Thursday, May 29, 2014

Workplace Innovation - Obama Adopts German Apprentice Program

German Ambassador to the United States Peter Wittig (left) meets with Secretary of Labor Thomas E. Perez to discuss apprenticeships and skills training, March 28, 2014. Click for a larger photo.
German Ambassador Peter Wittig (L) and
U.S. Labor Secretary Thomas E. Perez. 

In March, I wrote about the way the German government encourages employers to retain workers during a period of slow demand, by paying part of workers' salaries in a shortened work week. This skills-banking approach, called Kurzarbeit,  allows for a more rapid recovery from a slump as labor shortages are reduced on the uptick.

Another program that Germany uses to bring new workers into the labor force is a system of 1.8 million apprenticeships. This vocational training system is considered a international model and the German Embassy leads a "Skills Initiative" in the United States, convening businesses, workers and local training institutes to show how apprenticeships work.

The United States, with four times the population of Germany, has one-fifth as many apprentices. In other words, the German apprenticeship rate is 20 times that of the United States.

President Obama seeks to double the number of U.S. apprentices in the next five years. Labor Secretary Thomas Perez met yesterday with newly appointed German Ambassador Peter Wittig to discuss how this might be achieved. They are exploring what it takes to create a successful apprentice program and they are also sharing ideas on other ways to address youth and long-term unemployment. (Based on the DOL Newsletter, May 29, 2014. For further information on apprenticeships, click here. The Urban Institute is cooperating with the International Skills Standards Organization and the Department of Labor on an international seminar about apprenticeship programs.)

Thursday, May 15, 2014

EC POLICY | Minimum-Wage Facts Change Opinions

The U.S. minimum wage has been
$7.25 per hour since 2009. President
Obama wants to raise it to $10.10.
Yesterday I posted some news about initiatives to promote a living wage and to calculate what such a wage is in different places.

That prompted a few comments about the impact of imposing a minimum wage. Won't that put many workers out of their jobs?

Economists’ views on this topic have changed over the years, as one would hope, in the face of research that contradicts the conventional view. The neoclassical supply-and-demand curve for labor helped guide economists in polls to agree with the idea that a minimum wage would perversely reduce the number of workers that employers would hire and therefore would increase poverty. The preferred alternative approach was a government-guaranteed minimum income.

However, David Card and Alan B. Krueger challenged this orthodoxy and have brought many of their  economist colleagues along with them. They used a higher minimum wage in New Jersey in 1992 to look at the impact of a minimum wage on fast-food chains in New Jersey compared with fast-food chains across the state line, not affected by the higher minimum wage.

They found that since all of the chains in New Jersey had to adhere to the same rise in the minimum wage, the net impact of the minimum wage on their employment was zero. However, to cover the higher cost of labor, the chains in New Jersey raised their prices by an average of 3 percent - not something that would be very noticeable or would induce consumers to travel to another state. They found similar results for California’s minimum wage increase in 1988 and the Federal minimum wage increase in 1990-91.

(For more extensive summaries of the cumulative evidence on the minimum wage, go to a recent report by the Center for Economic and Policy Research. For a summary edited by people on different sides of the issue, go to the wikipedia entry on the minimum wage.)

The debate is not over. My friend Michael Phillips in California argues that the chain-store situation differs from that of small delis. Exemptions, or delayed enforcement, for small businesses might be reasonable.

But meanwhile, the popular debate has been reframed by evidence of rising levels of income and wealth inequality in the United States, leading to a closer look at both ends of pay scales. A flood of information in the wake of the financial crisis of 2008 showing compensation out of line with executive performance have been stirring up public sentiments in the same way that they were by the Pecora Committee in 1933. These sentiments have led to the news yesterday that more than 75 percent of shares were voted against a generous Chipotle executive-compensation package.

The international front offers evidence that countries with more equal incomes are performing better. Europe’s economic stalwart, Germany, doesn't have wide disparities of earnings, and will have a minimum wage of $11.75/hour in 2015. Germany exempts from the minimum wage minors, interns, trainees, long-term unemployed people for their first six months at work and, at least for the first two years, temporary or seasonal workers.

Denmark, which has the most equal incomes of the OECD countries, has strong unions that have negotiated a minimum wage of $20/hour. It also rates as the happiest country in the world, according to the U.N. in 2013. It has a lower unemployment rate and a higher labor force participation rate than the United States.

P.S. The CityEconomist blogsite just clicked over 78,000 page views. Thank you for reading.

Saturday, May 10, 2014

WW2 | D-Day+70 Data

D-Day Assault Plan.
June 6, 2014 is the 70th Anniversary of D-Day. A good time to look at D-Day Data.

The few surviving veterans from World War II are fading away with an attrition rate of about 30 percent per year. I have interviewed one survivor at length. By the 80th Anniversary there will be hardly anyone left to tell the stories, so this 70th anniversary is special.

My wife Alice and I are going to France to pay our respects at the beginning of June, in the departments of Normandy and Mayenne (just south of Normandy). My uncle Willem van Stockum is buried in Laval, Mayenne, along with his six crew-mates on a Halifax bomber that was shot down after its mission was completed on June 10, 1944. Another seven in crew from another Halifax on the same mission are buried next to them.

In preparation for our visit, I have been assembling data on D-Day and World War II in Europe. My main source is a new book targeted at young people by Rick Atkinson, D-Day: The Invasion of Normandy, 1944, published by Henry Holt. It is meant to be used in schools and is adapted from Atkinson's #1 best-selling book The Guns at Last Light. I could not find it on Goodreads' list of the 167 best books for kids about World War II, so I added it with a 5-star rating and a brief review. I have since found the listing, so Goodreads should have it twice. Something is wrong with the Goodreads indexing system because I couldn't find the book by author or title. The listing I found gives the book an average rating of 4, because one librarian objected to the poor quality of the photos and their somewhat haphazard placement. Also, the book is definitely for the older Young Adult market because the language does not make much allowance for expected vocabulary in the elementary school grades.

Deaths from WWII (Atkinson, USA)

Total 72 million people, or 28,000 people every day of the 2,174-day war. (This is also the top Wikipedia figure.)

Soviet dead 26 million - military 10.7 million, civilian 15 million
U.S. dead 419,000 - military 417,000 (out of 16 million who served), civilian 2,000
UK dead 451,000 - military 384,000 (out of 6 million who served), civilian 67,000
Canadian dead 23,000, all military (out of 1.1 million who served)
German dead 8.8 million - military 5.5 million, civilian 3.3 million
European Jews killed in Holocaust - 6 million
Number of American soldiers buried in Europe - 25,000
U.S. pilots killed behind enemy lines - 14,000

Deaths from WWII - Second Source (
Total dead 50-70 million.

Soviet dead 26.6 million, of which 8.7 million soldiers died in World War 2.
British 700,000 military and 60,000 civilian deaths
Poland’s dead were between 5.6 and 5.8 million.
USA military dead is around 416,800 people.
German total 7.4 million, of which military dead and missing are 5.3 million.

Deaths from WWII - Third source - USA History Channel
Total dead 35-60 million (a big range, especially when Atkinson and Wikipedia go up to 72 million.)

D-Day Armada
Allied Troops landed - 156,000
Vehicles landed - 30,000
Planes - 11,000 (my uncle's plane had a crew of seven, so many more airmen were involved)
Ships and landing craft - 5,000
Parachutists - 13,000

Most Effective Bombers in European War
Britain Avro Lancaster, DeHavilland Mosquito (wooden, to avoid radar)
USA B-17 Flying Fortress, B-24 Liberator, B-29 Superfortress
Germany Heinkel III, Junkers 87 Stuka, Junkers Ju-88

Most Effective Tanks in European War
USA M4 Sherman
Soviet T-34
German Panther (partly copied from Soviets), PzKfw Mk. IV Panzer, Tiger I/II

Friday, May 2, 2014

R.I.P. | Jerry Goodman, "Adam Smith"

George J. W. ("Jerry") Goodman, aka "Adam Smith"
Yesterday's vivid memorial service in New York City for George Jerome Waldo ("Jerry") Goodman will stick with me as a reminder of how such events should be conducted. Goodman died on January 3 this year at the University of Miami Hospital, after a long effort to fend off the bone-marrow disorder myelofibrosis.

Paul Krugman was one of those present to bear witness to Jerry Goodman's contributions to letting light into the closed world of Wall Street.

Goodman was elected a Rhodes Scholar from Missouri in 1952, but resigned from residence at Oxford University because of plumbing and padlocks at Brasenose College.

His moniker "Adam Smith" was reportedly given to him by Clay Felker when he was editing New York Magazine, to preserve Goodman's anonymity as he tried to stay in the business while pillorying it. Goodman said others have also claimed credit. Later, Goodman used the nom-de-plume for his wildly popular books about Wall Street and then as a trademark for a widely praised show on economics for the general public.

Goodman was born in St. Louis on August 10, 1930. He was the son of Alexander Mark Goodman, an attorney, and Viona Cremer Goodman. Jerry Goodman's officemate and friend, Craig Drill has written a testimony to the public-spiritedness of Alexander Goodman in the attached comments at the memorial service.

Jerry Goodman attended Harvard College, graduating magna cum laude in 1952, and was an editor of The Harvard Crimson. Goodman won a Rhodes Scholarship to Brasenose College, Oxford, where he studied political economy. However, he quit the college before the end of the first year of his scholarship. As his son Mark put it to me yesterday:
He liked the people at Oxford, but he did not like the facilities. He said: "I never want to take another cold shower ever again." He also didn't like the fact that the college gates were locked every night and he had to climb over to walls to get back in.
Instead of spending his time at Oxford in residence at Brasenose, he spent it writing a novel, The Bubble Makers, published in 1955, about a Harvard student in conflict with his grandfather. He wrote several other novels and a book for children.

In 1954, he joined the US Army First Special Forces (later called the "Green Berets") in the Intelligence Group known as Psywar (psychological warfare).

In 1961, Goodman married an actress from Phoenix, Sally Cullen Brophy, who had a full Broadway and television acting career in the 1950s and 1960s. When she retired from acting, they moved to Princeton and she taught theater arts at local universities. She died of non-Hodgkin's lymphoma in 2007. Their two children, Susannah and Mark, both spoke at the memorial service, with warm words for Goodman's participation in their childhood activities, and an emphasis on the music that they shared a love for.

Goodman pioneered a style of financial writing that made the language and concepts of Wall Street more understandable and accessible to the typical investor. He was founding editor of Institutional Investor in the second half of the 1960s, and in the process transformed financial writing. Michael Lewis at his best is channeling Goodman. The first non-fiction book that Goodman wrote, The Money Game, was published in 1968 when he was at Institutional Investor and was soon Number 1 on the bestseller list. A colleague who was at the Harvard Business School at the time told me after the memorial service yesterday:
It is hard to imagine the impact that Adam Smith and the book had on B School students at the time. When the first piece about "Red-Dogged Motorola" came out in New York Magazine, we rushed out to get on the phone. We got early copies of The Money Game and we couldn't get enough of Scarsdale Fats and the other characters.
In the book he memorably introduced the joke that ends with an economist on a desert island proposing to two fellow storm survivors faced with cans they can't open: "Assume a can opener". His point was to make fun of economists who make unwarranted assumptions.

His love of music, and especially opera, led him to interview Placido Domingo, during a period when he was singing in Wagner's Ring Cycle at the Met. Jerry showed him why so many Americans know the Ride of the Valkyries theme - Elmer Fudd, bedecked in a Teutonic helmet and plunging a shovel in the ground as he goes, sings it as he chases Bugs Bunny from hole to hole: "Kill Da Waabbit, Kill Da WAAAbbit, Kill Da WAAABit... etc." After they watch the clip, Jerry sings the theme again, and Placido Domingo lustily joins in. A cartoonist celebrated Jerry's 70th birthday with a picture of Lincoln Center lights advertising the duet - "Placido Domingo/Adam Smith sing KILL DA WABBIT".

I first met "Adam Smith", the late Jerry Goodman, through fellow Trinity College, Oxford alum Ham Richardson, the late Louisiana-born top-ranked tennis great who moved to New York City after his tennis career ended, to participate in the venture capital world. Jerry and I got talking about Oxford, Cecil Rhodes, the British Empire, Rudyard Kipling, and the Just-So Stories set in southern Africa that we both loved. (Postscript December 2014 - Kipling may be the only author to have two books in the Grolier Club's 100 Most Famous Children's Books - The Jungle Book, set in India and made into a Disney movie, and the Just-So Stories, set in South Africa.) We both remembered the "great grey-green greasy banks of the Limpopo River, all set about with fever trees." Jerry said offhandedly that he supposed the Limpopo River was in the Congo, and I said that didn't make sense, that Kipling was writing about South Africa, and my recollection was that the Limpopo ran through the top of the eastern end of South Africa. He was interested, and bet me $10 that I was wrong.

So we Googled it on our iPhones (actually, no, it was 1975 - it took a while for us to get an Atlas in Ham Richardson's  library, and find the river), and when he saw I was right he immediately handed over a $10 bill with no hesitation. Not as exciting a betting ranges that start Liar's Poker, but Jerry got something he seemed always willing to pay something for - good information.

During a stint in Hollywood, he wrote screenplays, including an adaption from one of his novels,  The Wheeler Dealers (still a good flick), starring James Garner and Lee Remick.

He was a member of the Editorial Board of The New York Times, an editor of Esquire Magazine, a writer for Fortune, and a founding member of New York magazine.  In 1984, PBS television launched him as the anchor and editor-in-chief of Adam Smith's Money World, which won eight Emmy nominations and five of its Awards. The program was aired in more than 40 countries and the Soviet Union ran a Russian-language-dubbed edition, doubtless watched by a young Vladimir Vladimirovich Putin, who was born the year that Goodman was elected a Rhodes Scholar.  Goodman interviewed, among others, Warren Buffett and (in Moscow) Mikhail Gorbachev.

The family suggests donations in memory of Jerry Goodman be sent to two research programs for the cure of Myeloproliferative Disorders: (1) Robert Rosen, Chairman, MPN Research Foundation, 180 N. Michigan Avenue, #1870, Chicago, IL 60601 (or online, or (2) The Tisch Cancer Research Institute, Mt. Sinai School of Medicine, One Gustave L. Levy Place, Box 1079, New York, NY 10029.

Here are links to some memorable obituaries of Jerry Goodman:

Jason Zweig, in the Wall Street Journal, who provides some of the original comments that Goodman was most famous for.

Douglas Martin, New York Times.

Martin Sosnoff, Forbes

Other good ones? Tell me at

April 30, 2014

Jerry and I were friends for almost forty years. Over the last two decades, we were officemates, sharing soup and sandwiches regularly.    

Jerry was raised in St. Louis at the end of the Great Depression. He told me that his father, Alexander Goodman, a lawyer, never made much money because he chose instead to take on cases and causes that he believed in.

Alexander once represented a farmer whose dog had been killed by a train. The attorney for the railroad asserted: “The dog was on our tracks, and, anyway, what is the value of a dog?”  

Well, Alexander’s answer was one of eloquence: “What is the value of a dog?  What is the value of a dog? Who wakes with the farmer before the break of day? Who toils daily beside his master in winter’s cold and summer’s heat? And who, when the farmer has gone to his final resting place, by the grave site, sits, refusing to leave, his muzzle between his paws?”

The farmer won his case. And Jerry’s father’s words were published in the holiday card sent around by the St. Louis Bar Association.  Now we know from whence came Jerry’s story-telling ability! 

Jerry entered his early teens during World War II and always had a special interest in military history.  He rarely spoke about his time as a Rhodes Scholar at Oxford, but told many stories about his time in the US Army First Special Forces Group.  His favorite World War II hero was Ernest Evans, a mixed-blood Cherokee, who, as Captain of a destroyer in the Battle of Leyte Gulf, repeatedly attacked, against all odds, the Imperial Japanese Fleet.  

Of his time at Harvard, Jerry talked mostly about writing for The Crimson. Moreover, he was thrilled to have been accepted into a small seminar on modern poetry led by Pulitzer Prize winner Archibald MacLeish. 

He enjoyed singing in the Glee Club and had a solo in one Christmas concert, which he later sang out to our office with gusto.  But he truly “sang his song” as a writer.  

Through the prism of humor, he helped us to better understand ourselves (sort of), as well as this sport -- and addiction -- called the modern stock market.  He had an uncanny ability to tell the real from the phony, even though the phony for many of us has glittering attractions.  

Jerry was proud to have coined some memorable words and phrases.  “Gunslingers,” a term for aggressive money managers from his classic, The Money Game, was one of his favorites. Some of his unforgettable phrases have found a permanent place in Wall Street vernacular, among these: “The stock doesn’t know you own it” and “If you don’t know who you are, the stock market is an expensive place to find out.”  

And he was proud of some of the images he created, among them the partygoers at the Masque of the Red Death ball -- money managers in the frothy “go-go” years -- asking, “What time is it?  What time is it?  But the clocks had no hands.”  

And he was gratified that his pioneering “Adam Smith’s Money World” -- which ran for 13 years on PBS -- won five coveted Emmy Awards and that his popular Goodman Lectures at Princeton on Media and Global Affairs had to be moved to larger auditoriums.  At the tail end of the dot-com bubble, Jerry, Mark, and I started, which was a tremendous success in terms of fun and for father and son to work together.

Jerry was a polymath, a Renaissance man. He would take our lunch discussions from the Coptic-language Gospel of Thomas to his meeting with G√ľnter Schabowski, the portly spokesman for the East German Politburo whose comments on TV -- inadvertently -- helped to bring down the Berlin Wall. 

Invariably, at our lunches, Jerry could not refrain from talking about investing and stocks. “Why is John Hancock so cheap?” “Is Continental Airlines going bankrupt again?” Jerry did his homework, and to better understand the biotech stocks, he actually went back to Princeton and audited two courses.

Despite many financial successes and fame, he never changed homes. He certainly never behaved ostentatiously or arrogantly. Jerry was destined to become a carrier of our culture, not just a passive observer, articulating with grace and wit the voice within us that knows what is right…as his father had done.

Jerry often bragged about Susannah and Mark, and it was evident how much he loved them. Beaming with pride, he showed me photographs of his granddaughters, Sophie, Lily, and Leah, who brought him great joy. Buying a condo in Coconut Grove was a big step for him, and he enjoyed going down to the warmth and the sea, along with Lynda, his loving partner, and his family.  

Jerry and I fell into the habit of reciting evocative poetry. Just a few months before his own death, as he was saddened by the loss of two close friends, Jerry read aloud Stanley Kunitz’s “The Layers.” As he read it, I could see the young man in Archibald MacLeish’s poetry class and, now, the older man with the courage of Captain Ernest Evans.  He felt this poem was a spiritual testament to what it is to be human.

THE LAYERS - Stanley Kunitz
I have walked through many lives,
some of them my own,
and I am not who I was,
though some principle of being
abides, from which I struggle
not to stray.

When I look behind,
as I am compelled to look
before I can gather strength
to proceed on my journey,
I see the milestones dwindling
toward the horizon
and the slow fires trailing
from the abandoned camp-sites,
over which scavenger angels
wheel on heavy wings.

Oh, I have made myself a tribe
out of my true affections,
and my tribe is scattered!

How shall the heart be reconciled
to its feast of losses?

In a rising wind
the manic dust of my friends,
those who fell along the way,
bitterly stings my face.

Yet I turn, I turn,
exulting somewhat,
with my will intact to go
wherever I need to go,
and every stone on the road
precious to me.

In my darkest night,
when the moon was covered
and I roamed through wreckage,
a nimbus-clouded voice
directed me:

Live in the layers,
not on the litter.

Though I lack the art
to decipher it,
no doubt the next chapter
in my book of transformations
is already written. 

I am not done with my changes.