Saturday, September 21, 2013

Amerisclerosis? Why US underemployment (and probably inequality) persists.

Brad DeLong excerpts Olivier Coibion, Yuriy Gorodnichenko and Dmitri Koustas: Amerisclerosis? The Puzzle of Rising U.S. Unemployment Persistence: "The results suggest that only cultural factors can account for the rising persistence of unemployment in the U.S., but the evolution in mobility and demographics over time should have more than offset the effects of culture."

I can't tell from the excerpt what is meant by cultural factors. It could be "declining labor mobility, changing age structures, and ... decline in trust", in which case the term has a technical meaning rather than the usual way we think of culture.

The "decline in trust" is weird for a non-specialist, I assume it too has a technical meaning.

Declining labor mobility is a bit of a black box; for example if automation were concentrating employment opportunities in high EQ/IQ positions labor mobility would be more genetic than cultural.

I continue to follow these discussions from a non-specialist perspective. I don't know how this can be tested in economic frameworks, but I continue to think we live in a world where the rate of change, largely driven by globalization (India/China) and information technology, has outstripped our ability to adjust and adapt. Perhaps we'll catch up if/when change stabilizes.

Beyond that, I think the rise of massively powerful corporations that dedicate wealth to legal and financial manipulation rather than innovation, combined with an increasingly aged (and, in the true sense of the word, conservative) electorate, is worsening America's ability to adapt.

No comments: