It always surprises me the short, perfuntory shrift that most newspapers give to labor and employment news, even at a time when the national mind is almost entirely focused on one word: jobs. This piece in the Washington Post typifies what I’m talking about. There’s nothing “wrong” in the piece, but it doesn’t give enough context for a reader to understand what the bottom line actually is. And the bottom line is that the economy didn’t necessarily add the dismal 80,000 jobs the Post and most newspapers have fixated on; the economy added somewhere between 80,000 and 277,000 jobs, depending on which survey you’re looking at, and the number is likely much higher than 80,000, if the trend of recent jobs (under)estimates continues. I’m not saying the jobs situation is rosy; I’m saying it’s more positive than is being conveyed in most daily media, and could be even rosier, if Republicans hadn’t killed a jobs bill that would’ve funded employment in state government. And why am I saying that? Entirely because of this remarkably concise, interesting and well-illustrated post by Daniel Indiviglio over at The Atlantic, which continues to impress me with the depth of expertise it is managing to recruit and wind effortlessly into the Atlantic’s online offerings.
Category Archives: economics
In my last days as editor of Miller-McCune, I was lucky enough to work with Gillian Hadfield, a USC professor of law and economics who wrote a wonderful essay on the reasons that the U.S. legal system needs to be overhauled to better serve American innovators and global commerce, especially as regards Internet-based business. It’s a nuanced argument that makes the astounding and obvious point that lawyers make laws to benefit lawyers, not the economy in general, even though a huge percentage of what lawyers do involves business relations. The result is a legal system that serves the legal profession but hinders innovation. But the lawyers don’t have to be in total charge of our legal infrastructure, as Hadfield shows in a discussion of legal reforms in the U.K.
Here’s the takeaway:
I have spoken with dozens of general counsel, entrepreneurs, business leaders and experts in innovation about how well the American legal system is supporting the innovative enterprise powering the global economic transformation under way since the fall of the Berlin Wall and the birth of the Internet. They have been uniformly optimistic about the pace of innovation in their industries — but uniformly despondent about the legal tools available to them to support their efforts to ride the surging waves of the new global economy. One complained about the great “DNA gap” between lawyers and business thinkers. Another bemoaned the need to resort to a patchwork of law firms around the world to manage operations that are “global from day one” in a new economy firm. A third shared his frustration with lawyers who produce reams of paper — erudite analysis memos or long complex contracts — when what is needed, and fast, is targeted business advice or short documents that memorialize key commitments. … Surprisingly, the complaints I hear focus far more on the value of legal work than on the cost. … Clients feel that they are paying more and more for legal work that helps them out less and less. There is a way out of the legal morass that surrounds our most innovative businesses, but it involves loosening the near total grip that lawyers have on creating the law and supplying legal services in the U.S. In America, such a notion is often dismissed as a flight of fancy, in no small part because lawyers here so jealously guard their prerogatives. But the process of opening the markets that generate legal infrastructure to investors, managers and others who aren’t lawyers is already under way in the United Kingdom, creating possibilities for legal innovation — and enormous economic advantages — that ought to interest Americans whether they are lawyers or not.
This is a truly groundbreaking article that should be read throughout Silicon Valley and its subsidiaries in Austin, New York and Massachusetts — and then shoved in the face of congressmen of both parties. The piece opens with this provocative quote from the general counsel of Cisco: “Law is too important to be left to lawyers.” Yes, it is. Read this piece, and you’ll understand why.
I love The Economist for its wry wit, its international scope and the distinctive literary style its editors impose on the publication’s writers. (Alternate theory to that last assertion: The Economist has licensed a gene-splicing protocol that allows it to produce infinite numbers of journalists who write permanently with one half-raised eyebrow and refer reflexively to “magazines” as “newspapers.) But boy, when The Economist goes overboard with its free-markets-fix-everything mantra, does it drown everyone in screwball ideological boilerplate. In this post, The Economist decries the International Energy Agency’s decision to put 60 million barrels of stockpiled oil on the market to combat high petroleum prices brought about, primarily, by the uprising in Libya, which, one would hope, is a transitory phenomenon. But the Economistas see this attempt to smooth world oil prices during a time of unpredictable conflict not as a response to emergency, but as unwarranted intervention in a “free” world oil market that is, actually, quite unfree, being buffeted by the political whims of the OPEC cartel, an unprecedented series of uprisings in Middle Eastern countries and predatory speculation in oil futures that, taken together, constitute a clear example of market failure, increasing price volatility in a basic commodity that is price inelastic in the short run. (If you don’t believe me, don’t drive to work the next time speculation drives gasoline prices above $4.50 a gallon and, when your boss complains, tell him you were just responding to market forces.) In this context — as the world struggles to emerge from a major recession and the lingering aftermath of a global financial panic — using the IEA oil reserve to send prices on a soft glide downward seems a reasonable and reasoned act by world leaders concerned with protecting fragile economies. This clearly is an unusual politico-economic situation that is distorting a very imperfect market. Measured government intervention to minimize the distortion — and reduce negative impacts on hundreds of millions of citizens and tens of thousands of businesses — would seem at least a plausible reaction. The Economist‘s dogmatic take?
Plugging a supply gap is all very well. But this sets an unfortunate precedent that the stockpiles are there to smooth the ups and downs of the oil price rather than to guard against genuine emergencies. Moreover, any interventions by the IEA cannot be sustained over the long term when (high) prices will be determined by voracious Asian demand and the difficulties of finding and extracting extra barrels from beneath the earth. Overall, the best solution to a high oil price is a high oil price. Tinkering with that equation is rarely a good idea.
With this piece, I think The Economist failed to think and, instead, spewed out boilerplate drivel that translates, roughly, to: Overall, the best solution to market failure is to ignore it and praise the free market. Tinkering with that equation is rarely a good idea, because our prime demographic is chauffered in Jaguars and thinks of gasoline as an incidental expense the driver (and what’s his name again?) will always take care of.
Amid the ridiculous Tea Party-inspired focus on the national debt and deficit at the very time the government should be spending more money to increase the pace of economic recovery, it’s nice to be able to offer a little fiscal sanity. Here it is, contained in a very readable Center for Economic Policy Research report titled, “7 Things You Need to Know About the National Debt, Deficits, and the Dollar.” Among the report’s seven bullet points are a couple that you ought to shove between the cheeks of your favorite debt-demagoging congressman at every opportunity: Social Security is not in significant financial trouble; the U.S. trade deficit is at the center of the country’s debt problems, which (although it sounds somehow unpatriotic) a weaker dollar would help solve; and the rate of increase in private sector health care costs is the primary driver of the Medicare and Medicaid funding problems that really do threaten America’s long-term financial vitality. Yes, leaving Social Security alone and expanding Obamacare actually are significant parts of a smart, fact-based approach to the long-term fiscal difficulties that the country faces and that ill-timed Tea Party austerity measures would only worsen.
The oversimplified analogy of America to Rome at its moment of imperial overstretch — paralyzed by its own corruptions and indecision and on the verge of implosion — is at least as old as the mid-70s, when the twinned horrors of Vietnam and Watergate slid into stagflation and malaise. Over at The Dish, Andrew Sullivan allows his readers to retail the idea that the barbarians began climbing the gate during the Clinton administration, which seems to me a real confusion of appearance and reality. Yes, media coverage of the Clinton administration certainly gave the impression of decadence and inability to take decisive action. But there’s a problem here: The Clinton presidency was on the whole, by any objective measure, the most successful of my now-fairly-long life. The economy soared; average Americans made more money; federal finances were repaired; government was indeed reinvented; and so on and so forth, in a long litany of accomplishments that any Clintonista can recite off the top of his or her head. The notion that the presidency and government as a whole were corrupt and ineffective, because the president allowed an intern to fellate him, is plain wrong. I suspect that in another couple of years, the Rome metaphor will drop from favor, perhaps for decades. There is a transformation underway, from a world economy of manufacturing run by fossil fuels to a global system based on information and alternative energy. The nation that leads the transformation will be the nation that leads in its ability to innovate. As soon as the fiscal overhang from the genuinely corrupt administration of George W. Bush is cleared — and it will be, in one way or another — the enormous advantage in innovation contained in Silicon Valley and other elements of the U.S. research and development complex, from Austin to Raleigh-Durham to Massachusetts and beyond, will show, slowly at first and then increasingly and dramatically. The new century will be solar, computational and American.