Archive for the ‘Economics’ Category

A Lost Decade

Tuesday, March 2nd, 2010

Political philosopher William Galston argues that we are not investing enough in our nation’s future.

He cites data from a 2009 study conducted by the Information Technology and Innovation Foundation:

We rank fourth in science and technology researchers as a share of our workforce, but only 20th in our rate of change over the past decade; fifth in corporate R&D investment, but 17th in the rate of change; fourth in government R&D investment, but 15th in the rate of change; seventh in broadband, but 22nd in rate of change; first in GDP per working-age adult, but 16th in rate of change; and so on. […] (In seven of the 16 ITIF indicators, we’ve actually gone backwards since 1999.)

The reason according to Galston:

The federal budget and tax code are honeycombed with unproductive payoffs to special interests; it’s time to purge them. And the private economy has been dominated by a financial sector that’s more interested in transferring wealth (to itself) than in creating wealth through sensible investments. Perhaps the 2008-2009 financial crash will force bright young people to stop producing complex derivatives and start working on innovations that improve our lives.

He doesn’t say which “unproductive payoffs to special interests” but I suspect subsidies to oil companies and corporate farms are at the top of the list.

Casual Labor Harms Science

Sunday, February 28th, 2010

Conventional wisdom holds that the U.S. educational system does not produce enough scientists and engineers to support our science-based economy.

Scientific American recently published an article challenging the conventional wisdom.

The problem is not a lack of science PhD’s but instead a lack of secure, well-paying jobs, a situation caused by the re-structuring of labor markets that has been going on in academia for decades.

30 or 40 years ago, roughly 75% of science faculty were permanent employees. Today, that percentage has slipped to less than 25% by some estimates. Most science research is done by graduate students or temporary employees with low pay and no job security and little hope of career advancement.

“There is no scientist shortage,” says Harvard University economist Richard Freeman, a leading expert on the academic labor force. The great lack in the American scientific labor market, he and other observers argue, is not top-flight technical talent but attractive career opportunities for the approximately 30,000 scientists and engineers—about 18,000 of them American citizens—who earn PhDs in the U.S. each year. […]

Most PhDs hired into faculty-level jobs get so-called “soft-money” posts, dependent on the renewal of year-to-year funding rather than the traditional tenure-track positions that offer long-term security.

It is no wonder that talented people choose to go into law, finance, or medicine that offer better career prospects. Yet, politicians and the media tell a different story.

Despite these realities, the existence of a technical talent dearth is nonetheless almost “universally accepted” in political circles, where it plays an important role in shaping national policy on science funding, education and immigration, says Ron Hira, assistant professor of public policy at Rochester Institute of Technology. “Almost no one in Washington” recognizes the “glut” of scientists, nor the damage that lack or opportunity is doing to the incentives that formerly attracted many of America’s most gifted young people to seek scientific and engineering careers, he says.

If the claim that the U.S. is not deficient in producing science Ph.Ds is false, why is it so often repeated?

As usual, when you want to know the answer to a question, follow the money.

University administrators save money with this system because they don’t have to allocate scarce resources to hiring permanent faculty; state governments (and taxpayers) are happy because they don’t have to support the universities; the few privileged scientists who administer grants are happy because all the money is funneled through their departments; corporations are happy because a depressed labor market keeps the salaries of their science employees low and they can argue for the need for more cheap foreign employees through special H-1B visas; and those politicians and members of the business community who seek to defund American universities and privatize education see their dream continue its ineluctable advance.

Meanwhile, our science-based economy suffers:

…the U.S. …finds itself increasingly dependent on an inherently unreliable stream of young foreign scientists, mostly in the country on short-term, non-resident visas, to do much of the routine labor that powers American research. The American research enterprise—the indispensable engine of national prosperity and the world’s leading innovation establishment—has therefore become vulnerable, observers say, to conditions beyond its borders and its control. At the same time, experts note that recruiting sufficient amounts of the talent needed for vital defense-oriented scientific and engineering work that requires security clearances has become increasingly difficult.

Ain’t capitalism grand?

Losing A Generation

Wednesday, February 24th, 2010

According to Pew Research, as of November 2009, “Only 46 percent of 16-to-24-year-olds are employed, which is the smallest share since the government began keeping track in 1948…”

Via Brian Leiter, The Atlantic lays out the disturbing long-term consequences of our current recession and the failure to provide adequate stimulus to the economy—both, by the way, the consequences of a conservative ideology that may be back in power in 2010. Who better to put out a fire than an arsonist?

[I]n fact a whole generation of young adults is likely to see its life chances permanently diminished by this recession. Lisa Kahn, an economist at Yale, has studied the impact of recessions on the lifetime earnings of young workers […] She found that, all else equal, for every one-percentage-point increase in the national unemployment rate, the starting income of new graduates fell by as much as 7 percent; the unluckiest graduates of the decade, who emerged into the teeth of the 1981–82 recession, made roughly 25 percent less in their first year than graduates who stepped into boom times.

But what’s truly remarkable is the persistence of the earnings gap. Five, 10, 15 years after graduation, after untold promotions and career changes spanning booms and busts, the unlucky graduates never closed the gap. Seventeen years after graduation, those who had entered the workforce during inhospitable times were still earning 10 percent less on average than those who had emerged into a more bountiful climate. […]

When Kahn looked more closely at the unlucky graduates at mid-career, she found some surprising characteristics. They were significantly less likely to work in professional occupations or other prestigious spheres. And they clung more tightly to their jobs: average job tenure was unusually long. People who entered the workforce during the recession “didn’t switch jobs as much, and particularly for young workers, that’s how you increase wages,” Kahn told me. This behavior may have resulted from a lingering risk aversion, born of a tough start. But a lack of opportunities may have played a larger role, she said: when you’re forced to start work in a particularly low-level job or unsexy career, it’s easy for other employers to dismiss you as having low potential. Moving up, or moving on to something different and better, becomes more difficult….

The article goes on to provide evidence that people who don’t establish themselves in the job market within two years tend to suffer long-term psychological and physical damage that continues to inhibit their careers even if they eventually find steady work, suffering from increased rates of alcoholism, depression, mortality, and apathy.

I hope things turn around before our students hit the job market.