I popped in to Mankiw's talk at the Eastern Economic Association Conference, but only briefly. No personal disrespect to Manks here, but I have a fairly strict policy I like to keep which is this: i don't go to talks given by Economists unless I'm the Economist giving it. I wasn't always like this. I just learned, little-by-little, that Econ talks almost always leave something to be desired, and are usually a complete waste of time.
In any case, "Joe the Plumber", whom Meghan McCain called a "dumbass" was the inspiration for Mankiw's talk. To his credit, the talk was about the rising trend in inequality, but took the Goldin/Katz line that it's all about education and skill-biased technological change. I'd agree with him that, looking at recent US data, it looks pretty convincingly like we've had SBTC. But then, three other basic types of evidence completely contradict SBTC. One is the international evidence -- inequality trends in mainland europe, japan, and korea look nothing like the trends in Anglo-Saxon countries. Secondly, the long-run time series in America also shows that there are periods, which correspond closely to changes in institutions, when inequality ebbs and flows -- which suggests the more obvious conclusion that it's the institutional changes which are important. Thirdly, when we talk about the rise in inequality, we're mostly talking about just the top 1% of the population. And among the top 1%, we're mostly talking about the top .1%. So this has nothing to do with increasing returns to education generally, or any of that nonsense... Perhaps he critiqued the SBTC later in his talk, but I didn't stick around.
Other interesting things are that he's practically a hunchback, he was quite nervous for his talk, and afterwards, at the cocktail reception, after His Big talk, he was really puttin' em' down.
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Walk down the hall of any research lab on your campus. Choose physics, biology, or chemistry. Count the number of foreign post docs and graduate students versus American post docs and grad students. China alone has more smart people than the US has population. That cheap skilled labor has to go somewhere and it's generally staying here because China does not have enough jobs for all of its college graduates ( although that trend may have changed with the GFC ). That's not even taking into account H1-B visas. But the point is that there exists the importation of cheap skilled labor and those people are being used to drive down overall wages of skilled people who live and work in this country. With the outsourcing of certain labor to China and India, the problem is exacerbated. A job that goes overseas is a big loss to society in the form of consumption and tax revenue that is greater than the impact of labor importation, but both are bad for the Middle Class. Even the H1-B visa holders don't like outsourcing since they came here from India and China to make good, and now those jobs are migrating overseas.
ReplyDeleteThorstein: A small matter; in your profile summary you dropped one 'e' in raison d'etre. Needs a quick correction.
ReplyDeleteGood post.
ReplyDeleteLeo at zerohedge linked an alternet article that hits the same points, but with greater, almost excruciating, detail via links.
http://www.zerohedge.com/article/extraordinary-coup
The SBTC argument is pure bunk, as college graduates are seeing some of the highest rates in unemployment growth.
I really wish "Manks," Kudlow, and the rest of the clown car that we call "CNBC" would actually look at data before stammering all of this nonsense. The habit of answering every question with "TAX CUTS!" "FREEDOM!" "PRODUCTIVITY!" "WE'RE #1! WE'RE #1! USA! USA! USA!" before the question is even asked is really irritating.
I guess this is one of the reasons Dubya loved him so much.
http://www.economics.harvard.edu/files/faculty/40_nov00.html (<-The headline of this OpEd is a scream)