Uncategorized

Here’s a graph to think about:

My goodness!

It would be really interesting to see this broken down by industry, which I’ve had a quick look into but have been stymied by the BLS website for now. I’m sure the data is there but blogging is taking a firm back seat to studying until I’m past my exam later this week.

Baby boomers aren’t going to retire like their parents did because they can’t. And that’s very good for the economy because they’re a damn productive bunch for the most part.

I’ve forgotten where I saw this graph first as it’s been sitting in draft limbo for a few days…

Specialization is one of the three or four absolutely fundamental concepts in economics. And there are some iconic discussions of its virtues: try Adam Smith’s pin factory story for one:

Those ten persons could make among them upwards of forty-eight thousand pins in a day… But if they had all wrought separately and independently… they certainly could not each of them have made twenty, perhaps not one pin in a day;

And how about Leonard E. Read’s famous I, Pencil story. “Who can make me?”, asks the Pencil of his readers. Trick question:

…not a single person on the face of this earth knows how to make me. This sounds fantastic, doesn’t it? Especially when it is realized that there are about one and one-half billion of my kind produced in the U.S.A. each year.

How can we make millions of pins and pencils when no person can make even one? Specialization: each person can make some part or machine that can make the final good.

Interesting enough, but rather dry stuff, which is why I delighted in reading this article about the music business. Who would have thought creative works would so easily succumb to improvements by division of labor and specialization?

Let’s start with a familiar player: the much-derided but hugely successful model of singer-not-songwriter:

Rihanna is often described as a “manufactured” pop star, because she doesn’t write her songs, but neither did Sinatra or Elvis. She embodies a song in the way an actor inhabits a role—and no one expects the actor to write the script. In the rock era, when the album was the standard unit of recorded music, listeners had ten or eleven songs to get to know the artist, but in the singles-oriented business of today the artist has only three or four minutes to put her personality across. The song must drip with attitude and swagger, or “swag,” and nobody delivers that better than Rihanna, even if a good deal of the swag originates with Ester Dean.

Who is Ester Dean? She’s one of the best hook writers (“top-liners”) in the business. Here’s a peek into her process:

After several minutes of nonsense singing, the song began to coalesce. Almost imperceptibly, the right words rooted themselves in the rhythm while melodies and harmonies emerged in Dean’s voice. Her voice isn’t hip-hop or rock or country or gospel or soul, exactly, but it could be any one of those. “I’ll come alive tonight,” she sang. Dancing now, Dean raised one arm in the air. After a few more minutes, the producers told her she could come back into the control room.

“See, I just go in there and scream and they fix it,” she said, emerging from the booth, looking elated, almost glowing.

“And they fix it”. There are more involved, you see:

Stargate went to work putting Dean’s wailings into traditional song structure. As is usually the case, Eriksen worked “the box”—the computer—using Avid’s Pro Tools editing program, while Hermansen critiqued the playbacks. Small colored rectangles, representing bits of Dean’s vocal, glowed on the computer screen, and Eriksen chopped and rearranged them, his fingers flying over the keys, frequently punching the space bar to listen to a playback, then rearranging some more. The studio’s sixty-four-channel professional mixing board, with its vast array of knobs and lights, which was installed when Roc the Mic Studios was constructed, only five years ago, sat idle, a relic of another age.

Within twenty minutes, Dean’s rhythmic utterances had been organized into an intro, a verse, a pre-chorus (or “pre”), a chorus, and an “outro”; all that was missing was a bridge. (Friday, the final day of the sessions, was reserved for making bridges.) Delaine, the engineer, who hadn’t said a word thus far, sat down at the computer and began tweaking the pitch of Dean’s vocal. Dean went back into the booth and added more words: “Give me life . . . touch me and I’ll come alive . . . I’ll come alive tonight . . .”

This is a high performing team that cranks out hits which then get picked up by established artists. They transact in a marketplace which, astonishingly for an industry obsessed with copyright, has poorly defined property rights:

The top-liner is usually a singer, too, and often provides the vocal for the demo, a working draft of the song. If the song is for a particular artist, the top-liner may sing the demo in that artist’s style. Sometimes producers send out tracks to more than one top-line writer, which can cause problems. In 2009, both Beyoncé and Kelly Clarkson had hits (Beyoncé’s “Halo,” which charted in April, and Clarkson’s “Already Gone,” which charted in August) that were created from the same track, by Ryan Tedder. Clarkson wrote her own top line, while Beyoncé shared a credit with Evan Bogart. Tedder had neglected to tell the artists that he was double-dipping, and when Clarkson heard “Halo” and realized what had happened she tried to stop “Already Gone” from being released as a single, because she feared the public would think she had copied Beyoncé’s hit. But nobody cared, or perhaps even noticed; “Already Gone” became just as big a hit.

It’s an interesting phenomenon that all of these various artists and musicians specialize increasingly narrow tasks. In every other industry this is called progress and the resulting products are inarguably better then their predecessors.

Can we say, then, that the music of today is in some way objectively superior to that of the past? As in the way that bridges and sprinters are better? If the comparison is possible, surely you have to say yes.

I go straight to Calculated Risk for all my ‘real’ economic news, by which I mean the data and basic commentary. Their graphs are outstanding.

And those graphs are telling all kinds of still-nasty stories about the downturn we are still in.

Look at the housing starts:

Hopefully it’s becoming clear that the economic story is not about ‘we built too many houses’. It’s about lots of stuff (debt deleveraging, etc). Have a look at this. The single family housing starts are down, sure, but so are owner built and built for rent sales, which didn’t really pick up in the boom.

And I like the graph below because I’ve long had the impression that most apartment buildings were built in the 70s and 80s. And it’s true!*

When people talk about “infrastructure spending” think about all of the low hanging fruit that’s already been picked.

Let’s build some highways. Got ’em.

Let’s build some airports. Got them, too.

Ok, how about apartment buildings? Done, and, in any case, NIMBY!

Replacing these things are going to be much less accretive to growth than building them in the first place.

And of course the real story is employment.

*My wife and I recently moved and had trouble finding a place that would both let our two dogs in and was built in the last 10 years.