Discover more from Second Best
Links and tweets 4/5/23
Labor market slack edition
A lot of trends over the past decade are said to have been “zero interest rate” phenomena: crypto, SPACs, ESG funds, etc. There’s a similar “marco-explains-micro” story related to labor market slack. It’s no accident Uber took off in the depths of the Great Recession, for instance.
As I and Brink Lindsey noted in Faster Growth, Fairer Growth, a comparison between the actual unemployment rate and the CBO’s estimate of the natural rate implies the U.S. labor market has had excess slack for 70 percent of the time since 1980. In turn, the U.S. economy adapted to the expectations of reserve labor, giving rise to industries and coalitions that only reinforced a political economy premised on persistent unemployment. As the paper above suggests, labor market slack may also have been an ambient force behind the college degree-arms race and rising credentialism.
Time will tell if the labor markets can stay tight enough long enough to finish filtering out the coalitions and industries premised on the easy replaceability of labor. That means letting low labor-productivity firms fail, rather than buying into their claims of worker shortages. But it also means embracing the relative decline in the status of college degrees which, on the margin, rose in value as a signal of human capital for employers to use when hiring into a buyer’s market.
I didn’t realize how volatile lithium prices were in recent years.
h/t Simon Moores.
Also this: “China Plans to Ban Exports of Rare Earth Magnet Tech.”
Despite Trump facing 34 felony counts, his PredictIt odds of winning the nomination have barely budged. If anything, they’ve gone up. Not what I would have expected, but after seeing how preposterous the charges are, it makes sense.
Thanks for reading Second Best! Subscribe for free to receive new posts and support my work.