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Posts Tagged ‘economics

“A man is worked upon by what he works on”*…

 

Jobs

 

Further to last week’s “The most perfect political community is one in which the middle class is in control, and outnumbers both of the other classes”*

The numbers tell one story. Unemployment in the US is the lowest it’s been in 50 years. More Americans have jobs than ever before. Wage growth keeps climbing.

People tell a different story. Long job hunts. Trouble finding work with decent pay. A lack of predictable hours.

These accounts are hard to square with the record-long economic expansion and robust labor market described in headline statistics. Put another way, when you compare the lived reality with the data and it’s clear something big is getting lost in translation. But a team of researchers thinks they may have uncovered the Rosetta Stone of the US labor market.

They recently unveiled the US Private Sector Job Quality Index (or JQI for short), a new monthly indicator that aims to track the quality of jobs instead of just the quantity. The JQI measures the ratio of what the researchers call “high-quality” versus “low-quality” jobs, based on whether the work offer more or less than the average income.

A reading of 100 means that there are equal numbers of the two groups, while anything less implies relatively lower-quality jobs. Here’s what it looks like:

Job Quality

So, what is this newfangled thing telling us? Right now the JQI is just shy of 81, which implies that there are 81 high-quality jobs for every 100 low-quality ones. While that’s a slight improvement from early 2012—the JQI’s 30-year nadir—it’s still way down from 2006, the eve of the housing market crash, when the economy regularly supported about 90 good jobs per 100 lousy ones.

Or, in plainer English, the US labor market is nowhere near fully recovered from the Great Recession. In fact, the long-term trend in the balance of jobs paints a more ominous picture…

Quality vs. quantity: more at “The great American labor paradox: Plentiful jobs, most of them bad.”

Resonantly, see also: “Job loss predictions over rising minimum wages haven’t come true.”  The higher minimum wages in question are still below the average that separates high- and low-quality jobs; but they are a step in the direction of narrowing the gap.

* “A man is worked upon by what he works on. He may carve out his circumstances, but his circumstances will carve him out as well.”  – Frederick Douglass

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As we “Get a Job,” we might recall that it was on this date in 1956 that serendipity yielded one of the coolest collectibles ever: rockabilly legend Carl “Blue Suede Shoes” Perkins was recording at Sam Phillips’ Sun Records in Memphis; Perkin’s buddy Johnny Cash, a Sun artist and a country star by virtue of his recent hits “I Walk The Line” and “Folsom Prison Blues,” was hanging out in the booth; and soon-to-be-famous Jerry Lee Lewis was playing piano (for a $15 dollar session fee– “Whole Lotta Shakin’ Goin’ On” was set for release a few weeks later).

A couple of years earlier, Phillips had launched Elvis Presley with “It’s Alright Mama”; but in 1955, as Elvis’ career exploded, Phillips had sold his contract to RCA, and Elvis moved on.  But The King was back in Memphis that fateful day; he stopped by Sun to say hello… and an impromptu jam ensued.  Phillips had the presence of mind to order his engineer, Jack Clement, to roll tape– a tape that was promptly shelved, forgotten, and unheard for 20 years.  The recordings of what was arguably the first “supergroup” were found in 1976 and finally released in 1981… since when, they’ve been treasured by fans– a new crop of which has emerged with the success of the Broadway musical Million Dollar Quartet.

https://i1.wp.com/farm9.staticflickr.com/8200/8239430651_733906291d_o.jpg source

 

 

Written by LW

December 4, 2019 at 1:01 am

“The most perfect political community is one in which the middle class is in control, and outnumbers both of the other classes”*…

 

middle class

 

But is there a middle class?…

Every politician defends the middle class, but none of them knows quite what it is. In August, during a town hall, Joe Biden said, “We have to rebuild the middle class, and this time we bring everyone along.” In his telling, the middle class is part memory and part aspiration, less a demographic group than a morality tale of loss and redemption. It “isn’t a number,” Biden is fond of saying. “It’s a set of values.”

For many social scientists, though, the middle class is a matter of numbers. The Pew Research Center says that anyone who earns between a mere two-thirds of the median household income and twice that amount falls within it. By that definition, just under half of all American adults are middle class. Unlike in Britain, where the category is seen as more culturally refined, the American middle class includes blue-collar workers whose consumption patterns fit the bill; they can buy a home or put their kids through college. Biden defines the middle class even more expansively. To be middle class, he said in Iowa this summer, is to know “that your kid is safe going outside to play”—something most humans, if not most large primates, would agree they want. To be middle class is to be, well, normal.

Republicans, for their part, rarely promise to rebuild the middle class; they want, as President Trump has said, to make it “bigger and more prosperous than ever before.” But liberal politicians from Biden to Barack Obama to Elizabeth Warren often vow to restore the middle class to the former glory of the three decades after World War II—a time when, they say, prosperity was shared and class conflict neutralized.

Even then, however, there was a sense that the middle class was in crisis. In his 1956 best-seller, The Organization Man, William Whyte wrote of a middle class—an implicitly white middle class—trapped in suburbs and office jobs, shorn of the entrepreneurial individualism and wartime solidarity of earlier generations. In 1969, a New York Times reporter found in Italian-American Queens a community trapped between escalating grocery bills and the expanding “ghetto.” In 1977, the middle class was “struggling uphill,” the Chicago Tribune wrote. In 1992, it felt “betrayed” and “forgotten,” according to the Times. And since 2008, Times subscribers have read of a middle class that is “sagging,” “shrinking,” “sinking,” and “limping.” In short, the middle class, as our politicians imagine it, has never really existed [in a settled, continuous way]: It is always in decline, always on the brink of being rebuilt.

To imagine the middle class, then, is to invoke a myth. Politicians use it to bind Americans together in a shared hope that they can one day return to the lost idyll of the postwar period. In that sense, the concept is remarkably optimistic, if somewhat inconsistent. As Lawrence Samuel argues in The American Middle Class: A Cultural History, the term expresses two incompatible things: It suggests that the United States is a classless society in which most citizens belong to the same social sphere, even as it hints at a rarefied class above the middle that anyone can reach if they work hard enough to ascend the ladder of opportunity. These can’t both be true—if the United States were a classless society, there would be no need for upward mobility. The metaphor gives the lie to the myth. Every ladder, after all, has a top and a bottom—and it’s the bottom that bears all the weight…

Politicians– and business people and academics– are quick to reference “the middle class.”  John Patrick Leary (@johnpatleary) explores “What We Talk About When We Talk About the Middle Class.”

* Aristotle

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As we contemplate classification and its consequences, we might recall that it was on this date in 1792, during George Washington’s first term as president, that the first edition of The Farmers Almanac was published.  (It became The Old Farmers Almanac in 1832 to distinguish itself from similarly-titled competitors.)  Still going strong, it is the oldest continuously-published periodical in the U.S.

Almanac source

 

Written by LW

November 25, 2019 at 1:01 am

“Symbols can be so beautiful, sometimes”*…

 

McDonalds

 

One of Northern Europe’s arguably most distinctive exports is “slow TV”: real-time recordings of train journeys, ferry crossings or the migration of reindeer, which regularly draw record audiences.

Among perhaps the most successful — and least exciting — examples of that genre is the live stream of a McDonald’s cheeseburger with fries. At its peak, it drew 2 million viewers a month. The only element on the screen that moves, however, is the time display.

The burger looks the same way, hour after hour.

As of this week, it has looked like that for 10 years.

Purchased hours before the corporation pulled out of the country in 2009, in the wake of Iceland’s devastating financial crisis, the last surviving McDonald’s burger has become much more than a burger. To some, it stands for the greed and excessive capitalism that “created an economic collapse that was so bad that even McDonald’s had to close down,” said Hjörtur Smárason, 43, who purchased the fateful burger in 2009. To others, the eerily fresh look of the 10-year-old meal has served as a warning against the excessive consumption of fast food…

A symbol for our times: “The cautionary political tale of Iceland’s last McDonald’s burger that simply won’t rot, even after 10 years.”

* Kurt Vonnegut, Breakfast of Champions

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As we muse of the messages in our meals, we might send gloriously-written birthday greetings to today’s epigramist, Kurt Vonnegut Jr.; he was born on this date in 1922.  In a career spanning over 50 years, Vonnegut published fourteen novels, three short story collections, five plays, and five works of non-fiction, with further collections being published after his death. He is probably best known for his darkly-satirical, best-selling 1969 novel Slaughterhouse-Five.

Vonnegut called George Orwell his favorite writer, and admitted that he tried to emulate Orwell– “I like his concern for the poor, I like his socialism, I like his simplicity”– though early in his career Vonnegut decided to model his style after Henry David Thoreau, who wrote as if from the perspective of a child.  And of course, Vonnegut’s life and work are resonant with Mark Twain and The Adventures of Huckleberry Finn. 

Author Josip Novakovich marveled that “The ease with which he writes is sheerly masterly, Mozartian.”  The Los Angeles Times suggested that Vonnegut will “rightly be remembered as a darkly humorous social critic and the premier novelist of the counterculture“; The New York Times agreed, calling Vonnegut the “counterculture’s novelist.”

220px-Kurt_Vonnegut_1972 source

 

 

 

 

Written by LW

November 11, 2019 at 1:01 am

“There are two ways to make money in business: bundling and unbundling”*…

bundle

Many ventures seek profit by repackaging existing goods and services as revenue streams they can control, with technology frequently serving as the mechanism. The tech industry’s mythology about itself as a “disruptor” of the status quo revolves around this concept: Inefficient bundles (newspapers, cable TV, shopping malls) are disaggregated by companies that serve consumers better by letting them choose the features they want as stand-alone products, unencumbered of their former baggage. Why pay for a package of thousands of unwatched cable television channels, when you can pay for only the ones you watch? Who wants to subsidize journalism when all you care about is sports scores?

Media has been the most obvious target of digital unbundling because of the internet’s ability to subsume other forms and modularize their content. But almost anything can be understood as a bundle of some kind — a messy entanglement of variously useful functions embedded in a set of objects, places, institutions, and jobs that is rarely optimized for serving a single purpose. And accordingly, we hear promises to unbundle more and more entities. Transportation systems are being unbundled by various ridesharing and other mobility-as-a-service startups, causing driving, parking, navigation, and vehicle maintenance to decouple from their traditional locus in the privately owned automobile. Higher education, which has historically embedded classroom learning in an expensive bundle that often includes residence on campus and extracurricular activities, is undergoing a similar change via tools for remote learning…

Things that have been unbundled rarely remain unbundled for very long. Whether digital or physical, people actually like bundles, because they supply a legible social structure and simplify the complexity presented by a paralyzing array of consumer choices. The Silicon Valley disruption narrative implies that bundles are suboptimal and thus bad, but as it turns out, it is only someone else’s bundles that are bad: The tech industry’s unbundling has actually paved the way for invidious forms of rebundling. The apps and services that replaced the newspaper are now bundled on iPhone home screens or within social media platforms, where they are combined with new things that no consumer asked for: advertising, data mining, and manipulative interfaces. Facebook, for instance, unbundled a variety of long-established social practices from their existing analog context — photo sharing, wishing a friend happy birthday, or inviting someone to a party — and recombined them into its new bundle, accompanied by ad targeting and algorithmic filtering. In such cases, a bundle becomes less a bargain than a form of coercion, locking users into arrangements that are harder to escape than what they replaced. Ironically, digital bundles like Facebook also introduce novel ambiguities and adjacencies in place of those they sought to eliminate, such as anger about the political leanings of distant acquaintances or awareness of social gatherings that happened without you (side effects that are likely to motivate future unbundling efforts in turn)…

In a consideration of one of the most fundamental dynamics afoot in our economy today, and of its consequences, Drew Austin observes that no goods or services are stand-alone: “Bundling and Unbundling.”

* Jim Barksdale (in 1995, when he was the CEO of Netscape)

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As we contemplate connection, we might recall that it was on this date in 1980 that IBM and Microsoft signed the agreement that made Microsoft the supplier of the operating system for the soon-to-be-released IBM PC.  IBM had hoped to do a deal with Digital Research (the creators of CP/M), but DR would not sign an NDA.

On Nov. 6, 1980, the contract that would change the future of computing was signed: IBM would pay Microsoft $430,000 for what would be called MS-DOS. But the key provision in that agreement was the one that allowed Microsoft to license the operating system to other computer manufacturers besides IBM — a nonexclusive arrangement that IBM agreed to in part because it was caught up in decades of antitrust investigations and litigation. IBM’s legal caution, however, would prove to be Microsoft’s business windfall, opening the door for the company to become the dominant tech company of the era.

Hundreds of thousands of IBM computers were sold with MS-DOS, but more than that, Microsoft became the maker of the crucial connection that was needed between the software and hardware used to operate computers. Company revenue skyrocketed from $16 million in 1981 to $140 million in 1985 as other computer-makers like Tandy and Commodore also chose to partner with them.

And as Microsoft’s fortunes rose, IBM’s declined. The company known as Big Blue, which had once been the largest in America, and 3,000 times the size of Microsoft, lost control of the PC platform it had helped build as software became more important than hardware.  [source]

Microsoft Founders Paul Allen and Bill Gates

Paul Allen and Bill Gates in those early years

source

 

Written by LW

November 6, 2019 at 1:01 am

“Not with a bang, but a whimper”*…

 

automation

 

What actually happens to workers when a company deploys automation? The common assumption seems to be that the employee simply disappears wholesale, replaced one-for-one with an AI interface or an array of mechanized arms.

Yet given the extensive punditeering, handwringing, and stump-speeching around the “robots are coming for our jobs” phenomenon—which I will never miss an opportunity to point out is falsely represented—research into what happens to the individual worker remains relatively thin. Studies have attempted to monitor the impact of automation on wages on aggregate or to correlate employment to levels of robotization.

But few in-depth investigations have been made into what happens to each worker after their companies roll out automation initiatives. Earlier this year, though, a paper authored by economists James Bessen, Maarten Goos, Anna Salomons, and Wiljan Van den Berge set out to do exactly that…

What emerges is a portrait of workplace automation that is ominous in a less dramatic manner than we’re typically made to understand. For one thing, there is no ‘robot apocalypse’, even after a major corporate automation event. Unlike mass layoffs, automation does not appear to immediately and directly send workers packing en masse.

Instead, automation increases the likelihood that workers will be driven away from their previous jobs at the companies—whether they’re fired, or moved to less rewarding tasks, or quit—and causes a long-term loss of wages for the employee.

The report finds that “firm-level automation increases the probability of workers separating from their employers and decreases days worked, leading to a 5-year cumulative wage income loss of 11 percent of one year’s earnings.” That’s a pretty significant loss.

Worse still, the study found that even in the Netherlands, which has a comparatively generous social safety net to, say, the United States, workers were only able to offset a fraction of those losses with benefits provided by the state. Older workers, meanwhile, were more likely to retire early—deprived of years of income they may have been counting on.

Interestingly, the effects of automation were felt similarly through all manner of company—small, large, industrial, services-oriented, and so on. The study covered all non-finance sector firms, and found that worker separation and income loss were “quite pervasive across worker types, firm sizes and sectors.”

Automation, in other words, forces a more pervasive, slower-acting and much less visible phenomenon than the robots-are-eating-our-jobs talk is preparing us for…

The result, Bessen says, is an added strain on the social safety net that it is currently woefully unprepared to handle. As more and more firms join the automation goldrush—a 2018 McKinsey survey of 1,300 companies worldwide found that three-quarters of them had either begun to automate business processes or planned to do so next year—the number of workers forced out of firms seems likely to tick up, or at least hold steady. What is unlikely to happen, per this research, is an automation-driven mass exodus of jobs.

This is a double-edged sword: While it’s obviously good that thousands of workers are unlikely to be fired in one fell swoop when a process is automated at a corporation, it also means the pain of automation is distributed in smaller, more personalized doses, and thus less likely to prompt any sort of urgent public response. If an entire Amazon warehouse were suddenly automated, it might spur policymakers to try to address the issue; if automation has been slowly hurting us for years, it’s harder to rally support for stemming the pain…

Brian Merchant on the ironic challenge of addressing the slow-motion, trickle-down social, economic, and cultural threats of automation– that they will accrue gradually, like erosion, not catastrophically… making it harder to generate a sense of urgency around creating a response: “There’s an Automation Crisis Underway Right Now, It’s Just Mostly Invisible.”

* T. S. Eliot, “The Hollow Men”

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As we think systemically, we might recall that it was on this date in 1994 that Ken McCarthy, Marc Andreessen, and Mark Graham held the first conference to focus on the commercial potential of the World Wide Web.

 

 

Written by LW

November 5, 2019 at 1:01 am

“Time isn’t the main thing. It’s the only thing.”*…

 

12_population

 

Vaclav Smil is a distinguished professor emeritus in the faculty of environment at the University of Manitoba in Winnipeg, Canada. Over more than 40 years, his books on the environment, population, food and energy have steadily grown in influence. He is now seen as one of the world’s foremost thinkers on development history and a master of statistical analysis. Bill Gates says he waits for new Smil books the way some people wait for the next Star Wars movie. The latest is Growth: From Microorganisms to Megacities.

You are the nerd’s nerd. There is perhaps no other academic who paints pictures with numbers like you. You dug up the astonishing statistic that China has poured more cement every three years since 2003 than the US managed in the entire 20th century. You calculated that in 2000, the dry mass of all the humans in the world was 125m metric tonnes compared with just 10m tonnes for all wild vertebrates. And now you explore patterns of growth, from the healthy development of forests and brains to the unhealthy increase in obesity and carbon dioxide in the atmosphere. Before we get into those deeper issues, can I ask if you see yourself as a nerd?
Not at all. I’m just an old-fashioned scientist describing the world and the lay of the land as it is. That’s all there is to it. It’s not good enough just to say life is better or the trains are faster. You have to bring in the numbers. This book is an exercise in buttressing what I have to say with numbers so people see these are the facts and they are difficult to dispute.

Growth is a huge book – almost 200,000 words that synthesise many of your other studies, ranging across the world and exploring far into the past and future. Do you see this as your magnum opus?
I have deliberately set out to write the megabook on growth. In a way, it’s unwieldy and unreasonable. People can take any number of books out of it – economists can read about the growth of GDP and population; biologists can read about the growth of organisms and human bodies. But I wanted to put it all together under one roof so people could see how these things are inevitably connected and how it all shares one crystal clarity: that growth must come to an end. Our economist friends don’t seem to realise that…

The always-illuminating Jonathan Watts interviews the always-provocative Vaclav Smil: “Vaclav Smil: ‘Growth must end. Our economist friends don’t seem to realise that’.”

Pair with “Minimal Maintenance,” the essay version of a talk by Shannon Mattern, Professor of Anthropology at The New School for Social Research.  As Patrick Tanguay suggests: it is a “really excellent read which ties together maintenance, degrowth, libraries, museums, environmental justice, and architecture…[it] frames degrowth not as blanket anti-growth but as a critique of growth as an end in itself.”

See also Astra Taylor’s “Bad ancestors: does the climate crisis violate the rights of those yet to be born?” and. for a look at the challenges ahead, The Economist‘s “The past, present and future of climate change.”

* Miles Davis

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As we ponder progress, we might recall that it was on this date in 1961 that How to Succeed in Business Without Really Trying premiered on Broadway.  A musical comedy by Frank Loesser, with book by Abe Burrows, Jack Weinstock, and Willie Gilbert, it was based on Shepherd Mead’s 1952 book of the same name.  It follows young, ambitious J. Pierrepont Finch, who, with the help of the self-help manual How to Succeed in Business Without Really Trying, rises from window washer to chairman of the board of the World Wide Wicket Company.

The play, which starred Robert Morse and Rudy Vallée, ran for 1,417 performances; it won seven Tony Awards, the New York Drama Critics Circle award, and the 1962 Pulitzer Prize for Drama.

220px-How_to_Succeed_in_Business_Without_Really_Trying_1961_Original_Cast_Recording source

 

 

“We only have what we give”*…

 

Charity

 

Total charitable giving rose 0.7% measured in current dollars over the revised total of $424.74 billion contributed in 2017. Adjusted for inflation, total giving declined 1.7%…

“After reaching record-breaking levels of giving in 2017, American individuals and organizations continued their generous support of charitable institutions in 2018,” said Rick Dunham, chair of Giving USA Foundation and CEO of Dunham + Company. “However, the environment for giving in 2018 was far more complex than most years, with shifts in tax policy and the volatility of the stock market. This is particularly true for the wide range of households that comprise individual giving and provide over two-thirds of all giving.”

A number of competing factors in the economic and public policy environments may have affected donors’ decisions in 2018, shifting some previous giving patterns. Many economic variables that shape giving, such as personal income, had relatively strong growth, while the stock market decline in late 2018 may have had a dampening effect. The policy environment also likely influenced some donors’ behavior. One important shift in the 2018 giving landscape is the drop in the number of individuals and households who itemize various types of deductions on their tax returns. This shift came in response to the federal tax policy change that doubled the standard deduction. More than 45 million households itemized deductions in 2016. Numerous studies suggest that number may have dropped to approximately 16 to 20 million households in 2018, reducing an incentive for charitable giving…

More detail from Giving USA at “Americans gave $427.71 billion to charity in 2018 amid complex year for charitable giving.”

* Isabel Allende

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As we reach more deeply, we might recall that it was on this date in 1862 that President Abraham Lincoln signed the (preliminary) Emancipation Proclamation, announcing that if the rebel states did not end the fighting and rejoin the Union by January 1, 1863, all slaves in those states would be free.  No Confederate state capitulated, and on the first day of 1863, President Lincoln issued the Proclamation declaring “that all persons held as slaves” within the rebellious states “are, and henceforward shall be free.”

Despite it’s expansive wording, the Emancipation Proclamation was limited in many ways. It applied only to states that had seceded from the Union, leaving slavery untouched in the loyal border states. It also expressly exempted parts of the Confederacy that had already come under Northern control. Most important, of course, the freedom it promised depended upon Union military victory.

Still, it captured the hearts and imagination of millions of Americans and fundamentally transformed the character of the war.  After January 1, 1863, every advance of federal troops expanded the domain of freedom.  Moreover, the Proclamation announced the acceptance of black men into the Union Army and Navy, enabling the liberated to become liberators.  By the end of the war, almost 200,000 black soldiers and sailors had fought for the Union and freedom.

“First Reading of the Emancipation Proclamation of President Lincoln,” by Francis Bicknell Carpenter

source

 

Written by LW

September 22, 2019 at 1:01 am

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