One way to adjust for choice of occupation is to compare earnings of men and women in the same occupation with the same or similar schooling. Ms. Goldin, Mr. Katz and Marianne Bertrand of the University of Chicago made that comparison in a 2010 study, which found that the primary factor behind long-term differences in earning was child-rearing. For M.B.A. students who graduated from the University of Chicago’s business school between 1990 and 2006, the authors found almost no gender gap in employment or wages just after graduation. But 10 years later, women had taken an average of one year off from work, while men had taken off only 1½ months.
Presumably, the reason is that women were having and raising children. The authors noted that three factors—the particular M.B.A. courses taken and performance in the courses, time away from work, and the number of hours worked—explain 84% of the wage gap.
It makes sense. In a 2010 study, Ms. Goldin and Mr. Katz pointed out that women often receive a wage penalty for demanding a job that’s flexible enough for the woman to be the “on-call” parent. Men are more apt to receive a wage premium for being willing to be the “on-call” employee.
Scott Winship continues to expose the tendentious research done by writers associated with American Compass. Here’s Scott’s conclusion:
American Compass has produced another analysis that implicitly has a sole breadwinner family in mind as the norm. I’ve explored this view before, including with Jeremy Horpedahl. The group’s commitment to the sole breadwinner norm and the idea that all families without a sole breadwinner want one (or their indifference to what families want) continues to drive a policy agenda based on an overly declensionist analysis.
Don’t get me wrong: if 95 percent of workers had job security, I would still want to help the remaining 5 percent. But policy has to be driven by accurate empirical conclusions. American capitalism does not require “rebuilding” and with earnings at near-record highs and unemployment exceptionally low, the labor market is working pretty well. Our economic challenges are less pervasive than American Compass thinks and we need to focus like a laser on helping more people benefit from what remains a remarkable economy.
China had no blueprint for its spectacular development but found that moving from plan to market, and taking into account the principle of comparative advantage, was a win‐win situation. Yet there are many weaknesses in China’s institutional architecture, especially the Chinese Communist Party’s (CCP’s) monopoly on power, the lack of an independent judiciary, and the absence of a genuine rule of law to safeguard fundamental rights.
Without a free market for ideas and limited government, China could drift back toward planning and control, putting a drag on market‐led development. This is already happening under the rule of Xi Jinping. Turning inward and embracing industrial policy to prop up state‐owned enterprises (SOEs) poses serious risks to the spontaneous order, harmony, and wealth creation that free markets and limited government would bring to society.
If we look solely at the industrial sector, it is striking that in 1978, SOEs accounted for nearly 80 percent of gross industrial output, but by 2016, their share had declined to 20 percent (Figure 2). In China’s 40 Years of Reform and Development: 1978–2018, Nicholas Lardy attributed that relative change to “the opening of the economic space available to private firms, the superior financial performance of private firms and the increased access of these firms to funds from banks and the domestic stock markets.” However, he notes that SOEs continued to grow in absolute terms.
Nonstate enterprises were the driving force in foreign trade. As trading rights were extended, the number of domestic firms engaged in foreign trade increased from 12 in 1978 to more than 5,000 a decade later. By 2001, when China joined the WTO, the number of domestic firms engaged in foreign trade reached 35,000, according to Integrating China into the Global Economy (p. 41). China’s trade‐to‐GDP ratio climbed as tariffs and nontariff barriers declined in the run‐up to joining the WTO. After accession, the general tariff level fell to 9.8 percent in 2007, compared with 16.4 percent in 2000, according to China’s 40 Years of Reform and Development: 1978–2018 (p. 35). Marketization reached new levels, and the foreign trade share of GDP accelerated (Figure 4). Today, China is the world’s largest trading nation.
The main lesson for China’s future development is clear, according to Ronald Coase and Ning Wang in How China Became Capitalist (p. 207): “When the market for goods and the market for ideas are together in full swing, each supporting, augmenting and strengthening the other, human creativity and happiness stand the best chance to prevail.”
The case for reading Smith maps well but not perfectly onto the case for reading Great Books. With increasing pressure on universities and other educational institutions to show the practical benefits of study, it’s an argument that is very current even though it deals with old books.
In the spirit of self-disclosure, I admit I have a vested interest in people reading Smith. I am part of a cottage industry of academics and educators devoted to the study and teaching of Smith’s ideas—I’m the deputy director of a program named for Smith in the Department of Economics at George Mason University. A declining interest in Smith would probably not bode well for me professionally.
At a deeper level, though, I’ve spent a great deal of time thinking and writing about eighteenth-century moral philosophy and political economy. I want to believe that my intellectual efforts have been time well spent. A critic might argue that that want colors my analysis, and it probably does to some extent. As one cutting-edge psychologist noted: “The opinion which we entertain of our own character depends entirely on our judgment concerning our past conduct. It is so disagreeable to think ill of ourselves, that we often purposely turn away our view from those circumstances which might render that judgment unfavourable.”
But those self-reflections notwithstanding, I affirm that there is still value to reading Smith (and the Great Books generally), for both academics and lay persons.
Can I really thank the federal government for saving me from Microsoft 25 years ago? That thank-you note should go to Steve Jobs and his team at Apple. Now, who will I thank for saving me from Amazon? (“Khan’s Weak Case Against Amazon,” Review & Outlook, Sept. 28). My thanks go to people like Netflix’s Reid Hoffman and Walmart’s Doug McMillon. Their work in the past decade restrained Amazon’s online market power more than any government agency did.