Month: November 2024

Here's something esoteric that I didn't know:

Even as overall productivity has risen 34% (since 1987), capital productivity has declined 15%. And it's not just the US:

Capital productivity has plummeted across all rich countries. In the food and construction sectors it's down more than 50%. In other sectors it's down 30%, and only in IT is it up.

Why? Remember the investment drought we talked about frequently during the financial panic? Another term for that is capital glut, and we still have it. There's so damn much capital sloshing around the world that it's become super abundant compared to labor—and since abundant inputs are inherently the least productive, capital productivity has suffered. Lenders are eager to lend and even mediocre projects get funded, driving down the overall average.

Does this matter? There's the rub: I don't know. But no one seems to be very concerned about it, so. . .

Yesterday Trump chose former MTV "Real World" host and current Fox host Sean Duffy to be his Transportation Secretary. Today it's this:

Not counting himself, this makes three TV hosts in Trump's cabinet (Hegseth, Duffy, Oz) plus a bevy of other folks with proven chops on Fox. At least Trump is consistent about what he wants.

This is crazy:

Roughly speaking, families in the "upper income" third earn $150,000 or more. And yet 59% of Republicans who make this much say they're working class. A third of Democrats do too.

Where does this come from? I could sort of understand it if these were people who were raised working class and still view themselves that way no matter how much they make. But I've seen the mobility numbers. Most of these high-income folks were raised in high-income families, and the vast majority were raised in at least middle-class families.

What do Republicans think working class means? Anyone who wishes they made more money? Anyone who resents people richer than they are? Anyone who's appalled at how much it costs to fill up their Land Rover?

What the hell is going on here?

A street scene in Santa Ana. Or a sidewalk scene, anyway.

Two internet cables in the Baltic Sea have been cut, and one current guess is that it was done by a Chinese vessel at the behest of Russia. But why cut an obscure cable between Sweden and Lithuania? Rod Thornton, an expert at King's College London, explains:

“It’s cutting a cable that isn’t going to offend too many countries. They could have gone to the Atlantic and cut a cable there between the US and the UK, or between Europe and the US, which could have major, major consequences, so this is a kind of warning shot,” Thornton said.

OK. Second question: why did China get involved, if indeed they did? Answer: Possibly because they wanted the practice for a future war with Taiwan.

Maybe. Of course, the last time something happened in the Baltic we blamed Russia and it turned out to be a Ukrainian op. So don't make up your mind too quickly on this.

Here's an odd story that popped back to mind recently. It happened one day in seventh grade when my English teacher decided to hold an impromptu spelling bee. A classmate and I picked the teams, and after a few picks my teacher blurted out, "Are you trying to lose?"

I wasn't, but for some reason I had the idealistic notion that a lot of the bad students were actually pretty bright underneath their facades of indifference. So I picked them. Needless to say, it turned out I was wrong and we got walloped.

Anyway, Trump's cabinet choices triggered this old memory. I have a feeling Trump is going to learn that under their clownish facades, all these guys really are clowns. They're going to get walloped too.

Congratulations to Shannon Rowbury! She just won the 1500 meter bronze medal . . .

. . . in the 2012 Olympics.

She placed sixth in the actual race, but moved up to fourth when the top two finishers were disqualified for doping and then to third when yet another was DQed. But why did it take 12 years to figure this out?

I don't know how big a deal this is, but in the aftermath of the Trump election economic uncertainty has reached its highest level since the index began 40 years ago:

There have actually been a few single-day spikes higher than the current level, but the difference is that today's reading is the result of a steady rise since Election Day:

This is a volatile index. By Thanksgiving it might be back to normal. Then again, it might not be.

And it could matter. Here are the findings from the paper that originated the index:

We find that policy uncertainty raises stock price volatility and reduces investment and employment in policy-sensitive sectors like defense, healthcare, and infrastructure construction. At the macro level, policy uncertainty innovations foreshadow declines in investment, output, and employment in the United States.

You have been warned.

Here's a helluva chart:¹

Both elite private universities (Harvard, Stanford, etc.) and elite public universities (Berkeley, U Michigan, etc.) got most of their students from affluent families up until World War II. After that the GI Bill identified smart but poor teens who could benefit from an elite education, and the number of kids from upper income families declined.

But by the end of the '70s, those kids were all high income too and started sending their kids to elite colleges. By now we've done such a good job of finding and rewarding smart kids that there are hardly any left among poorish families. So we're back where we started.

¹It comes from a new paper, "The G.I. Bill, Standardized Testing, and Socioeconomic Origins of the U.S. Educational Elite over a Century." The authors performed a truly stunning bit of data collection to get the results they did.

A few days ago I read an interview with Sherrod Brown about why he lost his reelection race in Ohio this year. My answer would have been that Ohio has been getting redder for years and it finally caught up with him. A gazillion dollars of crypto money opposing him didn't help either. But Brown himself kept saying that people were still pissed off about NAFTA.

Brown knows Ohio better than me, but I'm skeptical. NAFTA passed 30 years ago and had virtually no effect on jobs. We lost a few and gained a few. In particular, if you look at manufacturing jobs they're dead flat for the entire decade of the '90s—including in Ohio.

But you know what did cost us lots of jobs? In May 2000 Congress approved permanent normal trade relations with China, which gave manufacturers the confidence to move factories offshore without fear that every little trade spat would ruin their production. Within only a few months manufacturing employment began to plummet:

Relative to overall employment, manufacturing crashed by 31% in just nine years. That's a little more than five million jobs—about 400,000 of them in Ohio. This didn't end until 2010, which is still a while back but not nearly as far back as NAFTA. What's more, the impact of the China shock is still evident today in midsize towns that a lost a single big factory and have never entirely recovered.

I supported PNTR for China and I probably still would today. But there's no question that it hurt a lot of blue-collar workers and didn't accomplish its goal of liberalizing China and turning it into a normal trading partner. It's hardly any wonder that lots of blue-collar workers still resent people like me over this.