Editor's Note

JG, our reliable correspondent who just moved from Passadumkeag, Maine (pop. 356), to Qaanaaq, Greenland (pop. 598), in hope of beating the rush, wonders when the rest of us will follow.

Actually, JG, we have domestic destinations in mind – perhaps one of the winter beach resorts planned for Lake Superior or maybe Las Vegas after they’ve completed the air-conditioned dome over the city. Meanwhile, don’t let JG distract you from the contents of this dandy new issue.

Kathryn Edwards, a labor economist and columnist for Bloomberg, surveys the wreckage of the American labor movement and argues that the phoenix could and should rise again – only this time in a quite different form. “The traditional framing of unions dictates that there are two sides to the fight – that one is either with workers or their employers,” she explains. “But the economic evidence and history of the past century belie that choice. If there are sides to take, they’re being for or against income inequality at the extremes we’ve reached. Unions should be seen as a means to an end, not the object of an ideological battle resurrected from the 19th century.”

Gary Hufbauer and Ye Zhang of the Peterson Institute for International Economics remind us that in spite of the current focus on the ebbing American lead in manufacturing, the stakes are higher in global competition in services. “When you picture the Great American Job Machine,” write Hufbauer and Zhang, “images of workers beavering away on production lines at GM, U.S. Steel and Goodyear probably still come to mind. But today, the top five firms in terms of employment are Walmart, IBM, UPS, Target and Kroger.”

“It is the best of times and worst of times in global trade in services,” they add. “While key nations are unwilling to move forward on liberalizing traditional services like shipping and finance, the combination of digital delivery and artificial intelligence promises a bright future for the electronic services. The unanswered question is whether the combination of nationalism and protectionism will block that promise.”

David Galenson, a professor of economics at the University of Chicago, focuses on an inflection point in the history of art where market forces drove creativity in a startlingly different direction. “Art historians have exhaustively described the independent group exhibitions that the Impressionists held during 1874-86,” he writes, “along with their impact on the reputations of the artists. Yet these historians have almost all failed to see how the resulting changes in the market for advanced art changed the potential rewards for different kinds of innovators – and, in particular, how they created conditions that would favor radical conceptual approaches.”

Michael Ostrovsky (Stanford) and Frank Yang (Harvard) celebrate New York City’s initiative in using fees to moderate traffic congestion, but warn that the failure to price correctly is undermining their effectiveness. “Fortunately, having identified this problem, it would be relatively straightforward to address it,” they explain. “Instead of raising the rate for private vehicles in coming adjustments, we think it should be kept at $9” while rates for taxis and trucks should be increased to reflect the amount of congestion these vehicles actually create.

Tom Coleman and David Weisbach of the University of Chicago sift through the misunderstandings over what’s happened to income distribution in the U.S. in recent years that have left analysts talking past each other. “While there are differences in their estimates of the effects at the top of the distribution,” they conclude, “there is broad agreement that large increases in transfers to the bottom swamp changes at the top. Second, the tax-and-transfer system has become more redistributive over the last half century, with much of the impact occurring in the last several decades.”

Cassandra Zimmer-Wong, an analyst at the Niskanen Center in Washington, hammers home the reality that the only credible medium-term fix for the alarming personnel shortages in health care is sharply higher rates of immigration. “America’s health care system is buckling, squeezed between a rapidly growing population of elderly and a shrinking number of workers in the supply pipeline,” she writes. “Rather than treating foreign-born talent as a last resort, U.S. policy should recognize immigration as a vital pillar of a strong, sustainable health care workforce – and act accordingly.”

Ramona Handel-Bajema, a historian of modern Japan, revisits the land of the rising sun for the first time since Covid-19. She arrived at a moment of collective self-doubt in which everything from population decline to fears of the loss of the American defense umbrella cloud the future. “Japan may not need more F-35 fighter jets or JASSM-ER cruise missiles,” she writes, “but it plainly does need more childcare, more workforce support – in short, a sustainable demographic future in a country in which fewer than 700,000 babies were born in 2024 – an unwelcome milestone that the government hadn’t predicted would happen until 2039.”

In her new book, The Licensing Racket, Vanderbilt Law School professor Rebecca Allensworth probes the puzzle of when licensing professions serves the public and when it merely protects incumbents from competition. “The first step is to realize that our experiment in giving the professions unfettered autonomy over their regulation has been a failure,” she writes. “The next is to see that we need to use licensing as a regulatory last resort and to administer it in the public interest. Convincing the people in power that these things are true will be difficult, but not impossible.”

Do enjoy. — Peter Passell