Does the Import of Manufactured Goods Destroy US Jobs?

One of the implications of being home rather than at school is that at home not everyone has drunk the economics Kool-Aid, so to speak.  I have to grapple with opinions that I never hear around campus.  One frequently raised issue is trade with China, more specifically the effects of importing of manufacturing goods and having a negative balance of trade on manufacturing jobs and the US economy as a whole.  Many people at home think that the negative balance of trade destroys US manufacturing as Americans buy more imported goods.

Russel Roberts, the host of Econtalk, has a great essay responding to this point of view available here.  You will have to check out the original for the excellent charts that back up each of his claims, but his main points are the following:

1. Even though the United States has only run a persistent trade deficit since 1976, the long term increasing job creation trend did not change after 1976.

2. The relative number of manufacturing jobs to other American jobs has declined steadily since World War II, with no trend change in 1976.

3. During the same period, there have been huge productivity gains in American manufacturing.  Roberts shows that even though there are less manufacturing workers today than there were in 1959, there is 4.7 times more domestic manufacturing output today.

Roberts makes a few more points as well.  Read the whole article if you get a chance.

Pushing and Pulling towards Taiwan

I am taking advantage of my summer vacation to read up on the economics of migration, the topic on which I am going to write my master’s thesis.  Today I read part of one of my adviser’s papers about the effects of migration on fertility.   The underlying factor driving migration in her model is the differential in wages between rich countries and poor countries.  The idea is that the larger income increase an individual can get from migrating, the more likely he is to go.

The idea seems straightforward enough, but then I thought about my adviser herself.  She got her PHD a few years ago from UCLA, and for academics with American degrees there are few barriers to migration.  Combine this with the fact that teaching in Taiwan pays very, very little compared with an American university position (~$30,000/year vs. $94,000/year), and it seems like my adviser’s model would have a hard time explaining her own behavior.  Moreover, every single one of my professors last year at National Taiwan University had an American degree.

I suppose that proximity to one’s family or living in a familiar culture could also be considered wage factors, but with such a large nominal gap, one would not expect so many professors with American degrees to teach at NTU.

Elections and Torture

Last night my family and I had a discussion about whether or not it makes sense to vote.  I was arguing that since state or national elections are never decided by one vote, it doesn’t make sense for any individual to vote since voting is costly in terms of time.  Although our family friend Craig Ostrand, a Republican, was thrilled that I was thinking of not voting, the rest of my family chimed in with the usual argument: My point is correct for an individual, but if everybody thought that way then no one would vote. Therefore, everyone should vote to prevent the outcome in which no one votes.

The whole discussion reminds me of Derek Parfit’s Harmless Torturer story.  Even if each torturer adds an unnoticable amount of pain to a victim, since together they cause pain what they are doing is still bad.  I often think of this example when confronting moral problems.  A single person littering, for instance, may not make the streets of a city noticably filthy, but the behavior is still bad.  Similarly, I don’t expect the meat industry to close down since my decision a few months back to become a vegatarian.  But I still think that being a vegetarian is good.

Voting seems like a similar case.  My family was right to point out that if everyone thought that voting was irrational and didn’t vote, then elections would cease to work.   Of course, once few enough people were voting, a rational person would begin voting again since a single vote would be worth more, but that is beside the point.  The most important difference between Parfit’s torturers and voters is that we all agree that torturing is bad, but it is not necessarily true that voting is good.  Without getting into a discussion of the moral status of voting, it is at least plausible that an intelligent person might consider voting amoral.  If voting is not good or bad in a moral sense, than one is free to decide whether the cost of taking time to vote is worth the expected impact of one’s vote on an election without considering the moral implications of everyone else not voting.  On the other hand, if one believes that voting is virtuous and not voting is wrong, than one has a responsibility to vote.

When money becomes meaningless…

Maybe the residents of Zimbabwe should think about cowry shells or gold coins…

My First Earthquake

Petek and I were just getting to sleep last night when the walls started shaking.  We jumped out of bed, but before we could figure out what to do it was over.  The shaking lasted for about ten seconds, and there were several noticeable aftershocks over the next hour or so.

According to the news, the earthquake registered 6.0 on the Richter scale.  The epicenter was near Ilan, about 20 miles away from our apartment.  This was a moderate to strong earthquake and frightening enough, but it was (of course) dwarfed by the size of the Sichuan earthquake last month.  Since the Richter scale is a logarithmic measure of shaking amplitude, last night’s earthquake shook us 1/100th of the amplitude that the 8.0 Sichuan earthquake shook the Chinese (10^(8.0-6.0) = 100).  Making the comparison more complicated, the power of earthquakes apparently scales at 1.5 on the Richter scale, so last night’s earthquake was 1/1000 as powerful as the Sichuan earthquake ((10^(8.0-6.0))^1.5 = 1000).

The most surprising thing about the experience was that no one mentioned it this morning.  When I brought the earthquake up, my classmates told me they felt it but thought nothing of it.  Foiled again by habituation.

Having been really so bad?

David Benatar’s anti-natalist monograph Better Never to Have Been left me unconvinced.  The short book presents Mr. Benatar’s simple argument in favor of non-existence, describes how life is more harmful than most people think, and discusses the implications of Mr. Benatar’s view.

The non-existence argument is so simple I can sum it up in several sentences (if I read it correctly).  The absence of suffering is always good even if there is no one to be not suffering.  The absence of pleasure is however merely neutral, neither bad nor good.  Thus not having a child is always good, because no matter how pleasurable a child’s life may be, there will always be some suffering.

If Benatar had convinced me that this asymmetry between pleasure and suffering was real, his conclusions would have been hard to argue with.   Unfortunately, he didn’t explain why the absence of pleasure is only neutral, and not bad.  The closest he comes to defending the asymmetry is to say that if we accept that the absence of pleasure is bad, we must have as many potentially happy children as possible, and regret that there are uninhabited islands on which people could pleasurably live.  It is strange that someone who is advocating the cessation of childbirth and extinction of the human race would be unwilling to accept these much less counter-intuitive conclusions.

Benatar is on stronger footing when he discusses the harmfulness of life.  The discussion is more complicated than the asymmetry argument, but most convincingly Benatar notes that even the people with the most satisfying lives spend much of their time stressed out, tired, uncomfortable, hungry, having to go to the bathroom, etc.  Nearly everyone’s life has some events of profound suffering, such as grieving the loss of loved ones.  Moreover, many people have profoundly unhappy lives (malnutrition, war, etc.).   Even here, though, there is a way around Benatar’s argument.  Certainly some people are more likely than others to have happy children.  People in a country like the Democratic Republic of Congo, for instance, with its extended, brutal, ongoing civil war are likely to have children that profoundly suffer.  But on the other hand, a very rich family in Switzerland might be relatively likely to have happy children.  As long as the Swiss family has a high chance of having a happy child, it doesn’t seem immoral for them to give birth.  This, of course, if we reject the asymmetry argument.

On the whole, the book was provocative and peppered with interesting digressions and a surprising variety of famous peoples’ anti-natalist quotes.  It was worth reading, but in the end left me where I started–on the fence about the kid question.

Childless by Choice?

In the last several weeks I have brought up the subject of having children with two childless married couples I know.  Both dropped a hint about how not everyone can have children and subtly changed the topic.  I didn’t press further.   These two families already represent most of the married people I know who don’t have children.

I realize that when I was growing up my parents tended to hang out with other parents, and that most of my friends are still not married.  Also, I guess many people get married to raise a family, so I shouldn’t be surprised that those who do tie the knot also have children.  But there must be some people out there who marry, have the ability to have children, but choose not to, right?

I’ve had fertility on mind lately for obvious reasons.  I have been following the great Wilkinson-Caplan debates, am part way through Better to Never Have Been by David Benatar, and am taking a family economics course.  I am on the fence about children.  Your thoughts?

A pleasant day on Mars

Lying Parents

All of them are.   Paul Graham considers some of the lies, why parents tell them, and their benefits/costs.  Here is an excerpt:

Some parents feel a strong adherence to an ethnic or religious group and want their kids to feel it too. This usually requires two different kinds of lying: the first is to tell the child that he or she is an X, and the second is whatever specific lies Xes differentiate themselves by believing…One reason this works so well is the second kind of lie involved. The truth is common property. You can’t distinguish your group by doing things that are rational, and believing things that are true. If you want to set yourself apart from other people, you have to do things that are arbitrary, and believe things that are false. And after having spent their whole lives doing things that are arbitrary and believing things that are false, and being regarded as odd by “outsiders” on that account, the cognitive dissonance pushing children to regard themselves as Xes must be enormous. If they aren’t an X, why are they attached to all these arbitrary beliefs and customs? If they aren’t an X, why do all the non-Xes call them one?

The Turks I have known are always careful to add “Mashallah” or “Thank god” after giving a compliment to the old or young.  The idea is to prevent accidentally giving the object of the compliment the “evil eye”.  Americans take off their hats and put their hands over their hearts when they hear their national anthem.  Many Christians make a point of saying grace before every meal.  Taiwanese Buddhists refuse to eat garlic.  These are just some arbitrary customs, false beliefs give even stronger examples.

It seems plausible that if you have spent a minute saying grace before every meal for your entire life (or childhood), for you to renounce Christianity you would need to admit that you wasted all those minutes doing something useless and silly.  Therefore, it is likely that you will continue to be consider yourself Christian and keep saying grace.  Moreover, the longer one continues doing something, the higher the costs of admitting it is a silly behavior.  Have you ever noticed that the elderly can be set in their ways, even if there is an obvious way of doing things better?
The Graham article is interesting throughout, recommended reading.

Hat tip: Robin Hanson

Free != Free

What’s the difference between Gmail and Wikipedia? Both are very good free products, but Gmail is a for profit venture by a for profit firm. No one is making money off of Wikipedia, and yet its quality is similar to that of the best encyclopedias. Why are people putting out such high quality product for no (monetary) compensation?

Are Economists going to have to pick a new motto? Maybe we can talk about it over lunch.

Hat tip: Chris Anderson on Econtalk