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Archive: November 2009

Blog on Mexican Economy and Politics

American University economics professor Robert Blecker points me in the direction of "El placer de disentir", an excellent blog by economist Gerardo Esquivel on the Mexican economy and politics.

A post today notes that an international rating agency has downgraded Mexican sovereign debt, citing a host of economic problems facing the country. Esquivel comments that seven of the eight reasons cited (including high dependence on oil, weak public finances, and slower economic growth than the rest of the region) are ongoing structural problems that should have been built into the agency's rating all along. (I was struck by how many of the negative factors essentially represent a critique --from the left-- of Mexican macroeconomic policy: lack of a credible countercyclical economic plan and the likely inability to raise tax revenues in the future, for example.)

A post from last week compiles several recent foreign news stories on Mexico, including a depressing piece by Philip Caputo in the current issue of The Atlantic on "The Fall of Mexico" and a story on "reverse remittances" --the poor in Mexico sending money to their struggling relatives in the United States-- that appeared in the New York Times in mid-November.

First Ever "Linux" Post

A while back, I stumbled across a reference to the first ever internet post announcing the availability of what would come to be known as the Linux kernel.

Just 18 years ago, Linus Benedict Torvalds posted notification of a "Free minix-like kernel sources for 386-AT" on the comp.os.minix newsgroup.

Here's the original post in its entirety.

The part that most caught my eye:

I can (well, almost) hear you asking yourselves "why?". Hurd will be out in a year (or two, or next month, who knows), and I've already got minix. This is a program for hackers by a hacker. I've enjouyed doing it, and somebody might enjoy looking at it and even modifying it for their own needs. It is still small enough to understand, use and modify, and I'm looking forward to any comments you might have.

GNU/Linux is the operating system that now runs a good chunk of the world's computers, including the one I'm typing on right now, the ones that host this website, the ones I use everyday at work, and an enormous portion of those at Google.

Action News Fever

My sister emailed me this tremendous Youtube video that lays the "Action News" theme song from my childhood on John Travolta's famous dance scene from "Saturday Night Fever."

Limbaugh on "Chickification" of Unions

Yesterday, Rush Limbaugh alluded to CEPR's recent report on "The Changing Face of Labor," reading the headline from Tuesday's AP story on the report and then mocking the idea of women in unions.

'Women on pace to be a majority of union workers.'

No good can come of that. Trust me on that folks. Don't... Ahh... That's... I mean...

Well now, wait a minute! Chickify the unions? Ooh ooh, wait a minute...

No. No. My instincts never fail me. No good can come of that. That's right. [Laughs.] Demands on labor are high enough. [Laughs.]

The 32-second audio transcript is at Media Matters.

Veterans Day

To mark Veterans Day, a link to a webpage run by friends of Army First Lieutenant Dan Berschinski, a Peachtree City, Georgia, soldier who is convalescing at Walter Reed Army Medical Center after he lost both his legs in Afghanistan in August 2009.

The blog includes posts about Dan's treatment and recovery, links to his appearances on the front page of Stars & Stripes and the Washington Post, and photos with some of his famous visitors, including the Secretary of the Army, Senator Johnny Isakson from Georgia, and President Obama.

Wishing Dan and all veterans the very best today.

Changing Face of Labor

Kris Warner and I have a new paper out today, "The Changing Face of Labor, 1983-2008" [pdf].

We reviewed the last 26 years of data from the Current Population Survey, starting with the earliest consistent data on unionization. Our main findings:

Women now make up over 45 percent of unionized workers, up from just 35 percent in 1983. At current growth rates, by 2020, women will be the majority of union workers.

Latinos are the fastest growing ethnic group in the labor movement. In 2008, they represented 12.2 percent of the union workforce, up from 5.8 percent in 1983.

Asian Pacific Americans have seen considerable gains and made up 4.6 percent of the union workforce in 2008, an increase from 2.5 percent in 1989.

Black workers were about 13 percent of the total unionized workforce, a share that has held fairly steady since 1983, despite a large decline in the representation of whites over the same period.

Over one-third of union workers had a four-year college degree or more, up from only one-in-five in 1983. Almost half of union women had at least a four-year college degree.

Only about one-in-ten unionized workers was in manufacturing, down from almost 30 percent in 1983.

Just under half (48.9 percent) of unionized workers were in the public sector, up from just over one-third (34.4 percent) in 1983. About 61 percent of unionized women are in the public sector.

The typical union worker was 45 years old, or about 7 years older than in 1983. (The typical employee, regardless of union status, was 41 years old, also about 7 years older than in 1983.)

More educated workers were more likely to be unionized than less educated workers, a reversal from 25 years ago.

Immigrants made up 12.6 percent of union workers in 2008, up from 8.4 percent in 1994.

In rough terms, five-in-ten union workers were in the public sector; one of every ten was in manufacturing; and the remaining four of ten were in the private sector outside of manufacturing.

And here's one of the twenty or so graphs in the report. This one illustrates the large increase in the educational attainment of the union workforce. In 1983, union workers had about the same level of formal education as the overall workforce. Today union workers have more education than the overall workforce.

Bar graph showing educational breakdown of union workers in 1983 and 2008

UPDATE 11/11/09: The New York Times and the Associated Press have run great stories on the report. And nice posts at BusinessWeek.com's "Money & Politics", The Plank at The New Republic, and Economix at the New York Times.

UPDATE 06/06/10: A version of the report is now out in the peer-reviewed journal WorkingUSA.

Graphabulous No. 3: Flash to Scale

Via Andrew Gelman's Applied Statistics blog, a fantastic flash graphic that gives you an idea of scale, from a coffee bean down to a carbon atom, using a slider on the bottom of the image.

Screen shot of Flash-based graph on relative scale of small objects

Real World Economics Review Blog

The Post-Autistic Economics Network, publishers of the real-world economics review, has started a new blog.

The bloggers at the new site: Frank Ackerman, Paul Davidson, Paul Omerod, Kevin Gallagher, Mark Weisbrot, Steve Keen, Dean Baker, and Edward Fulbrook.

Honduran Coup

Dan Archer and Nikil Saval have written and illustrated a fantastic graphic history of the June 28 military coup against Honduran president Manuel Zelaya.

Cover page of Archer and Saval graphic novel on Honduran coup

Wrong Incentives

University of Chicago economist Steven Levitt (of Freakonomics fame) has made a name for himself outside the economics profession by emphasizing the role of incentives in everyday life.

"Economics is, at root, the study of incentives: how people get what they want, or need, especially when other people want or need the same thing. Economists love incentives. They love to dream them up and enact them, study them and tinker with them. The typical economist believes the world has not yet invented a problem that he cannot fix if given a free hand to design the proper incentive scheme ...An incentive is a bullet, a lever, a key: an often tiny object with astonishing power to change a situation." (Freakonomics, p. 20)

The first chapter of Levitt and co-author Stephen Dubner's Freakonomics includes an extended example of how a new system of "high stakes testing" for grade-school students in the 1990s led about five percent of Chicago public school teachers to alter their students' answers to standardized tests in order to boost scores and earn performance-related raises and promotions.

But how does this kind of pretty run-of-the-mill insight about incentives translate into one of the best selling books of the decade and an industry of imitators inside and outside of academia?

The interesting question is not why a small share of Chicago public school teachers cheated when cheating could raise their pay. The really interesting question is why the vast majority of the teachers didn't cheat --especially when getting caught took a University of Chicago professor using a complicated computer algorithm that analyzed "700,000 sets of test answers, and nearly 100 million individual answers" (p. 28) and only produced "evidence ... strong enough to get rid of a dozen of them"? (p. 37)

Elinor Ostrom, who won the most recent Nobel Prize in Economics, spent a large chunk of her professional life looking at exactly the more interesting of these two questions. In particular, she wanted to know why there were so many exceptions to the "tragedy of the commons" --where individuals have an incentive to overuse jointly owned resources such as community grazing land or fishing grounds. Her research on a variety of commonly owned resources in a variety of different national settings showed that communities frequently develop a complex set of formal and informal institutions, from social norms to monitoring and governing structures, that blunt the economic incentives and avert the tragedy of the commons.

Early on in Freakonomics, Levitt and Dubner pay lip-service to non-economic incentives, noting that "There are three basic flavors of incentives: economic, social, and moral. Very often a single incentive scheme will include all three varieties." (p. 22) But, the whole book, the whole franchise, is about how economic incentives consistently trump social and moral incentives among sumo wrestlers, real-estate agents, drug dealers, and most of the rest of the human race.

Of course, Levitt and Dubner may well be on to something. Levitt has made millions from Freakonomics and is now one of the best known economists in the world. Ostrom, despite decades working on the research that led to her Nobel, was almost a complete unknown in the economics profession, not to mention among the general public.

Wired on Twitter

If you are like I am, and signed up for Twitter just to see what it was all about, and still can't figure it out, then the current issue of Wired has a piece that will help. The story gives a nice "history" of Twitter (I have older boxes of pasta in my kitchen), runs through the company's founders and key players, and describes its organizational philosophy (which has a lot in common with open source software development).