Economics – Page 128 – artdiamondblog.com

Unions Spend $108 Million on 2016 Elections

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

(p. A1) PHILADELPHIA–U.S. labor unions are plowing money into the 2016 elections at an unprecedented rate, largely in an effort to help elect Hillary Clinton and give Democrats a majority in the Senate.

According to the most recent campaign-finance filings, unions spent about $108 million on the elections from January 2015 through the end of August [2016], a 38% jump from $78 million during the same period leading up to the 2012 election, and nearly double their 2008 total in the same period. Nearly 85% of their spending this year has supported Democrats.

For the full story, see:
BRODY MULLINS, REBECCA BALLHAUS and MICHELLE HACKMAN. “Labor Unions Step Up Presidential-Election Spending.” The Wall Street Journal (Weds., Oct. 19, 2016): A1 & A4.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the story has the date Oct. 18, 2016, and has the title “Unions Up the Election Ante.”)

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.)

Land Use Regulations Increase Income Inequality

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

(p. A3) In this year’s election, candidates have focused blame for rising income inequality on broad economic forces, from globalization to the decline of the American manufacturing base. But a growing body of research suggests a more ordinary factor: the price of the average single-family home for sale, from Fairfield, Conn., to Portland, Ore.

According to research by Daniel Shoag, an associate professor of public policy at Harvard University, and Peter Ganong, a postdoctoral fellow at the National Bureau of Economic Research, a decadeslong trend in which the income gap between the poorest and richest states steadily closed has been upended by growth in land-use regulations.
Moving to a wealthier area in search of job opportunities has historically been a way to promote economic equality, allowing workers to pursue higher-paying jobs elsewhere. But those wage gains lose their appeal if they are eaten up by higher housing costs. The result: More people stay put and lose out on potential higher incomes.
. . .
Messrs. Shoag and Ganong looked at mentions of “land-use” in appeals-court cases and found the number of references began rising sharply around 1970, with some states seeing a much larger increase than others. For example, the share of cases mentioning land use for New York rose 265% between 1950 and 2010 and 644% in California during the same period. By contrast, it increased by only 80% in Alabama.

For the full story, see:
LAURA KUSISTO. “Land Use Rules Under Fire.” The Wall Street Journal (Weds., Oct. 19, 2016): A3.
(Note: ellipsis added.)
(Note: the online version of the story has the date Oct. 18, 2016, and has the title “As Land-Use Rules Rise, Economic Mobility Slows, Research Says.” A few extra words appear in the online version quoted above, that were left out of the print version.)

The research by Ganong and Shoag, mentioned above, is:

Ganong, Peter, and Daniel Shoag. “Why Has Regional Income Convergence in the U.S. Declined?” Harvard University, John F. Kennedy School of Government, Working Paper Series, Jan. 2015.

FCC Regulations Motivated by Cronyism, Not Economics

(p. A13) . . . , this burgeoning competition between fixed and mobile has always been predictable and yet has figured not at all in the Federal Communications Commission’s regulatory efforts, which paint the country as descending into an uncompetitive broadband hell.
A new study by economists Gerald Faulhaber and Hal Singer details how an agency that once prized economic analysis increasingly ignores or disregards economics in its regulatory findings. Why? Because if it acknowledged the increasing competitiveness of the market, there would be nothing to regulate, no favor-factory opportunities for its political sponsors to milk.

For the full commentary, see:
HOLMAN W. JENKINS, JR. “BUSINESS WORLD; Big Cable and Mobile Are Ready to Rumble; Technology is about to upend Washington’s dire prescriptions for a broadband monopoly.” The Wall Street Journal (Sat., Oct. 8, 2016): A13.
(Note: ellipsis added.)

The working paper mentioned above, is:
Faulhaber, Gerald, and Hal Singer. “The Curious Absence of Economic Analysis at the Federal Communications Commission: An Agency in Search of a Mission.” 2016.

Medal-Winning Official Steals Concrete from Public Road and Sells to Cronies

(p. A4) MOSCOW — Corruption in Russia sometimes amounts to highway robbery, literally.
A senior prison official has been accused of stealing the pavement from a 30-mile stretch of public highway in the Komi Republic, a thinly populated, heavily forested region in northern Russia, the daily newspaper Kommersant reported on its website on Wednesday [January 13, 2016].
. . .
While he was in Komi, Mr. Protopopov won a medal for fostering “spiritual unity,” the Kommersant report said, without specifying whether the unity was with the crews doing the illicit road work.

For the full story, see:
NEIL MacFARQUHAR. “Don’t Blame Snow for Missing Road in Russia’s North.” The New York Times (Thurs., JAN. 14, 2016): A4.
(Note: ellipsis, and bracketed date, added.)
(Note: online version of the story has the date JAN. 13, 2016, and has the title “Missing a Road in Russia? This May Be Why.”)

“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.)

Many Can Have Good Jobs, and Good Lives, Without College

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

(p. B1) American employers struggling to find enough qualified industrial workers are turning to Germany for a solution to plug the U.S. skills gap: vocational training.

Two million U.S. manufacturing jobs will remain vacant over the next decade due to a shortage of trained workers, according to an analysis by the Manufacturing Institute, a nonprofit advocacy group affiliated with the National Association of Manufacturers, and professional-services firm Deloitte LLP.
While the Obama administration has invested millions of dollars to promote skills-based training, it remains a tough sell in a country where four-year university degrees are seen as the more viable path to good-paying jobs. The Bureau of Labor Statistics said two-thirds of high school graduates who enrolled in college in 2015 opted for four-year degrees.
. . .
In Germany, roughly half of high-school graduates opt for (p. B2) high-octane apprenticeships rather than college degrees. One draw: almost certain employment.
German apprentices spend between three and four days a week training at a company and between one and two days at a public vocational school. The company pays wages and tuition. After three years, apprentices take exams to receive nationally recognized certificates in their occupation. Many continue working full time at the company.
The Labor Department said 87% of apprentices in the U.S. are employed after completing their training programs. Workers who complete apprenticeships earn $50,000 annually on average, or higher than the median U.S. annual wage of $44,720,

For the full story, see:
ELIZABETH SCHULZE. “U.S. Turns to Germany to Fill Jobs.” The Wall Street Journal (Tues., Sept. 27, 2016): B1-B2.
(Note: ellipsis added.)
(Note: the online version of the story has the date Sept. 26, 2016, and has the title “U.S. Companies Turn to German Training Model to Fill Jobs Gap.”)

New Tech in Costly Cars “Trickles Down” to Cheaper Cars

(p. B5) Chances are slim that the car, starting at just over $200,000 ($215,000 as tested), will grab market share from the Toyota Corolla and Honda Civic. But in the four days I had the GT, my wife was astonished at my eagerness to run errands of any kind.
. . .
Surely, few people buy cars this expensive, but such vehicles are important because they pioneer technology that trickles down to everyday cars. Recall that anti-lock brakes showed up first on supercars in the late 1970s. (The 570GT’s brakes are very good, by the way.)
Perhaps McLaren’s carbon-fiber tub chassis structure will be common in the future.

For the full commentary, see:
TOM VOELK. “Driven: McLaren 570GT: High Speed Meets High Style (at a High Price).” The New York Times (Fri., NOV. 3, 2016): B5.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date NOV. 3, 2016, and has the title “Driven: Video Review: McLaren 570GT Is a Rare Blend of Speed and Comfort.”)

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.

GE Shifts Away from Six Sigma and Toward Innovation

(p. B1) One of the biggest engineering projects under way at General Electric Co. these days isn’t a turbine or locomotive. It is reinventing the way the company’s employees are assessed, reviewed and even paid.
For decades, an ideal GE worker was one adept at squeezing out product defects and almost allergic to admitting uncertainty.
Now, as the 124-year-old company refocuses itself on industrial businesses, executives say top performers are those willing to take risks, test new ideas with customers and even make mistakes.
Leaders say GE’s multiyear effort to remake itself into a leaner, innovation-driven company requires a nimble workforce that can develop products faster and more cheaply. The shift is significant for GE, whose corporate ethos had long been embodied by Six Sigma, a manufacturing system designed to eliminate error, enshrining certainty and consistency.
. . .
(p. B6) The new style of measuring employees has roots in FastWorks, a companywide initiative intended to hasten product development and ensure that customers want new products before GE spends millions building them. It is based on Lean Startup, a management system popularized by Eric Ries, a 37-year-old author and consultant GE brought in with the blessing of Chief Executive Jeff Immelt to help employees get comfortable with trial, error and experimentation.

For the full story, see:
RACHEL EMMA SILVERMAN. “GE Tries to Reinvent the Employee Review, Encouraging Risks.” The Wall Street Journal (Weds., June 8, 2016): B1 & B6.
(Note: ellipsis added.)
(Note: the online version of the story has the title “GE Re-Engineers Performance Reviews, Pay Practices.”)

Ries’s Lean Startup management system is advocated in his book:
Ries, Eric. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. New York: Crown Business, 2011.

Those Who See, and Fill, Big Unmet Needs Are Often “Weirdos”

(p. A11) . . . “A Truck Full of Money” provides a portrait of a strange, troubled man who happens to be one of the smartest minds in the Route 128 tech corridor.
. . .
The book is being marketed as inspirational, but I found it to be the opposite. No one could read it and become Paul English, or want to. Most tech startups think too small, but the few people with the vision to identify big unmet needs seem to be, for whatever reason, weirdos. The split-second fare comparison that Kayak did is something no human being could do–it requires super-computing–and it has an enormous value, since 8% of the U.S. economy is travel. But once you’ve solved a problem like that, what do you do next?
Paul English hasn’t figured that out, so this book sort of peters out–he may do his once-in-a-lifetime charity project, or he may follow through on Blade–and he has retreated back into the familiar, running a company called Lola that is sort of the opposite of Kayak: It gives you live access to travel concierges. But how could Mr. Kidder’s ending be anything but inconclusive? Mr. English is just 53. Undoubtedly he has another billion-dollar idea nestled in that overactive brainpan, but his investors have to make a leap of faith–that they’ve bet on the right weirdo. God bless these genius geeks, who make our economy leaner by constantly finding more efficient ways to do old things. And God bless the pharmaceutical industry, which protects and preserves them.

For the full review, see:
JOHN BLOOM. “BOOKSHELF; The Man Who Built Kayak; During one episode of hypomania, Paul English bid $500,000 on an abandoned lighthouse. Recently, he decided to become an Uber driver.” The Wall Street Journal (Thurs., Sept. 27, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the review has the date Sept. 26, 2016.)

The book under review, is:
Kidder, Tracy. A Truck Full of Money: One Man’s Quest to Recover from Great Success. New York: Random House, 2016.