Beat the Press is Dean Baker's commentary on economic reporting. He is a Senior Economist at the Center for Economic and Policy Research (CEPR). To never miss a post, subscribe to a weekly email roundup of Beat the Press.

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It seems the world's financial markets have stabilized for now, but we're still seeing all the pieces that were written with the expectation of a further plunge that were already in the pipeline, such as this front page piece in the NYT. I don't mean to mock all these writings. The market certainly could take another plunge since prices are high, but they do provide a useful way to see the extent to which people are focused on real versus imagined fears.

As I have noted elsewhere, the obsession with inflation is clearly overblown. Not only is it not visible in the data, it is not visible in people's expectations. As investors were supposedly dumping stock because of inflationary fears, the gap between the interest rate on government bonds and inflation-indexed bonds barely budged. This gap should be a pretty good measure of inflationary expectations and presumably, there is considerable overlap between the people who invest in the stock market and people who invest in the bond market.

Apart from inflation, there is another aspect of the higher wage growth reported last Friday that did not get as much attention. Actually, there was not much of a jump in wages in any case. The year-over-year change in the average hourly wage was reported at 2.9 percent. Twice in the last two years, it has been 2.8 percent. The increase in the average hourly wage for production and non-supervisory workers, a group that includes more than 80 percent of the workforce, was just 2.4 percent.

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Yes, boys and girls, it's time to play "Why Did the Market Fall?" This is when you get to blame who or whatever you like for the big plunge in the market that began last Friday (now largely reversed).

I want to blame the partial unwinding of the Affordable Care Act, which is likely to leave millions more uninsured and tens of millions paying more for their health care. I have a friend who wants to blame her uncle's bad breath. Then there is Andrew Sorkin at the NYT who tells us that investors fear that Donald Trump's tax cuts will succeed all too well, causing a boom which will generate inflation.

So the Sorkin story is that we get a big uptick in demand from the tax cuts, which will push the economy above its potential level of output creating a good old-fashioned wage-price spiral. That will mean higher interest rates and therefore lower stock prices.

If we want to test this one we can look at measures of investors' expectations of inflation. On January 31, just before the plunge, the yield on 10-year Treasury bonds was 2.72 percent. The yield on an inflation-indexed 10-year bond was 0.61 percent, implying a gap of 2.11 percentage points. On Friday, the day of the first big plunge, the yield on the 10-year Treasury bond rose to 2.84 percent, while the yield on the inflation-indexed bond rose to 0.7 percent, giving a gap of 2.14 percentage points.

That's 0.03 percentage points more than before the crash. Do we really want to say that an increase in the expected rate of inflation of 0.03 percentage points will sink the market? Of course, the gap was back down to 2.10 percentage points at the end of the day on Monday, so it's not clear what happened to investors' fears that the Trump tax cuts would spur inflation.

Okay, we get that Sorkin is apparently very fearful of inflation and presumably thinks the Fed has to be very vigilant on the inflation watch. He doesn't even care if he lacks the evidence to make his case.

(It is worth noting that if the Trump tax cuts "work" it is supposed to be by spurring a flood of new investment. That should increase productivity growth, which would relieve inflationary pressures. So if Sorkin has a vision of Trump's tax cuts causing inflation, he seems them "working" in a different way than has been advertised.)

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I have to disagree with Paul Krugman on his assessment of the current state of the economy. While I would agree with most of his comments about the state of the stock market and housing market, and also the competence of the Trump administration, I think he is wrong in saying that we are at or near full employment.

There are a few points to be made here. First. Krugman rightly notes the aging of the population pushing down the overall labor force participation rates. However, employment-to-population rates for prime-age workers (ages 25 to 54) are still below pre-recession levels and well below 2000 levels. The falloff is pretty much across the board, applying to both men and women and both more educated and less educated workers (not all by the same amount) suggesting that a supply-side explanation is not likely. In other words, there is reason to believe that if there were more demand, more people would be working.

While the 4.1 percent unemployment rate is low by the standards of the last 45 years, it is worth noting that other major economies (e.g. Japan and Germany) now have far lower unemployment rates than almost any economist thought plausible just four or five years ago. I don't see any reason to believe that the US unemployment rate can't fall to 3.5 percent, and possibly even lower, without kicking off an inflationary spiral.

As evidence in the other direction, Krugman cites the quit rate, the percentage of workers who quit their job. He notes that this is almost back at pre-recession levels and not much below 2001 levels (the first year for which data are available). While this is true, much of the story here is a composition effect. A much smaller segment of the labor force is in sectors with low quit rates like manufacturing and the government. A larger share are in high quit rate sectors like restaurants and professional and business services. 

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Before anyone starts jumping off buildings, let me give you a few items to think about.

1) The stock market is not the economy. It moves in mysterious ways that often have little or nothing to do with the economy. In October of 1987, it plunged more than 20 percent in a single day. GDP grew 4.2 percent in 1988 and 3.7 percent in 1989. The market did recover much of its value over this period, but we don't know whether or not it will recover the ground lost in the last week either.

2) The market has gone through an enormous run-up over the last nine years. The current level is more than 230 percent above its 2009 lows. That translates into an average nominal return of more than 14.0 percent annually, before taking into account dividends.

The gains have been even more rapid over the last two years. Even with the recent drop, the market is more than 40 percent above its February 2016 level. Most people would have considered it crazy to predict the market would rise by 40 percent over the next two years back in February 2016. In other words, people who have invested heavily in the stock market have nothing to complain about. If they didn't understand that it doesn't always go up then they should keep their money in a savings account or certificates of deposit.

3) This plunge is not in any obvious way linked to higher interest rates. We can say that because interest rates have not risen that much. The yield on 10-year Treasury bonds stands at 2.71 percent. (It fell sharply today as the market was plunging.) That compares to about 2.4 percent a year ago. It's pretty hard to tell a story that a 0.3 percentage point rise in long-term interest rates will sink the stock market and the economy. The yield had been less than 1.8 percent two years ago.

4) The plunge in markets is worldwide with markets in Europe and Asia also sinking sharply. This undercuts the blame Trump story unless the theory is that Trump is so bad he is going to sink the whole world economy. Also, the markets are still above the levels they were at when Trump took office, so this is really not a good theory for Trump critics to embrace.

In short, calm down. The economy is not going to collapse. If you have less money in your 401(k) than you did last week, just remember: you have far more than you expected to have last year.

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Heather Long had a column in the Washington Post telling us that "it feels like 2006." As someone who did his best to warn of impending disaster in 2006, I can say that it doesn't look at all like 2006. It is frustrating, but perhaps not surprising, that the economics profession and economic reporters have done their best to learn absolutely nothing about their enormous mistakes at that time. (Fortunately for them, economics is not an area where people are held accountable for the quality of their work, so this failure cost almost no one their job or even led them to miss a scheduled promotion.)

The basic story of real world 2006 was that the impending disaster was not hidden. It did not require some super-sleuth to figure out what was wrong. It required access to widely available government data and knowledge of third-grade arithmetic.

We had an unprecedented run-up in nationwide house prices. The national average had risen by more 70 percent since 1996, after adjusting for inflation. This followed a century in which house prices had just moved in step with inflation. And, this was a nationwide story. It was not just a few hot housing markets on the coasts, prices were soaring in Chicago, Minneapolis, and even Detroit.

Furthermore, this run-up was clearly not connected with the fundamentals of the market. Unlike the last five years, nothing was going on with rents. They were just rising in step with the overall rate of inflation. Furthermore, we already were seeing record vacancy rates even before the collapse of the market. In short, we had a gigantic neon sign hanging over the housing market saying "bubble."

I should also add that the bad loans fueling the bubble were hardly a secret either. The National Association of Realtors reported that more than 40 percent of first-time homebuyers put down zero or less (they borrowed to cover closing or moving costs) on their homes in 2005. And, there was widespread talk of "NINJA" loans, which stood for no income, no assets, no job.

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The stock market tumbled by 2.0 percent on Friday. Given that the top 1.0 percent hold a grossly disproportionate share of stock wealth, this means they took a big hit. Are we more equal as a society now?

Those who like to focus on wealth measures on inequality would have to say yes. And if the market continues to fall (not a prediction, but it certainly is possible that the correction will continue) then we will see a further gain on the inequality front. Suppose it falls 30 to 40 percent, bringing price-to-earnings ratios closer to historic averages. Will the country then look much different than it does today?

I'm inclined to say no, at least if the distribution of income has not changed. To my view, the major story on inequality over the last four decades has been the more than doubling of the share of income that goes to the 1.0 percent, from less than 10 percent in the 1970s to slightly more than 20 percent today. The top 0.1 percent have been the biggest gainers in this picture.

Wealth has not always followed the same pattern since so much of the wealth of the rich is tied up in stock. We had two big plunges in the stock market during this period, 2000 to 2002, when it fell by more than half, and again between 2007 and 2009. It's hard to see how the poor and middle class were doing any better at these troughs in wealth (2002 and 2009) than they were when wealth was at its peaks before the crashes.

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The NYT had a very good piece pointing out that the bonuses promised by many corporations following the tax cut are often less consequential than they appear. For example, many companies highlighted their maximum bonus amount. This was often a figure (e.g. $1,000) that went to a full-time worker who had been with the company for twenty years or more. At a company like Walmart, very few of their workers would have been there for twenty years and many are part-time. This means that the typical worker would receive much less than the hyped $1,000 bonus.

However, the most remarkable aspect of the bonus game is the fact that a bonus could be tax deductible in 2017 even if it was not paid until 2018. This inexplicable (on policy grounds) quirk in the tax code gave corporate America an enormous incentive to announce bonuses at the end of last year since bonuses announced in 2017 cost much less money than bonuses or pay increases announced and paid in 2018.

If a company like Walmart or AT&T gave its workers $100 million in bonuses or pay increases in 2018 it would cost the company $79 million in after-tax profits, given the new 21 percent corporate tax rate. However, if the same $100 million bonus was announced before the end of 2017 it would only cost the company $65 million in after-tax profits since it could be deducted in a year when the tax rate was 35 percent. (These calculations assume that the companies actually pay the marginal tax rate.)

This means, in effect, that the government would have been paying these companies $14 million to announce a bonus before the end of the year. Since we all believe that companies respond to incentives, it should not be surprising that many announced bonuses before the end of 2017.

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As I have pointed out repeatedly, the Republicans story about how their corporate tax cut will benefit everyone hinges on the idea that it will kick off a huge round of new investment. In their telling, investment is hugely responsive to tax rates. This means their tax cut will spark an investment boom. The higher levels of investment will increase productivity, which will eventually lead to higher wages.

We got our first weak test of this story with the Commerce Department's release of advanced data on capital goods orders for December. As I pointed out, these are orders, not deliveries, so fast-moving companies should have been able to get some in before the end of the month.

Even though the tax bill was not signed until almost the end of the year, its passage was virtually certain by the middle of the month. Furthermore, the outlines had been known since Labor Day, so unless a corporation's management was sleeping on the job, they had four months to plan their response.

As it turned the initial release showed a modest 0.1 percent drop in new orders for capital goods. Today the Commerce Department released its full report on manufacturing orders for January, with more complete data. This showed a 0.5 percent drop in orders for non-defense capital goods (0.4 percent, excluding aircraft).

Perhaps we will see a different story in future months, but so far it doesn't look like corporate America is feeling inspired to undertake an investment just yet.

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Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau (CFPB), effectively decided to incentivize ripoff schemes by taking away the enforcement powers of the CFPB division that is charged with blocking such schemes. As fans of free markets everywhere know, if it possible to make money by designing deceptive financial products that rip off low- and moderate-income people, profit-maximizing companies will do it.

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An NYT article noted that people are more likely to work at home now than in the early part of the last decade and that this is reducing energy usage. Near the end, the piece included this paragraph:

"In addition, between 2003 and 2012 the number of part-time workers in the United States almost doubled, from 4.6 million part time workers to 8.3 million, many of whom are involuntarily part-time workers. “The number of people who are spending time at work is going to go down because you’re sort of swapping out a full-time worker for a part-time worker,” said Dr. Simon. That may be good for energy use, but not necessarily so great for the employee’s wallet."

The problem is choosing 2012 as an endpoint. The labor market has tightened considerably since 2012. The percentage of workers who report working part-time because they could not find full-time jobs is the same now (3.5 percent) as it was in 2003.

Strangely, the piece ignores the much larger number of workers who choose to work part-time. (The workers say they choose to work part-time, that's how we know.) In the most recent data, this number stood at 21.1 million workers or 13.9 percent of the labor force.

This is also roughly the same as the share in 2003, but the endpoints conceal an important pattern. Voluntary part-time had dropped considerably until 2014 when the main provisions of the Affordable Care Act. The number of people choosing to work part-time rose from 18.9 million in 2013 to 20.9 million last year, an increase of 10.6 percent. This is presumably due to the fact that people were now able to get insurance without working at full-time jobs.

 

Addendum

I thought I would add the link to our paper showing that the rise in voluntary part-time is almost entirely among young parents, the people who we would expect health care insurance to be most important to. Also, just to give numbers here, taking averages for the last three months (single month data is erratic) the number of people reporting that they are working part-time for non-economic reasons rose by 291,000 from the last three months of 2011 to 2012, then fell by 38,000 the following year. In the first year the ACA was fully in effect it rose by 1,043,000.

 

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The Commerce Department gave us more news today indicating that manufacturing isn't bouncing back like Donald Trump promised. The Commerce Department released its data on construction spending for December.

It turns out that construction of manufacturing plants is down by 11.7 percent from its December 2016 level. It was running at $60,595 million annual pace in December of 2017, down from a $68,624 pace in December of 2016. This probably shouldn't be a surprise given the $50 billion (0.26 percent of GDP) increase in the size of the trade deficit, but it does go against President Trump's promises about bringing back manufacturing.

Another noteworthy change was a drop in construction spending on power plants of 10.8 percent. Also, spending on religious facilities fell by 8.3 percent.

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Some folks may have been impressed with Donald Trump's plan for $1.5 trillion in infrastructure spending over the next decade. This is both because they have little sense of the size of the economy and also because they don't realize that he is not proposing for most of this spending to come from the federal government.

While he didn't lay out a specific plan, past documents indicate that he wants the federal government to increase spending by $200 billion, with the rest coming from state and local governments, as well as private investors. Since GDP is projected to be almost $240 trillion over the decade, Trump is proposing to spend an amount equal to a bit more than 0.08 percent of projected GDP.

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An important provision of the new federal tax code was the capping of the deduction for state and local taxes at $10,000. This was an explicit hit at states like New York and California, which have relatively high tax rates in order to provide relatively high-quality services in areas like education and health care. These states also tend to vote Democratic in national elections.

One way that these states can partially get around this cap is by replacing a portion of the state income tax with an employer-side payroll tax. This can be in such a way that almost no one would end up paying more in state taxes, but they would effectively be able to still deduct their taxes from their federal income taxes.

The way a payroll tax works is that an employer pays it on the worker's wage. If a worker gets paid $50,000 a year and we impose a 5 percent employer-side payroll tax, then the employer would pay $2,500 on this worker's pay.

Economists generally believe that employer-side payroll taxes come out of wages. Employers don't care whether they have to pay the money to the worker or to the government, they will pay the same amount in either case. (To make the transition as easy as possible, it should be done in two or three steps, which would mean that workers would more likely be foregoing pay increases rather than looking at actual cuts in pay.)

In this case, the new payroll tax would lead to a reduction in this worker's pay of $2,500 to $47,500. But if the worker had been paying 5 percent of their wage to the state income taxes, they are in the exact same position as they had been in previously. They have $47,500 income after the money paid to the state in taxes.

The big difference comes when they pay their federal income tax. If they getting paid $50,000 and are unable to deduct their state taxes from their income, they will pay federal taxes on the full $50,000. However, with the employer side payroll tax, they will only pay income tax on the $47,500 they get paid by their employer. This will save them from paying income tax on $2,500 and also Social Security and Medicare taxes on this money.

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The centerpiece of the Republican tax cut was a big reduction in the corporate tax rate, lowering it from 35 percent to 21 percent. While critics argued this was just a handout to shareholders, who are overwhelmingly wealthy, the counter was the tax cut would lead to a surge in growth, which would benefit everyone.

The logic is that a lower tax rate provides more incentive to invest. With new investment in plant, equipment, and intellectual products, productivity will rise. Higher productivity will mean higher wages, which is good news for the bulk of the population that works for a living.

We got the first test of the jump in investment story today when the Commerce Department released data on capital goods orders for December. It is not good for the Republican position. New orders actually fell for the month, dropping by a modest 0.1 percent from the November level. Excluding aircraft orders, which are highly volatile, orders fell 0.3 percent.

These are not huge declines and this series is always erratic, so no one should make a big deal about the reported fall in December. But it certainly is hard to make the case here for some huge tax-induced jump.

If folks think it's too early to make any assessment, let's take the Republican argument at face value. They claim that the tax rate makes a huge difference in the investment decisions of firms. While the bill was just signed into law at the end of last month, it was pretty much a sure deal by the 20th. Furthermore, the basic outline was on the table at the start of September.

If the tax rate is really a big deal for investment decisions, then corporate America should have been putting together its list of likely projects as soon as a big tax cut became a clear possibility back in September. By December, forward-looking firms should have been ready to jump as soon as they knew the tax cut would be a reality.

This means that we should have seen at least some of these orders being registered before the end of the year. The fact that there is zero evidence of any uptick suggests that investment decisions are not as sensitive to tax rates as claimed.

It is, of course, early — maybe the January data will tell a different story. But so far, it doesn't look the Republicans have much of a case. The tax cuts definitely made the rich richer, at this point we don't have much evidence they will help anyone else.

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A couple of days ago, Treasury Secretary Steven Mnuchin touched off a firestorm by saying something that is obviously true. He said that a lower-valued dollar would reduce the trade deficit. 

As I pointed out yesterday, this is based on the radical concept of downward sloping demand curves. The idea is that when the dollar falls in value relative to other currencies, it makes goods and services produced in the United States cheaper for people living in other countries. This means that they will buy more of our exports.

On the other side, a lower-valued dollar means that we will pay more for imports. This means that we would buy fewer goods and services from other countries and instead buy domestically produced goods and services.

With fewer imports and more exports, we have a smaller trade deficit. It's all pretty straightforward. But for some reason, Mnuchin's comments prompted widespread outrage, with former Treasury Secretary Larry Summers leading the charge.

For the most part, the complaints don't make much sense (yeah, a lower-valued dollar raises the price of imports — that's the point), but one of the central lines seems to be the idea that the Treasury Secretary is not supposed to try to talk down the value of the dollar. I'm not sure where that appears in the Constitution, but others have violated this sacred principle.

For example, Lloyd Bentsen, one of Summers' predecessors as Treasury Secretary in the Clinton administration, quite openly suggested that the US would benefit from a lower-valued dollar. Going back a little further, James Baker, who was Treasury Secretary during the Reagan administration, negotiated a decline in the value of the dollar with our major trading partners in the 1985 Plaza Accord. In short, the idea that the Treasury secretary has some obligation to blather about the virtues of a "strong dollar" has no basis in either economics or history.

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The level of ignorance among people who report on economic issues can really be astounding sometimes. Steven Mnuchin made a statement about trade that is almost definitionally true. He said a weaker dollar would improve the trade balance.

This is associated with the idea that a low price increases demand. When the US dollar falls, our exports are cheaper to people living in other countries. Fans of economics believe this will cause them to buy more US exports.

On the other side, imports are more expensive for people in the United States. This will mean that we will buy fewer imports and instead purchase more domestically produced items.

Somehow, the fact that Mnuchin accepts this simple economics is deemed major economic news. Of course, it does follow from this that a lower valued dollar would reduce the trade deficit. Mnuchin did not go so far as to argue for a lower valued dollar, unlike some prior Treasury Secretaries, but if the Trump administration actually cared about the trade deficit, this would be the logical way to go.

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Morning Edition had a lengthy segment telling us that most workers are not worried about automation, even though we hear so much about it. Insofar as this is accurate, these workers are in agreement with the bulk of the economics profession.

Productivity growth (the rate at which technology is displacing workers) had slowed to roughly 1.0 percent annually in the years since 2005. This compares to a 3.0 percent growth rate in the decade from 1995 to 2005 and the long Golden Age from 1947 to 1973. Most economists expect the rate of productivity growth to remain near 1.0 percent as opposed to returning back to something close to its 3.0 percent rate in more prosperous times.

This difference is actually central to the disputes between the Trump administration and Democrats over the tax cuts. The Trump administration argued that the economy could grow at 3.0 percent annually, which would imply productivity growth somewhat over 2.0 percent. Most Democrats derided this view.

If we see a more rapid pace of automation then a 3.0 percent growth rate should be possible. If we actually got back to a 3.0 percent rate of productivity growth, then we could see GDP growth of close to 4.0 percent.

It is also worth noting that the high productivity growth in the period from 1947 to 1973 was associated with low unemployment and rapid wage growth. If another productivity upturn instead leads to high unemployment and weak wage growth it will be the result of deliberate policy to shift the benefits of productivity growth to those at the top end of the income distribution (e.g. government-granted patent and copyright monopolies, high interest rates by the Fed, and trade policy that protects doctors and other highly paid professionals from competition — all discussed in Rigged [it's free]). It will not be the fault of the robots.

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That seems like a reasonable question to ask. After all, we spend far more on prescription drugs, probably more than $470 billion or 2.4 percent of GDP this year, than we do on washing machines. And the protectionist barriers are far larger with drugs than with washing machines. Rather than adding 20 percent or 50 percent to the price of a washing machine, government-granted patent monopolies typically raise the price by around 1000 percent and sometimes more than 10,000 percent. And people don't die due to lack of access to washing machines. And just as tariffs lead to economic waste and corruption, so do patent monopolies, except on a hugely greater scale.

It is probably worth noting that the people who benefit from protectionist measures on prescription drugs are overwhelmingly higher income and well-educated. The people who are ostensibly supposed to benefit from Trump's tariffs are manufacturing workers, most of whom do not have college degrees.

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Actually, I really have no idea how hard Marvin Goodfriend works, but he did get everything wrong. Paul Krugman has a nice piece on Goodfriend, who is Trump's nominee to be a governor of the Federal Reserve Board.

In this position, Goodfriend will have a major role in setting the country's monetary policy. Goodfriend had been a persistent critic of the Fed's efforts to boost the economy, expressing serious concerns about runaway inflation in the early days following the crash. He also thought it was pointless for the Fed to try to get the unemployment rate much below 8.0 percent.

But, America's a great country. Driving a school bus into oncoming traffic shouldn't ruin one's career as a bus driver and not having a clue on monetary policy shouldn't keep you from being put in the driver's seat at the Fed.

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The 750 is a rough guess, but the NYT touted Macron's commitment to "invest more than €15 million" in retraining programs. If we assume that a program cost 20,000 euros per worker (about $24,000), then 15 million euros should be enough to retrain somewhere around 750 workers. Since France's labor force is almost 30 million, it may not be surprising that the French unions are not overly impressed with this commitment.

The piece presents France's economy as lacking dynamism. This is not consistent with most data comparing France to other countries. According to the Conference Board, France's GDP per hour of work was near the top in Europe in 2012 (the last year for which this series is available), slightly above Germany.

The piece notes that France's unemployment rate has been "persistently stuck at more than 9 percent for nearly a decade." However, its employment rate for prime-age (ages 25 to 54) workers is 80.2 percent, 1.7 percentage points higher than in the United States.

It also includes a reference to France's rough unemployment rate "of more than 25 percent." This is misleading since, unlike in the United States, most French young people are not in the labor force. Since college is nearly free and students get stipends to cover their cost of living, most colleges students don't work. The percent of the youth population in France that is unemployed is close to 9.0 percent, not much higher than in the United States.

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It didn't actually directly say this, but that is certainly a likely outcome of one of the scenarios it describes in its description of some of the possible effects of ending NAFTA. After describing the ways in which the US and Canadian pork industries have become integrated and the possible impact of the end of NAFTA on this integration it tells readers:

"But this agricultural supply chain would be disrupted in other ways. American pork would face a tariff of 20 percent when moving into Mexico, which generally has higher tariffs. That would hurt American farmers."

If Mexico did, in fact, impose a tariff on imports of American pork it would lower the price of pork in the United States. (That's what it means to hurt American farmers.) Lower pork prices are of course bad news for those in the industry (and those who care about animal rights) but are good news for the vast majority of people in the United States who are not employed in the industry.

The point here is that the effort to imply that repealing NAFTA would be an economic disaster is largely overblown. Most of the likely impacts would be small and in most cases, there would be gains offsetting the losses, even if the latter might be larger than the former.

Also, the repeal of NAFTA does not mean that all three countries would adopt the highest possible tariffs allowed under the WTO. It's not clear that Mexico's government would think that it would improve its popularity if it made people in Mexico pay 20 percent more for pork due to a tariff. Presumably, US pork would eventually be replaced by pork from other countries, but the net effect will still almost certainly be higher pork prices for Mexican consumers. That is both bad economics and in all probability bad politics.

NAFTA was originally sold to the public with a slew of completely dishonest arguments about how it would lead to a boom in exports to Mexico and be a massive source of job creation. This was not at all what economic theory predicted and of course, it is not what happened. It would be nice if the argument for retaining NAFTA was not based on the same sort of deceptions.

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