The American Economy

> We have an economy in which [46.5 million Americans live in poverty][1], the real [unemployment rate is above 12 percent][2], and our [400 wealthiest citizens enjoy as much wealth as the entire bottom half of the population][3].

— [Eric Levitz][4]

[1]: https://www.census.gov/hhes/www/poverty/about/overview/
[2]: http://www.cnbc.com/id/101398855
[3]: http://www.cnbc.com/id/101038089
[4]: http://www.salon.com/2014/06/08/capitalism_vs_education_why_our_free_market_obsessions_are_wrecking_the_future/

How We Spent

Bloomberg’s new Data View feature is quite compelling. A recent interactive visualization focused on [changes in consumer spending][bb] over the past 30 years. The most eyebrow-raising thing I noticed while looking over the various graphs was that almost all of them reveal a change in consumer spending about three years before the collapse of the mortgage bubble: some time between late 2005 and early 2006 consumer spending dips significantly and continues to dip until it bottoms out in 2008. I am not enough of an economist to know if this dip helped break the bubble or if it reveals that consumers were, in some way, aware of the bubble and already anticipating the trouble to come.

[bb]: http://www.bloomberg.com/dataview/2013-12-20/how-we-spend.html

The Re-Emergence of a Craft-Based Economy

In an article in the *New York Times*, Adam Davidson synthesizes a number of recent events into a larger phenomenon that he calls a “craft-based economy.” He points to Sam Adams beer, Starbucks, Apple, and the various products offered on Etsy as facets of what is apparently called “happiness economics”, which argues that “once people reach some level of comfort, they are willing — even eager — to trade in potential earnings at a lucrative but uninspiring job for less (but comfortable) pay at more satisfying work.” Another dimension of this view is that other individuals within this economy, and presumably enough of the middle class to matter, are willing to be price insensitive on certain consumables.

That is, even in these tight economic times, some individuals are leaving good jobs for jobs that pay them less well, and often require more work, but make them happier, and some consumers are choosing not the commodity version of an item but the one that satisfies some other dimension. Davidson, and I guess happiness economists too, ignores the fact that there are other quantifiable dimensions of a product than its price: e.g., organic produce.

But the larger point is an interesting one, and I like that Davidson included in his examples a micro-manufacturer who saw a niche for precisely-milled metal alloy parts and now has contracts with Boeing and General Electric. There is, as Davidson points out, always the danger that a bigger player will decide that the niche is large enough to be profitable and to displace the smaller player, but this is something of which smaller players, like the fabricators that I study, have long been aware.

On the Maturation of Automation

According to an article in the New York Times, two economists who began with the optimistic goal of documenting the “cornucopia of innovation that is going on” realized along the way that “as the employment picture failed to brighten in the last two years, [they should change] course to examine technology’s role in the jobless recovery.” What they discovered, they believe, is that as the forms of automation have become increasingly sophisticated, it has begun to affect diverse parts of the jobs market. Close to ten percent of sales positions have been lost, for example, which would seem an important place to have a human, but I am guessing that their argument is that better technologies — data mining, etc. — have made it possible to have a smaller team be more targeted in their work. Oof.

I should note that I have not read the book and the article itself makes it clear that their conclusions are already being debated within economics. (And economics, it’s becoming increasingly clear, is really more of an interpretive practice than a science.)

Amazon’s Low Prices Sometimes Come with a High Cost

Regular readers know that I am not only a fan of Amazon.com, but also a subscriber to its Prime feature. I think the company has made most of the right moves, except its digital content offerings, especially video, seem stuck in some older, uglier version of the web where a lot of the functionality you expect isn’t there and what functionality you expect requires a click that takes you to yet another page. Worse, those pages often don’t know from whence you came.

All that noted, there is always a potential dark side to human endeavors, especially in the business world where costs, by and large, don’t magically disappear, but instead get shifted somewhere. The question is always there. Americans have largely had our stagnant wages propped up through the low cost of items manufactured in other countries where wages are low and the cost of regulation, such as environmental protections, are far less.

If you are in the distribution business like Amazon, however, you have little choice but to have facilities throughout the U.S. But there is always a way to squeeze out costs. The way Amazon does it, in at least one location in Pennsylvania but one has to assume the others operate similarly, is to operate a warehouse that is not air conditioned, use temporary workers, and design a system that literally uses people up, guaranteeing they won’t stick around for a permanent position.

A local Pennsylvania paper has the complete story.

Exploring Non-academic Options for Humanities PhDs

According to the Chronicle of Higher Education, the American Council of Learned Societies (ACLS) has embarked upon a program to place individuals with PhDs in the humanities in various NGO and GO positions:

The council’s effort, the Public Fellows program, will place eight recent Ph.D. recipients in staff positions at nonprofit groups and government agencies for two years. The program, which will be financed by a grant from the Andrew W. Mellon Foundation, will pay fellows an amount equivalent to what someone with similar experience and education would make as a new employee of the same agency or nonprofit group. Those amounts will probably be comparable to the wages a new doctoral graduate would earn in an academic job, about $50,000 to $78,000, said Nicole A. Stahlmann, director of fellowship programs at the council, a private, nonprofit federation of 70 national scholarly organizations.

This is a great first step, but I really think if we are to re-think the way we do things not only in the academy but also in the corporate world, we really need to see some humanities PhDs in the private sector. What that would look like, I’m not quite sure, but I think that’s where we should set the bar.

I think this target is too low, and, in all honesty, isn’t there already an informal path to NGO directorships and staff positions for folks with humanities PhDs? That’s been my experience, and, I want to be clear, I think it’s a fine option, and I think this program somehow diminishes the work of folks who have already blazed this trail, suggesting as it does that they did it on the fly while somehow this program is going to formalize things, make it official, and *then* it will be okay to pursue this path.

Given the intense scrutiny and funding pressures facing NGOs and governmental agencies, it strikes me that a truly ambitious program would look to the private sector for interesting possibilities. Especially in the American context, growth almost always occurs in the private sector long before it finds its way into the public sector.