For the first time in decades, and probably ever, workers retiring from the US labour force will be better-educated on average (according to one measure anyway) than their much younger counterparts. Some 12 per cent of 60-64 year olds have a master’s degree or better; less than 10 per cent of 30-34 year olds do. More generally, the decades-long rise in the educational quality of the labour force is coming to an end. This is important, because that rise has been one of the principal forces driving American economic growth.

These findings are from a new study by Jacob Funk Kirkegaard of the Peterson Institute for International Economics: “The Accelerating Decline in America’s High-Skilled Workforce: Implications for Immigration Policy”. If you are interested in the prospects for American competitiveness and continued economic leadership, Jacob’s study is mandatory reading.

Consider this particularly striking chart (from chapter 1 of the study [pdf], page 12), which shows the proportion of the labour force with at least a college degree, by age group, for OECD countries.

Look first at the squares in the diagram, which represent 55-64 year olds. For this age group, the US lags only Russia (whose competitiveness, Jacob points out, was not a problem thanks to communism). But the US is exceptional in the diagram (Germany is the only other instance) in that its younger cohorts, on this measure, are no better educated. In most other countries, the proportion of 25-34 year olds with at least a college degree has soared. (More than half of South Koreans, Japanese and Canadians in this age group have a college degree or better.) As a result, in that cohort, the US is not 2nd, but 11th. At first sight, anyway, it is hard to see how US leadership in per capita incomes can be sustained in the face of this trend.

Jacob cites this and other data as urgent grounds for liberalising immigration of highly educated workers (a cause to which I would be very sympathetic, I admit, even if it were not for the good of the country, since I am one such immigrant). The point is, the US devotes a lot of effort to keeping such workers out, while other countries try just as hard to attract them. I’ll come back shortly in another post to what I think of Jacob’s specific recommendations, but for the moment I just wanted to draw your attention to the study–and to that disconcerting chart.

No sooner had I finished berating the candidates for failing to pay attention to the housing-finance meltdown than Hillary Clinton devoted a whole speech to the subject. And a pretty good speech too.

Not that I agreed with it all. I think the proposed 90-day moratorium combined with a “voluntary” five-year freeze on interest-rate resets is a bad idea: a drastic remedy, and yet to little effect. What is the point of prolonging the agony? And I cannot say I am impressed by the call for an “Emergency Working Group on Foreclosures”: a working group, even if it is a Working Group, is not a solution–though I grant you that the idea of putting Alan Greenspan (as Hillary suggests) on a panel to sort through a mess somewhat of his own making has a definite appeal. However, much of the rest of what Hillary said seems sensible. For instance, she agrees with Larry Summers’ idea for a new bankruptcy procedure that would curb repossessions and allow mortgages to be written down. Though she got the thing a bit muddled:

I’ve also proposed that we amend the bankruptcy code to give judges the discretion to write down the value of struggling families’ homes. Believe it or not, bankruptcy judges can write down the value of many other things to help families pay off their debt, but not their homes. They can write off the value or write down the value of second homes, which seems kind of ironic to me. Making this amendment to the code will help families in bankruptcy pay off their mortgages and stay in their homes.

It is not the value of the homes that would be written down, obviously, but the value of the mortgage debts secured against them. Assuming that is what she meant, I agree with her: it’s a good idea.

By the way, one argument offered against doing this (though it’s debatable whether it is in fact an argument for or against) is that it would discourage future mortgage lending. A recent study, “The Effect of Bankruptcy Strip-Down on Mortgage Markets” by Adam Livitin and Joshua Goodman, pours cold water on that notion.

The most important proposal was that the FHA should start buying impaired mortgage-backed securities–except that, to be precise, she only said that it should “stand ready” to do so. The question is, when and under what circumstances ought the FHA, or some other taxpayer-financed entity, actually start buying up this stuff. But I cannot be too hard on her for failing to answer that question because nobody else appears to know the answer either.

The markets were thrilled by J.P. Morgan’s quintupling (to $10 a share) its offer for Bear Stearns. But does this not make the whole operation, from a public-policy point of view, look like even more of a shambles? The Fed explained that its $30 billion of support for J.P. Morgan, secured against Bear’s most dubious assets, was not a bail-out because Bear’s shareholders were being wiped out. Well, now they aren’t being wiped out. The more general point is this: having secured Fed support for its purchase of Bear, is it now entirely a matter for J.P. Morgan how much it pays for the bank? (The Fed has apparently participated in the revised offer. The terms of its support have been adjusted: it is no longer standing behind the first $1 billion of Bear’s impaired assets.) Was the Fed’s support for the deal in the first place conditional on the price J.P. Morgan was going to pay, or not? To say that the authorities are making this up as they go along is putting it mildly.

I agree with Lex’s take:

Where does this leave the Fed? Outwardly better off. Under the new deal, JP Morgan guarantees the first $1bn of losses on the $30bn of illiquid Bear assets the Fed originally took on. But it also means that the Fed loses its sacrificial Bear. Its intervention has given shareholders $10 a share instead of zero. (Lehman shareholders did even better from the Fed. Lehman’s shares soared from their lows in large part because its future was guaranteed by the Fed’s decision to give investment banks access to the discount window.)

Moral hazard is returning to the fore. When the smoke clears, the Fed must get its pound of flesh by regulating Wall Street, and doing it more aggressively, to make sure this never happens again.

Of course the other point of having a blog (see my previous post for the main reason) is to advertise one’s enthusiasms, as if anybody gives a damn. Therefore, while I am in this narcissistic frame of mind, be it known, I am a Joni Mitchell fan. She is one of the greatest musical artists of our time, and a woman I have lusted after (it goes without saying) man and boy. More than 30 years ago I recall attempting to persuade the poet Roy Fuller that many of Joni’s lyrics were capable of being read as serious poetry, no less than his own. He was very nice about it.

The great thing about Joni is that she improves with age. Her artistry soars as her record sales decline. I am not talking about the enviro-politics, I hasten to add—you have to look past the whining apocalyptic gloom. (We make these adjustments for our loved ones.) But the music just gets better, and the lyrical ingenuity is undimmed. I urge you to listen to “Shine”, her newest album (and the first of new songs for nearly 10 years) if you haven’t already. The jazz sensibility is perfectly assimilated. It’s beautiful.

And do listen, also, to Herbie Hancock’s lovely new album of Joni covers, “River”. It features—and I would say stars—Wayne Shorter, my favourite saxophone player and a frequent Joni collaborator. A couple of reviewers have complained that the album is subdued and understated. That’s what I like about it. It’s a dreamy, reverent reflection on Joni’s wonderful melodies. I think he likes her music as much as I do.

What is the point of having a blog, really, if you are not allowed from time to time to vent a personal grievance? No point, you say? I quite agree.

I am a born-again Apple devotee and recidivist iPhone-fondler. However, I am disturbed by a couple of recent developments in the Apple product line, and want to see these errors corrected. I believe I am not alone.

The separation of presidential politics from the troubles assailing the US economy is now verging on the surreal. With banks collapsing, the dollar reeling, the Federal Reserve making up new rules as it goes and observers discussing a new Great Depression, the presidential candidates are still on scripts they wrote a year ago. The main problem is either the North American Free Trade Agreement (Barack Obama and Hillary Clinton) or high taxes and excessive regulation (John McCain). If delivery from this ordeal depended on any of the contenders saying something intelligent about it, prudence would require that the entire country be written down to a nominal sum.

What makes this even odder is that the Democrats, at least, continue to hammer away at economic anxiety. The squeeze on “middle-class families” gives them an edge against the Republicans in November, they calculate. But they were saying this last year, and the year before – when unemployment was not rising, the economy looked pretty healthy and most Americans still did not know the difference between an SIV and a CDO. The themes are trade and jobs, shuttered factories, stagnant incomes, unlevel playing fields and labour and environmental standards. As for the complete breakdown of the credit system and the danger of a years-long Japanese-style slump – oh, yes, there’s that as well.

The remainder of this column can be read here. Please post comments below.

Ron Brownstein asks whether the Democrats’ increasingly strident anti-trade line might be a political mistake as well as an economic one (the link expires in a week). Writing from Miami, he notes the signs of international connectedness wherever he looks. Can Democrats plausibly tell their supporters in such places that they would be better off if the US retreated from world markets?

This is the side of the international economic story that Barack Obama and Hillary Rodham Clinton obscured in Ohio with their spiraling denunciations of free trade. But many of America’s most vibrant communities are benefiting enormously from their connections to the global economy. What’s more, most of these communities, the places that would suffer most if America tried to wall out the rest of world, are becoming Democratic strongholds. This means that in seeking to retreat from globalization, Democrats are threatening the interests of voters and communities increasingly central to their electoral coalition. “The Democrats are in all the globally connected places,” says Robert Lang, director of the Metropolitan Institute at Virginia Tech University. “They are biting the hands that feed them.”

Lang and his colleagues, in a paper dated March 21, identified the 20 American metropolitan areas most thoroughly integrated into the global economy. The researchers ranked the cities along four dimensions: the presence of global service firms (such as advertising, law, and financial services); whether the area has a major port; whether it has an international airport; and the value of exports that pass through it.

At the top of the list stand New York, Chicago, Los Angeles, San Francisco, and Miami. They are followed by Atlanta, Washington, Boston, Dallas, and Houston. The second 10 start with Seattle and Philadelphia and end with Phoenix and San Jose, Calif.

These globally connected cities retain many differences. But they generally share an expansive outlook marked by receptivity to foreign markets, foreign investment, immigration, and ethnic diversity. “They are the places where when you walk into a building, they have clocks set all around the world,” Lang says. In the 1980s, as Hispanic immigration surged, a popular South Florida bumper sticker read, “Will the last American to leave Miami bring the flag?” Today, notes Ojeda, most Miami leaders of all races recognize “that our international [population] base has given us the economy we have.”

In this new column for National Journal, I discuss the Fed’s latest manoeuvres:

If banks are too scared to lend and consumers too scared to borrow regardless of interest rates, even the most aggressive easing of monetary policy might fail to push the economy out of recession. That is why, separately from the push to lower interest rates, the Fed is struggling so hard to maintain structural confidence in the financial system — by keeping Bear Stearns in business and by promising to give banks (and now, for the first time, many nonbanks) the assurance of access to short-term loans they are no longer willing to extend to each other.

Where does it all end? If the Fed could be granted one wish, it would be that house prices start to bottom out. That would begin to put a floor under losses on mortgage-backed securities, and help to restore banks’ confidence in one another. Its biggest fear, conversely, is that house prices fall further and faster. A particular risk in that case is that many more borrowers would find they owed more than their house is worth, so that it would make sense for them to default on their mortgage. (Most mortgages are nonrecourse loans, meaning that in case of default the lender gets the house and has no further claim.) If mortgage defaults catch on in a big way, causing a flood of foreclosures and forced sales, it is hard to say where the floor for house prices might be — and the losses for lenders could dwarf current estimates.

You can read the whole column here (the link expires at the end of the week).

As I’ve said before, don’t count her out just yet. Jay Cost at RCP has a new post summing up his earlier argument that Hillary has a path to the nomination which is “plausible, but unlikely”. I think his reasoning is correct, but I would add a couple of things. (And to head off my own batch of emails accusing me of being a Hillary stalwart, I will first repeat right now that I much prefer Obama as the Democratic nominee.)

A first point, which should hardly need to be made, is that this race is close. Clinton and Obama have divided the party right down the middle. If you look at that fact alone, what can people calling on Hillary to give up now and drop out be thinking? We know that the pledged-delegate count will not settle this. The outcome will depend on the superdelegate vote, and that is not pre-ordained. Hillary would be mad to surrender in this situation.

Second, especially if Hillary can narrow (or overturn) the various vote-count gaps by August, the candidates’ standing in the polls will count too. This is the main thing I would add to Jay’s take. Suppose that Obama has a small lead in pledged delegates, and Clinton has forced, in effect, a tie in the popular vote. But also suppose that by then the national head-to-head polls show her with a ten-point lead or better over Obama. That will sway some of the superdelegates–as it damn well ought to, since their most important task is to get a Democrat elected.

A lot can happen between now and the summer. (Despite Obama’s fine speech on the subject, it is not yet clear how much harm the Wright affair has done to him. There might very well be more such setbacks, for either side.) By the summer, the polls might be tied too, of course–which would be bad for Hillary, because she has to overturn Obama’s pledged-delegate advantage. But they might not be tied–and if they aren’t, that will matter.

This just in from CNN:

Two Florida state senators presented a plan Wednesday to seat the state’s delegates at the Democratic National Convention, hoping that Sens. Hillary Clinton and Barack Obama will embrace their compromise.

Florida Senate Democratic Leader Steven Geller and Sen. Jeremy Ring outlined a proposal to seat all the delegates at the convention in August. The plan recommends seating half of Florida’s 210 delegates based on the results of the January 29 primary. The remaining delegates could be allocated in a number of ways, including evenly, proportionally based on the national popular vote (excluding Florida and Michigan) or proportionally based on the total national delegate count, also excluding Florida and Michigan. “I invite the campaigns to endorse our compromise to ensure victory in November,” Ring said.

This was the part that caught my eye:

“There is no do-over, no mail-in ballots, no complicated math. Just the basic process of American democracy is in play here.”

That’s all right, then.