Welcome! The articles below caught my attention this week. What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********). Article titles preceded by [SR] require a subscription.
Last week I wrote a bit about David Epstein’s Range: Why Generalists Triumph in a Specialized World, which I have now finished. As the book neared its end, chapter 11 “Learning to Drop Your Familiar Tools,” really caught my attention. I don’t want to spoil things for those who might read it, but it did point to the importance of intellectual flexibility when confronting problems, especially in “wicked” environments, and gives good examples. I was especially drawn to David Epstein’s distinction between “the chain of command” and “the chain of communication.” Historically, excessive commitment to the chain of command has resulted in informational failures with dramatic consequences.
(23 August 2019): “Lost Jobs of North Carolina Are Gone for Good. Few Seem to Mind” Bloomberg.com
——-The stretch “of U.S. 321 from Hickory to Lenoir, known locally as Furniture Row, is littered with closed showrooms. While [President] Trump won this area 2-to-1
[during the 2016 election]
, few locals expect his 25% tariffs to bring back lost jobs. Civic leaders are eager to attract skilled trades and emerging technologies. Meanwhile, Hickory’s made-to-order upholstered furniture sector—which survived the foreign onslaught—is thriving, and managers complain more about an aging workforce than Chinese competition. If any lost jobs did return, it’s not clear who would fill them. Manufacturing is a tough sell for many young people. While factories now have air conditioning and on-site health clinics, it’s still physically demanding, sometimes risky work.” Indicative of this—“The median age of a U.S. manufacturing workers rose to 44.1 years in 2018 from 40.5 years in 2000.” Chinese manufacturing jobs that conceivably return to the U.S. as a result of tariffs seem to be headed to Vietnam instead. As Michael Shelton, of North Carolina’s Valdese Weavers, notes: “In our world, everyone who’s in China is trying to move into Vietnam.”
********This is a clear example of how bilateral thinking can lead to incorrect inferences in a multilateral world. If U.S. manufacturing jobs have declined due to the growth of China as the “factory of the world,” a bilateral view might conclude that new tariffs on China’s goods will result in an increase in U.S. manufacturing. But in a multilateral world, those tariffs are more than likely to find another low-cost producer, in this case Vietnam. But Vietnam is not without its problems, as the article “Trade war pushing companies from China to Vietnam, but experts warn they may have missed the boat” South China Morning Post. Vietnam has neither the infrastructure not the highly developed production ecosystem of China.
********At this moment, the Quicktake “How the U.S.-China Trade War Go to This Point” Bloomber.com might be interest.
(24 August 2019): “Blame Economists for the Mess We’re In” The New York Times
********This column, by NYT Editorial Board member Binyamin Appelbaum, is based upon his forthcoming book The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society. It argues that economists played an important role in reworking of government and markets that have done so much to increase the inequality of income and wealth, especially in the United States. The book will surely do a more thorough job of making (and documenting) the argument than is possible in a few paragraphs. In the article an unnamed “British acolyte” of “small government” is quoted as saying the world needed “more millionaires and more bankrupts,” a statement that is sure to touch a nerve. It turns out that the unnamed person was Keith Joseph, who was a member of the British Conservative Party under Prime Minister Margaret Thatcher. You can read the quote here.
*******I was especially taken by Appelbaum’s statement that “Markets are constructed by people, for purposes chosen by people — and people can change the rules.” Whether markets are ‘constructed’ or not, certainly they are conditioned by and emerge from the purposes of people and the rules of the game. How nicely these relate to the invisible forces: markets (the invisible hand), purposes (the invisible handshake), and rules (the invisible foot).
(28 August 2019): “What to Know About Recessions, Including the Next One” Bloomberg.com
——–“Economists now see a one-in-three chance that the U.S. economy is headed into recession in the next year, following its longest expansion in history. . . . So much time has passed since the Great Recession of 2007-2009 that many adults haven’t experienced an economy that’s contracting rather than growing in their working lives. But slowing global growth and the U.S.-China trade war, among other strains, have flamed fears that the next recession is around the corner.”
********For the reasons given above, this Quicktake provides some information that is valuable to know. It does a couple of very nice things. First, it clearly discusses the relationship between U.S. and global recession. Although the National Bureau of Economic Research holds that the “U.S. has experienced 11 recessions since the end of World War II,” the International Monetary Fund “counts only four global recessions” since 1960. Second, it provides a useful sampling of U.S. recessions since 1929. There is a table that summarizes recession duration, GDP change, and peak unemployment rate that gives rise to thought. It would be instructive to run these U.S. numbers up against global recession numbers. As always, The Reference Shelf provides a number of ways to learn more.
May you have a good week!