Friday, June 8, 2007

Bad productivity numbers, or just bad numbers?

Last onh I blogged about the puzzling housing sector -- despite output slowing to a crawl, employment in that sector had not abated. Indeed, I made the following half-assed suggestion:

This seems like a peculiar inverse of what was happening in the economy circa 2002-3 -- astounding productivity gains that were not matched by wage or employment growth. One wonders if this means that, for the next year, the U.S. economy will observe the obverse of marginal productivity increases but robust wage and employment growth.
Economically, this makes little sense, but it did seem to be happening.

In today's FT, Krishna Guha looks a little closer at this puzzle:

A conundrum in construction lies at the heart of a US jobs market puzzle that continues to baffle economists – including officials at the Federal Reserve.

After a year of sub-par growth unemployment is a mere 4.5 per cent. With jobs growth strong but output growth weak, productivity looks very poor....

The Bureau of Labor Statistics payroll survey shows total construction employment and residential construction employment down just 2 per cent year on year in May, the latest month for which figures are available.

The absence of the expected drain of net job losses in construction is the single biggest reason why overall job gains remain so strong – 157,000 in May – and unemployment remains so low....

There are a number of possible explanations.

One is that companies are hoarding labour in expectation of a rapid rebound in the housing market. This looks increasingly implausible as the housing correction drags on.

Another is that there is a time lag in construction and big job losses are just around the corner.

There may be some truth to this. But the slowdown has already been under way for a long time.

New home starts peaked in May 2005. The 12-month rolling average (new starts over the preceding 12 months) peaked at 2.1m in March 2006 and has since fallen to 1.6m.

If it all fails to add up, the answer may be that the official statistics are not accurately capturing what is taking place in an industry that employs both a large number of small subcontractors and a large number of illegal immigrants. Specialty trade contractors – who work for small subcontracting firms – account for nearly two-thirds of all construction jobs. These workers tend to belong to small, often informal businesses.

The payroll survey is likely to understate the extent to which these workers have switched from the residential sector to fast-growing commercial construction....

The separate BLS household survey does show a 300,000 increase in the number of people working part-time for economic reasons over the past year.

The labour market statistics may also be missing a big decline in work by illegal migrants, who make up perhaps 20 per cent of the construction workforce.

posted by Dan at 06:20 AM | Comments (5) | Trackbacks (0)

Thursday, June 7, 2007

June's books of the month

The book selections for June had to pass a very stringent set of criterion. Namely: which books would actually manage to engage me when I was in a distant Caribbean isle, lounging on the beach, with naptime beckoning?

The general interest book is Tyler Cowen's Creative Destruction: How Globalization Is Changing the World's Cultures. Cowen's book considers the various arguments about globalization leading to a withering of cultural diversity. Cowen takes these arguments seriously, but points out the hidden ways in which globalization can enhance cultural diversity within and across nations (one obvious effect -- globalization widens the diversity of material and ideational imputs for artists). He also performs a public service in debunking Mohandas K. Gandhi's theory of swadeshi.

Creative Destruction was a particularly fun book to read on vacation in the Caribbean, as one could literally see Cowen's arguments at work.

The international relations book is Robert Kagan's Dangerous Nation. The book is a history of American foreign policy from the colonial era to the Spanish-American War. Kagan's thesis is clear: contrary to perceptions that the United States pursued isolationism until the 20th century, the U.S. was actually an active, aggressive player in world politics. Furthermore, its foreign policy was not based on realpolitik but rather infused with liberal idealism (with a tragic dollop of pro-slavery policies). In essence, Kagan is arguing that neoconservatism is not some 21st century creation, but rather deeply rooted in American history. Kagan is particularly sharp when he places major foreign policy addresses (Washington's farewell address, John Quincy Adams' July 4th speech, the Monroe Doctrine) into their sociopolitical context.

Kagan's thesis will lead to more than a few readers squirming in their seat. As David Kennedy pointed out in his Washington Post review of Dangerous Nation, "Europeans and others wary of America's motives and influence may find that it confirms their deepest dreads; some neoconservatives may wonder if Kagan has decamped to the Chomskyite, America-bashing left." I'm not entirely convinced of Kagan's thesis -- the role of ideas waxes and wanes throughout American history, and the isolationist impulse is not quite as small as Kagan believes -- but this book is lively and well-researched.

Go check them out!

posted by Dan at 10:45 AM | Comments (2) | Trackbacks (0)

Citation protocol

In a strange confluence of blog streams, Ross Cameron and Brian Weatherson debate the propriety of posting papers online with the "Do not cite without author's permission" caution. The comment thread on Weatherson's post is particlarly interesting, and does highlight a growing problem. Since working paper versions of published journal articles are often easier to access online, they might generate citations when the final paper is an improved version.

At the same time, Eric Rauchway and Brad DeLong discuss the fears of non-blogging academics that anything they do or say on the web will come back to haunt them. DeLong believes the fear of having one's ideas stolen from an online paper is vastly exaggerated (this is a phobia that seems particularly concentrated among graduate students).

I agree with DeLong, but Rauchway makes an interesting point about disciplinary divides:

I expect [DeLong's belief] derives from the difference in scholarly discourse between History-Department historians and Economic-History historians: History-Department historians tend to operate individually, cooking up ideas slowly over time, until we can publish a book bristling with defenses, counterarguments, and qualifications; Economic-History historians tend to work with each other, to toss ideas out in working papers, conference papers, and articles long before they get committed to books (if indeed they ever do). Ideas in the latter form of discourse enjoy a more experimental status; one need not fully commit oneself to their defense; one can even play with them, scattering them like paper boats to test the wind and currents.

In this respect, History-Department historians, and practitioners of other disciplines that emphasize books over articles, may be especially unsuited to derive benefits from blogging. We don't do brisk give-and-take. We lay the keels of large vessels slowly, load them with our ideas and evidence, and launch them deliberately. Thus projected, they rarely meet direct objection. A review cannot supply a counterargument of sufficient weight to scuttle them (and, perhaps acknowledging this, few reviews really try for a fair fight). Other historians' books follow their own paths, and normally avoid direct contact; engagements if inevitable usually occur briefly and inconclusively.

With one possible exception, political scientists tend to fall in with the economists when it comes to sharing work -- we get a lot out of workshops, conferences, and the like (if you doubt this, consider the following hypothetical -- if Mearsheimer and Walt had actually presented the academic-y version of their "Israel Lobby" paper at a few public and private conferences, how many subsequent errors, omissions, and brushfires would have been avoided?).

The possible exception is political theory, and here's why. In my experience, political theorists devote the greatest amount of energy to making their prose as precise as possible in their written work. For example, when theorists present their papers to an audience, they tend to read the actual text rather than riff from notes -- a practice shared by historians but not by other political science subfields. With these kind of practices, it would not be surprising that theorists act more like historians when it comes to questions of online publishing activities.

posted by Dan at 09:08 AM | Comments (4) | Trackbacks (0)

Wednesday, June 6, 2007

What the f$%& is Kevin Martin thinking?

Via Jonathan Adler, I see that while I was away FCC chairman Kevin Martin did not react well to the Second Court of Appeals decision to strike down the FCC's policy governing "fleeting expletives". The court characterized the policy -- designed to make the network liable when someone unexpectedly swears during a live broadcast.-- as "arbitrary and capricious."

Martin's response -- on the FCC's web site, no less -- contains the following:

I completely disagree with the Court’s ruling and am disappointed for American families. I find it hard to believe that the New York court would tell American families that “shit” and “fuck” are fine to say on broadcast television during the hours when children are most likely to be in the audience.

The court even says the Commission is “divorced from reality.” It is the New York court, not the Commission, that is divorced from reality in concluding that the word “fuck” does not invoke a sexual connotation.

A few questions:
1) Did Martin write this himself or did people with actual training in press relations whip this statement up?

2) By the FCC's interpretation, is Martin is obnoxiously hitting on erveryone who reads his statement?

3) Am I obviously encouraging rape and bestiality when I say, "F#$% Kevin Martin and the horse he rode in on?" or could I have a different intent in mind?

4) As Adler asks, "Given the Second Circuit's ruling, could a network air Martin's remarks without fear of federal sanction?"

posted by Dan at 02:46 PM | Comments (3) | Trackbacks (0)

The topic of this month's Cato Unbound is.....

Why, hey, what do you know, the topic of June's Cato Unbound will be All Politics Is Global: Explaining International Regulatory Regimes!!!

My lead essay, "The Persistent Power of the State in the Global Economy," is now up. Response essays will be written by Jeremy Rabkin, Ann Florini, and Kal Raustiala.

Go check it out.

posted by Dan at 12:36 PM | Comments (0) | Trackbacks (0)

Score one against the Blinder-Friedman hypothesis

One of the difficulties with the Blinder-Friedman hypothesis is that it can't really be tested right now (though perhaps this is where Blinder and Friedman disagree. Friedman already thinks the world is flat, whereas Blinder just thinks it will be much, much flatter over the next few decades).

Nevertheless, one would expect the industrial organization of call centers to closely resemble the future according to Blinder and Friedman. These were the jobs that everyone was yammering about disappearing a half-decade ago. Does this sector look flat?

Thanks to Cornell University's Industrial and Labor Relations school, we now have some data... and most of it does not support the Blinder-Friedman hypothesis. From the press release:

Contrary to what many people think, most call centers serving U.S. customers -- service centers in remote locations that handle telephone and Web-based inquiries -- are operated in the United States, not in India or other overseas locations.

So said Rosemary Batt, the Alice H. Cook Professor of Women and Work and professor of human resource studies at Cornell's ILR School (industrial and labor relations) and a lead author of a report on the largest-scale study to examine call center management and employment practices in Asia, Africa, South America, North America and Europe, covering almost 2,500 centers in 17 countries.

The study, "The Global Call Center Report: International Perspectives on Management and Employment," was a collaborative effort involving more than 40 scholars from 20 countries....

The large majority of centers around the world -- except India -- serve their own domestic markets and consumers. There is no common global face to call centers, since they tend to take on the character of their respective countries and regions based on that country's or region's laws, customs and norms....

Two-thirds of all call centers are in-house operations, serving a firm's own customers. Subcontractors operate the remaining one-third of centers. In-house centers across all countries have lower turnover rates and higher quality jobs than subcontracted ones.

From the executive summary:
The mobility of call center operations has led many to view this sector as a paradigmatic case of the globalization of service work. And we find that the call center sector looks quite similar across countries in terms of its markets, service offerings, and organizational features. But beyond these similarities, we find that call center workplaces take on the character of their own countries and regions, based on distinct laws, customs, institutions, and norms. The ‘globalization’ of call center activities has a remarkably national face....

Call centers typically serve national rather than international markets. Eighty-six percent serve their local, regional, or national market.

If the world is getting flatter, it's happening at a rather glacial pace.

posted by Dan at 09:18 AM | Comments (4) | Trackbacks (0)

Tuesday, June 5, 2007

Obama says potato, Romney says potato....

Last year I blogged about how, despite clams claims of growing partisan and ideological divides, there wasn't a whole hell of a lot separating the leading presidential candidates.

This year, we'll continue this theme by doing an ol' compare and contrast of the foreign policy visions of Barack Obama and Mitt Romney -- courtesy of Foreign Affairs.

Here's the game. I'm going to name the issue, then put forward statements by the two candidates. See if you can guess which is which!


Candidate A: "I will work to finally free America of its dependence on foreign oil -- by using energy more efficiently in our cars, factories, and homes, relying more on renewable sources of electricity, and harnessing the potential of biofuels."

Candidate B: "[T]he United States must become energy independent. This does not mean no longer importing or using oil. It means making sure that our nation's future will always be in our hands. Our decisions and destiny cannot be bound to the whims of oil-producing states....

We need to initiate a bold, far-reaching research initiative -- an energy revolution -- that will be our generation's equivalent of the Manhattan Project or the mission to the moon. It will be a mission to create new, economical sources of clean energy and clean ways to use the sources we have now. We will license our technology to other nations, and, of course, we will employ it at home. It will be good for our national defense, it will be good for our foreign policy, and it will be good for our economy."

Candidate A: "We should expand our ground forces by adding 65,000 soldiers to the army and 27,000 marines. Bolstering these forces is about more than meeting quotas. We must recruit the very best and invest in their capacity to succeed. That means providing our servicemen and servicewomen with first-rate equipment, armor, incentives, and training -- including in foreign languages and other critical skills. "

Candidate B: "[W]e need to increase our investment in national defense. This means adding at least 100,000 troops and making a long-overdue investment in equipment, armament, weapons systems, and strategic defense."

Candidate A: "As China rises and Japan and South Korea assert themselves, I will work to forge a more effective framework in Asia that goes beyond bilateral agreements, occasional summits, and ad hoc arrangements, such as the six-party talks on North Korea. We need an inclusive infrastructure with the countries in East Asia that can promote stability and prosperity and help confront transnational threats, from terrorist cells in the Philippines to avian flu in Indonesia. I will also encourage China to play a responsible role as a growing power -- to help lead in addressing the common problems of the twenty-first century. We will compete with China in some areas and cooperate in others. Our essential challenge is to build a relationship that broadens cooperation while strengthening our ability to compete."

Candidate B: "A critical part of the economic resurgence and peace of postwar Europe was the United States' support for a unified market and U.S. engagement in cross-country ties. Today, we must push for more integration and cross-border cooperation in the Middle East. As a group of experts working on the Princeton Project on National Security noted recently, 'The history of Europe since 1945 tells us that institutions can play a constructive role in building a framework for cooperation, channeling nationalist sentiments in a positive direction, and fostering economic development and liberalization. Yet the Middle East is one of the least institutionalized regions in the world.'"

Candidate A: "To see American power in terminal decline is to ignore America's great promise and historic purpose in the world."

Candidate B: "We are a unique nation, and there is no substitute for our leadership."

Answer key is below the fold:

Candidate A is Obama, candidate B is Romney.

So, what are the differences between them? There's a few:

1) The Middle East. Romney thinks the problem is radical jihadism; Obama thinks the problem is a failure to solve the Israeli/Palestinian problem. For the record, I think both answers are facile (though Americans like hearing the latter answer).

2) Iraq. Obama wants to withdraw; Romney does not.

3) Nuclear proliferation. Obama devotes a fair amount of space to this issue; Romney does not.

4) Reorganizing the foreign policy chain of command. Obama doesn't say much about this; Romney makes an interesting proposal on this front: "Just as the military has divided the world into regional theaters for all of its branches, the work of our civilian agencies should be organized along common geographic boundaries. For every region, one civilian leader should have authority over and responsibility for all the relevant agencies and departments, similar to the single military commander who heads U.S. Central Command. These new leaders should be heavy hitters, with names that are recognized around the world. They should have independent objectives, budgets, and oversight. Their performance should be evaluated according to their success in promoting America's political, military, diplomatic, and economic interests in their respective regions and building the foundations of freedom, democracy, security, and peace."

Check out both speeches, and tell me if I'm missing anything.

Having read them, I feel a little better about Romney than I did before. His Iraq position is wrong, but the civilian proconsul idea is at least intriguing. This might be because my expectations of Romney were low to begin with.

I feel a bit worse about Obama than I did before. He focuses in the Israel/Palestine problem, blasts the Bush administration for inaction, and then suggests, "we must help the Israelis identify and strengthen those [Palestinian] partners who are truly committed to peace, while isolating those who seek conflict and instability." Ummm...... how is this different from current U.S. policy? Again, however, this might be due to elevated expectations.

See Matthew Yglesias for more.

UPDATE: Check out my colleague Jeff Taliaferro in the comments -- he wants to see more realist content in these proposals.

posted by Dan at 09:19 PM | Comments (7) | Trackbacks (0)