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May 30, 2009

Economist's View - 5 new articles

"The Fall of the Mall"

Compares sales in the first quarter of 2009 to the same quarter in 2008. "The deeper the red, the steeper the loss."

Reich: The Future of Manufacturing

Robert Reich:

The Future of Manufacturing, GM, and American Workers (Part I), by Robert Reich: What's the Administration's specific aim in bailing out GM? ... Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology.

When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots. ...

What happened to manufacturing? In two words, higher productivity. As productivity rises, employment falls because fewer people are needed. In this, manufacturing is following the same trend as agriculture. ... America can generate far larger crops than a century ago with far fewer people. New technologies ... have ... made farming much more productive.

Manufacturing is analogous. ... Since 1995, even as manufacturing employment has dropped around the world, global industrial output has risen more than 30%.

We should stop pining after the days when millions of Americans stood along assembly lines and continuously bolted, fit, soldered or clamped what went by. Those days are over. And stop blaming poor nations whose workers get very low wages. Of course their wages are low; these nations are poor. ... When America blocks their exports by erecting tariffs and subsidizing our domestic industries, we prevent them from doing better. ...

Want to blame something? Blame new knowledge. Knowledge created the electronic gadgets and software that can now do almost any routine task. This goes well beyond the factory floor. America also used to have lots of elevator operators, telephone operators, bank tellers and service-station attendants. Remember? Most have been replaced by technology. Supermarket check-out clerks are being replaced by automatic scanners. The Internet has taken over the routine tasks of travel agents, real estate brokers, stock brokers and even accountants. With digitization and high-speed data networks a lot of back office work can now be done more cheaply abroad.

Any job that's even slightly routine is disappearing from the U.S. But this doesn't mean we are left with fewer jobs. It means only that we have fewer routine jobs... Technophobes, neo-Luddites and anti-globalists be warned: You're on the wrong side of history. You see only the loss of old jobs. You're overlooking all the new ones.

The reason they're so easy to overlook is that so much of the new value added is invisible. A growing percent of every consumer dollar goes to people who analyze, manipulate, innovate and create. These people are responsible for research and development, design and engineering. Or for high-level sales, marketing and advertising. They're composers, writers and producers. They're lawyers, journalists, doctors and management consultants. I call this "symbolic analytic" work because most of it has to do with analyzing, manipulating and communicating through numbers, shapes, words, ideas.

Symbolic-analytic work can't be directly touched or held in your hands, as goods that come out of factories can be. In fact, many of these tasks are officially classified as services rather than manufacturing. Yet almost whatever consumers buy these days, they're paying more for these sorts of tasks than for the physical material or its assemblage. ...

The biggest challenge we face over the long term -- beyond the current depression -- isn't how to bring manufacturing back. It's how to improve the earnings of America's expanding army of low-wage workers who are doing personal service jobs in hotels, hospitals, big-box retail stores, restaurant chains, and all the other businesses that need bodies but not high skills. More on that to come.

Yes, it isn't the jobs that are lost to technology that are of concern, it's the jobs we create to replace them, the speed at which those jobs are created, and how those jobs are distributed (both within and across countries). Even though the value of what has been created with the resources that have been freed by technology has exceeded the value of what has been lost, the distribution of those benefits has been very unequal.

"Redistribution, Height Taxes, and Utilitiarianism"

I don't think I'll comment on any of the underlying philosophical issues:

Mankiw, Redistribution, Height Taxes, and Utilitiarianism, by Mathew Yglesias: Via a distraught Conor Clarke, I see that not only did Greg Mankiw once write a cheeky paper arguing that maybe we should impose a height tax, he also goes in for some odd philosophical claims. To try to reconstruct his argument, he believes:

  1. The main arguments in favor of redistributive taxation are grounded in utilitarianism.
  2. Utilitarian theory supports taxing tall people more heavily than short people (this is the thesis of the paper).
  3. Therefore, people should either sign on for the height tax or else abandon their support for redistribution.

He concludes with this:

A moral and political philosophy is not like a smorgasbord, where you get to pick and choose the offerings you like and leave the others behind without explanation. It is more like your mother telling you to clean everything on your plate. If you are a Utilitarian redistributionist, the height tax is like that awful tasting vegetable your mother served up because it is good for you. No matter how hard you might wish it wasn't there sitting on your plate, it just won't go away.

I think there are a ton of mistakes being made here. This goes back to a point I was making a while ago about how dangerous it is that the public discourse is so dominated by low-quality freelance philosophy done by people with PhDs in economics. I'm fairly certain that if Mankiw were to walk over to Emerson Hall he could find some folks ... who could explain to him that there's little grounds for the belief that a commitment to utilitarianism is the main justification for redistributive taxation.

So point one is factually wrong.

But that aside, I think the "smorgasboard" argument is a confused way of thinking about moral reasoning. A great many crucially important questions in normative ethics are easy. Is it okay to murder Greg Mankiw to steal the money in his pocket? No, it isn't. But a lot of foundational questions in ethical theory are hard. And a lot of meta-ethical questions are hard. ... There's a certain hyper-literal sense in which these questions all form a hierarchy. First I must decide where I stand on meta-ethics. Am I a reductive moral realist? A quasi-realist? A practical reasons theorist? An old-school "moral facts are facts too, damnit" moral realist? Are there theological issues in play? Then I need to decide if I'm a utilitarian (and if so, what kind of utilitarian!) or maybe some other kind of consequentialist or maybe I have a more Kantian view. So then depending on those answers, I can say "killing Greg Mankiw to steal the money in his pocket is wrong because…" and then lay the whole thing out.

I think what Mankiw is implying with the "smorgasboard" argument is that this is how people should actually engage in moral reasoning. ... Maybe killing Greg Mankiw really is okay? And if I'm not uncertain, if I say "the reason it's wrong to kill Greg Mankiw and steal his money is that the murder would reduce net utility" then the murderer can counter with "well, if you believe in utilitarianism, you ought to believe in a height tax." Then I say "well that sounds wrong!" And then, having debunked utilitarianism, Mankiw gets shot and everyone agrees that justice has been done.

Something's gone wrong there. We don't abandon considered convictions about normative issues that quickly. Murder is wrong. If forced to contemplate the alleged contradiction, there are a bunch of things we might want to consider. Maybe the analysis of the height issue has gotten something wrong, utility-wise. After all, though the paper is clever, it's hardly a comprehensive review of all of the hedonic issues in play. Or maybe utilitarianism isn't the best theoretical grounding for the conviction that murder is wrong. Or, maybe the height tax thing actually is a good idea, albeit an unrealistic one. ...

George Bush and Bill Clinton Love Fest

What's the deal with this?:

Bush-Clinton Policy Talk Strikes a Congenial Tone, by Jim Rutenberg, NY Times: Former President Bill Clinton really misses the presidency. ... Former President George W. Bush hardly misses it at all....

But that was practically where the differences stopped as the two former presidents appeared for the first time on a stage together to discuss national and international policy. Each earned more than an estimated $150,000 for the appearance. ...

And as they settled into overstuffed chairs, Mr. Bush and Mr. Clinton became something of an ex-presidents' support group, avoiding direct critiques of each other, or, for that matter, their future club member, President Obama...

When Mr. Clinton said one of his biggest regrets was the lack of United States action during the mass killings in Rwanda, saying "I have no defense," Mr. Bush responded, "I think you're being a little tough on yourself." He added that Mr. Clinton's lament that he should have sent troops ignored the fact that such deployments are not so simply done.

When Mr. Bush ... defended his policy toward the Darfur region of Sudan, Mr. Clinton got his back, in return. "I think he did about all he could do," he said. ...

If there was anything that even bordered on a sharp exchange, it was the discussion over Iraq.

Mr. Clinton said he would have preferred for Mr. Bush to have given weapons inspectors more time in Iraq before invading and, in the meantime, "concentrated on Afghanistan."

Mr. Bush said, with a hint of irritation, "I don't buy the premise that our attention was distracted," a rejection of the argument that the Iraq war came at the expense of progress in Afghanistan. ...

Afterward, even audience ... expressed surprise at the level of congeniality. ...

links for 2009-05-30

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