Category: Economic Growth

In Last Decade, Extreme Poverty in World Fell from 18.2% to 8.6%

(p. A15) The 2010s have been the best decade ever. The evidence is overwhelming. Start with the United Nations Development Report. Framed as a warning about inequality, it plays down the good news: “The gap in basic living standards is narrowing, with an unprecedented number of people in the world escaping poverty, hunger and disease.”

The World Bank reports that the world-wide rate of extreme poverty fell more than half, from 18.2% to 8.6%, between 2008 and 2018. Last year the World Data Lab calculated that for the first time, more than half the world’s population can be considered “middle class.”

. . .

Rich countries use less aluminum, nickel, copper, steel, stone, cement, sand, wood, paper, fertilizer, water, crop acreage and fossil fuel every year, as Andrew McAfee documents in “More From Less.” Consumption of 66 out of 72 resources tracked by the U.S. Geological Survey is now declining.

For the full commentary, see:

Johan Norberg. “The 2010s Have Been Amazing.” The Wall Street Journal (Tuesday, December 17, 2019): A15.

(Note: ellipsis added.)

(Note: the online version of the story has the date Dec. 16, 2019, and has the same title as the print version.)

The commentary is related to the author’s book:

Norberg, Johan. Progress: Ten Reasons to Look Forward to the Future. London, UK: Oneworld Publications, 2016.

The book by McAfee, mentioned in the commentary, is:

McAfee, Andrew. More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources―and What Happens Next. New York: Scribner, 2019.

Jobs Return to “Creative Destruction Parts of the Country”

(p. B5) “If you look, there are a heck of a lot of successful manufacturing parts of the country right now,” Kevin Hassett, the departing chairman of the White House Council of Economic Advisers, said in an interview. “But look at where they’re being created.”

Mr. Hassett drew a distinction between “creative destruction” parts of the country, where the Great Recession wiped out jobs but others sprung up to replace them, and “destruction-destruction” parts, where jobs have been slow to return. Recent factory job growth, he said, was “not necessarily disproportionately in the destruction-destruction places.”

For the full story, see:

Jim Tankersley. “Growth in Factory Jobs Skips Traditional Hubs.” The New York Times (Friday, June 14, 2019): B1 & B5.

(Note: the online version of the story has the date June 13, 2019, and has the title “In the Race for Factory Jobs Under Trump, the Midwest Isn’t Winning.”)

Clayton Christensen Wrote Well on Innovation

Clayton Christensen’s The Innovator’s Solution (co-authored with Michael Raynor) was packed with insights and examples on how entrepreneurs and incumbent firms innovate. He wrote several other thought-provoking and useful books, starting with his now-famous The Innovator’s Dilemma. Just a few days ago, I told one of my students from Africa that he should read Christensen’s latest book, which gives wonderful examples of how entrepreneurial innovation in developing countries can help them prosper.

This evening (Thurs., Jan. 24, 2020) I was discouraged to receive an email alert from the Wall Street Journal saying that Christensen died today.

A year or so ago, I sent him a late draft of my Openness to Creative Destruction, which references his work several times. He never responded. Maybe he already was too ill to look at it, or maybe he didn’t like it. I’ll never know. But either way, I thank him for all that his books taught me about innovation.

Christensen’s best book is:

Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

Christensen’s best-known book is:

Christensen, Clayton M. The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business. New York: Harper Books, 2000.

Christensen’s most recent book is:

Christensen, Clayton M., Efosa Ojomo, and Karen Dillon. The Prosperity Paradox: How Innovation Can Lift Nations out of Poverty. New York: HarperBusiness Press, 2019.

Art Carden Praises “Openness to Creative Destruction”

Economist Art Carden has written a fine review of my Openness book under the title “New Ideas Are the Key to Economic Development.” The review is fair, mostly positive, and well-written. His main reservation is that he sides with many other distinguished libertarians, but against me, on my argument that the patent system should be reformed rather than abolished.

Here is the final paragraph of Carden’s review:

I am glad to see Openness to Creative Destruction appear in print. It strikes a fine balance between detail and a big-picture perspective that, I think, can be read profitably by specialists and students alike. Anyone who wants to understand how the world grew rich and, importantly, what will sustain our enrichment would do well to have this book on the shelf.

Chinese Growth Closer to 3% than to Reported 6%

(p. A1) In the second quarter of this year, official Chinese data showed economic growth of 6.2%, close to Beijing’s target and within a percentage point of what it has reported every quarter for the past 4½ years.

A few months earlier, satellites monitoring Chinese industrial hubs suggested parts of the world’s largest trading economy were contracting. An index of Chinese industrial production created by a multinational manufacturer was pointing to lower growth than official figures. And a web-search index used to gauge how many workers return to their jobs after the Lunar New Year holidays was down sharply from a year earlier.

Beneath China’s stable headline economic numbers, there is a growing belief among economists, companies and investors around the world that the real picture is worse than the official data. That has analysts and researchers crunching an array of alternative data—from energy consumption to photos taken from space—for a more accurate reading.

Their conclusion: China’s economy isn’t tanking, but it is almost certainly weaker than advertised. Some economists who have dissected China’s GDP numbers say more accurate figures could be up to 3 percentage points lower, based on their analysis of corporate profits, tax revenue, rail freight, property sales and other measures of activity that they believe are harder for the gov-(p. A10)ernment to fudge.

For the full story, see:

Mike Bird and Lucy Craymer. “Private Data Show Sharper China Slowdown.” The Wall Street Journal (Monday, Sept. 9, 2019): A1 & A10.

(Note: the online version of the story has the date Sept. 8, 2019, and has the title “China Says Growth Is Fine. Private Data Show a Sharper Slowdown.” )

Wisconsin May Have a Robustly Redundant Labor Market

From Nathan Wiese’s description, below, Wisconsin is described in as what I call a “robustly redundant labor market” in my book Openness to Creative Destruction: Sustaining Innovative Dynamism.

(p. A1) ROSENDALE, Wis.—Nathan Wiese, a third-generation dairy farmer who is struggling to get by, says even if he has to close his family’s farm, he feels confident he could hire on as a truck driver and take home more money.

“If you want a job, you can get a job,” said Mr. Wiese, who voted for Donald Trump in 2016 and plans to do so again. “I could probably get one in one day.”

. . .

. . . in an era of severe worker shortages, people losing jobs when a plant or a farm closes are quickly getting scooped up by others. This provides a safety net in the broader economy by keeping incomes and consumer spending strong.

For the full story, see:

Shayndi Raice and Jon Hilsenrath. “In Wisconsin, Demand for Workers Buffers a Slowdown.” The Wall Street Journal (Friday, November 29, 2019): A1 & A9.

(Note: ellipses added.]

(Note: the online version of the story has the date Nov. 28, 2019, and has the title “How a Strong Job Market Has Proved the Experts Wrong.”)

My book, mentioned at the top, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Economists Surprised by Strength of Economy

(p. B3) There are a lot of good things to say, and few bad things to say, about the November [2019] employment numbers that were published Friday morning.

Employers added 266,000 jobs, a blockbuster number even after accounting for the one-time boost of about 41,000 striking General Motors workers who returned to the job.

. . .

Still, there is a bigger lesson contained in the data, one that is important beyond any one month’s tally of the job numbers: that the American economy is capable of cranking at a higher level than conventional wisdom held as recently as a few years ago. As the economy continues to grow well above what once seemed like its potential, without inflation or other clear signs of overheating, it’s clearer that the old view of its potential was an extremely costly mistake.

The mainstream view of the economics profession — held by leaders of the Federal Reserve, the Congressional Budget Office, private forecasters and many in academia — was that the United States economy was at, or close to, full employment.

. . .

People often say that this expansion, now in its 11th year, is growing long in the tooth, or that we are late in the economic cycle. And maybe that’s right. But the biggest lesson when you contrast where the labor market stands at the end of 2019, versus where smart people thought it would stand just a few years ago, is that there’s a lot we don’t know about just what is possible and how strong the United States economy can get.

For the full story, see:

Neil Irwin. “In Hindsight, Economy Is Stronger Than It Looks.” The New York Times (Saturday, December 7, 2019): B3.

(Note: ellipses, and bracketed year, added.]

(Note: the online version of the story has the date Dec. 6, 2019, and has the title “How a Strong Job Market Has Proved the Experts Wrong.”)