An entire cottage industry has grown up in the blogosphere devoted to exclaiming at the periodic outbursts of wrongheaded analysis presented in the New York Times by conservative economist Casey Mulligan.
Yesterday's offering from Mulligan made the case that offering paid sick days to workers is an example of a bad labor incentive. If you pay workers to stay home sick, he says, citing data in Sweden, Norway and the Netherlands, then sometimes they will stay home when they are not sick. As a result, company productivity suffers. "...Workers in the Netherlands, Sweden and Norway stayed home sick about twice as much as American workers did." In Sweden, "men reported sick merely to watch sporting events on television."
Are you outraged? I'm outraged. This cannot stand! If Americans can't get paid to stay at home and watch sports on television, then everyone must be denied this right.
Kidding aside, sure, there's an incentive to pretend to be sick when you have access to paid sick days. But as John Schmitt, an economist at the Center for Economic and Policy Research, points out at his blog, NoApparentMotive, Mulligan doesn't consider what kind of incentives are presented by not paying for sick days.
The current system [in the U.S.] -- which does not require employers to provide paid sick days and leaves upwards of 50 million workers without paid sick days -- gives strong incentives to workers to go to work sick, lowering productivity and potentially spreading illness.
Of course, offering paid sick days also gives workers incentives to take time off when they are not sick. But, there is nothing in Mulligan's post that says where we should set the optimal level. He doesn't even make a case that the most generous systems in Europe are too generous, just that they lead to more sickness absences in some cases. For all we know, after we factor in the cost of contagious diseases, the most generous European systems might still be too stingy.
Whatever the truth is about the relative pros and cons of paid sick days, the key word to pay attention to in Schmitt's post is "optimal." In economic policy debates, we too often pretend we are operating in a zero-sum game. Stimulus is either totally unwarranted government waste or a Keynesian magic bullet. Government health care is either socialism, or should be included in the Bill of Rights. Patent protection for new pharmaceutical blockbuster drugs should be eternal, or shouldn't exist at all. Far too rarely does the debate focus on figuring out how to "set the optimal level" -- what kind of stimulus is most productive, what's the best health care in terms of cost effectiveness, just how long should a patent be enforceable?
Mulligan, no doubt, would say that the market, and the market alone, should be allowed to figure out the optimal levels. But then you end up with coal miners dying young from black lung disease and health insurance companies denying coverage to sick people. Society takes a dim view of this. And society gets a vote.
Schmitt also observes that Mulligan leaves some countries out of the chart that he displays to show how nations with generous sick leave policies encourage more people to claim they are sick.
Denmark, Germany, and seven other countries with more generous statutory paid sick days policies all have lower sickness absence rates than the United States. A really interesting question is: how is it that these countries are able to provide both guaranteed paid sick days and lower sickness absence rates? (And why didn't Mulligan include these countries in his graph?)
I agree -- that is a really interesting question. Of course people, given an opportunity, will abuse generous benefits. But what explains the situations where they don't?
As the year 2009 finally lumbers to its unlamented end, the zeitgeist smells foul. In the U.S., the right bemoans a socialist takeover while the left decries a corporate sellout. All the rest, clinging to the middle, have a hard time finding anything to cheer for, as they scramble to keep jobs and homes and health. It's been a decade of war and financial disaster, and now, just in time for Christmas, a terrorist attack for the icing on top! If this is a harbinger of what the 21st century has to offer, going forward, we had better stock up on the antidepressants.
Call it the price of success? Ten years ago, American triumphalism was at its peak. We were the lone superpower, dictating the Washington Consensus as the answer to all the world's economic development problems, preening ourselves as we regarded our mighty technological prowess and the downfall of communism. But now comes the midlife crisis, popping up in end-of-the-year think pieces everywhere. What's the theme? It hasn't been just a bad year but also a "big zero" decade, and even worse, the end of optimism.
To wit: In a remarkable piece of handwringing published today in the Financial Times, "Self-Doubt Tarnishes Brand America," Edward Luce observes the decay of "American intellectual hegemony" and declares that "the metallic rust of decline has crept into the American soul."
Meanwhile, over at the Wall Street Journal, we are offered a glimpse at the annual Christmas letter sent out by Guy Hands, the founder of private equity firm Terra Firma Capital Partners.
We need to question the accepted wisdom that a truly global market benefits all citizens in western developed nations. Indeed, I suspect we will, in time, see globalization as the driver that delivered a massive transfer of economic power from the west to the east.
Over the long term it will result in an ever growing class of permanent poor being created in the west. I also suspect new graduates will find it increasingly difficult to get the jobs for which they are qualified. It is the young and the poor in the west who will pay the cost of global human resources competition.
No doubt: Globalization makes it tougher to compete — though we can argue whether it is ultimately more economically devastating to workers in the formerly flush West than relentless technological innovation. (For example, my own industry, journalism, is being remade by the Internet, not China or India.) But that's quibbling: Globalization plus technological progress together are squeezing Western workers in a giant vice grip.
It didn't use to be that way. Once upon a time, all you had to do was be born in the U.S., or West Germany, or Japan, and, barring certain disadvantages such as race or gender, a headstart on grabbing for the good life was all but assured: widespread levels of affluence and a steadily rising standard of living unmatched throughout all of human history. Now it's not so easy — in part because of this "massive transfer of economic power from the west to the east."
Of course, from the East's perspective, it's maybe not so bad. As FreeExchange notes, "the economies of India and China basically doubled in size over the [last decade], dealing a major blow to poverty in countries that are home to over 2 billion people, one third of earth's population." I'm betting that that there are few citizens in those countries who would be excited about a return to the halcyon days of the 20th century, or who would be so prone to decry the fact that global markets don't benefit all the citizens in Western developed nations.
One person's massive transfer is another's rebalancing. For centuries, Western Europe, the U.S. and a handful of other countries dominated the global economy by force of gunboats and market capitalism. That's over, or at least in serious jeopardy. But should this change of fortune be read as a marker of Western decline or as the natural, inevitable rise of the rest of the world? We've all seen how the West can no longer enforce its will at World Trade Organization or climate change negotiations. Should we lament the loss of hegemony — which makes it easy to get things done — or celebrate the rise of multipolarity — which makes it much, much harder to cut a deal?
There's also, as Andrew Sprung points out at Xpostfactoid, the encouraging news that globally, life expectancy is up, child mortality down, and the poverty rate is shrinking at an accelerating pace.
Maybe, as 2010 approaches, it's time to suck it up a little bit, and instead of bemoaning how screwed up everything is, take some time to think about the vast global trends that may make the 21st century a better time to be born in China or India or Brazil than has been true for centuries — or ever. Or if that kind of one-world thinking is too hard to reach, we can perhaps settle for smaller victories. I, for one, am very glad the Christmas bomber didn't kill anyone, that the prospects for the U.S. economy are nowhere near as frightening today as they were a year ago, and that we at least seem to have our attention focused on the important problems — energy, climate, healthcare, financial regulatory reform — instead of just blithely ignoring them.
Rust in the soul? There's nothing here that a little WD-40 and some elbow grease can't fix. Or at least, that's HTWW's New Year's resolution.
Ten days is a long time to go without blogging, but only now, as I return (briefly) to work today do I realize I was so eager to go on break that I never even published a leaving-for-vacation post. I blame the 3:30 wake-up call, followed by the distractions of family Beatles: Rock Band addiction.
But I'm back, for today, although Thursday and Friday are Salon holidays, so HTWW won't return to full vigor until Monday, Jan. 4th.
Quick! What could the following possibly be in reference to?
So those who say that no deal is better than what is going on here are flat wrong. They really don't know anything about how government works and they've never taken a long trip. Maybe they've just gone next door to see the neighbor and watch television.
If you guessed health care, you lose. It's Tim Wirth, head of the United Nations Foundation, former undersecretary of state for global affairs during the Clinton administration, talking about a possible climate change deal with Grist's Amanda Little.
Wirth is reasonably optimistic that a last minute compromise will be hammered out involving concessions on all sides, focusing on the four main areas of dispute -- emissions reductions, financing provisions for the developing world, monitoring and evaluation, and technology transfer. But it won't be a perfect deal, and it certainly won't satisfy the climate activists currently getting tear-gassed by the Danish police.
Obama campaigned on hope and change, but is governing according to the principle that a few incremental steps of progress are better than flat-lining, (or going full-throttle in reverse.) It's probably the only realistic approach, but it sure explains his sagging poll numbers. Because it's very hard to get excited about crumbs when you've been dreaming about cake.
The market intelligence firm iSuppli is predicting that the LED light industry will shrug off the worldwide semiconductor industry decline, and register double-digit revenue growth in 2009 and a "a near doubling in market revenue by 2013."
iSuppli analyst Jagdish Rebello says the "growth is being driven by the rising penetration of LEDs as the lighting source of choice for a myriad of existing lighting applications, including automotive, traffic and street lighting, the backlighting of small LCD displays and keypads in mobile handsets, personal navigation devices, digital picture frames and cameras. The market also is being aided by the emergence of new applications, such as backlighting of large-sized LCDs in televisions, notebooks and computer monitors and personal illumination."
But what about the sheep?
Or perhaps you missed the emergence of flocks of back-lit LED sheep as the latest killer app for the latest, greatest, lightning technology? Korean technology giant Samsung hooked up with some Wales sheepfarmers and produced some fairly stunning demonstrations of what can be done with a heck of a lot of LED lights and some very enthusiastic Australian shepherd dogs.
If I were a sheep, I'd probably be annoyed beyond exasperation by the human-dog cabal that forced me to play the part of a pixel in a game of Pong spread out across a Welsh hillside, but there's no denying the sheer kookiness of as one commentator described it, "farmyard animals playing giant computer games:
For bonus, here's some light news coverage of the viral sensation:
And just to prove it's not all about the sheep, here's some more mesmerizing LED magic, this time from the Bayer headquarters in Leverkusen, Germany.
The Bayer display incorporated 5.6 million LED lights -- suggesting that the solid growth of the LED industry might be at least partially due to massive public relation stunts.
With Christmas one week away, Barry Ritholtz has gone on the warpath against gift cards at The Big Picture, employing rhetoric remarkably similar to that which he usually employs while lambasting bailout-prone politicians and greedy banksters.
Gift cards blow. The straight dope your nephews and nieces and grand kids are too nice to tell you: They hate getting them.
Why? Because they suck.
Nothing says "I am both thoughtless and inconveniencing" like a gift card. They let the recipient know that you couldn't be bothered actually picking out a present, so here is a cash equivalent -- only so much less convenient than the crisp paper kind of cash. And, you can only spend it in one place.
If you can't get them a gift, says Ritholtz, "just give them the damned cash."
Now, before I launch into a defense of gift cards, let me acknowledge that I am fully aware that they are essentially a scam. The creators of gift cards count on the fact that they will be left in drawers, or lost, or incompletely cashed out. What can you buy with that 89 cents remainder left on your card? Nothing good. When you buy a gift card for someone, you are essentially forking over some portion of the purchase price directly to the corporation selling the cards. This is sleazy and underhanded.
However, there are also efficiency gains from properly distributed gift cards. I don't buy into Joel Waldfogel's "Scroogenomics" thesis that decries winter gift-giving for its "billions of dollars in value destruction" as people give each others gifts that they don't want and don't need. But I am all too aware that a 12-year-old boy is a much better judge of what games he wants for his Nintendo DS or Xbox 360 than I am.
So why not just give the boy cash? Surely cash would allow an even more efficient allocation of resources? But cash is inferior, I think, because cash, like it or not, carries with it some assumption of responsibility. You don't want to waste your cash frivolously, or you might feel compelled to save it for some greater goal. You might end up, horror of horrors, being forced to use it to buy some other kid a birthday present! But a gift-card to, say, GameStop, is a ticket to freedom. Go be frivolous! Buy a game! Buy whatever game you want! It's better than money because it comes with an explicit, unignorable directive to use it in a way that gives you pleasure.
If you gave me cash for Christmas, I'd probably save it to pay for groceries. But if you gave me a gift card redeemable at my local bike shop -- I'd be utterly delighted to splurge on new gloves.
The same goes for an iTunes gift card, or a bookstore gift card. Sure, the gift-card issuer is taking its slice off the top, but the combination of a more efficient process of gift-giving along with the direct mandate against fiscal prudence means there is real value in the present.
Maybe I'm biased because my own 12-year-old son has made it clear that he considers gift cards to game stores or bookstores acceptable and desirable. Which is not to say that he would be pleased if that's all that was under the tree on Christmas morning. That would be upsetting and disappointing. He also wants to be surprised, and enjoys having some proof that people understand him and what he wants and can demonstrate that by giving him a cool gift. I certainly would rather pull off such a magic trick than just give him a gift card. But let's not to be so quick to condemn -- and instead appreciate that almost everything has its evolutionarily useful niche, if correctly deployed.
Secretary of State Hillary Clinton arrived in Copenhagen and promptly announced that the U.S. supported the creation of a $100 billion annual fund to help poor countries adapt to climate change. The money would be raised together with other major economies from both public and private sources.
As the Secretary noted, "$100 billion is a lot," and the number matches up with what poor countries have loudly been demanding. But while the last few remaining optimists that anything substantive might be achieved at Copenhagen are calling the news a "bombshell" that could unlock the current stalemate, there appear to be at least two major obstacles to any such progress: China, and the U.S. Congress.
Clinton declared that the fund would be contingent, reported the Washington Post, "on whether the nations gathered here could reach a substantive pact that includes 'transparency' on tracking emissions cuts." But that's precisely what China has steadfastly refused to do all along. It's no wonder that press coverage of the climate talks has become steadily more negative, day by day.
Furthermore, with deficit hawks occupying more and more of the rhetorical high ground in Washington, and President Obama's ability to push his agenda apparently weakening by the day, it is difficult to see where any significant sums of money are going to come from.
Which brings to us the best line delivered so far in Copenhagen, concerning the U.S.'s commitment to meaningful action.
Ladies and gentlemen, introducing standup comedian Hugo Chavez! (From Politico's Glenn Thrush):
"If the climate was a bank they would already have saved it."
A conversation about globalization.
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