From the New York Times today:More
Billionaire businessman Marc Cuban insists that the H-1B visa racket is a feature of the vaunted American free market. This is nonsense on stilts. It can’t go unchallenged. Another billionaire, our president, has ordered that the H-1B program be reformed. This, too, is disappointing. You’ll see why.
First, let’s correct Mr. Cuban: America has not a free economy, but a mixed-economy. State and markets are intertwined. Trade, including trade in labor, is not free; it’s regulated to the hilt. If anything, the labyrinth of work visas is an example of a government-business cartel in operation.More
The Phoenix suburb of Mesa is Arizona’s third largest city, the spring training home to the Chicago Cubs, and, most famously, home to yours truly. Unlike most cities, our leadership is always looking for costs to cut, rather than expensive new programs to create. But their latest budget-minded initiative is angering the local powers that be.
For decades, Mesa has sent its misdemeanor offenders to Maricopa County jails, but that comes with a steep price tag. Over the past 10 years, the county has increased its daily housing prices by nearly 40 percent and its booking cost by more than 60 percent. So now the city is negotiating a deal with private contractor CoreCivic to house the inmates in a neighboring county. The move could save up to $2 million a year. Sounds like a win/win to me, but the county sheriff is seeing red ink:More
Sure, Donald Trump mused about returning to the gold standard during the campaign. But as president, he’s really more of a steel bug than a gold bug. “American steel” to be specific. To Trump, the decline in steel production and steel worker’s jobs are emblematic of lost American greatness. And when Big Steel is back, so will be America. As Trump put it last summer: “We are going to put American-produced steel back into the backbone of our country. This alone will create massive numbers of jobs.”
So with his First 100 Days almost complete, Trump is looking to make a down-payment on his American steel promise. Reuters reports:More
Breitbart: A recent study conducted by researchers at Harvard Business School concluded that minimum wage laws increase the likelihood that non-elite restaurants will go out of business. More
The example of Japan is frequently raised as a warning sign of the dangers of “Demographic Decline.” If current trends continue, Japan is set to experience a decline in its population, which will also be growing much older. This is why, we are lectured, we need to avoid Japan’s fate by importing as many young, […]
MIT’s Erik Brynjolfsson—who has appeared frequently in this blog, including here and here—has coauthored a book-length paper on the IT revolution and how government is unprepared to deal with it. From the FT:
An information vacuum about the sweeping impact of robotics and artificial intelligence has left governments badly positioned to respond to the coming upheaval in employment, say two US professors who have been co-ordinating a broad study on the subject. The warning, in a paper published in Nature on Thursday, calls for a new partnership with digital companies such as Uber and LinkedIn, which are quickly becoming repositories of the information needed to understand how work is changing. “Given the pace of change in the economy, we’re really flying blind,” said Erik Brynjolfsson, a professor at Massachusetts Institute of Technology and co-author of the report.
Donald Trump’s first act was as real-estate developer who loved leverage. Big time. Recall his CNBC interview last spring where he called himself “the king of debt” and gushed about how he “loved playing” with debt. Right about the same time, Trump weighed in on monetary policy: “Right now I am for low interest rates, and I think we keep them low.” Call that the prime-the-pump, Keynesian Trump.
But there’s another version of Trump. It’s one more in tune with the modern GOP; certainly its hard-money, supply-side wing. As he told GQ in 2015: “Bringing back the gold standard would be very hard to do, but boy would it be wonderful. We’d have a standard on which to base our money.” When Trump was president, the dollar would be king. Oh, and the “highly political” Fed boss Janet Yellen probably would no longer be at the Fed, inflating the “false economy.”More
A key question about recent jobs reports, such as the March report last Friday, is what it says about labor market tightness. Just how much slack is left, if any at all? This bullish note from Capital Economics argues that little slack remains, based on two new employment surveys (bold is mine):More
The above chart is an ugly one, at least if you care about rising living standards. The observed productivity decline has helped drive the idea that the US and other advanced economies are stuck in a “great stagnation.”More
Regional price dynamics in the U.S. (how inflation varies between regions) is complex. Ryan Murphy at George Mason University has a blog post outlining a rather disturbing facet that’s been ignored until now: Consider the case of the inflation-targeting central bank. The inflation rate of the United States can be interpreted as a weighted average […]
Wall Street was predicting a March payrolls number of around 180,000. But it came in light at 89,000. Another positive month, though. One of many. As IHS Markit notes (bold is mine), “The string of consecutive months of payroll growth is now 78—the longest since official record keeping began in 1939. One can infer from the length of recessions prior to 1940, that the string is also the longest since 1854.”More
Techno-pessimists tend to be underwhelmed by recent innovations, like the smartphone, as well as most upcoming ones, like driverless cars. Especially driverless cars, it seems. In “The Rise and Fall of American Growth,” economist Robert Gordon is dismissive of the productivity impact of all sorts of emerging technologies, including artificial intelligence and robotics. And he puts driverless cars right smack at the bottom: “This category of future progress is demoted to last place because it offers benefits that are minor compared to the innovation of the car itself or the improvements in safety that have created a ten-fold improvement in fatalities per vehicle mile since 1950.”
I don’t know how autonomous vehicles will affect measured productivity data. But they are going to be a pretty big deal, nonetheless. And I doubt too many analysts have thought through potential consequences as thoroughly as Benedict Evans of venture firm Andreessen Horowitz. His recent blog post, “Cars and second order consequences” is a must read on the subject. The first order consequences of electric — and they will be electric — autonomous vehicles are obvious. Fewer highway fatalities and a big drop in demand for gasoline, currently half of global oil production.More
During the campaign, candidate Trump promised, “If I’m elected president, I’m accepting no salary.” Today, President Trump began to fulfill that commitment. He has donated his first three months of salary to the National Park Service.
Press Secretary Sean Spicer announced the move at his Monday briefing, presenting a check for $78,333.32 to Interior Secretary Ryan Zinke. “The President has spoken with counsel and made the decision to donate his first-quarter salary to a government entity,” Spicer said.More
Reworking just a bit Ronald Reagan’s famous 1980 debate question (really more of a zinger), “Are you better off than you were four decades ago?” The above chart suggests the answer for working Americans is no. Looks like worker wages, adjusted for inflation, have gone nowhere overall since Bruce Springsteen released “Born to Run” in 1975. And some pessimists calculate the stagnation even back into the 1960s. You’ve seen headlines such as “Millennials Earn Less Than Their Parents” or “For Most Workers, Real Wages Have Barely Budged For Decades.”More