Tag: US

How the US Economy Can Counter Its Demographic Headwind

 

The excellent 2016 book The Rise and Fall of American Growth by Northwestern University economist Robert Gordon — a book I frequently write about — is often portrayed as a work of technological pessimism. But Gordon doesn’t see it that way. Tech progress and innovation, as eventually reflected in productivity growth, isn’t going to slow in his view. It will pretty much continue as it has for decades — just no acceleration to the boomy 1920-1970 productivity pace due to advances in AI or robots or medical miracles. The demise of rapid economic growth is due to various “headwinds,” he argues, not technology. Not only will those factors slow per capita GDP growth, but much of that growth will be captured by wealthier households. Indeed, inequality is one of Gordon’s headwinds.

Another growth constraint, according to the economist, is demographics. This is uncontroversial. All those baby boomers are heading into retirement, and Americans are having fewer kids. Labor-force growth used to be so rapid — especially with women entering the job market as never before — that overall economic growth stayed fast even as productivity growth weakened. A San Francisco Fed analysis in 2018 noted the following:

In the 1970s, labor force growth alone contributed 2.7 percentage points to GDP growth, meaning that even if productivity growth had been zero, the economy would have expanded at 2.7%, slightly faster than the pace of our current expansion. Since that peak, labor force growth has come down substantially. As the forecast for 2025 shows, labor force growth is expected to remain stuck at 0.5% for the next decade. This means that, absent a surge in productivity, slow growth in the labor force will be a restraining factor on the U.S. economic speed limit.

Pro-Growth War?

 

Anti-China hawks in the US are eager for a New Cold War that would disentangle the two mega-economies, especially their technology sectors. They see the inevitable economic disruption as a necessary evil to bolster US national security. And there might be even a partially beneficial economic offset if a slice of Asian manufacturing returns to American shores.

But some nationalists are more optimistic about the potential economic gains from escalating the current trade conflict into something broader. According to this view, the New Cold War would pit the two economies in a high-stakes competition for technological supremacy — and thus geopolitical dominance — in the 21st century. The sense of urgency would force each side to marshal all of their resources and talent in pursuit of victory. Space Race, meet the AI race. The resulting scientific advances and tech innovation would boost both economies. And with prosperity rising, neither side would risk the cold war turning into a hot one.

The seeds of this hot-take argument might be found in the 2014 book War! What Is It Good For?: Conflict and the Progress of Civilization from Primates to Robots. In it, archaeologist Ian Morris argues that war, over the long run, “has made humanity safer and richer,” in part because of the military-driven investment in scientific and technological research. Or maybe the inspiration was the 1998 film Armageddon which has a scene where the American president tells a global audience that “all of our combined modern technologies and imaginations, even the wars that we’ve fought, have provided us the tools … to prevent our own extinction’’ from an approaching planet-killer asteroid.

The US Remains the World’s Most Competitive Big Economy, By Far

 

Nearly nine years into an economic expansion, most Americans continue to believe their country is headed in the wrong direction. Now that attitude probably reflects more than just economic perceptions. And even feelings about the economy’s vigor seem influenced by political leanings.

That said, there’s some evidence that economic pessimism is unfounded. There is, of course, the continued expansion. And the American jobs machine keeps generating gobs of jobs, resulting in the lowest unemployment rate since 2000.

USA #1 (in global competitiveness, according to new reports from the IMD World Competitiveness Center and the World Economic Forum). Image via Twenty20

Anti-Semitism Worldwide: It’s Getting Worse

 

The cancer of anti-Semitism hasn’t been cured; it’s only gone into remission. These days it’s making a notable re-entry worldwide. By looking at France, the United Kingdom, and Germany, we can get a pretty good idea of the reasons for the increase; we can also take a look at the problem in the United States. And we can’t fool ourselves into thinking that there’s going to be a quick or easy cure.

There are 500,000 Jews living in France:

In 2012 an Islamic fundamentalist in Toulouse shot dead three children and a teacher at a Jewish school. In January 2015, four people were killed at a Jewish supermarket by an associate of the two brothers who had killed staff at Charlie Hebdo. Most recently a 85 year-old Jewish woman [Holocaust survivor] was stabbed to death and set on fire. Reports of anti-Semitic violence in France rose by 26 percent last year, which has led record numbers of Jews to immigrate to Israel.

America’s Not as Divided as the Media Thinks

 

If you’ve flipped by the news any time in the past century, you’ve heard over and over and over again that America is a fetid cesspool filled with institutional racism, violent bigotry, and everyday intolerance. Multimillionaires protest the oppression of their race, silver spoon sophomores yank down statues, and media elites damn America for not being enlightened like our continental betters.

Yes, racism exists. Yes, slavery scars our history. Yes, Americans are imperfect. And yet…

America and Marvel, Part II: Reflections of and on Society

 

A few days ago, I talked to my associate Prof. Harmon who raised a fundamental question by way of a preposition. This is not as rare an occurrence as you might think. He asked whether I meant to speak of American cinema as a reflection of American society or a reflection on it. As I said, the movies are our human way of seeing what we’re like, as humans. But what does that mean more clearly?

“Reflections of society” involves the obvious meaning of imitation. What you see on the screen is what the movie-makers saw looking around — America. But this could mean two different things, being that no movie can reflect America as a whole. American movie-makers might offer Americans the images they think will please them — they see what Americans approve, and are governed in their works by that experience. This would mean cinema is a kind of flattery; a barely concealed form of self-congratulation. Every theater-going experience is really an awards ceremony in disguise. There is more than a little truth to that. Do people leave the theaters of this great notion in a soul-searching mood, somewhat chastened by the experience, or rather smug, and even self-important?

Or on the other hand, you could have what in literature we used to call realism and naturalism: An impious, immoderate staring at ugliness and misery, to chasten the bourgeois materialism of modern society. That’s not fun cinema. Even in America, this paradise, there is misery and there is suffering. That could be reflected in the movies instead of the fun stuff. This is not unheard of, but is very rare; it’s been rare in every decade except the Seventies, and the vaguely suicidal public mood in America at that time suggests there is more than a little that’s questionable in this fascination with ugliness.

Competitive Capitalism vs. Cuddly Capitalism: Which Is Better?

 

shutterstock_278463809Europe is a rich, well-educated, orderly place. And many Americans not only like to visit and do business there, but also see it as an aspirational economic model.

Well, not Greece and Italy so much, but certainly the Nordic nations. Many progressive Democrats really have a thing for Scandinavia and its egalitarian social democracies. “I think we should look to countries like Denmark, like Sweden, and Norway, and learn from what they have accomplished for their working people,” Bernie Sanders said during one of his debates with Hillary Clinton. And there are certainly Europeans who agree. For instance, I recently had a long chat with by Anu Partanen, a New York-based Finnish and American journalist, about her book “The Nordic Theory of Everything.”

In another Q&A, however, my AEI colleague Stan Veuger was skeptical that going Nordic was as easy or efficacious as progressives and Partanen believe. Along the same lines, a 2012 analysis by Daron Acemoglu, James Robinson, and Thierry Verdier argues that even though many countries “may want to be like the Nordics with a more extensive safety net and a more egalitarian structures,” it’s not really possible to have “cuddly” capitalism with America’s more high-pressure, competitive, or “cutthroat” capitalism. From their research:

Member Post

 

Here’s a guy writing in National Review who wants Mr. Pollard to die in jail for the crime of treason. Mr. Pollard’s crime was giving information to Israel. The story I have heard is, Capital-l-A America got so angry with Israel for bombing Saddam Hussein’s nuclear reactor, that the CIA stopped giving Israel some satellite […]

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Should America’s Middle Class Really Envy Canada’s? — James Pethokoukis

 

The American middle-class certainly has reason to be bummed. The worst downturn since the Great Depression has been followed by an unusually weak recovery. Unemployment remains high. Median wages are still below their pre-recession peak. And if all of that weren’t bad enough, the New York Times’ new Upshot site offers this additional bit of discouraging news: “The American Middle Class Is No Longer the World’s Richest.”

Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it. Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several — including Britain, the Netherlands and Sweden — is much smaller than it was a decade ago.