How the World Works

New jobs numbers: Not horribly awful!

Overall payrolls drop 54,000, but private sector employment rises. The government's take: "Almost unchanged." Yay?

New jobs numbers: Not horribly awful
AP
Data for the month of August shows the economy shedding more jobs, but not as many as expected

First impression of the August non-farm labor report from the government's Bureau of Labor Statistics: It's not as bad as it could be. The top-line stats are unpleasant: Payroll employment dropped by 54,000 in August and the unemployment rate rose from 9.5 percent to 9.6 percent. But the drop is more than accounted for by the removal of 114,000 Census workers from the rolls. Private-sector employment, according to the government, rose by 67,000.

The private-sector numbers are mildly encouraging -- if that trend continues, September's numbers should show positive overall payroll growth. But in the meantime, someone at the BLS is taking extra-special pains to encourage us not to get too agitated.

Here's the government's first paragraph. (Italics mine.)

Nonfarm payroll employment changed little (-54,000) in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Government employment fell, as 114,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment continued to trend up modestly (+67,000).

Of course, another way to say "almost unchanged" in this context is "rose." But I guess that was unpalatable. The pattern is repeated throughout the report. Civilian labor participation rate: "essentially unchanged." Number of people marginally attached to the labor force: "little changed."

Nothing to see here, move along, move along!

But maybe the BLS is right to emphasize how little has changed -- there's not much to take encouragement from in this report, but it also doesn't indicate a sharp deterioration in the labor market. Yes, two indicators that we usually scour for signs of a burgeoning economy -- the number of hours worked per week, and temp hires -- barely budged up at all, but the BLS also made significant positive revisions to the June and July payroll numbers: June went from -221,000 to -175,000; July, from -131,000 to -54,000. So the summer hasn't been quite as bad as we thought it was, especially when one takes into account Census hiring.

And yet:

  • The number of persons employed part-time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 331,000 over the month to 8.9 million.
  • In August, 42.0 percent of unemployed persons had been jobless for 27 weeks or more.
  • The seasonally adjusted U-6 measure of "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force": 16.7 percent.

That last number has hardly moved at all this year, and that's a case where "almost unchanged" translates as just plain lousy.

The Burger King-eating boys from Brazil

We interrupt this American recession with an important news break: The rest of the world is moving on and up

The Burger King-eating boys from Brazil
Salon/Wikipedia

So a New York-based private equity group backed by Brazilian capital is buying Burger King for a tidy $3.3 billion. And China's state-owned chemical giant, Sinochem, is reportedly looking for ways to block an Australian mining giant's bid for Canada's Potash Corp -- one of the world's biggest fertilizer giants. Meanwhile, today's news out of India is that the subcontinental economy grew at a blistering 8.8 percent (annualized) pace in the second quarter of 2010.

Brazil, China, and India. I name-checked those three countries in my post yesterday on Malthus and the Discovery Channel gunman as likely sources of the human capital that might help us innovate our way through the challenges of the 21st century. But while skimming the headlines today, I realized that even I, ostensibly a writer about globalization, had not been paying enough attention to what's been going on in the "emerging" world.

There's an excuse -- the financial crisis, Obama's election, and the ensuing intense political struggle over domestic policy in the United States turned my attention inwards. These were all gripping, important stories and I don't apologize for becoming obsessed with them. (And to be frank, Elizabeth Warren tends to generate a lot more traffic than anything I write about India, Brazil, or even China). But there's a price to be paid for turning inward -- and that's running the risk of missing the really big story.

The giant financial sinkhole that sucked the U.S. and Europe into its maw turned out to be a mere speed bump for the brawniest new players on the global economic scence. Brazil's economy grew at the fastest rate in 14 years in the first quarter of 2010. China rebounded so fast that it's a wonder the entire nation doesn't have whiplash. And India seems barely to have noticed. These are not trivial trends. Together, China, Brazil, and India have a combined population of 2.7 billion -- nearly half the world's population. If their economies continue to grow at comparable rates in the decades ahead, the entire course of human history will shift profoundly.

It's dangerous to generalize too much. China's state-dominated enterprises pursuing strategic goals meant to advance the entire nation's interest embody a different strain of capitalism than Brazil's international agenda. China wants a piece of Potash Corp. because it wants to ensure access to cheap fertilizer for food production. Brazil's movers and shakers, on the other hand, don't appear to care whether they are buying hamburgers or beer. They're just looking for profit. Meanwhile, India, much more quietly, is sneaking up on everyone, it's growth healthily driven far more by domestic demand than is China's.

You would be hard put to find a point in history, at least since the economic explosion of Western Europe prior to and during the Industrial Revolution, in which the global economy featured such a multi-polar set of independent economic power centers. And yet in the U.S., more than ever, we have become wholly consumed by our own internal cultural flashpoints and brain-dead political squabbles. As the rest of the world is busy growing up, we're steering ourselves straight into a backwater.

I was trying to figure out a grand narrative to tie this all together, and then discovered that Jacob Zuma, the president of South Africa, did a pretty nice job of it in a speech he gave in Beijing, just last week.

The entire speech is meaty and worth reading. Here are a couple of excerpts:

That the world is changing is not in dispute.

It is an irrefutable fact that economic power is in a process of shifting from North to South, and West to East. China for example is once again assuming its historic position as a major power in the world.

The objective reality is that today no major decision on issues of global governance, such as reforms of the United Nations, the WTO Doha Development Rounds, Climate Change, global financial issues related to G20, rebalancing the world economy and addressing the global financial crisis -- can be taken without the consent of the developing world.

... [I]n the middle of the financial crisis, the developing world grew four and a half percent faster than the OECD member countries.

In the past it was the other way around when the industrialized countries sneezed, the world caught a cold. This time, the influenza has affected the industrialized countries most severely.

Also, in the past, economists from the developed countries told the developing countries that they should behave more like the developed countries.

The developing world was told that if it did not Westernize and change its political systems to mirror those of the West, they could forget about achieving economic growth and development.

Now we are asking what we could learn from other political systems and cultures?

... The OECD Development Center estimates that, measured in terms of real domestic buying power, the developing countries will have a larger share of the world economy than the OECD countries by the year 2012.

By the year 2030, developing countries will have fifty-seven percent of the world economy, and the current OECD members, forty-three percent.

If we measure the contribution of different parts of the world to economic growth, the developing world contributed almost seventy percent of world growth last decade, measured in terms of domestic buying power.

Ladies and gentlemen,

It is plain for all to see that we are living through one of those historic moments in world economic history.

Elizabeth Warren bails out of Harvard

The law professor cancels a class. Does she need free time for a bruising confirmation fight?

Elizabeth Warren bails out of Harvard
Reuters/Mike Theiler
Elizabeth Warren

Don't expect anything to happen before the Labor Day weekend, but the latest iota of information on Elizabeth Warren could, just maybe, or quite possibly, be construed as encouraging. A tweet from the Columbia Journalism Review's Ryan Chittum points us to a Washington Post item by Brady Dennis reporting that the law professor suddenly dropped out of her fall contracts class at Harvard.

"I'm writing to let you know that Professor Jerry Frug will be teaching your Contracts class this term instead of Professor Elizabeth Warren," law school dean Martha Minow wrote to students on Tuesday, according to an e-mail obtained by The Washington Post. "Professor Warren regrets that she will not be able to teach you this fall and we regret the last minute change."

Classes are scheduled to begin next Wednesday.

How does this tidbit rank against the news that Warren was spotted having lunch with Obama advisor Valerie Jarrett or that she was seen leaving the White House on a Thursday afternoon a couple of weeks ago? The Post observes that she managed to teach her class during the last two years, even while overseeing the congressional panel investigating TARP. So something is up.

I choose to be heartened. A class full of Harvard law students may be disappointed, but where they lose out, the nation gains.

Treasury Secretary Bloomberg? Not a chance

Why would the Mayor of New York want such a thankless job? And why would Obama want him?

Treasury Secretary Bloomberg? Not a chance
Reuters/Chip East//Salon

Last November, the New York Post suggested that the Obama administration was considering JP Morgan CEO Jamie Dimon as a possible replacement for Treasury Secretary Timothy Geithner. The notion was ridiculous for an abundance of reasons, indeed, with each day that has passed since then, the idea has become even more absurd.

But is the Post chastened? Hardly. Today, the Post is backing a different horse for the same job: New York Mayor Michael Bloomberg.

The evidence? President Obama and Bloomberg played golf together last weekend.

Asked about last weekend's four-hour golf game with President Obama on Martha's Vineyard, Bloomberg told reporters yesterday, "The economy was the main subject, other than discussing golf."

Now there are whispers that the president went even further and sounded out Bloomberg about whether he would join his foundering economic team as treasury secretary, replacing prime blame-target Timothy Geithner.

"Obama needs Bloomberg more than Bloomberg needs Obama," a source tells us. "Obama's looking to do something bold and credible before the election."

Let HTWW state for the record that the prospect of Bloomberg moving into the Obama cabinet, while not as risible as Dimon's chances for the same job, is also just as unlikely.

Let's put aside the Post's methodology here, which appears to be just to make things up if there's any chance they can be spun to create the impression that the Obama administration is flailing around. Never mind that -- why would the Mayor dream of moving to Washington in the first place?

Bloomberg already has a demanding, high profile job where he actually has executive power. Why would he exchange that for the job of Treasury Secretary, where he would find himself stuck in a miserable no-win situation? No matter what happens in November, I'm guessing that the Obama administration is going to be pretty constrained on the economic front. Bloomberg will face the same unpalatable dynamic we've seen all year. The left will be upset because Treasury isn't doing more to get the economy going, while the right will be outraged if Treasury attempts to do anything at all. Unemployment will stay high, and anyone in a position of supposed authority will get blamed. Run away!

But here's the real kiss of death. According to one "insider," Bloomberg is a great choice because "he's very well-liked and well-respected on Wall Street."

Wonderful -- that's exactly what will get the Democratic base all pumped up to go out and vote in November. Because what Obama really needs right now, is more cabinet members who are well-liked by Wall Street. If Obama wants to make a "bold and credible move" right before the election, all he needs to do is appoint Elizabeth Warren to run the Bureau of Consumer Financial Protection.

How Malthus drove the Discovery Channel gunman crazy

The greatest pessimist in economic history has been wrong for 200 years, but he's still freaking people out

How Malthus drove the Discovery gunman crazy
AP/Wikipedia
James J. Lee in a 2008 booking photo and Thomas Malthus

Among the demands of James Lee, the deranged gunman who rampaged through the  headquarters of the Discovery Channel in Washington, D.C., before being shot and killed late Wednesday afternoon, was a request that the TV network "develop shows that mention the Malthusian sciences about how food production leads to the overpopulation of the Human race."

Insane, but perhaps not quite as kooky as it might initially seem. Because when choosing crazy-making prophets of doom and destruction as your inspiration, you could do a lot worse than the late 18th-century economist Rev. Thomas Robert Malthus.

The original "dismal scientist's" main contribution to economics -- the theory that the growth of population would always outrun the growth of production, thus dooming humanity to crushing poverty -- was proven wrong by the Industrial Revolution almost immediately after he set his thoughts down on paper. Few theorists whose names have endured for centuries have been more spectacularly off the mark. In almost every measurable way, the world is immensely richer than it was at the time of Malthus, even in the face of a surge in global population that the economist would never have dreamed remotely feasible. For at least the last century Malthus' ideas have been routinely dismissed in introductory economics textbooks and scoffed at by most mainstream economists, whether liberal or conservative, Keynesian or Chicago School.

Not only has food production outpaced population growth, thanks to technological innovation, but the richest nations on the planet tend to be the ones in which the birth rate drops the fastest -- the so-called demographic transition. So Malthus was wrong twice.

And yet his dystopian vision that humanity's lot, our inescapable fate, will be grinding, desperate poverty, lives on. Down for more than 200 years, but not yet out, because there's  always a get-out-of-jail-free card for Malthus: Just wait.

Just wait until the technological wellsprings of innovation run dry, when even the most advanced genetic modification technologies can no longer boost food yields. Just wait until peak oil puts an end to the age of cheap energy, until the oceans are overfished and the atmosphere is choked with carbon dioxide. Just wait until Chinese and Indians and Brazilians consume with the same unsustainable abandon as Americans. Malthus isn't wrong -- he just isn't right ... yet.

Malthus stays popular, he disturbs our dreams and sends mentally disabled people rushing to the local gun store, because that unsettling question -- is the Industrial Revolution sustainable? -- lurks in the dark recesses of our collective consciousness. We've had a pretty good ride, especially in the West, for the last couple of hundred years, but where is it written in stone that our great fortune is a permanent state of affairs? Who gets the last laugh? All those economists, serene in their assumption that human ingenuity will keep on innovating our way out of the bottleneck? Or Malthus?

With this background, the connection between environmentalist concerns and the work of Thomas Malthus is easy to make, especially when one is considering the subset of environmentalists who believe that unchecked population growth is the planet's biggest problem. So no question, poor James Lee is already becoming the latest front in the culture wars. Any suggestion of resource limits spawns ideological division. The free market, in this formulation, is either Malthus' worst enemy, or will ultimately prove him right. Capitalist self-interest will either keep finding new resources to exploit, or ways to exploit them more cheaply, or will empty its bag of tricks and, suddenly, we're headed back to the Dark Ages. Pick your side.

But what made crazy James Lee's craziness bizarrely more interesting than your run-of-the-mill whacko eruption was his very first demand:

"The Discovery Channel and it's affiliate channels MUST have daily television programs at prime time slots based on Daniel Quinn's 'My Ishmael' pages 207-212 where solutions to save the planet would be done in the same way as the Industrial Revolution was done, by people building on each other's inventive ideas."

"My Ishmael" is a very odd book. I haven't read it from start to finish, but I've skimmed it, and paid close attention to the section called out above. Best I can tell, it features the philosophic, economic and sociological observations of a telepathic, intelligent gorilla as told to a young girl. Fox News anchors are already reading passages of it aloud to their readers, and everybody's getting a good chortle.

I can't tell you whether it is true, as some tweets are declaring, that "My Ishmael" is "anti-religion anti-human anti-capitalism pro-gang pro-commie racist BS." But I can tell you that the section where the gorilla discusses the Industrial Revolution bears a pretty astounding similarity to the new growth economic theory of Paul Romer. This gorilla kind of knows what he's talking (or thinking loudly) about. Paul Romer is no wacko. He makes a compelling, mathematically grounded case that the key to economic growth is the widespread production and distribution of information. That's how the Industrial Revolution took off, that's how scientific knowledge accelerates -- that's the pathway  to the utopian Star Trek future.

Saith the gorilla:

James Watt is often credited with inventing the steam engine that started it all, but this is a misleading simplification that misses the whole point of this revolution. James Watt in 1763 merely improved on an engine designed in 1712 by Thomas Newcomen, who had merely improved on an engine designed in 1702 by Thomas Savery, who doubtless knew the engine described in 1663 by Edward Somerset, which was only a variation of Salomon de Caus's 1615 steam fountain, which was in fact very like a device described thirteen years earlier by Giambattista della Porta, who was the first to make any significant use of steam power since the time of Hero of Alexander in the first century of the Christian era. This is an excellent demonstration of how the Industrial Revolution worked.

In other words, we progress by copying, tinkering and making gradual improvements. One of new growth theory's primary insights is that if you put up impediments to the spread of knowledge -- like overly strong patent and copyright laws -- you create friction that slows down economic growth. This does not mean abolishing all intellectual property laws; it means finding the right balance between property rights and the freedom to share and innovate so as to create a more prosperous, equitable society for all.

Talking (or telepathic) gorillas, Malthus-gone-wild, a deranged armed man wreaking havoc on the Discovery Channel: It's a crazy stew, and it will only get crazier as political opportunists start weighing in. Lee's own manifesto doesn't hold together in the slightest. If you believe, as he purports to do, in finding ways to unleash the creativity that spawned the original Industrial Revolution, then you don't have to worry at all about population growth or immigration or the "pollution" of "filthy human children." Those children -- those newly educated Chinese and Indians and Brazilians -- are exactly the people who will come up with the ideas and innovations that keep us hurtling forward into the unknown future.

Unless, of course, they are prevented from doing so by governments in thrall to special interests, corporations intent on monopoly control, politically motivated attacks on the scientific method, and a growing chorus of ranters who wear ignorance as their coat of arms and shout down all those with whom they disagree.  We probably have the tools to solve the big problems that face us this century, but our own stupidity may well prevent us from properly using them. That's truly crazy making and we'd better get used to the collateral damage.

William Gibson jacks into Google's cool menace

The author probes the search engine's spooky utility, in between tweets promoting his new novel, "Zero History"

William Gibson jacks into Google's cool menace
Putnam/Michael O'Shea

I don't like William Gibson's Op-Ed piece on Google in today's New York Times merely because, barely a week after I went all Jeremy Bentham Panopticonic on the cat bin lady, he writes that "Jeremy Bentham's Panopticon prison design is a perennial metaphor in discussions of digital surveillance and data mining, but it doesn't really suit an entity like Google." Even though it's kind of a put-down (perennial!), still, great minds think almost alike, right?

Nor am I content just to revel in the crispness of his prose:

Google is a distributed entity, a two-way membrane, a game-changing tool on the order of the equally handy flint hand ax, with which we chop our way through the very densest thickets of information.

That's some nice work. It doesn't matter what the format is, tweet, Op-Ed column or novel; the man knows what he is about with the English language. (Seriously, Gibson tweets like a cyborg-Mozart. He's unstoppable!)

But we knew that already. No, what I like most about Gibson's column is how he manages to plumb, in his consideration of Google, depths that are equal parts menacing and cool, just as he does in his novels, including his newest offering, "Zero History," arriving momentarily at a bookstore or e-reader near you.

The cyberspace of "Neuromancer," Gibson's first novel, established the template. When Case jacked into his Ono-Sendai deck and merged his consciousness with the data flow, the adventure seemed simultaneously hip and dangerous, cool and spooky.

So is Google -- that handy flint ax and instrument of collaborative surveillance. Google knows too much about us, while helping us find out whatever it is we want to know. The two functions, of course, are complementary. You don't get the enlightenment without giving up some privacy. Few writers are better situated to explore this cyber-generated paradox than Gibson.

In his newest novel, Gibson continues his career-long flight from cyberspace into something more or less analogous to the present day. Malign Japanese transnational corporations have been replaced by the military-industrial-fashion complex. (Cool, yet scary, just like Google.) Denim jeans push the plot harder than silicon wizardry. But the sensibility is the same, even if cyberspace jockies have been replaced by ex-punk rock singers with a nose for street-level haute couture. It's a good read.

But even as abreast of the zeitgeist, or ahead of it, as Gibson usually operates, Google is moving more quickly than even a well-timed Op-Ed column in the New York Times can manage. Just yesterday, my Twitter feed was alive with discussion of a new feature for Google's Gmail, Priority Inbox. Currently in elite beta testing, Priority Inbox is supposed to be able to float the really "important" e-mails to the top of your queue, while dropping down the mailing list flame wars, office gossip and other extraneous bullshit that clogs up our e-mail pipes every day.

Of course, to do this, Gmail has to figure out even more about us than it already knows. Who are the correspondents we judge more deserving of our attention, et cetera? The trade-off is obvious. The give and take between utility and panopticonic omniscience is as exquisitely illustrated by Priority Inbox as anything Gibson name-checks.

And I want it, even as I bristle at the idea that Google can figure out what my priorities are without my help. Given the track record of the past decade, I'm trusting Google to deliver on its promises. Just as I trust Gibson to keep writing excellent novels.

Only difference, with Gibson, there's no downside.

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