Beat the Press is Dean Baker's commentary on economic reporting. Dean Baker is co-director of the Center for Economic and Policy Research (CEPR).

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The New York Times told readers this morning that the European Central Bank (ECB) would like to cut back on its quantitative easing program but is reluctant to do so because of the weak dollar. The piece notes that a weak dollar reduces the euro zone's trade surplus with the United States. Also by making low-cost imports available, it undermines the ECB's effort to raise inflation to its 2.0 percent target.

The piece explains the weak dollar:

"There’s not much Mr. Draghi can do about the weak dollar, which analysts say reflects pessimism about the ability of President Trump and Congress to agree on legislation that many economists believe would help goose growth in the United States, such as infrastructure programs or corporate tax reform.

"'Investors no longer trust the American government to push through tax reform and fiscal stimulus,' Alwin Schenk, a portfolio manager at the German bank Sal. Oppenheim, said in a note to clients.

"The dollar’s decline is also an expression of the nervousness investors feel about geopolitics, primarily nuclear saber-rattling by North Korea and bellicose rhetoric from Mr. Trump. The euro is seen as a safe haven from the turmoil."

This would be a compelling story except for the fact that the dollar is actually quite high relative to euro, as can be seen.

fredgraph17

The real value of the dollar measured against the euro is well below its average since its creation. It is more than 15 percent below the peaks hit in the middle of the last decade. While the dollar is down from its value last year, this follows a long period in which its value increased by more than 20 percent in value against the euro. (The chart shows the value of the euro, so a drop means a rise in the value of the dollar.) The complaint about a low dollar is especially bizarre since the United States has a trade deficit and the euro zone has a trade surplus.

Hopefully, this confusion about the value of the dollar stems from the NYT's reporting and does not represent the actual thinking at the ECB.

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In listing bad things that Donald Trump is doing for the economy, Washington Post business reporter Heather Long included his threat to end the trade deal with South Korea. The piece noted that U.S. beef exports to South Korea topped $1 billion last year. While this is intended to be a big deal, it is not clear that it is.

This amount is roughly 1.5 percent of total beef production. More importantly, it is wrong to imply that this output would just sit and rot if the trade deal were cancelled. While South Korea might reduce its imports of beef from the United States, it is unlikely they would go to zero even if the deal was cancelled. If the U.S. is the lowest cost provider of beef to South Korea, the government would effectively be punishing its own people by denying access to U.S. beef. Democratically elected governments usually don't think it's good politics to punish their people.

The other point is that insofar as U.S. beef exports to South Korea are replaced by another supplier, it will be opening up a new potential market for the United States. For example, if Brazil, the world's #2 beef producer, began exporting another $500 million in beef to South Korea, by diverting exports that had previously gone to other countries, then these other countries would offer a new potential market to the United States.

It will be the case that the result of Trump cancelling the trade deal will be somewhat lower U.S. beef exports, resulting in beef producers getting slightly lower prices in the United States, but the idea that this would be some sort of catastrophe for them does not make sense. (FWIW, I think it is a bad idea to pull out of the trade deal.)

The piece also attributes the fall in the stock market yesterday to the uncertainties created by Trump's threats on the trade deal, ending DACA, and the risks of war with North Korea. While this is possible, it is also possible that investors are getting concerned that they will not see the promised tax cuts as the recovery from Harvey just increases the congressional agenda for the fall. It is also possible that the fall had nothing to do with anything, which is often the case with stock market fluctuations.

 

Addendum:

I forgot to add that if the prices received by domestic beef producers falls, this means lower prices to consumers in the United States, which will free up more money to spend on other items. This effect will almost certainly be trivial, but that's because the impact of any changes in exports is likely to be trivial, in spite of the claims of highly paid lobbyists and the promoters of these trade deals in the media.

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Just in case you were wondering how big a deal this is for the budget. Put another way, it is equal to about $25 for every person in the country. It might have been helpful to include such information in this NYT piece given the paper's commitment to putting numbers in context.

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That seems to be the argument by Rana Foroohar in a Financial Times column (sorry, behind paywall). The argument is that because recent changes to the patent law have made it easier to challenge inappropriately granted patents, inventors are unable to benefit from their inventions. She argues that this is causing companies to shift their research to other countries where their patents enjoy more protection.

There are two problems with this story. The first is that the United States has a notoriously lax patent system. In 1999, a patent was granted for a peanut butter and jelly sandwich. Unlike many countries, the United States does not allow pre-patent challenges from other parties. While recent reforms have made it easier for competitors to challenge a patent, the system in the U.S. is almost certainly still more patent-friendly than in almost any other country.

However, the more important point is that there is no connection between the strength of patent protection and where research is conducted. Under a wide variety of treaty commitments, the United States and other major countries are prohibited from discriminating in patent issuance and enforcement based on the country in which the research was conducted. This means that, contrary to the claim in the column, a lessening of patent strength in the United States would provide absolutely zero incentive for a company to shift its research to Europe or China.

If the people running the company are familiar with arithmetic, they would do their research in the low-cost country regardless of its level of patent enforcement. In other words, there could be reasons to worry about our patent laws not sufficiently protecting innovation (unlikely), but the threat of moving research is not one of them.

 

Addendum

jconroy4989 points out in his comment that as of September 2012 there has been a mechanism, "pre-issuance patent submissions" through which third parties can submit information arguing against the granting of a patent. In this way, the United States was getting more in line with most other countries which had long allowed for pre-issuance challenges.

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An NYT article, headlined "Minnesota finds way to slow soaring health premiums," reported on how the state is now paying insurers $270 million in each of the next two years to keep down the cost of premiums in the health care exchanges. It may not have been entirely clear from reading the piece that the reduction in premiums is the result of a state subsidy of $1,700 per patient per year.

Thanks to Robert Salzberg for calling this to my attention.

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The average hourly wage has risen by 2.5 percent in the last year. We have that on pretty good data from Bureau of Labor Statistics. That's okay in a context of inflation around 1.7 percent (it translates into 0.8 percent real wage growth) but hardly great. It is not keeping pace with trend productivity growth and is not allowing much catch-up from the bad years in the Great Recession and the immediate aftermath. It also indicates no acceleration from the last two years in spite of unemployment rates that are below the level at which point most economists expect wages to be accelerating.

There have been several efforts to pump up this number to make things look better. Robert Samuelson tells us about one, a study by the San Francisco Fed that shows the median wages of full-time workers who have stayed with the same employer for the last year has risen by 4.0 percent over the last year. While Samuelson (whose piece mistakenly links to this AEI publication rather than the San Francisco Fed paper) tell us that this gap is due to retiring baby boomers being replaced by lower paid younger workers, the study shows that only around 0.5 percentage points of this gap can be explained by retirements.

Furthermore, the study indicates that this effect depressed wages by around 0.2 percentage points in the years 2002–2007, so increasing retirements can only explain about 0.3 percentage points of the slowdown in wage growth compared to the first half of the last decade. The retirement of the baby boomers offers no help on the issue of wage growth not accelerating in the last year since the study indicates it has been somewhat less of a factor in this period than in 2015.

It is also worth recognizing what a narrow group of workers this is describing. These are workers who have been employed full-time by the same employer for at least a year. More than 27 million workers are presently employed part-time (22 plus million choose to work part-time). More than 5 million workers lose or leave their job every month. So this growth figure refers to a relatively privileged segment of the workforce. It is also a figure that includes a tenure and experience premium since by definition these workers have a year's more experience in 2017 than they did in 2016.

It's nice to see that Samuelson can cherry pick data to find groups that appear to be doing somewhat better than average, but this is not a way to seriously assess conditions in the labor market.

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This is an important point that Neil Irwin slips up on in an otherwise excellent piece on the growing practice of outsourcing among major corporations. The piece contrasts the experience of Gail Evans, a black woman working as a custodian for Eastman Kodak in the 1980s, with the experience of Marta Ramos, a Hispanic woman who is currently employed doing custodial work at Apple's headquarters. While the woman working at Kodak was actually an employee of Kodak, the woman working at Apple is employed by a company that contracts with Apple.

Irwin notes the growing practice of outsourcing many tasks and in the third paragraph writes:

"The approach has made companies more nimble and more productive, and delivered huge profits for shareholders."

As the piece subsequently explains, it is not at all clear that this outsourcing of jobs had made companies more productive. It has almost certainly made them more profitable since there is considerable evidence that workers employed by contractors are paid less than they would be if employed by the parent organization. But this is just shifting the location of a relatively low productivity job from the company to the contractor, it does nothing to increase economy wide productivity.

In fact, from an economy wide perspective, it may well do the opposite. As the piece points out, Kodak employees enjoyed considerable job security. If there was no need for their work in one part of the company, it would look to transfer them to another part where they could be used. This meant that the company was effectively preventing workers from suffering unemployment and turning to government services during a downturn or shift in demand.

The piece also describes how Kodak created an internal job ladder through which Ms. Evans was able to rise into managerial and eventually executive positions. There are no comparable job ladders for Ms. Ramos. This also shifts a responsibility from the company to the government. While Kodak was prepared to devote resources towards training and developing the skills of its lower level employees, Apple is leaving this to the government. This may improve Apple's profitability, but there is no reason to believe that this shift in responsibility leads to any productivity gains for the economy as a whole.

Essentially Apple and other leading tech companies have profited in part from being able to shift to the government responsibilities to workers that major companies had carried themselves in prior decades. This is to a large extent the point of Irwin's piece, but it is important to be careful about wording. There is no evidence that this shift has led to any gains in productivity, even if it has increased profits at a small number of giant firms.

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It must be great to be able to read people's minds. Most of us lack that ability, but thankfully the Washington Post was able to find a reporter who could tell us Emmanuel Macron's motives in moving to weaken France's labor laws in a way that gives businesses more power and workers less. Those of us who lack mind reading ability might have thought that Macron was motivated by a desire to give businesses more power and workers less. After all, he is a wealthy person who made a fortune in investment banking. He also won without much support from France's labor unions.

But the Post can tell us Macron's true motives:

"...to stimulate economic growth and lower unemployment, now over 9 percent."

This is especially not obvious since the most effective way to boost growth and reduce unemployment would be to increase spending, something that Macron is not planning to do. It is far from obvious that the labor market reforms described in this piece will have the effect of boosting growth and lowering unemployment, so it seems that Macron is badly confused.

The piece also makes many assertions that are wrong or misleading. It tells readers in the second sentence:

"Find one of those golden tickets and you basically cannot be fired, even if you stop performing."

This is a Washington Post invention, like the claim that Mexico's GDP quadrupled between 1987 and 2007 due to NAFTA (the actual growth figure was 83 percent, according to the I.M.F.). It is simply not true, employers absolutely can fire workers in France if they can show they are not doing their jobs.

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Donald Trump can boast at least a little bit about the return of manufacturing jobs during his presidency. Employment in the sector is up by 125,000 since January. It's not exactly a boom, after all, we are still down by almost 1.3 million jobs from the pre-recession level and 4.8 million from where we were in 2000, but at least it is movement in a positive direction.

In an NYT Upshot piece, Neil Irwin sorts out the reasons for this modest uptick in manufacturing jobs. He points to a small increase in oil prices and a drop in the dollar, both of which are likely factors. (He also points to weak growth in government employment. I'm not sure how that matters here.)

However, Irwin left out what might be the most important reason for the increase in manufacturing jobs: weak productivity growth. According to the Bureau of Labor Statistics, output in manufacturing has increased at 2.0 percent annual rate in the first half of 2017. This would mean that if we had a modest 2.0 percent rate of increase in productivity in the sector (manufacturing productivity usually grows faster than the rest of the economy), we would have no need for more labor, and presumably no new jobs.

But now America is great again, manufacturing productivity has slowed to a crawl, increasing at just a 1.4 percent annual rate in the first half of the year. So, there we have it, extraordinarily weak productivity has translated into 125,000 new manufacturing jobs under President Trump.

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Washington Post columnist Thomas Heath discussed a plan being considered by Republicans to end the tax deductibility of contributions to IRAs and 401(k)s. Under the proposal, the contributions would be subject to taxes, but all withdrawals would be tax free. This would in effect make all retirement accounts like Roth IRAs, which many people now contribute to voluntarily.

Incredibly, Heath did not make the obvious point, this change doesn't actually save the government any money, it just changes the timing of tax collections. The government will collect more tax revenue now, as people place money into retirement accounts, but less money in the future when people are pulling the money out.

Mandating this change is a cheap trick that only makes sense as a way to hide the cost of a tax cut. This would have been worth pointing out to readers who might otherwise think that this switch serves a real purpose.

In discussing the debate over IRAs and 401(k)s as policy, it would have also been worth mentioning the argument of critics that they rip people off. The actual cost for the financial industry of maintaining and IRA or 401(k) is very low. (Vanguard doesn't charge anything, getting its costs covered by the fees on individual funds.) Nonetheless, the average fee for an account (on top of the cost of individual funds) is close to 1.0 percent annually, with many companies charging more than 1.5 percent.

This means that someone with $120,000 in an IRA is paying $1,200 to a bank or insurance company each year for nothing. This is a great welfare program for the financial industry, but it is a needless tax on savings. These fees can be reduced with better regulation. Also, states like California, Oregon, and Illinois are making their government-run programs for public employees, which have much lower fees, available to workers in the private sector.

The Trump administration has attempted to block these state programs and efforts at better regulation. It argues that people in the financial industry are too incompetent to make an honest living so that they need the government to stack the rules in their favor so that can get the six and seven figure salaries they have come to expect.

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As a result of the fact that he vacations at Mar-a-Lago and his New Jersey golf club, demands protection for his adult children, and had his wife and youngest son stay in New York for the first five months of his presidency, Donald Trump has added $120 million to the annual cost of providing protection for the president compared with what a normal president would require. The New York Times reported that he pledged to contribute 0.8 percent of this amount ($1 million) to help the victims of Hurricane Harvey. If he follows through on this pledge, it means the public will only be down $119.0 million ($119.4 million, after taking account of the tax deduction).

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One of the ways in which the government pays for things it wants done is to grant patent and copyright monopolies. This is not a statement about the merits of patents and copyrights as mechanisms for financing research and creative work; it is a definition. The government grants these monopolies to allow companies to charge prices that are far above the free market price as a reward for its past innovation or creative work.

In this way, patent or copyright monopoly can be thought as being like a privately imposed tax. If a drug company like Gilead Sciences can charge $84,000 for a Sovaldi, when the free market price would be something like $300, it has the same effect on the public as if the government imposed a tax of 28,000 percent on Sovaldi. It is the same amount of money out of people's pockets.

We can argue about the merits of patent and copyright monopolies (see chapter 5 in Rigged [it's free]), but the fact that they are alternative mechanisms that the government uses to finance research and creative work is not an arguable point. If we spent another $400 billion a year on research (roughly 20 percent of annual income tax collections), this would show up in the deficit and add to the debt. Yet somehow we are supposed to not pay attention when the government grants patents and copyrights that add hundreds of billions of dollars to what we pay for drugs, medical equipment, software and other protected items. (By my calculation, drug patents and related protections add close to $400 billion to what we spend each year on prescription drugs alone.)

This obvious point is missing from almost all the whining about the debt and deficit (see here for today's example). The additional costs the public pays for items as a result of granting patent and copyright monopolies are never mentioned as burdens imposed on future generations. Somehow, we are not supposed to be concerned about making our kids pay huge amounts of money to Pfizer and Microsoft, it's only a burden when the money has to be paid to the government.

That might fly as cheap political rhetoric, but it doesn't make sense. And the people who talk about debts and deficits without mentioning patent monopolies deserve only ridicule, they should not be taken seriously. 

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Fans of economic policy are used to the old "night is day," "down is up," approach to economic policy. After all, much of the media are worried about robots taking all the jobs even as the data from the Bureau of Labor Statistics show that productivity growth (the rate at which robots are taking jobs) is at a record slow pace.

That's why it is hardly surprising to hear the argument being taken seriously that reducing corporate taxes will lead to more investment and thereby greater wage growth in the future. The data from the last seventy years show there is no relationship between aggregate profits and investment.

fredgraph16

As can be seen, there is no evidence that higher corporate profits are associated with an increase in investment. In fact, the peak investment share of GDP was reached in the early 1980s when the after-tax profit share was near its post war low. Investment hit a second peak in 2000, even as the profit share was falling through the second half of the decade. The profit share rose sharply in the 2000s, even as the investment share stagnated. In short, you need a pretty good imagination to look at this data and think that increasing after-tax profits will somehow cause firms to invest more.

Having said this, there is a good argument for reforming the tax code in a way the reduces the opportunities for gaming. The tax avoidance industry is both an enormous waste and an important source of inequality. The resources spent on avoiding taxes, in the form of lawyers, accountants, and corporate engineering, are a complete waste from an economic standpoint. Also running tax avoidance scams allows some people to get very rich. The private equity industry is to a large extent a tax avoidance scam.

So it would be a big gain for the country if the tax code could be restructured in a way that eliminates most of the opportunities for gaming. As I have written before, my preferred approach is requiring companies to turn over a percentage of their stock in the form of non-voting shares, which would be treated exactly like voting shares in terms of dividends and buybacks. This would make it impossible for companies to cheat the government unless it was also cheating its stockholders.

Anyhow, that my preferred route, but it's probably too simple to get anywhere.

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I may have missed it, but the coverage of Dara Khosrowshahi's pick to be the CEO of Uber seemed to leave out the fact that he is a board member of the New York Times. This would seem to be a point worth mentioning in his profiles. It's also an item that we would especially expect to see in NYT pieces on Mr. Khosrowshahi.

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The NYT had a piece on efforts to reduce loopholes to ensure the government actually collects in taxes something close to the targeted rate. The piece likely left readers with the belief that it was not possible to establish such a system.

Actually, it is not hard. If the government required companies to turn over a percentage of its stock in the form of non-voting shares, which are treated exactly like voting shares in terms of dividends and buybacks, it would be impossible for companies to cheat the government unless it was also cheating its stockholders. This means that if the targeted tax rate is 25 percent, companies turn over an amount of shares equal to 25 percent of the total. If the company pays a $2 dividend to its other shares, it also pays a $2 dividend to the government. If it buys back 10 percent of its shares at $100 each, it also buys back 10 percent of the government's shares at $100 each.

Anyhow, we could construct this sort of share system to ensure the government gets its share of corporate profits, but it's probably too simple for policy types to understand.

 

Addendum

An important point that is often missed in this debate is that the tax avoidance industry is both an enormous waste and an important source of inequality. The resources spent on avoiding taxes, in the form of lawyers, accountants, and corporate engineering, are a complete waste from an economic standpoint. Also, running tax avoidance scams allows some people to get very rich. The private equity industry is to a large extent a tax avoidance scam. It has produced some of the very richest people in the country. For this reason, a reform to the tax code that substantially reduced the opportunities for gaming would be a big gain from a progressive perspective even if led to a small loss of tax revenue from the corporate sector.

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Reporters in principle have the ability to get behind the assertions of politicians to tell readers whether they are true or not. Unlike most news readers, they are supposed to have the time and necessary expertise to assess claims being made.

This is why it is striking that Politico reported on the strategy of Trump and Republicans to present their tax cut plan as a populist measure for the middle class as though they were reviewing a play at the theater. While the specifics of the Trump/Republican plan are not yet known, the outline is. It will feature large tax cuts for the rich and trivial tax cuts for everyone else. If the cost of the tax cuts is offset by spending cuts, the typical middle-class family is virtually certain to end up a big loser.

In other words, presenting the tax cut as a populist measure aimed at helping the middle class at the expense of the rich is a lie. Politico's reporters presumably know it is a lie, but decided not to share this information with readers. Apparently, they want to assist Trump and the Republicans in their efforts to deceive the public so that the rich can be made even richer with this tax cut.

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The 11 countries left in the Trans-Pacific Partnership following the withdrawal of the United States are still looking to finalize the deal. One of the changes they are considering, now that the U.S. has left, is to eliminate rules that would require countries to strengthen patent-related protections for prescription drugs. These protections could hugely raise the price of prescription drugs. Patents and related protections can often be equivalent to tariffs of several thousand percent on the protected items. 

The push to remove the protectionist rules is apparently coming from Vietnam. Now that the U.S. pharmaceutical industry is no longer at the table, the remaining countries seem willing to go along. If the final deal excludes these rules, it could be a useful precedent for other trade deals.

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We are seeing many terrible pictures from Houston as a result of Hurricane Harvey. People with young children and pets are wading through high water in the hope of being rescued by boat or helicopter. Elderly people in nursing homes are sitting in waist high water waiting to be rescued. It's a pretty horrible story.

One thing we can feel good about is that because the United States is a wealthy country, we do have large numbers of boats and helicopters and trained rescue workers able to assist the victims of the storm. We also have places where we can take these people where they will have shelter, as well access to food and medical care. However bad the human toll will be from Harvey, it would be hugely worse without these resources.

This might be a good time for people to take a moment to think about Bangladesh, a densely populated country on the other side of the world. More than 160 million people live in Bangladesh. Almost half of these people live in low-lying areas with an elevation of less than 10 meters (33 feet) above sea level.

Bangladesh experiences seasonal monsoon rains which invariably lead to flooding, as well as occasional cyclones. The monsoon rains and cyclones are likely to get worse in the years ahead, as one of the effects of global warming. This will mean that the flooding will be worse.

Bangladesh does not have large amounts of resources to assist the people whose homes are flooded. It does not have the same number of boats and helicopters and trained rescue workers to save people trapped by rising water. Nor can it guarantee that people who do escape will have access to adequate shelter, medical care, or even clean drinking water. This means many more people are likely to be dying from floods in Bangladesh in part as a result of the impact of global warming.

Emissions of the greenhouse gases responsible for global warming are often treated as a natural market outcome, whereas efforts to restrict emissions are viewed as government intervention. This is nonsense.

Allowing people to emit greenhouse gases without paying for the damage done is like allowing them to dump their sewage on their neighbor's lawn. Everyone understands that we are responsible for dealing with our own sewage and not imposing a cost on our neighbor. It's the same story with greenhouse gases.

It is understandable that a rich jerk like Donald Trump might not want to pay for the damage he does to the world, especially when the people most affected are dark-skinned, but it is not a serious position. The emissions from the United States and other wealthy countries will result in a lot of Harvey-like disasters in Bangladesh and elsewhere in the developing world. We have to take responsibility for this human catastrophe.

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Someone who had no knowledge of trade deals like NAFTA and the TPP would be justified in thinking they must be really bad news since their supporters have to make up obviously absurd claims to push their position. George Will is on the job this morning in his Washington Post column.

"Mark Perry of the American Enterprise Institute says that in the past 20 years the inflation-adjusted value of U.S. manufacturing output has increased 40 percent even though — actually, partly because — U.S. factory employment decreased 5.1 million jobs (29 percent). Manufacturing’s share of gross domestic product is almost unchanged since 1960. 'US manufacturing output was near a record high last year at $1.91 trillion, just slightly below the 2007 level of $1.92 trillion, and will likely reach a new record high later this year,' Perry writes. That record will be reached with about the same level of factory workers (fewer than 12.5 million) as in the early 1940s, when the U.S. population was about 135 million. Increased productivity is the reason there can be quadrupled output from the same number of workers. According to one study, 88 percent of manufacturing job losses are the result of improved productivity, not 'rapacious' Chinese."

Okay, this one is in "how stupid do you think we are?" department. Guess what, the tree in my backyard is taller than ever before. Imagine that?

Yes, economies grow through time and so does productivity. That means that, in general, we expect output in most areas, like cell phones, haircuts, and manufactured goods to increase through time. So telling us we are near record levels of manufacturing output is basically telling us absolutely nothing. It is the sort of thing that only a cheap demagogue or someone totally ignorant of economics would do.

The basic story is that we have seen productivity growth in manufacturing as in all areas. Since growth has been somewhat faster in manufacturing, it has meant that manufacturing jobs have declined as a share of total employment, but generally, the increase in demand has been enough to keep employment in the sector roughly constant. The big exception was the period when our trade deficit exploded at the start of the last decade, eventually reaching almost 6.0 percent of GDP.

Here's the picture.

Manufacturing Jobs

manu empl

Source: Bureau of Labor Statistics.

As can be seen, there is relatively little change, apart from cyclical ups or downs, in manufacturing jobs from 1970 until the late 1990s. Employment then plunges in the first half of the 2000s (before the Great Recession) due to the explosion of the trade deficit. This job loss was due to trade, but George Will and other supporters of U.S. trade policy think they have to lie to people and deny this fact.

While the trade deficit has declined somewhat in more recent years due to the drop in the value of the dollar, it is still near 3 percent of GDP (around $540 billion a year). The idea that it would not create more manufacturing jobs if we had more nearly balanced trade is absurd on its face (i.e. we could produce another $500 billion in manufactured goods every year without employing more workers), but apparently folks like George Will and the Washington Post editors want us to believe it.

Since we're on the topic of lying to promote trade deals designed to redistribute upward let's again note the famous 2007 Washington Post editorial touting NAFTA that told readers:

"Mexico's gross domestic product, now more than $875 billion, has more than quadrupled since 1987."

According to the IMF, Mexico's GDP grew by 83 percent over this period, which is pretty far from quadrupling. Honest newspapers correct their mistakes, but as the slogan at the Washington Post says, "lies in the service of giving more money to rich people are no vice."

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This point is worth mentioning in the context of a comment by Esther L. George, president of the Federal Reserve Bank of Kansas City, to CNBC yesterday. Ms. George said:

"While we haven’t hit 2 percent, I’m reminded that 2 percent is a target over the long term, and in the context of a growing economy, of jobs being added, I don’t think it’s an issue that we should be particularly concerned about unless we see something change."

Actually, the Fed's stated policy is that 2 percent is a target as a long-term average. This means that the periods of below 2 percent inflation should be roughly offset by periods of above 2 percent inflation.

Most forecasts show the inflation rate remaining under 2 percent for at least the near term future. At some point, the economy will have another recession, during which the inflation rate is almost certain to fall. This means that if the inflation rate is just reaching 2.0 percent at the point the economy enters a recession, the Fed will have seriously undershot its stated target.

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I appreciate the work that Glenn Kessler does as the writer of Washington Post's Fact Checker column. It's a difficult job. I don't always agree with his assessments, but I think he tries to be fair in his analysis. For this reason I was disappointed to see him max out with four Pinocchios over Donald Trump's trade representative Robert Lighthizer saying that NAFTA led to a government certified loss of 700,000 jobs.

According to Kessler, the basis for this figure is the 757,000 petitions for NAFTA-related trade adjustment assistance that were certified by the Labor Department between Jan. 1, 1994 and Jan. 1, 2001. Kessler raises three major objections to this figure.

First, he argues that the number is old. This is true, but it is difficult to see why that is relevant. There may have been some additional NAFTA related job loss in subsequent years, but that would make the number higher not lower. Complaining that the number is dated would be a bit like criticizing a figure for the number of traffic accidents in 1995. Presumably, there has been no major recalculation of the number of accidents that took place in 1995, so using the originally calculated number would be reasonable for most purposes, even though it is now more than twenty years old.

The second point is that the number could be overstated because the Labor Department was very generous in accepting petitions and likely gave assistance even in instances where the job loss had nothing to do with NAFTA. This is undoubtedly true, but there also had to be many cases where workers lost jobs due to NAFTA, who never filed a petition.

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