South By North Strategies, Ltd.

Around The Dial – July 18, 2012

Economic policy reports, blog postings, and media stories of interest:

• Dan Rodrik weighs “the new global economy’s (relative) winners.”
• Martin Wolf still has “that sinking feeling.”
• Off the Charts mulls the potential loss of food stamp benefits.
• Paul Davidson isn’t a believer in “the confidence fairy.”

Employers Not Looking Too Hard

Rortybomb considers the relationship between recruitment intensity and mass unemployment.

The collapse of recruitment intensity helps us understand several things. First, the issue of how job openings are increasing while wages aren’t. The research notes that “[i]ncorporating a role for the recruiting intensity index also improves the stability of the Beveridge Curve and yields a better fit to data on the job-finding rate for unemployed workers.” This helps us understand some small movements in job openings in the Beveridge Curve while other measures of supply-constraints in the labor market aren’t going off.
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The second issue it helps us understand is a common media story we see — the story of the boss who complains about the workforce but doesn’t want to raise wages. Dean Baker likes to point out these stories as lacking economic sense. This shows that employers not trying very hard to fill empty jobs, even on non-wage margins, is a general phenomenon.
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Finally, it explains why you or your friends and loved ones are having such a hard time finding a job even when you see advertisements for a perfect job that never seems to be filled. It is probably not much comfort to understand that this is a national phenomenon, one we have the tools to fix but that Republicans in Congress, bank regulators, and the FOMC are not willing to address.

Offshoring And The North Carolina Economy

A new brief from the NC Budget and Tax Center looks at the impact of offshoring on the North Carolina economy.

In North Carolina, offshoring has had a significant, direct, and negative impact on the state’s economy over the past decade, clearly contributing to stagnant wage growth and job creation during the 2000s, and especially to the state’s sluggish recovery from the Great Recession. First, job losses related to trade deficits with China and Mexico in particular have exacerbated the anemic pace of job creation and the inability of the state’s labor market to return to pre-recession employment levels. Defined as the difference between the value of US exports to a particular country and the value of the goods imported from that country, trade deficits represent an excellent measure of offshoring since every dollar imported from another country is a dollar that would otherwise be produced by an American worker, serving to displace American workers who would have otherwise produced the imported good. Although US exports created jobs in North Carolina, it is important to note that the job losses due to foreign imports more than offset these minimal gains, according to a recent study by the Economic Policy Institute. For example, offshoring related to US trade deficits with Mexico (the nation’s largest trading partner) created 26,600 jobs through exports in 2010, but resulted in the displacement of 44,900 jobs through imports, resulting in a net loss of 26,000 jobs related to offshoring in that year.

Around The Dial – July 17, 2012

Economic policy reports, blog postings, and media stories of interest:

• Raghuram Rajan asks if inequality is inhibiting growth.
• Economix notes that only half of Americans are wealthier than their parents.
• Jared Bernstein looks at changing American tax rates.
• Calculated Risk thinks “the housing bust is over.”

A Walking Billboard For Progressive Taxation

Over at the blog Rational Irrationality, John Cassidy wonders if Mitt Romeny’s offshore accounts will renew interest in progressive taxation.

Behind the theatrics, two important and opposing principles are at stake: the principle that rich people should pay substantially more of their income in taxes, which underpinned American politics for almost a century; and the principle that a politician who endorses a tax increase of any kind is inviting certain defeat, which has dominated politics in Washington for much of the past decade. Obama is endeavoring to give new life to the first principle and overturn the second. If he succeeds, there will be a great irony—Romney and his byzantine personal finances will have played a significant role in saving the progressive-tax system.
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The Obama campaign isn’t just trying to change the subject from jobs—although that is certainly part of it. It is rolling out a political strategy designed to make a debate about taxes that is potentially hazardous to Democrats into a much more favorable debate about just how rich and out-of-touch Mitt Romney is. (If your answers are “very” and “totally,” award yourself another gold star courtesy of Axelrod.) It’s a clever enough strategy, but one that is not without risks for the White House.