Friday, June 05, 2009
(U-6 is total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.)
So, let us do some crude math. The national unemployment rate is at 9.4 percent, but the U-6 measure is at 16.4 percent.
In Oregon, unemployment is at 12 percent. Which means, it is not unreasonably to think of Oregon's U-6 measure to be at 20 percent. This is some Great Recession!
But, here is what I don't get: why are oil prices increasing this rapidly then? For crying out loud, it oil prices broke the $70 mark for the first time since the phenomenal plunge last year. The more I think about it, the more I am convinced that the jump in oil prices is not because of an anticipated fast global economic growth. Instead, it is because (a) investors are betting on it, as much as they bet on share prices, and (b) the dollar is losing value, and oil exporters always raise prices to factor in the loss in the greenback's worth.
On March 4th, I euro got 1.2555 dollars. The latest? 1 euro = 1.4177 dollars. That is 16 percent in three months. No wonder then that Geithner is on a mission to convince the Chinese that the dollar is ok. And Bernanke is worried about the deficits. Hey guys, talk up the dollar.
Here is what President Obama said about the GM restructuring:Ouch!What we are not doing -- what I have no interest in doing -- is running GM. GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They -- and not the government -- will call the shots and make the decisions about how to turn this company around. The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions. When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision.Very well put. Apparently, however, the president's congressional allies did not get the memo. Today's Boston Globe reports:
In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly.Will the Obama administration call Congressman Frank and ask him to refrain from further politicization of GM business decisions? Or will it put aside its principles and defer to Congress on these matters?
Frank intervention extends life of GM's Norton center
General Motors Corp. will delay the closing of a Norton parts distribution center it planned to shutter by the end of the year, according to US Representative Barney Frank. The extension will temporarily preserve about 80 jobs....
The plant manager received word yesterday that Frank had successfully lobbied GM chief executive Fritz Henderson to delay the closing....
Frank, whose district includes Norton, said he told Henderson, "Look, I understand that these things have to happen but they don't have to happen in the midst of the worst recession in years."
So, does this mean that just as we have an "independent" base closing commission, we will soon have an independent and bipartisan commission on which auto dealerships to close, and which auto factories to close? Lordy lord!!!
Notice in this graphic from the NY Times, the HUGE drop in corporate income taxes in Oregon :-( Downright scary. Add that the drop in personal income tax collected, well, so long and farewell to any possible improvement in the condition of higher education here in Oregon.
But, if one political notion is that a crisis is nothing but an opportunity for fundamental reforms, then now is the best time to overhaul higher education. Everything from how we do general education (which is atrocious) to how we structure majors and minors (equally atrocious) to how we have reduced higher education as all about faculty pursuing their own petty little interests (the worst of all) .... And, oh, maybe this is also the time for many, many, graduate programs to downsize or even close down: it is a crime to implicitly promise students that a graduate degree will get them jobs, and then for these MA and PhDs to later find out that there is practically nothing out there. There, is that a good list to start with? :-)
Thursday, June 04, 2009
Speaking of Iran, the Iranian media seem to be taking particular interest in this one paragraph in the President's speech:
For many years, Iran has defined itself in part by its opposition to my country, and there is in fact a tumultuous history between us. In the middle of the Cold War, the United States played a role in the overthrow of a democratically elected Iranian government. Since the Islamic Revolution, Iran has played a role in acts of hostage-taking and violence against U.S. troops and civilians. This history is well known. Rather than remain trapped in the past, I've made it clear to Iran's leaders and people that my country is prepared to move forward. The question now is not what Iran is against, but rather what future it wants to build.The big headline at one Iranian site:
Barack admits US role in 1953 Iran coupI suppose Mahmoud and Barack are chums now for the President to be referred to by his first name :-)
But, seriously, I wonder how this will play out when Ahmedinajad's political future is to be decided at the polls only a week from now. Could it be interpreted by voters as that the President is truly apologetic for some zany actions during the Cold War, and that only by throwing out Ahmedinajad can they begin to start working with the US? Or, could they think that this apology came about only because of a potential nuclear bomb and, therefore, to become a real player Iran needs that nuke after all? In which case they will swing in favor of Ahmedinajad?
Obama is shrewd, and he has lots of talented people helping him out. I am sure they thought through such scenarios as they parsed every sentence of his speech. I can't quite make up my mind on what the impact will be. But, here is the thing: it was also a special day in Iran--the 20th anniversary of Ayatollah Khomeini's death. And note what his successor, Ayatollah Khamenei said:
He said the US remained "deeply hated" in the region and "beautiful and sweet" words would not change that.That speech was a few hours before Obama's speech in Cairo.
He told the huge crowd at the mausoleum of his predecessor, Ayatollah Khomenei, that action was needed not words.
Another aspect of the timing of the speech that worries me: why did they choose Thursday? Fridays are important prayer days for Muslims, and many imams routinely use their pulpit to talk about the political issues--particularly in the highly volatile Middle Eastern countries. At least the impression from the outside is that these imams are highly Islamist, and support militancy. Won't this Thursday speech then make it convenient for those imams to make a big deal out of small issues?
I suppose I am a very, very cautious optimist.
Wednesday, June 03, 2009
Saudi Arabia warned today that the world could be facing another oil shock, with prices back above the record highs of almost $150 a barrel within two to three years.Meanwhile, there is a growing worry that a fast recovery might lead to very rapid increases in the price of oil, which will then push us back into a nasty recession all over again. I think we are screwed!
Prices have fallen back from the peak they reached last year, largely because of the fall in demand in the downturn, and are hovering at about $60 a barrel.
"We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions," said the Saudi oil minister, Ali al-Naimi, ahead of an Opec meeting in Vienna on Thursday. "However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two to three years another price spike similar to or worse than what we witnessed in 2008."
He said low prices and weak demand had discouraged investment in energy projects. Those problems had been compounded by high development costs, tight credit markets and energy policies that are focused on alternative fuel sources.
IMF first deputy managing director John Lipsky said: "With long time-to-build lags, significant setbacks to oil investment today could set the stage for future sharp price increases."
Left leaning faculty don't like Sommers though. But, then left leaning faculty do not like any kind of dissenting opinion anyway. (Don't know about right leaning faculty--they are so few that it is a rare opportunity to even spot on, leave alone have a conversation with them!) So, the result is that instead of engaging in discussions on the content, well, .....
After I returned to academe, I have been only in teaching institutions. And in both the universities I have been--in Oregon and in California--female students outnumber males by 2:1. In the Honors Program, well, let me put it this way: one student commented that perhaps we ought to recruit male students with the tag line that they will get to meet lots of females if they joined Honors :-)
Which is why I am not at all surprised with this graph from Mark Perry.
All the more I think there is more than simple laugh line in save the males.
Tuesday, June 02, 2009
The workers are now, finally, significant owners of the means of production. The United Auto Workers control about 65 percent of Chrysler and 17.5 percent of General Motors.Daniel Gross has, as always, an engaging column. The ending is even better:
A shrinking union accepts stakes in shrinking companies. It promises not to strike. The governance system muffles the union's voice by restricting its board presence. It sounds like an arrangement a union-hater like Jack Welch would have cooked up.
I was reading this essay on "Defending Collegiality", which was triggered by The No Asshole Rule, where I found a reference to an article on collegiality. So, of course, I followed-up on that. I liked that essay by Linda Hutcheon, who is a University Professor of Literature at the University of Toronto. I liked these sentences the best:
At stake here is more than the quality of our daily communal life; what we see ourselves doing as professionals is affected. We are critical thinkers; we value dissent. But must rigorous critical thinking be reduced to its simplest and easiest form: attack and destroy? We treasure subtlety in other things, why not here? We know from observing the political realm that destructive disputation does not require careful and serious listening, reading, or even thinking. If we do choose to listen, read, and think with care, we might see what we share as well as where we differ. If we make fewer assertions and ask more questions, there may be more room for an intellectual form of collegiality. We need to feel more comfortable entertaining others’ positions on any given topic without thinking ourselves less rigorous for that. In other words, there is value to entering imaginatively another’s claim rather than simply opposing it. To reject out of hand is to fail intellectually: it is simply too easy.I suppose the audience I would like to target here, and remind them about Hutcheon's remarks, will never be subscribers to this blog :-)
Monday, June 01, 2009
We should be concerned lest GM become a kind of economic Vietnam, where the federal government throws good money after bad, year after year, in a vain quest for victory.Leave it to Richard Posner for clear thinking, and clear writing. Though am not always inclined to agree with him, in this case I am just convinced that Posner is correct.
John Quiggin has been arguing it is. That's why he wants to add America's higher incarceration rate to its unemployment statistics when comparing us to Europe.
To my surprise, when I proposed this theory to Mark Kleiman a while back, he disagreed. Crime is only very weakly correlated with changes in the labor market. It spiked during the golden age of unskilled employment in the 1950s and 1960s, and then fell for no particular reason during the poor labor market of the early 1990s. Crime is a labor market outcome in the sense that people with poor impulse control gravitate towards a "job" that requires little in the way of gratification delay, not in the sense that people who end up in jail literally had no alternatives, or even no better alternatives. In the normal operation of the American economy, most people who want a job can find something. Given the low probability-weighted returns to crime, often even something better than sticking up 7-11s.
There are other problems with the theory. Even if crime were a labor market outcome, incarceration is a policy outcome, not a labor market outcome, because incarceration has increased even as crime has fallen. Furthermore, what correlation there is between crime and the economy is to property crimes--burglary, etc. Violent crime, which accounts for more than half of America's incarceration rate, and virtually all of the change in our incarceration rate since 1980, isn't clearly related to the economy. In theory, being laid off might make you more prone to bar fights or beating on your girlfriend. In practice, it doesn't seem to show up in the numbers.
Now, one could argue that high incarceration rates are supressing the unemployment figures. But America's employment-to-population ratio is still higher than Europe's, though a number of individual European countries do better than we do.
Animal Farm plus 1984 is one lethal combination of ideas and arguments. One of my other favorites is his essay on the usage of the English language. Orwell had a pretty simple bottom line: use simple words and simple sentences. Took me a long time to understand that message and practice it :-)
In a recent essay in the New Statesman, I liked the following comments:
Thanks to A&L Daily for the link.
It is interesting that Orwell did not go to university. He went to Eton, but loafed around there and, afterwards, went off to Burma as a police officer. University is where you sometimes get loaded up with fancy terms whose meaning you’re not quite sure of. Orwell was an intellectual and a highbrow who thought Joyce, Eliot and Lawrence were the greatest writers of his age, but he never uses fancy terms.
You could say that Orwell was not essentially a literary critic, or that he was the only kind of literary critic worth reading. He was most interested in the way that literature intersects with life, with the world, with groups of actual people. Some of his more enjoyable essays deal with things that a lot of people read and consume – postcards, detective fiction, “good bad books” (and poetry) – simply because a lot of people consume them.
Postwar intellectuals would celebrate (or bemoan) the “rise of mass culture”. Orwell never saw it as a novel phenomenon. He was one of the first critics to take popular culture seriously because he believed it had always been around and simply wanted attention. These essays are part of a deeply democratic commitment to culture in general and reading in particular....
He was not, as Lionel Trilling once pointed out, a genius; he was not mysterious; he had served in Burma, washed dishes in a Parisian hotel, and fought for a few months in Spain, but this hardly added up to a life of adventure; for the most part he lived in London and reviewed books. So odd, in fact, has the success of Orwell seemed to some that there is even a book, George Orwell: the Politics of Literary Reputation, devoted to getting to the bottom of it.
When you return to his essays of the 1940s, the mystery evaporates. You would probably not be able to write this way now, even if you learned the craft: the voice would seem put-on, after Orwell. But there is nothing put-on about it here, and it seems to speak, despite the specificity of the issues discussed, directly to the present. In Orwell’s clear, strong voice we hear a warning. Because we, too, live in a time when truth is disappearing from the world, and doing so in just the way Orwell worried it would: through language. We move through the world by naming things in it, and we explain the world through sentences and stories. The lesson of these essays is clear: Look around you.
Describe what you see as an ordinary observer – for you are one, you know – would see them. Take things seriously.
And tell the truth. Tell the truth.