Economics – Page 34 – artdiamondblog.com

Higher-Paid Finance Jobs Moving from NYC and San Francisco to Phoenix, Salt Lake City, and Dallas

Source of graph: online version of the WSJ article quoted and cited below.

(p. B1) Traditional finance hubs have yet to recover all the jobs lost during the recession, but the industry is booming in places like Phoenix, Salt Lake City and Dallas. The migration has accelerated as investment firms face declining profitability and soaring real estate costs.
. . .
“San Francisco is a wonderful place, but unfortunately it’s an expensive place from a real estate standpoint,” said Brian McDonald, a senior vice president for Schwab. “So we had to identify other places where we could make things work.”
While the finance industry has been relocating entry-level jobs since the late 1980s, today’s moves are claiming higher-paid jobs in human resources, compliance and asset management, chipping away at New York City’s middle class, said (p. B2) Kathryn Wylde, president and chief executive of the Partnership for New York City, a nonprofit that represents the city’s business leadership.
“This industry isn’t just a bunch of rich Wall Street guys,” Ms. Wylde said. “It’s a big source of employment that’s disappearing from New York.”

For the full story, see:
Asjylyn Loder. “Wall Street’s New Frontier.” The Wall Street Journal (Thurs., JULY 27, 2017): B1-B2.
(Note: ellipsis added.)
(Note: the online version of the story has the date JULY 26, 2017, and has the title “Passive Migration: Denver Wins Big as Financial Firms Relocate to Cut Costs.”)

Seattle Increase in Minimum Wage Results in Fewer Hours Worked, and Lower Incomes

(p. A13) By now you have read 15 articles on the Seattle minimum-wage fiasco. Since the city boosted its local minimum from $9.47 in 2014 to $13 last year (on its way to $15), a detailed investigation by University of Washington economists finds that beneficiaries actually saw their incomes fall by a net $125 a month because employers cut their hours.
. . .
The impetus came from people who don’t actually earn the minimum wage–labor-union leaders and think-tankers and activist organizations.
. . .
Organizers look fondly to Denmark, where a McDonald’s line worker receives $41,000 a year and five weeks of paid vacation. As the Atlantic put it two years ago, “Unionizing workers at McDonald’s and other fast-food chains might be a long shot, but if it succeeds, it might help lift a million or more workers into the middle class (or at least into the lower middle class) and create a model for low-wage workers in other industries.”
This sounds pretty but is misleading in a fundamental way. The workers a McDonald’s franchise would hire at $15 an hour are different from those it would hire at $8.29, the average earned by a fast-food worker today.
Costs would go up. The industry would likely shrink, it would likely replace workers with automation, but it would still create jobs at $15 an hour for people whose productivity can justify $15 an hour. The people who work at McDonald’s today, typically, would already be earning $15 an hour somewhere else if their productivity could justify $15 an hour.
Everybody needs to start somewhere, including the unskilled and those who lack a work history. Some need a job that doesn’t demand much of them. They have other obligations. They accept less pay to maximize flexibility and freedom from responsibility. They don’t plan to make a career of it. The fast-food industry in America is built on such people.

For the full commentary, see:
Holman W. Jenkins, Jr. “Seattle Aims at McDonald’s, Hits Workers.” The Wall Street Journal (Sat., July 1, 2017): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date June 30, 2017.)

The Seattle minimum wage paper, mentioned above, is:
Jardim, Ekaterina, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor, and Hilary Wething. “Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle.” National Bureau of Economic Research Working Paper Series, # 23532, June 2017.

“Splendid Tutorial” of Bitcoin, Distributed Ledgers, and Smart Contracts

(p. A13) ‘The future is already here–it’s just not very evenly distributed.” The aphorism coined by novelist William Gibson explains why Andrew McAfee and Erik Brynjolfsson’s tour of the technologies that are shaping the future of business, “Machine, Platform, Crowd: Harnessing Our Digital Future,” contains sights that are already familiar and others that are not. This is a book for managers whose companies sit well back from the edge and who would like a digestible introduction to technology trends that may not have reached their doorstep–yet.
. . .
In the penultimate chapter, the authors present a splendid tutorial on things that are too new for most civilians to have gained a good understanding of–cryptocurrencies like Bitcoin, distributed ledgers, and smart contracts. The authors present the theoretical possibility that conventional contracts and the human handling of disputes could be rendered obsolete by dense networks of sensors in the physical world and extremely detailed contracts anticipating all contingencies so that machines alone can handle enforcement. But they show that computing power, however much it grows, seems unlikely to replace the human component for dispute resolution.

For the full review, see:
Randall Stross. “BOOKSHELF; The Future On Fast Forward; GE used ‘crowdfunding’ to gauge interest in a new ice maker. McDonald’s has begun adding self-service ordering in all its U.S. locations..” The Wall Street Journal (Thurs., July 6, 2017): A13.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 5, 2017.)

The book under review, is:
McAfee, Andrew, and Erik Brynjolfsson. Machine, Platform, Crowd: Harnessing Our Digital Future. New York: W. W. Norton & Company, 2017.

Some New Jobs Require Same Skills as Old Jobs Did

(p. B1) . . . many of the skills needed to do fading jobs are applicable to growing jobs.
. . .
(p. B2) A New York Times review of the activities and skills that jobs entail, based on the Labor Department’s O*Net database, shows how much overlap there is between many seemingly dissimilar occupations. Service industry jobs, for example, require social skills and experience working with customers — which also apply to sales and office jobs.
. . .
. . . , employers hire based on credentials that job applicants can’t change — a college degree or previous job title — rather than assessing the skills an applicant has developed, said Mr. Auguste, who was an economic adviser in the Obama administration. He said the approach should instead be, “If you learned it at Harvard or Cal State Northridge or on the job as a secretary or in the Navy or as a volunteer, awesome.”

For the full commentary, see:
CLAIRE CAIN MILLER and QUOCTRUNG BUI. “The Upshot; Old Skills, New Career.” The New York Times (Fri., JULY 28, 2017): B1-B2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date JULY 27, 2017, and has the title “The Upshot; Switching Careers Doesn’t Have to Be Hard: Charting Jobs That Are Similar to Yours.”)

A.I. “Continues to Struggle in the Real World”

The passages quoted below are authored by an NYU professor of psychology and neural science.

(p. 6) Artificial Intelligence is colossally hyped these days, but the dirty little secret is that it still has a long, long way to go. Sure, A.I. systems have mastered an array of games, from chess and Go to “Jeopardy” and poker, but the technology continues to struggle in the real world. Robots fall over while opening doors, prototype driverless cars frequently need human intervention, and nobody has yet designed a machine that can read reliably at the level of a sixth grader, let alone a college student. Computers that can educate themselves — a mark of true intelligence — remain a dream.

Even the trendy technique of “deep learning,” which uses artificial neural networks to discern complex statistical correlations in huge amounts of data, often comes up short. Some of the best image-recognition systems, for example, can successfully distinguish dog breeds, yet remain capable of major blunders, like mistaking a simple pattern of yellow and black stripes for a school bus. Such systems can neither comprehend what is going on in complex visual scenes (“Who is chasing whom and why?”) nor follow simple instructions (“Read this story and summarize what it means”).
Although the field of A.I. is exploding with microdiscoveries, progress toward the robustness and flexibility of human cognition remains elusive. Not long ago, for example, while sitting with me in a cafe, my 3-year-old daughter spontaneously realized that she could climb out of her chair in a new way: backward, by sliding through the gap between the back and the seat of the chair. My daughter had never seen anyone else disembark in quite this way; she invented it on her own — and without the benefit of trial and error, or the need for terabytes of labeled data.
Presumably, my daughter relied on an implicit theory of how her body moves, along with an implicit theory of physics — how one complex object travels through the aperture of another. I challenge any robot to do the same. A.I. systems tend to be passive vessels, dredging through data in search of statistical correlations; humans are active engines for discovering how things work.

For the full commentary, see:
GARY MARCUS. “Gray Matter; A.I. Is Stuck. Let’s Unstick It.” The New York Times, SundayReview Section (Sun., JULY 30, 2017): 6.
(Note: the online version of the commentary has the date JULY 29, 2017, and has the title “Gray Matter; Artificial Intelligence Is Stuck. Here’s How to Move It Forward.”)

Inventor Haber and Entrepreneur Bosch Created “an Inflection Point in History”

(p. C7) . . . , Mr. Kean’s narrative of scientific discovery jumps back and forth. The first episode narrated in detail is Fritz Haber and Carl Bosch’s conversion of nitrogen into ammonia, the crucial step in producing artificial fertilizer, which Mr. Kean characterizes as “an inflection point in history” that in the 20th century “transformed the very air into bread.” The process consumes 1% of the global energy supply, producing 175 million tons of ammonia fertilizer a year and generating half the world’s food. Haber and Bosch both won Nobel Prizes but were subsequently tainted by their involvement in developing chlorine gas for the German military.
The book’s middle section turns back the clock to steam power, the technology that launched the Industrial Revolution. James Watt was its master craftsman, though Mr. Kean confesses that, as “a sucker for mechanical simplicity,” he regards Watt’s pioneering engine, with its separate condenser, as “a bunch of crap cobbled together.” A more elegant application of gases was Henry Bessemer’s process for making steel, which used blasts of compressed air to make obsolete the laborious and energy-hungry mixing of liquid cast iron and carbon.

For the full review, see:
Mike Jay. “Adventures in the Atmosphere.” The Wall Street Journal (Sat., July 22, 2017): C7.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 21, 2017.)

The book under review, is:
Kean, Sam. Caesar’s Last Breath: Decoding the Secrets of the Air Around Us. New York: Little, Brown and Company, 2017.

Russian Regulators Jail Entrepreneur for Innovating “Too Fast and Too Freely”

(p. A1) AKADEMGORODOK, Russia — Dmitri Trubitsyn is a young physicist-entrepreneur with a patriotic reputation, seen in this part of Siberia as an exemplar of the talents, dedication and enterprise that President Vladimir V. Putin has hailed as vital for Russia’s future economic health.
Yet Mr. Trubitsyn faces up to eight years in jail after a recent raid on his home and office here in Akademgorodok, a Soviet-era sanctuary of scientific research that was supposed to showcase how Mr. Putin’s Russia can harness its abundance of talent to create a modern economy.
A court last Thursday [August 3, 2017] extended Mr. Trubitsyn’s house arrest until at least October, which bars him from leaving his apartment or communicating with anyone other than his immediate family. Mr. Trubitsyn, 36, whose company, Tion, manufactures high-tech air-purification systems for homes and hospitals, is accused of risking the lives of hospital patients, and trying to lift profits, by upgrading the purifiers so they would consume less electricity.
Most important, he is accused of doing this without state regulators certifying the changes.
It is a case that highlights the tensions between Mr. Putin’s aspirations for a dynamic private sector and his determination to enhance the powers of Russia’s security apparatus. Using a 2014 law meant to protect Russians from counterfeit medicine, investigators from the Federal Security Service, the post-Soviet KGB, and other agencies have accused Mr. Trubitsyn of leading a criminal conspiracy to, essentially, innovate too fast and too freely.
. . .
(p. A9) Irina Travina, the founder of a software start-up and head of the local technology-business association, said Akademgorodok was “the best place in Russia,” with “outstanding schools, low crime and a high concentration of very smart people.”
But she said Mr. Trubitsyn’s arrest had delivered a grave blow to the community’s sense of security.
“In principle, anyone can fall into this situation,” Ms. Travina said, praising Mr. Trubitsyn as a patriot because he had not moved abroad and had invested time and money in science education for local children. “It can happen to anybody,” she added. “Everyone has some sort of skeleton in their closet. Maybe nothing big, but they can always find something to throw you in jail for.”

For the full story, see:
ANDREW HIGGINS. “Russia Wants Innovation, but Jails Innovators.” The New York Times (Thurs., AUG. 10, 2017): A1 & A9.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date AUG. 9, 2017, and has the title “Russia Wants Innovation, but It’s Arresting Its Innovators.”)

“Shannon’s Principles of Redundancy and Error Correction”

(p. C7) There were four essential prophets whose mathematics brought us into the Information Age: Norbert Wiener, John von Neumann, Alan Turing and Claude Shannon. In “A Mind at Play: How Claude Shannon Invented the Information Age,” Jimmy Soni and Rob Goodman make a convincing case for their subtitle while reminding us that Shannon never made this claim himself.
. . .
The only one of the four Information Age pioneers who was also an electrical engineer, Shannon was practical as well as brilliant.
. . .
Wiener’s theory of information, drawing on his own background in thermodynamics, statistical mechanics and the study of random processes, was cloaked in opaque mathematics that was impenetrable to most working engineers.
. . .
“Before Shannon,” Messrs. Soni and Goodman write, “information was a telegram, a photograph, a paragraph, a song. After Shannon, information was entirely abstracted.” He derived explicit formulas for rates of transmission, the capacity of an ideal channel, ability to correct errors and coding efficiency that could be understood by anyone familiar with logarithms to the base 2.
Mathematicians use mathematics to understand things. Engineers use mathematics to build things. Engineers love logarithms as a carpenter loves a familiar tool. The electronic engineers who flooded into civilian life in the aftermath of World War II adopted Shannon’s theory as passionately as they had avoided Wiener’s, bringing us the age of digital machines.
. . .
Despite the progress of technology, we still have no clear understanding of how memories are stored in our own brains: Shannon’s principles of redundancy and error correction are no doubt involved in preserving memory, but how does the process work and why does it sometimes fail? Shannon died of Alzheimer’s disease in February 2001. The mind that gave us the collective memory we now so depend on had its own memory taken away.

For the full review, see:
George Dyson. “The Elegance of Ones and Zeroes.” The Wall Street Journal (Sat., July 22, 2017): C7.
(Note: ellipses added.)
(Note: the online version of the review has the date July 21, 2017.)

The book under review, is:
Soni, Jimmy, and Rob Goodman. A Mind at Play: How Claude Shannon Invented the Information Age. New York: Simon & Schuster, 2017.

Code Schools Provide Intense 12 Week Training, and Jobs

(p. B1) Across the U.S., change is coming for the ecosystem of employers, educational institutions and job-seekers who confront the increasingly software-driven nature of work. A potent combination–a yawning skills gap, stagnant middle-class wages and diminished career prospects for millennials–is bringing about a rapid shift (p. B4) in the labor market for coders and other technical professionals.
Riding into the breach are “code schools,” a kind of vocational training that rams students through intense 12-week crash courses in precisely the software-development skills employers need.

For the full commentary, see:
Christopher Mims. “Code-School Boot Camps Offer Fast Track to Jobs.” The Wall Street Journal (Mon., Feb. 27, 2017): B1 & B4.
(Note: the online version of the commentary has the date Feb. 26, 2017, and has the title “A New Kind of Jobs Program for Middle America.”)

Fanjul Sugar Family Donated to Inauguration and Now Seeks Sugar Price Protection

(p. B1) MEXICO CITY — The sugar barons of Florida, Alfonso and José Fanjul, have been equal-opportunity political donors for decades, showering largess on the campaigns of Democrats and Republicans alike to ensure that lawmakers will protect the American sugar industry.
When Donald J. Trump was preparing to take office as president, the Fanjul brothers wrote another check. Among the contributors to Mr. Trump’s inaugural festivities in January was Florida Crystals, a Fanjul-owned company that contributed half a million dollars.
The brothers most likely had more on their mind than a sumptuous ball. Led by the Fanjuls, large American sugar producers and refiners were eager for the new administration to tackle some business left unfinished by the Obama administration: an agreement to control imports of Mexican sugar.

For the full story, see:
ELISABETH MALKIN. “Sugar Talks May Hint at Trump’s Approach to U.S.-Mexico Trade.” The New York Times (Mon., June 5, 2017): B1-B2.
(Note: the online version of the story has the date June 4, 2017, and has the title “Sugar Talks May Hint at Trump Approach to U.S.-Mexico Trade.”)