Economics

"When Passionate Advocates Meet Research on Diversity, Does the Honest Broker Stand a Chance?"

A paper based on the Presidential Address Northwestern professor Alice H. Eagly delivered at the 2015 conference of the Society for the Psychological Study of Social Issues. Abstract of the paper (available free online):

In an ideal world, social science research would provide a strong basis for advocacy and social policy. However, advocates sometimes misunderstand or even ignore scientific research in pursuit of their goals, especially when research pertains to controversial questions of social inequality. To illustrate the chasm that can develop between research findings and advocates’ claims, this article addresses two areas: (a) the effects of the gender diversity of corporate boards of directors on firms’ financial performance and (b) the effects of the gender and racial diversity of workgroups on group performance. Despite advocates’ insistence that women on boards enhance corporate performance and that diversity of task groups enhances their performance, research findings are mixed, and repeated meta-analyses have yielded average correlational findings that are null or extremely small. Therefore, social scientists should (a) conduct research to identify the conditions under which the effects of diversity are positive or negative and (b) foster understanding of the social justice gains that can follow from diversity. Unfortunately, promulgation of false generalizations about empirical findings can impede progress in both of these directions. Rather than ignoring or furthering distortions of scientific knowledge to fit advocacy goals, scientists should serve as honest brokers who communicate consensus scientific findings to advocates and policy makers in an effort to encourage exploration of evidence-based policy options.

Link via The American Interest, via Instapundit.


"Declining Mobility and Restrictions on Land Use"

Alex Tabarrok:

Mobility has been slowly falling in the United States since the 1980s. . . .

In fact,mobility has declinedwithin age, gender, race, home ownership status, whether your spouse works or not, income class, and employment status so whatever the cause of declining mobility it has to be big enough to affect large numbers of people across a range of demographics.

My best guess is that the decline in mobility is due to problems in our housing markets (I draw here on an important paper by Peter Ganong and Daniel Shoag).

Note, though, this recent paper, "Understanding the Long-Run Decline in Interstate Migration," present a different hypothesis.

We argue that the fall in migration is due to a decline in the geographic specificity of returns to occupations, together with an increase in workers’ ability to learn about other locations before moving there, through information technology and inexpensive travel.


"Why You Should Think Twice Before Building a Rail Transit System"

I'd urge more than just twice but twice is a start.

Forty years after opening, Metro already faces a maintenance crisis.

This should give other regions pause when it comes to building a rail transit system. My colleague Alex Armlovich points out that NYC has more or less been on a 40 year refresh cycle, with two rounds of major system investment since the subways opened. This doesn’t seem out of line as a capital life heuristic to me.

So cities need to keep in mind that if they build a rail system, they not only have to pay to build it, they pretty much have to pay to rebuild it every 40 years. This is a challenge because as we see it’s easier to muster the will to build something new than to maintain something you already have.


"The exact reasons why Europe is accusing Google of acting like a monopoly"

Even more misconceived than the DOJ's case against Microsoft 15 years ago.

Google created strong incentives for device manufacturers to use the company’s search engine and browser, ensuring those programs would be dominant on Android devices, the European Commission said in a statement. "Based on our investigation thus far, we believe that Google's behaviour denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players, in breach of EU antitrust rules," the European Union's competition commissioner, Margrethe Vestager, said. . . .

According to the commission, Google obliges smartphone makers who want to pre-install Google's popular app store to also pre-install Search and set it as the default search engine on those devices. And the manufacturers who want Google's Play Store or Search also have to pre-install Google's Chrome browser.


"Democrats have lost their minds over the minimum wage"

Nice, brief answers to some of the strange claims recently advanced in favor of a higher minimum wage: minimum wage hikes will lead to productivity-boosting automation, minimum wage hikes helps firms make more money, and two others.

See also "The Left Lets the Veil Drop".

And of course, there's this: "California Labor Union That Fought for $15 Minimum Wage Now Wants an Exemption" and "The Minimum Wage Con".


"The Truth about Trade"

A fine article. Among the excellent points it makes is this one:

. . . there remains no evidence that imports are the primary driver of U.S. manufacturing-job losses, or that the U.S. manufacturing sector is actually in decline. In fact, American manufacturers began slowly and steadily shedding workers as a share of the U.S. work force in the late 1940s and in sheer numerical terms in 1979 — long before the North American Free Trade Agreement existed or Chinese imports were more than a rounding error in U.S. GDP. By contrast, the United States has gained about 54 million jobs since 1980, 30-plus million of which came after the creation of NAFTA and the World Trade Organization in the mid 1990s.

That point is echoed in "What the Presidential Candidates Get Wrong About Free Trade".

Neither trade agreements nor trade caused Rochester’s huge job losses. It was advances in technology, something no one can stop. But technology is the answer as well as the challenge. Investing in both education and research and development is the best hope to save the cities like Rochester, and it has made a lot of progress—creating a new economy around 22 colleges and universities that can and is bringing jobs back.

(See also "The Myth of Middle-Class Job Loss" by Stephen J. Rose. He worked for the Progressive Policy Institute and as an adviser to Robert Reich. Neither is known to be a member of the Vast Right-Wing Conspiracy.)

But perhaps a more important point, a point deserving far greater emphasis than it currently gets, is that in the long run, exports equal imports. So discouraging imports in the name of protecting jobs will discourage exports which will cost jobs. See, for example, "Exports Prop Up Local Economies" (5.5 years old but absolutely just as relevant today):

Columbus, population 40,000, is an export powerhouse thanks largely to diesel-engine maker Cummins Inc.,which has added 1,000 jobs there since 2003. Kingsport, population 44,000, is home toEastman Chemical Co., which is spending $1.3 billion to upgrade its sprawling chemical plant there on the strength of its global sales of plastics and fibers. And Waterloo, population 68,000, owes its healthy export economy to Deere & Co., which has announced its second major investment this year of its tractor plant there. . . . 

Foreign buyers are scouring the U.S. for everything from guitar strings and wine corks to used dump trucks and newsprint. The volume is so great that some inland trade hubs can't find enough metal shipping containers to load products headed overseas.

Or see "The great iPhone trade-off"::

A similar story seems to hold for jobs. Greg Linden, Jason Dedrick and Kenneth Kramer of the University of California, Irvine, look at the jobs created by the old faithful iPod. Their study reckons that the iPod accounted for almost 41,000 jobs worldwide in 2006, and only 30 of those were in manufacturing in the US. But the iPod supported more than 6,000 engineering or other professional jobs in the US – as well as almost 8,000 lower-paid jobs in the likes of retail and distribution. Linden and his colleagues reckon that US workers earned more than two-thirds of all the wages paid to workers in the iPod value chain.

It may well be that many US workers have been hurt by the forces of globalisation. But the iPhone and iPod show why the whole business is complex. Products that are made in China may actually be rewarding producers in Japan and California, and, of course, consumers across the world. It’s a curious paradox: the more pervasive globalisation becomes, the less we understand it by looking at trade statistics.


"Cultural Intelligence"

Arnold Kling:

Socialists and progressives who seek to remake society have typically claimed that their efforts have a scientific basis. Frequently, they accuse their conservative opponents of being anti-science. They dismiss the warnings of Burke, Hayek, and other conservative intellectuals who doubted the ability of the individual scientist-reformer to fully comprehend the social order he proposes to overthrow.

Ironically, there is a growing body of academic research that supports the conservative view of the social process. Thanks to work in a number of related fields, collected in some exceptionally important books published in just the past few years, it is becoming increasingly apparent that progress tends to arise from the evolution of decentralized trial-and-error processes more than from grand schemes launched by planners and revolutionaries.