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Economic possibilities for our future robot overlords

[ 256 ] April 11, 2014 |

Following up on Erik’s post about working hours in France, in 1939 John Maynard Keynes published what eventually became a famous essay, entitled “Economic Possibilities For Our Grandchildren,” in which he tried to predict what “the progressive countries” (what would now be called the developed world) would look like in 2030.

The essay makes two big predictions:

(1) By 2030 the developed world would be in per capita terms four to eight times wealthier than it was a century earlier.

(2) This explosion of wealth would produce a tremendous reduction of hours worked, as people chose leisure over yet more income.

The first prediction was almost uncannily accurate, while the second has turned out to be completely wrong in regard to the United States, and largely wrong about Europe. (I’m not familiar enough with the relevant statistics in regard to the emerging economies of Asia and Latin America to comment on the salience of Keynes’ second prediction to them).

Regarding the first prediction, U.S. per capita GDP was about 6.2 times higher at the end of 2013 than it was at the end of 1929 (it increased from just over $8000 to just under $50,000 in chained 2009 dollars). Extrapolating out, Keynes high end prediction appears to have been if anything slightly conservative. Keynes thought that such a trajectory would result in something like a 15-hour work week for most people who worked for income:

For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!

At the time, this seemed like a reasonable projection, as work hours in the US and Europe had declined considerably over the previous half century, and Keynes assumed that the income effect — the declining marginal utility of income in relation to leisure — would cause this trend to continue. Since then, however, the decline in working hours has ceased almost completely in the US, and slowed down drastically in Europe (Europeans do work about 20% fewer hours than Americans however, which is not a trivial distinction).

Economics being a rather tautological discipline, there is of course a ready theoretical explanation for this as well: the substitution effect — i.e., to the extent that productivity increases are reflected in higher income per hour worked, each hour of forgone work in favor of leisure becomes more costly to the worker.

Of course this doesn’t explain why the substitution effect seems to have won out almost completely over the income effect in the US, and to a lesser extent in Europe. And here the biggest weakness of Keynes’ analysis in the essay — a surprising weakness given how relatively sensitive he was to sociological considerations — becomes obvious: there isn’t a word in the piece about distributional considerations.

Here are some numbers from the U.S. census bureau (all figures are in 2012 dollars):

Median household income in 1967: $42,323

Median household income in 2012: $51,017

Per capita GDP 1967: $21,893

Per capita GDP 2012: $49,231

In the late 1960s, median household income was nearly double per capita GDP, while today we have nearly a one to one relationship between the two metrics (Households are on average only slightly smaller today. I don’t have figures for 1967 handy, but in 1975 the average household included 2.89 people, while in 2012 it featured 2.54 persons). Or to put it another way, if over the past 45 years the nation’s increasing wealth as measured by output had ended up getting distributed equally across income groups as income, median household income in the US would be nearly $100,000 per year, rather than half that sum.

This helps explain, I think, why in the US in particular the substitution effect has been so much stronger than the income effect: it’s much harder to forgo additional income in favor of increased leisure when the relative wealth of those above you in the SES hierarchy is increasing faster than your own — especially in a culture obsessed with the conspicuous consumption of positional goods.


Foreign Entanglements: Potpourri

[ 0 ] April 10, 2014 |

On this week’s episode of Foreign Entanglements, Matt and I talk stuff.  In particular, we discuss the idea of Israeli B-52s…

Today In Republican Minority Outreach

[ 128 ] April 10, 2014 |

Shorter Ben Shapiro: Everything is racism except racism, but definitely including brilliantly well-executed satire of clowns such as myself.

The U.S. is Truly a Greater Nation than France

[ 124 ] April 10, 2014 |

We American proles are busily doing whatever our bosses ask us to do whenever they want it, even if we are at home, because we support the noblest thing in the world–creating wealth for the 1%. What are those savage French doing? I’ll bet their workers think they have the right to a life outside of work!

Just in case you weren’t jealous enough of the French already, what with their effortless style, lovely accents and collective will to calorie control, they have now just made it illegal to work after 6pm.

Well, sort of. Après noticing that the ability of bosses to invade their employees’ home lives via smartphone at any heure of the day or night was enabling real work hours to extend further and further beyond the 35-hour week the country famously introduced in 1999, workers’ unions have been fighting back. Now employers’ federations and unions have signed a new, legally binding labour agreement that will require staff to switch off their phones after 6pm.

Under the deal, which affects a million employees in the technology and consultancy sectors (including the French arms of Google, Facebook, Deloitte and PwC), employees will also have to resist the temptation to look at work-related material on their computers or smartphones – or any other kind of malevolent intrusion into the time they have been nationally mandated to spend on whatever the French call la dolce vita. And companies must ensure that their employees come under no pressure to do so. Thus the spirit of the law – and of France – as well as the letter shall be observed.

My god! If that kind of craziness happened here, bosses might actually have to hire enough employees to get work done by 6:00. All those takers would have jobs. That’s simply not acceptable. Can’t we just automate more work to free us from the oppression of employment and food? Certainly that’d be better than the hellscape of France.

A jesuitical interlude

[ 46 ] April 10, 2014 |

The ABA just published employment statistics for the class of 2013, based on reporting by law schools of the status of their graduates as of February 15, 2014, i.e., approximately nine months after graduation, and four to five months after bar results. On a national level, this year’s stats are pretty much identical to last year’s, with only 53% of graduates obtaining full-time long-term employment requiring bar admission (excluding law school funded “jobs” and putative sole practitioners).

Needless to say even these numbers ought to be treated with some skepticism, as schools are under tremendous pressure to gild the lily in all sorts of ways. (For example, by using favorable default assumptions regarding conditions of employment when, as is often the case, it’s not actually known if a position is full-time and/or long-term).

An amusing example of how “flexible” reporting standards can be is provided by Santa Clara University’s law school, home to Prof. Steve “People Who Criticize the Law School Status Quo Are Actually Trying to Bring Back Jim Crow” Diamond (see also). A little background: Until the spring of 2011, the US News rankings excluded graduates who schools listed as “Unemployed Not Seeking” from the denominator, when calculating graduate employment rates. This seemed like a reasonable choice, given that very occasionally graduates don’t happen to be seeking employment nine months after graduation. And most schools listed very few if any graduates in this category: the median percentage was below 2%, and the mode was zero, with nearly a quarter of schools not listing even one graduate as unemployed not seeking.

But in the spring of 2011, after schools had submitted their reports, US News decided that it would start including graduates listed as unemployed not seeking as unemployed, in part because of (well-warranted) suspicions that a few schools were manipulating the category, by for example using perverse default criteria, such as assuming that unemployed graduates who didn’t affirmatively indicate to their Career Services Office that they were looking for work weren’t actually looking for work (Many law students and graduates have very negative views of their CSOs, so assuming that an unemployed graduate who didn’t use the CSO’s services wasn’t looking for a job was a conveniently disingenuous way of radically understating a school’s true unemployment rate to US News, which at that time was the only entity publishing that information).

Which brings us back to Santa Clara. Behold Santa Clara’s unemployment statistics before and after US News started counting students categorized as “unemployed not seeking” as simply unemployed:


Total graduates: 305
Unemployed Not Seeking: 55
Unemployed Seeking: 6
Reported unemployment rate to US News: 2.4%
True unemployment rate: 20%


Total graduates: 297
Unemployed Not Seeking: 47
Unemployed Seeking: 24
Reported unemployment rate: 9.6%
True unemployment rate: 23.9%


Total graduates: 298
Unemployed Not Seeking: 28 (9.4%)
Unemployed Seeking: 24
True unemployment rate: 17.5%


Total graduates: 322
Unemployed Not Seeking: 1 (0.3%)
Unemployed Seeking: 57
True unemployment rate: 18%

Santa Clara experienced a 98.3% decline in the percentage of its graduating class that was unemployed but not seeking work, relative to the percentage of unemployed graduates seeking work, after the former category was no longer useful for disguising the school’s true unemployment rate.

I suppose it’s possible to deploy some legal academic casuistry — perhaps the doctrine of mental reservation as applied to the Public Good of the Rule of Law — to produce a benign explanation for this series of events.

B-52s for Israel, Revisited

[ 37 ] April 10, 2014 |

At War is Boring, I extend my remarks on the proposal to send B-52s to Israel a bit:

“B-52s for Israel,” as we’ve dubbed it, is a silly little proposal with approximately zero chance of actually being implemented. And it’s possible Deptula and Makovsky don’t even mean for anyone to take its details seriously.

Their bomber idea could be part of a media game of sorts, one that certain political constituencies are playing in order to broadly influence policy, rather than comprise policy.

But just for fun, let’s consider “B-52s for Israel” as a sober proposal.

Jonathan Chait Writes Bible-Length Treatise on the Obama Presidency and Race: Comes to the Exciting Conclusion Obama is Leaving Office in a Couple of Years

[ 151 ] April 10, 2014 |

Thanks so much to our own DocAmazing for calling attention to this

If anyone can make heads or tails of this article, I’d be mighty obliged. I certainly could be misreading this, but it seems an awful lot like Chait is trying to make it seem as if the occasional misguided charge of racism by liberals is somehow comparable to racists finding refuge in modern conservatism for decades.  Please tell me he’s not doing that.

New AV Club column: “Game of Thrones cordially invites you to take a damn seat at the kiddie table”

[ 10 ] April 10, 2014 |

Here’s a taste:

got06The long eye-laser-less nightmare is over!



[ 110 ] April 10, 2014 |

Well, at least he’s leaving Comedy Central, where he’ll be competing with the iconic show recently and successfully taken over by a graduate of America’s finest institution of higher education.

I have somewhat mixed but ultimately positive feelings about this. The “Stephen Colbert” character on the Colbert Report is a work of comic genius, but diminishing returns will eventually set in, and Colbert has a much broader set of comedic chops. I see no reason why he won’t do very well taking over for Letterman.

TBogg Uber Alles

[ 18 ] April 10, 2014 |

This is the best thing you’ll read on the Interwebs today.

UPDATE: It has been brought to my attention that this may well be the best thing you read on the Interwebs all year.

Gender Equity and the Washington Post

[ 52 ] April 10, 2014 |

As Dana Houle notes in comments, at the risk of being called shrill by Ruth Marcus it’s worth noting that the WaPo roster of op-ed columnists features 7 women and 25 men. A problem even if they’re all being paid equally!

In fairness, I’m sure Hiatt is having trouble finding qualified women. It’s not just anyone who can meet the high standards being set by intellectual

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and moral titans like Marc Thiessen and Richard Cohen.

Wal-Mart Organics

[ 52 ] April 10, 2014 |

Wal-Mart is introducing a line of organic food at low prices:

Walmart plans to announce on Thursday that it is putting its muscle behind Wild Oats organic products, offering the label at prices that will undercut brand-name organic competitors by at least 25 percent.

The move by Walmart, the nation’s largest retailer and grocer, is likely to send shock waves through the organic market, in which an increasing number of food companies and retailers are seeking a toehold.

“We’re removing the premium associated with organic groceries,” said Jack L. Sinclair, executive vice president of Walmart U.S.’s grocery division. The Wild Oats organic products will be priced the same as similar nonorganic brand-name goods.

So good, right? Well, yes and no. One of the legitimate criticisms of organic food is that it is too pricey, making it something for the nation’s elite. This would help reduce that. But what is the real cost of cheaper organics? Who makes up the difference? It certainly isn’t Wal-Mart. Rather, we can expect Wal-Mart to do what it does on apparel and foreign-made consumer products–put the screws on producers to lower production costs. That means labor, especially in a food production system without the same kind of chemical inputs as conventional food. How will the workers producing this food be treated? The article is silent on this, as are most similar articles that focus on this issue from the perspective of consumers and to a lesser extent from the corporate view. The voices and views of labor are completely erased from the conversation. And if we know one thing from Wal-Mart, it’s that people at work will suffer to produce this food.

As Mark Bittman has argued, food costs need to be higher and wages need to go up in order to allow the poor to eat it. This of course means in part taking the world back from the retail corporate domination of the Wal-Marts, Targets, and Gaps. A tall order, but just offering cheaper organic food under an exploitative labor system is not much of an answer to our ailing food system.

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