Beat the Press is Dean Baker's commentary on economic reporting. Dean Baker is a Senior Economist at the Center for Economic and Policy Research (CEPR).

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A NYT article reported on a commitment by its president, Xi Jinping, to raise everyone in China above its official poverty level of 95 cents a day by 2020. According to the piece, 43 million people in China now fall under this income level.

While the piece implies this would be a difficult target for China to make, the cost would actually be quite small relative to the size of its economy. If it were to hand this amount of money (95 cents a day) to each of these 43 million people, it would cost the country $14.9 billion annually. This is just over 0.05 percent of its projected GDP for 2020 of $29.6 trillion. This target would still leave these and many other people very poor but if this is what China's government is shooting for, there is little reason to think it will not be able to meet the target.

The article also says that China's slowing growth will make reducing poverty more difficult. While it is harder to reduce poverty with slower growth rather than faster growth, China's economy is still projected to be growing at more than a 6.0 percent annual rate, which is faster than almost every other country in the world.

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It is common for economists to assert that the trade deficit is equal to the gap between national savings and national investment. If the United States invests more than it saves (combining private savings and government savings) then it is running a trade deficit. This is true by definition.

Intro Econ fans may remember that we have the basic accounting identity saying that output is equal to income:


...where C is consumption,

...I is investment,

...G is government spending,

...X-M is net exports (exports minus imports),

and Y is income.

We also can say that Y=S+C+T,

...where S is savings,

...C is consumption,

...and T is taxes.

The basic story is that the government taxes away some of our income and the rest is either saved or consumed (saved means it is not consumed).

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An NYT article discussing Republican plans to sharply limit the tax deduction for 401(k)s noted how these retirement accounts have largely replaced traditional defined-benefit pensions and said that they were cheaper for employers. This is not entirely clear.

In principle, a payment for a retirement benefit is supposed to be a substitute for wages. If a worker gets $2,000 a year paid into a defined-benefit pension or a 401(k) plan, this is supposed to be offset by roughly a $2,000 reduction in wages. In the simple case, the retirement benefit is not costing the employer anything, since the worker is seeing a reduction in pay corresponding to the value of the benefit. (This is the same story economists tell about employer-provided health care insurance.)

As a practical matter, the offset is almost certainly not one to one. Many workers will view the contribution for retirement as worth more than the same amount of dollars in their paycheck while younger workers who are far from retirement might view the contribution as being worth less than the same amount of dollars in their paycheck.

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The NYT had a very informative piece on the prospects for the labor market changes being pushed through in France by its new president Emmanuel Macron. While the background explaining the proposed changes and their rationale was useful, the article included one important item that is seriously misleading. It said that nearly one in four young people in France is unemployed.

This figure is referring to the unemployment rate for French youth (ages 15–24), which the OECD reports as 24.6 percent. However, this figure is the percent of the labor force who are unemployed, not the percent of the population. The labor force is defined as people who are either employed or report to be looking for work and are therefore classified as unemployed.

In France, many fewer young people work than in the United States because higher education is largely free and students get stipends from the government. As a result, the employment rate for French youth is 28.3 percent, compared to 50.1 percent for the United States. If we look at unemployment as a share of the total youth population, the 8.7 percent rate in France is not hugely higher than the 5.8 percent rate in the United States.

Youth unemployment is still a serious issue in France (as it is the United States), but not quite as serious as the one in four figure may lead people to believe.

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It seems the folks reporting on the third quarter GDP forgot to do their homework. The articles touted the 3.0 percent growth figure, which was somewhat stronger than generally expected. However, much of the basis for this stronger than expected growth was a pick-up in inventory accumulations that added 0.73 percentage points to the growth rate in the quarter. The growth in final demand was just 2.3 percent.

It is common to look at final demand growth, which excludes inventory changes, both because the inventory numbers are highly erratic and also are not sustainable. No one thinks that the pace of inventory accumulation will continue to increase at anything like the pace in the third quarter. This point is important since if we are trying to determine the underlying growth path of the economy, it is far more likely to reflect the rate of growth of final demand than a GDP number that is inflated (or deflated) by big changes in inventories.

One potentially very important item that seems to have been missed in the coverage of third quarter GDP was the pick-up in productivity growth implied by the GDP data. Output in the non-farm business sector rose at a 3.8 percent rate in the quarter. With hours worked in the private sector increasing by less than 1.0 percent, this likely means a rate of productivity growth close to 3.0 percent. This would be a huge uptick from the 0.7 percent rate we have seen the last five years.

Productivity data is highly erratic so a single quarter's data should always be viewed cautiously. But an uptick in productivity growth has to start somewhere and if this is the first sign, it is a really huge deal. More rapid trend productivity growth would be far more important than whether the GDP growth rate in the quarter was 3.0 percent or 2.0 percent.

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Earlier this week I had a column in Politico pointing out that doctors in the United States get paid roughly twice as much as their counterparts in other wealthy countries and that we could save almost $100 billion a year ($700 per family) if we got doctors pay in line with their pay elsewhere by opening up the market. This made many folks (most identifying themselves as doctors) angry, as they let me know with e-mails, tweets, facebook comments and various other outlets. My response to these criticisms is below.

Folks also may be interested in picking up the discussion with a segment next Monday (10-30) on Wisconsin Public Radio at 7:00 A.M. EDT.


Response to Critics

The criticisms of my piece took a variety of directions but the vast majority noted the large debt that many doctors incur in med school. This is a serious issue, but I would raise a couple of points here. First, a debt burden of $250,000 comes to less than $9,000 a year over a 30-year career. That’s less than 4 percent of the average doctors’ pay. Even if you add in one-third for interest costs, it is still less than 5 percent of the average doctors’ pay and only around 10 percent of the difference between the average doctors’ pay in the U.S. and their pay in other wealthy countries.

I would agree that we should alter the way med school is financed and instead have it covered by the government, as is largely the story elsewhere. (The same applies to college.) However, it is interesting to note how when we talk about opening up the market for doctors to more international and domestic competition we get this huge outcry over the fate of doctors with high debt. I don’t recall similar outcries about the risk to the continued employment and pensions and retiree health care benefits of autoworkers and steelworkers when these sectors were opened to international competition. Nor do we hear these complaints expressed as vocally in reference to efforts to restrict Amazon and other internet retailers when it means the loss of hundreds of thousands or even millions of jobs in traditional retail stores.

Many complained that I had no evidence for what I argued in the piece. The links in the piece provide pretty solid evidence that U.S. doctors are paid substantially more than their counterparts in other wealthy countries. Here’s another source that readers may find useful.

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Roger Altman, an investment banker and deputy treasury secretary under President Clinton, warned about the effect of growing inequality on national politics in a Washington Post column. He implies that this increase in inequality has been a natural outcome of the market:

"A series of powerful, entrenched factors have brought the American Dream to an end. Economists generally cite globalization, accelerating technology, increased income inequality and the decline of unions. What’s noteworthy is that these are long-term pressures that show no signs of abating."

The "powerful entrenched factors" are all the result of deliberate policy choices that Mr. Altman apparently doesn't want to see altered. In the case of globalization, we have made a deliberate decision to put our manufacturing workers in direct competition with low-paid workers in the developing world, while largely protecting our most highly paid workers like doctors and dentists. This has the predicted and actual effect of shifting income upward.

"Accelerating technology" (actually it has been decelerating as productivity growth has slowed to a crawl in the last decade) does not lead to upward redistribution; laws determining ownership of technology, such as patent and copyright monopolies redistribute income upward. There is a huge amount of money at stake with these government-granted monopolies. In the case of prescription drugs alone, patents and related protections add close to $370 billion a year (almost $3,000 per household) to what we pay for drugs in the United States. Bill Gates, the world's richest person, would probably still be working for a living without patent and copyright monopolies for Microsoft software.

And, the drop in unionization rates in the United States has also been the result of deliberate policy to make it more difficult to organize unions and to weaken the unions that do exist. Canada, which has a very similar culture and economy, has seen no comparable decline in unionization rates over the last four decades.

Someone seriously interested in reversing the upward redistribution of income would look to reverse these policies, but Altman seems to want us to believe that they are unalterable and instead focus on band-aid solutions. But, what do you expect from Jeff Bezos' Washington Post? (Yes, this is the point of my [free] book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.) 

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Fareed Zakaria pushes the pet myth of the arithmetically challenged elite (yes, that is probably redundant) that the federal debt is limiting spending for many important ends in his column this morning.

"It is politically paralyzed, unable to make major decisions. Amidst a ballooning debt, its investments in education, infrastructure, and science and technology are seriously lacking."

Arithmetic fans would evaluate this assertion by looking for evidence that the debt is causing problems such as high interest rates and inflation and creating a large debt service burden.

The opposite is the case, with long-term interest rates still under 2.5 percent compared to more than 5.0 percent in the surplus years of the late 1990s. Inflation remains under the Fed's 2.0 percent target and has actually been trending downward this year. And, debt service is less than 1.0 percent of GDP (net of interest rebated by the Fed), compared to over 3.0 percent in the 1990s.

In short, there is no evidence that debt is limiting our ability to spend more in these and other areas. There is a strong case that fears over the debt, raised by folks like Zakaria, are limiting our ability to invest for the future.

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I'm off on vacation. I'll be back October 27. So remember, don't believe anything you read in the papers until then.

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Trade deals are usually thought to increase productivity by allowing countries to benefit from comparative advantage, where each country concentrates on the areas where it is relatively more efficient. For this reason, it is striking that a study on the impact of reversing NAFTA that was cited in an NYT article found that the United States, Canada, and Mexico would all see an increase in productivity if NAFTA was reversed.

While both the article and the study highlighted the number of jobs that would be lost if NAFTA were repealed, the study actually projects that GDP would fall by a considerably smaller percentage for each of the three countries. In the case of the United States, the study projects a loss of 255,000 jobs or 0.17 percent of total employment. However, GDP is projected to fall by just 0.08 percent. This implies a gain in productivity of 0.09 percentage points.

Canada is projected to lose 125,000 jobs or 0.69 percent of total employment. However, its GDP is only projected to drop by 0.48 percent, implying a productivity gain of approximately 0.21 percent. Mexico turns out to be the big winner, with its employment falling by 951,000 or 1.82 percent, while GDP only drops by 0.87 percent, implying a productivity gain of approximately 0.95 percent.

This gain in productivity is presumably associated with higher wages, since we expect workers to be paid in accordance with their productivity. In principle, governments could tax away a portion of these wage gains and redistribute them to the unemployed to ensure that everyone gains, making the reversal of NAFTA a win-win for all involved.

No, I don't take these projections seriously, but the NYT apparently wants us to. So, if we buy what the NYT is selling, we should believe that we could get a modest boost to productivity if we just did away with NAFTA altogether. 

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Doug Schoen, a former consultant to Bill Clinton, argued the case that the Democrats should keep their ties to Wall Street in a NYT column this morning. While he does advance his argument with some red-baiting and bad logic, he uses tradition as a starting point.

"Many of the most prominent voices in the Democratic Party, led by Bernie Sanders, are advocating wealth redistribution through higher taxes and Medicare for all, and demonizing banks and Wall Street.

"Memories in politics are short, but those policies are vastly different from the program of the party’s traditional center-left coalition. Under Bill Clinton, that coalition balanced the budget, acknowledged the limits of government and protected the essential programs that make up the social safety net.

"President Clinton did this, in part, by moving the party away from a reflexive anti-Wall Street posture. It’s not popular to say so today, but there are still compelling reasons Democrats should strengthen ties to Wall Street."

Of course, memories are not actually short, contrary to what Schoen claims. Many supporters of harsher policies directed against the financial sector remember the stock bubble whose crash led to what was at the time, the longest period without job growth since the Great Depression. They also remember a financial sector that continued to run wild as the housing bubble inflated. And they remember the Great Recession that followed the collapse of that bubble. And, they remember the government's bailout policies that ensured that the financial industry-types would end up on their feet and not in jail.

But Schoen does go beyond appealing to tradition.

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When it became impossible to sell the Trans-Pacific Partnership (TPP) on its economic merits, proponents of the deal began to argue for it as a way to contain China's power in the region. Thomas Friedman picks up this line and runs with it in his latest column.

"Trump came into office vowing to end the trade imbalance with China — a worthy goal. And what was his first move? To tear up the Trans-Pacific Partnership, the trade deal that would have put the U.S. at the helm of a 12-nation trading bloc built around U.S. interests and values, potentially eliminating some 18,000 tariffs on U.S. goods and controlling 40 percent of global G.D.P. And China was not in the group. That’s called leverage.

"Trump just ripped up the TPP to “satisfy the base” and is now left begging China for trade crumbs, with little leverage. And because he needs China’s help in dealing with North Korea, he has even less leverage on trade."

Let's see, we're eliminating 18,000 tariffs. That sounds really impressive, except the vast majority of these tariffs were near zero anyhow. Admittedly, a zero tariff is more supportive of trade than a tariff of 1.0 percent, but it's not exactly going to lead to a flood of exports. It has roughly the same impact as a 1.0 percent decline in the value of the dollar, the sort of change in currency values that we often see in a single day.

The touting of the number of tariffs, rather than the impact on trade is the sort of cheap trick propagandists resort to when they can't make a serious argument. It's worth also noting that the 18,000 tariff figure includes many altogether meaningless tariffs, like Brunei's tariffs on ski boots made in the United States and tariffs on items that are already banned from international trade, like shark fins.

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No regular reader of the NYT expects great insights from David Brooks, but the sort of name-calling in today's column is the sort of thing one expects from a grade schooler. It turns out that if you don't agree with Brooks' view of the world you are a "downswinger," you have gone from an "optimistic, progress-embracing view toward a pessimistic, system-doubting view."

Well hey, who wants to be a downswinging pessimist, as opposed to someone who embraces progress? How about we instead divide the world between those who live in reality and work for a living and those who earn a good salary lying in NYT columns.

David Brooks begins his piece by telling us these are the best of times, especially for those of us who live in the United States. Here's his second paragraph:

"In 1980 the U.S. had a slight edge in G.D.P. per capita over Germany, Japan, France and the U.K. But the U.S. has grown much faster than the other major economies over the past 37 years, so that now it produces about $54,000 of output per capita compared with about $39,000 for Japan and France."

Hmmm, a slight edge in 1980? Here are the numbers according to the International Monetary Fund.

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The White House is pushing the line that their proposed cut to corporate tax rates will lead to an increase in average household income of more than $4,000.

“Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually. The increases recur each year, and the estimated total value of corporate tax reform for the average U.S. household is therefore substantially higher than $4,000. Moreover, the broad range of results in the literature suggests that over a decade, this effect could be much larger.”

This is a pretty impressive claim, but it gets even better a couple of pages later:

“When we use the more optimistic estimates from the literature, wage boosts are over $9,000 for the average U.S. household.”

There are few things worth pointing out about the White House’s claims here. First, the idea that workers would see large gains from a reduction in corporate income tax rates is not based on the idea that lower taxes will be directly passed on in wages. The amount of tax at stake is far too small to have the sort of impact on wages claimed here.

Rather the implication is that there would be a huge burst of investment leading to a huge increase in productivity and growth. The higher levels of productivity would be passed on to workers in the form of higher wages.

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Robert Samuelson used his column to relate concerns expressed by former Fed chair Ben Bernanke that the Fed would lack the ability to fuel a recovery when the United States next falls into a recession. Although Samuelson doesn't go into detail, the background here is that the country has faced a persistent shortfall of demand at least since the collapse of the housing bubble.

One way this shortfall can be filled is with larger budget deficits. Unfortunately, there is intense political opposition to budget deficits fueled by people like Wall Street billionaire Peter Peterson and the Washington Post. The failure to have larger deficits have cost the country trillions of dollars in lost output and made the economy permanently weaker, in effect imposing a huge tax on our children and grandchildren in the form of lower wages.

The other obvious way that the shortfall could be filled is with a smaller trade deficit. If our trade deficits were, for example, 1.0 percent of GDP instead of the current 3.0 percent of GDP, we would not be facing a shortfall of demand and Bernanke's problem would disappear. Unfortunately, people in policy circles largely cling to an absurd trade deficit denialism under which the size of the deficit cannot affect demand and employment, an argument which is made explicitly in an NYT column this morning by former Secretary of State George Schultz and Pedro Aspe, a former secretary of finance in Mexico.

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This is a question that people should be asking, as there is a considerable effort to include digital commerce in a revised NAFTA argument, as argued in a NYT column by former Secretary of State George Schultz and Pedro Aspe a former secretary of finance in Mexico. For example, the rules on digital commerce may prevent countries from imposing punitive damages, similar to what exist for copyright infringement under the Digital Millennium Copyright Act, for spreading fake ads. This is a realistic fear since Facebook and other major social media companies are likely to have substantial input into writing digital commerce provisions, whereas groups concerned about fair elections and the rights of users are not.

This piece also contains a striking error in economic reasoning. It dismisses concerns about trade deficits, telling readers:

"We hear a lot about trade deficits, but repealing trade agreements will not fix the arithmetic. If a country consumes more than it produces, it will import more than it exports. Federal deficit spending, a huge and continuing act of dissaving, is the big culprit. Control that, and you will control trade deficits."

It is definitional that a country with a trade deficit consumes more than it produces, sort of like it is definitional that a dead person doesn't have a working brain. But just as we might want to know why a person died, we also have reason to want to know why a country is running a trade deficit.

If a country is below its potential level of output, which means that it has higher than necessary levels of unemployment, then the trade deficit has been a factor reducing demand in the economy and increasing unemployment, as was undoubtedly the case in the United States since the collapse of the housing bubble until at least the very recent past. In this context, a lower budget deficit would reduce the trade deficit only by shrinking the economy further and in that way reducing imports. (When the economy is smaller, we buy less of everything, including imports.)

The lost output due to the trade deficit since the crash runs into the trillions of dollars. If we had more balanced trade, millions of additional workers would have had jobs and people would have been able to keep homes. This is a big deal, it is amazing that these distinguished figures don't seem to understand the issue.

It is also striking that they tout the competitiveness of U.S. manufacturing relative to European and Asian competitors. This must be their own subjective definition of competitiveness, since by the market test (the trade balance) the United States' manufacturing sector is losing badly.

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Donald Trump has justified his decision to ending a subsidy for insurers providing improved coverage for moderate-income households by saying that he wanted to end subsidies for insurers. Actually, because insurers are required under the Affordable Care Act to provide these subsidies to moderate-income households whether or not they receive the government subsidies, Trump's decision will likely lead to higher premiums. And, since the subsidy provided to moderate-income households depends on the size of the premium, the subsidies provided to these households will rise in step with the premiums.

As a result, while Trump is cutting off the direct subsidy to insurers from the government, the indirect subsidy through the government's assistance to households buying insurance will increase by an even larger amount. As a result, the Congressional Budget Office projects that the amount the government will pay out in insurance subsidies over the next decade will increase by almost $250 billion (roughly 0.5 percent of federal spending), with the bulk of this money ending up in the pockets of insurers.

It is not clear that Trump understood that his action would increase the money going to insurers, but it would have been helpful to note this outcome.

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The Washington Post had a lengthy piece on the intense lobbying efforts by the pharmaceutical industry, along with retail drug store chains, to block legislation that would have imposed stronger penalties for improperly prescribing and distributing opioids. While the piece provides considerable detail on the efforts of specific actors to intervene with members of Congress to weaken legislation, it neglects to mention the importance of patent monopolies in this picture.

As everyone who has taken Econ 101 knows, when the government imposes a tariff in a market that raises the price of an item by 10 or 20 percent, it encourages corruption. The beneficiaries of this tariff have the incentive to lobby to try to extend and enlarge this protection. Lobbying and bribing politicians can be a more effective way to increase profits than cutting production costs or developing a better product.

In the case of patent monopolies, the price can increase by a factor of ten or even a hundred, equivalent to a tariff of 1,000 or 10,000 percent. The implied mark-ups provide an enormous incentive for companies to lobby to protect and enhance their markets. As the piece tells readers, "each 30-pill vial of oxycodone was worth $900." If a 30-pill vial was selling for $30, there would have been much less incentive to lobby against legislation that would limit sales.

For some reason, patent monopolies and their role in maintaining high prices for opioids are never mentioned in this piece. It is probably worth mentioning that the Washington Post gets a substantial amount of advertising revenue from the pharmaceutical industry.

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For four decades the United States has actively pursued a trade policy designed to put manufacturing workers directly in competition with low-paid workers in the developing world, while largely protecting doctors and other highly paid professionals. It has also sought to impose longer and stronger patent, copyright, and related protections on our trading partners, as it strengthened these protections at home also.

The predicted and actual effect of these policies is to redistribute income from the less-educated (those without college degrees) to more educated workers and owners of capital. Not surprisingly, many of the losers from this pattern of trade are unhappy about it and have sought paths to change it. This was one reason many less-educated workers voted for Donald Trump for president.

While the basic facts in this story are pretty clear, the NYT seems confused about them. It told readers:

"People here embraced Mr. Trump’s anti-trade message, including his vow to withdraw from the North American Free Trade Agreement and punish China, even though Canada, Mexico and China are Iowa’s three largest foreign trading partners. They did not mind if Mr. Trump opposed increasing the minimum wage and expanding access to health care."

It is not clear what is supposed to be meant by "even though" in this context. People in Iowa would not be hurt by trade with countries if its economy was not actually involved in trade with the countries. If a manufacturer in Iowa gets many of its parts from Canada, Mexico, or China then it could be displacing workers who might otherwise be employed in Iowa. If manufacturers located in Iowa had no trade with these countries, this would not be the case. It is precisely because Iowa's economy has been exposed to trade with these countries that its workers could end up as losers.

It is also worth noting that Trump promised to offer a better health care plan in his campaign, with lower deductibles, premiums, and co-pays. Iowa's voters might have been more aware of the fact that he was lying if the NYT and other news outlets had spent a bit more time talking about health care and less time on Hillary Clinton's e-mails.

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Donald Trump came up with a new measure this week when he compared the wealth created by a rising stock market with the government debt. It is not clear how much the president has to do with stock valuations, but arguably his promised tax cuts may be a factor pushing the market higher.

In principle, stock prices are supposed to reflect the discounted value of future profits, so if people come to think that Trump will give corporate America more money at the expense of those who own little or no stock, it should push the market higher. This would be good news for the relatively small number of people who own large amounts of stock, but bad news for those who rely largely on wages for their income and will likely face higher taxes and/or reduced government services as a result of lower corporate tax rates.

However, even by this measure, Trump is doing poorly as the NYT pointed out. The stock markets in Japan, Germany, and France, along with many others, have risen more in the last year than the U.S. market. So it appears that Trump has been a drag on the stock market.

Also, Trump does very poorly by his metric compared with Obama. Trump blamed Obama for adding $10 trillion to the federal debt during his administration. He apparently missed the Great Recession caused by the collapse of the housing bubble which happened before Obama entered the White House. This was the major cause of the run-up in debt over the last eight years.

But if presidents get credit for an increase in stock values, then Obama's performance vastly exceeds Trump's. In October of 2009, the stock market was already up by more than 30 percent from where it had been on inauguration day, compared to less than 20 percent with Trump. Furthermore, the stock market more than doubled during President Obama's tenure, creating more than $20 trillion in wealth, this hugely exceeds the government debt added in this period, so by the Trump Metric, Obama did fantastic in his terms in office.

(For the record since people, and mostly American people, own the government debt, this is also wealth. So absolutely nothing about the Trump story makes any sense.)

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For many years before and after the Affordable Care Act went into effect, many policy-types argued that its success or failure would depend on whether the "young invincibles" would sign up for health care insurance. The argument was that the system needed premiums from young people with few medical expenses in order to balance out the cost of providing care to less healthy people.

The problem with this story is that it is not just young people who have low medical expenses: most older people (pre-Medicare age) also have relatively low health care expenses. In fact, the older healthy people help the finances of the system more since the premiums for the 55 to 64 age bracket average three times the premiums of the youngest age bracket. If we have a healthy young person and a healthy old person, both of whom cost the system nothing, we are much better off if we can get three times the premium from the older person.

The Kaiser Family Foundation did a nice analysis of this issue a few years back showing that even extreme skewing of enrollment by age made relatively little difference to the finances of the system. On the other hand, skewing by health makes an enormous difference.

Vox had a nice piece on the issue of the skewing of the patient pool in the context of President Trump's executive order allowing insurers to offer bare-bones plans that would only be attractive to healthy people. The piece pointed out that Tennessee already has a plan along the lines authorized by Trump and that it has pulled 23,000 people out of the exchanges. It points out that insurance premiums on the Tennessee exchange are among the highest in the country, presumably because more healthy people have been removed from the pool.

However, in making this case, it tells readers:

"Those 23,000 people buying the skimpier health plan are presumably younger and healthier."

While it is very likely that the people buying into the bare-bones plan offered in Tennessee are healthier than the population as a whole, there is no reason to assume they are younger. In fact, the older pre-Medicare age group may actually save more money from this plan than younger people.

So let's leave the age issue out of the discussion, it just generates needless confusion. To keep costs down an insurance pool needs healthy people, it doesn't matter how old they are. 

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