Economic populism: or one reason why Trump and Sanders are thriving

Posted on by

Nice New Yorker piece by James Surowiecki:

Both Trump and Sanders downplay the enormous economic benefits of globalization for American consumers of all incomes, and their proposed solutions are vague and could well be harmful if implemented. But their words resonate with many voters, because they articulate an important truth: free trade has created major winners and major losers in the U.S. economy, and the losers—mostly blue-collar workers—have received little or no help. Trade with China, in particular, has inflicted serious damage on American communities across the country, damage from which they have yet to recover. As the economists David Autor, David Dorn, and Gordon Hanson have documented1, what they call the “China shock”—beginning in 1991 and lasting into this century—demolished manufacturing in much of the U.S. Workers in the affected communities had a hard time finding and keeping new jobs, and unemployment stayed high and wages low for at least a decade afterward.

Trade isn’t the only reason that blue-collar workers’ standard of living has declined; automation and weaker unions have also played a part. By focussing on trade, though, both candidates are acknowledging something important: what has happened to U.S. labor was not a natural disaster but, in part, the product of government policies designed to accelerate globalization and expose American workers to foreign competition. That admission is more than working-class Americans have got from most Presidential candidates.

  1. The abstract for their NBER paper “The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade” reads:
    “China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.” ↩

What the FBI vs Apple contest is really about

Posted on by

Wired nails it

But this isn’t about unlocking a phone; rather, it’s about ordering Apple to create a new software tool to eliminate specific security protections the company built into its phone software to protect customer data. Opponents of the court’s decision say this is no different than the controversial backdoor the FBI has been trying to force Apple and other companies to build into their software—except in this case, it’s an after-market backdoor to be used selectively on phones the government is investigating.

The stakes in the case are high because it draws a target on Apple and other companies embroiled in the ongoing encryption/backdoor debate that has been swirling in Silicon Valley and on Capitol Hill for the last two years. Briefly, the government wants a way to access data on gadgets, even when those devices use secure encryption to keep it private.

Yep. This is backdoor so by another route. It’s also forcing a company to do work for the government that, in this case, the government wants to do but claims it can’t. This will play big in China, Russia, Bahrain, Iran and other places too sinister to mention.

The FBI’s argument that the phone is vital for its investigation Seems weak. They already know everything they need to know, and the idea that the San Bernardino killers were serious ISIS stooges seems the prevalence of mass shootings in the US, and the say they conformed to type. What’s more likely is that the agency is playing politics. They’ve been arguing for yonks that they simply must have back doors. The San Bernardino killers presented them with a heaven-sent opportunity to leverage public outrage to force a tech company into conceding the backdoor principle.

Whither Twitter?

Posted on by

My comment piece in today’s Observer.

If there’s one thing Wall Street and the tech industry fears, it is the idea that something potentially profitable might peak or reach some kind of equilibrium point. Endless exponential growth is what investors seek. Whereas you or I might think that a company with more than 300 million regular users that pulls in $710m in revenues is doing OK, Wall Street sees it as a potential zombie.

At the root of the dissonance is the fact that Twitter is a public company. At its flotation in November 2013 it was valued at $32bn, a figure largely based on hopes (or fantasies) that it would keep modifying its service to attract mainstream users, that its advertising business would continue to grow at a phenomenal rate and that it would eventually be bigger than Facebook.

It didn’t do all these things, for various reasons, the most important of which is that it wasn’t (and isn’t) a “social networking” service in the Facebook sense. At the heart of the distinction is the fact that, whereas it is easy to give an answer to the question “What is Facebook?”, the answers for Twitter depend on who you ask…

Read on

What happens after Moore’s Law runs out of steam?

Posted on by

This morning’s Observer column:

Fifty years ago, Gordon Moore, the co-founder of the chip manufacturer Intel described a regularity he had observed that would one day make him a household name. What he had noticed was that the number of transistors that could be fitted on a given area of silicon doubled roughly every two years. And since transistor density is correlated with computing power, that meant that computing power doubled every two years. Thus was born Moore’s law.

At the beginning, few outside of the computer industry appreciated the significance of this. Humanity, it turns out, is not good at understanding the power of doubling – until it’s too late. Remember the fable about the emperor and the man who invented chess…

Read on

Those were the days

Posted on by

If people ask me to recommend a good book about journalism (well, British journalism anyway), I always point them at Michael Frayn’s Towards the End of the Morning and Evelyn Waugh’s Scoop. Of the two, I prefer Scoop, and I was reminded of it by Roy Greenslade’s Guardian piece occasioned by the provisional death certificate recently issued for Lord Lucan. Greenslade reminds us of Garth Gibbs, the archetypal Fleet Street hack who diligently pursued the ‘missing’ Earl for many years:

Gibbs, who died in 2011, was renowned for his tenacious belief that he was only ever one step behind the missing peer. Not that he minded, however, because he spent a great deal of his employer’s money travelling the world while failing to get his man.

Reflecting on the matter after 30 years of fruitless journalistic endeavour, he explained that he had adopted as his motto an observation made by the canny Sunday Express editor John Junor: “Laddie, you don’t ever want to shoot the fox. Once the fox is dead there is nothing left to chase.”

Gibbs wrote: “With that in mind I regard not finding Lord Lucan as my most spectacular success in journalism. Of course, many of my colleagues have also been fairly successful in not finding Lord Lucan. But I have successfully not found him in more exotic spots than anybody else.”

Indeed, he had. He failed to locate him after three weeks in Cape Town, which was handy because Gibbs, a South African, was able to visit friends and relatives. Nor did he find him in Macau or Hong Kong or the Bahamas.

Colleagues who liked to toast Gibbs’s heroic failures were particularly surprised when he announced that he was off to check on a Lucan sighting in Wales. They couldn’t see the point: no sunshine and no expenses.

And thus was born one of Fleet Street’s enduring myths: the plotting by reporters and photographers of sightings of Lucan in remote hotspots across the globe that ensured first class travel to spend sun-kissed days in five-star hotels.

Sigh. Those were the days.

While I’m on the subject, the latest theory about Lucan’s fate is that he shot himself at John Aspinall’s zoo, after which his body was fed to a tiger. The really shocking thing about that is that nobody saw fit to call the RSPCA.