Economy

Is the U.S. Economy Too Dynamic, or Not Dynamic Enough?

New York Times: “The economy has become too volatile and uncertain. Perhaps the dissatisfaction is driven by globalization, automation and the decline of employers’ implicit promises to offer workers jobs through thick and thin. These factors have made it harder for people to get good-paying jobs and to hold onto them for decades. High levels of inequality mean many of the benefits of growth don’t accrue for people at the middle and bottom of the pay scale.”

“Robert Johnson, the president of the Institute for New Economic Thinking, argues that the cumulative impact of rapid technological change and shifts in work can have downsides that economists should try to account for more rigorously… In short, one could summarize this set of complaints as the economy’s having become too dynamic for its own good.”

“But a different line of research offers an alternate theory.”

“A new report from the Economic Innovation Group, a research outfit funded largely by technology executives, suggests that the real problem isn’t too much dynamism but too little. The authors describe trends that have blocked the formation of new businesses and jobs and that are having a stultifying effect on the economy.”

School Gun Violence Is Linked to Economic Insecurity

“Episodes of gun violence at America’s schools are both heartbreaking and disturbingly frequent, but the circumstances that inspire them remain elusive. A new Northwestern University study comes up with at least a partial answer,” Tom Jacobs writes for Pacific Standard.

“It finds such incidents are more common during periods of high unemployment. During an economic downturn, the assumption that a diploma leads to a good job is revealed as false (at least for the moment), leading to frustration, disillusionment, and, sometimes, violence.”

U.S. May Export More Oil in 2017 Than Four OPEC Nations Produce

Bloomberg: “U.S. crude exports are poised to surpass production in four OPEC nations in 2017 and may grow even more if President Donald Trump honors pledges to ease drilling restrictions and maximize output.”

“The world’s largest oil-consuming country could sell as much as 800,000 barrels a day of crude overseas this year, according to four analysts surveyed by Bloomberg. That’s more than OPEC producers Libya, Qatar, Ecuador and Gabon each pumped in December. The U.S. exported 527,000 barrels a day in the first 11 months of 2016, Energy Information Administration data show.”

Stability Is Good for Business. Trump’s Whims Threaten It.

Matt Levine: “This is a widespread pattern. Many people in the business and financial and technology communities listened to what Trump said and cheerily assumed he’d do something completely different. Sure, he talked about restricting trade and banning Muslim immigrants, but what they heard was that he’d enact ‘sensible immigration policy’ and pro-growth trade agreements, reduce taxes, cut back regulation, and generally improve conditions for business. In the runup to the presidential election, billionaire Peter Thiel and other Trump supporters said the candidate should be taken ‘seriously but not literally.’ As I wrote in my Bloomberg View column, taking Trump literally means believing that he’ll do what he says; taking him seriously means believing that he’ll do what you want.”

“The reason the U.S. is a good place to do business is that, for the past two centuries, it’s built a firm foundation on the rule of law. President Trump almost undid that in a weekend. That’s bad for business.”

Solar Employs More People In U.S. Electricity Generation Than Oil, Coal And Gas Combined

Forbes: “In the United States, more people were employed in solar power last year than in generating electricity through coal, gas and oil energy combined. According to a new report from the U.S. Department of Energy, solar power employed 43 percent of the Electric Power Generation sector’s workforce in 2016, while fossil fuels combined accounted for just 22 percent.”

“Just under 374,000 people were employed in solar energy, according to the report, while coal, gas and oil power generation combined had a workforce of slightly more than 187,000. The boom in the country’s solar workforce can be attributed to construction work associated with expanding generation capacity.”

Trump’s Ban Isn’t Just Inhumane—It’ll Make America Dumber 

Emily Dreyfuss: “Universities and colleges across the US have come out in condemnation of Trump’s ban because of this threatened brain drain, from Harvard to the University of California. Former Republican governor of Indiana Mitch Daniels, now the president of Purdue University wrote: ‘The President’s order related to immigration is a bad idea, poorly implemented, and I hope that he will promptly revoke and rethink it.'”

“Reza Kahlor, a green card-holder, is an Iranian scientist at Harvard who before this week was deciding between applying for professorships at top US universities or starting a company in Boston based on his biological discoveries. But if this ban restricts his ability to travel, he says he’d maybe rethink and go to Germany, or France, or Canada. That would be one less entrepreneur the US gets to claim as its own, one less potential discovery that could turn into an industry-changing technology that could generate jobs.”

Quartz: Graduate Schools Will Be Hardest Hit by Trump’s Immigration Ban

If Trump Gets His 20% Tax on Mexican Imports, These Are the US Household Staples That Will Be Hardest Hit

Quartz: “The Trump administration has today suggested it would force Mexico to pay for the wall by implementing a 20% tax on all Mexican imports. Such a move by the White House—which isn’t allowed—would hit Americans hard in their grocery carts.”

“It would be difficult for Republicans to engineer a situation in which food companies would not pass the extra cost of doing business to consumers. There isn’t an easy replacement source for these foods, as in many cases Mexico is by far America’s biggest supplier. Over time, the US has grown more dependent on Mexican imports of fresh produce, which rose by 264% between 1999 and 2014.”

Trump Could Really Mess Up Mexico’s Economy

“Remittances, however, are just the beginning of the risk Trump’s presidency could pose to the Mexican economy. If he follows through on his proposed policies, Trump could change the calculus for doing business in Mexico, and thus endanger the economic prospects of the whole country,” Lucia He writes for FiveThirtyEight.

“Among his proposed policies, Trump has threatened to renegotiate or completely withdraw from the North American Free Trade Agreement (NAFTA) and impose a 35 percent tax on businesses that ship goods to the U.S. after relocating out of the country. Either policy could be devastating for the Mexican economy.”

How to Make America’s Robots Great Again

Farhad Manjoo: “In 2013, China became the world’s largest market for industrial robots, according to the International Federation of Robotics, an industry trade group. Now China is working on another big goal: to become the largest producer of robots used for factories, agriculture and a range of other applications. Robotics industry experts said that goal could be a decade away, but they see few impediments to China’s eventual dominance.”

“There’s a way to address this problem, but it’s politically perilous: The United States should invest in robots.”

“If we don’t, robot scholars said the president’s plans for a resurgence in manufacturing could backfire. Today, we buy a lot of stuff made in China by Chinese people. Tomorrow, we’ll buy stuff made in America — by Chinese robots.”

Will Trump Go After NAFTA With Tweezers or a Hammer? 

Neil Irwin: “Trade experts say there really is room to make major change in the two-decade-old agreement. A renegotiation could well lead to a better deal for all three countries. But it will require the United States to make concessions that the Trump administration may be wary of offering.”

“If not approached carefully, revamping an agreement that has created the economic underpinning of major industries would risk American jobs as well as higher prices for consumers. And the closer the Trump administration gets to blowing up the deal, the larger those risks loom.”

The US Has More Immigrant Inventors Than Every Other Country Combined

Quartz: “Recent research on the immigration patterns of high-skilled workers (pdf), shows that, from 2000 to 2010, the US received over 190,000 inventors migrate to the US, while only a little over 10,000 left the country. The US received more inventors combined than every other country, and was one of only two countries in the study with a positive net migration.”

“US president Donald Trump has promised substantial changes to US immigration policy, some of which may threaten the country’s preeminence in attracting innovative immigrants.”

Do Regulations Really Kill Jobs?

Alana Semuels: “In some cases, the politicians do have a point: Regulations that seek to make air and water cleaner can also cause concentrated job losses in certain industries and locations. These losses are painful for the people they affect, who often have a hard time finding new employment, especially in regions where a newly-regulated industry is concentrated.”

“But the idea that regulations stunt job growth more broadly is not supported by research. Many of the academic studies that have explored the question find that regulations don’t decrease jobs in the overall economy. They sometimes reduce jobs in certain sectors, but they create new jobs in others. A factory that makes lead additives for gasoline might be shut down because regulations have banned lead additives. But new jobs will then be created at a factory that makes catalytic converters, which are emissions-control devices for cars. Some workers, then, benefit from regulation, while others lose. That doesn’t mean that the losses aren’t real and painful for the people who held those jobs, but the overall picture is not one that can be accurately characterized by the phrase ‘job-killing.'”

Trump Will Use 4 Real Estate Business Tricks to Rebuild the U.S. 

Jay N. Rollins: “Trump’s real estate background provides him with the outline for how to fix the economy:”

  • “Spend money on the asset using debt”
  • “Make improvements that, when completed, will generate more income (in this case, infrastructure to improve commerce)”
  • “These new improvements will lead to more business, which will generate more cash flow (in this case economic growth)”
  • “The hope is that increased cash flow will outpace the growing debt”

“When it works, it can be very profitable. When it does not work, the project could end up in Chapter 11, like Trump’s New Jersey casinos.”

Why a Wall Won’t Keep America’s Newest Immigrants Out

Washington Post: “…new research suggests that picture of U.S. immigration may be changing fast. Analysis from Jed Kolko, chief economist at job search site Indeed, shows that recent immigrants are much more likely to be highly educated and to have found jobs in industries involving computers, mathematics and science than the immigrants who came before them. If these immigrants are taking jobs from natives, those jobs are increasingly likely to be highly skilled and highly paid ones.”

“Recent immigrants are also much more likely to come from Asia compared with previous waves. Among immigrants who came to the U.S. in the past five years, one-third were born in Latin America, and 12 percent in Mexico. That’s down from previous years: Looking at the U.S. immigrant population overall, half of those 25 and older were born in Latin America and 27 percent were born in Mexico, Kolko says.”

“The decline in immigrants from Latin America has been offset by a surge from Asia. In the past five years, 45 percent of immigrants to the U.S. were born in Asia, especially India, China and the Philippines. Among the overall U.S. immigrant population, those born in Asia make up only 30 percent.”