Somin’ don’t smell right with Ed Lazear’s claim in Friday's WSJ that “Germans with vocational apprenticeships are considerably better off than their American counterparts.” A graph in the NYT shows all but the lowest 30% of Americans earn more than their German counterparts. (People in the bottom 30% don’t work much, so differences in incomes are not simply a matter of wages.) America achieves these across-the-board results despite substantially less vocational ... Read More
Why On-The-Job Training Is So Much More Valuable in the US Than Europe
Buy my new book The Upside of Inequality: How Good Intentions Undermine the Middle Class (Penguin). ... Read More
What Is the Opportunity Cost of Additional Government Borrowing? (Tyler Cowen)
I don’t think advocates of stimulus will buy Tyler Cowen's argument that the opportunity cost of government borrowing is high. I think they would say the shadow price is reflected in the (low) cost of government borrowing, and that the price is low because the economy has idle savings, labor, and production capacity, which are use-it-or-lose-it resources without silos big enough to store savings—i.e., the economy just shuts down production. From my perspective, they ... Read More
U.S. Continues to Unnecessarily Absorb Disproportionate Share of World’s Risk-Averse Savings
The FT Alphaville's Izabella Kaminska presents a Citicorp chart depicting the evolution of trade imbalances. In truth, it shows the U.S. continues to absorb a disproportionate share of the world’s risk-averse saving. Trade deficits occur when countries with a surplus of savings, like China and Germany, buy financial assets, chiefly U.S. government-guaranteed debt, to balance trade flows rather than goods that employ Americans. When at-risk capital, namely equity, ... Read More
