Is knowledge of fashion history a new status symbol?

See Is the Luxury Handbag’s Heyday Ending? An $8 billion slide in sales shows attitudes toward designer bags are changing by Carol Ryan of The WSJ.  

I have several links below on what Thorstein Veblen called Conspicuous Consumption. That is when rich people "purchase goods and services to display one’s economic power and social status." Adam Smith also said something like this. 

But now knowledge of fashion history might be a more powerful status symbol. See the text in red in the excerpts below:

"Status symbols are an odd thing. Some purchases, like a mansion, have never lost their power to flaunt wealth. Pineapples—which were once so rare and expensive that they became the 17th century’s equivalent of the Birkin—fell out of fashion as soon as rising supply meant the middle classes could afford them too."

"Sales of luxury bags are down almost 10% from peaks seen in 2023"

"brands raised prices too aggressively during the pandemic"

"Luxury companies released 80% fewer new bags between 2023 and 2025 than they did between 2016 and 2019"

"Social-media feeds are flooded with images of once-scarce bags like the Hermès Birkin and the Chanel Classic Flap, which has killed some of the magic."

"“You are selling the promise of exclusivity. Anything that creates visibility is not necessarily good,” says Luca Solca, luxury goods analyst at Bernstein."

"shoppers are still obsessed with luxury handbags, but their tastes are evolving in ways that are unhelpful for luxury companies’ profits."

"Social-media content about affordable ways to access luxury handbags through resale and rental platforms like Vivrelle is up sharply"

"carrying a vintage luxury bag is becoming cooler than buying new. In May, searches for vintage bags were up 131% compared with the same month of 2025" 

"Vintage is gaining popularity because of growing disenchantment with modern, mass-produced luxury, according to Silvia Bellezza, an associate professor of marketing at Columbia Business School." 

"buying vintage is a way to look different in an era of algorithm-driven fashion trends. Buying vintage also requires knowledge of fashion history, which is emerging as a new status symbol itself."

Also see Veblen Goods by Andrew Loo of CFI (Corporate Finance Institute) . Excerpts:

"Veblen good is a type of luxury good named after American economist Thorstein Veblen. It shows a positive relationship between price and demand [it should say quantity demanded-CM], and thus an upward-sloping demand curve.

The demand [it should say quantity demanded-CM] for a Veblen good rises (drops) when its price increases (decreases). A Veblen good generally is considered a high-quality exclusive product and a status symbol. When the price goes higher, its status symbol makes the Veblen good more desirable to consumers with high social and economic standing. Some common examples of Veblen goods include luxury cars, wines, handbags, fine jewelry and watches and even sneakers."

"Conspicuous consumption is another relevant concept of Veblen goods. It represents the purchase of goods and services to display one’s economic power and social status, motivated by the desire for prestige.

The concept of conspicuous consumption was also identified by Thorstein Veblen in his book The Theory of the Leisure Class (1899). In the practices of conspicuous consumption, a higher price makes a product more desirable for its status symbol, which explains the features of Veblen goods from a sociological perspective."

Adam Smith may have beaten Veblen to the punch. In The Wealth of Nations, he wrote:

"With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eyes is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves. In their eyes the merit of an object which is in any degree either useful or beautiful, is greatly enhanced by its scarcity, or by the great labour which it requires to collect any considerable quantity of it, a labour which nobody can afford to pay but themselves. Such objects they are willing to purchase at a higher price than things much more beautiful and useful, but more common." (the entire book is online)

In Veblen's chapter on "Conspicuous Consumption," there is no mention of Adam Smith. 

There is statistical or empircal evidence that supports Veblen's theory. A Ph. D. student found that rich families do spend more on "Conspicuous Consumption." 

See also Doctoral Thesis Says Rich People Spend More on Conspicuous Things. Excerpts:

"Ori Heffetz, a doctoral student in economics at Princeton University (back in 2005-now he is a professor at Cornell University), has developed the first broad-gauged index of product visibility. Sure enough, he finds in his thesis that conspicuous items make up a greater share of the consumption budget in wealthier families."

"Mr. Heffetz estimated the relationship between the amount spent on each of 29 products and a household's income, using data on 3,924 households from the 1997 Consumer Expenditure Survey, conducted by the Bureau of Labor Statistics. The "income elasticity of demand," defined as the percentage change in consumption for a 1 percent increase in income, summarizes the degree to which a good is a luxury or a necessity. A good is a luxury if a 1 percent increase in income is associated with more than a 1 percent increase in consumption of that good.

Mr. Heffetz's analysis indicates that the higher the visibility of a good, the more likely it is to be a luxury item. For example, spending on cars and jewelry, two highly visible items, rises as a share of a household's budget as its income rises, while spending on home utilities, an inconspicuous category, falls as a share of the budget as income rises."

Related posts:

Is there InConspicuous Consumption? (2025) (what if rich people spend their money and they don't want to be seen doing it)

Is there InConspicuous Consumption? (Part 2) (2025) (links to some research on this concept)

What if you had to spend alot of money just to be offered the chance buy a luxury item? (2025) 

Has Luxury Lost Its Shine? Customers are complaining that they are getting less bang for their buck at the luxury store (a case of Veblen goods) (2024)  

Is Starbucks coffee no longer a Veblen good? (2024)

China's Government Cracks Down On Displays Of Wealth On Social Media (2022)  

(See In China, Bragging About Your Wealth Can Get You Censored: Online posts by users showing off their receipts, over-ordering food or scattering money have been deemed vulgar. Regulators say such content leads young people astray by Vivian Wang and Joy Dong of The New York Times.)

Payless sold its discount shoes for $600 a pair at mock luxury influencer event (2018)

Federal Reserve Economists May Have Discovered Another Cause Of Bankruptcy (if a neighbor wins the lottery people start spending more on consumption to keep up) (2016)

Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) (2007)

Have market forces eroded Apple's monopsony power for chips?

To see how monopsony works graphically, see the Wikipedia article. Monopsony means one buyer (whereas monopoly means one seller). Similar to what happens in monopoly where the price is higher than in competition and the quantity produced is lower, in monopsony less is produced and sellers get a lower price because the one buyer has market power.

And that is something that Apple has been accused of. See Apple Is America’s Semiconductor Problem. Excerpt:

"Apple’s sheer size as a buyer puts this into perspective. In 2022, Apple bought $67 billion of semiconductor chips, a full 11% of the global market for chips across all industries. Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones profits. Apple’s supply agreements with U.S. mobile operators demand that Apple products get the deepest subsidies and the largest share of sales."

But the recent increase in demand for chips for AI purposes means that there are many more buyers and it looks like Apple's influence is decreasing. See Apple to Raise Prices Due to Memory Chip Crunch, Tim Cook Says: The CEO tells the Journal in an exclusive interview that soaring costs make price increases ‘unavoidable’ by Rolfe Winkler of The WSJ. Excerpts:

"Apple plans to raise prices on its products to offset the surging costs of memory and storage chips, Chief Executive Tim Cook said"

"“There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” said Cook. “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”" (there is less supply for Apple)

"Memory companies are building more factories: Morgan Stanley forecasts that production capacity for DRAM wafers, the silicon discs on which chips are patterned, will grow 30% by 2027. Yet as suppliers prioritize the specialized AI memory, wafers for consumer tech will fall up to 15% short of demand, Morgan Stanley estimates." (so if there is more demand now with more buyers more will be produced meaning the monopsony power is being reduced)

"Companies that make PCs, game consoles, smartphones and more have raised prices"

"Morgan Stanley estimates a 15% bump for prices of smartphones and PCs in the U.S. this year."

"It is unclear how Apple could match, let alone beat, the deal terms that AI hyperscalers are offering to lock up supply. Those companies are signing three-to-five year agreements with huge cash prepayments that Apple is unlikely willing to match"

"Historically it has used its heft to wring the lowest prices out of suppliers, playing them off each other and leaving them little profit. As AI companies have stormed into the market, suddenly Apple has to wait in line." 

This last passage shows that Apple had some monopsony power that is decreasing since they used to be able to play suppliers off each other with little profit (meaning a low price as monopsony predicts) but now they have to wait in line because there are more buyers they have to compete with. 

Europe’s Arms Race Is Creating Boomtowns. Why Are Locals So Unhappy? (and an example of why labor supply curves slope upward)

New investment in French and British towns brings jobs but sparks division and resentment

By Sune Engel Rasmussen of The WSJ. 

Sometimes when there is a new product or government policy that leads to higher incomes for some locals but not all it stirs up conflicts. This seems like another example of that. 

Excerpts:

"In Barrow-in-Furness (in UK), an impoverished shipbuilding town in northwestern England, a multibillion-dollar contract to build nuclear submarines has highlighted inequality and pulled workers from other professions.

Residents of Bergerac, a cobblestoned French town famous for its wines, complain that all they have received from a revamped explosives factory are empty promises and drones in their skies."

"But the salaries and benefits offered by BAE draw workers from other professions, leaving the town bereft of mechanics, driving instructors and nurses. On a recent evening in a local pub, two builders asked other patrons for recommendations for tradesmen and were told they had to wait several weeks."

"The sudden influx of money and workers has sent real-estate prices soaring. Some housing has been converted into rental properties shared between several households."

"After the war began in Ukraine, the explosives manufacturer Eurenco invested 200 million euros, or about $230 million, to revive French gunpowder production at a government-owned site on the outskirts of Bergerac.

The factory now employs 600 people, up from 200 before the Ukraine war. Its annual revenue has tripled to €580 million from around €190 million over the same period."

"So far Bergerac has seen little of that money, according to local officials. Many Eurenco employees come from out of town"

This is because the process "requires specialized engineering skills that aren’t present in Bergerac." 

"“I would prefer that the jobs were created in schools and hospitals, that they put money toward health and education,” said Mathieu Brand, co-president of La Traverse, a community-driven cultural center."

The part in red above illustrates the issue with labor supply curves. Why do they slope upward?

1. As W increases, workers from other industries enter the market in question, so L increases. When W increases, we assume it increases in one market only. For example, if the wage paid to janitors increases, convenience store clerks will apply to become janitors.

2. As W increases, nonworkers enter the market in question. Some workers who were not previously working in any market, will start to apply for jobs if the wage rises high enough. Examples might be stay at home spouses and students.

So number one is at work here in this article.

Related posts:

Come Make $100,000, the Billboard Says: Police Departments Are Hustling For Recruits (especially when wages are rising for other jobs) (2024) (this article has a more detailed look at labor supply curves)

Two examples of wages rising for one occupation leading workers to move into it from other occupations (2024) 

Inter-industry competition can affect labor markets (2023) (this was about an auto related company in Alabama that was not only competing for workers with other firms in its industry but also with restaurants and retailers)

What ends expansions? (or what causes recessions according to Alan Blinder and Austan Goolsbee)

I originally posted this in 2019. The two articles excerpted here are both from 2019.

See The Obama-Trump Economic Boom: The current expansion may soon be America’s longest, and neither inflation nor tariffs are likely to stop it by Alan S. Blinder. He is a professor of economics and public affairs at Princeton University and a former vice chairman of the Federal Reserve. Excerpts:

"A common answer in the modern era is that the Federal Reserve clamps down to fight inflation. But today inflation remains quiescent despite extremely low unemployment. That the Fed didn’t raise interest rates in January, even with the federal-funds rate barely above inflation, suggests that Jerome Powell may be an even more dovish Fed chair than Janet Yellen. It sure doesn’t look as if an overzealous Fed will squelch the expansion.

Another common expansion killer, though not lately, is a spike in the price of oil. Predicting the price of oil is a fool’s errand, and I won’t try. But a jump to, say, $90 or $100 a barrel doesn’t look likely any time soon."

Lots of people are fretting about a full-scale trade war with China. That remains possible—and a threat to the world trade system. But would it derail the U.S. expansion? Not unless it’s a whopper. Exports to China are only about 1% of U.S. gross domestic product. Even if they fell by half—well, you can do the math. America’s total exports to all countries are vastly larger. But lately, our bellicose president doesn’t sound inclined to declare trade war on Canada. Let’s hope it stays that way.

According to legend, stock-market crashes often end booms, but that’s an exaggeration. A crash may have to coincide with some other financial calamity, as in the banking, bond and mortgage disasters of 2008-09. In contrast, the U.S. economy sailed right through the megacrash of 1987. The current expansion has already survived a market “correction” in December without much apparent damage. So while I never predict stock prices, a market crash ranks low on my expansion worry list.

Last but certainly not least, expansions are sometimes killed by sudden drops in either consumer or business confidence—or rather by the declines in spending that such drops engender. Might that happen in the next few months? I suppose so, but recent economic data don’t point in that direction.

Recent political “data” are a different matter. It is certainly possible that the U.S. will find itself in a full-fledged constitutional crisis in the coming months, precipitated by, say, the “national emergency” over immigration. What then? If business managers and market traders behave like Mr. Trump’s base, they’ll shrug it off: Constitution, shmonstitution. But if threats to democracy shake confidence, look out.

A low probability, you say? I agree. My bet is that the current expansion will sail through June, setting a new record."

See also You Never Know When a Recession Will Sneak Up on You by Austan Goolsbee. He a professor of economics at the University of Chicago’s Booth School of Business and was an adviser to President Barack Obama. Goolsbee seems to think a recession is more likely than Blinder and that an unforseen event that hurts confidence is more likely. Excerpts:

"recessions don’t come only from large, foreseeable events. Modest, unpredictable incidents can cause economic downturns if they lead businesses or consumers to freak out."

Seemingly small events can cause enormous problems. Think back to 2001 and the last recession of a “normal” size. (The recession that started in December 2007 was, by far, the deepest and longest since the Great Depression — about as far from normal as a recession can be.)

The 2001 recession developed when the internet bubble popped, or at least that’s how we tend to remember it. But go back and check the numbers. The internet accounted for, at most, about 2 percent of the economy then. If we use the logic we’ve been applying to trade wars and government shutdowns, it would seem that popping the internet bubble shouldn’t have been enough to cause a recession. But it did.

The reason it did was that the pop freaked out people outside just the internet sector. Consumer confidence plunged, and businesses stopped investing. The recession spread far beyond its origin.

In this sense, virtually every recession in the last 40 years coincided with a signal of fear, like a significant drop in consumer confidence. Sometimes confidence fell and didn’t spiral into recession, but all recessions have started with a confidence spiral."

"Another government shutdown could spiral into something far more damaging than the small decline in workers’ share of the economy that the simple math suggests. An escalating trade war with China could ignite a recession, even if the numbers show that trade isn’t a large share of the United States economy. These events just need to spook consumers or businesses into putting off spending, and then more dire consequences can start to snowball."

"If something scares people enough, it can start a recession, and you probably won’t know until it’s too late.

That’s because recessions are hard to recognize at the start. Looking back, for example, we know that a recession officially began in April 2001, yet scarcely anyone understood that then. In June 2001, only 7 percent of economists in the monthly Blue Chip survey believed a recession was underway. In the months before that 2001 recession began, only 16 percent of economists expected that a recession would start within the next year. Now, 25 percent of economists in a Wall Street Journal survey say they expect a recession within the next year, and anxiety seems to be growing." 

Related posts:

‘Recession’ Review: A Series of Unfortunate Economic Events: In their efforts to explain downturns, economists tend to connect unrelated data and occurrences. How forecastable are recessions?  

Monetary Policy and the Great Crash of 1929: A Bursting Bubble or Collapsing Fundamentals? (By Timothy Cogley of New York University) 

What Causes Recessions? What Do Recessions Look Like? (by Scott A. Wolla of the St. Louis Federal Reserve bank)

Some Bad News for Good News — Optimistic Forecasts Create Recessions

What ends expansions? (or what causes recessions according to Alan Blinder and Austan Goolsbee)

Are business cycles imbedded in longer cycles called financial cycles?

The Job That AI Was Supposed to Kill Needs More Humans Than Ever

Court reporters outmatch the technology in skill, but the profession faces another crisis: a shortage of workers

By Allison Pohle of The WSJ. 

So far it seems like it is more a case of the technology being brought in because there are not enough workers than the technology simply replacing workers.

As for the "shortage" of reporters, it might be true that there are fewer of them due to retirements. But if supply shifts to the left the price (or in this case the wage) would rise. Fewer reporters would be employed at a higher price. But the quantity demanded would equal the quantity supplied. But if these are government jobs, the wage might not be allowed to fully adjust to market conditions (and if the wage was not fully determined by market conditions in the first place maybe the term shortage is not appropriate in this case). 

Excerpts:

"The profession has become an example of AI’s limitations in replacing human skill in the real world. In an actual courtroom, court reporters record nonverbal cues like gestures and transcribe through distracting courtroom noises like coughs or door slams. Other times, they must gently ask witnesses to repeat themselves while recounting traumatic testimony."

"The threat isn’t that AI can do the job better, legal professionals say. It’s that too few humans are going into the field. A long-brewing shortage has worsened as more stenographers retire and too few newcomers complete the rigorous training to replace them."

"Instead of relying solely on traditional court reporters, more courts are allowing “digital” reporters to operate the recording equipment and certify transcripts."

"North Dakota phased out using stenographers this year and switched to recording all proceedings. The lack of court reporters is one reason."

"The National Court Reporters Association says AI-assisted transcription remains prone to errors. “Nobody can take over the integrity that we bring,” says Cindy Isaacsen, the association’s president."

"Others counter that the technology is improving" 

Related posts:

AI startups are literally paying people to fold their laundry (or perform similar chores) (2025)

"Companies such as Encord, Micro1, and Scale AI have launched paid “data collection” programs aimed at generating real-world video datasets for robotic learning." 

America’s Newest Auto Plant Is Full of Robots. It Still Needs the Human Touch: Hyundai’s sprawling complex in Georgia illustrates advanced manufacturing’s balance between people and machines (2025) 

No, AI Robots Won’t Take All Our Jobs: Instead, they will boost productivity, lower prices and spur the evolution of the labor market (2025) (it also has links to 14 other related posts from before 2024)

IBM CEO Says AI Has Replaced Hundreds of Workers but Created New Programming, Sales Jobs: The tech company promises higher total employment as it reinvests resources toward roles like software development (2025)

Technological Disruption in the Labor Market (2025)

Why AI Might Not Take All Our Jobs—if We Act Quickly (2025)

Some good news on productivity (2025) (AI is mentioned)

Some economics of A.I. (2025) 

The AI-Generated Population Is Here, and They’re Ready to Work (2024)

Two recent articles on robots and human workers (2024)

Self-service kiosks at McDonald’s are not reducing employment (2024) 

Robots writing science fiction (2024)

Amazon’s New Robotic Warehouse Will Rely Heavily on Human Workers (2024)

Automation Can Actually Create More Jobs: Evidence shows increased productivity leads to more wealth, cheaper goods, greater spending power and ultimately, more jobs (2016) 

"Since the 1970s, when automated teller machines arrived, the number of bank tellers in America has more than doubled. James Bessen, an economist who teaches at Boston University School of Law, points to that seeming paradox amid new concerns that automation is “stealing” human jobs. To the contrary, he says, jobs and automation often grow hand in hand."

"Sometimes, of course, machines really do replace humans, as in agriculture and manufacturing"

"a long trail of empirical evidence shows that the increased productivity brought about by automation and invention ultimately leads to more wealth, cheaper goods, increased consumer spending power and ultimately, more jobs.

In the case of bank tellers, the spread of ATMs meant bank branches could be smaller, and therefore, cheaper. Banks opened more branches, and in total employed more tellers, Mr. Bessen says. 

The AI-Generated Population Is Here, and They’re Ready to Work: AI that can predict how specific humans will look, act and feel could do the jobs of fashion models, focus group members and clinical trial participants (2024)

 

Meet the Robots Slicing Your Barbecue Ribs (2024)

 

Robots writing science fiction (2024)

 

Robots Are Looking Better to Detroit as Labor Costs Rise (2024)

 

Are robot vehicles replacing workers in freight yards, warehouses and seaports or are they being used because it is hard to find workers? (2023)

 

Rent a robot for Christmas? Makes sense if you are a logistics company (2022)

Answering the Call of Automation: How the Labor Market Adjusted to the Mechanization of Telephone Operation (2022)

Warehouses Look to Robots to Fill Labor Gaps, Speed Deliveries  (2021)

Is Walmart adding robots to replace workers or because it is hard to find workers? (2019)

Did iPhones reduce fertility? Two views

See Is the iPhone Birth Control? Causal Evidence from AT&T’s 2007–2011 Carrier Monopoly by Caitlin K. Myers & Ezekiel Hooper.

"The U.S. general fertility rate has fallen by 22% since 2007, a sustained decline not readily explained by economic conditions, contraceptive use, housing or childcare costs, or other commonly cited factors. We assess the potential role of a different shock: the diffusion of the smartphone. The U.S. rollout of the iPhone, the first modern smartphone, provides a natural experiment: from June 2007 through February 2011, the device was sold only on AT&T, allowing us to identify its effect from variation in AT&T’s mobile broadband coverage. Entropy-balanced Poisson and synthetic difference-in-differences event studies imply that access to the iPhone reduced births by 4.5–8.0% at ages 15–19 and 3.2–6.6% at ages 20–24, with statistically significant but smaller declines among older cohorts. Placebo analyses applied to Verizon and Sprint’s pre-2011 coverage footprint are null. Taken together, these cohort effects imply that the diffusion of the iPhone deepened the decline in births among women under 30 while suppressing the rise in births among older women. Overall, the diffusion of the iPhone explains 33–52% of the decline in the general fertility rate among women aged 15–44. National-survey evidence on time use and sexual behavior is consistent with the iPhone reducing in-person interactions, increasing pornography use, and reducing sexual frequency."

Also see A simple reason for skepticism about the iPhones/fertility link by Tyler Cowen.

"Here is the background to the debate.  Here is more from Noah.  Here is a thread from researcher Caitlin Myers.  And here is some basic information:

In 2008, 1.9% is the share of the mobile-subscribing population with an iPhone wireless subscription.  As a percent of all adults that is 1.6%.

In 2009, it is 4.3%.  3.6% of all adults.

In 2010, 6.8%.  5.5% of all adults.

Plus conception to birth takes nine months (give or take!), noting that actual family planning may make this lag far longer.  In 2008 fertility rates already were falling pretty sharply.  The whole “maybe the iPhone messes up your dating processes” factor also requires some time to operate, especially since iPhones as a network of many many users, and whatever negative effects on socializing you think that might have, was still to lie in the future.  And what you could access on the iPhone then was far more limited than today.

So when the authors talk about diffusion explaining 33–52% of the decline in the general fertility rate among American women 15–44, I still do not get how that is supposed to operate.

The explanations I am hearing seem to be parasitic on world intuitions from 2026, not the time period under consideration."

Driverless Trucks Are Here—and They’re Delivering Bags of Doritos (plus backlash aganist robotaxis)

PepsiCo has 41 trucks on the road in Arizona, Texas and Arkansas, bringing the technology into the mainstream

By Esther Fung of The WSJ. Excerpts:

[there are] "35 driverless trucks Pepsi is running on Arizona roads"

"At least nine autonomous-truck companies are operating in Southern and South-Central states, especially Texas, but many still have human monitors at the wheel"

"The truck has multiple cameras mounted at the front and back, as well as radar and lidar equipment that help determine what’s on the road."

"The trucks have had no accidents on public roads so far"

"the driverless trucks are more reliable than human drivers. The on-time arrival performance from driverless trucks reached 99%"

"The driverless trucks perform best when they shuttle back and forth in repetitive trips"

"PepsiCo employs thousands of drivers in the U.S., some represented by unions that have strongly opposed the rollout of autonomous trucks. The International Brotherhood of Teamsters has lobbied several states to require a trained human operator in any autonomous vehicle used to deliver commercial goods."

Also see Robotaxis Are Spreading Across the U.S.—and So Is the Backlash by Sean McLain of The WSJ. Excerpt:

"The Boston City Council has debated putting restrictions on robotaxis, supported by labor unions fearful of losing driver jobs. In Seattle, home of some of the biggest technology companies, robotaxi operators have been hit by protests."

I had a related post recently that touched on this kind of issue. I used a book called The Economics Of Macro Issues by Daniel Benjamin and Roger LeRoy Miller. It mentioned Luddites, people who destroyed industrial equipment in England in the early 1800s. They were weavers who lost their jobs to new machinery. 

See The American Rebellion Against AI Is Gaining Steam. 

Related posts:

When Humanoid Robots Come to a Small-Town Factory: Two-legged robots have taken over a job in a South Carolina auto parts plant. That’s just the start (2026)

AI startups are literally paying people to fold their laundry (or perform similar chores) (2025)

"Companies such as Encord, Micro1, and Scale AI have launched paid “data collection” programs aimed at generating real-world video datasets for robotic learning." 

America’s Newest Auto Plant Is Full of Robots. It Still Needs the Human Touch: Hyundai’s sprawling complex in Georgia illustrates advanced manufacturing’s balance between people and machines (2025) 

No, AI Robots Won’t Take All Our Jobs: Instead, they will boost productivity, lower prices and spur the evolution of the labor market (2025) (it also has links to 14 other related posts from before 2024)

IBM CEO Says AI Has Replaced Hundreds of Workers but Created New Programming, Sales Jobs: The tech company promises higher total employment as it reinvests resources toward roles like software development (2025)

Technological Disruption in the Labor Market (2025)

Why AI Might Not Take All Our Jobs—if We Act Quickly (2025)

Some good news on productivity (2025) (AI is mentioned)

Some economics of A.I. (2025) 

The AI-Generated Population Is Here, and They’re Ready to Work (2024)

Two recent articles on robots and human workers (2024)

Self-service kiosks at McDonald’s are not reducing employment (2024) 

Robots writing science fiction (2024)

Amazon’s New Robotic Warehouse Will Rely Heavily on Human Workers (2024) 

‘Recession’ Review: A Series of Unfortunate Economic Events

In their efforts to explain downturns, economists tend to connect unrelated data and occurrences. How forecastable are recessions?

By Diana Furchtgott-Roth. She reviewed the book Recession: The Real Reasons Economies Shrink and What to Do About It by Tyler Goodspeed.

Furchtgott-Roth is a Distinguished Fellow at the Energy Policy Research Foundation. 

Goodspeed is a former acting chairman of the Council of Economic Advisers who is now ExxonMobil’s chief economist.

Excerpts:

"As early as 1662, the physician and statistician William Petty asserted a cycle of “dearths and plenties” every seven years. In the 20th century, Nikolai Kondratiev had his “long waves.” Simon Kuznets believed in “secondary secular movements” or “long swings” linked to population and capital formation. Joseph Schumpeter held that creative destruction, in response to new technology, created economic swings. And Friedrich Hayek suggested that recessions occur regularly, as maladjustments build up from misguided interest-rate policies."

"“Recessions are fundamentally unforecastable,” writes Mr. Goodspeed"

"recessions don’t cleanse or restructure economies, the way wildfires clear forests of their dead wood. W​hen one examines statistical deviations from trend for output and employment, ​economies look similar before and after recessions, ​​and he sees little support for the Schumpeterian creative-destruction hypothesis. Recessions such as the Great Depression aren’t punishment for the excess of the Roaring ’20s, but interruptions."

"the timing, cause and depth of recessions may be attributable to a series of unfortunate events"

"the apparent business cycles that economists have spent careers documenting are “apophanies” rather than epiphanies: illusions of pattern imposed on noise."

"recessions are generally characterized by a confluence of overlapping and often interacting factors"

"“History simply offers a warning,” Mr. Goodspeed writes, “that we cannot look to the state to arrest episodes of economic contraction ex post, let alone to prevent them ex ante, except in both instances by way of the Hippocratic advice to first do no harm.”"

"The author organizes shocks into three categories"

"Acts of God are environmental: droughts, floods, locust plagues and the unusual winters"

"government-caused disruptions, such as Fed Chairman’s Paul Volcker’s move to raise interest rates to almost 20% at the same time as the federal government imposed credit controls, causing the 1980 recession"

"Acts of Man are human-made but not policy-driven, including frauds such as Edwin Ludlow’s misappropriation of funds from the Ohio Life Insurance and Trust Co. in 1857, or the savings-and-loan failures in the mid-1980s." 

"Mr. Goodspeed rarely finds recessions caused by a single one of these shocks"

"the frequency of recessions doesn’t determine the fate of an economy. Since 1945, Britain has had a 6% annual probability of entering recession, while the U.S. has had a 15% annual probability. Yet Britain’s gross domestic product per capita, which was 70% of that of the U.S. in 1970, has now declined to less than 60%."

"In 1914 America had 27,000 banks, 95% of them with only a single location. Interstate banking was not substantially allowed in the U.S. until the 1990s. This inability to spread risk made U.S. banks, and the economy they served, inherently fragile, with a financial infrastructure prone to amplifying shocks rather than absorbing them."

[there were] "two-cent taxes on bank checks that contracted the money supply by 12% during the Great Depression"

"what people thought was a financial shock in 2008 was also linked to energy and fertilizer. “As the cost of energy soared, so too did the price of highly energy-intensive fertilizer,” he writes. “By the time Lehman Brothers failed in September 2008, nitrogenous fertilizer prices had jumped by an unprecedented 86 percent year over year.” This caused ammonia prices to double, and food inflation exceeded 6% in the fall of 2008."

Related posts:

Monetary Policy and the Great Crash of 1929: A Bursting Bubble or Collapsing Fundamentals? (By Timothy Cogley of New York University) 

What Causes Recessions? What Do Recessions Look Like? (by Scott A. Wolla of the St. Louis Federal Reserve bank)

Some Bad News for Good News — Optimistic Forecasts Create Recessions

What ends expansions? (or what causes recessions according to Alan Blinder and Austan Goolsbee)

Are business cycles imbedded in longer cycles called financial cycles?

Ancient Clay Tablets Show Markets Worked 4,000 Years Before Economists Explained Them

Clay tablets unearthed in Asia Minor reveal a sophisticated commercial order emerging spontaneously nearly four thousand years before economists explained how markets work.

By Surse Pierpoint of The American Institute for Economic Research.

"A clay tablet from Kanesh, in what is now central Turkey, contains the founding charter of a twelve-partner trading company. Twelve merchants pooled thirty-three pounds of gold. The document specifies the partners by name, the starting capital, the profit split, and the penalty for any partner who wishes to withdraw early. Pull your share before the term ends and the firm will return silver at a steep discount to the gold you invested. Capital was locked up under prescribed terms.

The tablet is nearly four thousand years old. 

No one had yet written a sentence about markets. The word “capitalism” would not be coined for another 3,800 years. Adam Smith was 3,700 years from picking up his pen. And yet here, baked into clay by a fire that destroyed the building where it was stored (and in doing so preserved it) is a document that any modern private equity attorney would recognize on sight: defined partners, contributed capital, profit-sharing ratios, and a liquidity penalty designed to align the interests of investors with the long-term needs of the enterprise. 

The merchants of Assur, in modern-day Iraq, loaded donkeys with tin and textiles and walked them a thousand kilometers across mountain passes to Kanesh, roughly the distance from New York to Atlanta, on foot, through terrain that had no roads. Each animal carried about 180 pounds. The journey took two to three months, and yielded silver and gold in return for the trade. 

Archaeologists have recovered more than twenty thousand clay records from Kanesh. Most are business documents: receipts, loan contracts, shipping orders, correspondence, lawsuits. The economy they reveal is not primitive or embryonic, but teems with complete stories familiar to the modern mind. Partners sued each other in commercial courts. Husbands wrote home about prices. Wives wrote back, noting that the husband had been gone too long. A woman named Ahatum lent silver to four different men over nine years, keeping her own records, extending credit on her own terms, building a portfolio of receivables with no bank behind her and no theory to guide her — only prices, trust, and the accumulated discipline of knowing which borrowers repaid. 

People bought other merchants’ loan documents and used them as collateral for new loans. This was not a rough precursor to modern financial instruments — it was a modern financial instrument. Wall Street calls it securitization. The merchants of Assur called it Tuesday. One of the traders got caught smuggling tin in his undergarments to evade a ten percent import tax. 

There was, in other words, a tax. And a smuggler. And an enforcement regime capable of catching him. The full apparatus of commercial civilization, operating without a theorist in sight. 

In 2019, four economists from Harvard, Sciences Po, the University of Chicago, and the University of Virginia did something unusual. They took the Kanesh tablet records and ran them through a gravity model — the mathematical framework that modern economists use to predict trade flows between countries based on economic size and geographic distance. The model is a workhorse of contemporary international economics. Its coefficients have been estimated thousands of times using modern data. 

The Bronze Age numbers matched. 

Trade fell off with distance at nearly the same rate observed between modern nation-states. The relationship between market size and trade volume held. The paper appeared in The Quarterly Journal of Economics, which is not a venue given to romantic claims about ancient wisdom. It demands identification strategies and careful econometrics. The proposition the paper advanced was this: the fundamental structure of human commercial behavior has not changed in four thousand years. 

This is not a sentimental finding. It is a measurement. The gravity model does not care about ideology or historical narrative. It fits a curve to data, and this curve fit. 

Friedrich Hayek (1899–1992) spent much of his career trying to explain why centrally designed economic systems fail while spontaneously ordered ones succeed. His answer was the knowledge problem: the information required to coordinate a complex economy is dispersed among millions of actors, embedded in local circumstances, expressed in prices, and impossible to aggregate in any planning bureau. No designer can know what the market knows because the market’s knowledge exists only in the act of exchange itself. 

Hayek was right and received the Nobel Prize in economics. He was also, in a precise sense, describing something that had been running for at least four thousand years before he named it. 

The merchants of Assur did not read Hayek. They had prices, which told them where tin was scarce. They had interest rates, which told them what credit was worth. They had courts, which told them what contracts meant. They had penalties for early withdrawal, which told them that patient capital and impatient capital are different things with different values. They had Ahatum, who told four borrowers what her terms were and kept her own records of who had honored them. 

The system worked not because anyone designed it, but as the residue of thousands of individual decisions by people trying to do better for themselves and their families. It was, in the vocabulary Hayek would eventually give it, spontaneous order. Pushu-ken, one of the Assyrian merchants whose correspondence survives, would have called it simply trade. 

Deirdre McCloskey has argued that the bourgeois virtues — prudence, enterprise, honest dealing, the willingness to truck and barter on agreed terms — produced the modern world. Her argument is not that these virtues were invented in Amsterdam or London, but that there, they were celebrated for the first time. The rhetorical and cultural legitimization of commercial life was the novel event of that period, not the commercial behavior itself. On that point, Kanesh cannot argue. The tablets show the behavior. They do not show a civilization that held its merchants up as an expression of human virtue. 

But they do complicate the explanation. The graph of human welfare is essentially flat from Kanesh to roughly 1750. Four thousand years of merchants practicing every virtue McCloskey names: prudence, honest dealing, contract enforcement, patient capital, and the world did not get meaningfully richer. Something else broke the graph open. McCloskey calls it rhetoric and dignity. Others point to energy density, Atlantic scale, or the dismantling of usury prohibitions. The tablets from Kanesh cannot settle that argument. What they can do is clarify the prior question: whatever the answer, it is not the birth of commerce. Commerce was already ancient when the argument began.

This matters for a reason beyond historical curiosity. 

The recurring argument for managed economies, regulated markets, and designed commercial systems rests on a premise that is rarely stated explicitly but always present: that markets are artifacts, constructed things, instruments of policy that require expert supervision to function and expert correction when they fail. In this view, the market is downstream of theory. Someone had to think it up. Someone has to maintain it. Remove the hand of the designer, and the thing collapses. 

Kanesh is a four-thousand-year refutation of that premise. The courts that enforced Ahatum’s loan contracts were not the creation of a policy commission. The interest rates that told Pushu-ken whether a shipment was worth the risk were not set by a central authority. The early-exit penalty in the founding charter of that twelve-partner company was not mandated by a regulator. These were the spontaneous products of people with things to trade, routes to travel, and enough accumulated experience to know that trust required terms and terms required enforcement. 

When the Harvard and Chicago economists ran the gravity model on the Kanesh data and got modern coefficients, they were not discovering that ancient people were clever. They were discovering that the underlying structure of commercial behavior is not a cultural achievement that can be redesigned. It is closer to a constant. 

Adam Smith described a market that had been running since before his civilization existed. Every argument for designing markets from theory has it exactly backwards. The theory arrived to explain something already there, already working, already generating the surplus that funded the theorists. 

Pushu-ken wrote a clay tablet to his business partner about a shipment of cloth. A woman named Ahatum recorded who owed her how much silver. Neither of them had a theory. They had prices and trust and the patience to walk a thousand kilometers for a net margin. 

That was enough. It always has been."

Related posts:

New PBS Series "First Civilizations" Has Interesting Episode On Trade (2018) 

Some History of Insurance (Insuring Against Disaster: Insurance policies go back to the ancient Babylonians and were crucial in the early development of capitalism) (2019) 

World's oldest writing not poetry but a shopping receipt (2020)

'World's oldest' coin factory discovered in China (2021) 

Both numeracy and literacy were invented in the service of finance and commerce (2024) 

Price controls in ancient Rome (2024)

How to Find Ancient Assyrian Cities Using Economics (2025) 

Related article:

The V.C.s of B.C. by Adam Davidson in The NY Times (2015) Excerpt: 

"during one 30-year period — between 1890 and 1860 B.C. — for one community in the town of Kanesh, we know a great deal. Through a series of incredibly unlikely events, archaeologists have uncovered the comprehensive written archive of a few hundred traders who left their hometown Assur, in what is now Iraq, to set up importing businesses in Kanesh, which sat roughly at the center of present-day Turkey"

Monetary Policy and the Great Crash of 1929: A Bursting Bubble or Collapsing Fundamentals?

By Timothy Cogley. He was then at the Federal Reserve Bank of San Francisco (1999). He is now at New York University. 

"In recent years, a number of economists have expressed concern that the stock market is overvalued. Some have compared the situation with the 1920s, warning that the market may be headed for a similar collapse. Indeed, some suggest that lax monetary policy contributed to the Great Crash and have argued that current monetary policy is also dangerously lax. For example, an April 1998 Economist article stated:

In the late 1920s, the Fed was also reluctant to raise interest rates in response to soaring share prices, leaving rampant bank lending to push prices higher still. When the Fed did belatedly act, the bubble burst with a vengeance.

To avoid the same mistake, The Economist suggested that it would be better for the Fed to take deliberate, preemptive steps to deflate the bubble in share prices. It warned that the bubble could harm the economy if it were to burst suddenly, reducing the value of collateral assets and bringing on a recession. The article went on to say that “the longer that asset prices continue to be pumped up by easy money, the more inflated the bubble will become and the more painful the economic after-effects when it bursts,” and it concluded that “the Fed needs to raise interest rates.”

In this Economic Letter, I argue that The Economist has misinterpreted the lessons of the Great Crash. A closer examination of the events of the late 1920s suggests it is mistaken on at least four points. First, stock prices were not obviously overvalued at the end of 1927. Second, starting in 1928 the Fed shifted toward increasingly tight monetary policy, motivated in large part by a concern about speculation in the stock market. Third, tight monetary policy probably did contribute to a fall in share prices in 1929. And fourth, the depth of the contraction in economic activity probably had less to do with the magnitude of the crash and more to do with the fact that the Fed continued a tight money policy after the crash. Hence, rather than illustrating the dangers of standing on the sidelines, the events of 1928-1930 actually provide a case study of the risks associated with a deliberate attempt to puncture a speculative bubble.

Monetary Policy 1927-1930 

In 1927, there was a mild recession in the United States. In addition, Britain was threatened by a balance of payments crisis whose proximate cause was a demand by France to convert a large quantity of sterling reserves into gold. Thus, both domestic and international conditions inclined the Fed to shift toward easing. The resulting fall in interest rates helped damp the decline in domestic economic activity and facilitated an outflow of gold toward Britain and France.

Should the Fed have refrained from easing in 1927 because of concerns that the stock market might be overvalued? Measures of conventional valuation suggest the answer is no, for there was no obvious sign of an emerging bubble at that time. For example, Figure 1 illustrates the price-dividend ratio on the value-weighted New York Stock Exchange (NYSE) portfolio. At the end of 1927, the price-dividend ratio was around 23, which is actually a bit below its long-run average of 25. Although share prices had risen rapidly in the 1920s, so had dividends. Given that the price-dividend ratio was slightly below average, the Fed would have had little reason to refrain from easing in a recession year or to decline assistance to a gold standard partner in maintaining balance of payments equilibrium.

 

In any case, equity prices began to accelerate in January 1928, and they rose by 39% for the year. Dividend payments also grew rapidly that year, and the price-dividend ratio increased by 27%.

Motivated by a concern about speculation in the stock market, the Fed responded aggressively. Between January and July 1928 the Fed raised the discount rate from 3.5% to 5%. Because nominal prices were falling, the latter translated into a real discount rate of 6%, which is quite high in a year following a recession. At the same time, the Fed engaged in extensive open market operations to drain reserves from the banking system. Hamilton (1987) reports that it sold more than three-quarters of its total stock of government securities: “in terms of the magnitudes consciously controlled by the Federal Reserve, it would have been difficult to design a more contractionary policy.”

Furthermore, as Eichengreen (1992) has emphasized, monetary policy was tight not only in the U.S. but also throughout much of the rest of the world. By that time, roughly three dozen countries had returned to the gold standard, and when the Fed tightened, many countries faced a dilemma: Unless their central banks also tightened, lending from the U.S. would be disrupted and their balance of payments would move toward a deficit. In that case, they would either have to devalue or abandon the gold standard altogether. The former option was unattractive for countries with dollar-denominated debts, and the latter was virtually out of the question at the time, especially for countries where restoration of the gold standard had been painful and difficult.

The alternative was to conform with the Fed. By shifting toward more contractionary monetary policies, other gold standard countries could ensure that domestic interest rates would rise in parallel with those in the U.S. and would be able to maintain balance of payments equilibrium. This explains, for example, why the Bank of England shifted toward tighter policy in 1928, three years after Britain had entered a slump. It also explains why countries still rebuilding from WWI would adopt contractionary policies.

The implication is that monetary policy was far more restrictive than a purely domestic perspective might suggest. In 1928 there was a synchronized, global contraction of monetary policy, which occurred primarily because the Fed was concerned about stock prices. These actions had predictable effects on economic activity. By the second quarter of 1929 it was apparent that economic activity was slowing. The U.S. economy peaked in August and fell into a recession in September.

What were the effects on the stock market? At the beginning of 1929, it seemed that the contractionary measures taken in 1928 were working. The NYSE price-dividend ratio reached a local peak in January and then fell gradually through the first half of the year. Thus, it appeared that stock prices had stabilized. Furthermore, shares still were not obviously overvalued. The local peak was reached at 30.5, which is roughly 20% above the long-term average. Dividends had grown rapidly through 1928, and investors projecting similar growth rates forward may have been willing to settle for dividend yields somewhat below the long-run average.

Monetary policy was on hold during the first half of 1929, and some economists have argued that inaction in this period was responsible for the events that followed. But three observations are relevant here. First, as mentioned above, price-dividend ratios had stabilized and were falling gradually. To a contemporary observer, it would have appeared that the actions of 1928 were having the intended effects. Second, it was becoming increasingly apparent that general economic activity was slowing, and many other countries already had entered recessions. And third, while monetary policy was not becoming tighter, it was still quite tight. Short-term real interest rates were still around 6%, and there was no growth in the monetary base.

Price-dividend ratios continued to fall until July 1929, but then prices began to take off. In August, the Fed raised the discount rate by another percentage point to 6%. The stock market peaked in the first week of September. It is worth noting that at its peak the price-dividend ratio was 32.8, which is well below values reached in the 1960s or 1990s. Share prices declined in a more or less orderly fashion until the end of October, but then the market crashed. From its peak, the price-dividend ratio fell roughly 30%, to a level roughly similar to that prevailing at the beginning of 1928, when the Fed began to tighten.

In the immediate aftermath of the crash, the New York Fed took prompt and decisive action to ease credit conditions. When investors attempted to liquidate their equity holdings, many lenders also called their loans to securities brokers. With the encouragement of officials at the New York Fed, many of these brokers’ loans were taken over by New York banks, who were allowed to borrow freely at the discount window for this purpose. The New York Fed also bought government securities on its own account in order to inject reserves into the banking system. In this way, they were able to contain an incipient liquidity crisis and prevent the crash from spreading to money markets.

But this respite from tight money proved to be temporary. After the liquidity crisis had been contained, monetary policy once again resumed a contractionary stance. Throughout 1930, officials at the New York Fed repeatedly proposed that the System buy government securities on the open market, but they were systematically rebuffed. The reasons other members of the Federal Reserve gave for opposing monetary expansion are instructive. Several felt that much of the investment undertaken in the previous expansion was fundamentally unsound and that the economy could not recover until it was scrapped. Others felt that a monetary expansion would only ignite another round of speculative activity, perhaps even in the stock market. In any event, monetary policy remained contractionary; the monetary aggregates fell by 2% to 4%, and long- term real interest rates increased.

By maintaining a contractionary stance throughout 1930, after a recession had already begun, the Fed contributed to a further decline in economic activity and share prices. By the end of the year, the price-dividend ratio had fallen to 16.6, or roughly 34% below the long-run average. By then, there was a consensus that speculative activity had been eliminated!

Were the Fed’s actions stabilizing or destabilizing?

If one grants that a speculative bubble existed at the beginning of 1928, when the Fed began to tighten, then stocks must have still been overvalued in the aftermath of the crash. After all, price-dividend ratios were about the same in the dark days of November 1929 as at the beginning of 1928, and fundamentals must surely have taken a turn for the worse. If equities were still overvalued, it follows that a further dose of contractionary monetary policy was needed to purge speculative elements from the market. Perhaps this is what motivated the famous advice of Treasury Secretary Andrew Mellon to President Herbert Hoover, to “liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” To argue that the actions of 1928-1930 were stabilizing, one must adopt the liquidationist position.

On the other hand, if one interprets the Great Crash as a bursting bubble, so that shares were more or less properly valued in the aftermath, then it follows that they were probably also not far from their fundamental values at the start of 1928, when the Fed began to tighten. Again, prices and price-dividend ratios were about the same after the crash, and fundamentals had surely become less favorable. According to this interpretation, the Fed’s initial actions may have been destabilizing, and the actions of 1930 certainly were.

Conclusion

In retrospect, it seems that the lesson of the Great Crash is more about the difficulty of identifying speculative bubbles and the risks associated with aggressive actions conditioned on noisy observations. In the critical years 1928 to 1930, the Fed did not stand on the sidelines and allow asset prices to soar unabated. On the contrary, its policy represented a striking example of The Economist’s recommendation: a deliberate, preemptive strike against an (apparent) bubble. The Fed succeeded in putting a halt to the rapid increase in share prices, but in doing so it may have contributed one of the main impulses for the Great Depression."

Related posts:

What Causes Recessions? What Do Recessions Look Like?

Some Bad News for Good News — Optimistic Forecasts Create Recessions

What ends expansions? (or what causes recessions according to Alan Blinder and Austan Goolsbee)

Are business cycles imbedded in longer cycles called financial cycles?