This is how we do it!

If me and Mungo ran a bidness........

Wage Stagnation?

D-Boo, goin' all Boudreaux, in person for once...

Behavioral/Ideological Selection?

An interesting question:  Suppose all the people who believe abortion is okay to use as birth control actually do that.  And don't have kids.

And the people who disagree...DO have kids.

Over time, might the composition of the electorate change?

Differential Fertility as a Determinant of Trends in Public Opinion about Abortion in the United States 

Alex Kevern & Jeremy Freese 
Northwestern University Working Paper, July 2014 

Abstract: Differential fertility is frequently overlooked as a meaningful force in longitudinal public opinion change. We examine the effect of fertility on abortion attitudes, a useful case study due to their strong correlation with family size and high parent-child correlation. We test the hypothesis that the comparatively high fertility of pro-life individuals has led to a more pro-life population using 34 years of GSS data (1977-2010). We find evidence that the abortion attitudes have lagged behind a liberalizing trend of other correlated attitudes, and consistent evidence that differential fertility between pro-life and pro-choice individuals has had a significant effect on this pattern. Future studies should account for differential fertility as a meaningful force of cohort replacement in studies of public opinion where parents and children are likely to share the same attitude. 

Nod to Kevin Lewis

Economics is Hard, When You Draw Inferences From Residuals

Matt Iglesias showing once again that economics is hard.  At least, it seems hard for him.  Because he has been saying some remarkably ill-informed stuff lately. Here, he argues that "corporations" should pay more.  And in fact,  Matt (being smarter than anyone in business) recognizes that if they paid more, they'd make more money.  Presumably, Matt could take this insight and start his own business, and grossly overpay workers.  If he's right, he could make a FORTUNE, I'm telling you.

Problem:  Far from falling, total cost of employment has been rising, sharply.  Corporations have NOT been saving money by squeezing labor.  The "productivity wedge" that everybody whines about (see below) is real enough.  But it is due to our inability to come up with a sensible health care policy, and regulatory accounting rules that give substantial disincentives for hiring full time.





What is squeezing labor is enormous costs for medical care, pensions for older workers, and regulations that make hiring workers prohibitively expensive. You say workers are not getting pay increases? That's true. But those evil corporations are getting labor cost improvements, either.


For some reason, people ignore the second graph.  It is expensive, and getting more expensive, to hire workers.  The first graph simply assumes that all the "extra" profit from productivity gains is going to corporations.  But it's not true.  You can look it up.

Amazing Op-Ed in WAPO

Even by the standards of the craven, screed-vending WaPo this is amazing. Excerpt:

By now, even the economics profession concedes that our openness to the developing world — call it the Global South — has played a role in depressing the incomes of U.S. workers...But how much of this problem originates in the Global South and how much in the American South?...In the northern system, workers have more rights and higher incomes. In Dixie, they have fewer rights and lower incomes...When it wants to slum, business still goes to the South...[I]f the federal government wants to build a fence that keeps the United States safe from the dangers of lower wages and poverty and their attendant ills — and the all-round fruitcakery of the right-wing white South — it should build that fence from Norfolk to Dallas. There’s nothing wrong with a fence, so long as you put it in the right place.

Nod to Kevin Lewis for the find. Some observations:

1.  Look, y'all:  we tried to leave.  You wouldn't let us.  We tried and TRIED to leave.  'Til Stoneman's cavalry* came, and tore up the tracks again... Now I don't mind choppin' wood, and I don't care if the money's no good. Take what you need and leave the rest, But they should never have taken the very best.   You had your chance, ya Yankee S.O.B.  Now you are stuck with us.

2.  If you build the wall where this guy says he wants it, he'll keep OKLAHOMA and (most of) ARKANSAS.  In the part he loves, and respects as being liberal and progressive.  I don't think Mr. Myerson gets out much, frankly.  Maybe we should draw big paint lines on the state boundaries, so he can actually learn some geography from his window seat at 30,000 feet, flying back and forth to Portland or San Francisco.  Problem is that Mr. Myerson's wall will have to start at Baltimore, I think.  And just like in the war, DC will be surrounded by hostiles.

3.  "Even the economics profession"?  Seriously?  Mr. Myerson actually advertises his ideology as a qualification, a reason you should admire him.  In his world, at least.

*Corrected.  I had Joan Baez's version in my head.  She said "so much cavalry..."  The above lyric is the original.  If you want to know...
Or...
If you want to watch...gives me chills.

The Left in NC Discovers Anew An Ancient Truth

It's fun to watch when the little kids discover something on their own.  They remember it better that way, that's a rule of teaching.  So, even though all the grown-ups knew this all along, it's better to let the younglings figure it out.

It appears that the Progressives, the Left, whatever you want to call them, in North Carolina have "discovered" that regulation, even regulation that the regulator says is benign, can be harmful.  It's intrusive, it makes everything more expensive, and it has a chilling effect on people being willing to use your product.

Now, the Prog-Left has discovered this truth about abortion clinics in NC.  Regulating abortion clinics is going to make it much more difficult, more scary, and more expensive to get an abortion, or even to get counseling.  Abortions are legal, but regulations will make it harder for customers to obtain them, and it will be impossible for businesses to provide this otherwise legal service.  It's like someone is saying, "Oh, you can do this, but we are just going to regulate it," as a way of actually outlawing the activity.

Let's hope they take this deep insight and apply to other kinds of small businesses.   The same thing, THE SAME THING, is true for all the regulations, from petty to draconian, that you folks want to impose on businesses of all kinds. Because the Prog-Left has always pretended (until now, when they actually care about the business) that regulations are a benefit, rather than a harm.  Sauce for the goose...

Minimum Wage

Interesting piece in the FREEMAN on minimum wage.

Still, I have to admit I have been converted to Angus's position.  Minimum wage is probably a bad policy, and it should be indexed.  But if you want to make a list of the really awful things the state does to regulate prices or kill people, minimum wage is not really worth your time.

In 2006 I wrote this.

But now I think this is right.

Not a Caricature, Not the Onion

I often get criticized (yes, me!) for "caricaturing" the Keynesian view of the multiplier and job creation.  To be fair, Keynes himself was circumspect.  But the Keynesians are quite clear.

Here is an acolyte, making the straightforward argument that unemployement creates jobs, as long as we PAY people to be unemployed.  It gets good after about 2:50...



Hilda Solis is the US Sec'y of Labor.  She apparently wants to be the Sec'y of Unemployment.  Employed workers aren't docile enough, and they might vote the wrong way.  But unemployed folks, getting other peoples' money in the mail?  THOSE are Democrats.

Nod to William H., and to Pretense of Knowledge.

Cheap Sex as a Collective Action Failure

I had Laura Sessions Step, author of UNHOOKED, in at Duke to give a talk a few years ago.  Her question, simplifying a bit, is why do young women make themselves so available, unmarried, to young men in hopes of making themselves, the young women happy?  (This clearly makes the young men happy, but that's beside the point).

Pileus has a simpler and cleaner explanation.

Excerpt:
This downward spiral that women have been caught in—the dwindling supply of available men induces women to make themselves even more sexually available than the next women in order to compete, thereby further dampening the supply of potential mates—seems impossible to break out of. At the heart of the problem is a classic, Olsonian collective action failure. All women would benefit if, collectively, women were to require more of men they had sex with. But every woman knows that her behavior, by itself, will not cause market prices to change, so she cheats—and by “cheats” I mean she cheats the female collective. The problem with this free riding behavior is that everyone faces the same incentives and there is not an effective punishment for cheating. The result: men get more sex and women can’t find mates. Such are the fruits of feminism.
Maybe the old (some would say sexist) adage that “good girls don’t” had something going for it after all.

Apparently Dilbert agrees with me (and not with my lovely wife)

Well, it's not exactly what I was saying about the future of work, but it's close!

The mysterious recession, take II

Yesterday I claimed that the behavior of the US economy in our current recovery is, contra Matt Ygelesias, "mysterious", in that we have not seen the common "v-shape" or recovery to the original trend.

Ace commenter John Thacker pointed out that Greg Mankiw (and others) have argued that macro aggregates have a unit root and thus reversion to a fixed trend is not to be expected.

I don't want to get into a big discussion about the power of unit root tests here, so let me show a picture (from the blog Calculated Risk) that illustrates what I was trying to say (clic the pic for a more glorious image):

The graph shows job losses in the recessions since WWII. All but the last three could be reasonably described as "sort of V shaped" and except for them, time to recovery seems almost independent of the severity of the recession. Our current situation is notable both for the severity of the job losses and the extreme slowness of the job market to recover.

If these be sweatshops, give me MORE of them!

Just after midnight in Munich. Tremendous doner durum for dinner, then a variety of locally brewed malt beverages. Nonetheless, I am over here watching my boy Ben Powell. And you should watch, too.



Still, here at KPC we strive for fairness. Since Ben Powell is a smart guy, and he's right, the opposing view should be a nonsensical article written by an idiot. Here you go; enjoy!

Immigration Studies

What Drives U.S. Immigration Policy? Evidence from Congressional Roll Call
Votes

Giovanni Facchini & Max Friedrich Steinhardt
Journal of Public Economics, forthcoming

Abstract: Immigration is one of the most hotly debated policy issues in the United States today. Despite marked divergence of opinions within political parties, several important immigration reforms were introduced in the post 1965 era. The purpose of this paper is to systematically analyze the drivers of congressional voting behavior on immigration policy during the period 1970-2006, and in particular, to assess the role of economic factors at the district level. Our findings provide robust evidence that representatives of more skilled labor abundant constituencies are more likely to support an open immigration policy concerning unskilled labor. Thus, a simple factor-proportions-analysis model provides useful insights regarding the policy making process on one of the most controversial facets of globalization.

-------------------------

Migration from Mexico to the United States: Wage Benefits of Crossing the
Border and Going to the U.S. Interior

Ernesto Aguayo-Tellez & Christian Rivera-Mendoza
Politics & Policy, February 2011, Pages 119-140

Abstract: Emigrating from Mexico to the United States requires three steps: going to the border, crossing it, and going to the final U.S. destination. This article attempts to measure the earnings benefits of each migration step, focusing particularly on the second step: crossing the border. Using U.S and Mexican microdata of workers living in Mexico and in the United States, this article compares wages of identical individuals on both sides of the border after controlling for unobserved differences between migrants and nonmigrants. On average, Mexican workers increase their wages 1.22 times by moving to the Mexican side of the border, 4.15 times by crossing it, and 1.12 times by moving to an interior location in the United States. Gains are larger for unskilled workers. Also, gains for crossing the border are larger for illegal workers, while gains for going to the U.S. interior are larger for legal workers.

-------------------------

The typification of Hispanics as criminals and support for punitive crime
control policies

Kelly Welch et al.
Social Science Research, May 2011, Pages 822-840

Abstract: The Hispanic population is now the largest and fastest growing minority in the United States, so it is not surprising that ethnic threat linked to Hispanics has been associated with harsher crime control. While minority threat research has found that individuals who associate blacks with crime are more likely to support harsh criminal policies, the possibility that this relationship exists for those who typify Hispanics as criminal has yet to be examined. Using a national random sample, this study is the first to use HLM to find that perceptions of Hispanics as criminals do increase support for punitive crime control measures, controlling for various individual and state influences. Moderated and contextual analyses indicate this relationship is most applicable for individuals who are less apt to typify criminals as black, less prejudiced, less fearful of victimization, politically liberal or moderate, not parents, and living in states with relatively fewer Latin American immigrants.

(nod to Kevin Lewis)

Econ Econ uber alles

I am stuck underneath the Goethals bridge for the foreseeable future! Here though is a self-serving tidbit from USA Today:

"Recent college graduates lucky enough to nab jobs are earning less, according to the National Association of Colleges and Employers, which said that 2010 graduates' average starting pay was $48,661, down 1.3% from 2009...."

However, "Offers for economics majors rose 2.1% to 50,885; those studying finance got a 0.0% bump to $50,356."

Come and join us!

Seriously, beyond the miniscule differences in starting salaries, and my obvious bias (though I was a business major in college), I believe econ is a much better undergraduate major that finance. Econ BA + Finance MBA is a great combo though.