tag:blogger.com,1999:blog-17232051.post8617067387097392301..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: The Great Labor DumpNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger53125tag:blogger.com,1999:blog-17232051.post-11705532248237337302013-12-19T00:35:46.623-05:002013-12-19T00:35:46.623-05:00Multi-factoral (with error bars)Multi-factoral (with error bars)Luke Leahttps://www.blogger.com/profile/11290760894780619646noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-53501900753221183462013-12-12T05:48:52.149-05:002013-12-12T05:48:52.149-05:00Actually I do not find robots displacing that plau...Actually I do not find robots displacing that plausible. Or to put it in another way, any technological advance has the same property as "robots". It is not self-explanatory to say "people have lower wages because new technology displaces labor". For instance new technologies in agriculture were displacing farm labor for centuries and the wages were increasing. So why it is different now with robots? <br /><br />And I have to second Andy Harless and one Anon commenter on very good hint: Rents. Krugman has a good article about this named "Profit Without Production". Every cent earned due to copyright protection, patents or any other way to prevent competition from entering the market means additional profit from rents. There are tow additional sources of rents Matt Yglesias likes to talk about:<br /><br />1) Rising real estate prices cause by which is just another way how to say increasing rents on land is another example of the same phenomenon. The main source of these rents are zoning regulations that protect existing owners of the valuable land.<br /><br />2) Occupational licensing that is skewed against low income workers. While factory workers are not only facing competition of global marketplace for manufactured goods and rising imigration, some occupations like Doctors have a lot of monopoly power to ban opening the labor markets to competition. <br /><br />The same dynamics goes on top level, where for some reason executives would laugh out anybody opposing relocation of manufaturing due to cultural reasons - but they would be probably surprised if somebody would say they hire cheaper German or French or Chinese executive who will work as hard as them and take fraction of their pay. There is something rotten in corporate governance laws in this regard. <br /><br /><br />Anonymoushttps://www.blogger.com/profile/14853090724221729923noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-61801001734194624852013-12-11T16:28:42.247-05:002013-12-11T16:28:42.247-05:00Why do economists treat mass redistribution of inc...Why do economists treat mass redistribution of income as some sort of "last resort"? Is it because they're employed by the rich?<br /><br />It should be the first resort, and it's called "taxation". It's a good thing.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-70801737986753267932013-12-11T16:09:33.785-05:002013-12-11T16:09:33.785-05:00The tax law changes are, embarassingly, pretty muc...The tax law changes are, embarassingly, pretty much global. The few countries which kept confiscatory taxes on the rich have NOT had the same economic problems.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-38847116303186224592013-12-11T16:08:06.004-05:002013-12-11T16:08:06.004-05:00Yep. The tax laws are a big issue here, completel...Yep. The tax laws are a big issue here, completely ignored by the essay.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6762965820410112022013-12-11T16:01:38.554-05:002013-12-11T16:01:38.554-05:00Theory #4. Tax rates.
In the 1950s, the very ric...Theory #4. Tax rates.<br /><br />In the 1950s, the very rich had their income taxed away from them as soon as it arrived. This meant that corporate profits got reinvested in expanding the coproration, increasing employment, raising wages, etc., forcing the CEOs to compete by being "more paternalistic" than each other, rather than "richer".<br /><br />Now, they can keep the money. So they do.Nathanaelnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-20989424494927938002013-12-11T12:02:55.571-05:002013-12-11T12:02:55.571-05:00Stephen Williamson: "But the demand for high...Stephen Williamson: "But the demand for high-skilled workers went up. That, combined with scarcity (it's costly to acquire technical skills) increased the wage premium to higher education."<br /><br />Which is why salaries for engineers have been soaring in the US for the past few decades? Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-33290701387523363202013-12-11T11:51:31.396-05:002013-12-11T11:51:31.396-05:00Oh, in addition 'wait' is what the - well,...Oh, in addition 'wait' is what the - well, liars - of neoliberalism have been telling us for four decades now. The rising tide is drowning most people.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-35456682268561115592013-12-11T11:49:04.373-05:002013-12-11T11:49:04.373-05:00In addition, we see strong signs in most of the de...In addition, we see strong signs in most of the developed world[1] that the elites have been using their increased gains to improve their political power. The end result of the waiting game (esp. with Africa and S. America coming 'online' over the next few decades) is a developed world with a multi-generational system, which should be very locked in. The majority of people will have poor education, high debt, high labor market risk, and the laws and systems structured against them.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-54120012858120610842013-12-11T11:42:46.845-05:002013-12-11T11:42:46.845-05:00These points are all very, very good, but I'll...These points are all very, very good, but I'll emphasize point 1 ('Volker's put raised price of dollar and put enough people out of work to weaken industrial labor unions for decades'). This was deliberate, choking the sh*t out of the economy until the bargain power of labor was largely gone.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-40526327702598056172013-12-11T11:41:25.780-05:002013-12-11T11:41:25.780-05:00" It is hardly the fault of the theory that t..." It is hardly the fault of the theory that this has, to put it mildly,...."<br /><br />It is indeed the fault of the theory, and the advocates, because it was a huge assumption, and had to come *after* certain groups profited (meaning among other things that their political clout increased).Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-68508074762322853562013-12-11T01:05:24.558-05:002013-12-11T01:05:24.558-05:00Hi.......................
...Hi.......................<br /> Great post like this must be highly recommended. It is so nice to read such wonderful blog. Thanks.<br /><br /><br /><a href="http://www.smurugappan.com" rel="nofollow">Foreign Trade Policy India</a>smurugappanss@gmail.comhttps://www.blogger.com/profile/06393643260515914669noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47198321490101485302013-12-10T21:00:22.445-05:002013-12-10T21:00:22.445-05:00Richard Freeman made the same argument with much t...Richard Freeman made the same argument with much the same supporting data back in 2006. See <a href="http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCwQFjAA&url=http%3A%2F%2Femlab.berkeley.edu%2Fusers%2Fwebfac%2Feichengreen%2Fe183_sp07%2Fgreat_doub.pdf&ei=AManUtKjA8vwoASB14L4Dw&usg=AFQjCNGO4mcffSekDYRxjUzuOVMmLLo2zg&sig2=P2PKpXpGC1h51pRp80LRbA&bvm=bv.57799294,d.cGU" rel="nofollow">"The Great Doubling,"</a> Freeman, R., U.C. Berkeley, 2006. <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-70188822426213132472013-12-10T19:29:31.845-05:002013-12-10T19:29:31.845-05:00interesting that only one comment mentions rent, t...interesting that only one comment mentions rent, that too in passing.<br /><br />obviously the function of academic economics - to deceive and occult the truth about political economy using differential equations has worked well.<br /><br />decline labor share just means rising rents. heck why do you think so many lawyers are there in DC? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-32217830976787238632013-12-10T01:37:57.740-05:002013-12-10T01:37:57.740-05:00In a word, yes. The New York Times article about i...In a word, yes. The New York Times article about iPhone manufacturing missed this entirely; they assumed that if it were assembled in the US Apple would need the same huge army of employees that Foxconn employs. But US labor rates would justify investment in a lot of automation. For that automation to be flexible enough to accommodate the frequent model upgrades, yes, they would have been pushing the envelope.Ken Schulzhttps://www.blogger.com/profile/06997834949296198821noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-8892295123350503252013-12-10T01:20:24.010-05:002013-12-10T01:20:24.010-05:00The decline in the relative price of investment go...The decline in the relative price of investment goods has everything to do with the openings of China and India. Both countries had severely outdated production systems, not just cheap labor (Remember the Great Leap Forward and backyard ironmaking?). You can reap large productivity increases inexpensively by upgrading very old production technology to merely old technology. Meanwhile, past high wage rates in the advanced economies justified expensive investments in leading-edge (at the time) labor-saving technology; further productivity improvement would require even more expensive technology. Technology at the leading edge hasn't become cheaper, but it's less needed when wages are low; trailing-edge tech is enough.Ken Schulzhttps://www.blogger.com/profile/06997834949296198821noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-88680025500719536762013-12-09T21:35:22.095-05:002013-12-09T21:35:22.095-05:00How do we keep getting into "either/or" ...How do we keep getting into "either/or" choices rather than "both/and"? Multivariate, anyone? Proof that economists can be both vain and boring. Nevertheless US productivity has been improving over 100 years, but persistent trade deficits are relatively new. <br /><br />The whole point of the PBOC creating trillions of Yuan to buy trillions of US Treasuries and MBS is to import jobs and demand from the US to China (and as a byproduct exporting inflation too). How can a 2-3% of GDP trade deficit not increase unemployment? Foreign governments own $6 trillion in US securities, how can that not create bubbles and low interest rates? What academic gymnastics could prove otherwise?<br /><br />Between the efforts of Asian central banks and the lobbying of US multinationals there is a concerted effort to outsource labor. Free trade must be fair trade, which means that large economies must let their currencies float. <br /><br />In the past when machines replaced men, the human labor was directed towards serving each other education, healthcare, and entertainment. But the persistent leak of employment, tax revenue, and viable capital investment is constraining the median American's ability to pay for new services.<br /><br />As an aside, why does Apple pay for Chinese rather than robots to manually assemble iPhones? And does that cheap labor retard innovation?Kent Willardhttp://www.kentwillard.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-86044582572901680642013-12-09T18:27:48.320-05:002013-12-09T18:27:48.320-05:00Robots?? As a computer scientist who has spent a ...Robots?? As a computer scientist who has spent a career automating clerical processes, I am still amazed that most people seem unaware of how much automation has replaced white collar workers - not blue. Just think about it. Remember 20 years ago? Airline reservations? Shopping? Newspapers? Your bills? Ordering just about anything? Books? Music? People's memories seem very short. Mary Robinsonhttps://www.blogger.com/profile/12953349287856947944noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-17170502003690459462013-12-09T18:01:45.469-05:002013-12-09T18:01:45.469-05:00Add to that rising costs (health, food, energy, ed...Add to that rising costs (health, food, energy, education) amidst 3+ decades of stagnant income and MAYBE you are getting close to the answer. Also, plants on the border with Mexico have been operating for decades.Anonymoushttps://www.blogger.com/profile/16161765107446705362noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-38242151207165728452013-12-09T17:58:38.560-05:002013-12-09T17:58:38.560-05:00You and your mentor are also missing massive tax c...You and your mentor are also missing massive tax changes from the late 1970s to Present that privilege non-wage income over wage income, credit market laws that make debt easier (and the parallel issue, easier for bond holders to force payment). Deindustrialization does not begin with China, it begins with Japan in the 80s, and with the migration to the coasts. Also, agriculture as a form of employment went from #1 in 1900 to not-even countable (legally) today, increasing the high cost of the shrinking city phenomenon. It is NOT all about cheaper labor (machines, chinese people), contrary to economic opinion. There is more to history than plugging things into the equationAnonymoushttps://www.blogger.com/profile/16161765107446705362noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-25115535748893294522013-12-09T17:57:39.000-05:002013-12-09T17:57:39.000-05:00P.S. It has some earmarks of the "seriousness...P.S. It has some earmarks of the "seriousness" thing, much like being anti-Social Security is the only way you can get into the DC "VSP" club. Maybe it's like a necessary mantra for entry into the profession, perhaps because the profession instinctively hates the idea of greasy, uneducated workers interfering with management's vision and decision-making. It's just messy that we have this freedom of association thing mucking up the decisions predicted by pure economics. Or something like that.urban legendnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-1502959687961542512013-12-09T17:46:32.581-05:002013-12-09T17:46:32.581-05:00"And the decline of unions is sad in many way..."And the decline of unions is sad in many ways, but it seems to be a symptom of labor's decline rather than a cause."<br /><br />Seems to me there's 100 elephants in the room on this one. What you are talking about is union strength in the declining manufacturing sector. The poorly unionized parts of the non-offshorable services sector are many, many times the number of employees in U.S. manufacturing at its peak. You can't be serious and tell us that determined and coordinated employer opposition has not played a huge role in the failure of organizing in the retail, lodging and healthcare industries, to name only the biggest, to fill in the gaps several-fold caused by off-shoring manufacturing.<br /><br />Why are so many liberal economists so anxious to discount the decline of unions -- the decline in the ability of workers to participate in negotiating their share of the revenues their work is substantially and often primarily responsible for generating -- as a major force in growing inequality? Curious? What's up with that? urban legendnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-14651184397163332012013-12-09T17:26:26.827-05:002013-12-09T17:26:26.827-05:00Stephen,
"Technology has made it cheap to re...Stephen,<br /><br />"Technology has made it cheap to replace humans with automation, driving profits up and wages down." I believe this is a tautology, otherwise why would a company implement a technology? I also believe that this has always been true, particularly at the end of WWI when "mass production" really started and people worried about the replacement of manufacturing jobs with machines. I think that the rate of technology replacing humans is the primary metric in terms of timescales of human careers. If technology would to replace all workers tomorrow that shock would be very disruptive to workers and their actions as consumers. However, if workers get replaced at a rate that allows them to change careers along the way, then the change is not so disruptive.<br /><br />I think that Autor's comments are really about this rate of change of employment by automation. I agree with his points, but they do not imply high unemployment per se, rather a change in employment from low skilled to high skilled jobs. The challenge is to enable workers to make this change of job category during their working careers. A change of jobs category between generations is much easier as the children simply study something that will allow them to get the jobs more in demand for then than for their parents. We've seen this throughout history. E.g. the father is a toolmaker the son is an engineer.David W. Vielhttps://www.blogger.com/profile/16559249540276639324noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-82319735177066881242013-12-09T16:39:15.988-05:002013-12-09T16:39:15.988-05:00Also, technology has made offshoring a LOT easier....Also, technology has made offshoring a LOT easier.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-395263084613236382013-12-09T16:18:50.566-05:002013-12-09T16:18:50.566-05:00You seem dismissive of the "robot" story...You seem dismissive of the "robot" story. There's more to it than:<br /><br />"Technology has made it cheap to replace humans with automation, driving profits up and wages down."<br /><br />David Autor takes the technical change story quite seriously. His story is that technical change "hollowed out" the labor force, decreasing demand for middle-skill workers - e.g. typists and people doing clerical work. But the demand for high-skilled workers went up. That, combined with scarcity (it's costly to acquire technical skills) increased the wage premium to higher education.<br /><br />Here's a random piece of anecdotal evidence about China. About 3 years ago, I was in Shanghai, and talked to an assistant professor who was teaching at Fudan University. Her father owned a textile company in Shanghai, and he was complaining about competition from Thailand where, he argued, they seemed to have an abundance of cheap low-skilled labor.Steve Williamsonhttps://www.blogger.com/profile/16629774961390533020noreply@blogger.com