Structural vs. Cyclical Unemployment

I have never liked the distinction between cyclical and structural unemployment. Maybe it is useful for some purposes, but it is at least as likely to be misleading as useful. Stephen Ayer notes the following use of the distinction in a NY Fed paper by Groshen and Potter

Cyclical adjustments are reversible responses to lulls in demand, while structural adjustments transform a firm or industry by relocating workers and capital. The job losses associated with cyclical shocks are temporary: at the end of the recession, industries rebound and laid-off workers are recalled to their old firms or readily find comparable employment with another firm. Job losses that stem from structural changes, however, are permanent: as industries decline, jobs are eliminated, compelling workers to switch industries, sectors, locations, or skills in order to find a new job.

I propose a different scenario:

Suppose there is rapid technological change in a number of industries. Suppose further that as a result, the marginal productivity of labour sky-rockets in those industries. Labour is attracted to those industries, not forced from the old, unchanging industries. Old industries decline and jobs are lost there, but at the same time, there are many new jobs and opportunities in new and growing industries.

How long does it take labour to move from one job to a different one? In general, probably no longer than it takes to sit home on unemployment waiting for a call-back on a cyclical unemployment job.

I much prefer to think of unemployment as job search.

More on the New Food Triangle

For some reason, my piece linking to Kip Esquire’s posting, receives considerable interest via Google and Yahoo search engines. Here is another, that concludes pizza forms the perfect food triangle.

See? There’s even a little delivery guy coming up the porch steps.

I expect the gubmnt report was referring to pizza slices since they are shaped like triangles.

Oxfam and the WWF are Free-Traders

At least it seems so when the circumstances suit them.

Trade Minister Mark Vaile says Australian farmers will benefit from a World Trade Organisation (WTO) ruling that the European Union’s (EU) sugar subsidies are illegal.

Australia, Brazil and Thailand had brought the case against the 25-nation bloc.

The 25-nation bloc had attempted to overturn last year’s finding by a panel of trade judges on several million tonnes of surplus EU sugar output, known as “C” sugar.

The judges had found that while the sugar should have been exported without subsidies, it was benefiting from state aid.

…Activist groups like Oxfam and WWF, which are frequent critics of the WTO’s staunchly free-trade line, have applauded.

They say that the EU must now “radically reform its scandalous sugar regime.”

One of the big questions will be whether decisions like this will carry any weight. Will the EU comply? and, if so, how much? We in Canada know that the U.S. has been an extreme foot-dragger, and there is little reason to expect anything different from the EU.
[h/t to BrianF for the link]

A Slightly Different Version of Comparative Advantage

From Forbes magazine (link courtesy of Newmark’s Door):

The more transparent an economy becomes, the more David Ricardo’s 19th-century law of comparative advantage rules the day. Then came the commercial Internet, the greatest window into comparative advantage ever invented. Which means if your firm’s price-value proposition is lousy, too bad. The world knows.

Well, that is one way of looking at comparative advantage. Here is another.

What matters is not the absolute cost of production, but rather the ratio between how easily the two countries can produce different kinds of things.

A Slightly Different Version of Comparative Advantage

From Forbes magazine (link courtesy of Newmark’s Door):

The more transparent an economy becomes, the more David Ricardo’s 19th-century law of comparative advantage rules the day. Then came the commercial Internet, the greatest window into comparative advantage ever invented. Which means if your firm’s price-value proposition is lousy, too bad. The world knows.

Well, that is one way of looking at comparative advantage. Here is another.

What matters is not the absolute cost of production, but rather the ratio between how easily the two countries can produce different kinds of things.

A Slightly Different Version of Comparative Advantage

From Forbes magazine (link courtesy of Newmark’s Door):

The more transparent an economy becomes, the more David Ricardo’s 19th-century law of comparative advantage rules the day. Then came the commercial Internet, the greatest window into comparative advantage ever invented. Which means if your firm’s price-value proposition is lousy, too bad. The world knows.

Well, that is one way of looking at comparative advantage. Here is another.

What matters is not the absolute cost of production, but rather the ratio between how easily the two countries can produce different kinds of things.

The High Price of Erotica

A biscuit tin produced in Liverpool in the 1970s sold at auction for 119 pounds this week. [h/t to BrianF for the pointer]. And the reason had nothing to do with the Fabulous Four.

The Huntley and Palmer [no relation] tin, made in the 1970s at the company’s Liverpool factory, appears on first glance to show an idyllic lunchtime scene.

On closer inspection, the illusion of tranquillity is shattered by drawings in the background of a naked couple.

These are said to have been added by a designer who had just been sacked.

…Amid the scenes of ladies and children lunching around a table at a Manor House, are said to be those of a man and woman locked in an amorous embrace in a flower bed.

The tin also depicts two dogs mating behind a tree and a jam jar decorated with an obscene label.

I wonder whether these scenes had a subliminal seduction effect that boosted sales of the tins before people consciously knew about the scenes.

Always Low Prices

Discerning readers have undoubtedly noticed the most recent Blog Ad that has begun to appear on The Eclectic Econoclast (and Newmark’s Door).

Click here to read what Kevin at Always Low Prices has to say about the organization.
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I have no idea why they decided to advertise on these blogs, but I thank them for their contribution to the furtherance of free market capitalism.

New Standards in Gubmnt

From New Zealand:

Labour MP Dover Samuels appears to have been caught up in an embarrassing incident in an Auckland hotel.

Newstalk ZB says Samuels told them he urinated in a corridor of the Heritage Hotel nearly three weeks ago after attending a function.

The radio station says Samuels told them he couldn’t get into his room because of a faulty key, and relieved himself in front of the duty manager.

Samuels had earlier denied any incident when contacted by One News.

The hotel has refused to comment.

Okay, now. Everyone in unison:

1. What is the risk?
2. Who is the least-cost bearer of the risk?

Link via Rodney Hide, who is not a labour MP in New Zealand. Check out the comments, too!

I Hate Minority Gubmnts

The reason I especially dislike minority Liberal gubmnts is that if they don’t get in bed with the socialists, they face another election, and they usually prefer sleeping with socialists.

Mike, at London Fog, has two quotes that are appropriate for this situation. The first is from H.L. Mencken:

“The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.”

And this one is from Andrew Coyne:

So now we know: there is no price Paul Martin isn’t willing to make you pay to save his job. And there is no amount of corruption Jack Layton won’t overlook as long as the price is right: at $4.6-billion, it works out to about $250 million per NDP MP. About the same price as the sponsorship program, as it happens.