Steven Pearlstein of the Washington Post comments on a new study out from an NYU prof that shows how globalization and so-called free trade have opened up a schism between two parts of the U.S. economy.

Michael Spence and Sandile Hlatshwayo divided the economy into tradable (manufactured goods, natural resources, financial services, etc.) and non-tradable spheres (teaching, health care, retail, etc.) and found:

One was that all the job growth came pretty much in the non-tradable activities, in particular government and health care, while across wide swaths of the tradable manufacturing sector, jobs declined significantly.

The other thing they noticed was that in terms of economic value-added - the “output” that is measured by GDP and generally correlates with income - the tradable sector experienced a slight edge.

Put the two together - the very unequal employment growth and nearly-equal output growth - and what you get is an economic tale of two cities, one that is growing in terms of jobs but not income, another that is growing income but not jobs. In short, a recipe for increasing inequality and social and political polarization.

Fascinating.

— One wonders what we’d know if the feds had tapped Wall Street’s phones during the crisis.

The Wall Street Journal (which has done a lot of great work on the Galleon story, by the way) reports that prosecutors allege that hedge fund manager Raj Rajaratnam tried to cover up the fact that he was trading on inside information.

Unfortunately for him, the feds were taping his calls:

In a taped phone call, Mr. Rajaratnam told two former Galleon employees to create an email “trail” that would make it seem as though a purchase of stock was based on price rather than information received from Anil Kumar, the former McKinsey consultant and a star witness for the government.

The alleged cover-up involves the purchase of shares of a company spun off by chip maker Advanced Micro Devices Inc. called Spansion.

“You just have to be careful, right?” Mr. Rajaratnam told the former Galleon employees, adding that he would send an email asking about a stock “so that we just protect ourselves.”

“We just have a[n] e-mail trail, right, that uh … I brought it up,” he said, after telling them about the deal described to him by Mr. Kumar.

Ouch.

And:

“What I would do is, I would buy a million shares and sell 500,000,” Mr. Rajaratnam advised her. “If you want to buy 500, I would buy a million and sell on Friday 500,000, you know?”

They didn’t appear to suspect the FBI was listening. “I’m glad that we talk on a secure line,” Ms. Chiesi said. “Right. I never call you on my cellphone,” Mr. Rajaratnam responded.

How’d you like to be that guy’s lawyer?

— The Journal’s Katie Rosman has a terrific vignette on life at South by Southwest, the legendary Austin music festival that has been somewhat overtaken by the tech crowd.

She approaches SXSW like an anthropologist would an alien culture:

A unique social etiquette pervades the event. At the door of the bar or hotel, a PR neophyte searches an iPad for your name. Once you pass muster, you “check in” to the venue on your geo-location social network of choice. Next, via your preferred group text-messaging app, you text a core of friends alerting them to your whereabouts. You sidle up to the bar and order a Shiner Bock. (It’s a Texas beer and you’re here to enjoy the local culture, right?) You snap an arty photo of the scene with your iPhone camera and post it on Instagram and Twitter, affixing “#sxsw” to the end of your micro-message so all your followers know you are in-the-know and on the list.

Then, casually, you sip your drink, checking your device to see who has retweeted you, the warm glow of the screen casting you in the right light. The tech-obsessed indulge, free of judgment. Overheard (or, in Twitter parlance, “OH”): “Looking down is the new looking up.”

Charging batteries is a priority, and there is major competition for electrical outlets at the Austin Convention Center. You can catch a buzz on the street: representatives from Sonos, a wireless stereo company, carry mini-generators in backpacks and let passers-by plug-in.

Really good stuff.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.