Labor Economics – Page 68 – artdiamondblog.com

High Costs of Public Sector Unions

(p. A11) . . . the costs of public-sector unions are great. “The byproduct of political management of the economy is waste,” the author notes. Second, pension and benefit obligations weigh down our cities. Trash disposal in Chicago costs $231 per ton, versus $74 in non-union Dallas. Increasingly, such a burden is fatal. When Detroit declared bankruptcy in 2013, a full half of the city’s$18.2 billion long-term debt was owed for employee pensions and health benefits. Even before the next downturn, other cities and some states will find themselves faltering because of similarly massive obligations.
There is something grotesque about public workers fighting for benefits whose provision will hurt the public. Citizens who vote Democratic may choose not to acknowledge the perversity out of party loyalty. But over the years a few well-known Democrats have sided against the public-sector unions. “The process of collective bargaining as usually understood cannot be transplanted into the public service,” a Democratic politician once declared. His name? Franklin Roosevelt.

For the full review, see:
AMITY SHLAES. “BOOKSHELF; Public Unions vs. the Public; Pension and benefit obligations weigh down our cities. Trash disposal in Chicago costs $231 per ton, versus $74 in non-union Dallas.” The Wall Street Journal (Fri., Jan. 16, 2015): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date Jan. 15, 2015.)

The book under review is:
DiSalvo, Daniel. Government against Itself: Public Union Power and Its Consequences. New York: Oxford University Press, 2015.

Police Unions Make It Harder to Get Rid of Bad Cops

(p. A29) A small percentage of cops commit most of the abuses. A study by WNYC News in New York found that, since 2009, 40 percent of the “resisting arrest” charges were filed by just 5 percent of New York Police Department officers. In other words, most officers rarely get in a confrontation that leads to that charge, but a few officers often get in violent confrontations.
But it’s very hard to remove the bad apples from the force. Trying to protect their members, unions have weakened accountability. The investigation process is softer on police than it would be on anyone else. In parts of the country, contract rules stipulate that officers get a 48-hour cooling-off period before having to respond to questions. They have access to the names and testimony of their accusers. They can be questioned only by one person at a time. They can’t be threatened with disciplinary action during questioning.
More seriously, cops who are punished can be reinstated through a secretive appeals process that favors job retention over public safety. In The Atlantic, Conor Friedersdorf has a riveting piece with egregious stories of cops who have returned to the force after clear incompetence. Hector Jimenez was an Oakland, Calif., cop who shot and killed an unarmed 20-year-old man in 2007. Seven months later, he killed another unarmed man, shooting him in the back three times while he ran away. The city paid damages. Jimenez was fired. But he appealed through his union and was reinstated with back pay.

For the full commentary, see:
David Brooks. “The Union Future.” The New York Times (Fri., DEC. 19, 2014): A29.
(Note: the online version of the commentary has the date DEC. 18, 2014. )

Ways Technology May Decrease Inequality

(p. 7) As the previous generation retires from the work force, many more people will have grown up with intimate knowledge of computers. And over time, it may become easier to work with computers just by talking to them. As computer-human interfaces become simpler and easier to manage, that may raise the relative return to less-skilled labor.
The future may also extend a growing category of employment, namely workers who team up with smart robots that require human assistance. Perhaps a smart robot will perform some of the current functions of a factory worker, while the human companion will do what the robot cannot, such as deal with a system breakdown or call a supervisor. Such jobs would require versatility and flexible reasoning, a bit like some of the old manufacturing jobs, but not necessarily a lot of high-powered technical training, again because of the greater ease of the human-computer interface. That too could raise the returns to many relatively unskilled workers.

For the full commentary, see:
TYLER COWEN “TheUpshot; Economic View; The Technological Fix to Inequality.” The New York Times, SundayBusiness Section (Sun., DEC. 7, 2014): 7.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the commentary has the date DEC. 6, 2014, and has the title “TheUpshot; Economic View; How Technology Could Help Fight Income Inequality.” )

“It Is the Individual Who Is the Agent of the Action”

(p. C6) Mr. Mischel begins by describing how, in the late 1960s, he and his colleagues devised a straightforward experiment to measure self-control at the Bing Nursery School at Stanford University. In its simplest form, children between the ages of 4 and 6 were given a choice between one marshmallow now or two marshmallows if they waited 15 minutes. Some kids ate the marshmallow right away, but most would engage in unintentionally hilarious attempts to overcome temptation.
. . . About a third of the original subjects, the researchers reported, deferred gratification long enough to get the second treat.
. . . in 2006, . . . Mr. Mischel published a new paper in the prestigious journal Psychological Science. The researchers had done a follow-up study with the students they had tested 40 years before, examining the sort of adults they had grown into. They found that the children who were able to delay gratification had higher SAT scores entering college, higher grade-point averages at the end of college and made more money after college. Perhaps not surprisingly, they also tended to have a lower body-mass index.
. . .
In his commencement address, Adm. McRaven explained his final life lesson with an anecdote: “In SEAL training there is a bell,” he explained. “A brass bell that hangs in the center of the compound for all the students to see. All you have to do to quit–is ring the bell. Ring the bell and you no longer have to wake up at 5 o’clock. Ring the bell and you no longer have to do the freezing cold swims. Ring the bell and you no longer have to do the runs, the obstacle course, the PT–and you no longer have to endure the hardships of training. Just ring the bell.” To ring the bell is to give up.
Interestingly, one of Mr. Mischel’s lesser-known marshmallow experiments had a similar setup, with a bell that the children could ring to call back the experimenter and save them from themselves. For the children, though, ringing the bell was not giving up but calling in the cavalry. His book is an encouraging reminder that, despite all the factors that urge us to indulge, “at the end of that causal chain, it is the individual who is the agent of the action and decides when to ring the bell.” You are ultimately in control of your self.

For the full review, see:
MICHAEL SHERMER. “Willpower and Won’t Power; To resist the tempting treat, kids looked away, squirmed, sang or simply pretended to take a bite.” The Wall Street Journal (Sat., Sept. 20, 2014): C6.
(Note: ellipses added.)
(Note: the online version of the review has the date Sept. 19, 2014, and has the title “Book Review: ‘The Marshmallow Test’ by Walter Mischel; To resist the tempting treat, kids looked away, squirmed, sang or simply pretended to take a bite.”)

The book under review is:
Mischel, Walter. The Marshmallow Test: Mastering Self-Control. New York: Little, Brown and Company, 2014.

Leading Computability Expert Says Humans Can Do What Computers Cannot

(p. B4) What does Turing’s research tell us?
“There is some scientific basis for the view that humans are doing something that a machine isn’t doing–and that we don’t even want our machine to do,” says S. Barry Cooper, a mathematician at Leeds and the foremost scholar of Turing’s work.
The math behind this is deep, but here’s the short version: Humans seem to be able to decide the validity of statements that should stump us, were we strictly computers as Turing described them. And since all modern computers are of the sort Turing described, well, it seems that we’ve won the race against the machines before it’s even begun.
. . .
The future of technology isn’t about replacing humans with machines, says Prof. Cooper–it’s about figuring out the most productive way for the two to collaborate. In a real and inescapable way, our machines need us just as much as we need them.

For the full commentary, see:
Mims, Christopher. “KEYWORDS; Why Humans Needn’t Fear the Machines All Around Us; Turing’s Heirs Realize a Basic Truth: The Machines We Create Are Not, Indeed Cannot Be, Replacements for Humans.” The Wall Street Journal (Tues., DEC. 1, 2014): B4.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Nov. 30, 2014, and has the title “KEYWORDS; Why We Needn’t Fear the Machines; A Basic Truth: Computers Can’t Be Replacements for Humans.”)

One of the major books by the Turing and computability expert quoted in the passages above, is:
Cooper, S. Barry. Computability Theory, Chapman Hall/CRC Mathematics Series. Boca Raton, Florida: Chapman and Hall/CRC Mathematics, 2003.

Solution to Problems of Retirement: Don’t Retire

(p. A13) Unsurprisingly, one response to the retirement challenge is: Don’t do it. Not, at least, until you really must. As Mr. Farrell argues (with plenty of supporting evidence), there is no magic element of personal doom attached to one’s 65th birthday or whatever age is believed to separate honest labor from a twilight of idleness. If you like what you do well enough, can perform your tasks competently and could use the income, why not keep working? The satisfactions of work are too often unrecognized in the popular imagination. Without it, a lot people wouldn’t know what to do.
And the longer you work, of course, the more money you will have when you eventually do retire, a strategy that works to the good of society too, since your paychecks will be contributing to FICA and will help keep the system running.

For the full review, see:
GEOFFREY NORMAN. “BOOKSHELF; Second Acts After 65; People who could be playing golf and doting on their grandchildren are starting businesses. One senior launched a coffee house in Detroit.” The Wall Street Journal (Weds., Sept. 24, 2014): A13.
(Note: the online version of the review has the date Sept. 23, 2014, and has the title “BOOKSHELF; Book Review: ‘Unretirement’ by Chris Farrell; People who could be playing golf and doting on their grandchildren are starting businesses. One senior launched a coffee house in Detroit.”)

The book under review is:
Farrell, Chris. Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and the Good Life. New York: Bloomsbury Press, 2014.

Inequality Much Less If You Count Government Transfers as Part of Income

Despite the gratuitous jab contained in the “fanciful assumptions” phrase, what is notable about the passages quoted below is that Porter is mainly, though grudgingly, granting Burkhauser’s main point: including government transfers reduces allegedly high inequality.

(p. B1) Washington already redistributes income from the rich to the poor. Richard Burkhauser and Philip Armour from Cornell and Jeff Larrimore from the Joint Committee on Taxation have become heroes to the right by trying to establish that government redistribution has, in fact, erased the trend of increasing inequality.

While these claims rest on fanciful assumptions about what counts as income, their analysis of taxes and government programs does support the argument that the government does more than it has in a long time to protect lower-income Americans from the blows of the market economy.
. . .
(p. B5) “Substantial changes in tax and transfer policies during the Bush and Obama administrations have increased dramatically the resources available at the middle of the distribution and at the bottom more so,” Professor Burkhauser told me.
. . .
Research by Leslie McCall of Northwestern University finds that . . . American voters remain lukewarm about government interventions to reduce income inequality, . . .

For the full commentary, see:
Eduardo Porter. “Seeking New Tools to Address a Wage Gap.” The New York Times (Weds., NOV. 5, 2014): B1 & B5.
(Note: ellipses added.)
(Note: the online version of the commentary has the date NOV. 4, 2014.)

The Burkhauser co-authored paper summarized above, is:
Armour, Philip, Richard V. Burkhauser, and Jeff Larrimore. “Levels and Trends in U.S. Income and Its Distribution: A Crosswalk from Market Income Towards a Comprehensive Haig-Simons Income Approach.” Southern Economic Journal 81, no. 2 (Oct. 2014): 271-93.

I believe that the research being to referred to by McCall is in her book:
McCall, Leslie. The Undeserving Rich: American Beliefs About Inequality, Opportunity, and Redistribution. New York: Cambridge University Press, 2013.

French Entrepreneurs Protest Government Crushing Them with Taxes and Regulations

“Protesting business owners in Paris brandished locks and chains to signify the constraints they said the government imposed on French businesses.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) PARIS — They jammed the boulevards, blowing whistles, tossing firecrackers, wearing locks and chains around their necks, and shouting into megaphones: “Enough is enough!”

In France, where protest marches are a well-practiced tradition, it is usually workers who take to the streets. But in a twist on Monday, thousands of French bosses demonstrated in Paris and Toulouse, the opening act in a weeklong revolt against government regulations and taxes that they say are straitjacketing companies, discouraging hiring and choking the economy.
“We feel like we’re being taken hostage,” said Laurence Manabre, owner of a home-maintenance business that has 28 workers — but could employ many more, she said, if not for onerous government-imposed labor rules.
Ms. Manabre marched with the throng toward the Finance Ministry, brandishing a bronze lock, a symbol that hundreds of other bosses wore to signify the constraints they said the Socialist government imposed on French businesses. “Between regulations, taxes, new laws, and razor-thin margins,” she said, “we’re being crushed little by little.”
. . .
. . . there are . . . entrenched parts of the French labor code, which employers say make it a difficult, lengthy process to lay off employees, and make bosses reluctant to take on new workers, especially with permanent contracts.
“France has high unemployment,” Ms. Manabre said. “But the French labor code is incomprehensible, and it just keeps getting more complex. How can I possibly hire more people?”
. . .
Mr. Roland has 35 employees, and his son is supposed to take over the business when he retires. But now his son is thinking of leaving the country, Mr. Roland said, because “France doesn’t seem to have a future, and the conditions for entrepreneurs are difficult.”
Mr. Roland said he did not plan to hire more workers, out of concern that coming regulations would menace his already-thin profit margins.

For the full story, see:
LIZ ALDERMAN. “In Twist on French Tradition, Bosses Take to Streets in Protest.” The New York Times (Tues., DEC. 2, 2014): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date DEC. 1, 2014,)

Inequality Increased by Lack of Investment Knowledge or Discipline

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

(p. A2) Millions of Americans inadvertently made a classic investment mistake that contributed to today’s widening economic inequality: They bought high and sold low.
. . .
. . . the data suggest some investors simply sold at the wrong moment. “Even at the worst of the recession, most people still had jobs,” said Mr. Maki. “Certainly, some of the people who got out of the equity market were doing it because of fear rather than need.”
That’s also the finding of new research from economists Bing Chen and Frank Stafford at the University of Michigan. They plumbed the Panel Study of Income Dynamics, a survey that tracks the same households over time, to evaluate the factors behind their fluctuating incomes and wealth.
Households with the highest education and strong portfolios to begin with were likely to keep buying stocks during the decline, they found. Those with less education and smaller account balances were more likely to sell during the downturn.
When the subsequent rebound happened, the already rich got even richer.
. . .
“. . . there certainly is a widening gap there in terms of the return that higher-income people are receiving in the market,” said Mr. Akabas [an economist at the Bipartisan Policy Center in Washington who works on the center’s Personal Savings Initiative]. “Lower- to middle-income people aren’t privy to those gains. That’s exacerbated by the fact that many of them have taken their money out of the stock market.”

For the full commentary, see:
JOSH ZUMBRUN. “THE OUTLOOK; Market Missteps Fuel Inequality.” The Wall Street Journal (Mon., Oct. 27, 2014): A2.
(Note: ellipses, and bracketed words, added.)
(Note: the online version of the commentary has the date Oct. 26, 2014, and has the title “THE OUTLOOK; Bad Stock-Market Timing Fueled Wealth Disparity.”)

How “the Credentials Arms-Race” Now “Defines Young Adulthood”

(p. A11) . . . “Excellent Sheep” is a cri de coeur against the credentials arms-race that now defines young adulthood–and even childhood–for many Americans. But you don’t have to take his word for it: The book features interviews and correspondence with students and recent graduates of elite institutions. Beyond their glowing transcripts and the fact that they have become “accomplished adult-wranglers,” these students are anxious, depressed and searching for some deeper meaning in their lives. “For many students, rising to the absolute top means being consumed by the system. I’ve seen my peers sacrifice health, relationships, exploration, activities that can’t be quantified and are essential for developing souls and hearts, for grades and resume building,” one Stanford student told the author. A Yalie put it more succinctly: “I might be miserable, but were I not miserable, I wouldn’t be at Yale.”

For the full review, see:
EMILY ESFAHANI SMITH. “BOOKSHELF; The Credentials Arms-Race; Students sacrifice all to grades and resume building–‘I might be miserable,’ a Yalie noted, ‘but were I not miserable, I wouldn’t be at Yale.’.” The Wall Street Journal (Thurs., Aug. 21, 2014): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date Aug. 20, 2014, and has the title “BOOKSHELF; Book Review: ‘Excellent Sheep: The Miseducation of the American Elite’ by William Deresiewicz; Students sacrifice all to grades and resume building–‘I might be miserable,’ a Yalie noted, ‘but were I not miserable, I wouldn’t be at Yale.’.”)

The book under review is:
Deresiewicz, William. Excellent Sheep: The Miseducation of the American Elite and the Way to a Meaningful Life. New York, NY: Free Press, 2014.

U.S. Patents and Start-Ups Fall When We Exclude Tech Immigrants

(p. A19) The process of bringing skilled immigrants to the U.S. via H-1B visas and putting them on the path to eventual citizenship has been a political football for at least a decade. It has long been bad news for those immigrants trapped in this callous process. Now the U.S. economy is beginning to suffer, too.
Every year, tens of thousands of disappointed tech workers and other professionals give up while waiting for a resident visa or green card, and go home–having learned enough to start companies that compete with their former U.S. employers. The recent historic success of China’s Alibaba IPO is a reminder that a new breed of companies is being founded, and important innovation taking place, in other parts of the world. More than a quarter of all patents filed today in the U.S. bear the name of at least one foreign national residing here.
The U.S. no longer has a monopoly on great startups. In the past, the best and brightest people would come to the U.S., but now they are staying home. In Silicon Valley, according to a 2012 survey by Duke and Stanford Universities and the University of California at Berkeley, the percentage of new companies started by foreign-born entrepreneurs has begun to slide for the first time–down to 43.9% during 2006-12, from 52.4% during 1995-2005.

For the full commentary, see:
MICHAEL S. MALONE. “OPINION; The Self-Inflicted U.S. Brain Drain; Up to 1.5 million skilled workers are stuck in immigration limbo. Many give up and go home.” The Wall Street Journal (Thurs., OCT. 16, 2014): A19.
(Note: the online version of the commentary has the date OCT. 15, 2014.)

The 2012 survey is discussed further in:
Wadhwa, Vivek, AnnaLee Saxenian, and F. Daniel Siciliano. “Then and Now: America’s New Immigrant Entrepreneurs, Part VII.” Ewing Marion Kauffman Foundation, October 2012.

An in-depth discussion of the issues raised by Malone can be found in:
Wadhwa, Vivek. The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent. pb ed. Philadelphia, PA: Wharton Digital Press, 2012.