China’s Economic Surge Not Shared by Consumers and Small Businesses

(p. B1) Factories are whirring, new apartments are being snapped up, and more jobs are up for grabs. When China released its new economic figures on Friday, they showed a remarkable postpandemic surge.

The question is whether small businesses and Chinese consumers can fully share in the good times.

China reported on Friday that its economy grew by a jaw-dropping 18.3 percent in the first three months of the year compared with the same period last year. While the figure is steep, it is as much a reflection of the past — the country’s output shrank 6.8 percent in the first quarter of 2020 from a year earlier — as it is an indication of how China is doing now.

A year ago, entire cities were shut down, planes were grounded and highways were blocked to control the spread of a relentless virus. Today, global demand for computer screens and video consoles that China makes is soaring as people work from home and as a pandemic recovery beckons. That demand has continued as Americans with stimulus checks look to spend money on patio furniture, electronics and other goods made in Chinese factories.

China’s recovery has also been powered by big infrastructure. Cranes dot city skylines. Construction projects for highways and railroads have provided short-term jobs. Property sales have also helped strengthen economic activity.

But exports and property investment can carry China’s growth only so far.

. . .

(p. B3) A slow vaccination rollout and fresh memories of lockdowns have left many consumers in the country skittish.  . . .  When virus outbreaks occur, the Chinese authorities are quick to put new lockdowns in place, hurting small businesses and their customers.

. . .

Families continue to save at a higher rate than they did before the pandemic, something that worries economists like Louis Kuijs, who is head of Asian economics at Oxford Economics. Mr. Kuijs is looking at household savings as an indication of whether Chinese consumers are ready to start splurging after months of being stuck at home.

“More people still seem to not go all the way in terms of carefree spending,” he said. “At times there are still some lingering Covid concerns, but there is perhaps also a concern about the general economic situation.”

. . .

Mr. [Jinqiu] Li, who is recently married and has a baby at home, is still choosing to save instead of spend. He had planned to work for the family business, but it has been hit by the pandemic and he doesn’t think there is much opportunity for him if he stays.

“The whole family has some sense of crisis,” Mr. Li said. “Because of the pandemic and because of family business, I have a sense of crisis.”

For the full story, see:

Alexandra Stevenson and Cao Li. “China’s Gain Is Hardly Felt by the People.” The New York Times (Friday, April 16, 2021): B1 & B3.

(Note: ellipses, and bracketed first name, added.)

(Note: the online version of the article has the date April 15, 2021, and has the title “China’s Economy Is Booming. Shoppers Are Skittish Anyway.” The quote starting “More people” appeared in the print, but not in the online, version of the article.)

The Wealthy Benefit More from Lower Corporate Tax Rates than from Lower Income Tax Rates

(p. A18) The main cause of the radical decline in tax rates for very wealthy Americans over the past 75 years isn’t the one that many people would guess. It’s not about lower income taxes (though they certainly play a role), and it’s not about lower estate taxes (though they matter too).

The biggest tax boon for the wealthy has been the sharp fall in the corporate tax rate.

. . .

Since the mid-20th century, however, politicians of both political parties have supported cuts in the corporate-tax rate, often under intense lobbying from corporate America. The cuts have been so large — including in President Donald Trump’s 2017 tax overhaul — that at least 55 big companies paid zero federal income taxes last year, according to the Institute on Taxation and Economic Policy. Among them: Archer-Daniels-Midland, Booz Allen Hamilton, FedEx, HP, Interpublic, Nike and Xcel Energy.

The justification for the tax cuts has often been that the economy as a whole will benefit — that lower corporate taxes would lead to company expansions, more jobs and higher incomes. But it hasn’t worked out that way. Instead, economic growth has been mediocre since the 1970s. And incomes have grown even more slowly than the economy for every group except the wealthy.

For the full commentary, see:

David Leonhardt. “‘A Dirty Little Secret’: Corporate Tax Rates and the Very Rich.” The New York Times (Thursday, April 8, 2021): A18.

(Note: ellipsis added.)

(Note: the online version of the commentary has the same date as the print version, and has the title “Corporate Taxes Are Wealth Taxes.” Where the print and online versions differ, the passages above follow the print version.)

Productivity Pessimist Robert Gordon Becomes More Optimistic

(p. A2) After a decadelong drought, worker productivity might be about to accelerate thanks to pandemic-induced technological adoption, which could lift economic growth and wages in coming years while staving off inflation pressure.

. . .

Robert Gordon, a professor at Northwestern University who has studied productivity and living standards during the past century, said productivity growth slowed after 2005 because the payoff from computers faded and new inventions such as smartphones and tablets didn’t revolutionize business operations. In 2015 he had predicted productivity growth of only 1.5% a year over the next 25 years. Recent developments have made him more optimistic, and he expects annual productivity growth of about 1.8% this decade.

A shift toward e-commerce should push up productivity by eliminating workers needed in bricks-and-mortar stores, Mr. Gordon said. Videoconferencing should also help, though the public-transit sector could offset some of the gains because buses and rail transit will carry fewer riders, he said.

. . .

Remote work could deliver a one-time 4.7% lift to productivity after the pandemic, though a large share of the growth will stem from shortened commutes that government productivity data won’t fully capture, according to a working paper from Stanford University’s Nicholas Bloom and co-authors.

For the full commentary, see:

Sarah Chaney Cambon. “Productivity Looks Ready to Pick Up.” The Wall Street Journal (Saturday, April 5, 2021): A2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 4, 2021, and has the title “U.S.’s Long Drought in Worker Productivity Could Be Ending.”)

Gordon’s pessimistic old views were most fully expressed in his much-discussed:

Gordon, Robert J. The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War. Princeton, NJ: Princeton University Press, 2016.

The working paper co-authored by Bloom is:

Barrero, Jose Maria, Nicholas Bloom, and Steven J. Davis. “Why Working from Home Will Stick.” Working Paper, April 1, 2021.

Krugman Argues Costly Universal Basic Income (UBI) Not Justified by Automation

(p. A22) [Andrew] Yang’s claim to fame is his argument that we’re facing social and economic crises because rapid automation is destroying good jobs and that the solution is universal basic income — a monthly check of $1,000 to every American adult. Many people find that argument persuasive, and one can imagine a world in which both Yang’s diagnosis and his prescription would be right.

But that’s not the world we’re living in now, and there’s little indication that it’s where we’re going any time soon.

Let’s do a fact check: Are we actually experiencing rapid automation — that is, a rapid reduction in the number of workers it takes to produce a given amount of stuff? That would imply a rapid rise in the amount of stuff produced by each worker still employed — that is, rapidly rising productivity.

But that’s not what we’re seeing. In fact, the lead article in the current issue of the Monthly Labor Review, published by the Bureau of Labor Statistics, is an attempt to understand the productivity slowdown — the historically low growth in productivity since 2005. This slowdown has been especially pronounced in manufacturing, which has seen hardly any productivity rise over the past decade.

. . .

The recently enacted American Rescue Plan gave most adults a one-time $1,400 payment, at a cost of $411 billion.

. . .

. . . the Yang proposal to pay $12,000 a year would cost more than eight times as much every year — well over $3 trillion a year, in perpetuity. Even if you aren’t much worried about either debt or inflationary overheating right now (which I’m not), you have to think that sustained spending at that rate would both cause problems and conflict with other priorities, from infrastructure to child care.

For the full commentary, see:

Paul Krugman. “Andrew Yang Hasn’t Done the Math.” The New York Times (Friday, April 16, 2021): A22.

(Note: ellipses, and bracketed first name, added.)

(Note: the online version of the commentary has the date April 15, 2021, and has the same title as the print version.)

Clarity Is Rewarded, at Least Among Cave Experts

After Deirdre McCloskey published her classic “Economical Writing” in Economic Inquiry, Jack High published a critique in the same journal arguing that young economists would ruin their careers if they followed McCloskey’s advice to write clearly. High claimed that clear writing would be less published and economists who wrote more clearly would therefore be less likely to receive tenure. McCloskey published a rebuttal saying that clear writing was more likely to be published, to be read, and to help the writer receive tenure. But she added that even if she was wrong about that, we should try to write clearly because it is the right thing to do.

The study mentioned below provides some evidence to support McCloskey’s claim that clarity is rewarded.

(p. D2) . . . a team of researchers has analyzed jargon in a set of over 21,000 scientific manuscripts. The study focused on manuscripts written by scientists who study caves, . . .

They found that papers containing higher proportions of jargon in their titles and abstracts were cited less frequently by other researchers. Science communication — with the public but also among scientists — suffers when a research paper is packed with too much specialized terminology, the team concluded.

For the full story, see:

Katherine Kornei. “Confused by All That Scientific Jargon? So Are the Scientists.” The New York Times (Tuesday, April 13, 2021): D2.

(Note: ellipses added.)

(Note: the online version of the article has the date April 9, 2021, and has the title “Are You Confused by Scientific Jargon? So Are Scientists.” Where the wording in the online version differs from the wording in the print version, the passages quoted above follow the print version.)

The study discussed in the passages quoted above is:

Martínez, Alejandro, and Stefano Mammola. “Specialized Terminology Reduces the Number of Citations of Scientific Papers.” Proceedings of the Royal Society of Britain (April 7, 2021)
https://doi.org/10.1098/rspb.2020.2581.

The McCloskey classic article, and the exchange with Jack High, are:

McCloskey, Deirdre. “Economical Writing.” Economic Inquiry 23, no. 2 (April 1985): 187-222.

High, Jack C. “The Costs of Economical Writing.” Economic Inquiry 25, no. 3 (July 1987): 543-45.

McCloskey, Deirdre. “Reply to Jack High.” Economic Inquiry 25, no. 3 (July 1987): 547-548.

Biden Plan “Lurches Into” the “Quagmire” of Government Picking Tech Winners and Losers

(p. A23) The Biden administration has put forward the biggest, boldest, most expensive expansion of government in at least a half-century.

. . .

The Biden plan doesn’t just tiptoe around the quagmire of the government picking winners and losers, or what has been termed “industrial policy” — it lurches into it. Hundreds of billions of dollars will be invested by government agencies, whose record of success with direct involvement in the commercial world is, at best, mixed.

A recent case in point: the 2009 American Recovery and Reinvestment Act, which, at $787 billion, was much, much smaller than the more than $4 trillion sum of the two Biden plans put forward thus far. While the 2009 stimulus did put much-needed dollars into the economy without fraud or abuse (as Mr. Biden likes to remind us), it didn’t achieve another of its goals: a swifter transition to clean energy.

As a 2015 Congressional Research Service report reviewing stimulus projects further noted, “Solyndra declared bankruptcy in late 2011 and defaulted on its $535 million loan, Abound Solar received about $70 million of its $400 million loan before shuttering its solar panel operation and filing for bankruptcy in 2012, and SoloPower never met the requirements to initiate its $197 million loan guarantee.”

None of this should be too surprising. Going all the way back to the creation of the Synthetic Fuels Corporation in 1980, which I covered as a New York Times correspondent, the federal government’s recurring efforts at directing energy transitions have mostly struggled.

. . .

No one should want the Biden plan to fall short. But given its vast sweep — I conservatively counted more than five dozen initiatives — the administration should increase its chances of success by leaning more heavily on private models for help and using tax incentives to a greater extent for efficiency.

For the full commentary, see:

Steven Rattner. “Handle Big Government With Care.” The New York Times (Tuesday, April 13, 2021): A23.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 9, 2021, and has the title “Biden’s Big Government Should Be Handled With Care.”)

Still Plenty of Fruit to Pick from the Tree of Science

Some pessimists have argued for imminent economic stagnation on the grounds that technological progress depends on new scientific knowledge and that we already pretty much know all there is to know about science. One way in which they are wrong is that the process of scientific discovery still has a long way to go before we fully understand the world. (If C.S. Peirce was right in saying that truth is the result of infinite inquiry, then we will never fully understand the world.)

(p. A1) Evidence is mounting that a tiny subatomic particle seems to be disobeying the known laws of physics, scientists announced on Wednesday, a finding that would open a vast and tantalizing hole in our understanding of the universe.

The result, physicists say, suggests that there are forms of matter and energy vital to the nature and evolution of the cosmos that are not yet known to science. The new work, they said, could eventually lead to breakthroughs more dramatic than the heralded discovery in 2012 of the Higgs boson, a particle that imbues other particles with mass.

“This is our Mars rover landing moment,” said Chris Polly, a physicist at the Fermi National Accelerator Laboratory, or Fermilab, in Batavia, Ill., who has been working toward this finding for most of his career.

The particle célèbre is the muon, which is akin to an electron but far heavier, and is an integral element of the cosmos. Dr. Polly and his colleagues — an international team of 200 physicists from seven countries — found that muons did not behave as predicted when shot through an intense magnetic field at Fermilab.

The aberrant behavior poses a firm challenge to the Standard Model, the suite of equations that enumerates the fundamental particles in the universe (17, at last count) and how they interact.

“This is strong evidence that the muon is sensitive to something that is not in our best theory,” said Renee Fatemi, a physicist at the University of Kentucky.

. . .

(p. A19) For decades, physicists have relied on and have been bound by the Standard Model, which successfully explains the results of high-energy particle experiments in places like CERN’s Large Hadron Collider. But the model leaves many deep questions about the universe unanswered.

Most physicists believe that a rich trove of new physics waits to be found, if only they could see deeper and further. The additional data from the Fermilab experiment could provide a major boost to scientists eager to build the next generation of expensive particle accelerators.

For the full story, see:

Dennis Overbye. “A Particle’s Tiny Wobble Could Upend the Known Laws of Physics.” The New York Times (Friday, April 16, 2021): A1 & A19.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the article was updated April 9, 2021, and has the title “A Tiny Particle’s Wobble Could Upend the Known Laws of Physics.”)

My point at the start of this entry is directly relevant to my argument in the first half of the last chapter of:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Where Hospitals Charge Higher Prices for C-Sections, More C-Sections Are Performed

(p. B6) The more a hospital profits from a cesarean delivery, the more likely a woman is to get one, a new analysis suggests.

For the study, published in JAMA Network Open, researchers analyzed records of 13.2 million deliveries nationwide from 2010 to 2014, using a large database of generally healthy women.

. . .

During that period, profit from C-sections varied, from an average of $4,969 for the one-quarter of hospitals with the lowest charges to $26,129 for the quarter that charge the most.

The researchers found that compared with the one-quarter of hospitals that averaged the lowest profit per cesarean, those that made the most per formed 8 per cent more C-sections.

For the full story, see:

Nicholas Bakalar. “In Brief; Making Profits From C-Sections.” The New York Times (Tuesday, April 13, 2021): D6.

(Note: ellipsis added.)

(Note: after considerable search, I could not find this article in the online version of the NYT as of 4/24/21.)

The JAMA Network Open article discussed in the passages quoted above is:

Sakai-Bizmark, Rie, Michael G. Ross, Dennys Estevez, Lauren E. M. Bedel, Emily H. Marr, and Yusuke Tsugawa. “Evaluation of Hospital Cesarean Delivery–Related Profits and Rates in the United States.” JAMA Network Open 4, no. 3 (2021): e212235-e35.

Cuomo-Endorsed Closure of Indian Point Nuclear Reactors Increases New York’s Use of Fossil Fuels

(p. B6) For most of his long political career, Gov. Andrew M. Cuomo railed against the dangers of having a nuclear power plant operating just 25 miles away from New York City, saying its proximity to such a densely populated metropolis defied “basic sanity.’’

But now, the plant is preparing to shut down, and New York is grappling with the adverse effect the closing will have on another of Mr. Cuomo’s ambitious goals: sharply reducing the state’s reliance on fossil fuels.

So far, most of the electricity produced by the nuclear plant, known as Indian Point, has been replaced by power generated by plants that burn natural gas and emit more pollution. And that trade-off will become more pronounced once Indian Point’s last reactor shuts down on April 30 [2021].

“It’s topsy-turvy,” said Isuru Seneviratne, a clean-energy investor who is a member of the steering committee of Nuclear New York, which has lobbied to keep Indian Point running. The pronuclear group calculated that each of Indian Point’s reactors had been producing more power than all of the wind turbines and solar panels in the state combined.

For the full story, see:

Patrick McGeehan. “Nuclear Plant’s Shutdown Means More Fossil Fuel in New York.” The New York Times (Tuesday, April 13, 2021): A15.

(Note: bracketed year added.)

(Note: the online version of the story was updated April 13, 2021, and has the title “Indian Point Is Shutting Down. That Means More Fossil Fuel.”)

Zoning Regulations Restrict Building Affordable Homes

(p. A25) Although zoning may seem like a technical, bureaucratic and decidedly local question, in reality the issue relates directly to three grand themes that Joe Biden ran on in the 2020 campaign: racial justice, respect for working-class people and national unity. Perhaps no single step would do more to advance those goals than tearing down the government-sponsored walls that keep Americans of different races and classes from living in the same communities, sharing the same public schools and getting a chance to know one another across racial, economic and political lines.

Economically discriminatory zoning policies — which say that you are not welcome in a community unless you can afford a single-family home, sometimes on a large plot of land — are not part of a distant, disgraceful past. In most American cities, zoning laws prohibit the construction of relatively affordable homes — duplexes, triplexes, quads and larger multifamily units — on three-quarters of residential land.

For the full commentary, see:

Richard D. Kahlenberg. “Zoning Is a Social Justice Matter.” The New York Times (Tuesday, April 20, 2021): A25.

(Note: the online version of the commentary has the date April 19, 2021, and has the title “The ‘New Redlining’ Is Deciding Who Lives in Your Neighborhood.”)

Defending the Enlightenment

(p. C7) The dishonoring of Hume, and attacks on other Enlightenment luminaries such as Jefferson and Kant, indicate that the case against the Enlightenment has escaped the faculty lounge and is now in the streets. This turbulent context will inevitably frame any modern history of the Enlightenment, and so it is with Ritchie Robertson’s “The Enlightenment: The Pursuit of Happiness, 1680-1790.” Mr. Robertson’s study is part of a growing rearguard action. He is determined, alongside colleagues such as Jonathan Israel and Anthony Pagden, both to defend the Enlightenment on its own terms and to promote its “particularly urgent message for our time.”

. . .

What the Enlighteners offered was reason alloyed with sentiment. “In this book,” writes Mr. Robertson, “I try to present the Enlightenment not only as an intellectual movement, but also as a sea change in sensibility, in which people became more attuned to other people’s feelings, and more concerned for what we would call humane, or humanitarian values.”

. . .

He uses the sentimental revolution to explain important reformist causes, such as the suppression of cruelty to animals, penal reform and new models of education. A “feeling” for humanity in all its diversity, among figures such as Diderot and Burke, informed powerful critiques of European empire. Even Adam Smith—(p. C8)often misremembered as a pitiless capitalist—made feeling central to sociability in his “Theory of Moral Sentiments” (1759). According to Smith, as Mr. Robertson puts it, social and economic life was not powered by “cold calculations” but by “desire, which had to be properly channelled in order to produce happiness.”

The postmodernist attacks on the Enlightenment as coercive, disciplinarian and hierarchical, Mr. Robertson claims, ignore its softer dimension, its humane sympathy and its concern to ameliorate suffering.

For the full review, see:

Jeffrey Collins. “Let’s Be Reasonable, and Humane.” The New York Times Book Review (Saturday, March 13, 2021): C7.

(Note: ellipses added.)

(Note: the online version of the review has the date March 12, 2021, and has the title “‘The Enlightenment’ Review: Daring to Feel.”)

The book under review is:

Robertson, Ritchie. The Enlightenment: The Pursuit of Happiness, 1680-1790. New York: Harper, 2021.