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Paul Krugman needs to read my article again

Wed, 24 Oct 2007 03:04:40 -0400

Thanks <again> to Brad DeLong for pointing this out.
Paul Krugman writes:
And one more before the day’s round of media stuff begins.
Another weirdly persistent myth is that rich people vote Democratic, while working stiffs vote Republican. Here’s Tucker Carlson:
OK, but here’s the fact that nobody ever, ever mentions — Democrats win rich people. Over 100,000 in income, you are likely more than not to vote for Democrats. People never point that out. Rich people vote liberal. I don’t know what that’s all about
Actually, people mention this alleged fact all the time — but the truth is just the opposite.

Anyone who wants a refresher, my article on voting tendencies, wealth, and education can be found here.

Paul Krugman must have read my article

Mon, 24 Sep 2007 23:11:28 -0400

Thanks to Brad DeLong for pointing this out.
Paul Krugman writes:
Bubba Isnt Who You Think: Since I’ve just published an op-ed about the enduring influence of race on Southern voting, I’m sure to be accused of being a typical Northeastern snob talking about poor white trash who don’t know what’s good for them. So I thought I’d mention an important point... low-income whites in the South are not very different from low-income whites in the rest of the country.... It’s relatively high-income Southern whites who are very, very Republican. Can I get away with saying that rich white trash are the problem? Probably not.
What this reflects, in turn, is the odd fact that income levels seem to matter much more for voting in the South. Contrary to what you may have read, the old-fashioned notion that rich people vote Republican, while poorer people vote Democratic, is as true as ever--in fact, more true than it was a generation ago. But in rich states like New Jersey or Connecticut, the relationship is weak.... In the poorer South, however, the relationship is very strong indeed.
This is why it’s true both that rich voters tend to be Republican, and that rich states tend to be Democratic...

Anyone who wants a refresher, my article on voting tendencies, wealth, and education can be found here.

Misleading employment stats

Sun, 8 Jul 2007 13:11:41 -0400

Someone finally notices. Ever wonder how we keep hearing that employment is back near “structural minimums” and yet anecdotally you hear of people still unable to find gainful employment - still all these years after the dot-com implosion? Well I have, and I’ve always attributed it to the people who are out of the labor force (In a unique statistical twist, people who do not actively seek work every week are not considered unemployed). Discouraged workers we say.

But, people entering the labor force were entering at lower rates. Real wages were not growing, but GDP was, something was amiss.

Brad DeLong picked this story up today.
http://delong.typepad.com/sdj/2007/07/watching-the-em.html

Beat the Press | The American Prospect: [N]ews reporting on yesterday's job data seems to have largely missed the story on sagging employment rates.... This is not a demographic story. The declining employment rate [EPOP] is being driven by prime age workers. The employment rate for workers ages 25 to 54, has fallen from 80.3 percent in January to 80.0 percent in June... down 1.8 percentage points from its peak of 80.8 in February of 2000. By comparison, it is only 1.3 pp above its trough of 78.7 percent in March of 2004.
This drop is being driven primarily by workers ages 35-44. Their EPOP has fallen from 81.5 percent in January to 80.6 percent in June. This is 2.1 pp below the peak of 82.7 percent in Jan-Feb of 2000 and 1.2 pp above the trough of 79.4 percent in July of 2003. It is very difficult to think of any reason why hundreds of thousands of prime age workers (both men and women, the declines are roughly equal) would suddenly drop out of the labor market, other than limited job opportunities... EPOPS is not consistent with a strong labor market.
It seems my assessments were correct and discouraged workers, in the price of their productive years, are not finding their way back to the labor force, and are instead being supplanted instead by non-prime productivity workers.

Nice.

Side question: Where is the incentive for BLS or DOL to report the economic policies of the current administration are not successful?

RIP, Kenneth Sokoloff

Wed, 23 May 2007 06:08:28 -0400

One of the more influential economic historians, and proponent of the anti revisionist history (that is a technical term, not a colloquialism). Together with Stan Engerman, Kenneth wrote some of the most important articles on American development including a personal favorite, “History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World”

If you have any interest in the development of economic institutions, development of democratic institutions, or how factor endowments effect the entire system of government that evolves, READ THIS PAPER. (Its $5 for non-academics, but its free if you have an email address that ends in .edu)

The core idea in this paper is that the factor endowments (land, minerals, weather) of an area dictate what type of government institutions will development more accurately than any “traditional” explanatory event.

They FIRMLY rebuff the idea that America was successful resulting from the puritan work ethic (Ever hear of Providence Island? Didn’t work so well), The English Rule of Law (Belize, need we say more?).

Rather they suggest that the more likely a developing society is to encounter hardship, the more likely they are to develop democratic institutions.

New England: No economies of scale, poor weather, strong democratic institutions.
Mid-Atlantic/South: Large economies of scale, exploitation of labor, autocratic institutions
Mexico/Central America: Large endowment of minerals, exploitation of labor, autocratic institutions

But, you can carry this over to anywhere .... Sweden - harsh climate, limited economies of scale, strong democratic institutions ... Zimbabwe - ideal climate, huge economics of scale, strong autocratic institutions.

Anyhow, this wasn’t supposed to be a review of one of his articles, its supposed to be an obituary. RIP Kenneth. You will be missed.

Mark Sanford on Infrastructure

Thu, 10 May 2007 17:18:27 -0400

At Hank Paulson’s conference last week at GW speaking about attracting FDI to the US, Mark Sanford had some very enlightened views on the benefits of FDI and how to bring FDI to our shores.

Mark Sandford has a particular position of authority on this topic: His state (South Carolina) leads the nation in FDI.

A few of the points Governor Sanford resonated well with this fair economist.

The government has very little legitimate role influencing local production, but the role they do play is significant
The government should build the infrastructure business needs to grow
Part of this infrastructure is roads, electricity, etc. Part is education
He discussed the fact that our Bublefuck Healthcare System™ puts us at a competitive disadvantage. Everyone agreed.
He also stressed that a competitive tax advantage is necessary to attract foreign investment
He discusses the fact that foreigners are not willing to do business because of (the reality or the perception) that America is now a hostile climate because of our security apparatus. “I hate going to America now because they treat me like a criminal.”

Following a completely circumstantial tangent on the success of Sanford on building a successful infrastructure and attracting investment capital, I rode my motorcycle through the Carolinas recently (i.e. yesterday). At the south end of my least favorite state (North Carolina) I wound up stuck for over an hour in a traffic jam outside of Fayetteville (the site of a 2000 ticket, making this even less desirable of a location). The overfilled road was 2 lanes wide and had probably not been repaved in my lifetime. Yes, that was while I was wearing all my motorcycle armor. No, it was not fun.

But then magic happened. I crossed into South Carolina, where the governor, in an attempt to attract foreign capital, has seen to it that the major thoroughfares have been widened and modernized. The freeway doubled in size, and the 3 lanes were more than sufficient to carry all the traffic, and more. No matter which way you are traveling, North Carolina was clearly the bottleneck.

When I asked if any effort had been made to quantify the economic impact of investment in infrastructure, he responded that no study had been done. Obviously, I am very interested to follow any research that is done on this topic. However, I have to say, I am excited that someone has taken this idea ... and put it into practice. Even if they haven’t yet done any research to support it.

Henry Paulson on FDI

Thu, 10 May 2007 14:57:31 -0400

US Secretary Treasury Henry Paulson visited George Washington campus last Thursday to host an all-star lineup of panelists to discuss the Bush Administration’s position encouraging foreign direct investment (FDI) in America. This was an extremely enlightening conference and the panelists told a very good, very strong story with a unified message: FDI brings money and jobs to the US and we want more of it. The US is open for business.

Panelists include:
Mark Sanford - Governor of South Carolina
Thomas Friedman - Author of “The World is Flat”
Barney Frank - Chairman of house finance committee
Paul Vikner - President of Mack Trucks
Joseph Taylor - COO Panasonic North America

I cannot stress enough how economically enlightened the opinions of this group were.

Sandford has first hand experience. South Carolina leads all states in FDI by a factor of 2-1 over the next closest state (according to Secretary Paulson). Think “BMW” and “Honda.” South Carolina has lost 97,000 low paying textile jobs in the past 7 years, but they have added 117,000 high paying manufacturing and engineering jobs. Sandford is intelligent, compelling, and well versed in economic development. He also got his MBA from Darden. He also, sadly, is not running for president in 2008.

Friedman, clearly understands FDI and the leveling of the playing field. And yes, he is correct, the PC changed everything. But, yes, I am tired of hearing it. next!

Barney Frank. Who knew. I thought the Dems were anti-FDI because it looked like competition for the unions. But really, he was surprisingly enlightened. He says FDI is good for the Democratic contingency because it provides an alternative for offshoring labor. It means other countries can offshore here. Interesting, and true. Think “Cheap Alabama labor versus German or Japanese labor”

Vickner and Taylor both had really good points including “my company has been taken over by a multi-national and it still created more jobs in the United States” and “we investigate every aspect of the cost of doing business in any country in which we invest, and we still build in the US” I don’t mean to cut them off, but really, you aren’t going to read much more, so I have to be brief.

The three key points:
The Bush Administration is trying to attract FDI and it is critical to the future growth of our economy.
The bumblefuck (technical term) of our health care system is putting us at a significant competitive disadvantage globally, and many firms (INCLUDING US BASED FIRMS) will not invest here until it is resolved
Building infrastructure (including education) attracts FDI. (See accompanying post)

All members of the panel enthusiastically agreed with #2, even though the moderator agreed off microphone.

Lots of links here:
Webcast of the entire event
Transcript of Secretary Paulson’s introduction
Information on the event