Category: Economics

Nothing on topic I can think of. But this story about blue collar wages rising faster than college grad wages is interesting. The old I get the more I think the economy is almost entirely psychological. Sure, I do believe things like “If you print money, you will eventually get inflation,” and I’m sure money does have some degree of velocity, but I think increasingly that malaise drives bad times and eras of good feelings drive good economic times.

In this very divided country, are we going to see a bifurcated economy where depending on who’s in power drives who gains and who falls behind? It strikes me that the Obama years were very good for the very top and very bottom, and not so good for most other people. I can tell you that I personally am not feeling the booming “Trump Economy.” But I live in an area that doesn’t swing too hard in good times or bad times. I am also a college educated professional, so not in the current “era of good feelings” group.

One area where I’ve always departed with libertarian market purists is on anti-trust, but I could never really articulate it well until now:

One place where I break with the Borkian consensus on antitrust is that I don’t think the Sherman Act was about maximizing consumer welfare so much as it was about inhibiting the growth of unaccountable political power. (The drafers of the Sherman Act, of course, weren’t aware of Bork’s theories.) We’re seeing a lot of unaccountable political power here, and it’s going to get worse if nothing’s done.

I probably couldn’t have come to the conclusion in my 20s, but these days I think political power and economic power aren’t really separable. The latter breeds the former.

If you worked in tech in the 1990s, you remember Microsoft using its monopoly in operating systems to essentially strangle Netscape. By the time the government came around to dealing with that, technology had moved on. Back then I felt it was a pretty good example of how anti-trust law wasn’t really well suited to a post-industrial economy such as ours. But Microsoft’s great accomplishment was swindling IBM out of their monopoly on computing. Jeff Bezos has laid waste to main streets across this country. Google has absconded with the advertising revenues of all the local news rags we grew up with. Don’t even get me started on Facebook.

And we all cheered while they were doing it. What a fool I feel like for believing technological and free market progress would eventually solve all our ills. I might not believe Trumpian populism is the answer, but I can’t help but say we’re in a hell of a pickle now.

Gun news is pretty thin on the ground today. Via Instapundit, I noticed this article about how there is no real shortage of STEM (Science, Technology, Engineering and Mathematics) workers:

The truth is that there is little credible evidence of the claimed widespread shortages in the U.S. science and engineering workforce. How can the conventional wisdom be so different from the empirical evidence? There are of course many complexities involved that cannot be addressed here. The key points, though, are these …

If you work in a STEM field, I’d highly recommend it. Having worked in the STEM industry for a number of years, I can tell you that if you’re a chemist, at least in my local job market, it’s tough to find jobs. Big Pharma isn’t running large chemistry labs anymore, having shipped most of those functions overseas to places like China and India. There’s still jobs for talented medicinal chemists, but bench chemistry is done almost entirely by overseas firms. Engineering and Information Technology jobs have also had to deal with the outsourcing bug. But I don’t think that really represents the whole picture of the job market, and the real factors are beyond soundbites or short articles.

In IT, at least in my local market, there really is a shortage of talented people. They are tough to find, and there is a lot of chaff to beat through before you can get at the wheat. The article does hint on what I think part of the issue is: the boom/bust cycle. When there are booms in STEM and related fields, the rising pay and opportunity attracts a lot of people into the field who honestly don’t belong in it. They can get hired in boom years because companies are desperate to fill jobs, and since they can’t find good people fast enough, or just can’t afford them, they end up settling. When I graduated from college, it was the height of the dot com boom, and they would hire anyone that could spell “Unix.”

And then comes the bust, and a lot of folks who never belonged in the field to begin with, end up washing out of the field, enduring long periods of unemployment, and/or having to take less pay. It does seem to go in a cyclical fashion, and STEM fields seem to have a particularly harsh business cycle compared to other industries. I think the issue is not so much that there’s a shortage of STEM workers overall, but that there’s a shortage of STEM workers who really belong in the field. The boom cycles that bring a lot of unqualified people into the field tend to make the bust cycles deeper and more painful.

Tam offers an important lesson:

Meanwhile, I will point out a basic bit of Capitalism 101: If Seller Sam asks $100 for a 50rd box of Remchester .22LR, and Buyer Bob gives him $100 for it,  then the price of a 50rd box of Remchester .22LR in that place, at that time, is $100.

It’s killed me that some of the same folks who were excoriating Obama for being a socialist were some of the first to scream “PRICE GOUGING!” when the law of supply and demand started to work its magic. If demand goes up, and price does not follow with it, you get a shortage. A lot of vendors didn’t want to be accused of that, and did not raise prices. So how’s that new AR you just bought? What about the 1000 rounds of .223? Yeah… shortage.

I tend to agree with Glenn Reynolds that it’s pretty much economics. For me, the economics are being quite late settling down, and no longer having the spare income to save for a kid’s college fund. Looking back, I’m kind of amazed by parents managed to raise two kids, a dog, and a cat, on a single income. My dad worked, and my mother was a stay at home mom. Given my current difficulty maintaining a childless household with a single income, I don’t honestly know how they did it. But when it comes to the benefits of parenting:

He’s clearly right about the economics. Children used to provide cheap labor, and retirement security, all in one. Now they’re pretty much all cost and no return, from a financial perspective.

My parents were believers in the cheap labor part. I think I had more to do as a kid, than kids growing up today. Not all of it was hard labor, but it sometimes it was dangerous by today’s standard. As a fairly young kid, under 13 for sure, I was out crawling around on our roof and scaffolding, helping my mom and dad put vinyl siding on the house. There was always a project in the works. I would often use power tools, though there were some I could not use without supervision, and some I could not use at all (and the ones I couldn’t use at all, I own now. Take that Dad!). As a fifteen year old, I was called on to rewire some outlets in my grandmother’s house. I could do that on my own by that age.

These days I’m pretty sure if you had your 11 or 12 year old kid crawling around on a roof or scaffolding doing manual labor, or working with electrical circuits, if they didn’t come after you for child abuse, the neighbors would certainly frown on you as a horrible parent. I hated having to help out as a kid, but now that I own my own home, it’s saved me a tremendous amount of money, because there’s not much I don’t know how to do in a house. Furnace stops working at 3AM? Thermocouple? Have a spare of those. Leaking auto vent? Keep them on hand too. Power head on the zone valve? Can get it in 24 hours from Amazon Prime. I will also never be one of these kids you see on the side of the road, with a roadside assistance guy changing their flat tire for them. There is a pride in not being dependent on someone else for every little thing that goes wrong in life. Which brings me back to Prof. Reynolds:

But in recent decades, a collection of parenting “experts” and safety-fascist types have extinguished some of the benefits while raising the costs, to the point where what’s amazing isn’t that people are having fewer kids, but that people are having kids at all.

It has crossed my mind that the the kind of expectations that existed for me are looked down upon these days as bad parenting. I agree with Glenn that society has made parenting seem unattractive. For us, it’s pretty much economic. Bitter being a the better part of a decade younger than me gives us a little more time. If our household economy turns around, maybe. As for the other problems? Well, I can’t get up on ladders anymore, and kids generally love that kind of thing, “So get up there boy, and clean out those gutters. I don’t care how much what’s in there is gross!”

But hey, if I decide to complete the transformation into my own father, the kid will get a sip of my beer when it’s all done (which he’ll promptly wince at). (Don’t worry Dad, I’m sure there’s a statute of limitations on that kind of thing).

Clayton Cramer notes:

Which means a lot of Obama voters — people that bought into Obama’s “soak the rich” rhetoric — who have been able to deduct the first $2,500 of student loan interest from their federal income taxes — are going to lose that deduction if they are more than five years into their loans.

Since they introduced this deduction, I’ve always been above the income cap for being able to take it. With a sharp income reduction in this era of hope and change, this year I’d probably be able to take it… and now it may go away.

I think I’m part of the generation that’s always going to find themselves paying for all this wonderful government, but never actually benefitting from any of it.