Category: economics

President Obama’s muddled plan to boost employment by hindering trade

President Obama’s muddled plan to boost employment by hindering trade

When Obama brags that “over 1,000 Americans are working today because we stopped a surge in Chinese tires,” he’s implementing a small-scale version of a similar idea. Blocking an influx of cheap Chinese tires does, indeed, preserve jobs for tire-makers. But tire-buyers pay higher prices and presumably curtail their purchases of some other goods or services in exchange. Meanwhile, Chinese tire-makers have lost jobs and are now less likely to buy American soybeans or DVDs of our movies.
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This line of thinking swiftly stumbles into self-contradiction. After lambasting companies that “ship jobs overseas,” Obama launched into a feel-good anecdote about how “Siemens opened a gas turbine factory in Charlotte and formed a partnership with Central Piedmont Community College.” Is a politician in Germany giving a speech lambasting Siemens for shipping jobs to the U.S. and complaining, as Obama did, that it’s “not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized,” perhaps through partnerships with community colleges.

This is where Obama gets things wrong. You can compete by having poorly paid workers living in dorms working 60 hour weeks with no concern about the health and safety of those workers or you can compete by having workers produce much more value per hour worked. The former is the developing nations model, the later is the developed nation model. Why I think the later is a better idea for the US should be obvious in the same why it is obvious why China picked the former.

Say’s Law For Thee But Not For Me

Say’s Law For Thee But Not For Me

Mark Thoma notes a double standard in the conservative outcry over the Keystone XL decision. As he notes, when it comes to the question of whether government spending can create jobs, the usual suspects claim that it’s logically impossible: income has to be spent somewhere, so all the government can do is divert funds from other uses. But when it’s a private investment, somehow that logic no longer applies.

They also fail to connect tax cuts and tax credits to Say’s Law. The larger point is that they don’t care if the argument is true. It doesn’t have to be true for them to benefit from it.

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things like public libraries, used bookstores, and the widespread practice of lending books to friends all cost publishers money. But nobody (I hope) is going to introduce the Stop Used Bookstores Now Act purely on these grounds. The public policy question is not whether the libraries are bad for publishers, but whether libraries are beneficial… Continue reading Untitled

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Deadweight loss exists any time the profit-maximizing price of a unit of something exceeds the cost of producing an extra unit. In a highly competitive market in which many sellers are offering largely undifferentiated goods, profit margins are low and deadweight loss is tiny. But the whole point of copyright is that the owner of… Continue reading Untitled

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The great era of US economic growth was the postwar generation; even during the good years of the 90s we didn’t achieve comparable growth, and overall, the post-Reagan era was marked by slower growth than the equivalent period of time pre-Reagan. And I haven’t even gotten into the income distribution thing. All of which makes… Continue reading Untitled

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America is both especially unequal and has especially low mobility. But he also argues that because we are even more unequal now than we were a generation ago, we should expect even less social mobility going forward. Very illuminating — and disturbing. (via The Great Gatsby Curve – NYTimes.com) Wow. This looks awful.

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Leaving the payroll tax intact and reducing Social Security benefits for higher-income seniors is, in effect, an increase in marginal tax rates but it was clear from the discussion at this morning’s GOP Presidential debate that few Republicans see it this way. Still, it’s true. The way Social Security works is that you pay taxes… Continue reading Untitled

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In case you thought the European financial crisis was over, today’s auction of new German debt garnered an average nominal yield of -0.0122 percent, the first time we’ve ever seen a negative nominal yield. Negative Nominal Yields On New Germany Debt Liquidity trap.

Businesses seek state’s new ‘benefit corporation’ status

Businesses seek state’s new ‘benefit corporation’ status

A dozen companies committed to maximizing social good while turning a profit have filed papers with the state to become California’s first “benefit corporations.” … While that may sound like marketing hype, it’s important from a legal standpoint because it helps shield benefit corporations from lawsuits brought by shareholders who say that company do-gooding has diluted the value of their stock. California becomes the seventh state to adopt this relatively new corporate structure. Until now, California corporate law mandated that shareholders’ interests trump those of all other parties. Entrepreneurs who wanted to incorporate green initiatives or social causes into their businesses were often forced to become nonprofits, limiting their ability to raise venture capital.

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(via Jobs For College Grads) So if there is a college bubble, and there just aren’t jobs for all those college students then why are there job losses for high school grads and gains for college grads?