Noah Smith [Noahpinion] - Page 3 of 4

January 19, 2023

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• The U.S. and China are in a technological competition, with government policies aimed at dominating strategic high-tech industries poised to reshape the global economy.
• Three technologies are at the heart of the superpower rivalry: semiconductors, wireless networking, and AI.
• The U.S. is winning the semiconductor wars for now, with all the basic components in the hands of either the U.S. or its allies.
• China has kicked the U.S.’s butt in wireless tech, with Huawei dominating the market through a combination of corporate culture, research, IP theft, and state subsidies.
• In AI, Kai-Fu Lee argues that China will be able to dominate the U.S. through plentiful data, ruthless entrepreneurship, engineering talent, and government support.
• However, four years later, many of Lee’s predictions have proven wrong, and it is difficult to assess which country is actually leading in AI technology.

Published January 19, 2023
Visit Noahpinion to read Noah Smith’s original post Three books about the technology wars

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Secretary jobs in the age of AI [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

January 17, 2023

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• The secretarial role has shifted since the start of the Industrial Revolution and is expected to continue to do so in the age of AI.
• Hollis Robbins predicts that secretaries could be in demand in the AI-driven future, not as administrative assistants, but as confidantes and advisors.
• The mid-20th century Gibbs training speaks to the competence, intelligence, and cultivation expected of top secretaries.
• Self-secretarying has contributed to office fragmentation long before remote work.
• A good secretary will use ChatGPT to help manage information flow but will focus most working hours on tasks that are unique to each leader.
• A good executive assistant will more than make up the deficit of a $120,000 salary.
• The role of the secretary provides a real springboard for leadership and is fulfilling in and of itself.
• Colleges and universities could play a role in training students to practice skills that AI can’t deliver and that employers value.
• The idea of posting a job ad for a “secretary” sounds comically old-fashioned, but to be the person literally entrusted with secrets seems fundamentally more accurate to the role.

Published January 17, 2023

Visit Noahpinion to read Noah Smith’s original post Secretary jobs in the age of AI

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Repost: Distributed service-sector productivity [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

January 15, 2023

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• The internet has the potential to spark a productivity boom, just as electricity did in the 1920s.
• Productivity growth has slowed to a crawl since the mid-2000s, and technology is needed to help boost us out of this.
• Electricity took a long time to start lifting productivity by measurable amounts, as factories had to reorganize their systems of production around the new technology.
• Computers allowed production to reorganize itself, with the rise of outsourcing.
• Service industries have been contributing less to productivity growth than manufacturing, but the internet could help change this.
• Remote work could allow companies to distribute their workforces to low-cost locations, and could nudge them to reevaluate the necessity of many meetings and routine office tasks.
• Working from home could save on commute time and costs, and dual-use living space and office space with home offices.
• Remote work has the potential to increase productivity by reducing costs associated with commuting, housing, and outsourcing.
• Location arbitrage allows people to move to cheaper places to live and work, and international task outsourcing allows companies to hire people from cheaper countries.
• Improved outsourcing management makes it easier to monitor contractors and blur the line between within-firm and between-firm cooperation.
• Efficient time management allows remote workers to manage their own time and do something else once their tasks are completed.
• Telehealth and distance education can reduce commuting time and office space, and offer economies of scale.
• Productivity gains come with social disruptions, such as reduced ridership for transit systems and downward pressure on wages for some workers.

Published January 15, 2023. Visit Noahpinion to read Noah Smith’s post: Distributed service-sector productivity

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Is the Fed hiking too fast? [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

January 14, 2023

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• Inflation is slowing but still above target, with headline inflation very low and core inflation moderate but above target.
• Many are worried about a recession, with an inverted yield curve being a decent predictor of slowing economic activity.
• The labor market is still strong, with payrolls adding 223,000 jobs in December and the prime-age employment-population ratio still around 80%.
• The Fed started hiking rates in March 2022, but some argue that the rate hikes haven’t had time to affect the economy yet and are unnecessary.
• Research is divided on how long it takes for rate hikes to have an effect, with some studies predicting a hump-shaped effect and others predicting a gradually increasing impact.
• It’s possible that fiscal policy is playing a role in the moderation of inflation, with deficits closing in late 2021 and disposable personal income stopping being anomalously high around the same time.
• As long as the trend continues, the Fed will likely taper off its rate increases, with the conquest of the post-pandemic inflation underway.

Published January 14, 2023. Visit Noahpinion to read Noah Smith’s original post.

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The Poland/Malaysia model [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

January 10, 2023

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• Poland and Malaysia have both achieved impressive economic growth in recent decades, despite relying heavily on foreign direct investment.
• Both countries have built up world-class manufacturing sectors, with electronics and automotive goods forming the backbone of their exports.
• Malaysia has done this by creating special economic zones and offering incentives to foreign companies to invest there, while Poland has benefited from its proximity to Europe and its accession to the EU.
• Both countries have yet to move into higher-value-added activities, and are struggling to upgrade their productivity levels.
• Ha-Joon Chang and other industrial policy fans are suspicious of FDI due to potential crowding out of domestic companies, stunting of local growth, and potential for property value bubbles and crashes.
• Poland and Malaysia may now be running into this problem, with McKinsey citing Poland’s need to develop or acquire strong brands and Malaysia’s failure to build domestic champions.
• Poor countries may benefit from an FDI-centric strategy as it is simple and straightforward, and could potentially lead to escaping poverty.
• Poland and Malaysia may have found the secret to getting upper-middle-class quick, rather than getting rich quick.

Published January 9, 2023. Visit Noahpinion to read Noah Smith’s original post.

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Three economics happenings of note [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

January 7, 2023

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• The FTC has proposed a national ban on noncompetes, which are clauses in a worker’s employment contract that prevent them from working for a competitor for a set period of time.
• Evidence suggests that banning noncompetes can raise wages for low-wage workers by 2-3%, and for workers bound by noncompetes by as much as 14-21%.
• Businesses argue that noncompetes make them more willing to hire and train workers, and that they allow them to invest more in creating new technologies.
• Opponents argue that noncompetes quash innovation by preventing new companies from entering an industry.
• The debate is ultimately about the choice between a dynamic, competitive economy and one dominated by big, secure companies.
• Park et al. (2023) argue that papers and patents are becoming less disruptive over time, with a measure of disruptiveness (CD index) declining across a variety of fields.
• Alternative explanations for the decline include: low-hanging fruit hypothesis, burden of knowledge hypothesis, and cultural/institutional changes in academia.
• Pierre Azoulay’s analysis of life sciences papers suggests that the decline in disruptiveness may have halted in the 80s.
• Olivier Blanchard’s thread asserts that inflation is the outcome of a distributional conflict between firms, workers, and taxpayers.
• Paul Krugman’s “Football Game Theory of Inflation” likens the process to a football game in which everyone tries to stand up to see over everyone else.
• Ivan Werning’s model suggests that a wage-price spiral can occur even with falling real wages.
• Ricardo Reis argues that labor may not be the most important variable cost for companies, and thus wage demands may not be driving inflation.

Published January 7, 2023. Visit Noahpinion to read Noah Smith’s original post.

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Why Paul Ehrlich got everything wrong [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

January 6, 2023

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• Paul Ehrlich’s predictions in The Population Bomb were spectacularly wrong, but it is important to recognize that his warnings about environmental catastrophes should still be taken seriously.
• Ehrlich’s predictions were wrong due to countermeasures and adaptations that acted as a dampening force, slowing down the trend lines before catastrophe hits.
• These countermeasures and adaptations included the Green Revolution, lower fertility rates, and human ingenuity.
• The lesson from Ehrlich’s mistakes is that stabilization of global food supply was achieved via technological innovations by concerned scientists, which were then adopted by concerned governments.
• Paul Ehrlich’s predictions of population and resource scarcity in the late 1960s and 1970s have been echoed by degrowth advocates in the late 2010s and 2020s.
• Degrowth advocates often rely on aggregate measures of resource use and trend extrapolation, which are flawed metrics.
• Environmental catastrophes are a real possibility, and it would be dangerous to ignore the people warning about them.
• Alarmism about environmental catastrophes may be a useful counterweight to human callousness towards non-human life, and may help to keep habitat destruction in the public consciousness.

Published January 5, 2023. Visit Noahpinion to read Noah Smith’s original post.

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Inequality might be going down now [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

January 1, 2023

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• Thomas Piketty’s 2013 book, Capital in the Twenty-First Century, argued that capitalism would naturally lead to greater and greater inequality unless extraordinary forces intervened.
• This year, stocks crashed, disproportionately affecting the wealthy, and wealth inequality has plateaued or declined since Piketty’s book was published.
• Wage inequality has also plateaued or declined, with the bottom 10% of earners seeing real wage gains, and job switching increasing since the pandemic.
• Total income inequality has plateaued, but government benefits have boosted the incomes of the poor relative to others.
• The drops in inequality are modest, and it is unclear why they are happening, but it suggests that predictions of an imminent crisis of capitalism were overdone.

Published January 1, 2023. Visit Noahpinion to read Noah Smith’s original post.

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The third magic [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

December 31, 2022

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• Humans have achieved greater living standards than other animals due to two great meta-innovations: history and science.
• History is about recording knowledge in language, while science is about discovering generally applicable principles about how the world works.
• Science is often done in a lab, but can also be done by observing nature. Mathematics is a powerful tool for expressing laws of the universe.
• Despite the success of science, some complex phenomena have so far defied the approach of discovering si1mple, generalizable laws, leading to the idea that some domains of human knowledge may never be described by such principles.
• Leo Breiman’s essay “Statistical Modeling: The Two Cultures” demonstrated that algorithmic models (early machine learning techniques) were yielding better predictions than data models, even though the former were far less easy to interpret.
• Alon Halevy, Peter Norvig, and Fernando Pereira argued that in the cases of natural language processing and machine translation, applying large amounts of data was effective even in the absence of simple generalizable laws.
• AI may always be powerful yet ineffable, performing frequent wonders, but prone to failure at fundamentally unpredictable times.
• Natural experiments are a different tool than science and history, as they allow us to verify causal links.
• Khachiyan et al. used deep neural nets to look at daytime satellite imagery, in order to predict future economic growth at the hyper-local level, with astonishing accuracy.
• AI may revolutionize fields of endeavor where traditional science has run into diminishing returns, leading to a leap in human power and flourishing.

Published December 31, 2022. Visit Noahpinion to read Noah Smith’s original post.

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Repost: Why immigration doesn’t reduce wages [Noah Smith, Noahpinion]

By Spencer Chen

In Noah Smith [Noahpinion]

December 27, 2022

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Immigration does not reduce wages for native-born Americans, except in a few special circumstances.
Immigration increases labor supply and labor demand, which tends to cancel out the downward pressure on wages.
Economists have done a lot of research on the question of whether immigration lowers wages, and have found very small or no labor market impact.
Studies on refugee waves have found no negative effect on native-born wages, and some studies have even found that immigration increases native-born wages in the long run.
Other studies have looked at internal migration in the U.S. and found that inflows of internal migrants cause a boom in housing construction, which supports local labor markets.
George Borjas wrote a paper claiming to find negative effects for a very small slice of less-educated minority workers, but other economists found that even that drop was actually the result of a change in measurement.

Click HERE for original. Published December 27, 2022

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CategoryNoah Smith [Noahpinion]

Three books about the technology wars [Noah Smith, Noahpinion]

Secretary jobs in the age of AI [Noah Smith, Noahpinion]

Repost: Distributed service-sector productivity [Noah Smith, Noahpinion]

Is the Fed hiking too fast? [Noah Smith, Noahpinion]

The Poland/Malaysia model [Noah Smith, Noahpinion]

Three economics happenings of note [Noah Smith, Noahpinion]

Why Paul Ehrlich got everything wrong [Noah Smith, Noahpinion]

Inequality might be going down now [Noah Smith, Noahpinion]

The third magic [Noah Smith, Noahpinion]

Repost: Why immigration doesn’t reduce wages [Noah Smith, Noahpinion]

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