Research assistant needed

The Progressive Policy Institute, where I’m chief economic strategist, is looking to hire a full-time research assistant.  Here’s the ad:

Policy institute in Washington, D.C. seeks a full-time research assistant to support senior staff on economic and policy projects. Key duties include: writing reports, downloading and analyzing economic data, and creating charts. Bachelor’s degree and a year or more of work experience are required. Excellent written and oral communications, interpersonal and analytic skills are essential. The ideal candidate will be a resourceful quick-study who can take initiative and pay attention to detail.

If interested, apply to mmandel@ppionline.org. Include a current resume.  Equal Opportunity Employer

Air Force Certifies the Weakness of Domestic Manufacturing

I was just revising a portion of my textbook, Economics:The Basics and I happened to come across this March21, 2011 entry in the Federal Register where the Air Force is granting a waiver from the  Buy American requirements of the American Recovery and Reinvestment Act of 2009. This is what the waiver said:

The domestic nonavailability determination for these products is based on extensive market research and thorough investigation of the domestic manufacturing landscape. This research identified that these products are manufactured almost exclusively in China.

Which products are they talking about?

… the following construction items to be incorporated into the project FTQW094001 for the construction and replacement of military family housing units at Eielson AFB, Alaska under task order FA8903-06-D-8505-0019. The items are 1″ Collated Screws, Shank #10; 1-1/2″ (Taco) Air Scoops for Hydronic Heating Systems; 1-5/8″ Ceramic Coated Bugle Head Course Thread Screws; 2″ (Taco) Air Scoops for Hydronic Heating Systems; 2-1/2″ (Taco) Air Scoops for Hydronic Heating Systems; 2-1/2″ Collated Screws; 3″ Ceramic Coated Bugle Head Course Thread Screws; 3″ Spool Insulators;3/4″ Collated Screws, Shank #10; 3″;Bolt Guy Clamp; Ceiling Fan; Ceiling Fan w/Light Kit; Door Hinge Pin Stops; Exterior Wall Mount Two Head Flood Light w/270 Degree Motion Sensor & Brushed Nickel Finish; Ground Fault Circuit Interrupt (GFCI) Receptacles; Handrail Brackets; Maclean Power Systems Guy Attachment; Residential Style Satin Chrome Handrail Bracket; Satin Nickel Outdoor Sconce Light Fixture; Tamper-Resistant Ground Fault Circuit Interrupt (GFCI) Receptacles; Weather-Resistant Ground Fault Circuit Interrupt (GFCI) Receptacles; Pendant Bar Light Fixture; 24″ Bath Vanity Light Fixture; Pendant Chandelier Light Fixture; Linear Fluorescent Ceiling Lighting Fixture (48″ Lensed Fluorescent w/Dimming Ballast & Satin Aluminum Finish); 48″ Bath Vanity Light Fixture; 20″ Utility Shelf Bracket; Chrome Finish Residential Dishwasher Air Gap Cap Fitting; Satin Chrome Finish Convex Wall Mount Door Stops; Residential Microwave w/Range Hood; Residential Style Polished Chrome Towel Ring; Residential Style Polished Chrome Toilet Paper Holder; Residential Style Polished Chrome Double Robe Hook; Residential Style Bright Stainless Steel 60″ Curved Shower Rod & Flanges; Residential Style Polished Chrome 24″ Towel Bar; Residential Style Polished Chrome 30″ Towel Bar; Satin Nickel Finish Wall Mounted Spring Door Stop.

Hmmm…it’s pretty amazing, don’t you think, that the Air Force is certifying that none of these items are available from American manufacturers. It’s even more extraordinary given that the BEA reports that  the U.S. fabricated metal and electrical equipment industries were producing at very high levels as recently as 2007. Similarly, the BLS is reporting record levels of output in the ‘turned product, screw, nut and bolt’  industry as of 2007.

I see four possibilities.

First, the Air Force could be lazy. The parts are really available, but they can’t find them.

Second,   U.S. manufacturers only make sophisticated parts, not towel bars and door stops.

Third,  these industries were doing great through 2007,   and have only gone offshore since the recession.

Fourth,  the official data didn’t pick up the offshoring in the 2000s.

Take your pick.

The Price of Wireless Service Dives

This morning’s CPI report show that the price of wireless phone service is falling at an accelerating pace. That suggests the communications sector is becoming more and more important as a driving force for growth.

More Regulatory Overreach at the FCC

Imagine that you had an industry where customer satisfaction was increasing faster than any other part of the economy.  Now imagine that the same industry showed rising real investment, even during the worst recession in 75 years.  Finally, imagine that industry charged  falling prices for both consumers and businesses.

But of course, that industry is not imaginary: The telecom industry, and in particular the wireless sector, has  outperformed  the rest of the economy on key measures such as customer satisfaction, investment, and price.  Moreover, at a time when President Obama is calling  for more innovation,   the wireless industry has produced more genuine new products and services than anyone else.

So given the great performance of the industry during this tough period, why the heck does the Federal Communications Commission keep imposing additional regulations on wireless providers? The latest case of regulatory overreach: On April 7,  the FCC issued an order forcing the  big wireless providers to sign ‘data-roaming’ agreements with smaller carriers.  In effect,  the smaller carriers can now tell their customers that they could have data service all over the U.S., free-riding on the mammoth investments by the big carriers. In addition, the FCC made it clear that it is willing to set the price for each data roaming agreement if it doesn’t like what the big carriers are offering–effectively reinstituting price regulation for the most dynamic sector of the economy.

This aggressive regulatory move by the FCC follow its enactment of confusing ‘net neutrality regulations’ in December 2010, an 87-page order that raises more questions than it resolves. And then coming down the road is the ‘bill shock’ regulation. In order to address the rather rare and fixable problem of a surprisingly high bill, this regulation would force providers to spend scarce investment dollars on revamping their billing system rather than  building out their networks. 

In many ways, enacting this series of regulations is like throwing pebbles in a stream. One pebble doesn’t make much of a difference, but throwing enough pebbles in the stream can dam it up.

Frankly, the degree of regulation that the FCC wants to impose is more appropriate to a failing industry rather than one which is demonstrably successful and growing.  Let’s just run through the performance of the telecom/wireless industry over the past five years.  According to the American Customer Satisfaction Index,  satisfaction with wireless service has increased by 14% over the past five years, by far the biggest  jump of any industry.

Now let’s look at investment. The data on investment is somewhat fuzzier than for satisfaction, since the government’s figures on industry investment only run through 2009, and merges the telecom and broadcasting industries.

But here’s what we see: In the telecom/broadcasting industry, real investment in equipment and software  is up 30% since 2005, despite the turbulence of the financial crisis. By contrast, overall private sector real investment in equipment and software is down 8% over the same period.

And then of course the price of wireless service keeps falling. The latest figures from the Bureau of Labor Statistics say that consumer wireless prices are down 6% since 2011, and business wireless prices are down a lot more.

Right now the FCC  has the good fortune to preside over one of the few growing industries in the economy.  If the commissioners genuinely want to  support  innovation and growth, they should stop throwing regulatory pebbles into the stream.

Most manufacturing industries are still flat on their back

This is a long post, but not epic.

A new story from the Associated Press argues that there’s been a big productivity surge in the U.S., post-financial crisis. Paul Wiseman writes: (my emphasis added)

The reason is U.S. workers have become so productive that it’s harder for anyone without a job to get one.

Companies are producing and profiting more than when the recession began, despite fewer workers. They’re hiring again, but not fast enough to replace most of the 7.5 million jobs lost since the recession began.

Measured in growth, the American economy has outperformed those of Britain, France, Germany, Italy and Japan — every Group of 7 developed nation except Canada,

According to the conventional wisdom, as summarized by Wiseman, the U.S. has sailed through the crisis in better shape than our industrialized rivals.  The conventional wisdom also says to the degree that we have a jobs problem, it’s because we are so good at boosting output and productivity.  

Of course, this directly contradicts my recent post, where I argued that the apparent productivity gain  from 2007-2009 was to  a large extent the result of mismeasurement.

But now let me make a different point. Wiseman argues that companies are producing more than when the recession began.  

I don’t think he’s right for most of manufacturing.

I’m going to show a series of charts for various manufacturing industries. These charts show shipments, adjusted for prices changes–‘real’ shipments.  Real shipments are a good measure of  what actually comes out of the factory.  

[Read more…]

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