JOLTS is the Job Openings and Labor Turnover Survey of the Bureau of Labor Statistics.
This is where they keep track of things like hires, separations, and openings.
The picture this data paints is of a more ossified job market. Hires are down. So are job openings. But turnover is also down: layoffs are about back to normal, but quits are way down.
I know – my title is kludgy.
One way to think about growth is to build it up from business cycles. So, you might assume that expansions and contractions/recessions are mirror images of each other. But, if expansions are longer (they are, on average, about 3 times as long) then on average the economy will grow.
This is not correct. And, it can lead to the presumption that the way to get an economy to grow is to encourage expansions and discourage contractions – that’s the Keynesian idea.
Instead, we need to recognize that the baseline is growth. The business cycles are then the deviations from that baseline.
This view is consistent with how the math of compounding works – and thus the use of natural logs and differences to help visualize the data. It also leads us to trying to explain the baseline first, and the fluctuations second.
When was the last time you heard a politician or pundit argue that we need to increase baseline growth, even by a tenth of a percentage point? You don’t hear that, but you should: it would make our children richer.
I mean “compete” in the economic sense here.
The answer to the question in the title is no.
It’s common to claim that the answer to this question is yes, and I suggest that a lot of policy mistakes are made because of that.
What governments actually do is keep score – usually with GDP, but also with stuff like trade deficits/surpluses, and balance of payments. They also judge winners and losers (both countries and policies) based on those scores.
Firms clearly compete with each other, even across borders. People do to, but perhaps not as seriously.
But, countries are not single entities for the purposes of most economic decisions. Instead they are collections of things we count together as a group.
When we talk about a country competing with another country, what we are really talking about is a multitude of individual competitions that probably are not managed by “the country”.
This is akin to claiming that a country won the Olympics. People do this, but we all know it’s kind of child-like to believe this claim.
Unfortunately, when it comes to macroeconomics, many people don’t think twice about this mistake. This is why trade protectionism is an easy sell to voters: “our team” is going to (actively) do something to “their team”. This is in spite of the fact that trade protections are largely transfers from our consumers to our producers.
This article is mostly not about macroeconomics, and is therefore not testable.
Having said that, it is a good introduction to how you should measure quality of life.
This is a squishy subject, about which many people BS.
They shouldn’t. It’s easy.
You just have to ask easy questions. Did you have children that should still be alive? Didyou have parents that should still be children alive? Did you have brother, sisters and spouses who should still be alive? Are you in physical pain? Do you have any unhealed injuries? Do you have all your teeth (or even better, did you have to have your wisdom teeth removed because the others didn’t rot as fast as Mother Nature intended)? Are you hungry? Do you have enough shelter? Are you warm enough in the winter? Can you avoid the heat in the summer? Can you move to improve your condition? Do you know where your friends are? Are you afraid? Of the night? Of the day? How much complete nonsense are you required to profess a belief in by people who are supposed to look out for you?
So … check out this piece in Slate by Christopher Hitchens about North Korea. In particular, the bit about height on the second page, and the link to the photo.
N.B. the photo link was bad on Monday. You can use this one of the lights of civilization at night – in particular, zoom in on North Korea and/or Cuba. These are places with 10 times as many people as Utah crammed into a smaller area.
To some extent, if we don’t like the Obama administrations fiscal policies, we should look at Bush – who partly laid the groundwork for the Democratic rise.
Paul Kedrosky of Infectious Greed did this, and shows that if the Bush administration and the Republican controlled Congress had held spending to 4% (a little tighter than inflation plus population growth – so approximately what a fiscal conservative would have done) Bush would have achieved Clinton-sized surpluses in 2006 and 2007, and the federal budget would have still been in surplus in 2008.
Nothing like a counterfactual to focus thinking.
Greece is in trouble, and there’s been a bit of a run on Portugal.
Both of these reflect the doubts of private investors internationally about the national public management in these countries.
Governments are financed with bonds, which are owned by private investors. When those investors get nervous, they sell those bonds, driving down the price, and driving their interest rate up.
There are two ways to measure this risk. The direct way is to look for prices for “bond insurance”. A lot of this data is proprietary (i.e., hard to come by at SUU). The indirect way is to look at interest rate spreads between similar bonds issued by two different countries.
The New York Times piece entitled “Fraying at the Edges” showed a plot of those spreads.
Greece is so bad (the top one) that it’s label is off the chart.
The Times doesn’t make it easy to steal their chart to put in this post. For perspective, the peak to the left of the chart is from last summer. So, Greece hasn’t been in good shape the whole time, but it’s gotten a lot worse over the last 3-4 months. Portugal’s problems are much more recent. The dashed horizontal lines indicate spreads of 1% over German bonds — so you get about 1.5% more by investing in Ireland and Portugal. Greece’s spread is around 4% right now.
One example of the direct method is to find an article that looks at the price of credit default swaps (CDS’s). Here’s one about Greece from Business Week.
A credit default swap is a derivative you buy that pays you the full value of a bond if the government defaults on it. If the government doesn’t default, you get nothing. Currently, to insure a Greek bond for 5 years, you need to shell out about 3% of its face value.
GDP doesn’t measure what people don’t want measured: typically illegal, or at least underground, activity. We used to call this the black market, but that’s not politically correct. Now we call it the shadow economy.
In the U.S. it can be hard to visualize how big the shadow economy is in other countries; relatively speaking, we’re girl scouts when it comes to hiding our affairs from the tax man.
The Wall Street Journal piece entitled “Tax Evasion Dogs Greece” has a table showing the size of the shadow economy in various developed countries.
Not surprisingly, it’s large in the PIGS or the PIIGS, and much smaller in G-7 countries (for example, it’s 22.3% of GDP in Italy, but only 10.6% in the U.K.). Part of this is certainly cultural in these countries, and part of it has to do with institutions that are not as well developed.
One important consideration for these countries currently, is how they are going to service their national debts. Tax revenues are the main source, but how do you tax the shadow economy.
There is way … but it’s a politically uncomfortable way: inflation.
Since shadow economies run largely on cash, and since inflation reduces the value of cash, it is in some sense a tax on the use of cash, and therefore an effective tax on the shadow economy.
The intellectual hurdle you have to leap to understand this is figuring out where the money goes. Inflation takes value away from people’s wealth held in cash. But, it can’t change the overall wealth of the economy (at least if people don’t flee the country with their stuff). So, what must be going on is that inflation is a tax/transfer scheme (like social security). But … inflation takes from those who hold their wealth in cash, and transfers it to those who hold their wealth in other assets.
Often, we assert that countries are mismanaged because they have both 1) a big shadow economy, and 2) a lot of inflation. But, really these are two faces of the same issue.
