Category: Economics

Reason Magazine Runs Excerpt from “Openness to Creative Destruction”

A three-page, edited excerpt from Openness to Creative Destruction appears in the Aug./Sept. issue of Reason magazine.

Innovative dynamism creates more jobs than it destroys and the new jobs created are usually better jobs than the old jobs destroyed. The Aug./Sept. issue of Reason includes an edited excerpt of this positive account of the labor market from Openness to Creative Destruction. The online version of the article is available now. The print version of the article either is on newsstands now, or will be soon. The citation for the article is:

Diamond, Arthur M., Jr. “How Work Got Good.” Reason (Aug./Sept. 2019): 22-24.

“Longest Streak of Job Creation in Modern Times”

(p. A1) The unemployment rate fell to its lowest level in half a century last month, capping the longest streak of job creation in modern times and dispelling recession fears that haunted Wall Street at the start of the year.

The Labor Department reported Friday [May 3, 2019] that employers added 263,000 jobs in April, well above what analysts had forecast. The unemployment rate sank to 3.6 percent.

Employment has grown for more than 100 months in a row, and the economy has created more than 20 million jobs since the Great Recession ended in 2009. Much of that upturn occurred before President Trump was elected, but the obvious strength of the economy now enables him and fellow Republicans to make it their central argument in the 2020 campaign.

For the full story, see:

Nelson D. Schwartz. “U.S. Jobless Rate Hits 50-Year Low As Wages Expand.” The New York Times (Saturday, May 4, 2019): A1 & A13.

(Note: bracketed date added.)

(Note: the online version of the story has the date May 3, 2019, and has the title “Job Growth Underscores Economy’s Vigor; Unemployment at Half-Century Low.”)

Cost of Housing Is Main Driver of Migration from Superstar Cities

(p. B1) Last month the Census Bureau confirmed a confounding dynamic taking hold across the American landscape: Superstar cities, the nation’s economic powerhouses, hotbeds of opportunity at the cutting edge of technological progress, are losing people to other parts of the country.

For the first time in at least a decade, 4,868 more people left King County, Wash. — Amazon’s home — than arrived from elsewhere in the country.

Santa Clara County, Calif., home to most of Silicon Valley, lost 24,645 people to domestic migration, its ninth consecutive annual loss.

The trend is becoming widespread. Eight of the 10 largest metropolitan areas in the country, including those around New York, San Francisco, Los Angeles and Miami, lost people to other places in 2018. That was up from seven in 2016, five in 2013 and four in 2010. Migration out of the New York area has gotten so intense that its total population shrank in 2018 for the second year in a row.

. . .

(p. B5) Research by Peter Ganong from the University of Chicago and Daniel Shoag of Harvard suggests that housing costs are a principal driver of the change in migration decisions: As the highly educated have flocked to superstar cities, they have pushed housing prices way beyond the reach of people earning less. Continue reading “Cost of Housing Is Main Driver of Migration from Superstar Cities”

Apart from R&D, Scientists and Engineers May Improve Firm Processes

(p. B5) Companies with a higher proportion of scientists and engineers are more productive than their peers, even when those workers aren’t directly involved in the research-and-development tasks that drive the most obvious forms of innovation, a new paper from the National Bureau of Economic Research suggests.

. . .

Some 80% of industrial scientists and engineers work in roles outside of formal R&D, such as information technology and operations. Their knowledge and training is critical to firms’ ability to improve processes, fix broken systems and implement new technologies, says Richard Freeman, a Harvard University economist and co-author of the paper.

For the full story, see:

Lauren Weber. “Scientists Are Useful Beyond R&D Work.” The New York Times (Wednesday, June 28, 2017): B5.

(Note: ellipsis added.)

(Note: the online version of the story has the date June 27, 2017, and has the title “For a More Productive Workforce, Scientific Know-How Helps.”)

The published version of the Freeman co-authored paper mentioned above, is:

Barth, Erling, James C. Davis, Richard B. Freeman, and Andrew J. Wang. “The Effects of Scientists and Engineers on Productivity and Earnings at the Establishment Where They Work.” In U.S. Engineering in a Global Economy, edited by Richard B. Freeman and Hal Salzman. Chicago: University of Chicago Press, 2018, pp. 167 – 91.

Modi Cut India’s Taxes, Corruption, and Regulations

(p. B1) MUMBAI, India — A jeans maker saw his delivery costs cut by half when the highway police stopped asking for bribes. An aluminum wire factory faced only three inspectors rather than 12 to keep its licenses. Big companies like Corning, the American fiber-optic cable business, found they could wield a new bankruptcy law to demand that customers pay overdue bills.

Prime Minister Narendra Modi promised nearly five years ago to open India for business. Fitfully and sometimes painfully, his government has streamlined regulations, winnowed a famously antiquated bureaucracy and tackled corruption and tax evasion.

. . .

(p. B5) Mehta Creation, a jeans maker in a dilapidated concrete building in the northern outskirts, paid a welter of taxes until two years ago. That included the dreaded octroi, a British import from medieval times that allowed states and some cities to collect taxes whenever goods crossed a boundary.

Mehta Creation’s budget was contorted by corruption. To avoid the octroi, which could triple the cost of a delivery and add delays, Mehta paid drivers about $5 for each parcel of jeans and then reimbursed them up to $6 per parcel to bribe the local police at every border, said Dhiren Sharma, the company’s chief operating officer.

Mehta’s costs dropped after the government abolished 17 taxes, including the octroi, two years ago and established instead a national value-added tax on most business activity. Continue reading “Modi Cut India’s Taxes, Corruption, and Regulations”

At 70, James Dyson Embarks on Audacious Electric Car Project

(p. B5) James Dyson, best known for innovative vacuum cleaners, said recently that he was preparing to introduce a new electric car and had 400 people working on the project.

. . .

But breaking into the car business is far more complex than it might appear at first glance. A new carmaker must design the vehicle and figure out how to manufacture it — and that is only the beginning. Success requires a number of to-dos: effective marketing, a dealer network and, perhaps, arranging buyer financing.

“There is a huge list,” said Peter Wells, a professor at Cardiff Business School in Wales. “That has been one of the reasons why the barriers to entry in the automotive industry have been relatively high.”

Still, Mr. Wells said that the car industry is “at a very important pivot point in its history now, where a combination of factors are radically altering what is possible.” And Mr. Dyson, 70, . . . , could be in a position to take advantage.

. . .

Mr. Dyson has proved himself a dogged inventor, designing high-end vacuum cleaners and other products like hair dryers. His technological savvy gives him a chance of scoring a hit in the much more complex and costly global car industry, analysts said. In 2015, he bought Sakti3, an American start-up that is working with solid state batteries. Mr. Dyson said he could be on track to commercializing a so-called solid state battery, which analysts say might be more powerful and safer than the lithium ion devices now used in electric cars and cellphones. He said both the start-up and his own team were working on the project. Continue reading “At 70, James Dyson Embarks on Audacious Electric Car Project”

Gig Jobs Benefit Workers by “Cutting Out Corporate Bosses and Rent-Seeking Middlemen”

(p. C4) An astounding 94 percent of American jobs created between 2005 and 2015 were for “alternative work.” Slow and steady growth used to be a cardinal virtue for the big American corporation. Now leanness and flexibility are prized, and nobody is spared. “In the end,” Hyman writes, “even white men were not protected from this new reality.”

Hyman, a labor historian at Cornell, argues that the common explanation for what happened — mainly, that our current dispensation was foisted on us by technological and economic change — is self-serving and inadequate. He says that human choice, including a palpable shift in values, played an essential role. “Temp” traces how, for corporations and government policymakers alike, “the risk-taking entrepreneur supplanted the risk-averse, but loyal, company man as the capitalist ideal.”

. . .

His ending, about the gig economy, is weirdly upbeat. He believes that it’s still possible for work to be rewarding — maybe even more possible, now that apps and online platforms offer the promise of (leaving in place a few rent-seeking technocapitalist billionaires, of course). Individuals can sell their labor directly to one another.

For the full review, see:

Jennifer Szalai. “BOOKS OF THE TIMES; Gig Jobs Replace Gray Flannel Suits.” The New York Times (Thursday, Aug. 23, 2018): C4.

(Note: ellipsis added.)

(Note: the online version of the review has the date Aug. 22, 2018, and has the title “BOOKS OF THE TIMES; How the ‘Temp’ Economy Became the New Normal.”)

The book under review, is:

Hyman, Louis. Temp: How American Work, American Business, and the American Dream Became Temporary. New York: Viking, 2018.

Learning to Apply Software Code in Business, Is One Path to the Middle Class

(p. B1) Brittney Ball was living in a homeless shelter with her baby when she learned of a one-year program offering technical training, professional skills and an internship. She took the plunge.

Five years later, Ms. Ball is a software engineer in Charlotte, N.C., earning more than $50,000 a year. A 30-year-old single mother, she has health insurance, retirement savings and plans to vacation in Mexico this year.

“It showed me that I could do something different,” she said about the training program. “It really lit a fire under me.”

Preparing people for tech jobs is hailed as the great employment hope of the future. Cities and states across the country are rushing to teach elementary and high school students to write software. “Learn to code” is a career-advice mantra.

Mastering code and applying it in business, some experts say, holds the promise of becoming the modern path to the middle class for people without four-year college degrees. And nonprofit programs like those used by Ms. Ball are considered central to getting (p. B4) people there.

. . .

There are bright spots, but those programs remain mostly small scale so far, and expanding quickly has many complications. Training, mentoring and counseling people — often from disadvantaged backgrounds — is not a mass-production process.

For the full story, see:

Steve Lohr. ” A Slow Build To Prosperity In Tech Jobs.” The New York Times (Monday, May 20, 2019): B1 & B4.

(Note: ellipsis added.)

(Note: the online version of the story has the date May 19, 2019, and has the title “Tech Jobs Lead to the Middle Class. Just Not for the Masses.”)

Many Fewer Killed in Natural Disasters Than Were Killed 50 Years Ago

(p. A13) . . . it’s deceptive to track disasters primarily in terms of aggregate cost. Since 1990, the global population has increased by more than 2.2 billion, and the global economy has more than doubled in size. This means more lives and wealth are at risk with each successive disaster.

Despite this increased exposure, disasters are claiming fewer lives. Data tracked by Our World in Data shows that from 2007-17, an average of 70,000 people each year were killed by natural disasters. In the decade 50 years earlier, the annual figure was more than 370,000. Seventy thousand is still far too many, but the reduction represents enormous progress.

The material cost of disasters also has decreased when considered as a proportion of the global economy. Since 1990, economic losses from disasters have decreased by about 20% as a proportion of world-wide gross domestic product. The trend still holds when the measurement is narrowed to weather-related disasters, which decreased similarly as a share of global GDP even as the dollar cost of disasters increased.

For the full commentary, see:

Roger Pielke Jr. “Some Good News—About Natural Disasters, of All Things; In half a century, the average number of annual fatalities declined more than 80%.” The Wall Street Journal (Saturday, Aug. 4, 2018): A13.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Aug. 3, 2018, and has the same title as the print version.)

Pielke’s op-ed piece quoted above, is related to his book:

Pielke, Roger, Jr.. The Rightful Place of Science: Disasters & Climate Change. Tempe, AZ: Consortium for Science, Policy & Outcomes, 2018.

SpotMini Robot Looks Like a Dog, but “Is Like a Hollow Doll”

(p. B3) Last time in this esteemed newsletter, my colleague Steve Lohr warned that automation would change the economy. But as he also explained, jobs are “more likely to be transformed by digital technology than destroyed by it.” This becomes clear as you look a little closer at the progress of robotics, including everything from the robotic arms that help build stuff in factories to the jaw-droppingly agile machines under development at a company called Boston Dynamics.

This past week, I wrote about Boston Dynamics, which runs a semi-secretive lab in Waltham, Mass., about 10 miles outside Boston. Built to move like animals and even humans, its machines are truly amazing (as YouTube watchers will attest).

At times, you can’t help but think of these mechanical creations as living things. The company will start selling one of them, a doglike robot called SpotMini, in the coming year. But even Boston Dynamics is not quite sure what these robots are actually good for.

Robots play tricks on the mind. We tend to think they are more advanced than they really are, perhaps because of science fiction movies or because our brains are wired to believe in bots. This is particularly true when it comes to the biomimetic machines inside a lab like Boston Dynamics.

“When we see a biped that looks like a person or a quadruped that looks like a dog, we project our previous experiences with people and dogs onto these machines. But, in fact, there is nothing inside,” said Gill Pratt, who worked with Boston Dynamics as an official at Darpa, a research arm of the Defense Department, and is now exploring new forms of robotics as the chief executive of the Toyota Research Institute. “It is like a hollow doll.”

For the full commentary, see:

Cade Metz. “The Week in Tech; Robots Are Improving Quickly, But They Can Still Be Dumb.” The New York Times (Monday, Oct. 1, 2018): B3.

(Note: the online version of the commentary has the date Sept. 28, 2018, and has the title “The Week in Tech; The Robots Aren’t as Human as They Seem.”)

Some Routine Tech Jobs in India Can Be Automated

(p. B2) . . . the global tech industry is increasingly relying on automation, robotics, big data analytics, machine learning and consulting — technologies that threaten to bypass and even replace Indian workers. For example, automated processes may soon replace the kind of work Mr. Choudhari was performing for foreign clients, which involved maintaining software by occasionally plugging in simple code and analyzing data.

“What we’re seeing is an acceleration in shedding for jobs in India and an adding of jobs onshore,” said Sandra Notardonato, an analyst and research vice president for Gartner, a research and advisory company. “Even if these companies don’t have huge net losses, there’s a person who will suffer, and that’s a person with a limited skill set in India.”

. . .

Of course, new technologies will create new jobs. The impact of automation and artificial intelligence still is not clear, and they could open up new areas that simply shift tech work rather than eliminate it.

For the full story, see:

Nida Najar. “Tech Jobs Cut in India. A Reason? Technology.” The New York Times (Monday, June 26, 2017): B2.

(Note: ellipses added.)

(Note: the online version of the story has the date June 25, 2017, and has the title “Indian Technology Workers Worry About a Job Threat: Technology.”)