Tag Archives: sustainability

12.10.2012 | Manufacturing Matters in the US

Hearing about an apparel firm that “insourced,” I confess I was not as enthusiastic as the report.

The firm, American Giant, had just enjoyed a run on their hoodies. As a Made in the USA producer, they have the caché of a San Francisco factory. Proclaiming better grommets, eaglets, drawstrings and zippers and a designer previously employed by Apple, American Giant says their quality is far better than their Asian competitors.

Looking at the NPR facts and other similar articles, I wondered whether making t-shirts and sweatshirts in the US was so beneficial. Yes, they were taking advantage of US expertise, eliminating middle people and selling directly online to consumers to cut costs. However, should we applaud making apparel here?

That took me to a Brookings Report that appeared to be on target. They asked “Why Does Manufacturing Matter? Which Manufacturing Matters?” And no, it is not in the apparel industry.

The Brookings report emphasized that manufacturing provides:

high wage jobs
innovation
exports
environmental sustainability

But not all manufacturing. The industries that reap the largest gains are:

computers and electronics
chemicals (including pharmaceuticals)
transportation equipment (including autos, auto parts and aerospace)
machinery

Our bottom line? Hoping to encourage global trade, economist David Ricardo (1772-1823) said each nation should produce the goods and services for which it has a comparative advantage because then, that nation sacrifices less in order to produce more.

Sources and Resources: You might want to look at the Brookings report here. 53 pages long, it has lots more detail. Meanwhile, the American Giant stories at Slate and NPR sounded more like commercials for the firm than news reports. Finally, at econlife, whenever we talk about manufacturing, I always recommend The Travels of a T-Shirt in the Global Economy, a wonderful narrative describing the multinational origins of the typical t-shirt.

From the Brookings Report on manufacturing, the following graphs illustrate their conclusion that manufacturing should be supported by public policy.

Posted by: adminEcon
Tags: "Made in the USA" label, American Giant, chemicals manufacturing, comparative advantage, David Ricardo, exports, high wage jobs, innovation, insourcing, machinery manufacturing, NPR, outsourcing, pharmaceutical manufacturing, Slate.com, sustainability, trade deficit, transport equipment, US Manufacturing
Comments (0) Add a Comment

11.28.2012 | Do You Like the GDP?

Having just come across the “Better Life Index,” I started thinking about Ed Koch, a former mayor of NYC who often asked everyone, “How am I doing?” Here are some thoughts about how to measure how well we are doing.

The GDP:

Frequently condemned as a measure of well-being, the GDP is the value of the goods and services produced in a country during one year. As a dollar amount, some scholars say it ignores too many variables to be a valid measure of economic health and wealth. One gentleman, though, from the Center for Economic Performance at the London School of Economics, says ”Hooray for the GDP.”

Here is a brief summary of his arguments from an excellent Timothy Taylor Conversable Economist blog post:

A growing GDP makes it easier to improve our welfare.
We should consider economic growth and income equality separately.
If happiness is a societal goal, we should note that we get pleasure from many contemporary goods and services.
Thinking of environmental damage, we should support GDP growth for the foreseeable future and debate its very long-term impact.
If we had to select one statistic to measure how we are doing, then GDP is a valid choice.

The “Better Life Index:”

In a wonderful interactive exercise, the OECD (Organization for Economic Cooperation and Development) has presented a “Better Life Index.” At their website, you can weight their variables according to how you believe national well-being should be assessed and then see where the US and other countries rank. It is fun.

Below is the OECD illustration of countries’ ranks when all variables are equally weighted. These are the variables: housing, income, jobs, community, education, environment, civic engagement, health, life satisfaction, safety, work-life balance.

Our Bottom Line: What we measure tends to determine what our fiscal policies will target. Indeed, the yardstick we use to answer, “How are we doing,” influences what our politicians do.

Sources and Resources: Here, you can manipulate the “Better Life Index,” see how national rankings change, and decide whether it could work as a well-being yardstick. On the other hand, here is the “Hooray for the GDP” essay with persuasive arguments that support the GDP and its summary at the Conversable Economist. Finally, for some GDP history that explains the decisions behind its components, here is an excellent video from Annenberg/CPB’s Economics USA series.

Posted by: adminEcon
Tags: "Hooray for the GDP", economic growth, GDP, happiness criteria, income equality, innovation, leisure time, Nicholas Oulton, OECD, Simon Kuznets, sustainability, The Better Life Index, Timothy Taylor
Comments (0) Add a Comment

08.30.2012 | Food Bites

Sometimes food is about a lot more than eating.

When a !Kung Bushman hunter returns from the forest, he is greeted with, “What, you made us come all this way for this bag of bones?” One Bushman explained why. “When a young man kills much meat, he comes to think of himself as a chief or a big man, and he thinks the rest of us his servants or inferiors. We can’t accept this. So we always speak of his meat as worthless. In this way we cool his heart and make him gentle.”

By contrast, try to imagine a painting that shows England’s King Charles II (1630-1685) in a garden with an opulent house in the background and 2 spaniels nearby. Yes, it shows the wealth and prestige the artist wanted to convey but the clincher is a pineapple. In the picture, the king’s gardener is offering him a pineapple. Rare in 17th century England, frequently rotting during the voyage from the West Indies, the pineapple is the fruit of royalty. More than anything else, the pineapple displays power.

My source: I’ve been reading Tom Standage’s An Edible History of Humanity. A perfect vehicle for economic history, Standage’s food stories start with ancient (and contemporary) hunter gather communities, they illustrate the monumental impact of the beginning of agriculture, they tell how food connected disparate cultures around the world, they look at the spice trade, at sugar, at potatoes, at pineapples and the future. As he points out, his book is focused on the impact of food–not eating it. In addition, his notes and bibliography provide an excellent springboard for further reading. (My quote about the !Kung Bushmen of the Kalahari can be found in the Standage book on p.35.)

While Standage does not discuss GDP (the money value of the goods and services a country produces), as we discuss here in econlife, food and GDP closely relate. And, for more about how we display our power and prestige, you might want to read about Thorstein Veblen and conspicuous consumption.

Posted by: adminEcon
Tags: !Kung Bushman of the Kalahari, An Edible History of Humanity, Charles II, conspicuous consumption, early agriculture, economic history, English history, food history, hunter gatherers, pineapples, spice trade, sustainability, Thorstein Veblen, Tom Standage
Comments (0) Add a Comment

07.05.2012 | How Wealthy is Your Nation?

When someone asks about your wealth, don’t you consider more than your income?

A new UN report explains where countries might do the same thing.

The report suggests that we focus more on a country’s land and capital assets. By land, they mean natural resources like forests, minerals and land. Dividing capital into its 2 components, they look at physical and human capital. Physical capital takes us to such structures and equipment as our roads and machinery. Somewhat intangible, human capital refers to facts about the learning people gather that enables them to become more productive. For 17 of the 20 countries in the UN study–all except Russia, Nigeria and Saudi Arabia, human capital is a top number.

The Productive Base

	Human Capital	Physical Capital	Land (Natural Capital)
Germany	67%	25%	8%
France	75%	24%	1%
Great Britain	90%	9%	1%
Japan	73%	26%	1%
USA	78%	16%	7%
Norway	61%	25%	14%

From: Inclusive Wealth Report 2012, p. 40.

Although not the focus of the report, an insight from economist Michael Mandel came to mind. He said that what we measure shapes our policies and priorities. If, in addition to GDP, we anxiously awaited a land, labor, capital asset report how might legislation be affected?

You might want to look at the UN Report for their long list of variables for each of the 3 asset categories (p. 31).

Quite a tome at 339 pages, the UN Report takes readers to sustainability issues after looking at wealth. In a detailed article, the Economist summarizes the report.

Posted by: adminEcon
Tags: human capital, Inclusive Wealth Report 2012, measuring wealth, Michael Mandel, natural capital, physical capital, sustainability, UN
Comments (0) Add a Comment

11.04.2011 | Frozen Jeans

Being a responsible citizen of the earth might mean freezing your jeans.

According to Levi’s, one pair of jeans, from its inception in the cotton field to its demise in the recycling bin, uses over 900 gallons of water. To reduce the climate change impact of your jeans by 48% (yes, Levi’s is precise), you could wash them one quarter as much–maybe once a month instead of weekly.

Here, one man chronicles a year in the life of his jeans without washing them. Or, as the NY Times tells us, putting your jeans in the freezer kills the germs that make them smell.

The Levi’s story does take us to questions about using water wisely. Discussed in this podcast, depending on where and when, wise water use relates to its quality and quantity. For Nature, water use is a “cropping efficiency” issue that will help us feed everyone in 2050. And for one Indian cotton farmer, this NY Times article describes the beneficial impact of targeted irrigation

From 2007, here is a NY Times interactive on where in the world water is scarce.

The Economic Lesson

As economists, we can predict that an increase in the cost of water will become the most potent conservation incentive.

An Economic Question: Using demand and supply graphs, explain how price stimulates conservation and encourages production.

Posted by: adminEcon
Tags: cost benefit analysis, demand, Levi's, supply, sustainability, water
Comments (0) Add a Comment