19 February 2018

The Kids Are All Right

For over a decade, young people have been voting overwhelmingly for progressives and, more importantly, telling pollsters that they identify with or lean towards supporting the Democratic Party. 
If you think that's always been the case, you're wrong — despite the unpopular war in Vietnam and the swirling cultural revolution, Richard Nixon won under-30 voters in 1972. Ronald Reagan and Jimmy Carter split young voters evenly in 1980, while Reagan and George H.W. Bush crushed it with the young in '84 and '88. Bill Clinton carried the youth vote in 1992 and 1996, but then George W. Bush tied Al Gore in 2000 with 18- to 24-year-olds and only barely lost the 25-29 bracket. 
Something remarkable began happening in 2004, though. That's the year John Kerry carried the under-30 vote by 9 points. And the next three presidential elections saw Democrats demolishing their opponents with young people by 34, 23, and 19 points. While the GOP's position with young voters has gotten better since 2008, the situation remains dire. There is simply no precedent for such a yawning gap in a party's fortunes with America's youngest voters over the course of four presidential cycles since pollsters started collecting this kind of data. And it is an ominous sign about the future of the Republican Party.
From here.

Contrary to conventional wisdom, people don't get significantly more conservative as they get older. They are conservative now, because they were conservative when they were young.

It isn't just a matter of partisanship either.

Young adults are more more LGBT and 420 friendly than older people, even if they are Evangelical Christians. But, they are also much more likely to identify as non-religious, or if they are Christian, to identify as simply "Christian" in a non-denominational sense, rather than as Evangelical or mainline Christian. This is even more true among students at elite universities who will provide our next generation of national leaders. For example, only 35% of Harvard freshmen identify as Christian, and half of them identify as Roman Catholic, a moderate force in American politics compared to many other Christian denominations, particularly under the leadership of Pope Francis.

My children's generation is the best behaved in terms of drugs, tobacco, crime, teen pregnancy and other risky behaviors than any other generation in history.

Young adults divorce less often than their parent's generation did. As families have gotten smaller, they have had more family resources devoted to them than earlier generations because those resources aren't spread amongst more siblings. This shift has been greatest in low income families. High income families have had somewhat more children, but have also had children later in life when families are more economically secure and have captured most of the nation's economic growth.

Few served in the relatively small, post-Cold War military, and those who did serve did signed up voluntarily, not because they were drafted. More grew up in cities and as a result, fewer hunt and fewer own guns.

They weren't exposed to lead. They have benefited from a generation's progress in public health and safety measures. Crime rates have been falling for most of their lives.

They aren't afraid of technology. Television, movies and the Internet have opened their eyes to a national and global culture, rather than trapping them in their parochial prejudices.

They are less white than earlier generations and less racist. They are more likely to have grown up knowing immigrants, non-Christians of multiple kinds, people who aren't white, and people who aren't heterosexual, so they are more tolerant than their grandparents.

The are politically active social justice warriors.

The mass hysteria and hate movement that is the Republican party today won't disappear because we change the hearts and minds of older people. It will happen because the young abandon it and fail to replace their elders who gradually die.

Still increasingly women are seeing though the deep misogyny of the GOP and changing their tune as well as shown in the table below. Early indications are that the trend of white women deserting the GOP will accelerate dramatically in the 2018 midterm elections:
In the Presidential election in 2016, white women (who made up 36% of all voters in 2016) preferred Trump over Clinton by 9 percentage points. Now, they favor Democrats over Republicans by 12 percentage points.
Female voter preferences in Presidential elections by year.

1976 D+4
1980 R+1
1984 R+16
1988 R+2
1992 D+7
1996 D+17
2000 D+10
2004 D+3
2008 D+13
2012 D+11
2016 D+12

Increasingly, Republicans are limited to grumpy old men who are determined to hold us back as a nation, and that isn't a majority coalition.

11 February 2018

Management Matters

A large share of the difference in productivity between firms in different countries and between firms within a country are attributable to the adoption by the more productive firms of management practices that are absent in the less productive firms according to a recent, gold standard study of the topic. This strongly echos insights I've drawn from the involvement of some of my extended family members in the establishment of a private college in Tanzania.

Some implications of this fact:

1. Management practices are something that can be intentionally changed. The present is not destiny. In contrast, efforts to identity average national IQ as a source of the difference in the wealth of nations only recommends complacency and provides no action items for economic development.

2. Most countries have at least some examples of firms using significantly better than the norm management practices that can serve as models for other firms. I suspect that the distribution of management practices within countries shows regional differences that help explain why big businesses can regularly sweep large regions in the face of local competition.

3. The people who have the power to change management practices in firms have a strong economic incentive to do so. Policy change is a matter of both power and choice. Here, informing choices is more important the power, because the people in power of immense incentives to listen to this advice.

4. Human capital is at least as important as financial capital, if not much more so. Breaking pervasive government policy decisions that assume the opposite is critical for economic development.

5. Management practices are more selective and empirically proven ways to tweak corporate culture than all or nothing aping of a culture with higher productivity a la early 20th century Turkey, which had businessmen dressing in a climate-inappropriate British fashion. This allows for reforms that are less culturally disruptive and may face less resistance.

Some details from the link (emphasis added):

Many estimates (e.g. Jones 2015) calculate that US productivity is more than 30 times larger than some sub-Saharan African countries. In practical terms, this means it would take a Liberian worker a month to produce what an American worker makes in a day, even if they had access to the same capital equipment and materials. . . .
This huge productivity spread between countries is mirrored by large productivity differences within countries. Output per worker is four times as great . . . for the top 10% of US establishments compared to the bottom 10%, even within a narrowly defined industry like cement or cardboard box production (Syverson 2011). And such cross-firm differences appear even greater for developing countries (Hsieh and Klenow 2009). . . .
The large, persistent gaps in basic managerial practices that we document are associated with large, persistent differences in firm performance. Better-managed firms are more productive, grow at a faster pace, and are less likely to die. Figure 3 shows [thatthere is] a close correlation between better-managed firms and higher productivity. This may not be causal of course, but we also observe these performance improvements after experimental interventions ‘injecting’ these type of management practices into Indian textile firms (Bloom et al. 2013). 
We performed a simple accounting exercise to evaluate the importance of management for the cross-country differences in productivity. We found that management accounted for about 30% of the unexplained TFP differentials driving the large differences in the wealth of nations.
TFR (total factor return) is a concept in the economic development and productivity literature that basically refers to productivity differences not explainable by other factors like capital investment spending.