Grasping Reality on TypePad, by Brad DeLong

Decline in the manufacturing share of employment, driven by:

• Technology 30% --> 12%
• Bad macro policy generating savings/investment imbalances 12% --> 9.2%
• Trade expansion—primarily Chinas and the post-1995 return of trade with high net factor content 9.2% --> 8.8%
• "Bad trade deals" 8.8% --> 8.6%
  • Large countervailing benefits from that job shift...

Ann Harrison's new book: The Factory-Free Economy: Outsourcing, Servitization, and the Future of Industry 019877916X http://amzn.to/2oBbJKq

Drivers of rising inequality:

• Financialization
• Losing the race between education and technology
  • The end of blue-collar roads to financial stability
  • If the problem is too little education, Harvard cannot and will not fix it—CUNY can
    • Harvard as the equivalent of the Yugoslavian worker-managed firm: when demand goes up, the workforce shrinks and production goes down because incumbent workers won't want to have to share the outsized profits with new hires...
• Worker power loss
• Overclass—Piketty political-economy vicious-circle stories

"Fairness"

• When the wise man points at the moon, the fool looks at the finger:
  • Market society the problem;
• Karl Polanyi and the "fictitious commodities" of land, labor, and finance
• People's belief that they have rights to things they do not have property rights over
• The negative valence of "welfare" today—Mitt Romney and the 47%
  • Why no negative valence to "we had to sell stock"?
• The end of blue-collar roads to financial stability
  • If the problem is too little education, Harvard cannot and will not fix it—CUNY can
    • Harvard as the equivalent of the Yugoslavian worker-managed firm: when demand goes up, the workforce shrinks and production goes down because incumbent workers won't want to have to share the outsized profits with new hires...

NAFTA abrogation

• Paul Krugman: "I have no estimate of the impact of Trump's trade policy..."
• Brad DeLong: "AND NEITHER DOES HE!!"
• NAFTA a thing for apparel and furniture
• NAFTA not a thing for autos—in spite of many predictions it would be
• NAFTA abrogation threatens to be a very bad thing for autos
• Knocking somebody down with your car, and then saying "I will fix it!" and backing up so that you run over them...

High-pressure and low-pressure economies

• Till von Wachter and company: How much better it is if you lose your manufacturing job when the unemployment rate is low
• There was no NAFTA shock to labor: NAFTA was implemented in a high-pressure economy
  • There was a China shock
  • There was a Reagan-era Japan shock
  • How much of both was due not to the size of the shift but rather to the fact that the shift took place in a low-pressure economy?

Somebody really needs to update Blanchard and Katz on regional shocks and regional evolution...

Robots!

• A 50-year issue
• How people add value:
  1. with backs
  2. with fingers
  3. as microprocessors
  4. as accounting 'bots
  5. personal services
  6. as social engineers
  7. as thinkers