As opposed to The Great Stagnation that looks backward, @TylerCowen working on new book looking forward, three trends:
2. Moore’s law
3. Talent clustering in urban centres, Richard Florida, young moving to a few places, e.g. Southern Germany where returns to working with other talented people is high.
People who have intellectual property rights earn more. Slowdown in ideas, but larger global markets.
Pie shrinking for labour, even more if not for IT. Median income falling 4% to 5%, the new normal. Falloff not just nominal, but real wages, so priming pump won’t help.
Financial sector innovates in a socially damaging way.
Tech sector, Facebook makes people happier, but doesn’t help. Returns to managers going up, still need managers to channel IT. Best places that are not IT are managing or marketing. Scarcity not of money, but also time. IT makes time more scarce, can do things while waiting in line.
Scrambling for attention, means marketers.
Income equality, today’s top 1% will become top 10%. Some wages equalization from wealthy countries to poor countries.
Median U.S. wage for men in 1969 was higher than today, stats say 30% to 7%. Female wages have increased.
Social gains, e.g. better for gays today, doesn’t show up in GDP.
Worry more about sex inequality as social than income inequality.
Female immigrants adjust better to society than male, so maybe no surprise they’re adjusting better to change.
If to hire babysitter, prefer 17 year old girl or boy?
If believe in Moore’s law, should believe in Artificial Intelligence. Greatest beneficiary could be North America. In China, factories also automating, a form of AI.
Seeing reshoring. Mexico undervalued, highly productive in auto making.
Think shipping will deglobalize, not financial nor communications. Worry about Canada.
Audience may know more about Canada. When look at clustering of talent, e.g. assembling iPads, believe that U.S. universities are opening up gaps compared to Canada. Results of Canadian R&D could go south of border.
Slide on multi-factor productivity, the residual from labour and capital, return from ideas, going down. Energy supplies from ground is easier, but now Canada is dependent on Asia to buy oil. Worried about Asia.
Household debt in Canada increasing, while U.S. crashed.
Canada based on resource wealth. Means corporatism, right wing. Canada could be more right wing than U.S.
Health care. All industrialized countries have it, think will have it in U.S. even if Romney wins, which he won’t.
Babysitters tend to not be 17 year olds, need credentials? See more and more service jobs being protected, e.g. lawyers. Protected jobs favour freer trade, but productivity not increasing.
Intellectual property, when ideas are a public good? Enhanced productivity? IT has rapid copying, with first mover getting good returns. Most innovation today comes from U.S., Canada, western Europe. China may not create clusters, because protections not as good.
Not legal protection, speed to market? Think of IP rights as something hard to copy.
Financial innovation? Banks trying to get leverage that doesn’t look like leverage to regulators. When banks trade, they’re not so transparent.
U.S. wealth, Occupy impatience? Elites buy off elderly with Medicare, and the young vote less. Expect continuing stagnation.
Canada as a cluster of talent, attractor? Could imagine a future where talent attracted, but projects move elsewhere.
Educational innovation, Kahn Academy? New project on MRUniversity, first class in October will be in developmental economics. Think will eventually all will be free or near-free. Designed for mobile, small bites. Who will take the time? Playing chess online, have great chess players in China and India, world winner is from Armenia.
Talent clustering favouring U.S., but R&D second largest? See China’s science as corrupt, will get to middle income trap, could be like Mexico.
Brain drain from developing countries to Canada? Also northern Europe with rule of law and transparency. A lot more of periphery will look like Sicily. English-speaking Italians can fly to London.
Talent underused in Canada? China is difficult for immigrants, not set up for innovation.
Talent for regions that can’t attract, e.g. Honduras? Singapore, South Korea, Finland do this well. Pessimistic about Honduras, corruption.
Moore’s law plateau? Don’t know foundation issues, see a lot of people working on this, maybe for next 30 years. Could be pessimistic about Moore’s Law 20 years out, still have AI.
Interaction between income inequalty and public goods? Don’t see why couldn’t get a Swedish-style talent cluster somewhere else, e.g. Minnesota. People migrating from high-benefit states to low benefit e.g. Texas.
Incentive to people to move to a talent cluster? Face to face will remain important. Have to meet at least once. Could have viewed Cowen on Youtube.
Devaluing universities if can get info offline? People get motivated by people around them. Maybe do a year online, and a year in person. Learning all online may be for 2% of people.
Future role of public servants and government? In U.S., state and local employment is falling, and middle class doesn’t want to pay taxes. More than Tea Party. Discretionary spending is being cut, but should cut middle class benefits instead.