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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It is really amazing how the political and economic establishment types feel the need to deny that trade can actually have a negative impact on manufacturing jobs and total employment in their arguments against Donald Trump's trade policies. George Will gave us a great lesson in this silliness in his column today.

Among the highlights were the claim that the loss of manufacturing jobs in the years after 2000 had little to do with the explosion of the trade deficit to almost 6 percent of GDP ($1.1 trillion in today's economy), but rather was almost all due to productivity. There are two points about this one that should immediately lead numerate types to tear up the column.

First, we always have productivity growth, that was not something that just happened in the decade of the 2000s. In spite of productivity growth, manufacturing employment changed little from 1973 to 1997, when our trade deficit first began to explode following the East Asian financial crisis and the surge in the value of the dollar. While manufacturing was declining as a share of total employment, the level remained roughly even (with cyclical ups and downs) at 17.5 million. Employment then plunged to around 12 million as the trade deficit soared. Productivity growth was not the new part of the story, the trade deficit was. (Susan Houseman has done excellent research showing that manufacturing productivity growth in the 2000s was almost entirely in the information technology sector, which means it will not explain a loss of jobs in sectors like steel and furniture.)

The other troubling item to numerate readers of Will's column is the implicit claim that if we had been producing an additional 6 percentage points of GDP worth of manufactured goods in the U.S. (e.g. another $1.1 trillion of manufacturing goods annually in today's economy) it wouldn't require any new workers. That sounds really cool. After all, it takes more than 12 million workers to produce the current $1.7 trillion in manufacturing output in the United States, so Will apparently thinks we can increase this output by 60 percent without hiring any new workers? That would be quite a surge in productivity growth, something our slow growing economy could badly use. Sounds like a great argument for protectionist measures if anyone really believed it.

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Neil Irwin used an Upshot column to address the issue of whether Donald Trump can acheive the 4.0 percent annual growth rate he has promised over the next decade. He argues that insofar as it is possible it is likely to involve two items that Trump voters may not like: job displacing innovations and increased immigration. While Irwin is right in identifying these two factors in promoting growth, there are few additional points to add to his discussion.

In the case of job displacing innovation, Irwin points to the prospect of self-driving trucks destroying up to 1.7 million long-haul trucking jobs over the next decade. Irwin notes that these jobs pay an average of $42,500 a year to workers who generally do not have a college education. (Many truck drivers do earn considerably more than this amount, especially if they are in a union.)

While the spread of self-driving trucks is likely to cost a substantial number of jobs, the savings should in principle allow other workers to be paid more. For example, the remaining workers involved in loading and offloading trucks (who might be supervising robots), should be a position to get higher pay. This was the pattern among longshoreman, as pay increased as fewer workers were needed for the job. If there are strong unions and/or a tight labor market, this can be the outcome.

The tight labor market issue brings up a second point. The Federal Reserve Board has been actively working to limit the number of jobs. This was the purpose of its rate hike earlier this month. The point was to slow demand growth in the economy and thereby reduce the rate of job creation. The rationale for this move was the fear of inflation.

Whether or not the Fed is right to fear inflation, there is a simple point here that everyone should understand. The Fed is deliberately acting to limit the number of jobs in the economy. It is more than a bit bizarre that we have people worried that automation will destroy large numbers of jobs who are fine with the Fed raising interest rates to destroy jobs. If we think there are too few jobs in the economy, then we should be very upset that the Fed, an arm of the government, is trying to keep people from getting jobs.

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Don't worry, I'm not advocating mass murder; I want to put to death a silly myth about Obamacare that keeps getting spread by people who should know better. The basic story is that Obamacare is dependent on getting large numbers of young and healthy people into the system. The premiums these people pay will help to cover the costs incurred by older and less healthy people.

The latest repetition of this myth appears in a NYT editorial urging Republicans not to destroy the Affordable Care Act (ACA). The piece notes the sharp increases in premiums last year and then told readers:

"Still, the cost of insurance, deductibles and co-payments is too high for many people, especially middle-class families that earn too much to qualify for subsidies. But the solution is not to take away the benefits of the law but to strengthen it. Costs could be lowered if more young and healthy people were encouraged to sign up to spread costs over a larger pool of people."

This comment wrongly implies that the problem of the system is that not enough young people have signed up. This is not true, the age distribution of enrollees has little impact on the cost of the program. While the distribution of premiums works slightly against the young, it is not enough to have a substantial impact on the finances of the system.

The Kaiser Family Foundation showed that even an extreme age skewing of enrollees would raise costs by less than 2.0 percent. It matters much more whether there is a skewing based on health conditions.

To see this point, think of the premium people pay as a tax. Under the ACA, people in the oldest age bracket (ages 55 to 64) pay premiums that are three times as large as people in the youngest age bracket (ages 18 to 34). This means that each older person pays three times as much into the system as a younger enrollee. This would mean, other things equal, we should value getting an older enrollee into the exchanges three times as much as a younger enrollee.

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That is in fact what his NYT column said, even though he writes it as though the opposite is the case. The basic argument is that the core Democratic constituency is in places like Silicon Valley and other tech clusters which Edsall claims are thriving in the global economy based on free trade. By contrast, he argues that Democratic populists like Keith Ellison and Bernie Sanders are trying to rally those left behind with a protectionist agenda. Edsall warns that this would run both counter to the interests of the key Democratic constituencies and threaten the country's economic future.

That is great as propaganda for the status quo, but flunks as serious analysis. The prosperity of the country's Silicon Valleys depends front and center on patent and copyright protections. These forms of protectionism have been made longer and stronger over the past four decades as a matter of conscious policy. The result has been an ever sharper divergence between the protected prices and free market prices. This is seen most dramatically in the case of prescription drugs where the ratio of the protected price to the free market price is often more than 100 to 1. This is equivalent to a tariff of more than 10,000 percent for folks who care about numbers. (Yes, we have alternatives to patent monopolies for financing research.)

We have also imposed these protections on other countries in trade deals, often at the expense of manufacturing workers. After all, getting stronger protections of drugs and software, while getting cheaper clothes and steel, is a win-win for the Silicon Valley types. 

Rigging the market to make the items produced in the country's Silicon Valleys expensive, while pushing down the price of the manufactured goods produced in the rest of the country might be good for the Silicon Valley types, it is not free trade. It is very generous for people like Thomas Edsall to provide cover for such class biased policies, but the rest of us might prefer to focus on reality.

Yes, this is the main theme of Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer (free download available here).

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There seems to be a great effort to convince people that the displacement due to the trade deficit over the last fifteen years didn't really happen. The NYT contributed to this effort with a piece telling readers that over the long-run job loss has been primarily due to automation not trade.

While the impact of automation over a long enough period of time certainly swamps the impact of trade, over the last 20 years there is little doubt that the impact of the exploding trade deficit has had more of an impact on employment. To make this one as simple as possible, we currently have a trade deficit of roughly $460 billion (@ 2.6 percent of GDP). Suppose we had balanced trade instead, making up this gap with increased manufacturing output.

Does the NYT want to tell us that we could increase our output of manufactured goods by $460 billion, or just under 30 percent, without employing more workers in manufacturing? That would be pretty impressive. We currently employ more than 12 million workers in manufacturing, if moving to balanced trade increase employment by just 15 percent we would be talking about 1.8 million jobs. That is not trivial.

But this is not the only part of the story that is strange. We are getting hyped up fears over automation even at a time when productivity growth (i.e. automation) has slowed to a crawl, averaging just 1.0 percent annually over the last decade. The NYT tells readers:

"Over time, automation has generally had a happy ending: As it has displaced jobs, it has created new ones. But some experts are beginning to worry that this time could be different. Even as the economy has improved, jobs and wages for a large segment of workers — particularly men without college degrees doing manual labor — have not recovered."

Hmmm, this time could be different? How so? The average hourly wage of men with just a high school degree was 13 percent less in 2000 than in 1973. For workers with some college it was down by more than 2.0 percent. In fact, stagnating wages for men without college degrees is not something new and different, it has been going on for more than forty years. Hasn't this news gotten to the NYT yet?

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The Federal Reserve Board raised interest rates last week and seem poised to do so again in the not distant future. The rationale is that the economy is now near or at full employment and that if job growth continues at its recent pace it will lead to a harmful acceleration in the inflation rate.

We have numerous pieces raising serious questions about whether the labor market is really at full employment, noting for example the sharp drop in employment rates (for all groups) from pre-recession levels and the high rate of involuntary part-time employment. But the story of accelerating inflation is also not right.

This is particularly important, since John Williams, the president of the San Francisco Federal Reserve Bank, cited accelerating inflation as a reason to support last week's rate hike, and possibly future rate hikes, in an interview in the New York Times this morning. Williams has been a moderate on inflation, so there are many members of the Fed's Open Market Committee who are more anxious to raise rates than him.

A close look at the data does not provide much evidence of accelerating inflation. The core PCE deflator, the Fed's main measure of inflation, has risen 1.7 percent over the last year, which is still under the 2.0 percent target. This target is an average, which means that the Fed should be prepared to allow the inflation rate to rise somewhat above 2.0 percent, with the idea that inflation will drop in the next recession.

Anyhow, the 1.7 percent rate is slightly higher than a low of 1.3 percent reached in the third quarter of 2015, but it is exactly the same as the rate we saw in the third quarter of 2014. In other words, there has been zero acceleration in the rate of inflation over the last two years.

Furthermore, even this modest acceleration has been entirely due to the more rapid increase in rent over the last two years. The inflation rate in the core consumer price index, stripped of its shelter component, actually has been falling slightly over the last year. It now stands at 1.1 percent over the last year.


Core CPI, Minus Shelter

CPI shelter

Source: Bureau of Labor Statistics.

It is reasonable to pull shelter out of the CPI because rents do not follow the same dynamic as most goods and services. In fact, higher interest rates, by reducing construction, are likely to increase the pace of increase in rents rather than reduce them.

This issue is hugely important, since if the Fed prevents the labor market from tightening further, it will be preventing millions of people from getting jobs. These people are disproportionately African American and Hispanic and also less-educated workers. The decision to tighten will also lessen the bargaining power of a much larger group of workers, making it more difficult for them to get pay increases.

The weak labor market of the Great Recession resulted in a large redistribution from wages to profits. The tightening of the labor market in the last two years has reversed part of this shift. If the Fed raises interest rates enough to prevent further tightening, then it will be locking in place this redistribution to profits. That would be bad news for tens of millions of workers, especially if the decision was based on a misreading of inflation data.

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The NYT had an interesting piece discussing the National Institutes of Health collaboration with private companies in the development of new cancer drugs. As the piece points out, this collaboration has proven very profitable for the drug companies, but leads to drugs that are very expensive because the drug companies are allowed to have patent monopolies, with no restriction on the price they charge.

It also suggests an alternative path. It shows, contrary to conventional wisdom in right-wing circles, everything the government funds is not worthless garbage. If the tables were turned, and all the funding came from the government (rather than relying on government-imposed patent monopolies), then the new drugs could be sold at generic prices since everyone already would have been paid for their research.

In many cases, the generic price would be less than one percent of the patent protected price. New cancer drugs that might sell for $100,000 for a year's treatment, might sell for hundreds of dollars. Policy types who don't work for the pharmaceutical industry should be looking into more efficient alternatives for financing drug research.

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Robert Samuelson decided to once again push the second Great Depression, applauding the Obama administration for preventing the Great Recession from turning into a depression. This is the great myth (I'm tempted to say "fake news") that establishment types push endlessly with zero foundation.

It is important for the worldview they like to promote, in which we have seen a massive upward redistribution of income over the last four decades, well you know, that's just because that is the way the world is. We may not like this rise in inequality, and after all President Obama did raise taxes on the rich and propose an increase in the minimum wage, and gave us Obamacare (all very good policies), but growing inequality is just baked into the genetics of the modern economy.

The Wall Street bailout that stands at the center of the second Great Depression avoidance myth is the world's largest slap in the face of promoters of the baked-into-the-genetics story. After all, other aspects of the rigging (yes, I'm promoting my free book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer) are more subtle.

We have free trade in manufactured goods but rigged protectionist measures that no one knows about that protect doctors, dentists, and other highly paid professionals. We have ever stronger and longer patent and copyright protections. These protections take hundreds of billions of dollars each year out of the pockets of the bulk of the population and give them to the people in position to benefit from them. Protection adds more than $350 billion a year to the cost of prescription drugs alone. We have a Federal Reserve Board that raises interest rates to throw people out of work, and keep workers from getting bargaining power, as a way of ensuring that an arbitrary inflation target is not breached.

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It really is hard to kill a false story on the state of the economy. The Economic Cycle Research Institute (ECRI) produced a report which purported to show that minorities were getting all the new jobs created by the economy and that whites were actually losing jobs. This report was made the central theme in a column by Eduardo Porter in the New York Times on Wednesday.

I pointed out that this conclusion was driven by demographics. While the number of prime age (ages 25–54) people had increased for the other demographic groups included in the analysis, it had fallen sharply for whites. This meant that the decline in employment for whites did not come from worsening labor market conditions, but rather whites retiring as they reached their sixties.

ECRI then did new analysis that looked at employment-to-population ratios (EPOPs) by age and compared November 2007 to November 2016. This showed a decline of 2.0 percentage points in the EPOP for prime age whites, while showing a modest 0.3 percentage point rise for African Americans. Porter highlighted this in a new piece on Friday. Porter also noted that ECRI find a rise in African American employment rates for the 55 to 64 age group, in contrast to a modest decline for whites in this age group.

The problem with this comparison is that the black employment data is extremely erratic so comparing single months of data can give a misleading picture. This turns out to be the case here.

As I noted, if we compare the first 11 months of 2016 with the first 11 months of 2007, the EPOP for prime age African Americans fell by 1.7 percentage points, almost the same as the 2.0 percentage point drop for whites. The decline in the EPOP for African Americans between the ages of 55 and 64 was actually slightly larger than the decline for whites in this age group.

Unfortunately, the Washington Post chose to highlight the response of ECRI to the initial complaints without checking with anyone familiar with the data. This leaves the mistaken impression that whites have fared worse than other demographic groups since the collapse of the housing bubble.

The take away is that workers, and especially workers without college degrees, have fared poorly in recent years. This gives them ample grounds for complaining about the course of the economy. However, white workers have not fared notably worse than non-whites.

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I enjoy reading Eduardo Porter's columns in the NYT and usually learn a lot from them, but I think he has made a mistake in arguing that white workers have fared worse in the recession and recovery than African Americans. In his Wednesday piece, he included a chart showing employment among whites had actually fallen by roughly 700,000 since November of 2007, while it had risen by more than 2 million for both African Americans and Asian-Americans and by twice this amount for Hispanics. This seemed to suggest a radically worse labor market experience for whites than for other groups.

After several people asked me about this chart, I checked the change in the working age (ages 16–64) population for each group. The number of whites in this age grouping had fallen by more than 2 million between 2010 and 2015, while the number of African Americans had risen by 1.4 million and the number of Asians had risen by 1.7 million. I'm sure the number of Hispanics grew even more, but these data are on a different table. In other words, the differences in the number of people working by demographic group reflected less their differences in labor market outcomes than their different population trends.

Porter has a piece today responding to this issue, the headline of which tells readers, "across age groups, whites fared worse in employment rates." The problem is that the data really don't support this claim. Porter notes that the percentage of prime age (ages 25–54) white workers who were employed fell by 2.0 percentage points from November 2007 to November 2016. By comparison, "[l]ast month 74.5 percent of prime-aged blacks held a job, 0.3 percentage points more than in November 2007."

While that would seem to suggest that African Americans had a sharply different experience from whites, this conclusion rests on comparing single months in a very erratic data set. If we take the first 11 months of 2016, we find that the EPOP for prime age blacks was 73.2 percent. This is down by 1.7 percentage points from the 74.9 percent average for the first 11 months of 2007. This is only slightly better than the performance of the EPOP for whites, and of course starts from a lower level.

The same problem arises with the comparison of the 55 to 64 age group.

"The employment rate of whites from the ages of 55 to 64 declined slightly — to 63.6 percent from 64.1 percent. By contrast, the employment rate of blacks, Hispanics and Asians increased."

Taking the first 11 months of both years, the EPOP for African Americans declined by 0.7 percentage points, from 52.7 percent to 52.0 percent. This is actually slightly larger than the decline for white workers.

I am leaving Hispanics out, both because I don't have immediate access to their EPOPs by age group and because their EPOPs are likely to follow a different pattern due to immigration flows. Immigrants who have difficulty getting a job are likely to leave and others will not come if they face dismal job prospects. Asian-Americans actually saw a sharper decline in prime-age EPOPs than whites, as Porter notes.

To be clear, I think Porter is right in seeing support for Trump as being to a substantial extent a response to bad economic prospects. But the economic prospects of working-class whites in the last decade were not notably worse than the prospects of working-class blacks. The difference in their voting patterns can be explained by the fact that working-class whites who feel they are being left behind by the economy can see hope in a white nationalist like Trump, working-class blacks, Hispanics, and Asian-Americans cannot. 


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A Washington Post article headlined, "[w]hy so many U.S. manufacturers are putting up 'help wanted' signs" might have led readers to believe that this is a great time for anyone looking for a job in manufacturing. That is not the case, according the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics.

According to the JOLTS data, the job opening rate in manufacturing has been 2.6 percent for the last three months. This is small decline from the rate earlier in the year. The same rate was reported for three months in 2012 and two months in 2007. In two other months in 2007 the rate was 2.7 percent.

The article also tells readers that manufacturers have been raising wages as part of their effort to attract workers. The Bureau of Labor Statistics reports that the average hourly wage for production and non-supervisory workers in manufacturing rose 2.7 percent over the last year. This compares to an increase of 2.4 percent in the economy as a whole.

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Eduardo Porter used his column to point out that Donald Trump got support from many whites who felt that they were being left behind. While there is evidence to support this view, one item in the piece may have misled readers.

The column includes a table showing the change in employment since the start of the recession for white, African Americans, Hispanics, and Asians. While the latter three groups all had increases in employment of at least 2 million, employment for whites fell by almost 1 million.

This can be misleading since the main reason for the difference is that the number of working-age whites actually fell during this period, while the number of working-age people in these other groups rose. The Census Bureau reported that there were 125.2 million non-Hispanic whites between the ages of 18 and 64 in 2010. In 2015 this number was down to 122.9 million. By contrast, the number of non-Hispanic African Americans rose from 24.2 million to 25.6 million. The number of Asians in this age band rose from 10.1 million to 11.8 million. There was a considerably larger rise in the number of Hispanics over this period.

In short, this was a period of weak employment growth, but workers from all demographic groups suffered. The numbers in this piece give a misleading picture in implying that white workers suffered disproportionately.

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The headline of a Washington Post article told readers:

"Trump is skipping his press conference to focus on his picks for agriculture and the VA."

Of course, the Washington Post does not actually know why Donald Trump skipped his press conference. It knows why he said that he skipped his press conference. As the article itself suggests, the reason given for missing the press conference may not in fact be the real reason.

It would be helpful if the Post just reported what it knew to be true rather than implying that Donald Trump's claims are in fact truthful. It also would have been useful if it had mentioned the purpose of the cancelled press conference. This was supposed to be the conference in which he disclosed his plans for his business empire while he is president. Trump claims that he will set up an arrangement that will prevent conflict of interest problems.


Thanks to Robert Sadin for calling this to my attention.

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Cokie Roberts outlined the history of the Electoral College in a discussion in a Morning Edition segment this morning. At the end of the segment, she was asked whether she would favor getting rid of the Electoral College and instead just having presidents elected by the direct popular vote. (Donald Trump lost in this category by more than 2.5 million votes.)

Roberts said no, that she would keep the Electoral College. Strangely, her argument was that she wanted to enhance the importance of minorities. She claimed that the Electoral College made the minority vote very important in key swing states.

While this is true, a recent analysis by Andrew Gelman and Pierre-Antoine Kremp showed that swing states are whiter on average than the nation as a whole. The basic story is that several large uncontestable states, such as California, are disproportionately minorities, while several of the swing states, such as New Hampshire and Iowa, are overwhelmingly white. This means that a focus on the outcomes in swing states will tend to reduce rather than increase the focus on minorities.

It is also worth noting that if we ignored the likelihood that a state would be a swing state and just examined how the Electoral College skews the importance of votes, it also works to the disadvantage of minorities. The reason is that the states with small populations, like Wyoming and Montana, which are over-represented in the Electoral College, are overwhelmingly white. By this measure also, the Electoral College does not work to the benefit of minorities.

It would have also been worth mentioning the National Popular Vote drive. This is an effort to get states to agree to award their electors to the winner of the national popular vote. It would take effect as soon as states representing a majority in the Electoral College agreed to assign their electors based on the outcome of the popular vote. States that account for 165 of the needed 270 votes have made this commitment thus far. This is the most plausible path at present for turning to a direct popular vote for president. It would have been useful to mention it in a segment like this.

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The supporters of the TPP and recent trade deals are licking their wounds and preparing their counter-attack. Rather than thinking about things like maybe structuring trade deals in ways that don't disadvantage large segments of the population (yes, this can be done — have free trade for doctors and other highly paid professionals and reduce patent and copyright protection — all in my book, Rigged [it's free]), they are focusing on new messaging for more of the same. The new messaging does not necessarily involve being truthful.

Hence, the Washington Post made a tool to show "how Donald Trump's offshoring tariff might affect your shopping." The tool is a calculator that shows how much Donald Trump's promised 35 percent tariff on the re-importing of offshored products will raise prices. If you click on, it shows that the retail price of the product is increased by 35 percent. For example, the price of the Carrier air conditioner, that the manufacturer had planned to make in Mexico, would rise by $800 from the $2,400 price listed by Amazon.

The problem with this story is that the basis for the calculation in the Post's "tool" is the retail price of the product. The basis for the tariff would be the wholesale price of the imported product, which would not include shipping costs, the markup of the retailer, nor many other costs that customers would be paying when they buy it from Amazon. As a ballpark number, the basis for the tariff would likely be in the neighborhood of half of the price that Amazon is listing.

I have said it many times before, and I'll say it again here, Donald Trump's plan for company specific tariffs for outsourced items is completely hare-brained. It would be easy to avoid and is hardly a substitute for serious trade policy. But this is not an excuse for making up stories to scare people. The way to have a serious debate on trade policy is to have a serious debate on the issues, not dumping manure on the people who disagree with you.

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The NYT ran a lengthy piece this weekend on how two private equity (PE) firms, Apollo Global Management and Metropoulos & Company, made a huge return on buying up the rights to Hostess Twinkies and a few of the company’s other brands, following the company’s bankruptcy. There are a couple of issues that deserve somewhat further attention than the article gives them.

First, while the article notes that its bankruptcy occurred under the ownership of Ripplewood Holdings, another PE company, it doesn’t discuss the issues which led to the original bankruptcy. Although the full story of Ripplewood’s control of Hostess would require another article of at least equal length, it provides a useful example of a private equity failure. Ripplewood borrowed heavily, putting the company in a precarious financial state. It also never made the investments necessary to modernize its facilities, putting it at a competitive disadvantage.

As the article notes, the bankruptcy relieved the company of its debts and pension obligations. The latter of which would fall to the Pension Benefit Guaranty Corporation (PBGC), which is run by the federal government. The PBGC is itself under serious strain presently, due to the collapse of many large pension funds. Furthermore, even if the PBGC is able to pay benefits at the legally guaranteed levels, most former Hostess workers will still see large cuts from the pensions they had earned while working.

This point is worth noting in the context of what appears to be the main basis for the huge returns earned by the two PE companies. It appears that they were able to buy the rights to Twinkies and other Hostess brands at a price that was far below the actual market value. While this indicated good insight on the part of the PE fund managers, if these brands had been sold for closer to the correct market value, there would have been more money to pay workers’ pensions and other creditors.

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This is really embarrassing, I'm having Robert Samuelson do my work for me. His column today pointed out that a Washington Post piece from last week may have misled readers on the amount of waste in the Pentagon's operations.

That article referred to $125 billion in waste that was identified in an internal Pentagon report that was never made public. This figure is then compared with the $580 billion annual budget for the Defense Department.

The problem is that the $125 billion is a cumulative sum over a five-year period. While the piece does identify it that way, it is likely that many readers would be prone to compare the $125 billion in waste identified by the report with the annual budget, rather than taking the implied $25 billion annual figure. The latter figure would imply that just over 4.0 percent of total spending fell into this waste category, while the full $125 billion figure would be more than one-fifth of spending.

Samuelson was right to call attention to this issue. There is no reason the Post could not have been clear in putting these numbers in an apples to apples context, either highlighting the amount of money spent annually that is identified as waste or comparing the $125 billion figure to five-year spending.

Remember, the point is supposed to be informing readers.

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Paul Krugman told readers that intellectual types like him tend to vote for progressive taxes and other measures that benefit white working class people. This is only partly true.

People with college and advanced degrees tend to be strong supporters of recent trade deals [I'm including China's entry to the WTO] that have been a major factor in the loss of manufacturing jobs in the last quarter century, putting downward pressure on the pay of workers without college degrees. They also tend to support stronger and longer patent and copyright protections (partly in trade deals), which also redistribute income upward. (We will pay $430 billion for prescription drugs this year, which would cost 10 to 20 percent of this amount in a free market. The difference is equal to roughly five times annual spending on food stamps.)

Educated people also tended to support the deregulation of the financial sector, which has led to some of the largest fortunes in the country. They also overwhelmingly supported the 2008 bailout which threw a lifeline to the Wall Street banks at a time when the market was going to condemn them to the dustbin of history. (Sorry, the second Great Depression story as the alternative is nonsense — that would have required a decade of stupid policy, nothing about the financial collapse itself would have entailed a second Great Depression.)

His crew has also been at best lukewarm on defending unions. However, they don't seem to like free trade in professional services that would, for example, allow more foreign doctors to practice in the United States, bringing their pay in line with doctors in Europe and Canada. The lower pay for doctors alone could save us close to $100 billion a year in health care expenses.

None of this means that the plutocrats standing alongside Trump are somehow better for working class people. They have made it pretty clear that they intend to use his presidency to take everything they can from the rest of the country. But Krugman is engaging in some serious fanciful thinking if he thinks that intellectual types have in general been acting in the interests of the working class. (And, I suspect many do ridicule the behavior and lifestyles of the working class.) 

Yes, all of this is talked about in my new book Rigged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer (it's free).

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In an article discussing the Trump administration's attitudes toward unions, the Washington Post misrepresented so-called right-to-work laws.

"Some union leaders are worried that a Trump administration would attempt to introduce a national right-to-work law — allowing any employee anywhere to exempt themselves from participating in a union — and block unions from deducting dues from paychecks."

Workers already have the option not to participate in a union. Workers cannot be compelled to join a union anywhere in the United States. They currently can be required to pay a representation fee in a workplace represented by a union. Under the law, a union is obligated to represent all the workers in a bargaining unit, whether or not they join the union. This means that all workers will benefit in the same way from the wages and benefits negotiated by the union. Also, the union is obligated to defend a worker in disciplinary matters or other individual issues even if they are not members of the union.

The issue is whether workers can be obligated to pay for this representation or have the option to get it for free. Twenty-six states now deny workers the right to negotiate contracts that require all workers to pay for the representation they get from a union. Apparently, some of those associated with Trump also want to prohibit workers from negotiating contracts under which the employer deducts union dues as a service to the union.

This is an issue about freedom of contract, where the government is limiting what sort of contracts unions can sign with an employer. It is not an issue about individual rights. Any worker who doesn't like unions has the option to work at a workplace where employees are not represented by a union. Just as an employer can impose conditions on workers (for example, wearing a silly uniform or requiring workers to address customers in a particular way), current law allows contracts under which workers set conditions on employment for their co-workers. Apparently, people associated with Trump want to take away this right.

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That would have been an appropriate headline for the NYT piece profiling Andrew Puzder, Donald Trump's pick to be head of the Labor Department. According to the piece, Puzder, who runs a restaurant chain:

"...strongly supports repealing the Affordable Care Act, which he maintains has helped create a 'restaurant recession' because rising premiums have left middle- and working-class people with less money to spend dining out."

In fact, restaurant spending and employment have risen rapidly since the key provisions of the Affordable Care Act (ACA) took effect in January of 2014 as shown in the figure below.

Jobs in Restaurants

restaurant jobsSource: Bureau of Labor Statistics.

Employment in restaurants in the most recent data is nearly 1 million higher than in December of 2013, the month before the health care exchanges created by the ACA began operating. Clearly Mr. Puzder is badly confused about business conditions in the restaurant sector. It would have been appropriate to point this fact out to readers, especially since it is very relevant to the job of the Labor Secretary.


Note: Thanks to Robert Salzberg for calling this to my attention.

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A NYT article that discussed Donald Trump's conflict-of-interest problem because of his business empire somehow couldn't find anyone who knew a way to do it without forcing him to risk selling it a large loss. Actually there are fun and easy way- to allow Donald Trump to quickly eliminate his conflict-of-interest problem without risking large losses. The article should have pointed out this fact to readers so they fully recognize how extraordinary Trump's behavior is in ignoring his conflict-of-interest problem.

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