David P. Goldman, AKA “Spengler”, has a good post at American Mind I wanted to call to your attention. In it he lists five myths about China:

1. America is making China rich, and can weaken it by reducing imports, investment, and so forth.
2. China depends on stolen American technology.
3. China faces demographic collapse.
4. China wants to take over Taiwan because it is led by an expansionist Marxist-Leninist party that hates and fears democracy.
5. We can deter China by shifting military forces to Asia and adding to conventional capabilities.

For the details read the whole thing. He also makes five prescriptions:

• We need to fund federal R&D at the Reagan level, that is, an additional 1% of GDP, or roughly $2 trillion over ten years;
• We need a radical revision of tax and regulatory policy to favor capital-intensive manufacturing;
• We need selective subsidies for mission-critical industries;
• We need to shift in educational priorities toward engineering and hard science; and
• We need to shift defense priorities away from legacy systems toward innovation, including space-based missile defense, directed-energy weapons, cyber war, and drone swarms.

He also makes some solid observations. For example:

Six trillion dollars of stimulus bought Chinese rather than American goods, because our creaky supply chains can’t meet a surge in demand.

which aligns with observations I have been making since long before the pandemic. We don’t make enough consumer goods domestically for consumption subsidies, e.g. “stimulus packages”, to have the effect our political leaders seem to think they will have. They are more likely to stimulate the Chinese economy than they are ours. Except for Jeff Bezos, the Wall family, and a few others.

I don’t agree with everything he says and I think there are some omissions. For example:

There are two possible remedies for a declining work force: import young workers, or export capital to where young workers live. China’s Belt and Road Initiative plans to assimilate more than a billion people from the Global South into China’s economic sphere.

Neither of those strategies will revitalize the American economy. The immigrants we will attract in the greatest numbers can contribute to agriculture and manual labor. That will continue our transition to a peasant society. That will be more like an early 20th century America than a 21st century America.

Also, burn this into your brain. Production engineering follows production; design engineering inevitably follows production engineering; junior engineers today become senior engineers tomorrow. It isn’t enough to “shift educational priorities”. The reason more kids aren’t studying engineering in the U. S. is because engineering is hard, not everybody can do it, and you must be able to recoup the investment made in time and money over the course of a stable career. Seeing the jobs you might have sought

Another point about R&D investment. The best strategy is to establish a long-term objective and create a bipartisan commitment to fund that objective. Example: the moon race. The objective must be feasible, agreed upon, and funded. Basic research is good but a mass engineering project is better. A “war on cancer” won’t do for two reasons. The first reason is that particular “war” has been going on for 50 years and the second reason is that we have reached the point of decreasing returns to scale.

What can we infer from Russian President Vladimir Putin’s speech? I think there are at least two things.

First, the Ukrainian counter-offense damaged the Russians. At least politically and strategically and possibly tactically. And second the Russians are serious—they are unlikely to back down easily

How will the U. S. respond? I’m concerned that most pundits will call for a redoubling of aid to Ukraine and oppose negotiations at this point on the grounds that it would be rewarding Putin and/or Russia.

That might be characterized as “calling Putin’s bluff” except I don’t believe that he is bluffing.

I also found this research, presented by Emory Universtiy, on how dogs think thought-provoking:

Scientists have decoded visual images from a dog’s brain, offering a first look at how the canine mind reconstructs what it sees. The Journal of Visualized Experiments published the research done at Emory University.

The results suggest that dogs are more attuned to actions in their environment rather than to who or what is doing the action.

One possibility that may not have been considered is that dogs my derive information from their senses differently than we do. Actions may be identified by sight where objects are identified by scent.

I found this article at the Institute for Art and Ideas by Conor Bronsdon interesting enough to share:

If we’re still sprawling outwards as populations grow, we’re not going to be able to achieve the efficiency needed in transportation and housing to meet our climate and space needs. We’ll also deeply damage our environment, getting rid of green space for single-family housing, cutting down trees that are doing important work filtering carbon from the atmosphere, and poisoning our rivers and streams with the heavy metals present in car tires.

The short version: you don’t need to just take my word for it. Even if you believe that global climate change is a risk, even if you believe it is an issue, electric vehicles are at best a patch and at worst a false step and a waste of effort.

The author’s view is that we should be aiming at greatly reducing vehicular transport. My own view is that the first step shouldn’t be EVs but to stop subsidizing sprawl. WFH may be a good step in that direction by allowing those workers who are able to eschew commuting entirely thereby reducing the public support for the interstates that enable sprawl.

I wanted to bring this post at Foreign Affairs by Nicholas Eberstadt and Evan Abramsky to your attention. Its basic point is that the United States is lagging behind many other countries in terms of educating its people which it documents. One particular passage particularly caught my eye:

The emerging economies that will challenge or surpass Western nations in the decades ahead are now achieving higher levels of educational attainment than most advanced Western economies did in the early postwar era. For example, 16 percent of 24- to 64-year-olds in Mexico are college educated—roughly twice the U.S. rate in 1950—and in Turkey, the share of this age cohort with some higher education is 22 percent, close to Germany’s share at unification in 1990.

What made me think in that passage was that the percentage of the working age population in Mexico with “some higher education” is higher than the percentage of Hispanics in the United States who also have “some higher education”.

There are all sorts of ways of explaining that, some more benign than others. For one thing I wouldn’t be a bit surprised if an increasing percentage of younger people in Mexico are pursuing college educations. For another something more like an “apples to apples” comparison would be the percentage of Guatemalan immigrants in Mexico who have some higher education.

The less benign explanation is that those coming here might not be drawn from the ranks of those with higher education and might be a lot more interested in working and supporting themselves and their families than they are in going to college. Also consider “cholo culture” which is of some significance among Hispanics.

Something else the article made me reflect on was that there are more people in India with college educations than there are people in the United States. Importing people with college educations from India is not a winning proposition for the United States, particularly considering that so many of the jobs being created here don’t actually require higher education.

The title of this post is taken from a highly influential essay written about 60 years ago during the height of the “space race”.

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.