If you are an economic technocrat staring at a dashboard of official indicators of how the US is doing, these look like pretty good times.
The unemployment rate is low. GDP is growing. Wages are rising a good bit faster than inflation, which is very modest. These might not be all-out boom times, but as far as economic policy goes, it looks like a job well done.
Your compatriots, it is amply clear, do not agree.
In polls, nearly twice as many Americans viewed the nation as being on the wrong track as the right one, and as recently as early November last year, many more people saw the economy as getting worse than getting better. Those economic assessments have flipped since the election, driven by US Republicans apparently feeling better about things, mainly because US President Donald Trump has promised to change the country’s direction.
Considering Trump’s rise, the anti-establishment energy behind the presidential campaign of US Senator Bernie Sanders, and parallels in the politics of Britain and other advanced nations, it takes no grand leap of logic to conclude that something is rotten in many peoples’ economic lives that has not been picked up by the headline data that government statistical agencies publish every month.
However, what exactly has gone so wrong?
One set of answers boils down to this: 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 do not accrue for people at the middle and bottom of the pay scale.
All of this has hammered people without an advanced education and left them feeling unmoored and without opportunity, even if by narrow measurements jobs are plentiful and compensation is rising.
Institute for New Economic Thinking president Robert Johnson has argued that the cumulative impact of rapid technological change and shifts in work can have downsides that economists should try to account for more rigorously.
“When firms invest in technical change that disrupts employment structures, their decisions focus solely on private profit and neglect the costly side effects that society must bear. When one small firm adopts a new technology displacing workers, this may not be a societal crisis. When many firms do this at the same time, the changes in the nature of production and employment across the nation become a profound social problem,” Johnson said.
Economists speak of “negative externalities” — for example, what happens when a firm pollutes the air, making everyone else worse off. In this argument, rapid change, when it takes place across many industries at once, is a negative externality that needs to be accounted for, particularly “when the economic insecurity leads to a desperate and extreme politics,” Johnson said.
In short, one could summarize this set of complaints as the economy having become too dynamic for its own good.
However, 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, suggested that the real problem is not too much dynamism, but too little. The authors describe trends that have blocked the formation of new businesses and jobs, and are having a stultifying effect on the economy.
They cite federal data showing that in 1977, more than 16 percent of firms in the US were less than one year old, a figure that had fallen to half that by 2014. New businesses have similarly done less to power new jobs than they once did, while the biggest, oldest firms account for a rising share of economic activity.
Market concentration increased for two-thirds of industries between 1997 and 2012, the report found.
That coincided with a steady rise in corporate profits as a share of GDP and in a decline in the share going to workers’ wages.
The job market has become less fluid. The proportion of workers who change jobs in a given year has fallen from 12 percent in 2000 to 7 percent in 2015. Workers are also less likely to migrate within the US. In the 1970s, more than 3 percent of the population moved across state lines in a given year; since 2006, it has hovered at about 1.5 percent.
Most startlingly, the creation of new companies has been concentrated in a small number of metropolitan areas: Los Angeles, Miami, New York, Dallas and Houston, Texas. From 2010 to 2014, those five regions created as many new businesses as the rest of the country combined. If you did not live in them, or were unwilling to move to them, you were out of luck.
“The debate is so thoroughly dominated by the idea that there is too much change, too much churn, too much disruption,” Economic Innovation Group cofounder John Lettieri said. “And it may feel that way to many people, but we think that what they’re really feeling is a lack of creation of new businesses and new jobs.”
Old industries have always faced pressure from various forces. The rise of computers obliterated countless jobs for clerks from the 1960s through the 1990s. New steelmaking technology rendered old plants obsolete in the 1980s.
However, in those earlier eras, new industries and new jobs were emerging quickly to take their place. Now, that entrepreneurial ferment, except for in a few megacities, is not happening as rapidly.
Both the “too much dynamism” and the “too little dynamism” narratives for what ails US workers have different potential remedies, which cut across ideological lines.
If you believe that increased market concentration is a central problem, you might consider tougher anti-trust enforcement, a favorite of liberals, but also explore conservative arguments that complex regulation creates an unfair advantage for big companies that can employ scores of lawyers.
If you look at globalization as the main problem, you might see some Trumpian renegotiation of trade deals and arm-twisting to get companies to keep jobs at home as being in order. However, you could also argue for a more generous social safety net and government funding for retraining.
Of course, the too much versus too little dynamism diagnoses are not mutually exclusive; there are probably elements of truth in both. Maybe the economy really is not working for many Americans because globalization, automation and changing labor practices have thrown them to the wolves.
However, maybe there are also deep-seated structural shifts preventing communities and individuals from tapping the great opportunities the modern economy offers.
Regardless, as the seismic political events of last year made clear, the data alone might not tell you much about how the economy looks to millions of people or what might be done to make life better for them.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations
On Jan. 13, Taiwan, backed by democratic individuals, groups and countries worldwide, succeeded to uphold democracy in the face of formidable challenges and threats posed by the semi-powerful communism and authoritarianism of the People’s Republic of China. It is time for Taiwan and president-elect William Lai (賴清德) to reciprocate. Taiwan is uniquely positioned to work with Afghan democrats and democracies worldwide, which could pave the way for democracy’s resurgence in Afghanistan. Taiwan has always stirred feelings of curiosity and admiration among Afghans. They are majorly sympathetic toward Taiwan’s cause of freedom, independence and democracy. Afghans also share Taiwan’s resilience, yet