Growth links of interest

Posted by Dietrich Vollrath on December 12, 2016 · 5 mins read

A quick post to vent some of the pressure from my reading list before it explodes:

  1. Greg Ip has an extensive piece in the WSJ on being “out of big ideas”. One quality of this article is that it gives some plausible ideas for why the pace of innovation may have slowed down in some areas. We may be plowing resources into things like medical research that have apparently small returns in terms of years of life saved. But, given our relative wealth, this may be entirely optimal. Adding a week to a cancer victims life may be worth more than inventing a better dishwasher. One quibble. Ip states early on that despite historically high number of scientists and engineers, “None of this has translated into meaningful advances in Americans’ standard of living.” We don’t know that. It may not appear to have generated advances in the growth rate of GDP per capita, GDP per capita need not be the same thing as meaningful advances in standards of living.

  2. One of the benefits of Twitter (yes, they exist) is following very smart people as they argue a point. I fell behind during an on-going discussion of Robert Allen’s concept of a “high-wage economy” in England driving the adoption of machines leading to the industrial revolution. Vincent Geloso did the Lord’s work in providing a fair summary of Allen’s position and some of the associated Twitter-commentary, and then catches you up on the possible holes in Allen’s argument. As a place to start reading about Allen’s hypothesis, this is quite nice, and provides many links to research questioning the assumptions behind Allen’s ideas. Then follow it up with Pseudoerasmus’ post on the same subject, and with a similar, honest, approach.

  3. MIT is starting a “micro-masters” program in development. Low-cost enrollment on-line for students in developing countries, with the possibility for exceptional students being offered physical positions at MIT. As a means of expanding the availability of education, this is great. As a way of tightening the net that excellent students may slip through, it is even better. I do admissions for the PhD program at UH, and I am sure that I have let slip students who would be incredible economists. But their applications just cannot show that. Giving students a low-cost way of signalling their quality ahead of time is the way to go.

  4. The Piketty, Saez, Zucman machine rolls on, with their new paper trying to reconcile national income accounts (GDP, etc..) with individual wealth/income distribution data. If you are reading this blog, you likely already have perused the paper or summaries based on it. It’s stark in how the fortunes of various percentiles of the income distribution have fared over time. What I also would like to applaud these authors for is writing papers that are about simple accounting. This the kind of economic research that you could explain to your neighbor in about 20 minutes, and that should be seen as a feature, not a bug.

  5. Timmer, Los, Stehrer, De Vries have a nice post of their current research regarding the change in trade over the last 15 years. In short, if I’m getting this right, the surge in trade from 2000-2008 was in large part due to the increasing fragmentation of production in goods - lots of parts coming from lots of different countries - and then this trend stopped after the crisis in 2008. Trade growth is slowing down because production is not increasing the number of sources for parts any more, to again over-simplify. Some of this slowdown in fragmenting of production appears due to demand effects, as countries (incl. China) shift demand towards goods (or services) that use fewer differentiated parts as inputs. Baumol strikes again?

  6. Useless, but fun. Selected stupid patents that have actually been granted.

  7. Another piece of evidence that much of the increase in capital’s share of income over time is due to housing. Gianni La Cava narrows it down further to an increase in the share of income going to owner-occupied housing. Now, this income is imputed from the value of housing, so La Cava is finding that the run-up in the value of the housing stock is creating a noticeable shift in the distribution of income towards capital. Here’s a good question, then, which I may try to tackle at some point. What is the capital/labor split of income without housing - or any other imputed value - included? Is the labor share shrinking as well?

  8. A nice timeline of various reporting on the possibility that machines will steal all the jobs.