Thursday, July 29, 2010

Adios heterodox economists

That's what Notre Dame is apparently saying. Here's a repost from the EconoSpeak blog:

Notre Dame exiled its heterodox economists to a separate department. Now it is about to execute a death sentence for the department. Apparently, mainstream economists have offered such excellent guidance that questions about their dogma no longer serve any purpose. 

As a student, I guess I just don't understand this or I am really naïve. You would think that in times of crisis that maybe it would be good to encourage more out of the box thinking, since clearly mainstream economic techniques aren't helping too much. Also, the Chronicle article paints a negative picture of having both mainstream and heterodox departments in one place. For students (especially graduates), it seems like having professors from both approaches available would be a great resource. Apparently though, the conversation between the two "schools" hadn't been going so smoothly.

This is sort of discouraging, but I also understand that when it comes to funding and publishing, departments and schools will act in self-interest to meet their bottom lines. Sad.

Tuesday, July 27, 2010


The Great Restructuring.... I don't think I agree with that at all, but it sounds like a pretty easy macroeconomic scape-goat

Exploring algae as fuel

The case for more "pink-collar" jobs, minus the blatant gender stereotype

Trickle down meanness

Monday, July 26, 2010

Comments on No-Layoffs, from Frank Koller

Frank Koller is the author of Spark: How Old-Fashioned Values Drive a Twenty-First-Century Corporation: Lessons from Lincoln Electric's Unique Guaranteed Employment Program. 

He left some very interesting comments on this previous blog post from last week. I am reposting these comments:

1. re: unions … Lincoln Electric is not a unionized firm and never has been. But as AFL-CIO President Rich Trumka told me, why should the AFL-CIO waste precious organizing resources on a firm which pays its workers extremely well in good times and bad, in safe conditions and never lays people off? Nonetheless, the story is a bit more complex than that, as you can imagine, and I do explore the history of labor relations at the firm, including fascinating conversations with some of the few employees who have over the years, set foot on the road to organizing the workforce.
2. The no-layoff policy is a bargain … with obligations on both workers and senior management … 
From Day One, every employee understands that the firm operates on this premise: if workers consistently meet the well-defined, well-publicized and rigorously and openly measured performance standards, then they will always have work.
Hours may be shorter in tough times – or much longer for salaried employees - your job may change, but .. you will be able to pay your mortgage and health insurance, keep up your car payments, keep your family intact and when the good times return … you will not have been crushed by the awful American experience of being “laid-off.”
3. What this does inside the company is create a business culture which can draw on an astonishing willingness of everyone in the firm to be very flexible, because people trust that over the long run … while the pain of bad times will be shared equally, so will the tremendous gains of good times .. in most firms across North America, management shares the gain, while workers share the pain … 
It is an amazingly powerful way to run a business which has meant that Lincoln has generated a profit every year since 1934, hence the bonus has been paid out every year since 1934 and the company has remained the world’s largest and best manufacturer of arc welding technology, a Wall Street favorite with investors (it’s also a Fortune 1000, Forbes 400, etc.) all along, and yet has bucked conventional wisdom by adamantly refusing to lay off its workers in tough times – in large part because of the unique “guaranteed employment policy.”
4. “A micro solution to a debilitating macro problem.” True in one sense, but one of the most stimulating books I have read in recent years was one by Harvard economists Martin Weitzman called “The Share Economy.” Not the easiest read in the world.. but hey! You’re an economics student!
Weitzman argues that a national economy based on the sharing of time and profits as Lincoln (and a few others) have done so successfully for so long would in fact be extraordinarily good for the national economy by flattening out the impact of the business cycle which most often has the worst impact on workers - i.e. unemployment. A macro solution!
In 1988 the New York Times said it was the most important piece of economic writing since Keynes. 

Information on the Wagner Act can be found here.  This was the National Labor Relations Act giving workers the right to organize, but it's possible that some of the no-layoff policies violate this. That doesn't appear to be much of a problem however, and I'm guessing that's because those who believe in no-layoffs and those who organize unions, are likely on the same page as far as worker rights go. Here is an interesting policy note from CEPR, which I think Koller may mention in his book. 

I haven't read the book yet, but I plan to eventually. These policies are interesting in and of themselves, but I think they are more importantly a small example of how social norms and economics can work together to create different incentives and goals. 

Thursday, July 22, 2010


Not so libertarian paternalism...Influencing Behavior Through Design

Are we genetically capitalist?

An overview of experimental economics

More on unpaid internships

New blog design

I redesigned my blog template, which was a fun foray into the world of design. You probably read this in Google reader, but the header that I am using was stolen from the UMass Econ website since I really liked the picture.

A fun idea would be to create a collection of images relating to "economics through art".

Update: I changed this around because I found some fun images on Flickr too. The internet is really overwhelming.

Tuesday, July 20, 2010


Dan Ariely on why people think $200 worth of frequent flyer miles is worth a $2 million investment

An interesting paper on text size and attention grabbing in advertising

Paternalism and psychology.... and for a follow up, Libertarian paternalism

I wish college were "pay-as-you-wish"

Wage deflation in home care

This is a very preliminary thought and observation. Hopefully I can further develop this in an upcoming thesis.

A relative of mine happens to have worked on and off as a home health care provider over the past 15 years. Considering her experience, I've noticed a few things about the home health care labor market that have changed since the late 1990s.

As a homecare provider with certifications (like CPR, home health certificate, etc.) this person was earning, as a new hire, roughly $10.75 an hour as a home health provider in 1999. She worked through a fairly large healthcare provider company. Travel was fairly reimbursed, such that it offset wear and tear on vehicles, gas, and the time spent driving from client to client (in a suburban area of Massachusetts).

Fast forward to 2010. This person now, after being re-certified and going back into care work, now is earning about $10 an hour without fair travel reimbursement. The company also does not recognize holidays (as to not provide overtime pay) and requires employees to spend significantly more time on training through reading/test packets and courses, which is unpaid.

By a quick calculation via Google, an entry level care provide was making $13.71 in 1999 (in today's dollars), yet now makes only $10.00. That's a 27% decrease in the starting wage. Although this is an isolated situation, I am very interested in finding a way to look at actual data regarding this. Was this a unique situation or an ongoing trend?

Why am I concerned? Besides the fact that this person is a family member and is having their labor exploited, I am interested in knowing more about this since I think homecare should be a viable and healthy option for the aging. However, with wage deflation, one can only assume that this "cost" is being reflected in quality of care, worker satisfaction (or dissatisfaction in this case), high turnover in care workers, and ultimately ends up effecting people's health and well-being, presumably for both patients and caregivers. Not to mention a declining wage also undermines the best option, care giving by a family member, by making market home health care providers comparatively less expensive when considering the opportunity cost of keeping care in the family.

In this particular situation, I believe the main reason for wage deflation has to do with the homecare company's contracts for those patients on state aid and possibly also rising administrative costs (which could easily be brought down, mind you, this particular company does not even use electronic timesheets.) But, there are other costs, particularly to the worker. This act as barriers to entry into a field of work that can be potentially very rewarding. Workers must have reliable transportation, flexible schedule, and in many cases fund their own training and certifications.

Basically, there's a lot going on here. I suspect that in an effort to cut costs and receive bids from the ever expanding state health system, wages and quality have been sacrificed. I'm interested in going way more in depth with this as a possible thesis topic for my upcoming academicyear. Should you read this and know of resources where I can find more information or data, it would be very appreciated.

Update: I dug around the BLS website and found some good data. At a glance, I've confirmed that there is indeed a decrease in the real wage for home health care workers. More on this to come.

Monday, July 19, 2010

How to fight unemployment? Simple, NO layoffs!

With the persistence of the unemployment rate, it is timely to start thinking about how micro policies may start solving macro’s problems.

ABC News ran a piece on the evening news last week profiling a manufacturing and design company in Cleveland, Ohio that has taken anti-recessive policy into its own hands by banning layoffs. That’s right, no layoffs.

Like several other “no layoff zones” around the country, Lincoln Electric’s policy forces a company to streamline its business and realign incentives towards keeping everyone employed versus just keeping the bottom line afloat. After all, shouldn’t people’s well beings be our bottom lines?

No layoffs zones certainly aren’t an easy way of combating a recession- like everything there are costs and tradeoffs. It takes hard work, shifting work hours, and maintaining top-notch quality to balance a downturn when sales may be sluggish. Workers at Lincoln Electric also have to purchase their own health insurance, as a means of corporate cost cutting. Some of the no layoff policies may even come at odds with the unions, making for labor relations tension. No layoffs also means no free riders or “social loafers”- everyone must work hard and be reasonably talented at their task in order to keep up the marginally productivity of labor.
How can a business possibly balance these tradeoffs without leading to self-destruction in our competitive, global economy? I suspect a similar thing happens in a no-layoff zone that also may occur in other alternatively designed business incentive systems, like that of a worker-owned enterprise. The dedication of workers to the cause and the company (and the guarantee of work) works to crowd-in workers’ intrinsic motivation. It also forces the company to only have the most productive employees.

Consumer coops, worker-ownership, and no layoffs zones certainly appear to be viable alternatives to combat the cyclical nature of our economy. A micro solution to a debilitating macro problem. As Nancy Folbre pointed out earlier today in Economix, another economics is indeed possible. It’s time to realign how business incentives work, but this bottom up movement needs momentum and organization. I couldn’t put it better, “Like the better world it could help deliver, another economics remains merely possible but profoundly necessary.”

For budding future economists, cooperative models may eventually be a flourishing research area.

Sunday, July 4, 2010

Econopocalypse... a Marxist take in doodle animation

Interesting.... also fun animation.

Here's the original link

Thursday, July 1, 2010

Art Stumbling

Emily Eveleth creates paintings, installations, and drawing using only one decadent subject: the jelly doughnut. Markets in everything, I guess, even in artful interpretations of sweet breakfast pastries. The delicious display will be available all summer and into the fall at the Smith College Museum of Art.

 If I don't make it to grad school and become an economist, I may consider painting scones for a living, although I don't think I could do so as cleverly and tastefully (no pun intended) as Eveleth.

Hat Tip: Flyer I found on the ground in Northampton.