Monday
Apr012013

Congress, raise the minimum wage. You’ll be doing it not for the proles but for your own class.

From the Wall Street Journal:

Huffpo adds this:

As unemployment skyrocketed during the economic downturn, job opportunities for everyone -- including college graduates -- narrowed and low-wage work began to replace steady middle-class jobs. Three-fifths of the jobs lost during the recession paid middle-income wages, while the same share of the jobs created during the recovery are low-wage work, according to an August study from the National Employment Law Project.

The result: Nearly half of the college graduates in the class of 2010 are working in jobs that don't require a bachelor's degree and 38 percent have jobs that don't even require a high school diploma, according to a January report from the Center for College Affordability and Productivity. The report called into question whether too much public money is being spent on providing students with degrees that make them overqualified for the only jobs that are available.

And--if it isn't too much trouble--please change some policies that are preventing the creation of 10-20 million jobs.  

Sunday
Mar312013

Most read Realitybase posts in March

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

H-1b, the "Outsourcing Visa" How H-1b and L-1 visas are being used and abused by US employers to outsource millions of high-tech jobs and to bring in low-wage indentured servants to fill jobs vacated by firing high-wage citizen incumbents.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Why we acquire beliefs and refuse to change them Describing and discussing six reasons with evolutionary advantages why we may cling to our beliefs even after they have become undeniably counterfactual and unreasonable. The original post is supplemented by numerous follow-ups containing examples and views of others including John Maynard Keynes, Sam Harris, David Brooks, John Quiggin, Ashwin Parameswaran, Lawrence M. Krauss, Thomas Kuhn, John F. Kennedy, and David Warsh. This is the first time this has made the monthly hit parade, but it is one of my favorite posts.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

Newspapers are obsolete—Part 3: New Horizons I have no idea why this old post got so many views. It's only one paragraph posted for the purpose of linking to a (gated) NYRB article.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The other American Dream of rising incomes—Horatio Alger stories One of my earliest and perhaps my longest inquiry into upward socioeconomic mobility in America. Spoiler alert: The rate of upward mobility has been declining since 1980, and Horatio Alger stories are now more likely to occur in Denmark, Norway, Finland, Canada, Australia, and other advanced nations than in the US.

Monday
Mar042013

Who are a politician’s constituents?

Dylan Mathews is reporting today on research showing that state legislators all across the political spectrum believe their own constituents are more conservative than they actually are as determined by polling.

Broockman and Skovron find that all legislators consistently believe their constituents are more conservative than they actually are. This includes Republicans and Democrats, liberals and conservatives. But conservative legislators generally overestimate the conservatism of their constituents by 20 points. "This difference is so large that nearly half of conservative politicians appear to believe that they represent a district that is more conservative on these issues than is the most conservative district in the entire country," Broockman and Skovron write. This finding held up across a range of issues. 

Mathews suggests the legislators are victims of epistemic closure, an inability or unwillingness to comprehend that they have incorrectly assessed their constituents' views. Digby, commenting on this at Campaign for America's Future, suggests that the political media and donor class are both more conservative than the electorate at large.

Years of right wingers playing the refs by accusing the media of being liberal lapdogs has taken its toll. And, frankly, many of the elite political media are extremely well compensated and live in a world filled with rich, powerful people. They naturally identify with them and have less understanding of the average Americans' daily concerns. (And no, it doesn't matter if they came up from the average middle class — our meritocratic ethos says they did it all on their own and everyone else could too. Many of them are more hardcore about this than the children of the aristocracy.)

Perhaps "playing the refs" has also influenced how ordinary people view themselves. In What does it mean that the US electorate is "center-right"? Nothing.--

I found it is true that self-described conservatives have outnumbered self-described liberals in every election year since at least 1970. But I found that when polled on specific policy questions likely voters were apt to skew liberal instead of conservative. In other words, respondents' self-described ideology is useless in predicting public attitudes toward specific policy issues.

But really doesn't it get down to this simple fact: A politician's true constituents are his/her donors and the media, not the voters? Those who represent their true constituents can get reelected, and those who represent only the voters in their districts will likely be replaced.

Thursday
Feb282013

Most read Realitybase posts in February

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth. This post got about 1,000 views from a Reddit referral. 

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

While Some Cities Conquer Economic Issues with High Tech Masters Programs, Others Struggle. (Guest Post) Education researcher Bree Hernandez says there is projected to be good jobs growth for STEM graduates but these jobs are destined to be concentrated geographically. She suggests that low-tech communities can improve their chances of becoming technology hubs by establishing STEM programs in local colleges and universities.

The Recession is Coming! The Recession is Coming! December 2007 post with charts showing America's middle class had been in recession for 7 years and asking if we really care.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

American Youth: Digitally Skilled and Unemployable. A graph shows that Americans under 25, who presumably are the most familiar with digital technology, are losing employment share to those over 55, who presumably are least at home in the digital age. This counterintuitive trend started long before the Great Recession.

Monday
Feb112013

What’s killing American females?

This question emerged unexpectedly from my post on US healthcare efficiency did not go off the rails until about 30 years ago. Lane Kenworthy posted the following graph to show that, when compared to all of 19 other wealthy OECD nations, US per-capita health care expenditures went through the roof while simultaneously delivering much smaller gains in life expectancy at birth.

My initial reaction was that something happened to accelerate the rate of spending increases in America. It did not occur to me that there had been a divergence in life expectancy improvement. However, taking the data apart revealed just the opposite: The rate of increase in real US per-capita health care expenditures has been steadily shrinking since at least 1960 but, starting in about 1983, America diverged downward from the peer nations in the rate of life expectancy improvements. 

 

Digging a little deeper it appeared that most of the adverse divergence was attributable to females and that males continued to have life expectancy gains at about the same rate as in the recent past. 

Why that happened was a complete mystery to me until the publication last month of U.S. Health in International Perspective: Shorter Lives, Poorer Health by the National Academy of Sciences. Hat tip Sabrina Tavernise at NYT. This is a monumental report of nearly 400 pages that is by no means focused on my question, "What's killing American females?" but there are clear partial explanations.

First, the study confirms that the US has been at or near the bottom in life expectancy and in the rate of increase in life expectancy and that the adverse divergence is almost entirely caused by US females.

These charts show the probabilities of surviving to age 50, which the report tells us is the age range that primarily accounts for the US's life expectancy disadvantage. Indeed, after age 75, the life expectancy of Americans is higher than in peer nations. At 3.

One striking finding is that US death rates are higher than the mean of peer nations for almost all causes of death and is not near the best with respect to any cause of death. Table 1.2.

The report doesn't tell us what changed since 1983, but it does tell us which causes of death account for the poor showing of American females versus the mean of 16 peer nations in the 2006-08 time interval.  Fully 37% of the excess deaths of American females occur from accidents and homicides, which are not normally thought of as "medical problems" that a better "health care system" might ameliorate.  

On the other hand, American females also lag their peers in deaths due to perinatal conditions, cardiovascular diseases, and other non-communicable diseases. Do American females have higher incidences of those maladies, or are they not getting as good treatment as in the peer nations? I don't think this report answers that.  

Because the report provides only a snapshot from 2006-08, the report is unable to identify the causes of death most responsible for putting American females on their lower life expectancy trajectory in about 1983. Indeed, Recommendation 6 is to investigate how different policies may explain cross-national differences over time.

I'm sure this is not the most important health policy question of all time, but I found it intriguing and am glad to have partial answers. I'm even more pleased that the NAS and others are addressing in a thorough fashion what is making us sick and killing us and what policies have been found effective to improve our health.

None of this should distract us in any way from the disastrous growth since the early 1980s in per-capita health care spending that did not improve our lives. Well, I guess it improved the lives of health care vendors, but not my life.  Or yours. 

Saturday
Feb092013

Education, the False God of Economic Recovery

No matter how much education your group has, or how little, your group's money income has been declining for 12 years, not just since the start of the Great Recession.

Yes, you need a good education to get a good job, but in the 21st Century you also need a good education to get a bad job. A recent study found that 46.3% of the projected beneficiaries of an increase in the Maryland minimum wage from $7.25 to $10.00 per hour have at least some college education. Yes, college educated people working for minimum wage, many of them full time. See the comments on Mark Thoma's post What's the Cost and Financial Value of College.

For plutocrats and employers, declining wages is a feature, not a bug. They want taxpayers to train their workers so they don't have to, and they want labor costs to keep going down. They are apparently not even embarrassed by this assault on American workers. Lumina Foundation and the Bill and Melinda Gates Foundation funded a study at Georgetown University's Center on Education and the Workforce to calculate how many more college graduates the US would need to turn out in order to drive down the college-versus-high-school wage premium from 74% to 46%! That's the goal—reduce the value of a college education by churning out an even bigger glut of degree holders. Even the study's authors question whether it will be feasible to get more Americans to complete college when they have to pay/borrow more as the incremental value of the degree is declining.

So here's my modest proposal: Declare a moratorium on hand-wringing about how to improve our educational system and instead focus serious national attention on creating tens of millions of jobs. Then we'll have the money to pay for more education for more people and a rising financial incentive for people to pursue higher education.

Why have we had for 12 years a chronic shortage of jobs up and down the education scale? Recently there has been a spate of punditry to the effect that American workers are being displaced by robots (shorthand for all sorts of automation). Well of course they are, and have been since the beginning of the industrial revolution, but I'm willing to bet that in the last 12 years many more American workers have been displaced by ill-treated Chinese teenagers than by robots.

Hat tip to Anne for the link to Census data. 

Monday
Jan072013

Obama’s Legacy—If Any

With President Obama's second inauguration just two weeks away, the pundits are talking about Obama's legacy. In an MSNBC interview with Michael Beschloss, for example, Alex Witt posts this list of Obama's first term accomplishments and calls them significant.

Lilly Ledbetter Act

Student Loan Reform

Auto Industry Rescue

Stimulus Bill

Healthcare Reform

Financial Reform Bill

Repealing DADT

Killing Osama bin Laden

To that we could add withdrawing troops from Iraq (pursuant to an agreement between his predecessor and the Iraqi government) and, of course, the facts that he is our first non-white President and was reelected. Are there other significant accomplishments that will impress historians a few decades hence? I don't think so, and if he had died yesterday in a prosaic, non-political way, such as by choking on a pretzel, he would be remembered 25 years from how for just one thing—being black.

Some might argue that he will be remembered for "Obamacare," officially the Affordable Care Act, but we don't seem to be remembering George W. Bush for the Medicare prescription drug plan, which is about as significant and a great deal more popular. Maybe the auto industry rescue will be remembered by some, but does anybody remember that President Carter rescued Chrysler in 1979, that President Ford bailed out New York City in 1975, or that President Nixon rescued Lockheed in 1971? (Other government bailouts are listed here.) No? Didn't think so.

It seems to me that none of the other accomplishments on the MSNBC list (or any others to date) are going to be remembered for long, let alone thought of as legacy material. So, if Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term.

Others have noticed this, of course, and describe Obama as having been so far a "transactional" President who would like to be a "transformative" President but isn't doing what he would need to do to get there. Tom Friedman nails the problem in yesterday's NYT op ed, More Risk-Taking, Less Poll-Taking: Obama is not articulating a vision of what America should and could be in five or ten years or a generation. He has been content to advocate for what he judges can be achieved under current political realities. He is not attempting to change how voters think about themselves and America. He's going with the flow. Friedman says this (emphasis added):

Maybe Obama has a strategy: First raise taxes on the wealthy, which gives him the credibility with his base to then make big spending cuts in the next round of negotiations. Could be. But raising taxes on the wealthy is easy. Now we're at the hard part: comprehensive tax reform, entitlement cuts, radical cost-saving approaches to health care and new investments in our growth engines. This will require taking things away from people — to both save and invest. A lot of lobbies will fight it. The president will need to rally the center of the country and the business community to overcome them. He'll have to change the polls, not just read the polls. He will have to take on his own base and the G.O.P.'s.

I'm sympathetic to the argument that transforming the American mindset is very difficult and perhaps impossible, but if Obama thinks that's reason enough not to try, then he's giving up the possibility of having a transformative position in history. I hoped for more, but I didn't really expect it. By the way, my agenda for transforming the nation would not be the same as Friedman's; in my opinion the transformational changes we most need are getting money out of politics and restoring full employment.

Monday
Jan072013

While Some Cities Conquer Economic Issues with High Tech Masters Programs, Others Struggle. (Guest Post)

[Realitybase has posted about the grim job prospects for recent college graduates and the failure of a trained labor force to cause the creation of jobs. Education researcher Bree Hernandez brings some new numbers and subtlety to these issues in this guest post. According to Bree, jobs are growing in certain sectors and in certain places, but the shift is by no means universal. Bree most often compiles statistics on accredited graduate education for interested students, and has a comprehensive knowledge of higher education today.]

In recent years, analysts have noted a connection between universities that offer cutting-edge, technology-oriented academic programs and thriving economic activity within the surrounding community. Likewise, universities that emphasize traditional industries often correspond to cities that are not conducive to tech-savvy businesses and organizations.

A 2011 report published by the Brookings Institute highlighted the long-standing relationship between economic prosperity and technological innovation. According to a recent survey of 120 countries over a 26-year period, each broadband penetration increase of 10-percent contributed to a 1.3-percent increase in a country's GDP. Additional studies have shown a strong link between "telecommunication investment and economic growth," particularly during post-recession periods. Many of today's industrial sectors are heavily reliant on technology. Physicians and nurses use telemedicine to exchange ideas and information with one another, energy companies supply power using smart grids; and higher learning institutions allow students to enroll in e-courses, among other things. "Technology fosters innovation, creates jobs, and boosts long-term economic prosperity," the report states. "By improving communication and creating opportunities for data-sharing and collaboration, information technology represents an infrastructure issue as important as bridges, highways, dams, and buildings."

According to an April 2012 report by IBISWorld, the U.S. GDP is expected to increase annually by 3.3 percent over the next five years; comparatively, the GDP grew by an average of 0.6 percent between 2007 and 2012. Much of this projected growth is attributed to industrial sectors that are concentrated in the fields of science, technology, engineering and mathematics (or STEM). One burgeoning field is 3-D printing technology, which grew 8.8 percent between 2007 and 2012, and is expected to increase 14 percent over the next five years.

Online technology and social media is another sector expected to grow considerably between now and 2017; this is especially true of the social network game development sector, which grew 128 percent in the last decade and is projected to increase another 22 percent in the next five years. Other STEM-related fields with high projected growth include pharmaceutical manufacturing, green construction, and solar panel development/manufacturing.

In order to succeed in the tech sector, Forbes contributor Jacquelyn Smith urges college and graduate students to choose programs that correspond to fields with high levels of projected job growth. Computer science majors, for example, earn a median mid-level salary of $109,000, while the sector is expected to grow 22.3 percent over the next eight years. A similar field, information systems, awards a median mid-career wage of $95,000, and is expected to grow 23.3 percent between now and 2020. Other lucrative programs include electrical engineering, mathematics and physics. "In a technology driven world, the need for those who not only understand, but can improve upon technology is high," said Katie Bardaro, a lead economist for Payscale.

However, the college or university a student chooses to attend can be just as crucial as the major he or she chooses. Academic experts advise students to choose their campus based on the strength of the local tech sector. A July 2012 report by Simply Hired found that two established tech hubs – Seattle and Portland, Ore. – were among the best cities in which to find a job related to the field of technology. Other cities, such as Newark and Birmingham, Ala., were listed among the "worst cities to find a tech job," due to a low ratio of available technology positions to workers who are currently employed in that field. Not surprisingly, the local economies of these cities reflect the strength of their tech sector. The unemployment rates of Seattle and Portland average around 7.1 percent, while the averaged unemployment rate of Newark and Birmingham exceed 12 percent. Furthermore, businesses in Seattle generated taxable income worth $58.6 billion in 2011, while Portland's job market grew by more than 10,000 jobs between September 2011 and September 2012. Meanwhile, the Newark labor force has been in decline each month since July and the Birmingham job market has lost roughly 2,700 jobs over the previous year.

A recent report by Rick Mattoon highlights the role that colleges and universities play in local economic development and prosperity. He notes that academic institutions are often the catalyst for regional economic shift. In some cases, a local school is the genesis point for a form of technology that evolves into an emerging industry. Other times, academic research and development aid an existing industry and enable it to further expand. In recent years, the University of Washington has exemplified this latter point within the city of Seattle; cutting-edge technology and engineering programs have yielded graduates who are able to contribute to the existing local workforce, while software development and business management programs have allowed graduates to thrive within the city's expansive startup sector. In Newark and Birmingham, on the other hand, academic programs are more geared toward traditional industries because the respective local economies have such weak tech sectors.

In order to bolster the local economy through technological innovation, city officials should encourage colleges and universities under their jurisdiction to adopt cutting-edge tech programs. Not only will these programs yield skilled graduates who are able to productively contribute to the city's workforce, but these institutions can also aid local industries through research and development, as the University of Washington has done in Seattle. Technology is a standard of modern business – no longer a mere luxury – and the varying economic strength between American cities effectively reflects this shift.

Monday
Jan072013

Offshoring manufacturing was a critical strategic blunder by the US.

When manufacturing is offshored, related technical talent, R&D spending, and innovative success tend to go with it. I've written about that unfortunate process here. Annie Lowrey reports the same story with additional examples in this NYT piece.

A growing chorus of economists, engineers and business leaders are warning that the evisceration of the manufacturing work force over the last 30 years might not have scarred just Detroit and the Rust Belt. It might have dimmed the country's capacity to innovate and stunted the prospects for long-term growth. "In sector after sector, we've lost our innovation edge because we don't produce goods here anymore," said Mitzi Montoya, dean of the college of technology and innovation at Arizona State University.

GE is trying to reverse that loss in advanced battery production.

The idea is to knit together manufacturing, design, prototyping and production, said Michael Idelchik, vice president for advanced technologies, who holds a dozen patents himself. "We believe that rather than a sequential process where you look at product design and then how to manufacture it, there is a simultaneous process," Mr. Idelchik said. "We think it is key for sustaining our long-term competitive advantage."

MIT Professor Susan Berger, a founder of the Production in Innovation Economy project was interviewed by Lowrey.

Thus far, she said, the anecdotal evidence from about 200 companies has proved striking, with company after company detailing the advantages of keeping makers and thinkers together. That does not mean every business, she stressed. Companies with products early in their life cycle seemed to benefit more than ones with products on the market for years. So did companies making especially complicated or advanced goods, from new medicines to new machines.

Wednesday
Jan022013

Most read Realitybase posts in December

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The Recession is Coming! The Recession is Coming! December 2007 post with charts showing America's middle class had been in recession for 7 years and asking if we really care.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

US health care efficiency did not go off the rails until about 30 years ago. Updates to this post show that the rate of increase in US life expectancy at birth, especially for females, abruptly slowed in 1982 and that this was apparently unrelated to healthcare spending which continued rising at a very steady rate.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

Friday
Nov302012

Most read Realitybase posts in November

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

California has the highest paid K-12 teachers in the nation and the largest classes. Just publishing some data without discussing policy implications.

Wages for college graduates in the cross hairs of US business. How US employers are driving down domestic wages by offshoring, importing guest workers, and deliberately creating an oversupply of American college grads.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by the devastating loss in 10 years of all gains made in the previous 20 years.  

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

Thursday
Nov152012

Those greedy bastards!

The recent Presidential election campaign involved much rhetoric from the right about "makers" and "takers." A paper published in February by UC Berkeley researchers gives us another way to think about who the "takers" are. The reported studies found that upper-class individuals had more favorable attitudes toward greed and were observed to be more likely to take what isn't theirs according to broadly accepted norms.

From the press release:

In seven separate studies conducted on the UC Berkeley campus, in the San Francisco Bay Area and nationwide, UC Berkeley researchers consistently found that upper-class participants were more likely to lie and cheat when gambling or negotiating; cut people off when driving, and endorse unethical behavior in the workplace.

The increased unethical tendencies of upper-class individuals are driven, in part, by their more favorable attitudes toward greed," said Paul Piff, a doctoral student in psychology at UC Berkeley and lead author of the paper published today (Monday, Feb. 27) in the journalProceedings of the National Academy of Sciences.

The abstract of the paper published in the Proceedings of the National Academy of Sciences:

Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals' unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.

So, it seems the rich really are different from you and me, not in the way F. Scott Fitzgerald imagined, but in the way Oliver Stone presented Gordon Gekko and, of course, in Ayn Rand's Atlas Shrugged hero John Galt and in her The Virtue of Selfishness. George Monbiot discusses Rand's poisonous and currently fashionable ideas in a Manifesto for Psychopaths.

Excessive greed and lack of empathy bordering on psychopathy could explain much of what goes on in the world of high finance and in public company CEO compensation, could it not? Clive R. Boddy develops that idea in The Corporate Psychopaths Theory of the Global Financial Crisis in the Journal of Business Ethics. About 1% of the population consists of psychopaths (20% in the prison population) and it could be that Wall Street traders are selected in part for their remorseless greed, likely making the population of these types in leadership positions atypically large in some organizations, instead of being weeded out as one might hope.

From an earlier paper by Boddy, Ladyshewsky, and Galvin, The Influence of Corporate Psychopaths on Corporate Social Responsibility and Organizational Commitment to Employees:

Leaders who are Corporate Psychopaths often create the illusion of being successful leaders. However, they are attracted to these positions of leadership because of the access to rewards and power that are vested in these senior management positions.

One implication of these ideas is that the rest of us may be at the mercy of powerful people who can only be controlled by strict laws and vigorous enforcement, and not, as Alan Greenspan erroneously thought, trusted to police themselves or subjected to subtle adjustment of incentives.

Hat tip to Yasmin Anwar at Real-World Economics Review Blog, where most of the Berkeley press release is quoted.

Thursday
Nov012012

Most read Realitybase posts in October

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

Crony Capitalism is the common enemy of the Tea Party and the Occupy Movement. Excerpts from a Chicago business school prof's op ed and a link to an earlier Realitybase post making a similar point.

Wages for college graduates in the cross hairs of US business. How US employers are driving down domestic wages by offshoring, importing guest workers, and deliberately creating an oversupply of American college grads.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by the devastating loss in 10 years of all gains made in the previous 20 years.  

Sunday
Oct072012

Mitt Romney loves Big Bird.

Sunday
Sep302012

Most read Realitybase posts in September

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.  

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson, Joseph Stiglitz, and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

Friday
Aug312012

Most read Realitybase posts in August

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.  

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Joseph Stiglitz, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

Wages for college graduates in the cross hairs of US business. How US employers are driving down domestic wages by offshoring, importing guest workers, and deliberately creating an oversupply of American college grads.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

Sunday
Aug122012

If the Ryan plan had been in effect in 2010, Romney’s tax rate would have been 0.82% instead of 13.9%. 

Paul Ryan's budget plan, which Mitt Romney has endorsed and now fully embraced by putting Ryan on the ticket, would eliminate all taxes on capital gains, dividends, and interest and lower the top marginal rate on earned income from 35% to 25%. Romney's 2010 income included over $21 million from capital, and he would pay no taxes on that. He had $0.6 million income from author and speaking fees that would have been taxed, but at a rate lower than his actual 2010 rate. Altogether his effective federal tax rate would have been 0.82%. Matthew O'Brien has the story at The Atlantic. Hat tip Mark Thoma. Can Romney/Ryan possibly win the November election without publicly disowning this tax proposal?

Thursday
Aug022012

Wages for college graduates in the cross hairs of US business

Nancy Folbre reports at Economix that fewer than half of recent college graduates are employed in jobs that require college degrees and that their real entry level wages are lower now than they were in 2000.  US college graduates are facing stiff competition from foreign workers here under H-1b visas, as well as by offshoring, keeping wages for these jobs depressed.

Further, he [Professor Matloff] observes that high-tech companies insisting that there is a shortage of STEM workers with advanced degrees in the United States don't seem willing to invest much in increased financial support for graduate education.

Maybe college students should seek jobs that seem less vulnerable to global competition, in fields like health sciences. But I just read an article about health care companies sending jobs overseas that gave me palpitations.

The economist Alan Blinder asserts that high educational requirements can make a job more rather than less "offshorable." Most large American companies have already figured this out – but it's not clear how many college students have.

Not only have large American companies figured this out, but Lumina Foundation and the Bill and Melinda Gates Foundation funded a study at Georgetown University's Center on Education and the Workforce to calculate how many more college graduates the US would need to turn out in order to drive down the college-versus-high-school wage premium from 74% to 46%! Yep, that's the plan. Your college education, even in STEM—perhaps especially in STEM—may not be your ticket to a well-paying domestic job.

Wednesday
Aug012012

Most read Realitybase posts in July

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying American business global competitiveness, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency, and proposing a solution.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

Still time for another not-Romney to enter the race? Campaign video promoting Wal-Mart for President.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.  

Executives inflate their own compensation with stock repurchase programs. How corporations drive up stock prices by buying back stock instead of investing in the business, triggering a Warren Buffett rant quoted here.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

Monday
Jul092012

American Exceptionalism, shake hands with Inconvenient Facts.

A big reason why America keeps drifting ever deeper into mediocrity is a misperception about how far we have already declined, how determined and effective our foreign competition is, and how ineffective minor tweaks to current policies are likely to be. I documented some measures of our decline, to which most Americans and apparently all politicians are oblivious, in Yeah! We're Number 40, 11, 16, 22, 24, 27, 48, and 29! and the updates to it.  Recently, Ed Fullbrook has published an e-book, Decline of the USA, which contains almost no text but shows in charts our ranking among 30 OECD nations in 56 indicators in seven categories. Overall USA ranked 29th, ahead of only Mexico. Recall that before its expansion to 34 nations in 2010 OECD members included not only all the prosperous nations of western Europe, Canada, and Japan, but also unenviable nations like Portugal, Turkey, Poland, Greece, Hungary, Czech Republic, and Slovak Republic. USA ranked behind all of them.

Out of 56 rankings, USA was in the top ten only once (labor productivity in GDP per hour worked). USA was in the second ten only 11 times and was in the bottom ten 44 times. In the seven larger categories, USA was in the middle of the pack on education and last or near last in all other categories:

Health                              28/30

Family                              30/30

Education                         18/30

Income and Leisure            27/30

Freedom and Democracy    28/30

Public Order and Safety      30/30

Generosity                         24/24 (data not available for all 30)