Via NBER, a new-ish paper on the union wage premium in 1950, at peak union power:
“The wage premium was larger at the bottom of the income distribution than at the middle or higher, larger for African Americans than for whites, and larger for those with low levels of education. Counterfactuals are consistent with the view that unions substantially narrowed urban wage inequality at mid-century.”
And, via Timothy Taylor, union density patterns in the OCED:
"1) Labor union power is weaker just about everywhere.
2) The extent of labor union power varies considerably across countries, many of which have roughly similar income levels. This pattern suggests that existence of unions, one way or another, may be less important for economic outcomes than the way in which those unions function. The chapter notes the importance of "peaceful and cooperative industrial relations," which can emerge--or not--from varying patterns of unionization."
Those peaceful and cooperative industrial relations are a big reason for Germany’s relative success in recent years. Relations were good, and so firms were able to ask for concessions from labor without too much backlash. The unemployment rate stayed low, so it's possible that in some dimensions this works quite well.
But it makes sense to think of those relations as a form of capital, or as a reservoir of goodwill: something that can be spent to achieve your ends (e.g., lowering labor costs), but not indefinitely. At some point, your reservoir's depleted, the capital spent, and your left with disgruntled workers who don’t trust "the powers that be." Germany's distinctive in that there’s both a cultural trope that saving/austerity/belt tightening is really crucial, and there’s enough social cohesion for people to believe everyone is tightening their belt and accepting pay cuts. That is, the cuts aren’t perceived as unfair.
In the long run, though, cooperative industrial relations are fragile; they are particularly hard to maintain when workers accept pay cuts. All it takes is for another group to do ok (e.g., immigrants / refugees, or the corporation / managers) for the setup to be perceived as unfair.
Larry Bartels argues :
"the attitudes fueling right-wing populism have been remarkably stable since at least 2002. … anyone tracking European attitudes over the past 15 years would have a hard time guessing that anything at all had happened. Anti-immigrant sentiment actually declined slightly, despite millions of new immigrants. …
There is no clear relationship between levels of populist sentiment and actual support for right-wing populist parties. ...
Political observers in the grip of what Christopher Achen and I have called “the folk theory of democracy” naturally assume that significant developments in democratic politics must somehow be animated by significant shifts in public opinion. If right-wing populist parties are gaining support, that must be because “populist views have been growing” and citizens are “more and more disillusioned with mainstream politics.” But that is an illusion. In reality, the populist views were there long before the current populist “wave” made them salient. What happens next will depend on the ability and willingness of political elites to exploit or defuse them."
Freddie deBoer, in what may be one of his last posts: "I think it’s a noble and necessary goal to help identify talented students from poor families. The point is that it’s odd to think of this as a project for increasing equality as such. We’re simply looking for more “diamonds in the rough,” and hopefully helping to pull them out from their peers – who are thus left even further behind. Here’s a point to stress: the very purpose of educational testing is to identify inequality. That is, we develop and administer tests precisely to better understand how students are not the same. …
"we talk about education as fulfilling two functions that are not just in tension with each other but directly contradictory: education is discussed as a tool for creating greater socioeconomic equality, and as a system for identifying excellence and rewarding it with status and economic opportunity."
Cool new paper by Jeremy Freese and others: “Accurate understanding of environmental moderation of genetic influences is vital to advancing the science of cognitive development as well as for designing interventions. One widely reported idea is increasing genetic influence on cognition for children raised in higher socioeconomic status (SES) families, including recent proposals that the pattern is a particularly US phenomenon. We used matched birth and school records from Florida siblings and twins born in 1994–2002 to provide the largest, most population-diverse consideration of this hypothesis to date. We found no evidence of SES moderation of genetic influence on test scores, suggesting that articulating gene-environment interactions for cognition is more complex and elusive than previously supposed."
Cas Mudde and Cristobal Rovira Kaltwasser's Populism: A Very Short Introduction:
"we define populism as a thin-centered ideology that considers society to be ultimately separated into two homogeneous and antagonistic camps, "the pure people" versus "the corrupt elite," and which argues that politics should be an expression of the volonté générale (general will) of the people." (kl 700-705)
"Pluralism is the direct opposite of the dualist perspective of both populism and elitism, instead holding that society is divided into a broad variety of partly overlapping social groups with different ideas and interests. Within pluralism diversity is seen as a strength rather than a weakness. Pluralists believe that a society should have many centers of power and that politics, through compromise and consensus, should reflect the interests and values of as many different groups as possible. Thus, the main idea is that power is supposed to be distributed throughout society in order to avoid specific groups— be they men; ethnic communities; economic, intellectual, military or political cadres, etc.— acquiring the capacity to impose their will upon the others." (kl 733-738).
h/t Dan Little
Deborah J. Schildkraut of Tufts at the Monkey Cage: "when we disaggregate young Americans by race, the standing of the Republican Party with young people is not as precarious as many think. Although Americans younger than 30 are less likely to identify as Republicans than are older people, the trend has been stable. … the gap between different age groups that emerged in the early 2000s has stabilized. There is no clear downward trend in Republican identification among young people. …
Second, within the Republican Party, young people are not always more consistently liberal than older people. For example, although young people are often described as racially progressive, younger Republicans do not have different views of African Americans. …
Young whites were more similar to older whites than to young nonwhites on many issues, including their views of African Americans, affirmative action and immigration. To be sure, young whites and young Republicans are not as conservative as older whites and Republicans on every issue. In the 2016 ANES, young whites and young Republicans were more opposed a border wall but more supportive of paid leave for new parents, legalizing marijuana and government action to fight climate change. …
And on other social issues, young Republicans are more conservative than older Republicans. … abortion … gun control ... The overall patterns do not suggest a massive Democratic or liberal surge among the young, or a significant number of liberal young Republicans on the cusp of leaving or changing the party."
I missed this last year, but a new-ish paper from Elizabeth Cascio “reveals a substantial positive effect of attending pre-K on cognitive test scores at age 4, but only for low-income children enrolled in universal programs. Both universal and targeted programs displace enrollment in other center-based care, and differences in state standards cannot explain the higher impacts of universal programs for low-income children. Together, these findings suggest that universal programs offer a relatively high-quality learning experience for low-income 4 year olds not reflected in the quality metrics frequently targeted by policymakers.”
Peter Lindert at VoxEU: "Since the late 1970s, several governments have shown a mission drift away from investing in lower-income children and working-age adults, while concentrating social insurance on the elderly. Japan, the US, and some Mediterranean countries have missed an opportunity for pro-growth income-levelling."
Poverty in the South, hookworm edition: “Hookworm was rampant in the deep south of the US in the earlier 20th century, sapping the energy and educational achievements of both white and black kids and helping to create the stereotype of the lazy and lethargic southern redneck. As public health improved, most experts assumed it had disappeared altogether by the 1980s. But the new study reveals that hookworm not only survives in communities of Americans lacking even basic sanitation, but does so on a breathtaking scale.”
From Larry Summers: “"[T]he current WHO budget for pandemic flu is less than the salary of the University of Michigan's football coach.”
rAlex Harrowell’s answer to why politicians got so awful: "For many years ... conservative parties' material basis rested on their ability to get enough company directors and top managers to contribute their time and money to the cause. Conservative politicians therefore faced a mechanism of responsibility with multiple triggers. … Extreme right-tail inequality has essentially destroyed this mechanism of responsibility. There are now quite a lot of private fortunes around whose discretionary spending power is large compared with the cost of political campaigning. … Rather than needing to make credible commitments to a significant fraction of the directorate, political entrepreneurs can now concentrate on finding themselves a couple of big individual donors who share their special interests or particular obsessions." The real threat from inequality is not coercion, it's that it lets the financial elite set the agenda.
Good sentences in the Monkey Cage, by Babak Bahador at George Washington U: “While foreign propaganda efforts to influence U.S. politics and society are a disturbing trend, it is important to realize that such messaging is, likewise, not manufactured out of whole cloth and is created and situated within an era’s existing political conversations. Social media messaging can only exploit and amplify polarization if a democracy is already polarized and politically torn. Online social networks are not the source of the problem; they are just a medium, albeit one with a new set of tools whose vulnerabilities we are just discovering."
Will Wilkinson at Niskanen: "If you know that you can’t know in advance what the freest social system looks will look like, you’re unlikely to see evidence that suggests that policy A (social insurance, e.g.) is freedom-enhancing, or that policy B (heroin legalization, e.g.) isn’t, as threats to your identity as a freedom lover. Uncertainty about the details of the freest feasible social scheme opens you up to looking at evidence in a genuinely curious, non-biased way.” This is a deep point, I’ve come to appreciate it more over the last years.
Puerto Rico population projection: “Fertility, aging/mortality, and lowest-low inflows are the real story here.“
Jeffrey Williams, from 1998: A “more accurate narrative of globalization experience in the decades prior to the World War I would read like this: A spreading technology revolution and a transportation breakthrough led first to a divergence of real wages and living standards between countries; the evolution of well-functioning global markets in goods and labor eventually brought about a convergence between nations; this factor price convergence, however, planted seeds for its own destruction because it created rising inequality in labor-scarce economies [the US] and falling inequality in labor-abundant economies [Italy, Sweden]. The voices of powerful interest groups who were hit hard by these globalization events were heard, generating a political backlash against immigration and trade.
A late-19th-century globalization backlash made a powerful contribution to interwar de-globalization. … history does supply a warning: a backlash against globalization can be found in our past, so it might reappear in our future."
Good paragraph from Citylab: "Perhaps the central problem of housing affordability is one of scale: the number of units that we're able to provide is too small. That's true whether we're talking about Section 8 vouchers (that go to only about 1 in 5 eligible households), or through inclusionary zoning requirements (which provide only handfuls of units in most cities). The very high per-unit construction costs of affordable housing only make the problem more vexing: the pressure to make any project that gets constructed as distinctive, amenity-rich and environmentally friendly as possible, means that the limited number of public dollars end up building fewer units. And too few units—scale—is the real problem here."
Sarah O'Connor in the FT writes: “[I]n Britain, it is increasingly on the country's physical edges, in its seaside towns, that you find people on the outside of the economy looking in. Blackpool exports healthy skilled people and imports the unskilled, the unemployed and the unwell. As people overlooked by the modern economy wash up in a place that has also been left behind, the result is a quietly unfolding health crisis. More than a tenth of the town's working-age inhabitants live on state benefits paid to those deemed too sick to work. Antidepressant prescription rates are among the highest in the country. Life expectancy, already the lowest in England, has recently started to fall. … For Jonathan Portes, chief economist at the DWP between 2002 and 2008, … "There's an argument for saying you can't do [welfare reform] separately from having some sort of place-based economic strategy as well — and we never really had that.”
Ryan Avent in the NY Times: "why should productivity growth have fallen in recent decades? … economic growth has contributed very little to the inflation-adjusted wages of workers without a college education — and since the turn of the century, everyone but the top 1 percent of earners. And so companies have felt very little pressure to replace stockers with robots, cashiers with touch-screens and customer-service staff with chatbots. Neither has there been much reason to squeeze more productivity out of workers by investing in training or by finding ways to equip them with new, productivity-enhancing technologies. Today, despite an unemployment rate at just 4.1 percent and fat corporate profits, wage growth remains well below the peak rates of the 1990s and 2000s.”
The NBER Digest on new research by Haltiwanger et al: "Upward movement of workers on a "job ladder" from low-productivity to high-productivity firms is heavily dependent on the business cycle. During booms, net employment at high-productivity firms grows faster than at low-productivity firms, resulting in workers moving up the ladder. During busts, these upward job-to-job changes essentially stop. Net employment flows are instead driven by layoffs, with low-productivity firms losing comparatively more workers than their higher-productivity counterparts. …
The researchers find that younger workers are disproportionately likely to climb the ladder by moving to more productive firms. … Less-educated workers also are disproportionately likely to move up the job ladder during expansions. More-educated workers are less likely to enter employment at low-productivity firms in the first place, but once in such firms they are less likely to separate from them. The researchers hypothesize that more-educated workers may be more specialized, and thus less mobile across firms. … Economic slowdowns, while imposing costs throughout the labor market, are particularly harmful to the employment prospects of younger, less-educated workers.”
They use Census LEHD data on firm productivity from 2003–11.
From the monster new NBER paper, The Rate of Return on Everything:
“Our paper introduces, for the first time, a large annual dataset on total rates of return on all major asset classes in the advanced economies since 1870. ...
residential real estate and equities [i.e., risky assets] have shown very similar and high real total gains, on average about 7% per year. Housing outperformed equity before WW2. Since WW2, equities have outperformed housing on average, but only at the cost of much higher volatility and higher synchronicity with the business cycle... housing returns are similar to equity returns, yet considerably less volatile. ….
After WW2, ... across countries equities experienced more frequent and correlated booms and busts. The low covariance of equity and housing returns reveals significant aggregate diversification gains (i.e., for a representative agent) from holding the two asset classes …
It is not just that housing returns seem to be higher on a rough, risk-adjusted basis. It is that, while equity returns have become increasingly correlated across countries over time (specially since WW2), housing returns have remained uncorrelated.”
They have a great summary of the secular stagnation hypothesis: "We are living longer and healthier lives and spending more time in retirement. The relative weight of borrowers and savers is changing and with it the possibility increases that the interest rate will fall by an insufficient amount to balance saving and investment at full employment.” The hypothesis is that the economy can fall into low investment traps. Their evidence is compatible with that view.
Also: “Piketty (2014) argued that, if the return to capital exceeded the rate of economic growth, rentiers would accumulate wealth at a faster rate and thus worsen wealth inequality. Comparing returns to growth, or “r minus g” in Piketty’s notation, we uncover a striking finding. Even calculated from more granular asset price returns data, the same fact reported in Piketty (2014) holds true for more countries and more years, and more dramatically: namely r>>g... In peacetime, r has always been much greater than g."
Sentences in Bloomberg: “Even after the Great Recession, mobile capital continued to concentrate wealth in the hands of a transnational minority ... Much of the success of demagogues such as Trump lies in this minority's ability to redirect public anger onto trade and immigration, while dodging blame for the consequences of financialization."