Economic Growth – Page 16 – artdiamondblog.com

The Good Old Days Were Grim

(p. A15) In “Progress,” the Swedish author Johan Norberg deploys reams of data to show just how much life has improved–especially over the past few decades but over the past couple of centuries as well. Each chapter is devoted to documenting progress in a single category, including food, sanitation, life expectancy, poverty, violence, the environment, literacy and equality.
In response to people who look fondly on the “good old days,” Mr. Norberg underscores just how grim they could be. Rampant disease, famine and violence routinely killed off millions. In the 14th century, the so-called Black Death wiped out a third of Europe’s population. Five hundred years later, cholera outbreaks throughout the world led to hundreds of thousands of deaths and even killed a U.S. president, James Polk.

For the full review, see:

MATTHEW REES. “BOOKSHELF; Bending the Arc of History.” The Wall Street Journal (Tues., December 13, 2016): A15.
(Note: the online version of the review has the date Dec. 12, 2016,)

The book under review, is:
Norberg, Johan. Progress: Ten Reasons to Look Forward to the Future. London, UK: Oneworld Publications, 2016.

Rigid Labor Regulations Hurt Labor in India

(p. A9) . . . rigid and complex regulations have discouraged investment in labor-intensive industries in India, . . . .
Many economists say India’s labor laws have encouraged enterprises to stay small, rely on informal labor or substitute capital for workers. A report by the Paris-based Organization for Economic Cooperation and Development said for India to return to a high-growth trajectory, it must “reduce barriers to formal employment by introducing a simpler and more flexible labor law which doesn’t discriminate by size of enterprise.”

For the full story, see:
NIHARIKA MANDHANA. “India State Tests Labor-Law Overhaul.” The Wall Street Journal (Sat., Dec. 6, 2014): A9.
(Note: ellipses added.)
(Note: the online version of the article has the date Dec. 7 [sic], 2014, and has the title “Modi’s BJP-Controlled States Become Labs for Contentious Reform.”)

Innovation Brought Rise of Middle Class and Decline of Aristocracy

(p. C7) Mr. Evans claims that “master narratives” have fallen into disrepute, and he does not aspire to provide one. But he returns repeatedly to such themes as the growth of “public space” as Europe urbanized and communications improved. He likewise describes the “shifting contours of inequality” as the middle classes burgeoned and benefited from the hastening pace of scientific innovation while the aristocracy slowly declined in status (albeit not in creature comforts).
Similarly, Mr. Evans offers an interesting discussion of how various forms of serfdom disappeared, even as the essence of rural immiseration generally did not. He conveys the degradation of existence for the emergent working class of the cities with controlled pathos yet without acknowledging the improvements in living standards that took place in advanced countries during the last decades of the century. He adduces evidence to show that the benefits of improved sanitation and hygiene, health and nutrition, consumer products and home conveniences, as well as longer life expectancy, went at first disproportionately to the urban middle and professional classes, strata that tripled as a fraction of the population in leading countries. Thus even in comparatively prosperous England, well-off adolescents at midcentury stood almost 9 inches taller than their proletarian contemporaries and by 1900 enjoyed a life expectancy 14 years longer.

For the full review, see:
STEPHEN A. SCHUKER. “The European Century.” The Wall Street Journal (Sat., December 3, 2016): C7.
(Note: the online version of the review has the date Dec. 2, 2016, and has the title “A Long Century of Peace.”)

The book under review, is:
Evans, Richard J. The Pursuit of Power: Europe 1815-1914. New York: Viking, 2016.

Everybody Is Seeking “a Life that Provides Them with Dignity”

(p. A11) I want to end this dramatic year writing of a man whose great and constructive work I discovered in 2016. He is the photojournalist Chris Arnade.
. . .
In his work you see an America that is battered but standing, a society that is atomized–there are lonely people in his pictures–but holding on.
. . .
Mr. Arnade didn’t intend to discover virtue in a mighty corporation, but McDonald’s “has great value to community.” He sees an ethos of patience and respect. “McDonald’s is nonjudgmental.” If you have nowhere to go all day they’ll let you stay, nurse your coffee, read your paper. “The bulk of the franchises leave people alone. There’s a friendship that develops between the people who work there and the people who go.” “In Natchitoches, La., there’s a twice-weekly Bible study group,” that meets at McDonald’s. “They also have bingo games.” There’s the Old Man table, or the Romeo Club, for Retired Old Men Eating Out.
I’ve written of the great divide in America as between the protected and the unprotected–those who more or less govern versus the governed, the facts of whose lives the protected are almost wholly unaware. Mr. Arnade sees the divide as between the front-row kids at school waving their hands to be called on, and the back-row kids, quiet and less advantaged. The front row, he says, needs to learn two things. “One is how much the rest of the country is hurting. It’s not just economic pain, it’s a deep feeling of meaninglessness, of humiliation, of not being wanted.” Their fears and anxieties are justified. “They have been excluded from participating in the great wealth of this country economically, socially and culturally.” Second, “The front-row kids need humility. They need to look in the mirror, ‘We messed this up, we’ve been in charge 30 years and haven’t delivered much.’ ” “They need to take stock of what has happened.”
Of those falling behind: “They’re not lazy and weak, they’re dealing with bad stuff. Both conservative and progressive intellectuals say Trump voters are racist, dumb. When a conservative looks at a minority community and says, ‘They’re lazy,’ the left answers, ‘Wait a minute, let’s look at the larger context, the availability of jobs, structural injustice.’ But the left looks at white working-class poverty and feels free to judge and dismiss.”
. . .
I asked how he describes his work. I see it as an effort to help America better understand itself. He said he was trying to show that “Everybody is kind of working in the same direction, trying to get by, get a life that provides them with dignity.” In this, he suggests, we are more united than we know.

For the full commentary, see:
PEGGY NOONAN. “Shining a Light on ‘Back Row’ America; Chris Arnade’s photos reveal an America that is battered but standing, atomized but holding on.” The Wall Street Journal (Sat., Dec. 31, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 29, 2016.)

Better Policies Can Turn Stagnation into Growth

(p. A19) . . . , now ought to be the time that policy makers in Washington come together to tackle America’s greatest economic problem: sclerotic growth. The recession ended more than seven years ago. Unemployment has returned to normal levels. Yet gross domestic product is rising at half its postwar average rate. Achieving better growth is possible, but it will require deep structural reforms.
The policy worthies have said for eight years: stimulus today, structural reform tomorrow. Now it’s tomorrow, but novel excuses for stimulus keep coming. “Secular stagnation” or “hysteresis” account for slow growth. Prosperity demands more borrowing and spending–even on bridges to nowhere–or deliberate inflation or negative interest rates. Others advocate surrender. More growth is impossible. Accept and manage mediocrity.
But for those willing to recognize the simple lessons of history, slow growth is not hard to diagnose or to cure. The U.S. economy suffers from complex, arbitrary and politicized regulation. The ridiculous tax system and badly structured social programs discourage work and investment. Even internet giants are now running to Washington for regulatory favors.
. . .
So why is there so little talk of serious growth-oriented policy? Regulated and protected industries and unions, and the politicians who extract support from them in return for favors, will lose enormously. The global policy elite, steeped in Keynesian demand management for the economy as a whole, and microregulation of individual businesses, are intellectually unprepared for the hard project of “structural reform”–fixing the entire economy by cleaning up the thousands of little messes. Even economists fight to protect outdated skills.

For the full commentary, see:
JOHN H. COCHRANE. “Don’t Believe the Economic Pessimists; Memo to Clinton and Trump: The U.S. economy can and will grow faster with the right policies.” The Wall Street Journal (Mon., Nov. 7, 2016): A19.
(Note: ellipses added.)

Business Cycles Can Be Moderated

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

(p. B2) It’s tempting to think of an economic expansion as being like a life span. The older you get, the closer you are to death; a 95-year-old probably has fewer years left to live than a 60-year-old. But this year Glenn D. Rudebusch, an economist at the Federal Reserve Bank of San Francisco, looked at the evidence from post-World War II United States economic expansions, and did not find that pattern held up at all.

“A long recovery appears no more likely to end than a short one,” Mr. Rudebusch wrote. “Like Peter Pan, recoveries appear to never grow old.”

Expansions don’t die of old age. They die because something specific killed them. It can be a wrong-footed central bank, the popping of a financial bubble or a shock from overseas. But age itself isn’t the problem.

A look around the world also shows plenty of examples of expansions that have lasted a lot longer than either the seven years the current United States expansion has been underway or the longest expansion in American history, from 1991 to 2001.

Britain had a nearly 17-year expansion from the early 1990s until the 2008 global financial crisis. France had a slightly longer expansion that ended in 1992. And the record-holders among advanced economies in modern times, according to the research firm Longview Economics, are the Netherlands, which experienced a nearly 26-year “Dutch miracle” that ended in 2008, and Australia, which has an expansion that began in 1991 and is on track to overtake the Dutch soon for the longest on record.

For the full story, see:

NEIL IRWIN. “Expansion Is Old, Not at Death’s Door.” The New York Times (Fri., OCT. 28, 2016): B1 & B2.

(Note: the online version of the article has the date Oct. 27, 2016, and has the title “Will the Next President Face a Recession? Don’t Assume So.”)

Rudebusch’s research, mentioned above, appeared in:

Rudebusch, Glenn D. “Will the Economic Recovery Die of Old Age?” FRBSF Economic Letter # 2016-03 (Feb. 8, 2016): 1-4.

Unbinding Entrepreneurs Can Create Jobs and Speed Growth

(p. A21) This week more than 160 countries are celebrating Global Entrepreneurship Week. The Kauffman Foundation, which I once led, created this event eight years ago to encourage other nations to follow the American tradition of bottom-up economic success. Yet this example has been less powerful in recent years, as American entrepreneurship has waned. Fortunately, President-elect Donald Trump has plenty of options if he wants to resurrect America’s startup economy.
Consider the economic situation that the president-elect is inheriting. Despite the addition of 161,000 jobs in October, the labor-force participation rate fell to its second lowest level in nearly 40 years, according to the St. Louis Federal Reserve. More people have joined the ranks of the chronically unemployed, slipping into poverty at alarming rates as their skills decay and dependency on public assistance grows. Considering population growth, America needs at least 325,000 new jobs every month to stanch the growing numbers of discouraged workers, according to the Bureau of Labor Statistics.
Merely bringing back factories from overseas will not solve this problem. Technology has made every factory more productive. Fewer workers make more goods no matter where they’re located. At the same time, fewer U.S. businesses are being started. New firms are the country’s principal generator of new jobs. Data from the Kauffman Foundation suggest companies less than five years old create more than 80% of new jobs every year. While the nation seems more enthusiastic than ever about the promise of entrepreneurship, fewer than 500,000 new businesses were started in 2015. That is a disastrous 30% decline from 2008.
. . .
What can President Trump do to encourage more entrepreneurship?
. . .
Government must . . . widen the scope of innovation by stepping back and letting the market find the future. By promoting trendy ideas and subsidizing politically favored companies, government dampens diversity in creative business ideas.
. . .
Mr. Trump can also reverse regulatory sprawl and cut government-imposed requirements that add to every entrepreneurs’ costs and risks. Anti-growth policies like ObamaCare and minimum-wage increases make hiring workers prohibitively expensive.
. . .
With these policies in mind, President Trump should set another goal: that his administration will create an environment that enables one million Americans to start companies every year. Such an outcome would assure his target of 4% GDP growth, as well as full employment.

For the full commentary, see:
CARL J. SCHRAMM. “The Entrepreneurial Way to 4% Growth; Trump should set a goal: fix the business climate so a million Americans a year can start companies.” The Wall Street Journal (Weds., Nov. 16, 2016): A21.

Air-Conditioning Is “a Critical Adaptation” that Saves Lives

(p. A3) Air-conditioning is not just a luxury. It’s a critical adaptation tool in a warming world, with the ability to save lives.
. . .
In our continuing research, my colleagues and I have found that hot days in India have a strikingly big impact on mortality. Specifically, the mortality effects of each additional day in which the average temperature exceeds 95 degrees Fahrenheit are 25 times greater in India than in the United States.
. . .
The effect of very hot days on mortality in the United States is so low in part because of the widespread use of air-conditioning. A recent study I did with colleagues showed that deaths as a result of these very hot days in the United States declined by more than 80 percent from 1960 to 2004 — and it was the adoption of air-conditioning that accounted for nearly the entire decline.

For the full story, see:
Michael Greenstone. “‘India’s Air-Conditioning and Climate Change Quandary.” The New York Times (Thurs., OCT. 27, 2016): A3.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 26, 2016.)

The Greenstone study mentioned above on heat mortality in the U.S., is:
Barreca, Alan, Karen Clay, Olivier Deschenes, Michael Greenstone, and Joseph S. Shapiro. “Adapting to Climate Change: The Remarkable Decline in the Us Temperature-Mortality Relationship over the Twentieth Century.” Journal of Political Economy 124, no. 1 (Feb. 2016): 105-59.

Dignity and Equality Before the Law Unleashes Creativity in the Poor

(p. A23) We can improve the conditions of the working class. Raising low productivity by enabling human creativity is what has mainly worked. By contrast, taking from the rich and giving to the poor helps only a little — and anyway expropriation is a one-time trick.
. . .
Look at the astonishing improvements in China since 1978 and in India since 1991. Between them, the countries are home to about four out of every 10 humans. Even in the United States, real wages have continued to grow — if slowly — in recent decades, contrary to what you might have heard. Donald Boudreaux, an economist at George Mason University, and others who have looked beyond the superficial have shown that real wages are continuing to rise, thanks largely to major improvements in the quality of goods and services, and to nonwage benefits. Real purchasing power is double what it was in the fondly remembered 1950s — when many American children went to bed hungry.
What, then, caused this Great Enrichment?
Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called “the liberal plan of equality, liberty and justice.” In a word, it was liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic.

For the full commentary, see:
DEIRDRE N. McCLOSKEY. “Economic View; Equality, Liberty, Justice and Wealth.” The New York Times, SundayBusiness Section (Sun., SEPT. 4, 2016): 6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date SEPT. 2, 2016, and has the title “Economic View; The Formula for a Richer World? Equality, Liberty, Justice.”)

McCloskey’s commentary, quoted above, is related to her book:
McCloskey, Deirdre N. Bourgeois Equality: How Ideas, Not Capital, Transformed the World. Chicago: University of Chicago Press, 2016.

Prehistoric Hunter Suffered from Ulcer-Causing Microbe

(p. A7) Microbes that once troubled the stomach of a prehistoric hunter known as “Otzi the Iceman,” who died on an Alpine glacier 5,300 years ago, are offering researchers a rare insight into the early settlement of Europe.
In findings reported Thursday [January 7, 2016] in Science, an international research group analyzed remnants of ulcer-causing microbes called Helicobacter pylori exhumed from the well-preserved mummy of the Neolithic nomad. With modern DNA sequencing technology, they reconstructed the genetic structure of this ancient microbe–the oldest known pathogen sequenced so far.
. . .
“We know he had a rough lifestyle,” said Frank Maixner at the European Academy Institute for Mummies and the Iceman in Bolzano, Italy, who led the team of 23 scientists. “We found a lot of pathological conditions.”
. . .
The researchers also determined that the bacteria had inflamed his stomach lining, indicating that the prehistoric hunter, fleeing into the icy highlands where he was shot in the back with an arrow and beaten, may have been feeling ill on the day he was murdered.

For the full story, see:
ROBERT LEE HOTZ. “Iceman’s Gut Sheds Light on Human Migration.” The Wall Street Journal (Fri., Jan. 8, 2016): A7.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date Jan. 7, 2016, and has the title “Otzi the Iceman’s Stomach Sheds Light on Copper-Age Migration to Europe.”)

The research summarized in the passages quoted above, was more fully reported in:
Maixner, Frank, Ben Krause-Kyora, Dmitrij Turaev, Alexander Herbig, Michael R. Hoopmann, Janice L. Hallows, Ulrike Kusebauch, Eduard Egarter Vigl, Peter Malfertheiner, Francis Megraud, Niall O’Sullivan, Giovanna Cipollini, Valentina Coia, Marco Samadelli, Lars Engstrand, Bodo Linz, Robert L. Moritz, Rudolf Grimm, Johannes Krause, Almut Nebel, Yoshan Moodley, Thomas Rattei, and Albert Zink. “The 5300-Year-Old Helicobacter pylori Genome of the Iceman.” Science 351, no. 6269 (Jan. 8, 2016): 162-65.

When People’s Lives Stagnate They “Often Become Angry, Resentful”

(p. 3) Benjamin M. Friedman of Harvard University, in his book “The Moral Consequences of Economic Growth” (Knopf, 2005), said that at a deep level people make judgments about the economic progress that they see in their own lifetimes, and in comparison with the progress made by the previous generation, especially their own parents. Few people study economic growth statistics. But nearly everyone knows what they are being paid. If they realize that they are doing less well than their forebears, they become anxious. And if they can’t see themselves and others in their cohort as progressing over a lifetime, their social interactions often become angry, resentful and even conspiratorial.

For the full commentary, see:
ROBERT J. SHILLER. “Economic View; Weak Economies Foment Ethnic Nationalism.” The New York Times, SundayBusiness Section (Sun., OCT. 16, 2016): 3.
(Note: the online version of the commentary has the date OCT. 14, 2016, and has the title “Economic View; What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy.”)

The Benjamin Friedman book mentioned in the commentary above, is:
Friedman, Benjamin M. The Moral Consequences of Economic Growth. New York: Knopf, 2005.