I really disagree with this "low-hanging fruit" idea. I used to work as a theoretical physicist at a major university until around ten years ago, and the problem I saw then was certainly not a lack of good ideas to work on. I had far more good ideas than I knew what to do with, and so did most of my colleagues.
The problem is that academia is just a shithole--poor funding, time increasingly consumed by administrative tasks, micromanagement of every activity, and absolutely insane decisions being made at really every turn.
Undergraduates are required to buy low-quality intro textbooks costing upwards of $500 (which you have to buy slightly different versions of every quarter for multi-quarter classes), are given department-assigned and graded homework and exams (professors were forbidden from doing either because the committee knows best), are largely unprepared (many didn't have a good grasp of even algebra), etc...
I just don't honestly see how anyone can look at a situation like that and say "yeah the problem is obviously that there are no good ideas left." The problem is that academia is oppressive, frustrating, and demoralizing, and it just isn't possible to consistently do good work in an environment like that. Pick up, say, one of Feynman's autobiographies and compare his academic experiences to a modern university.
As someone who is on the staff side of things at a university, I see this problem stemming from the fact that universities have two competing business models that are mostly at odds with each other: 1) recruiting, retaining, and graduating of large number of undergraduates and masters-level students (and a much smaller number of doctoral students), and b) the research/publishing industrial complex. Both require a ton of resources, but a) is more straightforward and clear in how it leads to revenue generation, so it usually crowds out b). More needs to be done to decouple these business models (more purely research institutes, more purely teaching institutions, or at least arms of institutions that are more loosely organized together to give the competing models more independence from each other) in my opinion.
Textbooks, at least, is getting better. There are high quality open source textbooks now for many courses (my wife always uses them to teach philosophical logic). Unfortunately, the big textbook makers are very good at pushing universities to adopt policies or IT systems that make this kind of thing more difficult.
While academia is inefficient in many ways if you dive into the numbers the individual labs arent really experiencing any cost inflation in administration. But yes the overhead of a huge number of random admin offices and responsibilities eats away at money that otherwise could go to research.
Part of the problem is that we pretend all the endowment etc is about education but the real orientation is toward research and status which means there is a mismatch between what the faculty can effictively oversee and what programs get launched.
I work in the private sector where I use a fair amount of research and published papers. There are more journals out today than 40 years ago and they are bigger with many more pages per year. A lot of it is repetitive schlock. Why publish one paper when you can get 5 or 10 from the same amount of research? I have to sift through way more papers to find the same number of key papers that I would have used 40 years ago. I have gotten pretty good at figuring out who is asking the incisive questions and writing interesting, useful papers. A lot of papers today are just data point papers where somebody is doing experiments and publishing the data without being able to put it into a comprehensive framework. Some of them will actually put new data in new papers; other times it is the same stuff with some variation on the conclusions and recommendations.
This is in large part a failure to move to a post publication style review. Rather than measuring contribution by the publication we should have websites that allow people in the field to rate papers after the fact and score them in that fashion as well as creating a permanent record of the discussion of those papers.
Unfortunately, this is in tension with the interests of for profit journals publishers making it harder to set up.
Love how noncompetes are non-enforceable in California. We're not unionized (very few physicians are) so it's the best pressure point we have against management and to reset some internal power dynamics.
Medicine doesn't have any proprietary knowledge when it comes to patient care so noncompetes are just anti-labor, especially since there are only a few practice opportunities in a region.
Also have spent some time doing research. Re: disruption, I agree with the "same needles, bigger haystack" phenomenon. Bigger journals may also not do a good job identifying the disruptive stuff since they're gummed up with submissions! We had a paper that we couldn't find a home for pre-covid (found a low-impact journal just to get it on PubMed) but became heavily-cited because it became highly relevant with covid disruptions.
What's most interesting to me is how many discoveries are now effectively the products of academic networks. Yeah, the low-hanging fruit discoverable by individual labs has been found but we're finding better ways to do and share research. There's a very interesting story about the surgeon who did the first laparoscopic cholecystectomy (one of the most common surgeries performed). The German gatekeepers disapproved, there was no PubMed, and things were siloed by language and custom.
You are a brilliant and interesting thinker and I am happy to read whatever you write. I even follow you on Twitter. I enjoyed the three sections because it is a weekend and I have more time, but generally it is hard to find the time to read longer articles during the week.
Ahh haha yeah, I will try to stick to shorter posts, I just wanted to write about all three of those things and I have a big backlog of stuff to write about...
I agree with this. The my reading workflow usually includes finding something I can start and complete while I have X available minutes (two young kids, so this varies), and then saving or archiving it once I’m done. Maybe counterintuitively, this means that I would actually prefer three mini posts to one post with a portfolio of topics in it...
You asked for an opinion about the types of newsletters that your readers prefer. But, I’m sorry that I cannot help you evaluate this issue because I’m finding that I like both versions that you asked about. This shorter version with three subjects I found interesting because each subject had observations that I either did not know much about or had not considered, and now, I’m thinking about those things you presented.
Your single issue newsletters I also look forward to reading because you’ve given the issue a lot of thought and research so now I can do the same thing. That is what a good communicator does. Thanks for do it, and I feel I’m getting good value for my subscription and the time I allot to reading what you write.
Hope this helps. It is simplistic, I know, but it is why I subscribe.
Re wage-price spirals: in the Nordics, wage changes for workers (incl. white collar) are still often collectively negtiated between employer and employee unions. Because these economiew are small, open and export-driven, there can be mutual interest in ensuring export competitiveness. Not an economist, but I would assume that there is a lot of research looking into the effect on inflation of these mechanisms.
This is also true for the Netherlands, where unions (of both employees and employers) set collective wage agreements that are followed by both union members and non-members. Wage moderation was a huge part of economic policy in the 1980s, and more or less imposed to overcome the Dutch Disease of the 1970s.
Germany followed a policy of wage moderation in the euro-crisis of the 2010s which did wonders for its employment rate, but was hated by the Southern European states because they became less competitive vis-a-vis Germany as a result.
So, there is some precedent for wage moderation in Europe, but these are mostly single countries in a larger union with lower labor mobility than the US. Not too sure if this would ever work for the US.
As a non-economist who's never taken an economics course, I am perpetually baffled by the seeming absence in nearly all "professional" discussions of inflation of an assessment of the role of human agency in creating it. Prices don't raise themselves: The price of any given thing will only rise if some human being -- or a human-designed algorithm -- actually decides to raise it, and then refuses to sell that thing to prospective buyers at anything less than the new price. Has anyone ever attempted to document this process? If the price of a gallon of milk I purchase at my local grocery story goes up by 50 cents, who, exactly, made that happen, and why? Presumably, someone, somewhere in the chain of production and distribution that leads from the cow that created the milk in the first place to the grocer who sells it, must have made a decision to raise the price of whatever good or service they contribute to the production or distribution of that gallon on milk: Who did that? Why? What happened further up (and down) the chain in response to that initial decision, and why?
Has anyone ever bothered to figure this sort of thing out? Inflation is an empirical phenomenon that originates with decisions made by human beings to raise prices. How can an economy-wide phenomenon possibly be modelled, predicted, understood and controlled if that phenomenon hasn't been studied granularly, at the level of actual human beings making decisions to raise prices for particular goods and services?
As another non-economist who's never taken an economics course, but has been reading many posts like this since 2008, it is my understanding that what you describe is the field of microeconomics, which has been well studied and is generally better understood. So now we come away from that with an understanding that all sellers always want to raise their prices, and their workers would always appreciate higher pay, but why is this happening now? What coordination mechanism led this many workers to demand higher pay at this particular time, or for so many sellers to raise their prices now and not 2, 3, or 5 years ago? That's where we move from micro to macro and try to understand the circumstances leading to his results.
In my capacity of the sales manager at "your local dairy," I often find that I have not enough milk to make all of my deliveries. To avoid angering my customers, I offer the milk at a price estimated to reduce desired quantities to match the quantity of milk I have available to deliver. Presumably, the stores then raise their price to make up for that additional cost.
That's very interesting. I have so many questions. Here's just one: If you've got a limited supply of milk, why don't you sell it to your grocers on a pro rata basis at whatever price enables you to meet your profit margin target? No one grocer gets the amount they would like to have purchased, but all grocers get some. Do you think grocers would be angrier about getting a reduced quantity of milk than they'd be about being unable to afford your milk altogether and thus getting none?
I am a corporation in a capitalist society. My prices have always been set in an effort to maximize profit. This general rule/methodology allows prices to automatically adjust to meet supply and demand levels. Why fix it if it isn't broke, I guess.
I get that profit maximization is the goal. I'm just curious about your strategy. Unless there are no other dairies available to supply milk to the grocery stores to whom you sell (at a price they are willing and able to pay), then one element of your profit maximization strategy must be to retain those grocery stores as customers. If I'm understanding you correctly, you don't seem to think that rationing the supply of milk to your customers solely on the basis of their willingness to pay -- with the result that some may wind up getting no milk at all when supply is limited -- has enough of a net effect on customer loyalty to negatively effect your long-term profitability: Your customers will remain loyal even if, occasionally, they can't afford your milk. Is that your thinking?
If that strategy works for you, then, you're right: Don't fix it if it ain't broken.
And we have a novel reason for the shortage of goods: a pandemic substantially reduced populations. Although the deaths have primarily taken old people, the workforce has adjusted. Workers are harder to hire and demand higher wages. With fewer workers, both goods and services are not as plentiful, and people are willing to pay more for scarce goods and services. Adjusting the money supply to slow production further reduces the supply of goods and services, which makes people eager to pay even more.
This sounds like an inflationary upward spiral to me. The central banks are pumping gasoline on the fire, and the pandemic continues to decrease the supply of workers. What fun!
Agree on the supply chain disruptions. Not only labor, though. Businesses got shut down. Imports got suffocated. Energy prices spiked.
The problem was that we pushed demand much higher with the insane fiscal policy and the accommodating and clueless monetary policy. We're reaping what we explicitly sowed.
Policy isn't going to be increasing supply for awhile. They just put in a bunch of tax increases that will slow investment, further squeezing supply. China is writhing with covid, further constricting supply. Europe business is reeling from the war. We have to match demand to those constraints, i.e., reducing the money supply, QT, higher rates, etc.
It wasn't just deaths; with children not able to physically attend school, many parents had to spend much more time taking care of children instead of working.
Absolutely no valid reason to have them! Medical care or administration isn't a trade secret and the point of their research stuff is to publish (or patent) publicly!
Does the proliferation of noncompetes say anything in formal terms about most people's intuitive sense that capital has more leverage than labor in wage negotiations? Simplistically, a noncompete is just a wealth transfer from employee to employer that would usually demand (at a minimum) a higher compensating wage to offset.
But while if you squint you can see how for high-level knowledge workers in highly-paying industries this might fit, I think it's clear that this completely breaks down at the point at which Jimmy John's subway sandwich shops are able to adopt them. That seems much more likely to reflect a structural lack of labor negotiating power than a kind of high level wage/restriction/investment tradeoff.
"Blanchard and Krugman yearn for a planning regime where the government basically coordinates between companies and workers... though who knows if it could ever really work in real life..."
Maybe the history of Australia's prices and incomes accord 1983-96 and other interventions by the Hawke government (using the national system of industrial arbitration and other powers, policies, negotiations and persuasion) provide some partial answers to the question.
Australia has a very good system of wage boards (sector-specific minimum wages), which I don't think is well-known because Australians' habit of giving everything inscrutable slang names like "bottleo" and "chazzwazzers" even extends to their labor rights, so nobody else understands how it works.
(Try and guess what "award" "casual" "super" mean without looking them up.)
Is inflation just a vicious cycle like the never ending dog chasing its tail or egg & chicken argument. There is no overall inflation until something changes, ie the balance is upset by raising prices, which will then increase the demand by labour for higher wages. But it will always be a question of what came first. BigCorp's demand for profit has always been there but the Gov't has stepped in to provide incentives to temper that demand - QE, tax cuts, bail-outs have all made profits easier to come by on the balance sheet.
Clearly, in the process of stopping those incentives, BigCorp is pushing back by raising prices to achieve profit motivations & the cycle responds accordingly.
My questions: can there be an equilibrium of profit/price/costs/incentives based on 2% inflation? Must there always be a 'thumb-on-the-scale' somewhere to achieve that balance or must we accept an economy, a society where, 'Privatise the profit & Socialize the cost' is the norm?
As a retired economics professor, I don't need you to apologize for a wonky post. After forty years studying econ, I still find many aspects of the field fascinating. So much so, that every time I see a meeting announcement I'm tempted to go. Regarding the decline in "disruptive" research, I believe refereed journal publication is responsible for much of the decline.
Because academic administrators desire qualifiable metrics, refereed journal acceptances aware highly valued. This has two consequences. First at institutions with lower levels of research support, it produces a good of low quality research to low quality journals. However, there may be some wheat among the chaff. The other consequence is what I refer to as "sausage making". This involves applying the same technique repeatedly to various days sets. This results in "high" productivity from an academic administrator's perspective but little disruption.
The other difficulty with peer review is that it locks in existing heirachies of quality research. Once again, there are two channels by which the process stifles disruption. Academic affiliation plays a too significant role in the seriousness with which a submission is considered. This is to a certain extent understandable, a paper from these backgrounds will likely have been presented on the seminar circuit. So the refereeing will not be completely blind. The more significant source of disfunction lies in the choice of reviewers. When an editor receives a potentially disruptive paper they will invariably choose an established scholar in the field. Such a reviewer may have a vested interest in not seeing their own contributions finished. I've consciously not personalized this, but I have friends whose innovative work had been rejected despite is apparent merits.
This is not sour grapes by the way. My research record was modest, definitely not disruptive.
As a business owner/employer, I only use noncompetes for senior management roles and high-level sales roles. It feels reasonable to me that if you’re going to get a bunch of insider information about a company (customer lists, employees, margin data, etc.), you shouldn’t be able to just walk next door and sell it off. Creates a very ugly environment.
Agreements should be reasonable and commensurate with the job, but in practice I think getting rid of all noncompete/non-diversion agreements would result in an uglier market equilibrium. You’d probably see a replacement of noncompetes with some form of compensation claw-backs instead, as well as a stronger reluctance to hire. No employer is just going to expose themselves without some defense mechanism.
Top employees in California are typically tech employees. Tech employees are paid disproportionately in RSUs, which have 3-4 year vesting schedules. The incentives to stay (you can think of them as compensation claw-backs) are right there.
Also, large Bay Area companies famously had tacit agreements between each other to not poach. They got in big trouble over this.
I’m a lawyer working for a software company that isn’t based out of California. Non-competes are non-existent in the industry and the most sought after engineers would laugh if a prospective employer tried to make them sign one. Piecing the history together I suspect this practice arises out of California’s ban on non-competes, but is now industry standard.
I sympathize with your concerns but they can all be covered by a standard confidentially agreement or provision which would allow greater worker freedom while still protecting your business. I say this as someone who has drafted many non-competes and enforced the same.
I really disagree with this "low-hanging fruit" idea. I used to work as a theoretical physicist at a major university until around ten years ago, and the problem I saw then was certainly not a lack of good ideas to work on. I had far more good ideas than I knew what to do with, and so did most of my colleagues.
The problem is that academia is just a shithole--poor funding, time increasingly consumed by administrative tasks, micromanagement of every activity, and absolutely insane decisions being made at really every turn.
Undergraduates are required to buy low-quality intro textbooks costing upwards of $500 (which you have to buy slightly different versions of every quarter for multi-quarter classes), are given department-assigned and graded homework and exams (professors were forbidden from doing either because the committee knows best), are largely unprepared (many didn't have a good grasp of even algebra), etc...
I just don't honestly see how anyone can look at a situation like that and say "yeah the problem is obviously that there are no good ideas left." The problem is that academia is oppressive, frustrating, and demoralizing, and it just isn't possible to consistently do good work in an environment like that. Pick up, say, one of Feynman's autobiographies and compare his academic experiences to a modern university.
Oof. Yeah, that's not good.
As someone who is on the staff side of things at a university, I see this problem stemming from the fact that universities have two competing business models that are mostly at odds with each other: 1) recruiting, retaining, and graduating of large number of undergraduates and masters-level students (and a much smaller number of doctoral students), and b) the research/publishing industrial complex. Both require a ton of resources, but a) is more straightforward and clear in how it leads to revenue generation, so it usually crowds out b). More needs to be done to decouple these business models (more purely research institutes, more purely teaching institutions, or at least arms of institutions that are more loosely organized together to give the competing models more independence from each other) in my opinion.
Textbooks, at least, is getting better. There are high quality open source textbooks now for many courses (my wife always uses them to teach philosophical logic). Unfortunately, the big textbook makers are very good at pushing universities to adopt policies or IT systems that make this kind of thing more difficult.
While academia is inefficient in many ways if you dive into the numbers the individual labs arent really experiencing any cost inflation in administration. But yes the overhead of a huge number of random admin offices and responsibilities eats away at money that otherwise could go to research.
Part of the problem is that we pretend all the endowment etc is about education but the real orientation is toward research and status which means there is a mismatch between what the faculty can effictively oversee and what programs get launched.
I work in the private sector where I use a fair amount of research and published papers. There are more journals out today than 40 years ago and they are bigger with many more pages per year. A lot of it is repetitive schlock. Why publish one paper when you can get 5 or 10 from the same amount of research? I have to sift through way more papers to find the same number of key papers that I would have used 40 years ago. I have gotten pretty good at figuring out who is asking the incisive questions and writing interesting, useful papers. A lot of papers today are just data point papers where somebody is doing experiments and publishing the data without being able to put it into a comprehensive framework. Some of them will actually put new data in new papers; other times it is the same stuff with some variation on the conclusions and recommendations.
This is in large part a failure to move to a post publication style review. Rather than measuring contribution by the publication we should have websites that allow people in the field to rate papers after the fact and score them in that fashion as well as creating a permanent record of the discussion of those papers.
Unfortunately, this is in tension with the interests of for profit journals publishers making it harder to set up.
Love how noncompetes are non-enforceable in California. We're not unionized (very few physicians are) so it's the best pressure point we have against management and to reset some internal power dynamics.
Medicine doesn't have any proprietary knowledge when it comes to patient care so noncompetes are just anti-labor, especially since there are only a few practice opportunities in a region.
Also have spent some time doing research. Re: disruption, I agree with the "same needles, bigger haystack" phenomenon. Bigger journals may also not do a good job identifying the disruptive stuff since they're gummed up with submissions! We had a paper that we couldn't find a home for pre-covid (found a low-impact journal just to get it on PubMed) but became heavily-cited because it became highly relevant with covid disruptions.
What's most interesting to me is how many discoveries are now effectively the products of academic networks. Yeah, the low-hanging fruit discoverable by individual labs has been found but we're finding better ways to do and share research. There's a very interesting story about the surgeon who did the first laparoscopic cholecystectomy (one of the most common surgeries performed). The German gatekeepers disapproved, there was no PubMed, and things were siloed by language and custom.
https://en.m.wikipedia.org/wiki/Erich_M%C3%BChe
You are a brilliant and interesting thinker and I am happy to read whatever you write. I even follow you on Twitter. I enjoyed the three sections because it is a weekend and I have more time, but generally it is hard to find the time to read longer articles during the week.
Ahh haha yeah, I will try to stick to shorter posts, I just wanted to write about all three of those things and I have a big backlog of stuff to write about...
Anyway, thanks for the kind words!
I agree with this. The my reading workflow usually includes finding something I can start and complete while I have X available minutes (two young kids, so this varies), and then saving or archiving it once I’m done. Maybe counterintuitively, this means that I would actually prefer three mini posts to one post with a portfolio of topics in it...
I agree. I read everything you write, though some with greater interest than others. To me, variety is the desired spice here.
Where is the argument that price gouging by corporations is a driver of inflation, or do you believe this is not a well-founded argument?
Ahh, I wrote a post about this!
https://noahpinion.substack.com/p/greedflation-gouging-and-price-controls
Noah,
You asked for an opinion about the types of newsletters that your readers prefer. But, I’m sorry that I cannot help you evaluate this issue because I’m finding that I like both versions that you asked about. This shorter version with three subjects I found interesting because each subject had observations that I either did not know much about or had not considered, and now, I’m thinking about those things you presented.
Your single issue newsletters I also look forward to reading because you’ve given the issue a lot of thought and research so now I can do the same thing. That is what a good communicator does. Thanks for do it, and I feel I’m getting good value for my subscription and the time I allot to reading what you write.
Hope this helps. It is simplistic, I know, but it is why I subscribe.
> around 18% of American workers currently under a noncompete
Typo, I think there should be an "are" in there.
Thanks, fixed!
Re wage-price spirals: in the Nordics, wage changes for workers (incl. white collar) are still often collectively negtiated between employer and employee unions. Because these economiew are small, open and export-driven, there can be mutual interest in ensuring export competitiveness. Not an economist, but I would assume that there is a lot of research looking into the effect on inflation of these mechanisms.
This is also true for the Netherlands, where unions (of both employees and employers) set collective wage agreements that are followed by both union members and non-members. Wage moderation was a huge part of economic policy in the 1980s, and more or less imposed to overcome the Dutch Disease of the 1970s.
Germany followed a policy of wage moderation in the euro-crisis of the 2010s which did wonders for its employment rate, but was hated by the Southern European states because they became less competitive vis-a-vis Germany as a result.
So, there is some precedent for wage moderation in Europe, but these are mostly single countries in a larger union with lower labor mobility than the US. Not too sure if this would ever work for the US.
As a non-economist who's never taken an economics course, I am perpetually baffled by the seeming absence in nearly all "professional" discussions of inflation of an assessment of the role of human agency in creating it. Prices don't raise themselves: The price of any given thing will only rise if some human being -- or a human-designed algorithm -- actually decides to raise it, and then refuses to sell that thing to prospective buyers at anything less than the new price. Has anyone ever attempted to document this process? If the price of a gallon of milk I purchase at my local grocery story goes up by 50 cents, who, exactly, made that happen, and why? Presumably, someone, somewhere in the chain of production and distribution that leads from the cow that created the milk in the first place to the grocer who sells it, must have made a decision to raise the price of whatever good or service they contribute to the production or distribution of that gallon on milk: Who did that? Why? What happened further up (and down) the chain in response to that initial decision, and why?
Has anyone ever bothered to figure this sort of thing out? Inflation is an empirical phenomenon that originates with decisions made by human beings to raise prices. How can an economy-wide phenomenon possibly be modelled, predicted, understood and controlled if that phenomenon hasn't been studied granularly, at the level of actual human beings making decisions to raise prices for particular goods and services?
Or maybe I'm just missing something.
As another non-economist who's never taken an economics course, but has been reading many posts like this since 2008, it is my understanding that what you describe is the field of microeconomics, which has been well studied and is generally better understood. So now we come away from that with an understanding that all sellers always want to raise their prices, and their workers would always appreciate higher pay, but why is this happening now? What coordination mechanism led this many workers to demand higher pay at this particular time, or for so many sellers to raise their prices now and not 2, 3, or 5 years ago? That's where we move from micro to macro and try to understand the circumstances leading to his results.
In my capacity of the sales manager at "your local dairy," I often find that I have not enough milk to make all of my deliveries. To avoid angering my customers, I offer the milk at a price estimated to reduce desired quantities to match the quantity of milk I have available to deliver. Presumably, the stores then raise their price to make up for that additional cost.
That's very interesting. I have so many questions. Here's just one: If you've got a limited supply of milk, why don't you sell it to your grocers on a pro rata basis at whatever price enables you to meet your profit margin target? No one grocer gets the amount they would like to have purchased, but all grocers get some. Do you think grocers would be angrier about getting a reduced quantity of milk than they'd be about being unable to afford your milk altogether and thus getting none?
I am a corporation in a capitalist society. My prices have always been set in an effort to maximize profit. This general rule/methodology allows prices to automatically adjust to meet supply and demand levels. Why fix it if it isn't broke, I guess.
I get that profit maximization is the goal. I'm just curious about your strategy. Unless there are no other dairies available to supply milk to the grocery stores to whom you sell (at a price they are willing and able to pay), then one element of your profit maximization strategy must be to retain those grocery stores as customers. If I'm understanding you correctly, you don't seem to think that rationing the supply of milk to your customers solely on the basis of their willingness to pay -- with the result that some may wind up getting no milk at all when supply is limited -- has enough of a net effect on customer loyalty to negatively effect your long-term profitability: Your customers will remain loyal even if, occasionally, they can't afford your milk. Is that your thinking?
If that strategy works for you, then, you're right: Don't fix it if it ain't broken.
Too much money chasing too few goods. All the rest is noise.
That actually has no explanatory power at all as it fails to distinguish between the money increasing or the supply decreasing.
Or vice versa, as in 2008. But it does say that if there is inflation, money is too loose for the current supply regime.
And we have a novel reason for the shortage of goods: a pandemic substantially reduced populations. Although the deaths have primarily taken old people, the workforce has adjusted. Workers are harder to hire and demand higher wages. With fewer workers, both goods and services are not as plentiful, and people are willing to pay more for scarce goods and services. Adjusting the money supply to slow production further reduces the supply of goods and services, which makes people eager to pay even more.
This sounds like an inflationary upward spiral to me. The central banks are pumping gasoline on the fire, and the pandemic continues to decrease the supply of workers. What fun!
Agree on the supply chain disruptions. Not only labor, though. Businesses got shut down. Imports got suffocated. Energy prices spiked.
The problem was that we pushed demand much higher with the insane fiscal policy and the accommodating and clueless monetary policy. We're reaping what we explicitly sowed.
Policy isn't going to be increasing supply for awhile. They just put in a bunch of tax increases that will slow investment, further squeezing supply. China is writhing with covid, further constricting supply. Europe business is reeling from the war. We have to match demand to those constraints, i.e., reducing the money supply, QT, higher rates, etc.
It wasn't just deaths; with children not able to physically attend school, many parents had to spend much more time taking care of children instead of working.
I’ll help the economists here. Recent inflation was caused by the energy shock and the post covid supply shocks.
And by money printer going BRRRRRRR
It’s crazy that after the last 3 years, hospitals like the Cleveland Clinic still have non competes.
Absolutely no valid reason to have them! Medical care or administration isn't a trade secret and the point of their research stuff is to publish (or patent) publicly!
Does the proliferation of noncompetes say anything in formal terms about most people's intuitive sense that capital has more leverage than labor in wage negotiations? Simplistically, a noncompete is just a wealth transfer from employee to employer that would usually demand (at a minimum) a higher compensating wage to offset.
But while if you squint you can see how for high-level knowledge workers in highly-paying industries this might fit, I think it's clear that this completely breaks down at the point at which Jimmy John's subway sandwich shops are able to adopt them. That seems much more likely to reflect a structural lack of labor negotiating power than a kind of high level wage/restriction/investment tradeoff.
"Blanchard and Krugman yearn for a planning regime where the government basically coordinates between companies and workers... though who knows if it could ever really work in real life..."
Maybe the history of Australia's prices and incomes accord 1983-96 and other interventions by the Hawke government (using the national system of industrial arbitration and other powers, policies, negotiations and persuasion) provide some partial answers to the question.
https://www.afr.com/policy/economy/from-houdini-hawke-to-albanese-s-answer-20220728-p5b5je
https://en.wikipedia.org/wiki/Prices_and_Incomes_Accord
Australia still has a very high minimum wage.
Australia has a very good system of wage boards (sector-specific minimum wages), which I don't think is well-known because Australians' habit of giving everything inscrutable slang names like "bottleo" and "chazzwazzers" even extends to their labor rights, so nobody else understands how it works.
(Try and guess what "award" "casual" "super" mean without looking them up.)
Chazzwazzer is a bullfrog, right? :)
Is inflation just a vicious cycle like the never ending dog chasing its tail or egg & chicken argument. There is no overall inflation until something changes, ie the balance is upset by raising prices, which will then increase the demand by labour for higher wages. But it will always be a question of what came first. BigCorp's demand for profit has always been there but the Gov't has stepped in to provide incentives to temper that demand - QE, tax cuts, bail-outs have all made profits easier to come by on the balance sheet.
Clearly, in the process of stopping those incentives, BigCorp is pushing back by raising prices to achieve profit motivations & the cycle responds accordingly.
My questions: can there be an equilibrium of profit/price/costs/incentives based on 2% inflation? Must there always be a 'thumb-on-the-scale' somewhere to achieve that balance or must we accept an economy, a society where, 'Privatise the profit & Socialize the cost' is the norm?
As a retired economics professor, I don't need you to apologize for a wonky post. After forty years studying econ, I still find many aspects of the field fascinating. So much so, that every time I see a meeting announcement I'm tempted to go. Regarding the decline in "disruptive" research, I believe refereed journal publication is responsible for much of the decline.
Because academic administrators desire qualifiable metrics, refereed journal acceptances aware highly valued. This has two consequences. First at institutions with lower levels of research support, it produces a good of low quality research to low quality journals. However, there may be some wheat among the chaff. The other consequence is what I refer to as "sausage making". This involves applying the same technique repeatedly to various days sets. This results in "high" productivity from an academic administrator's perspective but little disruption.
The other difficulty with peer review is that it locks in existing heirachies of quality research. Once again, there are two channels by which the process stifles disruption. Academic affiliation plays a too significant role in the seriousness with which a submission is considered. This is to a certain extent understandable, a paper from these backgrounds will likely have been presented on the seminar circuit. So the refereeing will not be completely blind. The more significant source of disfunction lies in the choice of reviewers. When an editor receives a potentially disruptive paper they will invariably choose an established scholar in the field. Such a reviewer may have a vested interest in not seeing their own contributions finished. I've consciously not personalized this, but I have friends whose innovative work had been rejected despite is apparent merits.
This is not sour grapes by the way. My research record was modest, definitely not disruptive.
As a business owner/employer, I only use noncompetes for senior management roles and high-level sales roles. It feels reasonable to me that if you’re going to get a bunch of insider information about a company (customer lists, employees, margin data, etc.), you shouldn’t be able to just walk next door and sell it off. Creates a very ugly environment.
Agreements should be reasonable and commensurate with the job, but in practice I think getting rid of all noncompete/non-diversion agreements would result in an uglier market equilibrium. You’d probably see a replacement of noncompetes with some form of compensation claw-backs instead, as well as a stronger reluctance to hire. No employer is just going to expose themselves without some defense mechanism.
"No employer is just going to expose themselves without some defense mechanism."
But employers do this in California every day - California - the most innovative region in the world for the last, I dunno, 100 years?
Top employees in California are typically tech employees. Tech employees are paid disproportionately in RSUs, which have 3-4 year vesting schedules. The incentives to stay (you can think of them as compensation claw-backs) are right there.
Also, large Bay Area companies famously had tacit agreements between each other to not poach. They got in big trouble over this.
It's really not that simple.
I’m a lawyer working for a software company that isn’t based out of California. Non-competes are non-existent in the industry and the most sought after engineers would laugh if a prospective employer tried to make them sign one. Piecing the history together I suspect this practice arises out of California’s ban on non-competes, but is now industry standard.
I sympathize with your concerns but they can all be covered by a standard confidentially agreement or provision which would allow greater worker freedom while still protecting your business. I say this as someone who has drafted many non-competes and enforced the same.