Where I am Blogging/Writing Now

Most of you have probably realized that I am no longer actively posting to this blog, which was started in late 2009 after I left BusinessWeek.   My writing/blogging is now mainly divided between two venues.  As chief economic strategist at the Progressive Policy Institute, a Washington think tank, I supervise PPI’s economic and tech policy work across a wide range of issues, including regulation, the data-driven economy, and innovation.  Our latest event was “Enabling the Internet: A Conversation with America’s Digital Policy Pioneers.”

As president of South Mountain Economics LLC, I run an economics analysis firm with a unique focus on emerging industries and emerging occupations.  Our latest report, “Building A Digital City,” documented in detail how the growing tech/information sector helped New York City outperform both the national economy and the surrounding suburbs.We are currently leading projects in California, Europe, and Asia.

I regularly speak around the country.  On February 13, 2014, I will be the keynote speaker at the annual meeting of the Mass Technology Leadership Council in Boston.  Please don’t hesitate to say hello if you are planning to be there.

Data: The Future of the U.S. Economy

In a great display of synchronicity, I had two reports released simultaneously today: “Beyond Goods and Services: The (Unmeasured) Rise of the Data-Driven Economy” and “The Geography of the App Economy”.

The first paper came out of the Progressive Policy Institute, and will serve as the keynote paper for the conference we are running in Rome next week, The Rise of the Data-Driven Economy: Implications for Growth and Policy.

The second paper was done for CTIA and the App Developers Alliance by myself and Judy Scherer, under the auspices of the economic development consulting firm South Mountain Economics LLC.

Both papers send the same message–that data is the driving force for both job growth and GDP growth. “The Geography of the App Economy” examines app economy jobs in each state, starting from Washington and California at the top of the list to Wyoming and West Virginia at the bottom. We show that the number of app economy jobs nationally is rising quickly, from 466,000 at the end of 2011 to 519,000 in April 2012. And we have plenty of examples, including ways that states can attract more app economy jobs.

“Beyond Goods and Services: The (Unmeasured) Rise of the Data-Driven Economy” look at the impact of data on economic growth. I argue that data should be a separate economic category, along with goods and services. The implication is that the growth rate of the economy is being underestimated, by about 0.6 percentage points.

There’s a political message here as well, but I think I’ll put that in a different post.


Some changes on accessing this blog

Up to now, it’s been possible to access this blog via both innovationandgrowth.wordpress.com and www.southmountaineconomics.com. That second url will now point to the site of South Mountain Economics LLC, the consulting firm that I run, which is putting out a new paper on the App Economy later today.

December 1 doubleheader…

…let’s play two.

In a miracle of scheduling, I’m going to be speaking at two different events on the morning of December 1 in DC. At 9AM I’ll be the lead-off speaker at a PPI event:

Is Tech Antitrust Off-Target? Debating the impact of high-tech acquisitions

Should be fun.

At noontime I’ll be speaking to the National Economists Club on

“The Cheshire Cat Economy: Why We are Underestimating the Impact of Trade”

‘All right,’ said the Cat; and this time it vanished quite slowly, beginning with the end of the tail, and ending with the grin, which remained some time after the rest of it had gone.

Alice’s Adventures in Wonderland, by Lewis Carroll

Revised textbook!

I just received printed copies of the second edition of my textbook Economics:The Basics–yeah! It’s designed for a one-semester “basics of economics” course–not much math needed, but covering all the economic principles the typical person might need.

I’ve started a new twitter feed at @MandeltheBasics specifically to accompany the textbook.

If you teach economics and want to see the table of  contents, look here.

Nobel Prize irrelevancy?

For years when I was chief economics writer at BusinessWeek, I would write our post-Nobel piece.  I was often one of the few people who would challenge the adulation of the prize winners, notably in this 2005 piece on the Nobel in game theory.

But today’s awards to Tom Sargent and Chris Sims simply leaves me stunned.  Let me give you a brief excerpt:

“It is not an exaggeration to say that both Sargent’s and Sims’ methods are used daily … in all central banks that I know of in the developed world and at several finance departments too,” Nobel committee member Torsten Persson told the AP.

I’m not sure why this is supposed to be a good thing.  None of the central banks foresaw the financial crisis, none of them foresaw the weakness of the recovery, and none of them had the right policy prescriptions.  This lack of ability to predict big shocks and their aftermath is a central flaw of the Sargent-Sims approach.  Sargent is well known for his work on rational expectations, which has a tough time with ‘irrational’ booms and busts. And Sims’s work on ‘vector autoregressions’ has a difficult time anticipating sudden shifts in regime, such as the shift from the Great Moderation to the today’s incredible volatility.

I would have much preferred to see the awards going to a growth economist, like Paul Romer; an expert in financial markets, like Reinhart and Rogoff; or an international economics expert.  While I’m sure Sargent and Sims deserve their award, the timing makes the economics profession feel out of touch and irrelevant.

Five Things to Remember

  1. The stock market is not the same as the economy. When the stock market was rising, it didn’t mean the economy was good. When the stock market is falling, it doesn’t mean the economy is bad (see here)
  2. Much of the growth of the federal deficit went to fund economic growth abroad, not in the U.S.  Yes, I know that the official data shows that real imports are smaller today than when the recession started. It’s not true.
  3. The official data are wrong. Real import growth is stronger than the numbers show, productivity and real GDP growth are much weaker. (see here).
  4. The last thing the U.S. needs is another stimulus to consumption. Consumption leaks right out the door as higher imports.
  5. The U.S. should be a production economy, not a consumption economy.  It’s time to stop chasing low consumer prices and focus on investment in physical, human, and knowledge capital. That’s the only path to sustained prosperity.