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

David Deming writes,

At the dawn of the 20^th 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.

Martin Gurri writes,

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

substacks referenced above: @

What economists don't know

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Manufacturing jobs boom not reaching places hit by the China Shock

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The World According to Kamala Harris

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The Past, Present, and Future of Office Work