The productivity slowdown: Is structural stagnation our fate?
In my widely overlooked book, After the New Economy, I initially took a very skeptical line towards the productivity acceleration of the late 1990s. I dismissed it as temporary and bubble-like, and an artifact of very imperfect measurement. When I wrote a new afterword for the paperback edition, though, I recanted my skepticism: the acceleration seemed to be going on long enough that, as painful as it was to admit, the bourgeois functionaries were right. Robert Solow’s famous 1987 quip, “You can see the computer age everywhere but in the productivity statistics,” had finally been repealed…. Read More
Plutonomy revisited
Business Insider has a write-up of a BoA Merrill Lynch report that declares that, the FT’s quibbles aside, Thomas Piketty is essentially right, and the super-rich is where the action is, so invest accordingly. (Never mind that Piketty utterly destroyed, in the most gracious manner imaginable, the newspaper’s economics editor Chris Giles’ half-assed critique.) The BoA Merrill report was written by Ajay Kapur, who is quoted by BI as saying: When wealth and income are as concentrated as they are, and expected (a la Piketty) to get even more so, examining the ‘average’ consumer or… Read More
New data on student debt from the NY Fed
The Federal Reserve Bank of New York is out with some new data on student debt (“Grading Student Loans”). Two major highlights: beware of using simple averages, and, more strikingly, more than one in four borrowers is behind on payments—more than twice the share of other forms of personal debt. First, the debt levels. Total student debt is about $870 billion—more than credit card balances ($693 billion) and auto loans ($730 billion). That’s an enormous number, but economists have paid it little attention—surprising, considering the attention paid to household finances. And student… Read More
Fed sees a gloomier future
The Federal Reserve is just out with its latest economic projections. Since the last edition in June, they’ve turned gloomier for the short, medium, and long term. They see growth as slower, and unemployment as higher, for 2011, 2012, 2013, and for the “longer run” than they did just three months ago. For this year, they’re looking for GDP growth to average 1.6–1.7%, compared with a projection of 2.7–2.9% in June. They see unemployment as staying in its current 9.0–9.1% range, instead of falling into the high 8s. For next year, they… Read More
It really is about that 1%
Wow, that top 1% is doing really, really well, you’ll not be surprised to hear. Everyone else, not so well. The Congressional Budget Office is out with some new stats on Trends in the Distribution of Income over the last three decades. Between 1979 and 2007, here’s how various slices of the population did in real (inflation-adjusted) income growth after federal taxes: top 1%: +275% next 19%: +65% middle 60%: +40% bottom 20%: +18% Or, in graphic form: The stairstep pattern—the higher you go up the income ladder, the stronger the growth—is remarkable…. Read More
Tough, Shorty
Economics proves that tall people deserve more: Andreas Schick, Richard H. Steckel NBER Working Paper No. 16570 Issued in December 2010 Taller workers receive a substantial wage premium. Studies extending back to the middle of the last century attribute the premium to non-cognitive abilities, which are associated with stature and rewarded in the labor market. More recent research argues that cognitive abilities explain the stature-wage relationship. This paper reconciles the competing views by recognizing that net nutrition, a major determinant of adult height, is integral to our cognitive and non-cognitive development. Using… Read More
Immigration: more evidence in its favor
I reviewed a lot of the studies of the economic effects of immigration in LBO several years ago: Economics of immigration. Bottom line: on balance, it’s quite good. Not popular these days, so it’s more important than ever to make the point. Just in, a new study from the San Francisco Fed. Quoting from the abstract: Statistical analysis of state-level data shows that immigrants expand the economy’s productive capacity by stimulating investment and promoting specialization. This produces efficiency gains and boosts income per worker. At the same time, evidence is scant that immigrants… Read More
LBO News from Doug Henwood 