smith: Globalization Has Cut Inequality Between Rich and Poor Countries https://www.bloomberg.com/opinion/articles/2019-09-24/globalization-has-cut-inequality-between-rich-and-poor-countries: "Up through the 1980s, the blessings of the Industrial Revolution seemed largely confined to a handful of countries in Western Europe, East Asia, the U.S., Australia and Canada. But in the past three decades, there has been a sea change, and developing countries have made great strides in catching up. Although inequality has risen within some nations, at the global level it���s going down: Much of this catch-up is happening in countries that are still largely poor, such as India or Indonesia. To an economist���or someone who cares about alleviating the suffering of the world���s poorest people���this still represents a miracle. But a skeptic of globalization might wonder whether it can really be called a success if broad middle-class living standards still remain the exclusive privilege of a handful of nations, many of them former colonial powers...

#noted #globalization #notebookslouching #notebookecon135 #2019-10-31

John Authers: Newsletter: Powell Will Need a Horror Show ...

John Authers: Newsletter: Powell Will Need a Horror Show to Cut Again https://mail.google.com/mail/u/0/#inbox/FMfcgxwDrvGtsgdxLzJlcxQKswVjrTMM: 'Every so often, I make a good call. It���s nice when it happens. So I start by drawing your attention to... ���Could this be the point when Powell tries to stake out his hawkish credentials once again, and stock market��day-traders, mugs though they are, show they have at last learned��to anticipate this and price it in? We will know soon enough.��� It turns out that the answer was ���yes���.�� One more good call and I can say I am right more often than a broken clock.... The Federal Open Market Committee cut its target rate for the third meeting running, and tried to give itself space not to cut again, also for the third time running.... But it still included a caveat which was enough to reassure everyone that he was no more hawkish than they had feared: ���if developments emerge that are a cause for a material reassessment of our outlook, we would respond accordingly.���... A ���material reassessment��� would imply the Fed would need to be proved seriously wrong, which in turn would imply a recession. So we could go along with the gloriously lugubrious assessment of TS��Lombard���s U.S. economist Steve��Blitz:�����This means it will take recessionary signals to cut and that, in turn, means they will be too late to avoid recession.��� That is in line with the lesson of history... either there is a recession, or the Fed has cut as much as anyone could have hoped. Now, eat, drink and make merry...

#noted #monetarypolicy #forecasting #notebookmodernmacro #2019-10-31

IMHO, the late Marty Weitzman's finest work. I would give...

IMHO, the late Marty Weitzman's finest work. I would give a testicle or equivalent value to have written this:

Marty Weitzman: Prices vs. Quantities https://delong.typepad.com/prices-vs-quantities.pdf: "There is, it seems to me, a rather fundamental reason to believe that quantities are better signals for situations demanding a high degree of coordination. A classical example would be the short run production planning of intermediate industrial materials. Within a large production organization, be it the General Motors Corporation or the Soviet industrial sector as a whole, the need for balancing the output of any intermediate commodity whose production is relatively specialized to this organization and which cannot be effortlessly and instantaneously imported from or exported to a perfectly competitive outside world puts a kink in the benefit function. If it turns out that production of ball bearings of a certain specialized kind (plus reserves) falls short of anticipated internal consumption, far more than the value of the unproduced bearings can be lost. Factors of production and materials that were destined to be combined with the ball bearings and with commodities containing them in higher stages of production must stand idle and are prevented from adding value all along the line. If on the other hand more bearings are produced than were contemplated being consumed, the excess cannot be used immediately and will only go into storage to lose implicit interest over time. Such short run rigidity is essentially due to the limited substitutability, fixed coefficients nature of a technology based on machinery. Other things being equal, the asymmetry between the effects of overproducing and underproducing are more pronounced the further removed from final use is the commodity and the more difficult it is to substitute alternative slack resources or to quickly replenish supplies by emergency imports. The resulting strong curvature in benefits around the planned consumption levels of intermediate materials tends to create a very high comparative advantage for quantity instruments. If this is combined with a cost function that is nearly linear in the relevant range, the advantage of the quantity mode is doubly compounded...

#noted #2019-10-30

Carmen Ye: Why We Need Better Re-Employment Policies For ...

Carmen Ye: Why We Need Better Re-Employment Policies For Formerly Incarcerated African American Men: "African American men... 33 percent of the 1.56 million Americans held in state or federal prisons.... When these men are released from prison, what will their employment prospects look like?... Black applicants with no criminal record receive a callback or job offer at the same rate as white applicants with a felony conviction. Yet black applicants without a criminal record were three times as likely to get a callback as those with a record...

#noted #2019-10-30

I have some disagreements with this by the smart Sufi, Mi...

I have some disagreements with this by the smart Sufi, Mishkin, and Hooper: the evidence for "significant nonlinearity" in the Phillips Curve is that the curve flattens when inflation is low, not that it steepens when labor slack is low. There is simply no "strong evidence" of significant steepening with low labor slack. Yes, you can find specifications with a t-statistic of 2 in which this is the case, but you have to work hard to find such specifications, and your results are fragile. The fact is that in the United States between 1957 and 1988���the first half of the last 60 years���the slope of the simplest-possible adaptive-expectations Phillips Curve was -0.54: each one-percentage point fall in unemployment below the estimated natural rate boosted inflation in the subsequent year by 0.54%-points above its contemporary value. Since 1988���in the second half of the past 60 years���the slope of this simplest-possible Phillips curve has been effectively zero: the estimated regression coefficient has been not -0.54 but only -0.03. The most important observations driving the estimated negative slope of the Phillips Curve in the first half of the past sixty years were 1966, 1973, and 1974���inflation jumping up in times of relatively-low unemployment���and 1975, 1981, and 1982���inflation falling in times of relatively-high unemployment. The most important observations driving the estimated zero slope of the Phillips Curve in the second half of the past sixty years have been 2009-2014: the failure of inflation to fall as the economy took its Great-Recession excursion to a high-unemployment labor market with enormous slack. Yes, if we had analogues of (a) two presidents, Johnson and Nixon, desperate for a persistent high-pressure economy; (b) a Federal Reserve chair like Arthur Burns eager to accommodate presidential demands; (c) the rise of a global monopoly in the economy's key input able to deliver mammoth supply shocks; and (d) a decade of bad luck; then we might see a return to inflation as it was in the (pre-Iran crisis) early and mid-1970s. But is that really the tail risk we should be focused monomaniacally on? And how is it, exactly, that "the difference between national and city/state results in recent decades can be explained by the success that monetary policy has had in quelling inflation and anchoring inflation expectations since the 1980s"? Neither of those two should affect the estimated coefficient. Much more likely is simply that���at the national level and at the city/state level���the Phillips Curve becomes flat when inflation becomes low:

Peter Hooper, Frederic S. Mishkin, and Amir Sufi: Prospects for Inflation in a High Pressure Economy: Is the Phillips Curve Dead or Is It Just Hibernating? https://delong.typepad.com/files/phillips-hibernating-1.pdf: "Evidence on whether the Phillips curve is dead, i.e. that its slope has flattened to zero. National data going back to the 1950s and 60s yield strong evidence of negative slopes and significant nonlinearity in those slopes, with slopes much steeper in tight labor markets than in easy labor markets. This evidence of both slope and nonlinearity weakens dramatically based on macro data since the 1980s for the price Phillips curve, but not the wage Phillips curve. However, the endogeneity of monetary policy and the lack of variation of the unemployment gap, which has few episodes of being substantially below zero in this sample period, makes the price Phillips curve estimates from this period less reliable. At the same time, state level and MSA level data since the 1980s yield significant evidence of both negative slope and nonlinearity in the Phillips curve. The difference between national and city/state results in recent decades can be explained by the success that monetary policy has had in quelling inflation and anchoring inflation expectations since the 1980s. We also review the experience of the 1960s, the last time inflation expectations became unanchored, and observe both parallels and differences with today. Our analysis suggests that reports of the death of the Phillips curve may be greatly exaggerated...

#noted #2019-10-30

There is no single effect of "automation" on the workforc...

There is no single effect of "automation" on the workforce and the labor market. It is long past time for us to dig deeper, and here is a good piece of spadework:

Sotiris Blanas, Gino Gancia, and Tim Lee: How Different Technologies Affect Different Workers https://voxeu.org/article/how-different-technologies-affect-different-workers_: "Since the early 1980s, technology has reduced the demand for low and medium-skill workers, the young, and women, especially in manufacturing industries. The column investigates which technologies have had the largest effect, and on which types of worker. It finds that robots and software raised the demand for high-skill workers, older workers, and men, especially in service industries.... From 1982 to 2005, using data from 30 industries spanning roughly the entire economies of ten high-income countries.... We used the Dictionary of Occupational Titles (DOT) and the Occupational Information Network (O*NET) to evaluate which jobs are more prone to automation based on the type of tasks they require.... Industrial robots decrease low-skill employment, while they increase the income shares of high and medium-skill workers, old workers, and men.... In manufacturing, robots lower low-skill, young, and female employment, while in services, they increase medium-skill and male employment. In both sectors, robots increase the income shares of high-skill, old, and male workers. Our results are consistent with the view that robots replace workers who perform routine tasks, especially in sectors where automation is more widespread, such as manufacturing. By contrast, they increase employment and incomes in sectors where automation has started more recently, such as in services, a sector in which new occupations are appearing. Given the industrial and occupational composition of these sectors, that robots are likely to complement engineers, product designers and managers���that is, occupations that are dominated by high-skill, more senior, and male workers. Software has a similar effect to robots, whereas ICT capital is associated with employment gains mostly for medium and low-skill workers...

#noted #2019-10-30

Gary Forsythe: A Critical History of Early Rome: 'By 264 ...

Gary Forsythe: A Critical History of Early Rome: 'By 264 B.C. peninsular Italy was firmly under Roman military control. Its population consisted of three different categories of people. First of all, there were the Roman citizens. They occupied the actual territory of the Roman state, which stretched across central Italy from the Tyrrhenian to the Adriatic, extended southward in a strip down along the Volscian coast to the Bay of Naples, and included northern Campania. According to Roman census figures, which seem to be credible from the early third century B.C. onwards, the adult male Roman population at this time numbered more than a quarter of a million. Secondly, there were the states allied to Rome. In geography and population they formed the largest of the three categories. They were the various Etruscan, Umbrian, Picene, Sabellian, Messapic, and Greek communities of northern and southern Italy, who still exercised local autonomy over their own affairs but were bound to Rome by individual bilateral treaties. Generally speaking, these states were governed by republican constitutions of various configurations, and political power was largely in the hands of local landed elites, who had the same basic social, economic, and political interests and outlook as the Roman aristocracy. The third category of people in Roman Italy were the Latin colonies scattered throughout the peninsula. Since their inhabitants enjoyed Latin status and had Rome as their mother-city, they were closely bound to the Roman state by law, language, culture, and sentiment. Though numerically the smallest of the three categories, their numbers were deployed geographically to best safeguard Roman interests in the lands of the allied communities. Rome held the commanding central position of this legal structure, which integrated all these peoples into a single military organization. Both the Italian allies and the Latin colonies were bound directly to Rome by individual treaties which spelled out their rights and obligations. As long as domestic tranquillity was maintained, Rome was content to allow the allied...

#noted #2019-10-30