• The behind-the-scenes jobs that we ignore from highly skilled human capital can be called invisible.

    The Invisible People in Your Life

    Jul 23 • Behavioral Economics, Businesses, Economic Debates, Entertainment, Labor, Lifestyle • 145 Views

    During the Nantucket film festival I saw Font Men. A mini-documentary, it was all about a business firm that specialized in letters.

    Font specialist might be the quintessential example of an invisible job. When we see Delta on the wing of a plane, few of us ponder who decided the width of the “A.” And yet, through the film, the significance of selecting fonts became increasingly clear as did the role of the market in validating a design.

    I guess we all ignore some human capital. Take a New Yorker Magazine fact checker. Few people pay attention until a fact is incorrect. Or a structural engineer who is only noticed when a skyscraper falls down. Or even an anesthesiologist, until a catastrophe occurs.

    One of my favorite invisible jobs is the wayfinder. Described in David Zweig’s Invisibles, wayfinders enable us to…yes… find our way. Hired by airport designers, they are the individuals who use architecture, signage, lighting and color to lead us from Terminal A to Terminal D or to the baggage carousel or maybe an arcade of stores. All types of buildings employ them to create paths for us.

    Debating what the universal restroom image should look like, airport wayfinders in Abu Dhabi considered but then vetoed dressing the male in a traditional Middle Eastern Robe (a dishdasha).

    wHuman capital wayfinders debatedthe images on the universal restroom sign.

    In his book, Zweig said that people who like invisible jobs are a diverse group that includes rock band guitar techs, UN interpreters and product namers (few of us know that Michael Cronan named the Kindle.). All of them, though, tend to be meticulous individuals who enjoy shouldering responsibility and care little about recognition,

    Our bottom line: Because I always seem to be talking about entrepreneurs, I wanted to look at a different human capital group that the market values.

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  • Adam Smith's invisible hand makes the market system work.

    Has the Invisible Hand Given You a Nudge Recently?

    Jul 22 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Growth, Economic History, Economic Thinkers, Government, Labor, Thinking Economically • 159 Views

    Since this week’s posts all will relate to “invisibles,” I wanted to admit that I have an invisible hand in my classroom. Given to me by a student, it is made of paper mache.

    In both of his major books, Adam Smith referred to an invisible hand. His invisible hand contradicted the seemingly haphazard nature of human behavior. Instead, Smith tells us that, pushed by an invisible hand, consumers and businesses predictably and productively interact.

    Adam Smith created his image of the invisible hand just as it was just starting to touch eighteenth century Europe. For centuries, medieval England’s economy had been agricultural until, because of the Crusades, the industrial revolution, exploration, and many other large and small events, countless peasants said, “Let’s leave the farm. Let’s go to the city.” Hired by factory owners, this newly created work force could use a division of labor to mass produce.

    Meanwhile, as the word spread about price and quantity, a variety of incentives started to motivate consumers and businesses. Consumers started to think, “What am I willing and able to buy?” If price is lower and quality is good, then I will purchase more.  Meanwhile, on the supply side, higher prices fueled production. With enough demand, division of labor, regional specialization and all of those ideas explained by Adam Smith were able to develop.

    The result? Many buyers and sellers agree on price and quantity (although each acts independently) and you know the price of, let’s say… your cookie. On a demand and supply graph, economists call that meeting point “equilibrium.”

    One contemporary called Adam Smith, “the most Absent Man that ever was. Another told how he moved his lips, talked to himself and smiled “in the midst of large Company’s…” At Edinburgh University, apparently deep in thought, he smiled at inappropriate moments during religious services. Probably pondering the fundamentals of virtue, he strolled the roads near his home attired only in his dressing gown. During tea with friends, he unconsciously placed his bread and jam in his teapot and then asked why the tea tasted fowl. Once, while walking with Charles Townshend, excitedly describing the division of labor, Smith fell into a tanning pit filled with gasses and fat. As someone who was diagnosed as having “hypochondriasis,” the event must have terrified Smith. (Once his doctor prescribed 500 miles on horseback to cure his affliction.)

    Our bottom line: I liked New Yorker writer James Surowieki’s description of a market in his The Wisdom of Crowds. He said that a market “aggregates” a decentralized group of people with diverse opinions who function independently. Together, they create a network of information and produce desirable results. Why? I could add that they are nudged by an invisible hand.

     

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  • Globalization and problems with a shrinking kilogram

    Why should you care about a tiny grain of sand?

    Jul 21 • Businesses, Demand, Supply, and Markets, Developing Economies, Economic Growth, Economic History, Government, Innovation, International Trade and Finance, Lifestyle • 178 Views

    Thanks to a grain of sand, the kilogram is shrinking.

    The international prototype kilogram is triple locked under 3 bell jars in a vault in a chateau outside Paris. Handled only 3 times since 1889, it is secured with 3 keys that are each held by a different official. To those in-the-know, it is called Le Grand K.

    Le Grand K

    Globalization Requires Standardized Weights and Measures

    From: National Institute of Standards and Technology

    While people do have an annual look at Le Grand K, its “witnesses”—the 6 copies that were made long ago—are used for making the reproductions that are used around the world as a global standard. In Maryland, the US copy of Le Grand K sits 60 feet underground in a bell jar behind 3 thick doors. Now though, the US copy and the others to which it has been compared are the weight of a grain of sand heavier than the original. No one knows why. 

    I guess we could say that the standard kilogram on which we base all other kilograms is no longer a kilogram. Or…is it a kilogram and nothing else is??? The answer really does matter to engineers that require precision in fields like fiber optics.

    Where are we going with this? To the global commercial impact of standard weights and measures.

    Imagine what commerce was like without shared weights and measures. In 18th century France, there were 250,000 different units and some even had the same name. Assorted fabrics, grain, wood all had their own metric. Traveling from one village to another, you could have seen a 20% difference in the size of a pint.

    From here, the story continues with the French Academy of Science appointing 2 scientists who, during the 1790s, identified the size of a meter by calculating the distance from the North Pole to the Equator and dividing it by 10 million. The task was actually a huge trigonometry problem as each one traveled from one place to the next creating huge imaginary triangles to measure the distance. Once they knew the size of a meter, they said the kilogram was “a cubic decimeter of rainwater at 4 degrees Celsius” and then fabricated a platinum kilogram cylinder.

    Today, except for the kilogram, the 6 other basic metric units—candela, ampere, second, meter, mole and kelvin—are based on a “constant of nature.” No longer a physical artifact representing a distance, the meter, for example, has become the “distance traveled by light in a given fraction of a second.” Still though, specific manufacturers of items as disparate as batteries and pharmaceuticals differ in their own measures. I just heard about a supply chain being disrupted because batteries labeled with the same voltage in the US and China were not the same. Embedded within other products, the batteries did not function predictably.

    Our bottom line: Invisible because we are so used to having universally accepted standards, shared weights and measures are a basic requisite for the globalization of commerce.

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  • Minimal GDP growth, an output gap and slowly declining unemployment indicate a sluggish economic recovery.

    Chart of the Week: The Rare Disease Spending Dilemma

    Jul 20 • Economic Debates, Government, Health Care, Households, Regulation, Thinking Economically • 148 Views

    Our Sunday Chart of the Week

    Since our chart looks at Medicaid spending on rare diseases, we better start with Medicaid.

    It is complicated. Yes, Medicaid targets the poor and has federal and state funding. However, varying from state to state, it has 50 versions because individual states implement their own eligibility criteria.

    All states, though, face disproportionately high spending for a small number or illnesses:

    Opportunity Cost of Medicaid Spending on Rare Diseases

    High spending takes us straight to opportunity cost. Spend more state Medicaid money on one item and the opportunity cost is less for something else.

    For example, with the elderly population growing, long-term care will need more Medicaid money.

    Opportunity cost and long-term care Medicaid spending

    From: JAMA /Kaiser Family Foundation

    And therein lies our dilemma and our bottom line: With scarcity an unavoidable economic principle, we not only need to decide how best to allocate our dollars within Medicaid but also between Medicaid and other state spending obligations. One Princeton economist suggests using the QALY.

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  • Econlife.com Weekly Roundup 7.26.14

    Our Weekly Roundup: From Traffic Lights to Sneakers, Everyday Economics Explained by 5 Great Economists

    Jul 19 • Economic History, Economic Thinkers, Gender Issues, Government, Health Care, Innovation, International Trade and Finance, Macroeconomic Measurement • 125 Views

    Our Econlife roundup for the week

    Adam Smith and laissez-faire7.14.14 An island without traffic lights displays the benefits of Adam Smith’s laissez-faire…more

     

    Comparative advantage and everyday economics7.15.14 Why David Ricardo would approve of where your sneakers were made…more

     

    Everyday economics, entitlements and J.M. Keynes7.16.14 John Maynard Keynes could say why you’ll get less Social Security than your grandma…more

     

    JS Mill's support of redistribution from taxation in the AFA7.17.14 How to pay for the ACA the John Stuart Mill way…more

     

    Everyday economics and Joseph Schumpeter's entrepreneurs 7.18.14 For Joseph Schumpeter, entrepreneur Eileen Ford was about 2 new kinds of models…more

     

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