Category: Economics

Productivity Rises at Fastest Rate in Almost 10 Years

(p. A2) WASHINGTON—U.S. workers’ efficiency improved during the past year at the best pace in nearly a decade, laying groundwork for stronger wage growth and continued economic expansion.

The productivity of nonfarm workers, measured as the output of goods and services for each hour on the job, increased at a 3.6% seasonally adjusted annual rate in the first quarter from the prior three months, the Labor Department said Thursday [May 2, 2019]. From a year earlier, productivity rose 2.4%. That was the best gain year-over-year since the third quarter of 2010, when the economy was just emerging from a deep recession.

Productivity tends to be strong in the early days of an economic cycle. Accelerating improvement nearly 10 years after the recession ended raises hopes that a combination of more efficient workers and Americans rejoining the labor force could provide necessary fuel to extend one of the longest expansions in the post-World War II era.

For the full story, see:

Eric Morath. “Productivity Rises at Fastest Pace in Years.” The Wall Street Journal (Friday, May 3, 2019): A2.

(Note: bracketed date added.)

(Note: the online version of the story has the date May 2, 2019, and has the title “U.S. Worker Productivity Advances at Best Rate Since 2010.”)

“Confidence Stops You from Learning”

(p. A15) Mr. Karlgaard, a former publisher of Forbes magazine, has plenty of vivid anecdotes to make his case for late bloomers.

. . .

Bill Walsh, the great coach of the San Francisco 49ers, got his first NFL head coaching job when he was 46 and won his first Super Bowl at 50. He was famously twitchy, self-deprecating and eager to learn, and had this to say about confidence: “In my whole career I’ve been passing men with greater bravado and confidence. Confidence gets you off to a fast start. Confidence gets you that first job and maybe the next two promotions. But confidence stops you from learning. Confidence becomes a caricature after a while. I can’t tell you how many confident blowhards I’ve seen in my coaching career who never got better after the age of forty.”

Late bloomers, Mr. Karlgaard argues, are not just people of great talent who develop later in their lives. They also possess qualities that can only be acquired through time and experience. They tend to be more curious, compassionate, resilient and wise than younger people of equal talent. This may be true, Mr. Karlgaard notes, of older people generally, who are being flushed out of the workforce much too early.

For the full review, see:

Philip Delves Broughton. “THE WEEKEND INTERVIEW; Standing Against Psychiatry’s Crazes.” The Wall Street Journal (Tuesday, April 30, 2019): A15.

(Note: ellipsis added.)

(Note: the online version of the review has the date April 29, 2019, and has the title “BOOKSHELF; ‘Late Bloomers’ Review: Please Don’t Rush Me.”)

The book under review, is:

Karlgaard, Rich. Late Bloomers: The Power of Patience in a World Obsessed with Early Achievement. New York: Currency, 2019.

Robots Allow Walmart to Better Use “Workers for New Tasks”

(p. B4) Walmart plans to use autonomous robots in more stores by next year to scan shelf inventory to be able to detect products that are out of stock and direct workers and shoppers to precise product locations, Mark Ibbotson, head of central operations for Walmart U.S., said in an interview.

Walmart is also adding automatic conveyor belts to backrooms that sort products to speed the process of unloading the roughly nine trucks that arrive at a typical store each week, executives said at a presentation in June. The conveyor belts cut the number of workers needed to unload trucks by half, from around eight to four, they said.

The changes give Walmart more labor dollars to spend on “pickers,” workers who roam the store to compile online orders that are picked up by customers in store parking lots, said Mr. Ibbotson.

“It’s a savings” that allows Walmart to keep labor costs steady, through attrition and better using workers for new tasks, he said.

For the full story, see:

Sarah Nassauer. “Retailers Bring on Robots.” The Wall Street Journal (Monday, July 2, 2018): B4.

(Note: the online version of the story has the date July 1, 2018, and has the title “Target, Walmart Automate More Store Tasks.”)

Finnish Universal Basic Income Did Not Increase Labor Supply

(p. A8) A much-watched experiment in Finland failed to provide evidence that offering people a guaranteed income is the answer to some of the insecurities caused by potentially profound changes in the jobs market.

Early results from a pilot program suggest that providing unemployed people with a minimum income doesn’t encourage them to find work, . . .

. . .

“The Finnish government hoped that UBI would increase labor supply and employment, but it did not,” said Christopher Pissarides, a professor of economics at the London School of Economics and a Nobel Prize winner.

For the full story, see:

Paul Hannon. “Basic Income Experiment Didn’t Boost Employment.” The Wall Street Journal (Saturday, Feb. 9, 2019): A8.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 8, 2019, and has the title “Experiment in Finland With Guaranteed Income Creates Less Stress but No Jobs.”)

IPO of Vanguard Achieved Only 5% of Goal

(p. A15) The First Index Investment Trust, which tracks the returns of the S&P 500 and is now known as the Vanguard 500 Index Fund, was founded on December 31, 1975. It was the first “product,” as it were, of a new mutual fund manager, The Vanguard Group, the company I had founded only one year earlier.
The fund’s August 1976 initial public offering may have been the worst underwriting in Wall Street history. Despite the leadership of the Street’s four largest retail brokers, the IPO fell far short of its original $250 million target. The initial assets of 500 Index Fund totaled but $11.3 million–falling a mere 95% short of its goal.
The fund’s struggle for the attention (and dollars) of investors was epic. Known as “Bogle’s folly,” the fund’s novel strategy of simply tracking a broad market index was almost totally rejected by Wall Street. The head of Fidelity, then by far the fund industry’s largest firm, put the kiss of death on his tiny rival: “I can’t believe that the great mass of investors are [sic] going to be satisfied with just receiving average returns. The name of the game is to be the best.”
(p. B4) Almost a decade passed before a second S&P 500 index fund was formed, by Wells Fargo in 1984. During that period, Vanguard’s index fund attracted cash inflow averaging only $16 million per year.
Now let’s advance the clock to 2018. What a difference 42 years makes! Equity index fund assets now total some $4.6 trillion, while total index fund assets have surpassed $6 trillion. Of this total, about 70% is invested in broad market index funds modeled on the original Vanguard fund.

For the full commentary, see:
John C. Bogle. “The Father of the Index Fund Sees a Reckoning Ahead.” The Wall Street Journal (Saturday, Dec. 1, 2018): B1 & B4.
(Note: the online version of the review has the date Nov. 29, 2018, and has the title “Bogle Sounds a Warning on Index Funds.”)

Bogle’s commentary is based on his book:
Bogle, John C. Stay the Course: The Story of Vanguard and the Index Revolution. Hoboken, NJ: John Wiley & Sons, Inc., 2018.

One Billion Fewer People Live in “Extreme Poverty”

(p. A16) The global population living in extreme poverty has fallen below 750 million for the first time since the World Bank began collecting global statistics in 1990, a decline of more than 1 billion people in the past 25 years.

. . .

The World Bank defines “extreme poverty” as living on less than $1.90 a day, or about $694 a year. The sum, which is based off measures of poverty determined by many low-income countries, is the amount it takes to afford minimal basic needs.

The figure is comparable, adjusted for inflation, to the $1-a-day threshold that became popular in the 1990s as the marker of extreme poverty.

For the full story, see:

Josh Zumbrun. “Share of World’s Poorest Falls to 10%.” The Wall Street Journal (Thursday, Sept. 20, 2018): A16.

(Note: ellipsis added.)

(Note: the online version of the story has the date Sept. 19, 2018, and has the title “World Poverty Falls Below 750 Million, Report Says.”)

Machine Learning Finds Female Brains Age Slower Than Male Brains

(p. C4)  . . .  there is fresh evidence that women not only have a longevity advantage; their brains seem to be more youthful throughout adulthood, too.

The new study, published last month [February 2019] in the Proceedings of the National Academy of Science, was led by radiologist Manu Goyal and neurologist Marcus Raichle, both at the Washington University School of Medicine.

. . .

The researchers used machine learning to detect distinctive patterns in the brains they studied. “When we trained it on males and tested it on females, then it guessed the female’s brain age to be three to four years younger than the women’s chronological age,” said Dr. Goyal. Conversely, when the machine was trained to see female metabolic patterns as the standard, it guessed men’s brains to be two to three years older than they actually were. That difference in metabolic brain age added up to approximately a three year advantage for women.

These brain age differences persisted across the adult lifespan and were visible even when people’s brains showed the harbingers of Alzheimer’s disease. “These new findings provide yet more evidence, as if more were needed, of just how ubiquitous sex influences on brain function have proven to be, often showing up in places we least expect them,” said Larry Cahill, a neuroscientist who studies sex differences in the brain at University of California, Irvine.

For the full commentary, see:

Susan Pinker.  “MIND AND MATTER: Women Have Younger Brains Than Men.”  The Wall Street Journal  (Saturday, March 30, 2019):  C4.
(Note:  ellipses, and bracketed date, added.)

(Note:  the online version of the commentary has the date March 27, 2019.)

The published research summarized above, is:

Goyal, Manu S., Tyler M. Blazey, Yi Su, Lars E. Couture, Tony J. Durbin, Randall J. Bateman, Tammie L. S. Benzinger, John C. Morris, Marcus E. Raichle, and Andrei G. Vlassenko. “Persistent Metabolic Youth in the Aging Female Brain.” Proceedings of the National Academy of Sciences 116, no. 8 (Feb. 19, 2019): 3251-3255.

Future Population Lower Than U.N. Estimates, Perhaps by Billions

(p. A15) Is a dangerous population explosion imminent? For decades we’ve been told so by scientific elites, starting with the Club of Rome reports in the 1970s. But in their compelling book “Empty Planet: The Shock of Global Population Decline,” Canadian social scientist Darrell Bricker and journalist John Ibbitson lay out the opposite case: “The great defining event of the twenty-first century,” they say, “will occur in three decades, give or take, when the global population starts to decline. Once that decline begins, it will never end.”

. . .

So why exactly is everyone still worried about the opposite problem? The authors pin the blame on faulty assumptions by the population establishment, as represented by the U.N. Population Division. They don’t use the United States as an example, but I will: The U.N.’s most recent population forecasts suggest that the average U.S. total fertility rate from 2015 to 2020 should be 1.9 children per woman. In reality, CDC data shows U.S. fertility has averaged about 1.8 children per woman from 2015 to 2018. In 2019, early indications are that fertility will probably be nearer 1.7 children per woman.

. . .

As Messrs. Bricker and Ibbitson point out, U.N. forecasts are substantially out-of-step with existing data from many countries, including China, India and Brazil. As a result of these mistakes, the most widely used population benchmarks in the world are probably wrong. The future will have far fewer people than the U.N. suggests; perhaps billions fewer.

For the full review, see:

Lyman Stone. “BOOKSHELF; A Drop In Numbers.” The Wall Street Journal (Thursday, February 7, 2019): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date February 6, 2019, and has the title “BOOKSHELF; ‘Empty Planet’ Review: A Drop in Numbers; Governments stoke fears about overpopulation, but the reality is that fertility rates are falling faster than most experts can readily explain.”)

The book under review, is:

Bricker, Darrell, and John Ibbitson. Empty Planet: The Shock of Global Population Decline. New York: Crown, 2019.

Australia’s 28 Years With No Recession Challenge Business Cycle Cliches

(p. 6) I had flown 16,000 miles . . .  to study . . .  the remarkable resilience of the Australian economy, which has gone nearly 28 years without a recession.

. . .

America is on the verge of its own economic milestone: The current expansion is on track to reach its 10th birthday this summer, which would also put it on record as the nation’s longest streak without a recession.

During the decade I’ve spent chronicling that growth as an economics writer, a persistent whisper has been: How long can it go? The run has been uneven, underwhelming and repeatedly on the verge of unraveling, including scary moments in 2010, 2015 and this past December. Seemingly every commentator without a good cliché blocker has referred to it as “long in the tooth.” Continue reading “Australia’s 28 Years With No Recession Challenge Business Cycle Cliches”

F.A.A. Regulations Slow Drone Innovation

(p. B2) Chinese aviation administrators, . . . , have already approved drone deliveries by the e-commerce giant JD.com and delivery giant SF Holding Co. But in the United States, it will depend on whether regulators eventually allow drone companies to have autonomous systems in which multiple aircraft are overseen by one pilot and whether they can fly beyond the vision of that pilot. Current regulations do not permit multiple drones per operator without a waiver. Operators like Wing, the drone-delivery company owned by Google parent Alphabet, have that capability.

. . .

Wing is . . .  one of several companies participating in a pilot program in Virginia. As with its testing in Finland and Australia, Wing will focus on the delivery of consumer goods, including food.

The Virginia site, in Blacksburg, near Virginia Tech, is one of 10 chosen by the Federal Aviation Administration as part of its Unmanned Aircraft Systems Integration Pilot Program.

The 10 were culled from 149 applications from “state, local and tribal governments,” agency spokesman Les Dorr said in an email. Those in the industry didn’t apply directly, but could show their interest, he said, and more than 2,800 companies responded.

. . .

While the F.A.A. has chosen the 10 pilots, the programs still need to apply for agency waivers because they will fly beyond the visual line of sight, fly at night and fly over people, fundamentals not allowed under current law. The agency is seeking comments on expanding permissible uses under current law; it is also testing to evaluate the parameters of regulation.

As a practical matter, this means that some of the pilot programs are not yet operational as they await F.A.A. approval.

That’s O.K., said James Pearce, a spokesman for the North Carolina Department of Transportation, which prefers to ensure that the drones can safely fly and that those on the ground are not exposed to any risks, including those that are self-inflicted. “We need to make sure that people know not to try to grab the drones.”

. . .

While the deliberate pace may seem slow, Mr. Levitt, like others interviewed, remains sanguine. “It’s like the red flag laws when cars began to populate the roads. You had to have someone walking ahead with a flag to warn others. That’s where we are today with drones — not being able to fly beyond the visual line of sight is like not allowing a car to drive faster than a person can walk.”

For the full story, see:

Ellen Rosen.  “No Drones at Your Doorstep, but Don’t Rule Them Out Yet.”  The New York Times (Monday, ):  B2.

(Note:  ellipses added.)

(Note:  the online version of the story has the date March 19, 2019, and has the title “Skies Aren’t Clogged With Drones Yet, but Don’t Rule Them Out.”)

Many Charities and Nonprofits Do Not Change the World

(p. A15) Opinion polls showing that present-day Democrats look more favorably on socialism than capitalism have prompted Tyler Cowen, an economics professor at George Mason University, to write what he calls a “love letter” to big business. His thesis: Corporations may lack heroic attributes, but they deserve more respect than they get.

. . .

Alongside the vilification of corporate capitalism has been a rise in the social status of nonprofits, as if the nonprofit label, by itself, signals both value and virtue. Mr. Cowen isn’t having it: He asserts that fraud is more prevalent in nonprofit organizations than in profit-making ones. What is more, “plenty of charities and nonprofits don’t actually change or improve the world or deliver any useful product at all, but rather simply continue as lost causes with no impact.”

Americans have a big stake in profits, as Mr. Cowen reminds us. “As of 2015, 55 percent of Americans had money invested in stocks . . . ,” he writes. “Even if you do not personally own many or any equities, there is a good chance your retirement fund or pension fund does.”

For the full review, see:

George Melloan. “BOOKSHELF; What Socialism Gets Wrong.” The Wall Street Journal (Tuesday, ): A15.

 

(Note: ellipsis between paragraphs, added; ellipsis internal to last paragraph, in original.)

(Note: the online version of the review has the date , and has the title “BOOKSHELF;‘Big Business’ Review: What Socialism Gets Wrong.”)

The book under review, is:

Cowen, Tyler. Big Business: A Love Letter to an American Anti-Hero. New York: St. Martin’s Press, 2019.