Extraordinary times

I, for one, welcome the end of the metric system

Photo by César Couto on Unsplash

Hello,

Welcome to Known Unknowns—a newsletter that provides a safe space for techno-optimists and metric system skeptics.

Personal news

I just launched a podcast called Risk Talking. I know, everyone has a podcast, and there are already many excellent economics podcasts, more than any one person could possibly listen to. However, I like to think that mine adds something new to the crowded party.

One of the best things about being an economist is that I get to talk to other (brilliant) economists. Understanding the economy requires a constant effort. You need to keep your eye on the data and then debate its meaning with the smartest people that you can find. This process never ends, no matter how good you are or how old you get. Even when I speak to economists who are well into their 80s, the first thing they do is ask about my opinion about the stock market, inflation, wages, or growth. Then, we argue (nicely—mostly) about it hours. This is how you stay sharp and keep learning. It never stops—this is what it means to be an economist, and I think that it’s the best part of the job.

When Manhattan Institute suggested that I start a podcast, I figured that it would be fun to let everyone listen in on these discussions. I find my talks with other economists incredibly valuable, and what kind of economist would I be if I did not take the opportunity to maximize their value and let other people listen in too?

In the first episode, I spoke to my all-time favorite economic historian, Joel Mokyr. I learn so much about the past, present, and future when I speak to him. He is the foremost expert on the industrial revolution, which means that he has a deep understanding of how innovation can come seemingly out of nowhere and create a market that generates unimaginable prosperity. Why does such a thing happen? Can we replicate it?

People forget how disruptive industrialization was. I don’t just mean the luddites; it changed social structures and how we work and live. It provides us with a perspective on where we are now. Often, the most important innovations take years to change the world, and when the world changes, our measures of productivity and prosperity don’t always make sense anymore. An example of this is the steam engine, which took more than 100 years to show up in productivity estimates.

Whenever I talk to Joel, I come away feeling hopeful about the future. We truly live in an extraordinary time for innovation. It seems like our lives are transformed every five years due to new technology. Moreover, we don’t even know the full potential of these new innovations, such as RMA vaccines and gene editing. The possibilities are endless. So what if productivity estimates show that progress has stalled? You can’t convince me that we aren’t living through something special and transformative.

Check it out wherever you get your podcasts and let me know what you think.

Immigration

One thing that really frustrates me about the immigration debate is that it tends to focus on illegal migration. This sucks up all our energy and means that we spend very little time discussing our legal migration policy, which is much more important and long overdue for an overhaul. Our immigration policy determines our future and reflects our values and economic priorities. If you want more immigration, great---but we need more discussion about who and how.

An overwhelming number of permanent migrants (people who can live in the United States permanently and eventually become citizens) get their status through family migration. Instead, we need to give more slots to people based on our economic needs, which means more slots for skilled workers, especially those in STEM. We’ve pretty much given up teaching rigorous math at high-school level. I wish that it weren’t true and that I could change that. However, I don’t have much hope. In fact, it feels like we are giving up on math all together.

Although our colleges and universities still offer excellent STEM training, we don’t equip many American students to undertake these degrees, which is why foreigners tend to dominate them. Therefore, if we want to be competitive, we’ll have to import people who learned math elsewhere. My idea is to increase the number of H1-B visas and offer temporary work permits that can be converted to permanent status to STEM graduates. As I said, this is an exciting time for innovation, and we need skilled people to make it happen and stay competitive.

However, we also need more temporary work visas for less skilled workers, as we’ll face increasing shortages as more of the population ages. The lack of migration is the main reason why we have faced so many shortages in services during the last year. These visas should come with the option to be converted to permanent status. This creates a legal means to immigrate, which may reduce some of the pressure on the border, and offers a pathway to citizenship for people who came legally, worked hard, and contributed to the economy.

In other news

I just got back from the Trade-PMR conference in Orlando. It was great to give a live talk again, and telling my stories to a room full of pension geeks is my idea of heaven. Speaking of, here is an interesting story on measuring big waves.

Why the Japanese are so risk-averse

Global realignment alert! The UK is considering bringing back Imperial measurements—-another step away from Europe and closer to the US.

Until next time, Pension Geeks!

Allison