VW, UAW

While I prepare a post on Mitsubishi Motors (I began going through financial statements a couple weeks back) let me point to a post by Jared Bernstein on ironies with the labor movement today. His contention is that we see pro-business, government-shouldn't-constrain us conservatives trying to constrain the ability of VW to invite in the union. Consistency is apparently for small minds. Behind the Veil

Two Further LF Graphs

While I continue to work on a blog post on Mitsubishi Motors, let me put up two further graphs on employment by age bracket, broken into (i) older workers and (ii) younger workers with January 2007 as a base. (I won't post details, but using a different base does not change things.)

First, since the share of older workers in each age bracket rises, the drop in LF participation is not due to a larger share of workers taking early retirement. Indeed, the data show just the opposite, that older workers are more likely to stay in the labor force than before the recession. (This is not a recent shift. Age breakdowns are available starting in 1994; older worker participation was rising by the late 1990s, but without a longer time series, I can't preclude that change having started earlier. Nor can I get a breakdown by gender on the BLS web site, though the BLS can likely generate those numbers.) Oh, and for a nice analysis of survey data on why people were not in the labor force, see Ellyn Terry's post on the Atlanta Fed macroblog, "What Accounts for the Decrease in the Labor Force Participation Rate?"

While I continue to work on a blog post on Mitsubishi Motors, let me put up two further graphs on employment by age bracket, broken into (i) older workers and (ii) younger workers with January 2007 as a base. (I won't post details, but using a different base does not change things.)

First, since the share of older workers in each age bracket rises, the drop in LF participation is not due to a larger share of workers taking early retirement. Indeed, the data show just the opposite, that older workers are more likely to stay in the labor force than before the recession. (This is not a recent shift. Age breakdowns are available starting in 1994; older worker participation was rising by the late 1990s, but without a longer time series, I can't preclude that change having started earlier. Nor can I get a breakdown by gender on the BLS web site, though the BLS can likely generate those numbers.)

In contrast, the participation of prime-age workers fell sharply (and that of teens is literally off the chart, so not included). Furthermore, there been at best a modest recovery so far, but no marked decline in any recent month beyond what could be noise. (I graphed a moving average of the number of the 13 age brackets for which the monthly change is negative; overall that's been around 5 for the past 20 years, and is about that now.)

So if the overall participation rate is falling, but each component is flat or rising, then that has to be a consequence of the population aging, shifting from high participation brackets to lower ones (age 55 and above).

(un) Employment

The latest Current Population Survey (and Current Employment Survey) data show a labor market that barely grew, once you account for demographics. Earlier posts (most recently Auto Recovery, yes ... but as for the rest) provide snapshots of employment and employment corrected for involuntary short hours, both relative to an employment-propensity weighted population projection. Here's another cut, shifts in age-specific ratios of employment to population. That helps correct for the aging of the baby boomers (but misses shifts in people on involuntary short hours). Unfortunately BLS doesn't post these ratios broken down by gender. Anyway, here are the data for January 2009 through December 2013; they provide a "cut" that doesn't seem to be widely reported but is a useful complement to those that are.

Hotelling redrawn: party dilemmas in a primary system

In August I posted an Economic Model of Elections. The new academic term began today, and the class following mine was preparing to look at a version of that model as their intro topic. Then a colleague stopped in and we chatted about the same thing. As a result I redid my graphs. First, the basic Hotelling model (dating to 1929), or to political scientists the median voter model, predicts centrist politics in a single member, one vote per person electoral system. All vote for the candidate closest to them in political stance. Candidates who try to stake a position away from the center get trounced, as their opponent will move closer to their position and pick up more than half the vote.

In the US national elections come after party primaries. While there are splinter parties, there are only two main parties, as seems to be the case in all (mature) single member district systems (Duverger's Law). In such systems, the same logic applies: at the primary stage, candidates adopt positions at the center of their party, but then must scramble to reinvent themselves come the general election. Flip-flops are required by our system because a liberal Democrat or a liberal Republican will find it hard to win their primary. Now that seems to be a good depiction of the Democrats, with former a University of Chicago law prof sitting in the White House carrying on many of the policies of his predecessor. That doesn't seem to fit the larger political scene. Clinton was a master of repositioning himself, but more important was also keenly aware of the power of Hotelling's logic, nudging his entire party to the right so as to dominate the electoral scene. His successors were less smart, and when the splinter candidate of Ralph Nader unified much of the left, Al Gore tried to counter his influence by staying to the left, rather than moving to the center. The result was an electoral loss against an otherwise unremarkable candidate who only barely managed to carry the state in which his brother was governor.

the US needs a Ralph Nader of the right

The first modification is to note that in the US there are splinter parties on the left (the Greens, and very small Socialist and Communist parties). However, there are none worth noting on the Right. So we can simply erase the Left as having electoral relevance. The next effect is to shift the entire political spectrum to the right. (In Japan a different electoral system allows multiple parties to exists, but the Left is fragmented, which again allows conservatives to call the shots.)

But we now have an additional factor: the fringe is less pragmatic, and since the fringe on the right remains within the Republican Party, that pulls the entire party further to the right, because any Republican candidate who moves too far to the center loses their vote. Among Democrats, that's much less the case. The net efect is to pull the entire political spectrum even further to the right. Again, Obama is evidence of that – if we went back to the 1970s and assigned him to a party based on what he's done, he'd be stuck in the Republican camp.

To date the Republican right – the Tea Party, religious conservatives, ethnonationalists ["racists"] have been funded by people wise enough (or egotistical enough to think they could buy the entire party) to not splinter. Maybe it's just for lack of a sufficiently charismatic leader. But if splinter they do, then politics will normalize. Republicans who survive a primary will be less ideological, and more centrist. The US needs a Ralph Nader of the right.

mike smitka

with thanks to Craig McCaughrin and Martin Davies