February 14, 2013
“A triumph for our culture of self-pity, narcissism and whining entitlement”
In sp!ked, Neil Davenport explains why the legal victory against workfare in England isn’t actually a good thing even for people in that situation:
… the case is still seen as a major coup. Joanna Long, a member of campaigning group Boycott Workfare, captured the mood of Reilly’s supporters: ‘Today’s ruling is a victory for the people against a government which thought it could compel unemployed and sick people to work without pay, backed by a vicious regime of sanctions which made the poorest far poorer.’ Really? Only in this victim-centred age could doing a few shifts at Poundland be seriously compared to forced slavery.
What the ruling in favour of Reilly is not, however, is a victory for ‘the people’. Rather, it is a triumph for our culture of self-pity, narcissism and whining entitlement. The new ruling will further cushion and cosset young people, relieving them of any impositions or pressures. And it will bolster the infantile notion that young people must be protected from the demands of becoming economically independent or hard working. In the long run, this will do the development of young people far more damage than a few weeks working for benefits.
[. . .]
In this sense, today’s ruling will bolster the idea held by some young people that the world really does owe them a living. The Reilly ruling seems to acknowledge officially that young people should not be expected to meet society’s requirement to work in case it damages their vulnerable self-esteem. It suggests that self-pity and a sense of entitlement is now far more laudable than simply overcoming life’s challenges or learning how to grow up.
Nevertheless, it shouldn’t be too surprising that the court came to such a decision. For the past two decades, the state has been keen to show that adult autonomy is not something people should exercise too much. So while the ruling looks like a victory for people power-style leftism against a (mainly) Tory government, in truth it is a demand for the state to look after us. It is an acknowledgement that we should forgo individual sovereignty for a close relationship with the all-watching, all-checking and autonomy sapping state. Whereas genuine radicalism was always a demand for autonomy from state regulators, today’s radicals aspire to be more tightly bound to state institutions. Any excuse to bolster state legitimacy and authority over us, even at the expense of a Tory government, will always appeal to elite-minded, undemocratic judges. Reilly and her supporters demand to be treated like children. Is it any wonder that a paternalistic state will oblige?
February 12, 2013
Rules for the masses, but not for the bureaucratic elite
The European Union’s rules on gender equality appear to apply to everything in the EU except the EU’s own bureaucracy:
Part of the aggrandised myth EU institutions like to propagate about themselves is that they are pioneers in promoting tolerance, gender equality, and diversity in the workplace. Read the promotional literature and you will find effusive descriptions of liberal workplace revolutions and the achievements of Soviet-style five-year plans. Yet, like the Soviet Union, there is an embarrassing mismatch between the trumpeted idealism and the reality.
Since its creation in 1967, DG Employment (Directorate-General for Employment, Social Affairs and Inclusion at the European Commission) has nominally been responsible for fair employment conditions in the European Union. Rising levels of workplace equality in member states (for which DG Employment take an undue amount of credit) are woefully incongruous with the situation of EU civil servants. Women occupy 19 per cent of senior management positions; compare this with the often decried 35.9 per cent of women in the top levels of the UK civil service.
Yet it is figures like the UK civil service’s that prompt EU proposals on affirmative action. One set of proposals has recently been discussed in the European parliament, for example, which if passed will introduce gratuitous and complicated legislation across the continent. That bureaucracy breeds bureaucracy is unsurprising, but it is hard to take seriously calls for equality from an institution endemically opposed to the concept.
The only European agency where women in management positions outnumber men is in the Institute for Gender Equality (the administration is 95 per cent female). Incontrovertibly, out of all the agencies, this is the one with the strongest prerogative for tackling equality in its workforce. But the message is clear: shout about equality to the world and create a dummy institute to anyone holding a mirror up to the EU bureaucracy itself. So far, the commission is on its fifth ‘action programme’ to tackle inequality within its institutions, taking the same form as every one that has come before it; vague guidelines forgotten until lobby group pressure becomes too annoying.
December 28, 2012
The Military-Industrial Complex leads to “a bloated corporate state and a less dynamic private economy”
An older article from Christopher A. Preble, reposted at the Cato Institute website:
The true costs of the military-industrial complex, they explain, “have so far been understated, as they do not take into account the full forgone opportunities of the resources drawn into the war economy.” A dollar spent on planes and ships cannot also be spent on roads and bridges. What’s more, the existence of a permanent war economy, the specific condition which President Dwight Eisenhower warned of in his famous farewell address, has shifted some entrepreneurial behavior away from private enterprise, and toward the necessarily less efficient public sector. “The result,” Coyne and Duncan declaim, “is a bloated corporate state and a less dynamic private economy, the vibrancy of which is at the heart of increased standards of living.”
The process perpetuates itself. As more and more resources are diverted into the war economy, that may stifle — or at least impede — a healthy political debate over the proper size and scope of the entire national security infrastructure, another fact that Eisenhower anticipated. Simply put, people don’t like to bite the hand that feeds them.
And that hand feeds a lot of people. The Department of Defense is the single largest employer in the United States, with 1.4 million uniformed personnel on active duty, and more than 700,000 full-time civilians. The defense industry, meanwhile, is believed to employ another 3 million people, either directly or indirectly.
What’s more, these are high paying jobs. In 2010, when the average worker in the United States earned $44,400 in wages and benefits, the average within the aerospace and defense industry was $80,100, according to a study by the consulting firm Deloitte. And 80 percent of that industry’s revenue comes from the government.
December 20, 2012
“Japanese are smart. Chinese are smart. Americans are smart. Even Finns are smart. But Canadians? We tend to be plodders.”
William Watson on a terrible psychological burden Canada has been labouring under for generations — the productivity gap — which does not actually appear to exist.
The good news just keeps pouring in. Last week we learned courtesy of a special report from TD Economics that median income in Canada had caught up with median income in the U.S. Never mind that the measure of income used was a little screwy: market income plus cash received from the government — basically all the goodies — with no accounting for taxes paid to the government. Most Canadians seemed tickled by the result anyway, as we always are when outperforming the Americans.
Now this week, just in time for Christmas, comes news that Canada’s productivity, far from having flatlined over the last 30 years, has actually been growing at a perfectly respectable pace that’s even comparable to American rates. It turns out we’re not nearly as incompetent as our official productivity numbers have been suggesting we are. We’ve just been calculating them wrong. In fact, it’s tempting to say our incompetence is mainly in the productivity section of Statistics Canada. Tempting maybe, but not fair. It’s Christmas, after all, and, besides, calculating productivity is like doing Sudoku for a living and there’s plenty of room for disagreement over what the data are saying.
[. . .]
StatCan’s estimates of our MFP have consistently suggested that as a people we aren’t at all clever. We may be lumberjacks. We may be OK. But doing more with less — or even more with the same — just hasn’t been our game. Japanese are smart. Chinese are smart. Americans are smart. Even Finns are smart. But Canadians? We tend to be plodders. Thus over the last half-century our business-sector MFP growth has averaged just 0.28% per year. By contrast, the Americans are used to rates a full percentage point higher. In 2010, they hit 3.4%! But now Diewert and Yu estimate that in fact over the last 50 years our MFP growth has averaged a perfectly respectable 1.03% per year. If you can add 1% a year to overall output without adding more and smarter people and machines to the mix — which of course you’re also allowed to do and we have been doing — your living standards will rise very nicely over time.
How can StatCan’s estimates have been so wrong? Diewert and Yu use quite different techniques at different stages of the calculation, but the main problem surrounds capital services. StatCan’s estimates of how much capital we use in production typically are much higher than Diewert and Yu’s. Partly the difference revolves around abstruse discussions about what internal rates of return to assume when trying to measure capital.
December 18, 2012
The real reason it’s so hard to cut military spending
From the January issue of Reason, Veronique de Rugy explains how the system is set up to protect military spending from even the most determined spending cuts:
The Department of Defense, with its 2.3 million workers, is the single largest employer in the United States. The defense industry, which is the main private-sector recipient of defense dollars, directly or indirectly employs another 3 million people. This, in a nutshell, is why it’s so hard to cut government spending in general and military spending in particular.
The scope and reach of the government are far bigger than we think, explains John J. Dilulio of the National Academy of Public Administration in the Spring 2012 issue of National Affairs. It’s more than just the money Washington spends or the people it employs. It’s also the people in the private sector who live off that spending. It’s the nonprofit organizations paid to help administer government programs. It’s the contractors who run the programs, the contractors’ sub-contractors, and so on.
[. . .]
Even when military contractors’ profits have reached an all-time high, Congress seems committed to sheltering the companies from any budget cuts. Industry lobbying probably plays a role here. According to the Center for Responsive Politics, the U.S. defense and aerospace lobby doled out $24 million to political campaigns and committees during the 2008 campaign cycle and spent nearly $60 million on lobbying in 2011. Lockheed Martin alone spent $15 million in 2011 on its lobbying efforts, plus $2 million in political contributions. Boeing spent $16 million on lobbying the same year.
In his seminal 1971 article “The Theory of Economic Regulation,” the Nobel-winning economist George Stigler noted that agencies eventually become captive of the very interest groups they were ostensibly designed to police. Writing regulation or even spending legislation requires in-depth industry knowledge, so federal agencies and lawmakers tend to hire directly from the very companies they must oversee or spend money on.
The reverse is true too. In order to gain better access to their regulators and government funds, companies hire lobbyists who used to work for Congress or government agencies. Of the 408 lobbyists employed by the military industry to apply pressure on Congress, 70 percent used to work on Capitol Hill.
The real barrier to self-improvement is always you
Just when did we take the portal to this alternate universe where Cracked is good? For example, this article:
If you want to know why society seems to shun you, or why you seem to get no respect, it’s because society is full of people who need things. They need houses built, they need food to eat, they need entertainment, they need fulfilling sexual relationships. You arrived at the scene of that emergency, holding your pocket knife, by virtue of your birth — the moment you came into the world, you became part of a system designed purely to see to people’s needs.
Either you will go about the task of seeing to those needs by learning a unique set of skills, or the world will reject you, no matter how kind, giving and polite you are. You will be poor, you will be alone, you will be left out in the cold.
Does that seem mean, or crass, or materialistic? What about love and kindness — don’t those things matter? Of course. As long as they result in you doing things for people that they can’t get elsewhere.
[. . .]
The human mind is a miracle, and you will never see it spring more beautifully into action than when it is fighting against evidence that it needs to change. Your psyche is equipped with layer after layer of defense mechanisms designed to shoot down anything that might keep things from staying exactly where they are — ask any addict.
So even now, some of you reading this are feeling your brain bombard you with knee-jerk reasons to reject it.
H/T to ESR for the link.
December 13, 2012
Sweden’s other export: migrant workers
A fascinating story of a small-but-rich country importing workers from Sweden:
As an American, it is bizarre to think of modern Sweden, so often lauded as a paragon of social and economic stability, as coughing up migrant workers. Stranger still is that the Swedes migrate to Norway, which has always been regarded as Sweden’s little brother. Often at war, Sweden forced Norway into an uneven union for most of the 19th century. Though politically independent of Sweden for over one hundred years, Norway has remained culturally subordinate to its larger, more-established neighbor. Norwegians watch Swedish television, listen to Swedish music, and read Swedish books. Before the Norwegian translation of Stieg Larsson’s The Girl Who Kicked the Hornet’s Nest was released, the original Swedish version was the best-selling book in Norway. But in the last 25 years, Norway has added workers to the list of things it imports from Sweden.
In the eighties, Norway became rich off of oil. Its sovereign wealth fund is currently valued at about 600 billion dollars. From 1999-2009, average Norwegian family saw an increase of almost 100,000 NOK, or about $17,000. With its population of only five million, Norway needed to import laborers and service workers for its exploding economy. I once hitched a ride from a retired sailor, and after running out of ways to compliment his RV, I asked him how Norway had changed over the years. He thought Norway had it too good now. As a young man, he’d been at sea for over a year at a time, whereas “the young people today don’t want to work at all. It’s good that we have the Swedes.”
Current estimates of the number of Swedes living and working in Norway hover between 80,000 and 100,000. In Oslo alone, it’s thought that there are 50,000 Swedes, which is about 10 percent of the city’s population. Most of these are service workers. Indeed, the Swede-as-service worker has become something of a stereotype in Norway. The 2010 rap hit “Partysvenske” is an extended mockery of male Swedish migrant workers, who are portrayed as effete drunks who invade Oslo’s nightlife. At one point, the rappers — Jaa9 & Onklp — chide, “Make a mojito, do what you do well.” The condescension towards Swedish migrant workers was prevalent enough for Norwegian television to produce a mocumentary series titled Swedes Are People. There’s a weird power dynamic at play, with both groups exhibiting a sort of passive aggressive bitterness towards the other. For their part, Norwegians seem eager to buck Swedish cultural influence and assert their economic dominance. Speaking to the New York Times in 2007, a professor of social anthropology at the University of Oslo put it rather well:
“When I was young, Swedes had whiter teeth, clearer skin, Abba, and Bjorn Borg. We had lots of fish, and not much more. Today, Swedes have been cut down to size. And I would say that many Norwegians enjoy the fact that so many Swedes are here doing menial jobs.”
When the Norwegian cross-country skier Petter Northug beat his Swedish rival across the line at the 2011 World Championships, he used opportunity to taunt Sweden about the low value of the Swedish currency. The Swedish media, on the other hand, laments the fact that Swedes are reduced to literally peeling bananas in Norway — albeit for about $23 an hour.
H/T to Tim Harford for the link.
December 12, 2012
What is driving the increasing price of higher education?
H/T to Daniel J. Mitchell, who adds:
The first part of the video shows that a college degree has become more valuable, so it’s understandable that the relative price of higher education has risen.
But then, beginning at about 1:55, the video discusses the role of subsidies. Echoing points I’ve made in the past, the professor explains how subsidies have simply generated higher prices. In other words, colleges have captured all the benefits, not students.
Business Week recently published a story that provides some glaring example of how universities have wasted all the additional money. Here are some remarkable excerpts.
“I have no idea what these people do,” says the biomedical engineering professor. Purdue has a $313,000-a-year acting provost and six vice and associate vice provosts, including a $198,000-a-year chief diversity officer. Among its 16 deans and 11 vice presidents are a $253,000 marketing officer and a $433,000 business school chief. The average full professor at the public university in West Lafayette, Ind., makes $125,000. The number of Purdue administrators has jumped 54 percent in the past decade—almost eight times the growth rate of tenured and tenure-track faculty. “We’re here to deliver a high-quality education at as low a price as possible,” says Robinson. “Why is it that we can’t find any money for more faculty, but there seems to be an almost unlimited budget for administrators?” …Purdue is typical: At universities nationwide, employment of administrators jumped 60 percent from 1993 to 2009, 10 times the growth rate for tenured faculty. “Administrative bloat is clearly contributing to the overall cost of higher education,” says Jay Greene, an education professor at the University of Arkansas. In a 2010 study, Greene found that from 1993 to 2007, spending on administration rose almost twice as fast as funding for research and teaching at 198 leading U.S. universities.
December 4, 2012
An American view of Canada’s immigration policies
Shikha Dalmia says that the US could learn useful lessons on immigration policy from Canada:
… Canada’s provincial-nominee program is a model of economic enlightenment. Under this system, 13 provincial entities sponsor a total of 75,000 worker-based permanent residencies a year, and the federal government in Ottawa offers 55,000. Each province can pick whomever it wants for whatever reason—in effect, to use its quota, which is based on population, to write its own immigration policy.
Provinces may pick applicants left over from the federal program. They can also solicit their own applicants from anywhere in the world. In a direct attempt to poach talent from the U.S., some provinces are sponsoring H1-B holders stuck in the American labyrinth.
The government in Ottawa can’t question either the provinces’ criteria or their methods of recruitment. Its role is limited to conducting a security, criminal and health check on foreigners picked by the provinces, which has cut processing time for permanent residency to one or two years—compared with a decade or more in the U.S.
Richard Kurland, a lawyer who is considered Canada’s top immigration expert, notes that provinces use the program for diverse goals such as enhancing existing cultural or ethnic ties with other countries. Not surprisingly, the most popular reason is economic: to augment the local labor market.
The program gives British Columbia the same flexibility to sponsor, say, bricklayers as it gives Ontario to sponsor computer programmers. It doesn’t treat the entire Canadian economy as monolithic and pretend that distant federal bureaucrats can effectively cater to local job markets. (Canada’s federal program is a different story altogether.)
November 28, 2012
November 27, 2012
Comparing Walmart to Costco
Megan McArdle explains why the facile comparison of the two big US retail firms does not make as much sense as people think:
One simply cannot have a discussion about Walmart’s wages without someone bringing up Costco. It seems to be de rigeur, like tipping your waiter, calling your mother on her birthday, and never starting your thank you notes with the words “Thank you”. So lets get it out of the way before the supper gong goes.
[. . .]
Costco has a more highly paid labor force — but that labor force also brings in a lot more money. Costco’s labor force, paid $19 an hour, brings in three times as much revenue as a Walmart workforce paid somewhere between 50-60% of that. (There’s a bit of messiness to all these calculations, because of course both firms have employees who don’t work in stores — but that’s the majority of their workforce, so I’m going to assume that the differences come out in the wash.)
This is not because Costco treats its workers better, and therefore gets fantastic productivity out of them, though this is what you would think if you listened to very sincere union activists on NPR. Rather, it’s because their business model is inherently higher-productivity. A typical Costco store has around 4,000 SKUs, most of which are stacked on pallets so that you can be your own stockboy. A Walmart has 140,000 SKUs, which have to be tediously sorted, replaced on shelves, reordered, delivered, and so forth. People tend to radically underestimate the costs imposed by complexity, because the management problems do not simply add up; they multiply.
One way to think about this is Thanksgiving dinner: how come you, who are capable of getting a meal on the table 364 nights of the year, suddenly find yourself burning things, forgetting the creamed onions in the microwave, and bringing the mashed potatoes to the table a half an hour late? Because when you’re cooking sixteen things instead of four, it is not the same as cooking four four-item meals. There are all sorts of complex interactions involving things like heating times and oven space, and adding more people to the problem, while probably necessary, itself multiplies the complexities.
November 24, 2012
The disappointment of the WalMart protest
Megan McArdle says that the turnout for yesterday’s nation-wide protest outside WalMart stores fell well short of expectations, but that this shouldn’t be surprising:
There’s an irony to labor organizing: the best time to get workers fired up is during economic downturns, but this is probably the worst time to actually organize them. People are most interested in union actions when jobs are scarce and they feel economically insecure, but of course, that’s when they can ill-afford to take economic changes. Unions made big gains during the Great Depression, to be sure, but they had a host of new laws and a labor-activist FDR administration throwing heavy weight behind those efforts. Without that political help, it’s hard to see how unions could have made such big gains — and of course, arguably, the higher wages that FDR’s policies pushed for helped prolong the Great Depression.
Recessions are also a time when employers don’t necessarily have a lot of profits to give up. Walmart’s $446 billion of revenue last year was eye-popping, but its profit margins are far from fat — between 3% to 3.5%. If they cut that down by a percentage point — about what retailers like Costco and Macy’s have been bringing in — that would give each Walmart employee about $2850 a year, which is substantial but far from life-changing. Further wage improvements would have to come out of the pockets of Walmart’s extremely price conscious shoppers. Which might be difficult, given how many product categories Amazon is pushing into.
The other potential strategy is to mobilize those customers — to cost Walmart business unless they up their wage-and-benefit game. But the Black Friday bargain hunters apparently simply pushed past the scattered protests in search of cheap flat-screen televisions — and the progressives who seem most on fire about this campaign are not really very likely to be Walmart shoppers. Which could be a metaphor for the whole US labor movement.
November 16, 2012
November 14, 2012
The “manufacturing fetish”
John Kay talks about the widespread belief that only manufacturing is “real” in terms of what a national economy produces:
Manufacturing fetishism — the idea that manufacturing is the central economic activity and everything else is somehow subordinate — is deeply ingrained in human thinking. The perception that only tangible objects represent real wealth and only physical labour real work was probably formed in the days when economic activity was the constant search for food, fuel and shelter.
A particularly silly expression of manufacturing fetishism can be heard from the many business people who equate wealth creation with private sector production. They applaud the activities of making the pills you pop and processing the popcorn you eat in the interval. The doctors who prescribe the pills, the scientists who establish that the pills work, the actors who draw you to the performance and the writers whose works they bring to life; these are all somehow parasitic on the pill grinders and corn poppers.
When you look at the value chain of manufactured goods we consume today, you quickly appreciate how small a proportion of the value of output is represented by the processes of manufacturing and assembly. Most of what you pay reflects the style of the suit, the design of the iPhone, the precision of the assembly of the aircraft engine, the painstaking pharmaceutical research, the quality assurance that tells you products really are what they claim to be.
Physical labour incorporated in manufactured goods is a cheap commodity in a globalised world. But the skills and capabilities that turn that labour into products of extraordinary complexity and sophistication are not. The iPhone is a manufactured product, but its value to the user is as a crystallisation of services.
[. . .]
Most unskilled jobs in developed countries are necessarily in personal services. Workers in China can assemble your iPhone but they cannot serve you lunch, collect your refuse or bathe your grandmother. Anyone who thinks these are not “real jobs” does not understand the labour they involve. There is a subtle gender issue here: work that has historically mostly been undertaken by women at home — like care and cooking — struggles to be regarded as “real work”.
