In economics a “substitute” is a good or service that can be used in place of another good or service. The classical examples include that you can use a $5 bill or five singles (fungibility) or that Coca Cola may be consumed as a substitute for Pepsi and vice versa. It doesn’t necessarily mean that the two goods or services are identical—just that one may be used in place of the other.

Substitution pertains to the labor market as well. Pyramids can be built using 20,000 workers dragging huge shaped stones, teams of draft animals and teamsters, or a relatively small number of workers operating machinery. You can get your hair cut by a barber or a hairdresser. You can be treated by a licensed physician or an unlicensed, untrained quack. The choices are governed by law, by availability, and by preference.

Returning to my post on unemployment yesterday, over the last half century in this country the availability of a reliable stream of low cost labor provided by immigrants, especially those who are in the country illegally, has had a substantial impact on the overall economy. We are growing crops we would not otherwise grow or growing and harvesting them in ways we would not otherwise use, building buildings that would not otherwise be built or would be built in a different way, and operating restaurants we would not otherwise be operating or in a way in which they would not otherwise be operated. All of those are forms of labor substitutions.

Furthermore, people are hiring nannies, maids, and gardeners to perform tasks they would otherwise perform themselves. In some cases this allows them to work at jobs themselves which they would not otherwise do. Using nannies or maids has observable effects on child development which may well be unforeseen.

The problem with all of this is that it is unsustainable. We are requiring more housing, transportation, security services, K-12 education, and healthcare than would otherwise be necessary and for people being paid wages too low to pay for them on their own. There are only a handful of ways of addressing that. We can pay those workers enough that they can be self-supporting. That will have material impact on the decision to engage those workers at all. In some cases the very fact that the workers function outside the law may influence the decision to engage them. We can continue to pay those workers low wages but augment their earnings with various forms of government subsidies, increasing taxes accordingly. That means we will be subsidizing certain sectors and the costs will be paid by people who may not benefit at all which is simultaneously unjust and inefficient. Or we can continue to pay wages too low for the people to live, creating a permanent underclass.

There’s a very good opinion piece by Shlomo Ben-Ami at The Strategist, the blog of the Australian Strategic Policy Institute (ASPI), which aligns very closely with my own views. Its entire thesis is summed up in these two sentences:

Despite Ukraine’s recent impressive counteroffensive around Kharkiv, the war with Russia has reached a prolonged deadlock. But there is one clear winner: the US arms industry.

Depending on your operative definition of “good”, I guess that’s good news. The U. S. is the world’s leading exporter of arms by a substantial margin. I suspect that margin has become even greater given the sanctions imposed on the second greatest supplier (Russia).

That reminds me of an old joke.

Question: When a mafioso goes to see a gangster movie, who does he root for?

Answer: The popcorn concession

My wife has been paying rapt attention to the rituals attending the death and burial of Elizabeth Windsor, Queen Elizabeth II of the United Kingdom of Great Britain and Northern Ireland. Today I would like to ask one question and make one observation.

My question is will the succession of Charles III have any impact on British foreign policy, especially its relationship with the United States? I don’t think so but I’d like to hear the views of others.

My observation is that the search terms “charles abdicate” gives 78,300,000 results.

I have come across quite a number of assertions that the wrong metrics are being used to assess on thing or another. Last week I read an article highly critical of our withdrawal from Afghanistan claiming that the metrics that were used there were those that were relatively easy to gather (as we did in Vietnam) rather than actual metrics of success.

Consider this passage from a New Yorker article by E. Tammy Kim:

Though twice as many Ohioans work in health care, education, and retail than in manufacturing, factory labor persists as a Rust Belt obsession.

One of the possible interpretations of that is that the author is using the wrong metric, i.e. number of jobs rather than the number of jobs that would have been supported with the natural market clearing price of health care and education. I have seen proposals for using R₀ or R_e rather the number of cases of COVID-19, new cases of COVID-19, or deaths due to COVID-19 to determine whether the COVID-19 pandemic has ended.

In this post I’m going to reflect on how we’ve used the wrong metric to measure the strength of the labor force for decades and the influence that has had on policy. For the last 90 years politicians have been using “unemployment” as a measure of the strength of the labor force. For subsistence farmers the term has no meaning—they are always busy, i.e. “employed”. Starting in 1880 (in the Federal Census) questions about individuals’ “profession, occupation, or trade” began to appear in the Census. In the 1930 census 20% were listed as “Class A unemployed”, i.e. able to work, not working, and seeking work, having risen from 5%.

Since then the unemployment rate, i.e. the number of those unemployed as a percentage of the total potential labor force, has been a cardinal metric for the strength of the labor force. As just one indication of that between 1980 and 2005 more than 1,000 papers were published in economics journals with “unemployment” in their titles. Politicians frequently cite the unemployment rate either favorably or unfavorably depending on the rate, which party is in power, and the party to which the speaker belongs.

I would claim that the headline unemployment rate (everything from U1 to U7) has been moot for decades, has resulted in a misallocation of government resources, and should be replaced by another metric that includes both underemployment and overemployment.

There are three varieties of underemployment: visible underemployment, invisible underemployment, and the sort of underemployment resulting from individuals being unable to secure jobs in their chosen fields. Visible underemployment is when an individual wants to employed fulltime but is only working part-time. Invisible underemployment characterizes those who have stopped looking for employment because they have been unable to secure a job in their chosen field. I’m going to use the term in an even more restricted sense: those who with college degrees who are working at jobs that do not require college degrees.

I’m going to use the term “overemployment” to describe individuals who hold full-time jobs as well as one or more part-time jobs.

The alternative metric I would propose would be something on the order of total individuals of working age less the number of those working full-time but not more than full-time less the number of underemployed. I think that measure makes intuitive sense, much more than the unemployment rate. Furthermore it emphasizes jobs that aren’t menial jobs and pay a living wages rather than maximizing the number of bad jobs which I what I think the employment rate has come to overemphasize.

I wish I had a catchy name for that metric but I don’t. If I were an economist, I might be trying to calculate that metric and compare it with the unemployment rate going back to about 1980. I think it would be eye-opening. If I were a political scientist, I might be trying to determine the impact of using that metric on policy if minimizing that had been the objective rather than minimizing unemployment.

The editors of the Chicago Tribune via Yahoo call for the enforcement of Illinois’s gun laws:

As Illinois Democrats continue to seek a ban on assault weapons and large-capacity magazines after the Highland Park massacre on July 4, critics of gun safety laws voice a familiar rebuttal:

Why pass new gun laws, opponents argue, when so many existing laws aren’t being enforced?

That’s a good question, but it dodges another, yet more obvious question: Why aren’t the existing laws being enforced?

That’s the question properly raised in a lawsuit filed by parents, including Shanice Mathews, a West Side mother of four. She’s the named plaintiff in Mathews v. State of Illinois, a suit filed by her and other parents on behalf of their children and others in a proposed class of Black children who the parents say have been traumatized by living in neighborhoods plagued by high gun violence.

The defendants are the state of Illinois, Gov. J.B. Pritzker and the Illinois State Police.

and

Illinois is known to have some of the toughest gun laws and regulations that the Constitution allows. But if FOID files are not kept up to date and related regulations are not rigorously enforced, the state’s citizens are not adequately protected.

The question they ask bears repeating: why aren’t the existing laws being enforced?

My view is that the undermining of the rule of law through laws that are routinely not enforced overwhelms any deterrent value those laws might have.

The cynical answer, I guess, is that proponents of tough gun control laws don’t really care about the matter one way or another. They do want the issue to run on.

At Yahoo R. Peña remarks on the “SAFE-T Act”, soon to become effective in Illinois:

Illinois is passing a law that some would say will make history. Illinois is looking to be the first state in the United States to abolish cash bail. And the consequences of passing such a law have many believing the state could mirror the horror movie “The Purge”. In the film, citizens were given 24 hours to commit all the crimes they wanted.

On January 1st of 2023 the ‘SAFE-T’ Act will commence in the state of Illinois. This act will get rid of the cash bail system in its entirety. The name SAFE-T is an acronym for ‘Safety, Accountability, Fairness, and Equity-Today’. Those that instated the act believe it will reduce arrests and limit those put away based on the crime.

There are 12 non-detainable offenses where the new law would end cash bail. The law includes second-degree murder, arson, drug-induced homicide, robbery, kidnapping, aggravated battery, burglary, intimidation, aggravated driving under the influence, fleeing and eluding, drug offenses, and threatening a public official.

I understand the problems with the bail system. The SAFE-T Act should be reformed. The author proposes some ways.

I think that violent offenses should never be deemed “non-detainable”. If you’re concerned about equity, consider that most of the victims of these crimes are members of minorities.

One way in which the law could be reformed could, for example, be to prohibit states attorneys from negotiating detainable offenses down to non-detainable. Another would be to make individuals arrested having been non-detained ineligible for non-detention.

I think the surest way that the defects in the bail system could be remedied would be to ensure speedy trials.

Lately we’ve been treated to some wild ironies.

On Meet the Press Vice President Kamala Harris declaims that there is no security problem at our southern border. A couple of days later Illinois Gov JB Pritzker declares a state of emergency and calls out the National Guard to manage illegal immigrants. You need to torture language and logic not to consider that a security problem.

Signs prominently displayed on Martha’s Vineyard proclaiming their support for immigrants. Illegal immigrants on Martha’s Vineyard removed from the island to a military base “for support”.

Mayors of cities that have declared themselves “sanctuary cities” complaining bitterly when they actually receive illegal immigrants.

Since taking office the Biden Administration has transported 500,000 illegal immigrants into the interior of the United States. The Biden Administration sharply criticizes the governors of Arizona, Texas, and Florida for transporting illegal immigrants.

What do you think of the tactic the governors of Arizona, Texas, and now Florida have used—chartering planes and busses to transport illegal immigrants from their states to New York, Los Angeles, Chicago, Martha’s Vineyard?

I have sharply mixed feelings. It has been called “politically motivated” and “cruel” and I think it is probably both. I think it is an Alinskyite strategy to goad the Biden Administtration into doing what’s necessary to stem the surge of illegal immigration across our southern border.

I think there’s a lot of cruelty to go around. I think it’s cruel of the governors to transport the migrants. I think it’s cruel to expect the people of Arizona, Florida, and Texas to pay for all the migrants. I think it was cruel of Candidate Biden to invite immigrants to come to the United States.

I doubt that legal methods to get those governors to stop will be effective.

And now for something completely different. The Ig Nobel Awards for 2022 have been awarded by the Annals of Improbable Research. Jennifer Ouellette reports at Ars Technica.

To my eye the first is the best, a study of ritual enemas on Mayan pottery. Although the moose crash test dummy isn’t bad, either.

I didn’t want to let these observations by the editors of the Wall Street Journal to pass without remark:

Mr. Scholz is dragging his feet on new tanks as Kyiv begs the West for the weapons to build on the momentum of its recent advances against Russia’s invaders. Berlin in April promised to provide Cheetah anti-aircraft tanks, and then waited until July to start delivering them. As of this week, Berlin’s defense ministry says 24 have been sent.

Germany could also send its Marten infantry and Leopard battle tanks, and a growing chorus of German leaders and foreign allies says Mr. Scholz should. That includes Foreign Minister Annalena Baerbock of the Green Party and chairwoman of Parliament’s defense committee Marie-Agnes Strack-Zimmermann, a Free Democrat. Both parties are part of the coalition government with Mr. Scholz’s Social Democrats. The opposition Christian Democrats also support sending more tanks.

Even Mr. Scholz’s party, long a bastion of pro-Russian pacifism, is changing. Social Democrat Michael Roth, chairman of the Parliament’s foreign-affairs committee, is a vocal advocate for more weapons deliveries.

I don’t find the Germans’ action as baffling as the editors seem to. I think that

1. The Germans are extremely reluctant to do anything which bears costs for Germany.
2. But they want to remain in the U. S.’s good graces

Basically, they’re trying to have it both ways. I suspect the Germans’ strategy depended on the war having been concluded before winter and they’re very disappointed with how it has dragged on.