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Showing posts from August, 2013

Technology vs. the Middle Class

I previously wrote that we live in the age of the great decoupling.   The decoupling of productivity from employment.  The decoupling of wealth from work.  The key to it all is technology.  Technology is racing ahead and leaving more and more people behind.  As symbolized in so many movies, the race against the machines is already here.  Those that learn to race with the machines are winning.  Those that try to race against the machines are being left behind.  Venture capitalist Marc Andreessen is supposed to have said: “The spread of computers and the Internet will put jobs in two categories: People who tell computers what to do, and people who are told by computers what to do.” Only one of these two job categories will be well paid.
Last week, the Opinionator section of the NYT had a piece on “how technology wrecks the middle class”.  It was written by David H. Autor, a professor of economics at MIT and David Dorn, an assistant professor of economics at the Center for Monetary and …

Recovery and Revolution

I remember some commentators warning about what could happen in August 2013.  Recent economic history has painted August as a month when things can get pretty shaky.  Fortunately, this year the reports in the media this month, suggest that the opposite seems to be happening.  An article in this week’s Economist notes that Eurozone GDP rose by an annualized 1.1% in Q2.  Britain’s recovery continues and in the US, GDP grew faster in Q2 than the initial 1.7% estimate.  In the Pacific, China’s economic indicators continue to be positive and Japan Q2 GDP growth came in at 2.6%.
There are three aspects of the recovery that I want to call attention to.  Firstly, there is the rise in inequality in certain nations.  Secondly, there is the danger posed by more economic bubbles.  Thirdly, there is the role of the United States in the global economy.
Firstly, it is hard to ignore that this recovery has a dark side.  As I have commented on many times before, income inequality is on the rise in m…

The cult of home ownership is dangerous and damaging

There was a July 26th article in the FT which carried the same title as this commentary.  As I read it, two Roberts came to my mind.  The first was Robert Shiller’s (Sterling Professor of Economics at Yale) writing in the NYT on July 13th as he explained why “Owning your own home is not always a virtue”.   The second was Robert Kiyosaki’s Rich Dad, Poor Dad which proved that for many of us, a house is a liability not an asset.  Regardless, the FT piece by Adam Posen makes 4 important points about why this political and cultural preoccupation could be, for some of us, so dangerous.
Firstly, as seen here in the UK, policies to increase home ownership do not necessarily improve the supply or distribution of housing.  In fact, it often works against it.  In fact, the OECD’s Better Life Index shows that no relationship exists between a country’s home-ownership levels and its average housing satisfaction and quality.  As for the British / American notion that higher-income economies must h…