Ask someone in a third world country to do some basic addition and they can do it pretty easily. Ask the average American, and they can’t. We’ve become dependent on calculators. AI may be like this for a much broader range of thinking and we risk turning ourselves into morons.
The China shock was actually quite minor compared to the size of the US population. Most lost jobs are due to automation, not China. Tariffs don’t solve this. Dumb tariffs, like Trump’s tariffs, make it worse.
Economies have gotten more productive, and this increases the wages of those doing productive things. But, things like providing education, housing, and healthcare aren’t as much more productive. To keep people choosing these careers, wages for these jobs have gone up too. So, ironically, because everything else has gotten so cheap and productive, these basic things have gotten more expensive. Or at least, that is one reason.
When is dynamic and personal pricing managing supply and demand in such a way that benefits most people, and when is it just using tricks and technology to screw people?
Trump’s aggressive rhetoric, threats of territorial conquest and ending countries’ existence, and trade wars, against allies, has led to US allies organizing more of their economies around the US, which weakens the US and makes Americans poorer. Trump’s actions have also limited his influence on allies. These actions put Trump’s misguided ideas first, and America last.
When you bully and act aggressively, other countries may not retaliate in the moment, but they do work to weaken you and become more robust to your attacks.
Such Trump aggression has increased China’s power, prestige, and popularity, while lowering those of the US. The CCP is an evil dictatorship, but at least they are predictable, unlike erratic Trump.
Democracies around the world have been weakened because foreigners trying to maintain democracy in their country relied on the US for pushback against the breaking of democratic rules.
Europe isn’t doing nearly as bad as productivity statistics and GDP per capita imply. European productivity growth has been about equal to growth in most of the United States except California. European Lower GDP per capita is largely driven by more vacations.
At some point in the 1990s, the central Chinese government made it so that profitable things like factories didn’t benefit local government revenue as much because it started going to the central government instead. However, the local governments could still make money by leasing land, and they could make a lot more money leasing land if they built a bunch of cool and useful stuff, making the land more valuable.
In Ohio, data centers spiked electricity costs, provided few jobs other than temporary construction jobs, and thanks to tax deals given to the companies by the Ohio government, the data center companies pay little taxes. They do however, use local services like firefighting when the data centers have fires.
Industrial policy has worked for China. It gained China its dominance on refined rare earths and magnets. A dominance China has used to choke other countries, including the United States. And this doesn’t only strangle economies, but militaries.
Statistics and econometrics alone are not science! They are tools that are a part of science. We need to do more than just find correlations, but also understand how things works. We should understand the cause and effect story, including the mechanisms that create the correlations.
An economist who has studied traits like executive functioning thinks it’s too late for Trump to have good executive functioning. He deeply criticized Trump, but also feared a left-wing socialist response.
There’s a problem in academia on the left and the right where people are reluctant to publish studies, or even work on studies, where the findings will be unpopular with their professional or social circle. Social scientists need to publish findings they think contribute to our knowledge on the topic, ignoring how it will make people feel.