The level of economic dynamism is a matter of how fertile a country is in coming up with innovative ideas having prospects of profitability, how adept it is at identifying and nourishing the ideas with the best prospects, and how prepared it is in evaluating and trying out the new products and methods that are launched onto the market.
Europe’s root problem is a dearth of such economic dynamism. Germany, Italy and France possess less dynamism than do the U.S. Far fewer firms break into the top ranks in the former, and fewer employees are reported to have jobs with extensive freedom in decision-making — which is essential at companies engaged in novel, and thus creative, activity.
From 2006 Nobel economist Edmund Phelps in today’s WSJ, Entrepreneurial Culture.
1. U.S. exports grew by 13.1% in the 12-month period through November 2006, totaling $1.3 trillion. To put this number into perspective, Germany’s entire GDP was $2.79 trillion and India’s GDP was $772 billion.
2. U.S. exports shot up to 11.2% of U.S. GDP in the third quarter alone, the highest level in dollar terms ever.
3. Since the 2001 recession, the U.S. economy has created 9.3 million new jobs, compared with 360,000 new jobs in Japan during the same period and 1.1 million new jobs in the euro zone. This despite our trade deficits and their trade surpluses.
From “As Global Trade Grows, So Will U.S. Economy,” by Donald Lambro.
NY Times article “As Inflation Soars, Zimbabwe Economy Plunges“
The trigger of the country’s crisis — hyperinflation — reached an annual rate of 1,281% this month, and has been near or over 1,000% since last April (see graph above). Hyperinflation has bankrupted the government, left 8 in 10 citizens destitute and decimated the country’s factories and farms.
The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who raises prices or wages will be arrested and punished.
MP: Perhaps instead of “declaring inflation illegal” (isn’t that like declaring high temperatures in August “illegal”), Zimbabwe should follow New Zealand’s approach to monetary policy:
“The Reserve Bank of New Zealand Act sets out an ambitious framework for setting monetary policy goals and holding the Governor to account for the conduct of monetary policy. The framework is built around the provisions that make the Governor the single decision maker, and allow the Governor to be dismissed for inadequate performance.”
You’ve probably never heard of Kannada, the native language of Karnataka. You’ve probably never heard of Karnataka either. But there’s a good chance you’ll chat with a Karnatakan if your iPod ever locks up or you have trouble installing the new Windows Vista operating system.
That’s because Karnataka is the Indian state whose capital city, Bangalore, is “the back office to the world.” Bangalore is awash in call centers for Western companies such as Apple and Microsoft, boasts over 200 high tech companies of its own, and enjoys the highest number of engineering colleges of any city on Earth.
But if an Indian court doesn’t step in soon, the out-sourcing capital of the world may put itself out of work.
If the crackdown on these schools succeeds, the English-fluent high-tech labor pool will gradually drain away and the sucking sound of jobs leaving Bangalore will be audible all the way to North America.
From the Cato Institute article “Only in Kannada, Eh?”
You can buy a brand new 3-wheel auto rickshaw for $6,800 from Columbia Scooters in Portland, Oregon.
The only effective way to reduce traffic congestion is to use pricing. The potential benefits to Americans in time and fuel savings are enormous. State and local governments have an obligation to use this new tool to enable traffic to flow freely.
Americans rely on prices for a stable supply of food, clothes, water, energy, and telecommunications. Why should roads be an exception? Pricing can improve the usefulness of existing roads and attract funds for improvement.
From the New York Sun, an article by Diana Furchtgott-Roth “Traffic Congestion Solutions.”
News Headline: “New Wage Boost Puts Squeeze on Teenage Workers Across Arizona: Employers Are Cutting Back hours, Laying Off Young Staffers.”
Some Arizona employers, especially those in the food industry, say payroll budgets have risen so much (because of the recent 31% minimum wage hike from $5.15 to $6.75 per hour) that they’re cutting hours, instituting hiring freezes and laying off employees.
Mark Messner, owner of Pepi’s Pizza in Phoenix, says he plans to lay off three teenage workers and decrease hours worked by others.
“I’ve had to go to some of my kids and say, Look, my payroll just increased 13 percent. Sorry, I don’t have any hours for you.”
“Income inequality” gets a lot of attention. Consider this:
There is significant income inequality of siblings with the exact same family background. One researcher found that the average annual earnings differential between brothers was about $28,000, compared with an earnings differential of $30,600 for men paired randomly.
That is, after controlling for sex, socio-economic status, religion, education opportunities, race, parental status, etc. (assuming those factors are usually the same for 2 brothers in the same family), there is significant income inequality of $28,000 between siblings within families, which is almost as much as the income inequality in the general population of males ($30,600).
And as Robin Hanson points out, there is also significant non-financial inequality, such as of popularity, respect, beauty, talent, ability, etc., and significant income inequality between the nations of a world, etc. that get very little attention, compared to the attention paid to income inequality among households in the U.S.