The Unassuming Economist

Owen Tudor at Touch Stone reports:

The World Economic Forum (best known for hosting this week’s Davos conference) plays host to a number of Global Agenda Councils which bring together experts in a particular field to produce reports summing up the best available wisdom on what to do next. There’s a GAC on Employment and Social Protection which has produced a report for Davos 2012 snappily titled “The Case for an Integrated Model of Growth, Employment and Social Protection“. But it makes some very pertinent recommendations for the global leaders gathered in Davos, and is part and parcel of the growing intellectual argument for growth and jobs to have a higher priority than debt and deficit reduction (see recent posts on ILO, IMF and OECD reports).

The GAC on Employment and Social Protection includes people you would expect to make these arguments – like Vice-Chair TUAC General Secretary John Evans, ITUCGeneral Secretary Sharan Burrow and AFLCIO chief economist Ron Blackwell – as well as people who work in the global institutions already leaning this way like Stephen Pursey of the ILO and Prakash Loungani of the IMF. But it also includes academics like Zhang Xiulan from Beijing Normal University and Jose Antonio Ocampo from Columbia University in the US; and business representatives like Premkumar Seshadri of India’s HCL Technologies and Thero Setiloane from Business Leadership South Africa. So it’s a broad-based group.

Their five recommendations are, very briefly:

Recent headlines suggest the ‘Made in the USA’ label is back in business. “Manufacturing employment has grown faster in the US than in any other leading developed economy since the start of the recovery,” says the FT. Indicators of the manufacturing sector also point to an optimistic outlook, according to January’s Business Outlook Survey of Philadelphia Fed.

The manufacturing outlook seems good in the rest of the world too with the exception of Europe. World industrial production will grow 5% next year, compared to 4.5% in 2011, according to Dan Meckstroth (Chief Economist of Manufacturers Alliance for Productivity and Innovation—MAPI).

But, beneath the surface things seem less hopeful, particularly in the advanced economies. For more than a decade, there has been a “hollowing out” of jobs in these economies — a striking loss of middle-income and manufacturing jobs – as summarized in a research piece I coauthored. The chart below shows a striking decline in middle-income jobs in advanced economies between 1993 and 2006.

This trend has continued over the past few years. “During the recession and recovery … highly skilled workers have done best, low-skill workers have done poorly, and those in middle-skill employment have done very, very poorly,” according to a recent article in The Economist. “Even as the job market has improved over the past year … employment among workers without a high-school degree rose by 126,000. Employment for workers with a college degree rose by just over 1m jobs. For those with just a high-school diploma, however, employment fell by 551,000.”

Advanced economies are also losing market share in manufacturing to emerging economies.

And in both advanced and emerging economies, manufacturing share’s of GDP is declining.

My research notes that the decline in manufacturing jobs accelerated during the 2000s and was accompanied by a huge increase in advanced economies’ imports from low-income countries. Other authors estimate that at least one-third of the aggregate decline in U.S. manufacturing employment during 1990–2007 can be attributed to increased imports from emerging markets. The chart below shows the sharp decline in U.S. manufacturing jobs and the increase in the profits of multinational firms during the 2000s. Meckstroth also points out that non financial corporate profits are nearly back to their peak, in particular, income for foreign affiliates which are extremely profitable.

Josh Rogin at Foreign Policy reports:

The Brookings Institution was selected today as the “top think tank in the world” by an academic program that evaluated over 5,000 think tanks from across the globe. 

That’s the second year in a row that Brookings has topped the “Global Go To Think Tanks Rankings,” compiled by the Think Tank and Civil Societies program at the University of Pennsylvania and published by the Diplomatic Courier. The project considered the views of 793 experts, 150 journalists and scholars, 55 current and former directors of think tank programs, 40 public and private donors, hundreds of think tanks, 25-30 intergovernmental organizations, and 120 academic institutions.  

Other U.S.-based think tanks also fared well. The Carnegie Endowment for International Peace held its spot from last year, staying put at #3 on the list, while the Council on Foreign Relations (CFR) dropped two slots from last year, coming in at #4. The Center for Strategic and International Studies (CSIS) jumped up two spots to #5, the RAND Corporation held its place at #6, and the Peterson Institute for International Economics kept its #10 position.  

Non-U.S. think tanks that made the top 10 were Chatham House (#2), Amnesty International (#7) , Transparency International (#8), and the International Crisis Group (#9).  

Conservative and libertarian think tanks took a hit in 2011: The Heritage Foundation dropped five places since last year, coming in this year at #13. CATO dropped from #12 last year to #14 this year, and the American Enterprise Institute dropped in the rankings from #13 to #17. Meanwhile, the liberal Center for American Progress made its first appearance on the top 25, coming in at #19. Human Rights Watch was ranked #22 in the world, down six spots compared to last year.  

Some U.S.-based think thanks were singled out as the best in specific regions or functions. CSIS was ranked #1 in international affairs and security research. The Carnegie Moscow Center and the Carnegie Middle East Center were ranked as the top think tanks in their region. Brookings was ranked #1 in international development research, and the Carnegie Endowment was named as the think tank with the most innovative policy ideas.  

Google Ideas, the “think-do tank” led by former State Department official Jared Cohen, was named the best new think tank established in the last 18 months. CFR was named as the best think tank in the world in the use of digital and social media.  

5,329 think tanks were nominated and then ranked overall and in 30 different regional and functional sub-categories. This year, the process was changed to include “expert panels” that evaluated the data, incorporate categories for smaller think tanks, and expand the participation of organizations in developing countries, especially in the BRICs (Brazil, Russia, India, and China).  

The United States by far has the most think tanks in the world (1,815!), followed by China (425), India (292), Britain (286), and Germany (194). Washington alone has 393 think tanks. Other leading states include Massachusetts, with 176, and California with 170.  

The think tanks were rated by their access to resources, how much content they put out, and their impact on policy and politics.  

“There are a number of major political, economic, social, and technological trends that are converging at this moment in history and that have a profound impact on governments and the institutions that serve them,” reads the beginning of the report. “It is essential that think tanks understand these trends and be ahead of them so that we are all not buried by them.”

In the 1910s, when delivering mail was a hazardous job, the post office was one of the few places where African-Americans could find work. The bulk of long-distance mail was delivered by rail; the railway cars where mail clerks worked were made of wood and were prone to falling apart—while the train was in motion.

When steel cars began to replace the wooden ones, the job of delivering mail became safer. The Railway Mail Association, a labor union which excluded blacks, began to recruit white workers to displace blacks from the postal work. In 1913, a group of African Americans formed a union of their own to protect their jobs and give blacks a voice with the postal authorities.

Against all odds, this black union survived. By 1921, it had made enough progress that a bureaucrat in the post office assured the the president of the union that the union members would be “treated white”. The president replied that he would prefer that his members just “be treated right”.

Hence the title “Treat us right, not white”, a fascinating history of this union—the National Alliance of Postal and Federal Employees (NAPFE)—written by my friend Paul Nehru Tennassee, the noted historian, political scientist and labor leader. The book is available here.

The union will mark its 100th anniversary in 2013 at the foot of Lookout Mountain, Tennessee, where it was founded. The union’s historian, Paul Nehru Tennassee, has a colorful history of his own which I hope will be told some day.

 

Economic expansion last longer in regions with more equal income distributions, my IMF colleagues Andy Berg and Jonathan Ostry say in Foreign Affairs. The effect is large. If Latin America, for example, could bridge half of its inequality gap with East Asia, its growth spells would last twice as long as they do now. This work is part of a growing research emphasis at the IMF on the consequences and causes of income inequality. In earlier work, my colleagues and I showed that fiscal austerity leads to greater declines in wages than in profits — see this earlier post and a summary of it in the press.