Economic Growth – Page 17 – artdiamondblog.com

Regulations Cause Sluggish Economy by Slowing Startup Creation

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

(p. A2) The U.S. economy is inching along, productivity is flagging and millions of Americans appear locked out of the labor market.
One key factor intertwined with this loss of dynamism: The U.S. is creating startup businesses at historically low rates.
. . .
The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a postrecession rebound.
. . .
Rules and regulations also could be at play. Goldman Sachs economists in part blame the cumulative effect of regulations enacted since the Great Recession for reducing the availability of credit and raising the cost of doing business for small firms, making them less competitive.
. . .
There is some disagreement on whether tech firms have fallen into the same doldrums as other startups like mom-and-pop shops. Mr. Haltiwanger and colleagues at the Federal Reserve and Census Bureau find evidence they have, with significant detriment to the economy.
“It may be that we are designing things here in the U.S. as rapidly as ever,” Mr. Haltiwanger said. “We’re just not producing here. That’s not good news for U.S. productivity.”
Researchers at the Massachusetts Institute of Technology delved into state business licensing information and found somewhat different but also discouraging results. That is, tech entrepreneurs are generating good ideas and founding companies at a healthy pace, but those ventures aren’t breaking out into successful big companies.
“The system for translating good, high-quality foundings into a growth firm, that system seems to have broken,” said Scott Stern, an MIT professor and co-author of the study on startups.

For the full commentary, see:
Sparshott, Jeffrey. “THE OUTLOOK; Sputtering Startups Weigh Down Growth.” The Wall Street Journal (Mon., Oct. 24, 2016): A2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 23, 2016 title “THE OUTLOOK; Sputtering Startups Weigh on U.S. Economic Growth.” The passages quoted above include a couple of sentences that appeared in the online, but not the print, version of the article.)

“Politicized Regulatory State” Cuts Hiring and Slows Innovation

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

(p. A13) Sclerotic growth is America’s overriding economic problem. From 1950 to 2000, the U.S. economy grew at an average rate of 3.5% annually. Since 2000, it has grown at half that rate–1.76%. Even in the years since the bottom of the great recession in 2009, which should have been a time of fast catch-up growth, the economy has only grown at 2%.
. . .
. . . the U.S. economy is simply overrun by an out-of-control and increasingly politicized regulatory state. If it takes years to get the permits to start projects and mountains of paper to hire people, if every step risks a new criminal investigation, people don’t invest, hire or innovate.
. . .
How much more growth is really possible from better policies? To get an idea, see the nearby chart plotting 2014 income per capita for 189 countries against the World Bank’s “Distance to Frontier” ease-of-doing-business measure for the same year. The measure combines individual indicators, including starting a business, dealing with construction permits, protecting minority investors, paying taxes and trading across borders.
. . .
Most of all, the country needs a dramatic legal and regulatory simplification, restoring the rule of law. Middle-aged America is living in a hoarder’s house of a legal system. State and local impediments such as occupational licensing and zoning are also part of the problem.
. . .
There is hope. Washington lawmakers need to bring about a grand bargain, moving the debate from “they’re getting their special deal, I want mine,” to “I’m losing my special deal, so they’d better lose theirs too.”

For the full commentary, see:
JOHN H. COCHRANE. “Ending America’s Slow-Growth Tailspin; The U.S. economy needs a dramatic legal and regulatory simplification.” The Wall Street Journal (Tues., May 3, 2016): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 2, 2016.)

After Infrastructure Stimulus “Japan Is Less, Not More, Dynamic”

(p. A15) To help fight . . . economic sluggishness, Japan has invested enormously in infrastructure, building scores of bridges, tunnels, highways, and trains, as well as new airports–some barely used. The New York Times reported that, between 1991 and late 2008, the country spent $6.3 trillion on “construction-related public investment”–a staggering sum. This vast outlay has undoubtedly produced engineering marvels: in 1998, for instance, Japan completed the Akashi Kaikyō Bridge, the longest suspension bridge in the world; just this year, the country began providing bullet-train service between Tokyo and the northern island of Hokkaido. The World Competitiveness Report ranks Japan’s infrastructure as seventh-best in the world and its train infrastructure as the best. But while these trillions in spending may have kept some people working, no one can look at the Japanese numbers and conclude that the money has ramped up the growth rate. Moreover, the largesse is part of the reason that the nation now labors under a crushing public debt, worth 230 percent of GDP. Japan is less, not more, dynamic after its infrastructure bonanza.

For the full commentary, see:
Edward L. Glaeser. “Notable & Quotable: Infrastructure Isn’t Always Stimulating.” The Wall Street Journal (Weds., Sept. 14, 2016): A15.
(Note: ellipsis above added; ellipsis in article title below, in original.)
(Note: the online version of the commentary has the date Sept. 13, 2016.)

The above commentary by Glaeser was quoted from the Glaeser article:
Glaeser, Edward L. “If You Build It . . . : Myths and Realities About America’s Infrastructure Spending.” City Journal 26, no. 3 (Summer 2016): 25-33.

Toy Car Gives Child with Cerebral Palsy Mobility and Control

“Madeline Hauschild, 3, is thrilled to be at the wheel of her modified toy car at the UNMC Student Life Center on Wednesday [August 10, 2016]. Cars such as Madeline’s enable children with little mobility to get around without feeling reliant on parents or siblings.” Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.

(p. 1B) Now Madeline Hauschild will be able to drive a toy car just like her brother.

On Wednesday [August 10, 2016] Madeline, 3, received a battery-operated toy car modified so that she could sit in it and make it go forward by pushing a large button on the steering wheel. Madeline, who has cerebral palsy, was one of six small children who received cars through a program overseen by the University of Nebraska Medical Center and Children’s Hospital & Medical Center.
. . .
The cars give children with little mobility the opportunity to play, explore and socialize rather than feeling stuck and dependent on parents or siblings to move them around.
. . .
(p. 5B) Cerebral palsy is a disorder that causes movement, posture and other developmental problems. Among Madeline’s challenges: She can’t walk or bear any weight on her legs.
Madeline, of Syracuse, Nebraska, smiled and pounded the button, giving her a herky-jerky ride.
. . .
“Is that fun?” Madeline’s mother, Kelly Hauschild, asked as her daughter enjoyed the erratic drive in a room at UNMC’s Student Life Center. “You do like it, don’t you?”
. . .
“I loved seeing her be able to operate it all by herself, and her smiles,” Hauschild said.

For the full story, see:
Ruggles, Rick. “Toy Cars Give Kids Vroom to Maneuver.” Omaha World-Herald (Thurs., Aug. 11, 2016): 1B & 5B.
(Note: ellipses, and bracketed date, added.)

Faster, Stronger 3-D Printing Method May Be Better for Manufacturing

(p. B1) Ford Motor Co. is experimenting with a new form of 3-D printing the auto maker says could solve a structural flaw that has kept the technology from widespread use in manufacturing.
The ability to “print” parts within an assembly plant would drastically reduce transport and logistics costs for the auto industry, where car makers must source parts from dozens of suppliers around the world. But the most widely used version of the technology is ill-suited for mass production because objects are printed layer by layer, a slow process that also creates tiny fault lines that can crack when stressed.
A startup backed by Alphabet Inc.’s Google Ventures is developing a different 3-D printing method that some manufacturers, including Ford, say shows more promise. Carbon3D Inc.’s printers project light continuously through a pool of resin, gradually solidifying it onto an overhead platform that slowly lifts the object up until it is fully formed. The process takes a fraction of the time of other printing methods, and forms solid items more similar to those created using conventional auto-part molds, said Ellen Lee, who leads a 3-D printing research division at Ford.

For the full story, see:
LORETTA CHAO. “Fast 3-D Printing Earn New Respect.” The Wall Street Journal (Tues., April 26, 2016): B1 & B4.
(Note: the online version of the story has the date April 25, 2016, and has the title “Auto Makers, Others Explore New Roles for 3-D Printing.”)

Low Interest Rates Cannot Substitute for Needed Deeper Reforms

(p. B3) MUMBAI, India — Three years before the 2008 global financial crisis, an Indian economist named Raghuram G. Rajan presciently warned a skeptical audience of top economic thinkers that excessive risk threatened the entire global financial system.
As Mr. Rajan stepped down on Sunday [Sept. 4, 2016] as India’s top central banker, following intense criticism at home, he offered a new warning: Low interest rates globally could distort markets and would be difficult to abandon.
Countries around the world, including the United States and Europe, have kept interest rates low as a way to encourage growth. But countries could become “trapped” by fear that when they eventually raised rates, they “would see growth slow down,” he said.
Low interest rates should not be a substitute for “other instruments of policy” and “various kinds of reforms” that are needed to encourage growth, Mr. Rajan said in a recent interview with The New York Times. “Often when monetary policy is really easy, it becomes the residual policy of choice,” he said, when deeper reforms are needed.
. . .
In discussing the Indian economy in the interview, Mr. Rajan offered a less-than-ringing endorsement of the government’s emphasis on manufacturing in India — what the prime minister has called his Make in India campaign.
Mr. Rajan said he did not support the view of critics that it was too late in world economic history for India to become a manufacturing hub. But he also said that he would not focus exclusively on manufacturing as the solution to joblessness.
If India improves infrastructure and reduces government regulations, manufacturing might take off in a big way, but it “could also be services. It could be value-added agriculture also.”`

For the full story, see:
GEETA ANAND. “A Departing Central Banker’s Warning.” The New York Times (Mon., SEPT. 5, 2016): B3.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date SEPT. 4, 2016, and has the title “Raghuram Rajan, India’s Departing Central Banker, Has a New Warning.” The online version is somewhat longer than the print version, and has minor differences in the last three paragraphs quoted above. The last three paragraphs quoted above, are from the online version.)

Japan Counting on Innovative Entrepreneurs for Economic Growth

(p. B3) TOKYO–Stacks of cardboard boxes serve as makeshift partitions at Mistletoe Inc.’s new office in Tokyo’s posh Aoyama district, where startups gather to work on their latest projects.
The do-it-yourself vibe–a far cry from the stuffiness typical of Japanese corporate offices–is something founder Taizo Son, serial entrepreneur and youngest brother of SoftBank Group Corp. founder Masayoshi Son, wants to see more of.
“Japan has the talent and funds but lacks the necessary ecosystem to create its own Silicon Valley, so that’s what we’re trying to provide,” said Mr. Son, 43, who describes Mistletoe as a program to cofound new businesses.
The nation that created the Walkman and the bullet train before China even had a tech industry now lags behind as Chinese Internet startups like Alibaba Group Holding Ltd. become global powerhouses. With its once-dominant technology industry struggling, Japan is counting on entrepreneurs to rekindle its hobbling economy.
The government is pledging to fund startups, top universities have launched incubators and venture funds to transform their wealth of knowledge into innovation and even Japan’s oldest and largest conglomerates, such as the Mitsubishi and Mitsui groups, are looking to nurture entrepreneurs..

For the full story, see:
ALEXANDER MARTIN. “Japan Looks to Rekindle Its Technology Innovation.” The Wall Street Journal (Mon., April 11, 2016): B3.
(Note: the online version of the story has the date April 10, 2016, and has the title “Japan Tech Hunts for Restart Button.”)

Cutting Taxes Helps Economy More than Increasing Government Spending

I believe the “policy missteps” diagnosis is mainly the right one, but quote some comments on the “secular stagnation” diagnosis because I want to document that for easy access for my book project.

(p. 3) Economists, like physicians, sometimes confront a patient with an obvious problem but no obvious diagnosis. That is precisely the situation we face right now.

. . .
Secular stagnation Lawrence H. Summers, former economic adviser to President Obama, has suggested that the problem predates the recent financial crisis. He points to the long-term decline in inflation-adjusted interest rates as evidence of reduced demand for capital to fund investment projects. He cites several reasons for the change, including lower population growth, lower prices for capital goods and the nature of recent innovations, like the replacement of brick-and-mortar stores with retail websites. The result, he says, is secular stagnation — a persistent inability of the economy to generate sufficient demand to maintain full employment.
His solution? More government spending on infrastructure, like roads, bridges and airports. If the government takes advantage of lower interest rates to make the right investments in public capital — admittedly a big if — the policy would promote employment in the short run as projects are being built and make the economy more productive when they are put into use.
. . .
Policy missteps When Barack Obama took office in 2009, the economy was in the midst of the Great Recession. President Obama’s advisers relied on standard Keynesian theory when they proposed a large increase in government spending to energize the economy. The stimulus package was the administration’s first economic policy initiative. As the economy recovered, the administration supported tax increases to shrink the budget deficit.
But even at the time, there were reasons to doubt this approach. A 2002 study of United States fiscal policy by the economists Olivier Blanchard and Roberto Perotti found that “both increases in taxes and increases in government spending have a strong negative effect on private investment spending.” They noted that this finding is “difficult to reconcile with Keynesian theory.”
Consistent with this, a more recent study of international data by the economists Alberto Alesina and Silvia Ardagna found that “fiscal stimuli based on tax cuts are more likely to increase growth than those based on spending increases.”

For the full commentary, see:
N. GREGORY MANKIW. “Economic View; One Economic Sickness, Five Diagnoses.” The New York Times, SundayBusiness Section (Sun., JUNE 19, 2016): 5.
(Note: ellipses added, bold font in original.)
(Note: the online version of the commentary has the date JUNE 17, 2016.)

A Larry Summers paper on his version of secular stagnation, is:
Summers, Lawrence H. “U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound.” Business Economics 49, no. 2 (April 2014): 65-73.

The Blanchard and Perotti paper mentioned above, is:
Blanchard, Olivier, and Roberto Perotti. “An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output.” The Quarterly Journal of Economics 117, no. 4 (Nov. 2002): 1329-68.

The Alesina and Ardagna paper mentioned above, is:
Alesina, Alberto, and Silvia Ardagna. “Large Changes in Fiscal Policy: Taxes Versus Spending.” In Tax Policy and the Economy. Volume 24, edited by Jeffrey R. Brown. Chicago and London: University of Chicago Press; Cambridge, Mass.: National Bureau of Economic Research, 2010, pp. 35-68.

RFID Tags Can Enable Process Innovations

(p. A11) The numbers don’t look good: Last week the Bureau of Labor Statistics reported that worker productivity dropped 0.5% in the second quarter of 2016–the third quarterly decline in a row. Productivity growth, a key driver of improved living standards, has averaged only 1.3% a year over the past decade, compared with 2.9% from mid-1995 through the end of 2005.
Why the slowdown? One theory is that markets have already wrung the easy efficiencies out of current technology. Federal Reserve Chair Janet Yellen noted in June that some economists “believe that the low-hanging fruit of innovation largely has been picked and that there is simply less scope for further gains.”
Count me in the optimistic camp. Low-cost wireless technologies are only beginning to break down the wall between the physical and digital worlds, and early-adopting companies are already achieving astounding productivity gains.
. . .
Employees can take inventory by waving an RFID reader over a shelf or a rack. A 2009 study by the University of Arkansas found scanning 10,000 items took 53 hours using bar codes, but only two hours with RFID. That efficiency allows Macy’s to inventory items every month rather than once or twice annually. Pam Sweeney, Macy’s senior vice president of logistics systems, tells me that RFID has pushed inventory accuracy in these departments to 95%.
. . .
As the cost of RFID tags falls to only cents apiece, the applications widen. Imagine checking out at the grocery store one day simply by running your cart through a scanner in a few seconds–no bar codes required. How many hours a year would that save consumers and employees both? If you want a million minuscule reasons to be bullish about productivity, look no further than tiny RFID tags.

For the full commentary, see:
MARK ROBERTI. “How Tiny Wireless Tech Makes Workers More Productive; Macy’s and Delta are using cheap RFID tags to blend the physical and digital.” The Wall Street Journal (Weds., Aug. 17, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Aug. 16, 2016.)

Cancer Is Not Due to Modernity

(p. 1A) Scientists’ conventional opinion about cancer was that it’s a relatively recent phenomenon caused by the stresses of modern life.

Dietary changes, behavioral changes and man-made changes to our environment have subjected humans to toxins that contribute to cancers, they say.

But new findings from researchers at South Africa’s University of the Witwatersrand published in the South African Journal of Science challenge that assumption.

Paleontologists found a benign tumor in a 12 or 13-year-old boy specimen that dates back almost 2 million years.

More significantly, they also found a malignant tumor that’s 1.7 million years old on the little toe bone of a left foot.

Previously the oldest discovered human cancer was between 780,000 and 120,000 years old.

. . .

(p. 2A) “The evidence is out there that these conditions have been with us a long time and we’ve been kind of hoodwinked that cancer is a modernity,” said Patrick Randolph-Quinney, one of the study’s authors. “These things are ancient.”

The greatest predictor of cancer, the study argues, even in our ancestors, is longevity. The longer we live, the more chances something in our bodies goes wrong, the more chances that something is a tumor.

For the full story, see:
The Washington Post. “Ancient tumor upends notion of cancer as modern affliction; 1.7-million-year-old malignant growth is causing scientists to rethink diseases and human history.” Omaha World-Herald (Sat., JUNE 20, 2016): 1A & 2A.
(Note: ellipsis added.)

The scientific article mentioned above, is:
Patrick, S. Randolph-Quinney, A. Williams Scott, Steyn Maryna, R. Meyer Marc, S. Smilg Jacqueline, E. Churchill Steven, J. Odes Edward, Augustine Tanya, Tafforeau Paul, and R. Berger Lee. “Osteogenic Tumour in Australopithecus Sediba: Earliest Hominin Evidence for Neoplastic Disease.” South African Journal of Science (July/Aug. 2016), DOI: http://dx.doi.org/10.17159/sajs.2016/20150470.

$10,000 Universal Income Would Reduce Work and Cost Taxpayers Trillions

(p. B4) This month [June 2016], Charles Murray of the American Enterprise Institute will publish an updated version of his plan to replace welfare as we know it with a dollop of $10,000 in after-tax income for every American above the age of 21.
. . .
Its first hurdle is arithmetic. As Robert Greenstein of the left-leaning Center on Budget and Policy Priorities put it, a check of $10,000 to each of 300 million Americans would cost more than $3 trillion a year.
Where would that money come from? It amounts to nearly all the tax revenue collected by the federal government. Nothing in the history of this country suggests Americans are ready to add that kind of burden to their current taxes. Cut it by half to $5,000?
. . .
As Lawrence H. Summers, the former Treasury secretary and onetime top economic adviser to President Obama, told me, paying a $5,000 universal basic income to the 250 million nonpoor Americans would cost about $1.25 trillion a year. . . .
The popularity of the universal basic income stems from a fanciful diagnosis born in Silicon Valley of the challenges faced by the working class across industrialized nations: one that sees declining employment rates and stagnant wages and concludes that robots are about to take over all the jobs in the world.
. . .
Work, as Lawrence Katz of Harvard once pointed out, is not just what people do for a living. It is a source of status. It organizes people’s lives. It offers an opportunity for progress. None of this can be replaced by a check.
A universal basic income has many undesirable features, starting with its non-negligible disincentive to work. Almost a quarter of American households make less than $25,000. It would be hardly surprising if a $10,000 check each for mom and dad sapped their desire to work.
. . .
As Mr. Summers told a gathering last week at the Brookings Institution, “a universal basic income is one of those ideas that the longer you look at it, the less enthusiastic you become.”

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; Plan to End Poverty Is Wide of the Target.” The New York Times (Weds., June 1, 2016): B1 & B4.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the commentary has the date MAY 31, 2016, and has the title “ECONOMIC SCENE; A Universal Basic Income Is a Poor Tool to Fight Poverty.”)