iTunes U and Podcasts

Since I got my iPhone, I have started listening to podcasts and courses put online by universities.

Specs listed the podcasts she listens to and Razib also mentioned a podcast recently, so I thought I should list the stuff I have been listening to on my iPhone and may be Razib and others can chime in with some suggestions.

Here’s my current list of podcasts:

In addition, here are some courses and lectures on iTunes U and as podcasts that I have been listening to or that are in my listening queue:

What do you recommend?

Buy a House, Get a Green Card?

Some people are suggesting an immigration program “buy a house, get a green card” but I argue that their numbers are all wrong.

Last month, Thomas Friedman wrote in the New York Times that:

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

Alex Tabarrok called it the “buy a house, get a visa” strategy and claimed that:

the multiplier on the “buy a house, get a visa” strategy would be much larger than any possible domestic multiplier since the money would come from outside the economy (and efficiency would improve as well.)

An op-ed in the Wall Street Journal has now suggested the same.

The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country.

[…] A better idea is to offer permanent residence status to the many foreigners who are clamoring to get into the U.S. — if they buy houses of minimal values (not shacks). They wouldn’t need to live in those houses, but in order to remove the unit from the total housing market, they couldn’t rent them. Their temporary resident status granted upon purchase would become permanent after, perhaps, five years, if they still owned the houses and maintained clean records. The mere announcement of this program might well stop the ongoing collapse in house prices, especially in cities such as Las Vegas, Miami, Phoenix and San Francisco, where prices are down 40% — but where many foreigners like to live.

Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.

[…] The blueprint for a program to sell surplus housing to immigrants is already in place with the EB-5 visa program. Each year, 10,000 EB-5 visas for this country are available for foreigners who each invest $1 million in a new enterprise ($500,000 in economically depressed areas) that creates at least 10 full-time jobs. After two years, the entrepreneur and his family can become permanent residents.

Of course, Alex Tabarrok liked it while Matthew Yglesias says:

I don’t think this idea is nearly the panacea that Gary Shilling and Richard LeFrak seem to think it is, but nevertheless a program to offer permanent resident status to foreigners who buy American houses does seem to me like a good idea.

John Mauldin goes completely overboard:

Let’s assume one million new immigrants would buy homes. At an average price of almost $200,000, that would be $200 billion injected into the economy. And each of those homes has to be furnished, food has to be bought, clothing will be needed, local taxes will be paid. Airplane tickets to research potential areas, hotels needed during the interim period, and other related expenditures would add up. Over two years, this could easily be another $100 billion.

I am not an economist and I’ll leave it to economists to discuss the multiplier and stimulative effects of this program. However, I am an immigrant and have looked at the immigration details in the US fairly extensively.

Let’s first look at the average number of immigrants per year to the US in the period 1998-2007: 935,948. It reached a peak of 1,266,129 in 2006 but was down to 1,052,415 in 2007. When 2008 data comes out, it is expected to go down further because of the economic conditions.

Contrary to Mauldin, these one million immigrants won’t all buy houses since the number of households is less than a million. The average household size in the US is 2.61. I remember reading that immigrant household size is larger but I can’t find that data right now, so using the US number, we get only about 400,000 households.

Before you start liking the 400,000 households number, remember that a majority (621,047 in 2007) of the immigrants were adjusting status, i.e. they were already in the US. At least some of those already bought a house since they were planning to immigrate. I know lots of H-1B visa holders who bought houses and later adjusted to permanent resident status.

The Wall Street Journal op-ed mentions an already existing investor immigrant program EB-5. Let’s look at its conditions:

10,000 immigrant visas per year are available to qualified individuals seeking permanent resident status on the basis of their engagement in a new commercial enterprise.

Of the 10,000 investor visas (i.e., EB-5 visas) available annually, 5,000 are set aside for those who apply under a pilot program involving an USCIS-designated Regional Center.

In general, “eligible individuals” include those

  1. Who establish a new commercial enterprise by:
    • Creating an original business;
    • Purchasing an existing business and simultaneously or subsequently restructuring or reorganizing the business such that a new commercial enterprise results; or
    • Expanding an existing business by 140 percent of the pre-investment number of jobs or net worth, or retaining all existing jobs in a troubled business that has lost 20 percent of its net worth over the past 12 to 24 months; and
  2. Who have invested — or who are actively in the process of investing — in a new commercial enterprise:
    • At least $1,000,000, or
    • At least $500,000 where the investment is being made in a “targeted employment area,” which is an area that has experienced unemployment of at least 150 per cent of the national average rate or a rural area as designated by OMB; and
  3. Whose engagement in a new commercial enterprise will benefit the United States economy and
    • Create full-time employment for not fewer than 10 qualified individuals; or
    • Maintain the number of existing employees at no less than the pre-investment level for a period of at least two years, where the capital investment is being made in a “troubled business,” which is a business that has been in existence for at least two years and that has lost 20 percent of its net worth over the past 12 to 24 months.

Now this EB-5 might have requirements that are too onerous and it’s always possible that the optimal investment is less than a million dollars and other conditions should be relaxed as well.

However, let us look at the number of immigrants admitted to the US under this program. The average number of EB-5 visas per year in the period 1998-2007 was 375. In 2007, the number of investor visas used was 806. This is not the number of investors, but of visas which includes family too. Let’s break down the numbers for 2007.

Adjustment of Status New Arrivals Total
Total EB-5 315 491 806
Investors 116 163 279
Spouses & children 187 328 515

As you can see, 10,000 visas per year were reserved for this investor program, but in the maximum used was about 8% of that. And the actual number of investors (not including dependents) in 2007 was only 279. Assuming the buy a house, get a green card program does a level of magnitude better because median house price (for 2005-7) is only about 181,800. Still, it would attract only about 3000 investors and their families. That would not do anything to the housing market or the US economy.

PS. The immigration numbers are from the 2007 Yearbook of Immigration Statistics, specifically Table 6 and Table 7.

Outsourcing and the Welfare State

On economic issues, I am probably much to the left of the median voter in the US. I am a fan of the social welfare states of Europe. Therefore, I found this paper by Peter Lindert (via A Fistful of Euros) on the effect of a welfare state on GDP interesting.

All our well-known demonstrations of the large deadweight losses from social programs overuse imagination and assumption. There are good reasons why statistical tests keep coming up with near-zero estimates of the net damage from social programs on economic growth. It’s not just that the tales of deadweight losses describe bad policies that real-world welfare states do not practice. It’s also that the real-world welfare states reap offsetting benefits from a style of taxing and spending that is pro-growth.

The keys to the free lunch puzzle are:

  1. For a given share of social budgets in Gross Domestic Product, the high-budget welfare states choose a mix of taxes that is more pro-growth than the mix chosen in the United States and other relatively private-market OECD countries.
  2. On the recipient side, as opposed to the tax side, welfare states have adopted several devices for minimizing young adults’ incentives to avoid work and training.
  3. Government subsidies to early retirement bring only a tiny reduction in GDP, partly because the more expensive early retirement systems are designed to take the least productive employees out of work, thereby raising labor productivity.
  4. Similarly, the larger unemployment compensation programs have little effect on GDP. They lower employment, but they raise the average productivity of those remaining at work.
  5. Social spending often has a positive effect on GDP, even after weighing the effects of the taxes that financed the spending. Not only public education spending, but even many social transfer programs raise GDP per person.
  6. The design of these five keys suggests an underlying logic to the pro-growth side of the welfare state. The higher the social budget as a share of GDP, the higher and more visible is the cost of a bad choice. In democracies where any incumbent can be voted out of office, the welfare states seem to pay closer attention to the productivity consequences of program design. In the process, those countries whose political tastes have led to high social budgets have drifted toward a system that delivers its tax bills to the less elastic factors of production, in the Ramsey tradition.

On the other hand, I am a big fan of globalization, free trade and outsourcing. The move of IT jobs to India and other countries has been in the news lately. Via Virginia Postrel, here is her article in the New York Times about the effects of jobs moving offshore.

The loss of people’s jobs definitely does affect them. And as an industry moves to cheaper places, some of those people need to change careers. This is one aspect where the government and/or US industry could help workers.

[P]rogrammers may need new training. […] To encourage companies to invest in such training, Dr. Mann argues for a “human capital investment tax credit,” similar to the credit for investing in physical equipment. She also believes that the federal aid given to displaced manufacturing workers should be extended to cover information industries. And she suggests that information technology itself may help with job searches, crossing the old boundaries of classified ads.

The article talks about the work of economist Catherine Mann who concludes that:

  • Globalization of IT hardware production is a model for the global evolution of IT services and software. Although technological change is the most important driver of IT price declines, globalized production and international trade made IT hardware some 10 to 30 percent less expensive than it otherwise would have been. These lower prices translated into higher productivity growth and an accumulated $230 billion in additional GDP (1995—2002). Real GDP growth might have averaged 0.3 percentage points less per year from 1995 to 2002, if globalized production of IT hardware had not occurred.
  • As IT hardware prices have declined, the importance of IT services and software in the IT package has increased from 58 to 69 percent of IT spending in 1993 and 2001, respectively. Over the same period, growth in software and services spending at 12.5 percent overwhelmed growth in hardware spending at 6.7 percent. In the face of this demand, and enabled only since the mid-1990s by the Internet and standardization of methods, software and services are now beginning to be produced globally. Just as for IT hardware, globally integrated production of IT software and services will reduce these prices and make tailoring of business-specific packages affordable, which will promote further diffusion of IT use and transformation throughout the US economy.
  • When some production of software and services is done abroad, some jobs will be done abroad too. Recent efforts to quantify IT-related and other white collar job loss “offshore” frequently use the peak of the economic and technology boom as the base for analysis, thus ignoring the business cycle, trend decline in manufacturing employment, dollar overvaluation, and technology bust. Cutting through the technology boom and peak of the business cycle and comparing end-1999 with October 2003, employment in architecture and engineering occupations is stable, that in computer and mathematical occupations is 6 percent higher and in business and financial occupations, 9 percent higher.
  • Going forward, broader diffusion of IT throughout the economy points to even greater demand for workers with IT skills and proficiency. In the 1990s, investment in IT propelled job growth for workers with IT skills to twice the rate of job growth in the overall economy. Over the next decade, the Bureau of Labor Statistics (BLS) projects that job growth to 2010 in occupations requiring IT skills will be more than three times the rate of job growth in the overall economy.
  • Globalization of software and services, enhanced IT use and transformation of activities in new sectors, and job creation are mutually dependent. Breaking the links, by limiting globalization of software and services or by restricting IT investment and transformation of activities or by having insufficient skilled workers at home, puts robust and sustainable US economic performance at risk.

And she focuses on the only the US. I am interested in the effect of just jobs on the poor countries where these jobs have moved as well. I am pretty sure the rise in the standard of living of Indians and others has been great.

Productivity: Experts’ View

While talking about the economic output per hour and hours worked in different countries, I had a question about estimating productivity in the IT industry:

I also have a question for anyone who knows economics more than I do. Everyone I know in the I.T. and other hitech fields works 50-60 hours a week but doesn’t get any overtime. Do they count as 40-hour work-week for calculation of productivity numbers?

Stephen Roach of Morgan Stanley provides some analysis:

In the four quarters ending 2Q03, the increase in manufacturing productivity (3.5%) was below the gain in overall nonfarm business productivity (4.1%). A strong increase in services sector productivity is the only way to reconcile these numbers; my rough guesstimate points to nonmanufacturing productivity growth of 4.5% on a year-over-year basis —- about 30% faster than measured gains in manufacturing.

This is where the productivity miracle falls apart, in my view. I honestly don’t think we have a clue as to how to measure productivity in the white-collar services sector. The problems lie both in the numerator (output) and the denominator (labor input) of the productivity equation. The production of the proverbial ‘widget’ makes measurement of tangible output in the manufacturing sector relatively easy by comparison. The intangible output of services is a different matter altogether. Measuring quality-adjusted value-added in knowledge-based activities is tough in theory and virtually impossible in practice. Yet that’s exactly what the productivity metric requires us to do. Is it correct to measure the output of a software programmer, for instance, by the lines of code that he or she writes? Or the number of words that an analyst produces? Or is less more? To me, the efficient software program and the insightful piece of analysis wins, hands down. Try measuring managerial output —- hardly a trivial consideration given that managers account for fully 25% of America’s total white-collar workforce.

As tough as it is to measure the numerator in the white-collar productivity calculus, I have long been equally critical of efforts to capture the denominator —- labor input. The official data on labor input comes from the establishment surveys of the US Bureau of Labor Statistics; at the crux of this gauge is an estimate of the length of average work schedules. For white-collar knowledge workers, these numbers simply don’t make any sense to me. Take financial services —- an industry in which I have spent my entire career. According to the BLS, the average workweek in the financial activities sector was 35.4 hours in July 2003 —- essentially unchanged from the level a decade earlier (35.6 hours in July 1993). I find that most difficult to fathom. Over the past decade, the IT-enabled knowledge worker has seen a radical transformation of work schedules. Courtesy of miniaturized and portable information appliances, together with near-ubiquitous connectivity, workdays have been extended as never before. Yet in this increasingly ‘24 × 7’ mindset, the official data speak of unbelievably short and unchanged work weeks. What a disconnect!

To me, this smacks of a classic measurement problem. The official data seem to underestimate woefully actual hours worked in America’s increasingly knowledge-based, white-collar economy. We are guilty of confusing extended work schedules with productivity growth. I’ve said it before: Productivity is not about working longer. It’s all about generating more value added per unit of labor input. To the extent that government statisticians are undercounting work time, it follows they are guilty of overstating productivity. With America’s newfound productivity gains skewed increasingly toward the white-collar services sector, this statistical conundrum takes on even greater meaning for the economy as a whole.

Brad DeLong disagrees with his analysis.

The first criticism is only half-right because the bulk of white-collar service-sector work—including virtually all of managerial work—are themselves inputs into further stages of the production process. The management of Daimler-Chrysler helps the rest of Daimler-Chrysler make cars. The management of Nike helps the rest of Nike make shoes. We know what a car is. We know what a shoe is. To the extent that we overestimate white-collar productivity in Daimler-Chrysler’s and Nike’s value chains, we automatically underestimate blue-collar productivity because the combined output of both—quality-adjusted cars or shoes—is something we know about. It is very possible that we are overestimating white-collar and underestimating blue-collar productivity, but such errors should cancel each other out for the economy as a whole. And yet the statistics for the economy as a whole are very impressive.

The second criticism is also only half-right. Because people are easier to reach, they are spending less time hanging around the office twiddling their thumbs waiting just in case somebody needs to reach them and learn something they know. Because people are easier to reach, they are being bugged more and made to work more outside formal normal working hours. Which effect dominates? I don’t know. I do know that people seem to prefer the wired to the hanging-around-the-office lifestyle, and prefer it by quite a bit. But I live near the center of where the most action is. It’s not clear to me whether Stephen Roach’s point is quantitatively important, indeed, it’s not clear to me that it cuts in the direction he thinks it does.

Moreover, there is a third potential criticism of the productivity numbers that Stephen Roach doesn’t make, and that I wish he would: the speed-up criticism. More and more, blue-collar and lower-level white-collar workers can be watched, monitored, and assessed. The pace at which they are expected to work can be ratcheted up with much more ease than in past ages. Is this factor—either the reduction in paid on-the-job leisure, or the breaking of the wage-effort social contract in the interest of extracting more value for each wage and salary dollar, depending on your viewpoint—important? I do not know. I wish I did.

No, I don’t have any intelligent comment myself.

Labor Productivity

The International Labor Organization has issued a report about key indicators of the labor market around the world. I was interested in seeing the productivity numbers as well as hours worked. Here is the data for the top 10 countries with the highest output per hour worked.

Country Output per person Hours worked Output per hour
Norway 51,155 1,342 38.11
France 52,444 1,545 35.28
Belgium 54,338 1,559 34.36
United States 60,728 1,815 32.43
Netherlands 42,788 1,340 32.31
Ireland 52,486 1,668 31.38
Denmark 45,531 1,499 30.25
Austria 44,888 1,518 29.56
Germany 42,463 1,444 29.40
Italy 46,509 1,619 28.74

Now, I have taken only one undergrad economics course, so I don’t have any profound comments on this like Brad or Max, but I must say I am more interested in the productivity per hour measure. I am a lazy man and rate leisure and life outside of work highly. Therefore, a high productivity per hour and a low number of hours spent working are important to me. This does show to me that Americans in general work a lot more than Europeans. However, it seems that Koreans take the cake. They work 2,447 hours a year, and that’s down from about 2,740 hours a few years ago.

I also have a question for anyone who knows economics more than I do. Everyone I know in the I.T. and other hitech fields works 50-60 hours a week but doesn’t get any overtime. Do they count as 40-hour work-week for calculation of productivity numbers?

Redux: The Non-Taxpaying Class

I am getting a lot of hits (my definition of “lot” may differ from yours) for searching on this WSJ editorial. I am #11 (yes, that’s near the end) on Google. I thought I should point my readers to my posts as well as others.

Tax the Poor

It seems like the Wall Street Journal editorial I mentioned before was inspired from Neal Boortz. Writing on his website on Aug 1, Boortz describes “THE DEMOCRATS’ (SECRET) PLAN FOR AMERICA”:

Remove a majority of voters from responsibility for income taxes
This is the biggie —- and they’ve made no attempt to hide their goals here. The Democrats have been working on this plan for decades —- with no small amount of help from the cowardly Republicans. The idea is simple. Using “refundable” tax credits and deductions and such ideas as the fraudulent Earned Income Tax Credit the Democrats are working to shift the entire burden for the payment of federal income taxes onto a minority of US taxpayers. Right now the top 50 percent of taxpayers pay almost 96 percent of the taxes. The Democrats are close to their goal. When the majority of voters have no federal income tax liability it will be almost impossible to pass any meaningful tax cuts ?— and further tax increases will be a piece of cake, especially if the taxes only affect those to be considered to be rich. Through this ploy the Democrats plan to create a defeat-proof socialist congress.


WSJ Editorial: The Non-Taxpaying Class

E.J. Dionne, Tim Noah and Josh Marshall are making fun of the Wall Street Journal editorial last week which basically says:

[A]s fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.

And WSJ’s example: people earning $12,000 a year! The quotes from the above sites make the editorial look like it was published by The Onion. I couldn’t find the editorial online as I don’t subscribe to the Wall Street Journal, so I can’t say if these characterisations are correct.

UPDATE: Matthew Yglesias has some ideas from the Dead Kennedys to accomplish what WSJ wants.

UPDATE II: The editorial can be found here. (Via CalPundit who has a good post on this topic.)

Bush Tax Cut

Very interesting table from the Tax Policy Center about how the Bush tax cut of last year would affect the rich and the poor after it is all phased in. Overall, the change in after-tax income will be 1.8%. The richest 1% get 4.5% however. The worst-off: those in the bottom 20% as well as the top 10% minus the top 1%. That’s curious indeed. (Courtesy of Max Sawicky)