Links to Consider, 11/4/2024
David Deming on information economics and work; Martin Gurri on Obama-Harris foreign policy; Conor O'Brien and Adam Ozimek on manufacturing jobs; Scott Sumner on industrial policy
At the dawn of the 20th century, the U.S. economy was data-scarce – just codifying information alone had economic value. A hundred years later, we are data-drenched, to the point of drowning.
Office work took off in the 20th century, as humans were involved in coding, transmitting, and storing information. But then came the computer and the Internet, replacing and improving on humans at performing those functions.
When information is abundant, the ability to make sense of it becomes especially valuable. This explains why managerial, professional, and technical occupations have grown since 1980, as rapidly as clerical work has declined. These jobs require you to go beyond collecting and storing information.
He sees AI continuing to replace routine office work. He is less confident that AI will replace more complex management tasks.
History, Obama believed, was a long march from violence to benevolence—a pilgrim’s progress that could never be reversed. The rules-based world order, therefore, wasn’t an objective to fight for or an ideal to be defended, but a sort of destiny. All it took was for certain highly evolved, future-oriented individuals, like the president, to explain to the governments of the world the benefits of abandoning their backward ways.
…Aggressors like Vladimir Putin misunderstood their own interests and were to be lectured, not opposed. History would show them the error of their ways.
He speculates that foreign policy under a Harris Presidency would continue to be carried out via words.
Words of great magic power are to be uttered in difficult times: They make inaction appear like action and disaster look like success. Echoed in transnational organizations—NATO, the European Union, the UN—these incantations, though meaningless in themselves, take on the aspect of a second nature, an agreed-upon reality.
Gurri’s critique reminds me of Winston Churchill’s speech in 1936 about Britain’s weak government. He said that they
go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all-powerful to be impotent.
Conor O’Brien and Adam Ozimek write,
those hoping for an “everything bagel” outcome that reshores critical sectors and does so in struggling regions while offering high-wage, unionized jobs might be in for a disappointment.
…post-pandemic manufacturing job growth is disproportionately happening in places that were least exposed to the China Shock.
…By 2023, union manufacturing employment was down 6.8 percent since 2019, while non-union manufacturing employment was only down 1.3 percent.
There is bipartisan stupidity in romanticizing manufacturing jobs. I would guess that men who want to work with things are going to have better luck in the building and construction trades.
But what the economic mix ought to look like is one of the things that economists don’t know. As Scott Sumner puts it,
sanctions ought to be one of the easiest policies to adopt. But we now discover that Germany continues to supply large amounts of industrial goods to Russia, albeit funneled through central Asia. DeLong mentions China’s support for Russia, but you can argue that India has been an even bigger factor, as its imports of Russian oil have surged far more than have Chinese imports of Russian oil. And our foreign policy establishment views Germany and India as friendly nations. Market forces have a way of getting around even the best intentioned policy constraints.
An excellent recent article in The Economist nicely explains the problem. They start out with an anecdote about how US bombers destroyed most of Germany’s ball bearing production in 1943. This was supposed to cripple their war machine. Unfortunately, it had almost no effect. Experts continually underestimate the importance of substitutes
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Napoleon marched into Russia using army boots supplied by British traders that had smuggled them past the Continental Blockade.
His own Marshals made a killing smuggling through the blockade. And all sorts of special interests in French society were able to get special legal exemptions for this or that "critical" thing to be imported.
There was a period very early on in the Continental system where a had bad harvest been combined with more pressure maybe the British could have been broken, but France's own legal exceptions got them through it. All of his attempts to bully and invade allies into joining it were spectacularly counter productive and never would have worked anyway had they gone well. If he put his own brother on the throne of Russia it would have gone no better than his brother on the thrown of Holland.
Sanctions are hard.
"They start out with an anecdote about how US bombers destroyed most of Germany’s ball bearing production in 1943. This was supposed to cripple their war machine. Unfortunately, it had almost no effect."
No, that's not what happened with the Schweinfurt bombing efforts. Indeed, the analysis from the late 50's that "ball bearings didn't matter anyway" was a kind of revisionist sour grapes rationalization to cover up a fiasco. Even at the time they tried to cover for it by exaggerating German air losses by 300%, and the 'unimportance' is belied by the intelligence collected of the Germans thinking that, yeah, actually, the plants were important, especially since the industry was concentrated in just a few huge factories in one region "the bottleneck", and furthermore inferrable by their reallocation of robust amounts of scarce military resources to protect them, and a snap campaign to disperse production elsewhere in Germany as fast as possible specifically to reduce the vulnerability to expected subsequent bombings, an effort which proved prescient and successful. The first attempt in August 43 took out about a third of production but at very high cost in lost air power as by then the Germans were getting better and better at air defense, despite not having RADAR. That did indeed threaten to hit the German war machine hard - and had the mission been twice as efficient it could have indeed crushed the German war machine early, but the chance was missed, and the Germans had the opportunity to recover. The Germans had enough spare reserve stock and undamaged capacity to keep going while they rebuilt production, and, as you can probably guess, continue to substantially augment the air defense for it. Yes, they were able to replace lost capacity and buy some bearings from abroad from neutral countries, but this was hardly an equivalent substitute, as much more delayed, risky, and costly. The US had to wait two months to try again, this time thinking the addition of a lot more fighter escorts would help, but instead it was a total disaster, "Black Thursday", with a quarter of aircraft destroyed, another 40% damaged, 650 highly-trained bomber pilots and crewmen (a quarter) lost. The 305th BG was entirely annihilated. The gain was to shut down all bearing production in the region until 44, but by then there were new plants elsewhere and the loss was so great the US -lost- air superiority over Germany as a consequence for four months until "Big Week" in late February helped set the stage for D-Day.