Signaling with degrees

If I were still teaching economics, I might use this article from Inside Higher Ed. It considers the possibility that higher ed is nothing more than signaling. Most examples that use economic concepts are esoteric to college students who have very limited experiences. But the question of whether going to college is a good decision or not is something that they can relate to.

External economies

Forbes discovers external economies: Why Amazon Can't Make A Kindle In the USA

(I recall reading the same about shoe manufacturing. It is almost impossible to make shoes in the US because all the support industries are gone. And it is the same reason that Silicon Valley was so productive--the large concentration of similar industries drove down costs for all of them.)

Memories

Do you remember the good old days:

The rapid improvement in the public's mood is without precedent in modern history. Last week's Washington Post poll found that 50 percent of Americans think things are generally going in the right direction, up from only 8 percent in early October. That's the quickest change in optimism since the question was first asked by The Post in 1980. Views of President Obama, in turn, were impossibly high: Ninety percent called him willing to listen to different views, and better than 70 percent called him a strong leader, honest and trustworthy, and understanding of people's problems.

And that was before happiness started busting out all over yesterday.

A ranting Brit

A bit of an impressive rant from England:

Now we know why they don’t call themselves ‘police forces’ any more. But they aren’t ‘services’ either, for they certainly don’t serve us or do what we want them to do, preferring to arrest us for defending ourselves. The criminals, who are cunning without being intelligent, all know this.

Read more: http://www.dailymail.co.uk/news/article-2025695/UK-riots-Police-water-cannon-plastic-bullets-After-50-years-lavish-welfare-state-earth-What-abject-failure-says-Peter-Hitchens.html#ixzz1V6Erdk8v

Rising to the top

From the MailOnline: Narcissists rise to the top because people mistake their confidence and authority for leadership qualities.  This helps explain a lot about the world around us.

2½ years. What?

I cannot find the original quote, but if he said it, it is a major gaffe:

Last night Obama was in New York for a fund-raiser. At that event he elaborated on the "you deserve better" theme: "What was remarkable was to see outside of Washington the enthusiasm, the energy, the hopefulness, the decency of the American people. And what I said to them is you deserve better. You deserve better than you've been getting out of Washington over the last 2½ months--for that matter, for the last 2½ years."

How smart is the president?

From Bret Stephens at the Wall Street Journal:

I don't buy it. I just think the president isn't very bright.

Socrates taught that wisdom begins in the recognition of how little we know. Mr. Obama is perpetually intent on telling us how much he knows. Aristotle wrote that the type of intelligence most needed in politics is prudence, which in turn requires experience. Mr. Obama came to office with no experience. Plutarch warned that flattery "makes itself an obstacle and pestilence to great houses and great affairs." Today's White House, more so than any in memory, is stuffed with flatterers.

Is this past week the time in which the median voters have started to acknowledge that the emperor has no clothes?

Some employment statistics

The Bureau of Labor Statistics (BLS) released the July unemployment rate this morning. The headline was that the rate dropped from 9.2% to 9.1%.

Some digging into the data shows that since 1948, the oldest data BLS has, there have been 45 months in which the unemployment rate has been 9% or higher. One occurred in the first Nixon administration, 19 occurred during the first Reagan administration, and 25 (or 55% of the total) occurred during the 31 months of the Obama administration.

The Obama administration looks better if we look at months in which the unemployment rate was 8% or higher. Nixon/Ford had 12 months, Reagan had 27, and Obama 30.

Both Nixon and Reagan won second terms. At this point in the Nixon administration the unemployment rate was 8.6% and it fell to 7.6% in September of election year, which would have been the last data available before the election. For Reagan the numbers were 9.4% to 7.3%.

Looking at the unemployment rate, the current situation seems much like what happened in the 1980s, though perhaps not as severe. However, a difference between now and then is that in the last few years we have had a large drop in the labor force. People have stopped looking for jobs and no longer are counted as unemployed. Looking at the employment data rather than the unemployment rate shows that the current downturn was much more severe than the two downturns in the 1970s and 1980s.

Employment peaked in January 1974 and then declined by 3.37% over the next 17 months. It took another 14 months to surpass the January 1984 peak.

Employment peaked in February, 1980 and declined by 3.82% over the next 36 months. However, it took only ten months from there to surpass the February, 1980 peak.

In our most recent downturn, employment peaked in March of 2007 and declined by 7.42% over the next 32 months. Nineteen months later we still have not reached the previous employment peak--we have regained only 22% of the jobs lost. The current downturn is almost twice as severe as the very serious downturn in the early 1980s based on the employment data.

(All numbers based on data from the BLS website.)

The Philippines

Every once in a while I check quantcast.com to see what they have to say about my website. I was puzzled by what I saw this week (Click on the graph to see it all):

The brown part of the graph shows visits from the Philippines, and in June my site was getting as many visits from the Philippines as it was from the U.S. I have do not know why, though I suspect that some course there was using the site for class assignments.

Usage of the site reflects what happens at school. Use is heavy from Monday through Friday and drops off dramatically on Saturday and Sunday. Visits are lower in the summer than they are during the school year. Christmas and Thanksgiving vacations are evident, though not shown on this graph. Visits for the first semester have been higher than visits for the second semester.

The most recent report says that 157584 websites sites have bigger U.S. audiences.

High praise not deserved

I occasionally review books, and sometimes they come with endorsements from famous economists. Most of the time those endorsements are deserved, but every once in a while a book that is mediocre at best, or something that never should have been published at worst, arrives with a dusk jacket full of glowing words of praise from well-known economists. I am reading on such a book now. Obviously none of the big-name economists who recommended it had read it--the target audience of the book was not professional economists. So why did they endorse it? Do they not worry that actions like this might reduce their credibility? Or is credibility of economists based only on research ability, so that a string of poorly-advised endorsements does not harm?

I suspect that the reason that this book got the undeserved praise is that the endorsers either know the author or want to be nice to the publisher. One thing that bothers me about this is that it tilts the playing field toward those who already have arrived and makes it more difficult for talented but unconnected authors to break through. I have read excellent books by little-known authors--not a lot, but they do exist. I have also read a number of forgettable books by authors with reputations.