At your service!

On quite a number of occasions, my father has expressed his surprise at how people earn money these days, in contrast to the old days when he was an active participant in the labor economy.  Back then the work products were a lot more tangible.  Farmers grew crops. Miners dug stuff. Workers made widgets.

His favorite way of expressing the change that he and all of us try to understand is "now, everybody is a consultant."

While that is an exaggeration, of course, it is true that even in the old country there has been a tremendous change in the percentage of labor in anything but agriculture, mining, and manufacturing.  There are consultants. Beauty parlors. Investment managers.  And that other comment that father makes: "if they are not consultants, they are all doing software."

If that is the story in the old country, it is even more dramatic here in the US.  However, listening to trump and his 63 million voters, one would believe that everybody is in farming or mining or making widgets in factories.  While facts do not matter to these minions, the rest of us care.

 “goods-producing” jobs like logging, mining, construction and manufacturing accounted for only 20.5 million jobs last month, in a nation with 148 million total positions.

Where do the overwhelming majority work then?  In the service sector.

If you have a mental model in which the only valuable jobs involve making steel or mining coal, it’s easy to lose sight of some of the middle-income jobs that are more common in the 21st-century service economy. Examples include the blackjack dealer in a Las Vegas casino, the nurse at a hospital renowned for its cancer treatments, the audio technician on a movie set, the engineer who advises companies worldwide on the best way to extract oil.

trump and his fellow idiots want to make America great again by trying to bring back those logging, mining, construction, and manufacturing jobs that will only fade more into the future?  What a bunch of morons!  "Fucking morons," to quote the now ousted Secretary of State, Wayne Tracker.

Services make a lot of money for the US.

The biggest is travel, which accounted for $204 billion last year. This is an area that the president should know well. When a Canadian couple stays in a Trump hotel in New York, the money they spend counts as a service export.
The next biggest category is “charges for the use of intellectual property,” a category that includes foreigners who pay to watch movies or music made in the United States, as well as licenses of patents and trademarks.
Other big ones include financial services, insurance, telecommunications and information technology, and a wide range of engineering and other consulting services.

If trump really cared for the average, forgotten, people, he should talk more about the plight of fast food workers than pretending to care about the coal mine workers.

Who am I kidding; the narcissist in the Oval Office cares for nobody but himself!

Masculinity and jobs ... with a p*y-grabbing president

Trying to get people--students, in particular--appreciate the urgency in understanding what masculinity means in the 21st century has been a frustrating failure for me, and yet I try again and again.

This issue of masculinity is extremely important because so many of our public policies, and social mores, depend on how much we are ready and willing to redefine a new masculinity that will be appropriate for the contemporary times and into the future.

Even in this blog, I have forever been talking about it.  There is a thread of "save the males," for instance.  Right?  Or, consider that just a couple of months ago, I quoted the following:

Succeeding in the new economy and culture may well require rethinking conventional ideas about masculinity.

Which is why I find nothing new when I read in the NY Times:

Much of men’s resistance to pink-collar jobs is tied up in the culture of masculinity, say people who study the issue. Women are assumed to be empathetic and caring; men are supposed to be strong, tough and able to support a family.
“Traditional masculinity is standing in the way of working-class men’s employment, and I think it’s a problem,” said Andrew Cherlin, a sociologist and public policy professor at Johns Hopkins and author of “Labor’s Love Lost: The Rise and Fall of the Working-Class Family in America.”
“We have a cultural lag where our views of masculinity have not caught up to the change in the job market,” he said.

Seriously, tell me something that I have not been saying for years now!

 One solution is for the men who have lost jobs in factories to become health aides. But while more than a fifth of American men aren’t working, they aren’t running to these new service-sector jobs. Why? They require very different skills, and pay a lot less.
They’re also seen as women’s work, which has always been devalued in the American labor market. ...

“It’s not that they couldn’t become a health worker, it’s that people have backward views of what their identity is.”

Unfortunate that quite a few men (and women) are holding on to some outdated definitions of "real men."

It’s no surprise, then, that Donald J. Trump appealed to men who feel this way — not just his promises to bring back factory jobs, but also his machismo.  

If only many more had understood that masculinity does not mean grabbing pussies!

How rooted are you in this footloose world?

Switching over from electrical engineering to graduate school in an alien field meant that every single day I was encountering ideas and arguments that I had never ever come across in my life in India.  I suppose to some, this is the worst approach because the more one keeps going after new ideas, the less one specializes.  Well, unless one is talented and able like this person, for instance, and I ain't! ;)

"Footloose" was one of those new ideas that made an impression on me.  No, not that footloose. All these years later, it turns out that neither Donald Trump nor Bernie Sanders has had that concept explained to them!  If they looked it up on Wiki, they would have understood this about footloose industries: "an industry that can be placed and located at any location without effect from factors such as resources or transport."

Note the key idea there--located anywhere.

That "anywhere" was China, for most manufactured goods.  Honest academics have known about this footloose nature for a long time.  But, we academics are mere buzzkills and we have no idea how to energize people like how demagogues can.  One of these days I should assume the name of Major Buzzkill, which describes me really well ;)

So, we now have a strange spectacle of Trumpeters from the right and Berniacs from the left yelling and screaming about China.  Meanwhile, China is also beginning to understand footloose:

In today’s China, however, workers face a more troubled outlook than Mr. Trump suggests. They are losing their jobs because of a slowing domestic economy, rising costs and stiffer foreign competition — including from the United States.
Presidential candidates “are screaming about yesterday’s problems,” said Jim McGregor, chairman of the consulting firm APCO Worldwide’s Greater China operations. “Manufacturing for export is getting harder and harder” in China.

Yep, they “are screaming about yesterday’s problems.”  But, you think you can explain these things to Trump and his maniacal supporters?

 Labor costs in China are now significantly higher than in many other emerging economies. Factory workers in Vietnam earn less than half the salary of a Chinese worker, while those in Bangladesh get paid under a quarter as much.

Gooooooooood Morning, Vietnam!  Or, even India, like in this case:

Taiwan’s Foxconn, best known for making Apple iPhones in Chinese factories, is planning to build as many as 12 new assembly plants in India, creating around one million new jobs there. A pilot operation in the western Indian state of Maharashtra will start churning out mobile phones later this year.

Now, it does not mean that the industry will always move only to lower labor cost countries.  My favorite way to explain this to students is this: If it were truly about the cost of labor alone, then every manufacturer would be based in countries like Ethiopia or Tanzania.  But then students, too, do not listen to me.  I write op-eds about the footloose economy and, well, nobody cares.  Story of my life! ;)

Anyway, back to China:

Rising costs have also significantly altered China’s competitive position compared with the United States.
In a 2015 study, the Boston Consulting Group said the costs of manufacturing in China’s major export-producing zone were now almost the same as in the United States, after taking into account wages, worker productivity, energy costs and other factors.

Oh, but don't jump up and celebrate thinking that this will bring in a gazillion jobs to the US.  Most manufacturing is and will be highly automated--machines can be awesomely cheap workers, if the technology is there.

BTW, you can now see why economic geography is such a fascinating intellectual field.  The intersection of economics and geography when viewed through how it affects the human condition, and what the policy implications can be is not only brain fodder but with immense real world implications.  If only our "leaders" had taken an introductory course in economic geography!    

Let them eat cakes ... made only by us!

Consider this:

[The] decision to manufacture in the U.S. isn’t solely about dollars and cents. Rather, it’s a function of the quality of the U.S. workforce—its noteworthy productivity and its easy familiarity with lean-factory principles—as well as the need for companies to react quickly to changes in domestic consumer demand. As Jeff Immelt, the C.E.O. of General Electric, put it in 2013: “Today, the product is the process, more or less. If you look at an aircraft engine, the content of labor is probably less than five per cent. We have two hours of labor in a refrigerator. So it really doesn’t matter if you make it in Mexico, the U.S., or China. Today it’s really about globalization, not about outsourcing; it’s how do I capture markets faster than the competition?”

Two hours of labor into the making of a refrigerator.  Just two hours of labor?  If you are like me, you have never thought about how much labor goes into the making of a fridge, right?  The fridge that has revolutionized our lives.

America manufactures a whole lot of stuff, yes.  It is not the strength of the manufacturing sector that is the problem, but the fact that the strong manufacturing sector does not generate the kinds of jobs that it used to in the past.  A point that Dan Drezner makes with data:

The problem isn’t that the United States doesn’t have a vibrant manufacturing sector. The problem is that sector does not generate the job numbers that used to be associated with manufacturing:

I wish politicians will make this distinction clear.

Both Trump and Sanders downplay the enormous economic benefits of globalization for American consumers of all incomes, and their proposed solutions are vague and could well be harmful if implemented. But their words resonate with many voters, because they articulate an important truth: free trade has created major winners and major losers in the U.S. economy, and the losers—mostly blue-collar workers—have received little or no help.

I have often blogged about my own stand on these: to a developing country, manufacturing and exporting provides the economic ladder going up.  To tell them that they should not "compete" against us seems like a variation of let 'em eat cakes.  Thus, if they manufacture stuff that then displaces workers here, then what is required is a new social contract that reflects a new reality, as much as the New Deal was in response to the economic situation of those times.  However, reworking the social contract requires thoughtful and responsible politics, which apparently is rarer than a unicorn!

Will the jobs of tomorrow be about competing for scraps?

With my debating partner on a holiday, this might be the best time to sneak in a topic where he always, always disagrees with me; but then, hey, at least, he agrees with me on how enriching travel is ;)  May he and his shiny companion have a good time!

So, yes, back to that topic ... about the jobs of tomorrow.  I am no Luddite, but I worry a great deal that the technological advancements are not helping to generate meaningful and gainful employment.  There is economic growth, no doubt.  But, that storied middle class jobs and life might soon become a fable.

Thus, when the managing editor of one of the leading academic journals in economics, Journal of Economic Perspectives, writes worrying about similar issues, I am all the more convinced that the young are screwed!

The question of how new technologies might be combined with workers of all skill levels to create middle-class career paths for the future will manifest itself in very different ways in countries all around the world. But in every country, it's one of the fundamental challenges for the global economy in the next few decades.

And, yes, he takes on a global view--not any provincial American perspective.

Economies all around the world need to create jobs. In part, this is to continue the process of recovery from the Great Recession. In part, it is to address expanding workforces in the countries that are still experiencing population growth. And and all around the world, jobs need to be created so that those who have unsatisfactory or insecure jobs have the prospect of something better.

This is when you want to tell him, "how about we just stop right here and simply pretend that everything is alright?"  But, of course, you don't tell him that.

Within the private sector, it seems highly unlikely that hundreds of millions of new jobs are going to be generated in the manufacturing sector. The reason lies in what the report calls the theory of "premature industrialization." In past episodes of economic development around the world, a common progression has been for workers to move from agricultural jobs to low-skilled manufacturing jobs, and then on to higher-skilled manufacturing jobs and service jobs. However, in a world of high-technology, many countries without especially high income levels seem to have already seen a peak in their manufacuturing  jobs--and the peak level of manufacturing jobs seems to be happening at lower levels of the workforce.

I.e., even in countries with low labor costs, manufacturing won't ever be a big-time employment generator!  Which means, it all depends on the service sector.  Should we really ask him for his opinion on that?

The jobs question all around the world is the extent to which service-sector jobs can provide a broad base of careers for a wide range of skill levels. As the ILO notes in discussing the idea of premature deindustrialization, "the extent to which services can take over the role of manufacturing and facilitate the convergence of developing to developed countries is still under scrutiny ..." In high-income countries, there are concerns that service industry jobs can tend to be polarized, with options for low-skill workers who do service jobs where a physical presence is needed, and high-skill workers who make heavy use of information and communications technology, but a hollowing out of options for the middle class.

If you are feeling discouraged at this point, well, read no more.  Because, the prospects will look uglier when I quote Robert Reich, who is worried that the "share economy" is nothing but a euphemism for "share-the-scraps economy":

How would you like to live in an economy where robots do everything that can be predictably programmed in advance, and almost all profits go to the robots’ owners?
Meanwhile, human beings do the work that’s unpredictable – odd jobs, on-call projects, fetching and fixing, driving and delivering, tiny tasks needed at any and all hours – and patch together barely enough to live on.
Brace yourself. This is the economy we’re now barreling toward.

You want Reich to give some examples at this point, right?

They’re Uber drivers, Instacart shoppers, and Airbnb hosts. They include Taskrabbit jobbers, Upcounsel’s on-demand attorneys, and Healthtap’s on-line doctors.
They’re Mechanical Turks.

Reich's bottom-line?

the biggest economic challenge we face isn’t using people more efficiently. It’s allocating work and the gains from work more decently.
On this measure, the share-the-scraps economy is hurtling us backwards.

There is only one way out of this for me--I have to be absolutely wrong.  Dead wrong.  I hope I am wrong.  I wish I were wrong.  For the youth's sake.

Come on, you know where this is from!

Proudly Made in the USA. Ha!

I bought a kitchen gadget, a pepper mill, as a gift item.  Amazon delivered it on schedule and the package was waiting for me on the front porch.

Yes, I live in a neighborhood where homes have front porches. Like in the old days. When neighbors stood around or sat on their porches and actually talked with neighbors.

So, where was I?  Oh, yeah, on the porch.

I brought the package in, and made sure that it looked the same in the real world as it did on the computer monitor.  Which is when I noticed the American flag sticker on the package.

I was pleasantly surprised that the gadget was made here in the US, when I thought such small things (as is the case with most big things too) are typically made in China.

Curiosity being my middle name (no, that is not my legal middle name; I don't have a middle name) I looked at it again.

Do you see what I saw?

Not made in the USA, but "PROUDLY FILLED IN THE USA".

That is correct; we are immensely proud to have developed the capability to know how to fill in the peppercorn.  Can't you hear Springsteen singing, "Filled in the USA!"

What a cheap gimmick to try to fool the consumer who might be a fan of "buy American."  Pathetic.

So, where was it manufactured?

Of course, right?

But, did you notice how the label makes it clear that pepper is not from China?

I wonder which executive came up with this brilliant idea!  Yet another instance when we need to be reminded about the market economy--caveat emptor!

BTW, I wonder where the pepper came from.  Could not have been proudly grown in the USA.  Come to think of it, shouldn't they have made clear where the pepper is from?  "Proudly imported from Kochi, India" maybe!

Source

Shed no tears over the demise of America's manufacturing. It ain't dead!

I should know by now, after all these years, that political leaders rarely say anything really meaningful in public.  Thus, I should ignore all their chest-thumping on bringing manufacturing back to America, and how we should be worried over manufacturing's decline.

But, I am human and I err--I point my ears towards them and then have an urge to puke!

What decline in manufacturing?

Robert Samuelson tackles this issue of "manufacturing isn't dead":

The transition from factory to office has raised living standards, curbed pollution and reduced the number of grueling, often-monotonous jobs. Yet this largely beneficial transformation suffers in the popular imagination. The vast “service sector,” which now dominates the economy, is seen as inferior, low-paying and even frivolous because it produces nothing tangible.

Exactly!

I bet the same people who talk with fondness for the manufacturing that is "dead" would have been the kinds of people lamenting about the "death of agriculture" a hundred years ago, without understanding that these are positive changes as a result of higher and higher productivity.

Of course, I have traveled this path before.  For instance, in May 2009, I quoted Robert Reich, who was President Clinton's Labor Secretary:

Any job that's even slightly routine is disappearing from the U.S. But this doesn't mean we are left with fewer jobs. It means only that we have fewer routine jobs, including traditional manufacturing. When the U.S. economy gets back on track, many routine jobs won't be returning--but new jobs will take their place. A quarter of all Americans now work in jobs that weren't listed in the Census Bureau's occupation codes in 1967. Technophobes, neo-Luddites and anti-globalists be warned: You're on the wrong side of history. You see only the loss of old jobs. You're overlooking all the new ones.

Yet, this logical explanation always loses to a faith that manufacturing is the key to boost up an otherwise anemic economic recovery?  Samuelson again:

Almost everyone seems to yearn for a manufacturing renaissance. This would, the reasoning goes, solve many problems. It would kick-start the sluggish recovery. By providing well-paying jobs, especially for semi-skilled men, it would strengthen the middle class. By restoring a heritage of “making things,” it would reduce U.S. trade deficits and re-establish our global economic pre-eminence. No doubt, millions of Americans endorse this appealing vision. It’s make-believe.

The mirage appeals to politicians and the regular folk alike, it seems.  And these people make it seem that we don't manufacture any damn thing anymore; again, I blogged about this in 2011:

America still makes a ton of stuff, and we make more of it now than ever before in history.’’ In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians — combined. American manufacturing output hits a new high almost every year. US industries are powerhouses of production: Measured in constant dollars, America’s manufacturing output today is more than double what it was in the early 1970s.

Samuelson also reminds readers about the same thing:

[In 2010] U.S. manufacturing production of nearly $1.8 trillion was the largest in the world; it was slightly ahead of China’s, about two-thirds higher than Japan’s and nearly triple Germany’s. China may now be No. 1, but the U.S. remains a manufacturing powerhouse. In 2011, near-record output was 72 percent more than in 1990 and six times greater than in 1950. Recall some American-made products: commercial jets, earth-moving equipment, gas turbines.

Logic and evidence don't capture people's attention and imagination as make-believe scenarios do.  No wonder religions continue to flourish!  But, I digress :)

As I noted in a post two years ago, The Onion, which is awesome at satirizing any issue, took on this notion of American manufacturing is dead.  And, of course, there is that other problem of defining what manufacturing is!

Anyway, as Samuelson concludes:

It’s a mistake to romanticize manufacturing and disparage services, portraying them as separate economic realms in competition with each other.

Finally, as Reason noted a while ago, to focus on Made in America is pretty darn stupid!

Is China's "cheap" manufacturing worth all that?

Back in 1987, when I joined graduate school at Los Angeles, I could not understand why the "natives" were complaining about the air quality there--the lack of it.  They thought the air was dirty and, to me, it seemed just fine, thank you.

Soon, I, too, started complaining about the smoggy haze.  The creepy color that enveloped the region was visible to one's eyes even as planes descended over the airspace in the daytime.  And then going to foothill communities like Glendora and Azusa and feeling the muck in the air was not what I liked to do.  (So, why did I keep going there? Long story!)

Over the years, Los Angeles has cleaned up a lot.  But, then my frame of reference has changed, and changed dramatically thanks to breathing remarkably clean Oregon air for more than ten years now.  (Well, except during those horrible grass seed season weeks!)

Intellectually, I understand there is an element of the inverted-U-curve relationship that seems to be the pattern as countries develop--development is accompanied by a rise in environmental degradation, and then after a level of affluence, there appears to be enough resources to clean up the air, water, and soil.  Emotionally, it is easy to question the need for the degradation in the first place, and the intellectual answer is equally easy: the degradation can be avoided if we are willing to pay for it.

McJobs in America: What exactly does "manufacturing" mean?

First this video (ht):



A couple of weeks ago, Matt Yglesias worried that Obama's push industrial-policy push for manufacturing could be more than election gimmicks and could guide his second term:

It is sensible for public policy to pay attention to the creation of great firms, to strength in specific sectors, and to the quality of the jobs generated by different economic models. But it should be obvious that the path forward for America is to focus on our strengths in information technology and media, and not compete with the Chinese for manufacturing supremacy.

Because ... the big money is not in the manufacturing of the widgets themselves; The Economist's chart on the breakdown of costs and profits serves as a classic illustration:

So, do we really want to bring back manufacturing, or ... And, BTW, remember what Steve Jobs said?

“Those jobs aren’t coming back”

Economists on re-starting American manufacturing; start with a ball!

From America's Finest News Source:

Claiming that the nation's standing within the increasingly competitive global marketplace was perhaps not what it once was, the economists gently encouraged American producers to "wipe the slate clean" and rebuild their confidence by starting fresh with a plain, basic ball.
"You really shot for the moon and tried to do something grand, and we think that's just great," read a statement from the American Economic Association that was addressed to the nation's manufacturing sector. "But let's face it, the whole American manufacturing thing hasn't worked out quite as well as we'd hoped, so we think there's no shame in just paring down your ambitions slightly and focusing on making a really good ball, no more, no less

True, there has been an extensive shift away from manufacturing.  But, then we better not quickly jump into concluding that somehow goods manufactured elsewhere means economic ruin for America.  We do manufacture a whole lot of high value items.  Here is what Reason had to say about "Made in America"



Which is the same point that he Onion, er, America's Finest News Source makes through its typical straight-faced satire:

The response within the American manufacturing sector has thus far been overwhelmingly positive, with hundreds of aerospace, home appliance, and electronics corporations readily discontinuing their more complicated products in favor of a simple little ball.
"We switched our equipment over to ball-production two days ago and things couldn't be going better," said Daniel Akerson, chairman and CEO of General Motors. "We're making 15 tons of balls a day, they're coming out nice and round, and we're just overjoyed with how much we're accomplishing. I'd completely forgotten how great it feels to make a product you're actually proud of."

As a student remarked in her assignment, we should go around asking the question that Dr. Phil apparently asks on his show: "How's that working for you?"  Hey, it is working out great.  The problem is not in the loss of manufacturing, but in our inability to move our thinking beyond that.  And the political governance problems, like with, ahem, blowing up the Constitution itself ...

Chart of the day: America's exports and trading partners

This is a chart that definitely passes the test of "a picture is worth a thousand words"

So, what exactly do we export, you ask?  Remember that it is a myth that manufacturing is all but dead in America?

Mythbuster: The decline, demise, and death of manufacturing in America

So, it seems like every other product has a "Made in China" sticker, right?  Manufacturing in America is dead, right?

Are you sure?  Is that your final answer?

Jeff Jacoby notes that (ht):

There’s just one problem with all the gloom and doom about American manufacturing. It’s wrong.

Americans make more “stuff’’ than any other nation on earth, and by a wide margin. According to the United Nations’ comprehensive database of international economic data, America’s manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China’s output of $1.48 trillion by nearly 46 percent. China’s industries may be booming, but the United States still accounted for 20 percent of the world’s manufacturing output in 2009 — only a hair below its 1990 share of 21 percent.

Our perception of the death of manufacturing in the US is based on: (a) the prevalence of low-price goods from China and other countries, and (b) a declining share of employment in manufacturing.  But, when one looks at it in dollar value, it is an entirely different story:

“America still makes a ton of stuff, and we make more of it now than ever before in history.’’ In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians — combined.

American manufacturing output hits a new high almost every year. US industries are powerhouses of production: Measured in constant dollars, America’s manufacturing output today is more than double what it was in the early 1970s.

I talk about this in my introductory class when we talk about lower-order and higher-order goods, and how America increasingly specializes in higher-order goods.  But, whoever goes to classes and, more importantly, listens to cranks like me in the classroom, right?

The future of manufacturing, and American workers

Robert Reich has a fantastic piece on why we ought not to be insanely worried about the loss of manufacturing. Read the entire argument here. An excerpt:

Want to blame something? Blame new knowledge. Knowledge created the electronic gadgets and software that can now do almost any routine task. This goes well beyond the factory floor. America also used to have lots of elevator operators, telephone operators, bank tellers and service-station attendants. Remember? Most have been replaced by technology. Supermarket check-out clerks are being replaced by automatic scanners. The Internet has taken over the routine tasks of travel agents, real estate brokers, stock brokers and even accountants. With digitization and high-speed data networks a lot of back office work can now be done more cheaply abroad.

Any job that's even slightly routine is disappearing from the U.S. But this doesn't mean we are left with fewer jobs. It means only that we have fewer routine jobs, including traditional manufacturing. When the U.S. economy gets back on track, many routine jobs won't be returning--but new jobs will take their place. A quarter of all Americans now work in jobs that weren't listed in the Census Bureau's occupation codes in 1967. Technophobes, neo-Luddites and anti-globalists be warned: You're on the wrong side of history. You see only the loss of old jobs. You're overlooking all the new ones.

The reason they're so easy to overlook is that so much of the new value added is invisible. A growing percent of every consumer dollar goes to people who analyze, manipulate, innovate and create. These people are responsible for research and development, design and engineering. Or for high-level sales, marketing and advertising. They're composers, writers and producers. They're lawyers, journalists, doctors and management consultants. I call this "symbolic analytic" work because most of it has to do with analyzing, manipulating and communicating through numbers, shapes, words, ideas.

Geography matters. In unemployment, and otherwise.

A colleague emailed me a link to this piece by Harvard's Ed Glaesar .... and the following resulted ...

To begin with, issues such as rocketing home price was not country-wide at all. I don't think speculators were "flipping" homes in North Dakota as they were even in Bakersfield. Which also means that foreclosures are not a country-wide problem at all. To a large extent, the physical aspect of the housing crisis is highly geographic in nature. That is the physical, real, stock.
Similarly, the real, tangible, manufacturing was also geographically concentrated. If I remember correctly, the relative importance of manufacturing in Oregon--in terms of percentage of jobs--was higher in our state than in the Northeast.

Money on the other hand was flowing in from everywhere, including the unfortunate and greedy investors from Iceland.

Economists almost always aggregate all these issues, and space does not matter to them. Thus, if at all, Glaesar is a tad late to the game. Richard Florida provided an interesting analysis in the March issue of the Atlantic, with a provocative title: How the crash will reshape America. in that piece, Florida noted that:
Financial positions account for only about 8 percent of the New York area’s jobs, not too far off the national average of 5.5 percent. By contrast, they make up 28 percent of all jobs in Bloomington-Normal, Illinois; 18 percent in Des Moines; 13 percent in Hartford; 10 percent in both Sioux Falls, South Dakota, and Charlotte, North Carolina.

Anyway, I agree with Glaesar's thoughts there. California is in a mess, and will get worse before it can remotely get better. This crisis, I think, is worse than the impacts of the aerospace/defense contraction of the 1990s. Because, that one helped the skilled folks apply their talents to other fields, including IT. Now, there is nothing to be gained from empty and sprawling McMansions.
The politics and the government there is not helping either. If it were not for immigrants, California would have tanked a long time ago--almost half the new tech firms were founded or co-founded by immigrants!
CA, AZ, NV are in the same housing crisis .... Again, from Florida's essay:
To an uncommon degree, the economic boom in these cities was propelled by housing appreciation: as prices rose, more people moved in, seeking inexpensive lifestyles and the opportunity to get in on the real-estate market where it was rising, but still affordable. Local homeowners pumped more and more capital out of their houses as well, taking out home-equity loans and injecting money into the local economy in the form of home improvements and demand for retail goods and low-level services. Cities grew, tax coffers filled, spending continued, more people arrived. Yet the boom itself neither followed nor resulted in the development of sustainable, scalable, highly productive industries or services. It was fueled and funded by housing, and housing was its primary product. Whole cities and metro regions became giant Ponzi schemes.

I simply resonate with his description that the entire economy essentially became one massive ponzi scheme. Sickeningly true. This is a HUGE difference between the post-IT boom and now--then, we were at least left with miles and miles of fiber optics, for instance, which then helped as the economy recovered. I don;t see anything productive out of the mansions that are now sitting empty, and turning into slums.

Oregon is in deep shit as well--perhaps not as bad as California is. Earlier today I was speculating at a semi-serious conversation that our unemployment might top out at 14 or 14.5 percent before things begin to improve. This is going to be brutal. I don't see an emerging economic activity that can suddenly provide an upward momentum .... Kulongoski seems to be betting on electric cars. I am not sure if that is a winning bet. It is still a car with a lipstick, to paraphrase the election-season nastiness about lipstick on a pig -)

Unfortunately, to a large extent, Americans are not as geographically mobile as we think we are. I.e., not many unemployed Oregonians are going to move to New Hampshire where the probability of employment is higher. One of the main reasons as it turns out--housing. Owning a home drastically makes us immobile! It is easier for a renter to pack up and move. So, while economists assume that the probability of jobs might be a huge incentive for migration, apparently we have firmly established disincentives that discourage the move. To quote from that same essay by Florida,
“If you no longer can sell your property, how can you move elsewhere?” said Robin Boyle, an urban-planning professor at Wayne State University, in a December Associated Press article. But then he answered his own question: “Some people just switch out the lights and leave—property values have gone so low, walking away is no longer such a difficult option.”

The next forecast by the state economist will be on May 15th. We will all be yelling "mayday, mayday, mayday" then :-(