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

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It is absolutely bizarre how the media continually feel the need to tell us what politicians think. The Washington Post was on the job today in an article that discussed Donald Trump's threat to impose 25 percent tariffs on imported cars for national security. The article told readers:

"The president holds an expansive view of national security, describing imported products like steel or passenger sedans as worrisome threats to the United States."

Really? How does the Post know that the president even has a view on national security?

This is a person that shows virtually zero evidence of coherent thought on anything. For five years he ran around the country insisting that President Obama was born in Kenya. He claims that global warming is a hoax invented by China to destroy the US economy.

If the Post has any reason to believe that Trump has a coherent view on anything, it should share it with its readers. Otherwise, it should stop fabricating things. Or as Donald Trump would say "Fake News!"

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The headline of the Washington Post article should have us all worried, "America has a massive truck driver shortage. Here's why few want an $80,000 job." That sounds pretty dramatic.

The article does begin by telling us about Joyce Brenny, who runs a trucking business in Minnesota, who supposedly pays many of her drivers more than $80,000 a year. (It doesn't indicate if she is the source for this number.) However, folks who read a few paragraphs down discover:

"A few drivers told The Washington Post that they earn $100,000, but many said their annual pay is less than $50,000 (government statistics say median pay for the industry is $42,000)."

In other words, if Ms. Brenny is actually paying her drivers $80,000 a year, she is very much an outlier. The typical driver makes barely half of this amount, which is a likely explanation for any shortage of truckers that might exist. (For a point of reference, the annual pay of a truck driver would be about half of what many CEOs earn in a day and roughly one-tenth of a what a top line politician would get for a one-hour speech to a major bank.)

It also seems that folks who run trucking companies have a hard time understanding how labor markets are supposed to work. Here is the average hourly wage, adjusted for inflation, in the trucking industry:

Trucking Industry: Average Hourly Wage, Adjusted for Inflation

trucker 3

Source: Bureau of Labor Statistics.

According to the Bureau of Labor Statistics, the average hourly pay for truck drivers is actually down from its level of two years ago. While it is up by roughly 5.0 percent from its level a decade ago, it is down by more than 7.0 percent from the peaks hit in the late 1990s.

This seems like yet one more case where we have employers whining about worker shortages because they are unwilling to pay the market wage. And, it seems the Washington Post is aggressively pushing the employers' case even if it means misrepresenting the facts.

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Peter Goodman had a very good NYT piece detailing how budget cutbacks are undermining the welfare state in the United Kingdom. However, at one point the piece warns that the UK's experience could be a wider warning for a future where "robots [are] substituting for human labor."

Actually, the UK's problem has been just the opposite. It has had extremely low productivity growth. Since the Great Recession, productivity growth has averaged less than 1.0 percent annually according to the OECD. This weak growth can actually provide some basis for an argument for austerity (not much, if workers had more bargaining power and higher pay, the country might see more rapid productivity growth). If productivity growth had been more rapid, then the government could easily spend more money without any fears of inflation.

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For some reason, there seems to be a big market in efforts to confuse the public about the relationship between unemployment and the trade deficit. Robert Samuelson gives us yet another example in his column today.

"By now, it must be obvious that US trade deficits are connected loosely, if at all, with the unemployment rate, which is now 3.9 percent — the lowest since 2000. Meanwhile, the US trade deficit in 2017 was $566 billion.

"The explanation for the apparent paradox is the dollar’s role as the major international currency, used to conduct trade and investment among many (non-US) countries. The extra demand for dollars raises its exchange rate, making U.S. exports costlier and imports cheaper. The result is a structural U.S. trade deficit."

This one makes pretty much zero sense. First of all, pointing to the low unemployment rate coinciding with a large trade deficit as evidence there is no link between unemployment and a trade deficit makes as much sense as pointing to a very underweight person suffering from the late stage cancer as an argument against any link between being seriously overweight and bad health.

This isn not a serious argument. A trade deficit reduces demand in the economy. It means that some of our spending is creating demand in Europe or Mexico, rather than in the United States. Other things equal, that means less demand in the United States and higher unemployment.

We can offset this lost demand with additional demand in the United States. We can have large budget deficits, as we do now. And we can have bubbles as we did in the late 1990s with the stock bubble and in the last decade with the housing bubble. That is why we can have a large trade deficit and low unemployment. It really is not hard.

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Roger Lowenstein had a column in the Washington Post criticizing Elon Musk for his new contract as Tesla's CEO that could net him $50 billion. I see the story somewhat differently.

Lowenstein essentially is blaming Musk for being incredibly greedy and notes that most other trailblazing entrepreneurs of the past and present have not needed lavish paychecks to provide them with incentive. While I totally agree with this point, there is a deeper issue that I see here. How is Musk able to get a contract that pays him so much more than necessary to do the job? (Actually, I'm not sure Musk's contract pays him so much, as I will get to later.)

The issue is that if CEOs are routinely paid more than necessary to get someone to the do the job they are doing, they are effectively taking money from shareholders. The question is then, why are shareholders allowing the CEOs to rip them off? Would they be okay if 1000 line workers pulled $10,000 a piece out of the cash register? If not, then they should not be looking the other way when a CEO gets $10 million more each year than is needed to get someone to do their job. (I'm defining "job" here narrowly as producing returns for shareholders.)

This isn't an issue of having sympathy for shareholders. We all know that ownership of share is hugely skewed to the top 10 percent and especially top 1 percent, although tens of millions of middle-income people own stock through 401(k)s and pension plans also are large shareholders. But the more important point is that bloated CEO pay affects pay structures throughout the economy.

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We all know that protectionism is bad. If someone proposes a 20 percent tariff on steel or cars the news pages will be filled with economists and other serious sounding people hyperventilating about how this tax will devastate the economy. Unfortunately, these voices are completely absent from discussions of the much more costly protectionism that allows our broken health care system to rip us off for hundreds of billions annually, and cost lives.

NPR and ProPublica gave us a fascinating account of how our broken health care system operates. The basic story was that Aetna had a contract with a major hospital that allowed it to charge grossly excessive fees for some procedures. Apparently, Aetna didn't mind the overbilling since it is able to pass its costs on to patients in a largely uncompetitive market. 

The piece is fascinating since the protagonist, Michael Frank, was an actuary with three decades of experience working with insurance companies. It describes in detail the effort he went through to try to get a clear explanation of why his bill was two or three times as high as the normal billing for a procedure he had done.

If anyone involved in the health care debate was committed to free trade, we would have a discussion of how this sort of abuse could be avoided if we facilitated foreign medical travel. If patients were routinely offered the opportunity to have this sort of procedure in high-quality facilities in other countries, with patients splitting the tens of thousands of dollars in savings (net of travel costs for themselves and a family member), it is likely that hospitals and insurers that engaged in this sort of price rigging would go out of business.

However, medical travel never features in discussions of trade. One can speculate on the reason, but it is almost certainly true that the reporters, economists, and political actors involved in trade debates have many more friends and relatives who benefit from the bloated health care system than work in manufacturing jobs.



The International Federal of Health Plans has some data on relative prices. To take an example, it reports an average price for bypass surgery in the United States of $78,300. This compares to $24,100 in the U.K. and $14,600 in Spain. This sort of gap would leave plenty of room to cover airfare and hotel stays, and still leave plenty of money to put in the bank.

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Bret Stephens rightly takes Elon Musk to task for his buffoonish attacks on his critics, dubbing him "The Donald of Silicon Valley." (I prefer my line, "the Donald Trump of futuristic entrepreneurs," but the point is the same.) Like Trump, Musk apparently is unable to accept criticism and lashes out at the integrity and competence of his critics. Also like Trump, he is apparently unable to run a profitable company.

However, where Stephens goes badly astray is in telling his readers that electric cars are not a viable technology. China is expected to sell more than 1 million electric cars this year. It expects to be selling more than 7 million electric cars annually by 2025. It's true that electric cars have substantial government subsidies in China, but this has been true of many technologies, such as the Internet.

Electric cars can clearly be very competitive in the near future with gas powered cars. They are clearly not decades away as Stephens tells readers.

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The Washington Post's analysis of projected increases in the cost of health care plans in the exchanges created by the Affordable Care Act (ACA) is seriously confused. Paige Winfield Cunningham seems to think she found a contradiction between Democrats who minimized the importance of price increases during the Obama presidency, but now highlight smaller increases projected under the Trump administration. Rather than being a contradiction, this reflects confusion on Cunningham's part.

The original premiums in the exchanges were lower than had been projected by the Congressional Budget Office prior to the bill's passage. Insurers priced their plans too low either because they wanted to attract patients or they failed to predict the health condition of the people who signed up. By 2016, premiums had pretty much caught up with the original projections.

Even though the 7.0 percent rate of increase projected for the next decade is lower than the 2017 increase, it still implies that premiums will double in nominal terms and rise by more than 60 percent after adjusting for inflation over the next decade. If this projection proves accurate it means that the unsubsidized premiums will be unaffordable to all but the richest people.

For example, this projection implies that an unsubsidized silver plan would cost more than $11,000 (in 2018 dollars) to a single 50-year old in 2027. A 60-year-old would have to pay almost $17,000 for a silver plan. It is understandable that anyone concerned about affordable health care would not view this as a good story, even if they happened to be Republicans.

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The reporting of pay ratios between CEOs and median workers has drawn considerable attention to the enormous gap. Most of this has taken a moral tone, noting that would take the typical worker hundreds of years, or in some cases, more than a thousand years to earn as much as the company's CEO gets in a year. While there are certainly important moral questions here, it is also important to ask a simple economic question.

Are the highly paid CEOs actually producing returns for shareholders? This is not an expression of concern for shareholders, the question is whether CEOs are actually worth their pay to the company or whether they are effectively ripping off shareholders. The latter story is plausible because it is difficult for a diverse group of shareholders to carefully monitor and control the conduct of a company, just as it is difficult for citizens to make sure that their city or state government is not ripping them off by having patronage jobs or sweetheart deals with well-connected contractors. 

The argument would be that the directors who most immediately monitor the CEOs have more allegiance to the CEOs and top management than the shareholders whom they ostensibly represent. This is a plausible story since directors who are renominated by their board win their elections more than 99 percent of the time. This means that directors would have little incentive to upset top management and their colleagues by asking annoying questions about whether CEOs get paid too much.

There is considerable research indicating that CEO pay does not reflect performance (measured as returns to shareholders), much of it summarized in Lucien Bebchuk and Jesse Fried's book, Pay Without Performance. Jessica Schieder and I did a short piece that also supports this view, showing no drop in CEO pay at health insurers, after the Affordable Care Act ended tax deductibility for pay over $1 million.

This matters because it means that if rules of corporate governance were changed (these come from the government, not the market) to give shareholders more control over CEO pay, it is likely CEO pay would fall. This is not just a matter between rich CEOs and mostly rich shareholders. (Pension funds and middle-income people with 401(k)s also do own stock.)

Bloated CEO pay affects pay scales throughout the economy. If the CEO gets $30 million, the folks next in line likely get $10–15 million, and the third-tier executives may earn in the range of $1–2 million. Also, top executives in the non-profit sector also get bloated pay, often well over $1 million a year at universities and major charities.

By contrast, if CEOs were getting $2–$3 million a year, the next in line would likely be getting paychecks not much over $1 million, with the third tier settling for the high hundreds of thousands. And, the presidents of elite universities might also see paychecks in the high hundreds of thousands. And, if there was less pay for those at the top, there would be more pay for everyone else.

The point here is that this would not be a story of just saying we don't like some people getting incredibly rich, while others get little (which may be the case), it would also be the story of getting the market to work better so that CEO pay reflects their actual performance, not their ability to take advantage of their insider position. There is no good argument for defending CEO pay that does not reflect performance unless you think it is a positive good that some people incredibly get rich while most workers get little benefit from the economy's growth.

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The New York Times ran a piece on a warning from the Internal Revenue Service that it would not allow plans to circumvent the new limits on the State and Local Tax (SALT) deduction by providing a credit for contributions to state-established charitable funds. At one point the piece told readers:

"The Treasury Department and the I.R.S. are worried that the workarounds could further balloon the cost of the tax cuts, which are projected to add more than $1 trillion to the national debt over a decade."

NYT reporters must have some extraordinary mind-reading abilities if they can know what is really worrying the Treasury Department and IRS. The worries attributed to them here seem especially out of line with the known facts since the Trump administration and Republicans in Congress have shown zero concern in their behavior about the size of the deficit.

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A Washington Post article reporting the decision by the Trump administration to not press employers to use E-Verify to prevent undocumented workers from getting jobs repeatedly tells readers there is a labor shortage, especially in farming, restaurants, and construction. The data indicate otherwise.

If there were a shortage of workers in these industries, we should see rapidly rising wages. We don't.

The Bureau of Labor Statistics establishment survey does not include farms, but we don't see especially rapid wage growth in either construction or restaurants. Here is the picture for the average hourly wage of production and non-supervisory workers in construction.

Construction: Average Hourly Wage, Production and Non-Supervisory Workers

construct wages

Source: Bureau of Labor Statistics.

Wage growth has been somewhat higher in the last two years than earlier in the recovery, but they still are rising less than 4.0 percent a year. And, the rate of increase is considerably less than at the peak of the last cycle.

There is even less of a case of a labor shortage in restaurants.

Restaurants: Average Hourly Wage, Production and Non-Supervisory Workers

restaurant wages

Source: Bureau of Labor Statistics.

The pace of wage growth has slackened some in recent months. It is more than a percentage point lower than peaks hit in 2017 and well below the pre-recession pace.

It undoubtedly is true that some employers cannot afford to pay higher wages. In this case, they will go out of business. This is what happens in capitalism. It is the reason we don't still have half of our workforce employed in agriculture. Workers had better-paying opportunities in cities that small farmers could not match.

Apparently, the Post thinks we should interfere with markets to protect low-wage employers and keep wages down. Those of us who like markets don't share the political views expressed in this article.

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MarketWatch had a short piece reporting that Michael Woodford, one of the country's most prominent macroeconomists, is now arguing that the Fed should actively look to stem the growth of asset bubbles like the housing bubble in the last decade. It points out that house prices have been rising rapidly in recent years. It also notes that Woodford argues the Fed should not distinguish between run-ups in house prices based on fundamentals and run-ups based on speculation.

As someone who advocated the Fed should counteract bubbles long before the crash of the housing bubble sank the economy, I am glad to see Woodford make this case. However, I think he is badly mistaken in arguing for using interest rate policy, rather than regulatory policy and public statements and information to try to sink a bubble. Also, it is very important to distinguish between a bubble-driven run-up in house prices and one driven by the fundamentals of the market.

Interest rates are a very inefficient tool for targeting an asset bubble. High enough interest rates will eventually burst the bubble, but they will also sink the economy. Bubbles are not likely to respond to modest increases in interest rates absent other measures from the Fed.

The effort to target rising housing prices, if they are driven by fundamentals (as is now the case), is likely to be self-defeating. Insofar as house prices are driven by fundamentals, it means that the best way to bring them down is by increasing supply. While this can be done through changing zoning policy at the local level, the Fed is not in a position to directly affect zoning. However, higher interest rates will reduce construction, making shortages of housing worse.

While higher rates will also eventually reduce demand by making house buying less affordable, this is a very indirect way of addressing the problem. It also means that it addresses a real shortage of housing by making it difficult for people to buy homes rather than increasing the supply. That doesn't seem like good policy.

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The United States has really awful policies on child care and parental leave. This makes it very hard for parents, and especially mothers, since they invariably get stuck with most of the responsibilities, to raise kids.

This is an outrage as Amy Westervelt points out in her Guardian column. But a declining birth rate, as the supposed downside for those of us not raising kids or thinking about it, doesn't pass the laugh test.

The prospect of less traffic congestion, less crowded parks and beaches, and lower house prices doesn't have me quaking in my boots. It's not clear what the point is here. In a good society, people should be able to have kids if they want to and not have to worry about a life of stress and poverty, but if we have fewer kids because people's priorities are elsewhere, so what?

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It's rare that you get a more explicitly classist piece in a major newspaper than Catherine Rampell's column on Donald Trump's trade war with China. While its assessment of the Trump administration's blustery rhetoric and confused actions seems very much on the money, its assertions about the country's actual interests is not.

It tells readers:

"So rather than taking the time to learn about our actual complaints regarding China’s trade policy (primarily, intellectual property theft), or how we could deal with them (through multilateral pressure, such as the Trans-Pacific Partnership that Trump killed), Trump fixated on deficits. The part of the story that sold with the public."

Okay, so Rampell tells us that we should not be concerned about a trade deficit that costs in the neighborhood of 2 million manufacturing jobs. Instead, we should be concerned that China is not as protectionist as she wants it to be when it comes to intellectual property claims of our software and pharmaceutical companies.

And why exactly should those of us who don't own lots of stock in Microsoft and Pfizer care if China doesn't pay them licensing fees and royalties? If we think through the economics here, this means that other things equal, lower payments to these companies mean a lower valued dollar, which would improve our trade balance on manufactured goods. What's the problem here?

Actually, the story gets even better. Suppose that China doesn't honor the patents of Pfizer and other drug companies so that it produces generic version of new drugs that sell for hundreds of dollars for a course of treatment instead of the hundreds of thousands of dollars that these companies demand for the patent-protected product (equivalent to tariffs of tens of thousands of percent). Suppose it sells these generic versions to people in the United States or just lets them come to China for their treatment.

This would save patients in the United States enormous amounts of money, and possibly save lives. This is what free trade is all about.

Sure, it means that Microsoft and Pfizer will not be as profitable and their shareholders will be less rich. It probably also means that some of the highly skilled workers whose pay depends largely on these forms of protectionism will get smaller paychecks. But as I recall, we are all supposed to be concerned about income inequality, so why should the country be pursuing a trade policy intended to give us more of it?

Yes, we do need a mechanism for financing innovation and research. But we can do better than extending a relics of the feudal guild system, even if most of the folks in policy debates are too lazy to bother thinking about the issue. (See Rigged, chapter 5. It's free.)

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Neil Irwin had an interesting Upshot piece in the NYT that takes advantage of new data on the median worker's pay at major corporations. The piece calculates the "Marx ratio" which is the ratio of profits per worker to the median worker's pay. It shows this number for each of the companies who have released data on their ratio of CEO pay to median worker's pay, as required by a provision of the Dodd-Frank financial reform act.

It's not clear exactly what this ratio is giving us. Suppose that a major manufacturer has subsidiaries in China and other low-wage countries that do most of its work. In this case, the median worker could be someone in one of these countries, giving it a low, median wage. However, it also has lots of workers (it's likely they employ more workers per unit of output in low wage Bangladesh than in the United States) so it may have low profits per worker.

Now suppose the company contracts out its manufacturing work in low-wage countries so that the people who work in these countries are no longer on the companies payroll. This will raise the median wage by getting rid of many of the company's lowest-paid workers. It will also raise per worker profits since it has fewer workers, but its profits will be pretty much unchanged.

There is a similar problem domestically. A company that contracts out its custodial staff, cafeteria workers, and other lower-paid workers will have higher median pay than an otherwise identical company that has many of these workers on the company's payroll. A better measure of the profits the company makes on its workers would not be sensitive to this sort of maneuver.

Of course, the main point of the new requirement was to call attention to how high CEO pay is relative to the pay of ordinary workers. This is arguably justified if the CEO is extremely innovative and able to produce large returns to shareholders. However, there is good evidence that CEO pay bears little relationship to their value to shareholders.

In that case, the tens of millions earned by CEOs is not reflecting their contribution to the company or the economy, but rather their insider contacts that allow them to secure and hold positions. This has a corrupting impact on incomes throughout the economy since it raises the pay for both the second- and third-tier executives, as well as setting a higher benchmark for pay in the non-profit sector and government.

And, as economists and fans of arithmetic everywhere know, more money for those at the top means less money for everyone else.

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Paul Krugman had an interesting blog post this morning in which he attributed the continuing weakness of wage growth to an increase in monopsony power. I'm a skeptic on this one since the collapse in wage growth happens to coincide with the Great Recession. The big issue is whether the labor market is again back to its prerecession level of tightness when wages were rising considerably more rapidly.

To argue the case that it is, Krugman follows Jason Furman in dismissing the drop in prime-age labor force participation as just being part of a longer-term trend. This leaves me uncomfortable for a couple of reasons.

First, it would be nice to have an explanation for the trend, instead of just pointing to it and saying "trend." We have clear explanations for trends like rising incomes through time or increases in life expectancy. What is the explanation for fewer men interested in working through time? Will this decline persist forever?

That brings me to the second reason I am uncomfortable with this story. Insofar as there had been an explanation, it was usually that the skills of less-educated men were less valued in the modern economy. We no longer need strong people to move things around, machines do that for us.

There undoubtedly is some truth to this story, except the drop in employment rates (EPOPs) since 2007, and especially since 2000, has been pretty much across the board. EPOPs have fallen for both men and women and at pretty much all education levels. These drops are departures from past trends. (Women's EPOPs had been rising until the 2001 recession.) A shortage of demand is the most simple explanation for why there would be a sudden drop in EPOPs hitting pretty much every demographic group.

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With Donald Trump declaring a truce in his "trade war" with China, it might be a good time to check the charts. According to data from the Commerce Department, the US trade deficit with China was $91.9 billion in the first three months of 2018. That's up from $78.8 billion in 2017 and $77.9 billion in 2016.

There are problems with this figure, as many people have noted. First, it is overstated due to the fact that we count the full value of a product exported from China, even though it may have just been assembled there, with most of the value originating elsewhere. The classic example is an iPhone, where the phone is assembled in China, but the bulk of the value is from items and intellectual property that are imported to China.

This is a real problem with the Commerce Department data, but there is also an analogous issue on the other side. Many of the goods we import from the European Union, Japan, and other countries have components that were made in China. My guess is that the net would still imply a reduction in our trade deficit with China, but probably not a huge one.

The other big issue is that many intellectual products never appear in our exports at all. When Apple contracts with Foxconn to produce its phones with China, the value of its software is not counted as an export. Some of this is due to inherent difficulties in measurement. (If Apple licensed Foxconn to produce the phones, the license would show up as export.) Some of the problem is due to tax avoidance, where companies attribute the value of the intellectual work to tax havens like Ireland, even if it was actually performed in the United States.

In any case, these problems in measurement are longstanding and almost certainly do not affect the direction of change. So as it stands now, Trump has taken us $13.1 billion deeper in the hole in terms of our trade deficit with China ($52.4 billion on an annual basis) compared to where things sat when he took office. We'll see how things change following the truce.

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That's what a story in the Financial Times tells readers. I don't think they have much of a case.

The argument is attributed to Hal Varian, Google's chief economist and a former professor of mine when I was in grad school at Michigan. According to Varian, if we accurately counted the value of software in smartphones it would add $200 billion to US exports, cutting our trade deficit in half.

The first item to point out is that our trade deficit is currently running at an annual rate of $640 billion, not the $400 billion claimed by Varian. A $200 billion reduction is still large, but it would imply cutting the deficit by a bit more than 30 percent, not half.

But the more important issue is the logic of the argument. Varian points out that, while Apple has proprietary software, for which it charges for its use, Google makes its software available for free, but demands ad placement in exchange for its use. This means that Apple's software should be accounted for in our exports, but Google's would not. This is indeed a problem, but perhaps not as much of one as Varian implies. (It is worth noting that the value of the software is in principle already counted in our National Accounts, so the Varian critique would imply no change in GDP, but that exports are understated and domestic investment is overstated.)

In effect, he is saying that Google is being compensated for its software by the ads that are subsequently sold on the phone. By contrast, Apple has been fully compensated at the point of sale. If we had proper accounting, then we would also count the value of Google's software at the point of sale. But look at what happens in subsequent years.

Suppose the Android phone is sold in some third country. Google will be collecting ad revenue from these phones for their full working lives. This ad revenue would then, in principle, (there is an important accounting issue I will address in a moment) be attributed to Google and count as an exported service. By contrast, the Apple phone does not directly generate any further revenue for Apple. This means that we should effectively be picking up the value of Google's software in Android phones through the ad revenue the phone generates in subsequent years. There is still an issue of timing, and also a definitional one (perhaps the original transfer of software should have been booked as an investment), but we are capturing the value of the software exported in the subsequent income flows from the advertising.

This would not be the case if the Android phone is imported back into the United States since the ad revenue is all domestic income. But there is no problem here because the imported phone costs less than it would have had the software been proprietary like Apple's. In short, there is not really a major issue here.

Now, there is a very important secondary point. Let's hypothesize that all of Google's innovation for its Android phone comes out of its Mountain View campus in California. Suppose to minimize their taxes, Google attributes most of the value and subsequent profits to its subsidiary in low-tax Ireland.

In this case, we would be understating the value of US exports, since the subsequent flows of income would be showing up at Google's Irish subsidiary, not its Mountain View campus. Clearly, there is much of this sort of gaming taking place, as most of the big tech companies seem to do a surprising share of their innovative work in low-tax countries, although it probably does not get you to $200 billion a year. (And here is my easy fix for this problem, if anyone is interested in a fix.)

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The NYT had a column by Christina Gibson-Davis and Christine Percheski telling readers that wealth inequality had grown much more among families with children than among the elderly. While there is little doubt that inequality has increased hugely over the last three decades (they look at the period from 1989 to 2013), with the implications they describe for inter-generational mobility, there are serious problems with their use of wealth.

First, it is important to note that while the authors' research shows a much larger increase in inequality among families with children than the elderly, they still find that the top one percent of elderly households has more than twice the wealth of the top one percent of households with children. The next 9 percent of the elderly households actually saw a considerably more rapid percentage increase in wealth over this period than was the case for the next 9 percent of the distribution for families with children.

While the bottom 50 percent of the elderly distribution look to be in much better shape in terms of their wealth than the bottom 50 percent of the distribution for families with children (median wealth of $46,020 for the elderly, an inflation-adjusted gain of 70 percent, compared with debt of $233 for families with children) on closer analysis this is much less clear. An elderly household was far more likely to have some income from a defined benefit pension in 1989 than in 2013. They were also more likely to have retiree health benefits. Furthermore, the amount of health care spending not covered by Medicare would be much higher in 2013 than in 1989. In addition, Social Security benefits are lower relative to workers' wages in 2013 than was the case in 1989. When these factors are taken into account (we would take the discounted value of these benefit reductions), it is not obvious that the median elderly household would have more wealth in 2013 than in 1989.

Wealth is also a problematic measure for families with children. The families at the bottom by this measure are likely to be recent graduates of elite programs like Harvard business school. These families would have borrowed heavily to earn their degrees, but would not have much work experience to pay off their debt and accumulate assets. Many recent college grads would also have negative wealth. While some of these people will face serious problems paying back their debt, most will have much higher paying jobs than non-college educated members of their cohorts and have much better life prospects.

Also, since there is a huge age aspect to wealth (on average, people have much more wealth in their 40s than in the 20s or 30s) the fact that many people are having children at an older age is likely to be a huge contributor to wealth inequality among families with children. This would especially be the case if more educated families tend to be the ones having children at older ages.

None of this should be taken to minimize the problem of inequality or the difficulties that children from low- and moderate-income families face in obtaining a decent education and in their subsequent careers. However, trends in wealth inequality are probably not a very good way to access these difficulties.

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It's really great that Tthe New York Times' reporters are able to read people's minds, especially when it comes to Donald Trump. After all, the guy constantly contradicts himself and makes assertions that clearly are not true, so it might be difficult for most of us to know what he really believes.

But NYT reporters can cut through the confusion with their mind reading powers. An article on the failure of a House Republican bill for renewing food stamps and farm subsidies told readers:

"[...]he [Rep. K. Michael Conaway, chair of the House Agriculture Committee] also sought to accommodate the White House and outside conservative groups, which demanded new election-year initiatives to reduce the rolls of the Supplemental Nutrition Assistance Program, or SNAP, which Mr. Trump regards, along with Medicaid and housing aid, as 'welfare.'"

It's good to know that Trump actually believes that the $126 a month that people collect in food stamps are welfare, as opposed to just being something he says to denigrate low- and moderate-income people for his base.

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Economists usually are inclined to trust the data coming out of the Federal Reserve Board and the government statistical agencies, but the NYT told us they are wrong in an article on trade negotiations with China. The article refers to a disputed promise by the Chinese government to reduce its annual trade deficit with the United States by $200 billion.

The piece explicitly dismisses the significance of this promise. It tells readers:

"Economists say that the purchase by China of $200 billion more in American goods per year — an amount equivalent to more than half of the annual American trade deficit with China — simply is not practical. 'The short answer is these are unrealistic numbers,” said Chad Brown, a senior fellow at the Peterson Institute for International Economics.'

"Even if the Chinese stopped buying other foreign products, like Airbus airplanes from the European Union or soybeans from Brazil, and purchased solely American products, it would add up to only a small fraction of the $200 billion total they are promising to purchase.

"'It would even be a stretch to get it to $50 billion,' Mr. Bown said.

"That is because the United States economy is already running near its full productive capacity, meaning it would not be able to produce enough new goods to meet Chinese demands, especially in the short term.

"In that scenario, the United States would probably stop selling airplanes, soybeans and other exports to other countries and sell them to China instead — shrinking the United States trade deficit with China but leaving the United States trade deficit with the entire world unchanged."

The claim advanced by Mr. Brown, which the piece implies is shared by all economists, implicitly assumes both that the US economy is at full employment and that the manufacturing sector cannot expand its output. Government data would indicate that neither claim is true.

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